Saving Capitalism: Keeping America Strong (Vintage) [Paperback]

Pat Choate (Author)

Book Description

Publication Date: September 8, 2009 | Series: Vintage

When the U.S. financial structure collapsed in fall 2008, it quickly became clear that our system of market capitalism was broken, endangered by decades of absolutist market dogma, shortsighted policies, and the abandonment of America's working people. Now, as the Obama administration seeks to repair the country's economy, one thing is clear: this crisis calls for drastic reforms. Regrettably, the government's response, so far, has been inadequate.

In Saving Capitalism, economist and bestselling author Pat Choate offers six game-changing actions that can strengthen the U.S. economy now and stimulate long-term, self-sustaining, noninflationary economic growth that will create millions of better jobs. Here are proposals for:

• Major tax reform
• All-encompassing financial regulation
• A strong social safety net
• A major infrastructure program
• Ways and means to balance U.S. trade with the rest of the world
• The renewal of national innovation

Urgent and provocative, Saving Capitalism is an accessible and informative dissection of the gravest threat our economy has faced since the Great Depression, and a bold and creative blueprint for the future.

Editorial Reviews

Amazon.com Review

A Q&A with Pat Choate

Question: Why did you write this book?

Pat Choate: My goal in writing this book is to create a clear and concise overview of the situation we are in and put forth positive solutions.

The book goes beyond questions of whether the stimulus is too big or not big enough. It proposes creative reforms that will strengthen the economy overall, and for a long time to come.

Question: How grave is the economic situation, really? Many economists are saying the worst is over.

Pat Choate: The arithmetic of our state of affairs is stark. Over the past 28 years, the United States has gone from being the world’s largest creditor nation to its largest debtor. Our federal budget deficits are doubling the national debt every 8 years and our trade imbalance with the rest of the world since 1981 has created a cumulative deficit of more than $6 trillion, which constitutes the largest unilateral transfer of wealth in world history. The financial sector, moreover, has more than a half trillion dollars of sub-prime loans that have yet to be reconciled on their books; almost $170 billion of the $1 trillion of unsecured credit card debt is in default, the commercial real estate sector has an equal financial overhang; 6 million home mortgages are in default or in foreclosure, and the Federal Deposit Insurance Corporation’s reserves are depleted.

No one in public life believes that the U.S. debt accumulation and these massive trade losses are sustainable for much longer. Yet the competing economic and political interests in our society have created a political gridlock in which these twin deficits go unaddressed.

My hope is that this book will stimulate a substantive discussion on what we need to do to save our economy. I have put forth six game-changing proposals that are within our political and fiscal capacity. They are a good starting point.

Question: You write that the economic stimulus plans enacted by Congress in late 2008 and in 2009 do not go far enough. Are we going to need more bailouts?

Pat Choate: Yes, more bailouts will be required to keep the nation out of deep depression, at least as far into the future as the U.S. continues its policies of market absolutism that prevent the nation from dealing pragmatically with changing global realities.

The financiers, and their lobbyists, want government out of their business, and it’s in their interest to keep alive this notion that the system works best with little or no regulation, and that it has thrived without it. But this is not true. The present financial crisis is the ninth since 1982. In each instance, the money industry gambled, lost, and then passed the cost onto U.S. taxpayers. Since 1982, the bailout policies of a succession of Administrations, including the present one, have been to restore the industry to the way it was before the crash, including retaining the same people in charge and even paying them enormous bonuses despite their failures.

Until the U.S. government regulates the financial industry in its entirety, sets prudent bounds on its risk taking, requires sound capital reserves, and rids the industry of those whose misjudgment created this crisis, another spectacular financial failure, the 10th, is inevitable. The only question is when.

Until we make basic structural changes, such as I propose, in our trade, financial, innovation, infrastructure, budgetary, and related policies, we are years away from creating long-term, self-sustaining, non-inflationary economic growth.

Question: You blame "free market absolutism" for much of what happened in the recent financial crash. What do you mean by that?

Pat Choate: U.S. economic policy has been under the control of those who fervently believe in the concept known as the "efficient market hypothesis," which is an academic theory that says that the decisions of millions of independent participants in the economy, always acting to gain their own narrow advantage, creates a market whose decisions are always right. Under this market absolutism, the U.S. government since 1981 has aggressively deregulated many parts of the economy, including trade laws and the Depression-era controls imposed on finance.

I open the book with quotes from a Congressional hearing in October 2008 in which Alan Greenspan, former Chairman of the Federal Reserve System, told a Congressional Oversight Committee that he was shocked to find that his view of the world (efficient market ideology) was not right and was not working.

