NeanderPubs, ©2008 UrbisMedia
Two of the main pillars of the American Dream are the house and the car. The privately-owned home, the equity in which comprises the stored wealth of most Americans, and cheap mobility, which allows them to reside more cheaply because of the sprawl of the American metropolis, are going down the tubes. Thanks to the Republicans, who have sold them on a con job that has siphoned more and more American wealth from bottom to the top of the social structure, their dream is much diminished. It had been a masterful job of selling enough fools to put the likes of Reagan and the Bushes in the White House, the DeLays and Grahams in Congress, and Alitos on the Supreme Court. If the housing and gas crisis of today, and the bailouts—once again, of the big guys, by the little guys—don’t convince the American people that they have been conned, this surely will be, if not the end, the Wal Mart-ing of the American Dream.
In this piece, we will deal with the housing pillar of the American Dream.
Ronald Reagan, a not very bright, but affable, dupe for the Republicans, gets much of the credit for the current problem. Mr. “De-regulation” felt that the American economy was being held back by too much government regulation. Laissez faire was the answer—take the regs off and let business soar free. It did, right into the Savings and Loan crisis, the precursor to what is happening now. Most of the perpetrators walked, among them Neil Bush, bro of The Prince of Ineptitude, and the S & L’s mostly got bailed out by the American taxpayer. Dan Shore, the venerable NPR news analyst, tells a story about a person who called him during the S&L bailout of the late 1980s. The man told Shore, “I don’t think that the taxpayer should have to pay for the bailout; I think the government should do it.” Mind you, they probably still will not get it. They probably will remain easily distracted by trying to control woman’s rights over their own bodies, or worrying that gay nuptials will ruin their marriage (not realizing that financial problems of their own will be what ruins them), or that the great Muslim invasion is coming soon to their home town. They are, frankly, not bright enough to see it; the are Republican voters.
The Republican leadership loves to talk about capitalism and the “free market,” and free competition. This is their little bow to Social Darwinism. But, of course, it is all fluff; when business screw up—especially businesses with good lobbying and contributions records with the party—they don’t have to pay the consequences they way Mr. and Mrs. Public do. Suddenly, government, the very monster that Republicans run against, becomes the benevolent cash cow that suckles those businesses back into solvency. The method used to reward bad behavior is that good old reliable fear. Tell the people that, if these businesses are not bailed out, there will be even worse consequences than the problem the businesses engendered. More succinctly, Republicans pols are hypocrites. Democrats can be intimidated into this as well; if they think the public has been well-conned by Republican rhetoric, many of them may feel they have to go along. The current “rescue” of Fanny Mae and Freddie Mac, run by men who receive handsome salaries, is such an example.
The Republicans love to talk about how they won’t raise our taxes. But they get huge amounts from the taxes they do collect, which they are always pushing to raise from the middle and the bottom. Reagan also pumped huge amounts of taxpayer money into defense industries, an inflationary hellhole in which products become obsolete sometimes in a matter of days, and the rest are blown up or sold to the Iranians in the unconstitutional Iran-Contra deal. But that’s a different part of the American Dream.
With little oversight thanks to de-reg American businesses have had a field day. Many started heading off to places where labor was really cheap—their patriotism was de-regged as well—and the securities “industries” (they don’t really make anything) began having fun screwing people out of their savings with junk bonds, and arbitraging their former places of employment. Still, they kept loyally voting for their Republican leaders who promised them such life-enhancing policies and putting “under God” back into the Pledge of Allegiance. They were like frogs that get cooked in water under a slow boil because they don’t feel the temperature rising. But the dream was dying out from under them. Families needed two wage earners to keep the dream up, often neither of them with pensions, union protection, or health benefits. But food could remain relatively cheap if their politicians used their taxes to pay off the farmers; products could remain relatively cheap if some American industries could head for China or South America to keep the cheap crap coming into big box stores and outlets.
Little by little Americans allowed themselves to be cooked, their dream to be diminished, assuaged that their Republican champions would stave off the onslaught of abortions and gay marriages and hold off the infidel by putting God into every public building. And de-reg would be their economic savior. Enron could have a field day screwing California, and then their own workers, and little would be said about it. A few biggies would go down, but de-reg would remain in place. Big Pharm would be able to get some drugs (you can’t show a woman in a bra in television commercials, but the biggest drug pushers in the universe can sell you one overpriced drug after another between the evening news) out there faster and get those profits in before people starting croaking. Regulations on auto emissions would become a joke, so the healthcare that forty million Americans don’t have wouldn’t be there when they would need it. (Blame it on the “tree huggers”; blame it on the illegal aliens.)
The cooking frogs might have begun to realize that the water was getting hotter, but then planes flew into the World Trade Center buildings and the Republicans were given a gift even they could not have prayed for (or did they?) They could de-reg the Constitution! Keep the people frightened, so that the necessary huge defense budgets (underwritten mostly by our Chinese friends), but make sure that nothing seems to change at home. There would be a “war on terror,” but it would not interfere with shopping. Shopping requires money, and Americans, no stranger to the credit card have something like the lowest savings rate in the developed world. Gross private debt is enormous, accounting for $1.5 Trillion in consumer spending. Meanwhile, the no-tax Republicans would not raise a cent in taxes for their war—they put it on the national credit card. If this sounds like some crazy fairyland that might all come to crashing halt someday, it is. Americans were spending like there was no tomorrow (the tomorrows their kids would pay for).
But the illusion seemed financeable. There were those houses, those temples of growing wealth—ever-increasing equity. All that was necessary was to convince homeowners that it was safe to re-finance some of that equity out for more fun and purchases (they would never have to pay that adjustable interest rate because things always go up in America—just listen to a Bush speech on the economy). They could even get mortgages for people who had no jobs to pay them, bundling their commission payments into the deal so they at least would get paid. The Great Ponzi was being built on the altar of De-Reg, all bundled up and hidden in securities instruments and sent out to even the supposedly most clever financial institutions. Even Fannie and Freddie got conned.
The rest we know too well from the nightly newscast. The now familiar Republican scenario: “Something has gone terribly wrong, probably because of some vague thing that Liberals have done. Our businesses are in crisis and they employ our workers, so we must—reluctantly—use government to “rescue” them—for the good of the country (or else).”
Bottom line: Suddenly we learned that WE ARE NOT WORTH WHAT WE THOUGHT WE WERE WORTH. Well, at least the little guys.
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© 2008, James A. Clapp (UrbisMedia Ltd. Pub. 7.26.2008)
See also, Archives, 43.1, and 43.6, on the subject of government resgulation.