Park Avenue, an analysis
This is the video my Cousin sent to me, it is an NPR production of wealth inequality within the US. It made me think about wealth inequality in the world. Here is my analysis of the video, why there is wealth inequality and what can be done to mitigate it.
It is unfortunate that some people are born poor and others rich. Wealth does give some people a massive advantage. However I think it is a lot more complicated then saying greed and big business caused this. As for government regulation helping to prevent or mitigate this depression is largely the opposite of what happened. It highly encouraged this event and instead of backing away they are making things worse. I can break it down like this.
There many aspects to the financial collapse of 08. I cannot address all of them but these are the important parts that lead to it. First, the massive spending by the Federal Reserve that loaned out money to the banks and the government at very low interest rates. This allowed the government to pay for the Iraq and Afghan war. It also pushed for very low interest rates on houses. This meant that banks and people were heavily speculating on housing. Next the government pushed banks to make loans to low income people by backing the loans with the full faith and credit of federal government. This means that people who would never be approved via a normal bank were getting loans. This should never have happened.
But these two parts are just a small parts of the pie. With all of this speculative money entering the markets people make bad decisions. Those bad decisions equated to buying too much house, too much car and too much of everything else. Once the apr jumped it was time to pay the piper. So A massive default happened and many people lost jobs due to these malinvestments.
The government projections grow due to this malinvestment and false prosperity. We now have to pay for more government then we need. It gets worse. The government also promised medicare, Medicaid, social security and obama care to the citizens of the us on top of a massive government. This should be taken out of taxes that the government collects. However the government cannot afford all of its liabilites so it has to borrow a trillion dollars extra a year to pay for these programs. (hence the debt growing a trillion each year)
Also the system at large will not change because the government underwrites mortgages, student loans and medical treatment. This means that the price will never go down. There is no competition in the system and the doctors, pharmacists, unions, teachers, professors have no reason to push for this essential monopoly to be taken apart. They make the money of the status quo.
I could go on but the bottom line is this. The collusion of big business and government drives the economy into the ground. People say that the government should take from these greedy business men and give it to the poor but you cannot just take something from some one without compensation. This compensation is the empowerment of the superwealthy. This is what we have seen in the last 30 years.