Posted August 20, 2007
Somewhere in the Hamptons a high-roller is cursing his cleaning lady
and shaking his fists at the lawn guys. The American poor, who are
usually tactful enough to remain invisible to the multi-millionaire
class, suddenly leaped onto the scene and started smashing the global
financial system. Incredibly enough, this may be the first case in
history in which the downtrodden manage to bring down an unfair
economic system without going to the trouble of a revolution.
First they stopped paying their mortgages, a move in which they were
joined by many financially stretched middle class folks, though the
poor definitely led the way. All right, these were trick mortgages,
many of them designed to be unaffordable within two years of signing
the contract. There were "NINJA" loans, for example, awarded to
people with "no income, no job or assets." Conservative columnist
Niall Fergusen laments the low levels of "economic literacy" that
allowed people to be exploited by sub-prime loans. Why didn't these
low-income folks get lawyers to go over the fine print? And don't
they have personal financial advisors anyway?
Then, in a diabolically clever move, the poor - a category which now
roughly coincides with the working class -- stopped shopping. Both
Wal-Mart and Home Depot announced disappointing second quarter
performances, plunging the market into another Arctic-style meltdown.
H. Lee Scott, CEO of the low-wage Wal-Mart empire, admitted with
admirable sensitivity, that "it's no secret that many customers are
running out of money at the end of the month."
I wish I could report that the current attack on capitalism
represents a deliberate strategy on the part of the poor, that there
have been secret meetings in break rooms and parking lots around the
country, where cell leaders issued instructions like, "You, Vinny --
don't make any mortgage payment this month. And Caroline, forget that
back-to-school shopping, OK?" But all the evidence suggests that the
current crisis is something the high-rollers brought down on themselves.
When, for example, the largest private employer in America, which is
Wal-Mart, starts experiencing a shortage of customers, it needs to
take a long, hard look in the mirror. About a century ago, Henry Ford
realized that his company would only prosper if his own workers
earned enough to buy Fords. Wal-Mart, on the other hand, never seemed
to figure out that its cruelly low wages would eventually curtail its
own growth, even at the company's famously discounted prices.
The sad truth is that people earning Wal-Mart-level wages tend to
favor the fashions available at the Salvation Army. Nor do they have
much use for Wal-Mart's other departments, such as Electronics, Lawn
and Garden, and Pharmacy.
It gets worse though. While with one hand the high-rollers, H. Lee
Scott among them, squeezed the American worker's wages, the other
hand was reaching out with the tempting offer of credit. In fact,
easy credit became the American substitute for decent wages. Once you
worked for your money, but now you were supposed to pay for it. Once
you could count on earning enough to save for a home. Now you'll
never earn that much, but, as the lenders were saying -- heh, heh --
do we have a mortgage for you!
Pay day loans, rent-to-buy furniture and exorbitant credit card
interest rates for the poor were just the beginning. In its May 21st
cover story on "The Poverty Business," BusinessWeek documented the
stampede, in the just the last few years, to lend money to the people
who could least afford to pay the interest: Buy your dream home!
Refinance your house! Take on a car loan even if your credit rating
sucks! Financiamos a Todos! Somehow, no one bothered to figure out
where the poor were going to get the money to pay for all the money
they were being offered.
Personally, I prefer my revolutions to be a little more pro-active.
There should be marches and rallies, banners and sit-ins, possibly a
nice color theme like red or orange. Certainly, there should be a
vision of what you intend to replace the bad old system with --
European-style social democracy, Latin American-style socialism, or
how about just American capitalism with some regulation thrown in?
Global capitalism will survive the current credit crisis; already,
the government has rushed in to soothe the feverish markets. But in
the long term, a system that depends on extracting every last cent
from the poor cannot hope for a healthy prognosis. Who would have
thought that foreclosures in Stockton and Cleveland would roil the
markets of London and Shanghai? The poor have risen up and spoken;
only it sounds less like a shout of protest than a low, strangled,
cry of pain.