Like Robert Frost so long ago, Americans stand at the junction of two paths, the tried-and-failed path of corporate capitalism and a path less traveled. To blaze that trail, the nation must first decide on the destination. They face a multitude of choices. To me, there are two logical alternatives: either social justice and a better world for all; or personal freedom with no rules and winner-take-all. I think President-elect Barack Obama has chosen the first goal. Perennial presidential candidate Ron Paul (photo below, right) defines the alternative.
In between is an emotional hodge-podge of religious bigotry, ethnic rivalries and prejudices, ancient grudges, unchecked greed, a lust for control of other people’s private lives… and so on. If Obama and his advisers have the good sense to ignore these distractions and keep their eyes on the finish line, they might come up with a path worth traveling. Of course, they may not be able to follow that path once they find it. There are many who would fight inexorably to pervert the process – from various kinds of ideologues to out-and-out thieves and looters. But it’s worth a try.
If we were to choose freedom and capitalism, we would restore our dollar to a commodity or a gold standard. Federal spending would be reduced, income taxes would be lowered, and no taxes would be levied upon savings, dividends and capital gains. Regulations would be reduced, special-interest subsidies would be stopped, and no protectionist measures would be permitted. Our foreign policy would change, and we would bring our troops home.
Paul says that under America’s current system:
Speculative bubbles and all that we’ve been witnessing are a consequence of huge amounts of easy credit, created out of thin air by the Federal Reserve. We’ve had essentially no savings, which is one of the most significant driving forces in capitalism. The illusion created by low interest rates perpetuates the bubble and all the bad stuff that goes along with it. And that’s not a fault of capitalism. We are dealing with a system of inflationism and interventionism that always produces a bubble economy that must end badly.
You will recall that Paul attracted a surprisingly large following in the recent Republican primary elections. And I believe he offers a logical alternative to Obama’s approach – a radical alternative, of course, with staggering implications. I don’t imagine for a moment that it is feasible but – like so many theories – it is plausible. If Paul joined Bob Barr’s Libertarian Party, he might attract a lot of disenchanted Republicans fleeing Sarah Palin-style theocracy.
Paul argues that capitalism does not exist in America today. “We are deeply involved in an interventionist-planned economy that allows major benefits to accrue to the politically connected of both political spectrums,” he declares. “One may condemn the fraud and the current system, but it must be called by its proper names – Keynesian inflationism, interventionism, and corporatism.”
I would respond that Keynesian economics has not been practiced either. What we have had for decades is a system of government intervention on behalf of special interests with no regard for the nation’s welfare. The American – and global – economy has been perverted to serve the interests of such enormously powerful interests as Big Business, organized professional and labor groups, and the military-industrial complex.
Finally, the American consumer, which has been the beast of burden for this bloated economy, has finally had enough. Like an abused mule, the consumer has balked. And the economy is at a standstill (see chart at left).
Obama and his talented corps are tasked with sorting out this mess. I don’t envy them, but they must not fail. One thing for sure is that they cannot follow the well-traveled path that brought us here. A different way must be found. I don’t think Ron Paul has the answer. I am anxiously waiting to see what the Obama team comes up with.