Research Analytical Essay at least 8 pages

30 November 2011

A Government Against the People

In the past decade or so, our economy in the United States has gone from being fairly stable to being on the verge of a complete collapse, heavily damaging the global economy as well. It is nearly impossible to go through a single day without hearing negative news that is about the economy. As Karl Marx illustrated in his “Communist Manifesto”, the bourgeoisie of old and new have immense power and appear to only care about their interests while having little to no regard for the everyday citizens. Ideally, the power struggle between the two classes would be under control and overall be fairly tame. Due to the government and the people (those who are supposed to be running it) being disconnected from one another, however, corporations or the bourgeoisie of today have stepped in and filled the void in order to advance their interests. The disconnect is apparent when recent polls, which put Congress’ approval rating at a measly 5%, are put into context (“Half of Americans…”). Congress’ dismal approval rating on top of our economic collapse has shown us that representative democracy in the United States has failed and now may be time to move towards direct democracy.

The chief reason why representative democracy has failed is because of the increase of lobbying and corporate influence in politics. A lobbyist is a person who works to persuade a politician to vote for a piece of legislation that would somehow benefit the group they are representing (Cooper). Over the years, lobbying has increased by nearly 260%: from around 10,000 in 1996 to 26,013 lobbyists in 2005 were registered in the capital (Katel). Lobbying is not necessarily a bad thing, when the playing field is level. Given that large corporations have more resources at their disposal than, say, a nonprofit organization, they have more power. They can afford to throw more money at a lobbyist (it is very safe to say money is a very good motivator) or make substantial campaign contributions. Since exposure greatly benefits any election campaign, money is directly related to the success of an election campaign. With more resources being readily available, it is substantially easier to fund television advertisements or to pay media outlets to run a smear campaign.

In relation to our current economic crisis, we see that one issue led to another. We have a government that allowed financial institutions to partake in practices that, before, were illegal. In the upper echelons of government, regulations enacted in the past that were, on paper at least, meant to protect consumers were either repealed or ignored. The golden example is the repeal of the Glass-Steagall Act, which forbid commercial banks from taking part in investment activities (Billitteri). Another possible culprit is the 2000 Commodity Futures Modernization Act, “which prohibited the regulation of most swaps” (Billitteri). The overall theme to both government actions is that the government put the investment firms’ welfare over the publics’ in order to allow them a profit despite the risks. How this conclusion was reached is simple: regulations have traditionally hampered corporations or banks in some way and benefitted the consumer. In the case of the Glass-Steagall Act, banks were denied some profit but the population was protected from the banks risking their money on the investment market without their knowledge. It was a balance that worked for everyone, given one was not only after money.

The likely beginning that directly involved ordinary citizens was the handing out of loans to those who, in the past, would have been denied them. The gamble was that the borrowers could then refinance to use their home’s rising value in order to pay off the loan (Billitteri). This gamble, however, required that housing prices continue their artificial increase. When prices fell, however, it set off a massive chain of events, creating the 2008 Housing Bubble. One would think that there would be a law against predatory lending, but the housing bubble showed that either there is not or the government turned a blind eye in hopes of maintaining a continually growing housing market and in turn allowing the economy as a whole to grow. Other culprits related to the Housing Bubble have come to light. The first was Fannie Mae who “bought or guaranteed $270 billion in risky loans between 2005 and 2008” (Billitteri). Ordinarily, a bank would not do such a thing because there is a very real chance that their money will be lost (hence credit checks for bank loans). The only logical reason why they did this could be so straightforward it is disgusting: greed and a profit by any means necessary. Greed led to the creation of credit-default swaps, which were essentially a type of insurance against inevitable defaults (Billitteri). Normally, one would not give out, for example, $100,000 worth of insurance when they only have $40,000 worth of capital immediately on hand (capital is, more or less, money). When financial institutions had to start paying out for the defaulted loans, they soon found they did not have enough capital to cover the costs. Investors who then bought the swaps in hopes of making money soon found that they lost their investment, not to mention the institutions who sold them ran out of money and collapsed (Billitteri).

