“History is written by the victors.” –Winston Churchill
It is still too early to say who will be the “victors” or “winners,” if any, in the current economic crises that threaten to engulf the US and much of the developed world. Economic troubles are not strictly war and it was war that Churchill was talking about in his famous quote; but, it sure has felt like an economic war raging over the past months as we watched some venerable Humpty Dumpty’s of the financial world shatter, collapse and cease to exist, right there on the pages of the morning newspaper. If, as current predictions have it, we are in for deep, deep Recession, or even Depression, through all of 2009, it may be until 2010 or beyond before we emerge from this devastation.
What flavor of Capitalism will emerge? Free Market Capitalism is where mutually consenting sellers and buyers without coercion exchange property rights at prices reached by mutual consent without government interference. If you want to buy and I want to sell and we have a meeting of the minds as to price and other terms, we do the deal or we don’t do the deal – let the forces of nature rule.
In stark contrast, in regulated or controlled markets, governing authorities dictate, or at least control, prices, terms, supplies and such things either directly or indirectly. Free Market theories hold that such regulation distorts natural market signals, producing negative consequences and a stifling of the great natural virtues of the free market.
But, as seen at various points in US history, those great natural virtues of the Free Market periodically break loose and gobble up everything in sight like some Pacman videogame gone berserk. It happened in the Gilded Age when the legendary Robber Barons and business trusts threatened to choke the free market, when monopolies of every stripe ruled the day – at least until Teddy Roosevelt emerged as the Trust Buster and Congress ginned up antitrust laws. We have seen a continuing tension ever since, as the pendulum has swung back and forth between these two polar opposites: sometimes favoring the Free Market theorists, on one hand, and sometimes favoring State-Managed Capitalism with its thicket of regulations and rules.
President-Elect Obama over this past weekend announced plans for a major pendulum shift back to State-Managed Capitalism, on steroids – in his words: “a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”
Democratic Congressional leaders have spoken of a staggering $300 Billion stimulus plan, which the Bush Administration opposes, but which even some conservative economists have opined may actually be the minimum needed or even too small to tackle the unprecedented challenges facing down the US economy. The President-Elect even spoke one of the dreaded D-words: “We now risk falling into a deflationary spiral that could increase our massive debt even further,” ominously also predicting that we may not yet have seen the bottom: “it’s likely to get worse before it gets better.” Obama may even back off one of his controversial campaign promises and let tax cuts for higher earners expire on their own in 2010, rather than push for any tax increase when the situation is so dire.
Whatever your politics and whichever party your affiliation may be, there is likely consensus that we had better do something before a real meltdown, perhaps rivaling the 1930’s, is at hand. There is also a screaming need to address our crumbling infrastructure and our long-neglected energy quandary where, curiously, we enrich, frankly, undeserving foreign kingdoms who, by luck of geological cards dealt millions of years ago, sit atop vast pools of ancient dinosaurs and swamps, at least before the abrupt price drop in oil of the last months. And, if those teetering US Automakers crash and burn, we will see unemployment figures up into the double digits and true misery in many areas of our nation.
It is time to put partisanship aside, join together, and help give this bold plan a chance to work.