Updated: July 16, 2010
It has been said that absolute power corrupts absolutely. This has become more evident as we watch America’s economy sink under the weight of lobbyists and Wall Street bookies. We are no longer a country that gives its greatest rewards to those who work the hardest. We have become a nation that financially rewards those who scheme the best.
Nobel Prize-winning economist Joseph E. Stiglitz said, “There used to be a social contract about the reasonable division of the gains that arise from acting together within the economy. But something happened 30 years ago, as the era of Thatcher/Reagan was ushered in. There ceased to be any sense of fairness… It became perfectly respectable to call it incentive pay, even when there was little relationship between pay and performance.”
Without bailout money from the taxpayers, the corporate gamblers that provolked our financial crisis would have simply lost. Game over. But the powers that be decided that it would be better to break the laws of capitalism. Washington stepped in and changed the rules of the game after it was over. What we have in its wake is an epidemic of foreclosures, rising unemployment and a disintegrating standard of living.
The gap between the classes has been widening for decades, and in 2008, reached levels not seen since the Great Depression in the 1930’s.
So how does the next generation see the future, when their parents have gone from owning to renting? From a career to a job?
“We have created a society in which materialism overwhelms moral commitment… in which we do not act together to address our common needs…There has been an erosion of trust—and not just in our financial institutions. It is not too late to close these fissures,” said Stiglitz.
The power in this country is held in the hands of a few. And they were not elected by the majority. They came to Washington with fists full of money and changed the rules of capitalism by buying the laws that would serve them best. The ever-potent lobbyists of Wall Street have taken control, yet not on moral or ethical grounds.
So where do we go from here?
“One of the lessons of this crisis is that there is a need for collective action, that there is a role for government… We allowed markets to blindly shape our economy, but in doing so, they also shaped our society. We should take this opportunity to ask: Are we sure that the way they have been molding us is what we want?” Stiglitz said,
Joseph Stiglitz suggests that mortgage originators and investment bankers knew that what they were doing was wrong – but they did it anyway – in the name of profits. It is the age-old dilemma of moral conduct, versus the temptation of desire.
Sometimes, it’s not what we do that defines us – it’s what we don’t do. If our economy is destined to fail, it will be because we went blind and forgot how to say no.
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Comments
this may be the worst time for the u.s. economy but it will rebound, maybe much later than way much sooner. what we're looking at in american working culture is, nobody is owed anything anymore, unlike it was generations ago when certain people thought they're entitled to a lifetime job.
>the corporate gamblers that provolked our financial crisis
Not only are they selfish, irresponsible people, they "provolked" a crisis. In the old days, provolking was a hanging offense, I think.
Random Guy..... I is lovin' you way of re-saying what she say all wrong.
The actions of Fannie Mae and Freddie Mac created a moral hazard, not a Free Market.
How is economy formed?
Judging from the depth of understanding in the comments section, the American Education System failed long ago.
I have wondered about the motivations of corporate America, from the Enron style accounting flubs that became so common to the sub-prime mortgage debacle and I think that the nation as a whole is to blame. Corporate greed is not to be discounted, but neither is the greed of the American consumer and stock holder. Would there have been a sub-prime mortgage market of people payed attention to the fact that they wouldn't be able to afford that house when the ARM adjusted in 2 years? Would corporations have been as motivated to falsify their accounting records if stockholders were more patient in their investments? Certainly, we can't blame the little guy entirely, but neither can we lay blame solely on the corporations. The problems our economy is facing are the end result of problems on all fronts, on the corporate, government and consumer levels, and it will take work on the part of all of us to make this right.
"There's class warfare, all right, Mr. (Warren) Buffett said, but it's my class, the rich class, that's making war, and we're winning."
The US had a good run after WWII. That was because the US had the most resources, the brightest minds, and an entire world that needed US products. It was easy. All of our economic competitors were destroyed by the war. Everyone in the US therefore reaped the benefits of being the marketplace to the world. Sorry, that`s not how the game works.
Our government`s current paradigm (one adopted during the Nixon administration) is that the government should do anything they can to help a spur successful business. That`s good for business, but not necessarily good for the nation, not when it leads to relaxing tariffs on imports, so it`s cheaper to outsource manufacturing en masse, not when jobs that belong here are sent overseas so businesses can exploit cheap labour.
