Mar 312010
 
Authors: Samuel Lustgarten

There’s no denying our explosion of wealth. Our American economy’s gross domestic product has grown from $2.8 trillion to a little more than $14 trillion between 1980 and 2008. Unfortunately, much of that wealth is clotted in the top 1 percent of the population. Free-market capitalists balk at this idea, claiming we’ll see it “trickle-down.” But the other 99 percent are waiting. They’ve been waiting for thirty years.

Brash arrogance in the financial world led to a climax of grandiose proportions. In a lucrative world of high risk and high reward, the markets imploded.

As a country, we’re still reeling on both sides of the aisle because of this recession. But there are some who have been spared the horrors of lost homes, unpaid bills and a decline in the quality of life. From about 2001 to 2007, the 400 wealthiest
Americans saw their collective net worth increase from $1.0 to $1.6 trillion. Meanwhile, average salaries for workers declined by $2,000.

Hallelujah for capitalism, prosperity and the free-market; none of which exist, except in disgusting mutations of their once well-intentioned hope.

Adam Smith, credited as the founder of capitalism, warned against monopolies and the possibility of runaway competition. Walmart is a prime example; as it moves into any city, with tremendous pricing power, mom-and-pop stores disintegrate.

The free-market, touted by the likes of CNBC’s Larry Kudlow, is non-existent. We subsidize our agricultural industry –– undercutting most of the world’s prices. Then, in the ultimate hypocrisy we demand the destruction of tariffs through capitalist arms like the IMF and WB.

Prosperity has come in a perverted, deregulated economic model founded by Milton Freidman. Friedman, who served on the President’s Economic Policy Advisory Board for Pres. Reagan in 1980, coerced American politicians into deregulating the financial industry. Since then, five recessions have claimed the financial lives of this nation.

A plutocracy has flourished –– unstoppable if we don’t act soon. With the wealthy in power, they’ve elected leaders that appoint
Goldman Sachs CEOs to be Treasury Department heads. Pockets are lined and lobbyists violently disrupt the fundamental idea that politicians should represent the people –– not corporations.

Instead, we have representatives who are evil sooth-sayers; appeasing the lobbying gods. Power is ripped away from the people and given to the wealthy.

When $700 billion of TARP money was requested by the frail, reeling banks, we caved and gave them what they wanted. The banking industry had convinced our politicians that full-scale meltdown would occur if we didn’t save them. Rather than securing their assets, companies like AIG paid out $450 million dollars in bonuses to top executives.

The boom-and-bust cycle is widely criticized, and one proponent for regulatory reform is Elizabeth Warren, Prof. at Harvard Law School and Chair of the Congressional Oversight Panel on the financial bailout.

Warren is a hard-hitting lawyer who has made a living defending the middle class in bankruptcy cases. Now that she’s asking questions about TARP and the Timothy Geithners of the world are beginning to squirm. The ways the money has been spent have been largely undocumented, unlawful and unjustified.

This is the Wild West. Until we establish a sheriff who will have complete oversight and regulatory power, the regular investor and middle class have no hope.

Markets will continue to be manipulated, short-term profits will be maximized and the profit-model, which results in the systematic firing of employees, will be hailed as the best thing since sliced bread. If we don’t change it now, we’ll likely see another recession within 10 years.

Unregulated capitalism inherently leads to more losers than winners. Executive pay has skyrocketed compared to average wages. Our financial heroes and success stories breed a society motivated by monetary wealth. Bill Gates and Warren Buffett are rich beyond belief, but their money came from defeating smaller businesses and cutting the extra “fat” (firing employees).

This amoral behavior is commonplace, but there’s a better way. Regulatory reform is our prescription. The opportunity is upon us. Strides are being made, and things like the Credit Card Act of 2009 are a testament to our ability to fix this ailing, predatory system.

Don’t be swept up in the falsetto of financial freedom. Arm yourself with education –– and for God’s sake, unionize.

Samuel Lustgarten is a junior psychology major at CSU. His column appears weekly in the Collegian. Letters and feedback can be sent to letters@collegian.com.

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