04 January, 2007

Barney Frank: Capitalist At Large

I caught most of the broadcast of Rep. Barney Frank at the National Press Club last night on C-Span. Mr. Frank is the Chairman-Designate of the House Financial Services Committee.
I happened to be channel-surfing when I noticed his speech in progress. I was compelled to stop and watch for a moment, in much the same manner as one would watch a train wreck.
As I was about to switch to a rerun of Who Wants To Be A Millionaire, I heard Rep. Frank utter,
Let's be very clear. Inequality is not a bad thing. It's necessary in a capitalist system, and I'm a capitalist.
What?! I could hardly believe I heard it. No sooner does this spill from his mouth, he follows with,
FRANK: We have a system which is producing, by a combination of natural forces and government policy, more inequality than is necessary for efficiency or than is socially healthy, because it produces gridlock.

Now, here's one point about the American economy that my conservative friends not only get wrong but are very inconsistent: They treat it as if it is some fragile flower.

My God, if you were to raise the minimum wage and pay these people who are working hard in jobs that aren't all that much fun -- $7.50 an hour -- God knows how the American economy could withstand it.

The fact is that the American economy -- a vast, sprawling complex combination of people and resources -- is much tougher than the conservatives argue.

And, in fact, it turns out -- and you can see this in the Clinton years -- there is a wide range of public policies which are consistent with economic growth. Bill Clinton raised taxes on the top bracket in 1993, and we had a great deal of economic growth afterward. Then George Bush cut the top bracket tax and we had economic growth less than we had under Clinton.

I'm not arguing that the Clinton tax cuts caused it, only that there is a much broader range of public policies, particularly those dealing with excessive inequality, that are compatible with our national economic growth.

And the fact is that if we do not reverse this trend and begin to reduce inequality, you will continue this gridlock.
He continues his lecture on capitalism by talking about unions, CEO compensation, shareholders representation on corporate boards, universal health care, increasing minimum wage, and the usual fare.
I have linked the transcript for those that are interested. I know I learned how much I misunderstood about capitalism. Or in Barney Frank's version of Kapitalism.

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