We’ve been focusing on a lot of extraneous issues.
Things like what Geithner knew and when he knew it. Or Bernanke. Or God knows who else. There is a huge outrage about the AIG bonuses, and quite rightfully so, since the majority of details about the financial meltdown have been kept out of the mainstream media.
Of course, a lot of the outrage has been on the part of those who were surprised to find out that anybody would have been against it.
Once in a while someone scratches the surface, like Jon Stewart, who in the end said to Cramer that it wasn’t about him or what he had been doing. Well, actually it was, since Cramer’s big deal was convincing large numbers of people to buy overvalued stocks that he was intending to short sell. If you had followed his advice, you’d have lost a bundle. If you had done the opposite, it would have made you rich. Does that make him incompetent, or a craven market manipulator who ought to be in jail?
But still, that’s only a tiny part of the story, and the more we learn, the more we get mired in the details of the crimes we are uncovering.
What has happened is actually a sea change in how we view much about business, society, and social class.
Before the Reagan administration began to institute supply side economics, all businesses were basically considered the same. Look at a small business, in this case a proprietorship. The owner runs that business to make money, and the only way to continue making money is to keep it solvent. If he can’t afford something, he doesn’t buy it. Investing in a lot of equipment that will take years to pay it off may mean him taking less profit out of the business to live on. Borrowing money to buy something he can’t currently afford would have to be weighed carefully against the cost of the borrowing and the potential benefits.
Years back, I was looking into starting a business, and had a few sessions with a consulting group, where I was told that the only reason to start a business is to earn a living for your family. Looking around, I could see where others had made errors that were fatal to the existence of their business by failing to understand that point.
Point in case: the restaurant owner who was in the business to make lots of wealthy friends and be known as a “star restaurateur”, like the ones you read about in the magazines. I know of one who made 4 restaurants fail before her husband finally pulled the plug on her ambition.
Corporations were run the same way as small businesses. They had responsibilities to their shareholders and their employees to keep the companies solvent.
But sometime in the past generation this has changed. The tax burden has shifted from the better-to-do to those who have much less, and the wealthiest among us have had their moral compasses snap. Greed fueled by a flood of cash has resulted in the limitless greed for more money and power.
We now have two types of people and two types of businesses.
People are now divided into “Financial Wizards” and “Everybody Else”. Financial Wizards are fundamentally different from Everybody Else. They earn their money not by providing products and services, but by speculation on speculation. They create wealth from nothing, or from wealth which is already created from nothing. Their value is in proportion to their risk-taking, so they see themselves as god-like. Because of this they figure that taxes on their earnings or their wealth should not apply to them.
In fact, no laws should apply to them at all. The way they see it, the honor system is good enough for Financial Wizards and the “free market”, the playground of Financial Wizards.
The rest of the population, those who work for a living, are considered to be “Losers” by the first group. As such, they should not only pay the entire tax burden of running the country, but they are fair game for the Financial Wizards who wish to steal what little money they have.
Businesses are now divided into the classical model, the “Solvent Business”, and the new “Mega-corporation”. Solvent Businesses should pay taxes just like working people. They are run by Losers. Solvent Businesses do not take risks, and it is risk-taking that catapults one to the level of Financial Wizard.
Mega-corporations are the natural habitat of Financial Wizards. Rules simply do not apply to them. Mega-corporations are the ones that fit the description of “too big to fail”, but basically the model they are run on is that they are “too complicated to understand”, except for Financial Wizards.
Without Mega-corporations, Financial Wizards would not exist. They have nothing to contribute to the Solvent Business model. Financial Wizards understand that the primary purpose of a Mega-corporation is not to remain solvent and to make money for its stockholders. The primary purpose is to funnel cash to Financial Wizards, whether or not the bottom line of the company can tolerate this.
It’s pretty simple. Two different groups of people who perceive two different realities. The problem is when realities clash. Obviously what we’re seeing right now is people on Wall Street and on CNBC, in the Treasury, the Fed, the Oval Office, and the halls of Congress scratching their heads, surprised to have found out that the majority of people do care and don’t think that there is no price too great to pay to keep the Financial Wizards on the case.
Financial Wizards are convinced they are under attack, and it is class warfare. After all, not only are they sure they deserve these things, but they are convinced it is not even a controversial concept. They see it as only right that incredible wealth should have been redistributed from the Losers to them during the past generation, as well as the money they stole fair and square from Losers who did not deserve to have it.
Class warfare it is. But the foot soldiers are the working poor, dittoheads attacking those who have just a little less than they do. They act on the behest of wannabe Financial Wizard suckups like Rush Limbaugh and Bill O’Reilly. The dittoheads have no clue that they are pawns. a mere distraction, and they have played a major role in causing their own misery by supporting politicians who have sold their souls at the altar of Financial Worship. They have been told that Financial Wizards are really just people who worked really hard for their money and should be permitted to keep it. They do not realize that the people they are fighting for see them as no different from the people they scapegoat—losers and easy marks.