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[Adventurer]

Thursday, October 16, 2008

The Great Reagan Pyramid Scheme Comes Crashing Down
by Juan Cole

The Republican Party that Nixon invented melded the moneyed classes of the Northeast with the white evangelicals of the South. This odd couple went on to simultaneously steal from and oppress the rest of us. The moneyed classes were happy to let the New Puritans impose their stringent morality, since they could always just buy any licentiousness they wanted, regardless of the law. And the New Puritans were so consumed with cultural issues such as homosexuality, abortion, school prayer and (yes) fighting school desegregation that they were happy to let the northeastern Money Men waltz off with a lion's share of the country's resources, consigning most Americans to stagnant wages and increasing debt. The Reagan revolution consolidated this alliance and brought some conservative Catholic workers into it.

These domestic policies at home were complemented by wars and belligerence abroad, which further took the eye of the public off the epochal bank robbery being conducted by the American neo-Medicis, and which were a useful way of throwing billions in government tax revenue to the military-industrial complex, which in turn funded the think tanks and reelection campaigns of the right wing politicians. The Reagan fascination with private armies and funding anti-communist death squads contributed mightily to the creation of al-Qaeda, blowback from which fuelled even bigger Pentagon budgets, spiralling upward and feeding on itself. Terrorism is much better than Communism as a bogey man, since you can just intimate that there are a handful of dangerous people out there somewhere, and force the public to pay over $1 trillion to combat them. In fact, of course, less US interventionism abroad would create less blowback, and genuine threats are better addressed through good police work by multilingual FBI agents than by a $700 billion Pentagon budget.

As a result of the Second Gilded Age and its serf-like subservience to big capital, most corporations in the US don't pay any income taxes, despite doing $2.5 trillion annually in business.

The Reagan Revolution included the stupid idea that you can cut taxes, starve government, abolish regulation of securities, banks, & etc., and still grow the economy. The irony is that capitalist markets need to be regulated to avoid periodically becoming chaotic (as in 'chaos theory,') but the people who most benefit from regulation are most zealous in attempting to abolish or blunt it.

What those policies did was create the preconditions for a long-term bubble or set of bubbles that benefited (for a while) the wealthiest 3 million Americans and harmed everyone else.

The average wage of the average worker is lower now than in 1973 and has been lower or flat for the past 35 years. That's the condition of the 300 million or so Americans.

In the meantime, the top 1 percent has multiplied its wealth many times over and now takes home 20% of the national income, owning some 45 percent of the privately held wealth in the US.

The Right keeps promising us growth, but it turns out that "growth" is mainly for them, i.e. for the 3 million (and indeed mainly for about 100,000 within the 3 million).

Those 3 million are a new aristocracy, lords of the economy, who reward each other with tens of millions in bonuses for ceremonial reasons that have nothing to do with the jobs they actually perform. Bush has been trying to make them a hereditary aristocracy by getting rid of the estate tax.

So there you have it. Abolish puritanism in government policy; go back to using the government to regulate industries and finance and provide services; and fight terrorism with better public diplomacy and better police work instead of with militarization-- and you might get out of this thing intact.

� 2008 Juan Cole

INTERESTINGREADANDBOLD

[Kuros]

Another humanities specialist advising us on economics.

I think Juan Cole's diagnosis is close enough, but his prescription is dubious. He's right about fighting terrorism with better public policy, but that'd be true independent of any monetary crisis.

But the government need not be the provider of services, nor the regulator of my business. Credit-default swaps need only be publicly traded, and the Clinton-era CFMA repealed and replaced with something more sensible. What should that sensible replacement be? Someone with more economic expertise than I should explain.

[Gopher]

My diagnosis: this mostly derives from people hostile to American capitalism and especially Reagan-era capitalism, who stand in the middle of what seems like dramatic change, who thus lack any possible perspective, and who nevertheless try their damnest to wish it down and out or at least convince public opinion that it is so by printing it again and again in the media.