Class Warfare! Elites v the poor

In my introduction to anthropology class today my teacher introduced the topic of how a society is structured by its economic classes. How the "elites" dominate the others, and essentially bleed them dry.

In passing she mentioned the recession of today, which was of course a prime example of how the greedy rich make money gambling with the livelihoods of the poor.

After class I asked her about how G. Bush attempted in 2003 to regulate fannie mae and freddie mac, such that they wouldn't make such terrible, unsustainable guarantee's of bad loans, but was rejected from congress being that, in the words of Barney Frank: 'These two entities are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'

And reminding her that such bad loans were only made after the govt. encouraged them and put the gaurantees in place such that the banks would pick them up, chop em up, repackage'em and sell them as high finance explosives.

So in this light it would seem that it is the causes of the poor which caused the financial crisis.

Then again maybe a Marxist, social warfare, perspective isn't the most realistic way of looking at such things.

So, you're blaming the poor for causing a financial crisis.....

Alright, lets clear up the first misconception here. The poor didn't actively or passively seek to bring down the economy; the businesses that decided to open up their mortgages and what not to those that couldn't afford it are the ones who, with full knowledge of what they were doing, made that decision. You cannot blame the poor for being poor when they took up the mortgage company's offer; you can, however, blame the mortgage company for being stupid enough to do what amounts to exploitation of such a situation.

The second misconception is where exactly the government failed in this regard. You almost hit it on the nail when you noted that Congress' failure to enact the proper regulation to keep these unsustainable mortgages were a huge cause. Where you went off track was when you said that the government's guarantees for these loans was the issue. The government guaranteed these loans, yes, but they had backing behind it; what failed was the element of that control over allowing businesses to exploit the dreams of those that simply couldn't afford it. Had it not gotten so out-of-control, then the situation would have been different, but unfortunately it did.

And, really, saying that the "causes of the poor" caused the recession is like saying "the rottenness of the cheese in my sandwich caused me to be sick."

It might have an element of truth, but its why you don't put the cheese on the sandwich - use your sense of sight and smell to prevent it.

Volkov, the mortgage companies were forced to give out loans to those in poverty by decree of Barney Frank and Chris Dodd. Bush tried to stop it, but Barney wouldn't let it happen. A person on welfare could feasibly get a $300,000 mortgage, all they have to do is apply - the mortgage company would be forced to comply - due to gov't.

volkov
lol, absolutely. I don't think that a Marxist class warfare point of view, is the right way of thinking about the economy.
People make decisions to benefit themselves. If a person takes a job, it's b/c they think it's better than not taking it. An "elite" is not coercing or dominating them by offering it.

I just wanted to point out that viewing the housing meltdown as a the greedy rich gambling with the lives of the poor is a silly way of looking at it.

Sure there are problems with the way pay is incentivized, and perhaps problems with the accountability to shareholders,
But there is also problems with the government skewing markets to the point of unsustainability in trying to graft social programs into them, instead of keeping them separate.

I am frustrated with the fact that in every social studies class, other than economics, the predominating point of view is a Marxist one.

At 11/5/2009 8:24:39 PM, Nags wrote:
Volkov, the mortgage companies were forced to give out loans to those in poverty by decree of Barney Frank and Chris Dodd. Bush tried to stop it, but Barney wouldn't let it happen. A person on welfare could feasibly get a $300,000 mortgage, all they have to do is apply - the mortgage company would be forced to comply - due to gov't.

I know, I commend Bush for doing as such; he knew the proper regulations in place could have stopped this egregious thing from occurring.

What the difference is between Frank's idea of "regulation" and Bush's idea of regulation was that Frank was pushing a social agenda on the mortgage companies when he shouldn't have been. I disagree with that immensely; it isn't the place of the government to set the standards for companies, but to make sure those companies don't abuse or exploit their customers, and to make sure individuals that cannot meet the standards of the company at least have the opportunity to in due course.

Bush's idea was sound; regulate companies so that they couldn't do this, and make us all end up in this nightmare.

I don't like the idea of "the rich" vs "the poor" because that's not the way economics works.

At 11/5/2009 8:43:32 PM, mattrodstrom wrote:
I don't like the idea of "the rich" vs "the poor" because that's not the way economics works.

It isn't but it doesn't matter; the divide exists, and Marxists play on that well.

What they don't realize though is that it is foolish to try and force a social agenda on the economy, because it simply won't maintain its productivity and capabilities once you do.

The best option is to create regulations to limit harm and abuse, and to have the government invest - not control, but invest - in the economy to help compliment the social issues of the day where it can. The creation of jobs, for instance.

But forcing a company to sell to consumers who cannot pay, or hire people who are not qualified, is a foolish endeavour on the part of the government. If the state really wants to help those that need such things, then they should create programs designed to give them the qualifications needed, or invest in products they can afford.

I agree in all except for this:
the govt. should "invest - in the economy to help compliment the social issues of the day where it can. The creation of jobs, for instance."

I think that the gov't makes a poor investor. For example it has a bad tendency of "investing" to prop up naturally dying, and inefficient areas of the economy, such as manufacturing. It also has the tendency to invest for it's own political agenda, such as "green tech" which may or may not be useful areas of expansion: for example hydrogen fuel cell, from all that I have heard, is a completely garbage idea, and yet the govt. still invests in it through subsidies.

Instead I should like to see social programs set up completely outside of the marketplace, like public housing.

plus anything that the govt. "invests" could be more efficiently invested, if it weren't taken from companies and consumers through taxes in the first place.

At 11/5/2009 9:08:40 PM, mattrodstrom wrote:
I agree in all except for this:
the govt. should "invest - in the economy to help compliment the social issues of the day where it can. The creation of jobs, for instance."

I think that the gov't makes a poor investor. For example it has a bad tendency of "investing" to prop up naturally dying, and inefficient areas of the economy, such as manufacturing. It also has the tendency to invest for it's own political agenda, such as "green tech" which may or may not be useful areas of expansion: for example hydrogen fuel cell, from all that I have heard, is a completely garbage idea, and yet the govt. still invests in it through subsidies.

Instead I should like to see social programs set up completely outside of the marketplace, like public housing.

The government only makes a poor investor when it has incompetence running its coffers; at which point, they get kicked out if they continue. That is democracy, my friend. The simple fact remains that a lot of times, without government investment, these ideas themselves simply won't get off the ground.

And yes, the government does invest in some dying industries. This is because of a lack of vision on their part, but it also isn't a necessarily bad idea either; the fact that GM and banks were bailed out is because they meant a lot to workers, consumers and the economy. Letting them die would be akin to simply allowing the economy to kill itself off and take consumers and workers down with it.

At least by bailing out companies, they give them the chance to restructure and become competitive again, while saving the economy and individuals from further pain, and ensuring continuous returns on their investments.