by Martin Harris
It’s been standard practice in this column to source all stats and quotes offered, but here’s an exception: the “rich” (1%, in Occupy-Wall-Street lingo) earn and save more than the non-rich 99%. Yes, we know that. We also know that they invest, even in such things as government bonds, to earn returns, and that when the 99% borrows via government debt, it obligates itself (or, in the case of long-term debt, its children) to pay interest to the 1% they despise. And we also know that the Left enthuses over government borrowing more than the Right. Question: why, then, would the Left agitate for policies –OWS wants more government spending (based on borrowing, of course) for education, jobs, health, overall “equality”– which fatten the despised opposition? It isn’t a new pattern: a century ago, the targets-of-choice were the robber barons of industry who had just brought ever-lower-cost electricity, refrigeration, indoor plumbing, central heating, and higher wages to a soaring recently-urbanized Industrial Revolution wage-earning population and in ungrateful return were labeled by such Progressives as Prez Teddy Roosevelt as “malefactors of great wealth”.
Predictably, it was Adam Smith, the 18th century Scottish writer on things social and economic who first in (semi-) modern times opined considerably on the strange phenomenon of resentment-to-benefactors, in the context of his other discussions of more normal human economic behavior in supply-and-demand, the invisible hand of the marketplace, and so on. In his day, the “biting the hand that feeds you” phrase was already ancient wisdom in Northern European folklore. In the case of the OWS folks –typically, higher-than-average in education, and, if you ask them, in intelligence and social status as well—one can’t plausibly make the argument that they don’t know what they’re doing with their eat-the-rich-but-borrow-from-them-first demands, only the first part of which shows up on Occupy posters. Or maybe they have in mind the Old Testament solution to the problem of excessive-wealth-transfer-via-debt-payments: the Jubilee Year cancellation of debts, freeing of servants, and return of rented lands.
An equally ancient solution (in modern times, exercised by the Federal Reserve) is currency devaluation via reduction of the gold or silver content, switching to paper, first gold-backed, then not (think “greenbacks”) or, now, printing so much that purchasing power collapses and debts can be re-paid for pennies on the “real” dollar. Think the wheelbarrows of paper currency in the Weimar Republic. Since its founding in 1913, the Fed has created fiat money so enthusiastically that it now takes $22.70 to buy what a dollar bought then. Any or all of these options may be in the minds of the eat-the-rich protestors. The entire phenomenon is well discussed, once again, in the just-published “Debt—the First 5000 years”, by David Graeber. Or maybe the OWS folks just want to borrow, let the interest pile up (a virtual, but unreal, fattening of the lenders) and then default. Munch, munch. They aren’t putting their monetary plans on their dietary posters.
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Literally, there’s nothing in Leviticus about “Jubilee debt-cancellation”, even though a modern global-activist group labels its campaign just that for all Third World countries to renounce debt to First World ones; it’s more about land tenure, sabbatical fallow years, indentured-servant emancipation, and so on. And, to this day, two of the three major religions pledge allegiance to no-interest-loans, while finding devious but acceptable ways for the money to be rented just like land or furniture. So, debt-cancellation as an approvable tactic for OWS advocates is unlikely, as their college-loan-based economics classes have already taught them. Remaining option: personal bankruptcy declaration. Not an attractive path to OWS-demanded income-re-distribution, either, as these status-sensitive folks surely understand. And the psycho-analysis profession has a convenient label for holding mutually exclusive concepts simultaneously: Cognitive Dissonance. Unfortunately for the rest of us, both the 1% and those of us in the 99% but not camped out on Wall Street (latest OWS demand: the west-end-of-Wall-Street Trinity Church micro-acreage for overnight tenting) CD can be found throughout government policy prescriptions.
Chief amongst these recently is the politically-inspired fiction that home-owner wannabe’s who can’t afford to carry mortgages should be awarded them anyway (the Community Re-Investment Act) together with the Fed-created credit-bubble (on behalf of government-supported enterprises Fannie and Freddie it printed dollars to buy the predictably worthless paper) which caused the present recession. Next in line (Humble Scribe prediction) the “doc-fix”. That’s Federal slang for the Sustainable Growth Rate in Medicare budgets, one which requires a cut in physician payments guaranteed to cause practitioner departures, and thereby brings about “the fix”: year-after-year official disregard of the SGR “savings” requirement. To get back on track for the excuses of the last 14 years would now demand a 27% cut in physician pay. Most MD’s would then reject Medicare patients or quit; some already do or have. Cognitive Dissonance: politicians can’t handle the physician departure and can’t handle the real cost of Medicare either, so they train themselves to avoiding thinking about both at the same time at the same conference.
The opposite of CD is shrewd (but probably short-term) cleverness, and it illustrates well in the Fed policy of starve-the retail bond-buyers , most of whom are not 1 percenters: interest rates on Federal paper are now below inflation, so the imprudent buyer-investor loses on the transaction. And maybe not quite clever enough: investment advisors to the 45% now urge them –us– to buy reasonable-dividend utility stocks instead. Lesson for the eat-the-rich-but-fatten-them-first OWS folks: you can’t force such purchases. Once you’ve learned that, maybe you would prefer to treat any of us non-purchasers whom you can capture in the finest traditions of rural French gastronomy: nail their feet to the floor, force-feed them, harvest their oversized livers for pate-de-foie-gras, and, then, just as in your slogan, eat them. We can avoid that by avoiding you.