Question: In your book, you call for major reform to the United States health care system. What specific changes would you like to see and what do you think of the current proposals Congress is debating?

Pat Choate: I call for expanding Medicare to include the entire U.S. population. It would be far more efficient than any proposal now before Congress, since the administrative costs of Medicare are about a third that of all other alternatives. The Medicare model requires broad-based financing from individuals and employers, allows choice, and enables savings from mass purchases. For decades, Medicare has been nothing more than a government-operated insurance company. Contrary to much of the current debate, Medicare beneficiaries are overwhelmingly pleased with the assured accessibility and modest costs.

The current proposals in Congress would keep the U.S. insurance industry in control of health care in the United States. Costs will remain high, those corporations will continue ration care to keep profits high, and millions of Americans will be without any care other than at public emergency rooms. Contrary to public misconception, the U.S. health care system is providing poorer service overall than in most most other developed countries, and at a far higher cost.

(Photo © Kay Casey)

About the Author

PAT CHOATE is a political economist, policy analyst, and the author of the books Dangerous Business, Agents of Influence, Hot Property, The High-Flex Society, America in Ruins, and, with Ross Perot, of Save Your Job, Save Our Country. A new book, Preparing for War, is forthcoming from Knopf. In 1996, he was Ross Perot's vice presidential running mate. He lives with his wife outside Washington, D.C.

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Product Details

• Paperback: 288 pages
• Publisher: Vintage (September 8, 2009)
• Language: English
• ISBN-10: 0307474836
• ISBN-13: 978-0307474834
• Product Dimensions: 5.2 x 0.8 x 8 inches
• Shipping Weight: 7.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.9 out of 5 stars  See all reviews (11 customer reviews)
• Amazon Best Sellers Rank: #1,199,719 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

12 of 15 people found the following review helpful:

5.0 out of 5 stars Solid Expert Advice On How To Heal Our Capitalist System, September 8, 2009

By 

Donald A. Collins "Free Lance Writer" (Washington, DC, USA) - See all my reviews
(REAL NAME)   

This review is from: Saving Capitalism: Keeping America Strong (Vintage) (Paperback)

Saving Capitalism: Keeping America Strong, By Pat Choate (Vintage 2009) Paperback

Review by Donald A. Collins

Veteran political economist, Pat Choate truly understands how to better manage our broken capitalist system. A policy analyst, and best selling author, his books include Agents of Influence, Preparing for War (forthcoming from Knopf), and, with Ross Perot, Save Your Job, Save Our Country. In 1996, he was Ross Perot's Reform Party vice presidential running mate.

His most recent book, "Dangerous Business: The Risks of Globalization For America" (Alfred A. Knopf, New York 2008), explained perfectly how the neo mercantilism of China (e.g. state capitalism) and our failure to exact trade concessions from such low labor cost trading partners has led us into unsustainable trade deficits.

Having served for some years on a non profit board with the author, I await eagerly the products of his lively mind for the incisive books on economic policy he produces in a most timely fashion. His latest, only 168 pages, again captures the essence of our dangerous present situation.

Now, as America has plunged into a recession (Choate sees this as a depression) unseen in decades, Mr. Choate has produced another powerful economic roadmap in his book, Saving Capitalism: Keeping America Strong (Vintage-2009) (Paperback).

I might comment he proves his economic perspicacity by issuing the book in paperback-most hard covers go for north of $25-so that readers can learn what our bumbling policy makers should consider for $15-or even less when discounted!!

In his Prologue, Choate posits this contention, "President Franklin D. Roosevelt not only saved the American economy, he saved market capitalism itself. 75 years later President Barack Obama now faces the same challenge, but in a far more complex and economically integrated world."

For anyone who thinks the recent upturn in the US stock market mean an end to the financial shocks when began in early 2008, Choate suggests, "The US is in the midst of a basic structural shift in the global economy that reaches to the very core of its economic institutions. Where American leaders once believed globalization would lead to the widespread adoption of market capitalism, this depression has brought into focus a different reality-the rise of state capitalism." Example abound: China, Japan, South Korea and even Germany.

He notes the "de-industrialization of the United States" and eloquently proves with numerous examples that the US cannot survive without a manufacturing base. "People without assets, jobs, and credit cannot buy the goods and services made and sold by others. They become poorer and their lives more difficult."

