The eventual size of the US taxpayers’ bailout to the troubled financial sector is unknown, but it is bound to be gargantuan. This morning, the ranking Republican on the Senate Banking Committee said it could go as high as a trillion dollars. Actually, it could go considerably higher than that.
You thought the Iraq war was expensive? The latest cost estimate I heard for that was $859 billion. But that was a week ago.
If there is a silver lining in the still unfolding financial crisis, it is that it gives all of us who are US citizens the chance to re-imagine at a fairly deep level what our country might become in the years ahead. This, for two reasons:
1. The market-fundamentalist approach that has dominated economic policy in the country since at least the Reagan era has proven itself destabilizing, anti-humane, and structurally broken. We have a great opportunity to imagine– and to work to bring into being– something fundamentally different.
2. The fact that the US’s citizenry will all become co-equal “owners” of a huge chunk of the country’s financial infrastructure means that we are all stakeholders in how its should be rebuilt. We should take this responsibility quite seriously and ensure that no groups of citizens are marginalized from having their voice heard and or from having their numbers-proportionate say in what should be done. This is certainly not a matter only for the (previous or current) owners of corporate and financial wealth, or the technocrats and economic “whizz-kids” who have largely dominated public discussions of these matters until now. It is all of our responsibility.
On a related note, I think it’s very important that we all become a lot more aware of the one-sided way that most of the MSM in this country has been approaching the stories about the current crisis. It is incredibly investor-centric, in that it simply assumes that everyone in the community that it addresses is (a) him- or herself a non-trivial investor in the financial markets, and (b) concerned overwhelmingly with the effect of the crisis on his or her own investments and/or on the previously much-admired titans of the investment industry, and only very secondarily (if at all) with its effects on society as a whole, or on the country’s most economically and socially citizens.
This is self-referential and anti-humane media “coverage” of the most disturbing kind. We know that most of these bankers and stock traders we see pictures of on the nightly news will end up being okay. (And none of the industry “leaders” or failed regulators who got us into this crisis yet seem to be exhibiting any shame or remorse, at all.)
But where are the media stories about the crisis in the nation’s food banks, or about those made homeless because of the sub-prime scandals? These are the stories and the voices that need to be included.
For years now, the “big” MSM in this country has been presided over by media “stars” like Tim Russert (RIP), Katie Couric, Charlie Gibson, etc… And whenever they got new contracts the salary levels they would lock in would be breathlessly reported all over the place… $1 million, $2 million, $5 million and more. So there is a complete air of unreality when these people solemnly pretend that when they “discuss the impact of” the crisis, they are doing so purely as disinterested observers. At the very least, they owe the rest of us substantial disclosure–as we demand from politicians– regarding which sectors they hold their personal wealth in. Or, they should hold it in a blind trust until their retirement.
But this investor-centric nature of the news coverage is only one symptom of a deeper distortion in the country’s political culture: namely, the robustness until now of the myth that “everyone” in the US has a substantial ownership stake in the country’s means of production and wealth creation. That is, after all, the myth that allows people in the MSM to imagine that when they give us their very investor-centric take on breaking events, they are speaking for and to “everyone.”
But this myth of universal “ownership of wealth” is palpably untrue. I’ve been trying to look for a measure of the degree of inequality of wealth among citizens in the US, which I know has been growing apace over recent decades. This is the best source I’ve found in a quick search– plus it gives a pretty nice explanation of how the Gini coefficient of inequality is calculated.
If you scroll down beneath the color-coded world map there, it gives the following data for the nationwide Gini coefficent for personal wealth, sourced to the US Census Bureau. Remember that for the Gini, “1” is perfect inequality– one person owns everything, everyone else owns nothing; and “0” is perfect equality:
1967: 0.397 (first year reported)
1968: 0.386 (lowest coefficient reported)
1970: 0.394
1980: 0.403
1990: 0.428
2000: 0.462
2005: 0.469 (most recent year reported; highest coefficient reported)
That is a significant rise from 1968 through 2005, and doubtless the trend continued after that until… well, maybe last week.
