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04/18/2006:
""Unbridled Capitalism Will Lead to Very Real Problems""
Harvard economist Kenneth Rogoff discusses the dangers of unbridled capitalism, the greed of corporate CEOs and a fundamental problem with the United States economy.SPIEGEL: Professor Rogoff, the US economy is surging forward, while President Bush celebrates high growth rates. But most Americans believe they are living in a recession. Who is right?
Rogoff: I too have asked myself whether people have gone crazy. But the fact is that the share of wages in total growth is shrinking.
SPIEGEL: In other words, most people are not benefiting from the recovery and are justifiably disappointed?
Rogoff: The working population's share of national income remained constant for 100 years. That's why Marx's theory that only capitalists benefit from capitalism and workers are exploited was completely wrong. Nothing could have been further from the truth. Workers earned more as economies grew.
SPIEGEL: Is this no longer true?
Rogoff: There has been a noticeable decline in the labor factor in all wealthy countries in the past 20 years. The rich are getting richer, but those at the lower end aren't moving ahead as quickly as the capitalists.
SPIEGEL: So Marx was right after all?
Rogoff: We're still a long way away from that. Workers are not being exploited. But if their share of growth doesn't increase, this could be a potential cause of social tension worldwide. The point is that so far attempts to reverse this trend in the US have failed. Boeing employees achieved barely anything by going on strike (editor's note: last autumn). Instead, the workers are now in a weaker position -- both in aviation and in other industries.
SPIEGEL: Meanwhile, corporate CEOs and Wall Street bankers are cashing in on record bonuses.
Rogoff: There has never been a better time to get rich. It's quite astonishing how much money people make in the hedge fund business and in the private equity field, and how well-off affluent families really are. Given these contradictions, it comes as no surprise that average Americans have a different perception of the economy than (US President) George W. Bush and his friends. They can play around with statistics as much as they want, but it's clear that we have an unfair distribution of wealth.
SPIEGEL: That hasn't seemed to bother anyone, as long as the dishwasher-to-millionaire dream still exists.
Rogoff: I tell my children that a man like Bill Gates has a personal fortune of $100 billion. They can't even comprehend that. Then I explain that he has more money than some countries. If we have these extremes, I can't understand why we should get rid of the inheritance tax. It hasn't harmed the economy, and it has evened out the distribution of income across generations.
SPIEGEL: Billion-dollar tax cuts for the super-rich -- such as eliminating the inheritance tax -- are meant to generate growth for all. Conservatives like to say that a rising tide lifts all boats.
Rogoff: The New Orleans disaster made it painfully clear what happens to people in deep poverty: they don't even have a boat. Even more tax cuts are the wrong approach, as long as we don't even have universal health insurance for children. I think that's outrageous.
SPIEGEL: Are these injustices the price for lower unemployment and strong growth in the United States?
Rogoff: This unbridled capitalism in the United States can't be sustained socially. It leads to tensions. If we experience another five years like the last five, we will start seeing greater social friction. After all, people aren't looking at how they're doing, but rather at how their neighbors are doing and at their own place in society. These huge inequalities are not a particularly desirable characteristic in our society.
spiegel.de
And this guy describes himself as a "Schwartzenegger Republican".
