The Debate Over the American Economy and its Effect on Future Elections

It has always been considered common knowledge that the state of the economy is often the driving force behind American elections. In political campaigns this often becomes a matter of each side blaming the other for what is bad in the economy, and each side trying to take the credit for what is good in the economy. Neither side can offer a solution if it does not realistically face the condition of the current economy, and nobody can realistically face the condition of the current economy without looking at what I believe are the important views about America’s current economic plight.

There are many businesspeople and economists who try to hold on to the traditional view of economics that has carried the day since the 1930’s and the Great Depression. This point of view generally looks upon economic failures as a failure of the human spirit and mistakes in judgment by the government and the money interests. This view holds that eventually things will get fixed, that out of the current pain and suffering a new alliance between government and business will emerge that will cure the mistakes of the past and put the country back on course. The main criticisms of this view is that it has too little interests in the amount of damage these economic downturns inflict upon average Americans, and how after each disaster it seems that the government always claims to have fixed the problem only to have another crises occur later on.

The traditional argument is the one presented by the Obama administration to the American people. When President Obama says the economic recovery is “painfully slow” he is sticking to the idea that a recovery is coming. The American public likes this point of view because it contains a lot of good old American optimism, which can at times do wonders for the America economy. One does not, however, know how realistic these claims are in the midst of a recession or depression.

There are, of course, voices in opposition to this. These are the voices which should be discussed in some detail since it seems to me as though these particular voices are gaining more and more power. Their main contention is that America is not in a recession or depression, that America is instead in a state of re-structuring. America, they say, has been re-structured in much the same way the corporations of the world have been re-structured. What is interesting about this view is that I find it is shared by the hard left and the hard right. In order to illustrate what I mean, I will use an example of each.

From the right, I will use Paul Craig Roberts. He was the Assistant Secretary of the Treasury in the Reagan Administration and is considered one of the creators of Reaganomics. The following is a example of what he writes about America in its current state. It is from an article called Americans: Serfs Ruled by Oligarchs:

The great American superpower and its 300 million people are being driven straight into the ground by the narrow interest of the big banks and the munitions industry. People, and not only Americans, are losing their sons, husbands, brothers, and fathers for no other reason than the profits of US armaments corporations, and the gullible American people seem proud of it. Those ribbon decals on their cars, SUVs and monster trucks proclaim their naïve loyalty to the armaments industries and to the whores in Washington who promote wars.

This is vicious rhetoric, but it reveals something very important. This point of view discounts the idea that all of our woes are caused by tragic miscalculations and simple human greed. Instead, it actually sees the current situation in the form of a project that is working to the benefit of a few and to the detriment of the many. And, like many other hardline conservatives and Ron Paul types, he believes many of the fundamental rights of Americans are being taken away by the federal government in order to keep America’s citizens in line while they are being robbed.

As an example of the left side of this point of view, I will use David Harvey, a Professor at CUNY (City University of New York). Harvey is a classical Marxist, and presents an idea in his works that speaks to the same issues Paul Craig Roberts discusses, even if it is done from a different angle. In Marxism there is the concept of “primitive accumulation,” which describes the early process of wealth accumulation. Very often these accumulations involve a criminal activity of some sort, including running people off the land they occupy. Marx considered primitive accumulation a one-time crime, and then a more normal period of capitalism began.

Mr. Harvey respectfully disagrees and sees what he calls an ongoing process of “accumulation by dispossession.” What, after all, is a foreclosure except a modern form of dispossession? What is important here is that Mr. Harvey does not look upon the current crises as some kind of accident. To Mr. Harvey, the problems are structural, involving criminal class war, and it will do no good to try to save the current system as it exists, which is what the Obama administration wants to do. The Obama administration has not, for example, done anything to seriously threaten the power of the Federal Reserve.

