Our Vanishing Middle Class Part 3

plutoc1.jpg In the 80s and early 90s laws were passed concerning corporate governance  that made corporate decision making more responsive to stockholder profits. Although designed to make CEOs accountable for poor choices, these changes in governance force CEOs and boards to pay more attention to the interests of investors than to the workers or manufacturers.  Consequently, workers have less security and bear more risk, as decisions are more likely to be made for the short-term bottom line than the long term. 

 I am not suggesting that manufacturers should not be profitable or be able to make money but making money is not the only reason they should exist.  They should exist to produce something people need and truly be good neighbors in their communities.   We now have things produced for which no market existed; but through novelty and clever marketing a market is created.  It is a set up for designing things without regard to waste or the environment or real need but only to make money.  We then  pass laws to protect the ideas that created these novelty products. 

As with the corporate governance laws, sometimes laws that are intended to solve one problem create a myriad of other problems. green_corn.jpgIn agriculture laws that protect the patenting of seeds means that seed companies ultimately own the crops and will reap the profits that farmers produce.  The laws are stacked in favor of big corporate agriculture and it is killing the family farm, the individual farm owner.

I think there are folks in our economy who know how to make these systems work, but instead of getting capital to them and supporting their efforts, monetarists invest in practices that will bring a quick return on their investment.  They tend to protect their interests against innovation and new ideas.  So where do new ideas come from and how can we encourage thinking that will give us the answers to the life problems we desperately need.  Like the problem of global warming, or providing health care to all citizens, or improving education so we really do prepare citizens for life in the future.  At a recent campaign meeting one citizen asked me how to solve the problem of outsourcing and not satisfied with my answer gave me a better one.  "Investing in education and creating opportunity is our only hope," he said.

rolnick_large.jpg Economists are clear that education is one of the best investments we can make.  Art Rolnick, of the Federal Reserve,  predicts a 12 to 16% return on the dollar when we, as a society, invest in early childhood education.  These returns come primarily in money that does not have to be spent to cure social problems caused by poverty and lack of education.  But because we are focused on letting the ‘market’ solve the problem through individual investment and gain rather than societal gains over the long haul, most cannot make the connection between investments that may involve some sacrifice now but will pay dividends later.  

Unless we make adjustments and change our thinking we will continue to see hope for sustaining a middle class diminish.  We will continue to strangle schools and miss the opportunity to invest in early childhood education for those who have fallen behind. Further, we will not invest the funds to improve higher education where the new industries we need are likely to be born.

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