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OpEdNews Op Eds    H3'ed 9/20/08

Saving the Wealthy Class from Itself

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The Gilded Age of America occurred after the Civil War and coincided with the industrial revolution of that period in which great wealth was concentrated to the upper classes. The wealth concentration to the very few resulted from the owners of business reaping most of the benefits of the productivity of the working class. The end of the Gilded Age coincided with the Panic of 1893 and a deep depression. The depression lasted until 1897 and marked a major political realignment in the election of 1896. After that came the progressive era accompanied by legislation to regulate the excesses of unfettered capitalism.

Approximately 30 years later we suffered the worst economic depression in our history because of the excesses of the 1920s unregulated capital and banking industries. Again the government stepped in to regulate the markets through the FDR administration, which prevailed for almost 50 years. The Republicans took control of government in 1981 and almost 30 years later we are again back into economic crisis. Do we now understand what the Republicans have done to our economy?

The reason all of this happens is because the productivity of America is not shared equitably between the working class and the ownership class. And when the working class runs out of money the economy has to tank as it has done several times in the last 140 years. Without government oversight and redistribution of wealth through a progressive tax system, the ownership class is actually self-destructing by stripping the working class of the ability to participate in the economy through consumption and investment. That is why we must help the rich predatory class understand that it is suicidal to continue the economic policy of the Republicans for the last 140 years.

One of the reasons the United States did not fall back into an economic depression after WW II was because there was a large underground economy during the war that made fortunes for those who had previously not had the opportunity to accumulate wealth. That, coupled with the shift to a consumer-oriented economy, allowed the U.S. to experience unprecedented growth from 1946-1962. Unfortunately the military budget has allowed for the skewing of wealth back up to the corporate class and the tax cuts of the Reagan and Bush regimes have again stripped the working class of its ability to participate fairly in economy.

When the middle class gets squeezed, mortgages are foreclosed and business loans default on a massive basis. This ultimately leads to unregulated and uncontrolled panic selling that we are experiencing right now. The lesson is very clear. Human nature is programmed to accumulate as much material wealth as possible to the detriment of the overall economy so it is incumbent upon government to prevent human instincts from destroying our economy.

Now that our government has stepped in to effectively take over the financial industry, it is time for it to suspend the collection and foreclosure of mortgage and other debt instruments until the crisis is over. We need a foreclosure and default holiday that the government can fund as it has done for the owners of the businesses it has acquired. If the government allows for the renegotiation of mortgages and other debt instruments that are in default, the panic selling will stop and the real estate and equity markets will be given a chance to recover by having far less selling pressure. That is just common sense.

I suggest that all borrowers be given an opportunity to have their loan payment plans be reduced to amounts that can be handled during this workout period. By doing that, there will be regular payments on these loans which will at least allow for some inflow to the financial companies that the government now owns. These types of loan assistance programs are central to our recovery and represent the necessary additional step to save the wealthy classes from themselves. It is not enough for the government to assist just the ownership of the financial industry. Now that the government is the effective owner, it must also fund the borrowers and keep the loans on the books to prevent even more of a crisis. The socialization of business that we are experiencing must be accompanied by a safety net socialization of the customer base in order for this plan to work.

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Sheldon Drobny was the co-founder of Nova M radio and Air America Radio. He has supported many philanthropic causes. Mr. Drobny specializes in business and tax matters and is admitted to practice before the U.S. Tax Court as a non-attorney. Less (more...)
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