6 Shocking Ways Capitalism Is Failing Working America
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Fannie and Freddie also wanted in on that enormously profitable Wall Street derivative game. But they got there very, very late just as the crisis was starting to unfold. These flawed private/government backed agencies didn’t cause what already was fully developed. Instead they were left holding the bag. You can’t blame them for the mess that Wall Street already created.
Who suffers? The middle-class homeowner who is already underwater due to the housing crash, and those who will purchase homes in the future. The drumbeat of attacks on Freddie and Fanny will surely lead to the privatization of those functions, which in turn will drive up the costs of mortgages for the rest of us.
How do we put America back to work?
These recent examples demonstrate yet again that "free-enterprise" on its own can not create enough middle-class jobs. Neither Apple, nor Bain-Staples, nor Wall Street, nor deficit reduction will get us there. By the way, neither will small business.
We need to recognize that modern financialized capitalism is deeply flawed. Without enormous government support, it cannot function. Without enormous government support, there will be no sizable middle-class.
The solution is both simple and difficult for us to accept. We need to use public money to create jobs and decent wages doing the things that need doing!
- We need more education? Then make higher education virtually free as we did at the end of W.W.II.
- We need alternative energy? Then use government funds to perfect the technology as we did with the Manhattan Project to build the A-bomb, and as we did with NASA’s moon shot.
- We need to rebuild our crumbling infrastructure? Then hire a million workers to do it as we did during the Great Depression.
How do we pay for it? By now that should be conceptually easy: Wall Street should pay for the damage it has done. (A financial transaction tax would be a good first step.) And while we’re at it, get rid of the carried interest loophole so that Romney and the rest of his gang pay the same rates as the rest of us.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).