The National Catholic Review

My recent post on Mitt Romney’s staggering wealth, and his own perception that President Obama is trying to stir resentment among voters because of it, generated a good bit of discussion on my claim that:

For all its ills, capitalism seems to be the best way for individuals to thrive socially, economically, and perhaps even spiritually. Such a system will inevitably produce winners and losers, though the hope is that the vast majority will find themselves somewhere in the middle. 

A few comments took issue with the assertion that capitalism is even a decent way for individuals to thrive, suggesting that the family could serve as a better model for developing an economy. Others wrote that the real problem was that the US actually embraces a system of socialized debt and privatized wealth, leaving the rich to richer and the poor to get poorer, as the saying goes. Finally, some suggested that individuals would be better off if the government got out of the regulation business altogether and let capitalism work its magic, rewarding the creative and talented, and, well, letting others fend for themselves.

The head of General Motors offered a defense of his thoughts on a similar subject in an interview with NPR. Daniel Akerson, chairman and CEO of GM, was defending his company’s decision to accept a massive government bailout that may have saved the company and allowed it to return to its spot as the world’s number one automaker, as recently highlighted by President Obama in his State of the Union address. The bailout means that US taxpayers now own about one-quarter of the company, causing some critics on the right to use the moniker “Government Motors.”

To his critics, Akerson says that the US rightly embraces a form of “hybrid capitalism,” and implicitly suggests that unfettered capitalism would be cruel and lack basic considerations for the weak and marginalized. From the interview:

"Sometimes people stylize the image of how the economy works because we have never been a truly 100 percent, unadulterated capitalist system," Akerson says. "Otherwise, your mother, as she aged in time ... and could not produce, you don't kick 'em to the curb."

Akerson says he believes the U.S. has a form of hybrid capitalism.

"There are times when government has a role, in my opinion, and there are times it should let the market ultimately determine winners and losers," he says.

Akerson cites the real estate crisis of the late 1980s, when the government stepped in to stabilize the market and eventually withdrew. In the case of GM, he explains, to have let it go through a complete bankruptcy would have been disastrous.

"To have uncertainty surrounding a company of this size and this magnitude for a long period of time I think would have been just devastating, and probably have condemned it to the heap," he says.

Comments

Stanley Kopacz | 1/30/2012 - 12:21pm
I've shirts made in Bangladesh.  Didn't know there was no capitalism there.
Douglas Brougher | 1/31/2012 - 11:42am
JR, I think you've had your say on this thread. If you wish to continue commenting on this blog, please limit the number and length of your responses. We do not want any one person taking over this conversation.
J Cosgrove | 1/31/2012 - 11:27am
Father Malloy,


In all my years as a Catholic and they are probably more than you, I have never seen a priest tell another Catholic what you have said about me.


''Above I suggested Mr. Cosgrove pray to God.  Maybe God can get through to him.  Mr. Cosgrove is certainly not listening to me.

I hope Mr. Cosgrove can go in peace.  He doesn't pay me.  He doesn't seem to love or respect me. So I feel no need nor desire to justify anything to him.  I hope he has a nice life.''


We are not disagreeing over theology, but politics or what is the best option to help the poor.  To suggest that capitalism is the problem for the poor and income inequality is absurd.  We have had poor and income inequality for thousands of years and capitalism only got hold in the mid 18th century in a couple countries and became prevalent in the Western world during the 19th century.  And since that time the health, wealth and education levels of the world have multiplied several fold.  Do you see a correlation?  Has it cured all ills?  No, but it certainly has made the life of the poor much better than it was prior to its existence.  To ignore that is disingenuous at best and indicates an agenda.


As far as facts, you use Piketty, Saez and Daniels as references but it is Saez and Piketty who say that the wealth of the top 1% has gone down over the last century and represents about 20-22% of the US wealth which has been stable for 40 years.  It was much higher percentage before capitalism appeared.  So it is not increasing.  The greatest increase in wealth of the Fortune 400 richest Americans took place when Bill Clinton was president (50% increase in five years from 1995-2000) and that was solely due to the run up in the stock market in the late 1990's and not a real increase in material wealth.  So a lot of the numbers presented are not very relevant for income inequality.  To look at stock capitalization as wealth is not a valid way to evaluate wealth.  It can vary dramatically in a short time.


If one wants to discuss capitalism intelligently, one cannot just paint a broad brush and denigrate it and just ignore all the changes in the world that have taken place since it became the prevalent economic model in the Western world.  There are many variants of capitalism.  I suggest that you purchase Jerry Muller's course on capitalism from the Teaching Company.  He is a professor at Catholic University and discusses all the pros and cons.  After doing that, then one can have a fruitful discussion.  It should be mandatory for anyone who wants to criticize capitalism. 


http://www.thegreatcourses.com/tgc/courses/course_detail.aspx?cid=5665


I suggest you not make future arguments personal and keep it to the level of ideas and facts and logical arguments.  That is what the Jesuits instilled in me.
Joshua DeCuir | 1/31/2012 - 11:18am
I think all of us need to constantly examine our hearts and minds to ensure that we're truly hearing "the other" and not idolozing our own way above mutual dialogue and respect.  Unfortunately, the Bible doesn't give us a blueprint for our current financial problems.  As I said above, I think government plays an important role in keeping our market free, but government action alone is insufficient, at best, and can at time, inhibit economic justice.  Again, it is an economic fact that excessive regulations give Big Business (what I suppose Fr. Malloy is calling "corporate capitalism") an economic advantage by keeping smaller businesses that can compete with them from developing; the costs of complying with excessive regulations and taxes cannot be borne by the smaller firms.  It is no coincidence that Big Business spends untold amounts in lobbying.  So if we want a "bottom-up" wealth creation, then we need to start by looking critical at these regulations and asking are they protecting big business.  I assume many of Mr. Cosgrove's critics here support greater financial regulation in form of Dodd-Frank; yet this fact is incontrovertible: since the passage of the Dodd-Frank bill and its signing by Pres. Obama, the biggest financial institutions in this country have only gotten BIGGER.

Finally, with respect to taxes, I think there is a broad consensus that this country needs some form of tax reform.  The incentives and current structure of the tax code are disastrous for EVERY American.  I also support a slight increase in the marginal rates that the higest earners pay, BUT it must be remember that even raising these rates will raise VERY LITTLE revenue with respect to the projecting budget deficits (which as Mitch Daniels correctly states will be borne by the poorest the worst).  Here are the numbers from Robert Samuelson who supports the "Buffet Rule":
"In September, the Congressional Budget Office estimated the 10-year deficit at $8.5 trillion. The nonpartisan Tax Foundation estimates that a Buffett Tax might now raise $40 billion annually. Citizens for Tax Justice, a liberal group, estimates $50 billion. With economic growth, the 10-year total might optimistically be $600 billion to $700 billion. It would be a tiny help; that’s all. “The purpose of the Buffett Rule is not to close the deficit gap,” Buffett has said. Hard choices remain, in part because existing deficit estimates already assume steep defense cuts.
It’s also a myth that all the ultra-rich enjoy low tax rates. In 2007, the richest 1 percent of taxpayers paid an average tax rate of 29.5 percent and provided 28.1 percent of federal revenues, reports the CBO. On their wages and salaries, many of the ultra-rich pay the top income tax rate of 35 percent plus a Medicare tax of 1.45 percent."
I suggest reading the entire column: http://www.washingtonpost.com/opinions/buffett-tax-and-truth-in-numbers/2012/01/29/gIQAikL5aQ_story.html?tid=pm_opinions_pop
Marie Rehbein | 1/31/2012 - 11:05am
JR, increasing taxes on the rich is what needs to be done at this point in time because there are no other people with enough spare change to provide the money that is needed to bring down the deficit.  Of course, the problem could have been approached differently when the recession started.  Government could have gone even more boldly into stimulus spending in order to bring people back into the workforce, which would have increased the tax base.  Since that did not happen, the momentum that would have created is not available to bring in the kind of revenue that was available in the late 90's. 

