Reparations for the 99%

[DDastardly00]

About 4 years ago, Huffpo posted and article about reparations for the 99% which I will link here. I know some of you may or may not like the source, but the data from the financial crisis, in other words, the winners and losers, is presented in a very clear way, and the sources used are solid.

https://www.huffpost.com/entry/reparations-for-the-99_b_7898816

It's a worthwhile endeavor to consider the merit of this argument, given that the American people were completely screwed out 1.9 trillion dollars and the Financial industry that caused this mess was bailed out to the tune of 3.3 trillion. Consider the lost wages, lost home values, direct foreclosure losses, people who lost businesses directly caused by the recession and you will quickly see a very ugly picture:

From the article:

THE DIRECT COSTS OF THE 2008 HOUSING/FINANCIAL CRISIS

The people........................... Lost at least $ 1.9 trillion
The government.................... Paid at least $ 3.3 trillion
The financial industry.......... Received at least $ 3.3 trillion

The third question, “Is this fair?”

The obvious answer is “NO!” But now we have to ask another question: what can be done to rebalance the costs and benefits among the key parties?

The financial industry should pay back at least some of the huge costs it imposed on the country. It is time for reparations. As a starting point for the discussion, here is a modest proposal: retrieve $4 trillion from the financial industry, returning $2 trillion to the people and $2 trillion to the government.

I would structure this payback as a 40 year loan, amortized as a 4% mortgage repayment. On this basis, the annual repayment to the treasury would be about $200 billion. The industry would have to figure out how to generate this payback, but a surcharge on financial transactions would be an easy starting point.

The government can handle collecting $2 trillion in reparations over 40 years, but what would work for the people? I would have the Treasury just write the checks, and use the industry repayments to recover the money. Payments to the people would be made within the next year.

About $1 trillion would go to those who suffered foreclosures since 2007, at least partly restoring their lost equity. The second $1 trillion would go as checks to nearly every adult in the country, an average of about $5,000 per person.....

I recommend reading the whole article, I left out some of important data that brings the scope of the issue into better focus in attempt to avoid a word fort.

 

[Eunos_Cosmo]

I can't get onboard with this, no matter how much I'd like to see the finance industry punished.

A functioning & growing economy is far more valuable to me than a measly $5,000. If I could pay $5,000 to ensure another 10 years of economic expansion, I wouldn't hesitate.

 

[Dotini]

There exists the potential for another crash in the economy that would greatly exceed the one were just endured. Rather than demanding reparations, we would be demanding their hides.

 

[Danoff]

Two wrongs don't make a right.

 

[Sander 001]

The third question, “Is this fair?”

Fourth question: Is this egregious lack of fairness expected in a plutocracy ?
Answer: Yes

 

[Liquid]

Two wrongs don't make a right.

Unless you're Homer Simpson.

I saw a funny satire news headline recently which was to the effect of:

TAXING REGULAR PEOPLE MORE THE ONLY WAY TO FIX THIS​

It did make me laugh a lot but I do agree, two wrongs don't make a right in this case. You can't undo what has been done in the past but what you can do is take precautions and measures to ensure that not only such a thing doesn't occur again but that if it does, those with the most responsibility bear the burden.

Of course that's easier said than done with powerful lobbyists and big business financiers able to influence in such a way that they don't receive punishment; these turkeys are unlikely to vote for Christmas.

 

[drummingcat]

You can't undo what has been done in the past but what you can do is take precautions and measures to ensure that not only such a thing doesn't occur again but that if it does, those with the most responsibility bear the burden.

.

Thats pretty much how I see it.

But, what I will say, is whatever actions need to be taken, need to be taken fast, but too many lobbyists and politicians with fingers in the pie prevent this from happening. And whether its the rise of the east, nuclear war, or climate change.

Interesting fact, when the barbarians were providing the roman empire with their sternest military test, and approaching the empire fast, the wealthiest inhabitants of Rome were setting up their own fiefdoms to avoid paying taxes to fund things like the army to defend rome.

I kind of see us like the romans now, but we have 3 or 4 potential reasons why our civilization could collapse, but concentration of wealth is the reason why nothing is being done.

 

[Imari]

I would structure this payback as a 40 year loan, amortized as a 4% mortgage repayment. On this basis, the annual repayment to the treasury would be about $200 billion. The industry would have to figure out how to generate this payback, but a surcharge on financial transactions would be an easy starting point.

