It seems like lately I'm stuck on economics. I'm in a tricky situation because there have been some big articles and political happenings with social issues that I tend approach with passion and enthusiasm, but there have also been some big economic happenings as well. I could get a new post on the social issues out as early tomorrow, but for now I'll stick to the economy.
First off the SEC has instituted new regulations against short selling. Wall Street is admittedly a weak point for me, but the move looks to be solid from where I stand. What they did was re-instate a rule which had been in place since the Roosevelt administration during the depression, one which was repealed in 2007. Ever since the days of Regan, Republicans have been waging a war against the New Deal and repealing whatever they can, and I have said before how I believe this to be counterproductive to goals of social equality and economic stability. Again, I'm not entirely sure what this means to the market, but most analysts believe short selling had something to do with Wall Street's inability to stop it's downturn.
Also touching on economics, the Republicans released their revised budget. I have a suggestion for helping the American people, why don't we take the Republican budget draft and all copies and donate them to families who are experiencing financial trouble? That way, at least they don't have to worry about buying toilet paper for their families for a while. I'm not really sure that anyone in the Republican party knows that they're the minority party, because they're acting like they can demand anything they want and be taken seriously. This is extremely counter-productive and even more hypocritical considering how much they talked about bi-partisanship during the elections. During Republican years, Democrats were willing to negotiate on issues and have some dialogue, something their candidate for president talked about excessively during the campaign, reaching across the aisle. Now that the elections are done, though, their tone is a lot different. There's no reaching on the part of the Republicans, just demands to do things their way or else.
The budget, frankly, is ridiculous. It proposes an overhaul of the tax system that basically turns the tax system into a flat one. It's still progressive, but the way it's scaled is such that there are only two categories, and the benefits are substantially higher for the people who fall into the richer category. They propose freezing spending on domestic programs, which is exactly what we don't need right now, and although they propose large spending cuts, the tax cuts they propose exceed $500 billion. In case you didn't know, tax cuts are a form of spending in that the government still loses money, only with tax cuts the money goes primarily to the wealthy as opposed to spending, where the money goes directly to industries and consumers who use it to create jobs and put money back into their local economies. I don't see how there is still an argument about this right now. People aren't spending money, and that is a prime reason why many companies are feeling the effects of this crisis. Instead of helping people get back on their feet and companies to hire more employees, you want to give tax cuts. No requirements that say you have to use a certain portion of the money for hiring, just take the tax cut and do whatever you want with it. Cut jobs, renegotiate union contracts, ship jobs overseas, do whatever you want, as long as it's profitable for your company. That, as opposed to creating green jobs, encouraging small business, and getting consumers to spend more money.
That brings me to something else that I think is absolutely ridiculous, companies who are experiencing profit cutting jobs, shipping them overseas, and trying to leverage against unions in negotiations. Despite posting impressive profits, telecommunications provider AT&T is approaching upcoming union negotiations with the mindset of the union needing to scarifice for the company, aiming to pass health coverage costs on to the employees. IBM, another company seeing significant profits, is going through some significant layoffs here in the U.S., all the while shipping jobs overseas to countires with cheaper labor. This is exactly the type of thing that creates social disparity. Americans, particularly the working class are struggling. There are still some areas that are recession-proof, but those companies are trying to use this recession as an excuse to villianize unions and pass more costs off to their employees. When are we going to realize the way we affect each other in this country? This is the failing of free markets, when given total free run a company will always do what gets them the most profit. This is why self-regulation failed, this is why we need to put regulations and programs into place to safeguard these people. These people are the working class, the largest segment of consumers. Passing off costs onto them should not be an option. When there is a segment of the population that is so wealthy and does not have to worry about health care and the quality of their healthcare, why do we accept that people who provide that wealth for other people should have such a disparity in coverage? Why is it acceptable, when unemployment numbers are reaching all-time highs, that profitable companies are shipping jobs overseas? We shouldn't, and it isn't, period.
I'm not even going to go into their plans for medicare, which most everyone have labeled as ridiculous. What I want to touch on now is one tactic the Republicans are using that seems to be working on some people. They keep saying how much spending there is and how much debt that will create. Some people I have been talking to lately go for this hook, line, and sinker. We're spending too much, we're creating debt, that's not good, right? What they don't emphasize, what they don't want you to realize, is the difference between government debt and spending and the public crisis. By emphasizing spending, they are trying to juxtapose government spending with the current economic strife, which just isn't right. Many governments are in debt, all spend money, and it does not affect the public in an adverse way. Right now consumers are not spending money, business are not making money, they are laying people off, and that is the core of the public crisis. The federal government is largely unaffected by this in the strictest sense. Spending government money will make this better, it will provide relief, and it will jump start certain industries. What it will not do is worsen our economic crisis. We've already gone fairly low, it's hard to imagine it getting much worse, and it got there by a lack of regulation and a growing gap in quality of living between the poor and rich. Those are two things we desperately need to fix. Fixing them will prevent a crisis like this from happening again, and it's only going to happen with the help of government spending. It's a large sum, no doubt, but it's a better alternative to letting this economic crisis get worse and, unlike struggling businesses and families, the federal government can afford to spend some money and take on a little extra debt.
