Bailout Is Capitalism Murdering Democracy

The United States has always struggled to balance its capitalist economy with its democratic ideals. We've spent the last many years telling ourselves that the two go hand in hand, only to watch capitalism thrive in China in the absence of democratic freedoms. Indeed, if there's been any lesson the last few years, it is that authoritarian capitalism -- rather than democratic capitalism -- may be the dominant ideology of the 21st century. And as I write in my newspaper column this week, that ideology may be coming to America.

The Wall Street bailout bill is a lot of things -- a giveaway, a heist, a legislative manifestation of crony corruption. But it's structure is pure authoritarian capitalism. Whether you think handing over $700 billion to speculators will help our economy or not (and many economists believe it will hurt it), it is undeniable that this bill vests authoritarian power in the hands of the Treasury Secretary -- and that is a radical departure from the fundamental tenets of our democracy.

What has differentiated America from other countries is our reliance on institutions rather than individuals. When we have faced crises, we have built institutions (think about the alphabet soup agencies out of the New Deal), not czars. That's what democracies do - they build nations of laws and institutions, not cults of personality.

This is clearly changing now. We saw Paul Bremer appointed monarch of Iraq after the invasion and we see Congress about to hand over its power of the purse to Henry Paulson so that he can be the financial despot, free to buy and sell whatever securities he feels like, with almost no oversight.

Perhaps this reflects a wider trend. We have become a country that has one national religion: presidentialism. That's the religion that says the president is an all-powerful deity - and the Oval Office is a position that is the only one that matters. That this outlook is fundamentally undemocratic and offensive to the principles of our Founding Fathers seems completely forgotten. We have embraced czarism with the zeal of cult worshipers -- and now this zeal has global economic forces at its back.

We are trying to economically compete with anti-democratic forces that can make financial decisions without any public input at all. As we saw with the debate over the bailout bill, the transnational corporate elite tell us our democracy and its careful deliberations are hurting our ability to make quick decisions in this global market -- and therefore that democracy must be subverted to the will of capitalism. Thus, a bill is rushed through Congress in a week that hands 5 percent of our entire economy to one man, Hank Paulson.

What will be the effect of this tectonic shift? It's hard to say, but with both parties endorsing the shift, we have to first and foremost realize that it is real. Capitalism is trying to euthanize democracy in the name of economic competitiveness -- and that is going to make this country a very different -- and in my opinion, a much scarier -- one from what it once was.

You can read the full column here.

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Comments

[twofish]

I think we should start a pool on how long it will take before we hear about the wonders of the "free market" and how we peasants should never be allowed to interfere with it. Not from the libertarian types who never stopped saying it, but from the thugs and criminals who are about to pocket our $700 billion.

First prize is a blow to the head. Second prize is a sharp stick in the eye. Suckers.

The Monday morning news is already saying how the stock markets are dropping again and this just isn't going to unfreeze the credit markets. Does that mean Paulson won't dole out the bailout cash? Ha!

[BadChristian]

While we may think this is a shift in ideology, it seems like we have been exporting this type of authoritarian democracy for a long time. I think the President is more like a high priest or a Pope of Capitalism than a deity. The pantheon of Capitalism talks to the upper reaches of the church of capitalism (led by the President) directly. From there, the people get the sermons of gloom and end-times prophecy that will come if the pantheon is not given it's sacrifice. Sometimes the sacrifice is regulations like Glass-Steagall, sometimes it is wars for oil, sometimes it is essential services that the public sector once owned, sometimes it's tax-breaks or shelters, sometimes it's rights or freedoms that used to be considered inalienable... And sometimes it is just boatloads of money.

The different Gods of the pantheon will act from on-high, getting themselves into whatever trouble and mischief tickles their fancy... As long as the Church of Capitalism doesn't "pull a Carter" and try to tell the pantheon how to act, the "Gods" of capitalism will allow them occupy their positions without throwing lightning bolts down from Mt. Mammon.


As the exalted one descended from the mountain, he proclaimed The Way...

" We"re history"s actors.. and you, all of you, will be left to just study what we do. "

[darthdarcy]

David a very wise successful well respected guy once asked me..

Kid what's the last three words in the Bible..?

I fumbled about trying to think of what they might be, with reasonable attempts taking him seriously and he just laughed and said no kid..

"Get the Cash..!"

See what I mean David..

We could take all of the more modern economics taught in Chicago and or elsewhere and condense it down to those three words, Get the Cash, that's what it's all been about for way to long and this bail out just once again reaffirmed this credo, mantra, admonition...

Get the Cash

Get the Cash

Get the Cash..!

Who got the Cash, did We The People get the cash..?

Hell no..!

They Got The Cash, so don't think for a minute there will be any lesson learned from this latest plunder of the United States Treasury by the rich and corporations for the rich and corporations because in the end the remained true to their credo and we The People did not....

