February 12, 2009

How to Fix the Economy (Including Social Security)?

The American Dream is being looted before our eyes.

I've worked for 40 years, stayed out of debt, saved, invested carefully – everything I was supposed to do. I and my employers have been paying into SS and Medicare for decades. During the last six months, I've lost a quarter of my retirement fund; and I fully expect that what I've got left will be eviscerated by inflation beginning in the not-too-distant future.

Now they want to cut Social Security and Medicare; see here, here, here, here and here.

I've got three multiple-choice questions.

1. WHO Should Pay for the Current Disaster?

(a) Old people who worked hard and saved, who've just lost a lot of their savings in the crash and have no hope of recovery before they die, let alone before they retire, and many of whom have no prayer of finding a job in this economy? (Note, not all the lost money simply "vanished," as some suggest. Some people came out ahead, and are still trying to.)

(b) Young people who mostly haven't yet lost much in the crash and may still have time to recover? (I'm NOT saying this is what should happen.)

(c) The wealthy top 2% who've benefitted the most by far from the regime of tax cuts and deregulation inaugurated under Reagan (remember the S&L debacle enabled by deregulation, and the subsequent bailout at taxpayer expense, which, monstrous though it seemed at the time, was apparently just a test-run for the much larger-scale looting now underway?), including but not necessarily limited to the Wall Street and military-industrial types who've most substantially helped create this mess??

(d) The people who've made/are still trying to make a bundle on credit derivatives and naked shorts??? (If you're not familiar with "naked shorts," see here and here. It's NOT fun for all.)
Personally, I'm voting for a new benchmark in public accountability: not one taxpayer should lose one dime before every one of the people who've made/are still trying to make a bundle on credit derivatives and naked shorts have LOST every dime.

2. HOW Should We Pay?
(a) We can cut Social Security and other "entitlements" to the people who proportionately contributed the most and who need it most, the elderly and the poor. (NOTE: even though it's true that SS funds have been borrowed by the rest of the gummint, there's still an obligation on the gummint to repay. If the U.S. is insolvent, there's a HUGE difference between being first in line for whatever's left vs. being last in line behind Wall Street and Halliburton, or worse, not being in line at all.)

(b) We can inflate the dollar, so everyone suffers equally in proportion to the dollars they hold (further vitiating peoples' retirement funds or other savings.)

(c) We can tax the heck out of everyone with assets or income greater than $2 million. 'Cause if you have more than that, you don't really need it, esp. not compared to the rest of us.

(d) We could confiscate the assets of the people who've made/are still trying to make a bundle on credit derivatives and naked shorts. After all, they just confiscated a quarter of my life's savings.
3. What Caused the Crisis -- WHAT Needs to Be "Fixed"?
(a) Deregulation. Over the last few decades, as our memories of the '29 Crash and ensuing Great Depression faded and our attention wandered or was spread too thin, conservatives repealed the restrictions that protected our savings from excessive speculation and fraud (yes, I know, some so-called "Dems" participated or failed to object; in my book, they're conservatives). They also gutted enforcement agencies by slashing budgets and staff. One result was the wave of S&L failures in the 80's. Few of those actually guilty were actually punished, so we continued down the primrose deregulatory path; voilà credit derivatives (the main part of the current disaster, esp. so long as we're not willing to allow those who made the bets suffer the losses), naked shorts, Madoff's 3-decade-long Ponzi scheme, etc.

We simply cannot leave the foxes in charge of the henhouse; we MUST not only restore but expand Glass-Steagall to cover new kinds of institutions, re-regulate in various other areas, and of course restore enforcement capabilities.

(b) The systematic impoverishment of the working/consuming classes in the U.S. and some other developed countries. During the last few decades, U.S. leaders (themselves in hock to multinational corporations) chose to promote a model in which economic growth was fueled by ever-increasing consumption, while allowing most consumers' real wages to fall far short of real inflation and enacting tax cuts that have disproportionately benefitted the top 2%. Jobs, but not labor or environmental protections, have been exported. U.S. workers' numbers, hours, and productivity have steadily grown; but we've been pushed into debt and steadily drained of the income and assets necessary to continue to consume.

Multinational corps. don't care; if U.S. workers can't afford the product; sooner or later, workers elsewhere will take up the slack.

(c) All of the above. Until we fix both (a) and (b) above, nothing else we do will restore us to genuine economic health.
It seems we're no longer governed by laws or governments; we are governed by multinational corporate interests -- and it's not even the interests of the stockholders in those corporations, as those of us who've watched our savings vaporize during the last few months have learned; it's the interests of senior management.

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