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A new cycle of the same old spiral

“On September 16, 1985, when the Commerce Department announced that the United States had become a debtor nation, the American Empire died.” – Gore Vidal

April 13, 2009
By Rob Lafferty

We just never learn. Despite a highly educated populace and widespread access to the greatest amount of information ever assembled, we still keep repeating the mistakes of our ancestors. We even recognize that we’re repeating history as we do it – but we do it just the same.

For example, just a quick look at the past century reveals that Republican presidencies tend to foredoom an economic crisis. The policies of Harding and Coolidge in the 1920’s helped trigger the Crash of 1929 while Hoover couldn’t prevent a slide into The Great Depression. In 1981, Reagan approved deep cuts in income taxes for the wealthiest of Americans and all US-based corporations; the economy reacted with an immediate drop into stagnation and recession. Bush the Elder was hugely popular in 1990 after “winning” the Gulf War against Iraq; two years later he was unemployed after a bad economy drove voters to bounce him out after just one term in office.

Yet none of that history could stop about half of this country’s voters from supporting Bush the Younger, whose deregulation policies cleared a path that led to the collapse of the mortgage banking system. So once again we have a depressed national economy and a dollar that shrinks in value on the world market, but this time we also have a national debt beyond any reasonable measure.

When you step back and take a different perspective, the American economy looks a whole lot like some of the Third World countries that we’ve ridiculed in the past. But if we can’t learn from our own mistakes we certainly won’t learn from the mistakes of others, so even a different perspective doesn’t really help.

Every time we redistribute wealth upwards and allow it to concentrate in the hands of the already-rich elite citizens of the Republic, our economy tanks. Reagan, Bush I and Bush II all supported a “trickle-down” economic theory that has never actually worked in the real world – the one where all the workers live.

As a basis for an economy, the idea that rich folks would ensure a prosperous middle-class by spending their money in ways that would benefit the masses was absurd from the start. But rich folks love it as a theory and continue to promote it long after it’s been proven a failure.

It’s not a new economic theory, of course. Feudal societies throughout history operated under a medieval version of Reagonomics; the upper class managed business and controlled labor and did whatever they wanted to make profits. Life in the manor house was excellent, but minions of the estate struggled to meet their basic needs in ways that minions have always been forced to do.

It’s an idea that the American upper class was able to sell to the general public because rich people have credibility in their communities because, well, they’re rich. They must know more than us about money, we think; they have more of it than any of us. So we show them respect in public and seek their financial advice while later we mock them behind their backs – but that deference still lingers in our general attitude towards anyone worth millions of dollars. They must know something...

Sometimes – not often enough, but sometimes – that respect is earned, appropriate, and based on someone’s actions. Many wealthy individuals use their time and good fortune to benefit people in need. Many of them are Republicans, too. It’s not always about politics, after all.

In fact, it is well beyond politics. A modern-day equivalent of the Divine Right of Kings is being claimed by a financial system that has bankrupted entire countries. It has the full support of the American government and now has that same government poised on the edge of default. In the face of that kind of economic power it matters very little which political party currently dominates the votes in Congress.

Corporate rights continue to supersede human rights in nearly every aspect of economic life. In the offices of power, business interests always have a chair available; citizen’s interests groups are seldom invited to sit down. When they do, their role is restricted to offering input and witnessing all decisions.

You can’t base an economy on the essential goodness of human nature because it’s still human nature to be selfish and greedy. We haven’t evolved beyond excessive consumption yet; given the chance to steal a pile of money without committing an outright crime, most of would do it. We might regret it later, but we humans always learn to live with our regrets.

That’s why we need good laws, to protect us from people who are very much like ourselves; often greedy, often selfish and not quite as smart as we think we are. Our best chance to reinvent American capitalism requires fundamental changes in the laws of the land. We wouldn’t need to nationalize banks or bail out large corporations with infusions of public money if we had learned anything at all from history and kept tight controls on the worst economic problem of them all – our inherent tendency to succumb to Greed...

Rob Lafferty is a former editor of the Haleakala Times. He can be reached via email at rob@moonvalleypress.com