The Great Bailout

The most essential reasons for the failures of the previous centralized economies were their inability to motivate workers and properly allocate resources. The former Socialist nations recognized the reasons for the failures and adjusted their economies to correct for them. The ‘iron rice bowl’ and guaranteed employment no longer exist in the new Statist nations; freer labor occurs in most industries. State planning has not entirely disappeared, but the overpowering command economies, which allocated resources, have been eclipsed by more market oriented economies that control demand and distribution.  Although still lacking political and economic democracy, the new Statist nations have lifted masses from poverty and constructed impressive economies. Their economic advances pose a challenge to the prosperity of the western world.

The Statist world incorporates low wage consumer production. Its economic successes have generated excessive demand, created resource and material shortages and increased prices of raw materials. Capital has flowed from the western world to an emerging world.  The accumulation of capital and reserves (1.3 trillion dollars in China, $500 billion in Russia, and $75 billion in United Arab Emirates) has diminished the financial dominance of America and Europe.  

The Bush administration is lost in rhetoric and will not recognize that the nation is declining - economically, socially, and politically. Elevated productivity gains are no longer feasible and the mixed economies of the fast growing nations of China, India and Russia have advantages that are not easily overcome. The mixed economy allows controls of currency exchange rates, wages, prices, production facilities, health care expenditures and pension plans, which enable a quicker response to challenges and yield a competitive edge in the global economy. The United States has no choice but to become more social and align government and industry in common goals that will correct the dangerous trends. Some general recommenations:

Cooperation between industry and the public, rather than free-wheeling economics, will enable more rational decisions and predictable operations.
Changes in life style that conserve energy (smaller cars, smaller houses) will lower energy prices, assist in the balance of payments and direct spending to domestic products.
Distribution of wealth will increase spending on vital goods and reduce spending of superfluous goods. It will also bring citizens closer together, increase faith in the system and ameliorate social problems; e.g.: crime, poverty, drugs.
End of military adventures will reduce military spending, reduce the deficit and allow re-direction of wasteful military programs to more beneficial social programs.
Development of a National Pension plan, properly prepared of course, will resolve the Social Security and pension crises.
Development of a National Health plan, properly prepared of course and similar to those in other western nations, will resolve the Health crisis.
Agreements on "outsourcing" will limit job losses.
Development of an immigration plan will preserve jobs for American citizens and prevent competition for wages.

The Paulson Plan is another patch in a worn out American socio-economic system. The plan might be a temporary solution to a problem but it is not a solution to the problems. It disguises the actual problems, which are the stagnation of U.S. manufacturing, an inability to compete in the changed global economy, an unworkable banking system that is constantly in trouble, and the demand for unsupportable credit to promote growth. United States’ history shows that private industry has never provided solutions to recurrent economic problems. Changes in life style and a return to the social awareness that characterized the Roosevelt era might be more applicable solutions for assuring a revitalized America.

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