Reich is particularly devastating when discussing the ways in which corporate lobbyists prevail on present-day K Street in Washington, D.C. It is not, he argues, so much that corporate lobbyists have a secret cabal to screw regular people. Instead, each company is locked in an everyday-life-or-death battle for the most profitability. As a result, they pour money into contributions and lobbying for minute changes in legislation that advantage this or that particular pharmaceutical product, or section of the airwaves.
His many excellent examples range from WalMart’s efforts to be allowed to get into the banking business, to the rules that prohibit online gambling companies in the United States. (not for any meaningful values reasons, since consumers can still have their pick of vices, but to advantage corporate gambling interests that had already invested in the expensive real estate of casinos), to what standards are required for food to be labeled as “organic” (if you guessed that these were the lowest standards, pushed by agribusiness, you are right). The net result is that politics are simply swamped with corporate money and lobbying, putting the time and energy of Congress and the administration into the things that matter to various businesses, leaving little bandwidth for the interests of you and me.
Where They Disagree (a Little): Cause and Risk
While Kuttner and Reich agree in the beginning and end of their argument (and share a publisher and a magazine), they play out their disagreements across the pages of The American Prospect Web site. While Freud would almost certainly call this “the narcissism of minor differences,” there are two interesting points of contention: over what caused the shift, and over how big the risk of economic catastrophe is as a result.
Essentially, Reich believes that Americans are all to blame, while Kuttner lays the blame more squarely at the feet of a corporate elite. Reich argues that most Americans are, whether we know it or not, of two minds. As consumers (who want and can now get much lower prices and better choices for food, electronics, household items, etc), and as investors (since a slight majority of Americans now hold some stock — some directly, and more through their 401ks, 403bs, pensions, college-savings funds, mutual funds, etc), Reich says, we have done significantly better under supercapitalism. As citizens seeking the common good, we have lost ground, to our common detriment. What made this possible, he suggests, is shifts in technology and transport that have given consumers and investors a far wider range of choices (and information) than they ever had before, allowing them to demand cheaper products and higher returns. Kuttner argues instead that corporate elites have systematically sought to undermine the public sector and regulatory institutions, with more corrupt insider dealings (think Enron).
On this disagreement, Reich has the more thorough and certainly more provocative argument, since it implicates all of us. We do need to confront his challenge that the choices that a majority of Americans are making as consumers and (wittingly or unwittingly) as investors, while helping a very small elite do so well, have widened inequality and undermined public goals.
The intervening months since both books were written (in 2007) have shown Kuttner as more prescient on the ways that the economy is increasingly speculative and vulnerable as a result of the weakening of regulatory functions. Reich does not focus on this trend, suggesting that he believes “supercapitalism,” while deeply problematic, is not inherently unstable. Kuttner argues instead that the increasing economic insecurity for ordinary Americans and the increasing financial risks to the entire economic system are two sides of the same coin. In his chapter on “Financial Engineering and Systemic Risks,” he describes how
The excessive speculation that dominates the real economy widens inequality, reduces economic efficiency, and increases systems risk … Most [of the systemic threats] are the consequences of the increasingly speculative financial markets permitted by cumulative deregulation and supercharged by globalization (Squandering, page 107).
Put another way, corporations have been able to change the rules so that the public sector (i.e. taxpayers) will bail out most of the corporations who take risks and fail, so they can be more speculative. The profits are private, the risks are public.