We need to wake up to a harsh reality: much of what we see around us in the United States, which we often attribute to the free market or American ingenuity and resourcefulness, is actually creativity and money-making off people’s suffering and needs. As I have argued in past posts, other advanced nations do not do this, at least not to the extent that we do it here. The result: vast income inequality in our country that is unparalleled elsewhere.
In this blog, we will examine the phenomenon whereby Americans are distinctly disadvantaged, on many levels and in many ways, by a system that is not only relatively new in our country’s history but which can be reversed. We will look at some areas of our lives where a small proportion of our citizens are exceedingly wealthy while the vast majority are worse off than Americans were 40 years ago. These wealthy individuals and corporations are exploiting our fears, illnesses, vulnerabilities, and insecurities – whether intentionally or inadvertently – and making millions of dollars for themselves, their families and their descendants. We will begin to see a disturbing pattern – a pattern that needs to be called out and changed.
In our next post, we will dream a little (but realistically) and envision what other options are possible and some of the ways by which we as individual citizens can start to change an unsustainable system.
Insurance: medical and otherwise. If we Americans look hard and open-mindedly enough, we will see that most of our peer nations provide health care to their citizens in a much different – and much more effective and efficient – way than we do. Steven Hill in Europe’s Promise concluded that France has the best health care system in the world, using a shared-responsibility model (pages 136ff). In Anu Partanen’s recent book, The Nordic Theory of Everything, the Finnish health care system is documented, with similar conclusions (pages 167ff). In contrast, we in the US face the following: confusion and complexity in our “choice” of insurers and providers; reams of paperwork; large fees, co-payments and deductibles; and diminished care in some parts of the country for women’s health services, for instance, due to decimation by abortion-related legislation. But insurance goes beyond medical: Americans are bombarded on all sides by advertisements and “offers” for renters’ insurance; pet insurance; auto insurance; home insurance; life insurance; travel insurance; fire insurance… The slick ads aim to convince us that their products are absolutely essential for a good, secure life – and meanwhile the top administrators of these companies, especially the largest corporations, rake in millions of dollars on the backs of our fears and insecurities.
Pharmaceuticals. For Americans, it is quite difficult to escape having some level of contact with the American drug culture (the legitimate culture – we won’t deal here with illegal drugs). The addiction epidemic is too vast for us to discuss today (we mentioned it briefly earlier), but we can take a look at how very wealthy individuals and large corporations routinely benefit from our vulnerabilities. Robert Reich in Saving Capitalism points out that the entire pharmaceutical industry has gained immunity from prosecution by convincing Congress in 1988 “to establish the National Vaccine Injury Compensation Program, effectively shielding vaccine manufacturers and doctors from liability for vaccines that have harmful side effects” (Reich, 68). Further, pay-for-delay agreements (banned in Europe), whereby “drug companies pay the makers of generic drugs to delay their cheaper versions,” generate enormous profits for drug companies for both original and generic drugs, meaning that “Americans pay more for drugs, per person, than citizens of any other nation on earth” (Reich, 25).
Reich also notes that laws enacted since the 1980s allow top executives, including those of drug companies, to cash in their stock options without disclosing them to the public, a reversal of practices that had been in place since the New Deal. This, along with other practices that large corporations pressured Congress to change, enabled CEOs of drug companies to depart from their companies extremely wealthy even when those companies were losing money. Hank McKinnell, Jr., for example, was CEO at Pfizer for only five years, at which point the company’s stocks dropped by $140 billion; despite this performance, McKinnell “left with a payout of nearly $200 million, free lifetime medical coverage, and an annual pension of $6.5 million” (Reich, 104-05). We the taxpayers suffer great harm from these situations because we subsidize them: “corporations deduct CEO pay from their income taxes” (Reich, 105) so we need to make up the difference. Needless to say, the rules that our congressional representatives have enacted do not work at all for the vast majority of Americans.
