Democracy - Not "The Free Market" - Will Save America's Middle Class

[USAMMAFAN]

Here are a couple of headlines for those who haven't had the time to study both economics and history:

1. There is no such thing as a "free market."

2. The "middle class" is the creation of government intervention in the marketplace, and won't exist without it (as millions of Americans and Europeans are discovering).

The conservative belief in "free markets" is a bit like the Catholic Church's insistence that the Earth was at the center of the Solar System in the Twelfth Century. It's widely believed by those in power, those who challenge it are branded heretics and ridiculed, and it is wrong.

In actual fact, there is no such thing as a "free market." Markets are the creation of government.

Governments provide a stable currency to make markets possible. They provide a legal infrastructure and court systems to enforce the contracts that make markets possible. They provide educated workforces through public education, and those workers show up at their places of business after traveling on public roads, rails, or airways provided by government. Businesses that use the "free market" are protected by police and fire departments provided by government, and send their communications - from phone to fax to internet - over lines that follow public rights-of-way maintained and protected by government.

And, most important, the rules of the game of business are defined by government. Any sports fan can tell you that football, baseball, or hockey without rules and referees would be a mess. Similarly, business without rules won't work.

Which explains why conservative economics wiped out the middle class during the period from 1880 to 1932, and why, when Reagan again began applying conservative economics, the middle class again began to vanish in America in the 1980s - a process that has dramatically picked up steam under George W. Bush.

The conservative mantra is "let the market decide." But there is no market independent of government, so what they're really saying is, "Stop corporations from defending workers and building a middle class, and let the corporations decide how much to pay for labor and how to trade." This is, at best, destructive to national and international economies, and, at worst, destructive to democracy itself.

Markets are a creation of government, just as corporations exist only by authorization of government. Governments set the rules of the market. And, since our government is of, by, and for We The People, those rules have historically been set to first maximize the public good resulting from people doing business.

If you want to play the game of business, we've said in the US since 1784 (when Tench Coxe got the first tariffs passed "to protect domestic industries") then you have to play in a way that both makes you money AND serves the public interest.

Which requires us to puncture the second balloon of popular belief. The "middle class" is not the natural result of freeing business to do whatever it wants, of "free and open markets," or of "free trade." The "middle class" is not a normal result of "free markets." Those policies will produce a small but powerful wealthy class, a small "middle" mercantilist class, and a huge and terrified worker class which have traditionally been called "serfs."

The middle class is a new invention of liberal democracies, the direct result of governments defining the rules of the game of business. It is, quite simply, an artifact of government regulation of markets and tax laws.

When government sets the rules of the game of business in such a way that working people must receive a living wage, labor has the power to organize into unions just as capital can organize into corporations, and domestic industries are protected from overseas competition, a middle class will emerge. When government gives up these functions, the middle class vanishes and we return to the Dickens-era "normal" form of totally free market conservative economics where the rich get richer while the working poor are kept in a constant state of fear and anxiety so the cost of their labor will always be cheap.

When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.

Smoot-Hawley "protectionist" legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy ("1.4 percent at most" according to many historians) its long-term effect was to bring American jobs back to America.

The fact that the "marketplace" was an artifact of government activity was well known to our Founders. As Thomas Jefferson said in an 1803 letter to David Williams, "The greatest evils of populous society have ever appeared to me to spring from the vicious distribution of its members among the occupations... But when, by a blind concourse, particular occupations are ruinously overcharged and others left in want of hands, the national authorities can do much towards restoring the equilibrium."

And the "national authorities," in Jefferson's mind, should be the Congress, as he wrote in a series of answers to the French politician de Meusnier in 1786: "The commerce of the States cannot be regulated to the best advantage but by a single body, and no body so proper as Congress."

Of course, there were conservatives (like Hamilton and Adams) in Jefferson's time, too, who took exception, thinking that the trickle-down theory that had dominated feudal Europe for ten centuries was a stable and healthy form of governance. Jefferson took exception, in an 1809 letter to members of his Democratic Republican Party (now called the Democratic Party): "The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government."

