The American Economy of Today, Research Paper Example

Plutonomy, Democracy, Aristocracy, and Republic. These four words capture a struggle that has ensued within the United States since inception. Half of these words allude to the upper class of society, which also represents the majority of the wealth. The other half represent the guiding principles of the United States and the people whom our government is designed to protect. At different points of history, Plutonomy has ebbed and strengthened as historical events occurred and individuals conspired to either weaken or strengthen the elite class. Many would argue that a period of strengthening has been occurring in recent decades, to the point that Democracy is threatened to be replaced by Plutonomy. A central concern is the accessibility, quality and status of education, and ramifications of an education “bubble” that could impact future generations for decades to come. The United States is transforming from Democracy to Plutonomy, and when the education “bubble” bursts, education will become out of reach for the majority of Americans.

Moving toward Plutonomy: the traditional struggle between the two representative sides of our government have been in place for some time, and each have come to be known for specific ideology. In simplified terms, The Democrats have believed that it is the government’s role to protect the people, and the public needs protection from businesses. Republicans contend that it is businesses who protect the people, and that the public needs to be protected from government. Such has been the way of government for a long time, but the current situation has seen a major shift toward businesses. According to one article, the United States has transformed socially and economically in a radical fashion over the span of several decades, driven by predatory financial practices that are used deftly by businesses and the social elite to implement widespread and unchecked criminal behavior that increases their vast wealth. This power has also been used to undermine the Republic, as this wealth exerts control and influence over representatives of both major government parties (Bandler).

Another article reinforces and concurs with this belief, stating that the current momentum of this radicalization of our society dates to the 1970s. It was during that time that President Nixon through appointments began weakening the very institutions he was supposed to protect. Placing ultra-conservatives in prominent positions to influence and change domestic policies he was personally opposed was a concept he pioneered, but others later built upon. This trend within the Republican party accelerated under President Reagan, who through the Office of Information and Regulatory provided business lobbyists the opportunity to critique and influence government programs and how they would impact corporations (Perlstein).

It is interesting to note that Reagan was a central figure in this effort for decades, dating back to his involvement as a key proponent hired by General Electric (GE) to convince union workers to back the company and not the labor union. GE employed a continuous campaign of influence and persuasion in an effort to favorably alter labor contacts when it was time to negotiate. Methods they would employ included focus groups, printed materials, and trained employee labor managers to present the company as the true labor protectors instead of the union. Reagan was hired as a chief spokesperson on GE’s behalf, and traveled throughout the country giving speeches, and also hosted a television show entitled “General Electric Theater” (Perlstein). These efforts by the company were deemed highly successful, and also explains some of the early roots of Reagan’s ideology that he doubtlessly brought with him into the Presidency.

In more recent years, the advances of Plutonomy have been more aggressive and obvious.  The dramatic increase in expenditures during elections leaves our politicians heavily indebted to their benefactors. The landmark case of Citizens United vs. Federal Election Commission in January, 2010 was a great victory for Plutonomy, as now unlimited amounts of money may be spent in either opposition or support of a candidate. One well known example of this issue is when Newt Gingrich received $20 million dollars in support from a single benefactor named Sheldon Adelsen. Some conspiracy theorists have gone on record stating that the super wealthy helped bring about this Supreme Court ruling (Bandler). Whether you agree on this or not, it is clear that this ruling only helps the wealthy, as the rest of the population lacks the resources required to take advantage of this major change in the rules. This court decision stands only to benefit a select few, and not the majority of the public.

There are those that argue against Plutonomy, claiming that America is in charge of its future and can be anything it wants to be. One article claims that we have been in flux before, and that during the Great Depression things looked as bad, if not worse, than they do now. These people could argue that the United States remains a leader in any measurement of productivity you care to mention, such as GDP, exporting, energy production, and agriculture. The United States dollar is the world’s currency of preference, and our educational institutions lead the world in research. They also argue that Democracy is an advantage that we cannot lose, as we are too accustomed to its advantages and in following the rule of law (Lieber). A counter argument is not to dispute these facts, as it is true that the United States remains a world leader in everything mentioned above, including Democracy. It is the potential threat to Democracy from Plutonomy that we need to be concerned about, for it threatens our leadership in the world in all that has been mentioned. One article suggests that the upheaval in economic changes we have been witnessing over the past thirty years is unprecedented in world history. Between 2002 and 2007, sixty-five percent of all income growth in the United States was distributed to the top 1% of the wealthiest people. Most Americans have seen stagnant or near stagnant real wages for decades. This is a strong sign that the wealthy continue to consolidate wealth within the highest of income brackets (Freeland).

The impact to public education, and access to education for future generations: on the surface, you are able to point to many statistics that would lead one to believe that education is doing well and is strong. After all, more than half of the top 100 universities are in the United States. The output of research, scientific papers and even Nobel laureates produced by American universities is unmatched elsewhere in the world. Most importantly, the belief that college graduates can earn a better life than those without a degree remains a highly persuasive reason why so many continue to pay for higher education (“Not what it used to be”).

