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home : columnists : columnists Sunday, April 30, 2006

4/30/2006 4:00:00 AM  Email this articlePrint this article 
Today's capitalism favors society's rich
Talk of the Town

By CHARLES KELLY Special to the Courier

If you want to understand how our country is changing from the kind of democratic capitalism we had under Roosevelt and Truman ­ to an aristocratic capitalism ­ read two recent items from the Courier

First, Donald Lambro lamented the difficulties President Bush will face in getting significant legislation enacted, and suggested that he should focus on, among other things, slowing the rate of spending growth, and extending the capital gains and dividend tax rate reductions.

Second, an Associated Press release described a few of the many kinds of spending cuts that Lambro and Congress have in mind: Social Security, Medicare, the National Institutes of Health, the Centers for Disease Control and Prevention, and the Commodity Supplemental Food Program (provides food to low-income mothers and children under 6 years old, as well as to the elderly poor).

Note that most of this legislation will endow the greatest benefits to our wealthiest taxpayers, and the greatest sacrifices to middle- and low-income working class Americans ­ the ones most hurt by globalization and by their loss of power to negotiate for better wages and working conditions.

Indeed, this trend becomes clearer when you couple these two items with a commentary published in Barron's magazine during Bush's period of high popularity (April, 2004): "Šthere is strong evidence that Bush also is engineering a fundamental change in the tax system. By gradually taking capital out of the tax base through reductions in levies on dividends, capital gains and inheritances, Bush is transforming the income tax into a pure tax on wages." (Note that Barron's is probably our most influential conservative financial publication for serious investors.)

In other words, we should inherit wealth and not tax income from wealth, regardless of whether someone inherits or not, should not be taxed. Only people who work for an income should pay taxes. This is almost a classic dictionary definition of an aristocracy, especially when you combine it with economic policies that increasingly put workers at a disadvantage in their relationships with employers.

Voters should take a page from general semantics and realize that "capitalism" and "free markets" don't exist. They aren't things anyone can point at. They're verbal symbols that represent different things to different people. Too often, demagogues use the terms to justify, or camouflage, their special view as to the real goals of their economic policies.

To me, capitalism means that most of the means of providing goods and services to the American public are under private ownership and operation. Government sets minimum standards for competition to make sure that the market remains free for those who respect the rights of investors, the public, the environment and their workers. Corporations aren't "free" to destroy the environment, or to cheat investors, or to take ruthless advantage of consumers and workers.

In another era of great disparity between rich and poor, Roosevelt set minimum standards for wages and working conditions, and reasonable protections of workers from competition from brutalized workers in other parts of the world, (among many other things). His policies led to the development of a vibrant middle- and upper-middle-class, and gave the poor an easier access to a better life.  

Today they define "capitalism," on the other hand, as a way for the "successful," no matter how they achieve their success, to live in luxury, while those who work hardest for a living no longer can afford health care or send their kids to college. Bush isn't alone in redefining capitalism and the free market to favor corporations at the expense of labor. President Clinton joined conservatives in Congress and gave us NAFTA, and strengthened GATT (through the WTO).

By expanding the labor pool to include the whole world, our government has allowed corporations and their investors to pit American workers against workers who don't live in this country, don't have our standard of living, and who have virtually no defenses against unfair labor practices.

And to cap it off, they're giving tax breaks to those who benefit most from workers' stagnant wages, and reducing benefits for those who must make all the sacrifices.

(Charles M. Kelly is a retired management consultant living in Prescott. His e-mail is

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