Civic Capitalism and Why I am a big enough government liberal

Part 1

http://nonprofitquarterly.org/policysocial-context/20515-the-renewal-of-civic-capitalism.html

Please read the speech above. It summarizes why we are here economically and how we can get out of this mess.

I have cut and pasted some significant quotes below.

As Nobel laureate Joseph Stiglitz points out, we cannot have a system that privatizes gains, but socializes losses...that in effect allowed the private corporations to be “too big to fail,” and deemed the individual homeowner “too small to save.” 

The obvious solution was to enact strong but limited regulation, allowing firms to operate within a generally free market, and to erect ethical barriers between powerful corporations and regulators. After the dot-com and accounting scandals, and then the financial disaster of 2008, how could we miss the need for regulation that established a firm baseline for corporate and government action? But we did.

 First and foremost, the financial crisis laid bare the rift between the high and low ends of the income distribution in the United States as well as worldwide. This “dual track” system is fundamentally unsustainable and threatens not only the viability of the financial system, but also the very ability of a citizenry to engage in productive economic, civic, and social intercourse.

 Moreover, the crisis exposed the far too cozy inter-relationships between business and governments. Regulators and the regulated must be two distinct, independent entities.

 “Civic capitalism” rejects both of these extremes: neither the free market nor the government alone is the solution. The solution is democracy itself, and the values that underlie it.

This framework—in which a strong civil society is the basis of a democratic, market society—means the free market is not an end in itself. It requires (1) a government referee to establish a system of rules and laws, permitting private and public enforcement; and (2) basic democratic values such as honesty, full information, transparency, and accountability—stemming from an overarching sense of equally available opportunity.

 However, over the past decade, we have come to see the private sector—and financial markets in particular—as the engine for the progress of society, instead of the product of a free but regulated society.

 Until our core values are revived, we are only applying Band-Aid solutions to our problems. 

 To this end, we must accept that there is an important, valuable, and honorable role for government—of, by, and for the people—to play in helping people participate in a democratic society, and vice versa, an important, valuable, and honorable role for citizen engagement.

 Yet the political debate today is polarized between two camps. On the one hand, the right tends to argue for unfettered free markets and corporate and financial deregulation. Conversely, the left tends to view the government as having the solution to many social ills. This is a false dichotomy. The missing link is the essence of a constitutional democracy: citizen participation. An engaged citizenry, demanding accountability, is critical to this process. 

 Government is not the answer. Markets are not the answer. Democracy—with leaders like you—is the answer. And that’s what civic capitalism is all about.

Civic capitalism is all about a robust business community, an engaged citizenry and a government that actively promotes your ability to provide a check on large institutions, from banks to corporations, and on government itself. It is about ensuring that democratic values endure, even as politicians and movements come and go. It is about rooting out corruption and insisting on honesty, opportunity, and full information, not just because it is the right thing to do, but because markets and civil society cannot function otherwise. Civic capitalism takes the long view, and teaches us that the government has a role in minimizing risks to the system—financial and otherwise—because that civil society is the base from which entrepreneurs and firms operate.

 My next post will be my comments on why I think this speech is so important. I know this is a lot to digest so this is why I am splitting this.

Palmetto Bug