As I sit at my computer on the 22nd of January, winter is right outside my window and yet I know that spring will come. But when will springtime return to American prosperity? Where are new opportunities–where is the boom instead of the bounce from periodic recessions? Where is growth? Where is American bank security with solvent and regulated banking? Where is having healthy infrastructure of well-kept roads and bridges? Where is an end to wars and overseas military bases? Where are good jobs that can pay off a mortgage and make healthcare affordable? Where are markets that are driven by people making exchanges that are mutually beneficial? What has happened to the American prosperity that once was so famous?
Looking back in time to 1771, Benjamin Franklin toured Ireland. I keep in mind what he had to say during that tour because he was able to contrast the fortunes of Americans with those of the Irish. This is what he said about economic disparity in Ireland:
“The people in that unhappy country, are in a most wretched situation. Ireland is itself a poor country, and Dublin a magnificent city; but the appearances of general extreme poverty among the lower people are amazing. They live in wretched hovels of mud and straw, are clothed in rags, and subsist chiefly on potatoes. Our New England farmers, of the poorest sort, in regard to the enjoyment of all the comforts of life, are princes when compared to them. Perhaps three-fourths of the Inhabitants are in this situation.” (1)
What policies led to Irish suffering? The Irish were under the thumb of the English and it would be many years before they were free from the political and economic oppression that the English brought to Ireland. They were heavily taxed and had few economic opportunities. By contrast, Americans were free to hunt for game and forage for food and they could farm and keep some of what they produced, selling only the surplus they didn’t need. They could start businesses and sell what they produced for a nascent American market in goods. There was no income tax and property taxes were low.
Is American ingenuity and productivity somehow going to waste now because of bad policies that come from Congress? Why are we seeing income disparities like those that were part of the Irish past? Have high frequency trading and computer technology become an oppressive force that steals away prosperity from most Americans? Are most Americans overtaxed? With little earnable interest on bank savings and constant underreported inflation, small capital holders with money in the bank watch their money erode away and isn’t that a kind of tax and a kind of oppression? Does the government’s overspending that creates inflation and does Federal Reserve banking serve the interests of most people?
I bring to mind a couple of commercials asking Americans in one example to save money for their retirement, I suppose in the stock market, and in another example to donate to food shelters.
In the first case, there’s an e-trade commercial that shows people who are clearly older, well past what was once normal retirement, who must keep a job and it makes fun of them by showing a wildly dressed old lady D.J. and old fireman. The fireman clearly can’t control a firehose as he tries to put out a fire. The announcer says that one-third of Americans have no retirement money saved away. I suppose I’m meant to blame these old people for not planning but I don’t blame them.
We’ve had zero interest on savings in the United States for long enough that people who have saved money and put it into the bank have actually lost a lot of money. Of course, one of the motivations for employing ZIRP policy was to drive people into the stock market. But the stock market had already been changed for the worse by high frequency trading. Our stock market changed into something beyond what people can trust. People who try to keep their money in the stock market see volatility and market manipulation that they have no control over. It isn’t a matter of picking a growing company the way that it once was. There’s little growth except on paper of companies that sell technology or gather statistics about their internet users but these companies don’t offer investment security. And they don’t employ many Americans.
The e-trade commercial failed to acknowledge that older people can’t always do work or find work. According to a recent court ruling, Kleber v. Care Fusion Corporation (2019), protections against age discrimination in the workplace apply only to employees and not to job applicants (2). I doubt that there are real old lady D.J.’s or old firemen like the commercial showed. If you go to an interest rate calculator and calculate the amount of earnings from interest that retired people can no longer earn, it seems pointless to blame them. As well as ZIRP, market volatility is also being caused by the Federal Reserve’s invention of derivatives and its financialization policies—policies that undermine a production based economy where many Americans once found work. Driving more people to buy stock market offerings by using ZIRP won’t likely give them more money for retirement. The market has been artificially pumped up well beyond a reality based value. We now see it falling down from earlier highs. And as people withdraw stock market funds at retirement, they can’t earn interest on this money.
The second commercial about people who don’t have enough resources to buy food probably has to do with unemployment. According to government statisticians, unemployment is very low—record-breaking low. These statisticians say that unemployment is low but they only can say that by ignoring people who have been unemployed long-term. They don’t report the many unemployed among us who can’t find a job and have stopped looking for one. The economy under financialization isn’t growing and isn’t providing a job for everyone. When the commercial calls for ordinary Americans to support their local food bank, it may be time to realize that eleven years after the Great Recession a lot of ordinary people working or not working are aging into the exact group of people who were in the first commercial. And if they can’t find work that pays well enough, they can’t change their fate and also can’t donate to food banks. It’s silly to continue the policies that brought us to the Great Recession, but I see that they continue. Banks are still deregulated, financialization continues and the economy isn’t prospering. Financialization only serves the interests of large capital holders.
After years of mergers and acquisitions destroyed a lot of American companies I have asked myself if Congress wanted to destroy the old economy in favor of a new one. Did Congress imagine that their policies would create an entirely new economy? If that was the plan, I have to say that it hasn’t worked so far. Economic springtime may depend upon Congress changing its policies by regulating banks, reinstating Glass Steagall’s separation between commercial and investment banking. And Congress should be acting more responsibly about problems that it has caused with bad policies. Congress should reconsider its legislation. Disruption caused by new technologies or by a stubborn Congress isn’t a form of evolution that works to create prosperity. Washington D.C. is wrapped up in its own dramas but meanwhile, there’s suffering out here waiting for a turn toward better policies that will create better outcomes.
If you’d like to learn more about how we got to our current political and economic reality, what policies brought us here and what ideas led us here, buy a copy of Political Catsup with Economy Fries at Amazon.com. You can also learn about financialization, political ideologies over us history, who the winners and losers have been and what policies brought them into greater or lesser prosperity.
(1) History of Ireland, https://stairnaheireann.net/2016/09/05/1771-benjamin-franklin-commences-a-visit-to-ireland-where-he-would-later-report-he-had-a-good-deal-of-conversation-with-the-patriots-they-are-all-on-the-american-side-of-the-questi/, accessed 22 January 2019.
(2) Jerri-Lynn Scofield, Naked Capitalism, “7th Circuit Rules Age Discrimination Law Does Not Include Job Applicants”, https://www.nakedcapitalism.com/2019/01/7th-circuit-rules-age-discrimination-law-does-not-include-job-applicants.html, accessed 28th Jan 2019.