Will Obama Save America From Capitalism?

The latest Survey of Consumer Finances, for 2004, has been released by the Federal Reserve. It shows the rich continue to account for a disproportionately large share of income and wealth in the US economy: the richest 10% of Americans account for 43% of income, and 57% of net worth. The net worth to income ratio for the richest 10% of Americans increased from 7.4x in 2001, to 8.4x in the 2004 survey. The rich are in great shape, financially.

Perhaps the most invidious part of the report warns that electoral democracy threatens to disrupt the wonderful party the rich are having:

Capitalism is as capitalism does. Maximization of profit above all else – to the exclusion of ethics, morality and the public good – is the mark of a vulture society. And this arrogant, coldhearted endeavor has been a bipartisan effort. Beginning with Reagan, Republican administrations have championed drastic cuts to the social safety net and massive tax cuts for the wealthiest Americans. Meanwhile, the Clinton years ushered in deregulation of the financial markets, and an end to welfare as we know it. Corporations have far more power than a free society can tolerate. And both major political parties are the water carriers of this plutonomy. They are the field hands for the financial interests that currently run the show and drive public policy – and are driving this nation into the ground.

The U.S. economy is worse than at any time since the Great Depression. In fact, as Simon Johnson of MIT recently told Bill Moyers, we are currently experiencing elements of a depression.

But in this jobless recovery, where there is one job for every six job seekers, Wall Street is doing well because its fate is not dependent upon the employment of everyday working people. Rather, its fate is dependent upon government handouts, paper shuffling, and the exotic hustling instruments to which they have grown accustomed.

But we have been here before. Eighty years ago, on October 24-29, 1929, the stock market collapsed. It was a testament to an economic system run amok, unregulated and unrestrained, for the benefit of concentrated, monopolistic power. President Franklin D. Roosevelt ushered in the New Deal – a series of economic programs and initiatives based on relief to the unemployed and farmers, reform of business, banking and finance, and economic recovery. The New Deal meant public works and infrastructure programs, economic planning by the government, social security, and labor standards that favored union growth. There was a sense that workers, consumers and farmers should have influence with the government, not just corporations.

Today – with the erosion of the New Deal legacy creating the huge mess that is early twenty-first-century America – President Obama has a golden opportunity to make things right. But will his administration step up to the plate and bring in the necessary reforms? Just as F.D.R. saved capitalism from itself, will Obama save America from capitalism? Or is the game already too fixed?

These times scream out for a “new” New Deal. Jobs are sorely needed by millions, but will not appear out of thin air. The foreclosed and unemployed middle class are joining the ranks of the poor and the homeless. The national infrastructure is crumbling. And the cartels and monopolies of old have returned. A paltry and ineffectual stimulus package, accompanied by some tweaking at the edges of a carnivorous, predatory system, will not make a difference.

If the Obama administration wants to be a truly transformational force in American history, rather than a slightly-better-than-average, one-term presidency with good intentions, it will give America the new New Deal. The Obama administration will find the intestinal fortitude to take on the banking system, and divest itself of Wall Street enablers and Goldman Sachs cronies. It will cast out such underwhelming individuals as Timothy Geithner and Larry Summers, and seek the advice of Nobel laureates such as Joseph Stiglitz of Columbia, and Paul Krugman of Princeton. It will go beyond its laudable plans for a consumer protection agency, and either reform the current economic system, or replace it entirely with one that reduces the status of corporations, and brings economic fairness and justice to the people.

In other words, President Obama will do what the people voted for in November.