SAVING CAPITALISM

This week’s chemotherapy seems to be sending me back to some kind of working groove. The process is a kind of coming together of existing ideas – my way of saying there is nothing original in all this, it is just a coalescence of facts and ideas, began with “60 Minutes” and an interview with Christine Lagarde, formerly France’s Finance Minister and is now head of the International Monetary Fund. She warned of economic dislocation leading to “social unrest.”

The Globe and Mail, in one of its centre spreads, commented on the end of left wing government in the Euro zone, punctuated by the victory of the centre-right in Spain. (Even though it seems like only months ago that the left won following the disaster of the terrorist attack on the Madrid Subway.)

In my wandering I remembered how many historians gave Roosevelt credit for saving Capitalism. There is a common thread. Lagarde recognizes that governments, of any political persuasion, were going to have to come up with money. Monti in Italy has already started. Tough guy, he will increase revenues and make the wealthy pay.

Behind all this is the threat of social upheaval. Roosevelt put a damper on the depression by spending millions in public works. (Critics complained that he stopped too soon just when America was on the brink of recovery. The war solved that one.)

That there is already social unrest is a fact. The rioting is back at Tahrir Square, There is unrest over cuts to social programs with Greece leading the way. The traditional establishment method of dealing with financial shortage is to impose austerity. “Austerity” usually translates into cutting benefits to the ones who need item most while making sure the wealthy do not suffer. The word used is “entitlements” which always sounds like poorly placed charity. The facts are always this: the ones who need it most are the ones who will spend it because they have to, while the ones who need it least continue to hoard money beyond their however expensive tastes.

Big companies squirrel away capital, the latest ploy being that they are spending capital to re-aquire assets in stock buybacks while spending little on capital or labor improvements.

I am truly sorry that we have marginalized the rather flimsy “dissent” here by deprecating the efforts of the “occupiers.” We have, instead of confronting the very real problem of inequities chosen to sneer at their effort characterizing them as intrusive koombayaw tent dwellers with no targets or policies. Unless of course you include silly stuff like unemployment and the rising costs of education.

The Euro group will have to face this reality: the stubbornness of Angela Merkel and her obvious striving for European hegemony. Ironically, when you look at “social unrest” is Germany; you would have to conclude that if there is any it will manifest itself in anger against the rest of Europe that wants Germany to bail it out. The Germans think it is a one-way street with all benefits flowing one way, from Germany to the rest of Europe. They refuse to admit that the Euro zone has been good for them, expanding their economy and guaranteeing their leadership. I would like to have been a fly on the wall for the conversations between David Cameron and Angela Merkel.

Behind it all is the utter tragedy of American politics, where November 2012 has trumped everything else; where the select panel of legislators fought fiscal change to a standstill, and where the American public has given a 7% approval rating to Congress. They got what they voted for. They just didn’t get what they deserved.