The Crash of 2016
Though the title implies that this is another book on the stock market, it is, rather, a review of the history of America’s experiment with democracy and of the difficulties that experiment has entailed over the years. It includes, of course, a prophecy. This might sound depressing and dull, but it is not. For those who are not familiar with Thom Hartmann through his many books and his daily call-in program on KBCS, it should be made clear that he is an unabashed progressive, totally committed to social democracy. His beliefs conform to those of Jefferson and he frequently cites Jefferson’s letters in support of his views. This is lively in its combativeness. His enemy is monopoly capitalism and the excessive inequality in welfare and political power that it causes.
The surprising phenomenon of the insurgency of Sanders and Trump may make this book especially timely for those who have turned away from politics in disgust. The failure of both parties to deal with the nation’s economic problems has clearly contributed to terrible rates of voting participation over the years. Yet the excitement generated by Obama, (quickly disappointed) and the emergence of the current insurgents may indicate a political sea change in activism is in progress. The question at hand is whether this will lead to more or less effective political representation for society as a whole, and whether its effect upon the general welfare will be beneficial. Hartmann argues that removal of big money as an influence in politics, the universities and corporate news media is key.
If you are wondering what all the fuss is about among the Bernie-ites, this book will present their point of view with lots of easily digested historical references as backup, going back to Aristotle and forward through Lincoln to FDR. His analysis of our problems relies heavily on Jefferson’s radical thoughts on the need for periodic adjustment of the laws to current circumstances. Jefferson believed the living generations (about two) should deal with their own welfare, and not be bound to past generations’ ways.
Hartmann also believes in the existence of a “Great Forgetting” by the generations, which explains the recurring 80 year cycle since the 1760’s of financial excess and crash, war, reform, and a return to concentration of wealth. He refers to Arnold Toynbee and current historians in this matter. They see a cycle consisting of about four generations during which the experience of the difficulties of the previous period disappear from the cultural memory, allowing the cycle to continue. His hope is clearly that the historically unprecedented explosion of the middle class after WWII and the Roosevelt reforms might break this cycle through better education and welfare. But the middle class must be preserved as essential to this.
To my mind, his material on the effect of tax and trade policies since the early 80’s on our middle class is most important. He bears down on the influence of reduced tax rates on corporate leaders’ decisions to either invest in their company or take money out in the form of bonuses, salaries, stock options and dividends. The reduced tax rates begun by Reagan are seen as inducing this tendency to take the money and run, letting domestic investment in technological advancement languish. He sees the offshoring of wealth and jobs and a turning to international banking financial legerdemain as a direct result of the lowering in tax rates for the very wealthy begun in the 80’s. He believes this has led to the breaking of the domestic circulatory flow of production and employment and the subsequent reduction of demand for production within our economy. This in turn, has caused the great disparities in income and wealth we have experienced. In this regard, it is persuasive that writers, such as Forbes columnist, Eamonn Fingleton and Reagan’s former Assistant Secretary of the Treasury and associate Wall Street Journal editor Paul Craig Roberts, support this analysis.
In fact, Roberts is so fervent a convert that he advises his readers to read deeply and take-to-heart the writings of Michael Hudson, a Socialist economist. Hudson advocates government infrastructure investment, and student and consumer debt forgiveness, as necessary to escape the debt-deflation trap we are mired in now. And our own Nick Hanauer advises his fellow billionaires to take heed, that the pitchforks may come if they don’t soon embrace reform. Change is certainly in the wind.