Get Rid of Employment and Education Directive
April 13, 2012 2:55 PM   Subscribe

A modest proposal to get rid of income inequality in America: just give every household a $10 million dollar loan.
posted by falameufilho (129 comments total) 14 users marked this as a favorite

 
When... everyone is the 1%, only outlaws... will be the 99%...?

Am I doing this right?
posted by GenjiandProust at 2:58 PM on April 13, 2012 [13 favorites]


Is it legally required that all satirical pieces published by major news outlets include the phrase "a modest proposal" just so that no one thinks it's anything other than satire?
posted by asnider at 3:01 PM on April 13, 2012 [33 favorites]


"Hey, pull in here! They have gas for less than $4,000 a gallon!"
posted by double block and bleed at 3:01 PM on April 13, 2012 [37 favorites]


If I owe America $100.00, I have a problem. If I owe America 10 million dollars, they have a problem.
posted by Intrepid at 3:01 PM on April 13, 2012 [33 favorites]


Bring back the continental dollar!
posted by Stagger Lee at 3:01 PM on April 13, 2012


Is it legally required that all satirical pieces published by major news outlets include the phrase "a modest proposal" just so that no one thinks it's anything other than satire?

I reckon you're too swift for them.
posted by Celsius1414 at 3:02 PM on April 13, 2012 [42 favorites]


If I owe America $100.00, I have a problem. If I owe America 10 million dollars, they have a problem.

$100 is a tragedy. $10 million is a statistic.
posted by shakespeherian at 3:02 PM on April 13, 2012 [14 favorites]


I wonder why they put the number "$1,200 trillion" in the article, as opposed to "1.2 quadrillion." Is there an AP Style not to go above trillions?
posted by roll truck roll at 3:03 PM on April 13, 2012 [6 favorites]


It certainly is a good illustration of how having a lot of money enables you to make even more, in ways not available to most folks.
posted by davejay at 3:03 PM on April 13, 2012 [10 favorites]


It is the nature of capitalism unrestrained and with little concern for the majority of its people that a gap not only exists but that it keeps increasing. Only laws in place to ensure otherwise will keep this from taking place.
posted by Postroad at 3:04 PM on April 13, 2012 [1 favorite]


Instead, let us all loan the government $10 Million each.
posted by TwelveTwo at 3:05 PM on April 13, 2012 [1 favorite]


James Hansen had an actually great idea for redistributing wealth: a gradually rising carbon tax with the revenues paid back to all citizens on a flat per-capita basis, with none kept by the government
posted by crayz at 3:06 PM on April 13, 2012 [8 favorites]


Only laws in place to ensure otherwise will keep this from taking place.

Unions have done a lot more to hold that line than politicians have.
Up here in Alberta we'd have lost public healthcare a decade ago if nurses weren't running out on illegal wildcats every time the government blinked at them. Lord knows it wasn't political will that stopped the scrap and sale of that particular public good.
posted by Stagger Lee at 3:07 PM on April 13, 2012 [8 favorites]


TwelveTwo: "Instead, let us all loan the government $10 Million each."

You're free to buy $10M in t-bills.

Unless you're one of those nobodies who needs to work for a living.
posted by double block and bleed at 3:07 PM on April 13, 2012


I'd buy that for a dollar!
posted by Blazecock Pileon at 3:08 PM on April 13, 2012 [7 favorites]


I wonder why they put the number "$1,200 trillion" in the article, as opposed to "1.2 quadrillion." Is there an AP Style not to go above trillions?

Probably not house style as much as an accurate assessment of the state of math education in America.
posted by Trurl at 3:08 PM on April 13, 2012 [6 favorites]


How come dollars don't take metric prefixes? "All we need is 1.2 petabucks."
posted by madcaptenor at 3:13 PM on April 13, 2012 [19 favorites]


You had me at 'give every household a $10 million dollar loan'.
posted by Splunge at 3:13 PM on April 13, 2012 [3 favorites]


What's wrong with $1,200 trillion? Do you have a similar problem with "sixteen-hundred" in place of $1,600? If anything we should all be using scientific notation, as in "That candy bar costs 7.5E-1 dollars."
posted by grog at 3:14 PM on April 13, 2012 [7 favorites]


How come dollars don't take metric prefixes? "All we need is 1.2 petabucks."

Because it robs us of our ability to say "they lost crores of dollars." and crore is an awesome word.
posted by GenjiandProust at 3:18 PM on April 13, 2012 [10 favorites]


In essence, though, wouldn't things have been better if the government had simply cut us a check for their bailout money and let the wall street douches crash and burn?
posted by maxwelton at 3:18 PM on April 13, 2012 [17 favorites]


Recent discussions have made me curious about whether there's enough wealth in the country to make everyone millionaires if divided equally. With a $15 trillion GDP, that's enough to make 15 million millionaires a year from income alone, and for standing wealth an oft-quoted number is that before the financial crash just the total value of credit default swaps was $63 trillion... it seems likely that there's enough wealth to at least make every American household a millionaire household, if not every individual a millionaire.

(I wonder about this not because I think it would be a good idea to do this but to put into perspective the notions that things like food stamps or social security checks, or healthcare, is something that society simply cannot afford.)
posted by XMLicious at 3:19 PM on April 13, 2012 [5 favorites]


Because it robs us of our ability to say "they lost crores of dollars." and crore is an awesome word.

