I read the newspaper today and many of the articles were dedicated to discussion about California’s economy. The liberal newspaper I was reading was well-satisfied with Jerry Brown’s budget praising it as aggressive in cutting the necessary fat from the budget while suggesting reasonable increases in taxes to make things balance. These articles mentioned the opposing view as mere obstructionist posturing, that the lack of adequate budget cuts proposed by Governor Brown and reliance on a special election to increase taxes were considered edicts from a holy see.
It made me think about Egypt. I thought about the violent efforts to overthrow the governments in Egypt, Tunisia, Lebanon, and Yemen. It made me think about Great Britain and Ireland, Italy, Spain, Japan, and Portugal where there are huge economic troubles. I thought about all the countries around the world where economic troubles threaten to change the status quo.
I thought about whether the economic crisis here in the US could really cause such dramatic global ripples and is that what we are really seeing? I decided that it was possible and worth exploring.
The amazing thing is that if it is true that the fallen US economy and the resultant loss of confidence in institutions – both economic and political – then what we have happening is nothing less than a Greek tragedy on a global scale. Greed is what upset the balance of world power, the greed of the average American, the greed of bankers, the greed of financiers, and the greed of foreign investors.
The rampant greed damaged trust and that I suggest is the important piece of the puzzle. Since I was a child, I was taught that repaying debt was a moral imperative. To borrow and not repay was tantamount to stealing. It was a basic tenant of living that if you borrowed, you repaid. Bankruptcies were a Scarlet Letter of a Hawthornian scale. Loans were made based on trust.
I suggest to you that to erode the trust of the rich who loan the money is a fool’s game. We are seeing that once the rich lose faith that the poor can be trusted to repay debts then lending is restricted to such an extent that nobody will be able to borrow. I’d also suggest that for the rich to covet their wealth too tightly leads to what we’re seeing overseas right now, also a fool’s game.
This is the state of affairs we are moving toward. So we all better be rich, or we’ll be forced to live out our poverty because nobody is going to lend us a dime. Credit is the great veil. Credit is the façade we erect to make ourselves and other people believe that we’re richer than we are. Without credit we’re all a lot more materially impoverished because we have to live on our income.
The gap between rich and poor has become more evident than ever in my memory. The middle class in this country has become a plastic mirage and the party is over. Too many people are walking away from debt unafraid of the stigma of bankruptcy because there’s no longer any stigma. The trust in the system to recover is gone so people do not have faith to endure their fiscal troubles.
With each person who walks away from a mortgage, with each person who runs up credit and declares bankruptcy, the trust erodes a little more. We are seeing now that the rich prefer to trust other rich people.
Word on the street is that the wealthy and the banks were bailed by the Federal government. If it’s true, that money has not come back down to the level of the average man, why is that and where did all the money go? Where is it? I believe that the answer lies in the fact that the stock market is doing well. The rich are betting on the rich, they are not willing to risk betting on the poor.
How will the US economy absorb the coming government cuts? Over the past two years, the Federal government has spent-spent-spent and yet local and state government has had to cut severely in California.
Federal Government cuts will mean more losses in local jobs, losses in local taxes, losses in local spending among shops and restaurants. More bankruptcies and defaulted loans are likely to follow in turn.
I suggest that loss of trust is causing the troubles and greed is at the root of this loss of trust.
So what is causing the loss of control of Egypt’s government with a leader who has been in power for 30 years? Is it that the people are feeling the pinch of the loss of trust? Or is it that there’s a perception that the balance of power in the world has shifted giving courage to demand change? I’m not well informed about all of that so I can’t answer those questions. But I suspect it’s a combination.
What will happen if the general public understands that like Egypt the rich aren’t lending simply because they can choose not to and don’t trust the ability and/or the willingness of the poor to repay?
What will happen when the cuts begin to be implemented and California college tuition rises dramatically again for the umpteenth year in a row? What happens when poor kids figure out that the education they’ve counted on to lift them from poverty is out of reach?
What if the poor kids decide that they’re poor for good in this country just as other kids in other countries who are now protesting in the streets? What if they figure out that the education ladder to a better life has been taken away from the brick wall they’re facing?
Is what we’re seeing in Egypt and other countries foreshadowing? The people of this country –rich and poor – need to spend some time on reflecting on what we’re seeing overseas. We need to face the realities that wealthy people are wealthy at least in part because the masses allow them to be so. The poor need to recognize that advancing to middle class relies on education and credit given on the basis of trust.
What happens when the ripples from loss of trust rock the unsteady boats we’re sitting in?