But, conservatives say, government is the problem, not the solution.

Of course, they can't explain how it was that the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression, while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class. (The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.)

Thomas Jefferson pointed out, in an 1816 letter to William H. Crawford, "Every society has a right to fix the fundamental principles of its association." He also pointed out in that letter that some people - and businesses - would prefer that government not play referee to the game of business, not fix rules that protect labor or provide for the protection of the commons and the public good.

We must, Jefferson wrote to Crawford, "...say to all [such] individuals, that if they contemplate pursuits beyond the limits of these principles and involving dangers which the society chooses to avoid, they must go somewhere else for their exercise; that we want no citizens, and still less ephemeral and pseudo-citizens [like corporations], on such terms. We may exclude them from our territory, as we do persons infected with disease."

Most of the Founders advocated - and all ultimately passed - tariffs to protect domestic industries and workers. Seventy years later, Abraham Lincoln actively stood up for the right for labor to organize, intervening in several strikes to stop corporations and local governments from using hired goon squads to beat and murder strikers.

But conservative economics - the return of ancient feudalism - rose up after Lincoln's death and reigned through the Gilded Age, creating both great wealth and a huge population of what today we call the "working poor." American reaction to these disparities gave birth to the Populist, Progressive, and modern Labor movements. Two generations later, Franklin Roosevelt brought us out of Herbert Hoover's conservative-economics-produced Great Depression and bequeathed us with more than a half-century of prosperity.

But now the conservatives are back in the driver's seat, and heading us back toward feudalism and serfdom (and possibly another Great Depression).

Only a return to liberal economic policies - a return to We The People again setting and enforcing the rules of the game of business - will reverse this dangerous trend. We've done it before, with tariffs, anti-trust legislation, and worker protections ranging from enforcing the rights of organized labor to restricting American companies' access to cheap foreign labor through visas and tariffs. The result was the production of something never before seen in history: a strong and vibrant middle class.

If the remnants of that modern middle class are to survive - and grow - we must learn the lessons of the past and return to the policies that in the 1780s and the late 1930s brought this nation back from the brink of economic disaster.


http://www.commondreams.org/views04/0312-08.htm

________________________________________ ________________________________________ _______

The truth has been revealed, study carefully and learn.

[Tiger_vs_Mantis]

"We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate… [When workers combine,] masters… never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen."

Adam Smith

[t-dizzle]

Which explains why conservative economics wiped out the middle class during the period from 1880 to 1932, and why, when Reagan again began applying conservative economics, the middle class again began to vanish in America in the 1980s - a process that has dramatically picked up steam under George W. Bush.

wtf ? There is so much bullshit in there i don't know where to start. From the begininng though i love how they use "Consevatvie politics" to describe the economic policies between the late 1800's to 1920's as if everything was a "conservative policy" and everything was totally fucked until FDR came around. Oh and btw for a quick history lesson. The republicans back then, were the party of protectionisim.

The highest tariff in American history, to date, was passed under republican leadership. At that point the republicans had made a strong shift to protect American companies from competiition. It was a collosal failure. . It called for a tariff of over 49.5% on most goods. This was passed by Republicans , which tried to sell it as helping out Americans. it did the exact opposite.

My point though is that this policy and hundreds of others that might of been passed under republicans, but would hardly be considered a "conservative economic" policy today. In fact The Mckinley Tarriff was a step right out of the communist manifesto. So i think from the beginiing of that load of crap you can see how bias it is.

Oh and for fucks sake does everyone and there mom forget that during Reagan's administration that

Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years


Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.


interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.

By the end of the Reagan years, the American economy was almost one-third larger than it was when they began.


From 1981 through 1989 the U.S. economy produced 17 million new jobs, or roughly 2 million new jobs each year.

Come on usamma your better than that man. Like Chuck D said DONT BELIEVE THE HYPE!!

[USAMMAFAN]

Originally Posted by t-dizzle

Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years[/b]


Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.


interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.

By the end of the Reagan years, the American economy was almost one-third larger than it was when they began.