Fine. You can say "all we need is 1.2 padma dollars", if you like.
posted by madcaptenor at 3:20 PM on April 13, 2012 [6 favorites]


Is it legally required that all satirical pieces published by major news outlets include the phrase "a modest proposal" just so that no one thinks it's anything other than satire?

You've got a great point - It's certainly to give homage to Mr. Swift, the problem is quite a few many writers cannot reach his level of the art of the Word. Sadly.
posted by alex_skazat at 3:22 PM on April 13, 2012 [2 favorites]


Where do I sign up?
posted by curious nu at 3:24 PM on April 13, 2012 [1 favorite]



You've got a great point - It's certainly to give homage to Mr. Swift, the problem is quite a few many writers cannot reach his level of the art of the Word. Sadly.
posted by alex_skazat at 3:22 PM on April 13 [+] [!]


Part of the problem is that as soon as they claim to be trying, we all cringe and look at our feet. As an amateurish writer it's probably best not to compare yourself to household names.
posted by Stagger Lee at 3:28 PM on April 13, 2012 [3 favorites]


The richest 358 people on earth possess as much wealth as the poorest 45% (2.3 billion people)
posted by Postroad at 3:32 PM on April 13, 2012 [18 favorites]


Hm, a thought: if the government collects taxes, and the government loans out money to banks, and we borrow that money and pay it back with interest, and some of that interest goes to the government, aren't we...oh.

blinding flash of obvious is obvious

I need to think about this for a little bit
posted by davejay at 3:33 PM on April 13, 2012


People think the carry trade is risk free, its anything but. Lets say you take the "safe" route, borrow $10mil and put it into treasuries at 2%. Treasuries then fall in value a little bit, you get a margin call and are wiped out in '2 shakes of a lambs tail'. The truly almost-risk-free route entails buying 30 day notes yielding just about zero, for a profit of 0. And lest you think this does not apply to big financial institutions, take a look at MF-Global, JEF, or any one of the many dead institutions who have over the years bet big on the carry trade. But of course, lets not let reality get in the way of a good 'grab the pitchforks lets kill some bankers' rant.
posted by H. Roark at 3:35 PM on April 13, 2012 [1 favorite]


"Hey, pull in here! They have gas for less than $4,000 a gallon!"

somebody understands economics.
posted by Ironmouth at 3:35 PM on April 13, 2012 [12 favorites]


You also have to understand that these are short term loans designed to make sure that capital reserve ratios are met. You'd have to pay back the loan in like 2 days.
posted by Ironmouth at 3:37 PM on April 13, 2012 [2 favorites]


How come dollars don't take metric prefixes? "All we need is 1.2 petabucks."

I've been informed that the metric unit is one Instagram = $1,000,000,000. One milligram = $1,000,000, one microgram = $1,000, etc. So this would be 1.2 megagrams. Pretty straightforward really.
posted by jhc at 3:41 PM on April 13, 2012 [9 favorites]


$10 million loan. Awesome. Just think of how many lottery tickets I could buy!
posted by perhapses at 3:48 PM on April 13, 2012 [13 favorites]


In essence, though, wouldn't things have been better if the government had simply cut us a check for their bailout money and let the wall street douches crash and burn?

Who is going to cash the check when the banks fail?
posted by malocchio at 3:51 PM on April 13, 2012 [2 favorites]


It certainly is a good illustration of how having a lot of money enables you to make even more, in ways not available to most folks.

Actually, the point is you don't have to have the money. The Fed is essentially giving money to banks free of charge that they then turn around and invest in Treasuries and skim off the interest with no risk using our money. Why can't you or I have that opportunity, too?
posted by Mental Wimp at 3:51 PM on April 13, 2012 [17 favorites]


You also have to understand that these are short term loans designed to make sure that capital reserve ratios are met. You'd have to pay back the loan in like 2 days.

And then you get another one!
posted by Mental Wimp at 3:52 PM on April 13, 2012 [1 favorite]


Note that it's obvious to most folks how destructive this would be.... but it's equally destructive to be doing the same thing for big companies. We are deploying huge amounts of cash to tell the economy to keep doing the stupid shit that got it in trouble in the first place, to keep the bad players in business, and the bad business models active.

More crashes are coming; we've deliberately spent a truly ungodly amount of money to actively prevent anything from being fixed, ensuring that the system will blow up again. And again, and again, and again, until we finally understand that printing money does not solve problems, it just delays the needed adjustments, while making them worse. Most things that were wrong in 2000, and then in 2008, are still wrong. And then, in addition, we have all the new problems from all the debt we're issuing to bail out those terrible ideas. Each time we go through this cycle, the problems get bigger.

I suspect that this may be the last pass through, because once the Government Finance Bubble pops, once the system realizes that transferring private losses to the government balance sheet won't work anymore, what's left?
posted by Malor at 4:01 PM on April 13, 2012 [8 favorites]


Hm, a thought: if the government collects taxes, and the government loans out money to banks, and we borrow that money and pay it back with interest, and some of that interest goes to the government, aren't we...oh.

