" Political Conflict in the U.S. and Abroad " Part two

Welcome Back fellow Tolerance Troops,

In this edition we'll examine political conflict, both here in the US and around the world. We'll discuss the underlying causes of political conflict and we'll propose specific remedies to these causes. 

In part one we left off discussing the role of lobbyists in Washington, D.C. and the role lobbies play in shaping American Policy. Let's discuss the Bush Administrations policymaking approach during the last 8 years and examine their results. The Bush Administrations policies have been pretty much in keeping with conservative and neo-conservative, right of center, and far right ideals which hold Adam Smiths model of economics in great regard. This model of smaller government, deregulated financial markets, and lowering the tax burden of business, has been followed almost without exception, even during the Clinton Administration, for the last 30 years going back to the Reagan Administration.

During the 1980's gold rush to deregulate the Banking system their were setbacks and warning signs about the Adam Smith model as far back as 1987 when the market crashed and Savings and Loan institutions nationwide started to go bankrupt. The response to this was the creation of the Resolution Trust Corporation, an ad-hoc government agency formed to help bail out the savings and loan industry.  

During the first Bush Admistration and the Clinton Administrations that followed, domestic and global deregulation was countinued but at a more restrained pace than it had been under the Reagan Administration. As a consequense, real wealth, GDP, and personal investment grew for practically all sectors of the American public and its economy. Just before the close of the Clinton Administration the Banking Lobby wrote and sponsored new legislation that favored even more deregulation of the banking market place.

This legislation enabled the rise of a new class of unregulated securities called derivatives. These derivatives were a new variation on the old "Bucket Shops" which existed before the 1907 Market Crash and were quite common before they were outlawed sometime after the Crash of 1907. In fact the new legislation specifically exempted financial institutions from intra-state prosecution under the "Bucket Shops" prohibition of existing state laws.  

What has been the result of all this unrestrained de-regulation and lowering of corporate taxes. The results my friends have been, to put it mildly, disasterous for our economy.  Just as cars traveling on an unmarked, unpaved, and unprotected highway face increased risks of serious collisions, we now have irrefutable proof that this "invisible hand"  theory of Adam Smith as outdated as it is, puts economies at risk of implosian every time it becomes the dominant paradigm. The more advanced our culture becomes, the more dangerous the "Adam Smith" model becomes.

Conservatives and Neo-Conservatives are already laying the groundwork for shifting the blame of  this huge economic sunami to non-regulation of the quasi-government agencies, Fannie Mae and Freddie Mac. They argue that these agencies were too liberal in their loan practices, thereby qualifying otherwise unqualified individuals to receive sub-prime mortgages. However this argument is baseless because these agencies market share was less than 7 percent of the subprime mortgage industry. The bulk of these loans were made by private mortgage companies such as Washington Mutual, Countrywide Mortgage, and Long Beach Acceptance Corporation.

Very bright individuals who are economists and physicists were awarded Phd's and have had long and successful careers at think tanks like the "Heritage foundation" and financial institutions like the "World Bank" developing this severely flawed global economic policy model.  Their model is based on an expanding pie theory. There is only however, the pie itself. It cannot expand outside of itself. If you want more of what's inside the pie you have to make more pie.  That's such a simple concept, but one which many conservative economists cannot seem to grasp or accept.

What could be the answer to the conservative economic dilemma? Could it be that crafting a more transparent, controlled, equitable, and flexible economic theorem in concert with liberal "Keynesian" economists might provide a blueprint for a less volatile and stronger market/consumer based economy. The markets could grow at a more restrained and predictable manner. This could enable more effective long term planning and growth of government and markets alike. The answer may lie in shifting the dominant paradigm of conservatisms "free market" policy model, to more of a "fair market" policy model.

There must also be a concerted effort to change the way conflict based corporations are compensated. There is too much incentive in the current system for this conflict based sector of the economy to undermine efforts at compromise or efforts at resolution of ongoing conflicts. Too much incentive exists in our current tax code for principals of conflict corporations to destabilize emerging governments all over the world as a way to increase their profits and satisfy nervous stockholders.              

This "Fair Market" policy model can work on a global basis as well, and in fact it may be critical to implement this system to avoid global economic depressions in the future.  Working to eliminate punitive, and or potectionist tariffs which unfairly restrict the flow of trade should be a top priority in any efforts to resolve global conflicts. In fact many of the global conflicts underway right now can be de-escalated by implementing " Fair Trade" policies.

This is the end of part two. In part three we'll popose even more specific remedies.

 

Yours in Humanity,

Phillip Sr.