Zakaria’s Capitalist Apologia
Fareed Zakaria takes to the cover of Newsweek this week to pass out his “Capitalist Manifesto.”
It’s not exactly stirring reading, unlike that other manifesto.
Few apologias are.
And that’s what this one is for the current crisis of capitalism: a big blanket of “Oh, it’s not so bad.”
Says Zakaria: “A few years from now, strange as it may sound, we might all find that we are hungry for more capitalism, not less.”
Here’s his argument.
First, he says, “When countries need growth, they turn to markets.” But not when the markets have capitulated, as they have now, and as they did in the 1930. In such circumstances, it’s much more prudent to turn to government for growth.
Then he piles on some “ifs” to arrive at the “then” that he prefers.
Hold on while I quote him:
“If, in the years ahead, the American consumer remains reluctant to spend,
if federal and state governments groan under their debt,
if government-owned companies remain expensive burdens,
then private sector activity will become the only path to create jobs.”
Well, he boiled the alternative right off that sentence.
And that alternative is federal deficit spending to create jobs and alleviate state budget crunches.
Having performed this sleight of hand, he all but says voila and then concludes: “capitalism remains the most productive economic engine we have yet invented.”
But the engine isn’t working right now. And it’s something serious, despite Zakaria’s sophistry.
His remedy for that is archaic and disproven: “We can ask that people steer themselves and their institutions with a greater reliance on a moral compass.”
Alan Greenspan has already pleaded guilty to believing in this myth that capitalists will be able to self-regulate.
But now Zakaria gives the myth another spin.
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Comments
I just have to respond to the oft-used revisionism that one reader posted concerning Reagan's tax cuts. All too often, in their effort to deify Reagan, his followers like to claim that it was his tax cuts that ushered in the economic growth of the '80's. But let's look at some hard facts that these same supporters chronically overlook. Congress passed Reagan's tax cuts in May, 1981, when the economy was deteriorating fast. And guess what? The economy (officially) remained in a recession until December, 1982, and did not start growing appreciably to lower unemployment until April, 1983. In other words, two full years after the tax cuts passed. Conclusion: the tax cuts failed to stimulate the economy and pull it out of a recession. One reason for this is that most people used the extra disposable income to pay debt accumulated during the Carter years rather than buy new cars or go to Disneyland so most of that money did not circulate in the economy. What finally got the US economy rolling again was the military (read, deficit) spending Reagan put forth, which contributed to the high US national debt that we (and our children) are paying for now. And one more thing. Like Clinton after him, Reagan and his tribe love to claim how many jobs were created during his administration. But they fail to tell us two things; one is how may jobs were lost (which is sort of like a baseball team only saying how may games they won without saying how may they lost) which is significant because during the 1980-82 recession, thousands of factories closed in teh US and moved overseas, which resulted in the loss of many thousands of high-paying jobs and the other is that most of the Reagan jobs created were low-paying, temporary and/or part-time positions (McJobs). One more thing, the real value of the average American income decreased throughout the Reagan era (as it did under Ford and Carter and, later, Bush I). Conclusion, things were never as good under Reagan as the Reaganites keep trying to convince us that they were and let's please get over this tax-cut revisionsim nonsense. If you need more proof, look at Bush II's $1.3 trillion cut. It failed to prevent 2 recessions this decade. How much more proof do you need?