The banks pay the government interest.
posted by esprit de l'escalier at 4:09 PM on April 13, 2012


In essence, though, wouldn't things have been better if the government had simply cut us a check for their bailout money and let the wall street douches crash and burn?

The difference is that wall street paid back the bailout money with interest whereas the public wouldn't have paid it back at all.
posted by esprit de l'escalier at 4:12 PM on April 13, 2012 [1 favorite]


You'd have to pay back the loan in like 2 days.

Either that, or go on a wild Brewster's Millions-style bender.
posted by Blazecock Pileon at 4:13 PM on April 13, 2012 [1 favorite]


You know, this kind of makes the prospect of eating your own children for sustenance seem reasonable by comparison.
posted by schmod at 4:19 PM on April 13, 2012


i am new to this.
posted by Phily2k at 4:24 PM on April 13, 2012


I can't believe an editor looked at that article and said "yeah, that's above our lowest possible standard for journalism." It read like a grade 4 essay.
posted by Rodrigo Lamaitre at 4:25 PM on April 13, 2012 [2 favorites]


Perhaps a test case should be tried, in case this is not a viable proposal. As a public-spirited citizen, I volunteer. (Unless there is a payback clause.)
posted by Cranberry at 4:36 PM on April 13, 2012 [2 favorites]


Recent discussions have made me curious about whether there's enough wealth in the country to make everyone millionaires if divided equally. With a $15 trillion GDP, that's enough to make 15 million millionaires a year from income alone, and for standing wealth an oft-quoted number is that before the financial crash just the total value of credit default swaps was $63 trillion... it seems likely that there's enough wealth to at least make every American household a millionaire household, if not every individual a millionaire.

(I wonder about this not because I think it would be a good idea to do this but to put into perspective the notions that things like food stamps or social security checks, or healthcare, is something that society simply cannot afford.)


At best, this would be a one-shot, one-time thing that would deprive anyone from having the incentive to earn money in the future. You're taking the size of the pie as a given and just looking at different ways to slice it. But the size of the whole pie is variable.
posted by John Cohen at 4:38 PM on April 13, 2012


asnider: Is it legally required that all satirical pieces published by major news outlets include the phrase "a modest proposal" just so that no one thinks it's anything other than satire?

You're assuming that most adults have even heard of "A Modest Proposal," let alone know what it's about.

AHAHAHAHAHAHAHAHAHAA... *wipes tear*
posted by tzikeh at 4:39 PM on April 13, 2012 [7 favorites]


This may not be satirical. Ed Glaeser made a very similar policy suggestion after Katrina (here). I actually just assumed that was what the guy writing was doing -- but it may be I was just reading Glaeser's older article into it.
posted by scunning at 4:43 PM on April 13, 2012 [1 favorite]


Wasn't there a serious proposal to just give poor people money, no strings attached, rather than funnel it through various government programs? I know for sure there was a proposal in Milwaukee to give poor people cars, because that was one of the primary factors in unemployment.
posted by desjardins at 4:44 PM on April 13, 2012 [3 favorites]


Wasn't there a serious proposal to just give poor people money, no strings attached, rather than funnel it through various government programs? I know for sure there was a proposal in Milwaukee to give poor people cars, because that was one of the primary factors in unemployment.

Minimum-income proposals have been around for some time. In some senses, the Earned Income Tax credit is just that. Its a transfer payment with near-zero overhead. GOP hates it, even though it is massively effective and a cheap way to prop up incomes.
posted by Ironmouth at 4:49 PM on April 13, 2012 [3 favorites]


Bush did pass the economic stimulus act.
posted by esprit de l'escalier at 4:52 PM on April 13, 2012


Poor people spending money can't possibly stimulate the economy because they're not Job Creators.
posted by mek at 4:54 PM on April 13, 2012 [4 favorites]


schmod: "You know, this kind of makes the prospect of eating your own children for sustenance seem reasonable by comparison."

Dang. My oldest is 27, a gym rat and taking the NYC firefighter's test soon. The young one is 24 and runs fast. The middle daughter lives in Seattle.

I'm screwed.
posted by Splunge at 5:03 PM on April 13, 2012 [5 favorites]


I thought this was serious. I feel so Gullivle.
posted by Infinity_8 at 5:03 PM on April 13, 2012 [1 favorite]


Postroad:

The richest 358 people on earth possess as much wealth as the poorest 45% (2.3 billion people)

I'd like to be able to quote this, can you cite it?
posted by mammary16 at 5:04 PM on April 13, 2012 [2 favorites]


I'm surprised nobody's recognized the author, Sheila Bair. She was Dubya's appointee as head of the FDIC, but surprisingly, she turned out to be a more forceful opponent of "too big to fail" banking than quite a few of Obama's appointees. The satire in this column is a bit flat, but I think her point has less to do with income equality per se than with showing how any idiot can make themselves a multimillionaire with access to interest free loans on the same terms that the big banks had after the 2008 financial crisis.
posted by jonp72 at 5:21 PM on April 13, 2012 [7 favorites]


John Cohen, it's odd because you included it in your quote but you speak as though you completely missed the part where I said, "I wonder about this not because I think it would be a good idea..."

