Pssst! The Free Market is Snake Oil! Pass it on!

I’m so tired of hearing about the “free market” as though it’s the perfect economic ideal.  It’s fiction.  Worse than that, it’s a lie.  And as it is with all successful lies, it’s entwined with enough truth to fool common sense if you’re not careful.

I believe in capitalism–as in capital investment in private enterprise for profit. It’s a beautiful thing.  And it works like gangbusters.

But the “free market” is capitalism in a vacuum.

An economy built on free markets–i.e., unregulated markets–is an economic theory.  And it’s an impossible economic theory at that.

The markets dictate everything?!

Let the chips fall where they may, argue the purists (country be damned, I guess).  Some will profit, others with perish.  C’est la vie.  Nevermind the fact that in deregulated markets companies can grow “too big to fail” and threaten to drag the entire economy down with them. I guess it’s better that a generation starves than a few bankers have to play by rules.

Free market supporters allege that industries will police themselves as a matter of sound business.  Utter nonsense.  Businesses are always cutting corners to make an extra buck.  Gun manufacturers pushed for  Stand Your Ground legislation and BP dumped 200 million gallons of oil into the Gulf of Mexico because they were too cheap to properly inspect their facilities.  Deregulation of Savings and Loan Associations in 1980 (under President Reagan) led to an $87 Billion crisis  ten years later and contributed to the to the U.S. recession in 1992.   Deregulation of banks in 1999 (under Clinton) and 2004 (under Bush) contributed directly to the financial crisis of 2007, the $700 Billion TARP bailouts in 2008, the $135 Billion+ bailout of Fannie Mae and Freddie Mac in 2010, and our current global recession.

The fatal flaw in free market capitalism is that the markets are friends to no one.  They will always go to where the water is calm and the grass is greenest. They will decimate–or flat abandon–regions, nations, continents, even entire hemispheres if it is profitable to do so.

Poor enforcement of regulation has led to catastrophic mine collapses, oil spills, energy shortages, and nuclear meltdowns.  Unregulated markets in Central Africa and Southeast Asia have led to destitution, internecine conflict, and slavery.  It’s 3rd world hell.

Of course, a 3rd world economy might be the goal for many of the wealthy disciples of free market capitalism.  It’s to their benefit.  Money gets overwhelming power and influence.  Sure, labor conditions might be exploitative and dangerous.  Products and services might suck.  But profits will overflow.  (Eventually the quality of life goes down even for the wealthy.  They wind up stuck behind fortress walls and need an armed security detail to go shopping.  Unfortunately for everyone, their greed overwhelms their reason.)

Is that really the ideal?

If this was 1789 and most people were doing business in the town square, the argument for free market capitalism would have some merit.   But if I walk into a Wal-mart today, which way is the power dynamic skewed?

That is the flip-side of the free market dynamic.  Labor forces in modern nations are in often in direct competition with developing nations where wages are at bare subsistence levels–or lower–and regulations are dangerously lax.  Wages in developed nations are driven downward in order to remain competitive.  Buying power is consequently diminished among consumers, in which case less capital investment is made, leading to fewer jobs.  Who’s going to invest in a business in a place where no one has any money?

In this way, what is good for business can be detrimental to the country.  Corporate interests overrun consumer interests and it’s a race to the bottom.

The proof is in our current economic predicament.  We’ve had a devastating extraction of jobs and capital over the last twenty years.  Wages have stagnated and now threaten to recede.

So again I ask, how is this ideal?

The answer is that it’s obviously not.

Yet in propagating free market capitalism as the high standard–initially by conservatives, but now as political axiom–we have prioritized profits–for an already wealthy minority–above everything else, including our national economic security.

The term regulation has become anathema–2nd only to taxes–in 21st century political rhetoric.  Yet, much like taxes, they are essential.

As soon as you acknowledge that no one should be able to dump radioactive waste into the water supply or sell rat poison as apple juice, you have acknowledged that a truly free market is impossible, irrational, and not an ideal anyone should be aspiring to.

https://i1.wp.com/www.nabc.nl/Portals/0/images/going-up-550x425.jpgInstead, the ideal should be a well-regulated, capitalist system; one that balances the present and future interests of workers, consumers, communities, the nation, and the environment, while encouraging capital investment in private enterprise.  That is a strong economy.  It keeps workers and consumers safe and the environment protected; it also promotes a broad and robust middle-class to participate in the economy, not concentrating billions into the hands of a few.

