The White Boys Are In Deep Sh*t

In the United States – and throughout much of the developed world – the white boys have always managed the financial show. This loose affiliation of males usually includes a few token non-white men and many fewer women. The Wall Street boys and the Feds built a rewarding edifice that allowed the very large middle class and a fair number of lower-class folks to prosper, sort of. They could get jobs, make money to afford transportation, a house or apartment, and save for retirement, with a final stipend of Social Security payments upon their retirement.

Meanwhile, many of the white boys, being industrious and well-educated in money matters – and very clubby – have become quite wealthy.

Let us now pause to thank the little people, trudging gamely forward, pulling the wagons loaded with giant stone cubes to construct the capitalist pyramid, and with little complaint about how God has burdened them. Thanks to these folks –and the captains of commerce – America's economy has morphed into a dynamic pyramid scheme built on increasingly arcane algorithms that few people understand, allowing the white boys to grow the economy, dip their snouts into the trough at intervals, and export our clever mathematics to other nations.

Thus the world became woven together by the viral ivy of global commerce and electronic technology.

And now we are melting down together.  

Tell Me It Ain’t True
The white boys are now glimpsing the real possibility that the cash cow they've milked for many generations is running dry. There are two reasons I've written about in Spirit Calling earlier: the drift toward a frictionless economy caused by the Industrial and Digital Revolutions which drives consolidation of all economic processes, and is now coupled with the globalization of cultures spurred by accelerated travel and communication. The abbreviated version of these several ideas is this:

*       Frictionless Economy. The old paper-intense economy was slow, paper passed from hand to hand after intense scrutiny by each party. Digits are electronic, moving swiftly from here to there – across the office and across the globe. The Digital Economy eliminates many middlemen (and middle-women), saving tons of money. The result is that fewer people do more work (and with more stress to do the work efficiently). Bad news: extreme digitization eliminates whole companies and whole industries as efficiencies are increased. Who needs seven computer stores when two in one small town will fight each other with lower prices? Another result: a squeezed (consolidated) economy.

*    Globalization simply exports the frictionless economy to every country we trade with. Price competition, no matter where it occurs, drives down prices, which ultimately puts less efficient competitors out of business. Who needs a Walmart and a Target in Center City if Walmart has lower prices and most of the same products? Speed of international travel and communications further accelerates the consolidation and price reduction of goods and services.

In 2008, as the chickens began to come home to roost – to continue the farm metaphor – the Wall Street Journal, on April 7, 2009, marked a key moment clearly. The Journal reported that James Lambright led a government team at years’ end dispatched to shrink Citigroup’s bonuses in the face of the crumbling credit and banking system. The report ended:

On New Year's Eve, Mr. Lambright...was fielding one call after another, including a tense call with Mr. Crittenden [CFO] of Citigroup. Before Treasury would wire the $20 billion [bailout] to Citigroup, it needed waivers from about 50 executives allowing the government to curb their pay. Treasury had been requesting the documents for about two weeks, but several were still missing.

"This is good news," Mr. Lambright told Mr. Crittenden. "This tells me you don't really need the money. Let's talk next year."

The waivers arrived within hours.                       

A New New Deal
Bad news, boys. Those fat bonuses are going away. Your work as a pyramid capitalist is simply not 100 times more valuable than work done by the folks who collect the garbage in front of your home or the schoolteacher who buys supplies with personal money because the school can't afford them. 

The new improved deal is an inevitable outcome of pyramid capitalism’s continuing downward spiral. (The adjective inevitable implies predestination and discounts human creativity – but is nonetheless true. Once in motion, broad cultural shifts have a certain gravity, like lava rippling from a volcanic eruption.) Getting to the bottom line – a stabilized economy – as quickly and painlessly as possible will require a tipping point, a moment when we can pull the switch and begin operations with a new American economic model.

Call it Capitalism 2.0 – Cap2 for short.

With Cap2, the United States would become a massive nonprofit entity within which everyone works for the common good. The nonprofit itself may be as wealthy as possible, as the United States, rife with energy and innovation, deserves to be. But personal salaries and benefits have a firm cap and defined range, top to bottom. Even for millionaire athletes, real estate tycoons and corporate deal makers. Even for Wall Streeters.

