An American Crisis
The current crisis threatening the economy has been called a financial crisis, it has destroyed the entire investment banking industry, led to the nationalization of several major financial businesses, and is now causing a stolidly Republican administration to organize a safety net for banks that may cost $700 billion. This all seems entirely financial, but I want us to focus on a larger issue. The steady loss and decline of American power. Reality is often not revealed by our senses: we know that well enough from our scientific discoveries. So it may seem as if the sun revolves around the earth as it was thought to do for millenia, but now we know the opposite is true. Simple observation is not enough. We need to dig deeper.
Thus it is now with the current crisis. I doubt that we will solve the deeper issues until we understand the causes that lay beyond our cursory observation. I find it simplistic to say that this crisis began with the torrent of mortgages lent to people who had no way to repay them as soon as the economy turned even modestly against them. If we examine beyond this obvious fact we reveal an economy that for two or three decades was unable to deliver wealth growth without debt accumulation. We find an economy built upon the Reaganite illusion that ‘things will work out’ and that America does not have to look at its habits of consumption. Beginning in the 1970’s a section of our population found that the so-called ‘American Dream’ was shifting further and further from their grasp. America had for decades been the world’s undisputed economic giant, leading in all sorts of economic categories, one of which was oil production. Yet ever since the 1950’s America had begun to import oil. Reagan’s response to these early signs of decline was to gloss over them with cream puff oratory that hid his paucity of action. He promised to cut government spending yet he oversaw a huge increase instead. His administration saw the beginning of America’s dependence on foreign goods and the decline of its manufacturing base. He quadrupled the Federal deficit and started the inexorable increase in debt that now bedevils us. Up until Reagan the American national debt had been in steady decline from its World War ll peak. Since Reagan it has mushroomed. And the middle class he enticed with his dreamy promises and allusions to ‘a city on the hill’ has found it ever more difficult to accrete wealth.
It is there somewhere that the malaise started. It is not Reagan that we should blame. It is we who are to blame for having fell for his balm. Instead of falling for the illusion, alluring though it was, we should have heeded Jimmy Carter’s call to look in the mirror and question the values that were even then leading us astray. Carter called for energy independence. He asked us to sacrifice in a grander cause: that of a freedom defined the way the George Washington saw it, where Americans had the independence to pursue their lives unencumbered by concerns or ties abroad. Reaganism has produced the exact opposite. In order to accumulate consumer goods Americans have encumbered themselves, way beyond their means, both with debt and with foreign policy entanglements so that the flow of goods and oil into America can be preserved.
The current crisis is a logical outgrowth of this process. We have defined freedom as the constant acquisition of consumer goods rather than having independence from intrusion. We made freedom an economic rather than a political concept. The consequence is that we bought the Reagan potion when the acquisition process became more difficult. We made our pact with the devil, and just as in Faust we now are facing the demand for payment.
So this is not a crisis of finance. It is a crisis of definition. What does it mean to be the “land of the free”? And what are we to be free from?
As a side note to this: one of the reasons I sincerely hope the current debate over the terms and conditions of the proposed bailout plan takes some time is that every American should be concerned to defend the constitution and the role of oversight it places firmly with Congress. The Bush regime has trashed the constitution and established an imperial presidency that has more in common with a monarchy than it does with a republic. We must draw a line and say that even though this crisis may be deep we will deal with it from within the boundaries of the laws and traditions that pre-date the Bush usurpation of power. Enough is enough!
