The Money's Gone

The money's gone, the money's gone,What we gonna do since the money's gone.
The money's gone, the money's gone,What we gonna do since the money's gone.

The fundamental principal of capitalism (and I'm no economist, so check my work) is, "Wealth accrues to capital."  If one has capital (traditionally real estate, manufacturing goods, stocks and bonds, but lately, believe it or not, "credit"), one can simply sit back and watch wealth come to it.  A capitalist system relies on industrious individuals to work hard to get capital, then to use the wealth that comes to capital to buy more capital, producing more goods, and use that greater wealth (more capital means more wealth comes to it) to produce more capital, etc.  Nothing wrong with this economic system:  in fact, one may argue quite successfully that a capitalistic economic system leads to greater wealth per average person quicker than any other.

The problem with capitalism doesn't appear in the early phases, or even in the mature phases.  The problem appears in the later phase, such as that in which we here in the United States find ourselves:  if left unchecked, the fundamental principal of capitalism will result in fewer and fewer people controlling a larger and larger percentage of the wealth.  You can see how this follows from the basic principal, "wealth accrues to capital," assuming that a person pursues more capital with her or his wealth.  Eventually, without redistributing the wealth, a country will find itself with less than five percent of the populace controlling more than ninety-five percent of the wealth.  In that situation, our situation, states don't have any money, universities don't have any money, a whole lot of people don't have any money, even the federal government doesn't have any money, because all the money is in the hands of that five percent.

I'm not mentioning this to be critical of capitalism, though as a Christian I have to be at least a little critical of an economic system that values things over people and their well-being (though we do recognize "intellectual capital").  And capitalism is basically an economic system that persists on our telling each other over and over that things have value, economic value.  And let's be honest:  many things should have absolute value - food, shelter, transportation (since we need that for getting food and working), medicines, basically any thing that leads to safe, healthy and secure lives.  But there's a really fuzzy line between "any thing that leads to safe, healthy and secure lives" and frivolity, such as diamonds (which admittedly don't have absolute value, though I know of very few who give diamonds no value whatsoever).  One can add to the frivolity easily (I'm sure you can think of examples), but most notoriously, in a capitalist economy, is the case when one person has way more than she or he needs while another person - sharing the same economic system and society and commonwealth - doesn't have enough of what she or he needs.  When this latter situation becomes extreme - where, for instance, five percent of the populace enjoys a standard of living in which they have waaaay more than they need while ninety-five percent are struggling to get by - then capitalism becomes very unstable.  And when those percentage get more lopsided, they can pass a point where capitalism collapses, not least because the participants in that economic system begin to revalue what things are worth.

The classic solution to a capitalistic wealth-imbalance is redistribution of the wealth.  I'm sure those of you in the United States remember when then-candidate Senator Obama said to a farmer in the midwest (I think, though I may be wrong) that we need to redistribute the wealth.  By saying this, he was simply being honest and aware of the limits of capitalism (just like President Reagan was being sooo honest when he named our economy a "trickle-down economy," because that's exactly how capitalism works:  wealth accrues to the top [capo] and drips down to the rest).  Without redistributing the wealth, wealth will continue to accrue to the top and eventually the whole system will topple.  Now, one would think that a government so capitalistic would be able to recognize when the system begins to totter and do something about it, such as increasing the federal minimum wage (a really small but important step in redistributing the wealth) or taxing the top to fund things like small business tax credits, social services, etc.  But an ironic aspect of a mature capitalistic system appears when anyone suggests such pragmatic moves:  since ninety-five percent see themselves as not having enough, proposing such governmental programs appears to them as if the government is trying to take even more away from them.  So the general public tends to protest a move that would benefit them.  And governors, whose primary goal seems to be to remain governors, don't want to alienate their constituents (forgetting, at all levels of our government, that our representatives do not represent parochial but common interests), so they sit on the needed reforms.

