Welfare for the rich

Richard Becker of PSL contrasts the US government’s response to Hurricane Katrina with their response to the subprime debacle. In the aftermath of Katrina, the poor and middle class were left to fend for themselves, yet in response to the subprime crisis, the Fed immediately cut interest rates, a move widely interpreted as bailing out investment banks.

Most of those in the relatively small section of the establishment that opposes corporate bail-outs fear that they will lead to a greater and deeper crisis further down the road. Their fears are well grounded. But for the typical corporate CEO, what matters is this year’s bottom line.

The latest bailout reaffirms that far from “free enterprise,” what we live under today is a system of state monopoly capitalism.

Meanwhile 1 in 5 working families, about 41 million people, can’t afford basic needs like health care and housing.

One comment

  1. Meanwhile half the world’s population lives on $2 a day or less. Basic health care? Many don’t have food, water & shelter.

    Real poverty (as opposed to relative poverty) does exist in this country, but most of us haven’t seen it because it’s not that visible. Poverty in Los Angeles, for example, (aside from the 50,000+ homeless population, less than 1% of the population) typically means food stamps, shelter, TV, and basic phone service.

    My great aunt worked with people in Appalachia where standards of living would appall you. Cross the border to Tijuana and see shanty towns without water, sanitation, or schools. Go to south and southeast Asia where people live in homes so small that there isn’t enough floor space for them to all sleep at the same time. In Bangladesh, tens of thousands of people live on the railroad tracks with no shelter at all. In India, low-caste women maim their children because they’ll have a better chance at survival as a beggar. (Yes, it really happens.) And Africa– let’s not even go there.

    I empathize with people losing their homes. I lost one in the 1990 real estate bubble, thanks to very similar circumstances (rising interest rates and 35% loss in property value). I also lost my corporate/union job the same year and (thanks to the quirky CA UI system) wasn’t eligible for unemployment. Times were hard after that– but I didn’t starve, I went into business for myself, and I now own my own home outright (no debt). I got a lot of help along the way. Little of it was from any level of government.

    My sister lives in a 2-bedroom apartment with three kids and a fiance; she scrapes to make ends meet. But they have food, phone, TV, health insurance for the kids (thanks to a state program), and a working automobile. Her son takes music lessons, and all three kids go to summer camp each year. Would I like to see her situation improved? Yes. Could she improve it herself is she really wanted to? Yes.

    I don’t trust the government to have my best interest at heart, so lack of more government help doesn’t bother me all that much. When I see someone who needs help, if I can, I help them. I hope you do the same.

    I think it’s wrong that our government supports corporations and leaves individuals to fend for themselves. The economic divergence between richest and poorest in this country is disturbing. Unfortunately, that’s the “new” capitalism: even the government is for sale.

    But on a relative scale, even many of the poorest Americans have it pretty good. On a scale of priority problems that includes climate change, worldwide poverty, war, and population growth, this one is hard for me to get excited about.

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