Our president-elect Barack Hussein “Barry” Obama has stacked his Economic Recovery Advisory Board: good move. It is headed by an 81 year old economist with a heavyweight reputation: Paul Volcker. He was once the chairman of the Federal Reserve Board. Fine. There are others on the board with sterling reputations in economics and economic theory. Great.
And yet the board is defective in its construction; Barack Obama didn’t select Ralph Nader to a position on the same board: bad move. And before I move forward with this column, let me reiterate: I fancy myself a strong supporter of Barack Obama. However, that doesn’t mean that I am afraid to scrutinize or critique his decisions and actions. Real “change” is bigger than Barack Hussein “Barry” Obama: much bigger. When you read this column you will see what I mean.
Of all the social-sciences I have studied, I find economics the most challenging. After all, we are attempting -as humans- to design a system to deal with the unlimited needs, wants, cravings, desires and such, of near all those alive and a small few of those already dead/lol. And we attempt this with limited resources. It’s no wonder that laissez-faire capitalism has so many core headaches; just as pure socialism. And that’s why over the course of economic history, we have seen many socio-economic experiments; many a mix and match with serfdom, feudalism, the barter system, mercantilism, colonialism, fascism, capitalism, socialism, communism, and others. Designing socio-economic systems that will satisfy the majority in the polity are ongoing challenges. It has been like this since time stood still.
And so, here we are in the midst of another crisis; something that’s not uncommon to history, anthropology, sociology, politics, economics, whathaveyou. This is life people. Crises are normal: so get over this one already; at least in your head. Crises challenge us to do our best. They motivate us to dig deeper into the core of our souls; they push us to seek out higher ground. They are invigorating. They are stimulating.
During the last presidential campaign, the prevailing wisdom was to bailout those who had gotten us into this economic mess; and in this regard, Congress agreed with that very intelligent president: Number 43 (George W. Bush). Now, trillions of dollars later, we still can’t make heads or tails of all this: and we are still in a mess economically.
This economic crisis represents for all of us an opportunity to make adjustments to the ways we have done international (and domestic) economics since the Bretton Woods Conference, held in New Hampshire during the summer of 1944. And given the hope that Obama has peddled, no other human on earth is in a position to influence such a happening. It’s long overdue; and that’s why Ralph Nader can help.
In a column I did a couple months aback, I totally opposed the bailout package that eventually passed Congress. Amongst many reasons, I felt there were no real safeguards to prevent a repeat of the behavior exhibited by the culprits who got us to this place anyway. I felt that they will eventually squander our tax dollars with their extravagant behavior, crass spending, selfish salaries, bonuses, perquisites, wild speculations, and such. I believed that the money could have been better spent on an ambitious national works program hitherto fore unseen in our history. I still feel that way today; even more so, as the bailout heads from billions to trillions. The final price tag on all this won’t be tallied for another couple years at least.
Suddenly, many a super-rich CEO in the USA has become a beggar. Here comes GM, Ford and Chrysler to join the “hat in hand” line trekking to Washington -looking for tax payer money. Funny thing is they travel to Washington to beg for our tax dollars -for bailouts- and don’t have the decency to leave their private jets at the tarmac. How long are we -Sly Stone’s everyday people- going to be insulted and abused by these corporate big shots?
When Congress sent the executives of the Big Three automakers (GM, Chrysler and Ford) back home to the drawing board -after refusing to give them the 25 billion dollars they requested- they came back and demanded 34 billion instead; all I can say is: WTF!
If you add up the total value of the Big Three on the stock market, I don’t think you will get to 34 billion. And their stocks are in a freefall. Their total assets -including inventory- aren’t worth this at present is it; so what’s happening here peeps? Are we being taken for a ride on a gas-guzzling money burner? If we -as taxpayers- buy in to these US auotomakers with billions of our dollars, is it worth it? In recessions some companies go bankrupt don’t they?
Coming back the second time , looking to beg for more money, is the kind of disregard and disrespect that too many big shot white boys have for the rest of us (many whites included here too). This is another example of the ‘sense of entitlement’ that I always try to write about, only to be subjected to perpetual ridicule – from some quarters on these blogs.
Ralph Nader has been the main presidential candidate over the past 20 years, who has consistently talked about corporate abuses. He has preached a gospel on corporate greed, corporate illegalities, corporate extravagances and the like. He has dealt with the environment, consumer protection, energy policy, international relations, domestic issues and near anything else under the sun. He has a track record of accomplishment and he is a deep “thinker”. So if Barack Obama wants to be true to his mantra -that he is willing to appoint to key positions in his administration, people who competed against him for the presidency- then the question becomes: why isn’t Nader on the team? After all, Hillary Clinton, Joe Biden and Bill Richardson all ran against him: and they are all on his “change” team.
As I said in my previous column (“Bailout”), we need to spend our tax dollars in an extravagant “works program”. All over the country there is a need to develop our infrastructure. We need to build houses, roads, rails, bridges, schools, hospitals, community centers, etcetera, etcetera: you name it.
There are at least 600,000 bridges in this country. Official figures suggest that 12% (roughly 72,000) are structurally deficient. The American Society of Engineers says it is more like 160,000 bridges that are structurally defective. Some other supposed experts say the real number is even higher. Before congress keep sinking good money after bad (since earlier bailout packages were somewhat ineffective), they should look at an unprecedented nationwide works program (even bigger than the one President Roosevelt undertook) as the best way to stimulate the economy and achieve economic growth this time around. They could start with schools, rails, roads and bridges, before moving on to other things.
