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What Ails America – and How to Fix It Jeffrey D. Sachs | November 23, 2024 | Common Dreams America
is a country of undoubted vast strengths—technological, economic, and
cultural—yet its government is profoundly failing its own citizens and
the world. Trump’s victory is very easy to understand. It was a vote
against the status quo. Whether Trump will fix—or even attempt to
fix—what really ails America remains to be seen. The rejection of the status quo by the American electorate is overwhelming. According to Gallup in
October 2024, 52% of Americans said they and their families were worse
off than four years ago, while only 39% said they were better off and 9%
said they were about the same. An NBC national news poll in
September 2024 found that 65% of Americans said the country is on the
wrong track, while only 25% said that it is on the right track. In March
2024, according to Gallup, only 33% of Americans approved of Joe Biden’s handling of foreign affairs. At
the core of the American crisis is a political system that fails to
represent the true interests of the average American voter. The
political system was hacked by big money decades ago, especially when
the U.S. Supreme Court opened the floodgates to unlimited campaign
contributions. Since then, American politics has become a plaything of
super-rich donors and narrow-interest lobbies, who fund election
campaigns in return for policies that favor vested interests rather than
the common good. Two groups own the Congress and White House: super-rich individuals and single-issue lobbies. The
world watched agape as Elon Musk, the world’s richest person (and yes, a
brilliant entrepreneur and inventor), played a unique role in backing
Trump’s election victory, both through his vast media influence and
funding. Countless other billionaires chipped into Trump’s victory. Many (though not all) of the super-rich donors seeks special favors from the political system for
their companies or investments, and most of those desired favors will
be duly delivered by the Congress, the White House, and the regulatory
agencies staffed by the new administration. Many of these donors also
push one overall deliverable: further tax cuts on corporate income and
capital gains. Many
business donors, I would quickly add, are forthrightly on the side of
peace and cooperation with China, as very sensible for business as well
as for humanity. Business leaders generally want peace and incomes,
while crazed ideologues want hegemony through war. There
would have been precious little difference in all of this with a Harris
victory. The Democrats have their own long list of the super-rich who
financed the party’s presidential and Congressional campaigns. Many of
those donors too would have demanded and received special favors. Tax
breaks on capital income have been duly delivered by Congress for
decades no matter their impact on the ballooning federal deficit, which
now stands at nearly 7 percent of GDP, and no matter that the U.S.
pre-tax national income in recent decades has shifted powerfully towards
capital income and away from labor income. As measured by one basic
indicator, the share of labor income in GDP has declined by around 7 percentage points since
the end of World War II. As income has shifted from labor to capital,
the stock market (and super-wealth) has soared, with the overall stock
market valuation rising from 55% of GDP in 1985 to 200% of GDP today! The
second group with its hold on Washingtons is single-issue lobbies.
These powerful lobbies include the military-industrial complex, Wall
Street, Big Oil, the gun industry, big pharma, big Ag, and the Israel Lobby.
American politics is well organized to cater to these special
interests. Each lobby buys the support of specific committees in
Congress and selected national leaders to win control over public
policy. The
economic returns to special-interest lobbying are often huge: a hundred
million dollars of campaign funding by a lobby group can win a hundred
billion of federal outlays and/or tax breaks. This is the lesson, for
example, of the Israel lobby, which spends a few hundred million dollars
on campaign contributions, and harvests tens of billions of dollars in
military and economic support for Israel. These
special-interest lobbies do not depend on, nor care much about, public
opinion. Opinion surveys show regularly that the public wants gun
control, lower drug prices, an end of Wall Street bailouts, renewable
energy, and peace in Ukraine and the Middle East. Instead, the lobbyists
ensure that Congress and the White House deliver continued easy access
to handguns and assault weapons, sky-high drug prices, coddling of Wall
Street, more oil and gas drilling, weapons for Ukraine, and wars on
behalf of Israel. These powerful lobbies are money-fueled conspiracies against the common good. Remember Adam Smith’s famous dictum in the Wealth of Nations (1776):
"People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the public,
or in some contrivance to raise prices." The
two most dangerous lobbies are the military-industrial complex (as
Eisenhower famously warned us in 1961) and the Israel lobby (as detailed
in a scintillating new book by historian Ilan Pappé). Their special danger is that they continue to lead us to war and closer to nuclear Armageddon.
