TRANSFORM WALL STREET AND THE EUROPEAN CRISIS

I spent last evening listening to Sasha Lilley, author of Capital and Its Discontents. She made mention of how economists and right-wing politicians had recently forecast ten years of austerity, here in America, in order to recover from the excesses of borrowing that the poor and middle class have indulged in. She further stated that more recently, as the crisis in Europe shows no signs of improving, these same talking heads have now begun to speak not of ten years but rather of an Age of Austerity.

To most people that is a scary thought. Austerity is code for slashing or eliminating government programs that aid the weakest and most vulnerable in our society. In these times when all economic classes recognize how vulnerable they are to uninsured illness, to layoffs, to underwater mortgages, to rising food and energy prices, and to credit card debt and interest payments that seem to grow with each passing month, we may well fear that the cuts to programs today may affect our own ability to survive in the near future, no matter how well off we may seem to be.

If we look around, we see that this fear has many manifestations:

  • Increased migration of unemployed workers, both within our own country and in population shifts out of the most desperate countries and into other nations under less economic stress
  • An increase in the strident rhetoric and sublime racism of conservative politicians and pundits about the supposed problem with immigration, and their willingness to forgo rights and protections of the Constitution in order to stave off some perceived threat from immigrant workers
  • A general willingness to accept increased workloads as co-workers are laid off (and not replaced), and an acquiescence to management demands for more hours and more productivity even as wages stagnate or decrease
  • Our silence as the bailouts continue, the money-printing continues, the charade of the Super Committee continues, and the celebrations of a rising stock market and record corporate profits continue
  • Ever-rising food and energy prices cutting into our budgets and often forcing us to make painful decisions about what to pay for and what to let go into collection or default

 

And yet, these are the results of the old system. Many Americans are waking up to these problems and finding their voice of discontent. Regardless of whether or not you feel that the Occupy Movement should hasten to issue a list of demands or not, it serves us best to focus our discussions and our energy on beginning to identify the big-picture changes we need to make in the systems of economics and governance that will overcome the decades of dysfunction we now face. Fear arises when we see no alternative, and no way out, of a present predicament. Yet there are many new and fulfilling ways of being, and some are already taking shape in your own neighborhood. Garden swaps, Move Your Money campaigns, fights to save schools from closure or teacher layoffs, book discussion groups, burgeoning time exchange groups; all are manifestations of a new, caring economic model that is arising from the cracks of the old paradigm.

Many people believe the pundits who say, “If we can just get the economy growing again, more jobs will be created and our problems will be solved.” We will never return to the economy we had ten or twenty years ago. If you examine the arc of economic history over the last 40 years, since the dollar was taken off the gold standard in 1971, five issues stand out. First, wages have not increased. All gains in lifestyle stem not from increasing pay but rather they are due to the increase in two- or three-income households, or the increase in borrowing, first through the use of credit cards and more recently, through the use of home equity credit. Both methods of coping are no longer available to the majority of citizens. Second, wealth has increasingly become concentrated in the hands of fewer people. While this trend has accelerated since the turn of the century because of lower tax rates on individuals and increasing tax credits and deductions for businesses, it has mainly been the result of the need for workers to borrow in order to meet their needs. Although lenders are not actually loaning out their own money, they are nonetheless allowed to collect interest, often at onerous rates of up to 36%. When you devise a system that requires people to borrow in order to survive, and to pay interest at rates that prevent people from ever really being able to pay down their loans, then you have created an effective system to syphon financial resources from the borrowers to the lenders. As our debt has increased, so has the flow of capital into the hands of the few with the ability to lend money they don’t have: the banks. This is why the financial sector today provides more than 40% of the record $1.7 trillion in corporate profits, even during difficult economic times. Third, our debt load as a nation; government, corporate and private, has doubled 5 times in these last 40 years. Today in America it stands at just over $50 trillion, and has not grown much these last four years as the economy has struggled to arise from the Lesser Depression. For the economy to look like it has during these previous four decades, and for the economy to continue to grow as we claim it must, we need to add another $50 trillion in debt in the next six years. There is no way that can or will happen. Thus, the economic rules we have played by for decades no longer apply and the sooner we realize this and begin to make plans for dealing with new realities, the better off we will be. Fourth, we live for the first time in a global economy. Not only has manufacturing spread around the world in order to tap into less-regulated environments, cheaper labor pools, and low transportation costs due to soon-to-disappear cheap oil, but our financial system has spread its dysfunction into every industrialized nation, and into many that are not considered First World countries. It is not, on the surface, much concern to America whether Greece defaults or not. U.S. banks have loaned Greece barely $7 billion, a drop in our bucket of debt. But the recent creation of credit default swaps, basically insurance on the debt of another, exposes American banks to huge risk should the default trigger the need to cover the debts of some European banks. These new financial instruments are unregulated, and therefore hidden from the eyes of anyone who could tell us details such as how much is insured and by whom. No one knows, and truly: no one knows, the extent to which American banks are on the hook should banks around the world begin to fail because of debt defaults in Europe. The one fact we do know, since the market for these swaps has been estimated (by the International Settlement Bank) to be north of US$600 trillion, is that it would again place the American taxpayer dead-center inside any bailout. Globalization has developed one other insidious aspect: just-in-time manufacturing. As we have seen this year (2011) with the Japanese earthquake/tsunami and the flooding in Thailand, our economic system is less resilient when parts manufacturing is scattered around the globe and not redundant. Disruption of one plant can force numerous other factories to halt production while they await a particular part. This means that isolated events now have global effects. And lastly, the growth of corporate spending on politics: through campaign contributions made largely in secret, by paying lobbyists, and by running media ads that are political in nature rather than focused on advertising a product, means that companies now effectively control the laws that are made and the budgets that determine the amount of enforcement of laws we already have. In effect, there is no difference between our two political parties in terms of the constituencies they serve; both serve corporations at the expense of the people. Thus any change in either politics or the economy will have to start with the people. We cannot wait for a leader to take the reins of power and force a change upon the system. We will be lucky if we can build enough of an alternative economy in our local communities before this old one collapses to allow us a peaceful, easy transition.

And transformation is our task today. This is why demands are useless. Demands imply that you are working within a system and willing to compromise. We can’t compromise, allowing corporations to continue to pollute or to privatize that which should be a public-owned space or service in return for some minor concession or regulation. We have to dream big: what will it look like when we take care of each other rather than spend all our energy in a race to acquire more stuff than our neighbors? How will we feed ourselves when we eschew eating oil, and instead begin to eat what grows in healthy soil? How will we build the relationships that ensure we will be well-taken care of in our old age, without reliance upon 10% annual returns from a stock portfolio driven to find profit regardless of the environmental or social impacts of profit-despite-all-costs? How will we survive with help from our neighbors, without depending on government assistance? How will we help educate, house and feed each of the now-seven billion people on the planet? And how will we do this for the people in our own neighborhood, who need our help today?

We risk everything when we fail to dream big enough. Band-Aid solutions are not going to work. Every problem is interconnected, just as we ourselves are interconnected with every living being, and more, in this Universe. How can we tap into this sense of our connectedness in order to find our freedom and our security? Money, and economics itself, is just a construction of rules that we have agreed to follow. Now we see how the rules are flawed. It is time to transform the rules, to play a new game. This time let’s play without fear and with compassion for all, even the 1%.

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