Recently in the United States, individual citizens have stepped forward to see if they can accomplish some wealth redistribution without the government's help (capitalism encourages individual rather than governmental initiative).  Bill Gates and Warren Buffet - two of the four hundred and sixteen billionaires in our country, have begun to reach out to fellow billionaires and encourage them to donate half their wealth to charities.  Please know how much I applaud Mr. Gate's and Mr. Buffet's efforts:  indeed, I do so wish my church, the PC(USA) (the richest per capita denomination in this country), would have done this ourselves (and done so by example).  I think this is a good first step, but still I have to ask:  if one is a billionaire, is giving away half enough?  Does one person or family need five hundred million in personal wealth?  Still, this is a great move and I wish them much success.  I doubt, however, that this move alone will be enough.

Rather than redistributing the wealth, our country emphasizes the ninety-five percent's taking on more debt.  I have heard many times that our economy depends on consumers consuming:  industry after industry, apparently having no cash reserves (the money's gone), depend on consumers who apparently have no cash reserves (the money's gone) continuing to consume:  the housing industry, the automobile industry, etc., are struggling because no one's buying.  So our government's response is, "Let's get the credit flowing again!"  The eight thousand dollar tax rebate on purchasing a new home looks good on paper (and certainly propped up the housing market the last several years:  indeed, Nancy and I sold our house to a first-time home buyer who wanted the rebate), but it actually encourages people to assume more debt.  In fact, the "American dream" of owning a house is actually a banker's dream of getting a consumer to mortgage a house for thirty years and, over the life of the loan, pay three times the cost of the house (or, from a consumer's perspective, paying three times what the house is worth).  All credit works this same way:  relieve the borrower of having to save cash and, subsequently, get her or him to pay more than the item is worth.  Any credit works the same way, even student loans.  And in a capitalistic system, credit means paying too much for something, encumbering it with debt, and subsequently slowing the process of wealth accruing to capital (even a home, encumbered with debt, is not a surefire way to accrue wealth, as we've found out here over the last several years).  Using credit - actually taking on more debt - just accelerates the flow of wealth from the ninety-five percent to the five percent, as I'm sure the five percent well know.

So that's kind of the glaring emergency in our capitalistic system, but I actually wanted to speak about a much narrower issue, though I hope you see how it relates:  values.  I hear and read so much about values:  family values, American values, Christian values, etc.  What I don't hear so much is questions about "values" themselves.  A "value" is a measure of worth you and I ascribe to something, implicitly ranking it in terms of worth with other values, creating a value economy (some are worth more than others).  But values are weak, flighty, fluctuating, much like a credit market.  Values have no inherent worth, only the worth we ascribe to them based on various factors such as mood, temperament, scarcity, abundance, etc.  In other words, there are no absolute values:  by their very definition, values my be devalued to the point where they do not exist.

I hate Christian talk of values:  what are our values, what do we value, etc.  I want to talk of principles.  Principles have this supreme characteristic:  they are unaffected by changes in valuation.  One may ask what a principle may cost a person, particularly a brave or unpopular principle (such as looking out for the have-nots rather than the haves), but whether or not people value the principal doesn't alter its worthiness.  Now, to be honest, what we call "values" are actually principles:  a family value, such as "parents, don't fight in front of your children," is actually quite principled.  Many of our so-called American values - compassion, patriotism, integrity - are actually and were formerly called "principles."  I object to values not because they are actually principles, but because we're calling principles "values," meaning, like everything else in our economy, they're for sale, they depend on market forces, some are up and others are down.  We devalue principles by calling them values, which is, I believe, the goal of some who want everything - our nation, our churches, even our faith - to be subsumed into our economic system.  And when everything gets a value, and hence gets put on sale, those with the money will be able to buy everything, even our principles.

Here's a principle for you:  don't buy on credit, buy with cash.  That's a foundational principal for a good capitalist.  Don't let anyone convince you that your credit rating has value, especially those who would never buy on credit themselves.  Let's stop the money flow, even reverse it.  Let's refuse to let anyone attach a value to our principles.  Thank you for reading.