(noun, etymology Dutch from ‘boedel’: estate, possession, inheritance, stock.). 1. Crowd, pack, lot, as in ‘the whole boodle.’ 2. a. Counterfeit money b. Money acquired or spent illegally or improperly, particularly when used in bribery for political purposes. 3. Slang for money in general.

The Day the Music Died

Posted on: Mar. 5, 2013  |  By: Ronnie Kahn  |  Category: Advice, General

The Great Shift Away From Economic Justice

“The day of reckoning is here, we’re at the end of an era where we have Democratic spending policies and Republican tax policies.  The result has been huge deficits and mounting debt burdens.  It doesn’t work”-  David Walker, former U.S. comptroller general.

Rome wasn’t built in a day, the saying goes.  Neither did it fall in one day.  Social change is slow.  Yet a meteorite and a comet appeared on the same day over Russia.  What are the odds of that?  While strange it may be, isn’t it nice though when something occurs right before your eyes, no gray area on that one day when, up to that point it hadn’t happened and then it did happen, just black and white clarity.  Could there be a day of economic reckoning where one day the economy is so broken it fails to work?  The closest thing we had was Black Tuesday, the stock market crash of 1929.  Of course, even here there were changes over a period of time that led up to that day.  Could there be another economic Armageddon?  Are we all living at the foot of Mount St. Helens and a day will come when the economy reaches a tipping point and just erupts like a volcano and blows the banks and the Greenback with it?  None of these insidious changes that bring us down, a little here and a little there, over time but rather a 9/11 of money.  Will we be able to point to the future one day and say, yes, that was the day both democracy and the economy just up and died?  After that, it just stopped doing what it was supposed to do, provide us with societal sustenance.

If money is the music of our lives, it has become an overwound music box.  We have seen quite a change along the way though leading up to the potential for this dark day.  It has been a slow funeral march leading to the day that our financial music could die.  Over the past forty years there has been a systematic denial of economic justice.  The U.S. economy works for the few and screws just about everyone else.  Prior to that though, our economy worked pretty decently.  From after World War II up to the late 1970’s, our economy was like listening to the precision of Handel’s Water Music but now it’s like getting water boarded.

It certainly didn’t become dysfunctional in a day.  There was a sour note here and a misplaced phrase of money music there.  A law change here and an abandoned employee benefit there have been slowly spread out over all that time since the 70’s.  An example would be in the banking industry.  In 1980, under the Carter administration, interest rate caps for first mortgages were removed.  Then, a couple years later under Reagan, adjustable rate mortgages were allowed along with loans where the principal could rise under negative amortization which when added to loans without any down payment and you have a formula where the loans can be higher than the houses are worth.  As If that was not enough, under Reagan, banks could sell and package their mortgages as investments which we have now all heard of in the wake of the bank mortgage meltdown.  Each of these “notes” were not enough on their own to create the housing crisis but when all was said and done, a culture had been created by the banks where they were charging high-fee loans even to persons who qualified for conventional loans.  Each one of these individual musical notes eventually turns into our financial dirge.  Then, late in the Clinton administration, the law that separated investment and commercial banks was repealed.  All of these changes allowed the bad loans that we all know brought the whole economy down in 2008.  When you add all this up, over the last forty years it seems more like a slow Chinese torture when it comes to ways of living and being in the U.S.  Forty percent of Americans live pay check to pay check.  What does the guy on Main Street do when everything is stacked against him?  Does the average person fight back when they are slowly water tortured?  Well, let’s just say that the average person’s response to all this water boarding and torture is to just avoid water.

The overall picture of the U.S. used to be one of much more social inequality, especially the obstacles facing those of color and women.  At the same time there was, conversely, a situation where there was much more economic fairness.  Today, though while there is still plenty of room for more social equality, the social and economic poles seemed to have reversed direction.  While the U.S. is a rich country with material gains and increases in living standards, the amount of income inequality (See The Great Gapsby blog post in June 2011) , unhappiness, ill health and declining well-being are becoming more and more prevalent.  Prior to our current business way, the idea was that if an employee is valued than they would keep producing quality work and help in the company’s progress.  So employees would climb the wage ladder while they were also rewarded with paid healthcare and pension benefits.  Somewhere along the line the narrative changed to pass any risk along to the employee, keep wages and benefits to a minimum, and it was the shareholder and heads of the company that would be valued.  The few at the top were once in charge of keeping the buds of growth coming but now the few seemed concerned only with their own interest and can’t worry about the exploitation of the rest.  Then the economic story turned to the “new economy.”  It was get out of the way of the market and let it do what it does best, grow and then get rid of anything that could get in the way of that growth or profit, such as regulations and high taxes.