It is wrong to bail out states with corrupt pension systems. It is immoral to reward those who speculated in this last housing bubble with debt forbearance; especially when those who worked hard and walked the straight and narrow, have to keep paying their bills on time. When those who lived frugally, and sacrificed and/or lived within their means (and budgets) have to face the brunt of the hardships from this bad economy; and do as best as they can to hold on to their good-credit status while attempting to take care of their everyday needs. And what about those who don’t own houses? Those who pay rent for their homes. And those who don’t have credit cards? How do you reward others for making bad choices? How do you help (bailout) those who made bad decisions and not reward those who made good decisions? So; since when is making good choices wrong?
The ways Congress has gone about these bailouts have been awful from the get-go. The underlying assumptions have been horrid. This is the time to force States that have been living and spending beyond their means, to take serious stock of themselves; the same for individuals in similar straits. You can’t just bailout Wall Street, Bank Avenue and Corporate America, without fully considering the implications to the long term interests of those living on Main Street America: John Legend’s “Ordinary People”.
In my estimation this recession is worse than anyone believes. And since there is no real definition in economics, that separates “long term recession”, from out and out “depression”, maybe we are about to experience something last seen in 1929, which lasted for close to a decade: they called it the “Great Depression”. Maybe?
Before Congress willingly bails out the entrenched interests of the wealthy and greedy, they need to tackle the disparity in wealth and income that laissez-faire capitalism throws up. I know many refuse to even peek at considering wages, prices and profits controls, but maybe the time has come to readjust our thinking along these lines. They always talk about “free markets” as if markets can’t be manipulated. That’s a crock.
We need to tell Barack Obama that it’s time for creative new ideas in economic philosophy. We need to engage economic thinkers on the left of the political spectrum. We cannot blindly continue to be steered by right wing economics propaganda as if it is gospel. What may have worked as successful economic development models in the twentieth century may need an adjustment in the twenty-first. This is nothing to be afraid of; the only “real” thing in life is “change”.
Why should a Wall Street CEO make over 25 thousand dollars to the every single dollar, that the average worker makes there annually? Why should Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) of the major corporations, voraciously keep raiding the tills of their shareholders with impunity? Why should we bail them out when they get trillions for their personal extravagances? It’s capitalism when they make obscene profits; but socialism -and government intervention- when the losses come? And we fall for this over and over and again. Enough already.
Why should second-rate actors and actresses make millions for just one movie? Why should athletes make millions for just dribbling a basket ball, hitting a baseball or catching a football? Why should those doing research seeking cures for AIDS, cancer and/or other major diseases make only peanuts when compared to those I just sighted? Why are teachers and professors paid so little when compared? It’s time for economics to reflect our values. We can create the economic system we desire; one that is much more equitable and just. Barack Obama could lead the way. It will take a long time but we must start the journey soon; otherwise we will continue to be the mercy of unscrupulous people without consciences and morals.
There used to be a time when the common economic thought suggested that 20% of the families in the USA, owned and/or controlled 80% of the wealth and productivity of the country; then it supposedly went to 15/85 during the Reagan era. Now I am told by some that it is more like 10/90. If these are the facts then we need to take a long look at the way we do economics; it is more than just printing or borrowing money; or floating bonds; or selling off treasured assets, products or services; or selling treasury bills; or coming up with any other creative ways of dealing with M1 (the money supply); on behalf of, or at the behest of corporate elites and interests. It is more than that.
It cannot be simply about mortgaging our grandkids future for our present selfishness and greed. It cannot be simply about printing up new money without accountability (inflation be damned). Recently someone suggested that the government should sell hundred-year bonds to finance this recovery. Wow! And to think that many thought twenty-year bonds were a stretch.
In the international arena, we the citizens of this country need to understand why we are being forced to make an adjustment in our standard of living. We have lived way beyond our means for years. We have annually used up most of the world’s oil and natural gas reserves, even though we only have less than 5% of the world’s population.
When you study economics, the symbol for “savings” is “S”. Savings also accounts for research and development. Why do you think our infrastructure has suffered over the years? It’s because in this country, our savings rate has been negligible for decades now. We have been subsidizing our collective lifestyle with borrowed money; and although some of the borrowed money comes from local sources, most of it comes from foreigners. How long did you think this could have gone on? We will have to make some serious adjustments if we are to maintain our extravagant collective lifestyle.
Please note that over eighty percent of the world’s population has never had a checking or savings account. A similar number has never had indoor plumbing; enough nutritional and/or survivability support (food/clothing/shelter); or a high school education; or proper mental health and/or medical facilities. There are times when too many of us living in the USA, refuse to look at our standard of living in an international context. As bad as things are today, we are still doing well when compared to most.
Barack Obama has an opportunity to look at economics in ways only few presidents have; especially with the mandate he has received; and further with the unprecedented international goodwill he has experienced. He needs to demand from his economic advisors, new and creative ways in their thinking about economics. It is time for a new world order; this time in economics; this time a real one. Too few people -with vested interests way beyond their needs- commandeer the way we do (and think about) economic development. It is time for a revolution in the way we deal with economic development. It’s time to take another look at distribution of wealth and resources -both domestically and internationally. Barack Obama could lead the way. The question is this: has he ever given this much thought. He has never written or spoken about this. It is time he says something along these lines. We shall see.
Stay tuned-in folks.