Capitalism won? (The Occupy Wall Street movement)

This is a bit or a reworking of a post I made about a year ago.  I decided to do this because…just when you think the economy can’t get any worse, it does.  & for those who  thought  Obama was a socialist, the whole Solyndra fiasco (coupled with AIG & bailing out the auto industry—again—-) should prove  he is either clueless about economics, or as greedy as any other capitalist on the Hill.  Add to that  a continuation of  foreign military aid to dictators.  There is no excuse for this, & he put  the  means of getting to energy self sufficiency further back than any of the tea partiers could possibly have.

The problem is that our math & science education in the US is so terrible, but we do a wonderful job of making people patriotic. What does this have to do with anything? Well, most Americans  can’t do more than add & subtract, and they even have trouble with that.   They  don’t understand where all the money we pay in taxes goes. It’s supposed to pay for infrastructure, salarlies for elected officials, pensions,  and the people who  provide services that don’t make money for us directly—but whom we need so the rest of the economy that does make money can function. But  the  politicians/elected officials   make it pay for pork.  In many communities,  any warm body in a classroom will do—even if that warm body doesn’t know math or science.  Part of the problem is that many people who are specialists in math & science can get much better paying jobs in  industries:  computer science, medical, engineering… with a lot less aggravation….

I’ve been told that it’s the teachers unions that prevent math and science teachers from being paid more. But that is not the  only reason. I did my master’s project on implementing  better  math and science teaching for  development, & the reason the qualified math and science teachers do not get paid more, or better working conditions is…there is no political will…& the reason for that is,  the people who could address this:  you, me, our neighbors,  are too lazy to  be organized and meet, and nag—for  a pay differential to  attract better qualified teachers,  In  Chicago,  if  the Chicago Board of Education can’t find teachers, they either  have a literature teacher teach science, or  don’t offer the course.  That’s also how the Chicago Community Colleges deal with the issue:  courses not offered.  Meanwhile, the principals, chancellors, and the  higher ups in the bureaucracy can find plenty of cash to pay themselves…just no money to pay for people offering to teach scarce skills.  Makes all the sense in the world, right?

This is important, because if you don’t know math, or basic science, you can’t understand economics.  Economics is the science that deals with the production, distribution, and consumption of wealth.  But it’s nor really a science—it’s more of a philosophy.

About 10 years ago, looking for a better way to make money without spending years in school, I looked in to brokering cash flows:  payment streams. They are traded among investors.  It works like this:  Say you agree to  payments—like a mortgage.  A 20 year mortgage  is 240 monthly payments.  It was—& still is— legal to by certain payments in that stream. You could buy payments 15 through 125, or  payment numbers 128, 146, 238, etc.  It didn’t matter.

My question was….what if the mortgage got paid off early?  Or was defaulted on?  Would you get the principal and  no interest?  How would you ensure this if the mortgage was sold several times?  Ah…this was the rub.  I realized that I didn’t have the back up capital to be involved in this industry.  I chalked up what I spent on learning this to ….education.

Years passed, and the  mortgage/cash flow industry (as it was known) continued to develop  creative financing, and it was legal because it was not illegal.  The  real estate appraisers were in collusion with this, and the term for this slice and dice was ultimately called the credit default swap.

The only ones who made money on this were the investors who  hedged bets against this—like Michael Burry (who was profiled by Michael Lewis in his recent book. The Big Short).  Because we are innumerate, and can get high school…& then get college degrees without being able to balance a checkbook,  we and our neighbors were tricked into buying houses we and they could not afford because  the mortgage brokering foxes running the henhouses told us and them  they COULD afford those houses when common sense said we and they could not.

Never mind that if they added up what they paid for utilities, groceries, clothing, insurance, CABLE TV, gym membership, eating  out, vacations, GETTING THEIR HAIR & NAILS DONE,  saving for retirement—and my very favorite:  getting the dog’s hair cut—- they’d see  that all this cost more than they brought into their households as income.  They could not afford the house (tho the dog’s haircut was the first casualty of real life in their faces…)

Nobody ever brought up:  what if the prices of gas, insurance, food, PROPERTY TAXES. or a repair to their homes—went up faster than their pay?

Nobody counseled them, or us.   This just could not happen. It’s a free country.   Bit,  this is how capitalism works.

When I started making mortgage payments over 30 years ago, I was not living so close to the edge…and since the  economic crash of 2008, I am living precariously close.  I’ve had to do some fancy footwork.  I can see right now, though, that  I can’t afford to  live in the house I live in now when I retire unless I win the lottery.

My biggest concerns are energy costs and property taxes.  Our governments are too bloated, and our elected officials are really too clueless.  Otherwise, how can you explain that , despite a federal deficit, we have money for wars, foreign aid, and to bail out banks & large industries?  What would have happened it AIG —too big to fail—had failed? How would that have affected me?   Locally, how did the city of Chicago, and the state of Illinois set up pension programs for themselves & state workers, based on a funding dream, not reality?  In fact, in Chicago, how did the union officials who  ‘worked’ maybe a week,  become eligible for both government & union pensions?  How could that possibly become legal when  virtually everyone else has to be on a job at least a year to be eligible for a pension?

