The Economy, A Girl, and Her Dog
When times are good, when everyone seems to be making more than last year, the abundance seems so extensive that we don’t really notice when certain people begin skimming off more than their share. When the growth, in general, is so much greater than can be reasonably expected, it’s hard to imagine that it might even be greater, were not someone sneaking away with a part of what we know, in our hearts, is undeserved gain, anyway.
Someone with $100,000 invested in 1987, when the Dow Jones was about 4700, would have had three times that much at the market’s peak in 2007 (not to mention dividends, in the meantime). A house bought that same year in New York City would like have brought (conservatively) four times as much twenty years later. That someone with the hundred grand stuffed away, a house, and an eighty-thousand-dollar mortgage in 1987 might have found herself with $300,000, a paid-off mortgage, and a house that would sell for $400.000 after just two short decades. She could then pat herself on her back, stating how brilliant she is; she knows how to “make” money.
But money doesn’t come from nowhere, and certainly not from sitting on investments or real estate. Money is generated through actions that add value, actions that do act as a rising tide, lifting all boats (the investments and the real estate), but that are based on making new things, by providing new services to the people who make new things, or by providing better access to things both new and old. In our hearts of hearts, we all know this—and many of us feel slightly guilty when we take a look at money that is ours, but that we did nothing for.
Some of us, unfortunately, feel jealous. They may even be among the lucky ones, but they see others who are even luckier, and get angry. “Why them and not me?” Some of these are extremely smart, and understand quite clearly just how little some of those who have gotten extremely wealthy have done to get that wealth. Some of them have worked quite hard, but still haven’t been able to equal those blessed in an unfair amount of luck.
Understanding that luck does not equal brains, some of these have concocted ways of separating the formerly lucky from at least some of the gains they didn’t deserve. The latest is Marc Dreier, a lawyer turned cheat… but the last week has also seen the arrest of Bernard Madoff, accused of bilking people of 50 billion dollars in a Ponzi scheme, and, of course, the case of Illinois Governor Rod Blagojevich, accused to trying to sell Barack Obama’s Senate seat, among other things.
What’s going on? Why so much of this now?
Well, that rising tide I mentioned? It’s receding. And when the water recedes, the muck underneath it is left exposed.
What we are seeing this week is only going to be compounded over the coming months. The excesses of the past years weren’t simply in the subprime business and bubble, but in venal and avaricious (and often illegal) activities by people outstripping in sheer greed anything that Gordon Gecko in the eighties movie Wall Street could have imagined, let alone engineered. Their actions, once hidden by growth, are now being exposed by recession.
Last night, I saw the new Michelle Williams vehicle Wendy and Lucy, a tale of the type of lives that more and more of us are now facing as a result of the careless and thoughtless avarice of our society these past few years. It’s a sad movie, especially if you have ever loved a dog. The experience it depicts is going to lead many of us to cynicism and anger, especially against the “them” that leeched the blood of our economy to the point of anemia.
The thing we are going to have to remember, though, as we try to help each other pick our lives up out of the wreckage, is that “them” includes most of us. Yes, few of us acted as badly as Dreier, Madoff, and Blagojevich, but most of us did benefit for a while, and did nothing to stop the craziness. So, instead of settling for anger and generalized blame, perhaps the best thing that each of us can do is to try to help Wendy and all the others slugged nearly senseless by this “economic downturn” (ha! What a euphemism!), assisting them to their feet and beginning to rebuild our nation from the bottom economically as many of us have been trying to do politically.
Lord knows, the political establishment is going to do little enough to help.