When you read about economic issues in the news, like the crisis in Greece or the Wall Street/banking mortgage shambles are you sometimes left befuddled by the seeming complexity, which no one appears able to untangle or explain to your satisfaction in simple English? Well, I certainly can’t explain it all myself, but I do know that the problem is not necessarily that you and I are economic illiterates.
The problem is often that the “experts” discuss these issues as if we’re dealing with hard and fast rules or laws, not to be violated, scientifically based, mathematically sound and rational; when, in fact, a great deal of what takes place in the real world of economics and in the arena of “expert” analysis of that world, is based significantly on partisan party politics, ideology, news headlines, speculation, manipulation, psychology (see the utter meaninglessness and absurdity of the daily rise or fall of stock prices), backroom deals of the powerful, and the excessive power given to and reliance upon thoroughly corrupt credit-rating agencies and insurers of various kinds.
The agencies like Moody’s and Standard and Poor’s are protection rackets—pay our exorbitant fees or we give you a bad rating, which investors and governments then bow down to as if it’s the result of completely objective and impressive analytical study.
Then there’s the exceptions made for powerful countries to get away with things that lesser countries, like Greece, are not allowed to get away with, but all still explained in terms of the unforgiving laws of economics.
And when all other explanations fail to sound plausible, the experts fall back on “the law of supply and demand.” But that law was repealed years ago; just try and explain the cost of gasoline based on it, as but one example.
So there’s a lot to cover up, many reasons why the financial-world players can’t be as open as they should be, as forthright as the public and investors may assume they are.
Consider the US budget deficit, about which we hear a great deal of scare talk. What we don’t hear is that the most prosperous period in American history occurred in the decades following the Second World War—from 1946 to 1973. And guess what? We had a budget deficit in the large majority of those years. Clearly such a deficit was not an impediment to growth and increasing prosperity in the United States—a prosperity much more widely shared than it is now. Yet we’re often fed the idea of the sanctity of a balanced budget. This and other “crises” are typically overblown for political reasons; the current “crisis” about the debt ceiling for example. Paul Craig Roberts, former assistant secretary of the Treasury under Reagan, now an independent columnist, points out that “regardless of whether the debt ceiling is raised the US government is not going to go out of business. . . . If Goldman Sachs is too big to fail, certainly, the US government is.”
In economic issues that occupy the media greatly, such as the debt ceiling, one of the hidden keys to understanding what’s going on is often the conservatives’ perennial hunger to privatize Social Security and Medicare. If you understand that, certain things become much clearer. Naomi Klein points out that “the pseudo debate about the debt ceiling . . . is naked class war, waged by the ultra rich against everyone else, and it’s well past time for Americans to draw the line.”
Consider, too, the relative value of international currencies. Logically, reasonably, if the British pound is exchangeable for two dollars, one should be able to purchase in Washington goods and services for two dollars which would cost one pound in London. In real life, this of course is the very infrequent exception to the rule. Instead, at places called “exchanges” in New York and Chicago and London and Zurich and Frankfurt a bunch of guys who don’t do anything socially useful get together each day in a large room, and amidst lots of raised voices, busy computers, and numerous pieces of paper, they arrive at a value for the pound, as well as for a barrel of oil, for a pound of pork bellies, and for various other commodities that affect our daily lives. Why should these speculators and parasites have so much influence over the real world, the real economy, and our real lives?
As a general rule of thumb, comrades, as an all-purpose solution to our economic ills, remember this: We’ll keep going around in crisis circles forever until the large financial institutions are nationalized or otherwise placed under democratic control. We hear a lot about “austerity.” Well, austerity has to, finally, visit the super-rich. There are millions [sic] of millionaires and billionaires in the United States and Europe. As governments go bust, the trillions of dollars of these people must be heavily taxed or confiscated to end the unending suffering of the other 95 percent of humanity. My god, do I sound like a (choke, gasp) socialist?
William Blum is the author of “Killing Hope: US Military and CIA Interventions Since World War 2,” “Rogue State: A Guide to the World’s Only Superpower,” “West-Bloc Dissident: A Cold War Memoir” and “Freeing the World to Death: Essays on the American Empire” He can be reached at: BBlum6@aol.com.
I agree 100%