BACKWARDNESS IN AMERICAN GOVERNMENT - CORPORATE BAILOUTS

[Morpheal]

BACKWARDNESS IN AMERICAN GOVERNMENT - CORPORATE BAILOUTS

It is my opinion that the US government had no constitutional, legal, right, to bail out big corporations. The constitution demands that the "general welfare" of "we the people" (not we the corporations) be considered first, and that places the plight of threatened and inadequate federal and state programs in precedence to corporate handouts. Not to mention the plight of small business, farmers, and workers in every other sector who would bear the prejudicial burden of the bailout. General welfare means job creation of new jobs, when sectors fail, as well as providing for other needs. It does not mean propping up the failures. Some of the failures had the best MBAs, accountants (remember that status craze and where did they take the economy), the best engineers, IT professionals, and management that money could buy. That goes for the finance sector, the automakers and others in the same big sinking boat. They had what they said they needed, and they failed. Now government needs to create alternatives. At least in the immediate, and likely into the long term future. Every penny of government money is needed elsewhere for that and for the well being of people, and must not be given to the corporations it is being given to. Only in that way can government assure it is performing its primary function.

Some have a false belief in trickle down to grass roots from big multinational corporation bailouts. While little does, it is not going to be anywhere near enough. It is a disastrous policy and will fail. The right and constitutionally legal strategy is to have trickle up, from grass roots spending stimulating car purchases. Infrastructure, education, housing, farming, environment, healthcare... spending can all trickle up from "we the people" to support corporate industry. People who have jobs will buy cars. Businesses that remain solvent will buy cars and trucks. So where is the problem ? Grass roots spending will support the corporations in question. Probably much better than direct bailouts ever could, but of course it does leave the corporations open to any competition. They might not get the dollars, and someone else might. It all depends on what they can provide as value. Well, that is only fair. Trickle up is the right way around, and trickle down from big multinationals is backwardness. Government spending on an American multi national manufacturing corporation leads to the feeling of need to force grass roots buying of the products of the supported corporation, and that is not really free enterprise. How to do that is another question. Likely it will not happen. Someone else’s product might win out, and even more so in a troubled economy. Legally you cannot interfere, if you are government, to manipulate the factor of competition, unless you introduce heavy tariffs, but that too is a thing of the past, and globalization of investment and multinational manufacturing ended that possibility in any really practical sense. So how do you arm twist now ? There is no legal way to do it. So what happens to the government money if bailouts happen ? The pay back in any terms might never be materialized. That too makes it illegitimate.

Nationalizing some defense components of big corporate industry can resolve the remaining issues and can cut defense costs significantly. Very significantly. Yes, there are portions of the automakers and other troubled industries that are significant to defense but in a corporate bankruptcy and restructuring, those divisions can be more readily nationalized at a much lower cost than otherwise. Not a bad idea, that chapter 11. It could be good for Uncle Sam too, but Uncle Sam isn’t usually that clever. He’s suffering from backwardness too.

For large corporations, bankruptcy restructuring, is far from the end of the world. It can be the beginning of a new lease on life. It is far different for small enterprise, and individuals where fiscal catastrophe can ruin families and entire life times. We cannot compare the impact of fiscal suffering on a large corporation with the impact on people. In fact large corporations do not suffer, but sole proprietors, family run businesses, and individuals do truly suffer. The question of where the government money is going to do the most good is a very important question.

Remember too that multinationals are exactly that, and their supplier base is also multinational. Globalization took care of that. You have to look at where the parts come from, and who makes them. You have to look at who has made a deal with whom, and where. You have to look at who the investors are. Some significant portion is multinational, not American. The big multinationals trade on the international market and anyone can buy in, and many have bought in. It is not simply a matter of American investment anymore. It is also not simply a matter of American suppliers anymore. When that is all spelled out and accounted for, you realize maybe it isn’t what it seems to be, in the first place. Something is wrong with the initial perceptions that led to the panic bailouts in the first place. It seems more like political spin by a few, twisting the minds of government, away from its primary task of looking after all of the people, to concerns about the investments of some of the people. That strategy of looking after those investments in fact not provable as a valid strategy for maintaining the general well being of the largest portion of the population in the short or long term.

What the United States has been trying to do wrong is a lesson in that type of backwardness for everyone to observe and learn from. Perhaps it is the American pyramid, with its eye too far up in the heavens that is the problem. That eye cannot even see the grass roots clearly from where it is situated, and the bottom third of that pyramid is being crushed under the growing weight from above it. That weight includes national debt, and an ever tightening strangle hold on much needed funding for state and federal programs, including grass roots economic stimulation with projects that have far more direct and deep impact upon human well being, now and into the future.

We need an end to backwardness, and American leadership in backwardness in economics in particular. We need progressive economics. Something the backward politicians in Washington are failing to really comprehend.

Robert Morpheal