How U.S. Capitalism might End

by William McGaughey

“Each day’s paper, it seems, brings more tidings of unrestrained selfishness and self-dealing and rafts of powerful people saying it’s good for us to be robbed if only we truly understood the system. The problem is, we’re getting to understand it all too well ... When I see what the top dogs at all too many corporations are now doing that trust (built up by the business community in earlier years) I feel queasy. Outrageous - yes, obscene - pay. Greedy backdating of stock options, which in my opinion is straight-up theft. Managers buying assets from their trustors, the stockholders, at pennies on the dollar, then forestalling competing bids with lockups and insane breakup fees. These misdeeds and many, many more are hammer blows at the granite foundation of trust we built in the 1940s and ‘50s. How long democratic capitalism can survive these blows before it gives in and gives birth to revolution or to an out-and-out aristocracy, I am not sure. Empires came and go. Economic systems come and go. There is no heavenly guarantee that capitalism will last forever as we know it.”

Ben Stein, “The Hard Rain that’s Falling on Capitalism”, New York Times, January 29, 2007. Ben Stein, a humorist and cable-television personality, is son of the Chairman of the President’s Council of Economic Advisors in the Nixon administration.

“In 2005 the US had a current account deficit in excess of $800 billion. That means Americans consumed $800 billion more goods and services than they produced. A significant percentage of this figure is offshore production by US companies for American markets. The US current account deficit as a percent of Gross Domestic Product is unprecedented ... The US pays its current account deficit by giving up ownership of its existing assets or wealth. Foreigners don't simply hold the $800 billion in cash. They use it to acquire US equities, real estate, bonds, and entire companies ... The federal budget is also in the red to the tune of about $400 billion .. . American consumers are heavily indebted. The growth of consumer debt is what has been fueling the economy. Social Security and Medicare are in financial trouble, as are many company pension plans ...

“The average Chinese wage is $0.57 per hour, a mere 3% of the average US manufacturing worker's wage. With first world technology, capital, and business know how crowding into China, virtually free Chinese labor is as productive as US labor. This should make it obvious to anyone who claims to be an economist that offshore production of goods and services is an example of capital seeking absolute advantage in lowest factor cost, not a case of free trade based on comparative advantage. American economists have failed their country as badly as have the Republican and Democratic parties. The sad fact is that there is no leader in sight capable of reversing the rapid decline of the United States of America."

(Note: When the U.S. trade deficit rose another 6.5% in 2006 to reach its fifth straight annual record, the Bush administration dismissed this as a product of U.S. economic growth while Democratic leaders blamed it on unfair currency practices by the Chinese and Japanese governments.)

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration and was once Associate Editor of the Wall Street Journal editorial page.

“In this country, there are millions of people facing the psychological and social pressures of downward mobility. In the months ahead, the members of the formerly middle class will suffer career reversals...

They will suffer lifestyle reversals.... Suddenly, the door to the land of the upscale will slam shut for millions of Americans.

The members of the formerly middle class will suffer housing reversals. ... Suddenly, the home of one's own is gone, and it's back to the apartment complex.

Finally, they will suffer a drop in social capital. In this recession ... the last ones to join the middle class will be the first ones out.

And it won't only be material deprivations that bites. It will be the loss of a social identity, the loss of social networks, the loss of the little status symbols that suggest an elevated place in the social order.

These reversals are bound to produce alienation and a political response. If you want to know where the next big social movements will come from, I'd say the formerly middle class.”

David Brooks, New York Times columnist, “The Formerly Middle Class”, November 18, 2008

The above quotations from persons with impeccable conservative credentials and connections to the business community of previous years ought to be a warning that U.S. capitalism is in trouble. The political and business system which Americans believe to be superior to any other in the world could undergo profound change and even cease to exist.

Bush, Cheney, and Rumsfeld

Capitalism can only be destroyed from inside, by the capitalists themselves and by their political supporters. To a certain extent, this would be the result of a natural process in history by which human institutions over time inevitably decay and are replaced by something else. But we see visible signs of decay today in the final two years of the presidential administration of George W. Bush.