We want lots of people buying cars and computers and trips to Disneyland, while putting money away for college and retirement without burying themselves in debt. That allows for stability as well as an attainable upward mobility that can spur the invention, innovation, and ingenuity necessary for successful private enterprise ventures.

I know, it’s a complex and highly variable ideal.  It requires expertise to navigate.  That is the necessary evil of a global economy that also carries the benefit of potentially elevating everyone’s quality of life in every income level across the globe.

We have to get past these simple-minded conventions from centuries ago.  Because the people in power who are perpetuating these ideas know that it’s a fallacy.  They’re just too greedy to help themselves.

Money out of politics.

Free. Thought.

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Wasn’t Justice First Anyway?

U.S. Army veteran and Representative for Florida's 22nd District, Allen West

You might have heard about how U.S. Representative and incendiary quote factory Allen West–an early candidate for both Fool of the Year and Fool of the Decade honors–followed up his not-so-subtle claim that “78-81” Democratic congressional members are card-carrying members of the Communist Party with the equally untrue assessment that economic justice is un-American.

(There are roughly 78 members of the Congressional Progressive Caucus (CPC)–all Democrats.  Again, not subtle.)

What you might not have heard is that the supposedly-Communist CPC proposed a budget in March of this year (which they suspiciously named The People’s Budget–Uh-oh!).

Their budget is designed to eliminate the deficit by 2021–in fact, it creates a budget surplus, while preserving Medicare, Medicaid, and Social Security.

This is primarily done by cutting waste in defense spending, applying the Buffet Rule, taxing capital gains as regular income, and eliminating oil subsidies and corporate loopholes from the tax code.  Their budget enacts a public option for healthcare.  It fixes–REPEAT–fixes Social Security’s insolvency.  It invests US$1.45 trillion in job creation, education, clean energy, housing, and broadband infrastructure.  It promotes energy independence.  It eliminates emergency war funding which will help prevent presidents from going to war without congressional consent (as mandated by that pesky U.S. Constitution).

In short, this is a budget that is not only balanced, but saves money by reducing spending overall, eliminating waste, and moving us closer to a flat tax rate (for all but the very poor). It might sound made up but it’s not.  I got all this directly out of the actual budget proposal (which you can read here).

The CPC budget stands in stark contrast to the budget proposed by Rep. Paul Ryan which devastates social programs, imbalances the tax code even more in favor of the rich and large corporations, and in the end INCREASES the deficit by more than US$3 trillion.  Despite being denounced by religious leaders as “immoral” and “irresponsible,” the Republican majority in the House passed the Ryan Budget on March 29, 2012.

The CPC budget proposal was voted down the very same day, 78-346.  It barely managed a ripple in the national media.  And Allen West called them communists for proposing it.

(A bipartisan budget proposal incorporating ideas from both sides also went down in flames that day.)

West has been one of the louder voices in the cacophony denouncing social justice as socialism, communism, Marxism, Leninism, Maoism, hell, syllogism, and whatever other ism they think will get a rise out of people.

Much as socialism and capitalism have been locked hand-in-hand by our Constitution, so has liberty and justice (I’m pretty sure I heard that somewhere).   Before the Founders even got started with the particulars of how our newly formed nation would work, they made their intentions clear:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

My glasses might be smudgy but I think justice is first.  Now obviously this isn’t a prioritized list but justice seems to at least be equally important as  the other things.  I hear so much talk of liberty being an American value.  Yet when many people say that they only mean economic liberty.  Oddly, many of these same people don’t interpret justice to include economic justice.

Communism dictates that an engineer and a janitor should earn the same income.  It’s ridiculous.  I’d be willing to bet that less than 0.01% of Americans believe anything remotely close to that.  What I believe, and I think many other Americans believe, is that a janitor should be able to put food on his family’s table and a roof over their heads.  That his kids should have access to a college education.  That no children should starve. That no one should die of untreated illnesses or exposure to the elements.

These are not radical assaults on American liberty.  They are American values that simply place a higher priority on justice.  There’s actually a reasonable argument to be made that economic justice  increases liberty because it allows more people the freedom to enjoy it.

Allen West’s type of partisan name-calling is usually just a means of deflection.  Unfortunately, so are the calls for a “change in the tone” of political discourse.  I disagree.  Our lives, our freedoms, our futures–and our children’s futures–are at stake.  We should be passionate about these things, so long as that passion doesn’t supersede truth and reason.

So it goes with liberty and justice, too.

Allen West--technically--violates U.S. federal law by putting Ol' Glory in water--on flag day. (I know, I know, but I just couldn't help myself. :))

The Great Private Prison Scam

Another of the innumerable reasons to get money out of politics.

