Because You Never Asked

THE GLOBAL ECONOMY: I DON'T GET IT

(6/10, Spain )

     Nobody with the least bit of intellectual curiosity could be in Europe at this moment and not be aware of the economic crisis that has blanketed the world. It seems to be an even more acute problem here because the European social contract is more developed than the American one and has always been a more tangible, routine part of European life. It is taken for granted the state will provide certain services and pensions in a wide variety of ways, from health care to recreational facilities and many things in between. In Spain it is called “El Estado de Bienestar Social”, or, literally, The State of Social Well Being. American sources of information condescendingly (insultingly?) refer to it as the Welfare State, which is a misnomer. Its services (which do include some help for those unassimilated in a variety of ways, what Americans do think of as welfare) are paid for with a wide range of taxing-revenue concepts. It is money extracted from the wealth produced by all citizens put back to work for the common good, not just private interests. In truth, not much different from what happens in the United States (when we ride on the interstate we don’t think of it as welfare), except for the degree to which each society relies on such public-people services.

     There are a number of things about this “crisis” that have me perplexed. My commentary, like that of just about every member of my species, can only be that of a layman. There are virtually no people walking this or any other planet that surpass this level of knowledge when it comes to economics and the subterranean machinations of this complex montage known as the global economy. Even for that microscopic spec of humanity beyond the realm of lay ignorance in this discipline (?), there is little clarity. Differing opinions are as plentiful as those voicing opinions. As a result, I am fully aware that some nerd from the Cato Institute or the Financial Times, upon reading what is to follow, will say, “no Jerry, it does not work like that --- “, but I’m going to say it anyway because --- I don’t get it. It would seem a healthy exercise for someone to put it in terms someone can understand and what I’m about to say cannot be any more bull than whatever the economic nerds have been laying down for god knows how long now.

     I don’t see how anyone can dispute this whole fandango was set into action by those at the very top of the economic system’s private, for profit sector, that is, the very largest banks, insurers, investors and combinations thereof operating as the most respected Financial Services Companies, the ones whose commercials sprinkle the telecasts of golf and tennis tournaments. That’s right, the captains of industry, the barons of finance, the creators of our wealth and dynamism, the impeccably tailored heroes of capitalist folklore. These are people we can trust --- educated, well versed, cutting the perfectly fitted figure of the good life we all covet. They know what they are doing (gag).

     Sad to say, it is quite possible they did know what they were doing, but greed had almost become a bodily function in their world, so much so that they talked themselves into things that can only be described as reckless, if not unthinkable. They began taking risks with huge sums of money they did not even have! They were backing dubious enterprises with money that did not exist, with the use of financial artifices that, I suppose, could be described as “avant garde”. As it turned out, there were no financial Picassos out there and nothing fails more stridently than the “avant garde” that does not work.

     In short, it’s their fault.

     What we are left with is an economic concept that is little more than vapor, but it must be saved because the whole house will fall if this pivotal part of the structure is let to rot --- the old “too big to fail” thing. But where do you get the money to do so? There is virtually no money left in the private sector, thanks to the oh so creative financial brush strokes of the aforementioned titans of capitalism. That leaves one other sector, the much maligned public sector, the sector, according to capitalist folklore, that is inefficient, bumbling, incompetent, the sector that should give way to the market on all fronts --- social security, health care, everything. Down with the public sector, up with private initiative, viva!!

     That is no more than a sick joke now, so the public sector it is, because, well, there is no other sector to do it. Now, just as a basic review of Finance 101, I’d like to remind the class that money in the public sector is your money. It is money that has come from many different places, but a lot of it is “little people” money. It is money we’ve all worked hard to set aside for the common good.

     This is where the titans of capitalism would jump in and say, yes, but we’re the ones who create the jobs, wages and sales that ring up the tax revenues, aren’t we wonderful, the most wonderful of all? And I’ll reply (and you should too), well sure, but maybe you should have thought of that when you started leaping off financial cliffs. All you’ve done lately is create debt and pestilence, not wealth, and the rest of us are going to have to pay for it, so shut up!

     You’d think at this point in the show somebody would say, “Thanks, thanks for bailing us out, thanks for making us whole again, thanks for putting us back in business, for saving our asses, for keeping our game viable. Really, we’ll remember this, we owe you one, we’ll make it up to you, we appreciate it so much, we love you guys”. (Cue Steve Martin) But nnooo! Now that we’ve so generously given them all this money, money that could have been used for so many other things (like killing more Talibans), we are going to have to suffer. All those wonderful social contract services we fought for and earned since the times of Spartacus; all those social advancements that are truly what the word “progress” stands for --- sorry, there is just no money for it because you’ve given it all to us (and we’ll keep trying to kill Talibans anyway).

