The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity

I have read several books which attempt to explain the current economic situation in the U.S. and around the world. Robert Kuttner's book, Squandering of America is the best of the bunch. Published in 2007, before the crisis hit, the book is precient in it's analysis of the changes that have taken place in the U.S. economy over the past thirty years and how the changes have resulted in a shift in the economic balance of power. He believes that this shift has produced an economy controlled largely by so called free market economic elites who have used political power to diminish contravailing forces that traditionally kept them in check. The result according to Kuttner, is an atmosphere of deregualtion, deunionization, and increasing inequality of incomes and opportunity. Kuttner also offers an analysis of how these changes have affected the world and discusses what he thinks might be done to rectify the situation. If you are interested in an overall view of our eocnomic problems from a Keynesian point of view this is the book for you.

Re-issued this November with a new preface, the author predicted a huge failure in the stock market, just before Wall Street took a huge nosedive and Congress planned its largest bailout ever. The author originally wrote warning of economic conditions in 1997, and the market fell in 2001-02. Kuttner contents that the tremendous stock swings have not been due to Federal regulations, which he says are virtually nonexistent, but rather to the fundamentalist rightward swing that our politics and politicians have taken in the last eight years. He writes extensively of Wall Street's history, saying that an unfettered market encourages insider trading and favoritism, and that the combination of laissez-faire government and big-bank and broker greed have given us an economy where credit card debt is soaring, with ordinary citizens no longer able to afford adequate health care, new homes or college educations for their children. Kuttner backs everything up and writes how conditions today are ominously like those of 1929 just before the crash and the Great Depression. He says the country will need a return to some kind of stock market regulation-and he ties this to a return to basic American freedoms. Nor is he optimistic that this will happen soon. He cites scientific studies which show that while costs of such things as health care, education and housing have risen tremendously, middle/lower class real wages and earnings have stagnated at a level they had thirty years ago. Only the top 10 percent of this country got richer, he says, and the highest returns went to the top one percent of that. With massive grassroots ` voting in this recent presidential election, it looks like most of the country is searching for a dramatic change in the way it does business and politics. It will give Kuttner's theories a unique test in the coming four years, to see if America can pull itself out of foreign fiscal debt, stop American jobs going overseas, and recapture those lost freedoms. Otherwise, he doesn't hold out much hope. It's a big order to ask of anyone. The book's figures and studies support its contentions and will provoke a firestorm of debate among people who want to know "what went wrong." Armchair Interviews says: The author is a political analyst, was a regular columnist with Business Week, a graduate of Oberlin College, and co-founder of The American Prospect magazine.

In this hard-hitting (naming names), but profoundly human book, Robert Kuttner analyses the reasons why the US is very close to losing its democracy, not just by rigged rules and stolen elections, but by the domination of politics by big money, the decline of political participation by ordinary people and the assault on basic constitutional liberties (using foreign threats to undermine freedom at home). Economics The squandering of America is the result of the deliberate dismantling of a managed form of capitalism, guaranteeing broadly diffused prosperity, better economic efficiency and higher stability in the system. The dismantling was called free markets and free trade (better dirty free trade, because agricultural products are untouchables). For R. Kuttner, rightly, free trade sacrifices the general interest for the self-interest of economic elites (`the class solidarity of insiders'). It resulted in a chronic structural trade deficit (making the US totally dependent on foreign banks), a collapse of the US manufacturing grid and the destruction of good wage contracts. Free markets are not better, because they are in no way reliable for providing (full) employment, decent wages, education, health care, clean air and water, economic stability, safety and the honesty of financial agents. Finance Financial deregulation increased inequalities, reduced economic efficiencies and increased economic risks. Extreme swings in retail gas prices, stealing of pension funds by take-over `artists' or disbursing 250B$ in fees for mutual fund managers between 1997 and 2002 while millions of investors suffered a net loss, can hardly be seen as financial efficiency. As Robert (!) Triffin in the 1960s correctly predicted the fall of the dollar, Robert Kuttner predicts now a serious decline of the dollar and the general US living standard. Government policies The conservative recipe of cutting domestic spending, of hugely increasing military outlays and cutting taxes for the wealthy, diminished vastly opportunities (education), security (jobs, health care) and living standards for the vast majority of the population. The resulting huge budget deficits were to be `solved' by cuts in social spending. Politics Money is the prime political currency in the US. Politics are there to serve the money holders, not democracy. The Bush II Administration spent more effort on suppressing voting than on expanding it. However, the ultimate test of a democracy is whether it is possible to throw out those in power. For R. Kuttner, the answer is YES. Therefore, real democracy should be revived. Mass quiescence is indeed a great convenience and a splendid political success for financial elites. Robert Kuttner's brilliantly argued book is a must read for all those wanting to understand (and influence) the world we live in.

These days, bad economic news is plentiful. But according to economist Robert Kuttner, the future is even bleaker than the numbers suggest. The reason, he says, is that the two major parties have become cheerleaders for laissez-faire, forgetting the lessons of the Great Depression that market failures are widespread. Kuttner argues that financial derivatives, inequitable trade policies, union-busting and economic bubbles have weakened the economy. Wall Street has become enormously powerful, while politicians have been looking the other way. Although the book draws on academic research, it is clearly written and accessible to a broad audience. getAbstract recommends it to political and business leaders, policy makers and citizens concerned about the implications of deterioration in the U.S. political and economic system.

Over the past three decades America's GDP has nearly doubled and unemployment remains fairly low. And if one listens to the evening financial news - other than, say, Lou Dobbs - we hear the chorus singing the praises of free-market capitalism. Robert Kuttner, co-founder of The American Prospect and the Economic Policy Institute, tells us these facts by themselves do not tell the whole story. Most of the economic gains have gone to the top 10%, and more yet to the top 1%. The median American family, however, has suffered a decline in living standards in the last 30 years. And most of the new jobs created in the last 10 years have been on the low-wage end. A number of new books have appeared recently on the widening income gap. (Robert Reich's Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (Borzoi Books) and Paul Krugman'sThe Conscience of a Liberal are but two examples.) As in the books by Reich and Krugman, Kuttner points out that the income gap was the narrowest between the 1930's and the 1970's. This was a time of "managed capitalism." After the Depression and World War II people turned to government to solve their problems and the government did rather well. It created many of the institutions that regulated and guarded against the excesses of free-market capitalism. It created social insurance programs such as Medicare and Social Security which are now considered indispensible. Kuttner argues that around 1980, with the election of Ronald Reagan, political power shifted from ordinary citizens to financial elites. The financial deregulation that followed has created many of the subsequent speculative excesses such as the savings and loan crisis, the dotcom bubble, the housing bubble, Worldcom and Enron. One need only look at the current subprime loan problems - a cause of the housing bubble - as an example of unregulated capitalism. Left to their own devices, lending institutions and borrowers will gladly agree to 1 or 2 percent "teaser" loans just to get the deal done. When they reset at higher and unaffordable rates presumably other creative financing schemes would be hatched. It was not forseen that housing prices would fall and no new schemes would be available. Do we need laws to protect us from ourselves? Apparently so. Free-market capitalists argued that the market would eventually sort things out, but they never realized it would actually put the entire market at risk. Kuttner argues that if banks had been properly regulated such loans would never have been allowed. He is nostalgic for the days when a bank examiner went into a bank to look at its portfolio of loans to see which ones were not performing. That was then. Today loans are packaged and securitized in such elaborate and arcane ways that no one really knows how to regulate them or calculate the damage when there are massive defaults. Everyone seems to be clueless as to what to do next. I tend to agree with Kuttner that a