Debt slavery is a natural consequence of unregulated capitalism
Thursday, May 7, 2015
6:58 PM
This article began as a set of notes for a presentation I gave at the Up From Debt meeting organized by Washington CAN. http://washingtoncan.org/wordpress/5828/up-from-debt-march-14-2015-2/ [Link is no longer available]
Disclaimer: I am a member of the 1%. Instead of wealth or title, I inherited good health, a world class education, integrity, and a robust moral compass. I am here to tell you brutal truths, because truth is empowering, and because I am morally outraged at what has been done. A friend calls me a traitor to my class. I am in good company: Tony Benn, Ivor Montagu.
The economic and political plight in which we find ourselves is a natural consequence of unregulated corporate capitalism.
Let me tell you how that plays out.
The financial crisis did not just “happen”. It was done, and there are people who did it. They did it knowingly and for profit.
In the past, there were industrial magnates like Rockefeller and Carnegie, who amassed great wealth while the people struggled. Today, it is corporations and their masters, together with the heirs of earlier fortunes, who have wealth and power.
A corporation has no morals. A corporation has no empathy for people who are affected by its actions. A corporation’s only goal is to enrich its bosses and shareholders. Corruption and pollution are simply ways to reduce cost; economists call this an externality.
If a person behaved like a corporation, we would call them dangerously insane.
Let’s talk about financialization. Along with corporatization, we have seen increasing control of the economy being concentrated in the financial industry (aka Wall St). Corporations’ share prices become subject to the opinions of financial analysts, who favor short term returns over long term sustainability. Corporations behave accordingly.
Every tangible asset has been mortgaged so that Wall St can take a percentage off the top of every piece of economic activity. Homes, commercial buildings, factories, tractors.
Now Wall St is allowed to trade in tangible goods on their own behalf, not just for their clients. They trade in metals, oil, rice, wheat, you name it. Market manipulation has become the rule rather than the exception. As an example, there is a law limiting the length of time that aluminum may be held in a warehouse, to prevent withholding supply to drive up the price. Wall St buys multiple warehouses and moves the aluminum between them, to defeat the law.
Wall St has become a place of illegal collusion in rigging markets. When a few institutions can manipulate market prices, and do so through collusion, it is no longer a free market, and such behavior is illegal. There is no market that I know of that is not manipulated in this way. Libor, forex, rate swaps, tangibles, it goes on.
The housing bubble and the resulting mortgage crisis was the tipping point where the fraud became part of the real world that the rest of us live in, and it exposed the fragility of the fraud-based financial system.
The federal government has chosen not to bring criminal charges against individuals or corporations, instead settling for large financial settlements (9 or 16 billion). However these are a percentage of the profits made by those institutions, and in the end banks are very good at not actually paying all that money. At the same time, the government is pumping money into these banks to keep them afloat, in fear of the entire system collapsing.
Wall St institutions are corporations (see immoral, above).
An investment advisor who deals with high net worth individuals (100 million and up) said that 90% of her clients worked in the financial industry. The big names like Gates, Buffet, Zuckerberg are the exceptions. Almost all the money is going to the bosses of Wall St.
It is hard to comprehend the degree of inequality that exists. These are people who have never been to a grocery store, never flown in a commercial plane, never driven a car except for sport. There may be some who have never set foot in a public space.. Most of these are the ones who inherited wealth, but even some newly-made billionaires share this trait.
What to do:
At every opportunity, fight for equality: minimum wage, unions, benefits, progressive taxation, corporate taxation.
Deal with local banks or credit unions instead of big banks.
Campaign to get your city to move money out of big banks. After all, they are not in fact safe as claimed.
Think local. Your neighbors might help you. Nobody else will.
If you are in a foreclosure fight with a bank, recognize that you are in an abusive relationship. Everything they do has all the characteristics of abuse. You can’t win, and trying to stop them hurting you won’t work. Get out as soon as you can.
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