Saturday, October 04, 2008

I Called it Right! I Called it Wrong

I Called it Right! I Called it Wrong

By Kevin A. Stoda

In December 2000, I had cavalierly told my old Texas A&M political science professor, Dr. John Robertson, that after a four more years of the Reagan-Bush Economics era (under the incoming Cheney-Bush Administration), Americans would finally have had enough the guiltless route to wealth for the elite. I predicted that th U.S.A. needed to really comprehend how bankrupt the myths of the 1980s were in order to return to an age of “capitalism with a more human face”.

In short, in December 2000 I had naively and optimistically predicted that within a few years of suffering under George W. Bush regime, the American economy would be so far off-course by 2004 that the combination of neo-conservatism and neo-liberalism would be shamed out of office.

I was extremely certain in my naivety that the American political pendulum could and would swing back to the eras which had brought America recovery and social-political-economic expansion, like those decades between the mid-1930s and 1960s.


By that particular December of 2000, I had already worked or traveled in nearly 70 countries and I knew that the political economic dogma of the prior 35 years had produced only a consistent series of boons and bust, whereby the U.S. economy was basically overseeing the largest (defense) spending in world history (using tax dollars) on things-that-go-boom.

These weapons and war bonds would lead to wounded veterans and worse, without really gaining much in the way of better transportation, educational, nor energy infrastructures. In short, American standards of living have only barely been treading water--despite the greatest growth in the stock markets which America has known in over half a century.

Only the booms (1) in the aircraft industry and (2) in areas of communication technology have really improved the homegrown U.S. economy much over the past 3 decades. For example, in my home state of Kansas, Cessna and the aircraft sector did particularly well for the last two decades of the 20th Century. Meanwhile, the related IT sectors and cable satellite sectors also expanded quickly, paving the way for a world of internet for nearly all.

Aside from those two sectors (and possibly the still growingly-expensive higher education sector), America was far from a global model for development for most of the developing world.

Why? Because homegrown debt is not a positive export product for most developing countries to try and mimic.

From 1983 to 2000, I had traveled and worked in regions around Japan, the UAE, Western Europe, and Nicaragua. Everywhere I went as a lifelong educator, I have bemoaned the hype about America Inc. as “the business model” for either the developed or developing world.

I, therefore, advocated that travelers from various lands not constantly look to the USA to find models for development. I had told several Brazilians and Argentineans whom I met in Hungry in 1987 specifically not to copy the USA in terms of getting their housing sector improved and developed. I explained that the USA model was based on debt or expensive rent—with only a little government help in the getting-the-loan stage.

These South Americans looked at me in dismay and said, “Where should we look for a model? Our country only looks at El Norte for its business and socio-economic development models these days, especially as communism and socialism seems to be collapsing around us.”


One area I have suggested developing countries look into, i.e. an area not pursued by the USA, is the idea of creating post-office banks, as used by many in Germany and Japan where I lived in the 1980s and 1990s. In those countries, I had observed that post offices actually functioned as banks, filling a great gap in countries where savings rates were being encouraged by government and by commerce. In fact, by 1995 the bank with the most customers on the planet was the Japanese Post Office Bank.

These nationwide-post-office-banks should have gained great appeal for most of the developing world in the era before micro-lending began to be practiced—banking by cell phone became possible. Especially, small businesses and farms should have liked the idea of keeping banking local when possible.

Threats of run-ons of banks would have become lessened for many people throughout the 20th century had there been a greater variety of types of global banks. Moreover, better access to locally based loans could have been possible by creating banks wherever a post office existed across the globe.

In summary, I am fairly certain that the idea of doing banking and encouraging savings at a local post office bank would have brought savings & loan service to millions in even the most rural areas of Latin America, Africa, and Asia. Such nationwide systems would have allowed loans locally to exist where they were otherwise being ignored by city- and international banks.

NOTE: On the other hand, it should also be mentioned that credit unions are, indeed, used in America and certainly could be a great model for some non-USA regions to consider. Kuwait, where I am currently living, does not have credit unions at all.


In both urban areas, like Kuwait, and in rural developing regions, like Nicaragua, there has been a consistent lack of a capital for funding the creation of (or building of) banking-credit service networks and providing loans in many of the poorer rural areas of the planet. They have not been put together due to lack of initial capital input, i.e. a problem which a national post-office bank could have overcame.

As a matter of fact, I am certain that the Japanese post-office banking model was appropriated from Europe nearly a century ago.. After WWII, Japanese quickly began stuffing their hard earns savings into such a post office bank—i.e. until they had saved enough to open other more speculative accounts with private banks.

For over 20 years from Peru to Thailand and back to Mexico, I have observed one very great common need. (This world-wide need was not only to empower and encourage Americans to save money better.) It was a worldwide need for people from all countries to be able save more and invest more locally.

“How could so many people all over the world do so without local banking firms concerned with their local community?” I pondered.

I asked this because I had already observed whole sectors of US urban neighborhoods losing their local banks throughout the 1970s and early 1980s. In Chicago, for example, in and around Woodlawn where I once studied urban economics, there were several hundred thousand people without local bank.

Only one community bank existed in South Chicago by January 1983. This was the South Shore Bank where I did my practicum.

