Despite the Crisis, the Rich ARE Getting Richer
Elio Delgado Legon
HAVANA TIMES — A recent article I wrote, which was published in Havana Times, was titled The People Pay for Misguided Policies. The last paragraph explained: “In the midst of this crisis, the rich are getting richer and the poor are getting poorer. Millions of middle class citizens have joined the ranks of poverty. The gap between the rich and poor is deepening every day.”
With each passing day, the news from the international press shows me to be correct.
We see reports daily that speak of rising unemployment, thousands of families left homeless because they can’t afford housing; and protests in the streets over budget cuts (especially in health care and education, with the closing of hospitals and schools and all this implies). These almost invariably end in protests that are violently suppressed by the police.
There is talk about billion-dollar bailouts that are forked out by the governments of countries in crisis. However these aren’t aimed at creating jobs and reviving the economy, but to pay off the existing and deepening debt and to buy weapons that aren’t needed. Meanwhile workers are seeing their real wages reduced and are living under the fear of possible layoffs.
While all of this is happening, other news indicates that the sales of luxury cars grew this year worldwide, especially BMW, which had solid gains and record sales in the month of September. Similarly, in Argentina for example, Porsches, Mercedes, Audis and BMWs showed sales increases of 11 percent.
In addition to those already mentioned, growth in automobile sales was recorded by Volvo, Mini, Land Rover, Sangyoung and Ferrari. The latter two brands increases by 272 and 200 percent, respectively.
In other news, according to the IPK International consulting group, global tourism this year registered an increase of 170 million passengers in relation to 2011.
Neither the workers who have lost their jobs, nor those who are in danger of losing theirs nor those who have been left homeless nor those who are seeing their real wages reduced due to the increased cost of living — who collectively constitute more than 80 percent of the world’s population — can afford to buy a luxury car or take an international trip, whose costs are always prohibitive.
The global economic crisis mainly affects the poorest 80 percent, while the richest 20 percent are seeing their wealth increase, buying luxury cars, traveling the world and staying in five-star hotels.
With what has been spent on bailing out the banks and governments in crisis, those sums could have been directed toward encouraging production and consumption and thereby job creation. Through that, this global crisis would have been mitigated.
I’m not saying that the crisis would disappear, because the current crisis can only be relaxed if handled intelligently, which isn’t being done. It will not disappear while capitalism predominates in the world as an essentially unfair system in which the rich are getting richer and the poor getting poorer.
$14 trillion+ is due to stimulus? what a crock.. that started in the reagan era where someone thought it was a great idea to instead of tax and spend, the gov could simply borrow and spend
Progressives seem to have a fixation on comparing everyone else to the least fortunate among us. Worse, the goal of these comparisons is to make the rest of us feel guilty for our comfortable lives. I lived in Cuba for three years. Many of the hardships that Cubans face are self-inflicted. My friends in Havana tell me that this week there are no eggs to be purchased anywhere. You know why? Because the chicken farms underfed the chickens. Underfed chickens don’t produce as many eggs. So what happened to the chicken feed. Literally tons of it was left to rot in the warehouses due to mismanagement. Put another way, a handful of incompetent mid-level functionaries are the cause of hundreds of thousands of households failing to have access to the only animal protein that their food budgets allow. Hell no, I don’t want to live like that. I worked hard for my life. My parents worked as hard (if not harder) to prepare me for a better life. You can call it exploitation, but I call it hard work, risk-taking and innovation in a system that rewards these attributes. Speaking only of Cuba, despite all of the challenges imposed by the US embargo, EU Common Position, and other external factors, Cuba remains it’s own worst enemy.
Moses, I am guessing that you are in the top twenty percent richest globally. You only have to earn $1000 a year to be there. If you earn $20000 a year you are almost in the top 10% and if you earn $21000 you are in the top 4% (see http://www.globalrichlist.com/). Thus I am not surprised that you would take living under capitalism as a better option than living in Cuba. The truth is no system can compete with U.S. capitalism and be fair. This is because it would take five planets for everyone to consume the same as the average U.S. citizen. The only way such consumption can be maintained is through imperialist exploitation. Cuba does very well without exploiting anybody. I am not saying there aren’t many challenges to improve the Cuban system, but if you are really interested in a world free from exploitation you will have to get used to the idea of living like a Cuban.