     It’s as if somebody was getting mugged and a Good Samaritan came to this person’s aid, drove off the mugger, and the victim got up, dusted himself off, and gave his savior and solid wamp right in the gut. Oooff! “Thanks”.

     I don’t get it.

     As an admitted layman in these affairs, I’m not here to dispute that this is how it has to be under the rules of this game. What I’m here to dispute is the game itself. Its rules are not fair. It seems to be always punishing the least guilty the most. If we step away from the realm of financial theory and the incomprehensible economic dialect spoken by this masonry of the chosen few, and move into the realm of hard core reality, what do we see? Have those responsible for this “crisis” been stripped of their wealth? Have they lost their homes? Have their lifestyles changed? Will they have to forgo a vacation, forget college for their kids, strip the family budget down to the rice-a-roni essentials? What do you think? I’ll tell you what I think; in spite of a few numerical adjustments on some financial ledgers kept in some secret bunkers buried under Atlantis, the answer to all these questions is “no”. The high life is still in order. I’d bet even Bernie Madoff’s family is eating, living and vacationing wherever they damn well want.

     I don’t get it.

     And the people are mad. Bravo! The brain dead are showing signs of life. They are sick and tired of it, but, unlike the famous movie Network, they are going to keep on taking it, taking it up their butts, because their anger has been deflected in the wrong direction. All across Europe (and America shows similar signs), incumbent governments are feeling the wrath of public anger. Those rioting in Greece are attacking their government and a similar scene could soon play out in Spain . The budgetary cuts in social well being are the work of governments. The public money used to bail out these reckless business ventures is the work of government, and nobody likes it. Wherever you look, those in governmental power, regardless of their political affiliation, are targets of ridicule.

     But the governments are secondary players in this burlesque. They are the “sicarios” not the “capos”. They are conveniently there to do the dirty work, to be the hit men, to take the blame. They are accomplices but not the master criminals, who operate in more rarified air far from the madding crowd. Changing governments that are all allied to this socio-economic system is a bait and switch tactic facilitating little more than a cosmetic change. Unless this justifiable public outrage can be channeled directly at the system itself --- its values, its modus operandi, its spiritual-material balance, and, perhaps most of all, its idea of who is paid what for what kind of work --- if all this and more is not being questioned, then little has been accomplished.

     I’ll never forget the day I heard they were laying off 5,000 teachers in the Los Angeles public school system. My thoughts began to race in many different directions. You’d think public education would be a top priority in a well developed industrial society and yet, it seems to be the most expendable item when the going gets tough. Think of all the wealth that’s been created in the United States . Think of it as one, big, huge pot of money that has to be used one way or another. Trillions and gazillions of dollars in the pot. Some of it is private wealth. Some of it is public wealth. There are wages, profits, dividends, property, services, merchandise, technology, infrastructure, educational facilities --- tangible wealth in uncountable quantities. Some of it is in principle, some of it is in interest and some of it is just everywhere you look. Some of it is in almost everyone’s pocket and some of it is in my pocket. Money! Himalayan amounts of money.

     And you’re telling me we cannot find a way to channel enough of this money towards a decent public school system? (We’ve been so demoralized by now I won’t even suggest an excellent public school system). For nine years we’ve been killing a Taliban here and there. What has been the per capita cost of each dead Taliban? How many teachers could we pay with the cost of one dead Taliban? Can somebody tell me!!!

     And then you hear things like Goldman-Sachs and General Motors have already paid back the money we lent them, or something to that effect. Really? So why are we laying off 5,000 teachers?

     I don’t get it.

     And then you hear stuff like President Obama has wrangled an agreement out of BP to put aside 80 billion dollars ($80,000,000,000), or some mythical amount like that, to pay for expenses and damages incurred from their little goof up in the Gulf of Mexico. Cool. But wait:

     “You’re telling me that a private business has that kind of money lying around?”

     “Well ---,” says a spokesman for the global economy ---

     “Well what? If they do have that kind of money lying around shouldn’t gas cost a lot less? Or maybe their workers should make more ---?”

     “Well ---“

     “--- or maybe they should pay more in taxes?”

     “Well ---“

     “Well what?”

     “Well, the money will probably come from future revenue sources.”

     “Future revenue sources ---?”

     “Yeah”, the spokesman has a grin from ear to ear, “that’s it, future revenue sources.”

     “Hmmm ---“ I think, scratching my head. “Hmmm --- So you’re telling me that BP, starting now in the year 1 AS (After Spill), is going to compete in a market business where everyone is trying to get the drop on everyone else, the jungle baby, thin margins, no holds barred free market capitalism, with an 80 billion dollar debt the other oil companies do not have?”

     “Well ---,” the smile is gone.

     “Well what?”

     I don’t get it.

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Email: JerryG@postcman.info