Tag Archives: US economics

Is This The End Of Laissez-Faire Capitalism?

The American financial crisis is raising issues about the future of capitalism, at least the version currently on display in the United States under the anti-regulation regime of George Bush. French President Nicolas Sarkozy stated bluntly the under-regulated system we once knew is now “finished” and the world must explore other versions of capitalism. German Finance Minister Peer Steinbruck said the crisis also marks the end of America as the world’s economic superpower. Sarkozy told a crowd of supporters, “the idea of the all-powerful market that must not be constrained by any rules, by any political intervention, was mad. the idea that markets were always right was mad.” He raise the issue as to whether capitalism must now be reconstituted so that ethics and government have important roles in modern economics.

The French president said we need a “market economy (that ) is a regulated market… in the service of all. It is not the law of the jungle, it is not exorbitant profits for a few, and sacrifices for all others.” Hopefully, the future will look back at 2008 as the time when those who believed in free enterprise began the process of creating a new version of capitalism.

Why The US Is Going Broke!

Chalmers Johnson, writing in Le Monde Diplomatique, says “there is an enormous anomaly in the US economy above and beyond the subprime mortgage crisis, the housing bubble, and the prospect of recession: 60 years of misallocation of resources, and borrowings, to the establishment and maintenance of a military-industrial complex as the basis of the nation’s econmomic life.” Part of problem stems from Bush arrogance that his group of neoconservatives actually knew what they were doing. As we enter the new years, America is unable to afford its bloated wasteful military and the Bush solution of putting off payment on the shoulders of future generations has only added to the collapse of many aspects of the economy.

Johnson identifies three glaring problems. First, spending billions on defense projects against unknown enemies and allowing the wealthy to get away from paying their fair share of taxes. Second, the mistaken belief America’s economy somehow benefits from fighting wars is fundamentally economically wrong. Military spending does not make the United States a stronger economic power, it diverts resources from economic development and creation of new industries. Third, devotion to the gods of military has resulted in failing to invest in our social and economic infrastructure. We spend too much on health care because we fail to focus on preventive care by instituting national health insurance.

Johnson argues “it is virtually impossible to overstate the profligacy of what our government spends on the military.” He estimates this year, when all military expenditures are added up, the United States may have hit the first $1 trillion military budget in history. Money actually being spent on military expenditures is hidden in the budgets of other areas of the nation. For example $23.4 billion for the Department of Engergy actually goes for developing and maintaining nuclear warheads, $25.3 billion in the State Department budget is spent on military assistance to foreign nations.

Many people believe spending money on the military somehow increases the wealth of a society. The $1 trillion being spent this year on the military would be much better spent on improving our economic infrastructure, in creating a healthier nation, in vastly improving our education system, in fostering small business enterprises or assisting in scientific research to develop new products. Bullets fired have no economic rippling impact on the American economy. We should be creating new forms of transportation that would once again make US auto manufacturers the leaders in the world. We should create new forms of energy that would generate sales abroad. Instead, America’s money is poured down the rathole of Iraq.