Monday, September 22, 2008
The Shallowness of American Politics
So it is with our current economic crisis. Instead of acknowledging the flaws in our policies that led to our current problems and acting to correct them, we are left with applying emergency fixes in a crisis. Thus we have bailouts of huge private economic linchpins allowed to grow unregulated until our economy is dependent on them. De-regulation of areas of financial markets turns into the sub-prime fiasco.
Yet we hear from many pundits that it is those people who got these sub-prime loans who are to blame for poor fiscal responsibility, for getting loans they knew they couldn't pay back. What's lacking in this analysis is the economic optimism encouraged by American society since WWII. Until relatively recently, Americans were used to thinking of themselves as continually moving up the economic ladder. Hard work leads to advancement and increased pay.
This hasn't been true for a long time but the attitude remains a core value and assumption for many American workers. Never mind that wage stagnation has been the rule for many years, the future's so bright I need sunglasses, right?
So what solutions do we hear proposed? Crisis band-aids and studiously forgetting the role money managers might have played in creating the problem. Top management keeps its billions of dollars in pay and bonuses despite their evident culpability while homeowners lose homes for want of a few thousand dollars.
We live in a kind of pyramid scheme called Capitalism. Where do those wealthy top 1% get their money? Conventional thought is that it comes from their bold investment of money with the risk of loss on a large scale. In other words, what most people do all the time when they make large purchases like an automobile or a home. The difference is that when those at the bottom of the pyramid make a poor decision, it is personally catastrophic.
One pundit recently said when some people end up defaulting on mortgages, they just put the keys in the mailbox and walk away, leaving the bank with the problem. I find that a fascinating perspective. I have to wonder how many people in today's society can actually just "walk away" from a bad debt. Unless they somehow have a new identity waiting, debt tends to follow someone around for a long time in one form or another. People don't just get disapproving looks for bad debt; they get phone harassment, revoking of credit lines, raising of credit card interest rates, and much more.
I seem to have strayed far from my initial subject but perhaps not too far. Our politicians seem bound by political expediency and fear of upsetting the big ticket contributors to their campaign coffers. So don't say the problem is de-regulation and overdependence on complex shuffling of paper money. The problem is the borrowers because the borrowers have all the power in the situation, right?
When the house of cards comes down, we are left wondering why our politicians didn't see it coming years ago. In a way, they did. Their solution was to focus on the "War on Terror". Iraq. Afghanistan. Because we still live with the post-WWII prosperity idea that wars benefit our economy. And wars did help our economy when we produced real goods. In a services economy like we've got today, not so much.
Wars do distract the population, though, keeping them from demanding too much or the right things.
*I use "elites" here to mean practically all national politicians and 98% of the "authorities" seen on any TV news or commentary.