Interventions The Salvation Of Capitalism
By Robert S. Becker, Ph.D.
25 September,
2008
Countercurrents.org
This week, as San Francisco's www.beyondchron.com report, Ohio Congresswoman Marcy Kaptur spoke out to denounce the "bailout game." The rules of this game, she said are (1) rush the decision, (2) disarm the public through fear, (3) control the playing field (hide info from the public, hold private hearings, and private teleconferencing calls), (4) divert attention and keep people confused, and (5) goal is to privatize gains and socialize losses.
I don't object to Congresswoman Kaptur's challenge to the Bush "bailout game," just her assumptions and expectations about likely prospects. There will be a credit support bill this week because our Congress is far more capitalistic than progressive. Kaptur demands crisis bailouts be handled well, but when has that ever the case? And when are big interventions timely moments to repair our skewered, inequitable system? Forget reform when the patient is fainting.
She rightly identifies the imperious, top-down, tin-ear attitude towards taxpayers by the Bush Team, but this is par for the course. Corporate capitalism will do whatever it must to preserve its assets and options, but that doesn't mean our doing nothing -- or objecting to White House high-handedness -- won't harm everyone. The problem with "free-market" capitalism is it's never been free, insisting on its own short-term accounting and crisis management while denying the real costs to people, the future, or the environment, of more population, jobs, comfort, wealth, or progress. But let that bide.
Let's remember what this intervention is about and why government's is the last, logical resort: first, there's no limit to the capital available (nor money it can print) and second, government is that special "investor" who writes and executes laws of compensation. No guarantee for every meltdown, but compare this leverage to normal investors when government can be judge and jury and executioner.
Remember,
this bailout is designed to 1) support stocks equities
(vulnerable to massive losses; every time the Dow falls 500, $500
billion evaporates); 2) support underlying paper assets (bonds,
obligations, money markets); 3) addstability of the banking and
insurance systems, the heart of capitalism; 4) unfreeze credit flows,
the blood stream of capitalism; 5) stabilize the bottom (and thus
all) home values (supporting 14 trillion dollars in mortgages against
the higher total of housing assets).
Most home owners understand benefits from No. 1 and No. 5, less so from No. 2, 3 and 4. We all swim in the same sea, and if every family of three puts up $7000 ($700 billion divided by 100 million families of three), everyone gets something, if only halting sliding home values. If you have a $500K mortgage, figure just over 1% as insurance; likewise, without capital and credit flow, home ownership and refinancing are blocked, especially for average FICO scorers.
The truth is, after national defense, government is about defending our economy more or less as it is, not as it should be. Along with decreased regulating, government fuels business, with both direct purchases (defense, military arms, materials) plus extensive research (practical and theoretical) in the billions. This isn't another Iraq, where losses are never regained, but working capital at risk, to be repaid over time.
Assuming Democrats improve the Paulson proposal, what if intervention makes the difference between a moderate recession and a severe depression? It's even likely for a benevolent dictator to maximize taxpayer profits, but let's also remember no small political risk: in three months Sen. Phil Gramm could take over. That nightmare could spook the whole deal! And costs could multiply as there are no guarantees.
And yet interventions are part of capitalism, even if just "to stop the run on the bank." Minimal blue-collar or middle-class support in Congress likely means this administration will again lean on the average many to enhance a very rich few. Further, greater tax burdens worsen whatever is left of our celebrated social and economic mobility.
But bailouts
are never about increasing opportunity but protecting what property
and stock owners have now. As usual, this Congress will protect both
real and "paper" assets and the more you have, the more
you benefit. Capitalism answers to human nature, but that doesn't
make it fair or progressive. That's why we really need a modern New
Deal or the Bush slide into mediocrity gets worse.
