United States of Communist America
At the time of the founding of the United States, European countries were suffering under crippling government regulation. Founding fathers of the United States, in their infinite wisdom, subscribed to the philosophy of freedom instead of feel-good social progressivism. They founded United States on 3 simple tenets of life, liberty, and property*.
Life: Government should protect citizens from physical harm caused by other citizens
Liberty: Government should promote individual freedom
Property: Government should preserve private property rights of the citizens, mainly through enforcement of contracts
These simple tenets have sown seeds for a nation that eventually became stupendously successful. There is no precedence in the history of mankind where a no-name nation reached the heights that the United States has reached in such a short span of time.
Today, for the most part, these three tenets are meaningless in the United States. A country where income tax was illegal till 1913, now takes up to 35% of its citizen’s earnings just through federal tax. Not to mention state, city, county, property, sales, death, marriage and a myriad other taxes.
A country that was born out of aversion for an omnipotent government now is all but consumed by a monster sized government.
That brings us to Karl Marx. Marx was the antithesis of freedom. His philosophy was diametrically opposite to the principles on which the United States was founded. His philosophy of Communism has killed over 100 million people around the globe. Communism is probably the worst kind of disease that ever infected human beings.
Similar to the United States founders’ subscription to the tenets of life, liberty, and property, Karl Marx (and Engels) passed 10 commandments for Communists. Sadly and ironically most of these tenets are now adopted by the United States in varying degrees. Marx might not be proud of his achievements in the Soviet Union, but he should certainly feel good about what he has achieved in the United States.
Without further ado, here are Marx’s 10 commandments and my commentary is underneath each tenet in square brackets [ ]:
1) Abolition of property in land and application of all rents of land to public purposes.
[The federal government alone owns 650 million acres of land, nearly 30% of the country’s total territory. The government uses this power in many eclectic ways that are beyond the scope of this commentary]
2) A heavy progressive or graduated income tax.
[Shall I say more? United States follows Marx’s second commandment to a tee through its graduated income tax program]
3) Abolition of all rights of inheritance.
[United States taxes 50% of its citizens’ earnings through various tax schemes. The government then takes up to 55% of the citizens’ accumulated wealth when the person dies- this is also called the “death tax”]
4) Confiscation of the property of all emigrants and rebels.
5) Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.
[Again Marx will be proud of what the United States has achieved via its Federal Reserve Bank. Chairman of the Federal Reserve is undoubtedly the second most powerful man in the country after the President. Instead of simply controlling the quantity of money needed to facilitate the exchange of goods and services, Federal Reserve, with its interest rate policies and lending procedures, constantly wreaks havoc on the economy. Federal Reserve gifted the citizens of the United States with 1930s great depression.]
6) Centralization of the means of communication and transport in the hands of the state.
[United States government, via regulation, controlled the world’s largest railway network and destroyed it. Whatever is left of this system is still in government clutches. Government monopolized the telecommunication system in 1913 through AT&T, which only ended in 1984. The government still controls delivery of mail through United States Postal Service. Efforts are currently underway to regulate Internet]
7) Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
[United States government today controls the automobile sector, the financial sector, the insurance sector, and is on its way to take over the health care sector.]
8) Equal obligation of all to work. Establishment of industrial armies, especially for agriculture.
[Sure we have industrial armies- they are also called unions. These armies help politicians with their votes and the politicians pay them back in kindness by rescuing their failing companies and funding failing public schools]
9) Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country.
10) Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production, etc.
[Again the nation follows Marx’s 10th commandment to a tee. Public school system is by far one of the worst tragedies caused by the government. 90% of children in the U.S. go to public schools. Government forcibly collects public school taxes from its citizens. The rich people in the country send their children to private schools. The upper middle class segment of the society, living in affluent neighborhoods, sends its children to successful public schools. Ironically, the middle class and the poor, who need most help, are stuck with failing schools.]
If Karl Marx were alive today, he would be ecstatic about the kind of influence his philosophy is having on the United States.
Is it any surprise why America is in decline?