Although the facts surrounding American educational prowess are not in dispute, it is equally clear that the financial pressures felt by the majority of the non-wealthy are having an effect on the affordability and accessibility of education. Students costs for those who attend universities have risen almost five times above the rate of inflation for thirty years. In the span of a single decade from 2001 to 2010, university education cost rose from 23% to 38% of median annual earnings. Those who do graduate with four-year degrees typically owe tens of thousands of dollars, and after six years only 57% of those who begin a four-year degree actually complete it (“Not what it used to be”). All of this data points to a disturbing trend, as it is likely that increased financial pressures are a likely contributor to many who fail to earn a college degree. Those that fail are deep in debt, and lack a degree to assist them with additional earnings that would enable them to afford what they owe.

What is equally troubling is the quality of education that is being provided appears to be in decline. There is an international literary average that has been set by advanced Democracies around the world, and the United States barely achieves the minimum standard. Also of concern is that the younger Americans get, the worse they perform toward the standard. For example, Americans aged 56-65 ranked second best in the world, while those schooled in the nineties only ranked fourteenth. Collectively the United States ranks twelfth, despite the considerable investment our nation places in education when compared to most other countries (Peterson).

This situation in education also points to the problem of our society converting to Plutonomy. College degrees are still a way to earn a better life, but the life that college degrees earn the recipient has eroded substantially. Graduates earn 16%-19% less than they did ten years ago, and they incur a tremendously larger debt burden than they would have ten years ago (“Not what it used to be”). Those without a college degree are in even worse shape, as their earning potential has never been as great as those with degrees, and their earning potential declined considerably as well. Unless the current, decades long trend is reversed, we will see a decline in educational opportunities for the majority of Americans. Stagnant wages or wages in decline coupled with dramatic increases in expenses have already had a profound impact.

The correlation between the housing bubble and the education bubble: history does have a tendency to repeat itself, and there are too many similarities to the previous housing bubble and the current trends that are in place in education. Like housing, there has been a disturbing trend in educational lending, spiking in 2008 when $20 billion dollars was distributed to students. This is despite the fact that over 9% of borrowers default on their loans within two years and that over 200 colleges and universities have a three-year default rate that exceeds 30% (“Not what it used to be”). Another articles likens housing to education as well, citing how the government, just like in their previous effort for affordable housing, pours money into student loans in order to increase the number of students. Like housing, this has contributed to the dramatic increases in costs, and at the same time there is evidence that the quality of education has been dropping significantly (Will).

Other analogies abound, such as an over-abundance of graduates with the wrong type of education needed for employment. Computer technology has replaced many white collar employment opportunities, and law school student enrollments have dropped dramatically due to the challenges of being hired in the legal field where unemployment rates are extremely high (Schumpeter). This is akin to the housing bubble, where construction of new housing was moving forward at a much faster rate than demand.

In closing, any trend can be reversed if the appropriate strength of will is applied. Although the current trends of Plutonomy and decreased educational opportunities are troubling, this country is entrenched with a belief in Democracy. The majority of Americans are not wealthy, and they are capable to organizing, communicating, and making their voices heard in order to preserve our society. Coupled with this effort should be a desire to preserve educational opportunities for future generations. A priority would be to make an effort to keep the education bubble from bursting, because if it does it could severely hamper educational opportunities for years to come.

Works Cited

Bandler, Beverly. “Strangling the Republic.” Consortium News 20 Jun. 2012. Web. <http://consortiumnews.com/2012/06/20/strangling-the-republic/>

Freeland, Chrystia. “The Rise of the New Global Elite.” The Atlantic Monthly Jan./Feb. 2011. Web. <http://www.theatlantic.com/magazine/archive/2011/01/the-rise-of-the-new-global-elite/308343/>

Lieber, Robert. “America in Decline? It’s a Matter of Choices, Not Fate.” World Affairs Journal Sept./Oct. 2012. Web. <http://www.worldaffairsjournal.org/article/america-decline-it’s-matter-choices-not-fate>

“Not What it Used to be.” The Economist 1 Dec. 2012. Web. <http://www.economist.com/news/united-states/21567373-american-universities-represent-declining-value-money-their-students-not-what-it>

Perlstein, Rick. “Enemies of State.” Democracy a Journal of Ideas Volume 19.Winter (2011).  Web. <http://www.democracyjournal.org/19/6784.php?page=all>

Peterson, Paul. “The Decline and Fall of American Education.” Hoover Institution 30 Jan. 2003. Web.  <http://www.hoover.org/publications/hoover-digest/article/6325>

Schumpeter. “The Latest Bubble?” The Economist 13 Apr. 2011. Web. <http://www.economist.com/blogs/schumpeter/2011/04/higher_education>

Will, George. “Subprime College Educations.” Washington Post 8 Jun. 2012. Web. <http://articles.washingtonpost.com/2012-06-08/opinions/35460102_1_student-loan-debts-tuitions-college-degrees>