A Popular American Bumper Sticker: Where Are We Going? And What Am I Doing In This Hand Basket?
Don’t go all glassy-eyed on me just yet just because I’m going to write about economics. It’s the most important subject now that much of the world is involved in World War III class warfare. An article by New Yorker writer Elizabeth Kolbert titled “No Time: How Did We Get So Busy?” summarizes an essay called “Economic Possibilities for Our Grandchildren” written in 1928 by John Maynard Keynes, a British economist who has ended up being tagged as the most influential economist of the 20th century. Prior to the influence of Keynes, most economists thought that free markets would always provide full employment—if workers were somewhat “flexible” in demanding wages.
In his essay of 1928, Keynes predicted that by 2028, American and European workers would only work about three hours a day—and some of the work would be unnecessary. Society would be so rich that no one would need to worry about making money. The 15-hour week would be sufficient because technological innovations in electricity, oil, steel, rubber, cotton, chemicals, and automatic machinery (robots) of mass production would spur tremendous growth. But Keynes warned that overwhelming abundance and the lesser need for physical labor would present great challenges. The greatest challenge would be leisure time. He wrote that only those who could appreciate “the art of life itself” would be able to enjoy the abundance. As Willie Shakespeare would say, “Aye, there’s the rub.”
How Did We End Up With The Rich With Too Much And The Poor With Too Little?
Nobel Prize economist Joseph Stiglitz of Columbia University says people learn how to consume by consuming—and that we learn to enjoy leisure by enjoying leisure. The half dozen or so large thrift stores in the Fargo-Moorhead area are filled to overflowing by consumers who have consumed too much. American consumers seem to get so many cheap thrills by “shopping” around the malls to buy “stuff” to add to “stuff’” that we have to rent space to store “stuff” we don’t have room for. Stiglitz points out that the Europeans with their “socialist” attitudes have learned to enjoy leisure by having more of it than most societies.
Labor records indicate that as late as the 1970s, Americans and Europeans worked about the same number of hours. But then Europeans began to trade income for leisure—and enjoyed it. If an American has a good job today, he works about 140 more hours per year than a Brit and 300 more than a Frenchman. By law, French workers get 30 paid vacation days a year and an English worker gets 28. The United States has no such law, so the American worker technically is guaranteed zero days.
Using the example that TVs can be put in every room and in the front and back of vehicles (I must report that we have two TVs in our motorhome), Stiglitz writes that Americans, having become Olympic-class consumers, will continue to work longer hours in order to buy “stuff.”
Sweden is now experimenting with the 30-hour work week combined with a 40-hour pay week. It might make a great deal of sense. We have millions of unemployed, perhaps as many as 25 million, who could find work if we went to six-hour days. We have to pay unemployment anyway to workers who currently search for jobs. Why not pay them for eight hours and have them work six? It adds another complete shift to the 24-hour work day and would eliminate huge chunks of unemployment compensation. Think about it.
What Happens When A WalMart Clerk At $8.40 And a Hedge Fund Manager At $1,660,000 An Hour Go To A Son’s Afternoon Baseball Game—On A Weekday?
Kolbert uses this example to show how economic pressures vary whether you are a consumer of “stuff” or a consumer of leisure. It will cost the WalMart clerk about $35 to watch his son strike out twice and perhaps get a scratch hit. It will cost a hedge fund manager sitting next to him, who made $3.5 billion last year, over $6,000,000 to take the afternoon off. Maybe his kid will hit a homer.
Keynes did worry that the rich might not find satisfying leisurely pastimes. Most of the ultra-rich seek satisfaction by investing in “stuff” that will make them all kinds of money while they consume “leisure” time. It is expected that a 19th-century one-cent postage stamp called the British Guiana One-Cent Black on Magenta will bring $20 million at a Sotheby’s auction in the middle of June. John DuPont of the chemical company paid only $935,000 for the stamp in 1980. From one cent to $20 million in about 160 years must set some kind of financial record.
In the annual “Power Lunch with Warren Buffet,” the second richest man in the world behind Bill Gates, Andy Chua of Singapore, who made an absolute fortune peddling hair-loss treatments, made the highest bid of $2.2 million. The money does go to a charity selected by Buffet, and Chua gets to talk to “The Oracle of Omaha.”
What Happens When The 66 Richest Individuals In The World Have The Same Assets As The Bottom 3.5 Billion?
Forbes publishes a billionaire’s list each year. This year it took only 66 billionaires to match the “wealth” of the bottom 3.5 billion of the world’s seven billion. Bill Gates at $76 billion, the world’s richest, has cash and assets equal to the bottom 156 million. Each of the 66 on average has assets equal to 52 million people from the bottom half.
When the housing market, mortgage manipulation, and Wall Street banksters peddling financial garbage out their back alley doors to suckers around the world blew the economy up in 2007-08, Federal Reserve chairman Alan Greenspan was “shocked” that banksters were so greedy! Here was an Ayn Rand free market icon who didn’t warn wussy regulators to tromp on the economic brakes.
