The implosion of this country’s financial system reveals that the United States is, indeed, an economic plutocracy. We have also seen that the ruling horde lives, essentially, in a different world from that which most Americans — and other people — inhabit.
What we have witnessed is, on one hand, are men who publicly extol the virtues of the free market — that is, until the system they cared about only to the extent that they could rig it came crashing down. Then, their true colors came into view: Their behavior is ruled by what Gary North has called "subsidy madness." That is to say, when they made unwise decisions or allowed their greed to get the better of them and the inevitable results followed, they wanted — no, expected and demanded — to be bailed out.
Really, they are no different from all of those ne’er-do-wells who expect that, if they blow their paychecks, they will be rescued by parents, spouses, other "significant others," or the government. And the only thing that distinguishes those investment bankers and their political patrons — who include the Presidential and Vice Presidential nominees of both major parties, Secretary of the Treasury Paulson, Federal Reserve Bank Chairman Bernanke and every member of Congress, save Ron Paul and possibly a handful of others — from "welfare queens" are their expensive suits and the BMWs that they don’t want to give up.
(Recently overheard: What’s the difference between a pigeon and an investment banker? Only one can still leave a deposit on a BMW.)
A definition of "plutocracy" implies the aloofness of that class of people from the hoi polloi. This they have shown by their recent behavior and the bidding Paulson and any number of politicians have been doing for them. The most obvious current example of this is, of course, the bailout plan they want to ram down taxpayers’ throats. (Section 2 alone should give pause to anyone who cares about liberty.) It’s as if their definition of "capitalism" is "the military-corporate welfare system."
One of the best possible outcomes of a situation in which we now find ourselves is, aside from the opportunity to let market mechanisms purge the greedy and imprudent, the opportunity to see who is included in the plutocracy I’ve been describing. In normal (for them) times, they are a "shadow" government, operating out of sight. Even most elected officials, for all of their visibility, are part of that cohort because nearly every one of them is doing the bidding of one of Gary North’s subsidy addicts. And most of their decisions, like the ones to print more money and loosen lending standards, are not noticed, much less protested until people feel it in their pocketbooks. And, as we are seeing, by then it’s too late.
Another outcome for me is that I’m gaining some confidence in the so-called "little people." Why? From conversations at the bus stop to commentary in the blogosphere, it’s becoming more evident that many, if not the majority, of Americans oppose the bailout plan. In fact, it seems they don’t want any scheme of the sort — even here in New York, which is already feeling the effects of bursting the FIRE bubble.
Most people may not understand the politics and economics, much less the thinking, behind the bailout plan. But they can see when they’re about to be dealt a bad hand, and they don’t want to be forced to play cards designed to keep the owners of the game from losing. Even if they can’t explain why, they know that the plan will raise their taxes and possibly prevent them from owning homes or sending their kids to college. They can see the barrels of the revolver pointed at them while the ones who made and cut the cards escape with the jackpot.
So, while it may well be that nearly all of us are subsidy addicts, at least to some degree, it seems that at least some of the so-called common people understand that the subsidies the financial industry has received, and will receive under the bailout plan, will make their own lives more difficult. What remains to be seen is how they will react if the companies that employ and insure them fall to the same fate as Bear-Stearns, Fannie Mae, Freddie Mae, Lehman Brothers, Merrill Lynch and Washington Mutual, but the government doesn’t rescue them. How will they react if they lose their jobs, businesses, homes and other assets as a result?
I find myself thinking of a lyric from Bob Marley’s "Them Belly Full:"
A hungry man is a angry man; A rain a-fall, but the dutty tough; A pot a-yook, but you no ‘nough; A rain a-fall, but the dutty tough. A pot a-cook, but you no ‘nough; A hungry mob is a angry mob
Either way, it doesn’t look good: Neither plutocracies nor empires (which are, more often than not, one in the same) ever end well. Even people who don’t know the words "empire" and "plutocracy" seem to understand that.
That’s more than can be said for Paulson or nearly any member of Congress — or for current Fed Chairman Bernanke or his predecessor, Alan Greenspan. May their motivations be brought to light, and may they see the light.