by Glynn Wilson

Editor’s Note: Why is it that in the United States of America, where free speech is part of our national psyche as well as the Constitution, and the most successful style of democracy in the history of the world was created, the debate on TV and in the nation’s news media seems so limited and fake about the current economic meltdown and President Bush’s bailout of Wall Street banks and insurance companies?

Noam Chomsky and other scholars have discussed this problem in the past in obscure academic texts most citizens have never heard about. But what if blogging software could provide a forum to bring this debate to the masses and go beyond the sound bites and actually foster a real debate on the past and future of American capitalism?

Are privatized free markets really better for people than government institutions?

As Chomsky once said, “In a totalitarian state, it doesn’t matter what people think, since the government can control people by force using a bludgeon. But when you can’t control people by force, you have to control what people think, and the standard way to do this is via propaganda (manufacture of consent, creation of necessary illusions), marginalizing the general public or reducing them to apathy of some fashion.”

He has also said, “It’s the primary function of the mass media in the United States to mobilize public support for the special interests that dominate the government and the private sector.”

Of course he is right, and we could point to a number of national and local examples, including the coverage of the prosecution of former Alabama Governor Don Siegelman in the Alabama press, or the coverage of the state of the economy by any number of U.S. news outlets.

But what I have found interesting over the past few days is the language creeping into mainstream news outlets questioning American-style capitalism. Here are a few examples.

“It’s a bitter pill for all those to claim that unfettered free markets were the best, that we don’t need regulation,” said Dan Seiver, finance professor at San Diego State University. “But perhaps this idea that unfettered capitalism is the way to go has finally been put to rest.”

“While Wall Street celebrates, the man in the street should be crying in his beer,” said Seiver. “It’s socialism for the rich, capitalism for the poor.”

Was that reported in some obscure leftist magazine? No, it was reported by Reuters, the conservative financial wire service started in Great Britain.

Bush Bailout A Bitter Pill for Free Market Capitalists

Yes, some alternative online news sites have found writers to take on this same theme. At AlterNet.org, here’s one recent headline.

“Free-market extremists brought us this needless economic collapse. Here’s a rundown of the mistakes we’ve made and the reforms we need now.”

The current carnage on Wall Street, with dire spillover effects on Main Street, is the result of a failed ideology — the idea that financial markets could regulate themselves. Serial deregulation fed on itself. Deliberate repeal of regulations became entangled with failure to carry out laws still on the books. Corruption mingled with simple incompetence. And though the ideology was largely Republican, it was abetted by Wall Street Democrats.

Only a Roosevelt-Scale Counterrevolution Can Prevent Another Depression

But even Newsweek, owned by the Washington Post company, published a special edition on this issue.

“Does the crisis on Wall Street mean that the American style of capitalism is no longer the model for the world?”

American Style Capitalism Called Into Question

The German magazine Der Spiegel, hardly a left-wing rag, reported this.

In fact, it really does look as if the foundations of US capitalism have shattered. Since 1864, American banking has been split into commercial banks and investment banks. But now that’s changing. Bear Stearns, Lehman Brothers, Merrill Lynch — overnight, some of the biggest names on Wall Street have disappeared into thin air. Goldman Sachs and Morgan Stanley are the only giants left standing. Despite tolerable quarterly results, even they have been hurt by mysterious slumps in prices and — at least in Morgan Stanley’s case — have prepared themselves for the end.

“Nothing will be like it was before,” said James Allroy, a broker who was brooding over his chailatte at a Starbucks on Wall Street. “The world as we know it is going down.”

Many are drawing comparisons with the Great Depression, the national trauma that has been the benchmark for everything since. “I think it has the chance to be the worst period of time since 1929,” financing legend Donald Trump told CNN.

Depression: Foundations of US Capitalism Shattered?

The Political Economy of the Mass Media, a book by Edward S. Herman and Noam Chomsky, first published in 1988, presents an analysis its authors call the “propaganda model.”

