Teaching American Studies in Torino, as I am for the next two weeks, is an eye-opening experience. I feel a bit as if I am a native informant, who has to try to undermine the inaccurate views of my students about the United States. One of the foremost of these is the myth that the U.S. is the land of opportunity.
My first class this week will focus on The Monster, Michael W. Hudson’s encyclopedic account of the depredations of the subprime mortgage industry in the U.S. over the last two decades. The industry that, in cahoots with Wall Street banks like Lehman Brothers and using arcane financial instruments like Collateralized Debt Obligations (CDOs) invented in order to profit from the subprime mortgage market, wrecked the global economy.
The sordidness of the subprime mortgage industry is impossible to overestimate. It was run by completely unscrupulous capitalist bosses who purposely targeted working class people of color, people who had finally managed to build up a bit of equity through government-backed mortgage schemes in the decades after the New Deal and the Second World War. Equity, mind you, that was radically less than what the average white suburban family was able to build up in the same period. Here’s an excellent video that gives a sense of the unequal (racialized) landscape of housing in the U.S.:
The subprime mortgage industry targeted working class people of color, siphoning their hard-earned housing equity into an insane Ponzi scheme built on virtually impossible to penetrate financial instruments like CDOs and Credit Default Swaps. The result was a complete crash of the global economy. Here’s a video that very nicely explains how all of these arcane financial instruments worked?
Underlying this crisis of credit Cafe Credit reminds us that, of course, the assault on working- and middle-class wages begun by global financial elites in the mid- to late-1970s, led, particularly, by Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. As elites clawed back more and more of the wage gains and other social benefits win during the period since the Great Depression and the Second World War, life for the average person became more and more difficult.
What this led to was the financialization of everyday life. The 99%, in the Occupy parlance, were forced to live more and more off credit (and women had to enter the workforce in order to maintain middle class standards of living). Slowly, people came to think of life itself in financial terms, as a kind of risky investment.
One area in which this shift is particularly apparent is higher education, which went from being seen as a right that was provided to the people free of charge through public higher education systems like the City University of New York and the University of California systems, to being seen as an investment that people had to pay for through tuition charges. This was a Faustian deal, though, since it only made sense – if it ever made sense – when the economy was doing well and this “investment” could be payed down quickly after snagging a well-paying job. Now that unemployment is high for young people, high tuition rates in universities (including public ones) seems more like a scam than a just exchange.
There was a good article in the New York Times today about a couple of French economists who have shown that inequality in the US is nearly as bad as it was during the Great Depression. This is no news break to Occupy activists, but one suspects that the American Dream myth is keeping most people in the U.S. in the dark about this fact, not to mention many people around the world, who continue to think of the U.S. as the land of milk and honey. Here are some amazing charts from the article that demonstrate spiraling income inequality:
It will take tremendous push-back in order to turn this horrible situation around. We’re just at the beginning of such efforts, but the Occupy movement has already initiated some very creative and brave responses to the economic crash. Here is a video of folks from Occupy Foreclosures who block house auction proceedings with choral singing:
The pranksters at Occupy also recently produced a beautiful video that, in Situationalist terminology, “detourn”s West Side Story to cover many of the issues I’ve touched on in this post: