Trump and Bernie are not going away.
Trump’s gaffes on abortion and women; Bernie’s crankiness about Democratic super delegates are issues. But with the majority of their supporters who are not bending there is something more front and center: their futures and their livelihood. And Trump and Bernie, in different ways, are addressing them.
Read this article in last week’s Economist and you will see the research that backs their feelings – without mentioning Trump or Bernie. Granted, I am not certain that Bernie or Trump have real solutions to these problems. In fact, I would bet if elected, both of them would disappoint the followers who put them in office.
Still, this piece offers one of the biggest reasons for the income gap and the feelings that our economic system is rigged – that I am guessing a majority of us believe.
Some highlights:
America has “a corrosive lack of competition”.
American firms are hoarding $800 billion in excess cash not working in the economy.
Research show that 2/3 of the economy’s 900-odd industries have become more concentrated since 1997 which means 1/10 of the economy “is at the mercy of a handful of firms—from dog food and batteries to airlines, telecoms and credit cards”.
$10 trillion wave of mergers since 2008 has raised levels of concentration further.
American firms that consolidate cut costs by more than $150 billion and added 10% to their profits but failed to pass on gains to consumers.
The outdated notion that cutting taxes on the wealthy will lead to more investment and economic activity. Cutting taxes for the wealthy just puts more money on the sidelines and stops competition. It is not JFK’s 1960s anymore.
Lobbying spending has risen by 33% in the past decade to $3 billion.
Those lobbying efforts have controlled patent rules for entrenched companies in health care and technology.
New regulations from Congress do not just fence big banks in: they keep rivals out.
Solutions:
- Stop industry consolidation
- Cut regulation on companies and especially small business start-ups
- Reform patent laws so “old discoveries are not milked by incumbent companies”
- Restrict holdings of giant fund managers in corporations.
If we did these things: we would create new jobs, encourage more investment into new companies, and consumer prices would be lower.
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