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The Crisis of America’s Political Economy: Ideals and Solutions November 1, 2008

Posted by Daniel Downs in capitalism, economy, finance, justice, morality, mortgage, politics, power, socialism.
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A few weeks ago one co-worker made an astute observation. He said no one is taking responsibility for the financial crisis our nation is facing. I’m not certain how party politicians fit into his picture, but many on Main Street blame both politicians and the greedy on Wall Street.

The Bush administration attempted to initiate change. Since 2001, Team Bush called on Congress and others to fix the problems evident in Fannie Mae and Freddie Mac. A Republican dominated Congress before 2004 and the current Democrat controlled Congress both failed even give serious consideration to the issues. The fact is the problems with Fannie and Freddie were being criticized internationally when Clinton was in office.

Since their partisan domination of Congress, leading Democrats like Pelosi and Franks claimed they didn’t see any serious problems with the two failing mortgage institutions. They also refused to give any serious consideration to Whitehouse warnings because it might hinder low-income Americans from obtaining mortgages.

The problem was not limited to unqualified low-income people. A local business owner told me about known middle-income borrowers that were given huge mortgages without any verification of employment or any credit qualifications. This was not unusual in Barak Obama’s hometown. I wonder if he was aware of the problem or if he may have been instrumental in its existence. You can be certain that inner-city activists like ACORN’s community organizers were instrumental in getting easy mortgages and other loans for low-income people.

It is not that low-income Americans shouldn’t be unable to own their own homes. The point is the system is corrupt and needs fixing. Status quo politicians, institutional investors, and main street businessmen and women are not unbiased and neither are many social gospel liberals and contemporary stock market capitalists.

Without a strong moral conscience, capitalists become just as corrupt, unjust, deceiving, and oppressive as socialists. And the middle ground is not Washington regulation or welfare. The answer lies in several statements, beliefs, and relational positions upon which our nation was founded. Those statements are “[they] are endowed by their Creator with certain unalienable rights” and “appealing to the Supreme Judge of the World for the rectitude of our intentions.” At the end of the Declaration of Independence, the founding Congress made God a partner in the new nation. That is why America is a covenanted nation with the Creator and Supreme Judge.

The history of the Jewish nation exhibits God’s mercy and justice. Exodus is a story of God’s intervention in history to deliver a group of unworthy humans from poverty and injustice in honor of His promise to their ancestors. Throughout the biblical history of Israel, the cause of injustice, enslavement, and poverty and God’s willingness both to deliver and to lead them in the way of right living was often repeated. This is the story of all peoples past and present. The issues and their solution remain much the same. As predicted by Thomas Jefferson, God visited America to deliver the enslaved blacks beginning with the Civil War and later Martin Luther King’s Civil Rights war.

America secularists are attempting to repeat history.

Unlike the claims of many investors and economists, the need for regaining global confidence in the American stock market capitalism is not the real cure because it is not the real problem. The problem is a socio-political one created by power-lusting, greedy, and sometimes ignorant politicians in partnership with greedy corporate-led financiers and defended by the various institutions and organizations they fund. Until the current election cycle, Democrats wooed the poor with inflated rhetoric that they would help the poor achieve the American dream or at least a part of it. They defined the dream as a decent life-style with a home with most of the modern amenities and necessities of the rich American-lifestyle. They promised a good education that would enable them to move up the ladder to get good paying jobs, homes, cars, insurance, and taxes. Republicans, on the other hand, continued to hold to the view that anyone willing to work hard could earn their way to the same American dream. Those who didn’t were dropouts of life and lazy or worse. All of the inflated rhetoric contained at best a crumb-sized element of truth and no more. I say this because it is evident that the poor are still with us and things are not much better than they were 40 or 50 years ago. The same problems or crises requiring more money to solve them has been repeated for nearly 50 years. Our kids have falling behind the world in science, math and engineering. The achievement gap between poor, middle, and upper income students is too large. Dropouts are still a problem. The wealth gap is increasing. Moral issues driving the culture war are still driving the supposedly non-existent culture war.

