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February 07, 2008

The brave new world of finance-4: From social being to consumer

(For previous posts in this series, see here.)

In the last post, I suggested that sending out checks for $600 to each taxpayer, especially those who don't need it, and then encouraging them to waste it, hardly seemed like a coherent economic plan. Such a policy can only be understood as a subsidy to the business sector disguised as a benefit to individual taxpayers. We are merely conduits through which money is given by the government to Wall Street.

It was not always the case that governments responded this way. The US has met greater social and financial challenges before and responded quite differently, most notably the WPA (Works Progress Administration) program, begun in 1935 to get the country out of the Great Depression of 1929. "[T]he WPA provided jobs and income to the unemployed during the Great Depression in the United States. The program built many public buildings, projects and roads, and operated large arts, drama, media and literacy projects. It fed children, redistributed food, clothing and housing…About 75 percent of WPA employment and expenditures went to public facilities and infrastructure, such as highways, streets, public buildings, airports, utilities, small dams, sewers, parks, city halls, public libraries, and recreational fields. The WPA built 650,000 miles of roads, 78,000 bridges, 125,000 buildings, and 700 miles of airport runways. Seven percent of the budget was allocated to arts projects, presenting 225,000 concerts to audiences totaling 150 million, and producing almost 475,000 pieces of art."

But those were days in which the collective good was more valued. Can you imagine that they even thought that spending money to provide cultural enrichment to the general public was a good thing? How quaint! Nowadays, we sneer at such an approach. What is considered good is not to have people be able to go to a library or a park or to enjoy a concert or play, but to get them to go to shopping malls. Nowadays, people are urged to not see themselves as part of a community, a social fabric, a collective. We are taught to see ourselves as 'consumers' whose only purpose is to accumulate private goods. When did that strange word 'consumer' come into vogue as a means of describing people? Its popularity is a symptom of how we are expected to see ourselves as merely voracious organisms, a species of bacteria, whose purpose is to eat up products to make the business sector happy. These days the purpose of a 'stimulus package' (as it is euphemistically called instead of the more accurate 'let's all waste money together' plan) is to serve as a subsidy to business. The government wants people to use the money to buy junk they don't need.

The notion that I, as an individual, have an obligation to spend money to 'stimulate the economy' strikes me as insane. I do not have to do anything of the sort. I have no obligation to goose up the economy by spending myself into the poorhouse, just because it is good for the stock market. As I see it, my obligations are to work productively, be a good citizen, serve my community, live within my means, and save for my family and the future – the kinds of things that Benjamin Franklin would have approved of. It seems blindingly obvious to me that the less I spend on unneeded goods and services, the better it is, both for my own financial health, the health of the community, and the long-term health of the planet. And yet, every muscle of government and business propaganda seems to be aimed at convincing people of the opposite. In a way one can understand that. When one is trying to convince people to so something that goes against common sense, one has to pull out all the propaganda stops. Thus the news media report with approval, and even glee, if people go on shopping sprees at Christmas. They are thrilled to tell us about people maxing out their credit cards buying gifts for all and sundry. They are downcast if people decide not to spend money they can't afford.

The government is even being urged to call the $600 check a 'bonus' rather than a 'tax rebate' since studies indicate that people think of a bonus as 'free money' and are thus more likely to spend it, whereas a rebate is seen as your own earned money being returned to you, and is thus more likely to be saved.

The sad thing is that some people have actually bought into this notion that their proper role is to serve as engines to drive the consumer economy. In interviews, I hear people actually blather on about how they feel they should immediately spend their $600 refund check so that the economy benefits. They have swallowed the whole bogus story, hook, line, and sinker.

It seems clear to me that we have ceded control of the economy to the worst elements of the financial world, by taking it away from those who see it as serving the long-term well-being of people by encouraging sound business practices, and handing it over to people whose main goal is use money to make money, a financial pyramid scheme that depends upon the collusion of the government, a few big industries, and the financiers and other money people of Wall Street. We see now the government essentially using the money of ordinary people to bail out (and thus essentially reward) the scandalously risky behavior of the financial sector that has been driven by greed.

British comedians John Bird and John Fortune show in this satirical interview how the banking and finance sectors recklessly siphon away people's money for their private benefit, confident that if things go badly wrong (as they have) the government will bail them out using public funds. The Northern Rock they refer to is the big British Bank that got into trouble due to the current subprime mortgage crisis and had to be bailed out by the British government.

Another example of how the government's priorities are to maintain the profits of a few at the expense of the financial health of the many can be seen in its attitude to single-payer health insurance plans. There is absolutely no question that this would be not only provide overall better health services to the public at lower costs, but would also be hugely liberating for business. (See here for earlier posts dealing with this issue.) The employer-based health care system has to be the biggest albatross dragging down American business competitiveness. And yet, the stranglehold that the health insurance, pharmaceutical, and medical industries have on our government, and the huge profits made by them at everyone else's expense, means that the current system continues without even a serious challenge to its existence, even as the economy gets dragged under. The ruthlessly exploitative health care industry has been helped in their efforts to preserve their lucrative cash cow by the Villager propaganda, endlessly repeated, that America provides the Best Health Care in the World and that Americans would never support a single-payer system. These are all completely unjustified assertions, but they are repeated unquestioningly.

Next: The rise of the 'bubble economy'.

POST SCRIPT: Flight of the Conchords

Those two wacky musical comedians give a quick summary of the Lord of the Rings.


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Comments

Have you seen the story of stuff?

http://storyofstuff.com/

Nothing earth shattering or particularly new, but all put together in a way that paints a very disturbing picture.

Posted by Shruti on February 7, 2008 08:33 AM

Some trivia for you: one of those wacky musicians actually played an elf (with a speaking part!) in the film.

Posted by Nicole on February 7, 2008 09:04 AM

Mano,

Your idea of the obligations incumbent upon a good citizen, is dangerously similar to the much but unjustly reviled middle class or bourgeoisie ideal. I am surprised to see this coming from you, as you as a non-status quo'ist in the best tradition of mid-20th century post-nationalist idealists, are "not supposed" to support middle-class ideals! Not that I care, because I know know you well enough, you are not doctrinaire in the least and value reason, equity, and compassion above all. So I am happy that that you advocate moderation, and good citizenship in the tradition of thinkers past - the Aristotlean Golden Mean, and the simple, profound, and gentle ethics of Tiruvalluvar in the Tamizh classic Tirukkural.

Posted by kural on February 7, 2008 11:51 AM

Kural,

You are right, I am in many ways a traditionalist!

Posted by Mano on February 7, 2008 03:52 PM