Day two of my experiment….Yesterday I pondered the nature of money; we use it everyday but do we really even think about what it is? A couple years ago I heard an episode of This American Life that detailed how a couple American trained economists turned around decades of severe inflation in Brazil. They did it by creating a new unit of money, virtual currency (the URV) that was listed in prices alongside the standard price, though the currency was not issued. The exchange rates for the URV were listed daily and over time people began to think about consumer prices in the URV and gain confidence in it. Finally at some point the URV was printed up and everybody started using it; they had confidence in it, unlike their previous currency, and the hyperinflation ceased. The next decade saw massive economic improvements.
Back in Obama’s first term many large companies were sitting on huge cash reserves but they weren’t hiring because they “lacked confidence in the economy,” because consumer spending was down. Spending was down because people didn’t have jobs. I remember thinking “Where is the leadership in the business community?” I understand the corporation’s responsibility to maximize profits for their shareholders, but it seems like the world has become so interconnected that this is not working as well as it once did.
There seems to be a mantra, repeated endlessly: “We are in a sluggish economy…the economy has not quite recovered.” I say BULLSHIT. Tell that to the Warren Buffet and the financial services industry. Tell that to Wall Street bankers. Tell that to the the telecommunications industry, Time Warner, Comcast, Verizon. The economy is doing just fine, for some people.
If you accept that money is finite, the huge windfalls that are reaped by some aren’t magical created, they come from everybody else who isn’t raking it in. The huge golden parachute given to the CEO of Time Warner is directly tied to the artificially high cable TV prices everyone is subjected to because TW and Comcast enjoy a monopoly that has been gifted to them by a Congress entirely bought off by campaign contributions. If you doubt that your cable and internet prices are artificially high, consider that the profit margin is well over 90%, and they haven’t reinvested in their infrastructure. Susan Crawford has detailed how we’re not just getting screwed, but falling behind other countries in many categories due to their advantage in terms of broad band access.
Okay, I need to go to a birthday party.