Wednesday, October 07, 2009
GORE VIDAL INTERVIEW
Tuesday, June 30, 2009
The 4th Branch of the US Government: Goldman Sachs
"It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity" Galbraith observed, sounding like Keith Olbermann in an ascot. "If there must be madness, something may be said for having it on a heroic scale"
"Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach."
"The basic scam of the internet age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement."
"It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there. But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted any more; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going."
Saturday, April 11, 2009
Prozac politics
Philosopher John Gray: 'We're not facing our problems. We've got Prozac politics'
The philosopher John Gray is riding high as one of the few thinkers to have predicted the current economic chaos. Here, he tells Deborah Orr how we got into this mess – and how we might get out of it
Saturday, 11 April 2009
It's universally recognised that some people benefit hugely from recessions. But no one really expects those beneficiaries to be philosophers. John Gray, thus far, has had a fabulous recession, not least because he was one of the few people who forcefully predicted it, notably in his 1998 book False Dawn: The Delusions of Global Capitalism. This week, with perfect serendipity, Penguin has published Gray's Anatomy, a collection of his political writings over the past 30 years. Gathered together, Gray's essays, articles and reviews offer a very handy historical and philosophical guide to how we all got here, in a hefty, readable slab of glorious prescience.
Gray, who is now 60, withdrew from his sparkling academic career not much more than a year ago, in order to write full-time, and he still gets a bit of a kick from his new-found freedom. He grandly insisted on booking a room in "the Wylie building" for our interview. This, I think, hints a little at pleasure in being represented by Andrew "the Jackal" Wylie, the pre-eminent transatlantic agent of his generation, and a lot at habituation to having well-appointed institutional rooms at his disposal. Gray moved to Bath, with his wife Mieko, a dealer in Japanese antiquities, around the time when he surrendered his most recent post, as Professor of European Thought at the LSE. So the plush Bloomsbury office now serves as a London base.
One might forgive Gray, as he sits in Georgian splendour sporting a rust-coloured corduroy suit, for being a little bit bumptious, and slightly prone to self-regarding cries of: "I told you so." But such egotistical grandstanding would be a betrayal of everything Gray has ever believed in, if he could be accused of ever having "believed in" anything. Gray eschews all "isms", except realism, and he admits, with some shame and an awareness of the dreadful irony of life, that "a surviving element of utopianism in me" presently leads him to hope against hope that realism – and the establishment of a reasonable modus vivendi – might possibly be the coming thing.
Long mistaken for a pessimist, Gray instead has a talent for calling an ideological spade an ideological spade. His intellectual speciality, or his "recurrent habit of enquiry", as he puts it himself, "is to try to identify features of the present moment, which are taken to be unshakeable by conventional opinion and established interpretation, but are not, in order to try to find out the interstices or weaknesses or fragilities". It's a technique that has served him very well.
However, Gray always does his best to respect the politicians who wield the ideological spades, preferring those who are "willing to get their hands dirty" and involving himself in the think-tanks that nourish them. This guiding principle dictated that he was an early supporter of first "the Thatcher project" and then "the New Labour project", even though many people would argue that one or both of these contributed vastly to our current predicament.
Again, it's all about realism. It would be wrong to say that Gray has "faith" in politics. But he does think that politics are a much better way of sorting things out than the messier alternatives – war and revolution. He also reserves a degree of disdain for protest politics, not because it never succeeds in getting its point across – Gray fully accepted the evidence of global warming early on, for example – but because he is suspicious of movements that people join in order to find psychological satisfaction and "give meaning to their lives". It is the "meaning-conferring function of political projects" that he identifies as the aspect of them that allows people to get carried away with dangerous fervour.
In the introduction to Gray's Anatomy, the author declares with some irritation that he has lost count of the number of people who have asked him why he stopped "believing in Thatcherism". He has the good grace to chortle amiably when I facetiously insist on making that my first question to him. Anyway, it's still a good question, as he concedes himself, because its answer encapsulates pretty much every aspect of Gray's formative thinking.
