The world’s most high-profile “advanced” corporations are manipulating their market power to extract unearned “rents” from the rest of us.
The “better-off everywhere” are exploiting their advantages in everything from income and wealth to health and education — and locking their family privilege in place for generations to come.
Those who assure us that we can count on high-tech “innovation” and “economic growth” to bring economic security to the world’s most hard-pressed are blowing smoke.
These bold claims all emerged last week in an important new report. Who made them? Some left-leaning think tank full of malcontents? Radical lawmakers in some obscure European parliament?
Hardly. These claims all appear in a new paper from the Organization for Economic Cooperation and Development, the Paris-based research and policy agency that’s funded by the 34 nations that make up the core of the “developed world.”
OECD analysts don’t carry pitchforks. They typically express themselves in rather ponderous bureaucratic prose. But in their just-published new report, The Productivity-Inclusiveness Nexus, these analysts have issued a fairly powerful heads-up to the world’s political movers and shakers.
Stay on your current economic course, their basic message goes, and we’ll find ourselves trapped in a “vicious cycle” that leaves true innovation stalled and well-being worldwide stagnant and sinking.
This latest OECD paper continues the steady drumbeat of warnings that have come over recent years from analysts at the world’s most significant economic institutions. The challenge the international economic order faces today, the new OECD analysis argues, involves much more than undoing the Great Recession.
The developed world, the analysis notes, faces a “worrying slowdown in productivity growth,” a trend now evident in 90 percent of the OECD’s member nations.
Accompanying this slowdown in productivity growth: an equally worrying increase in inequality. In all 18 OECD nations with comparable data, the most affluent 10 percent now hold at least half of all household wealth. All these nations have also seen a three-decade “surge in income at the top, especially the top 1 percent.”
The world faces, the OECD analysis acknowledges, other challenges as well. But few of these “pose greater obstacles to better economic performance than the productivity slowdown and the rise in inequalities.”
And these two unfolding trends, the OECD suggests, reinforce each other.
One example: The corporate giants the OECD labels “frontier firms” appear to be leveraging their dominant market monopoly position to slow the diffusion of new know-how. That’s limiting productivity gains, in the process “entrenching inequalities of income, not least by trapping workers in unproductive activities and low-quality jobs and producing ‘winner takes all’ dynamics in the economy.”
The “growing weight” of big banks in the global economy, meanwhile, has “diverted investment away from productive activities,” a move that has nurtured a still “higher concentration of wealth at the top of the income distribution.”
The more income concentrates at the top, the more those below “accumulate disadvantages.” A “policy environment that yields the outcome where some people have few resources,” as the new OECD study puts it, will see fewer people saving and investing “in their own skills.” In this environment, productivity growth will almost always be “sub-optimal.”
Also “sub-optimal” for greater productivity, in this OECD analysis: austerity budgets that dismantle safety nets for the vulnerable, the “regulatory capture” of government watchdogs by powerful industries, and the lavish government subsidies that go to fossil-fuel corporations. And don’t forget patent rules that “may unduly” favor corporate giants at the expense of innovative new competitors.
What do we do about all this? How can we meaningfully confront the great economic challenges of our times? At times, this new OECD report offers up suggestions sure to make our global corporate power suits squirm.
We could limit the “unproductive concentration of profits,” the OECD analysts note at one point, if we leveled the playing field and let state-owned enterprises really compete with private-sector firms.
But this new OECD analysis mostly shies away from any specifics that would directly discomfort the rich and powerful. Our “overarching objective,” the analysts pronounce, must be “to identify win-win policies that could deliver both improved inclusiveness and productivity growth.”
But no insistence on “win-win policies” will ever get us to where we need to be. No deeply unequal society will ever become meaningfully more equal unless those who benefit the most from inequality lose some appreciable part of their privilege and power.
Making that happen typically takes pitchforks, a willingness to confront grand private fortune and those politicos who serve it.
We can’t, of course, expect an official agency like the OECD to egg that confronting on. But we can at least thank the OECD for helping delegitimize our staggeringly unequal economic status quo — and those who pimp for it.
Institute for Policy Studies associate fellow Sam Pizzigati co-edits Inequality.org. His most recent book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900–1970 (Seven Stories Press).