Yes, it is a proposal for a longer piece.
On Thu, Oct 23, 2008 at 01:32:45PM -0700, [EMAIL PROTECTED] wrote: > Michaell, I like this. But it seems like the opening of something much > longer and I looked for the next page without finding it. Is there more to > come? > > Gene > > -----Original Message----- > >From: Michael Perelman <[EMAIL PROTECTED]> > >Sent: Oct 23, 2008 8:36 AM > >To: [email protected] > >Subject: [Pen-l] plea for comments > > > >I need to submit a proposal to a major publication tomorrow. I have had to > >rush it > >off. Any comments would be appreciated. > > > >How is it that the American dream suddenly morphed into like a nightmare? > >The > >subprime crisis is a symptom of something larger and far more dangerous. > >Even the > >meltdown of Wall Street is a symptom of something larger and even more > >threatening. > >Without extreme care, the intended cure is likely to make matters worse. > >Papering > >over a crisis, even with a trillion dollar bailout, may temporarily > >eliminate the > >symptoms, perhaps even making the economy look healthy again, but the > >underlying > >problems are almost certain to break out again in a more virulent form. > > > >A rational response to the crisis requires recognizing the deeper, systemic > >dimensions of the problem. On the most superficial level, the public face of > >problem > >was a group of people buying houses they could not afford. This perspective > >is > >misleading, especially because many of the loans were to people who were > >already > >homeowners or small-time speculators who were looking to flip houses. > > > >Like a Russian nesting doll, another face is blow the surface: predatory > >lenders, who > >were pushing deceptive loans that could never be repaid. Pulling away these > >predatory > >lenders, exposes a more complex presence: the great banking institutions now > >on the > >public dole. These supposedly respectable businesses, protective of their > >public > >face, do not allow their corporate names to be used by the predatory > >lenders, but > >they represent a very profitable component of their businesses. At the next > >levels, > >first a dysfunctional financial system appears and, then, something more > >abstract -- > >a political movement fanatically committed to deregulation, which allowed > >the whole > >financial system to go haywire. > > > >Recent scrutiny has exposed most of these actors, but even deeper forces > >have gone > >unnoticed. To get a handle of these forces requires looking back at the > >pattern of > >crisis and response over many decades. Since comparisons of the current > >crisis with > >the Great Depression have become commonplace, that period may be a good > >place to > >start. > > > >The Depression of the 1930s had disastrous human consequences, but it made > >the > >economy stronger in the long run. In effect, the depression drew much of the > >poison > >from the system. It swept away outdated, inefficient, and obsolete > >businesses, plant, > >and equipment. Under extraordinary market pressure, business found ways to > >improve > >efficiency. Finally, the Depression wiped out a great deal of debt, while > >New Deal > >legislation allowed unions to lift wages. World War II economy built up > >considerable > >wealth in the U.S. while the economies of international competitors were > >left in > >ruins. This constellation of forces left business and the public able to > >purchase > >goods and services once employment recovered. > > > >Shortly after the war ended, the U.S. enjoyed what economists call the > >Golden Age, > >because the extraordinary economic performance of the time. Business came to > >expect > >that the experience of the Depression had taught government how to make > >those good > >times last forever. Obviously, they did not. > > > >By the late 1960s, falling profits created enormous dissatisfaction for > >business. > >Both business and the public tended to hold the Democrats responsible for > >the > >faltering economy. In the decades that followed, the Democrats managed to > >elect only > >two presidents, both of whom governed like traditional Republicans, while > >the > >Republicans became increasingly ruthless about promoting business interests. > >The > >underlying obsession of both parties was to resurrect the profitability of > >the Golden > >Age. > > > >I will tell the story of the people and policies that set out to recreate > >the > >economic performance of the Golden Age. The reader will see how, instead of > >a Golden > >Age, they gave the world a jerry-rigged Gilded Age -- one in which the > >gilding > >covered up an increasingly dilapidated economy. Profits still rose, > >approaching their > >pre-Depression peak, but their recovery marked deeper problems. > > > >Normally, one would expect healthy profits to be a payoff from a productive > >economic > >structure, based on intelligent investments in plant, equipment, and a > >well-trained > >workforce. Instead, the improvement in profits reflected a combination of > >cheap labor > >(real hourly wages peaked in 1972), deregulation, low interest rates, and > >financial > >manipulation. The driving force of this new Gilded Age was credit rather > >than income > >for the majority of workers. Recurrent crises should have signaled the need > >for > >fundamental change. Instead, government and business chose to treat the > >symptoms. > > > >-- Michael Perelman Economics Department California State University Chico, > >CA 95929 > > > >Tel. 530-898-5321 > >E-Mail michael at ecst.csuchico.edu > >michaelperelman.wordpress.com > >_______________________________________________ > >pen-l mailing list > >[email protected] > >https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