Venkateswara Rao / Bhanu Prakash:
I am a Civil Engineer with Transportation Engineering specialty. Before I became a professor, as a consultant I worked on several large (huge in $$$ terms) infrastructure projects – including, public transportation, toll roads and infrastructure finance projects.
Obviously, there is so much for me to say on this topic. I am afraid I do not have time to respond to both your comments. But I will be brief:
1. No public transportation project in the world is profitable. They are all subsidized. That is the very nature of the beast.
2. The interaction of landuse (high-rise vs, single family etc) and existing transport infrastructure makes transport infrastructure decisions a lot complicated for any given city.
3. Sure, public-private partnership projects are getting popular recently. (e.g. some LA freeways and an ongoing project on Washington Beltway). But these are solutions to certain congested corridors. However they will never be viable on a larger scale (a la interstate highway system or even a inter-city highway).
4. Sure, Govt agencies in NY and NJ make tolls as a source of revenue. Even with that revenue, for nearly 20 years DOT budgets for almost all states are on shoe strings! They use these tolls to make improvements in the same corridor.
5. Since 1991, 18.3 cents/gallon is the federal fuel tax that is kept in a trust fund and is used exclusively for highways and transit. Try rising the gas tax by one penny and see what happens! Even if you strictly limit this additional revenues to infrastructure projects, people will be on war path for “tax and spend big government.” Lest we forget, for nearly 40 years (1958-1998) it is the same damn gas tax that created a highway system, which is the main backbone of the US economy. Furthermore, we gave a free rein to the Wall Street speculators to speculate on oil futures with phony baloney “India and China are driving more.” the result of their speculation increased the price at pump by as much as $1.50 in a week. This literal highway robbery is OK with the public. But, try rising 1 penny on gas tax – man, it will be outright civil war!
I can’t help but remember that Tea Bagger who descended upon DC to protest (a) (imagined) lack of Obam’s borth certificate; and (b) big spending Government. She drove here from somewhere near Atlanta on “Government” built highways, and while she was here she was complaining about the poor service by the Metro. The other classic – a scream by another Tea Bagger: Get your government hands off my medicare.
People in this country have their priorities wrong.
Mohan garu, If I understood you correctly, you are looking for a political party and especially a ‘leader’ to enunciate an ideology and lead you down that path. It has never happened in the past and it may never happen in future. The reason is simple – political parties and ‘leaders’ have a larger and hidden agenda surreptitiously embedded in their stated agendas. It always happens – whether it is monarchy or feudalism or fascism or nazism (statism) or socialism or communism or even democracy. The tendency is more in democracy because people are less suspicious of the real intent of the rulers and lazily think ‘oh, we can change them in the next election’.
Morality of an ideology is to be examined at a more fundamental level by every individual without looking at who is advocating it and without getting swayed by political interests. Because, like mathematics, reality sucks. It doesn’t change just by propaganda or political speeches. It will get back at you. Not only ‘free market proponents’, no one can have it both ways.
In this hard reality check, personalities don’t matter. Reagans come and go. It is your life, your time, your money and your happiness that you should protect from embezzlement.
You appear to be aware of the Austrian school’s perspective on business cycles. Evaluate the theory on its own merits and visualize where Obama’s socialization will take medicine.
As far as I know, Reagan was a reaction to unaffordable expansion of Government and taxes started in Johnson’s era. He was a great relief to oppressed US tax payers but while the people and media were snoozing in the holiday, Reagan activated the trojan horse in the code – to get re-elected or to benefit his corporate friends or whatever. The question is, what were YOU (I mean the voters) doing? What was the media doing? Afraid of confronting a very popular and powerful ‘leader’? Questioning each of his decisions now is like trying to give a mail offline.
We could be doing the same thing if we don’t question Obama’s madness right now. That, I suppose, is what Chakravarty Nalamothu was trying to do.
Question, fight issues contemporarily. Otherwise, the Reagans will be laughing at us from their graves.
Venkateswara Rao garu,
First a quick clarification – I am not looking for any leader. But I welcome one.
Another short note before I find time for a longer note:
When it comes to handling the economy, I am a big critique of Obama. I do not think the funding mechanism in the health care bill is correct. But, I am not opposed to the idea of some form of social safety net. As with “stopping Obama” I don’t know where you stand on previous administration’s misadventures, but most loud critics of Obama were silent when Bush a) nearly doubled national debt; b) took us to a war on lies; c) lied that war won’t cost us anything, but ended up costing more than $1.5 trillion and counting; d) did nothing to stop Fraud Street was pillaging our savings and giving them hefty bonuses: $141b between 2001-2006 and more later;
I am with you if you are criticizing Obama’s handling of Fraud Street bankers and the economy. I am not with his critics on everything. Both Bush and Obama are redistributionists – they are taking from the middle class and giving it to the rich. Between the two, I have some sympathy for Obama – he landed in the mess created by his predecessors.
In summary – I take a serious issue with the hypocrisy of the right.
Yes, I am a HUGE fan of Austrian school of economics. However, I do realize that it is also an impractical ideology. More later…
Do not think that condemning Obama’s socialized medicine has anything to do with Bush. I am analyzing contemporary issues contemporarily. It does not mean that I am endorsing his predecessors. I share ALL the feelings you expressed about Bush. Obama’s socialism does not compensate for Bush’s follies and the Right’s hypocrisy. It makes the situation worse.
Austrian economic ideology is just as impractical as getting 100 out of 100 in SAT or GRE or EAMCET. It doesn’t mean we should not try to achieve it and compare each other’s achievement against the touchstone of 100.
I rest my case. Thanks for your time
While there are certainly problems to be had with Marxism, I would argue that Marx himself cannot be blamed for the decisions made by Stalin, Lenin, Mao and their compatriots. Marxism in its purest form eliminates class differences and forms an utopia, something certainly not achieved in modern history.
I am interested to know the origins of the figure of 100 million dead.
I would like to know the source of that 100 million dead.
The very definition of ideology suggests a form of ideal world that never existed and will never exist. It applies to both sides of the equation: Marx and Smith. Modern equivalent of Adam Smith’s ‘invisible hand’ is Reagon’s trickle down economics. It destroyed the middle class in this country.
It is naive and stupid to expect people to be selfless and share everything they make with others. That is why communism fell. Not because reagan uttered some nonsensical words at the Berlin Wall.
likewise, it is naive and stupid to think people with wealth are going to invest, create jobs, and lead us to economic utopia. All that the post-Reagan rich did is speculate in stocks and bonds which created one asset bubble after another. Sure, it did create some jobs. But many of those are jobs have no business being there in the first place.
Check out R. J. Rummel’s Death by Government. If you look up the book on Amazon, it also provides several other suggested readings. Rummel has extensively compiled the democides across the world. Once you start learning about these, it is hard to stomach the tragedies.
Agree, there is a difference between MTA and Apple. The issue is Apple products are not a necessary for a New Yorker, where as they “NEED” subway i.e. MTA. It might cost more for a round trip ride, but you can get there without traffic delays. Leaving it in the hands of private company is a dangerous thing. You have to agree that things like infrastructure need to be in the hands of people i.e. government not some private corporation which is only after money/ share holders. Imagine you permit private companies to run MTA,
On a lighter note 🙂
Let us assume Apple , Microsoft and Google run the MTA lines.
Will these companies be innovative ? Yes.
Would they improve the MTA efficiency ? Yes.
Would they eliminate burger flipper jobs ? Sure why not.
Here is what will happen. In order to make more money from the trains Apple runs , they will announce better trains which are smooth, efficient, giving customers magical experience. Folks who can afford the price will buy the ticket and enjoy the ride. Each time they introduce a new train, folks will stand in line to buy the 100 dollar ticket for a two station ride. If the travel distance is up to 8 miles it will be 100 dollars. For 16 miles travel it will be 200 dollars. Then Apple will squeeze money from the vendors selling anything in their stations. There are about 180K street hawkers who sell stuff in and around the railway station. Few hawkers sell good stuff and make money. Others simply can’t make any money. Apple controls what is sold, the price … everything. As a customer if you don’t like them don’t ride the train. Each quarter they make 3 billion profit. But sad thing is there are enough folks in NYC who cannot afford a 100 dollar / 200 dollar train ride. So they walk. They go late to work resulting in decreased productivity.
