One Utah

Its not enough to just re-take Congress and the Executive and put professionals back in charge of our federal agencies. This time (unlike the Clinton era) we must take back the country by dismantling the lie called Supply-Side Economics, also known as “trickle down.”

I can only imagine the term Rove would have come up with to satisfy the simple-minded, sound bite-fed American populous like “the free money train”, or “healthy wallets”.

But in the end, “trickle down” wound up trickling into CEO pay packages until all that was left was a dribble of spittle that paid for higher gates around larger homes built by immigrant labor at $5/hour.

Jerome a Paris is a real and rare economist who has been so consistently right over the past several years, we should pay close attention. In this recent post, he helps us dismantle the GIANT Reagan-Thatcher-free market-supply side LIE.

The core of the Reagan-Thatcher revolution is that greed (especially that of financiers capturing future cash flows of the real world for their personal, immediate profit) spontaneously improves the common good (because it generates apparent GDP out of thin air, and that GDP could be shared) and that all regulations and taxes that limit it should be dismantled.

Well, we’re about to see the price of that grand collective delusion. But we should not mistake our target. Bankers and financiers should be made to pay for their follies but that is only a small part of it. The big thing is to blame it on the failed, and utterly dangerous, ideology of the efficient-markets/society-doesn’t-exist/government-is-the-problem crowd.

Otherwise it will start again - and not only that, but their proposed remedy WILL be lower wages, fewer worker rights, lower taxes and the other usual “reforms.”

As I argued in yesterday’s diary, the fact that a bubble is now publicly acknowledged ensures that there will be a major economic correction, irrespective of whether there is a full financial meltdown or not. There will be pain. There will be calls for bailouts. There will be further pressure on the lower and middle classes to bear the brunt of the price. Unless we have a coherent alternative economic discourse on the crisis - that of strict regulation of the financial world (real regulation, not the busybody but pretend kind like we have right now), financiers and their paymasters, the wealthy, will continue to capture wealth, even as the pie shrinks.

This is what needs to be blamed, again:

* the ideology of greed (this is the core of the conservative talking point: the idea that being selfish is somehow good for others as it creates more wealth, and thus that unregulated markets are good for society);
* the idea that only financial valuations give worth to anything (again, the cult of the dollar, and the underlying notion that trying to get rich is a good thing for society);
* the notion that wage inflation is bad but not asset price inflation (money going to the poor is bad, money going to the rich is good);
* the shockingly lax monetary policy of the past decade (when markets go up, fuelled by what is essentially easy public money, it’s capitalism at work; when markets go down, because of poor investments by the rich, it’s a systemic crisis and the rich need to be bailed out or else);
* the cheerleading by politicians of finance as the new engine of growth and wealth creation (industry, balanced budgets, communities are so yesterday and downright communist and evil);
* the unraveling of existing regulations (like Glass-Steagall) in the name of market efficiency, and the corresponding death of those old engineering concepts, resiliency, safety margins, redundancies, and of old old ethical ideas: reputation, community, duty to future generations.

This suggests a very simple political discourse; fighting these above trends with positive messages.

Wealth is not defined by how the richest fare, and should not be counted via how much they accumulate, but only by how the poorest amongst us are doing.

Society is not doing well when the rich get richer, but when communities care for their members, leave no one behind, and do not focus exclusively on how much money one has to rank and judge members. Richer does not mean better. Together is better.

Things built to last are the most valuable, even if they create no profit today. Infrastructure, education, careful nurturing of rare resources are investments that pay for all in the long run and can be handed over to future generations. Many government tasks are investments, not costs.

The financial crisis, if properly described, provides (together with the Iraq mess, the recent bridge collapse and other tales of Republican corruption) an unbeatable opportunity to make these points loud and clear - and to carry a positive message, not just the “we are not Bush” one.

But if the left does not make that case, I am certain that the current mindset will continue to prevail and the dominant economic ideology will stay, to the detriment of the vast, but impoverishing middle class.

This entry was posted Saturday, August 18th, 2007 at 6:53 am and is filed under Disaster, Economic Exploitation, Economy, National Politics. You can leave a response, or trackback from your own site.