Have you ever seen one of those videos of people putting rubber bands on watermelons? Granted, you have better things to do with your time than sitting around watching videos of people putting rubber bands on watermelons but you should watch at least one. That way, for the rest of your life you’ll be able to say you’ve seen what happens and nobody can ever take that away from you! (Click here to watch a short one.) All right, since I know some of you didn’t click, I’ll tell you. As rubber bands are added, the watermelon begins to lose it’s shape.
At some point – often without warning – the watermelon explodes. (Technically, I guess it implodes since the pressure is from the outside in. Either way, though, you end up with a mess of watermelon all over everything.) There’s even a challenge among people to see who puts on the last rubber band, that kind of thing. Really, it’s not what you think. Some watermelons can take as many as 1,000 rubber bands before breaking and the anticipation is pure suspense…
Have you ever heard of the Dow? (What, no segue? Don’t worry, I’ll tie it together…) Of course you have. It’s on every news report at some point. When it’s up, it’s often in a little box in the corner on the screen so we can watch our glorious economy grow and grow. (I’ve noticed that when it’s “off” – don’t say “down” – they hide the window…) Nobel Prize-winning economist Paul Krugman has three rules about the Dow. One, the Dow is not the economy. Two, the Dow is not the economy. Three, the Dow is not the economy. Those three rules are axioms. The Dow is not the economy. But you know what? It used to be. Or, rather, it used to be a solid indicator.
When the Dow was created, it was the Dow Jones Industrial Average and it collected together the most important industrial stocks in this once-great nation, creating a useful snapshot of the overall state of the economy at a given point. “The Dow,” as it was referred to, measured the output of things companies made or built or moved. But those industries are, mostly, gone, now. They’ve either collapsed entirely, become only shadows of their former selves, or they’ve been off-shored. As those industrial stocks sank, they were replaced by financial services stocks. “The Dow” became the Dow Jones Index but continued, deceptively, to present under the same name. It confuses people who don’t realize it just ain’t what it used to be. Financial services make nothing, build nothing, move nothing but paper. They create financial value for a very small number of people almost always at the expense of a large number of people.
My favorite current example is Toys R Us. (Sorry, I don’t know how to type a backwards ‘R’…) Toys R Us was once a thriving, going concern. They were doing just fine, thank you very much. They did SO well, they caught the eye of financial services people – never a good thing. The money people decided they wanted to own Toys R Us so they borrowed a massive amount of money and forced a buyout. THEN they stuck the debt load on Toys R Us. Toys R Us didn’t create the debt. They wouldn’t have because they knew they couldn’t manage it. The corporate raiders took everything of value from the company and then let it collapse under the weight of a debt Toys R Us didn’t want or incur in the first place. Tony Soprano called the same behavior a “bust-out.” A few people made a LOT of money. Tens of thousands of people lost their jobs in one fell swoop and the domino effect of closed stores and lost jobs harmed the economy across the land.
Sure, maybe just a little, overall, in the grand scheme. But that is just one event. This kind of thing has been going on across the land in industry after industry for something like 40 years, now. Once upon a time, thanks to FDR and the New Deal, the United States really DID have the greatest economy in the world so they’ve been able to paper over the effects of their rampage for a long time. But the stresses of our gutted society are beginning to show through with unmistakable impact. We all know the list. We can’t provide clean water. We can’t fix our roads. We can’t educate our young. We can’t provide health care to our population. Homelessness is becoming epidemic. But the Dow is up! Woo-hoo! Oh, My GOD, the news readers excitedly report, the Dow just passed 30,000!
The thing is, I’ve come to understand a rubber band on a watermelon as a metaphor for each and every point tick up in the Dow. (I told you it would all come together…) You see, that 30,000 number represents nothing so well as the success rich people have had extracting wealth from everyone else. I understand the Dow as a CEO happiness index, not a measure of the health of the US economy. These days, CEO’s are happy when the company’s bottom line increases. As an example, the CEO of PG&E realized he could increase his take home pay if they just eliminated the expense of maintaining the lines and equipment – so they stopped. It worked, too. Keeping expenses down raised the stock value. The CEO got more money.
Sure, he literally burned Paradise to the ground, wiping out the lives and livelihoods of countless people. Just one rubber band. In fact, PG&E maintenance failures have now been faulted in many of California’s fires. A few more rubber bands. But that one guy made a LOT of money. One guy benefits. Thousands suffer. The Dow ticks up. A rubber band. Toys R Us is busted out. Another rubber band. Flint, Michigan can’t get clean, safe water. A rubber band. People can’t earn a living wage and are told it’s their own fault. Add a rubber band. People agitate, then protest. Cops deploy water cannons, each one a rubber band.
Winston Churchill has a quote, ‘The farther back you can look, the farther forward you are likely to see.” What that means is that past is prologue. History tells us not only where we’ve been but where we’re likely going. We’ve all been watching the financial gutting of our country ever since Ronald Reagan inflicted voo-doo (aka, “supply side”) economics on us. We know that the takers in our society, the richest 1 percent, will never stop taking and never stop using their exaggerated market power to KEEP on taking. But we ALSO know that eventually, people just won’t have enough to function in the world. Anger sets in. People look for someone to blame. Right now, poor people are being told their problem is OTHER poor people but sooner or later, people will figure it out. America has been fighting a class war and the rich people have taken an early and decisive lead. But look back. History makes clear that, sooner or later, there’s going to be one too many rubber bands on the watermelon.
The suspense is killing me…