I would like you to think about this, too.  People in this country are proud of saying that hard work pays off and that great fortunes are built out of dedication and effort.  For example, Walmart and the Walton family.  This is wealth that grew from the ground up, not wealth that trickled down.  The environment in the country needs to be such that this can continue to happen.  However, if money gets concentrated in the holdings of the very rich, sometimes not even in this country, and the vast majority of people do not have enough money to support the businesses that hardworking people develop, how is this to continue?

It is only recently that the wealth of the rich has been so protected, and the result is that money is taken out of circulation.
Rick Malloy | 1/31/2012 - 12:19am
Check out Pope Benedict's critique of capitalism

http://www.ratzingerfanclub.com/blog/2007/09/pope-benedicts-critique-of-capitalism.html

"Starvation and ecological emergencies stand to denounce, with increasing evidence, that the logic of profit, if it prevails, increases the disproportion between rich and poor and leads to a ruinous exploitation of the planet."

"The facts have clearly demonstrated it. The Marxist system, where it found its way into government, not only left a sad heritage of economic and ecological destruction, but also a painful oppression of souls. And we can also see the same thing happening in the West, where the distance between rich and poor is growing constantly, and giving rise to a worrying degradation of personal dignity through drugs, alcohol and deceptive illusions of happiness."
Rick Malloy | 1/31/2012 - 12:04am


Here's E.J. Dionne......
October 27, 2011
Web Exclusive
Economic Indicator
When the Vatican Confounds Conservatives

E. J. Dionne Jr.
Will we soon see a distinguished-looking older man in long white robes walking among the Occupy Wall Street demonstrators in New York's Zuccotti Park? Is Pope Benedict XVI joining the protest movement? Well, yes, and no. Yes, the Vatican's Pontifical Council for Justice and Peace issued a strong and thoughtful critique of the global financial system this week that paralleled many of the criticisms of unchecked capitalism that are echoing through lower Manhattan and cities around the world.
The report spoke of "the primacy of being over having," of "ethics over the economy," and of "embracing the logic of the global common good." In a knock against those who oppose government economic regulation, the council emphasized "the primacy of politics - which is responsible for the common good - over the economy and finance." It commented favorably on a financial transactions tax and supported an international authority to oversee the global economy. But Vatican officials were careful to say that their report was not a direct response to the worldwide demonstrations. "It is a coincidence that we share some views," said Bishop Mario Toso, secretary of the council. "But after all, these are proposals that are based on reasonableness."
Indeed, and that may be a larger compliment to the "99 percent" activists. This document got more attention than it might have because the demonstrators have heightened concern about the problems it addresses. Moreover, the Vatican office's intervention shows that those protesting against a broken and unjust financial system are not expressing some marginal point of view. They are highlighting worries shared by many, including the Roman Catholic Church. To challenge what the global markets have wrought is not extreme. It reflects, as Bishop Toso said, "reasonableness."
Needless to say, Catholic conservatives were not happy with the document, and did all they could to minimize its importance. George Weigel, the conservative Catholic writer, took to the National Review's blog to denigrate the Pontifical Council as "a rather small office in the Roman Curia" and to insist that its document "doesn't speak for the pope, it doesn't speak for 'the Vatican,' and it doesn't speak for the Catholic Church."
Oh really? Then for whom does it speak? Weigel wasn't done. "This brief document from the lower echelons of the Roman Curia no more aligns 'the Vatican,' the pope, or the Catholic Church with Occupy Wall Street than does the Nicene Creed," he wrote. "Those who suggest it does are either grossly ill-informed or tendentious to a point of irresponsibility."
My, my. It is always entertaining for those of us who are liberal Catholics to watch our conservative Catholic friends try to wriggle around the fact that on the matters of social justice and the economy, Catholic social teaching is, by any measure, "progressive." Conservatives regularly condemn liberal "Cafeteria Catholics" who pick and choose among the church's teachings. But the conservatives so often skip the parts of the moral buffet involving peace, social justice and what Pope John Paul II called the "idolatry of the market."
As it happens, the Pontifical Council is no mere "small office." It has been a pioneer over the years in Catholic thinking about solidarity and justice. And this document is firmly rooted in papal teaching going back to Popes John XXIII, Paul VI and John Paul II. Pope Benedict's 2009 encyclical, Caritas in Veritate, spoke explicitly of the need for a global political authority to keep watch on an increasingly integrated world economy.
Inside-the-church politics aside, the Pontifical Council's document is important because it reflects an ethical approach to economics shared well beyond Catholic circles. In particular, the council grapples intelligently with the problem of how the economy can be subject to reasonable rules when the nation-states that once enforced such regulations have less and less power, given how swiftly and easily capital moves.
The document describes the benefits of globalization as well as its costs, and it does not pretend that establishing transnational structures will be easy. It addresses the importance of "democratic legitimacy" and speaks of "shared government" rather than some top-down world authority.
"We should not be afraid to propose new ideas, even if they might destabilize pre-existing balances of power that prevail over the weakest," the document declares. "They are a seed thrown to the ground that will sprout and hurry towards bearing fruit." Let's hope so. If our religious leaders won't challenge us to love mercy and do justice, who will? 
(c) 2011, Washington Post Writers Group

