Monday, September 22, 2008
An Economic Patriot Act?
After watching the events of Washington/Wall Street for the past few weeks, I've been stumped by the lack of the WHY things are going south.
Now I'll admit that with my lack of formal education in economics it would be unwise to trust me with matters financial. Give me a few years and I'd probably cause an economic meltdown due to my ignorance. Oh. Wait. Somebody from Yale or Harvard beat me to it.
This so-called "rescue" plan of Treasury Henry Paulson is emitting a disturbing resemblance to the Patriot Act. Or I should say, the passage of the Patriot Act. Basically it is this: there is no TIME to review it. Pass it. NOW. IMMEDIATELY. Ask your questions later, but uh, by the way, you won't be able to ask questions afterwards because the law will prohibit it. Just do it. The world will end if you don't.
And another thing: take that Constitution and shove it. We don't need no stinkin' Constitution. Sorry for the series of emergencies the past 8 years, but we've got practice at this. There's a fire here people, so just shut up and pass the gasoline.
Let's take a little sidetrip to the 1920's. The "roaring 20's." The name for the decade was derived from the economic "boom," particularly in the stock market. Along came FDR in 1933 and started saving capitalism from its own excesses, and fought every inch by the "investing" class. It wasn't until the advent of World War II that Americans started making money...I mean a LOT of Americans. It produced the solid middle class that endured for 30 years.
Looking back with 20/20 vision, many economists realized that the 1920's weren't so "roaring" after all...at least for farmers and in particular, industrial workers. You see, productivity skyrocketed. A single worker on average was producing double or triple every few years what he or she was producing the year before.
But...but...where did those productivity savings go? To the top. It boiled down to the relatively simple observation that those producing goods and services were not being paid enough to purchase those same goods and services. Post World War II this problem did not exist. The middle class expanded and everyone got fat, dumb, and Republican.
Take a look, particularly in this decade, where productivity gains have gone. It's the same as the 1920's and has been so for several decades. Perhaps the subprime mortgage collapse came about more from underpaid workers than anything else. That is because Wall Street, with its golden blinders on, convinced itself that while Americans stretched their work hours, went deeper and deeper in debt, and saw their real wages fall while productivity increased...that this was as it should be.
The ultimate in chutzpah is Wall Street, over the weekend, devising a new myriad of schemes to profit even further from their galactic gambling. The last two investment banks got the Fed to agree to allow them to become holding companies. That way they can take deposits and pretend to be like a real bank. I remember what Will Rogers said in the 1930's.." A holding company is a thing where you hand an accomplice the goods while the policeman searches you. "
The is the ultimate Bush legacy: a Thelma and Louise, sans Constitution, flying off a cliff.
And we, fellow citizens, are locked in the trunk.