Towards a populist economics
By Joseph Danison
Online Journal Contributing Writer

Jul 29, 2008, 00:22

As book titles go, The Shock Doctrine is arguably the most evocative in recent years. Naomi Klein�s reflection on the predatory behavior of the Neanderthal economics preached by the late Milton Friedman at the University of Chicago is certainly timely as we enter a period of economic shock and awe. As conditions worsen, we may become suggestible in our distress and willing to adopt solutions proposed by those who have dropped the economic bombs in the first place.

In truth, we suffer from economic Stockholm syndrome because we tend to identify with those who have abducted us and held us in debt peonage. Take for example the bail out of the Bear Stearns bucket shop on Wall Street. Numb and mesmerized, we stare slack jawed at Ben Bernanke and repeat the mantra: �Bail out the rich. Save the financial system. Bail out the rich. Save the financial system.�

It�s the equivalent of those in steerage and squalor voting to give those on the upper decks first crack at the lifeboats. And it�s the best thing to do under the circumstances! After all, they�re the smart ones, right? They�re the ones who understand the system, and if they go belly up, well . . . we�re all screwed, too, aren�t we? Realistically now, if we didn�t bail out Bear Stearns and other bucket shops, and banks, and Fannie and her brother, Freddie, the whole house of cards would come tumbling down and we�d all be selling apples on street corners, wouldn�t we?

We are a rare breed of obliging masochists, perfect schmoos for our latter day overseers, because we have made ourselves complicit in our own exploitation by adopting an American dream unknown to the generations that have come before. Once upon a time, this dream was renowned in the world for its simplicity and rectitude: work hard and follow the rules and you will succeed. That dream was transformed somewhere along the line through the magic of �trickle down economics� into something approximating: don�t work hard, work smart. Play the system and let somebody else carry the baggage. And don�t feel bad about it.

We have become a nation of investors and financial speculators in terms of our understanding of what constitutes economic activity. Better than 51 percent of American households own stocks, largely in the form of mutual funds, pension funds, and 401(k)s. The playground of the rich and famous, the stock market, became more appealing to the middle class around the time the world began to �flatten,� to use the idiotic metaphor of Tom Friedman, and the development of information technology led many to boast that the US economy was changing its blue collar character. The dirty old smokestack economy began to be shipped overseas. The new economy would be pretty much white collar, composed of software developers and paper shufflers of the information age, not to mention those who punched keys on cash registers.

In other words, in the information age, we were all going to become capitalists, more or less, investing in the productive activity of others, as we deluded ourselves with the idea that finance is a productive activity. The financial sector began to account for a larger and larger share of our GDP as the Wall Street geniuses designed ever more arcane �financial products,� Alan Greenspan kept interest rates low, and the home owning class began to view housing as another investment opportunity. We thought we could leverage ourselves into the lifestyles of the rich and famous in the new economy with a newly structured American dream.

Welcome to the new economy, and if you�re looking for someone to blame, look in the mirror. What is your American dream? Let me guess. You were planning to retire on the proceeds of your investments and rental income, maybe supplemented by a Social Security check, and an occasional lottery windfall. Well, you�re in for another episode of the shock doctrine when you finally realize that the rich are different from you and me. The rich live in an exclusive club and your McMansion does not qualify you for membership. When the ship goes down, they will sail away and leave you thrashing in the cold, dark sea. And it was you who gave their interests priority because you never understood what your interests and the interests of the American people generally are.

The stock markets will crash, and with it your American dream. Bet on it. Many of the rich you admire are doing just that. Take Jim Rogers, for example, the commodity king. He lives in Singapore. His kids are learning Mandarin. He�s very short the American dream and long on China. He could care less about the American people because in his mind and the minds of the global elite the earth�s billions of people are a faceless mass whose IQ taken together does not add up to the collective IQ of his own group, numbering in the mere single digit millions, who together own about 85 percent of the world�s wealth.

Follow the pied pipers of finance into the maw of your own financial oblivion if you must, but before we become too dazed and confused, remember that it doesn�t have to be this way. The founders of our republic employed a phrase that was not mere political rhetoric. They designed a system intended for use by �we the people.� That system was co-opted long ago by �we the privileged elite.� They did this because they were able to convince the ignorant mass of people that it was in their best interest that the financial system should be in private hands . . . their hands.

By now it should be clear to those people who are awake and taking notes that the Federal Reserve Banking System is a privately owned and operated financial system, not subject to oversight by the people�s government. It has never been audited nor will it ever be audited so that the people may know with certainty exactly how it operates. It is a temple of mystery in which the wealthy worship their self-interest. It exists in defiance of the spirit and letter of the law as defined in our Constitution.

By now, it should be clear, or becoming clear, that this privatized financial system is a colossal failure. It failed before in a spectacular way in 1929. Prior to that, before the inauguration of the Federal Reserve Act of 1913, the private financial system of the 19th Century failed regularly and with doleful consequences for we the people. This was why the Congress, asleep at the wheel, passed the Federal Reserve Act in the first place; because they were told it would stabilize things and prevent the boom and bust cycle that did such harm, though it never seemed to upset the apple carts of the rich. It was the acolytes of the rich who jumped from windows and stained the pavement, not the rich themselves.

As the shock builds and reverberates in every sector of the economy and around the world, bear in mind that it does not have to happen this way. Congress could reverse the malevolent economic trends within a month by acting to nationalize the private banking system to serve we the people as the founders intended.

There are a number of thinkers working today to create awareness of a populist economics that has been suppressed and forgotten, mostly notably Ellen Hodgson Brown, whose book, The Web of Debt, describes the solution with remarkable clarity. Others include the pioneer Stephan Zarlenga at the American Monetary Institute. Richard Cook whose articles can be readily found on the web is another voice of clarity and compassion.

There are two overriding factors that make a truly populist economics possible, however. The first is nationalism, a patriotic love of the constitutional republic bequeathed to us by our founders. The second is a moral concern for all the people, a sentiment that is conspicuously lacking among the wealthy, men such as Jim Rogers, and other internationalists who have jumped ship and abandoned traditional sentiments such as devotion to one�s own nation.

But, there are those in the wealthy elite, whose love of country cannot be impugned, men such as T. Boone Pickens who appeared before Congress recently and proclaimed loudly that he was an American patriot first and only secondly an oil man, as he offered to Congress the Pickens Plan to resolve our energy crisis and revive our job market through wind power.

A truly populist economics does not aim to �soak the rich� with some variation of a New Deal wealth redistribution plan because the rich are people, too, many of them, looking for solutions to our national crisis. A populist economics does not depend upon an income tax, a mechanism of wealth transfer from producers to investors and speculators, those who own our national debt, many of whom are not Americans, whether they hold US passports or not.

The economic debacle that is staring us in the face must be seen as an opportunity for the American people to begin thinking for themselves. It is time for the doors of the mysterious money temple, called the Federal Reserve, to be flung open, and for a national debate about money to begin. We can all be shocked back to the basics of our constitutional heritage, our true patriotic concern for the general welfare, and our creative can-do American ingenuity. Or, we can give up on the promise of democratic institutions and surrender to the hostile takeover of those who dream of the ultimate privatization: the fascist ideologues of an imperial presidency and a global New World Order.

Joseph Danison is a novelist and commentator in Western North Carolina. Contact him at

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