Mr. Bush, who has an MBA in business from Harvard, first went into the oil business and lost lots of money. He then became part owner and front man for the Texas Rangers, a professional baseball team. His main task was a political one: to convince the Texas legislature to build a new stadium for the team. After that job was successfully completed, Bush sold his interest in the team for a huge profit. His increased wealth came on the backs of taxpayers in Texas who financed the stadium and made the team which would use it much more valuable.

Dick Cheney, Bush’s Vice President, was Chief Executive Officer of the Halliburton Corporation prior to joining the administration. When the United States invaded Iraq and its infrastructure was destroyed, Halliburton received sole-source contracts to perform various services for the U.S. military and to help rebuild Iraq’s infrastructure. Revenue from Iraq’s oil production would finance part of this, and the U.S. taxpayer the rest. And so, the idea was that contractors working for Mr. Cheney’s former business would be earning large sums of money, and the company itself would earn large profits, while the Army Reserve and National Guard soldiers were forced to serve in dangerous combat positions at low rates of pay. In effect, it was slave labor. Officially “volunteers”, these nonprofessional soldiers were given mandatory tours of duty in Iraq, extended again and again, while their families at home were financially hard pressed.

Donald Rumsfeld, secretary of defense in the Bush administration, is a career politician who later became chief executive officer at G.D. Searle & Co., a pharmaceutical company later sold to Monsanto, by doing what Wall Street likes best. He increased the firm’s profitability by laying off employees. The remaining employees would be forced to work harder and smarter, it was supposed. Carrying that philosophy into his job at the Defense Department, Mr. Rumsfeld believed that the war in Iraq could be won with far fewer troops than what conventional wisdom would suggest. We would use our superior technology, combined with “shock and awe” tactics, to achieve a military advantage and then be greeted as liberators. Rumsfeld’s own superior insights and decisive leadership, honed through his business experience, would bring a glorious victory.

The Rumsfeld approach did bring Iraq’s quick conquest, however the lack of sufficient military manpower failed to keep the peace. In the absence of enough troops to police the conquered nation, Iraqi society became plagued by looting, shootings, mine explosions, and sectarian violence, if not civil war. Secretary Rumsfeld’s egotistical, arrogant insistence of conquering and holding Iraq on the cheap (in terms of human casualties) was a direct cause of this catastrophe. But in the end it wound up costing the nation and the world much more than was initially expected. Rumsfeld looked more like Robert McNamara, another business genius who fumbled in his management of the Vietnam war, than someone who would be attractive to historians.

So we see, in all three cases, that capitalism was combined with government power to maximize profits and perpetuate power. None of these men became rich by competing successfully in a free-market economy. George W. Bush used his father’s reputation and connections (and that Harvard MBA) to gain executive positions with the Texas oil company and professional baseball team. Cheney and Rumsfeld became chief executive officers of large corporations on the strength of their political credentials - former members of Congress, cabinet officers, and presidential chiefs of staff. In their business capacity, they then used government to build taxpayer-financed stadiums or provide lucrative contracts in the absence of competitive bidding.

Thus the nation’s top three political leaders themselves exemplify capitalism in its decadent phase. Their activities represent the squandering or appropriating of wealth accumulated by others to achieve personal gain. As managerial leaders, they betray the trust of many. Their policies put private interests ahead of the general interest of the organizations which they have been entrusted to lead. This is, at best, soft-core corruption. Such activities characterize societies or enterprises in decline.

Financial Irresponsibility of this Government and Signs of Institutional Decay

The Bush administration inherited a budget surplus and created budget deficits of unprecedented size in the ensuing years. While it is true that a recession and the terrorist attacks of September 11, 2001, contributed to the deficits, President Bush himself failed to exercise leadership in this area. He failed to veto a single spending bill even while the Republican Congress indulged itself in pork-barrel legislation. Much additional money thrown at homeland security was wastefully spent. A new prescription-drug benefit was created under Social Security which was neither affordable nor needed. Widely regarded as a giveaway to the pharmaceutical industry, the signed legislation would not allow the federal government to negotiate with drug companies for lower prices. Finally, the U.S. Government invaded Iraq and assumed responsibility for rebuilding the country after it was destroyed. This misadventure could add trillions of dollars to the national debt.

