Monday, April 30, 2007

Funding, regulation, trade liberalization...

Alexander Hamilton never designed the federal financial system to be utilized for deficit spending, neither would he had championed the Debt/Consumer Society that we have today in the United States. Though Hamilton tolerated moderate debt, his entire system was geared for fiscal responsibility, having the United States on good credit foundation for foreign investment. The present day's co-dependence on China and Japan buying up T-Bills with their surplus dollars they earned with their exports in the American market is a far cry from what Hamilton had in mind. Hamilton's key words were responsibility/independence in the market. Though AH favored tariffs to help infant domestic industries to get on their feet, he wouldn't had liked the high protective tariff walls that supported specific industries that we had in the later 19th Century ,either. He would had been revolted, however, at the de-industrializism, and reliance on foreign made goods of today.

It is false to point to Hamilton for the current globalization of the market and total irresponsibility of the federal government to fund the country for the last generation. Neither can the Gilded Age and Robber Barons be blamed on him either. Hamilton was brought to the forefront of thinking with the Progressive Movement of the early 20th Century that wanted to check the power and influence of the said Robber Barons and their monopolies(AH taught economic diversity). As demonstrated in last post, AH was never a crusader of laissez-faire capitalism and didn't trust corporations to be left alone to their own devices; certainly he was not a believer in the "hidden-hand" gnostic foolery preached by the neoclassical economic stooges of his day and to the present. To reiterate, Hamilton can easily be seen to be behind the New Deal as the shadow of Jefferson is cast on Reaganomics. Hamilton always believed that the tax burden should be on the wealthy, especially the affluent leisure class that Jefferson belonged to. AH didn't mind people getting rich as long as they worked for it and paid their dues to the Public. Hamilton wanted a harmony of interests, whilst excessive privatization today only has the upper 1% interest in heart and mind.

Free-market goons today charge that liberals and social democrats want to level everyone's income down to subsistence levels. The reality is that the upper crust are the ones doing the leveling as we have seen with the explosive CEO pay , the Third Worldization of wages, de-industrialism, the disapearing middle-class. We have witnessed a transition from fusionist capitalism into corporation feudalism in the last thirty years. Hamilton desired the wealthy to be a member of the orchestra of federalism, not the Conductor. Their energy should be geared to the common good of the United States, not the other way around. And Hamilton wouldn't had been privy to the practice of offshoring - where corporations set up shop in developing nations and market back their goods and services here, duty-free. AH was always an economic nationalist and believed in macro-regulation of the economy. The Jeffersonian opponents of commercialism in the Early Republic actually gave the speculators that they loathed carte blanche to run wild because of their insistence on no federal regulations, opposition to the National Bank and whatnot. This has been clearly demonstrated time and time again in history that excessive de-regulation actually benefits the very people that such policies are supposed to hold in check.

The end of the New Deal social-market can be said to have come from the de-regulation began by Jimmy Carter in the 1970s, and the election of Ronald Reagan later put the final nail in its coffin. Though Carter had a lot of help previously with the breakdown of the Bretton Woods system where the Yankee dollar could not maintain it's fixed- rate international hegemony. Bretton Woods collapsed by it's own weight, however, since the system was set-up to finance the post WW2 recovery of Europe and Japan with trade liberalization. In the 1960s when Europe and Japan was firmly back on its feet and competing in the international market on par with the USA, the path that should had been tread is that of reciprocal tariffs instead of unilateral lowering of tariffs and simultaneously asking everyone else to adopt Free Trade based on faith. There is no teeth in faith-based trade negotiations and the 'beggar thy neighbor' agreement for quotas, as we have discovered to our perdition. FDR's version of trade liberalization was that of bilateral reciprocation, nation by nation. WTO and NAFTA are definitely not what he had in mind.

No comments: