Wednesday, April 29, 2009

Government of, by and for the middle man

As Naomi Klein illustrates so forcefully in Shock Doctrine: The Rise of Disaster Capitalism, human calamity is great for business, at least in a macro sense.

Houses get knocked down by tidal surge? Sales of lumber and nails go up.

"Shock and awe" reigns over a decrepit, tin-pot power? The business of contracting "freedom" (and, of course, enabling Big Oil) goes through the roof.

Klein doesn't mention the tidal condition of Americans being up to their eyes in credit-card debt. But what better condition for capitalism? People keep buying, and with a spider's web of fine print, they become lifetime captors and profit generators for the money men. The merchants make a profit. The money men make a profit. GDP, baby. Bad-a-bing!

Much attention has been drawn to the number of homes being foreclosed at this scary moment. But consider this number: The average household owes 20 percent more than it makes each year. The personal savings rate is in the minus column.

Not all of the owing is simply based on goods purchased, understand. A lot of it is based on ratcheted-up interest rates, fees, penalties and steel traps in a barely accountable, accounting netherworld.

Consider the credit-card trick of offering to consolidate debts as a promotional interest rate, then applying one's payments to the newer debt. Meanwhile, the debt carrying the higher interest rate continues to burn holes down to Earth's molten core.

Last week Barack Obama invited executives from the nation's credit card companies to discuss the abuses associated with what they do. Now, you might say there's no such thing as abuse when profit (GDP) is the motive. Yes, you might.

"Caveat emptor," you say. That's why Texas continues to let loan sharks prey on the desperate with impunity.

What business had the president telling these hard-earning businessmen how to make their earnings?

Actually, it's the same kind of business that alerts the sheriff when a con man is knocking on doors offering to bring rain. Shame on the farmer for buying his spiel. But do we let the con man keep conning?

Speakng of fraud: We sorely miscalculated, in a GDP way, in assuming things were good when in fact, as Obama said, "40 percent of our profits came from a financial sector that was based on inflated home prices, maxed-out credit cards, over-leveraged banks and overvalued assets."

Well, things have changed, with things sinking so low that the federal government came to help prop up the banks that hold so much of the nation's consumer debt.

Since they asked for the government to be a partner, Obama has decided to be an active partner. Good for him and us.

Obama told the gathering that he seeks to find a balance between making a profit and using predatory practices, like thrifts' aforementioned practice of paying off the high-interest rate last. He wants to require the opposite, as does a bill in Congress.

Republicans in Congress oppose said measures, saying they will hurt lenders.

In other words, it's OK for the average American to be locked into a straight-jacket for life because it benefits an industry.

This reminds us of the argument against expanding the Children's Health Insurance Program. The argument is that a small percent of those now insured under private plans will shift to CHIP. Maybe that's true. But millions, all the rest, who have no health insurance will have it and the preventive, cost-saving care it brings.

So, which is more important, a marginal loss for private insurers, or a major step in insuring more children? That seems like a slam dunk in terms of human welfare.

But, too often we put the corporate weal ahead of the common weal. Our health-care system is designed to comport to the profit motive — the business of being a middle man — rather than one that uses cumulative health care dollars at the front end, and more wisely, through universal coverage. That can change if we stop thinking of human suffering as a venture opportunity.

John Young writes for the Waco Tribune-Herald.

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