The point is that when conservatives complain about people getting seventy bucks a week for food stamps and Michele Bachmann talks about how wonderful China is because they don't waste money on public programs like that, it's completely absurd: there is quite possibly enough money in our economy for each person to be a millionaire. Senior citizens getting some tiny bit of supplemental income each month through Social Security or everyone having access to health care isn't some overwhelming breaking strain on the economy, it's a pittance.
posted by XMLicious at 5:34 PM on April 13, 2012 [9 favorites]


The really stunning thing is taking that interest-free money and loading up on insanely risky sovereign debt and then demanding to be made whole by international agencies. Yes, any idiot can do that, but it takes a real idiot to actually pay that idiot.
posted by mek at 5:47 PM on April 13, 2012 [1 favorite]


I'm surprised nobody's recognized the author, Sheila Bair. She was Dubya's appointee as head of the FDIC, but surprisingly, she turned out to be a more forceful opponent of "too big to fail" banking than quite a few of Obama's appointees.

Precisely which Obama appointees.

There's two sides to too big to fail. The problem isn't bailing out too big to fail institutuons--the problem is their existence. Once they exist, not bailing them out means misery for everyone but those within the too big to fail institutions. If your plan to "teach the banks a lesson" is to put millions of people out of work, your plan sucks.

Seriously, the policy must be to prevent situations where the livelihood of a large number of Americans is dependent on the proper decisions of a very few. Too much of what I hear passing as policy solutions is "punishment" for "banksters" which in effect would do nothing to these people, but harm actual Americans.

No. The solution is a return to Glass-Stegal limits on risk, not GOP-style policy for political purposes that satisfies anger while harming working and middle-class people.
posted by Ironmouth at 6:15 PM on April 13, 2012 [5 favorites]


Precisely which Obama appointees.

Bair comes off a great deal better than Summers and Geithner in Ron Suskind's Confidence Men, because she was less willing to bow to pressure from the banking sector to water down fraud prevention regulations than Summers or Geithner.
posted by jonp72 at 6:25 PM on April 13, 2012


The richest 358 people on earth possess as much wealth as the poorest 45% (2.3 billion people)

I'd like to be able to quote this, can you cite it?

ooh, i can!

Milanovic, Branko. 2002. “True World Income Distribution, 1988 and 1993.” Economic Journal, 112(476).
posted by jjoye at 6:27 PM on April 13, 2012 [10 favorites]


My understanding is that allowing, say GM to fail, would have been a catastrophic domino effect. And I don't see how that wouldn't apply to banks as well. It may leave a bad taste in your mouth, but Obama did the right thing.

Correct me if I'm wrong.
posted by Splunge at 6:28 PM on April 13, 2012


I had an idea that each child should be given around $20,000 when born to be made available to them at 18, just to have some capital. We'd probably end up with some weird financial abstractions and promissory arrangements for parents to loot it or other grabbing, but I think the concept is sound.
posted by zangpo at 6:31 PM on April 13, 2012


18 would have been too young in my case.
posted by not_that_epiphanius at 6:38 PM on April 13, 2012 [4 favorites]


It could work like this:

1. Give every American household a $10 million loan.

2. Half of all households invest the whole loan in Powerball tickets.

3. The government rakes it in.


Wow. Herman Can has nothing on me.
posted by 4ster at 6:39 PM on April 13, 2012 [1 favorite]


Cain. Herman Cain. Damnit.
posted by 4ster at 6:41 PM on April 13, 2012


"Hey, pull in here! They have gas for less than $4,000 a gallon!"

somebody understands economics.


Which is another way of saying "Without x number of losers, our system isn't workable."

Or, "Capitalism, by definition, sucks."
posted by Benny Andajetz at 6:46 PM on April 13, 2012 [1 favorite]


and for standing wealth an oft-quoted number is that before the financial crash just the total value of credit default swaps was $63 trillion... it seems likely that there's enough wealth to at least make every American household a millionaire household, if not every individual a millionaire.

Credit default swaps are insurance policies. Say I buy a 1 year Greek bond for $100, that will pay me 20% by the end of the year. Then I buy an insurance policy (CDS) to cover my risk in case the bond fails. I pay, say, $5 for that. I am exchanging some of my gain for the guarantee that I'm going to get my principal back. If the bond pays off, I get my 15% return. If the bond fails, I get my $100 back. And the company I bought the CDS from gets my bond, which they can try to get some money for it.

So, the value of CDSs isn't wealth, any more than my home owner's insurance policy is wealth.

The problem with CDSs was that companies like AIG oversold them, and then bought their own CDSs to cover their eventual loss. And since everyone had "insurance" from everyone else, they didn't think they needed to worry about having the cash on hand to pay out when one failed. But because they were buying them from each other, everyone was super leveraged and somehow didn't know it. When the underlying assets began to fail, the balloon popped and nobody had any money to pay out.
posted by gjc at 6:47 PM on April 13, 2012 [2 favorites]


And as Ironmouth points out, the writer seems to be overstating the actual value of these low interest loans.
posted by gjc at 6:49 PM on April 13, 2012


But because they were buying them from each other, everyone was super leveraged and somehow didn't know it.

That's just staggering. Absolutely, literally, beyond belief.

I think a lot of players knew what was happening. They just figured they could jump in and get back out before the house of cards fell.
posted by Benny Andajetz at 6:51 PM on April 13, 2012 [1 favorite]


asnider: "Is it legally required that all satirical pieces published by major news outlets include the phrase "a modest proposal" just so that no one thinks it's anything other than satire?"