The government of the USA needs to make a major shift toward labour equity. American businesses need to be forced to pay overseas workers the equivalent to an American wage, or be heavily taxed for their labour exploitati
From Pres Eisenhower's 1961 farewell address:
"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist."
continued
"We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together."
Substitute "government" for "military", and "big business" instead of "industrial" and what Ike feared has indeed come to pass.
An incestuous relationship between government and megabusiness exists Mergers and acquisitions consolidate power in corporate hands and stifled competition. Lobbyists have influenced lawmakers for favorable treatment, lax enforcement and reduced accountability.
The solution as Ike professes is "an alert and knowledgable citizenry can compel". That means we can and must take our country back. We have one thing corporation don't have - the votes.
Where's a Teddy Roosevelt when we need one?
The good men and women who raised above the local stratosphere of popularity and into the public eye are gone and will seemingly never return. Why is that? The media that most American's prescribe to (Radio & TV) doesn't offer a person the opportunity to give an opinion not backed by a sponsor. Beck & Rush have sponsors the same as any talking head on MSNBC. You, however, do not. Sure you have blogs, opinion columns, and comment boxes such as this one, but you will not reach a broad audience with your message. Sorry. A novel message concerning the topics described in this article will not be tolerated by any sponsor. Big business controls many our publicly elected as officials, evident in regards to many US Congressman's net worth (more than half of them are millionaires, yet they "represent" us)so they really aren't on our side. We had a good run, but we are not the country we used to be.
Start up the death penalty for Washington Lobbyists, death penalty for political corruption, ceo/board of directors get the death penalty for corporate crimes, death penalty for lawyers (all of them), death penalty for the world bankers (all of them).
problems solved
The author has missed a lot of very pertinent details like the roll the government played starting back as far as 1913. This reads like pretty typical liberal stuff, only big government can save us, when in reality big government is the instigator of the whole mess. Is there a roll for government to play? You bet, it's job would be to get out of the way and return the rights to it's citizens to a free market that is not controlled by big government, again you have to go back to pre-1913 to see any real capitalism in this country. The real problem that the author completely dismisses is socialism. Socialism can only enslave and destroy freedom, it never makes anyone free.
I think Government intervention with free markets and a completly illogical tax system are real culprits here. Consumer or Flat tax system, smaller government with less government intervention and free markets are the answer.
Kamachanda said "Judging from the depth of understanding in the comments section, the American Education System failed long ago."
Hilarious but ever so true, and sad. Sorry folks but no matter what you want to believe, our society (as a world) is going to collapse. Try doing some research on 'peak oil' and see what I mean. Free markets wanted to produce the cheapest, easiest energy from oil and in doing so, managed to consume our finite resource in exponential rates, leading our society to its inevitable demise. Oil is the lifeblood of our economy, and once worldwide demand exceeds supply kiss your sorry materialistic, self centered american ways goodbye! There's no way around this, we are too deep in the dirt to turn back now, don't believe me? Take a look at www.lifeaftertheoilcrash.net & www.chrismartenson.com if we had been preparing in the nineties we might have been somewhat ok, but now its looking like peak oil production is happening
1: Fiat Currency soon to be more valuable as toilet paper.
2: Oil will be getting dearer as time goes on, the cheap stuff is gone.
3: A government that thinks we can solve all the above by printing more paper and cap and trading us into oblivion.
This American experiment has run its course. Monty Python: “and now for something completely different”
Quiz: a. When you close your eyes and die, the world will stop turning and will not go on without you. b. A country's economy cannot shift from, say, a manufacturing to a service/information base without ripping itself apart. c. You can shame bankers/Wall St. into not accepting their outrageous bonuses. If their sense of civic duty does not override their greed (who could imagine ?), sic the IRS on them. d. Socialism equals Communism equals bread lines and suffering. e. Absolutely unrestrained laissez-faire capitalism brings out the best in companies and really incentivizes them to deal fairly and honestly with issues like labor, environment, product quality, and fairness in all dealings.
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