Maybe it’s the whole economy that was structured by cows. The focus has been Wall Street, and there’s plenty of craziness there to focus on. People buy and sell hogs that aren’t born yet, fer chrissakes! Crops that haven’t grown yet, all kinds of insanity. They take bets – essentially bets – on which loans will go bad, and so on. It’s nuts, and that’s even with regulation. Without regulation it gets downright bestial.
But it’s obviously much more than Wall Street.
There’s been a lot of talk about debt – private debt, public debt – and how it’s been ballooning for 30 years. It was already considered problematic when Reagan, the balance-the-budget president, jacked the federal deficit to record levels. And as we all know, Bush had to pull out all the stops. Jack Rasmus (Z, Nov. 08) has a very thorough rundown of
Credit card and mortgage companies are now pushing new debt with ads that center around the bailouts!
Yesterday the Senate killed the vote on the auto bailout - playing 'chicken' with maybe 2 million jobs, and possible economic depression - but they keep talking about this the wrong way. It isn't clear at all to the American people why these humongous companies are in debt in the first place. It isn't just because sales have been declining. And it isn't really, except just in the immediate, because of the Wall Street crunch. Why would that bother big manufacturers? Don’t they have money? Or if they don’t, why didn’t they realize it before now?
It’s the way they run their businesses, by trading on their status - in a way that small businesses can never do, so really on their size. (Similar, you have to admit, to the way the big financial institutions were running: these are not bad loans, not irresponsible reckless screwball cowboy ventures, we wouldn’t risk our business that way, we’re big and well respected!)
Turns out, really big businesses don’t run the show on the money they take in, or on their savings or cash reserves, or even on loans that they plan for and include in annual or even monthly budgets. It’s more proof, in case we needed it, that capitalism doesn’t actually work, at least not without passing a giant collection plate around the plebes, sometimes (and always at least indirectly) at the point of a gun – serfs, Native Americans, African slaves, taxpayers, somebody has to prop up this façade at all times.
The dirty secret is, the Captains of Industry keep their show on the road by borrowing money, tens of millions, on a near-daily basis, and pay it back almost daily, too, usually. Your typical manufacturing giant or other towering edifice of capitalist potency will have, secreted away in the bowels of the organism, a small office that swings into action at the end of every business day, or at some point near the end. The function of this office is to check the daily balance – take versus layout – and if there’s a shortfall, borrow, say, $10 million or so, over the phone, just to tide the big boss over until tomorrow. Or, on days when there’s a surplus, pay it out.
There was a recent episode of “This American Life” that told the story, and jaws hit the ground in kitchens and living rooms all over
For some like GM the unwinding is happening so fast, they may code by the new year or soon after, taking 2 million or so jobs with them (in addition to the million-plus already down the crapper this year). That’s a lot like a depression, folks.
Talk about a house of cards.
But it’s an inescapable fact, it seems to me, that the kind of free money the carmakers are or were hoping for, sans fundamental restructuring, is just feeding the bad wolf. It wouldn’t even seem to delay the inevitable very long, maybe just long enough for stockholders to pull out but probably not long enough for 10-plus year employees to find another home, especially not nowadays. So the “free” marketeers don’t like it because it enables bad practice. But there’s a good reason for social progressives not to like it either: we could wind up paying them to kick people out of work.
And I know I’ve said it before, but we need to pay them to put people back to work. We need the opposite of an IMF, something like a Social Monetary Fund, and it needs to be one with a vision beyond the WPA or CCC. It needs to encourage investment in what economists might call “externalities”: infrastructure needs; gainful employment, yes, but also alternatives – a kind of social diversification – renewable energy, public transportation, etc.; we need to encourage freight to move by rail, not over public roads; so many things.
Now, GM can’t do that alone, no matter how much we lend them. But that’s where the Fund’s management comes in, a sort of coordinating function – “planning” you might call it. GM, for example, gets a bailout and it required to participate in restructuring, not just internal restructuring but external restructuring, of the whole economic mess.
It doesn’t have to be structured by cows. We are smarter than cows, in theory. The economy can be structured by people. It is anyway, just not by the right people, and not by enough people.