The book argues that since mass media news outlets are now run by large corporations, they are under the same competitive pressures as other corporations.

The pressure to create a stable, profitable business invariably distorts the kinds of news items reported, as well as the manner and emphasis in which they are reported.

This occurs not as a result of conscious design but simply as a consequence of market selection: those businesses who happen to favor profits over news quality survive, while those that present a more accurate picture of the world tend to become marginalized.

The book further points out issues with the dependency of mass media news outlets upon major sources of news, particularly the government. If a particular outlet is in disfavor with a government, it can be subtly “shut out” and other outlets given preferential treatment. (This has been particularly true in Bush’s two terms as president).

Since this results in a loss in news leadership, it can also result in a loss of readership/viewership. That can itself result in a loss of advertising revenue, which is the primary income for most of the mass media (newspapers, magazines, television).

To minimize the possibilities of lost revenue, therefore, outlets will tend to report news in a tone more favorable to government and business, and giving unfavorable news about government and business less emphasis.

So we have asked several scholars who know something about these issues to join us in a discussion here that we hope can go beyond the sound bites and start a more informed discussion around this country about how our economy should be structured in this democratic republic.

As I have reported before, the $700 billion Bush is about to spend on bailing out the Wall Street financial firms would be enough money to provide free health care and a free college education to every man, woman and child in this country. And we would be a smarter and more healthy country as a result.

But the key question is this: Is it even possible to discuss national health care or public college education in this country when any plan will just be dismissed as “socialism?”

According to my own training in political science, I learned that this country is in fact a socialist-democracy. We have Social Security, Medicaid, Medicare and other safety-net programs that actually prop up the weak end of our society and allow the rest of the private economy to function.

And every time the banks get into trouble, the federal government bails them out anyway. That could hardly be called “free-market capitalism,” since in a true free market, a business that can’t make enough profit to survive is allowed to fail and go out of business. But that’s what we continue to call it anyway in what is obviously a serious distortion of the truth — for propaganda purposes.

Other relevant recent columns:
America Needs a New Pill, Not Corporate Welfare
Media Bashing 501
Workers of the World Unite!

This discussion will continue in the comments section. Please feel free to join us…

The Bush Administration sent a $700 billion plan for a U.S. government bailout of bad mortgage debt to Congress on Saturday, seeking extraordinary authority as it tackles the worst financial crisis since the Great Depression.

Democratic lawmakers, who control both houses of Congress, said they hoped to approve the bailout quickly but wanted changes such as more oversight, limits on executive pay at participating firms, and assistance for homeowners.

Congress Examines Bush’s Proposed $700 Billion Market Bailout Plan

Corporate welfare, otherwise known as market socialism. So much for American capitalism…

Congress and the White House forged a deal Thursday to begin rushing tax rebates of $600 to $1,200 to most tax filers by summer, hoping they will spend the money just as quickly and jolt the ailing economy to life. How that is supposed to help the economy between now and then is unclear, except that it is obviously meant to keep the stock market from collapsing completely and putting all those rich people - made richer by seven years of Bush - from losing their ill-gotten gains.

The one-time tax rebates are at the center of a an agreement to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001, according to the glowing Associated Press account. Here are the toned down most important points.

About two-thirds of the tax relief would go out in rebate checks to 117 million families beginning in May. Businesses would get $50 billion in incentives to invest in new plants and equipment.

Individual taxpayers would get up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child under the agreement. In a key concession to Democrats, 35 million families who make at least $3,000 but don’t pay taxes would get $300 rebates.

The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000. Contributions to IRA and 401(k) retirement accounts and health savings accounts would not count toward the income limit.

The bill will go straight to the House floor next week and on to the Senate, where some Democrats hope to add elements such as extending unemployment benefits for workers whose benefits have run out.

Indeed, many Democrats, such as Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Edward Kennedy of Massachusetts, the liberal lion of the Senate, were deeply unhappy that Pelosi agreed to jettison that proposal in late-stage talks, as well as plans to increase food stamp payments.

