U.S. society remains, despite war and recession, sufficiently comfortable and deluded so that it refuses to face up to the harm it is suffering from allowing its pro-business/anti-people system to continue to exist. It is not necessary to eliminate business, which is a useful tool, but when that tool is transformed by a misguided elite into an idol existing not to benefit society but for its own sake, then the fundamental shape and values of society are warped, and the tool becomes a weapon employed by rich CEOs to plunder the wealth of everyone else. The solution is to create institutions that serve, not exploit.
The campaign by the super-rich to profit by stealing from the poor and using the funds for financial manipulations (rather than investment in productive enterprises) is the worst of all possible worlds for the long-term economic health of the country. Wisconsin Governor Walker’s union-busting campaign and the Supreme Court’s replacement of “one man, one vote” with “one dollar, one vote” are symptomatic. Whatever his sins, at least Stalin did concentrate funds on industrial growth; Wall St. today is worse – using the funds it takes from society for leveraged gambling that destroys lives quite as effectively as Stalin did but without building anything in return. The Obama Administration has wasted four years carefully refusing to face the need to punish financial crime, so the behavior that caused the Financial Crisis of 2008 remains unchanged, as illustrated by the libor scandal and mess at Morgan. As for the millions who lost jobs and homes, they are being defined as “superfluous,” like the Neo-Liberal victims of Pinochet and the Argentine junta’s “dirty war.” More precisely, if the populations of Chile and Argentina were suppressed with tanks and torture by a capitalist elite while the U.S. population faces little worse than mass unemployment combined with bank-plotted and court-supported foreclosures, in a capital-first, people-second society, that preferential treatment is no more than a momentary privilege for the oppressed. Either the U.S. population must demand a new system that puts people first or Chile’s past will be our future.
In the U.S., as is now commonly observed, we do indeed face a major economic challenge, but that challenge is not the cause of our troubles; it is the result. The cause, i.e., the real challenge facing the U.S., is socio-political: the social contract we call the New Deal essentially allowed the super-rich to remain super-rich as long as they accepted sufficient controls (regulation) so that the pie would continue to grow and the rest of society would also get steadily larger pieces. The class war is the decision by the super-rich over the last generation to break that agreement and ignore the size of the pie (long-term economic growth) in order to focus on increasing the size of their pieces by seizing slices from the vastly smaller but more numerous pieces in the hands of everyone else (short-term consumption of the seed corn). Roubini’s enumeration of our economic problems focuses only on second-order effects caused by our first-order socio-political challenge: we are under attack by the super-rich.
Like matches in the hands of a two-year-old, a corporation in the hands of a CEO whose primary value is self-enrichment is a dangerous misuse of a good tool. Wall St. would have burned the house down if its financial conflagration had not been doused by a flood of cash from the poor taxpayers it was fleecing. Corporations, whether financial firms or oil companies, constitute far too powerful a tool to be allowed to exist without the strictest oversight and the firmest sanctions for corruption. In practice, neither of those two forms of “social security” will function in the absence of a solid bolt locking the revolving door. We need a value system that makes it crystal clear that corporations may be useful institutions that society may choose to permit, but that they have no inherent moral or legal “right” to exist any more than a road or a red light or a sewer system has a “right” to exist. Sewer systems are not people; sewer systems are tools. Society constructs and uses sewer systems and red lights and, if it is wise, corporations to the degree that they appear to constitute the best tools available at the moment to achieve social goals. It should be perfectly clear that I am describing a fundamentally restructured political and economic system, with a fundamentally distinct moral foundation in comparison with that currently in place in the U.S.
To put it briefly, economics and politics can be structured for capital (profit) or social well-being. In practice, the two are obviously not mutually exclusive: economic crumbs may trickle down to the masses and a decent, moral, caring society can–given tight regulation, harsh punishment for financial corruption, and firm oversight by an educated population–permit a degree of individual wealth. (Despite a half century of vigorous effort in that direction, it is now clear that the U.S. population lacks both the level of education and the will to exercise sufficient oversight to create such a society.)
To the degree that capital accumulation is preferred over creating a good society, then that is exactly what will happen. Over the last decade, Wall St. has become a marvelous machine for short-term capital accumulation (except for those, like Lehman, that Wall St.’s political lackeys decide to sacrifice). The only problem is that society is being sacrificed. Wall St. need not be, but in its hubris has defined itself to be, the enemy of society.