Crashing Expectations: Market Meltdown Opportunity Missed

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by Jack Random
It was the Great Depression that made the New Deal possible.  Without it we would be a different nation.  We may never have passed Social Security or Medicare.  We may never have built the highways and bridges that are a legacy of public works.  We might never have ensured the right to organized labor or passed legislation to protect workers and secure unemployment benefits.  We may never have established regulatory limits on the size and conduct of corporate powers.  

In the years since the New Deal (particularly since the presidency of Ronald Reagan) we have witnessed a steady erosion of the programs and principles that guided us through the darkest days of the American republic. 
Having not experienced an economic meltdown so severe as the Great Depression, the nation has expunged those downtrodden years from its collective memory.  Hard times have been redefined from standing in soup lines to postponing the purchase of a digital television, from living in tent cities to living with relatives or taking on boarders, and from suffering without medical care to cutting back on prescription drugs.  


Most of us have no concept how close we came to an economic collapse of epic proportions.  Most of us seem to have forgotten that it was the anti-government economic advisors of George W. Bush that came to congress pleading for an unprecedented and immediate infusion of government capital to forestall systemic meltdown.  Most of us seem to have forgotten that after eight years of tax cuts for the elite and unlimited military spending the federal bailout program was initiated under Bush.  

Now while unemployment is unacceptably high and still rising, while wages continue to decline and personal debt continues to rise, common wisdom has it that we are in the period of recovery and perhaps we are.  Wall Street’s rise has been nothing short of spectacular.  Financial firms that only six months ago needed massive bailout funds to stay afloat are reporting obscene profits.  Even the auto industry as a result of the federal cash-for-clunkers program shows signs of sustainable life.  The housing market at the heart of the crisis may finally have bottomed out and people are beginning to feel better about the future.  

The problem with all this good news is that we have failed to take the lessons we should have taken.  Had the system collapsed and the nation fallen into a prolonged depression, the demand for systemic reform would have overwhelmed corruption in Washington like a tidal wave.  Now we are content to move on with window dressings and compromised initiatives that bear the mark of approval from the very corporations that led us to the brink of catastrophe.  

In the short term we have been spared the suffering and hardships that define a Great Depression but in the long term we are condemned to repeat the same crisis scenario and next time we may not be so lucky.  

It is only in hard times that people understand the fundamental need for a social safety net.  In hard times we have compassion for the homeless.  In hard times we recognize the importance of accessible and affordable health care.  In hard times we understand that we cannot afford to trade with other nations without due consideration for labor rights and living wages.  In hard times we understand that international corporations do not share the national interest and will press for short term profits every time without regard for the social consequences.  In hard times we recognize our responsibilities to our children and theirs and are therefore more willing to take the hard measures that will ensure our future.  

It is now pretty clear that we have failed to learn any of these lessons.  If we had we would shout down with cries of hypocrisy every Republican and Blue Dog Democrat who drones on about fiscal prudence after eight years of unconscionable fiscal irresponsibility.  

If we had experienced the full consequences of our government’s actions we would have ended forthwith our costly occupations of foreign lands and severely reduced our extravagant military expenditures.  We would have discovered the virtues of genuine diplomacy without the constant and overriding threat of military engagement.  

If we had suffered through a depression we would no longer be susceptible to the scare tactics of the far right.  The whole world has grown beyond the cold war mentality yet we allow our politicians to fight back all progressive programs with the “red menace” attack.  In academic circles there may be a spirited debate regarding socialism versus capitalism but in the real world social security and national health care are not only fundamental rights but common sense.  Since private corporations are not and will never be motivated to provide for the needs of the sick and elderly, the government must fill the void.  Further, since other governments fulfill their responsibilities, American businesses are handicapped in international competition.  

If we had experienced a depression we would have awakened to the reality of global free trade economics.  We would have recognized that no matter how hard we work and how efficient we become we can never compete with corporations that exploit workers in nations that ban organized labor, paying no benefits to bolster virtual slave wages.  

If we had suffered an economic collapse we would have eventually emerged with a clear understanding of the need for effective government regulation and oversight of all corporate endeavors.  We would never again allow financial institutions or any other corporate behemoth to gobble up smaller competitors until they become so omnipotent that they cannot be allowed to fail without the prospect of global economic collapse.  

In the great debate concerning what went wrong in the housing and financial sectors, all discussion of the consolidation of wealth has been absent.  There was a time in this nation’s history when the government in behalf of the people recognized the dangers of monopolies and acted in the nation’s interest.  Democracy was the check on unlimited corporate power.  Those times are gone.  Now we recognize that certain corporate conglomerates are too big to fail but instead of correcting that critical flaw in the economic machine we accept that nothing can be done except to provide massive government bailouts.  

We mourn the death of American dream but are not concerned enough to revive it before it is too late.  The consolidation of wealth and the resultant international corporate conglomerates have done more to destroy small businesses than any tax ever exacted or any regulation ever imposed yet our government pretends it is powerless to act while they continue to collect corporate dividends (political contributions) at election time.  

Because we have not slipped into the lower depths of economic hardship there have been no serious discussions of the kind of public works that once not only helped lift us out of a depression but also made us the great industrial nation that was the envy of all others.  The first Great Depression made us recognize the virtue of the government as the employer of last resort.  The second might have pushed us to recognize the right of all people to gainful employment – even if it means enduring public works.  We could have rebuilt our piecemeal and obsolete electrical grid.  We could have built windmills across the Great Plains.  We could have constructed an interstate mass transit system from coast to coast and border to border.  We could have installed solar panels on every public building in America and then gone on to homes and private industries.  We could have created a new economic base and once again secured our standing as the envy of the world.  

We are not completely out of the woods yet.  The forecast calls for a second wave of home foreclosures, a prolonged period of high unemployment, continued wage erosion, a further crippling of the labor movement, and a mounting debt that must eventually come due.  Yet it seems for now that we have escaped the worst-case scenario.  There will not be another Great Depression this time.  So we can breathe a sigh of relief and wait for the next crisis which will inevitably come because we have failed to learn what a full-scale collapse would have taught us.  

No one wants a Great Depression – certainly no one who lived it or anyone who has studied that period of history – and yet a great deal of good came from that period of suffering.  One cannot but wonder if the nation needs that kind of traumatic jolt to awaken it to the kind of changes that must come if we are to survive and prosper.  



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