Saturday, January 1, 2022

How Did We Get Where We Are Today?

The way our society is today isn't the result of one specific change or trend, but a plethora of relatively small changes over time.

People claim that our country and our world is in crises - and maybe they are right about that.  Then again, since I was born, we have had one crises after another - and they extend back in time for as far as you can imagine.  We like to think the world is going to hell in a handbasket, but often, things aren't as bad as they first might seem.  This is not to say that everything is just swell right now, particularly in the middle of a pandemic.  But how did we get here, to where we are today, to this dystopian hellscape (just kidding) where the rich have billions and the rest of us don't have squat?

The first thing to recognize is the "good old days" were anything but good, and what's more, an anomaly in and of themselves.  The Post-War era was different from the pre-war one.  Before WWII, America was much as it is today - with homeless "bums" riding the rails, and people paid survival wages and fired at whim.  You worked all your life and if you didn't get killed at work (or die in childbirth) you might enjoy a few years of retirement, living with your children and trying not to be too much of a burden.  Yea, life really sucked back then -  maybe these are the good old days, compared to that, at least.

The prosperity of the 1960's, such as it was, was an entirely different thing.  Unions were powerful and represented about 1/3 the workforce.  People had health insurance and retirement plans.  Even if you didn't have health insurance, the cost of a doctor or hospital wasn't that high as there wasn't much they could do for you back then.  Antibiotics and vaccines were novel things and other than setting a broken bone, doctors couldn't do all that much.

Renal failure?  You died.  Heart Attack?  You died.  Cancer?  You died.  Organ transplants? Radical experimental surgery!  A major operation back then was an appendectomy, which left a huge scar.  Insufflatory surgery using trocars was unheard of.  Much of what we consider "modern medicine" was unheard of as little as 50 years ago.

And even if you ran up the bill, well, you could declare bankruptcy and walk away from it.  Back then, before "bankruptcy reform", debts were largely wiped out when you pulled the trigger on that.   Bankruptcy reform, is one of those "little things" that changed how our society works.  Today, you can declare bankruptcy, after paying on loans for years, and still owe money to the lender, to be paid back over five years in a structured payout.  Often the lender still comes out ahead in these deals.

As a result, well, lenders are more willing to lend, often to the point there they assume you will fail.  As I noted before, in today's economy, you can make more money ruining a customer financially than in cultivating a long-term business relationship with them.   Lending practices such as usury are no longer outlawed - a victim of the double-digit interest rates of the late 1970's.  Car dealers sell cars to insolvent people with repossession a foregone conclusion - and factored into the price of every car.

Another "little thing" - but when taken with all the other little things, it adds up.

Back then, there was no such thing as a "credit score" and since computers were in their infancy, well, you went down to the bank and if the bank manager liked the cut of your jib (and you were white, of course) they might lend you money.  Yea, racism and redlining - things were not always better back then.  Then again, has much really changed, even if we have laws against such things?

Banks loaned money into the community through mortgages at 6% interest.  They took in deposits and paid 3% "bank interest".  Until the stagflation of the 1970's it was a stable economic system - for a few decades only, though.  By the 1990's, though, mortgage lending pretty much all went through the Federal Government, and mortgage loans were "bundled" together and sold off as equities.  Again, a tiny little change, but one with big consequences, particularly when combined with the others.  And like most of these tiny little changes, they went unnoticed by the vast majority of people.

But speaking of investments, back then, few people invested in the stock market - or anywhere else, for that matter.  Rank-and-file employees relied on the promises of their retirement plan, not the 401(k) and IRA (enacted in 1978, just as I graduated from high school).  Retirement plans didn't require that you make an active choice to invest.  Moreover, they weren't dependent on the whims and fluctuations of the market - or the poor decision-making of the investor.

With all these "retail" investors flooding into the market, it became even more unstable.  As we have seen in recent months, it is possible, using social media, to manipulate markets, particularly with regard to select "meme" stocks, or gold or "crypto".  Again, a small change, by itself not enough to rock society, but when taken with all the others... it produced serious consequences for the economy and for people - particularly the lower and middle classes, circa 2008.

Student loans basically didn't exist back in "the good old days" because only middle- and upper-class people went to college, which was cheap because the dean didn't make the inflation-adjusted equivalent of $500,000 a year.  He got a modest salary, a retirement plan, and a free place to live on campus.  The government opened the taps on student loan money and the consequences were predictable.  Yes, more people can go to college today, but the poorest and least-educated (and least smart) pay too much for substandard educations and worthless degrees.  Well, they aren't worthless, just worth less than they paid for them.

