Notes from the Scrap Heap: The Broken American Dream

This post will not be the last in the “Notes from the Scrap Heap” narrative, but it will mark the turning of the corner. Up until now, we have been looking at what has gone on in the past: (1) we looked at the 1930s and the terrible toll it took on hard-working people, including my grandfather James Boatman; (2) we reviewed my working life, forty years in the typographical trade, and my survival in it far longer than most of my colleagues; (3) we told the story of my personal economic catastrophe, the loss of my job and health insurance coverage, my filing for bankruptcy protection, and the upcoming battle against foreclosure of my family’s home; and (4) we discussed some of the historical, political, and social causes of the economic catastrophe, which is not mine alone. After this post, we will be continuing this blog, but it will be more like blogs to which you have probably become accustomed: it will be a more contemporary account, a day-to-day record of what I intend to be my and my family’s economic survival in this new Great Depression.

Over the past nearly eight months, I have received many expressions of support, encouragement, and outright solidarity from friends, relatives, neighbors, and even casual acquaintances, and, be sure, they help, more than they know. One person promised to pray for me and my family, and he wished that he could do more. I replied to him, first, thanking him for his prayers and letting him know that they were always appreciated, but asking him to do more, not for me personally, but for our country, which is in serious trouble. This is what we need to think about now: why has this happened to our country, and what can we do about it?

Well, in order to figure out what to do about it, we first have to determine why it happened, so that we can combat the cause, sort of like Omnaris nose spray.

I started to hint at it in the post called “From Bailey Park to Pottersville,” but there’s an even more basic cause, one that’s been with us since the beginning of the Industrial Revolution over two centuries ago. What we all do, basically, is this: we make stuff; we get paid for making stuff; then we take the money we’re paid and we buy stuff that other people make. That’s how it works. The money I get paid comes from the money that other people pay to buy the stuff that I make. The problem is this: I don’t make stuff on my own terms, and I’m not paid by the people buying the stuff that I make. There’s someone who owns the machinery that I use to make stuff, and that someone takes some of the money that comes from the price of the stuff that I make, even after the machinery and rent for the space is paid for. That someone doesn’t have to work; that someone pockets part of the money that’s paid for the stuff that I make. That part of the money is called “profit.” All right, I don’t necessarily begrudge that someone, and let’s call him by the right name—Boss, the profits. He’s put up an investment, more than I could invest, I suppose. But here’s the thing. He’s making his profits based on selling the stuff that I make, and that’s the whole business. But he only gets money when people buy the stuff that I make. And when everybody has it already and doesn’t need it any more, he can’t sell it. But he doesn’t lose his job. I do. And from his profits, he’s got a lot more money in the bank, in the value of his house(s), in stocks, and all kinds of investment instruments, than I do. I’ve put my money into, well, food, clothing (and not extravagant clothing, at that—no one in my family has a mink coat), one house, a car for me and for my wife, and in repairs and maintenance to that house and that car.

But as I said, I don’t want what he’s got. But the way we’re organized to make stuff, sell stuff, and buy stuff leads inevitably to a point where I’ve made too much stuff, and nobody needs to buy what I’ve made. Then I can’t buy stuff any more, which means that the other folks who are making stuff can’t sell what they’re making, because I haven’t got the money to buy it, and the next thing you know, we’ve all lost our jobs. This happens, inevitably, every few decades, and it’s been going on since George Washington was living in the White House.

Governments, whether our Republic, the British monarchy, or the Tsarist Russian empire, or whatever, have had to deal with this issue, and have done so in different ways, though it’s essentially been stopgap measures to do something—anything—with the “excess” people. For most of our history that’s involved moving them out of the East Coast cities and into the country in the Midwest or further, land that used to belong to the Shawnee, the Lakota, the Chickasaw, the Sauk and Fox, or even some of my own ancestors, the Cherokee, and of course many other indigenous nations. Meanwhile, across the ocean they were shipping “excess” people to our shores.

As we mentioned in “From Bailey Park to Pottersville,” industrialized countries expanded into the underdeveloped countries, ultimately leading to two catastrophic world wars, as well as resistance by the people in those underdeveloped countries, some violent, like Algeria and Vietnam, and some nonviolent, like India. The wars in Algeria (settled in 1962) and Vietnam (ending in 1954) led to the collapse of the French Fourth Republic. The U.S.’s war in Vietnam shook the confidence of the American government and was the first link in the chain of events that led to the only resignation of an American president in the history of this country.

