Wednesday, September 24, 2008


Question of the Day: If America is to adopt socialism ...

If America is to adopt socialism, why not have socialism for the poor, rather than for the rich? Why should American households that earn $50,000 a year subsidize Goldman Sachs partners who earn $5 million a year? —"Spengler" writing in "E pluribus hokum or When the gamblers bail out the casino"

"Spengler" is of course referring to the plan announced by George Bush to give the Treasury Department up to 700 billion dollars to buy from the banks all their subprime assets based on subprime mortgages and any other bad investments they may have made, while guaranteeing everybody's accounts in the money-market funds.

"Spengler" gives his answer—

Believe it or not, there is a rational explanation.... Part of the problem is that Wall Street, like the ethnic godfather in the old joke, has made America an offer it can't understand. The collapsing ... mortgage-backed securities market embodies a degree of complexity that mystifies the average policy wonk. But that is a lesser, superficial side of the story.

Paulson's dreadful scheme will become law, because Americans love their bankers. The bankers enable their collective gambling habit. Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino. Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole.

As usual "Spengler" gets it almost right but somehow manages to get it wrong. While his casino metaphor is apt after a fashion, I don't for a minute believe that the general public views the current economic situation in these terms. Yet it's true that the public holds attitudes and beliefs that may very well permit the greatest bailout of the rich in the history of the nation.

First, Americans do not love their bankers. Most Americans don't know any bankers and those who do often find the relationship somewhat strained.

What Americans do love is a notion of being rich that has been foisted upon them by the usual suspects: an assortment of moguls whose values and world-view are served to the public daily through their spokespersons—the politicians and the media. (The two groups are owned to the point of monopoly by the mogul class. In return for being owned these henchmen can expect to be excessively compensated. On their day off, rightwing preachers take up the slack—especially those preachers blessed with a TV or cable outlet. This is the basic organizational chart of American capitalism.)

In the capitalist Utopian vision the purpose of life is simple—to be rich. But I'm not talking here about what it really means to be rich. Most Americans don't know and aren't supposed to know about that. What I'm referring to here is an ideal, an ideal promoted to the society.

So in an attempt to answer "Spengler's" rhetorical question, let's take a look at "the rich," as they're presented.

Who are the rich?

Forbes has just released its list of the 400 richest Americans, but very few Americans will recognize more than a handful of the names on it. Instead, the public is given a chimerical vision of the class fed through occasional news items, opinions disguised as news, political speeches and the entertainment media.

The rich, as presented for public consumption, come to us in several varieties—

In the public mind there's not a securities trader, real-estate mogul or hedge-fund manager among them.

What this picture tells us is that any of us can be rich—whatever the truth of it.

By developing the negative of this image we2 are shown a picture of the poor, the other extreme of wealth. The poor are lazy and shiftless, born under a cloud and lacking in any talents that might allow them to rise above their station. There is some essential defect in them that will always keep them from being wealthy. Naturally we do not wish to identify with such people.

So laying aside the public's forgivable ignorance of the doings in the world of finance, my answer to "Spengler's" question is this: We of the "middle class" aspire to be rich—or at least to be permitted to display some of the trappings of wealth. And if the rich should need a helping hand, who are we to deny them? After all, any of us might find ourselves in their shoes someday.

Related posts
Appalling Commentary of the Day (10/21/05)
A note on understanding elites (9/03/07)
Welfare queens, homeowner queens and bailout queens (5/20/08)



1It's impossible to use a gender-neutral term here. Such individuals are always conceived to be men. [back]

2By "we" I mean the "middle-class" and by "middle-class" I don't mean much at all. Consider this oblique response to a question in WikiAnswers—

Q: How do the middle class and the working class differ?

A: middle class means the social and economic level between the wealthy and poor

In America we like to think of ourselves as "middle class" regardless of how poor we are. As reported by WKSU—

The National Center for Opinion Research says 36% of people earning less then $15,000 a year call themselves middle class.

That's more than a third of the people in poverty. We don't like to identify ourselves with the poor, no matter how blessèd the poor may be.


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