Meanwhile, the U.S. trade deficit soared to record levels. Part of this deficit was due to oil imports, reflecting the federal government’s chronic failure to control gas-guzzling cars, trucks, and SUVs. A larger part reflects the escape of manufacturing to low-wage countries such as China. Administration spokesmen have suggested that this is actually a healthy adjustment in the world economy, allowing us to specialize in high-end productive functions handled by our more educated and intelligent work force. It is foolish, however, to suppose that China does not also have an educated and work force or will respect our intellectual-property rights any more than Americans respected such rights of Europeans in the 19th century. Yet, in the face of mounting trade deficits, President Bush proposes even more free-trade agreements. It is a head-in-the-sand posture characteristic of declining national power.

If capitalism is to continue on a growth track, it needs to find new products and industries that will contribute to human comfort and well-being. To put more drug addicts into expensive prisons or build new gambling casinos does not fit that description. The fast-growing medical industry seems more committed to medicating patients and earning big profits than promoting health. Touting an “ownership society”, President Bush encouraged more people to buy their own homes instead of renting. Unless these new home buyers had incomes to support the mortgage payments, his rhetoric merely encouraged bankers and mortgage brokers to push houses at inflated prices on unqualified buyers who would soon be in default. Low-interest rates and inflated housing prices provided the means of financing consumer purchases; they got money from home-equity loans rather than current income. Meanwhile the cost of higher education was going through the roof even as young people eagerly purchased this service out of fear than they would otherwise be unemployable in the increasingly competitive global economy.

None of these "growth" industries contribute to personal well-being. Those which do - agriculture, manufacturing, etc. - are in a chronic state of decline. Yet, apologists for capitalism argue that Americans are becoming more prosperous; and, even if we aren’t, we are still better off than people in other parts of the world. The socialist alternative is discredited. Human thought and practice has yet failed to come up with a better economic or political system, they say.

While this argument may be partly true, it fails to recognize that the trends are unfavorable. It fails to recognize the lesson of history that powerful institutions seldom, if ever, remain for long at the peak of their power; they always enter into a period of decline. And they decline more often because of problems in their internal structure than through external threats. Less than two decades after communism was overthrown in eastern Europe, the capitalist system is itself at risk. No, history did not end. The Hegelian pendulum swung back to another position.

The Violation of Free Markets

Capitalism’s problems begin with the fact that the free market is imperiled. A free market requires choices freely made by the buyers and sellers of products, each seeking their own advantage. It requires adequate access to information about products, adequate financing, and relative freedom from government interference in the decisionmaking process.

Instead of this, we have in the medical field - the fastest-growing economic sector - state medical boards which decide who can and cannot practice medicine. In effect, government decides, in the name of ensuring high quality, that medical doctors must be licensed. It allows the medical industry itself to decide what qualifications are required for licensure. (Milton Friedman once compared this with government’s deciding that consumers can buy only Cadillacs and not the less expensive Chevrolets.)

A second departure from the free market is that typically the seller of the product - the medical doctor - decides whether or not the buyer will buy it and in what quantity.

Finally, we have a third party - the insurance company - paying most medical bills. The seller (who prescribed the product) has a direct incentive to inflate the price and the buyer (who is considered unqualified to make medical decisions) does not care about costs since someone else pays. Also, I might add that the decisionmaking process is contaminated by the drug companies’ high-pressure sales tactics, both with respect to lobying doctors and to exposing consumers to heavy television advertising.

Many professions have state boards that restrict entrance to the field in the name of ensuring high-quality service. In the medical field, where decisions can be a matter of life and death, this procedure seems justified. But would it be so bad if unqualified hair dressers were allowed to practice? If the customer received poor service, she could simply go to another hair dresser the next time. Isn’t that how the free market is supposed to work?

The beneficiary is the educational establishment. To pass licensing tests, or even sit for them, one needs to have completed a certain number of courses from an accredited educational institution. One needs a degree from an accredited college, or from high school, to be allowed to apply for the jobs that offer adequate pay and benefits and reasonable job security. One can have a degree in Russian history and be employed in banking - it does not matter. A degree is presumed to be necessary to fill certain jobs successfully.

Of course, this system is based on a fictitious understanding, fostered by self-interested educators and incumbent jobholders with degrees. In fact, human intelligence can meet the requirements of almost any job without formal training or with training targeted to the functions actually performed. The rest of our increasingly expensive and prolonged educational system constitute interference in the free market. This system illogically restricts the supply of individuals applying for jobs, which has the effect of increasing the price of labor.

