Breaking a Key Stranglehold
Suppose we heard not of stock-value/market fluctuation, but of a huge crop failure, say something like 30% of production wiped out. How would that translate? It wouldn’t be statistical. It wouldn’t be entirely subjective. We would fathom, anticipate, meet with and personalize tangible objective problems — like availability and affordability of food commodities and, more broadly, food security. Understanding and solving the problem would be direct and physical, involving farm, farmer and crop. Recovery would require comprehensive measures over a number of crop cycles. No mere words or statistics of government agency or politician could mask the reality or turn overnight famine into bumper crop.
Compare this with this swatch of typical news about stocks and market:
- Is There a Financial Time Bomb in Sight? (Washington Post November 14, 2018)
- Stocks Crash: The Dow Fell Over 500 Points Today, (Now This Politics, November 19, 2018)
- Dow, buoyed by Tech Stocks, Climbs Back From Big Loss, (Washington Post, December. 10, 2018)
- Federal Reserve Cuts Outlook for U.S. Economy; Stocks Plunge (Washington Post, December 19, 2018)
- Companies Buying Back Their Own Shares is the Only Thing Keeping the Stock Market Afloat Right Now, (CNBC, July 2, 2018)
- Market Stages One of the Worst Christmases Ever, (Washington Post, December 24, 2018)
- Dow Climbs as Fed Chief Jerome Powell Signals Patience on Rate Hikes, (Washington Post, January 4, 2019)
What governs this second world in defiance of the first? If the rules of the second world could govern the first, some priest, like the head of the Federal Reserve, City of London or World Bank, could pronounce some incantation and, the next thing we know, headlines celebrate booming crop production. But the world of stock market today is a market of trading debt — based on fictitious as well as real value, with or without productive assets. The rule of production is to produce the means of living for a population. The rule of contemporary finance is to keep confidence in the game going, so that schemers can unload increasingly bad debt on some sucker before the game is called to a halt.
The underlying tensions of managing this scheme, both in fact and in our perception of it, will sometimes warp the containment of news reporting, so that a slip of the tongue, so to speak, will give the game away, as in the following sampling:
- [Janet] Yellen [Chair of the Board of Governors of the Federal Reserve System from 2014–2018] Warns of Gigantic Holes in the System (CNBC, December 11, 2018)
- Here We Go Again: Our Double-bubble Economy (Seeking Alpha, June 14, 2018)
- How Financialization is Starving Manufacturing, (Industry Week.Com, September 21, 2018):
- Economic Growth is Slowing All Around the World, (Washington Post, December 25, 2018)
“Supporters of financialization make the case that financialization is the final or perfect form of free-market capitalism where profits are realized the quickest, costs are minimized, and the government is not allowed to interfere in the process. But financialization is all about short-term strategies to make fast profits. The short-term strategy effort has been so successful that the financial sector grew as manufacturing and other sectors have declined.”
- from How Financialization is Starving Manufacturing
How does this play out in the lives of ordinary people? Austerity — a rationing out of scarcity — is the economic cost, squeezing the labor, livelihood and means of living for households, schools and work places. But austerity also renders a social cost: if your means of living is squeezed hard enough, so is the lifeblood of your mind and thinking. Try warning someone who is suffocating under this about a financial collapse, ecological disaster or nuclear war coming in the next year. If pressed hard enough, fighting for your existence is reduced to what’s happening at the moment.
Suppose, in spite of this, and without broad support, we pass laws that we need — for health care, education, work or environment — without underwriting them with a proper economic overhaul? It better work, because if it comes undone, with nothing but competing partisan mouths attempting to crisis-manage to their advantage, then next thing we’ll have is backlash — organized and unorganized. And every attempt to label it as right wing or anarchist will be swept away as self-servingly falsehood.
Study any modern eruption — like the Yellow Vests revolt in France and Brexit revolt in England — in their social context. We’ll find a diversity of people driven into common causes for immediate relief, becoming playgrounds for ambitious, maybe unsavory, leaders to wrestle for control. Even a Hitler would not have been possible if austerity and ungovernable conditions had not ruled the streets of the Weimar Republic, twisting and exploiting the anxieties of ordinary folks.
We have danced all around this, hampering our minds and accomplishments, throughout the period since we bailed out the too-big-to-let-fail banking system, in defiance of existing laws. A recent conversation with a legislative director for a congressional office — one who was unusually generous and careful in working with me over a twenty-minute conversation — confirmed the following parts of what’s needed in any sound economic work plan:
- enact a development bank system to underwrite new and improved infrastructure and means of production
- modernize (or rebuild) infrastructure and means of production to overcome a physical deficit accumulated over several decades
- audit and segregate the financial system employing existing laws and reenactment of the New Deal era Glass-Steagall Act
With this package, we can organize the work of our population towards meaningful social missions and objectives; energize the entire range of employment from classroom, lab and retail store to machine tool shop, farm, music hall and park service; and generate a capacity for full employment of our people across the board.
How is this to happen? I was candidly informed that Congress alone can’t do it. First of all, even some of our better representatives feel that we’re stuck with the system that we have. They can’t work their way past that and existing budgets. Second, there’s a big gravitational pull to kowtow to donors. The few champions of a proper solution are hamstrung by such hampered colleagues. The only way out is — and these are not my words — to insert our popular component into government. But that democratic component of our democratic republic will be ineffective if it won’t concentrate on understanding the problem in depth, and drive a sustained and unwavering wedge to break the impasse on the measures outlined above.