Certainly Gray recognised in Thatcher, from the moment she became leader of the opposition in 1975, a politician who was willing to get her hands dirty. But more importantly for him, she was a militant anti-communist, as was he. He dates his interest in Russia from early in his teens, when he began reading Dostoevsky, and credits the hardening of his anti-Soviet, anti-ideological stance to "the enormous influence" of Norman Cohn's 1957 book The Pursuit of the Millennium.
"Cohn argued that all of the great political movements of the 20th century, including Nazism, were at least partly pathological versions of western religious traditions, in particular apocalypticism. If you talk to most centre-left people, these happy meliorists, these so-called inch-by-inch meliorists, they will say: 'That may be true of the 20th century and of the extremes of politics but not of us.' But I always believed that utopian or millenarian or, let's just say, irrational politics, could break out in democracies as well." His 2007 book, Black Mass: Apocalyptic Religion and the Death of Utopia, explains how the war in Iraq was one such nightmarish manifestation.
Crucially, Gray considers that one of the signals of incipient pathology is the advent of hubris. Hubris, he points out, entered the Thatcher project when communism collapsed. It was then that it came widely to be dubbed as "Thatcherism" and then that Gray judged it to have disconnected from reality. He recalls seeing Thatcher on television saying, "We are a grandmother," and thinking: "That's it, then..."
"One of my recurring tests of political reality and of political fantasy is when hubris penetrates not just leaders but an entire organisation," he explains. "Then it's over. That happened with Thatcher, and it happened with Bush. The key phrase with him was the famous: 'Are you part of the reality community?' "
Significantly, Gray's anti-communism differed in one important aspect from Thatcher's – and almost everybody else's. "Far from being pessimistic," says Gray, "I was considered wildly optimistic at that time because I thought communism – a tremendously repressive system of government – would simply collapse. Nearly everyone, including the Foreign Office and Sovietologists, always portrayed it as completely unshakeable. I didn't think that was true. It didn't have much internal legitimacy – ever."
So, while Gray fully endorsed Thatcher's "militant position in the Cold War", he wasn't utterly surprised when the Berlin Wall suddenly went, like a tower block that had been demolished in a controlled explosion. Except that this was an explosion that few saw the need to control.
"I was horrified by the uncomprehending and stupid western post-collapse policy towards Russia ... What were western policy-makers thinking in the Nineties, when Russia went through a demographic crisis? People were dying in numbers unique in modern peace-time. A third of the population went underwater, pensions and life savings went out of the window. What were they thinking would result from that? That was an absolute catastrophe. George Bush Senior, not long after the Wall came down, said: 'This is a great moment for freedom, but no occasion for triumph. It will be very, very difficult.' But nobody wanted to hear that.
"It went against the prevailing mood of triumphalism, when Thatcherism turned into a global project. It went against the opportunities for financial gain that presented themselves in the former Soviet Union. It went against the hubris of the time. What was needed was a very light touch, a non-ideological approach, very pragmatic, very flexible, very skilful. Instead what we got was: 'This is what you've got to do. Adopt this wonderful model that we've got.' "
The swaggering hubris of the time gained widespread intellectual legitimacy with the publication of Francis Fukuyama's essay The End of History, in 1989. Gray was back then contemptuous of what he saw as yet another expression of apocalyptic thinking, and an example of "the domination of the American mind by the liberal ideology that has fostered blind spots in American perception of the real world that have been immensely disabling for policy". While Fukuyama's theory is now dismissed as an aberration, Gray rightly maintains that its influence was pervasive and baleful.
Anyway, it is now all too obvious that neither global liberal democracy nor global free markets were unstoppable. Gray is quite certain, on the contrary, that they are over, in their present form. He predicts, during the piecemeal process of coming up with a different model, "a relatively long period of sheer survival".
"We are presently in the first phase, not of recession, depression, deflation, inflation – all these sterile debates. We're in the first phase of the collapse of this type of globalisation, or this phase of globalisation, which will have some features in common with the Thirties but will be different in lots of ways."