Here, for an international comparison, are some figures on the Gini coefficients of various nations regarding distribution of income, not wealth. (Though over a few years of income differences, that usually gells out into a significant difference in wealth; and the “income” measured is quite often a return on investments, rather than earned salary, so it is related to wealth in that way, too.)
1 Iceland n.a.
2 Norway 25.8
3 Australia 35.2
4 Canada 32.6
5 Ireland 34.3
6 Sweden 25.0
7 Switzerland 33.7
8 Japan 24.9
9 Netherlands 30.9
10 France 32.7
11 Finland 26.9
12 United States 40.8
13 Spain 34.7
14 Denmark 24.7
By the way, the listing numbers down the left column are the rankings the UN Development Program gave in 2007 to each nation for what it defines as its “Human development.” We are not Number One, and I don’t think we have been, ever since they started measuring this. We are Number 12.
All the other countries there have significantly lower Gini coeffficients of income than we do.
Norway is notable because it is a country that has considerable, nationalized oil production and revenues therefrom. But it has established ways of managing those revenues in ways that have stimulated the whole economy and have not substantially increased inequalities. Given that we US taxpayers are about to become co-owners of huge chunks of nationalized wealth, I think we could look to Norway to find out good ways to do so in a responsible, socially equalizing, and politically accountable fashion.
How about a well managed and accountable Sovereign Wealth Fund to take over all these financial and other entities we suddenly find that we’ve “bought”.
Here are a few other guidelines I’d like to put into the discussion:
1. Since we’re essentially buying either a huge amount of somewhat marginal housing stock or the mortgages thereon, we need to figure out what to do with it for the benefit of all of society. I would say that a bunch of the unsustainable big McMansions that have been built out in distant exurbs should be ploughed under, after all the removable parts of their properties and fixtures have been auctioned off to the highest bidder. Sad to think of all those dreams and all that workmanship getting ploughed under. But imagine all the exurban subdivisions that we can return to productive agricultural purposes!
2. As large-scale property-owners in many closer-in districts where ploughing under makes no sense, the Sovereign Wealth Fund (Housing Division), should certainly use its clout in the housing market to become an innovative developer of sustainably car-free communities. That would mean building up a lot of these areas into much denser mixed-use communities, whose density allows the installation of economically sustainable mass transit systems that can link them to each other and to nearby city centers.
3. The economic crisis can reliably be expected to get quite a lot worse than at present, before it gets any better. We need to use the assets of the Sovereign Wealth Fund to invest in our national infrastructure at all levels. Yes, Keynesianism– as with FDR’s New Deal. But this time, Keynesianism with a strongly pro-Green purpose. Wind far,ms and all other forms of renewable energy. Innovative forms of cradle-to-cradle housing and manufacturing. The whole shebang. And perhaps as a capstone project: A completely new, Ultra-High-Speed Rail System that knits the whole country back together in a way that we haven’t seen since Eisenhower’s Interstate highway system.
4. As another part of the rebuilding of the nation’s social and economic infrastructure, we should have a commitment to an excellent, universal and single-payer healthcare system, and other essential parts of a caring and accountable human welfare system.
It might seem crazy to think that, amidst the present crisis, our country could even start to think of financing projects like those mentioned.
But here’s the thing: Suddenly, we taxpayers find we have “bought” this huge bundle of assets. (Okay, yes, and liabilities, too)… And suddenly the numbers everyone is talking about in regard to these assets are absolutely enormous: right up there in the area of– or in many cases, well above– the costs that have always been mentioned as necessary in order to “fix” (or tinker with) this or that other aspect of the national system.
So now we, our legislators, and our next president will all have to suddenly think very “large” about what to do with these big new commitments Hank Paulson and Ben Bernanke have bequeathed us with. So let’s think just a little larger still. Let’s think about what the point of all this “wealth” and all this stuff is. Is it to enable a few superstars of the stage, screen, ballpark, or news-anchor’s desk to become even more unimaginably wealthy that before? Or is it to start over at trying to build a national community that values everyone, and that supports everyone to live up to her or his maximum human potential?
Time to think big here. (And yes, please add your own ideas below on how we might use the present opportunity to re-imagine America.)
Alternatively, we could just return to an increasingly plutocratic, mean-spirited, and unaccountable business as usual…