Renewing the Social Contract: A Response to the Economic Crisis

[Blue Meany]

All socities are held together by bonds of reciprocal obligations that maintain social cohesion and thereby serve the common good. The current financial crisis is an instance where such obligations are called to the fore: massive intervention is required to serve the common good of avoiding economic collapse. But it must be aknowledged that those who caused the crisis--both in the government and in the financial sector--did more than just create a economic crisis. A class of what are essentially pirates have been allowed to manipulate the financial markets so as to skim off wealth created by productive workers and companies. They used their influence to changes laws for their own benifit, to prevent regulations from actually being enforced, and, in some instances, acted in open defiance of the law.

In doing these thing, they violated the public trust, ignored the social contract that binds Americans together, and thereby damaged the trust and solidarity that is the fabric of society and that is essential for a stable country and a prosperious economy. Healing the damage requires not just addressing the immediate crisis, but bringing accountability to those who are currently "above the law" or "too big to fail." Furthermore, since we as tax-payers and workers are being called upon to bail out and correct the bad decisions of economic and political leaders, it is timely that we think about what we should demand in exchange for this bail out.

In my view, the core problem here is the concentration of power brought about by concentrations of wealth in the hands of individuals and corporations. There will always be loopholes in any legislation intended to deminish the influence of money in politics and, in any case, out-and-out bribery can take place regardless of the law. Therefore I propose that we eliminate the concentrations of power by:

1) Limiting wealth. By this I mean putting an upper limit on the accumulated assets of individuals. We can debate what this limit should be, but it should be low enough that one individual or family could not afford to have a major impact on political campaigns. Everything above this would be subject to a 100% tax.

2) Establish the principle that "too big to fail" is too big. Break up companies that are too big.

3) Limit CEO compensation to no more than a 10 to 1 ratio of what the lowest-paid workers receive. This should apply to all compensation: salary, bonuses, and stock options.

These measures would be a beginning to the elite back into the fraternity of citizenship, with its attendant obligations. However, measures need to also be taken to bring the benifits of citizenship back to rank-and-file Americans. For this I would propose the following:

1) Eliminate absolute poverty. If we can bail out the wealthy, we can certainly provide the essentials to poor, and no American should have to live in fear of what will happen if they lose their job or have an illness. Programs to eliminate poverty can be funded with the tax on wealth. The houses, whose bad mortgates we have just purchased, can be used for housing the homeless.

2) National health care. If we can bail out AIG, we can provide all Americans with health coverage.
It's better for the economy, and there is no longer an excuse not to do it.

3) Free education. College and trade school education ought to be subsidized, at least for those students meeting a minimum scholastic standard.