The Other Pandemic
Coronavirus didn’t crash the economy; the greed of the rich did.
Let’s begin with admitting that there is huge wealth disparity in the United States.
(Source: Pew Research Center)
This disparity is even more pronounced in the ownership of equities. Although the ubiquitousness of mutual funds makes it difficult to track ownership of individual stocks, the most recent data I could find from multiple sources pegs the numbers at 84% of the stock market being controlled by the richest 10% of investors.
Once upon a time, the value of the stock market was actually based on the value of the companies it represented – their assets and ability to produce income were what drove actual Return on Investment (ROI), and because for the most part well managed companies produced consistent results, investors got actual value when they purchased stock in a company. But for some time now, much of the anticipated ROI of any stock is simply in the expectation that as wealth is generated in the economy, the wealthy will seek to put their cash where it has greater passive earnings potential – the stock market. And combined with the bi-weekly dump of cash into the market in the form of retirement plan contributions, the law of supply and demand has regularly and reliably pushed the price of nearly all stocks higher (“a rising tide lifts all boats”). Of course, some companies still manage to go broke and go out of business; some do better and increase in value faster than the rest. And then there are the Apples, Amazons, and PayPals of the market, whose success rockets their values to the top of the market. But the whole thing is in large part a house of cards, based on the faith of the very small minority of Americans who essentially own it, that their riches are not only safe there, but prosperous.
It is important to note that the onus on creating ROI for the richest has led to the development of a less than healthy corporate environment. Company Boards, ever mindful of the investor’s bottom line, pay ever more exorbitant salaries for “star performers” in the C Suite, while cutting back on things they see as needless luxuries, like worker salaries, healthcare, fully funded retirement plans, and prudent reserves for operations through downturns. Windfalls of cash are used to benefit the wealthy, in the form of executive bonuses, dividends, and stock buybacks (which tend to increase the amount of the first two items….) Oh, and let’s not forget cash for campaign contributions, so those Senators who got bought will stay bought.
In an ideal world, when something untoward happens, people invested in good companies would stay invested in those companies, ride out the storm, and come out the other side no worse for wear. The companies themselves would dip into their prudent reserves only as much as necessary, weather the storm, and then get back to business, and slightly reduce earnings until they had re-established their prudent reserves.
But we don’t live in an ideal world.
Far from it – America has become an oligarchy, controlled by the greed and fears of the rich. And so, what has happened in the face of this pandemic is that the greedy rich, ever mindful of their own personal fortunes, have been selling off their stakes in the market, driving down the prices (and perceived values) of those stocks, until they have become a self-fulfilling prophecy.
Friends, the companies in the market and the rich who own them aren’t victims of the crash – they CAUSED the crash. They are the drunks behind the wheel – addicts to wealth and the luxury it brings; mindless of the misfortune they bring to anyone else. Because “Fuck you, I got mine, and I intend to keep it, and get more if I can.” That, friends, is some people’s idea of what America is all about.
Again, in an ideal world, we would have gotten out in front of this pandemic instead of pretending it didn’t exist. But that’s a different blog for a different day . . . In an ideal world, large corporations would be using their prudent reserves to maintain operations even without cash coming in, and paying even those workers who were unable to work from home, for the simple reason that it’s the right thing to do. In an ideal world, we would be focusing government relief where it is most needed: on those most vulnerable people in our society, who have no safety net. We would be legislating immediate and easily accessible relief for the small business owners and the self-employed. We would be providing direct aid to state and local governments. We would assist all who have been unemployed or laid off with immediate income replacement. And we would say to all Americans, “If you are sick, get treatment; you will be covered. Your Social Security Card is now also your Medicare Card. You are covered.”
But instead, the people with whom we have entrusted our lives and fortunes have chosen to create a half-trillion-dollar slush fund to be handed out to the corporate interests, so that they can continue to fatten the purses of the money-addicted, irresponsible, greedy wealthy, while letting the poor fend for themselves. There is even talk in some quarters of sacrificing the 2-3% of the population who might die if we return to “situation normal” because “the cure can’t be worse than the disease”.
Friends, what has become obvious to me is that we aren’t just dealing with one pandemic sweeping our nation, we’re dealing with two: the virus that causes COVID-19, and the no less soul-threatening addiction to wealth on the part of the rich. This second disease has driven economic policy and outcomes for the greater part of my lifetime. It has not only wiped out our middle class and destroyed our democratic institutions, but it now threatens to kill the goose that lays the golden eggs. Enough is enough. We, the people need to step up and survive this crisis by listening to the medical professionals and scientists, and then this November, replace the politicians who pander to the rich with ones who work for us.