Gray admires John Maynard Keynes, and admires the post-war settlement. Why shouldn't he? From a working-class background in South Shields, he was nudged into grammar school and from there to Exeter College, Oxford, where he studied PPE because its reading list "coincided with the things I was reading anyway". He describes himself as a Butler boy, a child of the post-war settlement. But he doesn't think that approach will work now. All it provides, he says, "is a staff to lean on" while we work out how to "stop fighting the last battle instead of the one we are in".
"A crucial difference is that America isn't the industrial powerhouse of the world any more, so reflating America, even if it was possible, wouldn't get us out of the mess. The Obama administration is essentially rudderless. Gordon Brown did stop the banking system from outright collapse, but that was crisis management, and we're now at a later stage. Mechanical Keynesianism won't work, or at least won't work well in a context in which capital movements and economies are open.
"A semi-open global free-market was created, especially for capital. It has its own features, its own logic, its own dynamism. I don't think anyone fully understood how it worked or how big it was growing. So then it becomes very difficult to control, because there's no entity that embraces this economy. Each separate state or entity presents problems without even comprehending what is happening. They all react in different ways as they resolve different issues. The elite oscillates between immediate crisis management, and just dithering, or not knowing what to do, or quarrelling about who is to blame.
"In this early phase of collapse, Brownian rationalist re-regulation at an international level is utterly remote from what is in fact happening, which includes an entrenchment of illegal parts of the economy that are rather globalised. The elements of de-globalisation are: less trade, repatriation of capital, nation state more important. If you're going to bail out a bank there will be pressure – so far not very effective – for the benefits of that to be felt locally.
"So all these classical features of collapse are present. Which has happened before. This is a normal historical collapse. There was a major collapse in globalisation after the First World War. I'm not saying we are going to have what we had then, because there were a number of malign features then that we don't have now. We don't have fascism or communism we don't have imperialism or colonialism ..."
But we do have ecological peril.
"Yes. Industrialisation is still occurring. China still wants and needs 8 per cent growth a year. That requires large energy inputs and so oil prices will go back probably to $80 or more in the next few years. When that happens, will it be against a background of governments having taken various measures to ensure that they develop alternatives to oil? I doubt it. Because most environmental and ecological projects are being reined back because now the immediate imperative everywhere – in the case of China for regime survival even, or in democratic countries just as part of winning the next election – is to try to get the show back on the road. But the reason it collapsed is that it is not sustainable.
"There are no goodies and baddies in this. It's not just the Russians, the Chinese. It's also Canada, Denmark, Norway. All saying: 'We want our share.' That's the future. If we had the realism to see that as an ongoing trend, it could be mitigated, the sharp edges could be taken off. We could expect conflicts we might be able to manage better.
"But the actual response, I think, and this is partly to do with the way democracy works and the way the mass-media works, is to avoid confronting these admittedly intractable problems, because there is actually underlying despair. It's Prozac politics. If you say actually, possibly, we're past the tipping point for preventing a two-degree change. That's despair: 'I can't get out of bed. I'll get drunk. I just can't take it.' So it's a very fragile mental resilience we've got here.
"But in the Netherlands, they're giving some land back to the sea, they're giving some land that was farmed back to nature, they're building on stilts, they're creating wildlife passageways – they're responding. Intelligently. To my mind that's inspiring. Just take the emerging consensus of scientists and respond.
"Realism is a necessary condition of serious politics and serious policy-making. And realism isn't popular. Because what many people are looking for in politics – including green politics at the moment, is a meaning for their lives. If you say to people: 'We can't move to a world in which we don't have either nuclear or fossil fuels. That's impossible,' they will say, 'That's not impossible, not if we all want it.' But many countries don't want it. Russia's not going to do it. Venezuela's not going to do it. Iran's not going to do it. Their wealth and power depend upon fossil fuel. 'Well, we can do it,' they'll say.
