by Charles Hugh Smith, Of Two Minds:
An economy of rackets designed to enrich the few at the expense of the many is brittle because self-serving rackets snuff out competition, accountability and transparency.
What’s remarkable about the lockdown isn’t the hue and cry about the economic damage–it’s the absence of any critical curiosity as to how our economy became so fragile that only the wealthiest contingent can survive a few weeks on savings or rainy-day funds.
A healthy, resilient economy would be able to survive a few weeks of lockdown without a multi-trillion dollar bailout of every racket in the land. A society that wasn’t threadbare financially and socially would be able to function and accept individual sacrifices for the common good.
Rather than being organized to serve the common good, our economy and social order is little more than overlapping rackets: rigged “markets” operated by quasi-monopolies to enrich the few at the expense of the many; brittle bureaucracies bound by thousands of pages of mindless “compliance” and exploitive neofeudal structures in which debt-serfs are paid just enough to service their debt but not enough to afford skyrocketing costs for housing, healthcare, higher education, childcare, junk fees and taxes.
While everyone is busy screaming about the damage done by the lockdown, nobody’s asking why costs are so high that few can survive a few weeks on their own means. Nobody dares look at the soaring costs imposed by cartels and monopolies (including government and government-funded rackets such as healthcare and higher education) because it might shine a light on the money-trough they’re feeding from. (Crush every racket but mine…)
If costs weren’t so crushing, more households and enterprises might have savings. Empires don’t collapse because everyone ran out of money; they collapse when the costs exceed earnings.
Put another way, the skyrocketing costs of self-serving sclerotic complexity, a.k.a. convoluted inefficiencies imposed by institutions which lack any accountability, far exceed the gains in productivity and resource mining needed to pay for the productivity-draining complexity.
As for innovation–please don’t make us laugh. All the rackets work overtime to avoid being disrupted by the forces of productivity and transparency. Just look at higher education: all the technology was available a decade ago to radically reduce the costs of effective education, (as I outlined in my 2012 book The Nearly Free University), but the higher education cartel fought to maintain its monopoly on credentials, squandering hundreds of billions of dollars on layers of administrators and self-glorifying buildings.
Just as Wall Street destroyed the private-sector mortgage market by financializing it, healthcare has been destroyed by Corporate America’s financialization of what was once for the common good, turning it into a hollowed-out profit machine for the few at the expense of the luckless serfs who have no choice but to serve the Financial Nobility. (You can pick any health insurer you want–but there’s only two, heh, and their prices are the same: Kafkaesque in their opaque complexity, and high enough to bankrupt all but the wealthiest.)