Well-known and widely respected economists, political scientists and social thinkers
examine Henry George’s philosophies in today’s society and economy


Aug. 11, 2015
Smart Talk with Andrew Mazzone and Thomas Palley

Andrew Mazzone, President of the Henry George School of Social Science interviews Thomas Palley, Senior Economic Advisor, AFL-CIO and author of the book “Plenty of Nothing, the Downsizing of the American Dream and the Case for Structural Keynesianism.” Their conversation focuses on a variety of issues including the Golden Age, shareholder value maximization and financial capitalism. The discussion spans 50 years of economic history and divides the 20th century into three components such as pre-1940, 1940-1980 and 1980 to the present.

Finance capitalism or financial capitalism is the subordination of processes of production to the accumulation of money profits in a financial system. Mr. Palley believes that government should shape capitalism through monetary, fiscal, trade, and regulatory policies that promote widespread prosperity.

The interview begins with focus on the Golden Age which was put in place under the trauma of the Great Depression and in conjunction with the threat of communism coming from the Soviet Union. Mr. Palley believes Franklin D. Roosevelt gave one of the most important speeches of his time in 1936 at Madison Square Garden in New York stating “The real truth of the matter is that a financial element in the large centers has owned the government since the days of Andrew Jackson.” President Roosevelt confronts the bankers and business men for trying to put an end to his efforts to create an equal full employment America. Palley believes it would have been the end of capitalism if Roosevelt didn’t do what he did.

Mr. Palley refers to a particular section of his book “Plenty of Nothing” that addresses the political economy. He specifically states that people began believing their own rhetoric, such as the belief they didn’t need economic institutions like unions anymore.

The discussion between Mr. Mazzone and Mr. Palley continues with the discussion of shareholder value maximization, which is a mode of thinking that the best measurement of a company’s success is how well it maximizes profit for its shareholders. It becomes a pretext for short termism, which is used to describe an excessive focus by a firm’s management on the pursuit of short-term profits over long term interests.

In the 1980’s, change is connected to financialization, which is an increase in the size and importance of a country’s financial sector relative to its overall economy. Financialization has occurred as countries have shifted away from industrial capitalism.

Today’s world is changing, by 2015, 3.3 million U.S. jobs moved offshore in search of cheaper labor. The United States now has wholesale off shoring and the breaking of unions. Leading up to this, Palley believes corporations had grown and developed within a 40 year time frame within a particular political economic climate. It brought the best out of corporations. Palley states: “A capitalist economy needs corporations but they need to operate within the right rules and regulatory restraints.

Importance is placed on economic and political history so it can be used to collaborate where the United States needs to go. During the 1970’s and 1980’s American companies began to go global, beginning within the United States. This is a time of manifest destiny, a concept prevalent during the 19th century period of American expansion that the United States not only could, but was destined to, stretch from the Atlantic coast to the Pacific coast. In 1998, Jack Welch CEO of GE, explains it best, “Ideally you’d have every plant you own on a barge to move with currencies and changes in the economy”, in order to take advantage of global conditions.

In conclusion, Thomas Palley, Chief Economist, U.S. – China Econ. & Security Review Commission believes America has possibilities and can do much better than it is doing. However, it’s going to be difficult. Palley believes there are opportunities for improvement and recommends solutions for change, including addressing currency manipulation, ensuring full employment, raising the minimum wage, enforcing the increase of unionization, increasing public investment and focusing on tax policies and financing public programs.

You can read more of Mr. Palley on his website,  http://www.thomaspalley.com/