One major difference between the Great Depression and the Great Recession is the death of a visionary progressive movement. Yes, the Republicans and the media like to call liberal Democrats "Left," but that just means they are slightly more moderate than Attila the Hun.
Many in the 1930s believed that capitalism needed a major overhaul. From there it got vague and contentious. The Communist Party, of course, was in love with the Soviet Union, which seemed to be the workers' paradise on Earth, in part because it had avoided the worst of the Depression. American socialists and Lafollette progressives looked more to a mixed system where government would not eliminate private capitalism but instead would heavily control it, even to the point of setting up its own key enterprises.
In general, the consensus view was that capitalism had run amok. Wall Street and the failing banking system were under fire. Serious change was in the air and progressives provided the agenda: unionization, public enterprises like the Tennessee Valley Authority, social security, minimum wage and overtime laws, public housing, controls on banking, public employment projects like the Works Progress Administration and the Civilian Conservation Corps. In addition there were experiments in alleviating debilitating competition, controlling prices and overproduction, soil conservation and a host of others, many of which failed.
The reason we don't have bread lines now largely is due to programs that progressives jammed through the under the rubric of the New Deal.
But you would think our Great Recession might be severe enough to at least conjure up a coherent set of reforms. After all, 29 million are unemployed or underemployed and we have poured about $13 trillion in cash and asset guarantees into Wall Street. Only a few months ago, we were all aghast at the incredible casino that was Wall Street. We couldn't believe that billions poured into junk fantasy finance instruments that got AAA ratings. We were really going to do something about those astronomical compensation packages. Our outrage knew no bounds but had no focus, no organization. We were, and maybe still are deeply angered, but we do so in private.
The banks that were too big to fail have actually gotten bigger. No one is even talking about regulating specialty derivatives that were so instrumental in the crash. The consumer financial protection agency is getting watered down by bank lobbyists funded indirectly by our bailout. And to name just one overcompensated financier, Andrew J. Hall, an oil speculator working for CitiGroup, is about to make a mockery of wage constraints by walking off with a $100 million payday -- from a bank that we virtually own.
Still no progressive movement. Still no national agenda for reforms. Still no compelling vision for what needs to be changed. Still no collective action to build our sense of empowerment.
If we are ever to form a coherent reform effort, there are two fundamental changes that should guide us:
1. We must move money from the top of the income ladder to the middle and the bottom. This crisis was the result of near-sighted, selfish tax "reforms" that encouraged money to accumulate in the hands of the top fraction of one percent. Those folks literally ran out of real world investment opportunities that satisfied their demands for high returns, so they poured their excess capital into the fantasy finance casino. We have the worst income distribution since 1929 - no coincidence, I would argue. When money is more fairly distributed we will dry up much of the demand for fantasy finance.
2. We must also move money from the financial sector into the real economy. Wall Street is too large, too bloated with excess and therefore much too eager to play croupier with other peoples' money. Before the crash it accounted for more than 20 percent of corporate profits. Wall Street's cheerleaders said we could have a prosperous economy that moved money around rather than produced tangible goods and services. We can't.
You move money away from the super rich and away from Wall Street and you will put an enormous damper on fantasy finance. All the proposed rules and regs, and new agencies, and modified pay schemes have little meaning if we fail to move money away from the casino and the super-rich who play there.
How do we do that? There are many ways:
Maybe the Great Recession isn't bad enough to generate a focused agenda and a new progressive movement. Maybe I'm completely off base and the stock market will go ever upward and, mirabile dictu, what's good for Wall Street will turn out to be good for Main Street with true full employment. But if the fundamental causes of our mess really are the mal-distribution of income combined with a bloated financial sector, then you can take it to the bank that we'll be bailing out the super-rich again in the near future, while millions go without work.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
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You can't fix our huge unemployment with an micromanagement of the economy.
Something is seriously wrong with the economy. And our society's solution to the problem is to shovel more money into the hands of the super-rich, who according to Les, are so cash heavy, they can't find a place to invest all their cash.
You may have heard about people demanding to know who holds their mortgage, only to find out... its been chopped up and packaged into a financial product and sold countless times.
I think the REVOLUTION will solve that little puzzle.
We should ignore that part of the public spectrum and in our daily lives, work and organizations, simply incorporate the ideas when we talk with friends, neighbors and co-workers. I believe that most working people when they hear these ideas (especially, returning to a tax structure that existed during the Republican President Eisenhower) of how taxing the wealthy benefits the majority of working people, their kids, communities & schools will be supportive. It is simply necessary to do the daily work of rationally explaining this to people.
Look, a faction of your populace hears about reforming health insurance and instantly screams "socialism". If you start talking about redistribution of wealth, you're going to be looking at a civil war.
Have "Republicans" sign and affirm -- that they will work -- and strive for a free market economic system, always, striving for a true liberal democratic ideal.
None will sign; then tax them 75% of, any and all, profits they make on and off the books.
However, Mr. Leopold's points otherwise are all good ones. The right has hijacked the discourse so much that what used to be viewed as a middle-of-the-road moderate is now considered to be a dangerous [insert your right-wing wildly inaccurate accusation here]. And actual leftists are demon spawn, of course.
In this immoderate political discourse, what would otherwise be sensible, unremarkable suggestions from Mr. L, the right will view as having the potential to destroy this country. Bachmann will suggest we investigate him for his unamerican tendencies, and a whole chorus of Wilson wannabes will shout, "You lie."
But really, they're very sensible moderate suggestions, almost the least we should do to get this economy to a better, fairer place.
10% of the United States population holds 70% of all our wealth.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
It is possible that 90% of our people only have 30% of the wealth because they are stupid and lazy. I don't subscribe to that theory though.
We do not truly have capitalism. It's some bastardized form of corporatism.
Privatize the profits and socialize the losses/risks, has got to come to an end.
In fact, since we have failed to institute remedies along the lines you describe, next time several banks will become "too big to SAVE." The Federal government will find that our dollar will collapse when we see the fire next time.
The clock is ticking.
"A limited liability corporation is not a person. Campaign contributions are not speech."
An important first step, in my opinion, is a 'cost-cutting tax.' Companies that lay-off employees and outsource workers to Asia should pay a punitive tax for doing so. That money should put into the funding of IDAs (Individual Development Accounts) for individuals looking to pay off their debts or start their own businesses. Such a program would contribute as least as much to our economy as any tax cut for the middle class and could serve as an important central component of the second round of economic stimulus.
Remember, there was second New Deal.
lowering the cost of employing people would help small business, but the USA is turning into a 3rd world nation where the giant corporations siphon off profits for the overseas stockholders to spend.
I have written similar comments here. A strong, united progressive movement puts pressure on politicians to shift to the left. Thats what happened with FDR, even with NIxon!
Without a strong progressive movement, there is little putting pressure on O to shift to the left (apart from hisown conscience maybe).
This isnt something easily fixed though.