The two points of view I have discussed bring us to the crux of the issue. Is the current state of the economy permanent? Has America been transformed into a country that will face chronic unemployment, massive government debt, higher taxes, a greater gap between rich and poor and more and more threats to its freedom as a way of life? In fact, they argue, there is no normalcy in America left to return to. The abnormal state we are in will become the norm.

The most dangerous aspect of this outlook is that both fringes on the hard left and the hard right too often wish the whole economy will come crashing down into a pile of rubble. The left figures this will allow the government to take over everything once and for all, and the right figures this will make people abandon the mentality of “government as the answer” since it was the government caused the problems in the first place.

The danger lies in believing a massive collapse will be good for anyone. Those who are the most vulnerable, including the sick and the elderly, will get hurt the worst. More importantly, there is no way to know what will happen if such a collapse were to occur. Those who argue in favor of the collapse have the opinion that America will simply refuse to take the proper steps to fix the debt and corruption in the government until the whole system goes under.

This is a brutal point of view, and gives the public very little credit. To avoid a collapse and its aftermath the public must begin, I believe, with victories for stability and sense in the coming November elections. We must believe that a graded, intelligent economic response is possible, or we will find ourselves wishing for our own destruction while holding onto the belief that what rises from the ashes will be the new America.

America needs to become competitive again.  The left will argue that our nation can get that way by reforming education and building a new workforce from the ground up (in the left’s own image, of course), while the right argues that the best way to foster growth is to make America more appealing for business than anywhere else in the world.

Facing this coming election, the economy is once again at center stage.  Republicans are calling for a tax rate freeze and a common sense freeze on spending; Democrats are looking to pour more money into failed policies, arguing that “they’ll work this time, honest” and appealing to those who honestly believe that government is the answer.  And yet, on the fringes, there are those who think that there’s either a lesson to be learned or a needed focus on the State which would come from a total economic breakdown.

That is a form of utopian thought I want to avoid. We need good sense, not idealistic revolutionary rhetoric. If America begins to fall into an abyss, how do we know how far we have to go to reach bottom, and how long it will take to get back to the top, if ever?

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Comments

  1. Anonymous says:

    Scary stuff. My poor grandson.

  2. Fiddler on the roof says:

    I hear fiddle music. How the economy be too bad?

    http://dailycaller.com/2010/09/17/neros-fiddle-obamas-golf-game/

  3. Gail B. says:

    And, by 2012, I believe it is, we will no longer be able to purchase incandescent light bulbs, which are currently manufactured in the United States. Instead, we shall be forced to use compact fluorescent lights and later, LED (Light Emitting Diode) bulbs. The incandescent factories will close, putting people out of work. The bulbs, being made in China, will benefit China, not the United States economy. Wait for it, folks, this is only the beginning. By taking the money from “the rich” and regulating what Americans may have and may not have, eventually the “rich” will be right along with the rest of us–and without the funds to create manufacturing here.

    I am afraid of Obama. I truly am. I PRAY that enough conservatives and honest, concientious people are elected on November 2 to tie Obama’s hands in Congress. We are into damage control at this point.

    And, whoopie-DOO! Obama went to CHURCH on Sunday because somebody in the White House told him to get off his tail and be seen in a Christian church! Who’s he fooling? When he stops kissing Islamic butts and bowing to them, then and ONLY THEN will I be impressed. Obama needs to start BEHAVING like an AMERICAN — if he is one!

    It’s not a good thing when an American citizen is afraid of her supposed president. We know more about that O’Donnell candidate than we do Obama!

    Ronald Glenn, thank you for another great piece. I just had to vent.

  4. Anonymous says:

    Ditto what Gail said.

  5. Randy Wills says:

    Gail, GE has already annouced the closing of it’s last U.S. incandescent light bulb factory.

    Unintended consequences? Maybe, maybe not. The “Planners” will have their way.