Market correction “is” the system.
By the way, ‘market corrections’ is newspeak for ‘the system has failed’.
I remember well the cover of Newsweek magazine saying “We are all socialists now”. Because that’s what the system is: socialist for the rich, capitalist for the poor.
On the contrary Luis, governments as lenders is very much a part of the capitalist system. In the case of bailouts, governments act as lenders of last resort. Naturally, if those banks or auto firms or insurance companies were able to receive better loan offers from non-government sources, they would have taken them. By and large, even bankruptcy, the dissolution of indebtedness is theoretically the system itself acting as lender. By no means are bailouts a contradiction. Arguably unfair or slanted toward those businesses who practice the best politics but very much a capitalist tool used to make large last resort market corrections.
“If not for bailing out the banks, the world financial system would have collapsed utterly.”
In one line, you admit the system you and Moses advocate for has intrinsic contradictions that cannot be solved by itself. In other words, the Marxists were right.
You are indeed funny. Systemic flaws in the US treated as human behavior issues while systemic flaws in Cuba are treated as systemic flaws.
The slogan, “the gap between the rich and poor” is based on a shaky economic understanding and a heavy dose of resentment, never a good emotion for human understanding or behaviour.
During the first year of the crisis of 2008 and into 2009, the fact is the rich and the poor both got poorer. However, incomes at the top end dropped more, in percentages as well as in absolute numbers. Mathematically, this meant that the gap between rich and poor got smaller! Was this a good thing, then?
Since then, as the economies of the West have crawled back, if not to vigour, at least out of deep recession, the incomes of the poor and middle class have increased slightly, while the rich have indeed gotten richer. Mathematically, the gap between rich and poor got larger as all incomes increased. Is this a bad thing? It means that unemployment is falling while wages and profits are rising. The economy is growing.
Yes, the sales of luxury cars is growing again, after dropping dramatically for a few years. But the sales of small, cheap cars is also growing.
Elio’s recommended economic policy, “With what has been spent on bailing out the banks and governments in crisis, those sums could have been directed toward encouraging production and consumption and thereby job creation. Through that, this global crisis would have been mitigated.”
We can quibble about how the bank bailouts could have been better handled, no doubt is could have been better supervised. However, that does not mean it was a bad policy decision. If not for bailing out the banks, the world financial system would have collapsed utterly. The crisis would have been 10 times worse than it was, to the point we might not even have been able to hold this online discussion. Several European countries as well as the USA would have gone bankrupt, massive unemployment, over 25% would be the norm. Riots and civil strife would have followed. Have you ever seen a run on a bank? Now consider what a run on all the banks would have looked like.
Furthermore, the US did opt for stimulating consumption and production. It didn’t work, few if any jobs were created, and now all they have to show for it is a huge debt, $14 trillion and rising. The new policy is to jack up taxes to pay for this ill-spent stimulus, which will only serve to drive the economy back into recession.
But hey, that’s good news right? With a new recession, everybody will be making less money again, so the gap between rich and poor will shrink. Wonderful.
Elio, while your observations regarding the redistribution of wealth worldwide is generally true, capitalism as the “bad guy” is a false conclusion. Human greed is to blame and greed occurs in economic systems of all types. In addition, not all government bailouts are bad. In the US, the safety net provided to the auto industry saved jobs and resulted in a net profit for government coffers. By the way, as the sale of luxury cars, boats and homes increase, please keep in mind that mostly average income workers who design, manufacture, and sell these luxury items continue to earn their living. All of the world’s richest economies are in search of “tweeks” to their economic systems which will continue to reward hard work and intelligent risk-taking while at the same time encouraging fairness and providing a safety net for those who need it. Besides, if the alternative to the rich getting richer and the poor getting poorer is what exists in Cuba, I would rather take my chances under capitalism.