A quick review of the reactions to former Reagan-era budget director David Stockman’s anti-capitalist essay in The New York Times last weekend finds a crowd of pundits denouncing him as “unhinged” and calling his criticism “a massive hissy fit.” But none of those detractors addressed the work’s most salient point.
Consider for a moment that America’s biggest banks got a $13 trillion bailout for running the economy into the ground in 2008. Thanks to Ben Bernanke, they continue to take $85 billion a month from the Federal Reserve in exchange for their toxic mortgage-based derivatives. Meanwhile, the rest of the country receives no remedies for its misery. For those who put the public welfare first, the inhumanity of the picture those figures paint was the unassailable crux of Stockman’s piece.
“Since the S&P 500 first reached its current level, in March 2000,” Stockman wrote, “the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the ‘bottom’ 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.”
As Truthdig Editor-in-Chief Robert Scheer said during a discussion of Stockman’s piece on “Left, Right & Center” this week, one in five Americans on food stamps and disability is an “astounding figure and image of America.” Given that adequately paid jobs are not being created by corporations that have received tax breaks over the last three decades, the only way to bring those Americans to a minimal condition of social and economic well-being is through deficit spending. “Obviously it would be better not to have deficits,” Scheer continued, “but we must spend now because we have unemployment. … The question is how do you spend.” To the terrible and deep misfortune of the public, the spending of the last few years went into a Wall Street liquidity trap, in which it’s kept by the banks and not used to get the rest of society on its feet.
More from Stockman on the immorality of the failed stimulus:
“[T]he White House, Congress and the Fed, under Mr. Bush and then President Obama, made a series of desperate, reckless maneuvers that were not only unnecessary but ruinous. The auto bailouts, for example, simply shifted jobs around—particularly to the aging, electorally vital Rust Belt—rather than saving them. The ‘green energy’ component of Mr. Obama’s stimulus was mainly a nearly $1 billion giveaway to crony capitalists, like the venture capitalist John Doerr and the self-proclaimed outer-space visionary Elon Musk, to make new toys for the affluent.
“Less than 5 percent of the $800 billion Obama stimulus went to the truly needy for food stamps, earned-income tax credits and other forms of poverty relief,” Stockman continued. “The preponderant share ended up in money dumps to state and local governments, pork-barrel infrastructure projects, business tax loopholes and indiscriminate middle-class tax cuts. The Democratic Keynesians, as intellectually bankrupt as their Republican counterparts (though less hypocritical), had no solution beyond handing out borrowed money to consumers, hoping they would buy a lawn mower, a flat-screen TV or, at least, dinner at Red Lobster.”
This disproportionate distribution of economic saving grace is a consequence of what Stockman and others recognize as crony capitalism. In that system, corporations and their paid representatives in government wield economic and political power for their own benefit. And it’s Reagan-insider Stockman’s exposure of this ugly fact that has pundits who are not suffering from the recession in a hypocritical tizzy.
As Scheer wrote in his column Tuesday, Stockman may be “some kind of naive libertarian actually convinced that a free market ought to be free of control by the financial cartels and the cronies they purchase in government,” but on the point of proclaiming the corruption of capitalism out loud and in the open, to the bilious effect of riling those who defend the anti-democratic practices that have shaped the economy over the last six years, Stockman deserves recognition. For that, we honor him as our Truthdigger of the Week.
—Posted by Alexander Reed Kelly.