You would think that in the debate over the pros and cons of privatizing things like Social Security, healthcare, and the education system, examples like this would get brought up for consideration.  Of course, both sides are bought out so there is no debate.  The money ALWAYS wins.

Capitalism and Socialism Making Sweet Love For Over 200 St. Valentine’s Days

(That's Capitalism on the right)

I’m starting to realize that the reason I started blogging is to define things.  Terms get thrown around in the media as if we’re all in agreement on their definition.  But these terms are interpretive.  Instead of real understanding we’re left with presumption, oversimplification, and gross generalization.  It’s pretty easy to get caught up in the rhetoric.  Next thing you know you’re wasting your time battling propaganda and false arguments and the point gets lost.

"What'chu talkin' 'bout, dog?"

Of course, obfuscation is the point more often than not.  Modern discourse in America isn’t about trying to solve the momentous problems we face.  It’s about playing politics.  We’ve been programmed to forswear actual debate and instead respond to sound bites.  Job Creators.  Pro Choice.  Family Values.  We hear the cues and infer the rest.

For example, the reason I started writing this particular blog was to rail against the privatization of our prison system (based on a story I saw on The Young Turks).  I feel strongly that our prison system should remain socialized.  But I kept feeling like I already lost the argument because I was talking about socialism, a word whose very mention opens me up to ad hominem attacks from the right and abandonment from everyone except the far left(many of whom are, in fact, socialists).  Never mind the fact that police, firefighters, teachers, and soldiers are all forms of it, the common argument is that socialism somehow destroys capitalism.  It failed in the Soviet Union; it’s failing in Europe; and it will fail here.  Socialism is un-American and by proxy, I am un-American for proposing it.

Being labeled a socialist might engender some mild criticism.

Socialism is automatically condemned as a hammock for the weak and lazy…as capitalism is worshiped as an almost biblical virtue.  In reality, neither is inherently good or bad.  They are simply economic systems.  Both have a variety of interpretations, manifestations, and specifics.  The good and bad is derived from their application.

So what do I mean when I say socialism and capitalism?

  • When I say capitalism, I mean an economic system where the means of production are primarily controlled by private enterprises.
  • When I say socialism, I mean an economic system where the means of production are primarily controlled by the government.

Capitalism is not morality.  However, it has proven to be the most effective way to cultivate resources and equitably distribute the goods and services needed to drive the economy and  meet the needs of the population.  It generates profits by rewarding ingenuity, invention, and hard work (and luck).  Markets are vicissitudinous.  Private enterprise can be very nimble.  Governments generally plod.  Capitalism is the most logical and natural economic system for the overwhelming majority of market needs.

Yay Products!

However, there are times when need for a good or service supersedes the profit that can be gained by providing it.  We can probably all agree that it’s better for our military to be controlled by our representative government than by private corporations.  It’s better not to need a credit card or account number when we call 9-1-1 to report a crime. And it is in the interests of our nation as a whole not to task Microsoft with educating our children.

Corporations aren’t necessarily malicious.  (Inherently, they are amoral, and free to decide how they will conduct themselves.)  But their main priority isn’t determining what’s in the best interests of the people they serve; it’s making money.

That’s where the argument lies.  It’s not a battle about whether or not capitalism or socialism can work as a philosophy.  Both have examples of success and failure.  Besides, I agree that capitalism is almost always the better choice.  Nor is it a battle for the country’s soul.  Capitalism and socialism have always been a part of America’s composition.

The U.S. Constitution establishes the government’s responsibility for raising and maintaining a military, building roads, and delivering post.  All are Constitutionally established socialized institutions.  So the un-American argument about socialism is fiction.  There are socialist institutions at our very core.  Socialism and capitalism can coexist in the same economy and have since our nation’s inception.  It’s a marriage that has lasted for two hundred and twenty-three years and looks highly likely to reach its tricentennial.

With the dogmas removed, the philosophical questions become simple.

  • Is it in America’s best interests that private corporations profit from imprisoning people?  Is it right that they lobby for more laws and stricter sentencing?
  • Is it in the interest of commerce to unburden private businesses of the responsibility of providing healthcare?
  • Does Social Security keep the elderly and disabled out of poverty?  Is America better off if the cost of their care is placed on individual families?

    Where do we go from here?

The devil is obviously in the details, but these are some of the real questions surrounding socialism and capitalism that can lead to real answers (and ultimately, real solutions) to our nation’s problems.

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