Government, Capitalism, and the Flow of Capital

With its Reaganesque trickle-down paradigm, basic capitalism --- raw, primal, Social-Darwinistic --- is like a purely gravity-fed water system. It'll function, but its reliability and volume of flow are at the mercy of changing, uncontrollable external conditions, and its destinations are completely constrained, often not where delivery is most needed.

Such water distribution systems worked (in a manner of speaking) for the Romans two millennia ago. But no reasonable citizen would choose them for a complex modern society, populous and sprawling, needing to maximize the benefit to be derived from scarce resources, and hopefully also concerned with a modicum of fairness for all of its people. Analogously, such a paradigm makes no sense as distribution method for the modern flow of capital.

Yet that is the direction to which virtually all Republicans and many Democrats are taking this nation. It must rank as one of the great ironies that capitalism, always arguing for the "best" use of scarce resources, so frequently and so thoroughly mismanages the scarce resource from which it takes its name.

And capital does seem to be a scarce resource, at least to the average person. Beyond personal finances, lack of money has become the rationale encountered for countless actions, ranging from corporate opposition to wage hikes (including even the minimum wage), through the neglect of infrastructure, to the elimination of some government services and the scaling back of others such as Social Security, Medicare, and Medicaid.

However, an objective observer from another planet might conclude that our problems arise less from inadequate capital than from failure to use it properly.

Consider the financial "industry". The stock market is basically a combination of numbers racket and circular firing squad, periodically resuscitated by cash transfusions delivered by its minions in Washington and fresh marks in the hinterlands. Except for IPOs, stock buybacks, and hedging of raw material costs and foreign exchange rates, trading is of little benefit to genuinely productive companies, and far exceeds the levels needed to establish a credible secondary market.

As to the rest of our economy, many of its goods and services --- expensive or cheap, exalted or plebian --- are actually of little true value. They are basically churn that only serves to provide the populace with enough employment and income to purchase its own stash of unnecessary junk, while business takes a portion of each transaction as profit.

I'm not advocating that we don sackcloth and become wandering ascetics. But I do find it intensely objectionable that we as a nation devote the overwhelming part of our economic energies to the unimportant, and to militarism, while the essential functions of a civilized society are aggressively being demolished. That combination, however, appears to be the inevitable outcome of laissez-faire capitalism coupled with inadequate governmental revenues, faulty leadership, and a fearful and easily-manipulated populace. These mutually reinforce each other, to our great national detriment, and as remedy we need to address each of them not in turn, but simultaneously. They are where our political focus should be, not on the dance-of-the-debt-ceiling, which serves only as distraction to enable the further looting of our nation by the wealthy, the corporations, and the military-industrial complex.

To return to my opening metaphor: It is clear that right-wing trickle-down is a faulty paradigm for the twenty-first century. Government, when it operates properly, is like a pumped water system, delivering a precious fluid when and where it is needed. When operating properly, government performs vital economic and societal functions which the capitalistic corporate sector cannot do without conflict of interest and/or added cost (if it were even willing to address them at all). To the extent that government does not function properly, we the citizens of the United States need to reclaim it, not cede it to the forces of greed, ignorance, and incompetence.

More WWII Analogy

In my previous post, I neglected to mention another way in which WWII and its run-up are appropriate metaphors for contemporary politics:

The German Nazis and Italian fascists got substantial initial support from business interests in general, and industrial and banking interests in particular, who thought that they could control them to the extent necessary for their corporate profit.

In the U.S., the Republicans and the Tea Party have received substantial support from American business, industrial, and banking interests, who similarly expected to effect control. However, judging from today's New York Times' report of the flow of lobbyists to Congress, it appears that businessmen are now experiencing some degree of fear, as it becomes apparent that, as in twentieth-century Germany and Italy, they have created a Frankenstein monster likely to damage their long-term interests.