Monday, September 29, 2008

The economy done sploded.

OK. I'll be the first to admit that I know nothing about economics. Or at least about "economic theory". Stock market? No clue. Interest rate accrual? Um... it gets bigger over time? High ones on credit cards and loans are bad, but on savings accounts are good. That's all I got. Bonds? Some kind of bank thing. Bull market vs. Bear market? There's this weird bronze bull statue down in the financial district. And when you're feeling fancy, the Bull and Bear at the Waldorf is a nice place to have a Dewars and soda.

But I know a few things about money, that evil stuff that seems to govern our lives. (By the by, it's the want of money that's the root of all evil; remember that.) I can remember worrying about money for as long as I can remember being alive. I've seen my parents make every mistake in the book: get into unbelievable credit card debt, buy cars they couldn't really afford, take out a second mortgage, go bankrupt. I also watched what happened to them financially over the healthcare costs of my mother's cancer. I've gotten myself into debt, and back out of it.

And I do know this: at the end of the day our country's economics are, at least in part, made up by the money issues and habits of individuals. So, despite all of the things I definitely do not understand (dow jones who?), here are some things I know for sure:

1. In a given household, there has to be more money coming in than going out. You'd think that this would be a basic tenement known since near birth, but somehow it evades many people.

2. Point number one can be extremely difficult given the ratio of cost of living vs. pay. Jobs are hard to find, and many of them (most of them?) don't pay nearly enough to live on. At this point it seems that few adult couples can get by on a single income, even without children; it's been as such for quite some time. If you're making, say, $8.00 an hour at 40 hours a week (which is far above the national minimum wage), you're making $1280 a month - minus taxes. Let's call that a take home pay of maybe a thousand dollars a month? So maybe you won't actually die in the street, but you'll most certainly be living paycheck to paycheck even in the cheapest of living situations, even only supporting yourself. Forget healthcare benefits, or being able to call out sick without losing a day's pay or sometimes even risking your job. So much for opening a new Wal*Mart to "create jobs". Jobs for teenagers who need pocket money maybe. Certainly not jobs for people trying to support themselves.

This is the biggest problem with unemployment statistics, by the way: they don't account for people who are technically employed but still can't afford basic necessities, now sometimes known as the "underemployed".

3. A townhouse should not cost half a million dollars anywhere ever, unless we're talking eight bedrooms and a walk-in sauna. But we're not; we're talking two to three bedrooms with nine foot ceilings and walls so thin that an errant foot will go right through them without a second thought. We're talking ugly pieces of crap with bedrooms measuring 8' x 10', and a living/dining combo with a kitchenette tacked on. We're talking a parking lot instead of a front lawn and a six lane highway out back. In the suburban areas of many cities, this is what these places now cost, or close to it. And compared to throwing $1000 and then $1200 and then $1500 and then $1800 a month in rent down a hole for a two or three bedroom apartment for years and years (and in just as awful a complex), this place seems like the American Dream come alive to many families.

Housing costs are out of control; this is not news. I live in a rent stabilized apartment, and as such it is still relatively affordable. Yes, I do live in New York - in Queens though, in a neighborhood that was built up over a hundred years ago in a building that's never been renovated. It's a fairly small one bedroom; there's a living room, a tiny bathroom, a small separate kitchen, and a hallway, the end. There are holes in the ceiling in the living room and in the bathroom due to plumbing and radiator issues that are so intrinsic to the old systems that they can't be fixed short of full on replacement. Jonathan and I live a cozy life here, but no way could I share this place with a roommate, and god forbid if we had a child. We'd have to move, no doubt. I've just received my renewal lease, and on it is listed the amount that they "should" be charging at market price. And according to my lease, at market value, next year I should be paying $1925 per month for all this luxury.

Perhaps you think that my idea of cost of living is skewed because I live in New York City, a place that everyone thinks is oh so expensive. But you're forgetting two things about New York. 1) When you can actually get a job here, it pays proportionally to the more expensive rent. 2) Instead of paying to lease, gas, insure, and park a car, I merely pay $81 a month to ride the subway, which takes me within blocks of absolutely everywhere I need to go. None of that, however, overrides the fact that charging $1900 for a one bedroom is ludicrous.

Also, let's not overlook the fact that for nine years before I lived here I lived in New Orleans, a city with a notoriously low cost of living. Trouble is, though, that most of the jobs are woefully low paying as well. And so you end up in the same conundrum. Pre-Katrina, I could rent a three bedroom house for $1100 a month. However, the best job I could get with a college degree paid $8.00 an hour, and that's after I was promoted to "supervisor".

