Bless his heart, Gov. Pat McCrory can't understand what's happening to our economy. On Friday, he pronounced himself pleased that the state's unemployment rate in February dropped to 6.4 percent because "more and more people are getting back to work." The same day, a Wall Street Journal story was headlined: "North Carolina Had More Job Losses Than Any Other State."
To be fair, McCrory—or whoever wrote his statement—was grasping at a speck of good news. The percentage of people who still think of themselves as in the North Carolina labor force and who report being employed ticked up slightly in February, according to the N.C. Department of Commerce. But that speck was dwarfed by two gobs of bad news:
• The state's labor force is shrinking rapidly—down 64,000 in a year—as more and more people give up on finding a job. That's the main reason the unemployment rate is down—because more of the unemployed aren't counted. (To a lesser extent, this is also true nationally.)
• The number of nonfarm payroll jobs in North Carolina dropped in February by a seasonally adjusted 11,300, according to the U.S. Labor Department. Overall, the country gained 175,000 payroll jobs; 33 states gained. North Carolina lost the most of the trailing 17.
McCrory, therefore, has no reason to be "encouraged by the continued progress we have made" unless by "we," he means the well-heeled.
The frightening truth is that our economy is failing to generate enough jobs. Of the jobs it does generate, too many pay stagnant or declining wages; fast-growth sectors like retail and food service are often at poverty scale. This despite the fact that we are supposedly recovering from the Great Recession, and U.S. stock markets have more than doubled since 2008.
Meanwhile, the richest 1 percent, who own more than one-third of U.S. shares, get ever richer. The top 0.1 percent are hideously rich.
Why? Capitalism. Which should be obvious, but in case it isn't, the hottest public policy book of the season, Thomas Piketty's Capital in the Twenty-First Century, is due out in English translation next week from Harvard University Press. It was published in France last fall. The Week says it's "the book everyone is talking about." The New York Times agrees it's "caused a stir."
Piketty, a professor at the Paris School of Economics, draws on data from 20 countries over 200 years to demonstrate that, when capital markets are working as they should (to quote a review by Thomas Edsall in the Times), the returns enjoyed by investors will exceed the growth rates of the underlying economies, suppressing wages and producing ever-greater inequality.
"A market economy is great at producing new wealth," Piketty says in an interview posted on the Harvard Press website, "but sometimes it can be quite bad at producing a distribution of wealth that is equitable in the long run." This is true in developed and emerging economies, Piketty shows, though the U.S. is the worst-case example.
Moreover, the problem of growing inequality is not self-correcting, Piketty says. Rather, it's self-perpetuating. Thus, unless governments intervene to redistribute wealth, the gap between investors and workers will eventually reach "a level of inequality that is simply not compatible with our democratic and meritocratic values."
Those who don't think so, Piketty argues, are beguiled by the mid-20th century era of greater middle-class expansion in the U.S. and Europe. They forget that two world wars and a global depression forced governments to tax and redistribute mightily—thus blunting, for a time, capitalism's dynamism.
Piketty's Rx? Countries should adopt steeply progressive income tax rates plus a modest tax on wealth. The latter must be multinational, because investors and corporations are. As political scientists Jacob Hacker and Paul Pierson explain in The American Prospect: "Inequality is becoming a 'wicked' problem like climate change—one in which a solution must not only overcome powerful entrenched interests in individual countries but must be global in scope to be effective."
There's a word for Piketty's prescription, though I don't think he uses it. I heard it at a branch meeting in Durham of the Workers World Party. Larry Holmes, the national party's first secretary, was there. Under capitalism, Holmes observed, automation is killing jobs. Under socialism, automation would replace bad jobs with better ones.
I'll buy that, though with a "P" word—progressive, populist—instead of the "S" word. The application of technology and robotics should free us from the strain of much manual labor. Indeed, it's doing so, but we're not replacing the lost jobs with enough better jobs, because capitalists don't value them.
The most obvious work that needs to be done is in health care and education, where too many kids continue to flounder. Along with the basics of good food, clothing and shelter, these are benefits that a prosperous nation can afford to supply in generous amounts to all. We can also support more jobs in the arts, recreation and travel—things that feed our souls.
But we can't afford them if capitalists continue to hoard their profits. And we can't afford them if politicians like McCrory choose to cut taxes for the rich and for multinational corporations, as he and his fellow Republicans did in last year's General Assembly session. They also cut school funding and denied health care to as many as 500,000 uninsured people who would've qualified for Medicaid expansion had lawmakers not blocked it.
Socialists believe that capitalism contains the seeds of its own destruction, relentlessly increasing production while relentlessly crimping what workers can buy. I prefer to think that capital, if put to its highest and best uses by private investors and a forward-looking public sector as well, is a tool to make life better for everyone.
As the political season begins, let's kick that progressive idea around.
This article appeared in print with the headline "Gov. McCrory's jobs doublespeak "