Friday, September 26, 2008

Feudal Privileges

At the end of the Roman Empire Europe fell into disarray and central government ceased to exist. In its place local nobles - rich people in positions of power - began to control their own fiefdoms, leading to the degradation and inequality of feudal times. Under the feudal system wealth and power were inherited, not earned. Wealth and power had to be protected, but not earned in the first place. And as part of the feudal system, peasants were essentially owned by the nobility. The land belonged to the nobility, and the peasants working that land owed much of what they produced to the rich people that possessed that land. They also owed the rich people a duty of performing a certain amount of labor without compensation. The rich grew richer, the peasantry lived in squalor, everybody worshiped the same Jesus, and that evil system lasted for hundreds of years. Descendants of some of those "noble" families persist today, as seen in the monarchies that live on in Europe still.

Our nation fought a revolution against inherited wealth and privilege, believing in the American Dream that if you worked hard and kept your nose clean, you could prosper and leave your children in a better place than the one you were born into - in short, the "Land of Opportunity."

Today the greatest single indicator of where you end up economically at the end of your life is how much money your parents had the day you were born. There is little upward social mobility, and likewise little downward mobility. If you are born rich you are almost certain to die even richer. Born poor you will die poor, and your children will be poor. Inherited wealth and privilege are in charge again. If you don't earn over $1 Million a year, look forward to outright peasantry.

As part of an attempt to save the very rich from their own gambling addiction, our government is bailing out Wall Street to the tune of $700 Billion dollars. This will not go to hard-pressed homeowners to help them pay mortgages (something that would help the very institutions the money will instead go directly to) but rather it will be simply dumped on Wall Street. If there is junk paper out there, the taxpayer will buy it. If we don't, we are told by the very same people that led us into this staggering mess - AFTER THEY WERE WARNED OF THE CONSEQUENCES - that the system will crash. See, it was not the elimination of New Deal era laws designed precisely to prevent the very same situation we now face that was the cause of this Second Great Depression. Oh no, not that at all. Nope. If the market crashes it will be because we did not agree to shoulder a $700 billion dollar burden in order to help the very rich. If we do not do so then the system will crash and it will be our fault. It will not be the fault of a rabid and unreasonable free-market ideology, what used to be called laissez-faire capitalism (an already thoroughly-discredited notion that the very rich repackaged as "deregulation" and "freeing the markets"). It will be because we decided not to give Wall Street $700 Billion Dollars. And when questioned about whether this will even work, we are told that, honestly, nobody knows what else to do.

But what, really, does this mean?

Here is one way to look at it. There are currently about 350 million Americans. The federal minimum wage is currently $6.55 an hour. And if the bailout is $700 Billion, then each and every American - from the newborn infant to the elderly and everybody in between - is on the hook to Wall Street whiz kids (like Treasury Secretary Paulson just a few years ago) in the amount of $2,295.08. In terms of the number of hours at federal minimum wage, the government is going to order us to donate, free of charge, without compensation, over 350 hours of labor each. That translates into almost nine weeks (8.76 to be precise) of free labor for Wall Street by each of us - young and old alike, able-bodied or not, each one of us is now obligated to perform free labor for Wall Street for nine weeks. This will, somehow, help us by ensuring those that took risks with their money (not ours) and who enjoyed enormous profits and tax breaks as the rich grew richer than ever (not us) will not lose their shirts because we - the peasants, apparently - will donate nine weeks of labor to them so that the can keep their boats and cars and jet planes and servants and, in the case of Senator McCain, an unknown number of luxury homes.

And if we don't agree to that, then somehow our failure to do so will be responsible for the largest man-made and entirely-avoidable economic disaster that has ever befallen any nation in the history of the world. Not looting and corporate cronyism at the highest levels of our government. Not deliberate decisions that went against the face of history in removing safeguards put in place in the 1930s that were designed to - and while in place, DID - prevent exactly what has happened. Oh no. It will be because we didn't agree to pay, each and every one of us, over $2,000 each to Wall Street - and on top of the largest budget deficit the world has ever seen.

And the most aggravating thing of all is, to neutral and impartial observers, this "bailout" will not even work. The markets are going to fail anyway because they are unsound, they are a house of cards. But at least the rich will stay rich as we enter the Second Great Depression. After all, that is what is important to those in power. They just need to lie to us and get us riled up - abortion, terrorism, gay marriage, whatever. And we will then agree to it and despise those who try to save us from our madness because they are "liberal."

The Roman Empire had bread and circuses to distract the masses. We have 24-hour news networks - all owned by the very rich - to do the same.

