I grew up in a family of the working poor, spending a good portion of my childhood in public housing.
My dad did his best to provide for his seven children, but money was tight, and we lived from payday to payday.
He supplemented his income by doing a bit of gardening for a couple of wealthy clients. We never owned a car, so he would carry his little push mower on the bus.
One summer he decided to try something different. He made arrangements with a man who owned a bit of property close by, to lease a plot of land where he could plant a garden. The idea was that he would grow vegetables and sell them in the neighborhood.
In lieu of rent, the landowner would receive a portion of the harvested crops.
My dad could grow anything anywhere, and the garden flourished, but when he sent us out to sell the produce, we found that while many people would love to buy, they simply did not have the money.
I would come home and say that Mrs. ---- 's husband didn't get paid until Friday, and she might buy something then.
Knowing what it meant to have to wait several days for much needed wages, my dad would take the vegetables to Mrs. ---- and give them to her, saying that he had pulled too many and didn't want them rotting and would she please take them off his hands. This soon became the norm and that garden kept many families going that summer.
He never made much money. In fact, he probably lost, but what his children gained from this, was the knowledge that some things are worth more. My dad already knew that.
Another memory from my childhood, took place when I was about eight. My dad had received a cheque in the mail for $1.36; a rebate from an over payment on something. He endorsed the cheque and sent me to the corner store to cash it and buy bread and milk. Don't laugh. At the time both items were nineteen cents each.
Anyway, the clerk at the store misread the figure and put the change in the envelope that my dad provided, from $13.60.
When I got home and he realized what had happened, he took out the appropriate amount and made me take the rest back, worried that the poor girl would lose her job for being short in the till.
In the latest NDP ad, Thomas Mulcair states that he was "raised with middle class values". What in the hell does that mean? The middle class refers only to an economic group, so if he means that he was raised to understand that money was important and that the "values" pertained to how much they had, then say that.
But if he means that only his class had values, while the rest of us did not, there is a problem.
Your true value comes from the kinds of things you value and not the size of your paycheque.
If he had said this in passing, I would have thought it a Freudian slip, but it's in an election ad. "Raised on middle class" values sound more like something Republicans would say, assuming that if you're poor you're just lazy, and if you're affluent you've worked hard to get there.
All parties are courting the middle Class this election and with good reason. When we had a strong middle Class we all prospered.
I recently thought about the families in that community, and with a few exceptions, at least one parent worked. They might have gone through periods of being laid off and would have to tap into social programs, but only temporarily. What kept them going was the determination to ensure that their children had a better life. I know, or at least know of, many of those children, and indeed they do.
They became members of the middle class, but not because they worked harder than their parents, but because there were more opportunities available to them, primarily because we had strong unions. Not everyone belonged to a union, however, those union wages kept the economy going, creating a snowball effect.
Then in the 1980s, things began to change. Conservatives and Libertarians tried to convince us that if they implemented policies that made the rich richer, and large corporations stronger, there would be a trickle down affect, that could make us all rich. It didn't happen.
Corporations started outsourcing jobs and hoarding their money, or using it to drive smaller companies out of business. The corporate welfare state was born.
And the wealthy took the position that the masses only wanted to take THEIR money and since they could afford to buy politicians to protect THEIR interests, all of those hard working people were hung out to dry.
Any hope of upward mobility was dwindling. For many, you only worked to survive.
In an eleventh hour attempt to rectify the folly, politicians are trying to correct the mistakes made by people like Margaret Thatcher in Britain, Ronald Reagan in the U.S. and Brian Mulroney in Canada, but it's an uphill battle. Those at the top don't want to part with their stockpiles unless it's to prevent the need to do so.
Mulcair only states that he will strengthen the middle class, but since he also promises not to raise taxes on the wealthy, or the corporate sector, it's anyone's guess how he'll do it. He also does not have a great track record when it comes to unions.
Stephen Harper boasts that his tax policies have helped families, but like Mulcair's "middle class", they are an exclusive group, with gold plated halos.
