Some of the writers whose views on the economy I enjoy reading have taken to calling the American financial system of the past two and a half decades a “casino” economy, meaning, of course, that by design it bred a few stupendous winners and an inordinate number of losers.
Think for a moment about the confluence of trends and notions that led to the collapse on Wall Street: Indian gaming started to find a niche in American life about twenty years ago, give or take a few years, and before we knew it every state boasted some form of casino gambling; Las Vegas shed its “Sin City” reputation and took on a respectability that its founders never dreamed possible; states from Maine to California used Lotteries to shore up tax-depleted budgets, only to find that state-sanctioned gambling never generated enough cash to go around.
Reality TV arrived soon after, with its contrived competitions that pitted people against one another with big rewards (money, celebrity) for the last contestant standing. Whether it was ballroom dancing, peddling overpriced real estate, losing weight or seeing who could create a ball gown out of saran wrap, we ate it up, as if a scripted and edited TV program was reality.
It’s no surprise that pop culture mirrored our economy. When corporate CEO’s raked in $50 or $60 million bonuses for creating paper wealth instead of real wealth, the public -- conditioned by years of Conservative propaganda to believe that CEO’s deserved huge rewards for feats of alchemy -- hardly blinked. Who cared? Times were booming and the money was green, and sooner or later riches would trickle down to the masses like Republicans always promised.
Working stiffs, folks of average means, saw the glitz and glitter and bling on TV and wanted their fair share. The only problem was that thousands of middle-class manufacturing jobs had been shipped to China, India, Pakistan and other places where people were willing to work for pennies; and thanks to an assist from the World Bank and the International Monetary Fund, nations near our borders saw their economies “restructured,” forcing destitute and desperate people to stream into our country in search of work, no matter how dangerous, demeaning or low-paying.
And let’s not forget how the Titans of Finance and their buddies in Congress used every tactic at their disposal to smash unions, slash pension obligations and make people responsible for their own medical care – at a time when the cost of care was streaking toward the stratosphere.
Taken together, these factors created wage stagnation for the majority of American workers.
But of course, workers and their kin were still expected to do their duty and continue consuming as if there was no tomorrow. Consumers tapped credit cards until the cards maxed out. Home equity came next and for a few golden years, as home values soared and money remained cheap, mistaking one’s home for an ATM worked fine.
Sensible people predicted that these schemes would collapse, but voices of reason were drowned out by the likes of Alan Greenspan, John McCain and George W. Bush. To these men, the “financialization” of the American economy was a tremendous success, a triumph of free market ideology.
Until it wasn’t. Until the music died and valueless pieces of paper choked the gutters of Wall Street and the Titans, panicked by the swift collapse of their sand castles, ran to the Government with hands outstretched and a tale of doom on their lips. The gambler’s mentality was still alive when Hank Paulson, himself a decorated Wall Street alum, demanded that Congress loan him $700 billion of taxpayer money – with nary a string attached. Say what you will, but Henry Paulson has enormous balls.
On the tube behind me, John McCain is insisting that he and no one else knows how to deal with the financial wreckage. McCain is stiff and phony and ridiculous.
Nobody knows if the Great Bailout of 2008 will restore stability and health to the world economy. The only certain thing is that taxpayers have been swindled once again.
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