Dave Shuster, Times Columnist

America’s economic conditions mirror those a century ago

Blame both major parties; voters seem to sense what’s wrong

According to the principles of free market capitalism, competition encourages efficiency and innovation, yielding higher-quality products for consumers.

Although the U.S. has a mixed economy — a private business sector regulated and taxed by a government that provides basic public services — the majority of Americans believe capitalism is our society’s backbone. Undoubtedly, no other economic system has approximated capitalism’s endurance and successes.

However, as the socialistic aspects of our economy are strangled by the self-interests of the few, capitalism, unthreatened by a viable competitor, runs the risk of imploding under the weight of its hubris and excesses.

The tragedy of our economic path is made more poignant by similarities to our past. During the first Gilded Age (some say we’re in the midst of the second), spanning the late 19th century, the industrialized U.S. economy grew rapidly, increasing national wealth by as much as 3.8 percent annually throughout the 1880s.

Comparable to the present, these riches, three-quarters of which were controlled by the wealthiest 10 percent of the population, were unequally distributed. The first Gilded Age also was characterized by indignant industrialists who opposed workers’ rights, paid off government officials who attended to the concerns of their affluent patrons, and congressional gridlock.

The gross inequities of the first Gilded Age, as well as repetitive boom-and-bust economic cycles, fostered reforms in the 1900s that yielded a strong middle class.

Communism and socialism

In this era of reform, many Americans were ardent supporters of communism and socialism, alternative economic systems that held the promise of avoiding capitalism’s tendency toward inequality.

History’s tarnished image of communism and socialism obscures their potential contribution to the U.S. economy. America’s moneyed elite were likely willing to accept certain aspects of socialism, such as unionization and government-sponsored social safety nets, rather than face the threat of massive income redistribution if either of these systems took hold.

During the past three decades, in conjunction with the collapse of communism, this mindset vanished. The tenets of free market capitalism were eulogized and vigorously enacted. An entire political organization, the Republican Party, focused on one principle — ablating all favorable notions of socialism from the American memory.

In legislation that benefited top income earners, both major political parties were complicit in deregulating the financial sector and reducing income, capital gains and estate taxes. Businesses directed their attention to the returns of shareholders, maximizing profit at the expense of employees. Finally, the U.S. Supreme Court wiped away any semblance of election integrity by allowing unlimited individual and corporate campaign contributions in the name of “free speech.”

As a result, predictably, income inequality rivals that of the first Gilded Age. Boom-and-bust economic bubbles, rare in the mid-1900s, returned. Congress, stymied by Republican dogma and bipartisan obsequiousness to wealthy campaign donors, is again gridlocked. Government-sponsored social safety nets are denigrated by opportunistic politicians and threatened by overzealous spending cuts. Greedy corporations relocate overseas for favorable tax rates.

And, yes, when challenged about their disparate economic success, some mega-rich “job creators” are offended, screaming “class warfare” and sneering at the middle class for “blaming wealthy people” for their problems.

Wrong direction

U.S. voters sense something’s wrong. In a recent NBC News/Wall Street Journal poll, 70 percent of respondents believed the country is headed in the wrong direction. Almost two-thirds were dissatisfied with the state of our economy despite recovery from the Great Recession.

Though participants blamed Congress and President Obama for their discontent, eventually, unless things change, they’ll realize the inequities of free market capitalism are responsible. When they do, watch out. Unremitting economic hardship induces violence.

The ultra-rich apparently appreciate this possibility because their expenditures on security services increased as income inequality worsened.

But know capitalism is capable of more than plunder. Look at B (benefit) corporations, for-profit companies required by shareholders and law to achieve social goals.

Still, such efforts, few and far between, receive little fanfare. Proponents of unfettered capitalism need to awaken from their self-satisfied stupor. Even though communism and pure socialism are no longer rallying cries for disadvantaged Americans, hopelessness and economic injustice will serve as more than adequate replacements.

This is the opinion of Dave Shuster, a St. Cloud resident whose column is published the first Sunday of the month. He writes mostly from a liberal perspective.