Democracy and Economy at Midsummer (Be Prepared for Everything to Change)

Posted on August 3, 2008


Has the corn ever been so green in Maryland, at the beginning of August? We’ve been blessed this year with frequent spring and summer rainfall, and we’re about to enjoy a bountiful harvest of tomatoes, cucumbers, and silver queen corn. It’s enough to make you forget about global climate change and the worldwide food shortage. Please remember, “Seven wet years, and seven dry years.”

As summer passes from July to August, it seems as if the whole world is on pause. We’re between the end of something old, and the beginning of something else. Jon Taplin calls it “The Interregnum.”

“The notion of an interregnum has classically been tied to those periods when one king has died and there is no clear successor. But for our purposes, the notion of interregnum refers to those hinges in time when the old order is dead, but the new direction has not been determined. Quite often, the general populace and many of its leaders to not understand that the transition is taking place and so a great deal of tumult arises as the birth pangs of a new social and political order. . . .

“We should concentrate on what kind of society we want to live in if the crisis stresses our democracy. Never underestimate the ability of an unemployed populace to look for scapegoats. In simple terms, democracy is at risk everywhere.”

In the U.S., it’s the bitter end of the Bush administration, and we’re not sure which administration comes next. It will be better, right? It has to be. On the other hand . . .

In Maryland, it’s the lull before a pitched battle over two visions: Maryland, a predatory state hooked on slot machines, exploiting the poor to comfort the rich; or Maryland, a progressive state with a fair tax system and a safety net for the poor. (Note: It’s generally more convenient for politicians to comfort the rich, because their numbers are few, and they have only two desires, i.e., low taxes and protection of property rights. In a free referendum on slots, the poor should have the advantage, but the rich have sufficient power and funds to confuse the issues.)

Worldwide, we’re in transition from an old economic past to a new economic future. Or are we? During the transition, will we have a recession, a severe recession, or a depression? Have we passed peak oil, is peak oil just around the corner, or are we on the verge of a drilling binge to tap every unexploited oil reserve and wring every barrel of oil from under land and sea? I don’t want to think about it right now.

The Washington Post’s economic columnist par excellence, Steven Pearlstein, gives us a heads-up on change in his August 1 column, Wave Goodbye to the Invisible Hand. (Click here, and then type in Steven Pearlstein). He writes:

“It’s always risky to call turns in history. . . Just as the Gilded Age gave way to the Progressive Era and the New Deal gave way to the post-war era of big government, big business and big labor, the current era of free market capitalism seems to be giving way to something else.

“To say that it is ending is not to suggest that it was misguided or illegitimate. It is merely to acknowledge that these eras tend to last a generation but no longer. . .

“Let’s be clear. It is not the protectionists of the AFL-CIO or CNN who are primarily to blame for the erosion of public support for trade in the United States, as bone-headed as they may be. The blame lies squarely with a business community that continues to support Republican politicians who refuse to raise the taxes and spend the money necessary to provide the economic safety net for American workers that a free-market economy has not, and will not, provide.”

Mr. Pearlstein enumerates failures of free markets in the realms of health care, energy, credit and housing. He sums up:

“For the past 25 years, the United States has put its faith in open, unregulated and lightly taxed markets, and there’s little doubt that, over time, that model has expanded economic output and improved economic efficiency. But what Americans have also come to realize is that the same model is less adept at providing other things that we value highly – things like safety, fairness, economic security and environmental sustainability. . .

It’s too early to say what the new model will be or what the new era will be called. . . .”

No one can predict the future, and thinking too much about the past and present is going to turn me prematurely into a cynical old man. Right now would be a good time to hold an Olympics, or a vacation. See you in September. — Bernie Hayden