Financial FAQs
What is American Socialism that candidate Bernie Sanders has
talked about ever since he has been running for President? In fact, our one and
only example of something that represents any definition of Socialism and
concerted government planning benefiting all Americans was President Roosevelt’s
New Deal.
But there has never been any actual American government ownership of businesses and its profits that is Socialism spelled with a capital ‘S’. Rather, tax revenues of private businesses and individual incomes have always financed government programs and investments.
New Deal-type programs were needed because we were living through the Great Depression with 25 percent of Americans unemployed that required government planning and investments to bring the U.S. economy back to life; and which also enabled the U.S. to win World War II.
There has never been American Socialism or socialist programs as defined by Marx-Engels’ classical definition that communist countries have espoused; that have only worked for a time in dictatorships by a wealthy elite such as rule China, North Korea and Russia.
Why did the New Deal work so well? By directing public investment in both infrastructure and the American people while building up an industrial base that could quickly convert to a war footing by converting automobile and aircraft factories to tank and military aircraft factories in 1941.
The investment in people was firstly creating social security, labor union legislation, Workman’s Compensation and other labor protections to support American workers, while paying Americans to keep working in such as planting trees, building dams, power grids, post offices, and all the public infrastructure we needed to boost the productivity of our economy.
The Roosevelt administration even created the Home Owners Loan Corporation (HOLC) to purchase and refinance more than one million delinquent home mortgages to keep homeowners who had lost jobs in their homes until the Depression was over.
Have we seen any such programs created today that helped US out of the Great Recession and the busted housing bubble? There were one-time spending boosts to public spending and the TARP bank bailout in 2007-08, but no new HOLC program to purchase and refinance delinquent loans and keep homeowners in their homes, which would have mitigated effects of the Great Recession and the tremendous losses for homeowners.
Yet even today, die-hard Republicans (and President Trump) call Bernie’s socialism no different than China’s or North Korea’s, or even Russia’s; where Russia is ‘owned’ by a very wealthy elite controlled by Putin and his oligarchs.
The New Deal was working so well by 1937 that Republicans gained a majority in congress, and convinced Roosevelt to begin to pay back the public debt that had boosted growth. But he had to reverse course in 1938 when the U.S. plunged back into the depression that lasted a total of 10 years, hence came to be called the Great Depression for its repeat performance.
The only reason the Great Recession didn’t become another Great Depression was a proactive Federal Reserve that printed $billions to create more liquidity when it realized government aid and action was necessary to fill the gap vacated by private business.
Why is a new New Deal necessary today? We are ignoring very real crises that could precipitate another Great Depression—maybe not this year or next. One such is looming Climate Change, or Global Warming, that could even create another World War says the U.S. Pentagon in several congressionally-mandated reports, as increasing droughts and rising oceans begin to drown coastal cities and even countries.
Professor James Livingston, a Rutgers University historian, has highlighted the excesses in capitalism responsible for the many post- World War II recessions we have endured (five just since 1980) in a NYTimes Op-ed.
It’s the decline of private sector investment over the past century in anything that continues to grow the American economy for all Americans. Corporations instead began to pay themselves a larger share of their profits in stock buybacks and higher CEO and executive salaries.
“So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.”In the words of columnists Nicholas Kristoff and wife Sheryl Wudunn via a NYTimes’ Op-ed describing their new book, Tightrope, a chilling portrait of the decline of Kristoff’s tiny rural Oregon home town since the Great Recession, “First, well-paying jobs disappeared, partly because of technology and globalization but also because of political pressure on unions and a general redistribution of power toward the wealthy and corporations.”
Bernie Sanders doesn’t have to call his election platform Socialism, since the New Deal was not really a lesson in socialism, but how governments should work for all Americans in a capitalist, private-ownership economy.
Harlan Green © 2019
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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