One of the reasons Canadian workers now have a higher median salary than American workers is that Canadian bankers have to hold the mortgages they grant for the life of the mortgage. The Canadian housing market did not blow up. No houses underwater to speak of in Canada. The latest figure I have seen for the U.S. reveals that we have 9.7 million homes underwater (worth a lot less than their mortgage) that house about 40 million people. That is a financial disaster for families and an economic disaster for the country.
Keynes Was Short In His Predictions
Keynes predicted in 1928 that technological innovations would cause the world’s economy to increase sevenfold and that a 15-hour work week would be standard. What happened to change all that? Cartoonist Jim Morin of the Miami Herald has a partial answer in his depiction of a father and son strolling through the grave markers in Arlington Cemetery. The father says to his son, “They gave their lives so we could live in a better world.” The son looks up at his father and says, “What happened?”
A study by the Goddard Space Flight Center of NASA indicates that our global industrial civilization might collapse soon because of “unsustainable resource exploitation and increasingly unequal wealth distribution.” We are using up the world’s resources at an alarming rate while polluting the earth at a disastrous rate. As an example, 71 of the 74 major Chinese cities consistently fail to pass air quality standards by wide margins.
The study uses historical data to report that the rise and fall of civilizations is a cycle found in practically every century in history. The fall of the Roman Empire foretells that even “advanced, sophisticated, complex, and creative civilizations can be both fragile and impermanent.” Like us.
What Is More Important To Our Survival: Art Or Healthcare?
There are two indicators that lead me to believe that the Goddard study has it right—unless we somehow change our ways. We still have 2.5 billion people in the world (1.6 million in the U.S.) without toilets. Good sanitation practices for the masses is essential for the welfare of society. Art is “nice,” sometimes inspiring, and is necessary to stir our creative juices, but it is not necessary for our survival.
Because of our tremendous inequality around the world, the ultra-rich have created a bubble in the art world to feed their competitive and investment juices instead of using their huge assets for the common good. Nick Paumgarten of New Yorker magazine came to this conclusion after studying the world art “market”: “The art world is full of pirates, rogues, eccentrics, bullies, and snobs, or, if you prefer, passionate aesthetes. It is, infamously, the last big unregulated industry, full of shady dealings and questionable practices, unwritten and often broken agreements, forgeries and price manipulation, wild tales of fortunes made and lost.” So what is the difference between Wall Street and the art market? Virtually nothing. Most of the ultra-rich involved in the art market are involved in or came from the Wall Street Casino and Bull. Many worked 80 consumer hours a week to gain their life’s American Dream: riches beyond measure. Leisure is not a goal in their case. Winning “something,” whatever that is, is.
What Is A Painting Worth? Will The Vatican Sell The Ceiling Of The Sistine Chapel?
A painting of artist Lucien Freud by Francis Bacon recently sold at Sotheby’s for a record $142 million. It was a contest of the ultra-rich fighting over who would have the right to say “I just bought the most expensive piece of art in the world!” A painting by Andy Warhol of Campbell Soup cans and other “stuff” on the side of weirdness sold for more than $100 million at the same auction. Three paintings for the covers of the Saturday Evening Post by the iconic American artist Norman Rockwell sold for $57.8 million, twice their sale estimate. Rockwell was paid about $3,500 for each one.
Another indicator of the ultra-rich thirst for consumerism is the record $237 million paid for an unfurnished apartment in London. Another record at Sotheby’s was set in the rare books arena when a copy of the Bay Psalm Book, the first book printed in the U.S., sold for $14.2 million. The previous record for books was held by John James Audubon’s “The Birds of America,” which sold for $11.5 million two years ago.
The Problem Of Wealth, Competitive Instincts, And Greed
Some would say let the rich play their silly games, spending fortunes for a few cents of oils splashed on canvas. A 1792 penny sold for $1.41 million in May. The problem is that these attitudes prevalent in art, real estate, and “collectibles” have carried over to our necessaries of life. Medicare and Medicaid services has just released a study of charges determined by 3,317 hospitals. Charges for chest pain rose ten percent in one year. Charges for digestive disorders rose 8.5 percent in one year.
Charges for 98 other common ailments all increased, most exceeding our two percent inflation rate. In 2011 a Florida hospital charged patients for irregular heartbeat an average of $25,361. A year later it charged $53,597. An Indiana hospital raised the charge for treating kidney and urinary tract infections by 70 percent. A San Antonio hospital raised its charges 34 percent for treating esophagitis and other digestive disorders. Hospital charges for treating pneumonia went up over $10,000 to $38,384 in just one year. Why did a Florida hospital raise its charge for treating small and large intestine disorders from $56,704 to $152,047 in just one year? Are doctors and medical administrators trying to get into the world art competition? Can they satisfactorily explain these increases to members of the public who are charged $1.50 for an aspirin when they’re patients in a medical facility?
John Maynard Keynes did influence the mysteries of economics when he said that free markets had to be regulated for the common good. But his predictions were way off. Remember that Greenspan thought Wall Street bankers weren’t greedy...
Raymond is a former Marine officer and school board superintendent and resides in Detroit Lakes.