Saturday, October 17, 2009
There is Something Wrong With This Picture
This week had a lot of good news for Wall Street. The Dow Jones indicators topped 10,000 for the first time in many months after dipping below 7000 at one point. Then because stocks were on the rise, the economists declared “the recession is over”. Then we heard that multimillion dollar bonuses were back for the big investment companies. Finally it appears that the financial bailout actually created more wealth and less competition for some of the country’s biggest investment firms Goldman Sachs and JP MorganChase. Meanwhile, the unemployment rate hovers near 10% (and that’s only counting the people who are looking; the real unemployment rate is probably closer to 17%), city governments are cutting back services, university systems such as California are having to raise their tuition significantly, and the Federal government looks at a multi-trillion dollar debt.
There is something wrong with this picture. How can the recession be “over” when only the wealthy and powerful are making their money again? My issue is not just that some people are making money while most are still struggling, but rather that the system that got us into the mess last year has not been fundamentally altered. It is a system that favors the powerful at the expense of the weak, and that concentrates the resources of the nation in the hands of a few while the many struggle. If Goldman Sachs is making a bundle, then they should pitch in for health care for every one in this country, and their wealth should be spread to better not just the wallets of its top execs but the people in the communities where they operate.
Ralph Estes argues in The Tyranny of the Bottom Line, that corporate “success” should not merely be measured by the profit margins and financial returns to investors, but on the social and environmental impact on employees and vendors, and the communities where companies operates. By that measure Goldman Sachs and JP Morgan Chase are dismal failures and the recession is far from over. While they were given bailout money to make affordable loans to people, they instead have used that money to trade on the stock market, and then passed the earnings on to themselves.
E.F. Schumacher argues in Small is Beautiful that we need to move from an economic model that is constantly focused on growth to an economy based on sustainability. The subtitle of Schumacher's book is "Economics as if people mattered." What a novel thought! The extreme capitalist model on Wall Street and in the business sector constantly measured growth, which in a world of fixed resources means loss for others. Thus, we get the obscene disparities between the haves and have-nots not only in this country but even more so around the world. Instead we need to create an economic model where they economy serves the needs of communities and individuals and is built on a commitment to community sustainability rather than individual gain.
There are some companies that have begun to get the idea that they are part of the community rather than predators on the community. There is a growing movement of socially responsible businesses that see their mission beyond their own bottom line. A company can do good and do well at the same time. The executives there may not run off to the bank with a multi-billion dollar bonus but the employees of those companies are paid well.
I am not an economist, but I am also not an idiot. Don’t tell me that the economy as we now have it is working. We have tried that slight of hand far too many times. The financial and economic system itself must be drastically altered so that we have an economy where if one suffers, all suffers, and if one succeeds, all succeeds. That is what community,justice and being socially responsible are all about.