Why our economy is Failing the working class?
“Government’s views of the economy could be summarised up in a few short phrases: If it moves, tax it. If it keeps moving regulate it. And if it stops moving, subsidize it” said Ronald Reagan, agree or disagree with him that the general balance between the government and economics, which is utterly shattered in our current predatory capitalistic world.
Let me be clear I am no supporter of Ronald Regan, nor a fan of Reaganomics(where the government has minimal interference in the economy and turning its back on the working class is acceptable). But the current economic interests are even radical to the economics in the Regan era(Reaganomics). The employer will abuse the employee for his work(By making them work for more hours with no increase in pay or promotion) and the employee has no option but to adhere to his/her Boss or leave the job. The freedom of negotiating the salary with the employer is a lie in the modern predatory capitalistic world.
A Minimum wage employee earns 7.5 $ an hour which is 300 times less than how much an average CEO makes which is not only unfathomable but is dystopian(the wealth having absolute power). This brings me to one of the famous economic theory called ‘Shareholder theory’ by Milton Friedman in 1970 which is still used as a reference by some intellectuals. Eric Posner a professor at the University of Chicago Law School did an extraordinary job of explaining why ‘shareholder theory’ is wrong I recommend you to check it out
What the Shareholder theory states are that the company’s CEO’s and the company’s executives are only responsible to the shareholders and returning profits to the shareholders which may seem good in theory but has resulted in one the most radical and predatory capitalist system that the humanity has ever witnessed. If the company’s executives are only responsible for its shareholders then the company will be in the constant rat race of making short-term profits with stock market bursts rather than making long-term investments in Research and development, increasing production capability, innovation, etc. which is very much the case with our current corporate world where the companies are deregulated to the point where the corporate executives can make strategical mergers with their competitors and become a monopoly in their Industry, and abuse their consumers with overbearing prices or decrease in the quality of the product.
For instance, the pharma companies are abusing their consumers with unjustifiable prices(insulin is nearly 7 times costlier in the US than in Canada).
Of course, some free-market enthusiasts argue government intervention in these pharma companies in form of patents is the main reason for this unjustifiable price hike. If this is the case then Corporate companies lobbying the governments, representatives, or lawmakers to not make any changes or reforms in those laws.
Even if the case made by free-market enthusiasts is true that if government intervention in these corporate companies is stopped that doesn’t solve the main problem ‘the corporate greed’. To make this clearer let’s analyze the pattern of insurance costs charged by insurance companies.
The health insurance premiums are increasing every year while the specialist co-pay (money paid after insurance negotiation) is still getting higher and higher. David Packman one of the left-leaning progressive talk show hosts, explains it clearly and what is happening in this broken system.
My point is not to change our entire economic system but to revamp our economic institutions in such a way that it doesn’t only work for the shareholder or the wealthy but all the stakeholders who are involved in the function of a specific company and the economy.