In the global market, our political and business leaders insist that the high-priced American workers compete directly against workers in less developed nations who earn a fraction of their wage. Our government has agreed that it will not use tariffs to buffer the price competition. Some working people, it is said, will benefit from the restructuring of industry while others - the uneducated and unskilled - will lose their jobs. They need to go back to school. Sound familiar?

The real advantage, though, is that the top managers of manufacturing firms can quickly boost company earnings, stock prices, and their own income by outsourcing production to low-wage countries and continuing to sell in the high-wage U.S. economy. This is the so-called "Wal-mart model" of business. And since these businesses that are large contributors to political candidates and hire armies of lobbyists, government policy caters to their wants and needs. And, of course, economics professors at our prestigious universities are unanimous in extolling the virtues of free trade.

Another departure from the free market has to do with the fact that modern business is conducted in an environment of advertising and mass merchandising rather than in a “market place” where buyers and sellers can exhibit and inspect merchandise and haggle freely. The retailers and sellers of goods, who set prices by policy, are responsive only to large-scale buying decisions. The information which buyers have about commercial products comes more often from newspaper and television advertisements than from actual inspection of products. It is mainly the heavily advertised and promoted products that achieve high sales volume. Only those goods that are carried by the large retailing firms will be available on the market for customers who habitually shop in such places.

At a local level, large businesses can negotiate tax concessions from local governments when deciding where to locate their facilities. Small businesses not only have to pay the full freight but increasingly are at the mercy of a political class and a ("progressive") political culture that suspects such business managers of gouging their customers or permitting criminal activity in their facilities. Onerous regulations imposed on small businesses, combined with hostile political rhetoric, create a kind of modern-day pogrom directed against businesses that are lower in the food chain.

Large businesses, on the other hand, can hire the public-relations specialists and lobbyists to deal with political problems. They can make campaign contributions to the candidates. The unrepresented taxpayer, especially the payer of property taxes, is often asked to foot the bill for deals made between government officials and large business interests.

In capitalism’s decadent phase, we see government intruding in business operations and helping a few while heaping the cost on the general taxpayers. We see more “corporate welfare”, or public subsidies to business enterprises which can afford to pay their own way but care not tot do so. Generally speaking, we see demanding political constituencies clamoring to get their hands on someone else’s property.

Recently we have seen how politically well-connected business interests took over functions of government as private contractors and were paid handsomely for their service. Employees of private contractors have outnumbered U.S. military personnel in Iraq. Those of private security firms under contract to the federal government outnumbered CIA employees. In 2006, private contractors received 70% of the $60 billion which the U.S. government spent on foreign and domestic intelligence.

This looting of the public treasury takes place under the guise of privatization and the myth that private enterprise operates more efficiently than government. Really, governmental services are a guaranteed market for the contractor services assuming that corrupt government officials can deliver the contract. Thus the new breed of manager in capitalism’s decadent phase is one with political connections - a Dick Cheney, for instance. Politics, not the free market, determines who succeeds in this business environment. But the free market remains a useful myth.

The track record in recent years calls in question whether U.S. politicians are capable of being honest and fair. It calls into question whether U.S. journalists are capable of fair and honest reporting of political and business events. In such an environment, long-standing and self-interested stereotypes become a substitute for truth.

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In the last several months of 2008, U.S. capitalism has entered a crisis stage. With a sagging housing market, Treasury Secretary Henry Paulson came to Congress with urgent pleas to pass a bill to bail out financial institutions that had purchased mortgages on foreclosed properties and other "toxic" investments which, he said, were preventing banks from making loans to credit-worthy customers. He needed $700 billion immediately for the government to buy some of those bad investments and free up the credit market. Adding another $150 billion for its own projects, the U.S. Congress passed the legislation.

Then it appeared that, despite restrictions on bonuses to top-level executives, some of the bailout money provided by taxpayers was going to bonuses for other management employees. The banks were not extending credit freely to customers but were hoarding the cash and, in some cases, were using the cash to buy other banks. The bailout plan was not working. At this point, having discretion to spend hundreds of billions of dollars as he saw fit, Secretary Paulson announced that he would not buy the "toxic assets" after all but would give the money directly to certain banks.