 
Rick Malloy | 1/30/2012 - 11:27pm
This will be my last comment on this thread.  I'm really not getting anywhere with Mr. Cosgrove. 

According to him, none of what I've posted here is evidence.  http://inequality.org/global-inequality/ isn't evidence.  Facts such as these (1) "Globally, 80% of Planet earth lives on less than $10 a day" or (2) "Across our planet, 21,000 children die each day from preventable causes," do not count as evidence of gross inequality and malfeaseance on the part of corpoate capitalism.

Church teaching is clear: “There also exist sinful inequalities that affect millions of men and women. These are in open contradiction of the Gospel” (Catechism of the Catholic Church, #1938).   “The equal dignity of human persons requires the effort to reduce excessive social and economic inequalities” (Catechism of the Catholic Church, #1947).  and

See Mary's Magnificat Luke 1:53, "He jas filled the hungry with good things and the rich sent empty away."  John 12:8 has Jesus saying to Judas "The poor you will always have with you."  Note to whom Jesus is speaking.  In other words, "Judas, the poor you always have with you."  Jesus isn't saying we will always have the poor with us.  The poor will always be with those who think and act and choose like Judas.  And again, Matt 25:31-46 speaks for itself

I believe in Jesus Christ and the Catholic faith, not corporate capitalism's selfish, self justifying, death dealing, greed.  I believe that economic systems are made by and for the human family.  I do not believe the human family is made to be sacrificed on the altars of malfunctioning economic systems like corporate capitalism. (cf Mark 2:27).  Justice is the Righting of Relationships and coporate capitalism's basic assumptions and ways of operating set up a system where the rich get richer and the poor get poorer. 

Absolute and relative poverty are often discussed concepts.  It is cogent to argue that he poor are relatively more poor today than in past eras. 

My argument is this: corporate capitalism is not working and we need to radically change the principles and symbolic meanings on which our present unjust system is based and is operating (e.g., the laughable assertion that the ultra rich are "job creators."  If they're the job creators, why is there a deficit of jobs?).  Anyone who can argue that corporate capitalism is working well for the vast majority of the human race ignores reality.

Many have made the case I make here.  Here's one, David Korten:  http://livingeconomiesforum.org/

Above I suggested Mr. Cosgrove pray to God.  Maybe God can get through to him.  Mr. Cosgrove is certainly not listening to me.

I hope Mr. Cosgrove can go in peace.  He doesn't pay me.  He doesn't seem to love or respect me. So I feel no need nor desire to justify anything to him.  I hope he has a nice life.
J Cosgrove | 1/30/2012 - 9:09pm
Father Malloy,

''Mr. Cosgrove, I don't have to justify my remarks.''   Yes, you do.  You are accusing a very large part of the world with responsibility for some very unfortunate circumstances.  And you are doing it without any evidence, just emotional arguments.


