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Recession Woes Require Direct Action

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Recent news based on last year’s census data reported on how severely the recession has impacted different ethnic groups in the United States.  The report speaks in opposition to one of our longest-held cultural myths. Specifically, it refutes the capitalist, often conservative belief in the bootstrap mentality. As the legend goes, success and wealth go hand in hand with hard work and self-reliance. This current economic downturn has proven it untrue yet again. If all things were equal, which they are not and have never been, that old myth might have some validity. But the issue here is a question of starting points. They are not and never have been the same. Whites have long had more capital to begin with, and those non-white have had to make do with much less.

Seeking to put the matter in a broader context, I’ll take a different tact altogether. For an analogy, I’ll reach back into our nation’s past. As a native Southerner, I’ve seen the results of economic inequality for years. The antebellum South was in many ways a wealthy region, but most of its money was concentrated in the hands of a few wealthy planters. The majority of whites were poor subsistence farmers. Some participated directly in the plantation system. Others had no connection to it at all. African slaves had no power or money at all, of course. The elites at the top of the food chain ran the show. Ironically enough, on paper, the Southern states were the wealthiest, but only a small amount of what they made ever trickled down. No middle ground existed in between those who had everything and those who had not much at all.  A middle class had begun to coalesce in the North, but not so for its Southern cousins.

The Civil War utterly destroyed the South. The top heavy distribution of wealth which in many ways rivals our own today is part of the reason why the devastation was so intense and long lasting. With the growth and spread of industrialization in the North, the South slipped further behind the rest of the country in the years following the conflict. Its fate would be cruel enough if another catastrophic event were not to arrive. This time, it took the form of the Great Depression. Whatever income the South was able to accumulate was then wiped out by the Depression. And it wasn’t until the Post-World War II economic boom that a phenomenon called the Bulldozer Revolution brought the beginnings of modernization to the South.

Even with that effort, the South has always lagged behind when it comes down to progressive ideas and basic infrastructure. Concentrated wealth and education in one spot usually does facilitate innovation.  Evening the score is a bit like asking someone to run a race when another runner has been given a thirty second head start. But to return to the column that provoked my reply, racism, if not overt, then certainly institutionalized is to blame, in part. But essentially the system’s failing is that that so many of us place full faith in a system designed to concentrate wealth in small pockets and disinclined to assist those who do not have the privilege of favorable birth. Capitalism provides no incentive to do anything more than make money and to hang on to what it already has.   I think constantly about how lucky I am to have been born middle class. Having some degree of income that carries over from generation to generation influences everything: our basic physical health, our standard of living, how satisfied we are with our life, our level of education, what jobs are available to us, and many others crucial factors.

Income disparities create the ills that confound us as a society. Instead of fixing them fully, we devise band-aid solutions which sound effective but only treat the effects of a problem, not the causes. The way to solve a crime wave is not to build more jails. The way to address unwanted pregnancies is not to shame, guilt, and otherwise seek to humiliate young women. The way to get children and adults to eat healthily is to provide the resources needed to buy healthy products, not condemn them for being overweight. We can no longer wash our hands of the problem, or worse yet, outsource it to someone else. This is no longer somebody else’s riddle to solve. Should we be unwilling to act, we should never be allowed to complain about the aftereffects. It’s easy enough to pull yourself up by your bootstraps, but impossible when someone steals your boots.  

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About cabaretic

  • http://www.republicofdave.com Dave Nalle

    Amusing inversion of reality here. In fact, the current recession demonstrates the folly of redistributionist policy. Driving companies overseas with inflated wages, overregulation and high taxes all designed to underwrite the 50% of the population which takes from the government instead of contributing to the economy, has created an unsustainable situation.

    Progressivism has brought this country to the brink of disaster. Now is the time to reaffirm our commitment to capitalism and government which supports business and individual aspirations rather than crushing them.

