March 29th, 2009

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Blue-Collar vs. White-Collar Bailouts

My partner Doug pointed out something to me recently, regarding government assistance to troubled businesses. People who shower before going to work get treated better than people who need to shower after work. When the government was dealing with auto companies, and workers who put cars together, it took the approach that workers "must" make "sacrifices" in order to get government money. Retirees were stripped of benefits they had been guaranteed in their contracts. But when the government was dealing with banks and financial institutions, and workers who sit at desks manipulating largely imaginary money-data, it took the approach that contracts are "sacrosanct" ... and when taxpayers complained about paying bonuses, it was "how dare" the "angry mob" intrude into private business matters and threaten contracts. The plain fact is, the people receiving the millions of taxpayer dollars in bonuses were making more money in the bonus alone than most auto workers make in a year on their base salary -- many times as much.

The less money someone has, the less they can afford to lose before they get to a point where not even frugality and sacrifice will stretch the funds far enough to cover utilities, food, health care, and housing costs all of which have risen much faster than wages. The more money someone has, the more leeway they have to lose some of it, because they can reduce spending on luxuries for quite a long time before they have to start crossing items off the grocery list to pay for medication. If rich people have less spending money, they might make fewer investments and slow the economy a bit; but if working-class and poor people don't have enough income for basic expenses, the whole economy collapses because people can't afford the goods and services made by the businesses in the first place. Therefore, when it's time to make "sacrifices," it is more appropriate to start that at the top of the income slope, not the bottom.

America doesn't do that because it respects wealth more than practicality. It respects people who handle large sums of money, even if they do their job so poorly that their company flounders, more than it respects people who handle very small sums of money, even if they are extremely frugal with it. No matter how little you have, it is your fault if you can't make it go far enough, and you're "lazy" and "stupid." But if you have a lot of money, you are "crucial" to the economy and "brain power" to your company, and it is not your fault if your bad decisions destroy your company and/or the economy.

What a bunch of bullshit. Thinking like this is contributing to America's slide down the achievement slope.