Headline Verbiage Clichés Considered Harmful
posted by Riki tiki at 6:54 PM on April 13, 2012 [2 favorites]


My understanding is that allowing, say GM to fail, would have been a catastrophic domino effect. And I don't see how that wouldn't apply to banks as well. It may leave a bad taste in your mouth, but Obama did the right thing.

On the whole, I agree. But I think there are significant differences.

The ripple effect was definitely the big problem. What would happen to all the ancillary businesses and employees attached to the auto manufacturers and the banks? The restaurants, and grocery stores, and construction companies, and so forth.

The car industry had a whole extra layer in their, though. Manufacturing concerns and manufacturing jobs. Not only would those businesses go under, once they were gone they would likely never come back. We've certainly seen it happen before.

Banking doesn't rely on that sector to any degree. In fact, most of their core business can be operated from anywhere (and increasingly is operated from elsewhere). So, failed banks would have been bad, but not bad in the way, or to the degree, that failed auto manufacturers would have been, in the long run.
posted by Benny Andajetz at 7:04 PM on April 13, 2012 [1 favorite]


Who is going to cash the check when the banks fail?
Are you under the impression that banks print money? The Government has a process for taking over small failed banks, and does so on a regular basis. Users don't see an interruption of service. All their accounts, debt cards, etc still work. People can still cash checks.

If you go back, say 100 years, there's no way that the fed could take over the banking operations for US bank or Citigroup in a short period of time. But these days, the fed could setup a website, import their account data directly from their servers (in theory) and get something going immediately.


Now, obviously in the real world computers aren't always compatible with each other. But the fed could mandate some kind of account interoperability standard so that you can take your account information from one bank to another the same way you can port your cellphone number. In that case, if a bank failed, all the FDIC would have to do would be to transfer those standardized files over, and all your electronic banking would still work fine.

The problem with bank bailouts is the fact that the CEOs and managers still get paid huge bonuses and salaries, essentially for cleaning up the mess that they created.
At best, this would be a one-shot, one-time thing that would deprive anyone from having the incentive to earn money in the future. You're taking the size of the pie as a given and just looking at different ways to slice it. But the size of the whole pie is variable.
It would deprive them of the incentive to work at a shitty job. But most rich people still work jobs they enjoy.
Precisely which Obama appointees.
Tim Geithner, for one. I realize your brain can't seem to process any information that might make Obama look bad in some way, but this is pretty much common knowledge.
posted by delmoi at 7:04 PM on April 13, 2012 [2 favorites]


If you go back, say 100 years, there's no way that the fed could take over the banking operations for US bank or Citigroup in a short period of time. But these days, the fed could setup a website, import their account data directly from their servers (in theory) and get something going immediately.

It's called "nationalizing" and you get to take the employees and assets too! Worked great for Cuba.
posted by mek at 7:07 PM on April 13, 2012


18 would have been too young in my case.

Yeah, I've gotta agree with not_that_epiphanius here... I actually knew a guy who inherited $20,000 when he was 18. It was gone in pretty short order and not into investment accounts or tuition or anything like that.

Although, does this actually happen for people who grow up in Alaska because of the Alaska Permanent Fund? Or do you not start collecting that until you're 18?

gjc: Yes, I know what CDSs are. I mentioned that number to illustrate that if just one subsection of the financial derivatives market can have been valued at $63 trillion and we've averaged $5 trillion in GDP yearly for more than half a century there probably is enough wealth sloshing around in 2012 to at least make it to the $120 trillion necessary for every household to be millionaires.
posted by XMLicious at 7:10 PM on April 13, 2012


It's called "nationalizing" and you get to take the employees and assets too! Worked great for Cuba.
Yes, the FDIC nationalizes small failed banks all the time, with no problems.

Bailouts are just as much "Socialism" as nationalization. In either case, the institution is using government money to operate. The only difference is that with a bailout, the people running the institution get to keep a lot of that money for themselves.

---

The net value of all those CDSes isn't really $63 trillion dollars. That's saying, because two people make a bet worth $1,000 the "value" of the bet is $2000. But obviously the net value of the bet is $0, no matter what happens the total amount of money stays the same.
posted by delmoi at 7:15 PM on April 13, 2012 [3 favorites]


Yes, valuation of anything, much less an entire economy, is extremely complicated.
posted by XMLicious at 7:21 PM on April 13, 2012


I've heard of a store in NYC that sells $50,000 mattresses. They'll get a lot of business if this ever came to fruition.
posted by reenum at 7:30 PM on April 13, 2012


Dave Chapelle had this idea covered years ago, albeit not for every household.
posted by fuse theorem at 7:37 PM on April 13, 2012


It's called "nationalizing" and you get to take the employees and assets too! Worked great for Cuba.

It actually did work out pretty well for Sweden.
posted by bradbane at 7:37 PM on April 13, 2012 [1 favorite]


Bailouts are just as much "Socialism" as nationalization.