    Dave

  • Glenn Contrarian

    I remember pointing out the income inequality to Dave Nalle, and his reply was to the effect of “so what?”

    You see, any effort towards income equality is to his mind nothing more than “wealth redistribution”. As far as I can tell, he really doesn’t get the point as income inequality increases, so does social disruption and dissatisfaction. Just ask the ones who wound up on the losing end of the French Revolution….

  • http://cabaretic.blogspot.com Kevin

    The argument has stalemated here for so long it’s hard to recollect at any point in history where it did not exist.

  • http://www.republicofdave.com Dave Nalle

    The French revolution had a deep gap between a tiny ruling class and an enormous class of the desperately – on the verge of starvation – poor. There’s no comparison.

    The whining about income inequality here is just laughable. What we have here is an underclass which is maintained at a level of luxury where a recent study showed that their standard of living is actually higher than that of the lower middle class. Then we have a large and suffering middle class, a downwardly mobile upper middle class and a class of the ultra rich who are functionally no longer part of our economy at all.

    To understand the real situation you have to remove the top half of 1% from the formula entirely. They are not wage earners, their income in no way effects the other classes and you could shoot them all and take all their money and redistribute it and no one would be significantly better off.

    Below them you have a middle class with several levels which supports the entire tax burden for the nation, paying 96% of all taxes and in many cases struggling to get by as a result. At the lower range of that class you have people who still pay significant taxes and whose wages have gone down and who have lost businesses or been forced to take second jobs and who as a result are actually living at a level below that provided by welfare and unemployment payments.

    Below that you have a mass of people who do pay less into the system in taxes than they take out in services and subsidies, some of them working and some of them not. Many of them criminals or employed in the enormous and growing underground economy.

    Yes, there’s a huge problem here and there’s a need for income redistribution, but the redistribution needs to be away from government and towards working people. We need to eliminate the disincentives to be legally employed and pay taxes, get people out of the underground economy and bring employers back to our shores.

    The only way to do this is by cutting taxes radically, especially on the middle class. I don’t care what you pretend to do to the ultra rich. Put their taxes at 90%. They aren’t going to pay it anyway. But stop making people who work hard and own small businesses subsidize the other half of the population, and stop driving employers to other countries.

    Dave

  • http://cabaretic.blogspot.com Kevin

    I recommend listening to Obama’s Speech on Race that was given during the 2008 campaign. I believe it was delivered in Philadelphia. He lays it out better than I ever could, but then one must be willing to listen and accept what he is saying, also.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Love your article, my man, love it for its energy and call to action. It is put up or shut up time. And we Americans had better realize it. Hiding ourselves behind our defunct political parties and system that no longer works is an exercise in illusion.

    Welcome to BC.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    The speech was great, Kevin, but it was just a speech. Nothing had changed. The configuration is the same. You don’t really think any meaningful changes are going to come about from our government, or do you now?

  • http://cabaretic.blogspot.com Kevin

    I appreciate it, Roger.

    I am suspicious of government, but equally uncertain about the effectiveness of collective action. We have to challenge the status quo, but I’ve yet to run across a model that does so effectively.

  • http://handyfilm.blogspot.com/ handyguy

    Dave’s comments, rare of late, suddenly appear today with a new shrillness and utter ideological recklessness. He just makes things up, wholesale, and declares them so. Down is up, poor is rich, income inequality is just an illusion, no matter what the census figures indicate. He ought to be ashamed of writing such stuff, and Blogcritics should be embarrassed to print it.

  • http://thingsalongtheway.blogspot.com/ Cindy

    Dear Free Market Dave,

    I am starting a new business with a few women. I just realized that my competitor (Nestle) could easily lower their price and lose money for years, if necessary, to remove my competition. In doing so those who would have benefited from my product will be forced to consume the same awful stuff that Nestle makes.

    Can you tell me in 50 words or less, how Uncle Milton would spin this as something positive?

