Why Capitalism Thrives–and how it self-destructs

Republican “starve the beast” strategy worked, as planned

If you want to understand the economic disaster that’s going on across the nation, go to Google and search “starve the beast” and “Grover Norquist starve the beast.” You’ll find hundreds of sites that explain the Republican strategy for dismantling Social Security, Medicare and Medicaid.

Anti-government = anti-capitalist

In 2004 anti-government libertarians and conservatives rallied around Grover Norquist’s pledge, “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.” Economists like Milton Friedman explained that government programs like Social Security, Medicare and Medicaid were so popular with the American public that they could never be reduced or eliminated by frontal attack.

Instead, conservatives should focus on starving the beast (government). If they could get politicians to cut taxes on corporations and the wealthy, it would create a huge deficit and politicians could make the case that government was broke and couldn’t afford to provide even necessary services for its citizens. All social problems would have to be remedied by the private sector—at a profit, of course.

Their hubris is truly spectacular. Conservatives not only openly described how they were going to attack government programs that benefited the middle class and poor, they openly pursued that attack. Incredibly, even after being warned, gullible American voters elected the politicians who vowed to implement those very same starve-the-beast policies.

Bankrupt government = bankrupt capitalism

Now that Republicans and Blue Dog Democrats have achieved their goal of a bankrupt government at both the federal and local levels, they’ve deliberately created an era of misplaced anger. Unemployed and poorly paid private sector workers are angry at public employees with adequate jobs and benefits. Nonunion workers are angry at better paid union workers. And everyone is angry at the big spending government that supposedly created the present deficit by paying too much for Social Security, Medicare and Medicaid.

Actually, private sector workers should be angry at the government policies that caused their own wages to stagnate for the past 30 years. Nonunion workers should be angry that, because of globalization, union workers no longer have the negotiating clout to demand the higher wages that raise everyone’s income. (When unions wages increase, nonunion companies must also raise wages if they are to remain nonunion.)

Not the time for middle-income sacrifices

Then there is the issue that begs the question: Why should middle- and low-income Americans make any more sacrifices for this horrible economy than they already have? They didn’t cause the problem, their wages have stagnated or declined for the past three decades, and they’re losing their homes and their standard of living. On the opposite end of the income scale, virtually all billionaires and millionaires, either directly or indirectly, realized huge income benefits because of those same chronic low wages and the resulting corporate and business profits.

In addition, America’s investors played a major role in preventing legislation, or getting it passed, that gave them huge advantages over the financially unsophisticated. As a result, they now have an overabundance of money. That’s why the stock market continues to skyrocket even when our U.S. economy is tanking for workers. Investors have become immune to conditions in this country, since so much of today’s corporate profits come from the developing world. They actually become richer when our low-wage international competitors keep working class wages low or declining in this country.

Government always sets the rules

Those who control government, either directly or behind the scenes, always determine the extent to which different classes of citizens share in the productivity of society, or even of their own productivity. If our government wants to create a vibrant middle class, as it did between 1932 and 1980, then that’s what it does. If it wants society’s elites to become a new class of royalty, and workers to barely survive, well then, government makes it happen. That’s the direction we’ve been going in for the past three decades, and it’s no accident.

Historian Arnold Toynbee wrote of “The nature and symptoms of social disintegration” in his twelve volume A Study of History. He concluded that “…the horizontal schism of a society along lines of class is not only peculiar to civilizations, but it is also a phenomenon which first appears at the moment of breakdown, and which is a distinctive mark of the phases of breakdown and disintegration, by contrast with its absence during the phase of growth.”

The GOP’s record proves that it played a significant role in depriving the federal government of revenue, and thus putting Social Security, Medicare, and Medicaid in jeopardy.  Removing that party’s ability , even as a strong minority, to hamstring our government should be a primary concern of voters.

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