Google trains will run for free, but they will setup computer terminals on each seat. You have to put your Google metro card in to the machine then click on advertisement links while you are traveling. At the end of the journey you will get points accumulated to your clicks which you can use for your travel. The more links you click the more money they make and give you extra points. Their trains run fine. But sometimes you don’t click on enough add links , so you won”t make money , which means you can’t travel. And OBTW, they know where you are traveling, the stops , the pattern,,,, everything. They can share/ sell your travel information in return for money.
Microsoft trains will not run as efficient as Google or Apple’s. But everyone uses them. The ticket prices vary. You have to wait for a good deal to buy their tickets. Some times you buy a season pass and keep charging it. All of a sudden Microsoft will stop supporting it. You have a buy a new pass with an upgrade fee. The trains stop in the middle. You have to restart the engine. Some times virus and bugs will come into the trains. You will get sick.
Will you agree that defense should be in the hands of government ? why ? why not private ? I hope you agree that defense is government business. Because whether you are rich or poor you need to be protected when someone is trying to attack you. In the similar vein health is something that can attack rich and poor. Infrastructure should be available to everyone living in the land.
Seriously speaking can a conductor be able to live in and around NYC with 60K salary ? And if you don’t like him making that much money , no one is stopping you from complaining. Complain to MTA. If there are enough people complain , MTA will rethink about it. After all part of the money comes from tax. Forcing MTA to make it better is one thing asking for privatization of MTA is hmm, I would dare say criminal.
Bhanu garu- Just go back a hundred years and see how private railways were run. Mind it, they have worked with the government, because you could not acquire the land without government help.
Chakravarthy garu, Agree they ran it hundred years back. But what happened now ? I do not agree with the Automobile lobby and such theories. It is the cheap fuel price , which helped the Planes and the cars , killed the railways. Wait till the gas price goes up to say 5 bucks, the trains will come back. People then want the public money to be dumped into train system.
Hatavidhi, it has become a fashion lately to say we are becoming socialistic country and blaming the government for everything. Hara Hara.
Sorry Chakravarthy Garu, I guess I can’t stop, I wanted another post to make few things clear. The argument that we are becoming communists is bunch of bull being spread by the naive “President Obama was born in Kenya type” republicans. I suggest the republicans to rent Discovery’s “Extreme Engineering” DVDs from Netflix. It will show them how the government created everything from Subways to the recent Boston’s Big Dig tunnels. Imagine folks going to Wall Street offices without the Subway in Manhattan.
Capitalism and free market are at their best now. The country is a hot bed for innovation. From Apple’s iPad to the latest bulb from GE’s latest bulb we are seeing true capitalism at work.
The innovation is there, the government is not stopping anything. Companies are making products the old fashioned way i.e. manufacturing. While the WalMart stuff comes from China, Automobile manufacturing is flourishing in America. Sure, Detroit is dead, but the factories at Alabama making Mercedes Benz cars, Nissan’s cars made in Tennessee, Toyota’s in Kentucky, Honda’s in Ohio, BMW’s in South Carolina, Honda’s Light Jets ( yes Honda making planes) in North Carolina and Ford returning to profitability the entire engineering sector is flourishing. In the tech world, Google is ruling the world followed by Apple, Microsoft, Intel….. the list goes on. In services IBM and HP are ruling. Heck even the Dell jumped in computer consulting and services from the moribund PC manufacturing. The oil companies, food, agriculture industry …all are doing just fine. WallMart just retained its old spot of No1 fortune 500 company.
The only issue seems to be in the Finance sector. Why? I know why. The Wall Street PANDI KOKKULU are having issues scamming people. Why? Because the administration started putting restrictions so that they cannot scam anymore. The issue seems to be in flawed American capitalism of late. In the past the investors, banks and such supported the manufacturing, agrarian sectors. The neo con artists of Wall Street are not supporting the above (manufacturing, services, agri… so on) but are acting like a manufacturing industry by creating and selling the derivatives. Which is vaporware, it’s a scam. They cannot produce anything. They are the middleman for everything. And now someone is watching them closely so they scream foul. And it’s a perfect time for republicans to say we are becoming “Communist government”.