  • http://thingsalongtheway.blogspot.com/ Cindy

    Oh, btw Dave, I discovered today that my dear competitor is withholding a new product from the US market (one that would greatly benefit people and help make for much better quality of life) to suit its own interests. How does the capitalistic selfishness that makes that decision possible actually benefit people who could be happier with the new product?

    Oh and have you noticed all the shitty goods being produced lately?

    This capitalism stuff is great, Dave. Crappy shit that breaks and which we have been trained to accept. Ugly architecture as the norm and prices so high that no town can make a workable budget.

    If capitalism wasn’t also dehumanizing, I’d hate it just for the ugly cheap crap it produces.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I appreciate Glenn’s and Handy’s comments, in particular, their concern about income inequality. The Census Bureau figures recently released definitely make a case for more than one America – the whites, the African-Americans and the Hispanics and other people of color.

    The question remains: How can these problems be addressed by our government?

  • Maurice

    I find this article offensive. As a proud black American I prefer we keep a level playing field. Against all odds I was laid off in 2009. Hard to believe a black engineer would get laid off in America. I was the only black guy in my group. Everyone else was Asian or Indian. The boss was a white women. I collected 4 unemployment checks and then had to get out of the house. Fortunately I have some skills. I started a handyman business and had 3 employees. I was well on my way to rebuilding my life when I was rehired (very rare) at my old job. Please don’t tell me I’m stupid because I’m black. I don’t need your pity or your unemployment check.

  • Irene Athena

    Cindy, just an idea for a business model, if you are thinking of doing what I think you are thinking of doing. (Don’t try it with the clam chowder experiment, but with the product that competes with Nestle’s. You’ll totally miss out on the vegetarian/vegan segment of the compassionate consumer market with the clam chowder thing.)

    Making a BIG investment in consumer awareness (including a museum) these folks turned a profit (at least that’s what I heard) for the first time, finally, last year. You could piggy-back on the success of their awareness marketing campaign. Become a friendly capitalist product/process improving rival. They’ve put chili powder in theirs (YUM!) You put lavender, rose hips in yours…I’m going to bed now but you’ll see this eventually.

  • http://cabaretic.blogspot.com Kevin

    Maurice,

    This article isn’t saying that black people are stupid. It’s saying that minorities simply don’t have the same ability and opportunities of whites to be able to concentrate wealth for extended periods of time.

    So when recessions come, their hard earned gains are wiped out, leaving these groups utterly gutted. They can’t rely on nest eggs, in other words.

  • http://www.RoseDigitalMarketing.com Christopher Rose

    Maurice, I’d say the stupid thing you did was take your old job back when you already had started your own business.

    This article is stupid because you don’t need much money to start your own business these days. I’ve started two in the last two years with practically nothing.

  • STM

    In regard to Dave’s argument,

    Someone pointed out to me last night that if you are on the dole in Australia, you are in the top 10 per cent of incomes in the world.

    Be that as it may, it still doesn’t buy you that much in Australia, especially if you live in one of the big capital cities, where you can’t buy an ordinary, average suburban house in a reasonable suburb for under $600,000.

    Our weekly grocery shopping costs at least $450 a week, and that’s being careful. Filling my car costs $80, and my wife’s is $50. Governments have consistently said that people earning %150,000 a year in Sydney or Melbourne aren’t necessarily even comfortable, let alone wealthy – and certainly can’t be considered to be doing well, especially if they have a mortgage hitting four grand a month.

    So heaven help any poor bastard on the dole, let alone somone in a blue-collar job struggling to make ends meet on the basic wage.

    The fact that we live in a very wealthy country isn’t the issue. It’s all relative to everything else that is going on; and it’s against these kinds of backdrops set out above that everything should be considered.

    That is also the case in the US, where Dave talks about an underclass of the working middle classes.

    Dave, come on mate, don’t tell me that people on welfare or depending on a tiny wage and tips they get in lunch diners and bars are doing well in the US.

