Monday, February 1, 2010

Populism: Then and Now



The term populism is being used rather loosely these days. The recent political victory of newly elected Massachusetts Senator Scott Brown and the rise of the Tea Party seems to be leading many commentators to believe that there's a growing populist movement in the U. S. But I seriously doubt it. For one thing, populism—as in the Populist Movement of the 1890's—came about due to a much different economic and political situation than that which we find ouselves in today.


The old populists railed against "Big Finance", which is what they called it, even then, and "Wall Street" bankers, much as people do today, but the difference is that the old populists believed that "Big Government" was the solution. Not so today. "Big Government" is, today, seen by many people as being the problem; not the solution, to our nation's current economic woes.


According to The Week magazine (February 5, 2010), "The federal government is now spending $2 for every dollar it takes in" and this is not something that I think most American taxpayers are in favor of, to say the least, but that's what's exactly what's going on; and things are only getting worse. In short, today's "populism" is against this sort of thing.


It's true that the old populists were motivated by the economic issues of their day, especially the Panic of 1893, the gold standard, and the free coinage of silver, and this makes their situation somewhat similar to ours, but then there was no "Big Government" in those days either. The populists believed that "Big Finance" and "Wall Street" were the cause for their dire economic plight simply because these banking institutions clung—tenaciously—to the gold standard as their economic foundation. The populists believed that, in order for the average working-class person (or farmer) to get ahead, these financial institutions should be compelled by "the people"---using the power and authority of the federal government---to loosen up both cash and credit. Sound familiar?


There's a big problem however, economically speaking, with "loosening up" both cash and credit. Not to mention using the power and authority of the federal government to force "Big Finance" and "Wall Street" to do so. Like the recent financial collapse, which was caused by the bursting of the so-called housing bubble, the old populists were guilty of being envious of those who were more successful, financially, than they were and they wanted to use the power of the government to take from the rich in order to give to the poor (i.e., themselves). As they say, "one man's wealth redistribution is another man's armed robbery", right? They also say: "There's no such thing as a free lunch."


For example, I get so tired of listening to people say they will be glad when we finally have universal health care in the U. S. because it will be free. It will not be free; I will be paying for it, with my tax dollars, and so will you (if you work, pay taxes, and don't receive any benefits from the federal government).


What the old populists failed to realize, or appreciate, was the economic wisdom had by "Big Finance" and "Wall Street". The gold standard, economically speaking, was a wise fiscal policy to have, especially if you were in the money business. Money, as a medium of exchange, is supposed to have intrinsic worth or value. Gold has much intrinsic worth and value, whereas the populist's free silver had very little, especially in comparison to gold, although it at least had some. As time went by, the U. S. completely abandoned the concept that money needs to have any intrinsic value at all. Think about it, how much intrinsic value does a printed, paper, twenty-dollar bill have? None. In fact, if you had the blank sheet of the paper that twenty-dollar bill is printed on it would be worth far more than just twenty dollars wouldn't it? If you wanted to you could print one hundred-dollar bills on it instead of twenties right? The paper is worth more blank than it is after it's had "twenty" printed on it.


Today, the money situation is far worse than it's ever been. Since the early part of the last century, the U. S. has adopted a fiat currency that is backed by nothing of intrinsic value; except the "full faith and credit of the U. S. government". That's a comforting thought isn't it? Most of the credit (or blame) for this current economic situation goes to the well known economist John Maynard Keynes, the father of deficit spending and the grand architect of modern inflationary economics.


The old populists have gotten their wish: "free money" from the federal government that has been widely distributed to financially unsuccessful people, because they were envious of those who've been financially successful. As for money, we've simply gotten what we've "paid for": worthless paper bills and debased, cheap metal coins.


Today's "populism" is very unlike the populism of the 1890's, because "populists" today realize that "Big Government" is the problem, not the solution. Many people today are railing against the big banks and big corporations because their employees are receiving fat paychecks and fat bonuses, but at least the people at these private institutions are working and producing wealth for their employers and their stockholders, whereas many federal government employees work very little and none of them produce any wealth for the government, because the government doesn't produce anything of value.


Even today, with our economy in ruins and millions of people out of work, federal employees are raking in six-figure salaries (as well as pay raises and big, fat bonuses), that are being funded by the American taxpayers. The "populists" of today, which both political parties should fear, are those who are sick and tired of "Big Government", which is taking them for a ride and laughing at them all the way to their banks.

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