“If we broke up the big banks tomorrow — and I will, if they deserve it, if they pose a systemic risk, I will — would that end racism? Would that end sexism? Would that end discrimination against the LGBT community? Would that make people feel more welcoming to immigrants overnight?” – Hillary Clinton, February of 2016. (emphasis added)
This was the call and response from a Clinton speech in Nevada earlier in 2016. Each question was answered with a loud “no” from the small audience.
In fact, the corruption and abuse exhibited by our too big to fail (or jail) banks and “the 1%” that led to a failed Occupy Wall Street movement just a few years ago is nothing compared to the Democrat’s desire to address these continuously redefined social issues. The sequence itself revealed the high-low alliance at play in the American left. Our economic elite have joined forces with the social progress crowd to cover for concentration of wealth and income.
Without an aristocracy to pay for it, there can be no welfare state in the left’s system, and that includes sinecures and diversicrat jobs.
No rational aristocracy would spend as much time crafting and spreading propaganda to its low alliance members as our does.
America’s aristocracy does, however, because the court eunuch class and priests gain status from playing the role of the shining light for the masses. These priests demand that driving force, and the economic high will fund it to help control the masses. The rest of America pays for it in taxation via economic growth that in the last generation has all come via asset bubbles.
The high receives plenty from this arrangement by using cheap money/asset bubbles to inflate their wealth, which is seen through the funneling of asset bubble lending into progressive-desired ends.
FIRE and education are the big winners. Each bubble is accompanied by low interest rates via the Federal Reserve and legislation that incentivizes lending or mandates lending in those sectors.
Currently, Americans carry over $1 trillion in student debt that is held mostly by the federal government, and the economic winners are the academics and administrators of the university system.
This bubble is needed to also juice GDP. Fictitious wealth drives luxury spending, as well as what high net worth individuals can borrow against their inflated assets. With GDP elevated and tax receipts rolling in, the welfare for the low in the alliance is paid. Note that for all of California’s struggles around 2009, it has become more quiet, as a newly reflated bubble has boosted property tax revenues. The system needs these bubbles to maintain the proper levels for pacifying their low coalition members.
This is why for all the talk of tackling the 1%, the 1% and Wall Street are donating to Clinton rather than Trump in overwhelming percentages. Trump’s desire to change the economic policy of America for the purpose of bringing back manufacturing would also mean a change in economic policy at the Federal Reserve, which is the wellspring of the current FIRE economy. Clinton is a safe bet for the economic elite, as was President Barack Obama, who has never jailed the TBTF banks. Attorney General Eric Holder also even admitted they could not do so. But somehow, Enron and Worldcom executives went to jail under President George W. Bush and the Savings and Loan Crisis resulted in many prosecutions roughly 25 years ago. What exactly changed?
The change was the flood of financial money that carried Bill Clinton to the presidency in 1992. Clinton and the DLC showed that the Democrats could play ball with big business, but that the style of big business had to conform to the New Left, to political power. The New Left cared about the environment. The New Left was going to represent immigrants, the government underclass, and capital.
The blue collar union voters were junked because they were a part of productive, polluting industries.
Banking, insurance, and real estate fit this new alliance perfectly, as they are paper industries; there’s no association with environmental degradation. The expert managerial class could count on Democrats like Clinton and now Obama to push free trade, which meant that American capital could outsource not only jobs, but outsource the pollution centers, as well. Many businesses started to follow the Nike example with design, marketing, and white collar work in America, while manufacturing was pushed out to the lowest cost and loosest environmental law jurisdictions.
Each asset bubble concentrates wealth into the hands of those who hold the assets first. The final outcome is empty subdivisions in California’s interior or sand states, which is really not much different from China’s ghost cities. America’s FIRE economy marries the Minsky-Rothbard early-middle-late receiver model to asset inflation models. Original asset holders and early receivers will benefit from that first bout of inflation, and by the time it gets to you, the late receiver, the easy gains have been made. The 1%, accredited investors, and those with impeccable credit scores get early access to lower interest rates to buy and bid up prices, all the while middle and late receivers have to wait their turn in line. For a long time.
It is an economy of asset inflation, not wage inflation.
This economic structure is why median incomes have been stagnant for decades now, and the left pays lip service to this fact, but the left’s policy recommendations are more education and easier access to loans. That usually means government backstopping of loans, making them lower risk for a lender to make money off of you. The median worker is not part of their coalition. One could argue that the rising economic elite of the FIRE and education economy also had a rising middle of college degree-holding employees who won over the productive and natural resource extraction elites and employees. The productive class and middle are not the left’s clients.
The 1% and the bottom are, and both of those pieces must be paid in order to maintain the peace. The 1% live often shoulder to shoulder in major metropolitan areas with the bottom. The welfare and sinecure jobs act as the danegeld they pay to live like feudal lords.
The left’s new focus on social inequality above all is to make sure the low votes for the economic high’s predetermined pick and leaves them alone.