Biden’s reckless recent decision to allow U.S. missile strikes deep
inside Russia, long advocated by the military-industrial complex, is
case in point. The
military-industrial complex aims for U.S. “full-spectrum dominance.”
It’s purported solutions to world problems are wars and more wars,
together with covert regime-change operations, U.S. economic sanctions,
U.S. info-wars, color revolutions (led by the National Endowment for
Democracy), and foreign policy bullying. These of course have been no
solutions at all. These actions, in flagrant violation of international
law, have dramatically increased U.S. insecurity. The
military-industrial complex (MIC) dragged Ukraine into a hopeless war
with Russia by promising Ukraine membership in NATO in the face of
Russia’s fervent opposition, and by conspiring to overthrow Ukraine’s
government in February 2014 because it sought neutrality rather than
NATO membership. The military-industrial complex is currently—unbelievably—promoting
a coming war with China. This will of course involve a huge and
lucrative arms buildup, the aim of the MIC. Yet it will also threaten
World War III or a cataclysmic U.S. defeat in another Asian war. While
the Military-Industrial Complex has stoked NATO enlargement and
conflicts with Russia and China, the Israel Lobby has stoked America’s
serial wars in the Middle East. Israel’s Benjamin Netanyahu, more than
any U.S. president, has been the lead promoter of America’s backing of
disastrous wars in Iraq, Lebanon, Libya, Somalia, Sudan, and Syria. Netanyahu’s
aim is to keep the land that Israel conquered in the 1967 war, creating
what is called Greater Israel, and to prevent a Palestinian State. This
expansionist policy, in contravention of international law, has given
rise to militant pro-Palestinian groups like Hamas, Hezbollah, and the
Houthis. Netanyahu’s long-standing policy is for the U.S. to topple or
help to topple the governments that support these resistance groups. Incredibly, the Washington neocons and the Israel Lobby actually joined forces to carry out Netanyahu’s disastrous plan for wars across the Middle East. Netanyahu was a lead backer of the War in Iraq. Former Air Force Command Chief Master Sergeant Dennis Fritz has recently described in detail the Israel Lobby’s large role in that war. Ilan Pappé has done the same. In fact, the Israel Lobby has supported U.S.-led or U.S.-backed wars across the Middle East, leaving the targeted countries in ruins and the U.S. budget deep in debt. In the meantime, the wars and tax cuts for the rich, have offered no solutions for the hardships working-class Americans. As in other high-income countries,
employment in U.S. manufacturing fell sharply from the 1980s onward as
assembly-line workers were increasingly replaced by robots and “smart
systems.” The decline in the labor share of value in the U.S. has been
significant, and once again has been a phenomenon shared with other
high-countries. Yet
American workers have been hit especially hard. In addition to the
underlying global technological trends hitting jobs and wages, American
workers have been battered by decades of anti-union policies, soaring
tuition and healthcare costs, and other anti-worker measures. In
high-income countries of northern Europe, “social consumption” (publicly
funded healthcare, tuition, housing, and other publicly provided
services) and high levels of unionization have sustained decent living
standards for workers. Not so in the United States. Yet
this was not the end of it. Soaring costs of health care, driven by the
private health insurers, and the absence of sufficient public financing
for higher education and low-cost online options, created a pincer
movement, squeezing the working class between falling or stagnant wages
on the one side and rising education and healthcare costs on the other
side. Neither the Democrats nor Republicans did much of anything to help
the workers. Trump’s
voter base is the working class, but his donor base is the super-rich
and the lobbies. So, what will happen next? More of the same—wars and
tax cuts—or something new and real for the voters? Trump’s
purported answer is a trade war with China and the deportation of
illegal foreign workers, combined with more tax cuts for the rich. In
other words, rather than face the structural challenges of ensuring
decent living standards for all, and face forthrightly the staggering
budget deficit, Trump’s answers on the campaign trail and in his first
term were to blame China and migrants for low working-class wages and
wasteful spending for the deficits. This
has played well electorally in 2016 and 2024, but will not deliver the
promised results for workers in the long run. Manufacturing jobs will
not return in large numbers from China since they never went in large
numbers to China. Nor will deportations do much to raise living
standards of average Americans. This
is not to say that real solutions are lacking. They are hiding in plain
view—if Trump chooses to take them, over the special interest groups
and class interests of Trump’s backers. If Trump chooses real solutions,
he would achieve a strikingly positive political legacy for decades to
come. The
first is to face down the military-industrial complex. Trump can end
the war in Ukraine by telling President Putin and the world that NATO
will never expand to Ukraine. He can end the risk of war with China by
making crystal clear that the U.S. abides by the One China Policy, and
as such, will not interfere in China’s internal affairs by sending
armaments to Taiwan over Beijing’s objections, and would not support any
attempt by Taiwan to secede. The
second is to face down the Israel lobby by telling Netanyahu that the
U.S. will no longer fight Israel’s wars and that Israel must accept a
State of Palestine living
in peace next to Israel, as called for by the entire world community.
This indeed is the only possible path to peace for Israel and Palestine,
and indeed for the Middle East. The
third is to close the budget deficit, partly by cutting wasteful
spending—notably on wars, hundreds of useless overseas military bases,
and sky-high prices the government pays for drugs and healthcare—and
partly by raising government revenues. Simply enforcing taxes on the
books by cracking down on illegal tax evasion would have raised $625
billion in 2021, around 2.6% of GDP. More should be raised by taxation
of soaring capital incomes. The
fourth is an innovation policy (aka industrial policy) that serves the
common good. Elon Musk and his Silicon Valley friends have succeeded in
innovation beyond the wildest expectations. All kudos to Silicon Valley
for bringing us the digital age. America’s innovation capacity is vast
and robust and an envy of the world. The
challenge now is innovation for what? Musk has his eye on Mars and
beyond. Captivating, yet there are billions of people on Earth that can
and should be helped by the digital revolution in the here and now. A
core goal of Trump’s industrial policy should be to ensure that
innovation serves the common good, including the poor, the working
class, and the natural environment. Our nation’s goals need to go beyond
wealth and weapons systems. As
Musk and his colleagues know better than anybody, the new AI and
digital technologies can usher in an era of low-cost, zero-carbon
energy; low-cost healthcare; low-cost higher education; low-cost
electricity-powered mobility; and other AI-enabled efficiencies that can
raise real living standards of all workers. In the process, innovation
should foster high-quality, unionized jobs—not the gig employment that
has sent living standards plummeting and worker insecurity soaring. Trump
and the Republicans have resisted these technologies in the past. In
his first term, Trump let China take the lead in these technologies
pretty much across the board. Our goal is not to stop China’s
innovations, but to spur our own. Indeed, as Silicon Valley understands
while Washington does not, China has long been and should remain
America’s partner in the innovation ecosystem. China’s highly efficient
and low-cost manufacturing facilities, such as Tesla’s Gigafactory in
Shanghai, put Silicon Valley’s innovations into worldwide use … when
America tries. All four of these steps are within Trump’s reach, and would justify his electoral triumph and secure his legacy for decades to come. I’m not holding my breath for Washington to adopt these straightforward steps. American politics has been rotten for too long for real optimism in that regard, yet these four steps are all achievable, and would greatly benefit not only the tech and finance leaders who backed Trump’s campaign but the generation of disaffected workers and households whose votes put Trump back into the White House. https://www.commondreams.org/opinion/why-america-is-failing |