[edited to correct typos]
Tony Judt has written a book called "Ill Fares the Land". I haven't read it yet, but I have read his introductory excerpt in the New York Review of Books (Apr, 29, 2010, at 17). I'll include here a few excerpts (with comments).
Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self-interest: indeed, this very pursuit now constitutes whatever remains of our sense of collective purpose....We no longer ask of a judicial ruling or a legislative act: is it good? is it fair? is it just? is it right? will it help bring about a better society or a better world?
***
The little crash of 2008 was a reminder that unregulated capitalism is its own worst enemy: sooner or later it must fall prey to its own excesses and turn again to the state for rescue. But if we do no more than pick up the pieces and carry on as before, we can look forward to greater upheavals in years to come.
Both of these points are important. The "greed is good" mentality that went along with Reagan's "deregulate, privatize, militarize and cut tax" revolution put free-market ideologues and economists in control of our policy and shortchanged everything else, the most important of which is seeking ways to make society fair for everyone. The crash that grew out of the huge profits for lenders and banks in subprime mortgages, securitizations and even helping clients make huge casino bets with naked CDS (an insurance product that we stupidly allowed to be sold without any regulation, in fact without even acknowledging that it was insurance and therefore required both reserves to ensure the insurer could deliver and an insurable interest to ensure the buyer wasn't just placing a casino bet) shows what happens with raw capitalism when the state steps back completely and lets power play its hand. We are doomed to repeat, unless we haul in the Big Banks with financial reform that has lots of teeth--regulation of derivatives, banning of proprietary trading, banning of naked swap positions, banning of predatory lending and usurious rates, and breaking up of big banks.
Judt goes on to note the inability of Americans to deal well with social policy, in part because of the misleading labels and predisposed opinions.
A liberal is someone who opposes interference in the affairs of others; who is tolerant of dissenting attitudes and unconventional behavior. ... Social democrats, on the other hand, are something of a hybrid. They share with liberals a commitment to cultural and religious tolerance. But in public policy, social democrats believe in the possibility and virtur of collective action for the collective good. Like most liberals, social democrats favor progressive taxation in order to pay for public services and other social goods that individuals cannot provide themselves; but whereas many liberals might see such taxation or public provision as a necessary evil, a social democratic vision of a good society entails from the outset a greater role for the state and the public sector. ... One of my goals is to suggest that government can play an enhanced role in our lives without threatening our liberties--and to argue that, since the state is going to be with us for the foreseeable future, we would do well to think about what sort of a state we want.
Readers will see much that is familiar here. I've argued that we need the state because the state can do what we cannot do for ourselves. And because we want the state to perform this important function, we should be glad to provide the revenues to make that possible.
Judt notes that the US for a long period was under the spell of the "Washington Consensus", from which we are now experiencing "a partial awakening."
On any issue "there was an economist or 'expert' expounding the virtues of deregulation, the minimal state, and low taxation. Anything, it seemed, that the public sector could do, private individuals could do better. ... Today there has been a partial awakening. To avert national bankruptcies and wholesale banking collapse, governments and central bankers have performed remarkable policy reversals, liberally dispersing public money in pursuit of economic stability and taking failed companies into public control without a second thought.
***
But it hardly constitutes an intellectual revolution. ...In short, the practical need for strong states and interventionist governments is beyond dispute. But no one is 'rethinking' the state. There remains a marked reluctance to defend the public sector on grounds of collective interest or principle.
There's the rub. In spite of the colossal collapse of the markets, proving that the free market theory of efficient market pricing and self-regulation was hogwash, we have not gotten beyond the stuck-in-the-50s notions of "capitalism" as a virtuous superhero fighting the villianous "socialism"--we can't recognize the hybrid political economy that is neither pure capitalism nor, of course, anywhere near pure socialism that is essential to the type of democratic spirit that exemplifies America. Judt notes that we are living in an "age of insecurity"--economic, political, physical--that breeds fear of change, fear of strangers, fear of decline, fear of an unfamiliar world, and it is that fear that corrodes the trust and interdependence on which society depends.
To develop this theme, he examines the growing inequality in the US and how poorly the US stacks up against other societies (ones that by and large have much less inequality) in terms of social mobility, health, crime, mental illness, and life expectancy.
In the U.S. ..., financial transactions have largely displaced the production of goods or services as the source of private fortunes, distorting the value we place upon different kinds of economic activity. The wealthy, like the poor, have always been with us. But relative to everyone else, they are today wealthier and more conspicuous than at any time in living memory. Private privilege is easy to understand and describe. It is rather harder to convey the depths of public squalor into which we have fallen.
...The symptoms of collective impoverishment are all about us. Broken highways, bankrupt cities, collapsing bridges, failed schools, the unemployed, the underpaid, and the uninsured: all suggest a collective failure of will. These shortcoming are so endemic that we no longer know how to talk about what is wrong.... And yet something is seriously amiss. Even as the US budgets tens of billions of dollars on a futile military campaign in Afghanistan, we fret nervously at the implication of any increase in public spending on social services or infrastructure.
... In 2005, 21.2 percent of US national income accrued to just 1 percent of earners. Contrast 1968, when the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker. Today the CEO of Wal-Mart earns nine hundred times the wages of his average employee. Indeed, the wealth of the Wal-Mart founder's family in 2005 was estimated at about the same ($90 billion) as that of the bottom 40 percent of the US population--120 million people.
This is what we have come to. A society that spends on war without complaining about deficits, but cannot spend on building bridges or providing health care without the complaints of those that want "smaller government." A society that lets the head of a corporation earn in about a third of a day what the average worker in the corporation earns in an entire year, so that the primary owners (the few dozens that make up the Walton heirs) can sock away more wealth than had by 120 million ordinary Americans.
This kind of inequality leads to societal pathologies--uneducated populace, depressed and sick people who have no jobs, crime, and all the evils of a decaying society without hope.
The wider the spread between the wealthy few and the impoverished many, the worse the social problems .... What matters is not how affluent a country is but how unequal it is. Thus Sweden and Finaland, two of the world's wealthiest countries by per capital income or GDP, have a very narrow gap separating their richest from their poorest citizens--and they consistently lead the world in indices of measurable well-being. Conversely, the United States, despite its huge aggregate wealth, always comes low on such measures.
***
As recently as the 1970s, the idea that the point of life was to get rich and that governments existed to facilitate this would have been ridiculed: not only by capitalism's traditional critics but also by many of its staunchest defenders. Relative indifference to wealth for its own sake was widespread in the postwar decades.
Judt concludes with a question--how can we make up for raising a generation who thinks material wealth is the be all and end all. Maybe, he says, we can do it by starting to teach our children that this economic thinking that has dominated us for several decades is not the only way humans can work. "There was a time when we ordered our lives differently."
Tax, spending, and social policies are inextricably interconnected. We can't continue to have public servants who preach against the very government in which they serve, while letting public infrastructure decay, schools decline, and yet another generation grow into a society of vast inequality and the disadvantages that such inequality breeds. Maybe we need to be issued badges, like the ones you get when you vote on election day, for filing our tax returns: "I paid my taxes, and I'm proud of it."
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