"And when you push it, it comes down to a kind of symbolic expressive function whereby even if the effect of certain policies – like moving towards wind power – is to be forced back to coal, then it doesn't matter, because the purpose of the policy is not actually to effect a real-world change but to keep the spirits up.
"The search for a narrative which confers meaning on people's lives and shows them to be part of a larger, meaningful picture, is to my mind a legitimate and deep-seated human need." For that reason Gray scorns Richard Dawkins, and the whole idea that if people turned away from religious belief, the world would be "better".
"The search for meaning is dangerous when it spills over into politics. It's not only dangerous when it produces the communists, the Jacobins and the Nazis, but also in the context of democratic or liberal meliorism, because it creates a preference for policies which satisfy this need for meaning rather than have an actual effect."
Gray sees the present collapse as an inevitable consequence of the human condition, and particularly the human belief that somehow industrialisation is progressive, and can become wholly benign, for everybody. "Humans don't always adapt well to industrialisation, but pretty much all humans want the benefits of industrialisation. They want clean water, they want long lives, they want warm rooms, and, let's be frank, they also want a high-stimulus environment. I can't imagine what life is like in an immobile village in the medieval period. But it would be a very low-stimulus environment, in which people are stuck. There's no room for romantic nostalgia here.
"Yet all forms of industrialism are on one hand attractive to humans and on the other intolerable to them. Partly, that's their revolutionary character. It is in the nature of industrialisation that markets rise up and disappear because new technologies rise up and disappear. So whole industries vanish, with some of the ways of life that are associated with them. People have to move or change their skills, or find other things to do. It's not a transition to a stable state. It's permanent change.
"It's not really about capitalism. Industrial civilisation itself is inherently dynamic and revolutionary. I think Marx got that right. That's partly what human beings like about it. That's what's attractive. What's unattractive is that it is very difficult to reconcile its actual operation with the human needs for security and stability. People do want security and stability. But they also want possibility and thrills. They do want happiness, but they also want excitement, which is quite different. And these are ubiquitous human conflicts."
Gray remains a fan of the 19th-century philosopher John Stuart Mill: "Not his utilitarianism, not his belief in progress, not his Victorianism – but his eclecticism. He took things from different systems of thought. The truth about human civilisation is very unlikely to lie in some single form. Which he understood."
Yet specialisation is another change that has been ever-increasingly wrought by industrialisation. Very few people on the planet now can really claim to be intellectual generalists yet still have a grasp of "the detail". Gray suggests that there are one or two people who manage to achieve a useful overview. He is complimentary about Nassim Taleb, the writer and hedge-fund manager who also anticipated the crash. But he is, like many others, a bit cross with the "experts" of Wall Street and Canary Wharf, who didn't read Keynes or Galbraith – or even Ayn Rand – until they got their redundancy bonuses.
"The type of economic thinking that went on up to and including Keynes – which was not that long ago – doesn't happen any more. Political economy. Adam Smith. Lectures on jurisprudence. Theory of Morals. And so on. David Ricardo. Marx came out of that tradition.
"Economics wasn't seen as a separate discipline concerned with mathematics and the ability to model it. It was seen as a historical discipline connected with history, connected with morality, connected with the analysis of the nature of the human mind. And that went on right up to Keynes, who was a sophisticated kind of guy, founder of the Arts Council and so on, but who also wrote a treatise on probability, read all the philosophers of his day, was an investor, liked to go to Deauville and have a flutter.
"The post-war settlement did last a long time and was a benign settlement, predominantly ... But the way economics has developed ... it has cut loose from history, even from the history of economics, let alone the history of economies ... the loss of the past, of the sense of history is a very profound development."
It's slightly weird talking to Gray, because I find I agree with absolutely every word he says. I'm not sure whether we are just on the same wavelength, or whether, over the years, he's had such a profound influence on my world-view that I'm just a little John Gray thought-clone. However, since that's one question that Gray is quite unable to answer, I fear that I cannot answer it either.
