Capitalism is supposed to be responsive to supply and demand; an essential premise for the moral good of capitalism is that it best serves the people's interests. Capitalism is not simply intended to be a reflection of the blind forces of natural evolution for-itself. It was intended by Adam Smith to represent the best way that free citizens of his day could enhance their economic well being. Free trade and capitalism were two sides of the same coin of individual enterprise.
The advantages of free trade internationally were largely those of the British in the late 18th century. Britain was not flooded with cheap Chinese products designed in America. Neither was Britain a land where an ossified petrol fueled transportation infrastructure was overheating the atmosphere with carbon dioxide greenhouse gassing, and it had yet to experience a housing Bubble made with cheap Mexican migrant (often illegal) labor workers putting up pre-fab mini-mansions financed with globally traded mortgage tranched and supported through derivatives. The complexity of an evolutionary approach to capitalism as a phenomenal economic for-itself may outpace rational supply and demand. Consumers may have their demands made for them by the demands of producers of finance packages for cheap, quick and dirty profit leaving unaccountable debt.
The housing Bubble that burst in 2007-8 created a recession that was badly managed by the Bush II and Obama administrations. Little reform developed to change Wall Street procedures. Many of those that profited by creating a housing bubble that collapsed leaving ordinary buyers 'under-the-water' on deflated home value vs home mortgage balance were able to buy up homes at distressed sales prices. Much of the recovery of the U.S. housing market the past year was a result of large purchases of empty homes by concentrated wealth that needs to find renters to fill their homes.
The empty homes may be filled by millions of newly eligible renters and home buyers given legal status through an amnesty program of Senators Graham and Schumer. It does make sense that the ending of Glass-Steagle and home mortgage security for Americans would result in a housing bubble, collapse, acquisition of billions of dollars worth of distressed or lost homes by investors with foreign and/or concentrated wealth followed by an illegal alien amnesty bill to place Mexican renters in the empty homes Americans lost their shirts trying to buy.
Along with the silliness about an Alaska-Canada gas pipeline and the tar sands Keystones pipeline across environmentally sensitive areas when their are adds boasting that the U.S.A. will surpass Saudi Arabia in oil production because of fracting the housing market bubble and 'This land is Mexican, this land is made for Mexico' singing of the U.S. Government (regarding casual labor along the sun belt) then Obama administration seems to be less than a game changer on U.S. economic development policy. One can hardly wait to see where it goes in the years ahead.
Given the right incentives and criteria for developing a different fuel and transport approach from the energy and transport spectrum capitalism is supposed to serve democratic supply and demand intelligently. With the right governance it ought to be possible to move the center of economic investment effort into environmentally benign transport and energy modes without cramping the economic liberty of any citizen. The Congress ought to start by extending the alternative energy tax credit for a decade this Presidential term, and then work on ending the oil depletion allowance.
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