    I don’t buy it. And if there is a criminal or black economy, that’s a social issue created by the very kind of argument you are raising here.

    The only way the US can get out of its current situation is for everyone to pay a little bit more in taxes. Note: a little bit. And yes, tax the crap out of the super-rich and make them complay. There are only so many Ferraris you can drive, or luxury holidays you can take to Tahiti.

    That would apply especially to the shysters on Wall Street who caused all this drama in the first place.

    But why should people who have nothing in the first place – existing on welfare especially (and let’s face it, if they are getting black money, that’s hardly helping lift them out of poverty and crime cycles) – compared to everyone else be made to suffer even more because of the greed of a few that brough the US to its knees?

    Like I say, it’s all relative.

    Trickle down economics and tax cuts are the exact opposite of what’s needed at the moment.

    Perhaps the key is to get Obama to invest taxpayers’ money into something that will actually be constructive.

    The idea is right, but the execution looks buggered up over there.

    Mind you, the lunatics running the show here haven’t done much better with our money, although they did stave off recession and we’re not going down the gurgler quite as quickly. Yet.

    Regardless, the old thinking won’t wash in this case because it can’t work quickly enough.

  • http://www.republicofdave.com Dave Nalle

    Cindy. Absolutely classic to take the problems created by central planning and overregulation and taxation of business and claim they are the result of capitalism. Your international exploitative megacorporation is a creation of government and the express enemy of capitalism. It is a state sponsored and subsidized monstrosity which colludes in the oppression of workers and entrepreneurs.

    It’s truly sick to see progressives use the abominations which their policies created as an excuse to try to further destroy economic liberty.

    Dave

  • STM

    It’s not so much about social engineering at the moment as keeping a whole nation afloat. The problem at the moment, sadly, is that can’t have your duck AND your dinner.

    Something has to give.

  • STM

    Dave: “further destroy economic liberty.”

    “Economic liberty” created the whole stinking mess in the first place. If anywhere needed prudential regulation, it was Wall Street. I know you know this Dave …

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Like you comments, STM. Whatever anyone may say about you, you’re a liberal – and I detest this word – with a conscience.

    $450 a week grocery shopping? That sounds like hyperinflation.

  • The AlterDestiny

    Handy:

    Dave’s comments, rare of late, suddenly appear today with a new shrillness and utter ideological recklessness. He just makes things up, wholesale, and declares them so. Down is up, poor is rich, income inequality is just an illusion, no matter what the census figures indicate. He ought to be ashamed of writing such stuff, and Blogcritics should be embarrassed to print it.

    Quite true. [unsupported allegation deleted by Comments Editor]

    Embarrassed? BC is way beyond that.

  • Baronius

    Comments #9 and #22 should both be pulled.

  • Baronius

    I’m pretty sure that the North was far wealthier than the South, precisely becaue the South didn’t have a manufacturing base. You would see mansions in the South that were unrivalled up north, but the vast majority of the population lived in squalor. The article rightly points out that there was a middle class in the North but doesn’t recognize the implication.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Perhaps you should apply, Baronius, for the position of Comments Editor. Why pull Handy’s comment out?

    Anyway, Dave’s a big boy and he’s perfectly capable of answering charges that are leveled against him. To the best of my recall, he too has been prone to accuse Handy of the very same of the very same sins – ideological shrillness, inattention to reality, etc. I just don’t recollect you raising any stink when Dave was dishing it out. But then again, perhaps I’m wrong.

  • Maurice

    Kevin – your point is refuted by the fact that many of the Asians I work with show up to the US penniless and then move to the upper middle class in one generation. By your logic my kids raised in an affluent nuclear family should be moving up the social/economic ladder but are instead homelss drug addicts.

