I’ve been trying to figure out exactly why President Obama’s approach to the economic crisis upsets me so much, so regularly, and I think I figured it out. His impulse—perhaps as someone with more faith in the power of centralized, top-down decision-making than I have—is to fix our economic problems by supporting existing institutions.
In the president’s view, the best approach now is to pump some necessary short-term assets into flagging institutions to help them make it through the rough patches in the economic road, and then get them to pay it back to the government once times are better. That’s the approach he’s taken to the banks, the automotive industry, and even the insurance industry.
What the Obama Administration doesn’t seem to understand is that the institutions they are attempting to prop up are the very ones whose solvency depends on the continuing extraction of wealth and value from the real people and places making up America.
Take the ongoing bailout of AIG. The American International Group is a big hedge fund masquerading as an insurance company, of sorts. Their fourth quarter loss last year of $61.7 billion was the largest loss by any company, ever. The core business of AIG, and the reason the government feels it is crucial to keep them afloat at taxpayer expense, is insuring corporations against lawsuits. Were AIG to go out of business, big enterprises like offshore oil rigs, amusement parks, and pharmaceutical firms might temporarily lose their insurance coverage.
What does that really mean? It means that larger corporations would lose a certain amount of their unfair leverage over smaller concerns. The handmade toy industry, for example, made up of thousands of individual craftspeople and cottage businesses, has been devastated by the Chinese lead paint debacle. It’s not that the domestic handmade toy industry has anything to do with corporate outsourcing to China. In fact, they represent the alternative to conglomerate-licensed, mass-produced, and outsourced toy manufacturing.
Read the rest at Arthur Magazine
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