Until the current crisis, more jobs were being created but millions of Americans were not earning more income. They still are not. The solution of the liberal left is to make government the sugar daddy of all including the poor, business, and the middle class. Based on the pretense of helping the middle class get adequate health care, leftist politicians claim universal health care is the solution. Obama promises to spread the wealth around, which is another way of saying welfare socialism. Universal health care is socialist institution that will be built by indirectly taxing the poor to pay for the middle income health insurance instead of fixing the real problem.

Hey! What happened to the upper income Americans in these grand solutions?

Here is what happened? Ten percent of Americans own 80% of America’s wealth. That leaves only 20% of all moneymaking capital to small business owners and workers. As you can see, the capitalist American Dream is largely a myth.

It is a myth not because many people don’t work hard. It is a myth because the Dream is owned only by the 10% at the top. Like George Soros attempting to buy the Presidency for Obama, the rich 10% own much of the political and economic system. The halls of Congress are filled with millionaires, corporate lobbyists of all kinds, well-funded special interest lobbyists, foreign-government lobbyists, and lobbyists of institutional investors. There ‘yes’ men and women fill the spots in business and media management, university professorships, and many think tanks.

As in the Roman Empire, most people had a place to live and food to eat, but only the top societal elites owned the majority of productive land, the vehicles of trade, and the wealth. Rome and their client kings robbed the citizenry of their wealth through exorbitant taxes. The same is beginning to happen in America. All of the tax rebates or deductions at the end of the year are not such a great deal when trying to make ends meet throughout the year. It is very beneficial to big government spending. It is beneficial to politicians and an increasing number of government employees who earn a very good income unlike many retail and service workers. It is beneficial to government and investors earning interest or dividends gained by using our tax dollars.

Just think, they want us to believe it is all for our good.

If the Hebrew prophets were right, God is severely opposed to economic injustice, the rich ripping off the poor; then we can be certain America’s Supreme Judge has a problem with America’s economic system. According to biblical history, when God delivered the Jews from Egypt’s injustice, God also smashed their idols too, which is reason for concern. If the Creator and Supreme Judge prosecutes America for it economic injustices as well as the murder of the unborn innocent and for much covenantal infidelity, the profit worshipping elites may have a God problem. The current economic crisis may be driven by more than corrupt and greedy people but also an angry God (to borrow Jonathan Edward’s sermon idea). The American profit-over-people confidence may become more than manic or depressed; it may be crushed under the execution of divine justice.

However, a merciful God carries out justice in stages. Divine justice is not without the opportunity for reparation. That is unless immorality, greed, violence has become so prevalent that even God refuses to forgive the seemingly repentant. Assuming that is not the case, the solution to the contemporary depression-like financial crisis is not $850+ billion of the same socialist solutions. The solution is to return to and restructure the political economy based on sound economic principles governed by godly morality. The kind of principles exemplified in scripture, natural law, and in the works economists like Adam Smith.

There is nothing new about international trade or monetary exchange just as there is nothing new about a few becoming rich off of the hard work of the many. Although many aspects of the global economy based on stock market capitalism is new, human nature has not changed much over the millenniums.

Instead of oppressing the poor and middle class through welfare dependency, New Deal’s third way politicians and their rich benefactors could have channeled the same welfare dollars to business to pay for training, for employment benefits, and for creating jobs and greater productivity that would have likely eliminated the need the welfare over time. That would have shown loyalty to America’s founding purpose.

Instead of forcing millions of Americans to live a pay-check-to-pay-check lifestyle, the 10% could curb their unjust gain so that the rest could earn a more natural lifestyle consistent with the needs of family and economic independence. The consequences would likely be positive and enormous.

 

Note: I have used Democrats, secularists, socialists, liberal left, welfare socialism, third way, and elites not to confuse but to show that they are all part of the same regressive progressivism. I must also exclaim that not all of the elusive elites are Democrats.

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