Cover of Capitalism: A Love StoryWhat is the cause of the Great Recession? Yes, we all know, it's the sub-prime mortage collapse, it's derivatives, credit default swaps and other fancy financial instruments - those that Warren Buffett famously described as "financial weapons of mass destruction". In one word: it's Wall Street.
But, bottom line, what's behind all this financial hubris? Dead peasants!
No, I'm not joking, I'm dead serious. Dead peasants, I tell you!
Let me explain. I just saw Michael Moore's latest effort, Capitalism: A Love Story, a brilliant documentary that seeks to explain how we ever got into the Great Recession in the first place. Of course, as he points out, it all started much before the collapse of Lehman Brothers on 15 September 2008. Moore takes us all the way back to the 1970s when President Jimmy Carter tried to tell America that it was fast becoming a society that had lost its values. The middle-class was in trouble, its values were being perverted, but who ever wanted to listen to that message? "What a bummer!" is Moore's comically terse comment about Carter's bungled attemtp to set the country back on a (more moral) course.
Whereupon, with the backing of Wall Street, a minor politician (a second-rate actor who looked like a cowboy, a politically desirable physique), I mean Ronald Reagan, was elected president and saved the day. As I've said in an earlier post, and here I agree with Moore (even if everything he does is not always in the best taste or even effective), the destructive game of deregulation started with Reagan (and with Thatcher in the UK). The dismantling of the Glass-Steagall Act was probably the turning point: it opened the door to unbridled high finances. From that moment, capitalism in its worst form - unregulated, iniquitous - had won the day. And it was a bi-partisan effort: Clinton's Democrats were as much at fault as the Republicans.
True, Obama was elected on a platform of change - "Yes We Can" - which tried to empower the American middle class. Did it mark a change in direction in America? For a while, with the reform of national health, it looked like it might. But it didn't last long. Barely two years, judging on the results of the last mid-term elections in America, where the Tea Party won on the improbable platform of "let's have a tax holiday for the rich and let's balance the budget! Out with Social Security!". Contradictory messages have never killed anybody, on the contrary. That's democracy in action. To close the door now on all this nonsense is probably next to impossible.
If you have any doubts, consider the "dead peasants" scandal. It is symptomatic of the disease affecting America. And exemplary. Do you know what "dead peasants" are? I didn't know until I watched Michael Moore's film. I was horrified. "Dead peasants" is the disparaging term used to refer to life insurance on a corporation's employees. The problem is that this life insurance is not owned by the employee but by the employer corporation, with benefits payable to the corporation. Moore interviewed a woman whose husband had died from cancer and whose employer benefited from a $1.5 million payment from the life insurer, while she, the widow with two children, got nothing. Yes, she got nothing, not even a small percentage of this sum! It's like taking life insurance on your neighbour's house: you would benefit if it burned down, therefore you'd be sorely tempted to become an arsonist, wouldn't you?
You could argue that at first, such insurance policies did make some kind of sense: a corporation would take it out on "key employees" to protect itself in case of death, since such key employees are relatively difficult and costly to replace. The trouble is that the usage of such policies was expanded over the years and came to cover minor employees, particularly women, for whom such protection was hardly needed. Why women more than men? Because they live longer, so if they die young, the life insurance premium is much juicier...And the beauty of all this (I mean from a capitalist's point of view) is that the practice is entirely legal.
That's what happens if you don't regulate capitalism...Dead peasants galore!
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