    Randy

  6. Boston Blackie says:

    Gail, You go girl!
    I have been slowing stock piling my lightbulbs, 2012 is right around the corner. Don’t forget to call hazmat when you drop an LED bulb since they have mercury in them.
    I’ll vote for Christine (I dabbled in witch craft as a teen) O’Donnell over Barack (I want to drive this country into the ground) Obeyme any day of the week.
    “the best way to foster growth is to make America more appealing for business than anywhere else in the world”
    And the best way to do that is get rid of the whole rotten crew running DC.

  7. Anonymous says:

    Stockpiling CFL bulbs for hazmat grenades.

  8. graypanther says:

    Ronald:
    To quote you, “Has America been transformed into a country that will face chronic unemployment, massive government debt, higher taxes, a greater gap between rich and poor and more and more threats to its freedom as a way of life?” First of all I agree with, and in fact applaud, your statement that this is the crux of the issue. Now, if I may, I will take your apprehensions one by one.

    Will we face chronic unemployment? Of course: absent an expanding economy, the only two alternatives are chronic unemployment and guaranteed employment. You can forget about guaranteed employment, which even China, Russia, and Cuba are abandoning gradually; therefore, chronic unemployment, yes.

    Massive government debt: of course. To begin with, entitlement programs make up the majority of government spending, and of that most is Medicare and Social Security, which in real terms can’t be touched. Okay, leave that alone and look for possible cuts in discretionary spending. Of discretionary spending, 56% is military spending. Gates is trying to cut that, and not getting very far. Set those aside and there’s simply not that much – not a useful amount in context – left to cut.

    Higher taxes: this is the only one that’s really up in the air. We shall see.

    A greater gap between rich and poor: This to me is actually, if you will, the crux of the crux. The elephant in the room is suggested by somebody’s remark the other day, which I remember as “Marxists are in favor of success, but then they share their success with the unsuccessful.” If the gap between rich and poor increases, it’s actually a demonstration that capitalism is working correctly. At the end of the Second World War, the disparity between an entry-level salary and a CEO salary was about 40 to one. As of a couple of years ago, it’s more like 400 to one. This is capitalism at work, and it’s not going to end, or particularly yield to moderation, for which there’s no real incentive.

    More and more threats to freedom as a way of life: There’s only one material threat to our free way of life. If the rich keep getting richer and the poor keep getting poorer, the day will come when the underemployed, the chronically unemployed, women, the elderly, and minorities enlist as footsoldiers for massive armed redistribution of wealth. That’s called a revolution. I don’t think it’s coming in your lifetime or mine, but with 50% of America’s wealth already in the hands of the top 1% of the population, it’s coming someday. (Please do not interpret my opinion as an endorsement of this outcome.)

  9. graypanther says:

    Boston Blackie: “Don’t forget to call hazmat when you drop an LED bulb since they have mercury in them.”

    That should be “CFC bulb.” An LED bulb has no particularly toxic content, and is awfully hard to break; you can drop one (I’ve done it) and it’s still fine. A broken CFC bulb, on the other hand, is a significant hazard to your health if you cut yourself on it, and yes, you should call hazmat immediately.

    The problem with LED bulbs is that right now they’re a little too expensive. If enough people start using them, the price will come down. An LED bulb in ordinary use, meanwhile, will last several years.

  10. Boston Blackie says:

    graypanther,
    Thanks for the correction on the bulbs. In my brain I was thinking CFL bulbs but somwhere along the way I had a brain freeze. Thanks for helping me thaw it out :)

  11. John Buyon says:

    Great article Glenn

    I just have a question

    do you agree with Mr. Roberts or Mr. Harvey or both of them?
    and the economic solution is found in the left or the right wing?
    thanks for answering

    @ Graypanther

    ” If the rich keep getting richer and the poor keep getting poorer, the day will come when the underemployed, the chronically unemployed, women, the elderly, and minorities enlist as footsoldiers for massive armed redistribution of wealth. That’s called a revolution. I don’t think it’s coming in your lifetime or mine, but with 50% of America’s wealth already in the hands of the top 1% of the population, it’s coming someday ”

    I love how you people are beginning to think exactly like those big time socialists in the new deal.
    not making any judgments just pointing out how much I respect you guys for your original thinking.

