Archive for Depression

Railroad barons, Robber barons, and the Mafia…

Posted in Economics, Economy, Politics, Work, Writing with tags , , , , , , , , , , , , , , , , , , , on February 6, 2016 by urbannight

This started out as a Facebook comment that turned intoOld Monopoly a much longer post.  It is something I’ve kept meaning to write more about but for which I never get around to doing the in depth research.  Partly because I am not an economist or interested in economy.  I am interested in history and this is something I’ve been putting together in my head based on viewing of a number of documentaries and articles and books that were not specifically about the economy.  But the past decade or so has had me pulling these threads together into this concept that I think has a valid point.

In the fight to change minimum wage into people being able to earn a living wage if they work full time may be easier to understand if one understands that our modern economic system was developed by the same people who create the ‘trunk’ system of work compensation. Once upon a time, these people were called ‘Railroad Barons’. Not because their work on the railroads made them rich but because they way they made money made people think of the old ‘robber baron’s’ back in the Old Country. These were people with titles who took to robbing travelers and merchants crossing their lands in order to have an income.

Railroad Barons as a term came about because most of these people were in the business of building railroads.  But it included others that were not but practiced business in the same manner.  These were the people who came up with the idea of creating towns at their factories or operations and paying people in company script that had no value outside the company town. Then getting the families in debt to the company so they would never be able to leave their jobs and move away.

The government determined this was simply a way to try to legally enslave people and made company script illegal. Wages must be paid in legal tender.  The government seemed to be less concerned with the payment itself and more concerned with the fact that it limited mobility, trapping people.  They probably could have paid the employees anything so long as it would have been considered to have an equal, legal value, anywhere they wanted to take it so it could be used and spent in other places.  They could have been paid in pocket watches because they could be sold and traded for a relatively constant value.  Well, at least until the market got flooded with pocket watches.  But it gets the idea across.  These company scrip were bit of paper that held NO value once outside of the company town.

But in response to the Great Depression, these people changed the perception of their characters. They became known as captains of industry. They were praised for attempting to put some kind of organization and structure onto the economy. We called it capitalism and made a board game praising the concepts of making as much money possible off of others while trying to compensate them with the least amount possible without getting in trouble with the law.

Another reason that people don’t really realize that the Mafia came really close to taking control of the government back in the day is the reason that so many people were willing to work for the Mafia and to protect them. It wasn’t because they were family members. It wasn’t because these were people with natural criminal inclination. It was because, back at this time period, the Mafia in the U.S. took better care of its workers and their families than any other employer did. Older kids and young men took jobs doing stuff for the mob because the work was more likely to be steady, reliable, and better compensated and their families were looked after better than any other job in the cities they could have found, for the most part. Which may be a really sad thing to say.

Our entire economy was solidified and fine tuned by people so questionable that they made the Mafia look good. Think about it. This is the Free Trade Capitalism that so many people say is the best method of Economy.  It is a method that says anyone can get rich if they work hard enough.  This ignores the fact that unless there is an unlimited source of money, it is blatantly not true.  Given a finite source of wealth in the world, that means only so many people can get rich while most people never will, no matter how hard they work.  Free Trade Capitalism is best for funneling the most money into the fewest pockets.

I’m not saying that people should run out and become the exact opposite.  That isn’t any better.  What I’m saying is that our system isn’t all that and a bag of chips and the very roots of that system is why a living wage is anathema to what most people have been taught.

Where has all the money gone…..

Posted in Economy with tags , , , , , on August 19, 2010 by urbannight

Money is a finite item.  Governments print so much of it and destroy a certain amount each year.  People get paid, buy stuff, the spent money then either goes back into that business or it goes to shareholders, some gets spent, some gets saved.  As it goes farther up the chain of people, business, corporations, and investors, more of it gets tied up and less gets put back into the flow of money movement.

We act as if money is infinite.  Students are told that anyone who works hard can become well off and maybe even millionaires.  On one hand we are recommended to save money, on the other hand we are told that saving is hording and that the only way to keep the economy going is to spend spend spend.

Even governments are constantly spending money they don’t yet have.  And then recessions happen, stocks drop, people discover that the money they thought they had has shrunk drastically.  Sometimes it has vanished. 

And I think about scandals of the 1990’s give or take a few years.  When the average person starts hearing about shady accounting practices that make business appear to have more money than they really do.  They learn you can move numbers around to hide problems and debt.  We all learned about corporate asset shuffling on paper can change the entire picture. 

I wonder how many of these practices have gotten into the whole accounting process.  How many of them are actually taught as acceptable ways of manipulating numbers?  How many of them are accepted ways of accounting that the people doing them don’t even realize they are shady?

Which brings me to another thought:  Where has all the money gone?  You read article after article saying people who thought they had this amount really have that amount, a smaller amount. 

We count resale value of a home as money in the pocket.  But it really isn’t.  There are lots of things we do to increase our worth on paper but the reality is that those things are not real money.  It’s the idea of potential future money. But we operate as if it is already in the bank. 

So I have to ask a question.  Was there really as much money in the world as people thought?  Or has all this number shuffling and creative accounting made the world as a whole look richer than it really is and now it’s just caught up with us?

Roosevelt’s solution of the Depression was to build highways and link up the entire country.  This created actual jobs.  This helped people out at the lowest level and which in turned help local businesses and it spread upwards.

The current economic thought is that you help out the financial institutions, you help out big business, and it trickles down.  But if you don’t help out the people at the base of the totem pole of economics, it doesn’t matter how much you repaint and repair the top of the totem pole.  It will still fall over because it lacks a sound support.  The people whose actions fuel the economy through consumer spending still don’t have the money to spend.  All because there seems to be less of it in the world than before.