'Gray's Anatomy' is published by Allen Lane, £20
Friday, April 10, 2009
Escape from the Zombie Food Court
Joe Bageant recently spoke at Berea College in Berea, Kentucky, Eastern Kentucky University at Lexington, and the Adler School of Professional Psychology in Chicago, where he was invited to speak on American consciousness and what he dubbed "The American Hologram," in his book, Deer Hunting With Jesus. Here is a text version of the talks, assembled from his remarks at all three schools.
Tuesday, March 24, 2009
LET IT DIE: Rushkoff on the economy
by Douglas Rushkoff
March 15, 2009
With any luck, the economy will never recover.
In a perfect world, the stock market would decline another 70 or 80 percent along with the shuttering of about that fraction of our nation's banks. Yes, unemployment would rise as hundreds of thousands of formerly well-paid brokers and bankers lost their jobs; but at least they would no longer be extracting wealth at our expense. They would need to be fed, but that would be a lot cheaper than keeping them in the luxurious conditions they're enjoying now. Even Bernie Madoff costs us less in jail than he does on Park Avenue.
Alas, I'm not being sarcastic. If you had spent the last decade, as I have, reviewing the way a centralized economic plan ravaged the real world over the past 500 years, you would appreciate the current financial meltdown for what it is: a comeuppance. This is the sound of the other shoe dropping; it's what happens when the chickens come home to roost; it's justice, equilibrium reasserting itself, and ultimately a good thing.
I started writing a book three years ago through which I hoped to help people see the artificial and ultimately dehumanizing landscape of corporatism on which we conduct so much of our lives. It's not just that I saw the downturn coming—it's that I feared it wouldn't come quickly or clearly enough to help us wake up from the self-destructive fantasy of an eternally expanding economic frontier. The planet, and its people, were being taxed beyond their capacity to produce. Try arguing that to a banker whose livelihood is based on perpetuating that illusion, or to people whose retirement incomes depend on just one more generation falling for the scam. It's like arguing to Brooklyn's latest crop of brownstone buyers that they've invested in real estate at the very moment the whole market is about to tank. (I did; it wasn't pretty.)
Now that the scheme we have mistaken for the real economy is collapsing under its own weight, however, it's a whole lot easier to make these arguments. And, if anything, it's even more important for us to come to grips with the fact that the system in peril is not a natural one, or even one that we should be attempting to revive and restore. The thing that is dying—the corporatized model of commerce—has not, nor has it ever been, supportive of the real economy. It wasn't meant to be. And before we start lamenting its demise or, worse, spending good money after bad to resuscitate it, we had better understand what it was for, how it nearly sucked us all dry, and why we should put it out of our misery.
Chartered Corporations
Back in the good ol' days—I mean as far back as the late middle ages—people just did business with each other. As traveling got easier and people got access to new resources and markets, a middle class of merchants and small businesspeople started to get wealthy. So wealthy that they threatened the power of the aristocracy. Monarchs needed to come up with a way to stabilize their own wealth before the free market unseated them.
They invented the corporate charter. By granting an exclusive charter, a king could give one of his friends in the merchant class monopoly control over a region or sector. In exchange, he'd get shares in the company. So the businessperson no longer had to worry about competition—his position at the top of the business hierarchy was locked in place, by law. And the monarch never had to worry about losing his authority; businesses with crown-guaranteed charters tend to support the crown.
But this changed the shape of business fundamentally. Instead of thriving on innovation and progress, corporate monopolies simply sought to extract wealth from the regions they controlled. They didn't need to compete, anymore, so they just sucked resources from places and people. Meanwhile, people living and working in the real world lost the ability to generate value by or for themselves.
For example: In the 1700s, American colonists were allowed to grow corn but they weren't allowed to do anything with it–except sell it at fixed prices to the British East India Trading Company, the corporation sanctioned by England to do business in the colonies. Colonists weren't allowed to sell their cotton to each other or, worse, make clothes out of it. They were mandated, by law, to ship it back to England where clothes were fabricated by another chartered monopoly, then shipped back to America where they could be purchased. The American war for independence was less a revolt against England than a revolt against her chartered corporations.
