American debtors must find a new capitalism

Capitalism has long been a cornerstone of the “American Dream.” A system based on the flow of money that gives everyone the same chance to own that house in the suburbs, picket fences and all, which Americans secretly crave – or so they are told. But it is becoming increasingly obvious that unchecked capitalism can be quite detrimental to society, as it is beginning to seriously hamper that “pursuit of happiness” it was said to bring.

Historically, America will not budge when it comes to protecting its right to capitalism. The United States spent trillions of dollars and quite a share of human lives in its battle against communism during the Cold War era. U.S. officials justified the expenses similarly to how they now frantically try to justify the expanding cost of the war in Iraq: America needs to fight for freedom throughout the world.

But the opposite is true. An increasing number of Americans are in debt, especially students. Financial aid is being cut while tuition is rising, leading to record numbers of students in debt, a large amount of which is credit card debt.

At the same time, the government has actively catered to the credit card companies and made it harder for individuals to declare bankruptcy. This leaves credit card companies reaping profits while the people elected to represent citizens’ interests sell off their rights. How is that for taxation without representation?

Most of these individuals would hardly say they are “free,” as they are trapped in paying off credit card bills and the like. Suddenly, paying the rent or buying groceries becomes so hard that goals the individual meant to pursue are no longer feasible.

Yet after the attacks of Sept. 11, President George W. Bush famously announced in an address to Congress that if citizens want to help the United States prevail, they should go shopping.

This was evidenced in the case of General Motors. After GM initially announced late last year that it would lay off 30,000 workers – about 22 percent of its remaining workforce in North America, according to – and close nine of its factories in the United States, the corporation’s stock went up for the first time in months.

After this, 30,000 Americans faced the grim prospect of not only being unemployed, but also having to worry about future retirement benefits getting cut. Yet the financial market celebrated the event – and by buying into the company’s stock, it even indirectly profits from GM’s grim fate.

But who could be surprised by this if even one of the most basic ways of measuring “progress,” – the gross domestic product – has a blind spot for unsustainable models? Combining a country’s total consumption, investment, government spending and exports, but subtracting imports usually computes the GDP. The value usually used as a representation of a country’s economic health gives no indication about sustainability. If Saudi Arabia were to sell all the oil it has at once, its GDP would shoot through the roof. But what then? A war can also raise the GDP. Germany’s per capita GDP went up after WWII, when the country recovered after being bombed to bits by allied forces – but is hardly something America should strive for.

Another increasing problem is that many individual corporations now own every aspect of a product’s path to a consumer. They no longer only make a product and sell it to a wholesaler; they now also have the means to hype the product on media outlets they own and sell the product in its own stores. This concept of vertical integration means a corporation makes more profit and can more effectively corner a market and freeze the competition even more.

Ironically, vertical integration is also one character trait of communist regimes, the key difference being that in a capitalist model, the company is privately owned. In effect, capitalism is even worse than a communist setting as the private company has no duty to the common good, only a duty to its shareholders.

Capitalism, or rather Americans’ understanding of it, will therefore have to change, as the way it exists in today is unsustainable. While nobody would argue that the model should be abandoned altogether, America needs to re-evaluate how it allows capitalism to control its citizens’ lives before the country creates a new way of feudalism in which corporations take the role of nobility or landowners of the past.

Sebastian Meyer is a senior majoring in political geography and is a former Oracle opinion editor.