The Perils of Free Market Ideology

In a recent Google-chat conversation with the brilliant David Welker:

David:
Under such a hypothesis, “bubbles” are not even conceptually valid. Actually, Clinton balanced the budget. It was George W. Bush and his tax cuts for the rich that broke the bank. Do you believe Greenspan was actually warning of the “risk” of paying down the debt too fast?


Janny:
That was a matter of lenders lending out subprime loans


David:
The housing bubble occurred during the Bush administration. In large part because Bush appointees did not believe in their mission to regulate the banks.


Janny:
Yes I see. That’s why many were out to make big bucks


David:
The banks are supposed to take care of themselves. The free market “works”


Janny:
Or loan out money to people at variable rates


David:
Yeah. Anyway, also Glass Steagall, which in the past prevented banks from making risky bets was repealed. So, we have this huge crisis when the bets that the banks made go bad. And then, we bail these rich people who invested in banks out.


Janny:
Exactly.


David:
We spend trillions. Yes, you heard that right, trillions, bailing them out. But then, we can’t even spend more than 800 billion bailing out the economy. And over 1/3rd of that was ineffective tax cuts that in the past have proven not to work very well as stimulus. So, you see where our priorities are. Bailing out rich people MUST be done to “save the system” (where one supposed the “system” is the thing that makes sure that the rich benefit more than anyone else)

Bailing out the economy to lower an unemployment rate that hurts young college graduates and those without any college education, well, that just isn’t important. It really is perverse. The Obama administration is the one that proposed an inadequate tax cut. I mean stimulus. It is the Obama administration who made it 1/3rd tax cuts, even though those are ineffective stimulus.
It is the Obama administration who directed the money to projects that take a long time to get going; a big portion of the stimulus still hasn’t even been spent! It was the Obama administration that came up with HAMP. Which is completely voluntary. Instead of making the banks, who we spent trillions bailing out, modify home loans to get the housing market going again.


Janny:
HAMP, Making Home Affordable Act. It gives servicers financial incentives to modify home loans for a very narrow set of home borrowers. It is completely voluntary. And lenders are given vast discretion under HAMP. And there tend to be few consequences for violating HAMP guidelines.


David:
THIS was the Obama administrations pathetic plan to get us out of the housing crisis.
And we wonder why the recession goes on and on and on. Inadequate stimulus. Inadequate relief for homeowners (heave forbid that we “bail out” an “undeserving” homeowner – but I guess the banks we bailed out were all “deserving” And now cuts to Pell Grants? I don’t know what Obama is thinking.

Janny:
Yeah, I just signed a petition against the cutting of Pell Grants by an additional $56 billion in the next 10 years. I also signed another petition against the UCs cutting $500 million. Not to mention, just got an email from Sojourner ranting against Obama and his administration. It said, Obama should have fought on taxes. The richest 2 percent of the country just got an extension of tax cuts they didn’t need at great cost to us all. There was GOP opposition, and Democrats battling with one another, but President Obama should have been fighting against the self-interests of the wealthiest Americans long before this. He allowed those who benefit from these tax cuts and the political allies they have bought in Congress to frame the debate and set the terms of engagement.”

Now, I ask you, reader, where is the justice? How does the “free market” benefit the collective? How can politicians say they value education when they endorse drastic cuts? Reductions in public spending, inspired by neoliberal ideologies and policies, have created inequality and suffering not only in the US, but in many African countries as well. We cannot call ourselves a democracy when as of 2007, research shows the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%. Now more than ever, we face perilous times.
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