The hard fact is that all the maneuvers that the financial elites have used in the past to cope with the downward side of the business cycle are no longer available. There are no more “wide open spaces” in which to expand. War has become potentially too destructive—in fact, nuclear weapons could wipe out all life on the planet—and too socially destabilizing when the people who have to do the fighting and dying decide that the cause is not just and has nothing to do with our country’s freedom or with the values for which the flag is supposed to stand. Today, the private consumer debt, to a great extent secured by residential housing stock whose value is decreasing rapidly, simply cannot be paid back by the current debtors. Some of that home mortgage debt is protected by government insurance, but that just means that the federal treasury has to make good on it, and the federal government has a debt problem of its own.

In spite of the shrill complaining by far-right political groups, government policy has been remarkably bipartisan. The Obama administration has continued the policies begun by the Bush administration, even while he blames the Republican party for “getting us into this mess.” The government’s action to stimulate the economy, to bail out banks and other financial institutions deemed “too big to fail,” and to do the same for General Motors, has proven beneficial for Wall Street—the Dow Jones Industrial Average is up about 3,000 points since the lowest point of the crisis—but by any measure job growth has been anemic. Businesses are choosing to work their current employees longer and harder rather than hiring new employees. Job growth, such as it is, has been in low-wage service jobs, including the proverbial burger-flipping jobs. The unemployment problem, as could be expected, is contributing to the inability of consumers to pay their exorbitant credit card debts and the inability of homeowners to stay current with their mortgages, which increasingly exceed the market value of the homes which secure them.

The most powerful decision-makers in government and finance have no long-term solutions. Nobel Prize–winning economists cannot agree on what will work to put people back to work and save the banks from trillions of dollars in debts that will never be paid back. The Secretary of the Treasury and the chairman of the Federal Reserve are making optimistic statements which echo the predictions of Herbert Hoover during the 1929–1932 period: “Recovery is just around the corner.” None of them have an answer to the fundamental problem: this downturn in the business cycle has coincided with the first decrease in residential housing prices since the end of the Second World War. One of the underlying foundations of the post–World War II economic structures has rotted and can no longer support the structure. Bold, decisive action is needed, but boldness and decisiveness are so rare as to be for all practical purposes nonexistent in Washington, D.C.

To be sure, a real solution would be an economy and governmental structure in which private profits for a few would cease to exist and all work and trade would be directed towards human needs. Though many if not a majority of people might think that such an economy would be nice, almost no one thinks it can really happen. I happen to think that it can, but until such time as a lot of people agree with me, it cannot, so I won’t even go there, at least not here and not now. So what kind of bold, decisive action would help people? What kind of bold, decisive action would help me?

Before going one step further, let’s clear the air about “big government” intervening in the economy—and I say this as someone with a gut-level hatred of bureaucracy and inefficiency. Everything that happens in an economy is decided by people. Prices, wages, employment levels, interest rates, all of it, are decided by human beings, not laws of nature, and certainly not God. In fact, I suspect that if God were running the economy things would be a lot different and a lot better. After all, according to the Gospel of St. Matthew 6:28–29, Jesus Christ said, “Consider the lilies of the field, how they grow; they toil not, neither do they spin. And yet I say unto you that even Solomon in all his glory was not arrayed like one of these.”

We are told that our government is democratic, that the United States has a government “of the people, by the people, and for the people,” as Abraham Lincoln said. And yet, nearly all the decisions that affect our day-to-day lives—whether we have jobs, whether we have homes in which to live, whether we can get care when we are sick or injured, and the list could go on—all these decisions are made by people who were chosen by…by whom? Are the people consulted when the prime interest rate is raised or lowered? Does any elected official set health insurance premiums? I know damned well that my job was taken away from me by someone who was not elected to anything by anybody, and yet he had the power quite literally to wreck my life. What kind of democracy is that?

So I don’t want to hear about “big government intervening in the economy.” If the United States is going to be a democratic country, democracy has to have some meaning. Economic decisions affect people’s lives more than any other decisions that any human beings make. We as citizens have the right to decide that we the people of the United States of America will come to the aid of its hard-working people, those who can still work and those who, for reasons of age (children and seniors), ill health, or injury, are not able to work. We have the right to do that. We have the right—and indeed the moral responsibility—to decide that no one in our country should go hungry or homeless. We decided over a hundred years ago that children had the right to an education and should not be in the work force. That was the right thing to decide. Why can’t we decide that those same children—and other members of their families—have the right to health, shelter, and for their parents, employment if they are able to work? Is that really too much to ask?

