Flimflamming America into a pseudo-services economy

Are we slowly coming out of a major recession, or will it turn into a double or even triple-dip recession thanks to the government’s infusion of capital that this nation neither has, nor will be able to pay back in the future to a lender? Several prominent economists, Prof. James Galbraith among them, sense that there won’t be a V-shaped recovery.

Whatever the economic prognosis, Americans are being hammered into their heads the idea that the economic predicament we’re currently experiencing is the result of deregulation, the tearing down of FDR’s New Deal regulatory wall. But is deregulation the true culprit of our woes?

It was those greedy Wall Street bastards, we are told, who in cahoots with legislators, such as former GOP Senator Phil Gramm, brought about this economic mess. Yet another article of faith from a government that, be it ran by Democrats or Republicans, wants us to remain faithful to the sacrosanct capitalist creed as defined by an illusory and, yes, we mustn’t forget, compulsory-patriotic American way of life.

But, don’t you believe it! True that deregulation was an intervening factor in bringing us to our economic knees when it did, but not the two-headed monster that caused it all. This bi-cephalic creature is still being kept locked in the closet by the powers that rule our society through a government which doubtfully has ever belonged to the people.

And just what are those two ugly heads that we should be putting the blame on? As I see it: usury and productivity-theft; all of us, of course, deserving part of the blame for allowing that two-headed monster to ultimately determine our fate.

It all started just three decades ago, perhaps as a prologue to Reagan’s presidency, when the US Supreme Court opened the dike of contained usury with an ill-fated ruling in Marquette National Bank v. First of Omaha Service Corp. (1978) denying Minnesota its right to impose its law against usury on an out-of-state (Nebraska) bank. SCOTUS’ ruling rationale stated that both banks were subject to the National Banking Act of 1864, which allowed banks to set rates where the lending bank is located, and not where the money is being lent. It ended, de facto, any mandated interest rate cap, and indirectly accelerated US’ transformation from a mature, productive manufacturing economy to a debt-ridden service society, where a disproportionate share of those services performed are non-productive, financially-parasitic on the poor and middle-class … strictly flimflam.

Simple human nature, and not just economics, tells us that capital will likely flow to any sector of the economy where it gets the better rate of return equated to the level of risk taken. Is it any wonder that capital barely returning 7 or 8 percent in manufacturing would flee to that Land of Financial Oz where it could do 2, 3, even 5 times as well by way of legalized larceny? American manufactured products have been diligently, and without much of a fight, replaced by “products” in real estate, insurance, and financial instruments of the exponential kind better known as derivatives… (non-calculus type!)

Exponential to be sure! Old bankers, financial conservators of our money, have been replaced by banksters, bookies with a smack of gravitas and, most often, an MBA diploma from an elite school. Banksters who have created their own currency backed by our government’s fear that they cannot be allowed to fail… or the entire capitalist system would collapse. God forbid! So here we find ourselves with over one-half of a quadrillion dollars in bets held by many of the same folks who are unashamedly, but legally, charging unsavory banking fees and usurious interest rates on credit cards.

As for the other head of the monster, productivity-theft, all available statistical sources, including those from the Economic Policy Institute, clearly indicate that in the past 36 years, a period during which productivity doubled in America, wages in this nation have remained basically the same (adjusted for inflation) – slightly higher for women, a logical expectation given how grossly underpaid they’ve been in the past relative to men. Sure, the overall family income has increased, but only because more family members work and/or put in more hours in the workplace.

But those productivity gains, that “doubling” of output, have not filtered down, not even a small share, to those who helped create it: the workers. Gains are nowhere to be seen; not in wages, not in benefits, not even in leisure time that workers in other industrial societies get. They all seem to have found their way to the coffers of capital-handlers, direct descendents of the moneychangers in the Temple of Solomon, as well as the landed gentry of old for whom we have always had the privilege to serve.

No, the monster will remain locked in the closet. President Obama seems to follow a trajectory not much different from that of his presidential predecessors. He may have a change of the guard wearing new uniforms in front of that locked closet; but the guards will be there keeping the monster out-of-sight from the citizenry, always vigilant in the defense of American-style predatory capitalism.

Treasury Secretary Timothy Geithner in his appearance on November 19 before the Joint Economic Committee of Congress assured its members of forthcoming economic growth, urging the creation of regulatory legislation to prevent another financial crisis… but as a good capitalism-acolyte, he failed to tell the members, or the public for that matter, about that two-headed monster that remains locked in the closet. Or, that we will be in the midst of a depression for years to come; that, in fact, the economic ill-being has yet to reach its crescendo.