It would be naïve to register shock at the government’s lopsided response to the collapse of the U.S. economy.
No one should freak out while the Federal Reserve System appropriates billions of tax dollars to bail out Bear Stearns and other toppling investment giants.
Only a fool would be amazed to learn that – as with Hurricane Katrina – there is no government agency with plans to provide for people whose homes, investments, and livelihoods are spiraling into a maelstrom of worthless currency.
In the context of this financial whirlpool and the lopsided nature of our government’s rescue efforts, it might be time to review a fundamental element of our democratic republic: the social contract.
In 1651, philosopher Thomas Hobbes argued that people in “a natural state” should obey their rulers only if said rulers reciprocated with protection and a regard for society.
A century later, Jean-Jacques Rousseau revisited both Plato and Hobbes. He imagined a society in which citizens create a "general will” or “popular sovereignty” with the power to shape government. The next step, of course, was a democratic republic, as described in the U.S. Constitution.
In American democracy, social contract is manifested in a basic quid pro quo: Americans pledge allegiance, elect representatives, pay taxes, and obey the rule of law in support of a government that must protect and serve the American people. That’s the deal, tit for tat, a social contract.
There have been challenges to America’s social contract. In the late 19th Century, Social Darwinism and laissez-faire capitalism gave rise to the Gilded Age and broke our democracy’s quid pro quo for decades.
In the 20th Century, a powerful industrial economy, massive immigration, the Great Depression, and two world wars demanded a sustained, high-stakes social contract between the American people and its government.
Flawed though it was, the U.S. government of the 1930s and '40s kept up its end of the bargain to protect and serve the American people with social security, industrial recovery, public education, and massive public works projects.
The American banking system was forced to accept a system of checks and balances also based on the social contract: The government, represented by a Federal Reserve System, would underwrite overextended banks, but only if they had followed rules designed to control investment risks.
Then along came “The Gipper,” AKA Ronald Reagan. Since Reagan’s reign began in 1980, America’s social contract has been breached on multiple fronts. The Reagan people ushered in a hydra-headed campaign designed to deflate the role of government, crippling its ability to act as servant and protector of the people.
The Reagan years hypnotized Americans into assuming that “big government” is inefficient, social programs suck good money after bad, that taxes are the bane of our existence, and that all politicians are no damned good.
The Bush I regime continued the Reagan hype by convincing Americans that government was not there to help them. If the people need help, King Bush I proclaimed, let them help themselves.
“A Thousand Points of Light” personified Bush’s contempt for the social contract. “You’re on your own,” he announced, “but if you serve your community, you’ll get a big pat on the back.” Civic participation and community service were relegated to unsupported chump chores that allowed King Bush I to separate the quid from the pro quo.
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