If it wasn’t already true before the 2008 crash of the markets and the ensuing big recession, it must be clear to about everyone by now, that the big money is on Wall Street and in Northern Virginia, more defined as the Nation’s Capital Washington DC and surrounding areas. That’s where the Takers wear suits except on casual Friday, when they pretend to be like the rest of us.
Since the riots in Baltimore last week I have been talking a bit about Givers and Takers in our current society, with Givers being those who produce value and Takers who consume value, without clearly defining the consequences. Sometimes the lines are blurred a bit because takers can be found in the entire fabric of our society. The wellfare recipient who milks the system for everything it has created to buy off guilt, is clearly a Taker, but in the total picture he’s just peanuts. As famed archaeologist Arthur Demarest explained in his book “Ancient Maya” the rise and fall of a rainforest civilization, we’re not the first society to be brought down by Takers. Takers caused the decline of the Mayan civilization too:
Society had evolved in too many elites, all demanding exotic bubbles; all needing quetzal feathers, jade, obsidian, fine chert,gold and animal furs. If we would study the Mesopotamians, the Egyptians, the Greeks, and so many other sub-cultural civilizations, we would find the same results time and again.
Nobility is parasitic, non-productive and expensive, siphoning away too much of society’s energy to satisfy its frivolous cravings.
Yes, it’s the elite Takers who are most expensive. The non producing welfare taker gets peanuts, albeit lots of them, if he works the system. But the elites get much more. And it’s the group in society’s middle, the group that produces, that gets lost in the shuffle, every time again.
For example, where did all those trillions in Fed “stimulus” go? Very little went to producing contributors, the middle class.
No, that money helped prop up the prices of financial assets (directly in the bond market and indirectly in the stock market).
Shareholders made money. Executives got bonuses. Wall Street firms made out… well… like bandits.
It’s easy. The financial wizards arrange for a company to sell bonds – earning millions in fees for the service.
Then the company takes the money (borrowed at the lowest interest rates in history) and uses it to buy back its own stock (paid for at one of the most richly valued levels in history).
The price of the remaining shares goes up (because more earnings accrue to each remaining share) – triggering bonuses for all the insiders.
The trick is so sweet that corporate America is set to hit a new milestone this year – nearly $1 trillion in buybacks!
Everybody is happy… all the corporate nobility, that is.
The poor working stiffs are worse off than ever. Because all this insider financial gaming reduces the long-term capital formation and serious investing that creates real jobs and real wealth.
But the plain people have no idea how the money system is rigged against them. And at least they have disability.
The elites always figure out ways to crony up and control government… and to turn themselves into Takers.
King Louis XVI of France probably was a decent fellow. But he was surrounded by Takers living off a boatload of privileges.
In fact almost the entire First and Second Estates – the clergy and the nobility – lived off of privileges, tariffs, taxes, grants, rents and other entitlements.
After they took their share, there was hardly enough national output left to support the working classes.
And you think America’s hedge fund managers have a nice tax deal with their “carried interest?” Nah…
France’s elite was practically exempt from taxes. Something we’re still working on in this country.
But with so many Takers, 18th-century France struggled to stay solvent. A couple of bad harvests… and people began to starve.
“We’re hungry. We want bread,” chanted the poor women in front of the Tuileries Palace in Paris.
Hearing the chants, if you believe the popular account, the king’s young wife, Marie Antoinette, could have have benefited from better PR people.
“They say they are hungry,” they would have told her, with the advice to say something about how she cared deeply about their hunger. How she felt their pain. And how she was working day and night with the royal court to alleviate the food shortages in France. (Evita Peron did a much better job of that 150 years later!)
Instead, the sweet but dim Austrian dirndl blurted out what must have sounded like:
“They have no bread? Well, let them eat cake!”
True or not, the story got around. And somehow it sounded true enough. Soon the mob was appropriately roused and the revolution couldn’t be stopped.