Wall Street exults while Main Street tumbles
How does the richest country ever, dedicated to the “pursuit of happiness,” reconcile 30 million laid off workers during the two months when the stock market surges 50%? How do progressives leverage the most explosive red flashing lights in ages, with an untold, unmatched range of pain and suffering? Will any better time emerge to dramatize how this broken economic system, in bed with big government, finds endless ways to socialize risk and privatize profits?
Since March, what we’ve all learned is the 1% is alone immune not only to compassion but a virulent virus that plagues everyone else. Rarely is the left “gifted” with headlines that broadcast today’s capitalism, working fine for a few, has no such safety net for normal, average families. Indeed, this economic calamity not only redefines “normal” but “average,” as well, shrinking socio-economic categories at least one notch across the board.
Except, as Naomi Klein proved so brilliantly, IF your family has money, power and opportunity to spare (“The Shock Doctrine: The Rise of Disaster Capitalism”). For Klein, modern capitalism feasts on, digests and grows new fingers for more profit pies. If capitalism is geared to predate, shouldn’t the rest of us gear up and do what our brains can do: learn constructive lessons from fiascos. To not benefit from bad experiences invokes all those who proverbially forget history and are thus doomed to repeat it.
Inequality –on the global short list
After climate change and runaway population growth, what greater global challenge exists than income and asset inequality? And “advanced countries” often lead the way as billionaires hoard their winnings like sloppy drunks fingering free drinks. Fat cat resistance – to equitably incremental taxation, let alone understanding only government can over time level the playing field — is becoming as predictable as pandemic contagion. Nothing dramatizes the big picture like the current burst of stock prices in the face of the worst unemployment numbers in our history.
Like never before, the Wall Street game for the affluent lives on another planet from Main Street. Though no rational adult thinks world elites conspired to produce Covid-19, the bitter truth is that big money is ready, willing able to leap on the back of big disasters. That’s hardly an option for the marginal 80% as hard times mean survival mode.
Disaster capitalism works because so few have so much, namely half of this nation’s assets. For the 50% of Americans ground down by a $500 car repair, any economic disruption is painful. This pandemic is the once-a-century variety – and that means the only “buyers” (especially of distressed companies) who optimize Klein’s “shock” are the very rich. Even upper-middle-class families suffer, fear lost savings or reduced house values augur ill for satisfactory retirements.
And for the dwindling few who hope against hope that “fairness” or laws or time will somewhat “make things better,” that law-breaking, scoffing, model of unfairness, Tedious Trump, explodes such facile dreams. Trump personifies Klein’s message: “What we have been living for three decades is frontier capitalism, with the frontier constantly shifting location from crisis to crisis, moving on as soon as the law catches up.” Trump is wholly unaccountable either because we lack proper laws (like on Inspector Generals) or the ones we have are betrayed, especially by rightwing Senate power brokers like Moscow Mitch.
Similarly, seeing the vast majority of the $3 trillion government “stimulus” (welfare, bailouts) go to big business only inspires more Klein truisms: “A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security.”
Hardly “irrational exuberance”
What the surging stock market shows is 1) even a potential depression did not impede the wealthy from scooping up “oversold” shares (those driven below the “wholesale” value of a company); and 2) stock buyers understand all too well what happens when the Federal Reserve juices up the overall U.S. M-1 Money Supply by 20% in eight weeks – an unheard of cash and credit booster shot. That happens when government bailouts (or bad tax policy or excessive deregulation) “print money” (amplifying future taxpayer liability) so that all of us share today’s high risk without sharing subsequent profits.
In short, behold the dreamy Rites of Spring for crony capitalism: the rich increase leverage (ownership) when times are tough, government intervention minimizes the risk, and owners may pay a pittance while stock prices, dividends, even bonuses improve. The fairer, “alternate system” is not hard to understand: if key industries need desperate help to survive, all the “investors” (private and public) should share the spoils. Most recent U.S. governments fall over themselves being big business-friendly – and that so improves the efficiency of the wealth transfer; three trillion dollars breezed through before anyone could blink. Not enough FDR “socialists” like Bernie and true populists had enough clout to offset this routinely rigged system, (and very different from the fake “rigged” rhetoric Trump trots out to cover his corporate welfare schemes).
Rest assured: this is no “irrational exuberance” (an outdated warning about inflated stock prices) in today’s 50% surge since the March lows. That’s a 25% return per MONTH. A few of my staid dividend stocks (suitable for my age bracket) did rise considerably, but none has returned to pre-crash levels. Sure, if we were stable geniuses, we’d have joined a very small minority, waited for the bottom and pounced – assuming there was cash lying about. So, while some nervous institutions and anxious investors were dumping stocks (wrongly, as it turns out), others, especially opportunistic hedge funds, rushed in when prices hit historic lows. Interest rates are so low the “cost of money” for top companies is inconsequential.
Fine, share the winning
The point here isn’t to demonize capitalists, especially billionaires, for that’s what “they do for a living:” seize rare opportunities, not without risk, though knowing every other time the system muddled through. Fat cats play the system like hungry lions stalking prey. The challenge for progressives is to educate more voters how our predatory system helps the rich get richer – and the multitudes get the empty stick. Any competent legislator can create laws that stop socializing risk without socializing profit.
The process could be that simple. We do have to elect officials who decide it’s in the national interest to keep airline companies afloat, as it were, then force them to share winnings – and like Alaska distribute earnings to every citizen. Publicize this unjust dynamic so that average families, especially without healthcare, won’t have to go begging every time a pandemic descends or today’s bust offset boom times. A fitting finale from Klein, “We do not always respond to shocks with regression. Sometimes, in the face of crisis, we grow up—fast.” Time to inform others in the trenches here’s a perfect time to grow up and act. It means voting and not just one time for one party. We still eventually need a New Progressive Party and that could be kicked off by better integrating all of the nation’s wealth with all of the people’s bank accounts.