This quote says it all: "The people at the top were not willing to pay people at the bottom wages.."
Last edited Tue Jan 31, 2012, 10:26 AM - Edit history (1)
... but they were willing to lend them money."
Heard on NPR's Marketplace last evening:
Kai Ryssdal: There's reassuring news on the macro-economic personal finance front today. We learned this morning personal income rose in December by the biggest amount in nine months. And here comes the good part -- Americans saved almost all the extra money they brought home. That's no mean thing in a country where debt is all too familiar. Debt is, in fact, and has been, an American way of life. Louis Hyman is the author of a new book called "Borrow: The American Way of Debt." Thanks for being here.
<snip>
Ryssdal: Yeah, which gets us to, writ very large, the banking industry. Right? Depending on who you talk to, banks are either directly responsible for the freeflow of capitalism, and thus the economic glory that is America. Or it is a vampire squid on the face of humanity. (OP's comment: )
Hyman: Yeah. Either way it's a monster and it's impersonal, and it's treated as if it were something we can't control. ...
<snip>
The question is why do we let them have all our money to play with? Certianly in the last year -- with the rise of Occupy Wall Street -- you have an increased sense of, oh, people are concerned again about inequality. For me the essential question is: How did inequality produce indebtedness? And in the book I talk about how the people at the top were not willing to pay people at the bottom wages, but they were willing to lend them money.
<snip>
Audio here: http://www.marketplace.org/topics/economy/big-book/history-american-borrowing
That boils the entire economic crash down to one sentence like I've never heard. The 1% literally owns and recirculates the money - 99% are NOT paid, they're LOANED to. Amazing.
PuraVidaDreamin
(4,109 posts)It's short and sweet and even a tea bragger could understand it.
hfojvt
(37,573 posts)xtraxritical
(3,576 posts)that it was called "the company store".
Itchinjim
(3,085 posts)liberal N proud
(60,346 posts)xchrom
(108,903 posts)limpyhobbler
(8,244 posts)inequality leads to debt, debt leads to slavery.
City Lights
(25,171 posts)Spread it far and wide!
mother earth
(6,002 posts)FailureToCommunicate
(14,023 posts)They were also happy to profit from Bush's two wars whose (borrowed) costs were hidden from Joe and Jane taxpayer.
EC
(12,287 posts)when Nancy Pelosi said the guys on top want us to be in a spiral of everlasting indebtedness. But they shut her down.
Richardo
(38,391 posts)I'll look for it when I see a copy.
jwirr
(39,215 posts)it back.
Uncle Joe
(58,426 posts)Thanks for the thread, Richardo.
Richardo
(38,391 posts)Yesterday in the car, I literally heard only the last sentence of that interview, and it totally gobsmacked me. (I looked up the rest of the interview this morning. - Now I've got to find the book.)
JDPriestly
(57,936 posts)lumberjack_jeff
(33,224 posts)The rich would much rather extend loans (through deficit spending) than pay taxes.
stockholmer
(3,751 posts)Rentier capitalism is a term used in Marxism and sociology which refers to a type of capitalism where a large amount of profit-income generated takes the form of property income, received as interest, intellectual property rights, rents, dividends, fees, or capital gains. (Wikipedia)
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On Short-Termism and the Institutionalization of Rentier Capitalism
http://www.nakedcapitalism.com/2011/05/on-short-termism-and-the-institutionalization-of-rentier-capitalism.html
Andrew Haldane and Richard Davies of the Bank of England have released a very useful new paper http://www.bis.org/review/r110511e.pdf on short-termism in the investment arena. They contend that this problem real and getting worse. This may at first blush seem to be mere official confirmation of most peoples gut instinct. However, the authors take the critical step of developing some estimates of the severity of the phenomenon, since past efforts to do so are surprisingly scarce. A short-term perspective is tantamount to applying an overly high discount rate to an investment project or similarly, requiring an excessively rapid payback. In corporate capital budgeting settings, the distortions are pronounced:
First, there is statistically significant evidence of short-termism in the pricing of companies equities. This is true across all industrial sectors. Moreover, there is evidence of short-termism having increased over the recent past. Myopia is mounting. Second, estimates of short-termism are economically as well as statistically significant. Empirical evidence points to excess discounting of between 5% and 10% per year. The result is that projects with long-term payback, beyond the 30 to 35 year timeframe, are treated as having no value. No wonder we dont fund basic science, infrastructure, or climate change related projects.
The writers point out the first order bad effects: good projects dont get funded, and those projects are often the ones with the highest potential for broad social impact (would we ever build the US highway system now?). But the knock-on effects are if anything more pernicious. The fact that most investors employ overly high discount rates produces is the same result youd see with oligopoly pricing: overly high returns with restricted output. And this is consistent with the picture we see in most of the world. Perversely, the corporate sector has been a net saver for nearly a decade in the US, longer than that in some other economies. As we wrote with Rob Parenteau last year:
snip
We have a peculiar desire in America to pretend that we have unfettered capitalism when, even before you consider the banking industry boondoggle, we have a remarkable amount of industrial policy by accident, via lots of special interest receiving subsidies and tax breaks. Wed do much better to try to put some of it on a more rational footing and implement broad-based programs of the sort Haldane and Davies suggest. But we may need to lose more ground to advanced economies before complacent CEOs and their various message validators are willing to consider more radical changes in how we do business.
TahitiNut
(71,611 posts)We're regressing. Next stop: "plantation economics." (Courtesy of your local Banana Republican.)
Canuckistanian
(42,290 posts)He made me a loan offer once, but I would rather have chewed off my own arm.
He KNEW that an indebted employee was a loyal employee.
So, I was free to organize union representation at the company. Which I did.
WillyT
(72,631 posts)Citizen Worker
(1,785 posts)between paydays at USURIOUS interest rates that at one time were illegal.