Credit and credit cards. We Americans also have the dubious distinction of having more credit card debt than other Western industrialized nations (except Turkey and the UK). Most families know why: we cannot pay for everyday expenses on our incomes (if we’re lucky enough to have incomes…), so we need to use credit just to keep our heads above water. Credit comes from big banks, and the sad fact is that “the biggest banks had already grown much larger and more profitable [by 2008] by persuading Congress and presidential administrations to dismantle many of the laws and rules that had been enacted in the wake of the Great Crash of 1929 to prevent big banks from making excessively risky bets” (Reich, 42). One example of this was the repeal of the 1933 Glass-Steagall Act in 1999 (under Clinton), “which had separated commercial from investment banking” (Reich, 175). In addition, large corporations are able to take full advantage of bankruptcy laws, unlike individuals, families and small businesses, which cannot (Reich, 59ff); and those same large corporations have the power and clout to foil enforcement of any progressive legislation that is passed (Reich, 70-73). Average Americans suffer – financially and otherwise – while corporations and their heads make out like bandits.
Tax preparers. Partanen in Nordic Theory makes an amazing, eye-opening argument about taxes: in Finland, her native country, her “tax form had been one page long, and came prefilled with my earnings and taxes paid. . . My job was simply to check that everything was correct and amend it if needed” (Partanen, 251). Any American adult who has ever filed his/her taxes knows the stark contrast with this picture: whether we do our taxes ourselves or hire a preparer, it is a complicated, time-consuming and often frustrating process. Mistakes are easy to make, and most of us dread the date of April 15th. H&R Block is one of the oldest and most highly respected tax preparation companies in the US. Its CEO, William C. Cobb, earned over $7 million in 2015, and others at the top of that corporation were earning in the $1 and $2 million range. These executives are living quite nicely off their clients’ fees every year.
Financial advisors, investment managers. I adore and greatly appreciate my “Edward Jones guy” – but in many ways, I wish he weren’t necessary. I wish I did not have to worry about whether I will have enough money to retire comfortably in a few short years. I wish my many employers over the past 40 years had just had a simple pension program guaranteed or supported by the government – without my having to “match” their contributions (since I often did not have enough income to do the match…). James D. Weddle, Managing Partner and CEO of the Jones Financial Companies, had an estimated total compensation of almost $14 million in 2015. I would guess that, were financial advising to become less of an industry under a more streamlined system in the US, Mr. Weddle and others like him would still be able to live comfortably at 10% of their current salaries!
Gun manufacturers. Like the pharmaceutical companies, gun manufacturers have gained immunity from prosecution in recent decades due to their unequal influence on legislators (Reich, 68). As we noted previously, gun violence is a problem in the United States that is faced nowhere else in the modern Western world; hundreds of Americans are injured or killed every year from gun violence, and gun manufacturers earn millions of dollars in the meantime. Gun sales often go up after a mass shooting because Americans have become convinced that if the “good guys” have guns, they can take down the “bad guys.” The majority of Americans (though not the majority of Republican lawmakers in Congress) recognize the need for legislation to reduce this tragic bloodshed, perhaps especially with the repeal of the 2005 Protection of Lawful Commerce in Arms Act, passed through the mighty lobbying efforts of the National Rifle Association. The Act “sharply limited the liability of gun manufacturers, distributors and dealers for any harm caused by the guns they sold” (Reich, 68).
In our next post, we will put a more optimistic and activist spin on these issues and show not only how things can be different (since many other countries demonstrate this truth…) but also what each of us can do to bring about change – change that will benefit the common good.
Hill, Steven. Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age. Berkeley and Los Angeles, CA: University of California Press, 2010.
Partanen, Anu. The Nordic Theory of Everything: In Search of a Better Life. New York: HarperCollins Publishers, 2016.
Reich, Robert B. Saving Capitalism: For the Many, Not the Few. New York: Vintage Books, 2015.