Absolutely, we agree on this. But even saying the N-word word is enough to destroy a politician's career in the USA.
posted by mek at 7:40 PM on April 13, 2012


The s-word as well, I would think.
posted by Splunge at 7:45 PM on April 13, 2012


Saying socialism plays really well if you're a Republican whining about Obama. My broader point is that nationalism is actually so far out of bounds of the discourse that American politicians can't even conceive of it anymore, even to accuse their enemies of planning it.
posted by mek at 7:47 PM on April 13, 2012


Sorry, nationalization, not nationalism. Obviously nationalism is a prerequisite of American political discourse.
posted by mek at 7:48 PM on April 13, 2012


Well, another problem is that the Republican concept of socialism and the definition of socialism are really two different things. Aren't they?
posted by Splunge at 7:50 PM on April 13, 2012 [3 favorites]


delmoi: The problem with bank bailouts is the fact that the CEOs and managers still get paid huge bonuses and salaries, essentially for cleaning up the mess that they created.

No, actually, they get paid huge bonuses and salaries for digging the hole even deeper, and transferring as much risk as possible to the government.

A few superficial "fixes" have been implemented, but they're bandaids on a big throbbing tumor.
posted by Malor at 7:58 PM on April 13, 2012


"The banks pay the government interest."

No, the banks pay a private banking cartel interest.
posted by cuomofied at 8:02 PM on April 13, 2012 [1 favorite]


It's always socialism though. Now socialism means bailouts. Would have been nice to have nationalization in the conversation. It's a huge framing fail how Democrats allow themselves to help pass Republican or Corporate policy while still taking a hit for being crazy hippie leftists.
posted by furiousxgeorge at 8:09 PM on April 13, 2012


Steve Waldman has nonsatirical proposal for a little economic justice for the working and middle classes.
posted by samw at 8:11 PM on April 13, 2012 [1 favorite]


"The banks pay the government interest."

No, the banks pay a private banking cartel interest.


You mean the federal reserve bank? Do you understand why the federal reserve bank is separate from the government?
posted by esprit de l'escalier at 8:17 PM on April 13, 2012


Do you understand why the federal reserve bank is separate from the government?

Do you?
posted by AElfwine Evenstar at 9:47 PM on April 13, 2012


"The difference is that wall street paid back the bailout money with interest whereas the public wouldn't have paid it back at all."

I was under the impression that whether or not you thought the banks paid back the bailout depends on what kind of accounting you use, and that the government didn't necessarily have that cash in hand and that a lot of what they lent got written off.
posted by klangklangston at 10:06 PM on April 13, 2012


Do you understand why the federal reserve bank is separate from the government?

Do you?


The standard economic answer is so that the public can't vote on monetary policy.
posted by esprit de l'escalier at 10:19 PM on April 13, 2012


Up here in Alberta we'd have lost public healthcare a decade ago if nurses weren't running out on illegal wildcats every time the government blinked at them.

Well, given what's probably about to happen in Alberta, you'll see various public sector unions bucking harder than any horse Danielle Smith has posed for a photo op next to.
posted by one more dead town's last parade at 10:31 PM on April 13, 2012


I'm trying to do the math...

Let's see, if those 358 richest people pass out all their money to the 2.5 billion poorest people, then it would take 754 years for each person to get his share. Assuming the rich guys passed out money 24-7-365.

No, wait, the guys at the head of the line would....

Hang on, I gotta think about this some more.

Maybe you could just pass the bag back to the guy behind you....
posted by mule98J at 10:47 PM on April 13, 2012


I don't get it. Is this article sarcasm written by someone who wants to abolish the minimum wage or something like that?
posted by Yowser at 12:07 AM on April 14, 2012


The standard economic answer is so that the public can't vote on monetary policy.

The public has much control over the federal reserve as the supreme court. Technically, they don't even get to directly vote for president either, but rather state electors who go to the electoral college. In practice the fed and supreme court are both issues during the presidential election, and will probably be more so in this next election
Let's see, if those 358 richest people pass out all their money to the 2.5 billion poorest people, then it would take 754 years for each person to get his share. Assuming the rich guys passed out money 24-7-365.
Just like how it takes the government several years to hand out each month's social security payments to millions of people. Oh wait, no it doesn't. WTF are you talking about?

Realistically, if bill gates wanted to evenly divide his money equally among every person, he would just set up a computer to distribute the money by computer, that would cover everyone with electronic banking, and you could send cellphone minutes (which frequently operate like a currency in the 3rd world) for others. It would be more difficult to reach the poorest of the poor, people who are illiterate and don't have banking services or cellphones - but the vast majority of people on earth have at least a cellphone.
posted by delmoi at 1:02 AM on April 14, 2012


It's funny to see the apologists argue that the bailouts are absolutely necessary because OMG everything would fail and then turn around and argue that they aren't really that valuable.
posted by patrick54 at 2:33 AM on April 14, 2012 [1 favorite]


Surely if only one person - me - had ALL the wealth in the world and you scumbags had none, it would be even MORE difficult and unreasonable for me to distribute that wealth to 7 billion people! So that implies that the most reasonable thing to happen is for me to be the only wealthy person in the world. So fuck you poor people, it just makes sense.
posted by the quidnunc kid at 2:57 AM on April 14, 2012


Banking doesn't rely on that sector to any degree. In fact, most of their core business can be operated from anywhere (and increasingly is operated from elsewhere). So, failed banks would have been bad, but not bad in the way, or to the degree, that failed auto manufacturers would have been, in the long run.

