Sunday, September 7, 2008

2008 election: Obama versus Reagan

The early 1980:s changed the western world in more ways than most people realize. It was the era of Reagan and Thatcher and their dramatically new economic policies. All things considered, I argue that almost the entire western world is still living in the Reagan-Thatcher era. The reasons behind this are complex, but a Russian saying sums it up rather well: “what is stolen in heaps is not easily returned”.

John McCain does not understand economics, and I doubt he has given much thought to the issues I am about to discuss. It comes as no surprise, therefore, that McCain does not really have an economic agenda. For this reason, he has turned to a line of thinking that is not so much and agenda, as it is the absence of one, namely the Reagan-Thatcher economic agenda. It does not strive to create anything, just to create the possibility of creation, or so it is said. McCain keeps repeating a mantra about small government, less bureaucracy and less federal spending. This is the essence of the Reagan-Thatcher thinking, and some detailed policies that come with it will be outlined below.

His statements on economic issues are rather fun to listen to, as they have no substance whatsoever. He wants America to become energy independent by drilling for more oil and gas in this country, when the reserves here don’t even come close to quenching America’s enormous thirst for oil. Why would we have started importing oil in the first place if we had all we needed right here (back when the oil consumption was a fraction of what it is now)?? When it was announced that Freddie Mac and Fannie Mae were to be placed under the management of the U.S. government, McCain hailed this as a way to make these two entities “smaller and more efficient”, and as a road towards lower interest rates. In both cases the reality is the complete opposite. With this statement, it is clear that he fundamentally misunderstands even his own economic agenda, which is that which was invented and implemented by Reagan and Thatcher: socialize risk, privatize profit.

The economic infrastructure, the transportation infrastructure, government agencies and utilities had been built up with taxpayer money for almost a century when Reagan and Thatcher came along. Their ideas were simple, yet multifaceted and far-reaching. This vital infrastructure was to be sold to the highest bidder, providing the country with a huge, one-time, income that enabled the lowering of taxes for the wealthy (Reagan was the first president to simultaneously lower taxes for the wealthy, and raise taxes for the poor). This process created a huge transfer of wealth in two ways, by transferring the ownership of infrastructure to the wealthiest echelons of society, while at the same time lowering the taxes for the people who now owned the infrastructure.

For a while, this type of selling on the part of the government will provide society at large with a vast amount of money that can indeed have a positive effect on job growth and increased standard of living. For a decade or so (and maybe longer), ordinary citizens might feel as if the economy is doing great, because the wealth that had previously been bound up in things like railroads and Freddie Mac was now spread around in the private economy. The fact remains, however, that vast amounts of money and infrastructure now lie in the hands of a small number of people who have only profit as their goal. This is not an ideological statement, this is how corporations work, and should work. If a company owns a toll road, there is obviously no incentive for that company to repair, make safer, or beautify that road beyond what is mandated by law. Profits will not be hurt, because everyone has to use the road anyway. There is also no incentive to keep tolls low, because there is no competition.

Sooner or later, though, one will start seeing signs of the inevitable decay that private ownership of vital infrastructure will bring. Public utilities in America today are both expensive and in poor condition (the price of electricity in Texas being a good example). Freddie Mac and Fannie Mae are imploding. Healthcare is obviously the worst example, and in that case the evidence does not get much clearer: the overall health of the people of The United States is the absolute poorest out of any first-world country (and poorer than that of many second-world countries such as Cuba).

A vote for John McCain is a vote for Reagan economics. Reagan economics has brought incredible decay to this country as well as incredible suffering for many of its people. It will take at least a decade to get this country back on track through deficit reduction and investments for the future. If McCain is elected, the decay and suffering will continue, and the enormous problems will be put off for another few years, resulting in those problems multiplying in strength.

John McCain is a joke.


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