Tuesday, August 21, 2007

Smashing Capitalism by Barbara Ehrenreich


Somewhere in the Hamptons a high-roller is cursing his cleaning lady and
shaking his fists at the lawn guys. The American poor, who are usually
tactful enough to remain invisible to the multi-millionaire class,
suddenly leaped onto the scene and started smashing the global financial
system. Incredibly enough, this may be the first case in history in which
the downtrodden manage to bring down an unfair economic system without
going to the trouble of a revolution.

First they stopped paying their mortgages, a move in which they were
joined by many financially stretched middle class folks, though the poor
definitely led the way. All right, these were trick mortgages, many of
them designed to be unaffordable within two years of signing the contract.
There were "NINJA" loans, for example, awarded to people with "no income,
no job or assets." Conservative columnist Niall Fergusen laments the low
levels of "economic literacy" that allowed people to be exploited by
sub-prime loans. Why didn't these low-income folks get lawyers to go over
the fine print? And don't they have personal financial advisors anyway?

Then, in a diabolically clever move, the poor--a category which now
roughly coincides with the working class--stopped shopping. Both Wal-Mart
and Home Depot announced disappointing second quarter performances,
plunging the market into another Arctic-style meltdown. H. Lee Scott, CEO
of the low-wage Wal-Mart empire, admitted with admirable sensitivity, that
"it's no secret that many customers are running out of money at the end of
the month."

I wish I could report that the current attack on capitalism represents a
deliberate strategy on the part of the poor, that there have been secret
meetings in break rooms and parking lots around the country, where cell
leaders issued instructions like, "You, Vinny--don't make any mortgage
payment this month. And Caroline, forget that back-to-school shopping,
OK?" But all the evidence suggests that the current crisis is something
the high-rollers brought down on themselves.

When, for example, the largest private employer in America, which is
Wal-Mart, starts experiencing a shortage of customers, it needs to take a
long, hard look in the mirror. About a century ago, Henry Ford realized
that his company would only prosper if his own workers earned enough to
buy Fords. Wal-Mart, on the other hand, never seemed to figure out that
its cruelly low wages would eventually curtail its own growth, even at the
company's famously discounted prices.

The sad truth is that people earning Wal-Mart-level wages tend to favor
the fashions available at the Salvation Army. Nor do they have much use
for Wal-Mart's other departments, such as Electronics, Lawn and Garden,
and Pharmacy.

It gets worse though. While with one hand the high-rollers, H. Lee Scott
among them, squeezed the American worker's wages, the other hand was
reaching out with the tempting offer of credit. In fact, easy credit
became the American substitute for decent wages. Once you worked for your
money, but now you were supposed to pay for it. Once you could count on
earning enough to save for a home. Now you'll never earn that much, but,
as the lenders were saying--heh, heh--do we have a mortgage for you!

Pay day loans, rent-to-buy furniture and exorbitant credit card interest
rates for the poor were just the beginning. In its May 21st cover story on
" The Poverty Business," Business Week documented the stampede, in just
the last few years, to lend money to the people who could least afford to
pay the interest: Buy your dream home! Refinance your house! Take on a car
loan even if your credit rating sucks! Financiamos a Todos! Somehow, no
one bothered to figure out where the poor were going to get the money to
pay for all the money they were being offered.

Personally, I prefer my revolutions to be a little more pro-active. There
should be marches and rallies, banners and sit-ins, possibly a nice color
theme like red or orange. Certainly, there should be a vision of what you
intend to replace the bad old system with--European-style social
democracy, Latin American-style socialism, or how about just American
capitalism with some regulation thrown in?

Global capitalism will survive the current credit crisis; already, the
government has rushed in to soothe the feverish markets. But in the long
term, a system that depends on extracting every last cent from the poor
cannot hope for a healthy prognosis. Who would have thought that
foreclosures in Stockton and Cleveland would roil the markets of London
and Shanghai? The poor have risen up and spoken; only it sounds less like
a shout of protest than a low, strangled, cry of pain.


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