Meanwhile, with their customers facing a credit squeeze, the Big Three automobile manufacturers were experiencing a loss of sales and were running out of money. Their top executives came to Washington to seek cash to continue operations. Congress rebuffed their request, demanding that the companies come up with a plan to show that the cash infusion would work. It was willing to risk that the entire industry would fail or, at least, restructure itself through bankruptcy. Concessions from current and retired auto workers would be required.

The American public could only watch this spectacle with amazement. Here was Henry Paulson, former CEO of Goldman Sachs, being given a huge pot of money that, in turn, would be given to troubled Wall Street firms. Some firms - AIG, Citigroup, Freddy Mac and Fannie Mae - would be helped while others - Lehmann Brothers, Wachovia - would be denied assistance. It seemed that Paulson was helping his former colleagues more than the others.

The Bush administration, which had deceived the American people with respect to the Iraq war, was now fleecing them at the end of its term. Money from the public treasury was going to cover the losses incurred by private financial institutions. And the Democratic Congress, which had given Bush approval to invade Iraq, was now acquiescing in the Wall Street bailout. No wonder - the same members of Congress were on the receiving end of campaign contributions from Wall Street interests.

This series of events could not help but corrode public confidence in the U.S. government and in the capitalist system. Such capitalism means that when risks have a positive outcome, the risk takers reward themselves with high salaries and bonuses and lucrative stock options. But when the risks fail, the taxpayer is asked to cover losses. "Heads I win, tails you lose" is the guiding principle.

And so, in the decadent phase of capitalism, there is much talk of the need for government to leave the private sector alone when times are good, but the reality of asking for subsidies and bailouts when times are bad. The name of the game is to take over the government and then appropriate its resources for private gain. Dick Cheney and Halliburton, Henry Paulson and Goldman Sachs - both thrust their hands boldly into the public purse. And that's why capitalism in its latest phase has been discredited. We have our Rasputins to inspire revolutionary sentiment.

Capitalism in a more Creative Period

Let us compare what is happening today with events in an earlier time when the U.S. economy was in its building phase. For much of our early history, American manufacturing was protected by the tariff system devised by Alexander Hamilton. We had the advantage of immense lands, taken from the Indians, which provided cheap timber, cattle, and wheat. We had abundant supplies of various minerals and, of course, clean water. We had small governments and low levels of taxation and regulation. Government subsidies helped to build roads, canals, railroads, and other infrastructure needed for transportation and the creation of large markets.

In this environment, ambitious individuals could invent new products or start businesses and sometimes become rich. There were no educational requirements standing in their way, fewer lawyers wanting to sue, or expensive medical obligations attached to their enterprise. While factory workers were paid low wages and worked long hours in sometimes dangerous conditions, eventually labor unions were formed to further their interests.

One of my favorite examples of enterprise dating to this earlier time would be the establishment and growth of the U.S. automobile industry. The story is focused especially upon Henry Ford. This was a relatively uneducated man who, growing up on a Michigan farm, had a certain mechanical knack. He was employed as an engineer in Edison’s electric-power company who spent much of his spare time tinkering with automobiles. After building his own car and gaining areputation from auto racing, Ford found financial backers for his product. The Ford Motor Company was established. Then Ford and his associates applied their mechanical ingenuity to developing mass-production techniques that would lower the cost of the product. It could be sold more cheaply and at a higher volume of sales. The consumer had a high-quality, low-cost automobile and Henry Ford became fabulously rich.

This is only part of the story. Besides building automobiles, Henry Ford had a vision of how to sell them. He realized that his potential customers needed to have enough money to buy the product and enough free time to be able to use the product to full advantage . In 1914, Ford unilaterally gave his production workers a huge increase in their hourly wage - to $5 a day - while restricting work time to eight hours a day. In 1926, during the changeover to the Model A, Henry Ford announced that Ford employees would no longer work six days a week, but only five. He introduced on his own initiative the five-day, forty-hour workweek, not for humanitarian reasons, he said, but because modern business needed to do that to remain profitable. (See interview with Henry Ford: "The Five-Day Week in the Ford plants.")