Jesus Hara Hara Vishnu Mahadeva Allah , someone do an IRS audit on these Tea Party folks. And while they are at it include the Fox news folks to the audit list. Everything should be fine after that.
I will stick with the meat of your comments.
MTA (Subways, LIRR, NJ Transit etc.)- Yes, these were built by government. The same government also wrecked the world’s largest private railway network that existed in the United States- Free to Choose addresses this in more detail. MTA is a wreck. For example, Apple faces a threat to its existence from its competitors on a daily basis, which forces innovation and cost reduction. Who is playing that role with MTA? An MTA ticket conductor makes 50-60k a year with a fancy pension plan. For about a 20 mile round-trip ride into the city it costs me $17.50. I thought mass transit was supposed to be cheap, eh? I don’t think the job of a ticket conductor is more difficult than that of a person flipping burgers. So, why does he deserve to make more money? Here is the other tragedy of paying ticket conductors, salaries that are higher than what market commands. High salaries attract talented individuals who otherwise would be working in far more productive jobs. Instead government incentives entice them into brain-dead ticket punching jobs.
“Capitalism and free market are at their best now.”
Capitalism and free market would be in a far better shape if there was less government interference via regulation and excessive taxation. Examples: minimum wages, double taxation of corporate income, healthcare incentives. Each one of these examples is a disaster in itself. Minimum wages cause unemployment (see my past notes on Teluglobe), double taxation results in corporations not paying dividends and executives taking large bonuses, healthcare incentives result in spiralling costs that we are experiencing now.
Derivatives are not vaporware, but an important market that keeps prices of essential commodities like oil, corn, oranje juice, pork, beef prices stable. The beneficiares often are entities such as airlines and farmers. In return for producers desire for stable prices, investors take on the risk of price fluctuations.
Now to Wall Street. It is a classic case of businesses colluding with the government. When a business fails it should go down. When we give government too much power and money, that is what happens. Govt props up automobile companies to help out unions, it props up insurance companies and financial companies to help out its donors, it props up public shools for teachers.
Derivatives are not vaporware, but an important market that keeps prices of essential commodities like oil, corn, oranje juice, pork, beef prices stable. The beneficiares often are entities such as airlines and farmers. In return for producers desire for stable prices, investors take on the risk of price fluctuations.
That was the original intent. In this day in age of zillion hedge funds you are naive to believe that derivatives are being used only in that sense. The Goldman Abacus deal, on which they were accused of commuting fraud was something like the 3rd derivative of the underlying mortgage asset. The CDS on Abacus, which AIG insured, is the fourth derivative. These derivatives of derivatives of derivatives serve no useful purpose other than exponentially increasing leverage and risk. In many cases, they threaten the entire financial structure.
Anybody who understands the fiat monetary system do know that M3 is a third derivative of M0. Now, imagine a fourth derivative, that too with a 40 to 1 leverage on the underlying assets, which themselves are valued in the 3rd derivative.
Now to Wall Street. It is a classic case of businesses colluding with the government. When a business fails it should go down. When we give government too much power and money, that is what happens.
Thank you for making my point – government did not get corrupted on its own. It was corrupted by business interests that themselves are corrupted by a bonus culture that was cultivated by excessive greed and a relentless aversion for regulation. Common to both places are people, and corruption. Government is not a five headed beast and corporations are not altruistic people. Both run by people. Milton Friedman’s euphemism for greed is economic self interest. To me economic self interest and political self interest are one and the same. It is called “self interest”
Since you are mentioned transportation, I will give you a positive example of government role. The Interstate Highway System in US is the single largest public works project in the world was funded by tax payers. Highway Trust Fund is a tax-lock box and it worked just fine for 40 years, until they started refunding every 6 years. Republigoons and Wussy Democrats both shiver at the mention of rising gas tax by a penny to fund highway projects. Yet, free reigning Wall Street speculators have come up with these “financial innovations” that encourage speculative trading in oil futures that result in a jump of over a $1/gallon at the pump in a week. The public is just STUPID.
