Tuesday, December 13, 2011

OECD: The Social Contract Has Been Broken and is unraveling....

OECD: The Social Contract Has Been Broken and is unraveling....

The Organization for Economic Co-operation and Development (OECD) is one of the world’s most prestigious economic organizations. An international economic organization of 34 countries, the OECD was founded in 1948 to administer the Marshall Plan to rebuild Europe after World War II, and then reformulated in 1961 to stimulate economic progress and world trade.

So it is dramatic that the head of the OECD said last week that the social contract is unravelling:

Trickle down theory is dead. The belief fostered by Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. in the 1980s, that if the rich got richer, their income and wealth would trickle down the income scale so that a rising tide lifted all the boats, has had the last rites pronounced on it – by the Organization for Economic Co-operation and Development.

Its report “Divided We Stand” published on Monday highlights how income inequality is rising almost everywhere in the developed world. Not just, as it first did, in the Anglo-Saxon countries, such as the U.S. and Britain, but more recently in traditionally more egalitarian countries such as Denmark, Sweden and Germany.


“The social contract is unraveling,” Angel GurrĂ­a, OECD secretary-general, said.

Indeed, many people have argued for years that our government has breached it social contract with the people.

Matt Stoller – former Congressman Grayson’s chief legislative aide – wrote in August:

To see what happens when a social contract falls apart, look at the massive rioting in London.

Middle-class incomes are down radically in the U.S. since 2007, as much as 15 percent according to new Internal Revenue Service data. Home equity is still falling. If cherished entitlement programs are also savaged by the politicians who destroyed our life savings, citizens might begin to question whether this whole constitutional democracy thing is worth it.

last year:

The rule of law is the basis for our social contract. Indeed, it is the basis for our submission to the power of the state.


Lawlessness – the failure to enforce the rule of law – is dragging the world economy down into the abyss.

When the Seattle City Council passed a resolution supporting the Occupy movement last month, the councilman sponsoring the bill said:

Working together, we can fix our broken economy and fix our broken social contract.

And economist Michael Hudson says that the powers-that-be are trying to revoke the social contract altogether, to make us into debt peons and to exert feudal power over our lives:

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.”....

367 Economists (And Counting) Support Occupy Movement....

See this piece at MSNBC and the OECD summaries.....

In October, I started gathering a list of economists who support the Occupy movement.

Now, Econ4.org has gathered 367 signatures (and counting) of economists from a diverse group of schools, some of them very well known:

“We are economists who oppose ideological cleansing in the economics profession. Equally we oppose political cleansing in the vital debate over the causes and consequences of our current economic crisis.

We support the efforts of the Occupy Wall Street movement across the country and across the globe to liberate the economy from the short-term greed of the rich and powerful “one percent”.

We oppose cynical and perverse attempts to misuse our police officers and public servants to expel advocates of the public good from our public spaces.

We extend our support to the vision of building an economy that works for the people, for the planet, and for the future, and we declare our solidarity with the Occupiers who are exercising our democratic right to demand economic and social justice.”


Gerald Epstein / University of Massachusetts Amherst


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