    Charlie Rose – I took my job back because it pays 6 figures and it is what I love to do. Also the insurance is much better. My brother in law now runs the handyman business and is in a much better place. I agree with your point about starting a business. It is as easy as posting a notice for services on craiglist and then making up your mind to not turn work away.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Maurice, my friend,

    Aren’t you overlooking the effects of stigma and scars born by the succeeding generations of the African-Americans? After all, the Civil Rights legislation is only 50 years old or so. I’m not arguing that these are impossible to overcome, but still …

    The Asians or the Africans who come to the US don’t labor under the same handicap.

  • Glenn Contrarian

    Maurice –

    I’m white, but I’m closely affiliated with the immigrant Asian community. I would have to agree with Roger that they do not suffer under the same social scarring as do blacks born and raised in America.

    I’m moving overseas – my sons are living in the Philippines now – and we are choosing to live in an area that is not nearly so affluent, so prosperous as is nearly all of America. Most Americans would see it as a poverty-ridden slum…as it certainly is by American standards.

    But this is why I’m moving my household there, because I feel that there’s something there that we’ve forgotten in our affluence.

    I don’t know that what I’ve written will have help you in the least, or even if it could apply at all…but I did note one thing when I visited there a few years back – the Great Recession touched the Philippines not at all. Why? In America, if you don’t have a job, you bust your butt trying to find a job…or you’re stuck being unemployed. In the Philippines (as in almost any third-world country), the national attitude goes something like this: if you can’t get a job, you make your own job selling or doing anything you possibly can. Otherwise, one finds out firsthand just how motivating an empty stomach can be. That’s why the Great Recession never touched them.

  • Maurice

    Roger and Glenn – I was born and raised in Idaho. A state that has very few blacks and have experienced very little prejudice based of my skin color. I did get a taste of prejudice when I lived in Detroit – from white and black people. Since my wife is white we purchased a home in white suburbia. It was my first such experience with prejudice. I have to agree that some parts of the country are not as accepting of black people as my home state.

    Glenn – I can relate to what you are talking about. When I was laid off from my high paying job we soon lost our McMansion and now live in a house we paid cash for (about 1800 sq ft). We have down sized plenty and it feels good. One last point. I did do exactly what you said “make your own job…” and I believe that sort of opportunity is still here in America. Thanks for your comments and advice.

  • STM

    Rog: “$450 a week grocery shopping? That sounds like hyperinflation.”

    You can’t look at ity from the US point of view Rog. That anount is being careful, too, but includes all our meat and fruit and vegies and extras. Natural disasters in Oz have pushed up prices quite a bit over the past six months, but it’s a one-off. I could easily spend over $500 a week on groceries if I bought a few imported foodstuffs etc.

    And bear in mind, Rog, that $450 is about $US500.

    This is a very expensive country to live in. Wages are generally very high (I earn considerably over $100,000 and my my wife earns about $80,000 – but it’s quite average really, even combined), but then it costs a fortune to buy everything.

    It always looks good to others when I go overseas and cash my dough into local the currencies, but as I pointed out to someone in the Philippines last month, back home I’m struggling to make ends meet.

    That';s why we have to look differently, and in the US too, at people living on welfare or what we would consider low wages. It’s not always as good as it looks from the outside.

  • Maurice

    I stand corrected. According to this article the black middle class is disappearing.

  • Anarcissie

    The Welfare state doesn’t contradict capitalism, it’s a form of the capitalist state which became interesting to capitalist ruling classes after the outbreaks of serious disorder between 1910 and 1940, like the World Wars, the Great Depression, socialism, fascism, and so forth. It seems to have been quite successful in the realm of quieting the masses and ensuring the good life for its ruling and privileged classes. The same may be said of the growth of industrial and financial regulatory practices during the same period.

    In general, capitalism has been intimately involved with and dependent on the growth of the modern state, including its very intrusive and one might say totalitarian ideology of government.

  • Arch Conservative

    I need a little clarification cabareitc……..

    Are you still living in your parents basement?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    It’s a penetrating question, Archie.