Henry Ford owned and managed the business where these decisions were put into effect. Controversial even in their own day, they could not have been introduced by a manager who answered to an independent board of directors or to outside stockholders. However, Ford’s two initiatives - higher wages and shorter working hours - did become prevalent in U.S. industry thanks to certain enlightened businessmen and competitive pressures but especially to labor-union agitation.

But then the Great Depression came. The labor unions, favoring wage increases for their members, lost interest in their traditional goal of reducing work time. Inspired by Lord Keynes, the federal government turned to financial techniques to regulate the economy. Hired managers became more focused on short-term profits. They wanted more compensation for themselves in the uncertain period of time when they might expect to be at the helm of the business. Wall Street made increasing demands on business managers, and government also loomed in the background. Instead of heeding Henry Ford’s advice that “the person who makes the bulk of goods is the (same) person who consumes them”, today’s business leaders, to boost profits, arrange for the producers to be in one country and the consumers in another. This is a formula for economic self-destruction.

Admittedly, one sees sparks of the creative business spirit in the computer, telecommunication, and consumer-electronics industries. A CEO such as Steve Jobs would compare favorably with industrialists of the earlier period. That is because the focus in such industries remains on how the product might affect the lives of consumers. There are trade shows where people become excited about new gadgets. There is a lively competition among competing brands. Prices are falling and quality improves. Capitalism flourishes in such an environment. Creative enterprise is required when a business enters uncharted territory.

What is missing, however, is a vision, comparable to Henry Ford’s, of how people can afford consumer (or other economic) products and have opportunities to use them more plentifully. If labor unions are no longer agitating for working people in general, then someone else - the government, perhaps - must do it. Socialism has a horrible reputation due to the brutality and excesses of Stalinist rule in the Soviet Union. Such situations have set such a bad example that no reasonable person would want to have this kind of government.

It could be argued, however, that socialism did not fail because it presented an inferior vision of a “better society” in its terms, but because its program was carried out by means of a totalitarian government. The national government owned and managed the businesses; it did not merely regulate them. There was an unchallengeable concentration of power which became intolerable in the hands of someone like Joseph Stalin. Lord Action’s saying about power corrupting and absolute power corrupting absolutely came home to roost in Stalin’s socialist (or communist) regime.

What’s Next for our Society?

Whenever government and business power are tightly combined, corruption can take place. That is the case in U.S. society today. Instead of having government crush business and assume its ownership, we have business interests infiltrating and subverting government. We have overt plundering of public resources by private parties. It is true that we Americans have Constitutional protections that the Soviet citizens did not have, but those traditions are being eroded. What we need to do is to separate the major institutions of power - government, business, religion, education, the media - and encourage each to achieve a certain independence from the others.

More likely, there will be an economic and political collapse. The chronic borrowing by government, businesses, and consumers, along with our trade deficit, will create heavier and heavier obligations. Meanwhilethe jobs to support this financial burden will be lost. A generation of college graduates, told that education was the ticket to a better life, will be increasingly disappointed. In such circumstances, constructive change might take place. As the level of personal discomfort increases and people become disillusioned with their leaders, political change might take place; and then economic change will follow.

There may not be a “revolution”, in the classical sense, or, as Ben Stein speculated, an “out-and-out aristocracy”. The lesson of history is that in times of stress and corruption people’s attention shifts to other concerns. The old abusive institutions remain but tend to wither away as fewer people take an interest in what they are doing.

That’s what happened after the two world wars. In World War I, the Europeans monarchies and colonial powers wasted the blood of their people on the battlefield. Angry ideologies developed and produced another war. But then what happened? The world’s people forgot about wars and ideologies and instead immersed themselves in popular entertainment. After Hitler, Stalin, and the Kaiser fell, Mickey Mouse remained standing.

The same thing happened after the Thirty Years’ War. This war of unprecedented devastation and severity, waged between Protestants and Catholics, had the effect of alienating Europeans from organized religion and their unproductive theologies. European intellectuals instead became interested in exploring nature. Natural science increasingly attracted people’s attention. In a similar way, the Crusades had the effect of discrediting the Papacy and instead promoting business organization, banking, trade, art, and ultimately the Renaissance. This pattern repeats itself time and time again.

