'the end of capitalism?'

Last week I had two intelligent people engage me on the current economic/political stew. I didn't answer either one of them fully, because to do sound would surely make me seem pompous. Since this blog is the perfect outlet for pomposity, here goes...

'Some people say this is the end of capitalism'. Yeah, I've heard some people say this as well. This is the same idea from the right wing that says that Obama is a socialist/communist. I'm a liberal leaning toward socialist, and not entirely comfortable with the newly fashionable label of progressive. This is an accusation that is tossed out as if one-word name-calling is really worth the Scott's tissue it is printed on. You cannot boil down complex historical events, sociological and economic philosophy, and government policy into one-word accusations. Well, actually you can but it is an oversimplification. In the not-too-distant past when Democrats resisted Republican efforts to pass legislation they were accused of being 'obstructionist', 'partisan' and other such simplistic words. Again, this is an oversimplification. The late Spiro Agnew coined the cute phrase 'nattering nabobs of negativism' to throw at those who opposed Nixon, and it largely worked.

Now we have the Congressional Democrats and President Obama trying to put some policies in place to repair the damage done by the 'free market' philosophy of the Republican Party. This philosophy has led to nearly unfettered speculation in the financial markets over the last 15 years plus. Yes, Clinton was partly at fault as was Carter. They were both 'free market' guys who strongly believed in deregulation of financial markets. This deregulation led to all kinds of loose loans that blew up in our collective face in 2008. The GW Bush Administration had plenty of warning about this, but as it was the most hardcore right wing 'free market' fundamentalist group in the White House since Reagan they could or would not do anything to regulate the markets.

When things blew up on them, they were forced by the reality of the situation to ask Congress for the $750 Billion TARP "bailout" in the fall. This was against their ideology, but they held their nose because reality trumped ideology. Congress approved the cash and the Bushies stuck to part of the ideological guns by giving the 1st half of the cash to financially strapped corporations with no strings attached. Collapse was averted, but the money is mostly unaccounted for. The Bushies stuck to their ideological roots in that they think oversight of the institutions who receive the taxpayer cash would be too 'big gubment' or just 'free market' enough for their blood.

Now the Obama Administration is suggesting that the 2nd half of the cash should have some strings attached to it when the corporations receive taxpayer money. This idea is more socialist than the Bush actions because it means that the 'big gubment' would have a say in what the corporations do with the money.

On the Stimulus Bill (currently being debated), the Democratic ideas are also more socialist and less capitalist than the Republican ideas. The Dems prefer to spend taxpayer money on improving schools, roads, transportation, etc. while Repubs prefer to eliminate all taxes that they can get away with. Socialism implies that the society work together to solve common problems, while capitalism implies that society is useless and that only individual hard work and greed can solve anything. I'm exaggerating, but not much.

Remembering that I'm a leftie, the Democratic ideas are far more practical in this case. What the Stimulus Bill should do is provide a floor or saftey net so people don't fall into deeper personal financial problems, and pump some cash into the economy to get people spending again. The credit and capital (Wall Street) problems should be addressed by the TARP money via the Federal Reserve and the Treasury.

The reason that tax cuts alone are not practical is because the way the Repubs want this to happen is that companies would get tax breaks to hire people and buy equipment, and individuals who have income from their work or riches would pay less in taxes. The business tax breaks would get companies to hire and buy, but they would likely do so in a way that would not be terribly productive. Kickbacks for hiring people (if they are too large) would lead to jobs being created where people do little work or 'busy work'. Kickbacks for purchases would lead companies to buy stuff they really don't need. Tax cuts to individuals who are making a decent living already would generate a little consumer spending, but much of it would go into savings - that's not very helpful for getting things moving.

The Dem options are better not because of capitalism vs socialism ideology, but because they are more practical. Adding to the saftey net for people out of work and otherwise hurting at the bottom of the income scale does have a feel good element, but this cash is more likely to get spent than the Republican tax cuts. It would also help prevent further problems like foreclosures and evictions which ripple through the economy in a very nasty way.

The spending of infrastructure is practical because it creates jobs that make the entire economy work better. Schools, roads, more efficient energy production just makes obvious sense. The tricky part here is getting the projects going quickly, and unfortunately this will lead to some waste. You know, haste being what it is.

There are also some big differences between Dems and Repubs on how they want to help the states. The Dems want to simply give money to them, while Repubs want to loan states the money. That's not so much a capitalism vs socialism thing, and my fingers are cramping up. So I'll stop here.