If you think we currently have “uncontrolled free market capitalism,” you’re mistaken. We haven’t had a free-market economy since about 1898.
Starting with President Teddy Roosevelt – the originator of government-as-safety-net (1901-09) – through World War I and Woodrow Wilson’s Progressive Era (1913-21), to FDR’s New Deal (1933-45), to Lyndon Johnson’s Great Society (1963-69), to George Bush’s compassionate conservatism (2001-09), we’ve converted from a peaceful, capitalist nation to the big government, warfare-welfare state of a mixed economy, half socialist, half capitalist.
It took 100 years, but with repeated wars and economic crises creating fear, Americans accepted a huge increase in the size of government and forgot the Constitution.
The Progressive Movement (1890’s – 1920’s) ended America’s capitalist heyday of the 1890’s, which were called the “Gay Nineties” for a reason. The Progressives, unfortunately, brought us the income tax and Federal Reserve Bank in 1913, drug prohibition in 1914 and (alcohol) Prohibition in 1920.
They advocated a “living” or “evolving” Constitution, calling it “outdated for our modern times.” You still hear this today. But the individual rights and limited government enshrined in our Constitution are timeless. And the Constitution can evolve and be “living,” but only by Amendments, not by ignoring it.
What’s collapsing today is our mixed economy, not capitalism. We need to reinstate the free market, which is the greatest engine of wealth and prosperity the world has ever seen.
Americans, sadly, have forgotten this.
The problem isn’t capitalism, but the 50 percent socialism we have. Don’t believe people who say what we have now is a free market. Just look at all the registration and licensing requirements, regulations and taxes that are on the books. Try starting a business. We aren’t free, not even close.
So what should the federal government do to end this recession? “First, do no harm,” as the doctors say. (Some say a depression is just a recession that the government mettled in.)
Then enforce banking fraud laws strictly and evenly. End, or at least audit, the Federal Reserve Bank — which causes inflation and the boom and bust cycle. End legal tender laws to allow commodity-based (gold or silver) competing currencies, so the dollar isn’t the only thing we can spend. Then just say “no” to bailouts. Let companies go broke, no matter how large, through an organized bankruptcy proceeding in Federal Court.
And deregulate banking by repealing subsidized Federal Deposit Insurance (FDIC), so banking gets out of its current state of corporate socialism, also known as “crony capitalism” — where profit is privatized, but losses are socialized (born by the state/taxpayer). This kind of “soft fascism” (economic, not the military kind) keeps the illusion of a free economy.
And lastly, end “fractionalized banking” where banks get, say, $100 from a depositor, and then loan out $1,000. This creates inflation and, because banks loan out money they don’t have, should be seen as fraud.
One hundred percent reserve requirements and fraud enforcement are key to keeping banks in line and restoring our free enterprise system, not regulations that give corporate welfare to rich bankers and perpetuate the boom and bust cycle and the warfare-welfare state.
Jeff Jared is a lifelong Kirkland resident and attorney.