Now a negative example of private sector role in the same transportation sector: auto manufacturers bought street car companies and dismantled them.
For every bad apple you cite on government, I can cite two bad apples where corporatism led to hurting people’s choices.
Finally, financial innovation by Wall Street is an oxymoron.
You are making a case that the Federal Reserve Board (FRB) is leftist. I could care less about the label. The Federal Reserve Board is an agency that should be abolished.
However, when FRB was headed by a crackpot believer in “free market” theories, all hell broke lose. His relentless pursuit to implement regulation-free free markets has brought us to this brink we are in today. You cannot run away from the record by simply calling FRB a leftist, when the guy who ran that is so much to the right and so wrong.
Mohan garu- I am not sure if you were commenting on my note. I didn’t say FRB is leftist. I only said that the government should stick with ensuring that there is enough money in the market place to facilitate the exchange of goods and services and should not be in the business of controlling interest rates.
I posted a reply to this last night. I wonder what happened to it.
You did not call FRB leftist. It was a deduction from my read. However, we are both in agreement about FRB – it is an agency that should be abolished.
The irony about Greenspan’s Fed is that though he was a staunch proponent of Ayn Rand version of free-markets, he tinkered with the free markets by repeatedly tinkering with interest rates and with financial sector bailouts.
With all this, you could argue Greenspan did not properly implement Rand’s ideology. Likewise, I would argue that Lenin and Stalin also did not implement Marx ideology in its purest form.
The problem is not only with the extreme nature of the ideology that goes against human nature, but it is also with the people implementing that ideology. Why? These very same people in charge get swept away by the same emotions as the rest of us. For example, Greenspan and you believe in the same ideology. You will never get anywhere close to where he has been in terms of making such a difference. But Greenspan’s ego got so big, he thought he could eliminate business cycles by tinkering with interest rates.
I know it is futile arguing with you. If Chakravarthy Nalamotu becomes in charge of a large economy or even a country, he will find a way to screw things up.
With this, I rest my case.
I am against “imlementing” any ideology. The undertone of the word “implement” alludes to forcing my views on you. I am for individual liberties, where each and everyone of us should live and practice the ideology of our choosing- and that is fundamentally what Rand stood for. However, today’s society is all about forcing your ideology on me.
I do not know what Greenspan believed in. But I do understand that he subscribed to objectivist principles. I don’t think business cycles can be eliminated. However, the effort was to temper the intensity of these business cycles. Great depression and the current crisis clearly indicate to me the government’s inability to engineer economies.
If I become in-charge of a large government that controls 50% of GDP and have unlimited power to regulate, complimented with military and police might- I can assure you that I will screw things up and that is precisely my point. You cannot engineer an economy or society. Please leave it to individuals to pursue their dreams. When we all work for our self-interest, the entire society prospers.
Chakravarthy Garu, Your points are not clear. I do not have the bandwidth to write a detailed reply on all points. But I have counter arguments for most of your points. While there is some truth to US turning to socialism type, the country is not becoming communist. And I would gently request you to do more research on points 1,3,6.
Let’s take the point 1, I can tell you with authority that most of the land we call America was really formed by the government with acquisitions. If not for the government acquiring the land and developing it, the USA would have been end up like another South America type continent where Europeans occupied the countries but never really thought of a big picture. The INFRASTRUCTURE is what made this country. Coming back to point 1, I am familiar with the BLM (Bureau of Land Management) agency , I worked for DOI (Department of Interior) on a major finance project. The land was not snatched from us the public, the land was rather acquired and developed for us. Read more about it http://www.blm.gov/wo/st/en/info/About_BLM/History.html.
BLM and Bureau of Reclamation are responsible for the West Coast growth. Take out the Hoover dam, then you will see how much effect it will have on the west coast economy.
I will leave it here. We will discuss points 3 and 6 later.
I love this debate. I agree with you on one thing – American is failing today, but not because of the reasons you are mentioning.
