Fiscal Sociology

In this week’s Economist there is an article entitled “Rage against the machine.” It is an article that explores the anger associated with the Occupy movement and its possible outcomes. This is illustrated by the following comment, “Yet even if the protests are small and muddled, it is dangerous to dismiss the broader rage that exists across the West.” On the national news today the newscasters were interviewing more established people who have joined the movement to vent against whatever. A movement that started as a complaint against Capitalism has now grown into a complaint about everything.

The problem with this movement is no one knows where it will go. We have never been down this road before. Globalization is a reality, and we cannot go back to the way it was. It will never happen. Therefore, we need to adjust. We need to learn, which is what we have been good at in the past.

The article reminded me of something I read in Bell’s book, “The Cultural Contradictions of Capitalism.” The book was originally published in 1978, so I find this quote especially interesting and prophetic. “The new class struggles of the post-industrial society are less a matter of conflict between management and worker in the economic enterprise than the pull and tug of various organized segments to influence the state budget.” We see these segments in the Occupy movement. Right now they are moving in the same direction, but who knows how long it will last.

Because of Globalization the way we work has changed. Therefore we have what is called structural unemployment. This means we may need to accept a higher level of what is called natural unemployment. A 4.5 to 6% unemployment rate has been the level of out of work people that we in the US call full employment, whereas the Europeans accept a 7 to 10% unemployment as the rate of full employment. We just may need to accept this higher rate, and if we do then fiscal sociology becomes a necessary discussion.

With higher levels of social need comes a greater requirement for transfer payments such as unemployment and welfare checks. With the government paying out more in entitlements, there is a requirement for more revenue. More revenue means more taxes. The critical relationship is no longer found in the market through its circular flow, but with the state and society.

This leads then to a tax-state and larger government. Larger government means a greater amount of regulation and distrust. Bell states, “The business corporations resent government regulation, even though it may sustain profits. . . Radicals are becoming increasingly suspicious of government,” all of this results in a state government that is a “cumbersome, bureaucratic monstrosity.” This monstrosity becomes like the plant in Little Shop of Horrors, saying “feed me Seymour, feed me.”

So here we are, what a mess. Is there anything we can do about it? Yes, we can quick whining about what someone supposedly owes us, and begin developing a renewed work ethic. Rather than spending your days sitting on a park bench holding a sign, volunteer, or work at McDonalds. Do something good for someone else. Instead of tearing things down work to reclaim civitas, which is what we really need.

And that is my thought for the day!

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