The Hamster Wheel Economy

Every once in a while I'm amazed by the degree to which we've become a rentier economy.

Take a look at any graph that measures debt levels, be it credit card, student loan, home loan, or medical, and there's a sheer explosion of indebtedness. From one point of view, this is a consequence of stagnating or falling wages, which is a process that began in the early 70s. Since that time, the American economy has in fact grown, oftentimes quite dramatically. But wages have been kept flat, so that every dollar of new growth has been funneled to those at the top. Consequently, in order to maintain a half decent quality of life, most of us have to finance this on debt. For example, people used to be able to pay for college by working summers, but wages have been kept flat for almost 50 years, so that paying your way through college is now impossible. As a result, we see an explosion in student debt, as it's the only way most people can finance higher education.

Aside from the knee jerk conservative reaction that ignores or doesn't care about the economic reality that created this indebtedness, and that instead chooses to blame debtors for their indebtedness (being poor or homeless is always a choice!), we don't give enough attention to what this means about how the economy has changed. Aside from stagnating wages, the consequent increase in debt levels has meant that a huge portion of the economy now depends on the interest from this debt. In other words, from the point of view of students, the trillion dollars in student debt is a personal tragedy, but from the point of view of lenders, that trillion dollars is the source of their livelihood.

Wealth has always made it easy to generate more wealth. But in the past, you would use your wealth in some productive fashion, investing your capital in industry and generating more wealth by manufacturing and selling goods. Granted, you were still exploiting your workers, paying them less than they deserved and giving them little autonomy over their work, but at least you were producing something. But now, production has become unnecessary, as all you have to do is lend out your wealth to a desperate population, and thereby make profit off of interest. You're not producing anything, but merely leaching off of others, so that the misery of the population has become the underlying cause of your success.

I was reminded of this when listening to a podcast about Puerto Rico. Puerto Rico is an island that's essentially been turned into a factory for the production of interest payments for Wall Street creditors. So, if you live in Puerto Rico, no matter what your job, that's essentially what you're doing - working every day to ensure that Wall Street gets its money.

But the same is true for the rest of us. The reasonable life that most of us want and that we deserve, a life filled with fulfilling work but also with plenty of free time, and with healthcare and education, has been turned into the carrot that propels us ever forward on this hamster wheel. However, with every turn, we get no closer, but Wall Street is sure to take its cut.