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Posts Tagged ‘capitalism’

Could the economy get even worse?

2011 will be remembered as the year of disaster capitalism. Almost $6.3 trillion was wiped from the global markets. While the Dow went through major upheavals almost daily, the net gain/loss for the year was absolutely flat. After all the drama, 2012 is looked to as the telltale year of global health for decades to come.

The Eurozone woes which began in earnest at the end of November are as yet unresolved, despite reassurances of European leaders and wishful thinking on the part of American analysts. In truth, European and US banks are broke. There is no new money to be found, and the engine of the global economy is running on fumes of mounting debt. At some point the whole thing has got to crash and many analysts see it all breaking loose in 2012.

Sovereign debt was a term that came into the public conscience in 2011, and in 2012 we may see the peripheral Eurozone countries so overwhelmed by their indebtedness that they will be literally owned by the financial institutions which have helped them simply tread water. Ironically, when countries such as Greece, Italy, Ireland and Spain are forced out of the EU, they will again fall back on the drachma or the lira, the currencies which will reinstate their sovereignty at the cost of their economies and their living conditions being laid to ruin.

China will become more a focus in 2012, possibly through a trade war with the US. The China economy is predicated necessarily of an 8-10% annual growth rate, and the country has fallen to 5%. It’s a bad situation and the only solution may be to lower tariffs to such an extent that they are giving away their own and made-for US products, hoping that the bulk of trade will make up for lost revenue. It’s a risky strategy in the current global downturn, and if there is no global turnaround, China might be forced to invest even more heavily in their military strength as the best and only economic driver. Already the prodigious growth spurt in new weaponry is causing a stir, and the China military industrial complex is being compared to the US circa 1945-60.

Taken as a whole, the health of the global economy is greatly dependent now on a demonstrable upturn beginning in 2012. Every country, including the US, is in jeopardy if the situation remains static or falls farther during the coming year. The potential for military upheaval in the Middle East and in Asia has the world is on edge.

Brazil is now one of the healthiest and most stable economies in the world. It is quite possible that South America, which is traditionally viewed as the largest aggregate of third world economies, may in fact be looked to more as driving the global recovery during the new year.

Ironically, it is the Mayan calendar which forecast disaster by the end of 2012. Let’s hope they got it all wrong.

Oil and water don’t mix

It’s often said that U.S. democracy is a model for the world, however it should be remembered that we live in a republic, over which democracy and capitalism are overlaid as fluid agents which advance and retreat over time.

All that can really be said about American democracy is that it works best for the rich. Capitalism is anathema to real democracy because the playing field for wealth is not level. Those with wealth are more likely to have their wealth enhanced through investment and legal support in good economic times and bad, while those starting at midfield with moderate holdings and income more often than not slide down the ‘ladder of success’ as time passes.

What we see now is the greatest economic disparity this country has ever known, with the middle and lower middle classes falling at almost free-fall speed, while the upper middle class and wealthy feed on the lost wealth of the lower classes. It is economic Darwinism in its most blatant form.

The truth is that capitalism and democracy cannot possibly work together, much less at the same time. They are mutually incompatible concepts. Your right to vote is meaningless when measured against the power of corporate lobbyists who actually shape policy and decide elections. As more power is given to the increasingly wealthy, it means that those on the lower rungs have less and less power as their fortunes and earning potential decline. Therefore it may be said that America’s democracy is controlled according to capitalist dominion.

The founding fathers were very careful not to spell out how the game was to play out and left even the playing rules vague. All that really shifted with the passage of the Bill of Rights and the four-month long Constitutional Congress of 1887 is that we would no longer be a nation ruled by a sovereign entity. It did not decree that we would be a nation controlled “by the people” in any real democratic sense.  It meant only that the power and money used to govern the land were to be determined by individual initiative rather than birthright.

Democracy can no longer be looked to through rose-colored glasses as a means of leveling the inequity on the playing field upon which we now find ourselves. The talk of a double dip recession is sugar pill passed down to us from the central government, the Fed, and the press. In fact we entered into a possibly final decline in 2008 that has only gone more steeply more and more quickly downhill in each following year. Our period of long-term unemployment is unparalleled in our history save for the Great Depression, and given that we are both a cause and an effect of the global economic decline, it is unlikely the US will be able to pull itself up by its own bootstraps as quickly as it was able to do in the 1940s.

It’s easy to bandy about the term ‘democracy’ when in fact democracy has and always will play a secondary role as a bit player on the capitalist stage.