America is failing today because of Reaganomics, which turned this country into a corporatistan (corporate oligarchy) by decimating the middle class. It is failing today because of the lunatic philosophies of Ayn Rand, which were implemented at a highest possible place: Federal Reserve Board, by her best discipline – a crackpot named Alan Greenspan. He admitted as such, but you are still clinging to a failed philosophy. The failure of Ayan Rand’s “unfettered regulation free, laissez faire” free markets is crystal clear and very fresh.
Often, we all have the same data and end up with different conclusion.
What did I write here? G O D I S N O W H E R E.
I see the debate getting a little dirty. Let us get some facts right. Alan Greenspan might have been an Rand follower in his youth but whatever he did as Fed chairman was nothing but objectivist or even libertarian financial policy. Creation of Mac and May which ultimately resulted in the burst of housing bubble is a nightmare for Randists. The way he played with interest rates does not make him even a Reaganite, much less a Randist.
You can’t compare Reagans with Lenins. Lenins do what they do by pointing a gun. The Reagans/Bushes/Obamas do it by demogoguery and depend on your naiveté.
You should always assess Greenspan or Reagan or Obama by what he DOES, not what he or the media says he is. Lots of times, prominent people are ‘created’ by media descriptions and we complain when they don’t behave exactly that way. Another classical case closer home is Manmohan singh and Chidambaram. They are supposed to be liberators of Indian economy. But just see what they did in the last six years. They fueled inflation, created a real estate bubble by playing with interest rates and housing credit policies, created a gigantic NREG program which is playing havoc with agriculture, did not take up a single infrastructure project in six years, cynically used the crisis in agriculture to get re-elected by writing off farmers’ loans…..where has the free market ideology in them gone?
There are simpler ways of analysing every economic issue than by debating type set images of personalities or name calling.
Just to take up one example, whether MTA should be publicly run or privately should be decided by more fundamental economic reasoning than by imagining a sci-fi scenario of Google running it. If you NEED a practical example to understand abstracts, imagine BSNL running all the telephones in India. MTA need not be run by Google or MS alone. Both of them and a number of others can run it simultaneously and compete. The result would be exact same as what we got in Indian telecom industry – call to US @ 50 paise per minute!!!
Its a long debate and an important debate. Please continue.
Venkateswara Rao garu, I don’t think the debate is getting dirty. Granted, it requires some level of maturity, we can have heated arguments and still be respectful of each other.
You are reinforcing my argument that the system is complex that sticking to a true ideology is nearly impossible. I called on Greenspan’s double standard – free market and interest rate tinkering cannot coexist. His biggest folly is not his interest rate tinkering, or advocacy of free markets – rather, failure to recognize and do something about bubbles and fraud. His believe was that “free markets will fix everything.” If you look at some of Rand’s interviews, that is what she ascertains. That is what I call a “blind faith in free markets.”
Furthermore, if it weren’t for excessive leverage and free money policies, we will not have all that (or the illusion of) wealth today. Another way to put it is, Bill Gate’s 50+billion and Limbaugh’s multi-million dollar annual contracts are a creation of Greenspan’s easy money policies. Monetary contraction, which started in 2007, takes the money supply equilibrium towards M0. Bush’s bailouts, which Obama is continuing, only delay the inevitable. I would be very surprised if this doesn’t end with a) devaluing the dollar; and/or; b) massive deflation. Bernake is trying to inflate his way out of this mess, which in a sense – outcome a). However, quickest way to get to (a) is not to bail banks out and hope they will continue to lend to people who got decimated in this rout or to those who don’t have jobs. Rather, to devalue the dollar.
Finally, no doubt some policies push a country more towards one direction than the other. I take the view that Regan, Clinton and Bush policies contributed to this mess. Obama is making it worse. When I say that, it is just not lip service – I mean it.
I am Venkateswara Rao. I was not reinforcing your arguments. Pl do not repeat the mistake of looking at what Greenspan SAID. Look at what he DID. While turning interest rates upside down and creating Mac and May to further the political interests of whoever was the President, how could he say “free markets will fix everything”? And how did you or the media lap it up without questioning? The naivete of the US society enabled him do this doublespeak.