Thanks to the internet, we can now see h0w other countries fare in terms of budgets…especially  when they are not fighting wars.

Let’s get a grip.  For decades, due to the concept of credit, we had the largest/strongest economy.  That is no longer true.  As long as people were willing to pay interest on loans, and had the integrity to pay the loans back, capital kept growing.

My grandparents  were first generation Americans, and raised my parents to believe that the USA is the greatest country.  For decades, we has the strongest and most diverse economy. That is no longer true.

There are a lot of people who have a vested interest in keeping you and your children misinformed.

It makes no sense that our prisons are filled with drug addicts, the stupid, and homosexuals (really), but there is no room for the truly dangerous.  It makes no  sense that the politicians can decide what to pay themselves and how many people to have on their payrolls, yet allow major industries (banking, health insurance, law) to influence what laws we have.  It makes no sense that people at the Securities and Exchange Commission  saw that Bernie Madoff had a huge pyramid scheme going, & nobody stopped the guy.

You might wonder how I started thinking about how all this works.  It started by  having to deal with people who impulsively bought pets they weren’t prepared to care for.  They didn’t have enough information, and  the law didn’t require sellers to give them information. It’s just too easy to acquire a pet animal!  But that’s how capitalism wants. It doesn’t meet needs, it creates wants!

Think about this:  if everyone who graduated 8th grade  had to demonstrate numeracy:  understanding a profit and loss sheet, or a budget, or how to balance a check book, and what diapers cost and how many a child under 2 years old goes through…we might have fewer people having kids and losing their homes.   I guess we’d have fewer people graduating  from high school, too…& college—with thousands of dollars in debt & no job.

Now, what does this have to do with  understanding economics .  The concept is actually pretty simple, to start out:  to run a business—any venture, you need inputs:  materials, knowledge, energy, labor, marketing, distribution, and savings for re-investment . All these inputs cost money.  So you have to charge more for the product or service than you spend to create the product or service. Simple.   So…how do you decide what to charge? Every  industry is different.  In some industries, you charge double your inputs…to make sure you have money to re-invest, and profitsWho gets the profits is the rub.

Karl Marx, the layabout philosopher supported by his father-in-law, Fred Engels, said the bosses  take too much  and exploit the workers (in a nutshell), and that soon, the workers would not make enough to support themselves.  &, by golly!  He was a visionary!

So, after the Soviet Union collapsed in 1991, & the  newspaper editors proclaimed that Capitalism won (because the  corporation that ran  the Soviet Union had to be bailed  out by the World Bank, who paid the same people who got themselves into the mess , to become oligarchs), we 99% had to go along with it.  We  pay everyone as long as they privatize their infrastructure & the elites can benefit.

But it wasn’t capitalism that ‘won’, as  Naomi Klein documented in her amazing book, Shock Doctrine:  The Rise of Disaster Capitalism, because capitalism got an unfair  bail-out from the World Bank that only benefited elites, who, she documented, proceeded to destroy what was left of their economies.   It wasn’t my imagination. It actually happened.   In her book, she also documented what is now called The Third Way—and that is the way of workers cooperatives, that  share the profits left over after re-investment.  The Third Way is also how citizens  keep  elected officials accountable…but  in other countries, they’ve done a lot better job educating themselves than Americans have.

You would think that Warren Buffet and The Bill and Melinda Gates Foundation would now spend their billions helping create that Third Way, but no, alas. it’s not in their interests.

Were I  not  having to make a living, I would be out protesting with the 99% , the occupy Wall Street protesters, who,  as inarticulate as they seem to be—with no ‘leader’— are starting the conversation.They were  born after the civil rights movement, after the Viet Nam War (interesting, that no  Afghanistan & Iraqi veterans against the war have emerged, like the Viet Nam Vets against the War).

We have to make this way of thinking the conventional wisdom.  Now, as for the  people who have lost jobs, who are looking to learn new skills:  if those skills don’t include learning to grow your own food  and do home repairs,  that new learning  will be a waste of time for the foreseeable future.  I really feel for  all the kids getting into debt to pay for college, betting against the future. What a shame.

Even Nixon said, “We are all Keynesians now” and that was back in the 1970’s.  It’s proven..infrastructure does not pay for itself, but there is no return in paying for wars and military aid to dictators, when our  own infrastructure is crumbling…and nobody has asked any of the Republicans how they plan to pay for infrastructure, when you can see, around the world, where infrastructure has been privatized,  everyone’s standard of living has fallen…amazing that the rich think they can buy their way out of a community.

If you think this blog makes sense, please send the link to everyone you know, including your elected officials (who, had they any integrity, should be taking a 50% pay cut, & reset to the 1970s).


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2 Responses to “Capitalism won? (The Occupy Wall Street movement)”

  1. Barbara Stella Says:

    I really liked your webpage!!! Would you care whether I put up a backlink from my website to your page?

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