Economic Freedom and the American Dream PDF
Preview Economic Freedom and the American Dream
Economic Freedom and the American Dream This page intentionally left blank Economic Freedom and the American Dream Joseph Shaanan ECONOMIC FREEDOM AND THE AMERICAN DREAM Copyright © Joseph Shaanan, 2010. Softcover reprint of the hardcover 1st edition 2010 978-0-230-61775-9 All rights reserved. First published in 2010 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-38067-1 ISBN 978-0-230-10223-1 (eBook) DOI 10.1057/9780230102231 Library of Congress Cataloging-in-Publication Data Shaanan, Joseph. Economic freedom and the American dream / Joseph Shaanan. p. cm. Includes index. ISBN 978-1-349-38067-1 1. Free enterprise—United States. 2. Capitalism—United States. 3. United States—Economic policy. I. Title. HB95.S48 2009 330.973—dc22 2009023031 A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: January 2010 10 9 8 7 6 5 4 3 2 1 Contents Acknowledgments vii 1 Introduction 1 Part I America 2 We the People: Government and Politics 13 3 Ideology and Myths 27 4 The Economy 41 5 The Secondary Economy 55 Part II Corporations 6 The Rise of Large Corporations 67 7 Large Corporations and Economic Power 75 8 Heads We Win, Tails You Lose: Large Corporations and Government 91 9 Media and Freedom to Profit 107 Part III Markets 10 Competition and Markets 123 11 Competition Policy 137 Part IV Individuals 12 Fortunes and Fairness 155 vi ● Contents Part V Culture 13 Culture and Values 175 14 Final Thoughts 189 Notes 199 Bibliography 221 Index 241 Acknowledgments M any people assisted in the writing of this book. From Palgrave Macmillan I would like to thank Laura Lancaster, Kristy Lilas, and especially Laurie Harting for her insightful suggestions and encouragement. I owe a debt of gratitude to many of my colleagues who were kind enough to discuss with me diverse topics related to the book. I would like to thank the students in my “America and the Free Market” class whose comments and views in the debates that took place gave me a better perspective on the subject matter. Finally, my greatest debt of gratitude is to my wife for her advice on an earlier draft and, most importantly, for her patience and support. CHAPTER 1 Introduction E conomic freedom is the distinguishing feature of the United States to millions around the world. Democracy, liberty, freedom of speech, and the separation of church and state all characterize the United States. However, it is primarily economic freedom that defines America. The present book Economic Freedom and the American Dream (EFAD) explores the overwhelming effect of freedom to profit on America; so pow- erful is the effect that it shapes nearly all aspects of American life, including politics, media, culture, and, of course, the economy. The benefits include a general level of affluence and opportunities for attaining the American dream, especially for the well educated, entrepreneurially gifted, and well organized. However, unrestricted economic freedom also inflicts a heavy toll on democracy, economic efficiency, and, paradoxically, economic free- dom itself. EFAD challenges the orthodoxy that our economic system is “free mar- ket” as well as the presumption that unchecked economic freedom necessar- ily enhances the nation’s economic well-being and political freedoms. It is proposed that, for the sake of illusory economic gains and a dubious descrip- tion of economic freedom, America is sacrificing some of its finest attributes. The recent bailouts have brought attention to the topic more so than in the past 70 years. With the socialization of risk for giant financial organizations, and “heads they win, tails we lose” type choices for the public, the bailouts represent striking examples of the consequences of what is described here as unrestricted freedom to profit. Examined are three economic freedoms distinctive of American capital- ism: (1) Best known among them is the individual liberty to pursue personal gain or economic self-interest. This freedom represents the nation’s driving 2 ● Economic Freedom and the American Dream force and is at the root of the other two freedoms. (2) The freedom of cor- porations to pursue profits is less heralded but no less important because giant corporations are the predominant form of economic organization. They command vast resources and possess substantial economic and polit- ical power, and their influence extends to all facets of life. (3) The freedom to enter markets and engage in business plays a significant role in America’s economic success; in addition, free markets represent the nation’s underlying political-economic philosophy. Free markets, specifically competitive free markets, are also used here as a frame of reference with which to evaluate the effects of the first two freedoms. By studying the effects of the three freedoms, their interactions (such as clashes between individual and corporate freedoms and between free mar- kets and corporations), and their relationships with noneconomic freedoms, the book offers an unusual perspective on some of America’s most difficult dilemmas. When those freedoms are studied separately and mostly in the context of a single area, for example, the economy or politics, the scope and the interrelated nature of their effects are obscured. Information from diverse areas allows for a more comprehensive assessment on how the freedom to profit defines the nation and its people and how it overpowers other values. Discussions on the influence of the freedoms are interwoven with detailed accounts of other topics, including individual opportunity, the culture of materialism, media and the news, politics, government, and economic power. The focus moves from society and the nation to firms and individu- als, with the common thread being the ubiquity and cost of economic free- dom. Although the perspective afforded is frequently that seen through an economic lens, nonetheless the study is interdisciplinary. Following the tra- ditional approach of studies in political economy, the book incorporates and synthesizes material from different branches of economics and from history, political science, and sociology. 1.1 General Overview EFAD provides a description of America as a nation driven and shaped by the freedom to pursue profits, where there is an ever-present awareness of business opportunities and a devotion to economic matters, including a willingness to make sacrifices in other areas of life. The book focuses on the high costs resulting from a rather broad interpretation given to economic freedom including, the freedom to profit by circumventing the market, especially, through government help. A key argument is that, in America, the freedom of corporations to pur- sue profits is paramount and has priority over that of individuals, and the
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