Happy Wall Street Day?

[Joanne98]

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration. -Abraham Lincoln

Believe it or not, we used to share Lincoln's belief in the value of labor. In fact, Labor Day began in 1882 to honor those "who from rude nature have delved and carved all the grandeur we behold."

Oh have we ditched that commonsense notion! Today, we worship wealth while labor is just another "input," a way to maximize production and profit. We even have a theory of global "comparative advantage," which holds that we're better off if that "input" is in some faraway nation where wages are low and we don't have to see the factories that are poisoning workers and the environment.

We have so devalued labor that we hardly notice when millions of people lose their jobs. If you take a close look at government reports, you'll see that 29,732,000 of our fellow Americans are unemployed and underemployed, giving us a real unemployment rate 18.55 percent.

But not to worry, we are told. Labor doesn't really matter anymore in the grand scheme of things. What matters is wealth, especially Wall Street wealth.

Lincoln thought labor created wealth. Now we think Wall Street creates value and wealth by moving money around, by buying and selling money instruments, and by passively investing accumulated wealth.

Take the Madoff scandal. Investors honestly believed they were entitled to double-digit returns every month, without fail, for doing absolutely nothing. They became easy prey to a swindler. All Madoff did was build on what he saw happening on Wall Street: Investors were flocking to fantasy finance instruments like synthetic CDOs that had almost no connection to any real assets. Madoff took it one step further: Instead of giving his gullible investors financial instruments that were almost worthless, he gave them nothing at all. And he got away with it because everyone wanted to believe in the magic of wealth creation.

We began building our sandcastles in the sky in the 1970s, when economists and policy-makers fell in love with the idea of deregulated markets. Organized labor was a constraint. Taxes on the wealthy were a constraint. Regulations on finance were a constraint. The answer was so simple: eliminate the constraints and unfetter the markets. This would bring new efficiency and new wealth to our economy. All boats would rise. Instead, it marked the end of labor as Lincoln knew it.

We weren't paying much attention as real wages for the average worker declined over the next three decades. We were too enthralled by our orgy of fantasy finance. So much money gushed to the top of the income ladder that the wealthy literally ran out of real world investments. Deregulated Wall Street "financial engineers" solved this problem by creating new derivative financial products for people to invest in. Bubbles inflated everywhere. Tangible assets didn't matter anymore, since it turned out we could make money from money, indefinitely and without any serious real world constraints. (Forgive me again for leading you to The Looting of America, which recounts this whole outrageous story.)

Not only did our free-market fetish destabilize the economy, but it saddled us with an aristocracy of wealth and waste that now blocks us from solving our problems. The wealthy are determined to hold onto their fictional profit-making activities and astronomical salaries -- even if it means forcing the rest of us to bail them out again with trillions of dollars in subsidies and toxic asset guarantees. With wealth they can buy the political process. But they also can shape our minds. They want us to believe that they are the natural rulers of our universe and that we are powerless to change it.

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http://www.huffingtonpost.com/les-leopold/happy-wall-street-day_b_278479.html