I think a lot about those early human societies, the very earliest ones. The first humans who realized they were thinking about their thoughts — how much that must have freaked them out. And when they realized, upon seeing people around them die, that they, too, were going to die. And the weather; and feeling rejected by the opposite sex; seeing mental illness and birth defects. It must have been terrifying. This is the "state of nature" Hobbes wrote about: where life was nasty, brutish and short. Poor early people. They did a pretty good job building systems around themselves to protect themselves from these things. They realized pretty quickly, it seems, that the biggest problems they face are not individual problems, but group problems. Sexual rejection was frustrating, but marauding hordes of enemy humans are much worse and more terrifying. In any case, banding together must have seemed the best solution. Besides terror, one drive likely pushed them towards that solution, and it is the one that we still can't shake, and which we share with all animals. It's an ability to measure our effort against our reward. Early humanity realized pretty quickly that pooling their efforts brought greater reward.
The effort/reward relationship is a defining one for humans, and all animals really. Our bodies and our minds wear down; we sense our own exhaustion and fatigue. We gauge the reward for that exertion accordingly; if we judge the reward insufficient, we reduce our effort. If it seems that an increase in effort is, indeed, giving us a greater reward, we may increase that effort (or, likewise, maintain their level of effort in recognition of the sufficiency of the reward.) It's a pretty important system. It's not only biological, either; it applies almost uniformly to our economic, emotional, and political lives. Input/output; effort/reward. It works.
Of the American GDP, if you trust the calculation of that figure, fully 70 percent is consumer spending. Since the 1970s, however, the American worker has not been seeing their income increase with their productivity. The leisure class, which is a racketeering class, has deftly engineered decades of productivity theft from the rest of us. But in order to keep us spending, they also lent us plenty of money. Much of Americans' debt is consumer debt — by some estimates, $9,000 per household of just credit card debt — debt that keeps the economy afloat, while ensuring that as little of the wealth we create comes back to us. Revolving debt — credit cards, as opposed to non-revolving debt, like car loans — is more than 30 percent higher than it was just five years ago.
Americans borrow too much, there's no doubt about it; but the abundance of available debt has made the price of durable goods — houses and cars, primarily — prohibitive to buy without huge debt financing. Couple that with the fact that we are not compensated according to our productivity — in other words, our income is not only not matching our productivity, but it is not even matching the growing cost of the things we are buying — and it is not surprising that we are all (well, except the people stealing from us) swimming in debt. Ask yourself — are Americans borrowing more because they are stupid? Or because they must? If that is a false dilemma, fine. Are Americans sinking themselves into debt so universally because they do not understand what they are doing? Or because they have little choice?
Even our public universities — created, remember, by a public trust, given public land granted tax breaks not by "the government" but by you and me — drive us into debt for our education. Public hospitals — given public money in the form of grants and tax breaks — drive us into debt for medical expenses.
This sore has been rubbed raw by the so-called credit crisis now hounding millions of American families. Predatory home loans with variable rates have forced an explosion in foreclosures, pushing families into the street. As these now-repossessed homes are snatched away by lenders, who will purchase them? Hopefully, other working and middle class families; more likely, speculators. It will be interesting to see what happens to those high-foreclosure neighborhoods (you can find a map of those neighborhoods here). Mass foreclosure and seizure, and selling at speculative prices sure seems like fast-tracked streamlining.
I eagerly await responses accusing me of inciting class warfare. There are all sorts of ways to respond to such claims — first of all, by pointing out that productivity theft has been well and repeatedly documented, secondly by making it very clear that there is already a class war going on, and it is being unilaterally waged by the racketeering leisure class against the rest of us — but there really is no need to. As we send our aged and infirm back into the workforce to make sure Paris Hilton never has to work a day in her life, and as we human animals see our effort and reward grow further and further apart, we can expect a (figuratively, I hope) violent correction of the economic system that has been imposed on us for the last 30 years or so, accelerated by the economic terrorism of "Reaganomics."
Effort and reward, it's important. The willingness of the racketeers to nickel and dime Americans wherever possible — I opened a $25 checking account at a bank two months ago. I didn't touch it, and now I owe the bank $60 — reveals their short-sightedness, and the dreadful bankruptcy of the modern American religion, which you could call "The Marketism." Dogmatic fundamentalists respond to any and all criticisms of the excesses of the ruling classes with bed-wetting and hand-wringing about the omnipotence of "the Market," a reified concept-cum-deity to whom they demonstrate childish, irrational fealty. Effort and reward in a debtor society become dangerously disconnected. But this does not mean Americans will go whistling into indentured servitude. As America stratifies into the lending class and the borrowing class, and as we work harder and harder only to hand what we earn over to our creditors — eventually, directly — more and more people will simply drop out of the system. They won't accept the increased effort for declining reward exactly because this is a human function and drive we cannot ignore.
The beautiful diversity of the US economy and the dynamic ability of American capitalism to create wealth are our greatest assets, and it is exactly these that are under assault by the leisure class-cum-lending class. Their goal, like the goal of their forebears in the Southern slave colonies, is elimination of meritocracy in favor of hereditary aristocracy. The concern is that the outrage of the millions of Americans thrown out of their homes, acting as a vanguard for the general American indebted class, overreaches. Debtors' revolts tend to be ugly matters, and their political expressions could end up causing irreparable damage to not only economic structures and institutions, but political ones as well.
Aristocrats have brilliantly drafted common people into their drive for aristocracy through this false religion, The Market. Reaganomics, in all its rent-seeking glory, was its crown jewel. It's time to repudiate it, find a sensible way to deal with America's debt, and return to Americans decades of stolen productivity. We can do it through redistribution — better yet, we can do it through collective bargaining. In any case, we need to something soon. As reward slips further and further from effort, we should fear being exposed, once again, to what the human animal, justly terrified and furious, is capable of in a state of nature.
Pedro / December 12, 2007 9:54 AM
You lifted this right off of a Hugo Chavez speech, right?
Were lenders shoving ARMs down peoples throats? No. People were clamoring for those loans to try to create wealth for themselves. You can blame the borrower for their naivete and for not reading their contracts.
You can also blame Bush for bailing the lenders out, certainly guaranteeing that this will happen again.