JOHN CHUCKMAN COMMENT: PLANS FOR THE FINANCIAL CRISIS   Leave a comment

JOHN CHUCKMAN
 
POSTED RESPONSES TO A COLUMN BY CLIVE CROOK IN THE FINANCIAL TIMES

I believe there is a basic economic problem with all of the stimulus plans, including Obama’s.

What put the United States into this mess are years of easy credit and a zero or less-than-zero savings rate.

Politicians made these results possible to keep an artificial degree of prosperity going in the United States and to “buy” popularity.

In a sense, the policies involved – mortgages with no money down, even mortgages for more than the price of a house in some cases, plus low rates at the Fed plus drastic tax cuts – are the fiscal equivalent of the American notion of having it all and having it now.

Well, any solution pumping countless billions into the economy and pushing banks and others to make credit available is just more of the same.

Rather than taking the hit necessary to wring out the economy, a huge platter of more of the same is being served up.

I’m not sure this is the right thing to do, but the right thing is too painful for any politician to make policy.

In a sense, I think this points to an even larger issue, and that is the question over the very ability of a people like Americans to govern themselves sensibly, rather than a constant lurching this way and that, both in domestic and foreign affairs.

The more you know about the history of the United States, and I mean hard, critical history, not the grade-10 civics version, the more starkly this proposition stands out.

The distinguished American historian, Page Smith, referred numerous times to America’s “schizophrenia,” and I believe this is part of what he was trying to capture with that word.

______________________

Sorry, it is not “very simple.”

The view taken by the above writer is the one repeated time and time again by the American Right Wing.

Taxes already have been cut to irresponsible levels.

Just one example was the elimination of inheritance tax under Bush’s incompetent government.

There is nothing productive about inherited wealth in limitless amounts. It actually has a net effect of creating aristocratic tendencies in a society, something that could not be clearer in the U.S. today, where many important offices, such as Senate seats, are almost becoming inherited.

Going back to Jefferson, this issue was recognized as an important one for a democratic society.

A good and decent society requires government as a partner in many areas of human effort. The libertarian notion that government should do very little – also a Jeffersonian one, one of several lame ones – is misguided.

You cannot make a meaningful, decent society out of a bunch of people sharing a space, paying a minimum of taxes for unproductive garbage like the military, and having no government involvement in most matters.

It’s 18th-century thinking, to say the least. Government builds airports, government regulates financial institutions (or should), government gets highways going, government sets standards in education, and it has a role in countless aspects of society.

Indeed, as technology and the complexity of society in every aspect such as finances increase, new roles are being created for government. Needful roles. The future will almost certainly bring more government, not less as the American Right Wing pines over.

It is precisely the withdrawal of government from its proper responsibilities that has caused the current mess.

It was also, by the way, the failure of government which caused the disaster of 9/11: failure in implementing the simplest regulations – such locked cockpit doors and more stringent inspection on boarding – after years of sky-jackings.

That particular failure of the American government has now created a tidal wave: two wars, horrible new restrictions, and a vast waste of effort. The total cost is incalculable.

And, of course, in the mainline media the untold part of the story of the current financial crisis is the titanic cost of those idiotic wars.

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