Dear G700 Friends,
I'm honored to be asked to write something for G700 and inspired by the new wave of young activism in Greece. Your struggle reminds me of those that swept the United States, France, Germany and Czechoslovakia in 1968. Perhaps had those struggles succeeded, the world would not be facing the crisis that now befalls it. I am 62. I was part of that 1968 generation. For a time I believed the crisis we now see would come very soon. Then, I believed it would never come at all. And suddenly, here it is: the failure of the corporate market system for all to see. Of course, we in the US bear primary responsibility for the pain that now inflicts working people around the globe. But so great a crisis is also an opportunity for re-making the world. It's up to us to seize it and make the most of it.
While Europe built and maintained at least a modest "social contract" more broadly sharing economic prosperity, the US turned first to the neo-conservative Reagan/Thatcher model. The idea was simple (and simple-minded): unregulated markets and unregulated greed, spurred by sharp cuts in tax rates for the rich, would produce an economic boom that would "trickle down" to the rest of us. It didn't happen.
Instead, wealth in the US gushed up to those at the top while wages for workers barely budged or even fell. The rich became so rich there was not even much in the way of real products they wanted to buy. So they invested their massive surpluses in real estate and a soaring stock market unsupported by real wealth creation and productivity increases.
Workers in the US were able to keep up their material lifestyles only by putting in longer hours on the job and going deep into debt. In time, they could not afford their enormous mortgages; their homes were foreclosed on and they were evicted. But the banks, left holding enormous mortgages they could not re-sell and already massively over-leveraged by the various derivative and pyramid schemes the deregulated market made possible. began collapsing.
But the turmoil was not confined to the US. European elites, envying their American counterparts (US CEOS were earning 400 times the salaries of their workers) and eager to take advantage of higher profits in the US, had invested heavily in American stocks and banks. Like collapsing dominoes, the US failures and those in the similar UK banking system spread quickly throughout the world.
Now, in the US, the scandal has reached a zenith. Poor and middle-income Americans are being asked to bail out the very banks and speculators who caused the problem in the first place. AIG, the company that had insured the collapsing banks, has received more than a hundred billion dollars from the US government and has paid millions in "bonuses" to the executives most responsible for the disaster. There is an anger in America over this that I have never seen before.
What is to be done? President Obama, a good man I believe, simply cannot use his stimulus money to restore the order that existed before the crisis. First of all, around the world, we must renew the concept of the social contract and shared prosperity. We must understand once again that an unregulated corporate market is a recipe for disaster. We must understand that governments must intervene to re-establish economic justice, and set new goals for a more just and sustainable economic system, reining in forever the unchecked power of global capital.
The second step is for citizens everywhere, led by passionate young people like yourselves, to raise a new question--not "what will this or that policy do to the economy?" but rather, "what's the economy for, anyway?" What are the economic policies that will bring us justice, good health, time for friends and families and communities, strong local institutions, economic security for all, and a sustainable world for generations to come?
As I have studied these things it is clear there are no Utopian models, but most western European countries have done a better job in meeting real human needs than has the United States, the country whose policies the European elites sought to emulate. Whether it be health or security or economic fairness or leisure time or education or children's welfare or the condition of the environment, the US, far from being a model, ranks near the bottom among the wealthy countries of the world.
It is time to create a social market system that works for all, time to strengthen the social contract, build on its best practices and steer away from the failed neo-conservative model. I remember the slogan of the Czech students who faced Russian tanks in the "Prague Spring" of 1968. Their rallying cry was "socialism with a human face." Perhaps the least we can demand 41 years later is "capitalism with a human face." I think G700 will be leaders in that struggle.
TAKE BACK YOUR TIME
Seattle, Washington, USA