The Trouble With Rich People
The big news today remains the failure of the supercommittee, also known as the debt panel, to reach a deal on the national debt.
Accordingly, the global markets plunged yesterday, politicians are posturing and the public is duly terrified. CNN’s sage analyst David Gergen asks, “Have they gone nuts in Washington?” I’ll answer that: No.
The Washington Post asked readers, “Are you surprised?” and 3,900 put in their hard-earned two cents. The only thing that’s nuts is to be surprised. The White House and Congress couldn’t solve this during the staged drama of the debt ceiling vote — a phony issue if there ever was one.
So the politicians, not quite sure how they might be blamed and totally clueless about what to do, formed a committee. Every political body that wants to refuse to do something, forms a committee in order to look like they’re doing it.
First of all, the national debt is a much overrated problem as such. I heard David Brooks, the New York Times’s moderate Republican, proclaim on PBS on Friday that the United States was going to follow Greece down the tubes within 10 years. That’s pretty scary, but incredibly misinformed.
The supercommittee’s mission is bogus. All this fear bubbling around is based on the hoary analogy that the nation must operate like a family household. Nevermind, that a very large number of households are deeply in debt. The ideal is that you go out to work, earn money, and never buy more stuff than you can pay for.
If households ever held strictly to this particular myth, the United States would be like Greece: poor. Even the most conservative household borrows money, usually to buy a house and a car. And when the economy is growing, safely buys too big a house, too good a car and easily stays out of trouble.
Families also do some very uneconomic things. For one thing, they devote huge sums of money to educate their children who, in return, give back nothing to the family. The children, in turn, take on their own debt that they struggle with for years to come.
If the great minds who produce nothing but political slogans were right, all these families are living beyond their means and our fabulously rich nation would have collapsed long ago.
But something happens that’s not quite tangible. All this investing into homes, cars and education contributes to our economy, and our well being, and magically we become richer. Maybe, spending is not the problem. Maybe, it’s the economy. Unemployment is high. Economic growth is stagnant. There are many, many sad stories out there.
Here’s where rich people fail. The current generation of budget cutters, radical fiscal conservatives, are trying to convince ordinary people that somehow, rich people will create jobs.
This myth is a more insidious than the family budget analogy. Rich people are no dumber than the rest of us. They do not put their money down unless they expect something back.
So I ask you, Who is going to build a factory and hire people to run it if they cannot sell anything they make? That’s the trouble with rich people.
Most people who are not rich cannot buy anything. In the absence of buying, there is no selling. When there is no selling, there is no building, there is no making, there is no producing, there is no hiring. Without hiring, no buying, and down, down the tubes we go. (That by the way, is likely a big part of the story of poor countries like Greece.)
One loose end is that there are not enough rich people to buy enough stuff to pull the rest of us along, no matter what Fox News says. There is so much stuff any one person can buy, much less use. And no one can seriously argue that rich people want to pull anyone anywhere.
After the banking and investment industry (which should never have been allowed to merge) went down the tubes in 2008, we didn’t go the tubes. It looked bad for a while. The losses were in the trillions.
So why didn’t the United State collapse?
A very large group of citizens continued to buy stuff. Who are these heroes?
Not the rich people. They all panicked when the portfolios melted. It was the old people on social security. The disabled people and sick people on disability. The poorest of the poor who need welfare and food stamps. All of the villains who get money from the evil entitlement programs.
No, we didn’t need a bipartisan committee to take away benefits that help everyone. Compromise and accommodation is not always the higher moral ground. The government is not evil, and corporations aren’t saintly — they aren’t even people. But we could go back to the tax rates of the very Republican 1950s.