While we once had a robust economy, with factory and production jobs supported by strong unions, this is no longer the caseand it must be understood in order for us to make any meaningful, sustainable changes in our lives and in our economy.
How did we get here? We went from a nation of people who madethings to a nation where a relatively small number of people made a lot of money moving money around, selling money andtrading money.
The next time someone tells me that Obama's a SocialistI am going to tell them, "'Yo Momma's a Socialist."
The Shift from a Production Based Economy to a Consumption Economy. It is important to understand that we were a nation of farmers, then a nation of producers, in factories, and now we have becomea nation largely of consumers, service workers and finance workers. In the book Bad Money, Kevin Phillips, the former Republican Party strategist turnedharsh critic of the Republican Party, outlines the shift made from being a production based economy to a finance centered economy. Phillips writes,
The financial services sector in the 1990's became the largest sector of the U.S. private economy. By 2004-2006 financial services represented 20-21 percent of the GDP , manufacturing represented just 12 or 13 %.
....continued in the next post. 'Yo Momma's a Socialist: From Production to Consumption' 'Yo Momma's a Socialist: Reagan and Bush, "The Banks Will Never Be Allowed to Fail" 'Yo Momma's a Socialist: Podcast
The 'Yo Momma's a Socialist Podcast is a conversation that Filthy and I recorded last September. We discuss: American Consumption,Racism, WWII,Adult Onset Poverty, Why More Schooling Isn't the main Solution, Lenin, Fordism The Soviet Union, Why Products Don't Last Anymore,Germany. Thoughts? Do you agree? Disagree? Need more info? All your money is in Euro's so it doesn't matter?
The Criminal Nature: Are Tax Payers Corporate Shareholders Now? Should some bank executives be put in jail cells next to Bernie Maddoff? Maureen O' Dowd describes the conflicts that arise with giving tax payer, the money that you pay to the government every April 15th to institutions who made money off of money instead of products.She writes,
At least the old robber barons made great products. When you make money out of money, unmoored from morality and regulators, it must unhinge you. How else to explain corporate welfare queens partridge hunting in England, buying French jets and shopping for Lamborghini's?
O'Dowd has arguably been the only public voice in a mainstream publicationthat admitted that the executives who are enhanced their bottom linesat the tax payer expense should be treated like the criminals they are.She states,
More than a disappointed parent, they need a special prosecutor or three. Spare the rod, spoil the jackal. Anyone who gave bonuses after accepting federal aid should be fired, and that money should be disgorged to the Treasury.
O'Dowd ends her piece with the statement,
The president needs to think like Andrew Cuomo. “ ‘Performance bonus’ for many of the C.E.O.’s is an oxymoron,” he said. “I would tell them, a) you don’t deserve a bonus, b) where are you going to go? and c) if you want to go, go.
Maureen O'Dowd has been, arguably one of the only people in mainstream media to say publicly that that the executives who took tax payer money and gave their employees bonuses should be prosecuted and sent to jail for what they have done.
I think that there is an unwillingness to criticize because at the end of the day, many of us, want to be rich one day, so we are reluctant to criticize the peoplethat are. What this misguided thinking fails to takeinto consideration is that, given the nature of thisfinance centered economy you are are likely to spend yourlife toiling in the service economy as a waitress, retail sales person,or as a nurse, than you are to wind up affluent.
Something very similar happened in Hip Hop. There was a timewhen rap artist criticized drug dealers. Now they rarely criticize thembecause they want to be like and or live like them. I will argue that there is a connection between thisshift and the current depression that we are now experiencing. 'Yo Momma's a Socialist: From Production to Consumption' 'Yo Momma's a Socialist: Reagan and Bush, "The Banks Will Never Be Allowed to Fail" 'Yo Momma's a Socialist: Podcast
The 'Yo Momma's a Socialist Podcast is a conversation that Filthy and I recorded last September. We discuss: American Consumption,Racism, WWII,Adult Onset Poverty, Why More Schooling Isn't the main Solution, Lenin, Fordism The Soviet Union, Why Products Don't Last Anymore,Germany.
Ronald Reagan & Bush: "The Banks will Never Be Allowed to Fail" Nationalizing banks isn't new, the modern American capitalist economic systempresumes that the financial sector will be bailed on ona regular cyclical basis.
