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America in Crisis

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  • America in Crisis

    From Susan Rosenthal's ( author of "POWER and Powerlessness") blog

    America in Crisis, Part I: Class Conflict

    America is deeply divided. For one thing, most Americans want an end to the war against Iraq and some form of universal health care, while the ruling class is committed to the war and to sacrificing social services to pay for it.

    This conflict between the rulers and the ruled reflects a deeper, structural rift. In a series of three articles (Z Magazine, February, April, May, 2007), Jack Rasmus documents how,

    "From the early 1980s on, income inequality widened, deepened, and accelerated until today well over $1 trillion in income is being transferred every year from the roughly 90 million working class families in the U.S. to corporations and the wealthiest non-working class households."

    Thirty-five years of pro-business social policies have hurtled class inequality back to the level of the 1920s. One percent of Americans now owns half the nation's wealth. In 2005, the total wealth of all U.S. millionaires was $30 trillion, more than the annual wealth produced in China, Japan, Brazil, Russia and the European Union combined!

    The extent of inequality has angered the working class and alarmed sections of the establishment. Inequality in "the land of opportunity" is usually blamed on the victim for lacking the skills and determination to succeed. Now that the majority has been left behind, this excuse has lost credibility. Consider this editorial comment from the New York Times (August 29, 2007),

    "The median household income last year was still about $1,000 less than in 2000, before the onset of the last recession... [W]hen household incomes rose, it was because more members of the household went to work, not because anybody got a bigger paycheck...The earnings of men and women working full time actually fell more than 1 percent last year...[T]he spoils of the nationís economic growth have flowed almost exclusively to the wealthy and the extremely wealthy, leaving little for everybody else."

    Americas are seething with discontent over falling living standards, the environmental crisis, the war and the abysmal state of the medical system. In the spring of 2006, this anger exploded in the largest demonstrations in the nationís history. Protesting anti-immigrant policies and chanting "We are America," the working class rose up and punched the capitalist class in the face. That fall, the Republican majority was swept from office by voters who were sick of government lies, incompetence and corruption.

    Reform or revolution

    The powers-that-be are concerned that popular discontent could coalesce into a generalized rebellion against the system. This happened after World War I, during the 1930s, and in the 1960s.
    America in Crisis, Part II: The Liberal Challenge and the Prospects for Socialism

    Containing discontent

    The capitalist class is a tiny minority that needs majority consent to rule. That consent could be lost if social problems are allowed to deepen. Arguing that an ounce of prevention is worth a pound of cure, liberals align with social discontent in order to contain it.

    When the President defended insurance industry profits over the needs of sick children, the New York Times shared the nationís outrage. In "An Immoral Philosophy" (August 1, 2007), Paul Krugman writes,

    "What kind of philosophy says that it's O.K. to subsidize insurance companies, but not to provide health care to children?...9 in 10 Americans Ė including 83 percent of self-identified Republicans Ė support an expansion of the children's health insurance program...There is, it seems, more basic decency in the hearts of Americans than is dreamt of in Mr. Bush's philosophy."

    The liberal media are running to get ahead of a growing number of dissidents, like Naomi Klein and Michael Moore, who are fueling discontent. Kleinís best-selling book, The Shock Doctrine: The Rise of Disaster Capitalism, has joined Mooreís documentary film, SiCKO, to punch holes in the lies that prop up the system. When Oprah and Moore agree on national television that America needs some form of socialized medicine, the wind is definitely shifting.

    Suddenly, "socialism" is not such a dirty word. In "A Socialist Plot" (August 27, 2007), Krugman writes, "The truth is that thereís no difference in principle between saying that every American child is entitled to an education and saying that every American child is entitled to adequate health care."

    Liberals must convince the capitalist class that a lesser-evil-capitalism, even when it calls itself socialism, is preferable to the threat of real socialism. However, conservatives argue that granting reforms will be the start of a slippery slope. If Americans think they have a right to health care, what else will they think they deserve?

  • #2
    Re: America in Crisis

    You would need to have grown up in Europe to see what the end game of this kind of humane socialism looks like. I'm with you on all the instinctive calls for some more humane face to our societies. I lived when I was a boy in Accra, Ghana and went to school for two years with boys so poor they only owned one shirt and one pair of worn sandals.

