BY VERN TURNER
Ray Carey is the author of Democratic Capitalism: The Way to a World of Peace and Plenty. His very illuminating essay [No. 26] is one that we all should take care to read before we let the angels of our more reactive nature mislead us into making fools of ourselves.
He said we have been wrong to blame the recent economic upheaval on capitalism. Instead, we should point to the misdeeds of the money managers and traders who used the peoples’ capital to speculate. He points out that these people are and were not capitalists while perverting capitalism for short-term and individual gains.
What he didn’t mention was that the overturning of the Glass-Steagall Act of 1933 by the Gingrich Congress of 1999 allowed banks to do that.
Carey points out that capitalism is the peoples’ trillions of dollars invested in companies that produce and distribute goods and services while creating jobs. He says, “Wall Street deflected this capital away from job growth exactly as Adam Smith warned that the ‘prodigals and projectors’ would do.”
We should all be furious with ourselves for electing those who allowed this perversion of capitalism and promoted the duplicity involved with spending trillions of dollars on the banks for even more speculation instead of requiring the investment of real capital in the form of jobs, goods and services.
The Federal Reserve actually provided over $7 trillion dollars instead of the stated $700 billion TARP money to the banks. The banks “borrowed” this money from the FED at rates as low as .01% while raking in $13 billion [so far] by “investing” in government bonds.
The real scandal is that for about 25 years “shareholder capitalism” has sacrificed job-growth programs for the price of stock, thereby building up enormous cash surpluses from job layoffs. There is $1 trillion of corporate cash surplus in the domestic economy, with another $1 trillion abroad, about $3 trillion left in 401[k] savings, and $1 trillion above required reserves sitting idle in the banks for lack of borrowers, lack of lending motive or perhaps both.
Carey concludes: “If our government had applied some of the energy and creativity in putting people back to work that they applied in putting the Wall Street speculators back in business, our economic crisis would be over. With a few changes in tax law, money could be moved out of Wall Street into infrastructure repair bonds, investment in growth programs, and additions to consumer demand from dividends.
“Libertarians have hated the Federal Reserve forever, and these events may help explain why. I think it is a deeper, more sinister reason, or reasons, that we are currently experiencing this global financial upheaval that threatens the very concepts of capitalism and global economy. Beginning in the early 1980s the political movements to deregulate everything gained a foothold in the psyche of politicians and began the great ‘investment’ in career politicians who supported corporate/banking America.”
The Supreme Court’s 2010 Citizens United decision allowed corporations and banks to fund elections and candidates with no constraints, thus opening the corporate vaults to literally buy politicians and make policy.
Before that final blow to the power of the people to choose their representatives, there was the creeping deregulation of business, industry and banking. One by one, the watchdog agencies were cut and compromised so that the financiers could have their way with investor money.
People have been trying to steal things from other people for all history, but today stealing has become very sophisticated indeed. Legalized speculation with other peoples’ money and without their permission is stealing on a global scale, and we let it happen.
Perhaps we will regain our senses this coming year, and replace this government of Wall Street employees with people who choose to represent “We the people” instead.
– Vern Turner is a regular contributor to The Oklahoma Observer. He lives in Marble Falls, TX, where he writes a regular column for the River Cities Daily Tribune. He is the author of three books – A Worm in the Apple: The Inside Story of Public Schools, The Voters Guide to National Salvation and Killing the Dream: America’s Flirtation With Third World Status – all available through Amazon.com.