Mom and Dad, raised in a different era, tell Junior to "go to college" and like my Mother did, encourage the children to get Liberal Arts degrees.  Maybe that was a ticket to success for their generation, but times have changed.  Again, a small change, but an important one for 20-somethings today struggling with student loan debt.  What is weird is that we have been having this discussion about student loans for two decades now, and kids today are still signing the loan docs for a worthless degree from an expensive university.  I just don't get that at all.  But I digress.

Annnnnnd.... another small change.  Because law students were declaring bankruptcy upon graduation and then walking away from student loan debt (after living high on the hog in law school) they made student loan debt - and then private student loan debt - survive bankruptcy.  A small change, with big consequences.  Remember what I said about banks making more money from ruining people than creating a long-term customer relationship?  Those chickens are coming home to roost.

The list goes on and on.  We didn't have casinos anywhere other than Las Vegas.  Now there is one within 30 minutes of almost every citizen in the country.  There is a casino boat about ten minutes from my house - how about you?  And that is not even counting the convenience stores selling lottery tickets (5 minutes from my house, by bicycle) promoting the idea of "winning big!" much as we do about stocks - er, Stonks.  Right?

Again, another tiny little change that by itself would not have a huge impact on America, but taken with all the other crap, amounts to a sea change in the way our economy works and how people live.

Our obsession with the price of gasoline and gas mileage can be traced to the Arab Oil Embargo of the early 1970's - and subsequent oil "shocks".  Again, the "good old days" were only a couple of decades long.  Before WWII, there were far fewer cars than Americans in this country (today there are more cars than people!).   If you were middle-class you could afford a car.  A car.  That is to say one car.  The "family" car.  The idea of two-car families wasn't something that really came into the fore until the mid-1950's.  Again, a small change, but one that changed the very way our cities were built, and one that lead to the suburban sprawl we have today - as well as the need for a car in this country, unless you live in the middle of a major metropolitan area (other than LA, that is).  And a car can cost thousands a year to own - even a "cheap" car.  A small change, but an important one.

Speaking of two-car families, how about dual-income couples?  Hardly heard of when I was born, and indeed, my Mother was an reluctant "housewife" through much of her marriage. She hated it.  The idea of dual careers wasn't in the cards for her.  And the idea of day care and after-school programs, latch-key kids and so on and so forth, simply didn't exist.  With dual incomes, many families made more money - and often spent it just as fast on two cars (or more, for the teenage kids) daycare, after-school programs, career wardrobes, as well as restaurant, take-out, and delivery foods (because both spouses are "too tired to cook").  Dual incomes was arguably a small trend, but an important one that changed our society dramatically.  Again, in one respect, this was an improvement in society, as women now had more choices in life.  But with the way it worked out, the "choice" became a mandate for many.

Since incomes went up, people had more money to spend, so housing prices went up.  Houses got bigger - from the 1800 sq. ft. one-bath house we had in Virginia (built 1949) the 4,000 sq. ft. four- and five-bedroom houses and "mini-mansions" we have today (where everyone has their own bathroom!).  A small change that occurred over time, but one that changed our expectations as to what a "house" had to be.  Believe it or not, people raised entire families in our tiny house in Virginia - with two bedrooms and one bath.  And they considered themselves middle-class, too!

Dual incomes might have started out as a choice, but it quickly became a mandate - you can't survive in many major metropolitan areas on just one income alone.  Progress!

I could go on and on- and I do tend to.  You can probably think of 100 other "little things" that have changed in our society in the last half-century or so. But getting back to the beginning of this posting, I think these little changes - like boiling a frog starting with cold water - were not that noticeable at first.  Life went on as before, we all got up and went to work, and didn't notice the changes - until it was too late.

Those guaranteed pension plans of 1970 turned to dust in 1990 as Mitt Romney and his ilk bought the aging factories, stripped off the debt load into a shell company and let it fail, while selling off the salvageable parts (if any) and rewarding themselves bonuses.  Yes, another "little" big change - a lot o the shenanigans done today on Wall Street were illegal back in the day. Regulations that my Grandfather help draft after the market crash of 1929 were, one by one, stripped away in the interests of "boosting the economy" and "creating jobs".   For example, stock buybacks were, until fairly recently, considered illegal.  And corporate CEOs were paid a salary, not stock options.

