Holman Jenkins, Wall Street Journal editorial board member, described President Obama’s economic views in terms of two equally extreme beliefs about creating jobs. “Mr. Obama’s simpler story” is one in which “... ravenous capitalists destroy jobs and government creates them with things like the Detroit/UAW bailout ...”
Thus, Jenkins cited two scenarios, neither of which Obama — or anyone else — considers desirable. First, one can believe in capitalism and still recognize the fact that vulture capitalists destroy jobs. And second, government’s primary economic role isn’t to create jobs, but that doesn’t mean that its policies can’t stimulate job creation.
In fact, unregulated vulture capitalism created the need for “corporate socialism.” When our economy was sensibly regulated, unprincipled corporations didn’t have a competitive advantage over ethical ones, and the financial sector took only 6 percent of the Gross Domestic Product for its services. Today, the financial industry demands closer to 40 percent of the GDP, and much of what it produces are speculative derivatives and not actual products and services.
The degeneration of the auto industry was the result of free-market vulture capitalists who successfully lobbied government to make radical changes in industrial policy. By deregulating international trade, government empowered corporations to pit American workers against workers in the developing world with low wages and few or no worker protections. There is no way U.S. autoworkers could compete with workers making one-tenth as much and who work under brutal conditions.
Corporate socialism was never a goal of Obama or his government. However, against serious opposition, Obama enabled the industry to survive and create jobs by infusing it with necessary funds. Unfortunately, however, it has only been through draconian reductions of wages that the auto industry has been reinvigorated in the U.S. In effect, the vulture capitalists have achieved their hidden agendas: stagnant or declining incomes for American workers and increased corporate profits.
Capitalism didn’t create the middle class by itself, and it didn’t create the savings and loan disaster of the ’80s or the 2008 economic meltdown. So, what is Obama’s story? It’s an economy in which government establishes regulatory, fiscal and monetary policies in a way in which capitalism benefits all levels of society — and predatory capitalists don’t enjoy competitive advantages over capitalists who value the moral standards of a civilized nation.
Charles M. Kelly is author of “The Destructive Achiever: Power and Ethics in the American Corporation” and “Farewell Fantasyland: Time for Political and Economic Reality.” He can be reached at firstname.lastname@example.org.