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Monday, March 9, 2009

President Obama, Whose Free Market?

President Obama continues to capture the audience. The Republicans have resorted to Bobby Jindal, and that did not turn out too well. Now, they are inciting tea parties. Do you get finger sandwiches with that? I am not sure it makes much sense. Former Little Boy Bush doubled the national debt while president. He ushered in a massive housing bubble that broken spreading recessionary fallout all over the nation causing homeowners to run from their nests by the millions; manufacturing companies began to lock up their doors and pull the blinds; working people were checking their mailboxes only to find letters saying their retirement savings got contaminated for life; 36,000 laid-off workers per week have been roaming the streets desperate for answers; all occurring as the fallout from the Bush presidential legacy drifted all across the globe. Yet what we hear from the Republican Jihadists is that President Obama must NOT spend money to help working Americans come out from under their desperation. It is all their fault and no one else is to blame. So now, the Republican Jihadists are hosting tea party protests to complain that the new budget is too high and the stimulus costs are too much. Did any of these naysayers ever tell Little Boy Bush, or Johnnie-man-to-the-rescue-McCain, as he ran to the Senate floor during the presidential campaign, that the Toxic Asset Relief Program (TARP) was a bad idea and the bankers need not get handed $700B to squander on fancy plane rides, and lavish luxury pay bonuses? I guess not. I guess all of this is Barack Obama’s fault. He is the big bad wolf in a nice tailored suit with a commanding presence. And, of course, don’t forget that he can give a darn good speech, too. Wow! He can even articulate what the problems are and what his plan is, even though there are many who do not agree with the objectives.

My problem with President Obama is that because of his economic plans, he continues to stand too far in the middle for my taste. I do believe he could be setting himself up for a big fall that will damage the Democratic Party if he is not careful. He is taking too long to move in more aggressive directions to salvage our very damaged economy.

I have to ask, what free market system does he support? Free, as in free from bondage enforced by the predatory private power brokers? Or, a neo-liberal free-for-the-taking-market? Free as a bird? The free lunch counter type of market where it is all you can eat without getting a check, but the cook pays the customer as a thank you for allowing him to be in the free market economy? A market free from regulation, and controls, and along the way, given a free hand to create an economic monopoly. Free from as much competition as possible. As Professor Michael Hudson wrote in his 2-24-09, article, “The Language of Looting”--

“…today’s “neo-liberal” advocates of “free” markets seek to maximize economic rent—the free lunch of price in excess of cost-value, [and] not to free markets from rentier charges. [Or] attempts to regulate “free markets” and limit monopoly pricing and privilege [which] are conflated with “socialism”, [and] even with the Soviet-style bureaucracy. The aim is to deter the analysis of what a “free market” really is: a market free of unnecessary costs: monopoly rent, property rents, and financial charges for credit that governments can create freely.”

What I believe he is saying is that through monopoly and debt-finance economic principles, of which our mega-corporate and financial systems have been freely enjoying without much interruption from The Regulatory Enforcers, most of us working in small and moderate sized business enterprises, and those who own them, have felt significant downward pressures that high rents, and compounding bank finance charges have squeezed against their limited profit margins, ability to expand, engagement in research and development projects, opportunities to increase wages and benefits, and/or hire new employees, thus, might find themselves pushed outside of the competitive playing field by those heavy power brokers controlling the monopoly and financial capitalist economy. This world ain’t big enough for the both of us, pal!

Professor Hudson also wrote that those progressive economists living a century ago would never have thought that “a world run by venal and corrupt bankers, protecting as their prime customers the monopolies, real estate speculators and hedge funds whose economic rent, financial gambling and asset-price inflation is turned into a flow of interest in today’s rentier economy. Instead of industrial capitalism increasing capital formation we are seeing finance capitalism strip capital, and instead of the promised world of leisure we are being drawn into one of debt peonage.” (Rentier is defined as someone who has a fixed income, as from stocks, land, etc.)

We have watched this happen over the last 30 plus years, as industrial capitalism diminished in its usefulness as a prime economic generator of wages, and products to be used domestically and exported, as well as a major source of revenue for the federal Treasury, state and local governments, giving meaning, value and prestige to a product-dollar-based currency. A currency given value through the production of real tradable and tangible goods had been gradually upstaged by our current esoteric, paper-generated-based financial capitalism economy (40% of our GDP) funded through securitization and the interest payments received from such debt, or as some would call assets, has now significantly disappeared into the wild blue yonder. Most of our production has been handed over to rising industrialized developing nations. More than likely not to be seen again unless dragged back onto our own soil kicking and screaming from those monopolistic capitalists very happy to have them operating elsewhere and far away from unions, U.S. government scrutiny, regulation and laws. This is President Obama’s most important dilemma from my point of view. What type of “free market” does he wish to establish under his presidency? Is he more in favor of debt-asset values replacing product-asset values?

Professor Hudson asks, “Exactly what does a free market mean? Is it what the classical economists advocate—a market free from monopoly power, business fraud, political insider dealing and special privileges for vested interests—a market protected by the rise of public regulation from the Sherman Anti-Trust law of 1890 to the Glass-Steagall Act and other New Deal legislation? Or, is it a market free for predators to exploit victims without public regulation or economic policemen—the kind of free-for-all market the Federal Reserve and Security and Exchange Commission (SEC) have created over the past decade or so? It seems incredible that people should accept today’s neo-liberal idea of “market freedom” in the sense of neutering government watchdog. [And] loot without hindrance or sanction, plung[ing] the economy into crisis and then use Treasury bailout money to pay the highest salaries and bonuses in U.S. history. [And] when neo-liberals use the word “nationalization” they [really] mean a bailout, a government giveaway to the financial interests.” (All [ ] had been inserted by this author.)

Professor Hudson wrote further in a terrific enumeration that “Today’s clash of civilization is not really with the Orient; it is with our own past, with the Enlightment itself and its evolution into classical political economy and Progressive Era social reforms aimed at freeing society from the surviving trammels of European feudalism. What we are seeing is propaganda designed to deceive, to distract attention from economic reality so as to promote the property and financial interests from whose predatory grasp classical economists set out to free the world. What is being attempted is nothing less than an attempt to destroy the intellectual and moral edifice of what took Western civilization eight centuries to develop, from the 12th century Schoolmen discussing Just Price through 19th and 20th century classical value theory.” “Any idea of “socialism from above” in the sense of “socializing the risk”, is old-fashioned oligarchy-kleptocratic statism from above.”

So, where will President Obama take the nation and all of us inside it riding the bus with him and his Inner Circle? I surely hope it won’t be over the cliff, but instead, down a road that maybe rutted and bumpy, which will require skilled steering and navigation, so as to end up on the road that will lead us into a new, and balanced mature economy that protects workers, worker rights, while freeing the nation from its grip upon fossil fuels by embracing sustainable energy and agriculture, with available health care for all, and sustainable job opportunities working in manageable industries, with regulated investments, without wars, and bloated defense and security department budgets. We have to ask, “So Mr. President, where are you taking us? And, what type of free market are you choosing?”

Thanks for reading, jerry