Economic
Taxes generate income for governments, enabling them to meet needs not met by the private economy.
Following the Great Depression and World War Two, corporate elites agreed they’d benefit from broad prosperity and strong unions. Labor and business agreed that the federal government must “save capitalism from itself” by preventing monopolies, avoiding the excessive concentration of wealth, and assuring consumers have enough purchasing power to fuel the economy.
The mid-1970s, however, saw a significant shift in global socio-economic dynamics with the rise of neoliberalism, austerity economics, and the Washington Consensus. Global corporations began to use their enormous lobbying resources to eliminate price controls, deregulate the economy, lower trade barriers, cut taxes, and privatize public agencies. This approach promoted unfettered free-market capitalism and reduced government spending globally. Proponents argued that lower taxes would boost economic growth and thereby eventually increase government revenue.
Critics called it “voodoo economics” and “trickle-down economics” and argued the predicted increases would never appear — and never did.
The neoliberal doctrine asserts that economic and political liberties are indivisible; any restriction on economic freedom necessarily limits political liberty. Adam Gopnik argues the doctrine affirms that all social life should be secondary to the market.
Laws undercut unions in many countries. Governments have increasingly withdrawn from social responsibilities, leading to a sharp rise in economic inequality. The most affluent individuals now pay less tax in wealthy nations. Offshore tax havens hold some 10% of the world’s GDP, costing countries billions of dollars annually in lost revenue. Small countries attract capital from developed countries with lower tax rates and secrecy, which diverts it from productive investment.
Fifty years later, however, the failures of neoliberalism became apparent. Large segment of the population, especially the working class, withnessed economic hardship and insecurity. The rise of populism globally, Trumpism in the United States, and the overwhelming defeat of the Conservative Party by the Liberal Party in Great Britain demonstrated widespread dissatisfaction with neoliberal economics.
In “The Rise and Fall of Neoliberalism, in 2023 Louis Menand argued
The free market used to be touted as the cure for all our problems; now it’s taken to be the cause of them…. Both parties have drifted closer to something like mercantilism [which aims to maximize exports and minimize imports]; the language of the market has lost its magic. “Bidenomics” entails immense government spending; meanwhile, a new cadre — protectionists, crony capitalists, ethno-nationalists, and social and cultural provincials — has been rewriting party platforms. Republicans eagerly lambaste Big Tech and clash with “woke” corporations, more intent on fighting a culture war than on championing commerce.
In Private Government: How Employers Rule Our Lives (and Why We Don't Talk About It), Elizabeth Anderson documents how bosses are often dictators. In many workplaces, employers minutely regulate workers' speech, clothing, and manners, leaving them with little privacy and few other rights. And employers often extend their authority to workers' off-duty lives. Workers can be fired for their political speech, recreational activities, diet, and almost anything else employers care to govern.
Democratic approaches to organizing the economy go beyond both unfettered capitalism and state socialism as well as traditional liberal and conservative paradigms. The primary solution is moral: a commitment to promote the public good.
Methods for building a more compassionate economy include:
Boost Unions.
New laws increase incentives for workers to join unions, enable unions to reach agreements that cover whole sectors of the economy, and reduce incentives for businesses to oppose unions.
Employee-owned businesses benefit workers, are more stable and productive, and are more involved with their communities than are investor-owned corporations. With technical assistance and long-term, low-interest loans, governments support the growth of worker cooperatives and family farms, which boost rural economies.
City-owned public banks support projects driven by public interest. In July 2023, the L.A. City Council funded a feasibility study for a Los Angeles Public Bank.
With tax breaks, governments encourage the spread of public benefit corporations whose charters require them to value employees, customers, vendors, communities, and the environment — to serve the public interest as well as make a profit.
In August 2023, UN Secretary-General António Guterres published a draft report evaluating options for a new framework for international tax cooperation under UN auspices to minimize the “race to the bottom” with tax havens.
A shift toward the “care economy” more fully rewards and respects service workers such as teachers, childcare workers, nursing home staff, and drug rehab counselors.
The above linked resources support the arguments presented in this chapter.
The above linked tools, some tested and others untested, present methods that compassion-minded people can use to advance a holistic democracy movement, whether or not they identify with this movement and explicitly commit to mutual support for self-improvement.
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