By Lynn Lanier
A poet’s metaphor helped me knit our nation’s “good, bad, and in-between” into a fabric of understanding – imperfect as it may be. Cities represent modern deadly sins – Pride is Los Angeles, Power is Washington, and Money is New York City. Of course, these three characteristics aren’t sins unless they’re abused, which happens often within the borders of the aforementioned cities.
Thirty years ago, the Financial Industry accounted for about 12% of the GNP. This seemed like a fair cut since the banks provided the capital needed for businesses to grow. The U.S. became the best at delivering goods and services. However, today financials rake in 30% of the GNP. Loan sharks come to mind. That extra 18% or so goes mostly into the pockets of financial wheelers and dealers, but in my opinion, this delivers little capital for producing goods and services that people need and want. No wonder the Occupiers – and many others – think the system is corrupt.
Financials make extra money largely by creating derivatives, company mergers, and company splits. These financial shenanigans don’t provide much capital for growth; instead, they mainly provide a method for the perpetrators to take another cut of the pie. To make it worse, these financial vehicles are so complicated that only an MIT graduate can understand them. Indeed, big salaries induced these physicists and mathematicians to work for Wall Street creating mostly non-productive financials. It’s a free market, but I think there’s something wrong when we encourage our best and brightest to pervert our capitalistic system instead of invent stuff that fuels future growth.
Whereas money drives the people of Wall Street, it’s power that drives the people of Washington D.C. I’m not sure when the quest for power and not the good of the people became paramount to the U.S. government. Power is built into human nature and likely played a role when our founding fathers defined our nation. I think we need people with power to get stuff done. However, power seems to have reached new heights – to a level of perversion. There are plenty of examples across the entire government.
The pinnacle of abuse is when a Washington lobbyist – not elected by the people – can influence most of a party to sign a pledge to serve his special interest group. Grover Norquist significantly helped to prevent a critical budget compromise. Some people may not want taxes increased; some may not want the government to bail out banks – okay. The Tea Party and Occupy Wall Street people seem to agree on this. However, the way to do this is through elected officials being influenced by the people in their districts, not being influenced by a fat cat with tons of special interest money who serves a relatively small number of privileged clients.
Unlike Washington and New York, we relish the excesses of Los Angeles. Plastic surgery, tabloids, and worship of rock and movie stars reveal our obsession with pleasure rather than substance. The Pride of LA wouldn’t exist unless we bought their wares – tabloids, tickets, and paraphernalia that entertains us and makes us feel good. Some excesses are evil – for example, children exposed to drugs, sex, and violence. However, most of us have control over buying what they’re selling. I don’t want to live there, but it doesn’t seem like Los Angeles poses much of a threat to me compared with New York or Washington D.C.
How did Wall Street and Washington become problems? This, too, boils down to human nature. Actually, it’s not just human but all of nature – survival of the fittest. Power and money are aggressiveness and territory. Kudzu is a vine introduced to America. It has no enemies and it’s aggressive, so it’s taking over the southeast, choking out weaker native plants – same with the Asian catfish in Midwestern Rivers. The big banks are growing even larger as they feed off the carcasses of smaller banks ravaged by the recession. Power and money spawn more power and money. Until an even stronger predator comes along, the rich and powerful will continue to choke the rest of us.
Starting in the 1980s, CEO pay increased from about 50 times the average worker’s pay to about 500 times average – 20-fold higher than other countries. Pride influenced the CEOs to game the system so that their compensation increased no matter how their respective companies performed. Unlike other industry executives, financial executive management raked in huge bonuses with no apparent proportionate improvement in U.S. productivity. The CEO to average pay ratio has declined recently – partly due to the government insisting on a small reduction in CEO pay when they have to bail out their bankrupted companies.
I don’t have an answer to the aforementioned problems, but I think the first step is to attempt to understand the origin and nature of the problems.