The other big innovation of the early corporate era was monopoly currency. There used to be lots of different kinds of money. Local currencies, which helped regions reinvest in their own activities, and centralized currencies, for long distance transactions. Local currencies were earned into existence. A farmer would grow a bunch of grain, bring it to the grain store, and get receipts for how much grain he had deposited. The receipts could be used as money—even by people who didn't need grain at that particular moment. Everyone knew what it was worth.
The interesting thing about local, grain-based currencies was that they lost value over time. The people at the grain store had to be paid, and a certain amount of grain was lost to rain or rodents. So every year, the money would be worth less. This encouraged people to spend it rather than save it. And they did. Late Middle Ages workers were paid more for less work time than at any point in history. Women were taller in England in that era than they are today—an indication of their relative health. People did preventative maintenance on their equipment, and invested in innovation. There was so much extra money looking for productive investment, that people built cathedrals. The great cathedrals of Europe were not paid for with money from the Vatican; they were local investments, made by small towns looking for ways to share their prosperity with future generations by creating tourist attractions.
Local currencies favored local transactions, and worked against the interests of large corporations working from far away. In order to secure their own position as well as that of their chartered monopolies, monarchs began to make local currencies illegal, and force locals to instead use "coin of the realm." These centralized currencies worked the opposite way. They were not earned into existence, they were lent into existence by a central bank. This meant any money issued to a person or business had to be paid back to the central bank, with interest.
What does that do to an economy? It bankrupts it. Think of it this way: A business borrows 1000 dollars from the bank to get started. In ten years, say, it is supposed to pay back 2000 to the bank. Where does the other 1000 come from? Some other business that has borrowed 1000 from the bank. For one business to pay back what it owes, another must go bankrupt. That, or borrow yet another 1000, and so on.
An economy based on an interest-bearing centralized currency must grow to survive, and this means extracting more, producing more and consuming more. Interest-bearing currency favors the redistribution of wealth from the periphery (the people) to the center (the corporations and their owners). Just sitting on money—capital—is the most assured way of increasing wealth. By the very mechanics of the system, the rich get richer on an absolute and relative basis.
The biggest wealth generator of all was banking itself. By lending money at interest to people and businesses who had no other way to conduct transactions or make investments, banks put themselves at the center of the extraction equation. The longer the economy survived, the more money would have to be borrowed, and the more interest earned by the bank.
Financial Meltdown
Which is pretty much how things have worked over the past 500 years to today. So what went wrong? Nothing. The system worked exactly as it was supposed to. The problem was that after America's post WWII expansion, there was really no longer any real growth area in the economy from which to extract wealth. We were producing and consuming about as much as we could. Almost no commercial activity was occurring outside the corporate system. There was no room left to grow. Sure, outsourcing, lay-offs, and technology created some efficiencies, but wars, rising costs of health care, and exchange rates essentially offset any gains.
Making matters worse, all that capital that the wealthy had accumulated needed markets—even fake markets—in which to be invested. There was a ton of money out there—just nowhere to put it. Nothing on which to speculate.
The dot.com boom seemed to offer the promise of a new market, but it fizzled almost as quickly as it rose. So speculators turned instead to real assets, like corn, oil, even real estate. They started investing speculatively on the things that real people need to stay alive. What real people didn't understand was that there is no way to compete against speculators. Speculators aren't buying homes in which to live—they are buying houses to flip. Speculators aren't buying corn to eat or oil to burn, but bushels to hoard and tankers to park off shore until prices rise. The fact that the speculative economy for cash and commodities accounts for over 95% of economic transactions, while people actually using money and consuming commodities constitute less than 5% tells us something important. Real supply and demand have almost nothing to do with prices. We do not live in an economy, we live in a Ponzi scheme.