This is insane. To rectify the imbalance between financial institutions and the public, he wants a payment that will be generated through a surcharge on financial transactions? Does he not think that the first thing that banks will do is tack that fee onto the end of every financial transaction, thus efficiently passing the cost on to the very public that is supposed to be benefiting from this? And it's not even like consumers could avoid those banks and go to others, because this would be industry wide and so the incentive for all the banks to collude and simply equally jack up their prices would be immense. Even without collusion, I'm pretty sure most bankers are smart enough to see the right move in that situation. Prisoner's Dilemma 101.

Seems like the author playing for the other team, to be honest. "Here, we could say that we're paying back the government which will then pass the money on to the people, but the real trick is that we get the money to pay the government from the people first!" Who really wins in that scenario? It's not the 99%.

 

[Biggles]

Seems like the author playing for the other team, to be honest. "Here, we could say that we're paying back the government which will then pass the money on to the people, but the real trick is that we get the money to pay the government from the people first!" Who really wins in that scenario? It's not the 99%.

What you're really saying is that the 1% - & especially the .01% - will always find a way to win. In spite of democracy - "discriminatory taxes" & the purported dangers of "mob rule" - it's not the mob that's in charge, but the plutocrats.

 

[Imari]

What you're really saying is that the 1% - & especially the .01% - will always find a way to win. In spite of democracy - "discriminatory taxes" & the purported dangers of "mob rule" - it's not the mob that's in charge, but the plutocrats.

Yes.

And given that pure capitalism is pretty much explicitly designed to encourage that, I think the right question to be asking is more like "hey, is this capitalism thing really working as well as we might want it to, or do we need to make some changes?" Because right now, it seems like money is power, specifically the power to not have the rules apply to you if you're rich enough.

Nominally, western society prides itself on the ability for anyone to do well if they work hard enough. The reality is that if the same people are doing well regardless of success or failure, then the structure behind the society might not be supporting that cultural desire.

 

[mustafur]

Let's be Real, the Perception that money is Power is Power.

When the World moved off a Gold/Silver standard it has been this way, Central banks are the real issue here, reducing Interest rates to make inflation, now that cash Transations are dying and they have very much been the ones to push this, they can implement Negative interest rates without people mass withdrawing for cash as to not loose money from Bank Deposits.

There is already alot of Laws in my country that have been secretly put through to fast track this process as it gets closer to Negative interest rates.

Banks will Win and everyone else loses, and the Market had no say Regardless.

 

[Danoff]

Yes.

And given that pure capitalism is pretty much explicitly designed to encourage that, I think the right question to be asking is more like "hey, is this capitalism thing really working as well as we might want it to, or do we need to make some changes?" Because right now, it seems like money is power, specifically the power to not have the rules apply to you if you're rich enough.

The solution is to end crony capitalism by not playing favorites. That's what this is, crony capitalism. Which isn't capitalism.

 

[mustafur]

The solution is to end crony capitalism by not playing favorites. That's what this is, crony capitalism. Which isn't capitalism.

Bad Capitalism Don't do that.

Essentially is what your saying.

 

[Danoff]

Bad Capitalism Don't do that.

Essentially is what your saying.

Nope. Crony capitalism is government. It comes directly from government intervention. Lobbyists are precisely lobbying for government force in their favor.

Government: "Capitalism why did you do that?"

 

[mustafur]

Nope. Crony capitalism is government. It comes directly from government intervention. Lobbyists are precisely lobbying for government force in their favor.

Government: "Capitalism why did you do that?"

Capitalism is Individualism, Last I Checked individuals are currupted because they have that problematic thing called Free Will.

That's not to say Collectivism is better or even Equal, we have seen how that works out.

The Point is your solution is to restart the Cycle rather then fix the cycle, because as far As I have seen it's not an easy answer and has yet to be done.

 

[Danoff]

Capitalism is Individualism, Last I Checked individuals are currupted because they have that problematic thing called Free Will.

Capitalism is a description of the behavior of people in an environment where human rights are protected. It's not a description of free will. Pure free will is anarchy, followed by dictatorship. People do not preserve each others rights (completely anyway) when left to their own devices, which precludes capitalism. Capitalism doesn't exist in anarchy.

