Perhaps one day I'll publish my own politico-economic manifesto. It will show that my own positions and conclusions are not too different from
SimpleDon's. However I do think he exaggerates. Certainly the claim that there is congruence between the mainstreams for both major American Parties is a very wrong and dangerous message.
Neoliberalism is the current political economics that defines our economics policies and it has been for more than forty years with 100% of the Republicans and 50% of Democrats, the blue dog conservative Democrats, the Clinton/Biden wing of the party, actively pursuing the neoliberal policies.
The main thrust of neoliberalism is to turn away from Keynesian economics that says we have to develop our economic policies by looking at the realities of how the economy actually works. Neoliberalism instead says that we have to turn back to neoclassical economics, driven by ideology, to what the economy would be if, one, a self-regulating free market is possible and, two, we could turn our existing economy into one. Both are rather dubious propositions, IMHO.
Everyone, even the governments of Communist China and Communist Vietnam, acknowledges the power of free-markets and private entrepreneurship to increase prosperity and general welfare. And almost all thinkers, beginning with Adam Smith 'father of capitalism,' acknowledge the need for government intervention to curb monopoly power, account for external costs, and to give priority to public benefit as well as private greed. (I write "almost everyone" to allow for the crackpottery of Rand Paul, Paul Ryan and others of that ilk — none of whom infest the Democratic Party.)
In short, the quoted excerpt paints a picture that is much too black-and-white. To lump Democrats who feel the Green New Deal moves too quickly with Republicans who suck up to their corporate masters by opposing all government regulations, is to enable the Ignorati — America's dominant political faction — to fall victim to the canard that "both sides are the same."
It IS true that politicians in the U.S. and around the world have been reluctant to oppose powerful financial interests. Often this support is NOT done to enrich campaign donors, but is done from fear of financial collapse. For example, in the 2008 crisis, SecTreas Henry Paulson was ex-CEO of Goldman Sachs and did not present policy-makers with options that would hurt the broad range of bank shareholders. Congress went along with Paulson's plans less to keep Wall Street paying big bonuses, and more out of fear (whether justified or not) of a financial Armageddon. (One saw something similar in South Africa: at the same time Nelson Mandela was gaining top political power, the bankers of South Africa were pushing through arrangements to ensure their continued wealth and power, and hapless politicians went along)
The practical result of our neoliberal economic policies are many but the one that we are concerned with here is a high and ever-increasing level of income inequality from higher profits created by suppressing wages. This is because a critical part of neoliberalism is the idea that we have a truly free labor market* where workers are paid what the economy determines what they are worth, not what they are able to negotiate, that negotiating is gaming and therefore, perverting the economy, and is somehow a denial of individual freedom.
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It is this bias toward ever-increasing income inequality that gives the already rich the money to drive up the stock market even when we are in an economic depression. The already rich are relatively immune to economic recessions now because the large corporations are immune also. The already rich have increased their share of the national income** after each of the last three recessions.
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Extreme wealth and income inequality are almost as old as civilization. As Thomas Piketty points out, the reduced inequality seen for several decades in the mid-20th century was an anomaly, driven by wars and the collapse of empires. Inequality is driven primarily by inherited wealth or caste. (The American colonies and U.S. of 18th and early 19th century had very low wealth inequality: immigrants had arrived with little, and land prices were kept low by abundance.)
Income and wealth inequality are likely to get worse. Not just capital owners, but very skilled workers get an increasing share of the pie, while low-skill workers compete with robots and overseas workers. This is a natural development. We do want our leaders to target this as a problem but, again, to lump Democrats and Republicans together on this topic is dreadfully wrong.
The stock market actually has no function in our current economy. Originally, stock markets were used to raise money for existing corporations to invest in new facilities for production or to research and to develop new products and processes. And the stock markets were used to raise money for new businesses. The stock markets were used to fund the lifeblood of economic growth in capitalism, increases in productivity and innovation. But no longer. The modern corporation handles these functions internally. They self-fund investments either by using retained earnings or borrowed funds through the sales of corporate bonds or bank loans.
If they would raise money through the stock market by selling either newly issued stock or their own stock they hold in reserve, both would be called secondary equity offerings (SEOs) which they are required to report to the SEC. Because these are widely considered to be the last resort for a corporation already in serious trouble, there are few to no SEOs in a year that provide the corporation with money. Unfortunately, the sales of the closely held stock is also considered to be an SEO, shares held by founding families, or where there are few stockholders because little stock is offered to the general public for any reason. This means that we can't easily separate out SEOs raising money by selling newly issued shares or of reserve shares from the sales of closely held shares, the shares sold to provide the corporation with money would be measured in millions of dollars, not billions, each year compared to the tens of trillions of dollars in stock market annual volume.
The U.S. financial sector is much MUCH too large and powerful. On that we can agree. Some pimps for intense financialization make arguments like "Market makers have provided a good public benefit (enhanced 'price discovery') therefore funnelling hundreds of billions of dollars through 'high frequency trading' must be even better."
Ha! One might as well argue that if a small glass of wine is good for health, guzzling gallons every day must be even better.
America's bloated financial sector is diverting top talent and resources, has too much power, and presents grave risks as we saw in 2008. I support a tiny Tobin tax, or tax on stock trades. But to imply that individuals should have no easy way to sell a few shares if they need cash for an emergency is, again, to think too much in black-and-white. Let's think in shades of gray.
