Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
23 August 13
ongress
is in recess, but you'd hardly know it. This has been the most
do-nothing, gridlocked Congress in decades. But the recess at least
offers a pause in the ongoing partisan fighting that's sure to resume in
a few weeks.
It also offers an opportunity to step back and ask ourselves what's really at stake.
A society - any society - is defined as a set of
mutual benefits and duties embodied most visibly in public institutions:
public schools, public libraries, public transportation, public
hospitals, public parks, public museums, public recreation, public
universities, and so on.
Public institutions are supported by all taxpayers,
and are available to all. If the tax system is progressive, those who
are better off (and who, presumably, have benefitted from many of these
same public institutions) help pay for everyone else.
"Privatize" means "Pay for it yourself." The practical
consequence of this in an economy whose wealth and income are now more
concentrated than at any time in the past 90 years is to make
high-quality public goods available to fewer and fewer.
In fact, much of what's called "public" is
increasingly a private good paid for by users - ever-higher tolls on
public highways and public bridges, higher tuitions at so-called public
universities, higher admission fees at public parks and public museums.
Much of the rest of what's considered "public" has
become so shoddy that those who can afford to do so find private
alternatives. As public schools deteriorate, the upper-middle class and
wealthy send their kids to private ones. As public pools and playgrounds
decay, the better-off buy memberships in private tennis and swimming
clubs. As public hospitals decline, the well-off pay premium rates for
private care.
Gated communities and office parks now come with their
own manicured lawns and walkways, security guards and backup power
systems.
Why the decline of public institutions? The financial squeeze on government at all levels since 2008 explains only part of it.
The slide really started more than three decades ago
with so-called "tax revolts" by a middle class whose earnings had
stopped advancing even though the economy continued to grow. Most
families still wanted good public services and institutions but could no
longer afford the tab.
Since the late 1970s, almost all the gains from growth
have gone to the top. But as the upper-middle class and the rich began
shifting to private institutions, they withdrew political support for
public ones.
In consequence, their marginal tax rates dropped -
setting off a vicious cycle of diminishing revenues and deteriorating
quality, spurring more flight from public institutions.
Tax revenues from corporations also dropped as big
companies went global - keeping their profits overseas and their tax
bills to a minimum.
But that's not the whole story. America no longer values public goods as we did decades ago.
The great expansion of public institutions in America
began in the early years of 20th century, when progressive reformers
championed the idea that we all benefit from public goods. Excellent
schools, roads, parks, playgrounds and transit systems would knit the
new industrial society together, create better citizens and generate
widespread prosperity.
Education, for example, was less a personal investment
than a public good - improving the entire community and ultimately the
nation.
In subsequent decades - through the Great Depression,
World War II and the Cold War - this logic was expanded upon. Strong
public institutions were seen as bulwarks against, in turn, mass
poverty, fascism and then Soviet communism.
The public good was palpable: We were very much a
society bound together by mutual needs and common threats. It was no
coincidence that the greatest extensions of higher education after World
War II were the GI Bill and the National Defense Education Act, or that
the largest public works project in history was called the National
Interstate and Defense Highways Act.
But in a post-Cold War America distended by global
capital, distorted by concentrated income and wealth, undermined by
unlimited campaign donations, and rocked by a wave of new immigrants
easily cast by demagogues as "them," the notion of the public good has
faded.
Not even Democrats still use the phrase "the public
good." Public goods are now, at best, "public investments." Public
institutions have morphed into "public-private partnerships" or, for
Republicans, simply "vouchers."
Outside of defense, domestic discretionary spending is
down sharply as a percent of the economy. Add in declines in state and
local spending, and total public spending on education, infrastructure
and basic research has dropped dramatically over the past five years as a
portion of GDP.
America has, though, created a whopping entitlement
for the biggest Wall Street banks and their top executives - who, unlike
most of the rest of us, are no longer allowed to fail. They can also
borrow from the Fed at almost no cost, then lend out the money at 3
percent to 6 percent.
All told, Wall Street's entitlement is the biggest
offered by the federal government, even though it doesn't show up in the
budget. And it's not even a public good. It's just private gain.
We're losing public goods available to all, supported
by the tax payments of all and especially the better-off. In its place
we have private goods available to the very rich, supported by the rest
of us.
Robert B. Reich, Chancellor's Professor of Public
Policy at the University of California at Berkeley, was Secretary of
Labor in the Clinton administration. Time Magazine named him one of the
ten most effective cabinet secretaries of the last century. He has
written thirteen books, including the best sellers "Aftershock" and "The
Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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