''If you are satisfied with global corporate capitalism and all its injustices, it is probably because you are not among the poor and oppressed billions who make up the vast majority of persons on the planet. ''  This is an incredible non sequitur.  You are right that I and probably everyone who reads this blog are not part of the poor.  If the poor are oppressed and lots of them are, who is doing the oppressing and who caused their poverty.  I have never seen any information that it is free market capitalism that is doing the oppressing or is the cause of their poverty.  I presented two links which apparently you have not read or looked at because if you did, you would not be making such comments.  If anything, capitalism has alleviated more poverty and hunger than any other economic system in the histroy of mankind.  Do you really thing there are more poor and oppressed now than 200 years ago when capitalism was first starting to take off in Western society.  Where are the poor and oppressed in Western society?  They are almost eliminated materially but certainly not spiritually.  If you want to see oppression, look where socialism or state control of production is the predominant economic system.


''If you are satisfied with the way things are, go ahead, be happy.  But don't castigate those of us who want to change things according to the teachings of the Gospel and Catholic Social Teaching.  Pray and see what God tells you.  Read Matthew 25:31-46 and realize we will all be asked at the end of our days how we responded to the poor and needy among us.''  I am certainly not satisfied with the way things are but who is doing the castigating.  What makes you think that you have a better way or are a better person.  On another thread which America has shut down the comments, the following comment was made


''Poverty isn't a problem, unless you experience it.''


to which I responded but was not posted


That is why people should explore the best ways to reduce it and should be willing to listen to other's ideas.  It will never be eliminated because Someone said ''For the poor you have always with you''.


What you and many of the liberal commenters here should do is listen to others.  They may have something that is appropriate for the alleviation of poverty.  I do not find too many people listening here, only ready to put other people down and imply that they are better or know what is better than those who disagree with them.  Not the Jesuits that taught me.
Joshua DeCuir | 1/30/2012 - 6:05pm
No sooner had I posted my comment above, than I ran across this opinion piece discussing the HHS Mandates, but that dovetails nicely with my feelings about why what we really should be concerned about if we're concerned about economic justice is the evil nexus of Big Government and Big Business:

"This is the logic of a lot of the administration’s approach to the private economy, not just to civil society. It is key to the design of Obamacare (which aims to yield massive consolidation in the insurance sector, leaving just a handful of very large insurers that would function as public utilities), of significant portions of Dodd-Frank (which would privilege and protect a few very large banks that would function as public utilities while strangling all the others with red tape), and of much of the regulatory agenda of the left. And it is all the more so the character of the administration’s approach to charitable institutions. It is an attack on mediating institutions of all sorts, moved by the genuine belief that they are obstacles to a good society."
www.nationalreview.com/corner/289647/religious-liberty-and-civil-society-yuval-levin


I think we should fear being at the mercy of big quasi-public institutions.
Joshua DeCuir | 1/30/2012 - 5:44pm
The last quoted comment from his speech above is the single most telling line:

"To have uncertainty surrounding a company of this size and this magnitude for a long period of time I think would have been just devastating, and probably have condemned it to the heap," he says."

This reveals the dirty little secret that neither the Democrats nor Big Business CEOs like Mr. Akerson like to confess: no one loves Big Government more than Big Business.  The reason why is revealed, ironically, in Mr. Akerson's quote above: regulations ensure that Big Business has a competitive advantage in the market over smaller would-be competitors who simply cannot afford the regulatory minefield - and the accompanying lawyers, accountants, and lobbyists - that is set up.  Indeed, the regulatory uncertainty surrounding Dodd-Frank's implementation has led the biggest banks before the Financial Crisis to get even BIGGER now - and to bail them out of another crisis won't even require Congressional authority this time around thanks to the provisions of Dodd-Frank.

