A Black Perspective12 012  A14, 201

Page 13

May 26, 2012

Lies of the Rich and Famous


            As the gap between rich Americans and poor Americans continues to widen, there are certain lies that the rich attempt to perpetuate. Here's a look at three such lies.  The first is that there is no class system in America and that the elevation into the hierarchy  of the rich is strictly based on laissez-faire capitalism.  The second is that the rich are rich due to hard work, ingenuity and adherence to a code of ethics.  The third is that the rich are the job creators in America.


Laissez-Faire Capitalism


            Laissez-faire capitalism means that private businesses and the free market system exist without any interference from the government.  A total laissez-faire capitalistic system is impossible, but its proponents insist that the least government involvement, the more productive the economy will be.  The American Government has always picked and chosen the amount of government involvement for a particular business.  This article will not even look at foreign dealings, another story for another time.  On the domestic front, one example is the Congressionally approved monopoly granted to Major League Baseball (MLB).  Another is the fact that the oil companies are given subsidies despite making record profits.  In fact, it just takes a look at the massive lobbying industry in Washington, D.C.  to see the intermingling of business and government.


The aforementioned examples pale in comparison to the mortgage industry collapse of 2008.  Deregulation of this country's financial institutions began under the Ronald Reagan administration.  It continued through George Bush, Bill Clinton and George W. Bush.  It ushered in a freewheeling mortgage industry, which caused insane real estate inflation, fueled by loans based on "stated income".  A quick example, a major mortgage institution gave a $1250 / month mortgage to a domestic worker whose monthly income was $1200.  This madness went on for 2 decades and economists all saw a bubble that had to burst.  In 2008 the bubble burst.


These bad loans were bundled with other loans and these bundles were sold on the global market.  The entire U.S. mortgage industry was riddled with bad paper that this country dumped on the world.  This is what happens when laissez-faire capitalism is allowed to run its course.  These financial institutions, who had pleaded for deregulation, now screamed for help.  The new cry was that they were "too big to fail".  They contended that if they were allowed to fail, the whole U.S. economic system would also fall.  The U.S. Government quickly complied with the biggest bail in the history of the country, $1,000,000,000,000.  So much for laissez-faire capitalism.


Hard Work, Ingenuity and A Code of Ethics


            The rich would have people believe that their wealth is a testament to personal achievement.  They believe that they deserve their riches and want others to believe that they earned these riches.  They are fond of proclaiming that if the money was totally and evenly redistributed, in short order the same people would end up rich.


Donald Trump was born to wealthy parents.  Their money was based in real estate.  Donald Trump took over his father's business and had some initial successes by following his father's business formula.  When Trump proceeded to operate the business his way, he ran into trouble.  At one point he was in personal debt of 900 million dollars.  At this point his business debt approached 3.5 billion dollars.  He was constantly dealing with one bankruptcy or another.

It is inconceivable that banks would continue to loan such an individual more money.  Yet this is just what they did.  Banks loaned Trump money as if he was a third world nation.  They rationalized these loans by claiming that he owned so much money that the only way the bank could recoup their losses was by loaning him more money (too big to fail).  Inevitably his fortunes hit an upswing and today Trump is a billionaire.  His financial prowess had more to do with an unlimited money supply than any economic genius. 

            George W. Bush was once described by the late Ann Richardson as," having been born on third base and thinking that he had hit a triple".  George W. Bush is the perfect example of the upper class privileged succeeding for no other reason than the privilege.  This man, who offered so little of substance, rose to the Presidency of the United States.  The right schools, the right connections triumphed over talent and even ambition.  It is hard to imagine where Bush would end up if the playing field was truly level.


            Bernie Madoff was the chairman of the Bernard L. Madoff Investment Securities LLC, which he founded in 1960.  He was the investment advisor to America's A-list.  Madoff investors made money no matter the financial climate.  Investors spoke of him in hushed terms, usually reserved for religious icons.  Reports of money invested with Madoff ranged from 36 billion dollars to 65 billion dollars.  After over 45 years the source of Madoff's genius was revealed, it was all a giant Ponzi scheme.  Madoff was merely paying off older investors with money invested by the newer investors.  His financial expertise was, quite simply, fraud.  He received 150 years in prison.

            These three men were bona fide members of America's rich and famous.  It has yet to be shown any qualities that they possess to entitle them riches.


Job Creation


            The latest rallying call of the rich is that the rich are the ones who create jobs.  Using this logic they contend that tax cuts for the rich would create jobs for America.  This logic has little to do with reality.

Today's global economy mandates that the jobs to be created will gravitate to countries that have low labor cost.  The rich would violate their corporate responsibilities if they did not produce a product at the most profitable cost.  Also, with the technological advance of robotics fewer jobs are going to be needed for production.  The jobs that the rich will be creating in America will be minimum wage service jobs.  These jobs do not provide a living wage for the workers. 


When the U.S. Government bailed out the financial institutions with the trillion dollars, this was direct money to the rich.  The underlying purpose was to stimulate loans.  The banks took the money but refused to provide loans.  After 2 decades of loans to any and all, now there are loans to none.

Had this trillion dollars been given to the 300 million U.S. citizens, this would have amounted to about $3000 per person.   This money would not have been invested in global corporations, but would have been immediately spent in the American economy.  So, who creates the jobs, the rich or the poor?

            America is increasingly becoming a nation of the rich and the poor, like the rest of the world.  The rich must be aware that the poor are not going to be subjected to poverty in a land of plenty.  The poor must be aware that the rich are not going to give up their privileges without a fight.


Random Thoughts


  May 26, 2012 is Africa Day Los Angeles at Cal State Dominguez Hills.  One theme of the day is support for the African Union.  I have no doubt that some celebrants at the event will be Black people who praised President Barack Obama for "getting Moammar Gadhafi ".  As President Obama and NATO asked the United Nations for permission to dismantle the Gadhafi Government, the African Union also appeared before the United Nations.  They offered a ceasefire in Libya and a plan for negotiations.  President Obama and NATO , along with the United Nations, summarily dismissed the African Union.  They, in effect, told the African Union that it had no business in the affairs of Africa.  Black people must recognize that the vote, without an understanding of the issues, is worse than no vote at all.


Just asking..... What does it mean when a society has empty houses and homeless people?

  A Black Perspective  

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