Moreover, continuing through the year 2000--from places as remote as Peru to Indonesia to Mexico to Egypt or India, I had observed many citizens from all-walks-of-life actually stuffing their pillow cases with dollar bills. (Many still do so to this to this very day—although some are also hiding their purchased gold, silver, and Euros.)

On the other hand, during my many travels, I had observed not-only-capital flight from poorer countries around the planet on-and-off during the boon and bust cycles of the most recent 4 decades, but I had observed the whispering of a common dream in many underdeveloped countries. This common dream was to one day actually be able to invest their one earnings and/or national currency in their own local economy. People of classes have similar desires.

“How could people be encouraged to save and invest where it was needed locally?” I asked myself.

In my homeland, we were only being encouraged to borrow and spend—even in the wake of 9-11.


The only answer Wall Street and big banking conglomerates offered was to grow and demand more injections liquidity—often with investments coming from the farthest corners of the world to bailout the bad business practices and lack of long term planning and business development in the U.S.A.

Throughout the 1980s and 1990s, the U.S.A. federal government was headstrong on allowing banks to grow and take each other over.

After my college days in those same decades, my own local-bank-originated student loans were taken over by either Citibank or by Sallie Mae. There was no government oversight to keep my moneys in local Kansas—even though some of these same Kansas banks had assured me in advance that those loans would be held only locally.

--No oversight!

--No responsibility to the local borrowing and lending industry affected Americans adversely and ran up costs in higher education for all Americans!

By around 1994, my sister and her husband had a combined college debt of a sum which would eventually reach to 100,000 dollars owed or paid to-date.

My sister was a teacher. How could she ever pay that debt back in any reasonable amount of time? My brother-in-law eventually had to enter military service to keep up with the Joneses and to pay off debt.

This same couple later bought a house, and luckily they were subsequently able to sell that same house just before the housing crashed two years back—but imagine how much more of a mess my siblings would have been had they not been so lucky as to have sold that house?

Hundreds of thousands of American military families are similarly adversely affected by DEBT.

This is one reason that many young and middle aged citizens still sign up to join the U.S. military or national guard these days—even though the executive-in-chief has not run the military industrial economy and policies any better than I had presumed back in 2000.


In short, Professor John Robertson had correctly warned young Americans against allowing the W. Bush Administration from taking office under the peculiar election conditions that December 2000, i.e. as the Supreme Court Justice votes counted more than the uncounted ballots in Florida.

NOTE: Recall the strategy in 2000 mis-election was the same by the news media as it is today in 2008. In both November and December 2000, news media claimed that a decision had to be made NOW—the markets couldn’t wait.

The Cheney-Bush Administration spent beyond my wildest dreams between 2000-2008, without even offering Americans high yielding war bonds to fight wars on multiple fronts simultaneously as had occurred in WWII.

I admit, too, I had failed America, too. I should have quit university in January 2001 and joined the protests and underground to stop the inauguration of the unelected Bush Presidency that same month. Instead, I just washed my hands of the fiasco and naively prayed that the better day would come soon.

Later in 2001, I also failed to go to Washington personally and lobby Congress to have Dick Cheney investigated for bullying the General Accounting Office. Recall that the GAO in 2001 was fully ready to investigate what the Vice-President of the United States had promised on the White House grounds to oil and energy producers starting in February and March 2001. (Not enough Americans stood up for the GAO investigators who could have uncovered Evidence of malfeasance and ridded the nation of Bush-Cheney before they had time to double-team America into unnecessary war and debt.)

I also failed to go personally to put my life on the line protesting the Invasion of Iraq in 2003. Recall that several witness for peace types died in Iraq in march 2003 standing in support of the victims of Bush’s war!--nor did I go to Washington to help make a million (or two million) man march on the capital in opposition to that unwise and ill-informed war.


Naturally, I have not been the only American to have failed to stand up more aggressively against bad governance and bad political economic theory.

Americans, like me, must take into account our failure to wipe out the status quo in Washington and Wall Street before now.

Many progressives, like me, know we have not been able to stop the flighty notions of neo-liberal, neo-conservative, and conservatism wiping out much of what was positive development in America after WWII to see that Americans could afford good housing, good and inexpensive higher education, and good infrastructure from our government.

These are things that we can do better on in the future by providing better banking services and government support—rather than an endless series of bailouts for badly run mega-firms, previously supported blindly by growth-at-all-cost capitalism over recent decades (even though we had already begun to see limits-to-growth without energy development and properly homegrown production facilities across the nation).

We have tried. We have spoken out, but so far, we have blown it, Progressives!

Let’s make sure that in elections 2008 we set a progressive tone for the next 3 or 4 decades.

Think out of the box.

Look to Scandinavia for improving the standard of living for all. Look to Australia for a better and more entertaining alternative to the US election process. Look at parts of the German political-economic system that are doing well.

Look around the world for good progressive examples and follow them! (We can talk about leading later.)

It’s catch-up-ball time, America!

Let’s not blow it, again. All we need to do is to remember that even in a recession, the USA leads the world in combined human resources and natural resources for political economies of its size! We just need to use and tocirculate those resources more equitably and efficiently.



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