“I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own,” Rangel said.

If the Senate gives quick approval, the first rebate payments could begin going out in May and most people could have them by July, he said.

It has become increasingly clear that the economy is teetering on the edge of recession, if it hasn’t already gone over that line. The crisis in subprime home loans has hit hard at many lending institutions, cramping credit for almost everyone else. Economic growth has all but disappeared, companies are reporting big losses and Wall Street had been tumbling day after day - even after emergency Federal Reserve rate-cutting - until Wednesday’s hopeful talk about the stimulus deal. The Dow Jones industrial average was up more than 100 points Thursday after soaring nearly 300 the day before.

In addition to concerns openly expressed by lawmakers, members of Congress are not eager to run for re-election this fall with voters fearful of losing jobs in a recession.

For businesses, the stimulus measure would allow them to immediate tax write-offs for 50 percent of the purchase price of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped in end-stage talks.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

“I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said. She said that House Democrats may act on other proposals to stimulate the economy, particularly if it worsens in coming weeks.

The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

Tax Rebate Deal Could Mean Checks by May, Or June?

This plan seems doomed to fail. Catastrophe is at the domestic door front, and the Republicans must now take responsibility. If they have to, the Democrats should go to the mat with Bush, even if that means the bailout fails. Let if fall and see how politics changes in this country.

The Tuesday after the Martin Luther King holiday promises to be a very black Tuesday, as stocks fell sharply worldwide Monday following declines on Wall Street last week and amid investor pessimism over the U.S. government’s weak stimulus plan to prevent a recession.

U.S. markets were closed for Martin Luther King Jr. Day, but the downbeat mood from last week’s market declines there circled through Europe, Asia and the Americas. Britain’s benchmark slumped 5.5 percent, France’s Index tumbled 6.8 percent, and Germany’s blue-chip plunged 7.2 percent.

In Asia, India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip index plummeted 5.5 percent, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Canadian stocks fell as well, with the composite index on the Toronto Stock Exchange down 4 percent in early afternoon trading. In Brazil, stocks plunged 6.9 percent on the main index of Sao Paulo’s Bovespa exchange.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

More from AP

We seem to be living in apocalyptic times, the New York Times reports. On NBC’s “Revelations,” Bill Pullman and Natascha McElhone seek signs of the End of Days. In the Senate, gray-haired eminences speak of the “nuclear option.”

The doomsday theme is seeping into the normally circumspect world of economics. In April, Arjun Murti, a veteran analyst at the investment bank Goldman Sachs, warned that oil could “super-spike” to $105 a barrel. And increasingly, economists are prophesying that the American economy as a whole may be sailing into choppy waters.

Just look at the many obvious and worrisome portents. The government each year spends much more than it brings in, and so the nation has a large budget deficit ($412 billion in fiscal 2004, and growing). Americans also import far more goods than they export, and so the nation has record trade and current account deficits.

As consumers, Americans personally spend significantly more than they earn. Worse, some imbalances are eerily reminiscent of conditions that helped touch off recent economic crises: Mexico in 1994, Asia in 1997, Russia in 1998 and Argentina in 2002. Throw in rising interest rates, warnings of a housing bubble and the potential for higher inflation and slower growth (a k a stagflation) - and you can understand why some economic analysts may be plumbing the New Testament for inspiration.

The forces propelling and buffeting the economy are like a series of interrelated and interconnected weather systems. Could they be setting the conditions for a perfect storm - a swift series of disturbances that causes lasting damage? . . .

“It sure sounds alarming,” reporter Daniel Gross says. “But as the clouds gather and the wind stiffens, we sail onward, with no apparent adjustment in course, full steam ahead.”

Hmmm. Like a ship sailing into a Class V hurricane at sea, without the benefit of radar. Our leaders are either blind, dumb or simply in it for themselves, although that is even hard to believe. Perhaps they are just macho Christian white males who do not believe in evidence.

As Hunter S. Thompson would have said, “We are doomed.”