Who's Your Nanny?
unagidon October 27, 2011 - 12:43pm
To some people, Western European socialism looks like a nanny state where capitalist assets which should be private are redistributed widely through society in the form of a social safety net. Safety net implies charity; the holder of the net clearly cannot be in the same boat as those who are falling. When we live in the United States where working without a net is preferred, because people are seen to fall out of personal weakness and a good bounce is considered a character building experience, a European style safety net at the least can look like an unnecessary and unwarranted diversion of investment funds and at the most like a means of weakening the social fabric (since if people know that there is a net, it somehow follows that they will become careless when walking the wire).When a social safety net is viewed as a form of charity, we can argue all day whether people deserve it or not. But I think that a safety net has very little to do with charity. Furthermore, while having or not having a strong safety net is of course a political issue, what underlies the issue is something intrinsic to modern capitalism as an economy.One word that we Americans like to use (and often misuse) is invest." We know that corporations invest and that people invest in corporations. But we also talk about investing in our homes, our education, and our jobs. Building a new school or a new road or a new water filtration plant is an investment." I have a friend who likes Beanie Babies, but she refers to her collection as an investment. We like to use the word investment because in our society investments are thought to be things that appreciate in value. We buy things to use and enjoy, but in our universal mercantile sensibilities we like to believe that the things we use and enjoy might also somehow grow in value all by themselves.
But investment isnt just about appreciation, no matter how shrewd we tell ourselves we are. Investments can also depreciate. We know this subconsciously at least. But we get confused because our desire to enjoy and find fulfillment in what we consume hides the true nature of the thing as an investment.Investmenttruly is speculation. We tend to use the word speculation to describe a class of risky investments. But all investment is speculation to one degree or another. All speculation means is that the value of the thing is driven by a market whose direction we cannot predict (especially now, since we are interlocked into an international too big to fail banking system and a lax regulatory environment that allows banks to have their big thumbs in every pie).When a capitalist economy collapses we are suddenly faced with the fact that all this investing we have been doing was speculation all along. We didnt buy a home. We bought a house in a housing market where we went toe-to-toe with massive swop-sealing investment banks and mortgage companies. Our educations may have been (at least by accident) enriching, but in fact we were playing roulette with our livelihoods at a table with 110 other foreign players and with the big people spinning the wheel. Almost everything we own or have, including what passes these days for our communities, is commoditized and we are in a formal speculative market relationship with whoever happens to be the biggest player in a particular market. All we have is always at risk.What the European system does is recognizes that market risks are far wider than we think they are in the United States. Big market moving capitalists are still allowed to speculate in Europe. Its just that Europeans know in a way we have forgotten, that companies are not just speculating with their own assets. In an integrated capitalist economy they are speculating with everyone elses as well.When the great auto companies moved out of Detroit and destroyed that city, they were playing with the public and private assets of all the people in that city. In a capitalist society public and private assets are commingled in a way that our individualist ideology just does not see. Detroit wasnt just about cars and the price of GM stock. The recent housing bubble wasnt just about houses. Risks flow very wide in a modern integrated capitalist economy. The social contract that Europeans have with their capitalists isnt about charity. Its about the appropriate spreading and valuation of risks. Its a system that does not allow capitalists to spread many risks beyond themselves. As a result, Europe has a smaller gap between those who have and those who have not.Its not about charity. Its about risk.