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How, exactly, did banksters swindle trillions from the middle class?

By   Follow Me on Twitter     Message Richard Clark       (Page 1 of 3 pages)     Permalink

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MSNBC's Dylan Ratigan and economist James Galbraith try to answer that question in the following account of their recent conversation on MSNBC.

As we all know by now, big banks and corporations are making out like bandits, taking all the "upside," as Dylan Ratigan likes to say, while sticking it to the American taxpayers who have been burdened with the "downside." Lately, the 'upside' for the banksters and corporate honchos who control our government has been real good. Treasury chief Tim Geithner says the bailout will prove to be a "good investment" for American taxpayers. Ratigan agrees with this assessment by Tim Geithner if by "taxpayers" he, Geithner, is referring to the banksters et. al. -- after all they pay taxes too (though many big corporations don't).

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For the big banks the bailout has been a fantastic investment (of taxpayer money). Why? Because they, the big banks, pulled in $21.6 billion in just the past 3 months, their biggest quarterly haul in the last 3 years, most of it thanks to contributions from US taxpayers. And considering the $1.6 billion in salaries and bonuses received by their CEOs last year, they have very little reason to complain.

Problem is, 30 million of those US taxpayers are now either out of work or underemployed at jobs that pay only a fraction of what they were earning two years ago. In constant dollars, the median wage for men is now lower than it was in 1975 -- only in America, where worker productivity and corporate profits have soared for more than 3 decades while wages have for the most part stagnated.

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Why so many jobless and underemployed in America? One clue is that US corporations are now hoarding all their cash instead of investing it. How much cash? More than $1.6 trillion. (Click here for source article.)

Instead of . .

(a) putting that cash in banks (or creating banks of their own, like GMAC), so that banks can loan it to small and/or new businesses (as North Dakota's state bank has been doing, regularly) -- and . .

(b) paying their employees enough so that they can make the purchases that would sustain such small businesses, . .

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. . banksters and corpsters prefer to gamble their corporate billions in our Wall Street credit casinos, or invest it in Asia where all the new factories and offices have been built in recent years and where most all our jobs have gone, thanks to corporate-friendly trade policies that allow US corporations to build products in Asia using dirt-cheap labor and then bring these products into the US, to sell them, without paying any tariff, thereby severely undercutting wages in America. American workers have even been conned into paying the costs of moving their factories, equipment and jobs from America to Asia! Corporations simply deduct the moving costs as a business expense, and the rest of America's taxpayers essentially pay it for them.

Therefore, what is often called "free trade" is nothing more than wage arbitrage. In a nutshell, here's how it works: US companies simply move a manufacturing operation to a low-wage country, manufacture the product there using ultra cheap labor, with no regulations or environmental concerns, and then ship the product to the US for consumption, paying no tariff or tax on that shipment into our country. Up to 60% of our imports come from this kind of operation. This is what has cost our country so many jobs, yet "Repuglican" toadies scream bloody murder at the first hint that the US corporations, who do this, might in any way be taxed for doing it. And the spineless Obama administration immediately caves in.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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