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For far too long, we have allowed Wall Street to play us as marks in a
confidence scam of audacious proportion. It’s time for action to bust the banking trusts,
replace the current Wall Street banking system with a Main Street
banking system, and to take back America. By David Korten.
3rd April 2012 - Published by YES! magazine
The tell-all defection of Greg Smith,
a former Goldman Sachs executive, provided an insider’s view of the
moral corruption of the Wall Street banks that control of much of
America’s economy and politics. Smith confirms what insightful observers
have known for years: the business purpose of Wall Street bankers is to
maximize their personal financial take without regard to the
consequences for others.
Wall Street’s World of Illusion
Why has the public for so long tolerated Wall Street’s reckless
abuses of power and accepted the resulting devastation? The answer lies
in a cultural trance
induced by deceptive language and misleading indicators backed by
flawed economic theory and accounting sleight-of-hand. To shatter the
trance we need to recognize that the deception that Wall Street promotes
through its well-funded PR machine rests on three false premises.
- We best fulfill our individual moral obligation to society by maximizing our personal financial gain.
- Money is wealth and making money increases the wealth of the society.
- Making
money is the proper purpose of the individual enterprise and is the
proper measure of prosperity and economic performance.
Wall Street aggressively promotes these fallacies as guiding moral
principles. Their embrace by Wall Street insiders helps to explain how
they are able to reward themselves with obscene bonuses for their
successful use of deception, fraud, speculation, and usury to steal
wealth they have had no part in creating and yet still believe, as
Goldman CEO Lloyd Blankfein famously proclaimed, that they are “doing God’s work.”
The devastation created by Wall Street’s failure affirms three truths
that are the foundation on which millions of people are at work building a New Economy:
- Our individual and collective well-being depends on acting with
concern for the well-being of others. We all do better when we look out
for one another.
- Money is not wealth. It is just numbers.
Sacrificing the health and happiness of billions of people to grow
numbers on computer hard drives to improve one’s score on the Forbes
Magazine list of the world’s richest people is immoral. Managing a
society’s economy to facilitate this immoral competition at the expense
of people and nature is an act of collective insanity.
- The
proper purpose of the economy and the enterprises that comprise it is to
provide good jobs and quality goods and services beneficial to the
health and happiness of people, community and nature. A modest financial
profit is essential to a firm’s viability, but is not its proper
purpose.
The critical distinction between making money and creating wealth is the key to seeing through Wall Street’s illusions.
Ends/Means Confusion
Real wealth includes healthful food; fertile land; pure water; clean
air; caring relationships; healthy, happy children; quality education
and health care; fulfilling opportunities for service; peace; and time
for meditation and spiritual reflection. These are among the many forms
of real wealth to which we properly expect a sound economy to
contribute.
Wall Street has so corrupted our language, however, that it is
difficult even to express the crucial distinction between money (a
facilitator of economic activity), and real wealth (the purpose of
economic activity).
Financial commentators routinely use terms like wealth, capital,
resources, and assets when referring to phantom wealth financial assets,
which makes them sound like something real and substantial—whether or
not they are backed by anything of real value. Similarly, they identify
folks engaged in market speculation and manipulation as investors, thus
glossing over the distinction between those who game the system to
expropriate wealth and those who contribute to its creation.
The same confusion plays out in the use of financial indicators,
particularly stock price indices, to evaluate economic performance. The
daily rise and fall of stock prices tells us only how fast the current
stock bubble is inflating or deflating and thus how Wall Street
speculators are doing relative to the rest of us.
Once we are conditioned to embrace measures of Wall Street success as
measures of our own well-being, we are easily recruited as foot
soldiers in Wall Street’s relentless campaign to advance policies that
support its control of money and thus its hold on nearly every aspect of
our lives.
Modern Enslavement
In a modern society in which our access to most essential of life
from food and water to shelter and health care depends on money, control
of money is the ultimate instrument of social control.
Fortunately, with the help of Occupy Wall Street, Americans are
waking up to an important truth. It is a very, very bad idea to yield
control of the issuance and allocation of credit (money) to Wall Street
banks run by con artists who operate beyond the reach of public
accountability and who Greg Smith tells us in his New York Times op-ed view the rest of us as simple-minded marks ripe for the exploiting.
By going along with its deceptions, we the people empowered Wall
Street to convert America from a middle class society of entrepreneurs,
investors, and skilled workers into a nation of debt slaves. Buying into
Wall Street lies and illusions, Americans have been lured into
accepting, even aggressively promoting, “tax relief” for the very rich
and the “regulatory relief” and “free trade” agreements for corporations
that allowed Wall Street to suppress wages and benefits for working
people through union busting, automation, and outsourcing jobs to
foreign sweatshops.
Once working people were unable to make ends meet with current
income, Wall Street lured them into making up the difference by taking
on credit card and mortgage debt they had no means to repay. They were
soon borrowing to pay not only for current consumption, but as well to
pay the interest on prior unpaid debt.
This is the classic downward spiral of debt slavery that assures an
ever-growing divide between the power and luxury of a creditor class and
the powerless desperation of a debtor class.
Bust the Trusts, Liberate America
Before Wall Street dismantled it, America had a system of
transparent, well-regulated, community-based, locally owned, Main Street
financial institutions empowered to put local savings to work investing
in building real community wealth through the creation and allocation
of credit to finance local home buyers and entrepreneurs.
Although dismissed by Wall Street players as small, quaint,
provincial, and inefficient, this locally rooted financial system
created the credit that financed our victory in World War II, the Main
Street economies that unleashed America’s entrepreneurial talents, the
investments that made us the world leader in manufacturing and
technology, and the family-wage jobs that built the American middle
class. It is a proven model with important lessons relevant for current
efforts to restore financial integrity and build an economy that serves
all Americans.
Two recent reports from the New Economy Working Group—How to Liberate America from Wall Street Rule and Jobs: A Main Street Fix for Wall Street’s Failure—draw
on these lessons to outline a practical program to shift power from
Wall Street to Main Street, focus economic policy on real wealth
creation, create a true ownership society, unleash Main Street’s
entrepreneurial potential, bring ourselves into balance with the
biosphere, meet the needs of all, and strengthen democracy in the
process.
For far too long, we have allowed Wall Street to play us as marks in a
confidence scam of audacious proportion. Then we wonder at our seeming
powerlessness to deal with job loss, depressed wages, mortgage
foreclosures, political corruption and the plight of our children as
they graduate into debt bondage.
Let us be clear. We will no longer play the sucker for Wall Street
con artists and we will no longer tolerate public bailouts to save
failed Wall Street banks.
Henceforth, when a Wall Street financial institution fails to
maintain adequate equity reserves to withstand a major financial shock
or is found guilty of systematic violation of the law and/or defrauding
the public, we must demand that federal authorities take it over and
break it up into strictly regulated, community-accountable, cooperative
member-owned financial services institutions.
Occupy Wall Street
has focused national and global attention on the source of the problem.
Now it’s time for action to bust the Wall Street banking trusts,
replace the current Wall Street banking system with a Main Street
banking system, and take back America from rule by Wall Street bankers.
David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group, and a founding board member of the Business Alliance for Local Living
Economies.
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