How could the government allow these things to happen? While this is a question that has no clear cut answer, if it even has one, understanding what kind of democracy the United States is using can help us to get a better idea on how everything could have happened. While all of the different forms of democracy are the same in respect to the people voting on issues and laws, the difference lies in how the voting process is approached. First there is direct democracy, in which the population collectively comes to a decision on issues using a voting system. This flavor of democracy has commonly been referred to as mob rule due to the obvious rule of the majority, even if it is a good indicator of the public’s will. Second, there is representative democracy which is the system the United States has been using since its founding. In this form of democracy, the population votes for representatives who, in theory, share the same views as their constituents which voted them in. On a large scale, the representative system is much more efficient because it avoids having millions (or even billions) of points of views that need to be accounted for. Representative democracy condenses these points of views or wills into a more manageable amount. With modern technology, however, this may no longer be a characteristic worth relying upon. For example, in 1776 the internet was not even something that the even the most brilliant of inventors could conceive, and it would be difficult to get the entire population to vote on a time-sensitive issue with technology from that era. With modern technology and the internet, however, once the proper fraud and security issues are worked out, allowing the population to vote directly on an issue instead of for a representative could be as simple as going to a website set up for voting and clicking a few buttons. While having representatives may still be necessary, power is returned to the public instead of it being hoarded by the politicians.

Both forms of democracy have a weakness of some sort. An obvious weakness of direct democracy is the fact the majority rules, even if they are morally wrong. While one would hope the voters would be fully educated on the issue they are voting for, there is a very real chance they only know part of the story. As Henry David Thoreau stated in “Civil Disobedience”, a majority rules not necessarily because it is right; it rules because it is the strongest (178). If one believes that, by nature, people are naturally good than this may not be much of an issue.

The inherent weaknesses of representative democracy are voices are lost or voters are placed in a less than ideal situation. Voices are either completely lost or the “vote for the lesser of two evils” situation arises where Senator Candidate A may share only 50% of a voter’s views, while Senator Candidate B shares only 20% (admittedly, both possibilities are closely related). Congress’ current approval rating illustrates that either one or both possibilities have turned into reality and have illustrated that the government has lost legitimacy, a repeat of our early history that led to our nation’s founding.

Our current form of representative democracy is completely against what Thomas Jefferson wrote in his “Declaration of Independence.” By its very design, a representative democracy needs to have the governed on board in order to make sure everything runs smoothly (for the people, at least). Without the people, there is no democracy, no matter what form it takes. Ergo, the people run the government. Jefferson was well aware of this, for he even stated “That to secure these rights [life, etc.] Governments are instituted among Men, deriving their just powers from the consent of the governed” (81). It is safe to say that the government is supposed to look out for the welfare of its people, for it is them that allow said government to exist. Thoreau may not disagree that the government needs to look after its people; he did mention the caveat of a government that used mob rule: some laws are enacted not because they are just, but because a majority wanted the law for some reason that benefits them (and usually restricts others).

Our form of representative democracy, however, is actually anti-democratic. As mentioned before, the Senators that are voted into office may only share some of their constituents’ views, and may actually go completely against them; there is no law stating that our representatives cannot “backstab” those who voted them into office. Another example is the Electoral College system we use in order to elect a president. With this system, we do not vote for a president; we vote for a representative who then votes for one of the presidential candidates. “The party that gains the most popular votes in a state receives one electoral vote for each of its electors” (Electoral College, 98). While these electors usually vote for the party that won the popular vote, there is no statute dictating that they must adhere to this unwritten rule (Electoral College, 98). Another anomaly is how the electoral votes are distributed. Given the electors do not go off and do whatever they please, all but 48 states award all its electoral votes to the candidate that wins the popular vote (Electoral College, 99). The two states that do not use this system and instead award electoral votes “proportionally according to the popular vote” are Maine and Nebraska (Electoral College, 99).

