Could Americans' Discontent Turn Violent?
At what point does discontent turn to violence?
Economically, we may or may not be close to hitting rock bottom, but policy-wise, this market still has a long way to fall. While there are individual sectors that in normal recessionary times would still be good hedges against further downturns, these days investors don't seem to be as concerned with equity, value, and earnings as they are with Washington's proposals. Stable, profitable companies, like many energy firms and pharmaceutical companies, see their equity slashed by the threat of regulation, while others with little prospects for profitability increase in value through the infusion of taxpayer subsidies. This is no way to rebuild an economy.
Unfortunately, the president's actions have put the country on notice that dependency-building not economy-building is his plan. His budget has the federal government spending an astounding one-third of the nation's GDP, fully half of which is borrowed from the future.
While his "rescue" plans threaten to create a double-dip recession, they simultaneously court increased corporate reliance on the government for help. Auto manufacturers, banks, and insurance companies are already there -- locked into a cycle of dependency. Chrysler and GM want their second bailout while AIG has asked for its fourth. Soon it will be the pension funds of companies and unions, as well as those for state and municipal employees, that will come begging to Washington. The Obama administration gives every indication that it will "help" those who then must depend on them. That, of course, means that Americans who rely on their own investments and see their accounts already battered by the market, will have them further eroded by taxes and inflation.
The risk to the administration -- nay, the risk to America -- is that when we reach bottom, it won't be an economic bottom, but a socio-cultural one. Ayn Rand was a great observer of economic principles, but having grown up in Russia, she was less astute about the American psyche. In Atlas Shrugged, her dystopian novel about an overbearing government, the productive protagonist simply refused to produce. That, after all, was the response of Muscovites, who in 1812 burned, then deserted their capitol rather than fight to retain their city in the face of Napoleon's advancing army. However, passive aggression has never been the American way. Around the same time in American history, General Andrew Jackson dealt with foreign invaders quite differently. His forces slaughtered 2,000 British soldiers two weeks after the war was over, rather than let them reach New Orleans. Americans don't go John Galt. We go postal.