By Clara Mattei
My response:
Social democracy was the cost of abandoning radicalism. The financing of the war saw the rise of the income tax, which allowed for the creation of structural national debt. Debt demanded austerity, while also creating seed capital for the creation of riskier capital assets. Rich people prefer to buy debt securities to paying income tax and fund both sides to do so, but only debt within limits.
The drive for lower tax rates from the mid 1960s to the mid 1980s gave the CEO class an incentive for wage theft that did not occur earlier, when high progressive income taxes took the incentives away from demanding higher incomes through cutting worker wages and benefits.
There is also the racism that demonized users of the welfare state, thus creating a low wage workforce for a lower cost two-tier economy.
For more on the relationship between the national debt and capitalism, see my book Settling (and Squaring) Accounts: Who Really Owns the National Debt? Who Owes It?
I am currently updating it with a new title: The National Debt as Class Warfare. The main points are the same, but numbers have been updated and new analyses added on the shifting of resources from the lower to upper class (the middle class remains the same percentage of Adjusted Gross Income).
Mainstream economics is afflicted with both-siderism, where all taxation is seen as a disincentive for work and investment. Investment has been equated with speculation (it is not - but no one challenges that untruth), while the role in high wage taxes to disincentivize wage theft is ignored.
Problem is, credentialism in think tanks has given a preference to those in the US who had a part in enacting the 1986 tax reform, which gelled Reaganism in place. The tax debate in the US changes the system around the edges, but resists large transformations that would more effectively tax high incomes and transfer wealth to workers.
I talk about this in The Future is Calling: It Wants a Refund https://www.amazon.com/dp/B07QQGDRCP and The Future is Calling: It Wants a Better Job.
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