Federal Reserve officials are finally admitting that the big private banks are “putting capitalism at risk”. George Soros noted that we are on the verge of another economic collapse. I am not the kind of guy that declares “the end of capitalism” every time there is a dip in the market or great depression caused by unregulated banks and a do nothing monetary policy, but certainly recent events should concern the capitalists.
Joseph Stiglitz writes “Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.”
Just 5% of Americans account for half of healthcare spending. The 5% are mainly the elderly and the disabled, and the health care system puts an unfair burden on those people. This is all happening while the middle class has about shrank out of existence. Wages for the average person in the United States have stayed the same for over 30 years, the wealth of CEOs and fat cat executives continue to get richer, and millionaire basketball and football players are squabbling with billionaire owners over how to share revenue. Despite popular support for reducing income inequality, western governments do little or nothing about the problem. Studies show that Americans want income equality at least comparable to Sweden, but receive worse income inequality than Egypt. Even the Fed is saying that income inequality is undermining growth. That may be admirable, but it was their own policies that created such vast income inequality in the first place. All of this is embodied in the news that recently bailed-out Goldman Sachs is outsourcing 1,000 jobs to Singapore. The administration’s response to great outsourcing is to keep approving free trade deals. The big banks continue to wrongfully foreclose on people. This leads us to ask: why hasn’t the Fed halted all foreclosures? It is astonishing that we live in a “free country” and at the same time, banks can kick people out of their houses without proper paperwork. The Atlantic had a piece asking whether Obama’s (willing) failure to go after Wall Street undermined any possible recovery for the economy. The article’s answer was no, but the obvious answer seems to be yes. Wall Street crashed the economy, the system was not changed, therefore there is no recovery. Many people are now asking how we can change capitalism to make it better. But one would wonder whether we need a new economic system all together. The current system has fostered self-defeating greed for quite some time now, and it seems time to create a new economy not based on destructive greed and profit.
Professors from the Chicago School of Economics are suggesting that the world treat Greece in the same way that Germany was treated after World War 1. Because that worked so well. Certainly Greece is a place where a radical anti-authoritarian movement could take hold, as protesters there continue to clash with police over the austerity cuts. The Greek Prime Minister said that the Financial System is “stronger than the will of the people”. I wouldn’t be so sure.