Money Sense's Mark Brown recently did a breakdown of the tax policies of the Liberals and Conservatives and Stephen Harper's plan only starts to look better once your income hits $192,000. That's almost $70.000 more than the top range of the upper middle class, so clearly they are not his priority.
Harper does boast of the increases to his Universal Child benefits, but since they're taxable, few in the middle class will gain anything.
Strengthening this important sector is a step in the right direction, but assuming that they have more non-financial value than the rest of the population, is absurd.
You can be middle class and steal, lie or cheat. You can commit adultery, have substance abuse problems or even commit murder. You can vote Liberal, Communist, NDP, Conservative, et al, or not vote at all.
And you can have strong core values whether you make $15,000 a year or $15,000,000.
I know this because I was raised with my parents' values and they, Mr Mulcair, HAD CLASS!
"The test of serious moral commitment to the family is a willingness to spend public money. Effective child protection, universal access to health care, affordable child care, first-rate primary and secondary education - these are the building blocks of the protective arch that society must raise over its families. This institutional arch doesn't come cheap, but those exponents of family values who won't stump up for it are just engaging in cheap talk." - Michael Ignatieff (1)
In Michael Ignatieff's year end interview, he claimed that his Party would be focusing their attention on the middle class. Some in the media are suggesting that Rob Ford, Toronto's new neoconservative mayor, is representing the middle class, which is pure nonsense.
Because to me the middle class were never mean, at least not collectively. Rob Ford represents millionaires who want all services privatized so they can make more money, by destroying the unions there to protect public servants. People who have been able to make their way to the middle because of fair wages and benefits.
The problem with Canada since Brian Mulroney, and the United States since Ronald Reagan, is that the middle is now being ignored, while all focus is on improving the lot of the wealthy, with some ridiculous notion that those wealthy will look after the poor.
That isn't happening and as one Conservative Christian said recently "we cannot foodbank our way out of poverty." We need government intervention to protect all citizens, because it's the right thing to do.
I've come down hard on Jack Layton and the NDP recently, after learning that they will be propping up the Harper government in January, and supporting future corporate tax cuts. Canada will not survive if they move to the right. We need a good strong party governing the centre, with good strong voices from the left making sure that the needs of citizens are being met. The NDP need to get back to the values of people like Tommy Douglas, Ed Broadbent and David Lewis, who took on corporations, not bowed down to them.
And the Liberals need to get back to the values of Pierre Trudeau and Lester Pearson, and even John Diefenbaker, now that his party has been wiped out.
Because when these guys were around, Canada worked. We were envied and admired. I never even heard the word "homeless" until neoconservative Mike Harris ran Ontario. There were vagabonds and tramps, but their lives were romanticized, because many chose that free lifestyle.
But no one chooses to be homeless. And families should not be living in their cars.
Today's Billionaires Do NOT Earn Their keep
The neoconservative principle of everyone being free to make as much money as possible, and then everyone will be taken care of through the trickling down; may be the biggest fraud since the pyramid scheme.
Canadian and American society has had it's classes, and most of the wealthy got that way through hard work, or inheritance from someone else, who worked hard to get rich. There were exceptions, but for the most part you could trace names back to an invention or the improvement of an invention.
I read the story of Henry Ford, a few years back, and when he was working on his ideas, his wife was there tinkering with him (literally, not a euphemism). She told of how she would have to remove engines from the kitchen sink before she could use it, and wipe motor oil off the counters. And eventually through hard work and innovation, they gave us the modern automobile. And the auto industry provided good union jobs and swelled the ranks of the middle class. The Fords got rich and everyone benefited.
Gerber baby foods also started with an idea. The Gerber family was struggling with the canning industry, almost bankrupt, when Mrs. Gerber first suggested that they try making baby food. Initially, her husband rejected the notion, so she left him to feed their baby, attempting to mash the food fine enough for consumption. He relented and turned a small portion of the plant into canning for infants. It went so well that within a short time, a prosperous baby food company and industry was born. The Gerbers got rich and everyone prospered.
Howard Johnson first made flavoured icecream when a boy, peddling it in his wagon. The radio, the television, movies. All started with someones idea and hard work to sell that idea.
