Saturday, July 9, 2011

Cascade Failure

We've, I've begun to think, identified ourselves ideologically with our strategies. The strategy of more government, more “oversight”, more “supervision” or less of it. As a result, we've failed to see an important part of the overall picture.

Namely, the corporate controlled government is no better than a government controlled capitalism. In fact the two, coming from different directions as they do, amount to the same thing, the emergence of a surveillance based fascism where the activities of the individual are all dictated from a single source. The question that we need to sit down and consider is to what extent this isn't already the case.

The impulse of the corporation is in fact the same as the impulse of the government: to consolidate power. Mergers and buyouts are the name of the game. Amass as much of the market as you possibly can. The latest company to prove this true is Microsoft.

The only way to thoroughly separate the government from its market, is for it be regarded as a conflict of interest to represent both the interests of a corporation through the government. In fact, what you have now is corporate controlled capitalism, which is sliding into a state controlled capitalism.

By and large the reason that this happened was that we had a fiscal conservative in GWB who outspent his “liberal” predocesser while simultaneously lowering taxes. It was a deficit that could only cause one outcome: bankruptcy. I believe that Barak Obama inherited this deficit from Bush Era spending. Bush in fact is perhaps the worst president in American history. Here is a quick look at his resume:

It is ironic that his failure is so abolute in large part because he is a terrible businessman. The delicate balance achieved by former presidents was thrown completely out of wack. It could be argued that bankrupting the federal government is a really effective way to weaken it, and may very well have been intentional.

Now, if I'm philosophically committed to a decentralist impulse (which I am) how do I reconcile the fact that I think this is one of the worst catastrophes in American economic history with a weakened federal government teetering on the brink of death. On some level, we must face the fact, that this was by and large, a corporate orchestrated attack, and face down the realization that the oil companies have more government protections and personalized government influence than any other corporate power in America (other than perhaps banks).

So the real question becomes, what in pragmatic reality would happen if we allow the current federal government default on it's debt? The answer is something akin to an apocalypse (generally speaking) this is the terminology that has been used to describe it. The following results are probable:

1.The dollar would be worthless
2.Lending would stop
3....causing a large portion of the population to lose their jobs
4....businesses would shut down, collapse and the burden of unemployment benefits would fall on bankrupt companies, and the federal/state government
5.Mass bankruptcy
7.Most of our debt would fall to China

Many Republicans in congress have signed a pledge not to raise taxes, and this is primarily the reason why we cannot balance the budget, and why the debt ceiling keeps climbing. My sense of this is that while philosophically I'm opposed to it, the burden of higher taxes, must be borne in order to avoid a cascade failure of epic proportions. The New Deal is irrelevant if we don't have the money to borrow and our credit is worthless. There won't be any deal at all because there won't be anything to deal with. For the time being, the debt ceiling must rise, and if it is not going to rise again we must figure out to avoid an inevitable situation like this one from recurring, or else we won't face any more easy choices.

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