  12. Gail B. says:

    Have you LOOKED at the LED bulbs? They have PRONGS! Maybe a manufacturer in the United States will start producing LAMPS for them.

    Meanwhile, how many “antique” lamps in the country will be useless?

  13. Gail B. says:

    More good news: Obama is on board with GLOBALIZING salaries. Think of what THAT will mean to our standard of living!

  14. Ronald Glenn says:

    To John Bunyon -
    Marxists have always made better social critics than social problem solvers. If they were doctors, they would be great at diagnosis but would end up killing the patient when they attempted for a cure. Harvey has the most coherent analysis of our economy, but even he admits he does not claim to have the solution readily at hand.
    Paul Craig Roberts has beeter solutions by far, but he has jumped completely onto the anti-empire bandwagon that much of the hard right believes at the moment. There is an element of the right that will never forgive the Republican party for the Iraq War, on which they blame a great deal of our woes.
    In the end, all socialist societies reach a point of crises becsuse they need lots of cash but end of driving capitalism away. This makes them end up relying way too heavily on printed money. My main point in the article is the question “is a collapse something to wish for?’ I think not.

  15. Ronald Glenn says:

    Sorry about butchering your last name, John. I wrote the answer on the run. I need to stop running while I’m typing.

  16. John Buyon says:

    @ Ronald Glenn

    I wholeheartedly agree with what you say

    Marxism is the most coherent way to analyze the modern world
    in fact the earliest defenders of capitalism were the Marxist who were awed by capitalism’s great efficiencies and huge productive capabilities.

    but Marxism doesn’t answer the question at all and whenever it does attempt to it fails miserably.

    I believe Roberts is right about the “empire” but I would be “pro-empire” not anti-empire I like the US intervening in crisis spots around the world but I would like to see them do it multilaterally, and responsibly.

    would a collapse really be that bad?
    I don’t think so…
    the status quo is unsustainable and unless it makes drastic reforms it is in-salvageable.
    maybe I think like this because Im relatively young and healthy
    It would be alot different for the elderly and sick.

  17. Gail B. says:

    Why are we even talking about Marxism? Our Founding Fathers did not set up our Constutution on socialism!

  18. Freud, friend of Marx says:

    8:08 said “maybe I think like this because Im relatively young and healthy”

    Qualify that as, physically healthy.

  19. kenezen says:

    America’s is in a situation in which our Federal Government has chosen a path that depends on Large Multi-National Corporations and Large Financial Institutions that are primarily global. Small business is largely ignored.

    The proof of this is the Federal Reserve Activity that, by Monetization, issues huge amounts of various maturities of Treasury Notes then purchases them back. This Piling on of more debt keeps the dollar down and imports competitive. Unfortunately the majority of these Companies assisted by this activity is plowing back the gains overseas.

    This activity causes, as a result,higher inflation in primarily Food and Fuel. These two most necessary items to life especially for the poor has risen in a few years to a near 100% increase. This threatens small business, our primary jobs engine, because a large part of the consumer business is lower middle class and poor. They now quit buying hard goods and focus on survival.

    The next reason we will have future difficulties is the pure size of federal Government. Any businessman knows that the largest cost factor to a corporation is Employee costs. Most companies see 70% to 80% of their expenses as employee related.

    Now go to the biggest Corporation in America, The Federal Government! Their employee count has increased since 1910 approximately 6600% as compared to 310% increase in population it serves. Think about this! We talk about how much the Federal Government spends. No one demands to know how much it costs just in salary and pension benefits each year.

    The way to save America is to freeze Government hiring immediately for a period of 15 years. This will shrink Government costs and reduce the needless agencies and create efficiencies. No spending cuts will outrun government overhead. Freezing hiring is a precursor to less spending.

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