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Effects of Government support of "free markets" |
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The following is from an author that can teach us an invaluable lesson about our “Free-Market System” and how it will destroy the middle-class of America and with it the American family. The reality is that there is no such thing as a “free-market” system, as Thom Hartmann explains:
Democracy not “the Free Market” Will Save America’s Middle Class
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 [from] 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…
…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 [always] 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 (Thom Hartmann, Democracy not “the Free Market” Will Save America’s Middle Class. Accessed: 26 Aug 2005 http://www.commondreams.org/views04/0312-08.htm).
Does anyone need proof that the George W. Bush Administration is “giving up the function” of watch-dogging corporations to ensure that the workers are not mistreated, such as jobs being sent to other countries? Here is a direct quote from Bush (there are many other quotes as Bush and the neo-cons are not ashamed to say that the scales should be tipped in favor of business). As you read this think of how Enron turned-out as they “took responsibility for telling the truth”.
We stand for a culture of responsibility in America. Our culture is changing from one that has said, if it feels good do it, and, if you got a problem, blame somebody else, to a culture in which each of us understands we're responsible for the decisions we make in life. If you're a mom or a dad, you're responsible for loving your child with all your heart and all your soul. If you're worried about the quality of the education in the community in which you live, you're responsible for doing something about it. If you're a CEO in corporate America, you're responsible for telling the truth to your shareholders and your employees. And in a responsibility society, each of us is responsible for loving our neighbor, just like we'd like to be loved ourselves, George W. Bush, August 12, 2004 (Presidential Prayer Team website).
It’s as if Bush thinks that all he has to do is say that CEOs will tell the truth and magically, all CEOs will indeed tell the truth. It is pure fantasy. Bush is making an obvious attempt to protection the corporatocracy and give it free rein.
Thomas Frank points out that corporations and the conservatives who support them get “hopping mad” about “big government” when it tries to regulate business. However, when “big government” steps in and passes laws like the bankruptcy bill (“written by the credit card lobbyist”) in October 2005, which “turns the Federal Government into a collection agency for corporations, they love big government. When big government is collecting on what is owed to them (the corporations) they love Big Government” (Frank, Thomas. Cover to Cover. KPFA, Berkeley, 7 July 2005).
The corporations have us believing that what is good for them is ultimately good for us since after all, they provide the jobs. However, without government maintaining a balance for the worker the corporations are being allotted absolute power. It does not have to be this way as Thomas Jefferson said, "The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government".
Government should be used to ensure that “We the People” are held in equal balance with business, other wise all we have is a government “of the rich” with no middle class and we can all get use to being serfs. For as long as we continue to elect politicians who believe that corporations have more rights than “We the People” we will continue to see laws passed, like the bankruptcy bill, that ensure we remain as serfs to our corporate lords.
If you do not think that this is scary stuff, contemplate the following. Think about what will happen when someone steals your identity and runs up a huge credit card debt. I know, you are thinking that the credit card companies work hard to make sure this doesn’t happen, they even write-off the stolen charges for us. The credit card companies work hard to prevent identity theft because they can’t collect on those stolen charges. However, and this is the scary part, the incentive to protect us was being taken away by the bankruptcy bill. Now, instead of writing-off the charges, that we “swear” we did not make, the credit card company may just keep on billing us. The recently passed bankruptcy bill says we have to pay! The big corporation has the law on its side. Don't go crying to conservatives, they won’t listen to a “dead-beat”.
You say that you do not think the credit card companies will do this? Try to remember that the credit card company is in business to make money. They are capitalists and profits are all that count. Even if they only get a little money out of you at least they didn’t have to write it all off this time. One day we will all wonder how we all got so poor; one needs to look no further than to Hurricane Katrina and all the people with no where to turn for debt relief. The heartless corporations were deaf to the cries for help and the oil companies raised their prices during the people’s hour of need. Katrina was just another “golden opportunity” for big corporations to make money.
The oil companies had their biggest profit in history during hurricane Katrina. (Exxon Mobil alone had sales topping $100 billion.) They gouged the people during a time of crisis and when Democrats (Chuck Schumer of New York) suggested taxing “big oil” to help the country recover from Katrina, President Bush protected big oil and the corporatocracy. To the mind of Bush and conservatives, big oil “earned” their money. Money earned by gouging the consumer, “we the people”, is considered “fair” when one is of the mindset that corporations are more important than the people. As long as we continue to vote for people who protect big business at our expense we will never have a government that is concerned with “the care of human life and happiness”. We cannot expect people who are hand-picked by the corporatocracy to behave in any other manner.
When the balance of power has been with business in the past it wiped out the middle class (see the Great Depression). Having not learned this history lesson we are all now doomed to repeat it. It is just so sad that the group that should have been at the forefront of the campaign to prevent this greed from taking over our country has ushered it in with opens arm in a stance contrary to their own God. Because the Christian Right is willing to believe in “my country right or wrong” they are lead by the nose by the rich. We will all have to do the bidding of the rich because we bought into the myth of the “free market” as the ideal democracy.
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