To the Editor:
Certainly size matters when the federal government intervenes, but your dichotomy between union and non-union is less useful than between labor and capital. Interventions are used to shield huge job losses — and federal funds do strengthen vulnerable, unionized manufacturers, for example, billions to develop efficient, alternative auto engines. But sudden bailouts intend above all to protect paper (read: capital) assets — notes and bonds, currency, debts and contracted payments between major entities — the whole range of credits and liabilities.
Our system is called capitalism for a reason, not “laborism,” and our affluence depends on capital flows, as distinct from cash or money. Any government supported by today’s corporatism cannot stand by if capital is so undermined that the system freezes up: capital brokers can tolerate blows to manufacturing (union or not) and to common stock valuations (greatly reduced) but not the underlying capital markets and the absolute need for trust between large entities.
What threatens capitalism is significant credit paralysis, caused by fear that loans or investments will not be repaid an/or the inability for risk assessment (thus determining the “cost” of money, such as amount of interest). Thus, it’s not just losers or winners that mandate intervention but how important an industry (or company) is to the capital foundations without which we are back to barter and/or simple exchange of goods.
Thus, huge brokerage houses, banks, and insurance firms get government support because they are the market makers for all-important capital flows — and financial leaders will act to protect them. You can in theory have a manufacturing business without global banking but you can’t have our capital system without the ability to repay and/or assess the value of capital. All labor, alas, is secondary.
Of course, massive interventions make a mockery of the mythic “free market ideology” that hack politicians like John McCain defend on good days and suspend when times are tough. If he were more skilled, he could talk out of both sides of his mouth and not sound quite so ridiculous.
What the crash of the last weeks, interestingly timed weeks ahead of the election, demonstrate to me are since in the power structure do endorse better regulation, thus welcome a mild paradigm shift.
Anyone who believes ours is a free market system, except at times when new industries are born, is deluded. Until the entire system changes, capital remains king and will be used to continue its reign.
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