Egregious personal profit is no longer acceptable. In fact, pyramid capitalism must go away.

Under Cap2 citizens will be given many opportunities to contribute to the growth and health of the national economy if they are able-bodied and able-minded. Past a certain age they can retire if they choose. If you don’t wish to row the national boat alongside everyone else – you’re a novelist or musician who prefers to dream and plan about that special creative project – well, fine, you’ll be at a lower rung of the income ladder. But you’ll get scalable cost-of-living and health benefits with everyone else.

For Cap2 the range of personal income and profit must exist within a fixed minimum and maximum. Any income that people generate above their cap is taxed at 100% and channeled to fund the common good: infrastructure rebuilding, health care, job training, education, wherever the greatest social needs exist. No person is permitted to live in dire poverty and without an adequate dwelling.

Property value and property tax will be broadly recalibrated. But everyone will not have to work to get a living wage. I repeat: Everyone will not have to work. We simply no longer need everyone to work.

The ‘full employment’ model is based on an assumption that if everyone isn’t pulling the oars, the boat will not go forward swiftly. This is no longer true. The digital-driven consolidation of the economy means that the Cap2 economy can grow and provide for citizens without the need to create jobs in every tiny airless pocket of a bureaucracy. If a majority of the adult population is contributing and producing, that will be sufficient. 

(This heresy I describe would not have been possible before the convergence of digitized processes and quickened global telecommerce. Now, it is more than possible. It is becoming mandatory, to stave off economic chaos.)

And as for you, Mr. Profiteer, you risk-loving gunslinger with nerves of steel – if you don’t want to work without getting paid the absurd bonuses to which you’re accustomed, well, get another job. If you’re a Prime Job Creator, a visionary at the top level of a hierarchy where there is a perceived need, you will be well compensated. But so will everyone else at the highest level: the President, heads of large corporations and government hierarchies…the National Leadership Team.

But the Cap2 economy will have a hard ceiling on personal income. We’ve seen the ugly underbelly of our bipolar economy: booms and busts, fiscal exuberance beaten down by recession – and now, an accelerating depression circling the drain with such shocking speed that the bottom is unpredictable. With Cap2 we would continue to collaborate to produce goods and services, buy and sell in the marketplace, grow the economy. Things would proceed apace, but without the hard driver of let’s-make-as-much-money-as-we-can – and screw everybody else.

But the theme of Cap2 is markedly different: either we all profit, or we all lose.

What Happened To Our Zero-Sum Game?
The pyramid capitalist model is a zero sum game: one player’s gain is offset by another player’s loss, equaling the sum of zero. But the losses are now piling up with frightening speed, and many former winners are flowing into the losing column. According to the Wall Street Journal during the week of July 5, 2009:

 Average hours worked per week are at the lowest level in 40 years.

1. Millions of full-time workers are being downgraded to part-time, as businesses slash costs
   
2. Factories are operating at only 65% capacity.
3. Payrolls are at their deepest slump in 50 years.
4. The jobless rate is approaching the 10% benchmark. For young people the situation is far worse. One in four young teenagers is unemployed. Prospects for fresh college graduates are no rosier than their younger high school counterparts.

 Pyramid capitalism is a dying beast, fallen to its knees and coughing up blood. Financial wizards in government and academia are beginning to echo this notion, to think the unthinkable: raw economic incentive no longer benefits a culture. Greed and avarice inevitably blossom and suck the life from the economy. The planet has finite resources. Cap2 would acknowledge that fact in every way.

What Is Next?
A broad national conversation must be launched so that, at a future date, a ribbon is cut to open the drawbridge to Cap2. Much psychological and social reorientation will be required, for these are radical but required prescriptions. Our downward trajectory is calling urgently for us to rebuild the culture to become, again, tribal animals, neighbors within a single earth-dwelling culture engaged in a profoundly collaborative endeavor. Technology and the digital revolution that sprang from technology have brought us to this precipice, to this opportunity to see humanity and its rich possibilities with fresh eyes.

We cannot return to the old ways. The path backward – to “fix the economy” – is crumbling. We can only move forward, to invent ourselves altogether differently. To imagine a unique new future. And then to make it so.