Now we have the" war on terror", the Iraq war, a possible war with Iran, nuclear proliferation, and assorted horrors associated with the Bush administration. Either the Israelis and Palestinians will reach an accommodation with each other or they will not. Maybe Iraq will fracture into several nations; or maybe not. Maybe the jihadists will continue blowing up people. Maybe the U.S. will attack someone else in the name of bringing them freedom. Who knows? It’s a continuing horror story that most Americans wish to escape.

Somehow or another, these problems need to be resolved. Someone will do it but not necessarily we. A general sense of disgust has set in. Once Bush is gone, the rhetoric will subside. Hopefully, Barack Obama and his team of public servants can find a way to repair the damage. If we are lucky, history will move in another direction.

An Economic Vision

There remains the question of how Americans will cope with the heavy burden of debt left by this and preceding administrations? What will Americans do for a living now that the nation’s manufacturing base has shrunk? Currency inflation remains a possible solution for the debt. It would represent a departure from earlier traditions; but these are uncharted times. It does seem that economic globalization is an irreversible trend. The best response would be to develop a corresponding political globalization, able to rein in and regulate the essentially amoral multinational corporations.

All nations are threatened by unemployment, scarce resources, and environmental waste. National governments need to cooperate to address their common problems. They need the United Nations to be a coordinating body. Governments can use taxation as a tool to encourage or discourage certain practices. Tariffs are a form of taxation. Instead of agreeing not to use them, governments should have and use tariffs to regulate international business. Tariffs targeted to the individual business rather than to classes of commodities or to nations of origin would give the international political community a means of ensuring that trade brings improved wages and hours and better working conditions with minimal damage to the environment.

A possible response to chronic unemployment is general shortening of work time. If work time is reduced in all countries, this change can be accomplished without harming any nation competitively. The appropriate level of work hours depends on a nation's level of industrial development. Industrially more advanced nations can afford shorter hours than others. The important thing is that the trend of hours be downward so long as unemployment and underemployment remain. National governments, being sovereign, can choose not to reduce their level of work hours; but, if they do not, other nations should be permitted to put tariffs on their exported products that would impose an offsetting cost.

Yes, to a degree this represents a globally planned economy. It would not be socialism, however, because business and government remain separate power centers. However, if the U.S. economy collapses, one would assume that long-standing pejorative labels of this kind might not have the same impact. People would be demanding plausible solutions to their very real problems. Government would be asked to be a watchdog to guard people’s interests.

If capitalism as we know it comes to an end, this need not mean the end of free enterprise. Free markets will continue to have a cherished place in society. Privately owned businesses will continue to operate. I daresay that the small business owners would be better off than before as leftist malcontents find new opportunities and public attitudes change. For one of the best kept secrets is that big business, with the help of its political friends, and the non-profits and foundations, works actively to cut off small business at the knees. That is what needs to change.

Instead, capitalist society may wither away as people lose interest in its program. Social advancement may take place by means other than achieving financial success. Tomorrow’s young people may realize that the personal commitment demanded for educational and career success amounts to accepting slavery. This is a kind of gilded slavery in which the "successful" one is not free. Such a bargain may no longer be seen as enviable or “cool” but merely stupid. Why waste the better part of one’s life as a smiling slave? A community based too much on individual social-climbing cannot stand. We must tell the beaters of those hyper-competitive drums to be still.

Humanity will forever wrestle with the problem of scarce resources and how they are distributed in society. With more personal free time, however, other concerns can come to the fore. People have issues related to their personal identity. They are naturally curious about certain things in the world. Some would want to put their attention on family life; others, on developing artistry or skill in a particular area. The economic obligation can be a kind of tax paid to society, which is real but not all-consuming. We can respect persons who assume that burden well.

All those recent innovations in consumer electronics, telecommunications, and computer communication make it possible to acquire colorful images and pleasing sounds, and to travel the world, at minimal cost. Even the poorest person can have a rich life. It will be possible to integrate society as never before culturally and socially. People will naturally gravitate into this happier life given an opportunity.

Let’s make the world safe for the next generation of Americans. Let's protect them from the ambitious politicians and greedy business leaders who would deny them a chance to fulfill themselves on their own terms.

Approaching Disaster

 

“The Americans want so much to be the winners. This winner’s complex is the main reason why everything in the world is so confused.”

- Former Soviet Union leader, Mikhail Gorbachev, July 27, 2007, saying that the fall of the Soviet Union had ushered in an era of U.S. imperialism.

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