Failed banks are 100% worse. They dry up credit and induce losses in healthy sectors by calling in loans. Too big to fail means too many healthy businesses go under. It's the effect on the broader economy.
posted by Ironmouth at 5:53 AM on April 14, 2012 [1 favorite]


Just like how it takes the government several years to hand out each month's social security payments to millions of people. Oh wait, no it doesn't. WTF are you talking about?

I think he meant it in a similar sense to how if you stretched out your blood vessels they would reach around the equator two and a half times. It makes no sense in reality; if you stretched out your blood vessels the most important thing would be that you would be dead. But it's an interesting thought experiment to get the scale of things.
posted by solarion at 6:39 AM on April 14, 2012


It doesn't matter what the decimal point and exponent of the money are. Our system of capitalism often promises that anyone can be rich while at the same time guaranteeing that everyone can't be be rich all at the same time. There have to be people at the bottom to do things like collect trash, work in factories and serve me a glass of Glenfarclas 1955 after I become a billionaire.

Because the deck is totally not stacked against me becoming a billionaire, if I'm smart and work hard enough. It's the American Dream.

Keep reaching for that brass ring, sucker. We'll keep charging you to ride our carousel.
posted by double block and bleed at 7:05 AM on April 14, 2012


Failed banks are 100% worse. They dry up credit and induce losses in healthy sectors by calling in loans. Too big to fail means too many healthy businesses go under. It's the effect on the broader economy.

Oh, it would be bad, definitely. But, in a way, it's all illusion, isn't it? If banks failed on a large scale, I could certainly picture this conversation:

Banks: "We're calling in your loans."

The People: "Fuck you."
posted by Benny Andajetz at 7:08 AM on April 14, 2012


The difference between GM and the banks is that the government isn't buying all the unsold cars, disassembling them, and selling the parts back to GM at below-wholesale prices.

Also, in this analogy people stopped buying GM cars because all their money was going to pay for the last GM car they bought, which begin to require an extraordinary amount of (GM-supplied) maintenance after 5 years. Some people suggested that if the government bought up those used cars and destroyed them, then people would use that money to buy new cars, but for some reason that was considered a silly plan.
posted by bjrubble at 7:18 AM on April 14, 2012 [1 favorite]


Cash for clunkers?
posted by Mental Wimp at 7:23 AM on April 14, 2012


The other essential thing with the automotive industry is that every country around the world that has established an automotive industry beyond the first few decades after the invention of the automobile, say the 1950s or so, has only done so with massive government subsidies and trade protectionism and infrastructure investment. So an auto industry isn't something that just springs up out of the ground of the free market, not in the 21st century. If we'd let it collapse we would have had to spend tons more money and hassle to re-create a domestic auto industry in the future.
posted by XMLicious at 7:23 AM on April 14, 2012 [1 favorite]


Are you under the impression that banks print money?

Well, actually, yeah. The multiplier effect of fractional reserve banking is one way of "printing" money. I'm not sure why this would be a controversial assertion.
posted by malocchio at 8:03 AM on April 14, 2012


Are Low Rates A Subsidy to Banks?
posted by dsword at 8:13 AM on April 14, 2012


Are you under the impression that banks print money?

Well, actually, yeah. The multiplier effect of fractional reserve banking is one way of "printing" money. I'm not sure why this would be a controversial assertion.


They create value, which is measured in money.
posted by Ironmouth at 9:42 AM on April 14, 2012


Screw loans. Loans are too complicated. Just hand it out.
posted by flabdablet at 9:57 AM on April 14, 2012 [1 favorite]


They create value, which is measured in money.

No, sir. Value/wealth is energy, stuff, and knowledge. Modern money is a claim on value, but has no value itself.

Printing money doesn't add value to the economy. Ultimately, labor and research do that.
posted by Malor at 10:59 AM on April 14, 2012 [2 favorites]


US Likely to Make a Profit on Bailouts
posted by yoink at 2:34 PM on April 14, 2012


...blow it all on a new aircraft carrier.
posted by furiousxgeorge at 3:27 PM on April 14, 2012


They create value, which is measured in money.

I think I'll just sigh and bow out at this point.
posted by malocchio at 3:31 PM on April 14, 2012


Money may measure value, but what does value measure?
posted by TwelveTwo at 4:20 PM on April 14, 2012 [1 favorite]


Bootstrap futures.
posted by furiousxgeorge at 4:23 PM on April 14, 2012 [2 favorites]


Which is another way of saying "Without x number of losers, our system isn't workable."

I look forward to your earnest pamphlet setting out a workable alternative.
posted by obiwanwasabi at 6:40 PM on April 14, 2012


The implication being that there are no workable alternative solutions to the problem. The belief being that there are no problems. The joke being that there are, but at present, no solutions, let alone any workable ones. The conclusion then is to take action. No wait, that other thing, internet comments. The answer is to make comments on the internet! We can call that action. Also petitions.
posted by TwelveTwo at 6:59 PM on April 14, 2012


It's funny to see the apologists argue that the bailouts are absolutely necessary because OMG everything would fail and then turn around and argue that they aren't really that valuable.

