I attend to my personal and professional interests, saving money, watching my financial accounts' performance from a vaguely uninterested distance, working steadily. And then there was no job, unemployment benefits barely covered my rent, and the remains of a small inheritance were slowly fed to pay my basic, unavoidable living costs.
My interests shifted to my personal financial disaster and to the greater countrywide disaster. How did this happen? I am still looking for details, but at this point it seems clear to me that the "economy" has done us wrong. We citizens have allowed our government to bend to the financial interests of large corporations and the players in the financial markets—the bankers, financiers, and investment managers. They have long proclaimed the greater good of free-market capitalism (FMC). They have persuaded governments to enshrine the interests of FMC in law. Initially there was some oversight and some regulation, but that has gradually fallen by the wayside. We are left with the foxes guarding the chicken coop—a situation we were taught as children to mistrust.
We were sold the idea of an "economy" that was more important than civil rights, workers rights, the health system, the environment, etc. The most important aspect of American life. The health of the economy is measured by GDP, Gross Domestic Product. This is a number distilled from financial transactions: Every time money changes hands, regardless of reason, the amount of the money is added to the GDP. Consequently the GDP includes, and makes no distinction between, salaries paid workers, bonuses paid executives, debt payments, payments for medical care, insurance payments, grocery purchases, boat purchases, and purchases of securities.
What we have overlooked is that the "economy" does not equate with prosperity, at least not a prosperity shared by the great majority of Americans. Instead what the GDP measures is money that is pouring up into the hands of the rich. It is the rich—the financiers, bankers, investment managers, and CEOs—who benefit from financial transactions. These people are so preoccupied by the large amounts on their balance sheets that even they forget that the stock market indices like the Dow Jones Industrial Average do not reflect the actual value of the securities. The stock market is a form of legalized gambling. The value of any security only reflects what someone is willing to pay for it, it does not reflect any intrinsic value in the underlying assets.
The recent mortgage debacle is a unavoidable example of securities whose real value is far less than their purchase cost and their current market value.
What is so amazing is that no one seemed to notice that American investors were gambling on the domestic real estate market.
What offends me and many others about the so-called "bailout" is that the big gamblers are being protected—their investments are being insured after-the-fact. But no one is offering to insure my investments or those of the millions of Americans who find themselves with seriously devalued retirement accounts.
I still have not worked out how it came to be that the banks will not lend money. But the resulting credit crunch is losing jobs by the second.
While we were looking the other way, our jobs and savings were stolen, our future was stolen (to borrow a book title).
The history of capitalism has become increasingly interesting to me, I want to understand what it was in its infancy and how it got to where it is today. Capitalism was discussed in my MBA studies, but not to the degree that a budding economist would study it. I graduated with a firm belief in free-market capitalism, and prompty joined the Libertarian party. About two years ago I changed my mind and my voting registration. I no longer believe that FMC is more important than providing for the common weal. I no longer want an economic system that forces the poor to support it with taxes, labor, and misery.
The American Dream is broken. We are drawn to the concept of a self-made man (and woman) like a moth to the flame, but we thought we didn't have to do anything to have it except work hard. We thought we didn't have to actually participate in the democracy our leaders wave about as justification for their rotten ideas. We thought we didn't need to vote, or demand that elected representatives actually keep their campaign promises and advance our interests. We thought we could coast on by.
Apparently we were wrong. True freedom, honest and meaningful work, and protected assets come with a price tag: continual participation in government, active democracy.
Written: 10-25-2008.