Friday, October 03, 2008

Is This the End of the Second Gilded Age?

Is the Reagan Revolution Over? I'm Skeptical

FDR at his first inaugural address, March 1933

I've had a couple of different financial advisors over the years, and I've always made a point out of voicing my concern to them about not wanting to invest in risky derivatives, if it could be at all helped.

Over time, the reaction I've increasingly seen from them is a blank look and a shrug. Eventually, almost all mutual funds became loaded up with them. We don't make anything here anymore, so investment houses have invented ways of pushing paper around bearing numbers that don't represent real industrial output, thereby creating one bubble after another. The housing bubble was the last bubble left to exploit in this casino-like environment.

In the midst of this financial crisis, I've heard several commentators claim that the era of greed and excess on Wall Street is over, and that things are never going to be the same again.

I'd like to think so, but I tend to doubt it... Even if they have run out of bubbles.

I remember how everything was supposed to be different after the attacks on September 11 too, and it was different. It lasted about a month or two.

I think I've probably cost myself the occasional reader or correspondent here with what looks on the surface like class warfare... Am I jealous? No, we are comfortable. We want for nothing. So far. What does get under my skin, though, is bullying and injustice. I hate bullying. The bullying of the powerless by the powerful in particular.

Even though a lot of Americans like to deny that there are class distinctions in this country, they are real. Here's my take on the evidence of class warfare that I see... Those at the bottom tend to worship the ones at the top, and the most vicious of class hatreds in the history of this country have tended to flow down. Evidence of this is illustrated in a book I've been reading recently called In Reckless Hands: Skinner v. Oklahoma and the Near-Triumph of American Eugenics, which is about the lively eugenics movement that existed in the USA during the first half of the 20th century, which advocated the forced sterilization of those who were considered congenitally "feeble-minded" and "a burden on the rest of society." National Socialism and the Final Solution took the gloss off of eugenics and its open advocacy and discussion in polite society, but I'm convinced the underlying sentiment is not far under the surface, and that the Sam Harrises of this world need to be kept an eye on. Social Darwinism is flourishing here.

I was watching Warren Buffett talking to Charlie Rose a couple of nights ago. Buffett was saying that 20% of the people in this country are living on $21,000 a year or less, which sounds almost impossible to me. When you absorb a fact like that, along with the knowledge that the investment houses now facing financial catastrophe have been paying out approximately half of their revenues over the past few years to their brokers and managers in salaries and bonuses, it puts a whole new spin on just who's been practicing class warfare.

I believe that libertarian Reaganism is still deeply imbued in the country's consciousness. Will this credit crunch undo that? I remain skeptical. I think it's too deeply entrenched. Just last night, Sarah Palin was repeating Reaganite lines about "government being the problem instead of the solution." Why do such people run for office? If most Americans have no faith whatsoever in government and consider it an enemy, what future is there for democracy? Why are we surprised to discover that we have been sliding into a plutocracy?

One thing I find especially telling... The bailout bill that just passed the Senate was full of tax-cuts for various targeted businesses and business sectors, and other sweeteners. All in all, the whole bailout approach seems to be centered around the saving of the skin of lendors. When FDR took action in the banking sector during the Great Depression, his interest was on saving the skin of depositors.

Precious little discussion is taking place right now about helping to restructure people's loans and mortgages so that they can be paid and so that people can stay in their homes. Very little discussion about changing the bankruptcy laws either. Doing so "would encourage the wrong kind of behavior" you see...

I had a post back in 2006 called FDR's First 100 days and the Saving of Democracy. A few remarks from his first inaugural address in 1933 are worth repeating again.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.
Was this class warfare? After his first term of wrestling with the enormous challenges posed by the Depression, Roosevelt gave an address announcing the Second New Deal in October of 1936. By that time, he knew a lot about class warfare, because it had been largely directed at him...
For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace--business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me--and I welcome their hatred.
Would we ever hear such speeches today? If not, I suggest that the Second Gilded Age is by no means over.


Garpu said...

I think there's a clear difference between being comfortable and being greedy. I mean, you've got kids. You need a level of comfort, you know? Sure, you could probably make do with a whole lot less, but I'm not convinced it would be best for everyone involved. I grew up in a family that was working poor. They were never well off, and it didn't get any better when my dad was put on disability.

Kids just kind of know when there's problems. They're a lot more perceptive than a lot of people give them credit for. I'm glad you can provide for them that they won't know the uncertainty that I did. I think trying to survive on less is every bit as much a form of pride than living beyond one's means. (And, yeah, the Benedictine in me is coming out again.)

Jeff said...

And, yeah, the Benedictine in me is coming out again.


We're glad as parents we can provide them with a level of comfort, but we also feel an obigation to do everything we can to make sure they are well educated, now and in the future. The way things are going, college tuition look like it's going to be very difficult.

We put limits on ourselves in terms of spending and on the kids too, which is difficult, because so many of their peers have no limits imposed upon them in this regard whatsoever. We try to live relatively simply, but in this town it often goes against the grain.

Garpu said...

Yeah I know the college funding thing...a lot of the funding that was in place when I was an undergrad is gone now. Don't discount private schools, though. Seriously, I had better financial aid packages at Augustana and CalArts than I have at UW, just because the first two had way more money available in the form of private trusts, grants, and the like. The cheaper school (state colleges) may not necessarily be the cheapest, when it comes to financial aid packages.

crystal said...

I get less than $10,000 a year from the government, and I'm grateful for that, but I do see a class system existing. One that ignores the plight of those who are not sucessful, for whatever reason, and is content to let them wither and die rather than help them to acheive more sucefful lives.

Jeff said...


It's characteristic of this Winner Take All Society