Little things, by themselves, each having a small effect, together having a large effect.  In fact, the amplify each other and one leads to another.  They multiply the overall effect as a result.

It seems that recently, we are reverting back to the economy of the 1920's or 1930's - when employment was never a certain thing, and unions utterly lacked any real power.  As I noted in an earlier posting, my Dad faced a strike at his plant (and he was paid a salary, not in stock options) and back then (1973?) it was illegal to just fire everyone and hire new people.  You had to bargain "in good faith" according to the NLRB.  Today, Kellogg's fires the entire workforce, in order to force the union to accept a new contract.  The union declares victory, of course, but some sharper pencils note that the actual agreement isn't too far off what was proposed initially (with raises barely keeping up with inflation, if that).

The systematic gutting of labor unions arguably began with the Reagan Administration, when the Air Traffic Controllers went on strike, and were promptly fired. It was the shot across the bow of unionism.  And yes, the unions were corrupted and had "gone too far" back then.  But the reaction took us entirely in a new direction, with plant closings and high unemployment.  People felt lucky to have a job.  Indeed, that was about the time both political parties ran on the platform of "job creation" - a legacy that lives on today.

Again, a little change, but with big results - today, "creating jobs" is used as an excuse to do whatever the hell you want to do - drill for oil in a nature preserve, or bulldoze down an historic structure or just pollute the atmosphere until the planet dies.  It creates jobs!  And that's all we care about, even as unemployment is no longer in the double-digits.  In fact, it is at all-time lows!

But these little changes add up, and the net result is, well, a lot of people are feeling put-upon today.  Maybe they are, maybe they aren't.  In so many ways, we are a wealthier country today than in the past.  We have fancy electronic gadgets. We all have cars - Mom, Dad, Brother, Sis, even little Baby Lisa, who has a tiny electric car that I would have given my right arm for, when I was five years old.  We have our smart phones and air fryers and gi-gundo televisions - things that were never dreamt of back in 1960.  But we have to pay for all of this, and thanks to these changes in society, at least half of us have a nagging credit card debt, staggering mortgage debt, and probably student loan debts (in addition to car payments!).  Very few Americans are debt-free or even see being debt-free as a possible or desirable goalWe have become a nation of payment-makersAnd who benefits from that? Those who have money benefit from that.

But of course, since we are all invested in our 401(k) we want stellar returns on our investments - even if it means screwing the little guy.  The investor economy has turned all of us into Simon Legree.

As a result of these pressures in our society today, we see two diametrically opposite political movements.  On the Left, progressives want free money for everyone, free college, free healthcare, and forgiveness of student loan debt.  I doubt they will get all of these things, or indeed any of them (they are sort of half-baked ideas anyway - more talismans than fleshed -out policy proposals).  Granted, in some other Western countries, college is indeed free (or heavily subsidized) and medical care is also "no charge" - you go to "hospital" if you are sick and there is no billing department because there are no bills.   Yea, weird, I know.

But with the staggering rise in health care costs (because today, well, we can do things unthinkable decades ago) no one can actually afford to pay for health insurance, unless the government subsidizes it or your employer provides it.  Without subsidy, Obamacare would cost us $1700 a month.  And it isn't fair that some people get insurance or Medicaid or Obamacare, and some do not (you can fall into a "hole" where you are too rich for Medicaid and too poor for Obamacare, in States that did not expand Medicare under the ACA).   It is a messed-up system!

On the right, a different set of priorities - among the poor.  People want their old factory jobs back - with high-paying union wages.  They don't see Democrats as providing that (and Republicans haven't done much better).  Jobs go overseas and new jobs are created.  But if you spent your entire life in a coal mine or a steel mill, it is cold comfort that maybe your kids can become coders or IT professionals,   Again, a small change - maybe a big one - but one that changed people's lives.

So they vote for Trump for a variety of reasons.  They see all these Spanish-speaking people show up and when they drive into their small town, half the signs are in Spanish and the stores are selling goods they never heard of.  Again, a small change, but it adds up.  And when Trump said he would curb immigration, well, they voted for him.  Never mind that these immigrants weren't taking the coal-mining jobs or steel-mill jobs - they were working in landscaping, house cleaning, restaurants, and harvesting crops.

