By James Thompson

As we anxiously await our annual peptalk by the president which is usually referred to as the “State of the Union” speech, many commentators and pundits are already producing vast quantities of hot air in an effort to excite the audience. However, in spite of their best efforts, many in the audience are frantically searching for something interesting to watch and give them hope or at least entertain them on TV tonight.

Inequality is a problem

On January 25, 2014, our learned professor of economics, Paul Krugman, wrote a Keynesian analysis of our current economic situation “Obama should focus on rising inequality.” It is his peptalk in preparation for the supreme peptalk. He starts with a quote from Keynes from 1936:

“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”

Prof. Krugman instructs us that “If, as has been widely reported, Pres. Barack Obama devotes much of his state of the union address to inequality, everyone should be cheering him on.”

He predicts instead that the “usual suspects on the right will, as always when questions of income distribution comes up, shriek ‘Class warfare!'” He also predicts that more sober voices will argue that jobs should take center stage in the grand follies of the state of the union address.

Prof. Krugman goes on to argue that inequality “help set the stage for our economic crisis, and that the highly unequal distribution of income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their way out.” He notes that high unemployment has destroyed workers’ bargaining power and has become a source of rising inequality and stagnating incomes “even for those lucky enough to have jobs.”

Prof. Krugman fails to explain these and other mysteries to the huddled masses clutching their newspapers or iPads reading his often repeated lines. He fails to explain that high unemployment is detrimental to the condition of the working class for many reasons. When unemployment is high, this means that the working class has fewer jobs and that the distribution of these jobs will be uneven. As a result, workers have overall less purchasing power. When workers purchase fewer goods and services, many companies choose to downsize or close in order to preserve capital which results in more loss of jobs. There is a spiral effect to this economic cyclical activity which eventually leads to another crisis. The crisis comes about when the amount of goods available for purchase substantially exceeds the amount of goods purchased. Economic crises are crises of overproduction as clearly demonstrated by Karl Marx in his scientific study of capitalism “Capital.”

Why is there inequality?

Back to the issue of “inequality”, no one is posing the crucial question which should be President Obama’s major challenge tonight “Why is there inequality?”

Marx also proved in his work on capitalism that the aim of capitalists is to produce continuing increasing profits. Profits are based on the amount of wealth extracted by the capitalist from the wealth produced by the worker. In other words, when a worker works, he/she is paid a wage by the capitalist which is usually less than the wealth she/he produces. The capitalist steals the difference between the amount of wealth produced and the amount paid out in wages and this is the basis of profits. In order for profits to increase, wages must fall. This is the basis of the inequality between the capitalist and the worker.

In 1936, another economist not well known to people in the US wrote about another aspect of inequality under capitalism. On page 213 of his book “Political Economy,” A. Leontiev wrote in a section entitled “The law of uneven development under imperialism”:

“In the capitalist system individual enterprises, individual branches of industry and individual countries develop unevenly and spasmodically. It is evident that with the anarchy of production prevailing under capitalism and the frenzied struggle among the capitalists for profits, it cannot be otherwise.
This unevenness of development is manifested with particular acuteness in the epoch of imperialism, and becomes a decisive force, a decisive law.”

This uneven economic development also contributes to inequality.

Leontiev’s work is based on the work of Lenin, particularly “Imperialism, the highest stage of capitalism.”

While Keynes identified inequality as a problem, Leontiev, Lenin and Marx understood the reason for it.

So, we can expect an upbeat view of inequality from the president. We will be likely to hear of economic reforms to address the problem which have been trotted out repeatedly over the history of capitalism. Anything threatening in the slightest way the position of the wealthy will be hysterically attacked by their right wing lapdogs. The left-wing lapdogs will defend the meaningless reforms tossed out by the president and will attempt to spin the reforms as a breakthrough. Even if the reforms were meaningful, it must be remembered that any reforms can and will be taken back by the ruling class when it is convenient for them.

However, such reforms are like spraying perfume on a pile of manure in an effort to make it smell better. The reality is that instead of improving the smell of the manure, it will actually make it smell worse. So it goes with most reforms with the exceptions of Social Security, Medicare and Medicaid as well as the Veterans Administration.

How can inequality be fixed?

What will fix the problem of inequality is another question for the president to answer tonight. One answer would be to throw out the pile of manure, i.e. capitalism itself. Unfortunately, there is a lot of manure to clean out and advancing the economic system towards socialism will take time. In the meantime, meaningful reforms could be proposed and fought for through the legislative process. Some examples of meaningful reforms might include: 1. Universal health care. This would be a true job creator and at the same time reduce corporate waste. It would be highly beneficial to workers and this has been recognized by many elements among organized labor which have endorsed it. 2. Legal services for all. If all people had equal access to quality legal representation, mass incarceration would be reduced. This would also be a job creator. 3. Free higher education for all. The exorbitant costs of higher education for students these days contributes to inequality. 4. Reduce the military budget by 75% and transfer the savings to programs that benefit people such as 1, 2, and 3 above. 5. Public funding for the arts, culture and sports should be dramatically increased. This would also be a job creator. 6. Inheritance should be made illegal except in the case of permanently disabled dependents. Estates of deceased persons should become the property of all the people. 7. Tax incomes above $500,000 a year at a 90% level. 8. Tax the profits of private corporations at a 75% level. Severely penalize any individual or corporation caught transferring funds overseas to avoid US taxes. 9. Severely penalize any individual or corporation caught moving industries overseas in order to chase low wages. 10. Fund meaningful unions and severely penalize any individual or corporation caught attempting to bust any union. 11. Enact and enforce the Employee Free Choice Act. 12. Enact and enforce legislation to criminalize and severely penalize discrimination in any form, e.g. racism, sexism, ageism, classism, etc. 13. Close all overseas military bases to include Guantánamo. 14. Raise the minimum wage to $20 an hour. 15. Long-term care for all. Provide quality assisted living and nursing home care to all people. 16. Comprehensive and equitable immigrants’ rights to include a quick, easily accessible application process for full citizenship. 17. Decriminalize petty drug use and provide comprehensive drug rehabilitation services for all.

These programs would help reduce the problem of inequality but until the manure is thrown out, inequality will continue to be a problem.

PHill1917@comcast.net