The Raging 2020s | Alec J. Ross

Summary of: The Raging 2020s: The Fight Between Countries, Companies, and People for a New Social Contract
By: Alec J. Ross

Introduction

Dive into ‘The Raging 2020s’ by Alec J. Ross and explore the fragile state of social contracts in today’s world, woven with challenges of inequality, exploitative corporations, and governments struggling to adapt to rapid technological advancements. This book elucidates the importance of maintaining a harmonious balance between governments, businesses, and individuals in order to secure a prosperous society. Journey through the fundamental problems faced by modern societies, and learn the significance of transitioning from shareholder capitalism to a more inclusive stakeholder capitalism, where everyone benefits.

The Power of Social Contracts

Social contracts are the glue that holds societies together. They determine the rights and duties of citizens, governments, and corporations. However, social contracts are always being tested and renegotiated as societies evolve. The United States and other developed nations find themselves in a new Engels’ Pause, characterized by government deregulation and increasing inequality. The social contract needs to be mended to achieve equilibrium and enable individual and societal growth.

Insulin Prices and the Flawed System

In the early 1920s, scientists discovered insulin, a life-saving drug, for $3, and it was considered inappropriate to patent medical innovations. Today, the insulin market is controlled by three companies that prioritize profit over anything else, causing insulin prices to be sky-high. Milton Friedman, an economist from the mid-twentieth-century, advanced a theory known as shareholder capitalism, where a company’s sole responsibility is to maximize profit for its shareholders. This approach has been disastrous, as seen with insulin prices. The alternative is stakeholder capitalism, which prioritizes anyone with a stake in the company’s success. One good example of a company practicing stakeholder capitalism is Patagonia, a privately-owned company that considers the environment a major stakeholder in its business. Companies need to be held accountable to stakeholders to have values beyond just making profits.

Hurricane Maria and the Decline of Governments

In 2017, Hurricane Maria devastated Puerto Rico and demonstrated the inadequate response of the US government in coordinating and distributing resources. This is due to the decline in government’s power and the growth of shareholder capitalism where companies possess more power than nations. While markets are effective, they cannot solve problems where there is no profit. Public access to services such as healthcare and transportation can only be ensured by the government. Corporate lobbying poses a significant threat to the government’s strength. Candidates become beholden to their donors, leading the government to prioritize business interests over the public. It is crucial to address corporate lobbying to help the government regain its power.

The Power of Unions

In 1936, the GM strike in Flint, Michigan demonstrated the strength of unions in negotiating for worker benefits. In their golden age, unions played a crucial role in shaping American history through securing important benefits like higher wages, insurance, leave, and pensions. However, union membership has declined sharply, leading to a race to the bottom as unions become more focused on maintaining the status quo rather than fighting for workers’ demands. The Nordic countries provide a great model for organizing labor, where workers gain benefits across the board through union federations, business associations, and local unions negotiating with specific companies. The key takeaway is that employees need to have a greater say in the workplace and developing new ways to organize labor is essential for everyone to thrive.

Tax Avoidance Schemes

Multinational corporations engage in highly complex tax avoidance schemes that enable them to pay much less in taxes than they should. This is done through maneuvers like transfer pricing and profit-shifting to tax havens. For instance, Google used the Double Irish with a Dutch Sandwich scheme to shift most of its global earnings to Bermuda, where the corporate tax rate is 0%. This cost the European tax authorities an estimated $3.7 billion in 2016 alone. Such tax avoidance schemes deny the government crucial revenue that could fund social safety nets and other benefits.

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