So it goes with social change.  A narrative change sparks small structural changes that chip away until the narrative slowly changes to a grand shift.  The problem with the narrative now is that it is so dysfunctional that is choking off the renewal and new change that needs to sustain our world.  We see the results of the shift in massive income inequality, rules and tax laws paid for with campaign contributions, and the quality of healthcare tied to income levels.  Here is a list of how things have shifted in economic justice and fairness:

  • Income and jobs emphasis replaced with an emphasis on capital – e.g. income is taxed at a much higher rate than capital gains.  There is more pressure to keep corporate costs down so that the company’s stock price will be attractive than there is for using excess cash for hiring.
  • Risk from employers transferred to employees – e.g. healthcare is paid for more and more by larger employee shares and retirement pensions have been replaced by 401(k)’s which depend on the skill of the investor and offer no guaranteed amount.  Employees have been replaced by contractor employees, temporary employees, and part-time employees all without benefits.  Risk transference increases corporate profits while the incentive is to cut plants and jobs while increasing productivity.
  • Income where wealth was shared somewhat to massive income inequality and those in the middle and the bottom barely or not even getting by.
  • Social opportunities for people have given way to a free market ideology that will trickle down.
  • Democracy has descended into campaign contributions as bribes and money as access.  Economics that was mostly separated from politics has become indistinguishable as one interrelated entity.
  • Those with lifetime pensions can now look forward to lifetime work.  Pension savings are out while bonuses and stock options are in along with executive and CEO pay that is not based on performance.  Most CEO’s did not use to receive any stock options prior to the New Economy.
  • Manufacturing jobs and products pushed by manufacturers are now dictated and pulled by retailers who use distribution to match inventory needs.  Some retailers actually pressure companies to open low cost production in other countries as well as businesses moving jobs overseas or to cheaper H-IB visa workers domestically.
  • Wealth lost from easy home equity loans as wealth was transferred to bank equity and banks are given loan guarantees and “too big to fail.”  Hard to easy credit and rise in bankruptcy.
  • Spending by government that is wasteful or is not geared enough to a social value that gives back more than it uses.
  • Government’s watchful eye on business replaced by industry by industry deregulation.
  • Education that keeps rising in cost and leaving a work force that is less prepared and innovative.
  • Social activism and responsibility to powerlessness and apathy.

Here is a list of the shifts in politics that have hurt economic justice:

  • Moderation and compromise replaced by extremism, partisanship, inflexible ideology, and rigidity.  Caucus system replaces party loyalty with agreement.  Partisan votes where no member of the opposite party votes for a bill that has come from the other party have become common.  These folks won’t even socialize with each other anymore.
  • Campaign costs escalation and contributions buying favors and access.  Unlimited funds are considered speech and corporations and others can now spend on Super Pac policy ads.
  • Filibuster rule change to allow for speechless filibusters and one person easily being able to highjack potential bills.
  • Appointees being delayed, held, or denied for political motives.
  • Redistricting drawn to unfairly represent gerrymandered districts.
  • There is a revolving door of government worker to lobbyists while the amount of lobbyists keeps escalating so that there are hundreds of lobbyists for each outnumbered member of congress.

If the point of an economy is to provide what the users need, we have deteriorated into massive dysfunction, meaning we are undermining the stability of the whole system.  Nothing is more emblematic of the shift from employee concerns to employer profits than when jobs have been replaced; it is the soon-to-be former employee who is the one that unknowingly trains their own replacement.  It is possible that more than half of baby boomers will not have enough money in retirement for their simple necessities.  We are not allowing for new users in the economy to get properly educated and fit into the working world by providing innovation and stimulus.  There are mass amounts of working poor and persons around the poverty line.  The list goes on and on.

The system is most likely too broken to even fix without a radical shift in another direction. It is not regulations by itself that will help when the problem is endemic and systemic. As it stands now, it is everyone out for their own advancement so that regulations get avoided and taxes are not paid.  With everyone so concerned with their own concerns and making ends meet, a culture of broken connections and lack of trust develops.  It is no wonder there are anti-depressants in the water supply.  What is needed is a revolution in the narrative that is our economy.  We need a regime change in the way we think of and use money.  We must start to think about the best ways to keep connection and interactions thriving for all.  In order to do this we need to start at the top with different rules, regulations, and taxes and allow for our economy to renew itself.  The idea of the “market” must be dumped. A better system needs to develop.  We also must continue at the bottom.  Everyone for whom the economy is not working must stop blaming  globalization, the government, and the corporations and get back to an activism which demands what they want align with what they spend, vote, and participate in the democracy accordingly.  This type of behavioral change can start to make a dent in the rigidity of the new economy narrative and start to chip away at restoring income equality and fairness.

To sum up, we need a regime change of narrative.  Only a revolution in narrative followed by systemic changes can remove a fate where the music will stop playing for all to hear.  In addition, under a better system we need to allow for rules and regulations to connect us all more efficiently along with an activism to change behaviors and decision making.  Otherwise, we can just refer to our situation as “bye, bye, miss American Pie.”

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