From 1981 through 1989 the U.S. economy produced 17 million new jobs, or roughly 2 million new jobs each year.

Come on usamma your better than that man. Like Chuck D said DONT BELIEVE THE HYPE!!

1) those "stats" you are spouting came from the Cato Institute, a "free market" (TM) think tank

2) Most, if not all of the economic gain that occured during Reagan went to make top income earners.

3) Reagan Cutting Taxes and increasing Government Spending (which is what he did overall on the military) did help the economy, but at the cost of a MASSIVE FEDERAL BUDGET DEFCEIT which of course has to be repaid on a later date and caused an economic downturn as a result

[t-dizzle]

I have never said it didn't creat a federal budget defecit. We are in total agreement about this. And btw Cato rawks!! I was getting at the doom and gloom that guy was saying was in the middle class during that period.

COme on dude you mean to tell me that "conservative economics" is the one to blame for all of the bad economic policies that came out of the 1880's -1920's?? Its laughable man. The guy is blaming republicans for everything. FIrst of all alot of bad policies from both parties wouldn't fit into what the political parties now claim as liberal and conservative economics. That and the fact that republicans were super tariff protectionists whose policies then would probably of fit way more into socialisim, than the democrats at that time.

I'm just keeping it real.

Oh and btw the Cato stats came from the CBO, Historical Tables, Budget of the U.S. Government, Fiscal Year 1997, and some other good shit, so don't blow it off.

[USAMMAFAN]

Originally Posted by t-dizzle

COme on dude you mean to tell me that "conservative economics" is the one to blame for all of the bad economic policies that came out of the 1880's -1920's??

That was the age of the robber barons, when corporations created monopolies, busted unions, and generally controlled the government.

Call it what you want, but the republican party is more the corporate party then the democrats are, both are controlled by coroporate interest though, without a doubt.

[USAMMAFAN]

The point i was making with this article is that :

1) there is no such thing as a "free market", the governement is what creates the market in the first place and establishes the rules of the game (unless we are talking about anarchy here, which isnt a reality today)

2) The governement should make the rules so EVERYONE IN SOCIETY BENEFITS, not just those at the top.

CAPTIALISM WITHOUT DEMOCRACY = SLAVERY

[chardog]

are you saying we should be more like europe?

[TheSuperunknown]

Originally Posted by USAMMAFAN

The point i was making with this article is that :

1) there is no such thing as a "free market", the governement is what creates the market in the first place and establishes the rules of the game (unless we are talking about anarchy here, which isnt a reality today)

2) The governement should make the rules so EVERYONE IN SOCIETY BENEFITS, not just those at the top.

CAPTIALISM WITHOUT DEMOCRACY = SLAVERY

'
Government intervention does not always or even usually equal societal benefits. Also there is no "free market" like their is no pure socialism. There will always be a ruling class. The question is how much government interference is acceptable.

[USAMMAFAN]

Originally Posted by chardog

are you saying we should be more like europe?

Yes more like the Scandanavian countries and Switzerland and less like Saudi Arabia (a religious theocracy with no democracy, which would be a republican utiopia)

The human poverty index for selected OECD countries The Human Development Reports website summarizes this as "A composite index measuring deprivations in the three basic dimensions captured in the human development index — a long and healthy life, knowledge and a decent standard of living — and also capturing social exclusion."

The last report, 2003, only has a ranking for 17 of the 21 countries with the highest Human Development Index. The ranking is as follows (with the country with the lowest amount of poverty at the top):

ranking country Probability at birth of not surviving to age 60 (%) People lacking functional literacy skills (%) Long-term unemployment (%) Population below 50% of median income (%)

1 Sweden
2 Norway
3 Finland
4 Netherlands
5 Denmark
6 Germany
7 Luxembourg
8 France
9 Spain
10 Japan
11 Italy
12 Canada
13 Belgium
14 Australia
15 United Kingdom
16 Ireland
17 United States

http://en.wikipedia.org/wiki/Human_Poverty_Index