4. People should not be taking out mortgages that they can't reasonably afford. But isn't there some shared responsibility here? Banks should not have allowed these people to take the mortgages in the first place. Before a bank gives you a loan, they pretty much find out everything there is to know about you. They know more about your financial standing than you do, and they sure as hell understand their rating structure better than we ever will. They no doubt have an idea of what your payments will be like once the "adjustable rate" increases. So, if that payment is going to be, say, more than 60% of a household's income, perhaps a mortgage should *not* be granted. Of course, this will lead to far fewer people being able to buy houses. But that's mainly because the houses are far too expensive in the first place.

Banks shouldn't be luring would-be homeowners with low initial rates that will then skyrocket to unmanageable levels - a tactic that is obviously meant to draw in lower income households who dream of not fighting with the landlord over the broken refrigerator anymore. There's a word for lending money and then charging outrageous interest rates on it: usury. People get all Regan-ish when you start talking about having laws to control the way that banks can operate; deregulation, keep government out of private affairs, bla bla bla. But trusting banks not to take advantage of people and their money? That's like saying, "Oh, I trust this fiendish bloodsucking vampire who hasn't fed in four days to behave himself at the junior prom." And hello: we're seeing what happens when we let them act as they will. It ain't pretty.

5. Speaking of usury, let's talk about credit cards. Yes, people do extraordinarily stupid things with credit cards. But some people are just using them to help buy enough food for three kids, or to pay the electric bill in winter, and they get punished by 22% interest rates all the same. Granted, the rate is somewhat based on your credit rating, and your credit rating is somewhat based on your personal actions. But there is a whole host of things far beyond personal control that can happen that will eff up your credit rating beyond belief. And anyway it's somewhat beyond my point. My point is that I don't think rates that high should really be legal. Sure, they're a business, and that's how they make money, et cetera. But even if they lower the max rate to, say, 15%, they'll still make plenty of money off of idiots who "really needed" that new flatscreen TV, and it'll be a little easier on people who use them to get through that week or two of unpaid leave they had to take when they had the flu.

6. Capitalist enterprises depend on perpetual growth. Every year, and beyond that even every quarter, a business must see an increase in sales and/or in profits. Stagnant profits are unacceptable, and any decrease is seen as catastrophe. This system... defies everything we know about people and nature and systems. (And sorry, but nothing happens with money that isn't a direct result of a choice of a person. It doesn't have a life of its own.) Nothing, but nothing, works this way. Nothing functions in perpetual growth. Could it work based on another model? I don't know. It depends on what is meant by "work". But I do know that it can't go on as it is forever... and they know it too.

* * *

Overall I guess my point is this: cost of living seems to have gone up beyond what current payrates can actually handle, even for the so-called middle class. The people who feel this the most are of course the people who can least afford to. Owning a home (at least, one anywhere near any actual city {read: near any quantifiable number of salaried jobs}) is quickly becoming a dream beyond the scope of what the middle class can hope for, even with two incomes and a willingness to take on an enormous debt that will last for most of their adult lives. There is something very wrong with this picture.

So what do I think should happen? Basically, I think the huge ridiculous multi-billion-dollar multinational corporations should make less money. And not fire people, or cut the benefits or pay of their employees. (Except maybe for the pay of employees making over a million or so a year.) The should just have less profit. Yep. You heard me. I said it. I think that enormous businesses should make less money, and individual people should get to keep more of their money. I know, I'm some kind of crazy hippie commie weirdo anarchist. I should probably be jailed.

Really, when it comes to basic necessities like food, shelter, and medical care, I become remarkably socialist. That flat screen TV that no one could possibly ever need for a healthy life? Charge whatever the hell you want for it. You'll never hear me complain about the price of caviar. But a safe place to live that's a reasonable distance from gainful employment and other life-sustaining amenities such as grocery stores? That's a different story.

I'll conclude my rant with someone else's: Jello Biafra's, to be precise. It's from his spoken word bits with the "no to the WTO combo" shindig during the protests in Seattle. He says a lot of great stuff between fairly mediocre musical interludes, and this segment seems particularly apt at the moment.
"This isn't barons and lords in the high castles with little peasants, terrified peasants on the other side of the moat tilling the land anymore; New Feudalism means that we know who the barons in the high castles are, and every time we buy anything from {insert major corporate name here: Jello rattles off a whole list}, we are their serfs... The wealth addicts have gotten carried away, and in the end, we're gonna win."
Well Jello, I certainly hope so.

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