Sunday, January 30, 2011

Really, rich just wanna stay rich?

I was just starting out in the work world when the Reaganomics economic theory was embraced in the US. What an attractive idea for the wealthy to push - make us RICHER and we'll take care of you. How had that worked out before? Well there was the French revolution but those were aristocrats not the USians who had pulled themselves up by the bootstraps. I didn't think the rich in the US are more generous about sharing their wealth; traditionally rich have built their fortunes on the backs of people less well-off whether they were slaves or minimally paid workers but …

I thought it was a poor idea just based on human nature and that it was a pity it would take a generation to see the effect of that economic policy. Then I went merrily on my way working through the ups and downs of the Canadian/Alberta economy. I bought a car when interest rates were over 20% because I needed one. We bought our first house when interest rates were over 12%. We both came from frugal families and while we were not as frugal, our financial plan has always been to be net positive if something catastrophic happened to us. Calgary was a strange place of wealth and layoffs so we've always been aware of our debt load which stood us in good stead in the early 90s. We didn't upgrade our lifestyles (much) as money became more available - we hoarded (aka saved).

How has Reaganomics worked out? This article at the Atlantic seems to indicate - not that well for the US middle class. And that would be okay - for the most part USians have brought this on themselves through prosperity churches, sub-prime loans and rampant consumerism - except that these are actually people not just number that are going up and down. Not only do USians not have much of a social net but they seem convinced, individually, that they aren't going to need it so they give tax breaks to the rich and protest about any kind of financial help for the poorer among them that doesn't include a way for the rich to profit. Universal health care? Only if we can make sure private insurance continues to reap profits. Financial regulation? No way. In spite of bank bust cycles (I can remember 3) people insist the rich have to remain on the leading edge of profit just in case they get rich. The economy has bounced back but employment hasn't. Now more than ever, the mid-income earners are going to have to be innovative in order to even stay in place and the poor will become more vilified and touted as a drain on the economy. 

Money has a strange effect on people. The more you have the more you want and the easier it is to justify keeping it to yourself. After all, it allows you to do everything you want without worrying about cost. What if you need that money for something else and you’ve given it away? What if you give that money to – let say health care – and it’s used to give a smoker a lung transplant or an alcoholic a liver transplant or a marginally viable infant a life? What if you disagree with those decisions and you don’t get to be the judge?  Better to just keep it. And it doesn't matter if someone else would judge *you* as unworthy of having that money, you think you’re worthy and that’s all that matters.

This is not a call to massively redistribute wealth but I am glad that Canada does have regulations that protect the people just trying to live their lives the best they can while rewarding the innovative.