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The Return of Madcap Capitalism

By       Message Robert Parry     Permalink
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Reprinted from Consortium News

For much of the post-World War II era, there was a broad consensus that well-regulated capitalism paired with an effective public sector was the economic model that worked best, especially compared with the Soviet Union's heavy-handed central planning or the madcap capitalism that had led to the Great Depression.

The harsh Soviet approach failed to meet basic consumer needs, and laissez-faire capitalism was too susceptible to the boom-and-bust cycles that brought on the Great Depression. President Franklin Roosevelt's New Deal had charted a middle course that let capitalists make money producing and selling products while the government constrained capitalism's worst excesses.

In the 1950s and 1960s, President Dwight Eisenhower's Interstate highway system and John Kennedy's space program also showed how smart government programs could help create an infrastructure to spur economic growth. Tax rates on the wealthy were relatively high in those days, but an expanding middle class was generating an unprecedented national prosperity.

Without doubt, there were many problems and inequities that the United States and other modern capitalist countries had to resolve, from ending America's racial segregation to eliminating the vestiges of European colonialism.

But it was generally agreed that a mixed economy, combining the dynamism of private enterprise with democratically elected leaders representing the broader interests of society, was the way to go. In this view, capitalism was like a powerful resource that could do much good but needed public oversight to stop it from doing much harm.

Over the past several decades, however, that consensus has broken down in the United States.

Amid relentless anti-government propaganda and endless pressures for more deregulation, madcap capitalism has returned. The consequences can now be seen from the desolate factory towns in Michigan to the oil spill poisoning the Gulf of Mexico, from teacher layoffs in California to crazy market swings on Wall Street.

Yet, a major difference between the public reaction to the Great Depression of the 1930s and today's Great Recession is that the U.S. electorate shifted toward more liberal and pro-regulatory policies after the stock market crash of 1929 while many voters now appear to be drawing the opposite conclusions from the financial meltdown of 2008.

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Instead of turning to politicians who promise to use government to restrain Wall Street and hold corporations accountable, many Americans seem influenced by the anti-regulatory, anti-government messages of the Tea Party and right-wing talkers like Glenn Beck and Rush Limbaugh.

These Americans want to punish President Barack Obama and the Democrats who favor more government regulation. Heading toward the November elections, the Republicans appear poised to win more seats in Congress, maybe a majority that would block any meaningful reforms favored by Obama.

Yet, the irony of this likely outcome is that it has been primarily the Republicans and their right-wing allies who dismantled Roosevelt's economic safeguards and demonized the concept of effective governance that Eisenhower and Kennedy championed, the old consensus that helped build and sustain America's middle class.

How the Right Has Won

For several decades now, the Right has invested heavily in think tanks and media outlets that trumpet the "magic of the market" and deride "big government." The Republicans have relied on this same propaganda machinery to drive "wedge issues" into the American public, exploiting grievances over race and social changes.

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The Right"s propaganda system is now so advanced and dominant that it has convinced not only Tea Partiers but large segments of the U.S. population that the answer to their current economic woes is less government interference and perhaps more tax cuts benefiting the rich.

Polls suggest that the right-wingers are winning this argument despite the irrationality of their "solution" -- that the way to resolve the twin problems of out-of-control capitalism and huge federal deficits is to get government more out of the way and to cut taxes more deeply.

To understand how such a poll result is possible, one has to go back to the days of Richard Nixon who pioneered the use of "wedge issues," like his Southern Strategy to draw angry white southerners into the Republican Party, and to the time of Ronald Reagan when Republicans denounced "welfare queens" to attract working-class whites to an anti-government "populism."

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http://www.consortiumnews.com

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at
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