Leeches on Leeches
There is an old, mythological belief in the nature of the universe that goes something like this: there is a World Turtle that supports the earth on its back. The myth suggests that this turtle rests on the back of an even larger turtle, which itself is part of a column of increasingly large world turtles that continues indefinitely (i.e., “turtles all the way down”). It embodies the idea of a fractal (self-similar) infinite regress. The more you dig into it, the more you find turtles.
The Covid-19 outbreak seems to have exposed something similar about the world economy. It turns out to be mainly comprised of leeches on leeches. At every level, every leech has a leech feeding on the its back. Way down, at the bottom of the stack, are key workers and indispensable employees, whose blood is feeding the entire stack of leeches, that are feeding upon leeches.
So much of the economy is made up of what economists might call “unearned income”. Things like rents, in a market where rents ought to be falling, stay high. Interest charges are undiminished, if not increasing. It turns out that most working people don’t spend the bulk of their money on buying things necessary for survival. Most of their income is handed over, in tribute, to wealthy people.
The thing about unearned income is that it’s…well…unearned. You have no entitlement to it, by dint of having earned it. It’s a privilege. Yet those incomes, perhaps uniquely among incomes, have not collapsed suddenly, due to everyone staying home. Those grasping hands are still held out, in the lively expectation of tributes to come.
The stock market has been revealed to be made of nothing very substantial. Billions of dollars’ worth of value can evaporate in an afternoon. If that is even possible, you must wonder what that value was made of. Smoke? Vapour? Confidence? What the hell is confidence? It’s a state of collective mind. You can’t hold it or eat it. It’s completely intangible, like an idea.
Asset values, similarly, also lack substance. They seem to represent nothing more than some numbers somebody made up. Yet, even though asset values are objectively plummeting, rents are not. With money now available at record low interest rates, your mortgage interest rate, your overdraft charges and your credit card interest haven’t budged one iota. In fact, all the government “relief” schemes announced, to date, are just vehicles for increasing the already out-of-hand levels of global debt that already existed, before there was a virus. If you don’t pay the interest on the debt directly out of your personal income, you’ll be paying it out of your taxes for decades to come.
Does the moral obligation to repay debt exceed the moral obligation to keep people alive and help them to survive? There is no economy, if everyone’s dead. The economy is supposed to serve the people, not the other way around. Debt is just a game of intimidation and shame. It relies on you wanting to maintain your reputation and good standing as a trustworthy person, to work. Well, if nobody can pay their debts or their rents, then nobody is any more trustworthy than anybody else. The shame factor fails.
That’s why now, when billionaires are posting on Instagram from the safety of their private Caribbean islands, or extravagant ocean-going yachts, while begging for government handouts to save their enterprises, and simultaneously firing all their workers, without pay, the moral case to keep paying these leeches on leeches is very, very tenuous. The stronger case is for global debt cancellation — a clean slate from which we can rebuild. Coupled with a universal basic income, we might have some chance of recovery. While we keep bleeding to feed the leeches, we can’t.
Having seen what happens, repeatedly, in times of crisis, why would we let markets decide anything? Far from providing the optimum outcomes for humanity, we see craven volatility and irrational herd behaviour, as investors try (usually in vain) to maintain their unearned income streams and personal net worth. We know, now, that net worth has far more to do with how many people you save from dying than what we previously used as a yardstick.
Right now, we’re overrun with hoarders, profiteering spivs, crony mates and price gougers. Leeches feeding on leeches. Every one of them is looking for a new ruse to milk dying and frightened people of their last dimes. Governments are being lobbied hard, like never before, for corporate exemptions, special pleading and their own profiteering agendas. There are many bad actors.
It’s an unedifying spectacle. When Boeing, whose order book is bare and global fleet of planes virtually grounded, won’t give up equity for cash, you know something is insanely wrong.
Will anything substantially change? I have no idea. If it doesn’t, I wonder what it’s going to take to shake off the unsustainable tower of leeches that the global economy has become. I don’t see how we can go forward, doing more of the same, but that appears to be the overwhelming instinct, in inexorable operation.
Everyone thinks that normality will soon be restored. Normality is gone forever.