The prime example of how the system could fail is the Gore and Bush presidential election. While Gore won the popular vote (and in theory should have won the electoral vote), Bush was elected. This was due to Florida, the state that was the deciding factor, being a winner-take-all state (Electoral College, 99). Questions arose in various counties over the accuracy of the ballots and a hand recount was ordered (Electoral College, 99). The Supreme Court in Bush V. Gore, however, ordered a cancelation of this recount and awarded Bush the presidency. There is a possibility Bush could have won even with the recount, however there is also the real possibility that Gore could have also won. Political preference aside, this is a shining example of how our system, for the most part, allows those in power to do what they please even if what they do goes against the wishes of the general populace.

Traditionally, much of the legislation that has directly benefitted the population has been socialist in nature. A prime example would be our public education system (though technically it is communist in nature). Taxes gathered from the population are used to fund a school system guaranteeing a K-12 education for children in the area. As illustrated with this example, socialism is simply the redistribution of wealth to help guarantee each member of society has a standard of living that is comfortable (Muravchik, 1812). Communism, in a way, is related to socialism. In communism, the government looks out for the welfare of its people by controlling the market and heavily regulating production, a contrast to capitalism’s market and production freedom (“Communism”, 36). In regards to public welfare (and ignoring the possibility of corruption), this is not a bad way to run a country given one can happily live with what the government says a person can and cannot have due to there being no private property (“Communism”, 36). The people, however, may eventually exhibit behavior that goes against communism. For example, let us say the government controlled production of a basic good, like yogurt. Because the government controls production (the easiest way would be through a quota system), each citizen would only be allowed one cup of yogurt a month. If someone wanted more, a demand would then be created. Their neighbor may not like yogurt and would be willing to sell their monthly cup, creating a market. Thus, communism can breed capitalist behavior, albeit on a small scale.

As stated, communism’s, and to a lesser extent socialism’s, polar opposite is capitalism. Capitalism is at the core of the “American Dream” which, as most of us know, states that if one works hard they will prosper. This goes directly with capitalism where if one works hard, maybe by opening up a restaurant, prosperity will eventually be reached. On paper this makes sense, however the type of capitalism the United States uses is not as nice. Our system is known as free-market capitalism, which is simply capitalism in which the government tries to avoid regulations as much as possible as shown by the constant bickering in Washington over how much regulation is too much. While this is great for making money and benefits those with power, it erects barriers to market entry for two reasons. Corporations can either make it prohibitively expensive to enter a market or corporations can have a borderline monopoly. A monopoly helps them limit competition which benefits the company by guaranteeing a secure profit pipeline, but goes against the core of capitalism which relies on competition in order to regulate prices and guarantee constant innovation and improvement. While we do have anti-monopoly legislation, the government is allowed to turn a blind eye for any reason they deem fit because in the end, they are the ones that make the rules. They can accomplish this by either completely ignoring what is going on (out of sight, out of mind), or by passing legislation that exempts a corporation from the anti-monopoly laws.

What do these different systems have to do with the economic crisis? Well, if we look at the government’s reaction we can see a serious contradiction in respect to the people. Free-market capitalism reigned with the repeal of the Glass-Steagall Act and with the outlawing of regulation on financial swaps. While some may claim that the investments that were used were safe, we can plainly see that the opposite is true. This is not to say that every part of the financial sector needs to be regulated; this would actually be counterproductive for too much regulation could hamper growth. What needs to be done is not hard to see, but for some reason the politicians think they know best. The solution is to re-enact regulation that helps to protect the public while still allowing corporations and banks to continue pursuing a profit. While finding this balance will no doubt be difficult, it was done before and can be done again.

Unfortunately, it is easy to see that our government has failed us. The almighty dollar prevailed and in the process, “socialism” became a word that was not to be uttered in the United States. While economic growth is important, the welfare of the public is equally if not more important for without them there is no economy. What is truly sad, however, is how the politicians are able to get away will all this. While there is not a written law stating that the public comes before money, one would think human decency would take control. Would a completely new form of government be the solution? That is a question that is truly difficult to answer. Even so, it is painfully obvious our current system is not working and something needs to be done.