From Empire to Democracy

Let's not waste $700bn on a bail-out, but use 'big government' for what it's best at – shaping a society that is fair and peaceable

By Howard Zinn

03/10/08 "The Guardian" -- -This current financial crisis is a major way-station on the way to the collapse of the American empire. The first important sign was 9/11, with the most heavily-armed nation in the world shown to be vulnerable to a handful of hijackers.

And now, another sign: both major parties rushing to get an agreement to spend $700bn of taxpayers' money to pour down the drain of huge financial institutions which are notable for two characteristics: incompetence and greed.

There is a much better solution to the current financial crisis. But it requires discarding what has been conventional "wisdom" for too long: that government intervention in the economy ("big government") must be avoided like the plague, because the "free market" will guide the economy towards growth and justice.

Let's face a historical truth: we have never had a "free market", we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with "big government" when it served their needs.

It started way back, when the founding fathers met in Philadelphia in 1787 to draft the constitution. The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators. And this role of big government, supporting the interests of the business classes, continued all through the nation's history.

The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked.

The alternative is simple and powerful. Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom "the free market" has not come through.

We have a historic and successful precedent. Roosevelt's New Deal put millions of people to work, rebuilding the nation's infrastructure, and, defying the cries of "socialism", established social security. That can be carried further, with "health security" – free health care – for all.

All that will take more than $700bn. But the money is there. In the $600bn for the military budget, once we decide we will no longer be a war-making nation. And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.

When the cry goes up, whether from Republicans or Democrats, that this must not be done because it is "big government", the citizenry should just laugh. And then agitate and organise on behalf of what the Declaration of Independence promised: that it is the responsibility of government to ensure the equal right of all to "life, liberty, and the pursuit of happiness".

Only such a bold approach can save the nation – not as an empire, but as a democracy.