On June 7, Jeffrey Sachs published an excellent article in the Financial Times. He argues that the Keynesian advice of public stimulus of the economy is a short-term solution. It brings positive results only if the private economy has ample unused reserves and just needs some "animal spirits" to trigger their sustainable use. Today neither the world nor the US economy has such reserves. So the direction and scale of a stimulus should be well analyzed.
What to do? Sachs makes several sound but futile proposals. Many economists propose also a Tobin tax on all financial transactions. This stone would kill several Goliaths. It would substantially decrease the deficit, and therefore the need for other forms of taxation. It would cut to size the financial industry and substantially reduce or eliminate its proprietary trading. Most important, it would substantially reduce or eliminate short-termism, the plague of our times.
The trouble is that any sound reform, economic or otherwise, infringes upon the interests of America's super-rich, who pay for the political music -- and, accordingly, order it. The 2007 election of president of France Nicolas Sarcozy has cost 37 million dollars; the 2008 election of President Barack Obama has cost 50 times as much. On the average, the election of one of 535 members of the 2008 US Congress has cost more than 10 million dollars. I am not analyzing here whether we have or not a positive return on the capital; I am just pointing out that only Big Business and Wall Street can afford these multi-billion dollar expenses. And the recent supreme idiocy of five deaf-and-blind "originalist" justices further aggravates the situation.
Obedient political flunkies will do nothing meaningful, which would be easy, since the US political system is geared to inaction. To do anything sound, we have first to replace a large fraction of our political elite.
Both Democrats and Republicans produce irrefutable proofs of corruption and anti-social behavior of the opposite party. Unfortunately, here the proverbial rabbi can say, without contradicting himself, that both of them are right.
The wittiest diplomat in human history, Prince Talleyrand of Napoleonic France, was asked who did he like better -- Robespierre or Rousseau. He responded: "When I think of one, I prefer the other." I think that millions of Americans have such reaction now to the two major parties. Basically, a pox on both your houses.
I have come from the USSR, a country where innumerable crimes were committed in the name of the "working class." Of course, workers had nothing to do with that, but incessant propaganda left a deep psychological imprint. In 1974, I came here to a country where the actions of arrogant and stupid union bosses were one of the main reasons of "stagnation." None of that endeared unions to me, either.
My first proposal would therefore be to change the rules of collective bargaining. It should be performed not with individual companies, but like in Europe, with the industry as a whole. That would eliminate the main blackmailing threat of a selective strike, mortally dangerous for any company in the face of intensive domestic and global competition.
Similarly, in times of enormous deficits the salary increases of public-sector unions should be severely curtailed or eliminated.
It should be evident from my former blogs, however, that I attach enormous significance to restoration of the "golden mean" balance between "countervailing powers" of business, labor, and government.
Therefore my second proposal is to create a third party. A Worker party. Which would not take a dime of contributions from corporate lobbyists.
A terrible proposal; I do not like it myself. But it seems to be an absolute prerequisite to any meaningful reform. We do not have the luxury now of searching for a sufficiently good solution, because none of them exists. We can choose only between less bad and more bad answers to our prayers.
A better idea, anyone? I would be really happy to hear some.
In conclusion, I would like to demonstrate how dangerous are some most venerable but double-edged union rules. (From Plato and Platypus Walk into a Bar by Cathcart and Klein.)
An American union boss comes to Paris. Naturally, he wants to visit one of the renowned Paris establishments. But he wants to find a unionized one. Finally, he discovers one, pays the fee, and browses through the albums. He says: "I'd like Collette." The madam answers, "I am sure you would, but Therese has seniority."