Populist Anger Has a Role in Shaping Economy

Given what we've learned about the economic crisis, faith in free market fundamentalism -- that the unfettered market will magically solve our problems -- should be as dead as Monty Python's parrot. Even France's conservative president, Nicolas Sarkozy, has proclaimed "Laissez-faire, c'est fini" (Laissez-faire is finished). But where does this leave us?

We can quickly dismiss head-in-the-sand Republican leaders whose solution for every conceivable problem, from space invaders to a reappearance of the bubonic plague, is the tiresome and predictable mantra: reduce taxes on the wealthy.

No honest person takes this nonsense seriously.

Professional economists and the punditocracy tend to divide between genuflecting market worshipers and those now advising the Obama administration to engage in more government spending, plus re-regulation of corporations. We know that over the past 35 years both parties have worked mightily to undo regulations.

Here it's important to note that the sole reason government intervention is gaining favor inside the beltway is identical to that during the Great Depression. It's seen as the only way for the plutocrats to shore up their capitalist institutions, a system caught in a downward vortex, what some experts are terming a "death spiral." That may be hyperbole as there's a well-documented, unsavory history of the privileged and powerful doing whatever is necessary to save capitalism at the expense of everyone else.

But what about the rest of us? Why not a meaningful government solution that approaches the scale of the depression confronting the vast majority of Americans? Surely it's not about finding the money because we know that abundant funds are there for other purposes.

The recent taxpayer mega-billion bailouts constitute an enormous transfer of wealth from workers to bankers.

A better example involves the Pentagon's budget. I wonder how many Americans know that the U.S. maintains some 1,000 military bases in more than 130 countries at a cost of $1 trillion (OMB, 2007) and this accounts for more than half of all discretionary spending?

This "defense" budget exceeds the combined military spending of all other industrialized countries and serves two purposes: A massive taxpayer subsidy to high-tech companies (e.g. Lockheed, Northrup Grumman and Boeing) and the maintenance of what can only be described as an empire. Again, both the military-industrial complex and the empire benefit the few but are paid for by sacrificing the treasure and lives of the many.

No, the reason that spending on purely civilian projects is so severely circumscribed is because it's opposed by economic and political elites. As political analyst Michael Albert puts it, social spending alters the balance of power in society toward working people. It has the potential to put them in a better bargaining position and this in turn threatens the power and profits of those on top.

Of course we shouldn't discount that Obama's limited social spending will soften the worst blows for some Americans. But there's a built-in political ceiling on realizing living-wage jobs, totally free government-run health care, affordable housing, raising the minimum wage, mass-transit, free public higher education, serious environmental protection and expanded social security. Raising that ceiling requires something more.

In 1933, with unemployment at 25 percent (the actual jobless rate today is close to 14 percent) serious unrest from below, including a general strike wave, forced the government to respond and enact a further-reaching "Second New Deal" in the late 1930s. Absent that mass pressure, FDR would not have undertaken his bold initiatives.

It's my sense that in 2009 we have another rare opportunity for public discourse on what a good society would look like. Personally, I'd like to see some discussion of the Swedish model and other European systems but if we're serious about exploring an alternative -- an equitable democratic economy that meets our public need rather then private greed -- then some righteous populist anger is in order.

We need a popular upsurge from ordinary citizens to push the Obama administration in the proper direction.

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