Upside Down Financial Crisis
I had the misfortune to read an article by William Cohan in the New York Times. It was about the impending fiscal crisis. It was about how we all have to tighten our belts. It was awful, and a testimony to the upside down group think now dominating our debate about the budget.
It made me think the following:
It’s funny, or distressing depending on your point of view, to see how the financial crisis has morphed from a private sector implosion based upon egregious risk taking, into a public sector implosion based upon assumed entitlement overreach. That this entire episode began in the bowels of Wall Street banks and was fed by insane risk models built around orthodox economic theory is now glossed over. We have moved beyond that into a period of hand wringing and soul searching about unaffordable pensions and health care benefits we have lavished on ourselves – against the better wishes of those conservative voices who railed against social safety nets all along. This is their moment. This is their glorious opportunity to hack away at those awful social programs and to inject a good old fashioned dose of pre-Dickensian sensibility. We have traveled back in time to the Victorian era when writers like Samuel Smiles could produce a best seller – called “Self Help” – full of those beloved Puritanical virtues of individualism and self-reliance that the ruddily healthy rich always seem to want to foist on the poor, elderly, or sick.
Along the way we are supposed not to notice the desperation, the social unrest, and the oppressive poverty that characterized the society into which folks like Smiles poured their class ridden homilies.
We have returned to those days.
Or at least we run the risk of it.
The entire discussion has been turned upside down. Instead of an insistence on reflating the economy and instituting sufficient limits on the banks to prevent another melt down, we are going in exactly the opposite direction. We are lashing away at our own backs with a fury those religious zealots of yore must be proud of.
But we didn’t cause this problem.
Why is it that we should bear the entire brunt of the fix?
Why is it that we should listen respectfully to the credit agencies warning us of potential sovereign debt downgrades when these are the same people who sold illusory AAA ratings during the go-go bubble years? Are they not for sale any longer?
Why is it that the credit markets, fresh from destroying trillions of dollars of wealth, have the gravitas and experience to dictate how we deal with the current phase of the mess they created?
With respect to the much debated tax deal in Congress: why is it that we should accept a reduction in payroll tax, which is the source of revenue for Social Security, as a good compromise in order to get a “backdoor” stimulus when, [a] stimulus should be both front door and self evidently sensible, and [b] the lost revenue from the Social Security fund will surely come back to haunt us as further evidence of a crisis in the entitlement programs? Where, exactly, is the compromise in giving away the store?
And if I read one more story about fiscal responsibility by a writer who previously defended the Bush tax cuts I think I will have to scream. What nonsense is that? Defunding the government is a well known right wing agenda item. Grover Norquist and his fellow conservative advocates have been beating that drum for years. Anyone who went along with those tax cuts knew their impact. They were destabilizing. They were meant to be.
Add that attack on the safety net to the extraordinary appropriation of wealth by the top tier of income earners over the last three decades and the picture becomes clear. The transformation of America into a 1920’s style plutocracy is nearly complete. The remaining step is a final attack on entitlements.
Which is why it has become necessary for them to invert the conversation.
Those who look forward to plutocracy have decided that the public needs to be told, incessantly, that the root cause of our fiscal problems is the entitlement burden. A burden that, suddenly, we can no longer afford. The astonishing ferocity with which the right wing defended the Bush tax cuts for the very wealthy is a sign that they are well aware of the nature of the society they want to create. What saddens me is how quickly a consensus has been built around the inevitability of cuts to the safety net. Only a few or our more zany left wingers lined up in its defense. The so-called independent voters, those muddled thinking centrists who have no clear world view, have been quickly coerced into capitulation. With the center lost to communal action, what hope do we have of avoiding a return to the era when people like Samuel Smiles could lecture us all about the efficacy of self help?
In this upside down financial crisis those who caused the problem are those who will save us. The innocent will pay reparations to the villains. The CEO’s, bankers, lawyers, accountants, and other hangers on who constructed the toxic empire, whose irresponsibility has never been called to proper account, and whose disproportionate reward has skewed our social values as well as our incomes, are about to force us to settle for even less.
Apparently we are not entitled any longer.
They are.
How upside down is that?