Also in the news, President Cheney says America is less safe. Apparently agreeing with him are the Republicans drafting their budget, because they call for increased spending. This is what I talk about with Republican stubbornness. There is a general consensus among even many Republicans that defense spending is out of control, and yet while the Republicans want to cut programs that directly benefit small businesses and manufacturers in need of help, they want to increase defense spending. We need to be smarter about how we go about exercising our global power. Just spending money is not the answer, especially when it comes at the cost of money that businesses, taxpayers, schools, and other government programs that directly benefit those in need of help desperately need. On a side note, Carlos Santana recently suggested legalizing and taxing weed, and putting the money directly into health care and educational programs. I love this idea, the issue is something I've been meaning to address, and hopefully I will soon get to it.
Back to Cheney, he says Bush Administration policies safeguarded America. First, I'd like to address some fickle logic I've heard used. Some defenders of the Bush Administration have said that there hasn't been another attack since 9/11, so what the Administration has done since then has worked, which is a prime example of specious reasoning. In all the years this country has gone without a major attack, we go eight years without an attack and suddenly what we were doing in the past eight years has all worked? Please, you'll have to do better than that. I would argue to the contrary, and just point to the perception of the two presidents in the Middle East. Our past president left office with Middle Eastern reporters throwing shoes at him, our current president is making public visits and being accepted by the people. Being overly aggressive and imperialistic only serves to increase the number of enemies we have. Even if we keep them at bay for a certain amount of time, we only invite attacks down the road. By being diplomatic and not completely alienating the Middle East with his rhetoric, President Obama has done what Bush couldn't do in eight years with Guantanamo, Iraq, and all the money he pured into those ventures, and that's give America a reputation of being conducive to negotiation and peaceful co-existence.
I'd also like to touch one something else I've heard a lot of, people complaining about hearing the words economic crisis. This, to me, is representative of how we let things go this far in the first place. For as long as I can remember in this country, we've had this idea that we are a true meritocracy and everyone is where they're at because of how hard they've worked. Thankfully, many people are starting to see past this charade. You can say what you want about Karl Marx and communism, but he was a highly intelligent person and he was right about certain things. For one, his ideas of those who control the means of production and those who provide labor. People do not get rich out of nowhere, it always comes at someones expense. If you receive money, you are getting it from someone. Who provides the labor that drives wealth and prosperity? Who buys electronics, cars, and other items that are not necessary for everyday life? Who goes to the movies, who provides the audience that make certain TV programs so lucrative for advertisers? The working class. The working class make up the largest part of America, they put the most money back into the economy, and they provide the wealthy elite with their wealth. This is not inherently bad, but when people who work full-time and need to provide for their families are living in poverty, when the people who benefit off their labor are living in extreme prosperity, and when the mismanagement of corporations and systematic disenfranchisement of the working class by unregulated opportunists causes an economic meltdown, there is a problem. Capitalism is not inherently a bad thing, but it must be reigned in so as not to create a society where the wealthy live like hogs and those who supply their wealth are doomed to an existence of labor and servitude.
What causes this misconception, or at least contributes to it, is the separation of the classes. Those born into prosperity do not see how the other side lives, they don't learn about their struggles or what caused them. They can live isolated from the rest of society, believing the half-truths they've been taught since birth. In the same way, people who say that we should stop using the crisis rhetoric seem to be very disconnected from the struggles of those who have lost their jobs, homes, businesses, and general livelihoods. Those lucky enough to remain unaffected can be apathetic about the crisis because they have the privilege of doing so. Those living out of their cars, those desperate for work, those in danger of losing their homes might not see it the same way. Do you really think you could look them in the eyes and say this isn't a crisis? How far do living conditions have to drop for it to be considered a crisis? The unemployment numbers are staggering, they're the worst this country has seen in many people's lifetimes. Yes, it has not hit every last corner of the country, but how far must it go before some people call it a crisis? How much further can it go? Do we wait until we're in a depression, then call it a crisis? We need to deal with this now, people's entire way of life depends on it. As rich a nation as we are, we can not continue to ignore the middle and lower classes that drive this country's prosperity, and now more than ever we have to make sure we safeguard their chances at prosperity.
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