Too big to fail: feudalism, socialism and other demons of capitalism

(From my examiner.com column)

There is a lot of talk these days about how the $700 billion bank bailout that passed in 2008 was a step toward socialism, that we were effectively nationalizing the banks. The "big bad" government would own our savings and our mortgages.

In fact, at the end of last year, according to Fox News, RNC Vice Chairman James Bopp, Jr., tried to get Republicans to sign on to a resolution that said, in part, that bailouts and other federally funded stimuli are:

"...moving our free-market based economy another dangerous step closer toward socialism."

(The GOP continues to find endorsers of the pending resolution. It is scheduled to be voted on next week by party delegates attending the RNC Winter Meetings in Washington, DC.)

But to move toward socialism in this country would take a lot more than having some ownership in banks and automobile companies. It seems to me that it is easier to view last year's final money grab by the outgoing administration as a slide back to feudalism, rather than a leap ahead to socialism.

Here's why I say that.

When, in the course of human events, our forebears revolted and evolved the radically progressive democratic republic we call home, they only sidestepped the troubling system of King George and the lords who supported and served him. Rather than allow a ruler to disseminate what was his will, the United States of America was to be a nation that was run according to the will of the people. To insure that no one branch of government superseded the other, the Founding Fathers intelligently installed a system of checks and balances.

We do not work to serve the king. We do not work to serve the lord of the manor. We work to better our own lives and the lives of our neighbors.

Let me take you back to that time, though, when the king counted on his loyal lords to give tributes and defend his lands. In return, the king ensured that those who supported him were all in alliance. If one of the fiefdoms chose to no longer support the king, His Royal Highness could entreat neighboring lords to subdue the free lance, in exchange for treasures and more land to call their own.

Likewise, if the kingdom was losing land to an invader, and his own lords were failing in their common defense, he would send the King's Army out to help them. If the fight was really desperate, the king would send an emissary to another kingdom, to ask for their help with men and money. In this way, wars were fought in feudal Europe for hundreds of years.

The patronage period of the Renaissance was only a different form of the same thing. The merchant republics that gave birth to the Italian Renaissance were little more than oligarchies, an early, quite undemocratic, form of capitalism. Someone with money made your life possible, but it was still a class society where nobility got ahead and the peasants suffered.

Indeed, according to Wikipedia's entry for Renaissance/Historiography, "many historians now point out that most of the negative social factors popularly associated with the 'medieval' period – poverty, warfare, religious and political persecution, for example – seem to have worsened in [the Renaissance] era."

The royal courts of Europe in the closing centuries of the last millennium were just an extension of that oligarchy. The royalty of the time was so puffed up about the Renaissance that their ancestors created, that they did not notice the seething peasantry they were crushing under their pointy shoes. They told them to "eat cake."

Even today, there are those who argue that in order to get Americans working, you have to make sure the companies that employ them get all kinds of breaks, like offshore tax shelters, like not having to pay them their employees a living wage. The trickle-downers basically echo that old capitalist chestnut, "What's good for GM is good for America."

Companies that are "too big to fail" are just modern day fiefdoms. Giving them our tax dollars, and the money we have gone to China to borrow, is just a new way for the king to save his realm. It is not socialism. It's just a perpetuation of the status quo.

-PBG

The Last Money Grab

Wall Street and Main Street Lay Siege to Easy Street

Best not to get stuck on Easy Street in these economic times.

It may seem oxymoronic to think of Easy Street and Wall Street as developments on the opposite sides of an economic rift, but that is just what is being created with this economic earthquake. While denizens of both may be sweating the distance of their fall, those on Easy Street, by implication, are really confident they have found a way to come out okay.

Those on Main Street, meanwhile, run around like town folk in a spaghetti western when the bad guys ride into town, ducking into clapboard buildings, horse troughs and rain barrels, lest the meteoric fall of the economy crush them under its growing shadow. If they knew what was good for them, they would scramble to higher ground, take buggies and coaches to the gates of Easy Street and rattle the gilded cage.

The Main Streeters wouldn't be alone. At the gate on the other end of Easy Street are the folks from Wall Street. They are going through a ring of keys, desperately trying each one in the gate's chained padlock, their hands sweating while they yell at each other and shake their heads.

"It's key number two!"

"No, it's key seven!"

"I say one! Key number one!"

It will take the traders a while to realize that the bankers on Easy Street have changed the locks, and they did it with the help of congress and Hank Paulsen. "Suspicion falls ... on the objectivity of Paulsen who is a former merchant banker." - October 3, 2008, canberratimes.au.com

"A lost cause."

If we were worried before about a growing disparity and the shrinking of the middle class, we should really be worried now. We lost 159,000 jobs in September, the worst monthly jobless report in five years. According to the NY Times, "with the job market now swiftly deteriorating and fear dogging the financial system, what optimism remained has given way to the broad assumption that 2008 is a lost cause."

And with the Fed contemplating another rate cut, there is little incentive to save. Not that it matters, since over 6% of us are not working and making money anyway.

So the bankers will take this money that congress is approving and the president will sign, go inside their ivory towers and shut the gates on Easy Street and the American Dream. "...banks may continue to hoard their dollars regardless of a rescue package from Washington, depriving businesses of capital needed to expand," the Times article goes on to say. If that's the case, what's the point of the package, except that Bush and Cheney will have succeeded in bankrupting the country of more than just its principles?

I wonder if the lamest lame duck administration in my lifetime will be forced by the courts to sell their own personal assets to help settle this debt and calm the markets. Yeah. Right. They'll be locked safely away, while Main Streeters and Wall Streeters alike slowly go broke, starve and die. Brother, can you spare grande mocha latte?

-PBG