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Don’t Blame Capitalism For Economic Meltdown

Written by The Two River Times. Posted in Letters & Commentary

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Don’t Blame Capitalism For Economic Meltdown

Published on February 24, 2012 with No Comments

PROTESTORS HAVE BLAMED “capitalism” for the economic disaster. Blame instead the money managers and traders who used the people’s capital to speculate. They are not capitalists, and the perversion they engage in is not capitalism. Capitalism is the people’s trillions of dollars invested in companies that produce and distribute goods and services. Wall Street deflected this capital away from job growth exactly as Adam Smith warned that the “prodigals and projectors” would do.
Citizens should be angry about this deflection of capital to speculation, and even angrier that their government has spent trillions of dollars not on jobs but rather on putting the speculators back in business. The $700 billion TARP money from the Treasury was pocket change compared to the $7.7 trillion the Fed pumped into finance capitalism. The banks borrowed at rates as low as .01 percent and then “earned” about $13 billion by “investing” in government bonds.
It is a scandal that the people’s capital was not invested for the benefit of the economy and retirees’ savings. An even greater scandal will be if the surplus cash is not now invested for the benefit of the economy and retirees’ savings. For a quarter-century, now, “Shareholder Capitalism” has sacrificed job-growth programs for the price of the stock, thereby building up enormous cash surplus from layoffs. There is $1 trillion of corporate cash surplus in the domestic economy, with another $1 trillion abroad, about $3 trillion left in 401 (k) savings, and $1 trillion over required reserves sitting idle in the banks for lack of borrowers.
If your government had applied some of the energy and creativity to putting people back to work that they applied to putting the Wall Street speculators back in business, our economic crisis would be over. With a few changes in tax law, money could be moved out of Wall Street into infrastructure repair bonds, investment in growth programs, and additions to consumer demand from dividends.

Locust resident Ray Carey, is the former chairman and CEO of ADT, Inc. and the founder of the Carey Center for Democratic Capitalism (www.democratic-capitalism.com)

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