    I learned how to expertly spin tops made of real snail shells (we'd grind them down on a piece of discarded concrete) and make them skip like a flat stone on water. You never met people with so much joy in their lives, they were really splendid people, full of laughter, and opened my eyes to the best that people can be.

    But then I went back to school in Europe, and in the next fifteen years saw the enlightened Euro-Socialist government entitlement programs turn previously vibrant EU nations into bawling masses crying out for their governments to give them guaranteed benefits. France is a great example of the risks. It took barely a half a generation before the humane programs were turned into "God given rights" no matter whether the countries were going broke or not, with no rational relation whatsoever to national GDP growth. The aftermath was one long bad opium dream.

    No amount of warnings thereafter could convince these nations, re-invented on the back of flabby and self righteously claimed entitlements, that their fate would then be to be taken out to the woodshed and shot by cutthroat Asian competitiveness.

    They tried what your author is writing about in many countries of the southern part of the EU, and they had a lot of very smart and humane people trying to make it work. It has indeed worked to some extent in a few of the wealthy northern countries of the EU with exceptionally efficient economies, but keeping this kind of Eurosocialism from destroying budgets and destroying the host country has an extremely poor batting average if you ask me.

    The Mediterranean countries' experiments with Euro-socialism have been a disaster.

    The US will most definitely slide back into a Rooseveltian experiment now. The times very much call for it, and I can see the harbingers all over the place. The tragedy is this won't give the needy much real deliverance at all. Such programs, based on my own 25 year experience in Europe, will only slide America's disadvantaged yet further into the muck. They did not create the muck of course, but this agenda will slide them into it regardless.

    Just my two cents.
    Last edited by FRED; 09-28-07, 12:21 AM.


    • #3
      Re: America in Crisis


      Again you and I are on the same page here.

      My thesis research (before I walked out on my thesis advisor!) was on modeling the psychology of risk taking behavior and of risk aversion. I am quite aware of the shortcomings of both sides of the coin! The question is of course how to tap the good sides of both while avoiding the negative aspects of each. However, in today's world, I see the evils of greed and elitism as far outweighing the shortcomings of egalitarianism.


      • #4
        Re: America in Crisis

        Rajiv, you are a one-man army!


        • #5
          Re: America in Crisis

          Europe versus US? See this link for the opposite view:


          The main reason the US is richer is, first of all, because a higher proportion of Americans are in employment and, secondly, they work about 20% more hours per year than Europeans.
          When we adjust for both these factors and look at GDP in 2005 per person per hour worked, there is virtually no difference between Germany, France and the US.
          So why do people in Europe work fewer hours? If "free time" is a normal good, then people can be expected to demand more of it as they become wealthier. This is what happened in Europe. It didn't happen in the US.

          The key to understanding why this has happened is the change in US income distribution over the past 30 years. Since 1979, the bottom 40% of income earners in the US has been treading water, while the bottom 20% has become poorer. US workers have needed to put in more years and longer hours simply to maintain their real income position.
          And why does Europe have lower employment? The article explains that Europeans spend longer in education and retire earlier. In the 25-55 age group, there is virtually no difference in employment.

          What about growth and productivity?

          Expressed on a per capita basis, GDP growth rates in the US and the EU are virtually the same over the past decade. The same is true of labour productivity growth.
          And last but not least:

          The most important feature of the comparison is neither the growth nor the unemployment record of the US and the EU. It is, rather, that US growth, unlike that in the EU, is funded by a dangerously high mountain of foreign debt. US external indebtedness, in turn, is driven by the US house-price bubble, enabling US consumers to spend more than they earn. Ironically, it is the EU which, together with China and Japan, continues to lend the money to the US which keeps their households spending and their economy growing.

          The article is one-sided but well argued. I recall economist magazine published an article some time back (re-printed in their "Economics" book) which came to largely the same conclusions: European "underperformance" is often exaggerated.

          As for people wandering around whimpering for government handouts, well,
          I live in Europe. Where do I go to get some hand-outs?