John McCain said in the last debate, “The whole premise behind Sen. Obama’s plans are class warfare – let’s spread the wealth around.”
Unfortunately not only does he share George Bush’s economic philosophy, he even shares Bush’s tortured syntax. What McCain and the whole right wing leadership refuse to acknowledge are the facts pointed out by Warren Buffett, one of the richest men in the world. “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Democracy is a philosophy of government, one in which the will of the majority is meant to determine policy. By its nature it is meant to serve the common good. Capitalism and socialism are economic systems, neither of which is specified by the constitution. The right has continually tried to equate democracy with capitalism – an assertion both historically and, by definition, inaccurate. Whenever this is pointed out, the right hollers “class war” and “socialism,” categorizing people who suffer from the right’s excesses as malcontents and wild-eyed radicals whose ideas are not worthy of discussion.
The Will of the Few
Beginning with the election of Ronald Reagan we have been in a period in which the goals of those on the right have been unleashed on the rest of us. Did they create a free market? No, they created a market that redistributed wealth to the rich.
This historic battle in politics is about which economic system achieves our common good and protects individual rights. Capitalism is an economic system that benefits those with individual power and influence. The nature of those who succeed in such a system pushes them to seek even more. The result is a neutered government and undue influence of the rich and powerful. The common good has been relegated to the back seat, looking out the window, while the hyper-capitalist globalizers have taken sole control of the wheel.
We can’t come to the end of the Bush administration’s ride soon enough. If we are not to descend into the dark ages their ridiculous supply-side economics, neo-con foreign policy and insane willingness to destroy the planet’s viability in the interest of oil companies must come to an end. The cavalier attitude towards the constitution and its amendments, criminal politicization of regulatory agencies and the justice department, and creation of the biggest internal security department since those of Stalinist Russia and Mao’s China must end. People tend to forget civilization once went backwards for almost 1000 years. It can again.
The full Republican “trickle-down economy” was put into process, and they turned a surplus into a deficit, destroyed the effectiveness of agencies meant to protect citizens, and bled working people and small businesses of capital. They suppressed unions, gave all kinds of government advantages to corporations over locally owned family businesses and, in return, offered them unlimited debt with cheap interest come-ons. At the same time, the administration’s policy of increasing the money supply, along with huge tax breaks to the rich, fueled the massive speculation responsible for this bust.
Not-So-Bright Future
The challenge for the next president will be monumental. He will be faced with getting out of Iraq and somehow returning some stability to the region that we destabilized. There is a war in Afghanistan that no foreign power has ever been able to win, an unstable, nuclear-armed Pakistan and a China that is facing environmental catastrophe and potential instability as a result of the economic crises. China’s stock market has declined 60 percent in value. Much of China’s middle class has bought stock in the soaring market on credit.
The challenges to global climate catastrophe must be faced now. The current world economic model requires an ever-increasing consumerism of an ever-increasing number of people, from ever-decreasing resources. It is an unsustainable model. How unsustainable? At current levels of greenhouse gas emissions alone – theirs is never a discussion of decrease –the planet will be largely uninhabitable by the end of the century. In the interim, that means an increase in the intensity and number of large hurricanes and dramatic shifts in rainfall and other normal weather variances. This, along with higher sea levels, has huge implications for coastal areas. A look up the coast makes that clear.
Global climate change also is expected to expand migration, legal and illegal, around the world. We already see how overpopulation and globalization have created instability on our own southern border. This poverty, along with the war on drugs, has created an unstable government right next door.
Curbing Consumption
Steve Pearlstein writes that economic conditions have halted expanded consumerism for the foreseeable future. He says in an Oct. 15 Washington Post article, “We are at the beginning of a transition period in which our collective spending as a nation will go from roughly 6-7 percent more than what we produce to closer to 2-3 percent less than we produce. We’re going to have to consume less, which means a temporary reduction in our standard of living.”
The economic structure must be corrected to put us on a path of a sustainable, less-consuming economy. The government has committed $2.6 trillion already to stem the blood-letting caused by the masters of the universe, and there are still bubbles left to break. The auto bubble is collapsing. The credit card business will be next. The rest of the dominoes to fall include hedge funds, commercial real estate and, of course, the leveraged-buyout junk bonds. While many believe the Dow will eventually level out at 8000-8200, a figure that is the historic projection of where we should be, it may well reach much lower before coming back to that point. Meanwhile, the great trail of buried debt publicly unwinds savaging investor confidence.
In addition to the millions who already have, millions more will lose their jobs, homes, health insurance and future opportunities for education and economic advancement. While those on the right scream class warfare, socialism and wealth redistribution, they embrace socialism for the richest among us. So that their problems won’t rain down on us, they say. Trickle down has already rained on us at the middle and the bottom of the food chain, and is bound to even more.
The government’s bailout plan does not give us a guaranteed return on our investment. We instead receive warrants, somewhat like stock options, that can be cashed in later. When we bailed out Chrysler, they were able to get a favorable administration to dismiss our warrants on their stock when it recovered, after taxpayers’ help.
In discussing the initial $2.6 trillion bailout plans, Treasury Secretary Henry Paulson, who fought against restrictions on executives of bailed-out companies, said, “Government owning a stake in any private U.S. company is objectionable to most Americans — me included.” Paulson wants you to invest tax money in banks, thrifts and companies, but the government will have no involvement in the decision making of those banks. That will be left to those who got us in this mess to start with. Unlike Roosevelt, who sent federal bank examiners into institutions to determine their true worth and viability, the administration of the bailout will be contracted out. To whom you ask? Again, the same companies that created this mess.
Secretary Paulson, the former Goldman Sachs C.E.O. and one of the leaders in creating this bust, has, instead of bringing direct government intervention to straighten out this mess, made public the debt and privatized government economic policy. This is to avoid socialism? Not one of the barons of capitalism would invest billions in a business and not have a voice in its management.
Politics is All About Where the Money Goes
The real dilemma is not socialism vs. capitalism but the top down neo-liberal capitalist economics of Milton Friedman vs. the bottom up capitalist economics of John Maynard Keynes. The top down or “trickle down” economics of Friedman and other right wing economists theory is that if you give more money to the rich through tax breaks and subsidies while cutting social programs, they will invest it creating jobs and wealth growth.
Keynesian economics says that in downturns you create deficit spending that goes into infrastructure and types of development that puts money into workers pockets who will then spend it boosting economic activity and wealth creation. This was what Franklin Roosevelt did in the New Deal.
While many will say that it was WWII that ended the depression, it was still Keynesian economics as the government gave contracts to produce war materials that directly employed people and funneled money to them to fuel the economic recovery. That philosophy guided public policy up until Ronald Reagan, the greatest period of economic growth in the history of the country.
It boils down to examining history. Twice in recent history we have shifted the playing field to the advantage of the rich and powerful (Friedman style) and the results were the great depression and our current situation. So let’s stop talking about capitalism vs. socialism and talk about the historical results of the implementation of these approaches.
It’s pretty straightforward. We have trillions of dollars of infrastructure, education and other needs. Set government policy that will produce energy efficient and other products we need to sustain our future and put money back in workers pockets where it has been disappearing since the 1970’s.
The Barons of Wall Street have had their chance and it didn’t work any better the second time. It’s time to move back towards the Keynesian economic policies that Barack Obama wants to implement that have been successful in the past and for the Republicans to get off the socialism soap box.
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