Economists who support free wheeling, unregulated capitalism warn of the psychological affects caused by deflation. The theory is that if people start looking for bargains, the economy will stagnate. Hence, corporations are encouraged not to cut their prices, which ensures that the corporation can ultimately show higher profits.
In reality, corporations need to cut their profit expectations and in doing so, pass the savings on to consumers. Once consumers see they are getting true value for their dollars, and that no one is profiting excessively from their purchases, they will be more willing to spend money.
The American public needs to re-evaluate their fascination with big money makers. That means to stop idolizing movie and sports stars whom they are supporting with every purchase they make. Americans need to realize that no person is worth a million or more dollars for playing with a ball for other people's entertainment.
This weekend, millions of Americans will be glued to their television sets watching these millionaires play with a ball. It is their consumer dollars that are paying those ridiculous salaries. Over $200 million is being spent on Super Bowl advertising. The consumer is paying that bill each time they purchase any products that are being advertised. The argument is made that things like the Super Bowl are good for the psychology of its viewers because it takes their minds off from the bad economy. Perhaps it is time that Americans started doing something positive for the economy by worrying about it and how it affects them directly.
Obama and Congress need to take strong steps towards controlling the economy. This can be done by severely limiting the compensation paid to executives of publicly held companies. Laws need to be enacted that will allow common stock shareholders to authorize and establish any bonuses that are paid to top executives. Corporate profits that exceed a certain threshold and which are not reinvested into the company or new ventures need to be taxed at the highest rates possible.
There are many things that can be done. Those things will not happen because to do so would smack of socialism. That is something that Americans fear worse than born-again Evangelical Christians.
At the Davos (Switzerland) forum -- a gathering of the so called best and brightest in government and business -- one point was repeatedly made: Those who believe in socialism or Confucianism do not believe in capitalism. It is those believers who are supporting those who believe in capitalism today.
Greed by the powerful will help ensure that regulations and controls on the American economy are not put into effect. The powerful are those in industry and Congress and they will not allow that to happen.
The biggest problem behind the economy is the American people. Corporations and Congress can be blamed, but it is the American people who have created the problem and allowed it to flourish. They have idolized the rich and powerful instead of challenging them. That only serves to contribute to the decline of America.
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