More Thoughts from William Greider’s Book

Greider extols the economics of John Maynard Keynes and the government led economy following WWII. All of it was condemned by the right but it worked and it worked well. The right saw it as a socialist intrusion. Greider also see correlations to our times. He says debt is not the problem if the money borrowed is invested in the future that creates jobs and wealth and a better economy which is what happened following WWII.

Despite what the right thought the wartime debt receded and for the next 35 years the economy expanded the “debt-to-GDP” ratio declined. We were in debt 120% of the GDP after the war and by 1980 it was 35% of GDP.

Then came Reagan and peacetime deficits which ran the debt back up to 70% of GDP, wartime numbers. But this debt was used to create tax cuts for the wealthy and subsidies to old industries rather than investing in new ones. And, of course, there were the ill conceived war costs in Iraq.

This spending was at the expense of the infrastructure, roads, bridges, schools and the like. And we as individuals spent like crazy; we became the buyer society rather than a producer society.

Though our economy and country is not the same as it was following WWII there are similarities. During WWII Americans had forced saving as materials went to the war effort, everybody tightened the belt so at the end of the war there was enthusiasm for spending and the money, middle class money, to do so. Would we not benefit from government enforced suppression of spending to increase our savings? Would not government investments in innovative industry and work on the infrastructure not benefit all? These are the things that would jump start our economy. And, would this not also lead us to more even import export ratios?

What Greider recommends is not likely to be popular and because of that probably will not happen. But it certainly is time for us to start thinking in longer terms and use economic theories that are proven rather than prolonging economic theories, supply side economics, that have failed.

A lot of this I think hinges upon significant changes in banking practices such as the mega-banks that followed immoral and illegal procedures that cause much of today’s problems. Regulations need to be instated and enforced. The FED needs to quit catering to Wall Street and focus upon middle America which has always be the driving force of true and equitable wealth in this country.

Corporate Pension systems need nationalized or so well regulated that businesses can no longer steal money from the employees while CEO’s continue to collect bonuses. This is in addition to shoring up Social Security.

We are far too complacent as a country and continue to allow abuses by the wealthy and their influence upon the government. It is our government not the means of a selected few who can buy influence. The tax codes need to be radically changed to support progressive change for our society. It is a moral issue not just an economic issue and should be understood as such.

Greider remains optimistic about our future because things have gotten so bad he believes this will force into clearer and more equitable thinking. I hope he is right. I would hope the President Obama becomes for FDR like and that congress, especially congress get behind the necessary changes to bring about a healthy nation.