Luckily for us, the banks, and the speculators depending on them, made a bad wager: they bet on our continuing capacity to provide a reality on which to base their highly leveraged schemes. We just couldn't do it. They put us between a rock and a hard place. With George W's help, they sold us on the notion of home ownership as a prerequisite to the American dream. And they created a number of loan products which made it look as if we could actually afford over-priced homes. The banking industry spent hundreds of millions of dollars lobbying for laws making bankruptcy difficult or impossible for average people to accomplish—while simultaneously selling average people loans that they would never be able to pay back.
The banks didn't really care, anyway, since they never meant to keep these loans. They simply provided the cash to mortgage companies, who then packaged the loans. In return for putting up the original cash, the banks also won the right to underwrite the sale of those mortgage packages to investors—investors like pension funds, retirement funds, or you and me. Get it? The banks get all the interest, but we put up all the money. Our retirement accounts and pension funds invest in the very mortgages that we can't pay back. The bank collects any interest, playing both sides of the equation but responsible for neither.
And when the whole scheme begins to break down, what do we do? We try to bail out the very banks that created the mess, under the premise that we need these banks in order for business to come back, since only banks can lend the capital required for businesses to flourish.
Yes, It is Wrong
President Obama may be smarter than most of us, but he's still attempting to rescue the very institutions that robbed us in the first place. He's not a socialist, as conservatives may be arguing, but he is a corporatist. Using future tax dollars to fund government job programs is one thing. Using future tax dollars to give banks more money to lend out at interest is robbing from the poor to pay the rich to rob from the poor.
As painful as it might be to watch, and as irritating as it might be to those with shrinking retirement savings, the collapse of the centralized corporate economy is ultimately a good thing. It makes room for a real economy to rise up in its place. And while it may be temporarily uncomfortable for the rich, and even temporarily devastating for the poor, it may be the fastest and least violent way to dismantle a system set in place for the benefit of 14th Century monarchs who have long since left this earth.
If the corporate supermarket chain's debt structure renders it incapable of stocking its shelves this spring, this may be the wake-up call that consumers need to finally subscribe to a Community Supported Agriculture farmer. If the former associate fund analyst at Lehman realizes that he is unable to get a job not just because his industry is contracting but because his work day creates no real value for anyone at all, he will be forced to learn how to do something that does. If an urban elite parent realizes he can no longer pay private school tuition for his kids, maybe he'll consider donating to public school the time he would have spent earning that tuition.
In short, the less we are able to depend on business-as-usual to provide for our basic needs, the more we will be forced to provide them for ourselves and one another. Sometimes we'll do this for free, because we like each other, or live in the same community. Sometimes we'll exchange services or favors. Sometimes we'll use one of the alternative, local currencies coming into use across the country as Central bank-issued currencies become too hard to get without a corporate job.
Deprived of centralized banks and corporations, we'll be forced to do things again. And in the process, we'll find out that these institutions were not our benefactors at all. They were never meant to be. They were invented to mediate transactions between people, and extract the value that would have passed between us. Far from making commerce or industry more efficient, they served to turn the real world into a set of speculative assets, and real people into debtors.
The current financial crisis is the best opportunity we have had in a very long time for a bloodless revolution against the faceless fascism under which we have been living, unaware, for much too long. Let us seize the day.
(UPDATE: "Hack Money, Hack Banking" by Douglas Rushkoff, the March 20 follow-up to "Let It Die," is available here.)
Longtime Arthur columnist Douglas Rushkoff has just finished his life's work, "Life Inc: How the world became a corporation and how to take it back," to be published June 2, 2009 by Random House. (Pre-order info: Amazon). His live talk radio show, Media Squat Radio, airs Mondays 7-8pm EDT on WFMU. Streams at www.wfmu.org and iTunes.
Previous Rushkoff columns on the economy:
"No Money Down" (Arthur No. 31/Oct 2008)
"Riding Out the Credit Crisis" (Arthur No. 29/May 2008)
http://www.arthurmag.com/2009/03/16/let-it-die-rushkoff-on-the-economy/
http://snipurl.com/egcnt