The whole debate on taxes and spending is missing the point, but this country has lost one of the most basics tenets of capitalism that I think everyone of any part of the spectrum could agree on. Capitalism is based on the idea that you can take ideas or raw materials and refashion them into a useful product for other people. Capitalism requires a basis to work off of: land, resources, and/or ideas. It then has an engine fueled by money from investors, whether they be banking cartels or mom and pop with their jar full of change they've been saving for a rainy day. When the basis of your economy starts to sputter, and the engine turns off, you have to open the hood and see what's broken. So far, we have one side that says throwing more gas into the tank, whether it's full or not, will fix the trick while the other thinks that ripping off the car doors will make the car lighter, and therefore easier for the engine to pull. Both are missing the point.
America's manufacturing base has been hollowed out by free trade and mechanization. Too bad both of these happened at the same time. The average American could no longer just go through high school and raise a family off a factory job with no skills. Now he has to wade into the weeds of a college education, junior colleges, and trying to figure out how many 10s of thousands of dollars in debt he needs to go to in order to roll the dice for a job. Too bad this is not for most people. There's still always straight up nepotism. Patronage never hurt anybody. While Asian countries are still utilizing mercantilism (both front door and back door), we are scrambling to make a country of 300 million either more like Sweden or more like Indonesia, and sort of succeeding at both.
We switched to the credit bubble economy back in the 80s, arming Americans with Visas and told them that when terrorists attack, go shopping. What choice did we have? Deng Xiaoping got up on the podium and said "To be rich is glorious." Communist bull@#$@# --- over. Now his hordes of Chinese people who have to pick between their crappy village and a crappy factory were going to hit the market. If there ever was a signal that we had no capital to really trade with the world or ourselves, at least not for the common family, it was flooding the market with credit cards and payday loans. We needed an economy built on ideas and services, because that's where we pushed ourselves into.
What did we need to inflate the tire? Banks of course. Banks with fancy sounding derivatives and financial packages. We needed gurus and wizards, and to tell people that their financial woes were not based on a model that didn't work, but the fact that they drank too much Starbucks. The banks moved in with their no money down, no credit, no capitalism loans. Subdivisions were born and then died within a few years as the adjustable rate tornado rode through town. Now, we have banks which are our only lifeline to an economic hologram where we fake it till we make it.
Elizabeth Warren knows otherwise. The system was supposed to collapse. It didn't have to blow up in a spectacular fashion, taking out thousands of people. The way the government did it, we let the banks let the stress out on the American people so they could stay on their two feet for no good reason. Capitalism would have decided what to do with them. Smart capitalism would have let them fail in an organized manner, meting out lessons to bankers left and right. A banker living in the Hampton's losing his job is not the same as a single mother being pushed out of her home, libertarianism be damned.
Spending cuts or tax increases? It doesn't matter if your model doesn't work. Banking and finance make up for most of our economy, or at least the integral part of it. If you don't go through the painful process of failure, the rejuvenating aspect of capitalism, then you are left with the same problems you had before. You need to open the hood, get rid of the old parts, update a few, and get the engine purring again. You can still have your state of the art BOSE player and keep your car doors!
Warren gets it. The aspects of our government that should stand as sentinels of capitalism have failed us, and we have banks that are unhealthy and filled to the gills with bad loans. The Federal Reserve can only print so much money before prices skyrocket and people feel the pain more so than they already do. Add in climate change and continuing conflicts in the Middle East (whose seeds we laid for ourselves 50 years ago) and price levels are not going to be comfortable for a family of four living off a McDonald's salary and still programmed to think that unionism is bad for them. Bank regulators are as useless as the failed business models they represent.
Warren gets it. Let's cheer her on.