Or, we could say no. We could fight back. We could vote intelligently. But given our recent history and the "issues" being discussed in this election (lipstick on pigs, Palin's "experience," whether Obama is a Muslim, and Jesus Jesus Jesus (the Savior is apparently now very comfortable with the rich and has decided He cares little for those less fortunate)), we will vote with our "gut."

Hail to the new boss, same as the old boss. And get to work - you have a staggering national debt to pay off and now Wall Street wants to cut out the middlemen and just have your tax dollars go directly to them.

I say we should let the system crash. It will be very, very painful, but it will take less time to fix and we will be able to focus our resources on those most in need of assistance as our house of cards tumbles. We will be able to rebuild on a solid foundation. And the risks of investment will be borne by investors, helping to avoid a repeat farther in history. And here is the kicker - if we decide not to do so, the system will STILL crash of its own weight, but the very rich will escape and remain rich.

I always wondered what it would be like to live through historical times. Now I wish I did not know.


Aviator47 said...


A very well worded appeal, but, I fear, a little too steeped in emotion. This is a self inflicted wound. America stood idly by while the rich fiddled away.

But, sadly, something must be done to try to engineer a soft landing. The less affluent will suffer more in a crash than the rich. The bailout will not solve the problem, but it will treat the symptoms until, hopefully, our nation once again is blessed with adult supervision. The question is how swiftly that supervision can be put in place, and how responsibly it functions.

We need a way to punish the offenders without the people going through living hell in the process of delivering the punishment.

Yes, a crash would be emotionally pleasing, but being only a generation removed from the Depression, I remember too many stories of the difficulties my small business owner parents suffered in the last crash, and they had incomes the entire time.

The only drastic measure I offer at this point is that those who profited from this scam of the mortgage market should be barred for life from holding positions that involve the slightest stewardship over another person's money. Further, we should levy a one time personal property tax of 50% on every "Wall Street" player with a net worth greater than 5 million dollars and use this money to pay for needs of those displaced by this mess. Hell, they would still be multi-millionaires.


pluto said...

I agree with both of your intentions but I fear that neither is possible.

JD's history is a bit flawed, the ancient civilizations relied very heavily on large agricultural estates that used slaves (the slaves had NO chance to get ahead as opposed to the VIRTUALLY no chance to get ahead that the later peasants enjoyed).

Furthermore, our nation fought a revolution because we weren't being accorded the rights of ordinary Englishmen, in other words, the founding fathers WANTED the system of the time to work and only rebelled when all legal opportunities were blocked. The American Dream only manifested itself in the 1820-40's when the full value of wise decisions made by earlier leaders came to fruition.

I am not going to argue against JD's assertion about inherited wealth because it's largely true but I do note that inherited wealth isn't everything it is supposed to be. There LOTS piranhas in the water who are stripping wealth from the unsuspecting inheritors.

In the current environment only the hungriest of carnivores and the most vicious scavengers are doing well and that MUST change or economic Darwinism will wreck us all.

While JD's history might not be strictly Gibbon, his math and economics are perfect.

World leaders (both political and financial) have made so many short-sighted economic decisions since the mid-1960's that there is little chance that even the US government can play Superman and save the speeding train before it hurtles over the cliff.

History teaches us that after a certain point any attempt to save the the system is going to backfire in the long-run and harm the very people the government is trying to help. We are either very near that point or have already past it.

Al is VERY right when he says that a Depression would more horrendous than we can imagine. Hobo communities beginning to form as overloaded homeless shelters are being forced to either throw out the people best able to care for themselves or founder under the weight of people who need their services. I can't imagine the agony of the shelter directors who have had to make these decisions. If I'm right and we're already beyond the point of no recovery, we are ALL going to be facing similar decisions in the next couple of years.

Al's suggestion of a one-time tax hitting the super-wealthy is a good one but isn't possible. Who do you think the politicians care more about, thousands of failing small donors or a few big donors who can probably survive the coming economic firestorm? Before you answer, take into account the fact that perhaps as many as 50% of the country's households have negative net wealth (if you sold all of their assets, they would still owe more than they have).

This country (and by extension the rest of the world) has been addicted to debt for over 40 years. We have finally reached the point that all addicts eventually reach, we have to decide whether we are going to break the habit or let it kill us. Breaking the habit is going to be incredibly painful, letting it kill us will obviously be worse.

The thing I find galling about our current leaders is that when presented with this choice, they suggest we borrow $700 billion. They've made their choice and want us to drink the kool-aid with them.