In recent decades, he reports "the number of jobs in the financial sector (the winner) grew and those in manufacturing (the loser) declined. The math is clear. Between 1981 and 2009, manufacturing employment fell from 18.7 million jobs to barely 12 million, a 40 percent loss, while finance grew from 5.1 million jobs to 8.1 million, a 60 percent increase. America lost almost three jobs for every one it gained in that exchange."

Over recent decades, the governing ethos has ben "government is the problem, not the solution". After the chicanery perpetrated by all sectors of US capitalism, many nations and half the US public now see capitalism as unworthy of emulation, a tragedy since "capitalism, properly regulated, is the most efficient means in the world to allocate scarce resources and stimulate economic innovation and growth."

So what does Choate see as the way out of this morass? He offers 6 "game changing" proposals. Sadly, with Congress lost in the brambles of even more than usual democratic government game playing, it doesn't seem focused at the moment on doing any of them, despite their obvious urgency and validity. They are restated here for brevity:

1. Strict federal supervision of all financial institutions (hey, I note we citizens already own majority stakes in many), leading to a sound currency.

2. Replace federal income and corporate taxes with value added or flat taxes, balance the budget and start pay down of the federal debt. (Would this give cover to raising taxes, maybe?)

3. Balance our trade deficit by pragmatic non protectionist deals with state capitalism.

4. Strengthen the American social net, stressing education, training, health care, jobs, insuring all a minimal income and pensions adequate for dignified retirements.

5. Initiate a massive capital budget of public works to improve our aging infrastructure, creating millions of new jobs. (Simultaneously helping to revitalize our manufacturing sector)

6. Create a national innovation strategy to facilitate more creativity, enhancing job creation.

Ambitious? You bet, Choate's text argues plausibly for exactly how to accomplish these steps, many of the same FDR used to stabilize a dire situation. Many key FDR advisors, including Walter Lippman, the nation's most influential editorial voice, called for FDR to become a dictator, something he declined to do, trusting no one not even himself with such power.

Real unemployment, now at 16% per the head of the Atlanta Federal Reserve Bank, coupled with rising deficits, now projected to be $9.2 trillion over the next decade, suggests Choate's point that "the rest of the world is unlikely to loan that much money to a nation whose people cannot control their government's spending."

I should point out something that Choate and I both know must also happen: Stop the massive flood of unneeded immigrant labor now!!. Choate has again provided readers with a brisk, engaging read. Don't miss it.

2 of 3 people found the following review helpful:

5.0 out of 5 stars Pat Choate's Saving Capitalism, September 25, 2009

By 

DLE - See all my reviews

This review is from: Saving Capitalism: Keeping America Strong (Vintage) (Paperback)

Author, renowned economist and former vice presidential candidate Pat Choate's latest book, "Saving Capitalism," is a must-read for any American concerned about the economic plight of their country.

Free of partisan bomb-throwing and inside-the-beltway conventional wisdom, "Saving Capitalism" is a timely, thorough and thought-provoking examination of just how far America has fallen economically since Franklin Delano Roosevelt saved the American way of life in the 1930's.

Faced with an almost as daunting task, Choate lays out detailed real-world policy solutions for current U.S. President Barack Obama to right the ship and avert disaster - much in the same way that FDR was able to through aggressive government action and a common-sense economic approach.

Inside Choate details how the "favored money industry" has manipulated Washington politics in its favor to the detriment of nearly every American and how scrapping the current federal income tax system and replacing it with a value-added tax would boost revenues, increase savings and drastically reduce the ever-growing U.S. trade deficit.

In addition, Choate details how "free trade" ideologues and their insatiable appetite for open markets and deregulation have decimated the once-mighty American manufacturing base, sending jobs overseas by the millions.

But "Saving Capitalism" is hardly all doom and gloom. Choate offers comprehensive solutions to America's most pressing problem, including fixing the nation's broken health care system, rebuilding America's crumbling infrastructure, balancing the country's out-of-control trade deficit and much, much more.

Any American concerned with the economic direction of their country or just plain interested in what went wrong or how to fix it should not be without a copy of "Saving Capitalism" on their bookshelves.

2 of 3 people found the following review helpful:

4.0 out of 5 stars Pat Choate does it again, September 22, 2009

By 

K. Ferriman (Ohio USA) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: Saving Capitalism: Keeping America Strong (Vintage) (Paperback)

This book is written by an economist for the average person. This reads like a book, not a text book. The problems and the solutions the author gives are real world practical, the average Joe will see and understand. Every politician, every American, should read this book. It lays out how we got into the economic crisis we are in and practical ways that we can get out of it. If you are thinking of buying this book, fir the price you should get two, send one copy to your congressman.