So, first, every American has to be guaranteed a job or an income. Never again should anyone be thrown on the scrap heap with the excuse that, “It’s not personal. It’s just business.” If the free market can’t put people to work, then the government—of the people, by the people, and for the people, remember?—will have to do it. In the 1930s Franklin Roosevelt proposed and Congress enacted the Works Progress Administration, which provided jobs for thousands of Americans. Was it a perfect solution? I can’t really say, since it was a long time before I was born; however, my grandmother (obviously my father’s mother) said simply of the WPA, “It kept a lot of people from starving.” Do you know something else? There is work that needs to be done. The physical infrastructure of our society—our roads, bridges, water mains, railroad beds, schools, hospitals—are in disrepair and need work, as we know. This has been said many times. Additionally, there are hospitals closing when people are going without health care and waiting for hours to be seen in emergency rooms; we need alternative transportation to the airlines and the automobiles—how can we be the only advanced country without a high-speed rail system? Why should our illiteracy and infant mortality rates be among the worst of any industrialized country? There is plenty of work that is not being done, and there are plenty of people who need jobs. Is there any good reason that the people who need jobs can’t be matched with the work that needs to be done? If there is, let’s get it out of the way.

Second, the American working people need debt relief, and we need it now. Hundreds of thousands, if not millions of American homeowners owe more on their mortgages than their houses’ market value. Consumer debt on credit cards, whose interest rates would make Tony Soprano proud, is approaching a trillion dollars. The banks have lent out money that can never be paid back. Even if the banks seize houses in foreclosure, ultimately, who can buy them? For what price can the houses be sold at auction? It has been pointed out that the majority of mortgages today are FHA or VA mortgages, that is, insured mortgages, so that the banks will recoup the full value of the loan from—guess who?—the government when they foreclose. So, if the government is the one really on the hook for the money, then it seems to me that the government—of the people, by the people, and for the people, am I right?—has a right to declare an immediate moratorium on foreclosures. Do we really, as a society, want to turn people out of the homes in which they have been living in some cases for many decades? If the government is on the hook for home mortgage insurance, then it seems to me that the government, which is supposed to be our government, has the right to tear up the mortgages, renegotiate the principal to the market value, and determine a monthly payment that residents can actually pay without having to live on cat food or leave serious illnesses untreated. Democracy, people!

Third, the American people need to get out from under the for-profit health care “system” that is siphoning billions of dollars from our pockets and putting them into the bank accounts of insurance companies and giant pharmaceutical companies. Our expenditures, both public and private, for health care are the highest in the world, but the quality of our care is not worthy of the United States of America. It is very likely that the cost of health insurance that my boss had to pay was key factor in my losing my job—and it was a substandard plan, which covered very little. A single-payer health system would remove a gigantic burden from the shoulders of small business owners as well as from workers. It’s time. A bold decision would scrap the so-called health care reform enacted by the Obama administration, and simply put everyone, regardless of age, into the Medicare system. It isn’t perfect, and we can make it better, but it will leave no American without medical care.

Will my suggestions be expensive? I suppose they will, though they won’t be as expensive as not doing them. However, there is a relatively easy way to bring in an extra trillion dollars to pay for them: first, bring the troops home from Iraq, Afghanistan, and Libya, and let’s stop spending money over there for death and destruction. Our freedom is not threatened in the Middle East, and however one assesses the threat of terrorism, there is no question that the war in Afghanistan is doing absolutely nothing to make us safer, and in fact is doing more harm than good. Second, make the rich pay their fair share. People who are earning some four hundred times as much as the average working person should be required to give some of that wealth back. Ask not what your country can do for you, rich people! People like me have worked long hours to give you the privileges that you enjoy. The least you can do is allow me to keep my house after over thirty years of living in it.

Those aren’t just my suggestions. They make sense to a lot of people. In the weeks and months ahead, I’ll be sharing with you what working Americans are doing together to convince—or force—our government to enact a jobs program, debt relief, and a national health program. And I will be sharing with you my family’s journey of survival. Be sure: we will survive!


One Response to Notes from the Scrap Heap: The Broken American Dream

  1. One little correction: I should have remembered that George Washington never lived in the White House! It was during his administration that the decision was to build a new capital city on the Potomac, not far from his own plantation. The first president to live in the White House was John Adams, and I’m not sure if it was even completely finished when he lived in it.

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