Also, since I see the usual suspects commenting here who often bemoan dirty corporate conspiracies, it should be remember that Pres. Obama's car czar - the man largely responsible for the auto industry turn out - was one Steve Rattner, a hedge fund manager who, while he was managing the auto industries, settled a fraud suit with the SEC to the tune of some $6 million dollars and a temporary ban from the securities industry for essentially bribing New York State officials to give him state pension plans to manage.  Just the facts.

Rick Malloy | 1/30/2012 - 5:42pm
Mr. Cosgrove, I don't have to justify my remarks.  If you are satisfied with global corporate capitalism and all its injustices, it is probably because you are not among the poor and oppressed billions who make up the vast majority of persons on the planet.  If you are satisfied with the way things are, go ahead, be happy.  But don't castigate those of us who want to change things according to the teachings of the Gospel and Catholic Social Teaching.  Pray and see what God tells you.  Read Matthew 25:31-46 and realize we will all be asked at the end of our days how we responded to the poor and needy among us.


On Oct 16 2011, Nick Kristof reported in the New York Times that:
* The 400 wealthiest Americans have a greater combined net worth than the bottom 150 million Americans.
* The top 1 percent of Americans possess more wealth than the entire bottom 90 percent.
* In the Bush expansion from 2002 to 2007, 65 percent of economic gains went to the richest 1 percent.
 
More data.
* 22% of children in America live in poverty.
* 15.1% of Americans live in poverty. That’s 46.2 million people.
* According to the U.S. Government, the poverty line is $22,314 for a family of four.
* Business Week noted: “The Pew Research Center said its recent polling shows that a majority of Americans - for the first time in 15 years of being surveyed on the question - oppose more government spending to help the poor. The deep budget cuts by the U.S. House earlier this year included programs that helped the poor.”
* Globally, 80% of Planet earth lives on less than $10 a day.
* Across our planet, 21,000 children die each day from preventable causes
SOME SELECTIONS FROM CATHOLIC SOCIAL TEACHING.
“There also exist sinful inequalities that affect millions of men and women. These are in open contradiction of the Gospel” (Catechism of the Catholic Church, #1938).
 “The equal dignity of human persons requires the effort to reduce excessive social and economic inequalities” (Catechism of the Catholic Church, #1947)
 “The needs of the poor take priority over the desires of the rich; the rights of workers over the maximization of profits; the preservation of the environment over uncontrolled industrial expansion; the production to meet social needs over production for military purposes” (Economic Justice for All, #94)
 “The way society responds to the needs of the poor through its public policies is the litmus test of its justice or injustice” (Economic Justice for All, #123)
 “Those who are more influential because they have greater share of goods and common services should feel responsible for the weaker and be ready to share with them all they possess... the church feels called to take her stand beside the poor, to discern the justice of their requests and to help satisfy them, without losing sight of the good of groups in the context of the common good” (On Social Concern, #39)
J Cosgrove | 1/30/2012 - 3:46pm
Marie,

''I don't think I was advocating increasing taxes on the rich in order to give the money to the poor.''


But increasing taxes on the rich may end up with less total tax revenue and hurt the poor.  Hardly a desirable outcome.  When Bush and the Congress lowered the tax rates in 2001 and 2003, tax revenues went up, mainly funded by the rich.  So what do you want?  More tax revenue, then don't raise tax rates on the rich.  To help the poor, then don't raise tax rates on the rich.  Slow down economic activity and put more people out of work, hurt the poor and get less overall tax revenues, then raise tax rates on the rich.  Make a lot of people feel better because they are sticking it to the rich, then raise their tax rates.  Is it fair to the poor to hurt the rich just to make some feel better for a short time.  Is that an instance of fairness?  Lower tax rates is also is what balanced the budget in the late 90's.


http://www.youtube.com/watch?v=54jr3Ceu894


Decide what your objectives are.
Marie Rehbein | 1/30/2012 - 2:26pm
JR,

I don't think I was advocating increasing taxes on the rich in order to give the money to the poor.  I think that is a mischaracterization of the reason President Obama wants to tax the uber-rich more and not increase taxes on the middle and lower classes.  This mischaracterization comes from the same group of people who insist that the budget must be balanced at this time and who then twist this obvious solution to the deficit problem to portray it as a Robin Hood move, which it is not.