How can you expect him to do anything about “recognising and do something about bubbles and fraud” when he himself was creating the bubble? If he says he didn’t know it, he is lying or is an idiot.
Sticking to a true ideology is NOT nearly impossible. If an ideology is moral and life enhancing, stick to it and strive towards the ideal. Blind faith in anything is injurious. Having reasoned faith is not.
Oops, Sorry – called you by wrong name.
Venkateswara Rao garu,
“Sticking to a true ideology is NOT nearly impossible. If an ideology is moral and life enhancing, stick to it and strive towards the ideal. Blind faith in anything is injurious. Having reasoned faith is not.”
I agree with the last two lines. But, I disagree with the notion that sticking to an ideology at such a large scale without being completely influenced by political interests is possible. It is nearly impossible. Once in a century a leader will be born who won’t get swayed by other political interests. In this country it was possible only for Lincoln. His leadership was on the moral side, not on the economic side. ON the economic side, I am yet to see one leader like Lincoln. Sorry, I don’t buy Reagan as a strong leader. For, IMO, he laid the foundation for boom and bust economic cycles. Economic theory is not as black-and-white as individual rights. Private sector or public sector, the power or money elite ultimately resort to oppression of the disadvantaged. Bush showed some courage and let Enron fail (Clinton would have bailed them out). And then he folded when Paulson came for a bailout of the Wall Street. If he is such a strong leader, why did he do it? More importantly, why did he fail to act on rampant mortgage fraud committed by mortgage bankers?
Volcker gave the tough medicine the economy needed. Why did Reagan shun Volcker and appoint Greenspan? It was the ideology. Reagan wanted a “deregulation” champion. He got more than he bargained for.
No matter who comes to power, they cannot stick to a core-economic ideology. By its very nature, all real world situations are special cases for any economic theory. Example: Greenspan’s policies are a special case for free-market proponents. If some Yellowspan comes tomorrow and nearly destroys the economy again with the same beliefs, believers in Free Markets will make the same special case arguments. Keep a watch on Bernanke – he has some more voodoo beliefs. He could not see a bubble when it developed on his watch. But he is “an expert” in fixing the economy after it imploded due to bubble’s pop. Bernake is going to make Greenspan look better.
I agree that Greenspan’s role at the Fed is contradictory to what he preached. But even more fundamental argument is that the very existence of Fed is “anti-free market.” However, the Fed’s easy money policies have accelerated wealth creation. NO ONE can argue with that. The free-market proponents cannot have it both ways. “I am worth $1 billion. I am against the existence of Fed.” You are worth $1 billion because of some misallocated capital. The economic value you created may be important. But, it is more than likely that you got lucky with the magnitude of reward for your success. Easy money leads to malinvestment (i.e. misallocation of capital). That in turn leads to ill-gotten wealth.
Good point on the Media perception rather than who the person really is. However I totally disagree with you on MTA. I am not an economist. Probably I am the least qualified among the ones ( Mohan garu, Chakravarthi garu and you) commented on this topic to talk about it.Your points are good. Nevertheless , here is my 0.02. Privatization of the telecom is not the same as running a subway system. The topic is deeper, lots of details , details. Its a big debate for another day.
Long story short , economics is not always the ultimate aspect when undertaking public projects. It doesn’t make sense to build Hoover dam, Interstate systems even the recent EZ Pass system if you purely go by economics.
I am not afraid of thinking up hoover dam or the interstate systems purely on economic reasoning. They were not built privately because they were not allowed to be built privately. Roads in India were not allowed to be built privately till recently. Now, every four lane road is a privately built BOT (build-operate-transfer) road, collecting toll. Of course the surcharge on petrol and diesel introduced for the sake of road building still continues!!!
You see one of those 150 year old bridges between NJ and NYC still collects toll. It is publicly owned. Do you think the bridge has not yet paid for itself? The Govt agency concerned must be making it a source of revenue. Private enterprise would not have been able to do that. They would have had to stop collecting toll after their contracted period was over. If Hoover dam and MTA were economically unviable, the Govt had no business building them with the tax dollars of a rancher in Kansas or a boatman on the Niagara. And if they were economically, viable, you would see a gold rush.