October 2, 2009

Can the market create prosperity?

Posted in economic recovery, foreclosure crisis, mortgage reform, taxes, U.S. Economy tagged , , , , , , at 8:32 pm by realitytax

Some of our elected representatives in Washington say our big government can’t do anything well.  Ironically, while it’s true the federal government obviously did a slip-shod job of regulating the mortgage and banking industry, those elected officials are in charge of everything from what the government spends to how it runs, and many of them have been there for well over a decade, doing whatever it is they do to make it “better.”

We’ve tried less regulation; we’ve tried lowering taxes; we’ve outsourced to save money including using private contractors instead of the military to fight a war that obviously hasn’t stimulated the economy; we’ve tried everything the politicians could think of except privatizing our social security accounts – and most of us are glad that didn’t fly.

Where have they led us?

The economy will need years to recover from the steep plunge in 2008, unemployment is still rising, mortgage foreclosure rates are problematic while home prices tumble, banks are being closed at a record pace, and institutions “too big to fail” are on the verge of filing bankruptcy despite the former administrations attempts to rescue them by propping up their finances with billions of tax dollars.

On the other hand, gas is back down under $3 a gallon – who would have imagined that was a good price 5 years ago? Still, that’s what the middle class is cheering about today (it sure isn’t the price of education or health insurance.)

When was the last time you say “Made in America” on the label of something you bought? Plants sit idle while manufacturing jobs continue to dwindle. Where have we been investing? In derivatives – financial products so complex that the people who buy and sell them can’t really tell you how they work. Once upon a time we heard about the huge growth of jobs in the service sector, but if you call for service you’re as likely to get a machine answering the call as a person, and when it’s a person they’re often overseas – who knew we could outsource service sector jobs?

The President’s got a real rat’s nest on his hands with the economy. Depending who you listen to he’s either put the foxes in charge of the chicken coop or hired the people who made the mess in the financial markets to clean it up.  The former would be a disaster, obviously, but even the latter is rather daunting (and yes, I know, banks hire former bank robbers, computer security firms hire former hackers, but that doesn’t make me comfortable.) Granted, Obama’s shown a desire to invest in America, to get people back to work, but he’s still a relative newcomer and the entrenched powers that be in both major parties were there – in charge – as all these problems brewed up this ugly mess in the first place. There’s enough blame to go ’round on Capitol Hill when it comes to the economy. One man by himself cannot create – or recapture – our American Dream.

It’s not enough to “stimulate” the private sector and create green jobs; our leaders have to insure that the sorts of abuses which led to this crisis won’t recur. The abuses of the public trust are not confined to Wall Street, they’re also there on K Street, First Street, and South Capitol Street… and consumers are justified in being dubious that the people who left this series of overlapping errors unattended are the proper ones to lead us out of the resulting crisis.  The denizens of the Capitol have shown a propensity for bickering and posturing, but little in the way of solutions has emerged – to the point that the executive branch is now authoring legislative proposals since the two parties can’t agree on how to move forward together.

It’s time to invest in us and our future – in infrastructure and education, and in making sure that anybody who works for a living can afford to stay healthy and enjoy the retirement they’ve earned.  I’m not advocating isolationism, mind you, but multi-national corporations aren’t helping anybody but themselves. Small businesses that put local people to work and keep the profits within our communities are the engine that can power economic recovery. Tax breaks for mega-corporations end up being bonuses for already-rich CEOs – what trickles down is being funneled through lobbyists right back to Congress, apparently.

We pay our taxes so the government can do what is necessary for the common good.  Seems to me all the government’s done for most of the past 10 or more years is grow larger. What have our Senators and Representatives done but watch as the entire system melted down? OK, granted, they did just boost their own budget, and sure, CEOs and lobbyists are still pulling down a good paycheck, with full benefits – but what about the rest of us?

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1 Comment »

  1. […] been pondering whether or not our financial markets can “create prosperity” other than for Wall Street insiders. It’s certainly not what the evidence suggests […]


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