Zinn: Bailout is trickle-down theory magnified
In part two of our interview with Howard Zinn, Prof. Zinn responds to the $700 billion bailout bill, the economic crisis, and provides his vision for an appropriate response. He describes his disappointment that both Obama and McCain joined to support the bailout, a move which Zinn believes fits into a long history of big government at the service of wealthy elites. Zinn argues that the roots of the crisis are the same as in 1930, a growing gap between the wealth at the top and the insecurity at the bottom. Zinn argues that in place of a bailout of the financial sector, what is needed is a 21st century New Deal, with government investment providing jobs and health care. He also argues that big government has always been a feature of the American system, and that the question is therefore not one of size, but of how the government and its power is to be used.
Why I support the REAL News
(a short message from a member)
JAY TABER, REAL NEWS MEMBER: I regularly seek out credible news sources outside corporate media, and Real News is one source I’ve come to rely on.
TEXT ON SCREEN: Howard Zinn is an American historian, political scientist, social critic, activist and playwright. He is best known as author of the best-seller ‘A People’s History of the United States.’ Zinn has been active in the Civil Rights and the anti-war movements in the United States.
Bailout is trickle-down theory magnified
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to the next segment of our interview with Howard Zinn. We’re discussing the financial crisis, the movement, and the elections. Thanks for joining us again, Howard.
HOWARD ZINN, HISTORIAN AND AUTHOR: Oh, thank you.
JAY: So talk a bit about the bailout, the financial crisis, what you think just happened, and what we might be looking at in the next few months.
ZINN: Well, I’ve been very disappointed in seeing Obama and McCain joining in supporting the bailout and giving $700 billion, essentially, to the financial institutions which have already showed their incompetence in doing anything for the economy.
JAY: And that’s just in the US. The Brits are apparently going to hand over about $1 trillion. And if you put in the European and Japanese money, the amount of global wealth that’s being thrown at this finance sector is staggering.
ZINN: Exactly. And what this is—this is a magnified version of the trickle-down theory, because after all, what is the problem? The people up on top, including the people who run the financial institutions, they’re not suffering except, you know, in the paper sense of, you know, sort of their billions reduced to $700 million, let’s say. The people who are suffering are the mortgage holders who are not being able to pay their mortgages, so are losing their homes, the people who are losing their jobs as the economy shrinks, and the people who are devoid of health care and who need it. These are the people. That’s the root of it. In fact, the root of the economic crisis is today as it was in the 1930s: the root of it is the enormous gap between the wealth at the top and the insecurity at the bottom. And we went through a period in 1920s of euphoria, of, "Oh, well, this is the age of prosperity." Well, it wasn’t prosperity for everybody, because that gap was growing. And we’ve just gone through in the United States a period where there’s a certain amount of complacency: "Oh, we’re doing very well," you know, "the American economic miracle." But the fact is that people have been suffering all along—one out of every five children in the United States throughout these last decades born into poverty. And so the root of it, the root of the problem, is this gap between rich and poor. There’s no purchasing power at the bottom.
JAY: Except through borrowing.
ZINN: And so to me the solution’s obvious, and that is instead of giving $700 billion to the financial institutions, you take that money and you give it directly to the people who need it. In other words, the government, instead of dispensing this money, takes hold of this money it was going to give to financial institutions. It’s interesting that it suddenly finds this $700 billion when it was, you know, complaining, "We don’t have any money for this or that." Take the $700 billion, and the government should give that in direct aid to people who are going to lose their homes, not allow anybody to lose their homes, and the government should create millions of jobs for people who need jobs. This was done in the ’30s.
JAY: Well, the counterargument is this liquidity issue, that there had to be some kind of fueling of the banking system, because the bank-to-bank loans and the whole way the financial sector works had to be un-paralyzed, that without that liquidity everything else would suffer. You don’t buy that argument?
ZINN: No. No. I think what that does is concentrate on the middle people, that is, the financial institutions and their welfare. And you only do that when you have given up on the idea of the government taking a direct hand in the economy. Now, we’re in the unique position where we can no longer accept the argument that we mustn’t have big government, because the government is acting in a very big way to bail out the rich financial institutions. In fact, we are in a position now to challenge that whole idea, which has been in dominance for some time now, the whole idea that we must let the free market and the market system, we must let that solve the problem, because we see now the free market is not capable of doing it, so the government steps in with its $700 billion. We’re in a position now to challenge that whole idea that big government won’t work, and take some history to understand that we have always had big government in this country, from the making of the US Constitution of 1787 down to the present time. The government has always—almost always, with a few exceptions, like in the ’30s and the ’60s, the government has always been in the service of the wealthy classes: big government’s subsidies to the railroads and the manufacturers in the form of tariffs; huge, huge grants of land to the railroads; subsidies to the merchant marine; and, of course, in more recent years, bailouts for Chrysler Corporation; saving the aircraft industry after World War II. The government has always done that.
JAY: And massive investment on the military side, which takes up a whole whack of the whole economy.
ZINN: Exactly. It’s interesting that when they say, "We mustn’t have big government," they don’t talk about the military, which is the biggest government of all. So we’re in a position now to say, forget about your argument about big government. It’s obvious that we need big government. Big government can do bad things; it can do good things. I mean, we have seen that it can do good things. Social security is a good government thing. The GI Bill of Rights which enabled me to go to college and graduate school, and millions of others, veterans of World War II, to go to school—a very successful government program. The New Deal gave millions of jobs to people who needed jobs. It gave jobs to not only people who built roads and who cleaned up rivers; it hired hundreds of thousands of young people. Instead of giving them guns to fight in a war, it gave them shovels, and they did an awful lot for the infrastructure of the country. The New Deal even hired artists, musicians, writers, composers, playwrights in the federal arts program. So this is what should be done today. The government should use its great power to tax, taxing the wealthy, raising trillions of dollars, which it can do by taxing the wealthy and diminishing the military budget, and use that money for the people.
JAY: What you’ve said is so sacrilegious that I think I will have to go and go to confession or see a rabbi or something. So in the next segment of our interview, let’s talk about how the hell did taxes get to be such a taboo topic in America. Please join us for the next segment of our interview with Howard Zinn.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.