Money and Morals. The Big Lie. American Class System - We Are Not All Created Equal, by Stephen Marche. Published in the January 2012 issue There are some truths so hard to face, so ugly and so at odds with how we imagine the world should be, that nobody can accept them.
Here's one: It is obvious that a class system has arrived in America — a recent study of the thirty-four countries in the Organization for Economic Cooperation and Development found that only Italy and Great Britain have less social mobility. But nobody wants to admit: If your daddy was rich, you're gonna stay rich, and if your daddy was poor, you're gonna stay poor. Every instinct in the American gut, every institution, every national symbol, runs on the idea that anybody can make it; the only limits are your own limits. Which is an amazing idea, a gift to the world — just no longer true. Hulton Archive/Getty; Oli Scarff/Getty (Cameron); Lewis Whyld/PA Wire/AP (riots) FIG. 2: Why is this man laughing? Joseph Stiglitz: “A Banking System is Supposed to Serve Society, Not the Other Way Around”
What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed.
Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply. It was this, more than anything else, that led to rapidly declining incomes. Farmers then (like workers now) borrowed heavily to sustain living standards and production. Because neither the farmers nor their bankers anticipated the steepness of the price declines, a credit crunch quickly ensued. Farmers simply couldn’t pay back what they owed. The cities weren’t spared—far from it.
The value of assets (such as homes) often declines when incomes do. Given the magnitude of the decline in farm income, it’s no wonder that the New Deal itself could not bring the country out of crisis. The Agriculture Adjustment Act, F.D.R.’s farm program, which was designed to raise prices by cutting back on production, may have eased the situation somewhat, at the margins. Too Smart to Fail: Notes on an Age of Folly. Notes on an age of folly Thomas Frank [from The Baffler No. 19, 2012] The “sound” banker, alas!
Is not one who sees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows so that no one can really blame him. –John Maynard Keynes In the twelve hapless years of the present millennium, we have looked on as three great bubbles of consensus vanity have inflated and burst, each with consequences more dire than the last. First there was the “New Economy,” a millennial fever dream predicated on the twin ideas of a people’s stock market and an eternal silicon prosperity; it collapsed eventually under the weight of its own fatuousness. The Shadow Banking System. Paul Volcker Pushes for Reform, and Regrets His Past Silence. Economists Who Did Their Homework (800 Years of It) - NYTimes.co. The Great Rupture. Simon Johnson: What Is Goldman Sachs Thinking? The next financial boom seems likely to be centered on lending to emerging markets.
Sam Finkelstein, head of emerging markets debt at Goldman Sachs Asset Management, summed up the prevailing market view - and no doubt talked up his own positions - with a prominent quote in Monday's Financial Times (p.13, front of the Companies and Markets section): "Debt-to-GDP ratios in the developed world are about double those in emerging markets and they're growing.
This makes emerging markets interesting because you're pick up incremental spread [higher interest rates compared with developed world rates], and in return you're actually taking less macroeconomic risk. This is a dangerous view for three reasons. First, against all historical evidence, it assumes that the only macroeconomic risks we should worry about - in general or for emerging markets - are related to standard measures of government fiscal policy.
Goldman Sachs knows all this, of course. Thomas Frank: We Should Avoid the Austerity Trap. Friendship in an Age of Economics - Opinionator Blog - NYTimes.c. Erin Schell The Stone is a forum for contemporary philosophers and other thinkers on issues both timely and timeless. When I was 17 years old, I had the honor of being the youngest person in the history of New York Hospital to undergo surgery for a herniated disc. This was at a time in which operations like this kept people in the hospital for over a week. The day after my surgery, I awoke to find a friend of mine sitting in a chair across from my bed. I don’t remember much about his visit. We benefit from our close friendships, but they are not a matter of calculable gain and loss. The official discourses of our relations with one another do not have much to say about the afternoon my friend spent with me.
The encouragement toward relationships of consumption is nowhere more prominently on display than in reality television. Op-Ed Contributors - Are Profits Hurting Capitalism? - NYTimes.c.