Which Way Now America?

As we have watched the U.S. and world economy over the past two weeks we have alternated among stunned silence, quiet panic, and repressed apprehension. It is no wonder since neither of our presidential candidates seems to be getting at the core of our political/economic crisis. Perhaps the reality of our crisis is too shocking for the general public to grasp, especially before an election, so it is best to take the safer road.

Perhaps after the election and certainly by the “state of the union” speech we should be able to face our future more honestly. By then we should be past tinkering-type programs that only put band aids on very serious wounds.

Meanwhile there is no excuse for the rest of us to run in neutral. Like many, I have been trying to think through where we are and our destiny as a political/economic nation. I am trying to encourage others to do the same and share their thoughts. Here are mine, begun in the previous blog, and now updated.

How did it all begin?

Since its founding our democracy has struggled with the issue of how to create simultaneously a political and economic system that would both encourage the human desire for freedom and meet the quest for personal security and well being. Our Constitution and Bill of Rights reveal the psychological recognition that our most noble and creative natures can thrive only if our social/political system will protect us from ourselves – the reptilian drives for domination and power. We call it the “balances of powers” or “checks and balances.” Today we are still living out the debates between Alexander Hamilton and Thomas Jefferson. The issues have never been clearly resolved. One thing is for sure, we fell short on the “checks and balances.”

Where are we now?

It is time to take off the emperor’s clothes and admit that the “free market” has not been “free” for decades. The real market is a byzantine mix of tax incentives, subsidies, price supports, import tariffs, etc., all fueled by special interest lobbies. We need to confess that for many years we have been operating much like the rest of our European democratic allies since the end of W.W.II. “Socialism” is not an evil term when it means a system that advances our social good, abhors poverty and seeks justice (fairness) in our economic life. Remember John Kenneth Galbraith’s remark that the only type of respectable socialism in America was socialism for the wealthy. Fifty years ago, in his The Affluent Society he argued that we were a nation living in abundance and had created excess with little public purpose. He urged the U.S., with its great capacity, to spend more of its capital serving the public good by pouring resources into education, health care and public parks.

As Christopher Jenks put it in Reinventing the American Dream, Chronicle Review, October 17, 2008:

. . . Both the Democratic and Republican versions of the American Dream will have to be rethought. They both focus heavily on income and material consumption. The idea that we can keep raising our material standard of living without making most of the planet too hot for human habitation is, I think, mistaken. Even the idea that we have 20 or 30 years to make the necessary adjustments appears wrongheaded.

So I'm afraid reinventing the American Dream really means trying to wean ourselves from the illusion that we all need and deserve more stuff. If we are to survive, we need a different definition of progress. That definition will need to focus on human needs like physical health, material security, individual freedom, and time to play with our children and smell the roses.

I'm not saying that material goods are unimportant. People need food to sustain them, a home in which they can afford to live until they die, and medical advice when they are sick. . . . . And I am quite sure that most of us could live without 85 percent of the stuff we buy in places other than grocery stores and gas stations.

An American Dream that doesn't destroy the planet will have to involve a more-equal distribution of basic material goods. It will also have to involve more emphasis on the quality of the services we consume than on the quality of our possessions. Perhaps most important, it will have to involve more emphasis on what we can do for others and less emphasis on what we can get for ourselves.

So where do we go from here?

1. Elect Senator Obama as our 44^th President since he can exercise the kind of leadership and command the national and international respect required to restore confidence in our democratic political system. As the editorial endorsement of The New Yorker (October 13, 2008) put it so well:

The election of Obama—a man of mixed ethnicity, at once comfortable in the world and utterly representative of twenty-first-century America—would, at a stroke, reverse our country's image abroad and refresh its spirit at home. His ascendance to the Presidency would be a symbolic culmination of the civil- and voting-rights acts of the nineteen-sixties and the century-long struggles for equality that preceded them. It could not help but say something encouraging, even exhilarating, about the country, about its dedication to tolerance and inclusiveness, about its fidelity, after all, to the values it proclaims in its textbooks.

2. Prime the pump gradually with stringent government oversight and appropriate tightening of credit and encouragement to live more simply and trim our wants more to our needs. And then stop priming the pump as confidence returns. This first step has already been taken with the nationalization of Fannie Mae and Freddie Mac and federal investments in our banking institutions.

3. Establish a reincarnation of the Resolution Trust Corporation, as we did in the 1980s with the S&L failures. At the same time institute the most effective aspects of the Glass-Steagall act. (The new version might be given the ironic title, the Greenspan Memorial Act.) We must not wait for the market to somehow magically tell us what the real values of our ponzied paper assets really are. We may never know. But we need to open the avenues of credit for legitimate and well regulated enterprises, those seeking mortgages within their ability to pay, and entrepreneurial innovative ideas that have genuine merit.

Tinkering with the present system will not be enough.

4. Create a major public jobs program as well as incentives for the creation of jobs from the private sector. BOTH (public & private) approaches are needed since the private sector will not be able to do it alone. Implement a major investment in our physical infrastructure including public forms of transport in our urban areas, upgrading of our energy grids, developments of practical alternatives to fossil fuels, and renovation of our schools and hospitals.

5. Invest in an upgrading of our human and social infrastructure with a national service program with a fresh emphasis on the education of teachers and health care professionals.

6. Admit to Americans now that we have a "hybrid" and not a "free" market economy. Make it clear that we will no longer reward or give social status to greed and avarice. We will no longer be proud to let 4% of the world's population consume 24% of its energy resources.

7. Encourage mergers and consolidations of corporations, large and small, to improve efficiency and productivity. For example, one or two major auto firms might concentrate on a hand full of models to meet the real needs of individuals and families. We certainly do not need the myriad of models now on the market, with their duplications. Such mergers of talent and innovation might speed our innovative capacities to produce one or two truly fuel efficient vehicles for mass consumption.

8. Recognize we will be balancing a recession with elements of inflation. We will need to tolerate an unemployment rate of between 12% and 15% with interest rates that do not exceed 10% and a GDP growth rates between 1% and 3%. The guiding hand will have to be very visible. We may well need to establish both wage and price controls.

9. Learn that our strength internationally is not measured by the tonnage of our weapons of mass destruction but by our ability to lead in the quest for social and economic justice at home and abroad. The overextension of our military presence and footprints world wide must cease. We must admit that our military domination and budget far exceed our national self interest.

10. We will learn to be proud of a nation that invests its resources in education, health care and improving the quality of life for all of its citizens. We will strive to be known again as the land of opportunity for all.

That is what change should be all about.

M.F.A.