There’s two kinds of people asking me about the economy lately: people with money wanting to know how to keep it “safe,” and people without money, wanting to know how to keep safe, themselves.
Maybe it’s the difference between those two concerns that best explains the underlying nature of today’s fiscal crisis.
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Bush’s tax cuts and other measures favoring the rich led to the biggest redistribution of wealth from poor to rich in American history. The result was that the wealthy—the investment class—had more money to invest, or lend, than there were people and businesses looking to borrow.
The easiest way to bring more borrowers into the system—and to create more of a market for money—was to promote homeownership in America. This is precisely what the Bush administration did, touting home ownership as an American right. Of course, they weren’t talking about home ownership at all, but rather pushing people to borrow money tied to the value of a house.If people could be persuaded to take mortgages on homes, real estate values would go up for those already invested (like land trusts and real estate funds) and banks would have a market for the excess money they had accumulated.
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The bigger picture, of course, is that speculation just worked too well for too long. The disparity between the market values and real values (rich people and poor people) got too large. Every asset class, even money itself, got too expensive. We became more valuable for our borrowing power than our labor—which also meant there was no way to work off our debt. Meanwhile, the people using reality as an investment vehicle have overwhelmed the real economy on which their “structured investments” are based.
Sure, this has happened before. It’s just that, traditionally, when wealth disparity got too great and there wasn’t enough money in the right places, the wealthiest bankers temporarily suspended their greed to bail out the system. Or progressive tax policies opened corporate coffers, permitting a “New Deal” that employed people while rebuilding the infrastructure required to make real things and provide real services to citizens.
Today, however, such temporary restraints on greed are systematically untenable and philosophically unthinkable. Conservatives are still so angry about New Deal reforms of the 1930s that that they have infused politics and banking with an economic ideology that sees any regulation of worker exploitation or predatory investment as anti-capitalist, anti-American, and even anti-God.
So instead we are the beneficiaries of “wink” reform: stuff that’s supposed to make us feel good while reassuring the speculators that their interests will remain paramount. A few hundred dollars mailed to every American family creates the illusion that government is lending a helping hand, but this money is not redistributing anything. It’s being taken from the same people who are receiving it, in the hope that they’ll just pump it back into the system at Wal-Mart or the Exxon station.