In Bad Money, Phillips also discusses the shift from a production economy to a service and finance economy. This idea supports the assertion that current bail outs are a current and necessary feature of modern American Capitalism. He writes,
In the late 1980's the government decided that finance, not manufacturing or even high tech, had to be the sector on which they would place its strategic chips- would "pick as a winner... farms and factories were expendable, but certain business and financial institutions would not be allowed to fail.
Would not be allowed to fail. Would not be allowed to fail. Would not be allowed to fail.Phillips goes on to write about the specific kinds of assistance offeredto banks.
Since the 1980's there have been three kinds of assistance that have been sought from (and generally provided): governmentbailouts when pivotal institutions, loans, profit methodologies got themselves in trouble services in trouble; Liquidity for the Fed required to keep the wealth escalator going; benign regulation and law making. Favoritism is what it use to be called.
In an interview in N+1 Magazine, Geography Professor, David Harvey explains why the modern American Capitalist economy assumes that bailouts will occur on a regular basis. He explains,
Instead of saying there is a systemic problem, which periodical erupts, in the history of capitalism, we tend to look at this peculiar incident of the present. But the property market crises have played a crucial role historically in triggering major downturns past economies
...The global downturn of 1973, everybody says it was oil. But the actual recession started six months before the oil embargo....with a global crash in the property markets. If you look at what brought the Japan economy down at the end of the 1980's it was speculation in the land and property markets. If you look at the recession in this country during the savings and loan crisis ...something like a thousand banks were on the watch list- it was as property market thing.
Harvey uses plain language to describe why this mortgage crisis has affected us differently than the crises of the past. He writes,
This is not unique to the history of capitalism. What is different this time around is the extent of it, and the degree to which finance changed its manner: For instance when the property market crashed in 1973, it was mainly local banks that got caught out, because if you had a mortgage, you had it with a local bank, so the mortgage market was localized. During the 1980's, the mortgage market became securitized , and they started to put together all these mortgages and push them onto organizations like Fannie Mae and Freddie Mac, or they would get package onto collateralized debt obligations and sliced up and sold to a pension fund in Florida or a bank that had excess liquidity in Germany.
Harvey also had some really interesting things to say about how risk was managed through out the globalization of American mortgages. He offers,
The mortgage market became really global. This was suppose to spread the risk. Which to some degree it did. But as it spread risk, it built more risk. People at financial institutions thought that if you spread risk, you eliminate risk, which of course you haven't done.
Harvey then goes on to discuss how we should all equally shoulder the burden of the failure of the banks. He explains that,
Technically everybody should, but we have a structure of state power which is dedicated to protecting the integrity of the financial system. So in the effect what happens in that state uses it power to bail out the financial institutions.
..If you look at cities like Cleveland and Baltimore, the foreclosures wave has been like a series of financial Katrina's.
After reading this, I would imagine that it is easier to see how the current cycle of bailouts has very little to do with subprime markets or middle and low income Black and Latino home owners buying more house than they could afford, per se.
Harvey concludes with the statement thatthe Capitalist economy has been about growth and that we need to prepare our selves to live in a society where there will be no growth. He mentionsthat every economy needs a surplus, some extra cushionjust in case things go bad. He suggests that we thinkabout our surplus being held by the government but controlled by the American people. While the tonewas somber and it was encouraging as well,
"What we see the system beginning to get rockier and rockier, and it is time that people started to say, "look, this system cannot continue in this way." So the best case scenario is the growth of a political movement.
I will discuss my thoughts about this idea in an upcoming poston local, green, artistic & sustainable economies.
'Yo Momma's a Socialist: From Production to Consumption' 'Yo Momma's a Socialist: Reagan and Bush, "The Banks Will Never Be Allowed to Fail" 'Yo Momma's a Socialist: Podcast
The 'Yo Momma's a Socialist Podcast is a conversation that Filthy and I recorded last September. We discuss: American Consumption,Racism, WWII,Adult Onset Poverty, Why More Schooling Isn't the main Solution, Lenin, Fordism The Soviet Union, Why Products Don't Last Anymore,Germany. Thoughts? I know you have some. Is it too much to grasp? Or does your bank account tell you that you don't have a choice BUT to try and understand it?
