Go To:
Contact:
Advertisements
Order your 'Vote Out Incumbents' window - bumper sticker.
Just $3 each. Each order helps Vote Out Incumbents Democracy (VOID) raise funds to spread the message around the country.
Polls:
Other Notable Sites
Since the Dow started its downward spiral all economists have focused on how to save our economic system. The same economists that led us into the current quagmire are offering solutions for extricating ourselves from it. More of the same, more of the same. It's time to disregard the old economists and to try to rebuild our capitalism.
Our economists, who keep talking about capitalism, have presided over a system that has seen the destruction of capitalism. Yes, that's what they did. They have allowed some companies to become so huge they are "too big to fail." By allowing them to grow so monstrously big they have enabled these companies to get rid of small companies - the lifeblood of capitalism - all together. These economists have built up a complex credit system that is like hieroglyphics to ordinary entrepreneurs. In a decent capitalistic system small capitalists build things that they sell in a competitive market. In our system we make very few things and spend an inordinate amount of energy playing around with "financial instruments."
First thing our economic leaders do is bail out companies that are "too big to fail." If they are "too big to fail" they are "too big to exist." We should not allow companies to become this big. "Too big" means "too powerful" and "too powerful" means it has too much of an advantage over smaller companies.
One of the ways Secretary of Treasury Paulson came to our rescue is by allowing huge Bank of America to swallow up huge Countrywide to make a super-huge company that is definitely "too big to fail." This is ridiculous. We must make it more difficult to merge, something we used to have anti-trust laws for. We need anti-trust laws again.
Lots of literature has been devoted to the need for credit and how credit makes our economy grow and brings riches to us all. Yet, everybody will admit that the runaway credit market is behind the collapse of the economy. Banks and mortage brokers sold individuals a bill of goods. The banks enabled people to buy homes even though it was obvious they could not afford them.
It appears that the purpose of the $700 bailout congress passed is to ease credit. Why? Would it not make more sense to make credit hard to get so that the bubble may be squeezed out of the system?
Read what Satyajit Das says:
The worldwide economic drama and tumult are not symptoms of the disease but the cure. The "disease" is the excessive debt and leverage in the financial system -- especially in the United States, Britain, Spain and Australia. The "cure" is the reduction of the level of debt -- the great "de-leveraging."The second phase of the cure is the higher cost and lower availability of credit. This forces corporations to sell assets, reduce investment and raise equity -- for example, as General Electric has done. It also forces consumers to cut debt by reducing consumption or selling assets.
The last reason, perhaps the main reason, for the terrible turn of economic events in the U.S. is that we no longer make anything. Financial people play around and who knows what they are doing. Yet financiers manage to make more money than anyone else. To get out of this terrible situation we are in we must switch to making things. Instead of helping the guys on top, why not help those on bottom? Instead of worrrying about credit, why not find work? The fat cats can take care of themselves. We must help those who lose their jobs.
This is the key to the new capitalism. Instead of helping financial institutions so they may offer loans to entrepreneurs, the government should be helping entrepreneurs get started. The things we must do and have not been able to do is build our infrastructure, develop an alternative energy manufacturing system and produce a health system that is the envy of the world. The government can do this and the result will be the growth, but not the stifling gowth, of the associated credit system.
Let's revive our capitalism by producing more small capitalists, emphasizing people instead of credit and by getting back to making things.
Was this article informative?
Categories:
0 TrackBacks
Listed below are links to blogs that reference this entry: Rebuilding Capitalism.
TrackBack URL for this entry: http://poliwatch.org/cgi-bin/mt-tb.cgi/9004
11:17 AM, 10 11 2008 | Permalink
Paul, good article and topic. But, I think we need to go even deeper to get at the root of the problem, namely the relationship between democratic governments and their constituents, and the relationship of both of these to private and public sector enterprise.
There are no pure capitalist governments anymore unless you turn to the illegal drug trade cartels. They are pure capitalism at its worst, driven by one motive alone, profit, and willing to destroy everything, including themselves, to protect that profit opportunity.
There are also no longer any pure socialist governments anymore. Those experiments failed in the context of communism and authoritarian regimes, and were replaced by governments that sanction a mix of capitalist and socialist policy. The only major difference at the economic level between China and the U.S. today, is that mix. China is moving toward more capitalism but with powerful but limited constraints, while the U.S. has been moving more toward capitalism while giving up powerful and limited constraints.
Of course, we are at a turning point in the U.S. as we are now abandoning that Republican folly and moving to reinstate more powerful but limited constraints on the private sector, while in some fundamental ways, also merging the private and public sector in a closer partnership.
Soon, the U.S. will have to overhaul its socialist programs transition them away from the entitlement paradigm toward a more insurance type model (everyone pays in to be insured against poverty, but, no one collects UNLESS they experience non-volitional poverty.)
You are absolutely right about the size of corporations. When there size becomes so large as to pose a threat to the health and welfare of the nation, they must be broken up and downsized, or decentralized. America has got to go on the attack against oligopolies and virtual monopolies, and decouple these entities from the political process, as well. I think we are going to move in that direction if McCain is not elected.
Reply to this comment