How Right Can the Left Be?

Can the Left actually be right? When we think about the latest headlines, the phone-hacking scandal, the Eurozone crisis, the U.S. economic anguishes, and the Occupy movement to name a few, it does seem that the greedy few have left many disheartened with our debased democracy. As we grimly read the papers and watch the news, it begs the question: can the Left actually be right? One of the Left's greatest arguments is that these events are a set-up whereby big corporations orchestrate a system of global magnitude enabling them to get richer and pay the lowest labor costs possible. The global economic imbalance is obvious, generating a spread of Dante-like visions of hell in many sweatshop countries, such as Cambodia's Phnom Penh and Bangladesh's Dhaka, where mountains of festering garbage release clouds of smoke from subterranean fires is common place for children ambling barefoot, who search for plastic that recyclers will buy for five cents a pound. It is not unusual to find many families living in shacks on smoking trash. Though I believe very few have access or know about it, such realities cause people to question the current system. Perhaps greedy capitalist bankers are as bad as the Left believes, pointing to examples such as Bank of America's attempting to charge its customers for the use of debit cards in stores. The U.S. credit crunch has exposed the process of how easily freedom can be seized. The liberty to borrow, which began in the 1980s to the delight of most, is now in jeopardy. Without access to loans, how many small businesses can open or first homes be purchased? Meanwhile, as governments around the globe inject unimaginable amounts of money into banks, these institutions, in turn, appear to be having a lot of fun, as if in their personal playground, fully loaded with derivative swings and CDS seesaws. The role for taxpayers is simply to pay for it and watch. Some are jealous, crafting elaborate Ponzi schemes. Others are aghast, realizing the optimistic free-market message of the Reagan era has now become shrill. We may proudly wave banners of the American dream, life, and liberty, but these messages carry a costly mark in small print: “Made in China”. In Europe, the Left-wing financial scene would be comical if it were not so tragic: they created a single currency, and assigned a single bank to control it without any authority monitoring it. Under this scenario, anytime the Eurozone's borrowing ability runs into misfortune, elected governments must acquiesce to virtually any indignity rather than let sacred bankers get hurt. Again, the people watch and pay—might as well grab some popcorn! Yearning for a perceived past does not create a workable environment for the present. This is where so many conservatives essentially end up espousing fairly authoritarian views. Having adopted the recipes of fashionable perspectives, they have no deeper understanding. Presidential candidate Michele Bachmann is said to carry around a copy of a book by Ludwig von Mises, but I wonder if she has ever read it. So, how right can the Left be? Do America's large multinational corporations really have anything to do with the hardships in the U.S. economy? Judging by the numbers, it appears to be very little: since last year, final sales of domestic product rose by 3.8% and nominal GDP by 3.7%. Looking at S&P 500 corporations, sales rose by 10%, employment rose by 10.6% (2009-10), and profits rose by 19%. But with all this sanguine news, why are Americans hurting so much financially and unemployment remains so high? Could it be because 47% of S&P 500 sales are overseas? Or the fact that, as several economists suggest, the U.S. has two economies; personal consumption, which is recovering, and the other, capital investment, that is not. The former is doing reasonably well in the world market and the latter, at least domestically, must still be scraped from the ceiling. Can the Left be right? Should we assess our economy as we do with emerging markets--except that at the moment ours is a submerging one? The Chinese often argue that they have two economies, an advanced one on the seacoast and a “Fourth World” one in the country's interior. India's economy follows a similar paradigm; a small modern one and a vast backwards one—who cares about the impoverished rural people when we have Tata, Reliance, Infosys and few others? By this same token, the U.S. has become a dual economy because a portion of its people has tumbled into destitution, while the larger American corporations are enjoying a strong recovery. There is an urgent need for the destitute side of the American economy to have access to the thriving and profitable side. Education and retooling of the workforce is of great importance, and can help balance the injustice. Moreover, the right combination of economic policies is necessary to revive the small business engine. Lower taxes on corporations and capital income and less oppressive regulation would also ameliorate matters. Finally, a rational immigration policy favoring entrepreneurs and highly skilled professionals will help the U.S. retain talent, as is the case with Canada and Australia. Otherwise, the Left may indeed be right, and the Occupy movement will make sure to expose that. Dr. Marcus Goncalves Assistant Professor of Management International Business Program Chair Director of Academic Programs at GPS Nichols College