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The Nature of Capital and Bob Herbert's "Stop Being Stupid"

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View Ratings | Rate It Headlined to H3 12/28/08

Today's NYT's has Herbert's latest OpEd, "Stop Being Stupid," in which he points out how extraordinarily stupid the idea - originating with the free market fundamentalists and implemented beginning under Reagan - is "that you could radically cut taxes and still maintain critical government services — and fight two wars to boot!"

Herbert scores many good points, but fails to really nail down the source of these stupidities and what it would take to turn the corner on it. He does correctly name some names, such as Alan Greenspan, Rob Rubin and Larry Summers, but not their ideological foundations.

An excerpt, followed by one reader’s letter and my commentary:

December 27, 2008
Stop Being Stupid

I’ve got a new year’s resolution and a new slogan for the country.

The resolution may be difficult, but it’s essential. Americans must resolve to be smarter going forward than we have been for the past several years.

Look around you. We have behaved in ways that were incredibly, astonishingly and embarrassingly stupid for much too long. We’ve wrecked the economy and mortgaged the future of generations yet unborn. We don’t even know if we’ll have an automobile industry in the coming years. It’s time to stop the self-destruction.

The slogan? “Invest in the U.S.” By that I mean we should stop squandering the nation’s wealth on unnecessary warfare overseas and mindless consumption here at home and start making sensible investments in the well-being of the American people and the long-term health of the economy.

The mind-boggling stupidity that we’ve indulged in was hammered home by a comment almost casually delivered by, of all people, Bernie Madoff, the mild-mannered creator of what appears to have been a nuclear-powered Ponzi scheme. Madoff summed up his activities with devastating simplicity. He is said to have told the F.B.I. that he “paid investors with money that wasn’t there.”

Somehow, over the past few decades, that has become the American way: to pay for things — from wars to Wall Street bonuses to flat-screen TVs to video games — with money that wasn’t there.

For the rest of his OpEd, see here.

In times of major crisis the opportunity presents itself to either recognize what's really wrong and radically change this (and thereby really resolve things), or fail to rise to the occasion and usher in some other more virulent version of what has previously existed. What paradigm one is employing will prove decisive. The following comment on the NYT's website from a reader, one of the NYT's editors' selections, reflects this:

"Nobody can argue with 'be smart.' But how many tens of millions of Americans make their living with a job that, in one form or another, is aimed at getting other Americans to decrease their savings or increase their debt? Too many of us go to work and devise ways to legally pick the pockets of our unknowing fellow citizens in ways big and small. Americans are subjected to a daily blizzard of hidden fees and co-pays and penalties and tolls, each of which wears us down mentally, emotionally and financially. And behind every one of those fees is probably another American who thought it up, and got a big bonus for doing so. We need to revert back (or should I say move forward?) to true capitalism, where the seller and the buyer understand exactly what is being sold and the price that will be paid, and where it is engrained into our capitalist souls that cheating, swindling, hiding, and misrepresenting are immoral, shameful, illegal, and a threat to our country's future. If we know what things truly cost -- whether it be a cell phone, a mortgage, a flight to Denver or a visit to our doctor -- we can can make more intelligent decisions and maintain more control over our financial destinies. This is what actually goes on now, every day, between sophisticated businesses: prices are known, terms are understood, and the commercial code is clearly defined. When there are two sophisticated parties to a transaction, armed with tools of enforcement, things run remarkably smoothly. But consumers are not armed with the information or power necessary to calmly and rationally control our financial destinies. We open our bills wincing at the hidden pain we expect to find, because we are completely vulnerable to small print and long disclosures and agreement amendments and impossibly byzantine rules that we had no choice but to sign on to. Making this change requires more than a "be smart" slogan (which is a good start, mind you). In the short run it requires legal access to information, and penalties and stigma strong enough to dissaude [sic] deception. In the long run it requires us to redefine right and wrong.

— Kevin C, New York, NY"

Kevin C, like Herbert, puts his finger on some important aspects of the situation. I especially like his point that many people's jobs and bonuses are tied to driving other Americans into debt and "legally pick[ing] their pockets."

However, the idea that pure capitalism is the solution is precisely 180 degrees incorrect.

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Cal Poly Pomona Sociology Professor. Author of "Globalization and the Demolition of Society," co-editor/author (with Peter Phillips) of "Impeach the President: the Case Against Bush and Cheney." National Steering Committee Member of the World Can't (more...)

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