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Mobilization of Bias 0 Decisions made by business firms usually considered nonpolitical or private 0 Should be considered political because they deeply.

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Presentation on theme: "Mobilization of Bias 0 Decisions made by business firms usually considered nonpolitical or private 0 Should be considered political because they deeply."— Presentation transcript:

1 Mobilization of Bias 0 Decisions made by business firms usually considered nonpolitical or private 0 Should be considered political because they deeply impact society 0 Society depends on what business can deliver 0 Gives them unique advantage in political arena 0 Elected officials under enormous pressure to offer inducements to business (land, patents, tariffs, tax breaks, subsidies, training, military, bailouts, etc.) 0 Mobilization of bias = distinctive political advantage business enjoys by virtue of economic power (ownership and control of productive system); but, not total… 0 Companies compete with each other, often have conflicting interests 0 Democratic procedures require policymakers to respond to many pressures/interests beyond business

2 Changing Landscape of American Capitalism 0 Corporate capitalism includes country’s largest mining and manufacturing companies, investment banks, financial services firms, retail chains, utilities, high-tech companies, media companies, and corporate law firms 0 see figure 2.1, p. 40, Top 20 Fortune 500 companies 0 Tend to be capital intensive, highly productive, diversified, global 0 In recent decades, structure of American economy has changed 0 competition has intensified due to globalization (more open markets) and technological innovation (transportation and communication) 0 mergers have created huge corporations 0 Especially pronounced in media (p. 42) reducing independent, not- for-profit media 0 As production becomes concentrated, control becomes centralized in fewer hands 0 A threat to democracy = concentration of economic power tends to promote concentration of political power

3 Who Owns America’s Private Government? 0 Do we have a “share-holder” democracy? 0 Half of American households do not own stock (either directly or indirectly through mutual funds, retirement plans) 0 (2004) wealthiest 1% of American households held 37% of all U.S. stocks 0 Next wealthiest 9% own 42% of stocks 0 One household in ten owns 4/5 of value of all stocks 0 Who own’s America’s private government? = one-tenth of the population 0 Corporate elite = white and male 0 Capitalist class cohesion 0 Social clubs (prep schools, private colleges, law/business schools, corporate headquarters; elite socialization) 0 Peak associations (interest groups such as the Business Roundtable, Chamber of Commerce, National Association of Manufacturers, etc.) 0 Corporate interlocks (board members serving on multiple corporate boards) 0 Tiny group of Americans (vast income and wealth) own America’s private government and are better situated than vast majority of citizens to shape political system to serve their interests

4 Changing Structure of Employment 0 Workforce shaped by changing needs of capital 0 In recent decades, industrial occupational order (manual, blue-collar factory jobs) replaced by postindustrial order (professionals, service employees, and white-collar workers) 0 See figure 2.2, p. 47 0 Good and bad jobs grew at expense of middle 0 Huge growth in financial sector 0 Service and sales jobs tend to be poorly paid, few benefits, require menial and routine labor, and rarely union protection 0 Income inequality in U.S. 0 (2007) top 1/5 captured ½ of all income; bottom 1/5 received 3.4% 0 Richest 5% received 21% of all income 0 Political choices play key role in shaping inequality (see figure 2.3, p. 49) 0 Markets tend to generate inequality and compensate unskilled labor with poverty-level wages unless checked by political/public forces 0 In U.S. these forces are weak = labor movement is tiny, parties skewed to the right, government unresponsive to interests of low-income groups

5 America’s Extreme Market Capitalism 0 Public sector is quite small 0 State, local, federal employment account for 15% of nation’s workforce (as compared to ¼ to 1/3 in other rich democracies) 0 Low proportion of GDP collected in form of taxes 0 U.S. government spending as share of GDP is low 0 Federal and state governments provide relatively few public services 0 Few constraints on business firms 0 Corporate management mostly decides who gets what, where, and how 0 Government regulation of the workplace is thin 0 U.S. has among the lowest proportion of unionized employees of any industrialized democracy (table 2.1, p. 52) 0 Helps account for income inequality 0 Caused by: failure to unionize in South; restrictive labor legislation placed obstacles in way of union-organizing; opposition to unions by corporations 0 Extreme market capitalism dominates our lives 0 Supercapitalism = roles as consumers and producers increased at expense of importance of public sphere and role as citizens

6 Capitalist Instability and Crisis 0 Instability a systematic, inherent, centrally important feature of capitalist economy 0 Great Recession (2007-present) 0 High unemployment – hitting lowest income groups worst 0 Decline in stock market 0 Bursting of housing bubble 0 Three time bombs 0 Sub-prime mortgages 0 Leverage 0 Securitization 0 Lesson to take from crisis = government’s hands-off relationship to capitalist economy is shelved when capitalism is in jeopardy 0 Stiglitz: socialism for the rich, losses socialized and profits privatized 0 Key question: whether enormous sums government provided to shore up financial system are followed by substantial reforms that minimize chance of similar crisis occurring again. The answer appears to be: No.

7 Critical Thinking Questions 0 Identify two ways American economic system can be characterized as extreme form of capitalism. What are advantages and disadvantages of this form? 0 Should government have provided large public funds to bail out the banks in the 2008-09 financial crisis? What are the pros and cons of its decision to do so?

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