Cross-posted from Robert Reich Blog
Thirty years ago, on its opening day in 1984, Donald Trump stood in a dark topcoat on the casino floor at Atlantic City's Trump Plaza, celebrating his new investment as the finest building in Atlantic City and possibly the nation.
Last week, the Trump Plaza folded and the Trump Taj Mahal filed for bankruptcy, leaving some 1,000 employees without jobs.
Trump, meanwhile, was on twitter claiming he had "nothing to do with Atlantic City," and praising himself for his "great timing" in getting out of the investment.
In America, people with lots of money can easily avoid the consequences of bad bets and big losses by cashing out at the first sign of trouble.
The laws protect them through limited liability and bankruptcy.
But workers who move to a place like Atlantic City for a job, invest in a home there, and build their skills, have no such protection. Jobs vanish, skills are suddenly irrelevant, and home values plummet.
They're stuck with the mess.
Bankruptcy was designed so people could start over. But these days, the only ones starting over are big corporations, wealthy moguls, and Wall Street.
Corporations are even using bankruptcy to break contracts with their employees. When American Airlines went into bankruptcy three years ago, it voided its labor agreements and froze its employee pension plan.
After it emerged from bankruptcy last year and merged with U.S. Airways, America's creditors were fully repaid, its shareholders came out richer than they went in, and its CEO got a severance package valued at $19.9 million.
But American's former employees got shafted.
Wall Street doesn't worry about failure, either. As you recall, the Street almost went belly up six years ago after risking hundreds of billions of dollars on bad bets.
A generous bailout from the federal government kept the bankers afloat. And since then, most of the denizens of the Street have come out just fine.
Yet more than 4 million American families have so far have lost their homes. They were caught in the downdraft of the Street's gambling excesses.
They had no idea the housing bubble would burst, and didn't read the fine print in the mortgages the bankers sold them. But they weren't allowed to declare bankruptcy and try to keep their homes.
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