Tuesday, February 12, 2013

The Progressive Era End-game

Probably there was no way for America but the Federal Reserve and the income tax.  "Everyone" was for it back in 1913.  It's what a modern country had to have.  Good central banking and a solid base of taxation to fund the social insurance programs invented in Germany by Bismarck.

But now we are approaching the end-game, according to Jay Zawatsky, natural gas guy and econ. professor.  It's either back to capitalism or the neo-fascism of Venezuela.
Given the power of the media and the inability of the current generation of Americans to withstand even minimal pain, the more likely new order will be one of increasing financial repression. 
He means that the Fed will keep printing money and maintain its zero-interest rate policy.  The ensuing inflation will hit "those who spend significant amounts of their income on food and energy."  Minorities and women hardest hit.

Zawatsky divides the nation into two opposing coalitions thus.  The Democrat coalition includes:
  1. The 1 percent financial elite.
  2. The 50 percent on the government dole.
The Republican side includes:
  1. The top 24 percent (after the 1 percent) business owners and non-union employers.
  2. The second 25 percent, the middle class with aspirations to the 24 percent.
Zawatsky sees the top 1 percent, the financial elite as the villains that "control the political elite through billions in direct and indirect campaign contributions," but I think he is naive.  He is buying into the left's "robber baron" narrative.

The financial elite and the crony capitalists are people paying tribute to the political elite.  It's important to understand this.  The modern ruling class is the class of educated progressives.  They rule through their ideas and through the free stuff with which they buy the votes of the bottom 50 percent.  They offer the 1 percent riches and influence in return for their contributions and their ideological support.  Ask yourself the question.  Can the 1 percent make and unmake careers in the political elite?  Not really.  Can the political elite make and unmake reputations and careers in the top 1 percent?  You betcha.

But the top 1 percent lives high on the hog, because they are very useful to the ruling political elite.

Here's another argument.  Over the past 100 years and more, the government has from time to time used the anti-trust laws to read the riot act to the rising big corporation of the time.  In the 1900s it was Standard Oil.  In the 1930s it was electric utilities and a nice union bill to tame the auto companies.  In the 1970s it was the anti-trust case against IBM.  In the 1990s it was anti-trust against Microsoft.  Now the target is Google.

What is the common thread through these actions?  These were powerful businesses growing to enormous size that were not much interested in government.  They made their money just by being first and best.  

But, as these corporations all learned, to paraphrase Trotsky:  "You may not be interested in government, but government is interested in you."  Government is force; politics is power.  When politicians see a potential rival they act to cut the rival off at the knees.

But back to the future of America.

The key to the future is what happens after the crash, what happens the day after the entitlement programs fail and the "increasing financial repression" fails.

On that day conservatives better be ready with an answer that will appeal to the broad majority of the frightened and desperate American people.  Or it's Argentina/Venezuela time.

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