During a discussion at the University of Michigan in 2010, the billionaire vice-chairman of
Warren Buffett's
Berkshire Hathaway firm, Charles Munger, was asked whether the
government should have bailed out homeowners rather than banks.
"You've got it exactly wrong," he said.
"There's danger in just shovelling out money to people who say, 'My
life is a little harder than it used to be.' At a certain place you've
got to say to the people, 'Suck it in and cope, buddy. Suck it in and
cope.'"
Photo: Robert Neff/cc/flickr
But
banks, he insisted, need our help. It turns out that moral hazard – the
notion that those who know the costs of their failure will be borne by
others will become increasingly reckless – only really applies to the
working poor.
"You should thank God" for bank bailouts, Munger told his audience.
"Now, if you talk about bailouts for everybody else, there comes a place
where if you just start bailing out all the individuals instead of
telling them to adapt, the culture dies."
In the five years since the financial crisis took hold, people have
been sucking it in by the lungful and discovering how pitiful a coping
strategy that is.
In Michigan, the state where Munger spoke, black male life expectancy is lower than male life expectancy in
Uzbekistan; in Detroit, the closest big city,
black infant mortality is on a par with
Syria (before the war).
As such, the crisis accelerated an already heinous trend of growing
inequalities. Over a period of 18 years, America's white working class –
particularly women –
have started dying younger. "Absent a war, genocide, pandemic, or massive governmental collapse, drops in life expectancy are rare,"
wrote Monica Potts in the American Prospect
last month. But this was a war on the poor. "Lack of access to
education, medical care, good wages and healthy food isn't just leaving
the worst-off Americans behind. It's killing them."
This particular crisis, however, has also accentuated the
contradictions between the claims long made for neoliberalism and the
system's ability to deliver on them. The "culture" of capitalism, to
which Munger referred, did not die but thrived precisely because it was
not forced to adapt, while working people – who kept it afloat through
their taxes and now through cuts in public spending – struggle to
survive. Given the broad framing of economic struggles in the west
exacerbated by the crisis, this reality is neither new nor specific to
the US. "Over the past 30 years the workers' take from the pie has
shrunk across the globe," explains
an editorial in the latest Economist.
"The scale and breadth of this squeeze are striking … When growth is
sluggish … workers are getting a smaller morsel of a smaller slice of a
slow-growing pie."
A few days before the bailout was passed,
I quoted Lenin in these pages.
He once argued: "The capitalists can always buy themselves out of any
crises, as long as they make the workers pay." What has been striking,
particularly recently, has been the brazen and callous nature in which
these payments have been extorted.
Last Friday, 47 million Americans had their
food stamp benefits cut.
These provide assistance to those who lack sufficient money to feed
themselves and their families. Individuals lose $11 (£7) a month while a
family of four will lose $36. That will save the public purse precious
little – bombing Syria would have been far more costly – but will mean a
great deal to those affected. "Before the cut, it was kind of an
assumption you were going to the food bank anyway," Lance Worth, of
Washington state,
told the Bellingham Herald. "I guess I'm just going to go $20 hungrier – aren't I?"
The cut marks the lapse in stimulus package ushered in four years
ago. But while the recession is officially over, the poverty it
engendered remains. Government figures show
one in seven Americans is food insecure. According to Gallup, in August, one in five said they have, at times during the last year, lacked
money to buy food that they or their families needed. Both figures are roughly the same as when Obama was elected. This negligence will now be compounded by mendacity.
Republicans propose further swingeing cuts
to the food-stamp programme; Democrats suggest smaller cuts. The
question is not whether the vulnerable will be hammered, but by how
much.
The impetus behind these cuts are not fiscal but ideological. Republicans, in particular, claim
the poor have it too easy. "We don't want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency,"
claimed former Republican vice-presidential candidate Paul Ryan. "That drains them of their will and their incentive to make the most of their lives."
The notion that food "drains the will" while hunger motivates the
ambitious would have more currency – not much, but more – if the right
wasn't simultaneously doing its utmost to drive down wages to a level
where work provides no guarantee against hunger. In last week's
paper for the Economic Policy Institute,
Gordon Lafer, an associate professor at the University of Oregon,
revealed the degree to which conservatives have been driving down wages,
benefits and protections at a local level after their victory at the
2010 midterms.
He writes: "Four states passed laws restricting the minimum wage,
four lifted restrictions on child labour, and 16 imposed new limits on
benefits for the unemployed. With the support of the corporate lobbies,
states also passed laws stripping workers of overtime rights, repealing
or restricting rights to sick leave, and making it harder to sue one's
employer for race or sex discrimination."
That's why 40% of households on food stamps have at least
one person working.
And the states most aggressive in pursuing these policies, Lafer points
out, had some of the smallest budget deficits in the country.
Immediately after Obama's election in 2008, his chief of staff to be,
Rahm Emmanuel, said: "You never let a serious crisis go to waste. And
what I mean by that is it's an opportunity to do things you think you
could not do before." The crisis didn't go to waste. But it is the right
that has seized the opportunity. Not content with
balancing the budget on the bellies of the hungry, it is also fattening the coffers of the wealthy on the backs of the poor.
© Guardian News and Media Limited 2013
Gary Younge is a
Guardian columnist and feature writer based in the US
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