Musings on economic philosophy

 This piece is in response to a friend's sending me an e-mail discussion among her family members. I will not mention who that is because I haven't asked her permission to do so. I must say the back in forth was vigorous, but respectful. Would it were so that all families and communities could have such debate. As a reader you will be at a disadvantage from not having read the earlier opinions and definitions set out, but I think you can get the gist off it.

 This is my reply to her:

If I were responding to your family members, I would say that the U.S. economy does not conform to the definition of capitalism, and has not for at least since the Reagan era. What we have is more of a global oligarchy, or what I would call corporatism or corporate socialism. In the examples of the businesses of human services you cite, a free market because cannot exist because there is no free choice. The buyer cannot beware, for the reasons you cited and because government has established rules for conduct in those markets that preclude competition. Obama is not in philosophy a socialist, however he has been branded. Reading his book, "Audacity of Hope" brings one a much clearer idea of just how much of a free market person he is. Even his health care proposals are market based. As a person who could most accurately described as a Democratic Socialist, I find Obama to the right of my beliefs. He espouses the notion corporations should be allowed profit, but that the value of those on the factory floor should be compensated a little closer (than 1:286) to what those in the board room earn. Such was a proposal in AT&T's stockholder meeting several years ago. The problem is that the way corporations work, and the amazingly entertwined nature of corpoarte boards and officers, preclude sanity and morality arising from individual stockholders. Ever more concentrated ownership of corporations globally move capital and labor in ways that no mere mortals can grasp. Witness the recent $700 billion bailout of an industry with up to $57 trillion in exposure. To the vast majority of us, saying those numbers is like a 3-year-old saying 40-11, nonsensical. Even Greenspan admits to being clueless. Profit in a truly free-market economy rewards risk. Salaries and bonuses reward competence and success. What we have done more and more since the mid-1980s is socialize risk and reward. Now they are both meaningless. We keep hearing that such and such a business is too big to fail. I wonder if they are not too big to succeed. The labor side of the free market equation has held up its side of the bargain: productivity has increased steadily as corporations and other economic entities have become more profitable. However, labor has not shared in this benefit. The disparity between the median salary in corporations and executive compensation has grown, literally, exponentially. Because of the global nature of the economy, we have our best educated workers losing engineering and technology jobs to overseas workers and reduced to selling pizzas or finding telemarketing jobs. To replace the high salaries in fueling the ecomonic engine, we loosened credit, over and over. We produced "commodities" out of air, then traded that air, combined it with other air, and traded that. We know now what happens when that house of cards collapses. We are engaged in the first set of wars, ever, in which we did not raise taxes to pay for our defense. Even in the conduct of this war, we are stoking the coffers of global corporations, paying private contractors' employees 10 times more than our soldiers in combat. Instead of hiring out of work Iraqis or U.S. citizens, those contractors are bringing in workers from Sri Lanka, Nepal, the Phillipines. Lots of government money, our money, goes out to benefit no one here but those who fill the corporate boardrooms. During World War II, Frank Sinatra paid 90 percent of his salary in taxes. He thrived financially, and talked with pride about his support of the war effort (Paying taxes is patriotic.) And I believe he thrived opulently in the years after the war. Because of the corporate and governmental excess and waist, stupidity and greed, failure to refree the game, particularly in the past eight years, we face the future with almost no resources, unthinkable debt and foreign challenges. Why anyone would even want to be president to inherit this mess is beyond me. In probably too simplistic terms: We face a future of either tax and spend or borrow and spend. So when we start tossing around philosophical tags like "socialism" and "capitalism" we need to decide if those are concepts that even apply to today's world. We must figure out how we can capture our brightest minds to invest whatever resources remain to produce a future for ourselves and our children. Who offers that kind of hope?