Setting the Record Straight

October 16, 2008

Good News From the Meltdown-Part II

Chance to Remake America

     The worldwide financial meltdown gives the United States under a new government come January a chance to think outside the box and shake off some of the old thinking that obviously has not worked to the good of the American people. We see three good things emerging from this mess.

     Since the government already is borrowing a bit from socialism, at least partially nationalizing some companies and now has support of both political parties to restoring a regulatory atmosphere, that should help dilute some of what has become an automatic Pavlovian response of seeing those three things as evils.

     There is nothing wrong with socialism, nationalization or regulation if they are used for the common weal. If this meltdown has shown us nothing else, it has demonstrated that unbridled capitalism allows our basic greed to overpower our basic good.

     There are two other bright spots from this collapse:

2. As we also have noted in yet another item on this Web site, the American public from the middle-class on down was aware by the beginning of this past summer that inflation was rising at a time when the nation also was entering a recession.
    The government and Wall Street were saying in unison at the time there was no recession and the rate of inflation was reasonable. But oil prices already had been rising at an alarming rate for months and even the price of food was rising. No other commodities have as much of an impact on those with little or no disposable income as do gas and food.
     Why did the government and Wall Street not see this happening? First, the government has to rely on objective data, not anecdotal indications, to show an economic slide qualifies as a “recession,” which relies on a downturn taking place over several months. Inflation is measures much faster, but it still takes weeks to reach the proper government levels. Meanwhile, as the government studies and Wall Street awaits the word on high, those without disposable income are getting pinched at the pump and checkout aisle while their employer cuts back on health care and pensions, and fewer jobs are listed in the help-wanted ads.
     The government needs to find some non-anecdotal way to capture what is happening at the level of the common weal at the time it is happening, not months later.
     With that trickle-up process, it could take action that would prevent the twin evils of inflation and recession, which become stagflation if they occur together. Currently, the government can only step in to correct the evils after they already have hurt the middle-class and below. That hurt eventually trickles up the line as their reduced buying affects business upon business stacked above them in the economic chain, eventually reaching Wall Street.

3. Even before nations in the EU moved to pour government funds into its businesses and financial institutions, other nations around the world were looking to move their investments from America to Europe as the United States led the world into the crisis.

     When we speak of these national investments, we’re talking about many billions of dollars per country into a smaller economy, a situation likely to make the EU the international financial center as the United States struggles to get back on its feet. Or at least the status of equality with the United States.
     America already had lost its leadership and credibility in terms of international security with the lunatic involvement in Iraq. Losing its leadership as the center of capitalism and eventually democracy would likely become a permanent situation in the lifetime of anyone alive on Earth today.
     What better time to remake the United States into a true democracy, back to a system that works with the interests of the common weal at its core. We have moved away from that over the decades that followed World War II into today’s division between the haves and have-nots that is as wide as what existed between the nobility and the serfs of the old British Empire.
     A new age is dawning in the United States. What are we going to do about it?



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