classical economics
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Europe Aids U.S. Reforms
By Wayne Jett
© 2009

    European leadership towards anything other than socialism has been rare for decades, but Sarkozy of France, Blair of UK and Merkel of Germany are acting in ways that may greatly benefit Americans and the world. They conferred in Paris January 8 and 9 on “the future of capitalism,” which is the diplomatic way of phrasing what to do about rampant corruption and criminality in U. S. financial markets and monetary policy.
Hooray for France
    Sarkozy asserts “no longer a single nation … can say what we should do or what we should think, … we cannot accept the status quo,” and calls for open discussions of how each country manages its currency and interest rates. He calls “financial capitalism” an “immoral system” in which “wealth goes to the wealthy, … work is devalued, … production is devalued, [and] entrepreneurial spirit is devalued." He says in 21st Century capitalism, there is “room for the state,” meaning the role of the state must be to eliminate rank corruption and criminality in financial markets produced currently by mercantilist influence. Sarkozy is speaking of U. S. economic policy and financial markets, and he is precisely right.
    Merkel says the present system “cannot continue as it is,” and calls for better regulation of financial markets. Merkel deplores gigantic fiscal deficits, particularly in the U. S., as each nation attempts to spend its way out of crisis, but unfortunately sees “no other possibility.” She suggests a body similar to the Security Council at the United Nations to deal with economic policy of member nations. It is crucial to note that the “other possibility” Merkel seeks would be found in Sarkozy’s reforms. Ridding markets and currencies of fraud, manipulation and corruption would restore economic growth and prosperity more rapidly than any deficit spending program.
    UK’s former Prime Minister Tony Blair called for new business ethic capable of placing creation of enterprise above short term profit or personal wealth accumulation. This is a worthy general goal completely at odds with practices permitted by captured regulators in U. S. markets, which enable Wall Street firms and a small cabal of hedge funds to rob other investors of billions daily.
Leadership When We Most Need It
    This is no small matter. European leadership on reform of financial markets can render a service to Americans on a par with U. S. aid to Europe following World War II. Financial mercantilism, the diplomatic term for gross criminality on the grandest scale, has a death grip on the political system, including mainstream media, and U. S. economic policy. In reaching for “change” in recent federal elections, Americans unknowingly took steps deeper into the remorseless embrace of Wall Street’s dominant influence of Democratic Party leadership.
    Examining today’s events in the light of America’s election of Franklin D. Roosevelt in 1932 is not too dire a comparison to make. Then, Americans properly thought they rejected the severe mercantilism of Herbert Hoover’s Republican Party, which destroyed world trade with Smoot-Hawley Tariffs and demolished American business with fraudulent financial markets and trebled income tax rates. But FDR confounded the common people by adopting those mercantilist policies and others that assured the Great Depression would be exactly that.
    The Democratic Party has been political home to U. S. mercantilists since FDR. They assisted Wall Street in taking the Treasury post in 2006 during George W. Bush’s presidency with Henry M. Paulson Jr., CEO of Goldman Sachs. Paulson’s actions at Goldman Sachs and at Treasury are linked closely with causes of financial and economic collapse in 2008, including regulatory equivocation towards manipulation of prices for corporate shares and crude oil. Now president-elect Obama’s economic team appears designed to promote Paulson’s agenda, except with more overt protectionism and historically high deficit spending.
    European leaders cannot change U. S. economic policy directly, but they are correct in perceiving that reforming that policy is essential to the vital interests and success of Western civilization. Permitting capital produced broadly by labor and enterprise to be sucked away through fraudulent practices of enormous pecuniary interests is fundamentally unjust and cannot be tolerated. If Americans can be assisted by Europeans in relieving themselves of this monstrous affliction, perhaps again one day they will be in a position to return the favor. ~