The Point is your solution is to restart the Cycle rather then fix the cycle, because as far As I have seen it's not an easy answer and has yet to be done.

The cycle is as follows. People see something they'd like to change (someone is rich, someone is poor, someone made a bad decision, etc.), and they decide to use the force of government to fix it. Other people realize they can profit by fine-tuning that force in their favor, so they lobby the government to tweak the use of force. Other people see more opportunity, and so on and so forth.

The fix to this is to use the force of government only for protecting human rights, and to not extend it. Lobbying exists precisely because there is profit to be gained by extending that force. If you're worried about the cycle starting over again, the worry is that government will grow beyond the job of protecting rights. And you're right, that's a concern. Not because of capitalism, but because people don't preserve each other's right's (completely anyway) when left to their own devices.

The best you can do (apparently) is vigilance against the growth and intrusion of government - which happened in a big way during the financial bailout. This problem only grows with growing government. You will see more and more people line up to profit from that growth.

 

[Famine]

Capitalism is Individualism, Last I Checked ... thing called Free Will ... to say Collectivism is ... or even Equal ... The Point is ... restart the Cycle ... as far As I have seen...

You do rather seem to be suffering from Inappropriate Capitalism...

 

[mustafur]

Capitalism is a description of the behavior of people in an environment where human rights are protected. It's not a description of free will. Pure free will is anarchy, followed by dictatorship. People do not preserve each others rights (completely anyway) when left to their own devices, which precludes capitalism. Capitalism doesn't exist in anarchy.

I'm not talking about Pure Free Will as an Economic platform or what not, I'm talking about the individual Humans, they themselves can pursue what they want, they are not controlled and predictable

The cycle is as follows. People see something they'd like to change (someone is rich, someone is poor, someone made a bad decision, etc.), and they decide to use the force of government to fix it. Other people realize they can profit by fine-tuning that force in their favor, so they lobby the government to tweak the use of force. Other people see more opportunity, and so on and so forth.

Sure that's just being Human, alot of what people see as reality is what they have experienced as they have no other basis to see reality

To fix to this is to use the force of government only for protecting human rights, and to not extend it. Lobbying exists precisely because there is profit to be gained by extending that force. If you're worried about the cycle starting over again, the worry is that government will grow beyond the job of protecting rights. And you're right, that's a concern. Not because of capitalism, but because people don't preserve each other's right's (completely anyway) when left to their own devices.

The best you can do (apparently) is vigilance against the growth and intrusion of government - which happened in a big way during the financial bailout. This problem only grows with growing government. You will see more and more people line up to profit from that growth.

But all of that Can be undone from the Free Market it self, People in Government are Humans and are not Immune from taking bribes, and even if you put a Government in that was immune to bribes when those get replaced(Humans die and all) your at square one fighting basic Human desires, whether it be from the government or the people it represents wanting a change due to how they perceive reality.

 

[Danoff]

But all of that Can be undone from the Free Market it self, People in Government are Humans and are not Immune from taking bribes, and even if you put a Government in that was immune to bribes when those get replaced(Humans die and all) your at square one fighting basic Human desires, whether it be from the government or the people it represents wanting a change due to how they perceive reality.

Government is not free market. Government is force. Yes they're all just people, but don't confuse the people with a free market, they're different entities. Bribing government officials is not "free market", that's "corrupt government". It's not just semantics either, there is a HUGE distinction (force).

You're describing the problem with government by the way. There is absolutely no reason whatsoever to refer to this as free market or capitalism.

 

[Imari]

The solution is to end crony capitalism by not playing favorites. That's what this is, crony capitalism. Which isn't capitalism.

Fair enough.

However, humans being social creatures that naturally tend to bond and have preference for those closer to them, genetically, emotionally, or otherwise, they have this tendency to form groups. I'm not convinced that crony capitalism isn't the natural evolution of capitalism. I've not seen a version of capitalism that looks like it actually stands up to use by real humans.

Which is exactly the same problem that communism has, ironically. On paper, if everyone does what they're supposed to it works fine. In the real world, a non-trivial amount of people will do their best to exploit the system and I'm yet to see any economic system that even attempts to deal with that gracefully.

