The Midas Touch – Late Capitalism

One day, some of King Midas’ men brought him a satyr they had captured in one of the king’s fields.  Midas recognized Silenus, the god Dionysus’ favorite satyr and ordered him set free.  Dionysus so appreciated Midas’ gesture that he offered to grant any wish the king might have.  Midas wished that everything he touched would turn to gold.

Dionysus frowned and asked Midas if he was sure that that was what he wanted.  Midas agreed that it was and so the wish was granted.  Midas, wanting to verify that his wish had been granted, laid his hand upon a bowl of fruit.  The fruit turned to gold.  He touched on thing and another and became giddy at the proliferation of gold objects in the room.

He grabbed his daughter by the hand to show her what he had done and what he could do. He was horrified to see a gold statue where his daughter had been.  He soon came to realize why Dionysus had hesitated in the granting of this wish.  He hungered and thirsted and whatever he tried to consume, of course, became unswallowable gold.

In early 21st century America, a nation that has embraced “free trade” economics for decades and whose devotion to that mythology has increased greatly over the last 30 or more years, a phenomenon similar to the Midas Touch has come to pass.  We have become a nation loathe to tax the wealthy because we believe that the wealthy are the “job creators” and that investments in private enterprise are superior to taxation.  Moreover, we must allow free enterprise to do what the market wishes and not thwart businesses’ desires with regulations.  Doing so could interfere with the “job creation” processes and harm our economy.

It may seem like I’m attacking the rich.  I’m not really.  The rich (I mean the really rich — if you’re thinking of the people who live in big houses in the nicest neighborhood you know, that’s not who I’m talking about), have perspectives and interests that influence their desires and their ideas of good policy.  The problem isn’t per se that they have so much money, it’s that the money is tantamount to political power.  Although no gods are around, they have gained the power to turn anything they touch into gold.  Our political system has evolved into an oligarchic charade in which 95% of the people are marginalized and their wishes and desires ignored.  The 1% can donate huge (to us) sums of money to candidates who will effect their wishes as policy.  Those huge donations have no effect on their day to day lives, they exist solely as lines in a ledger book.

In 2002, New York City was in perilous economic straits.  It’s deficit for that fiscal year was estimated at about $5 billion.  Michael Bloomberg, the city’s mayor at the time and a very wealthy man, could have written a check to cover the deficit and still control a $30 billion fortune.  I’m not attacking Michael Bloomberg or saying that he should have written such a check.  Undoubtedly, said check would have been a temporary solution and the fiscal problems, with causes unaddressed, would have returned.  Rather think about this:  one man, had the resources to cover the debts of one of the largest cities in the world and still remain one of the richest men in the world.  It would have been a significant chunk of the wealth he had accumulated but he still would have been fantastically wealthy!

Marx predicted that, in late stage capitalism, capital would begin devouring its own institutions in order to sate its requirement for growth and profits when the economy slowed to the extent that it wasn’t generating sufficient new wealth.  We can see evidence of this in the various investment inventions and derivatives that, seemingly, produce no objective goods, but generate profits.  If our current economic management persists we will see more and more cannibalism like this.  Corporate profits are soaring, job and wage growth are stagnant or falling and the great majority of us have little disposable income.  Without the economic engine of a prosperous middle class, capital looks elsewhere for its sustenance.  And it’s unsustainable.

We can’t expect the rich to come quickly to Midas’ realization that his power was unexpectedly crippling and harmful — to himself as well as to those around him.  Midas’ story, being a moral parable, comes with unmistakable signs of what has gone wrong and Midas’ awareness is inevitable and quick.  And power is intoxicating — one only willingly cedes it if it is causing harm.  And remember, for the most part, the rich are acting, as we all do, in their own interests, without malice and without gluttonous greed.

Nick Hannauer has realized that there’s a problem.  He is worth about $1 billion – a fortune he made in the late 20th century dot com boom.  In a Ted Talk, he points out that he’s not a job creator, that none of the vastly wealthy people can be a job creator.  He knows that consumer spending drives the economy.  He notes that his wealth allows him to purchase pretty much anything he wants.  This is true of all of the wealthy.  But even if every wealthy person went out and purchased everything he or she wanted, it would still not be enough to drive the US economy.  Policies that squeeze the vast majority of the people economically, even though they further enrich the wealthy, eventually create a world in which the rich cannot eat or drink.  Of course, long before that happens, as Hannauer says, the rich will look out of their mansions and see huge crowds with torches and pitchforks.

In our current oligarchic situation, it will be difficult — perhaps impossible — to reverse the ridiculous level of wealth inequality (a term, it seems to me, designed to sound absurd, as though the goal was for everyone to have equal wealth).  But it has to happen.  And the rich won’t realize that their power, their wealth, is causing the problem even when they begin to notice that there is a problem.  Only government can ameliorate the situation and government will be powerless to do so until the wealthy lose their grip on the reins of power.

Midas appealed to Dionysus to reverse the power to turn everything he touched to gold. The god instructed him to wash his hands in the Pactolus River and the power would leave him.  Before the rich go looking for such a river, a great deal of harm will occur.


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