It's right there in The Bible the last three words..."GET THE CASH..!"

Amen, the sermon is concluded, let us all go in Peace..!

[Paul]

The American economy under Ronald Reagan, to hear the Republicans tell it, was the cause of the fall of the Soviet Union. We simply out-spent them in the arms race.

Looks like the Chinese took the lesson to heart.

I wonder if someone in China made a phone call to the White House and said that if the US doesn't prop up the failing US credit markets, then China would begin dumping American dollars and debt.

Someone should be investigating the extent of foreign influence on our recent domestic financial legislation.

[doogiedude]

Another gem from the annals of history:

"Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy."

Andrew Jackson, 1832

[Rootsman]

Realizing that this "rescue" problem is most likely worst than its being portrayed, and will not get desired results, it also reveals the lack of a professional and representative Congress. There are probably many other good things that could have been done for" main street as well as wall street " before now. The "sweeteners" in this package and others, should have been offered earlier to Main Street. Maybe the economy would have received a slight boost and wall street seen the benefit. If it's the right thing to do now, it was right to do it before. The only difference seems to be perception. Providing aid to the ordinary man/woman on the street somehow, doesn"t seem to be as urgent or important. Too much like caring for society as a whole. This plan is the climax of seven years and the greatest (I venture to say) displacement of public funds in world history. It's a shame that we as Americans were forced to accept it with no choice

[doogiedude]

The First Inaugural Address of Franklin Delano Roosevelt:

"True, they have tried. But their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish."

Just sayin

[DuganS1]

The main reason a nasty recession turned into the Great Depression was because the Fed didn't conduct their normal open market operations and keep the money supply stable. FDR helped by closing the banks, creating the FDIC, and getting off the gold standard, but he made matters worse by creating the NRA and AAA and being openly hostile to businesses, particularly utility companies, and by increasing taxes.

[doogiedude]

Thanks for the comment.

IMHO, it's probably a matter of opinion that the actions (or inactions) of the Fed turned a recession into the Great Depression. It's hard to speculate what would have happened if different actions were taken.

As far as the NIRA(I assume you meant NIRA, not NRA. If not, my apologies) goes, it was supported by big business, General Electric in particular. The NIRA was ruled unconstitutional in 1935. Other than creating substantial red tape for businesses, I fail to see how this Act made matters worse.

The AAA was ruled unconstitutional in 1936 and replaced by Congressionally originated legislation in 1938. Again, under the circumstances, I think it is arguable whether the AAA made things worse or not by attempting to control commodity prices.

I also think you could make a case that while FDR was hostile to business in his rhetoric, he did get many businesses functioning again with programs like TVA and WPA. It does appear to me FDR put the interests of the workers and non wealthy citizens ahead those of businesses. I don't think that is a bad thing for many reasons, the least of which being if the people aren't working, then businesses are not functioning.

All that said, while not perfect, I think FDR's actions had noble intentions and accomplished more good things than bad.

Just sayin

[joebhed]

David,

This ain't socialism, and it ain't communism.
It could be called a big cooperative.
Because, we, the people, are all members.

ALL of the economic (financial) advisors to both political parties went to the same business school.
So, to expect a different outcome is back to that definition of insanity again.

Financial economics.
Money economics.
Economic democracy.

It's the same struggle as that leading to the Boston Tea Party.

The great pioneer of modern monetary reform was C.H. Douglas.

If even a tiny fraction of the people in this country understood the scientific relationship between money and economics, there would be a revolution tomorrow.
Read his book on Economic Democracy.

The private banking system of the monied interests known as the Federal Reserve would become an important part of our history.

The function of what we call money would be put to the use of balancing the productive and consumptive parts of our economy.
Money would cease to be a commodity.
And would again become a medium of exchange.

From the Douglas web site, one can learn more about the true nature of money, and how its false manipulation has held those with the money-creation privilege at the tiller of all economic power in this country.

Monetary transformation NOW !

[Gripen]

I come from a socialist country in europe and one thing i was teached in school is that pure communism never works and neither do pure capitalism.

The reason is the same, the human flaw of greed. In communism is it allways some that wants more then others and cheat to get more then others, In capitalism shall the wealth trikle down to the less fortunate but in reality is it so ppl on top are to greedy and do not let anything trinkle down.

So both systems fail because of the sin called greed.

Authorian capitalism with socialism tendencies are often called corperatism or fascism, they often hide the motives behinds any of the 3 basic political ideals, Socialism, Liberlism or Conservatism but is really a populistic mix of all and use only what they need to stay in power.

Here in Sweden are the left called socialists and the right called liberals, the conservativs died out with the increase social rights and i think the last real conservatives vannished after womans got the right to vote here. But dont kid your self, our liberals sounds just as your conservatives. So we got the same ppl here in sweden only they call them self liberals.