You're right that government plays a large role in this, but given that group nature of humans again, anarchy isn't exactly stable either. So it's assumed that there's going to be some sort of government or leadership, no matter how large or small, if for no other reason than it's an efficient way for groups of people to live easily. An economic system that can't work with a government is not useful in the real world, much like a submarine made of potassium. To argue whether it's the fault of the water or the potassium is to miss the point. It's neither, the problem is that they're incompatible.

 

[Danoff]

Fair enough.

However, humans being social creatures that naturally tend to bond and have preference for those closer to them, genetically, emotionally, or otherwise, they have this tendency to form groups. I'm not convinced that crony capitalism isn't the natural evolution of capitalism. I've not seen a version of capitalism that looks like it actually stands up to use by real humans.

Which is exactly the same problem that communism has, ironically. On paper, if everyone does what they're supposed to it works fine. In the real world, a non-trivial amount of people will do their best to exploit the system and I'm yet to see any economic system that even attempts to deal with that gracefully.

You're right that government plays a large role in this, but given that group nature of humans again, anarchy isn't exactly stable either. So it's assumed that there's going to be some sort of government or leadership, no matter how large or small, if for no other reason than it's an efficient way for groups of people to live easily. An economic system that can't work with a government is not useful in the real world, much like a submarine made of potassium. To argue whether it's the fault of the water or the potassium is to miss the point. It's neither, the problem is that they're incompatible.

Capitalism is often compared to communism as an economic system, but it's not. It's just a description of human behavior. It's not a "system". Certainly it's not a system of government, since it can't function on its own without some sort of government protecting rights. So blaming anything on capitalism is like blaming human nature, it's not helpful. Capitalism doesn't suffer from human nature, it is human nature (at least part of it). And it doesn't suffer from the same thing communism does. To an extent, communism suffers from capitalism.

The problem you're poking at is that we haven't found an uncorruptable system of government. You should be focusing your efforts on division of power withing government, representation, elections, constitutional guarantees, amendments to constitutional guarantees, and all of the ways that one can shield government from corruption.

It's not so much that capitalism can't work in the real world, it's just something that happens in the right conditions. It's that we haven't figured out how to keep a stable government that provides those conditions. I'm not blaming anything, just pointing out where the problem is and what the proposed solutions need to accomplish.

 

[DDastardly00]

Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one - Thomas Paine

Great comments in this thread, I enjoyed reading them all.

I think it's also important to remember the Government's role in the subprime mortgage lending crisis through entities like Fannie Mae and Freddy Mac. Both were pushed or persuaded (depending on your view) by the government to take on risky loans because the government guaranteed these loans. So the government is not without fault in regards to what (partly) caused the Great recession. This goes along with Danoff's comment about Crony Capitalism, the govt directly intervened by pushing these bad loans and guaranteeing them which effectively put the tax payers on the hook for the mess it created. Bad juju.

 

[Daz555]

Any reparations the financial sector makes will come from the pockets of employees and shareholders, and ultimately customers. That is perhaps ok of course, but we at least need to acknowledge that.

There are similar situations in the UK banking sector. Many UK banks are paying out compensation to customers who were mis-sold Payment Protections Insurance in the 90s and early 00s. This is great for customers and of course the right thing to do. However, what grates is that this compensation does not come from the execs, shareholders or employees who pocketted all the money at the time, but instead comes from the pockets of employees and shareholders who work at those banks today. UK's biggest bank (Lloyds Banking Group) has paid out around £20bn in compensation to customers to date.

The UK also saw significant bailouts during the financial crisis - not to the extent of the US however. In the case of Lloyds Banking Group, as mentioned above, it has already returned every penny to the treasury - but again on the backs of the work done by those who work there today, not those who banked all the mega bonuses in the good times before running away as the world fell in around them. What a load of banking w@nkers.

One good thing that came from the financial crisis was new legislation in the UK which will allow the Government to pursue execs and claw back bonuses etc from them should their actions result in significant losses down the road - even many years later.

 

[Danoff]

One good thing that came from the financial crisis was new legislation in the UK which will allow the Government to pursue execs and claw back bonuses etc from them should their actions result in significant losses down the road - even many years later.

An excellent business opportunity for someone to abuse I'm sure.

 

[Danoff]

Moved to here. What happened was, I looked too quickly at this thread and thought it was about slavery reparations. Oops.