This book has intrigued me more than almost any other book since reading
Friendly Facism. As I read it, I made notations of things that seemed
important. JG spent a lot of pages on the concept that the K-sector
operates as a monopoly - that was a big idea and one I still am ruminating
on. Another big idea was an intensive analysis of the C-Sector which
actually produces goods.
Page 126 Created Unequal
It seems fair to conclude that in investment, consumption, protection and
war, we have the four most important forces determining differences in the
way industries have performed in America since 1958.
Thomas
This idea of isolating forces that have affected change is a way of
analysing data differently - the same data that convention economics use but
with different insights.
Page 128
Once again, we have looked at the sources of change through time in American
industrial performance. And what have we found? We have found the traces
of the main macroeconomic and policy changes of the past generation. These
are, first and foremost, the heightened instability and more rapidly
churning business cycle brought on mainly by unstable monetary policy-by the
actions of the Federal Reserve-in the years following 1970. Second, we find
the effect of slower growth, and the squeeze on American wages and living
standards, turning up in a pattern of poor performance for industries most
sensitive to consumption demand. Third, we have found the effects of trade
protection, albeit strongly affecting a handful of industries, which
fluctuate with the exchange value of the dollar. And finally we detect the
traces of military spending on industrial performance.
Macroeconomic and political causes of change in wage inequality are
mediated, at the industry level, by the filtering and polarizing forces of
technology, scale intensity, trade sensitivity, and war. Government policy
did not determine, for the most part, which industries would be most
strongly affected by which forces. But neither can the industries
themselves, once they have chosen a particular path of development, escape
from the circumstances that government policies create. And in recent
times, three of the four major forces have been losers. Only investment
have been a winner in the industrial performance sweepstakes, and this
accounts for the vast relative success of the K-sector firms over the past
twenty-five years.
Page 133
As it turns out, the causes of rising inequality are mainly macroeconomic.
Thomas:
To my understanding, JG is saying that the changes in economics and the
resultant inequality we now experience came about - not through market
forces or globalization, rather they came about by political decisions at
the macroeconomic level. Rather than blaming the capitalists - to the
extent that I personally have been blaming them in my own thought, JG is
reframing my ideas to the concept that it was the political changes that
have caused the problem. Though that may seem self evident, it also has
within it the solution, political changes are reversible! If it was the
market or globalization as we have been led to believe - then there is a
sense of helplessness - we are at the mercy of forces beyond our control.
JG challenges this by reinterpreting the data and basically says that it was
the political decisions affected strongly by economic theory being used as a
guide that has led to most of the current problems. Government - plural -
have been dodging this answer because then the onus would then be on
governance to readjust the current situation with different policies. Once
government-s are forced to face up to this through the data presented - then
meaningful and productive change can come about. We are not helpless in the
face of impersonal market forces - the invisible hand does not exist - or
rather the invisible hand, like the emperor with no clothes is in reality
denial and the refusal of governance to change and accept responsibility.
New political leaders need to arise and challenge current political thought
with new policies based on a different reading of our past experience. Once
this dangerous idea shows the promise of a political following, then leaders
will come forth who adopt differ policy basics.
Enough musing for the night.
Respectfully,
Thomas Lunde
