Three years after raping taxpayers to the tune of $4.6 trillion to bail out Wall Street, under the lie that it would help the economy and housing market recover, both are still in the dumps. The bursting of the housing bubble caused $6 trillion in lost wealth so far, and an additional $2 trillion is still expected. As a consequence, working and middle class homeowners saw the bulk of their wealth disappear overnight and there is still no light at the end of the tunnel.
The wealthy and their politician allies argued that extended tax breaks for the richest Americans and their corporations would create jobs, yet millions of Americans are still out of work. They also said that if we did not bail out the banks and automakers, that it would worsen unemployment. Yet the UAW signed concessions with the automakers that resulted not only in layoffs, but declining pay and benefits for those who were lucky enough to keep their jobs, while the bailouts resulted in large raises and bonuses for corporate bosses, but no effect on unemployment rates.
So what would have happened if these large corporations had not been bailed out? Would the sky have really fallen?
We will never know for sure, but we do know that Bank of America, the recipient of billions of taxpayer dollars, was not only guilty of predatory and unlawful lending practices, but is now set to cut 40,000 jobs nationwide, according to the Los Angeles Times. The bulk of the layoffs will occur in California, which is still coping with one of the highest unemployment rates (12%) in the nation.
BofA is grappling with huge losses that are due in part to its idiotic takeover of the failing Countrywide and the requisite acceptance of its “toxic” assets. This takeover was possible only because of the bailout, which provided it the necessary capital to prey upon weaker competitors like Countrywide, money that the politicians said would be used to cut some slack to drowning homeowners or hire more employees or provide better wages and benefits to its employees.
Capitalism’s propaganda tells us that bosses are entitled to large profits precisely because they are taking large risks with their capital. The implied corollary of this is that if their businesses fail, if they make bad investments, take risks that do not pan out, or get caught cheating, lying or stealing, they will necessarily lose some or all of their wealth and their businesses will sink.
At the same time, so long as capitalists believe that they will be bailed out, their mistakes forgiven, and their profits insured by taxpayers, they will continue to take the biggest risks possible, thus ensuring more economic meltdowns and a continued downward spiral of wages, living standards and environmental degradation.
Perspective 1 (bosses and millionaires): The people should continue helping us acquire more wealth than we and our heirs can ever spend, both through low wages and benefits at our companies, and through taxpayer bailouts and subsidies to our businesses paid for through cuts to social services.
Perspective 2 (capitalist mythology): Businesses that fail due to poor management, risky investments or criminal activity, will necessary die a natural death, no matter how large or important, to be replaced by smarter, stronger and better businesses [that will continue to control the wealth and power of society].
Perspective 3 (working people): Workers are the actual source of all profits and economic growth and should not only control how all workplaces and society function, but should have an equal share of the wealth.
Large corporations that are sinking should not only be allowed to drown. They should be held under to minimize our suffering.