Saturday, June 29, 2019

Musings on a Politics of Reconciliation: An Impossible Dream?

  By Rudy Barnes, Jr.


American politics are hopelessly polarized, yet the stock market is booming, the unemployment rate is at a historic low and public confidence in the economy is high.  In politics It’s the economy, stupid.  Unless the economy goes south or there’s a war, it seems that a politics of reconciliation is an impossible dream.

Many economists have predicted a recession in 2020.  I’m not an economist, but I have an intuitive feeling that there will be a downturn in the economy before the end of the year.  If the economy doesn’t stall before November 2020, then we’ll likely see a Trump regime for another four years, and by 2024 a worse fate for America than a mere recession.

That’s why I’m hoping the stock market will fall, along with public confidence in the economy.  That would make a politics of reconciliation possible. It happened after the stock market crash of 1929 brought economic deprivation to a majority of Americans.  That initiated a spirit of altruism that overcame the public proclivity for selfishness and greed.

Without the altruism needed to motivate a politics of reconciliation, American democracy will remain politically polarized.  Meanwhile a charismatic right-wing populist demagogue--like Trump but with more finesse--might convince America’s mindless masses to forfeit their powers of self-government and, as Edmund Burke once predicted, forge their own fetters.
                     
Given the self-centered materialistic and hedonistic values of most Americans, it will likely take a cataclysmic event to create the altruism needed to motivate Americans to balance individual wants and rights with providing for the common good.  It would be a painful reminder that altruism in politics is essential to saving American democracy from self destruction.

The stock market crash of 1929 was caused by unrestrained greed on Wall Street and consumers spending money they didn’t have on things they didn’t need.  After regulations on Wall Street were eliminated, the same factors caused the recession of 2008. Today overvalued stock prices, excessive debt and unrealistic consumer confidence again threaten the economy.

This isn’t an issue of faith so much as it is one of balancing greed with altruism, which is a virtue of secular humanism and common sense.  Most Americans’ greed for wealth and power outweighs their altruism; but a healthy democracy must balance the rights and wants of individuals and identity groups with the altruism needed to provide for the common good.

Altruism is also a moral imperative of the Abrahamic religions.  It’s expressed in the greatest commandment to love God and to love our neighbors as we love ourselves, including those of other races and religions.  It’s taken from the Hebrew Bible, was taught by Jesus and is recognized by Muslims as a common word of faith and politics.

It’s a shame that human nature favors the self-centered zeal to attain wealth and power--as advocated by Ayn Rand and sanctified by the prosperity gospel--at the expense of altruism.  But in America greed will likely trump altruism unless a cataclysmic event like war or widespread economic deprivation motivates a majority to provide for the common good.

America’s materialistic and hedonistic culture is a formidable obstacle to altruism and a politics of reconciliation; and with America’s polarized politics the elections of 2020 are not likely to change that.  Without a cataclysmic event like widespread economic deprivation or a war to motivate a spirit of altruism, a politics of reconciliation will continue to be an impossible dream.


Notes:

Charles Sykes has advised Democrats that if they keep promoting radical liberal causes that further polarize America’s partisan politics they will guarantee Trump’s reelection.  See https://www.politico.com/magazine/story/2019/06/25/democrats-trump-election-2020-227215?cid=apn.

Matthew Continetti has cited favorable economic statistics, the lack of war and a global anti-elite surge of radical right populists in democracies around as a wave that could carry Trump to re-election.  See https://www.nytimes.com/2019/06/18/opinion/trump-2020-campaign.html.         

E. J. Dionne noted that we don’t usually put “moral” and “economics” in the same sentence, but that it’s time we started, citing Elizabeth Warren “pressing the issue of what it takes to build a moral economy.”   https://www.washingtonpost.com/opinions/we-dont-usually-put-moral-and-economics-in-the-same-sentence-its-time-we-started/2019/06/16/36c780c2-8eb8-11e9-8f69-a2795fca3343_story.html?utm_term=.894436cfad49&wpisrc=nl_headlines&wpmm=1.

Noted market bear John Hussman thinks that “US stocks could suffer a crash along the lines of a 60% to 65% plunge. He's also predicted S&P 500 total returns averaging roughly zero over the next 12 years. ...His argument boils down to one crucial misunderstanding he says is giving traders false hope: the idea that lower interest rates justify higher stock valuations. The problem is that if interest rates are low because growth is also low, lower interest rates don't justify any increase in valuation multiples at all," Hussman wrote in a recent blog post.  ...While Wall Street mechanically recites the aphorism that 'lower interest rates justify higher valuation multiples,' that proposition actually holds only if the trajectory of future cash flows is held constant." Hussman...lays out a completely plausible — and frightening — scenario. He says that if inflation remains around 2%, corporate revenue growth will be just 3.5%. Then, if there isn't "persistent expansion" in margins, profit expansion will also peak at roughly 3.5% annually. "Even the mildest retreat in valuation multiples will then likely produce a multi-year period of negative S&P 500 total returns," he said. "All of this is just basic arithmetic."  And it could produce a market crash.  
  
Robert J. Samuelson has noted, “We live in an age obsessed with economic inequality.  There is too much of it, most people agree. The findings of a recent study by the Federal Reserve indicate that the distribution of America’s wealth “is highly skewed and getting more so:
● In 2018, the net worth of the wealthiest 10 percent of Americans represented 70 percent of household wealth, up from 61 percent in 1989, the study’s first year. Even among this upper crust, wealth became more concentrated. Over the same years, the share of the top 1 percent went from 24 percent to 31 percent.
● The bottom 50 percent of U.S. households had virtually no net worth, the difference between assets and liabilities, mainly loans. Their wealth share tumbled from 4 percent of total wealth in 1989 to 1 percent in 2018. Their assets (roughly half were homes) stood at $6.8 trillion, compared with liabilities (primarily home mortgages) of $5.6 trillion, leaving a net worth of $1.2 trillion. Many of these households borrowed heavily in the real estate boom. Recall: Total household net worth equals about $100 trillion.
● The big losers over the past 30 years could be termed the broad middle class: those with wealth starting at the median (the midpoint of all wealth) and going to the 90th percentile. Their share of household wealth, though still sizable, has dropped from 35 percent in 1989 to 29 percent in 2018.
The truth is that we still don’t fully understand the surge in economic inequality of the past three decades. The populist temptation is to blame greed, but this is not a satisfactory explanation because greed is hardly new. It seems virtually certain that, sooner or later, taxes on the well-to-do and wealthy will go up. That’s where the money is, and that’s where the biggest private gains have been.”  See 
  

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