Who rules America? We all like to think we do, since we believe we live in a democracy. But what if that’s not true? If you watch the new documentary film Inside Job by Charles H. Ferguson you might think the rich rule us, and they’re doing a bad good job because of the 2007-2010 financial crisis. Greed triumphs over wisdom. Richocracy is a form of oligarchy, where the extreme tiny minority of the very rich have the power of ruling. The insight of Inside Job is these people reign whether the Republicans or Democrats are in control.
We do not see the real ruling rich in Inside Job, but their representatives, Henry Paulson, Ben Bernanke, Timothy Geithner, Alan Greenspan, the CEOs of the leading financial institutions, and their philosophical spin-doctors, the economists that teach in academia and consult in Washington. Many of these men stay in power regardless of which political party is in the Whitehouse or Congress. They rule by economic theory that justifies getting more wealth for the richocracy.
It’s all very obvious when you think about it. Money is power, the people with the most money have the most power. With very large amounts of money and power its possible to change both the laws of the land, and the rules of business. Furthermore the richocracy hire the top Ivy League economists to justify their wild money making schemes.
To me, the most damning evidence revealed in Inside Job is how the richocracy made the credit rating agencies a total sham. Wall Street created investment systems that insiders knew were worthless but got them rated AAA so gullible banks, investors, retirement systems, local, state and foreign governments, would buy. These investors of little people’s money used these corrupt credit ratings in their decision making, and thus trillions were stolen.
Would we have had this financial crisis if we had honest credit ratings? I don’t think so. Most people who invest money have very little knowledge of how their money is put to work. They have to trust the institutions that hold their savings. Those institutions use the credit rating systems like Moody’s and Standard & Poor’s to understand risk. An AAA rating is suppose to be as secure as U.S. government bonds. How do you feel about your retirement money being invested in schemes rated AAA (prime) but should have been rated CCC (extremely speculative).
But that’s the point of this film, greed corrupts everything. People ignore risk when they think they can make a quick buck. The solution to that is regulation. Capitalism without rules is chaos. The richocracy fights all regulation with every fiber of their souls. That’s how they use the Republican party. Regulation slows down wild speculation, but it’s the bubbles of wild speculation that create wild piles of wealth. But in recent decades most new forms of speculation have been no more rational then Ponzi schemes. The richocracy love the Ponzi scheme because it’s a quick way to take away a lot of money from the suckers and give it to the very few, the richocracy.
As Inside Job points out, in the old days investment firms invested their own money and they were very careful how it was used. Over recent decades investment firms started investing ever larger growing pools of money that didn’t directly belong to the money managers, so it became ever more easy to bet on riskier schemes. Governmental financial regulations are designed to keep investing money within the bounds of reality. Which means no Ponzi schemes. And all systems for quick riches ultimately come down to a Ponzi game.
Now the real question to ask: What can us little people do about this? The people with all the money have all the power, but the legal system is suppose to be based on democracy. Democracy is corrupted by lobbying. The more money you have, the more lobbyists you can buy. For the little people to gain power they either have to find ways to get their own lobbyists, or force a political change to the lobbying system. But the inherent nature of the richocracy really precludes the second option from happening.
The ultra rich is often called the top 1% of America, but that would be over 3,107,044 people. My guess is the richocracy is actually much smaller than that, maybe only the top .1%, or a little over 300,000 people. Those other almost three million people are hardcore richocracy wannabes. So we can think of it as us (99%) versus them (1%). You’d think the little guys would have the power, but they don’t, because all the wealth is with the 1 per-centers.
But that’s an illusion too. Us little guys have a lot of wealth too, but we let the richocracy manage it for us. Of course, we’re just as greedy as they are. We want 10% returns on our retirement investments and take risky chances with our 401k money. It would be possible to lobby with our money but we don’t control how its invested.
We don’t make the laws of the land, the laws of business, nor the theories behind government and finance. We think we have power with our votes, but I’m not so sure about that anymore. As Inside Job shows, people voted for Obama because they wanted change in the financial systems but he failed to deliver. Obama hired the same richocracy representatives that were used by the Republicans, and regulation was once again avoided.
Essentially us little people have no power and all we can do is sit by and hope the richocracy doesn’t drive the country into absolute ruin. We can hope the richocracy can learn from their own madness but Inside Job also points out that all the people that caused the recent crisis walked away rich. The richocracy is evidently waiting for the economy to settle down so they can start up the next bubble. They know how to get fabulously wealthy from financial bubbles. The trouble is if you look back at the history of these bubbles, they are getting larger each time, and the country and us little people are suffering more with each new cycle. How many more can we survive?
JWH – 11/14/10