If we are talking government deficits, then we must blame, not the real estate bubble, but the wars in Afghanistan and Iraq, which were not funded.
J Cosgrove | 1/30/2012 - 10:18am
''If this is the best corporate capitalism can do, we need a new system.''


Father Malloy,

Where would you want the typical person to live, Bangladesh or Chad.  That is what the world would be like with out free enterprise and capitalism.  I suggest you read Deirdre McCloskey and learn how the world works and not use irrelevant information. Here is a link to her site


http://www.deirdremccloskey.com/weblog/2009/07/07/the-tide-of-innovation-1700-present/2/


Also for a visual history of the progression of the world wealth and health see the following link.


http://www.gapminder.org/videos/hans-rosling-on-cnn-us-in-a-converging-world/


After studying these two links see if you can justify your remarks.
Stanley Kopacz | 1/30/2012 - 10:00am
GM is more a financial lending institution than an auto manufacturer.  It wimped out on a head start with electric cars because it was a disruptive technology wrt their big investment in internal combustion.  This is similar to Kodak hesitating to threaten their film technology even though they had a head start on digital camera technology.  Look at them now.  In the long run, will our near total reliance (an artificial one) on automobiles be sustainable?  Cities and towns connected by high speed rail, good local transportation and bike friendly roads.  That's where we have to go or nowhere.  If GM has a future, it'll tie into that.
Rick Malloy | 1/29/2012 - 11:38pm
If this is the best corporate capitalism can do, we need a new system.

http://inequality.org/global-inequality/





Tom Maher | 1/29/2012 - 11:02pm
USA Today reports that General Motor still owes 139 billion from the 2009 Obama stimulus program and most of this money will never be repaid . 

Capitalism had nothing to do with the massive governent takeover and bailout of GM.   As a politcal decision and in disreagrd of the cost the Obama administartion took over control and operation of GM in 2009.  Government appointed auto czars operated the company drastically downsize, resturcturing and stabilizing its finances before tuning the company back to private owneship and control number of months later.  The czars arranged the political outcome that made the unions the single largest GM stockholder thereby increaing the unions influence on all business decsions mad by GM. Government ownership, control and operating a busiensses is pure socialism, a calulated political by the Obama administration that greatly favored and rewarded unions over all other GM stakholders.  However the government directed reoganization did cause tens of thousands to be permanetly laid off and therby resulted in  significantly fewer jobs at GM for all the tax payer money spend.  The justification for the large net loss of jobs at GM was that jobs at GM's suppliers would be saved showing the GM takeover was part of a larger government planning for the auto industry.  Central governement planning of the auto sector is socialism not capitalism.
JOSEPH CLEARY II | 1/29/2012 - 9:16pm
Don't always agree with JR but I tend to agree that GM bankruptcy was not normal bankruptcy but rather a “stacked deck” arranged by the administration that favored certain creditors (namely unions) over others in a manner that few other companies or even unions get in chapter 11.
 
I also do not agree that the only choices for GM was “ complete liquidation vs salvation from BO, the Dems and Washington” That too is a straw man argument.
 
In most chapter 11 situations all creditors take some haircut. Politicians don’t pick the winners and losers. It’s not always easy and perhaps it is not always ideal but there is no long term model of success of “crony capitalism” where politicians and insiders pick winters and losers in the tax code, government grants, union benefits – in this case, to the best of my knowledge the automaker union benefits took no haircut of any note in a bankruptcy. Instead the taxpayers underwrote the whole darn thing.
 
Paul Ryan, a catholic who I believe is unjustly pillared at this site, again today summed it up—the answer is less to raise rates even more – on those other guys- but more to eliminate the special tax breaks, government grants and other privileges doled out by politicians that encourage crony capitalism. 

