Bivens via Libdem: “Sixty percent of the current shortfall (in Social Security) would be eliminated by a reversal of two adverse economic trends that have emerged since 1983: sluggish growth in average (real) wages and erosion of the tax base due to rapid growth in the inequality of earnings.”
Glenn of Brisbane is correct (and Libdem) with his admonition that we have become trapped in a set of ideas that make up classical economics, propagated by academic theoreticians and used by the 1%, through their influence over the political system, to gain more and more control over the economy and the labor force.
There are two documentaries worth watching. One is “Inside Job” narrated by Matt Damon about the recent financial crisis. It goes through most of what you know, but then delves into the role of academic economists who popularize these ideas at the nations prominent business schools, and do consulting work for the financial industry, where their students go to work, then move in and out
of the government At high levels to influence policy, then back to industry and academia.
Another is “the Forewarning” about the collapse of the $1.25 trillion hedge fund Long Term Capital Management in 1998. LTCM had as advisers two economists from Stanford and Harvard who had shared a Nobel prize for their work in options pricing; I.e., derivatives. LTCM had a risk model based on this theoretical work that it claimed would defeat risk in its investment portfolio. Well, like the engineer of the Titanic, they just didn’t figure on the collapse of the Russian economy after the Yeltsin revolt and when it went down, Greenspan as Fed Chair called Clinton and rushed a huge bailout through Congress to stabilize the financial system – banks, insurance companies, investment banks- they were all going down and the credit markets virtually froze as this problem got worked out. This documentary ends with a short interview with one of the economists in his home in San Francisco, where he displays his Nobel prize on his bookshelf.
Then there is one I watched yesterday called “Shock Doctrine” based on a book by Naomi Klein. While this is a little left wing edgy for my taste, it does trace the theories of classical economist Milton Friedman, based on the work of Austrian economist Friedrich Hayek, through major political events of the past 30 years, including the Chilean and Argentine military coups in the early 1970′s, the Thatcher and Reagan elections 1979-80;, the Rumsfeld initiative to privatize military functions after 9/11. The thesis is that capitalists will seize on political crises (“shock”) to impose stronger free market reforms for the purposes of consolidating wealth among the investor class. While this is, again, a little left of my own taste, I look at Romney running for president and that is exactly what I see him doing, so I cannot say she is wrong.