Let’s start with the depth and size of the underlying financial crisis, which is almost in the realm of hyper-reality. In 1997, for example, the total value of annual financial transactions worldwide was an already-staggering 15 times greater than global GDP. Today, it is 70 times greater . (1) In 1995, the six largest US banks controlled assets worth 17 percent of annual GDP. Today, the figure is 64 percent . (2) Again in 1995, the global total of outstanding derivative debt obligations was $17.7 trillion. By 2010, at nearly $470 trillion , outstanding derivatives were 741 percent of global GDP . (3)
This wholesale financialization of the US-led global economy has burdened the public sector with the task of propping up unregulated speculative debt in the private sector that is 7.4 times our annual productive capacity. Add US deficit spending for three wars since 9/11, and major cuts in the top tax rates, and the burden becomes unsustainable. The difference is being made up in the guise of austerity, as everything we own is liquidated, from personal and retirement savings, to homes and public-sector assets that have been built up over generations.
In the US, the inexorable logic of this process is embedded in the numbers that comprise the national debt. By most estimates, the national debt is at least $15 trillion .(4) Here is one way to understand where the money went.
The $15.2 trillion total of reckless government giveaways and war spending equals the national debt. Where did this money come from? It came from we the people. During the current economic downturn:
The total losses to citizen wealth are also $15 trillion.
From this perspective, the ongoing financial crisis of the past few years is a giant swindle that transfers wealth from low– and middle-income citizens to bankers, defense contractors, real estate speculators and the wealthiest 1% via the US Treasury, which is acting as an agent for upward redistribution.
From the start of this Reagan-Thatcher revolution, the “trickle down” theory of wealth was accompanied by promises of a smaller, less intrusive state, except for a strong military. Fast forward through 30-plus years of nearly uninterrupted neoliberal policymaking — Bill Clinton and Tony Blair were deregulating neoliberal champions — and not only do we have the most expensive, heavily militarized, war-prone, increasingly inequitable and intrusive state in US (and British) history, it is also the most indebted.
Neoliberalism is failing on its own terms, yet it continues to define US politics due to its appeal among a sizable and particularly fervent segment of the electorate. (12)
While those at the top with access to policymakers reap enormous financial benefits from their embrace of neoliberal theology, many of those at the bottom who stand to lose the most economically join forces with them because of political appeals to their utopian religious and patriotic beliefs. Neoliberal presidential candidates from Ronald Reagan to Rick Santorum and Mitt Romney have come before voters as kindred utopian spirits, true believers couching their self-regulating market utopianism in the familiar and compelling language of patriotism, individual freedom, mom and pop entrepreneurism and religion. (‘Believe in America.’) Utopian faith thereby trumps the pain of ugly reality.
And the ugly reality is that neoliberal markets — unlike the elegant models of classical economics — are rigged. And rigged in favor of the wealthiest members of society. Income disparity between the bottom and top 20 percent in the US has more than doubled since 1979. (15) Income for the top 1 percent grew by 275 percent from 1979 to 2007, while income for the bottom 20 percent grew just 18 percent. (16)
The US now has 49.1 million people living in poverty, the highest level since the Great Depression of the 1930’s. (17) Yet among true believers at both ends of the economic spectrum, the powerful emotional pull of a shared utopian vision transcends the homely realities of the fact-based world.
Also born to wealth, Ryan was a youthful devotee of neoliberal founding fathers von Mises and Hayek, supplementing his market faith with the culturally corrosive, ego-centered atheism of Ayn Rand, until the US Conference of Catholic Bishops, representing his professed Catholic faith, publicly objected to the cruelty and inhumanity of his 2011 US budget proposals.
The bishops described Ryan’s budget as being antithetical to their call to create “a circle of protection” around the poor and vulnerable. With his tea-vangelical base of support threatened, Ryan quickly discovered St. Thomas Aquinas as a more appropriate religious vehicle for channeling his market utopianism. (18)
The presentation of the Romney-Ryan ticket by the Republican Party tells us that the path to utopia is stony and difficult, as it should be. Reaching the neoliberal Promised Land requires sacrifice. In order to scale the utopian summit, we must cast out the unbelievers (Obama, Democrats, liberals, environmentalists, feminists, et al.) and balance the divine books with the purifying fire of “austerity,” the neoliberal equivalent of self-flagellation.
Austerity-mandated cuts in vital public services must be accompanied by ever-increasing tax reductions for the top income brackets — aka, the priestly class of “job creators” — thus intentionally accelerating the insolvency of the iniquitous public sector. Someone has to pay for the extravagant incomes, lifestyles and war profiteering of the oracular speculative class in order to keep the swindle going, and it turns out to be us.