[DuganS1]

Yes, but the US is far from a pure capitalistic country as there is a many socialist programs and a lot of regulation throughout the economy. There were even a large number of regulators that missed some of the credit issues entirely, particularly with Fannie and Freddie.

[Paul]

Government badly run is not the same as saying smaller government is better.

That's the main problem with Reaganism and why it is imploding now.

The socialist countries in Europe actually deliver value for the taxes paid.

They have:

A better healthcare system
A better educational system
Better mass transit
Better working conditions
A better environment
35 hour work week and six weeks vacation

In short, a higher standard of living for most of the people.

Socialism - the way forward.

[northicus]

Your column is what should be posted here not this watered down flim-flam, gives us what you really think not what you ought to say. History repeats itself with a twist. Its the likes of the 1929 crash for sure,why its even happening in the same place 75 years later. But, instead of the people pulling their money out of banks- were all basically broke anyways we have no savings. The idea that we the people will make a run on the banks thus causing a melt-down is impossible there's nothing to run for. Who is making a run, is the wall street banksters on the taxpayers. And life goes on for now!

[manitoumackinac]

It's because we have become a debt economy. People getting credit cards easily to buy stuff so blue chips can go up. Few people can save when they are in debt up to their eyeballs. It's due to the culture of spending money on the latest and greatest so they can impress their friends. Sometimes it's completely legitimate debt, like college loans, medical expenses and housing. Which compounds the problem, because people are getting into holes they can't get out of. Can't get decent jobs because of bad FICO scores, can't secure any loans to go to school. So they are limited to low paying jobs, and many of these places fill their heads with whoopee-love-your-company propaganda while they get exploited.

[Gripen]

Problem with a debt economy or as some "experts" in swedish news media call it a credit based economy is that all money you loan needs to be payed back and when enough of ppl cant payback, then the whole thing comes down as a house made of cards.

The whole thing looks as a type of pyramid game.

[jhNY]

As I am already a loyal reader and fan, I hope you are also author of the headline for your latest, as it is the most succinct description of the process on view. Thanks again for your insight!

[maggie lou]

The final rape of the American People by the Bush Admin before they leave office. They all ought to go to jail.

[johnie2xs]

Is there a chance that once Obama is elected, he will turn the tide on this decision?

Just askin'.

[joebhed]

Anything can happen.

But with only one business school, and only one curriculum on high finance, I have serious doubt.

Unless someone opens his eyes to C.H. Douglas and public credits.

Anyone who can get through this testimony before the Canadian Parliamentary Committee on Banking and Commerce will have the tools to fully understand what needs to be done.

http://douglassocialcredit.com/resources/resources/major_douglas-testimony_ottawa_1923.pdf

And the Douglas -Social Credit web site:
http://douglassocialcredit.com/douglas.php

We can't get there on this debt-money, private banker train.

Monetary transformation NOW.

[miriamac]

No. The time for him to show the courage & character required to be POTUS was now. He failed.
I was an avid Obama supporter. So I called his headquarters today. The volunteer who answered the phone's final defense was that McCain voted the same way.
Coin toss any one?
BTW the # is 866 675 2008.

[situationcritical]

Excellent analysis David.

Not to worry.

I think once O bama is sworn into the O v al office, Re publicans (now also called In dependents) will find a way to get rid of "Presidentialism", and limit President O bama's power and authority at every turn.

They'll rally for oversight, recall the c z a r s, t r e a s u r e r, etc., citing the "piece of paper" called The C o n s t itution in their defense.

[Gidster]

Because when Republicans do it it's patriotic, when Democrats do it it's reckless and dangerous. We have seen this nonsense before. Every time the Repubs lose majority.

The Great Experiment that was Democracy has failed do to the greed of a few and at the expense of the many.
Now those greedy thieves have been rewarded, and will continue to rape our economy.

[Jjc2006]

"You can have wealth in the hands of a few, or you can have democracy, but you can't have both." Judge L. Brandeis.

You have written few columns with which I could agree. You are a good writer but your personal biases sometimes are hard to swallow.
"That's what democracies do - they build nations of laws and institutions, not cults of personality."

Yes, the cult of hatred of certain persons who happen to run for the primary bothered me. Some did not give Senator Clinton a fair review because of the cult of hatred for the Clintons, asserting she, as his wife, had no ability to think for herself. At times she was too centrist while campaigning. The same is true of Senator Obama. Only Kunicinich campaigned from the left. The majority electorate is center right . The way to get elected in this country is to campaign centrist; but then govern from the left, and get people to move their thinking that way. This is not an easy task. People are uninformed, even many educated voters. The one thing we can thank W for is that his reckless behavior has awakened a vast amount of slumbering ciitizens.

I am now supporting Senator Obama and hope he will govern from the left. But I will always believe in my heart, Senator Clinton is closer to an FDR way of thinking than Senator Obama is. But I wish you well and hope you get your chance in many newspapers.