Jandos Rothstein
When a human sustains a wound that pierces the skin, the process of blood clotting begins. The damaged cells release chemicals that activate platelets in the bloodstream. Not only do platelets begin building the clot, they also release the same chemicals that activate more platelets to further accelerate the clotting. This process constitutes a positive feedback loop, a reaction whose rate increases until it is acted upon by an outside factor: a negative feedback loop that brings the system back to homeostasis.
In America’s current economic system, “the rich get richer.” Those who possess enough economic power are able to use this power to influence elections and court decisions that concern them and their wealth through large political donations and promises to politicians of future careers in the private sector. Thus, political power comes hand in hand with economic power. As the rich wield their political power to gain legal decisions that benefit them and increase their wealth, they in turn increase their political power. The loosening of antitrust laws, for example, allows a few companies to make more money at the expense of smaller businesses and the consumer. A positive feedback loop is in full force, resulting in a growing divide between the middle and lower classes and the very rich, a system wherein the richest 1 percent of households owns 32 percent of aggregate household wealth.
Saving Capitalism: For the Many, Not the Few, by Robert B. Reich
Blood does not clot indefinitely. Before clotting becomes dangerous to the body, negative feedback loops return the system to relative equilibrium. The clot dissolves once the blood vessel surrounding it is repaired so that blood may once again flow and bring oxygen to the cells of the body. It is time to mend the blood vessel of the U.S. economic system so that it may return to a state that is healthy for all parties.
Currently, capitalism is driven by the market. According to economist Robert Reich, author of the book Saving Capitalism: For the Many, Not the Few, the market is often oversimplified to conceal its inner workings. If 99 percent of U.S. citizens do not have a working understanding of how the market operates, it will continue to work for the 1 percent. The main misunderstanding of the market and the main focus of misinformation about it is the idea that it is “free.” The free-market doctrine dictates that market forces alone should control the market and that government involvement is detrimental to its efficiency. This argument is flawed. When there are no restrictions in place to ensure that greed does not outweigh morality in the market, the result is inequality.
Even with some government intervention, the market allows for practices that harm society. Market forces do not take into account the environment or the treatment of workers and consumers. If a company decides to maximize profits by sacrificing worker safety, for example, the market itself cannot stop it. A recent study conducted by the New York Committee for Occupational Safety and Health found that workers at an Amazon warehouse on Staten Island sustain injuries at three times the average rate of American warehouse workers. This rate is brought on by a harsh work environment and demanding quotas assigned to workers. There are laws preventing some practices that are detrimental to worker health, but these occurrences persist despite them.
The practices of many corporations also prioritize profits over the environment. For example, personal electronics and electric car manufacturers use cobalt, the mining of which often involves practices that harm the environment. A 2016 study by the Centre for Research on Multinational Corporations found severe pollution in the air and water surrounding mines in the Democratic Republic of the Congo. The U.S. government cannot regulate foreign countries, but it could prevent domestic companies from buying cobalt from distributors who engage in unethical practices, effectively limiting the scope of environmental damage.
These are just two examples of failings of the free market, and they are apparent even with some government oversight. More stringent rules regarding what can be asked of workers, as well as where American companies may source their resources, would help, but these changes would not address the root of the issue. The fatal flaw of the American system in its current form is not that the government oversees capitalism. This is necessary. The problem is that the government does not properly curtail the influence of the 1 percent. The inequalities and injustices in our system come, then, not because we have rules, but because existing rules stack the deck for the rich and against the poor.
In Saving Capitalism, Reich depicts a time when this was not the case. He opens with an anecdote about his family in the 1950s. His father owned a business that supported his whole family, and Reich writes that they “weren’t rich but never felt poor, and [their] standard of living rose steadily through the 1950s and 1960s.” This is a prime example of capitalism for all. The middle class was large and many families were in a similar situation to Reich’s: living comfortably. This period also saw a steep increase in the federal minimum wage, which peaked in 1968 at $11.99 per hour adjusted for inflation.
By comparison, today’s federal minimum wage is $7.25 an hour. This marked decline signifies the growing wealth gap in America. For a look at the other end of the spectrum, the American Federation of Labor and Congress of Industrial Organizations provided a look into executive pay relative to median worker pay of S&P 500 companies in 2018 and the decade leading up to it. While the average CEO pay increased by 56 percent, median worker pay increased only 18 percent, leading to an executive-to-worker pay ratio of 287 to 1 in 2018. These numbers are bleak, but they are not surprising. The rich, including these CEOs, have been able to tamper with political decisions to exact the ratio’s increase.
Reich’s anecdote and the 1968 minimum wage demonstrate that capitalism can work for all of us; we just need to change it from its current state to one more focused on helping the 99 percent. Breaking the cycle of the rich getting richer is the only way to go about this. While the 1 percent does have control over many of the politicians who hold office, they do not have outright control over who wins these offices. The poor and middle-class majority should have a distinct advantage over the rich minority in this area. The votes of the impoverished count as much as the votes of the very rich in our elections, and that must be what drives the change.
The majority must unite behind candidates who will help eliminate the abuses of the establishment and build a new and better system. These candidates will set in motion the negative feedback loop that will dissolve the clot that has grown harmful to the U.S. If the American people are able to set aside their differences and recognize their common qualms with the status quo, anti-establishment candidates could enter offices across the U.S. and begin to enact change.
For this metamorphosis of the American government—and the American economy—to occur, however, the majority must truly become a majority. Currently in the U.S., politics are divided by the two main parties, and the bulk of the public identifies with one or the other. A 2015 study by Michigan State University political scientist Corwin Smidt described a decline in people voting for a different party in one election than they had in the last. The percentage of these “floating voters” was down to 5.2 percent, largely due to the increased polarization of the political climate. The lion’s share of political decisions made by Americans are made depending not on which candidate’s policies best fit their interests and morals, but to which party the candidate belongs. This phenomenon has to change if progressive candidates are to be elected.
If voters are indeed able to let go of partisan tendencies and elect politicians who do not have ties to the corporate world, the economy could see a major shift. More regulation could be introduced to ensure the environment’s safety for years to come. The federal minimum wage could be raised. A universal basic income could be introduced, something that presidential candidate Andrew Yang argued for before dropping out of the 2020 race. These changes, constituting clear government intervention, would not necessarily be bad for the market. In fact, the market would benefit from them. With an increased minimum wage or a monthly income for all, the middle class could flourish, making more money with which to pay bills. Furthermore, they would hold more discretionary spending power, boosting the economy with their purchases. Limits on carbon emissions would prevent the depletion of resources that could result in a disastrous market failure.
Eventually, changes in government and the economy are likely to happen regardless of whether people change their political habits. A car with a flat can only drive for so long before it runs off the road. If the American public recognizes the problem with the current state of affairs, and decides to act, however, a substantial amount of pain and suffering can be avoided. In the end, the clot will dissolve, but it is in everyone’s best interest to make sure that happens before America suffers a massive stroke.
