Can We Have A Better Economic System?

by Wayne Spencer - January 29, 2009
This week we are witnessing a replay of a very old story. Representatives who seem to be representing the top five percent of the wealth of the country against the rest of us.

These representatives call themselves conservatives; but are they really? President Obama, like Democratic presidents before him have tried to extend an inclusive hand. At the insistence of the Republicans, President Obama included tax cuts to business in his stimulus plan. He even paid a visit to the House Republican Caucus on Capitol Hill. But today not a single Republican voted for his stimulus package. A package that nearly all leading macro economists endorsed. The majority of the criticism of the stimulus package made by economists was that it was too little to turn around the economy and that some of the tax cuts were a wasteful expenditure.

The Republicans this week hit all of the political talk shows and news media with the same old argument that we can't afford this stimulus package; that we are putting a burden on our children, etc. We have heard it all before. Yet, they had no trouble at all giving away $700 billion to the banks with no strings attached. I didn't hear a word about the "burden on our children" back in September.

As recently as late last week Senate Minority Leader Mitch McConnell was advocating that the stimulus package should be used to purchase more military hardware. Somehow wasting resources on unneeded military expenditures will not put a burden on our children, but better schools, highway improvement, bridge repair, healthcare, reduction in global warming, water treatment facilities, rapid transit and solar energy will.

This past week we heard from the Republicans that the Congressional Budget Office (CBO) had reported that their analysis of the stimulus package showed that very little of the money would be spent this year so it would be of no use as a stimulant to the economy now when it is needed most. The CBO then announced that no such report had been released and further the analysis of the stimulus package had just begun.

About the same time the "voice" of the Republicans, Rush Limbaugh, was saying that Republicans had to do everything possible to make President Obama's policies fail. The implication to me is that it is more important that Republicans get elected than the country survive this crisis. This is patriotic?

In the 1930's the Republican minority in Congress opposed President Franklin Roosevelt's stimulus plans as well. The Republican efforts did help to reduce the amount of government money spent to the detriment of the economy. Most economists agree that the amount of spending at that time was too little to completely turn around the economy. It was not until government spending was increased to what had been thought unimaginable amounts for military hardware did the economy completely turn around. Among politicians there is always enough money for warfare.

Back then the Republicans were against Social Security as they still are today. The repeated lie that Social Security is in trouble doesn't pass the laugh test. Yet, to many, this repeated lie has gained some traction. Imagine what it would be like had the Bush Administration been successful in privatizing Social Security. Indeed, had that happened, Social Security would be essentially broke. Instead, as of mid 2008 the Social Security trust fund was quite solvent holding a hefty $2.5 trillion in U.S. Treasury Bonds. Surprisingly, today in the time of financial crisis, U.S. Treasury Bonds are more sought after than gold. With yields now at record lows, the value of U.S. Treasury Bonds has skyrocketed so that the present value of the Social Security Trust Find is probably more like $5 trillion or more.

If so-called conservatives were completely honest, they would by now realize that FDR actually stemmed the rising tide of socialism with his economic policies. Most economists agree that FDR probably saved the capitalist system. It just could be that the Republican efforts now to block Obama's economic policies could lead to much more socialistic policies in the future. Socialist policies that may well be demanded by the American public as a result of what may be unimaginable hardships in the near future.

If the capitalist system were to be replaced, what kind of system would be fair, equitable and sustainable?

I urge you to read a book by Brian Czech called Shoveling Fuel for A Runaway Train. I spent a weekend with Brian a number of years ago at a retreat for the Green Party of Virginia. He gave a talk and a Q&A on his book. The way we now value GDP (Gross Domestic Product) more people getting cancer will add to our GDP. Destructive hurricanes, tornados or fires add to our GDP. Auto accidents and plane crashes add to our GDP. Higher cost of healthcare or higher tuition costs add to our GDP. Cutting down the nations valuable forests, building prisons and imprisoning two million of our citizens add to our GDP. What kind of crazy wealth accounting is that? Don't you think we could do better?

A new book by David Korten entitled Agenda for a New Economy: From Phantom Wealth to Real Wealth: Why Wall Street Can’t Be Fixed and How to [Replace] It will be on sale February 3, 2009. David Korten is the co-founder and board chair of YES! Magazine. He is also a former professor at Harvard University’s Graduate School of Business and the author of several books, including When Corporations Rule the World and The Great Turning: From Empire to Earth Community. The Democracy Now transcript of an interview with David Korten is included here:

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Copyright © 2009 by Wayne Spencer - This article may be freely distributed in its entirety with this copyright notice attached.