Greed is not new, but previous generations learned hard lessons about the perils of consolidating wealth in too few hands. The gilded age led to the Great Depression of the 1890’s, and the roaring 20’s led to the stock market crash of 1929 and the great depression of the 1930’s.
Out of necessity, FDR instituted the new deal framework that reined in excessive financial speculation and established the modern social safety net. Add in expanded access to college education and home ownership in the 1950’s and you have the largest and most prosperous working class in global history.
Then Lewis Powell writes the Powell memo to the US Chamber of Commerce in 1971 as a call to arms for American corporations to co-opt the media, university system, and the government to advance the interest of American corporations. Powell was appointed to the Supreme Court in 1972 while major corporations deployed the strategy outlined in the memo.
American wealthy elites learned from 1950-1970, broad based prosperity was too expensive because they could not control the American people. By 1970, working class Americans were transforming the country through the civil rights movement, anti-war movement, equal rights movement, and were attempting to organize a poor man’s march on Washington D.C. when Dr. Martin Luther King Jr. was assassinated in Memphis.
Yet the wealthy elites knew the lessons of previous efforts to consolidate wealth in too few hands had led to ruinous depressions. Their solution was to make wealth insulated from depressions by privatizing profits and socializing losses.
First, President Reagan dealt a death knell to the American Labor movement by firing the striking air traffic controllers in 1981. Then President HW Bush negotiated, and President Bill Clinton supported the ratification of the North American Free Trade Agreement (NAFTA), which de-industrialized America by off-shoring millions of manufacturing jobs.
By the late 1990’s, Wall Street forced Congress to repeal Glass-Steagall by merging Travelers Insurance with Citibank, which gave Congress one year to break up the largest financial services company in the world. Congress caved and repealed Glass-Steagall. Then in the lame duck Congress at the end of Bill Clinton’s presidency, Congress passed sweeping legislation deregulating complex financial instruments.
Wall Street then utilized complex collateralized debt obligations rated AAA by captive credit rating agencies to loot restricted institutional investors like pension funds, life insurance companies and municipal investors, and prey on unsuspecting residential mortgage holders. By the end of 2006, institutional investors stopped buying the mis-rated securities, which trapped homeowners in rapidly escalating adjustable rate mortgages and destroyed the investment banks that got caught holding trillions of dollars of worthless securities.
Some banks hedged their fraudulent investments with credit default swaps that bankrupted AIG (the world’s largest insurance company). Wall Street’s exit strategy was “too big to fail”, perfectly executed by former Goldman CEO, Hank Paulsen, who was selected to be W’s perfectly timed Treasury Secretary.
The great recession protected wealth while millions of Americans lost jobs, homes, pensions, and retirement savings. No major player went to jail because President Clinton made the complex financial instruments legal, and President Obama refused to use the RICO laws to prosecute the rampant fraud on the American people (Google “William K Black”).
The method was replicated with the COVID-19 pandemic. The CARES Act gave temporary support to individuals and small businesses (which expired by August 2020), while authorizing the Federal Reserve to ‘invest’ $4.25T in large multi-national corporations. By year-end, 2020 GDP contracted 3.5%, but the Dow Jones Industrial Average index increased 7.2%, S&P 500 increased 16.3%, Russell 2000 increased 18.4%, and the Nasdaq Composite increased 43.9%. US billionaires net worth increased over a trillion dollars, while 30% of all small businesses failed, and workers with annual wages of $26,000 or less lost 10 million jobs.
Thankfully, the American working class is fighting back. For the first time in 40 years, there are multiple strikes ongoing across America involving thousands of workers in deep red (Alabama) and dark blue (New York) states. The great resignation has totaled over 32 million workers with monthly recurring all-time records in August (4.2 million workers quit) and September (4.3 million).
Now is the time for each of us to decide with whom do we stand?
I stand with the working class.