Or they read about all this "transgender war on Christmas!" on Fox News and get all riled up.  Yes, cable television news - another small change.  Social Media - yet another.  Maybe small changes, but they had significant impacts.  You can get the laid-off factory worker to vote for his bosses, if you tell them it will mean their daughter won't get an abortion and their son won't get gay-married.

Speaking of abortion - the Republicans have mastered the art of "little changes" by chipping away at Roe v Wade around the edges, introducing incremental restrictions on abortion, and hoping people don't notice, or even if they notice, they won't care.  A frontal assault on Roe was bound to fail, but if you keep hammering at it, one chip at a time, eventually it will come crashing down.   And it looks like the final coupe de grace is about to be administered by the Supreme Court.  Small changes, over time - that's how you get things done!

Like gun control.   When I was a kid, no one had concealed carry permits, and if you had a gun, it was a piddly revolver or some hunting rifle - none of this "tactical" gear or 22-round automatics.  Today, you can carry a gun just about anywhere, and it is pretty scary when you round the corner at Sam's Club and see some sketchy meth-head dude with a Glock strapped to his belt.  Is he here to visit his ex-wife?  Where is the nearest exist?   School shootings, workplace shootings, mass-murders - we are all "used to" these things today, when they were unheard of decades ago.  Sure, there were a few isolated incidents back in the day - famous today only because they were so rare.  But today?  We forget about the latest school shooter by the next news cycle.  He only killed six people - amateur!

But that's how we got to where we are today.

But how to move forward?  On both the far-left and far-right, they posit that nothing will change without revolution.  Trump should be made dictator for life - and then he'd get things done!  They literally are talking about murdering their political opponents and incarcerating Democrats en masse.  And oddly enough, no one seems to care or take it seriously. But history has shown what dictators get done is often the opposite of what their supporters originally wanted.  Similarly, on the Left, some pine for an "overthrow of capitalism" (whatever that means) and a move to a more Socialist or even Communist form of government.  Again, history has shown this works out about as well as the fascist dictators.

Perhaps the problem isn't the government or the big corporations or whatever.  Perhaps the problem was us.  We were the frogs in the pot of cold water, not wanting to make waves and jump out.  We were content to keep things the way they were, even as they changed all around us.  We blamed others for our woes.  When gas went up, we blamed the Arabs.  When taxes went up, we blamed Democrats.  When the deficit went up, we blamed Republicans.   No one bothered to connect the dots and realize these idiots were elected by you and me.  They didn't make all these incremental changes to our society on their own, they were voted into power by all of us.

The 401(k) and IRA plans were created in 1978, when I graduated from high school.  I didn't have a voice in that change, as I wasn't able to vote until after the fact.  But then again, one reason we switched to the individually-funded retirement plan was that economists realized that the pension promises being made by companies (or indeed, the Social Security promises made by the government) weren't going to pan out - and in subsequent years, they were proved right, as one old-line company after another went bust, taking their pension plans with them.

But maybe we could have made other changes than simply offering the middle-class a tax-break for investing - because to the very poor, the IRA or 401(k) is just a cruel joke.  And maybe we could have funded Social Security better - rather than wait for it to go broke, so people could say, "I told you so!"

But that would mean raising taxes, and we all voted against that, right?  It is political suicide to even propose raising taxes, even if our tax burden pales in comparison to other Western nations.  So as a wise man once said, "We get the government we deserve!"

Maybe what we need isn't revolution - to the Right or Left - but rather making the same sort of gradual changes - incremental policy changes - to unwind some of what was done.  Maybe we can't afford to "forgive" all student loan debt - but we might be able to adjust the interest rates and principal for those who truly can never afford to pay the debt off (as opposed to, say, those who would rather get a new Playstation than make a loan payment).   And maybe, we can regulate how much schools can charge for tuition and room-and-board, if they want to receive federal grant money. Someone has to be held accountable - we all have to be held accountable.

It won't be easy and it won't change things overnight.  Then again, recovery from the Great Depression took the better part of a decade - and involved hundreds, if not thousands of changes to our laws, rules, and policies.

Well, that and a massive war.  Let's hope it doesn't come to that.

But the point is, whenever someone tells you how awful things are, bear in mind that we, as a nation, voted for these things or let them pass, one by one, without raising an objection.  We had the chance to make changes in the past and blew it off.  Maybe we need to pay more attention to what is really going on, than these window-dressing policies that are hurled at us - which mean nothing.  Meanwhile, obscure legislation changing the very foundation of our economic system is passed - one little bit at a time!