According to the latest government statistics, the unemployment rate has dropped below 6 percent compared to around 10 percent in 2010. Then why is the nation still in a sour mood? In the words of Steve Liesman, a CNBC Senior Economics Reporter, an NBC/Wall Street Journal poll conducted at the end of September indicates that "Americans' view of President Barack Obama's economic leadership stands at the lowest level of his presidency." While the president's popularity hits rock bottom, Congress' approval rating, less than 10 percent, is at its all-time low. So why are people disenchanted with politicians as well as our system? Perhaps the reason lies in the fact that seven years after the start of the Great Recession, the employment level has barely budged above its level in 2006, as millions of people have become so discouraged that they have simply dropped out of the labor force. Or it may be because median income is down by $5,000, with the rate of poverty the worst in more than 50 years. Meanwhile, federal debt has climbed by over $8 trillion, with the Federal Reserve spending an additional $4 trillion to bail out the financial system.
People wonder why this $12 trillion worth of stimulus has not even restored the status quo. The answer comes from a recent book by Apek Mulay entitled, Mass Capitalism: A Blue Print for Economic Revival. The author is an engineer by profession with a passion for economics, especially macroeconomics. While most experts blame the worst recession since the 1930s on the collapse of the housing market and the resulting banking crisis, Mr. Mulay sees the culprit primarily in the lack of competition among giant firms that dominate numerous industries in the United States. These firms charge high prices, pay low wages, lay off workers at will and engage in large scale outsourcing. As a consequence, their profits keep rising while the middle class suffers through dwindling wages and frequently part-time jobs.
Mr. Mulay then turns his attention to the semi-conductor industry, which is his forte, as he worked as an engineer for several years. This industry has been on the downhill along with many others. It is well known that manufacturing is fast becoming an endangered species in the United States, employing less than 10 percent of the labor force. Semiconductors have been hit especially hard by low-wage competition from China and some other Asian nations. According to Mr. Mulay, this industry can be revived with the help of a new system that may appropriately be called economic democracy, where the majority shares of a company are in the hands of employees themselves. In this system, the workers control the board of directors who in turn appoint key officers in management. Such is the idea behind mass capitalism, the phrase being synonymous with economic democracy. Ownership of shares will make employees give their best to their companies. They will work very hard to bring down the cost of production and thus be able to compete with low-wage foreign firms. This is Mulay's blue print for the revival of not only the semi-conductors, but also all other manufacturing industries in the United States. As a result, employment and real wages will rise in the entire economy, while poverty will slowly vanish.
Mulay is highly critical of the current system which to him only makes the rich richer, while wages stagnate and poverty keeps rising. When employees own the majority of a company's shares, the CEO will be sensitive to the needs of the workers whose wages will rise with their talent and skills. This will bring an end to wage stagnation, and the living standard will start to rise for all.
Mulay offers a fresh approach to America's myriad economic problems. It is a thoughtful departure from the conventional view that blames our travails on reckless banks and their speculation. While the financial system is not without fault, the main problem lies in oligopolies that dominate industry after industry in the United States.
However, Mr. Mulay leaves one question unanswered. Who will bring about the system of mass capitalism? I guess given the vast unpopularity of our political institutions and the resulting economy, the system will evolve itself. That is why mass capitalism appears to be the wave of the future. It is clearly unrealistic now, but if $12 trillion spent by the government and the Federal Reserve are unable to restore the economic conditions that prevailed in 2006, mass capitalism may be the only way to eradicate unemployment and poverty in America.