It's because it is a matter of timing. It's the need for the money at that exact moment in time when the economy freezes up and large entities need funds they can't get from frozen capital markets. If the don't have those funds, it snowballs into something worse. Normally the market can provide those funds, no problem.
posted by Ironmouth at 6:02 AM on April 15, 2012


Which is another way of saying "Without x number of losers, our system isn't workable."

I look forward to your earnest pamphlet setting out a workable alternative.


We've been presented with workable ideas many, many, many times. But we're always inundated by "voices of reason" who can explain ad nauseum why they aren't "economically" feasible.

Universal healthcare - too expensive. End of discussion.
Unions and higher minimum wages - too expensive and inflationary. End of discussion.
Family planning. Birth control. Mental health. Addiction treatment. Tax rates. Availability of capital. Civil rights. Voting rights. Military spending. Etc. Etc. Etc.
The list is, literally, endless.

Apparently, a lot of people believe an unjust society is necessary for a healthy economy. I just happen to believe the opposite.
posted by Benny Andajetz at 7:32 AM on April 15, 2012 [2 favorites]


gjc: Yes, I know what CDSs are. I mentioned that number to illustrate that if just one subsection of the financial derivatives market can have been valued at $63 trillion and we've averaged $5 trillion in GDP yearly for more than half a century there probably is enough wealth sloshing around in 2012 to at least make it to the $120 trillion necessary for every household to be millionaires.

Derivatives aren't wealth. They are wagers.
posted by gjc at 10:24 AM on April 15, 2012


>>"Hey, pull in here! They have gas for less than $4,000 a gallon!"

>somebody understands economics.

Which is another way of saying "Without x number of losers, our system isn't workable."

Or, "Capitalism, by definition, sucks."

Benny Andajetz, no; no it doesn't say that at all. Unless you define "loser" as "someone making less than someone else"; in that case, of course, rainbow-unicorn-governed socialism is the only acceptable system of economics.

Even in non-capitalist economies, supply grossly exceeding demand causes inflation.
posted by IAmBroom at 11:08 AM on April 16, 2012


Even in non-capitalist economies, supply grossly exceeding demand causes inflation.

Could you enlighten me, a non-economist, why when supply exceeds demand, inflation results? I would think prices would deflate in the face of an oversupply of a commodity. Or are you talking about the supply of money here? If so, what constitutes demand for money?
posted by Mental Wimp at 11:51 AM on April 16, 2012


Supply of money, demand for loans (ie money).
posted by desjardins at 4:05 PM on April 16, 2012


Derivatives aren't wealth. They are wagers.

In search of an even simpler way to put this: the point is the magnitude of the casino operation relative to a single dollar - that in sum the wagers are being made with the ten-trillion-dollar poker chips / Monopoly-money bills as opposed to the hundred-billion or ten-billion dollar ones. Unless you're saying that there isn't any wealth changing hands in casinos or that the things that go on in casinos are in no way reflective of the existence of any wealth, in which case let's stop calling it "wealth" and just say "the stuff that the people who receive the profits from casinos buy their yachts and mansions with."
posted by XMLicious at 4:59 PM on April 16, 2012


Even in non-capitalist economies, supply grossly exceeding demand causes inflation.

Could you enlighten me, a non-economist, why when supply exceeds demand, inflation results? I would think prices would deflate in the face of an oversupply of a commodity. Or are you talking about the supply of money here? If so, what constitutes demand for money?


My apologies for being so sparse in my wording, Mental Wimp. desjardins has it:

Supply of money, demand for loans (ie money).

More generally, gross imbalances of supply and demand in necessary components of the economy (money, food, housing) force the real value of money to change (inflation or deflation).
posted by IAmBroom at 8:00 AM on April 17, 2012


Supply of money, demand for loans (ie money).

So how does lack of demand for loans drive up the cost of gas to $4K/gal.?
posted by Mental Wimp at 10:06 AM on April 17, 2012


I don't know if this is applying the same principles but my first thought upon reading the original comment was that you would need to persuade multi-millionaires to be gas station attendants and to drive tanker trucks to deliver gas to the stations, presumably at astronomical wages, plus the owner of the station will need incentive to operate it concomitant with the fact that he or she is a multi-millionaire, so a profit of mere hundreds or thousands of dollars a day isn't going to be enough.

So, maybe it's not specifically demand for loans, but demand for any kind of transaction where one is owed money in return for something? There's no longer demand for wages that are significantly smaller than ten million dollars and there's no longer demand for business profit significantly smaller than ten million dollars, both of which are factors in the price of gas.
posted by XMLicious at 12:13 PM on April 17, 2012 [1 favorite]


Thanks, XMLicious. That wasn't immediately apparent to me. However, the conservative meme that they want everyone to be able to become millionaires breaks down pretty quickly in light of this analysis, doesn't it?
posted by Mental Wimp at 2:57 PM on April 17, 2012 [1 favorite]


Yeah... y'know, it's just struck me how similar that meme is to Mormonism. I wonder if there's any sort of divinity supply-demand theory in Mormon theology that must be applied to deal with any problems that might arise from every man having the potential to become a god.

Or Buddhism, with enlightenment. Imagine if Buddhism is actually a vast scam to prevent people from achieving enlightenment, to maintain the level of demand for it.
posted by XMLicious at 4:33 PM on April 17, 2012


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