J Cosgrove | 1/29/2012 - 9:15pm
Marie,


Increasing the taxes on the rich will not help the poor.  It will hurt the poor.  The shortfalls in the government revenues are mainly for programs for the elderly such as social security and medicare.  The other big shortfall will be for Medicaid of which a high percentage is for health care for low income families or which many are poor.  But it will not employ them or provide them with basic needs.  So taxing the rich if indeed would provide more tax revenue (lots of information to say it won't) will not employ the poor or really help them.  Programs such as food stamps and unemployment payments which help the unfortunate and do cost a fair amount are in reality a drop in the bucket compared to real revenue shortfalls.  But you will not hear that from people here who demonize the rich and say they are not taxed enough.


What is mainly needed for helping the poor is getting them jobs.  Until 4-5 years ago we were at near full employment so it should not be out of the imagination to create this situation again if the right policies are in place.  If we were at 5% unemployment there would be approximately $500- $600 billion more tax revenues and on top of this there would be less federal costs as unemployment benefits would be down and so would other programs such as food stamps.  State and local governments would have more tax revenue and less need for the federal government to subsidize them.  Of course nothing might save California.


And by the way there are lot less rich people these days so the rich are not getting richer.  That rich get richer and the poor get poorer expression sounds good but it is not true at present.
Marie Rehbein | 1/29/2012 - 6:49pm
JR, it's not that the poor are getting poorer; they are not.  Their ranks are growing, however, while the really rich are getting richer, almost automatically, after having set up the rules of the game so that this can happen.

If I work for money, save some of it, invest that wisely, is it really my entitlement to never give any of it to the government other than what was initially taken out of my pay?  Why should I have to pay taxes on my ownership of my house or my car, but not my monetary wealth, held in stocks or bank accounts?

The economy is in essence a game.  The rules should be set, and they should be followed.  Agencies of the government should exist to enforce the rules.  The idea that there can be an economy that regulates itself is a fantasy on par with many utopian visions.

It's very nice that the GM Chairman is grateful, but it is sickening that his pay, his benefits, etc. were rescued while the wealth of the middle and lower middle classes was sacrificed for it.  It would have been appropriate, I think, to let GM fail, while dividing up that same amount of money and disbursing it at the level of households so that they could pay their debts.  That would have been a shoring up of the nation's economic foundation and possibly the world's given that the suffering is the result of the real estate bubble, which need not have been left to burst so violently.
J Cosgrove | 1/29/2012 - 5:15pm
This OP introduces straw men arguments, and then lets them ride as the real issue when in fact the straw men are just that, phony arguments to try to justify something.  For example,

''Sometimes people stylize the image of how the economy works because we have never been a truly 100 percent, unadulterated capitalist system,''  I know no one in the universe who believes or wants a truly 100 percent, unadulterated capitalist system.  So why even use this phrase?


''Otherwise, your mother, as she aged in time ... and could not produce, you don't kick 'em to the curb.''  A nonsense statement which again has no one but a few nut jobs advocating this.  So why use this phrase?  Unless someone wants to get others angry.


''In the case of GM, he explains, to have let it go through a complete bankruptcy would have been disastrous.''  Maybe that would have been the best way.  Large corporations have bit the dust before and we could have had a discussion on what was best.  Ford did not use any help and the government screwed a lot of bond holders of GM debt which Ford didn't go through.  The whole GM thing seemed to be union driven and we know who they vote for.


''some suggested that individuals would be better off if the government got out of the regulation business altogether and let capitalism work its magic, rewarding the creative and talented, and, well, letting others fend for themselves.''  Who recommended that?  I didn't see it.


''the real problem was that the US actually embraces a system of socialized debt and privatized wealth, leaving the rich to richer and the poor to get poorer,''  I didn't see this either.  So who is recommending this here ?  What information do you have that the poor are getting poorer? 


If you want to get into some discussions about reality, then I suggest that the OP address it instead of make believe stuff.