But how are many of today's millionaires and billionaires making their fortunes? Some like Bill Gates, with an idea, but too many others with a scam.
And one of the biggest scams of late is the sub-prime mortgage industry.
In their new book: The Trouble With Billionaires, Linda McQuaig and Neil Brooks, tell the story of John Paulson and Goldman-Sachs, who cashed in big on the misery of others.
Paulson didn't invent sub-prime mortgages, only took them to unheard levels, after reading a newsletter by an aging, little-known economic consultant named Gary Shilling. While everyone else was painting a rosy picture of continued growth and prosperity, Shilling predicted a crash.
It was now up to Paulson to find a way to exploit this.
Paulson had been looking for an opportunity to bet that the housing bubble would burst. There was enough information around about the shoddy nature of many of the subprime mortgage deals—with clients who had little in the way of assets, income, or employment—that a number of close observers realized a lot of "homeowners" would soon be in dire straits, unable to meet their monthly payments. In the betting parlours of Wall Street, this represented a chance to make some serious money.
The best vehicle for betting against the housing market, as Paulson and a few other Wall Streeters had figured out, was to take out "insurance" on packages of mortgages that had been bundled together and sold as a stock. This was an odd concept that twisted the conventional notion of insurance .... What was unusual here was that the Wall Street types were taking out insurance on something they had no personal stake in, on something that involved other people's assets. It was like buying insurance on a car owned by a stranger, in the hopes of collecting money if the stranger's car crashed. (2)
It was gambling on the misfortune of others. But the problem was that the needed risks were not there. Still too much caution, and you can't make money with this scheme if people are too cautious.
So Paulson decided to take a more pro-active approach. What if he worked through a lending institution, to convince the most vulnerable to buy houses they couldn't afford? That way when they lost those homes, as they almost always did, his insurance policy "against" those foreclosures, would kick in.
This "insurance"—known as a credit default swap (CDS)—was simply a bet. One frustration for Paulson was that there just weren't enough of these stocks, known as collateral debt obligations (CDO), to bet against. So he decided to become proactive. He approached a number of investment banks with the request that they create more CDOs to sell to clients, so that he could then take out insurance betting these would fail. The arrangement Paulson had in mind was rife with potential conflicts of interest. He clearly wanted to help pick the mortgages that would make up the new CDOs. And he would obviously favour particularly risky subprime mortgages, thereby increasing the likelihood that the CDOs would become worthless and he would be able to collect on the "insurance" he had taken out.
Bear Stearns, the giant investment bank where Paulson had once served as managing director, said no to his scheme. But Goldman Sachs agreed to the arrangement, providing Paulson with his dream opportunity: a chance to bet on toxic CDOs worth about $5 billion.(2)
And when the bubble burst and $5 billion dollars worth of mortgages were deemed worthless, Paulson pocketed $1 billion in "insurance." And as his gambling continued to pay off, his net gain was $3.7 billion.
He did not earn this money, he stole it, and yet he was heralded as a hero on Wall Street. The triumph of an underdog. The Greatest Trade Ever, became the name of a book of his exploits, written by Wall Street Journal reporter, Gregory Zuckerman. How can this be?
Certainly, the Paulson—Goldman scheme set off a series of events with extremely negative repercussions. Investors purchasing the toxic CDOs lost billions of dollars, unaware that they were buying faulty merchandise. Furthermore, the scheme exacerbated the impact of the housing collapse and the near-bankruptcy of insurance giant AIG, which had sold some $64 billion of CDS "insurance" on CDOs related to subprime mortgages. AIG was unable to pay out the money it owed to those, like Paulson, who had bought insurance on now-worthless mortgage-related CDOs.
... But it gets worse. Insisting that AIG's bankruptcy would devastate credit markets, the U.S. government stepped in to prop up the giant insurance conglomerate. In a deal overseen by then Treasury Secretary Henry Paulson [no relation],' Washington bailed out AIG with $170 billion. Out of that huge pool of taxpayer money, AIG paid Goldman $14 billion to make good on the insurance Goldman had bought on its CDOs.' Similarly, it paid Paulson $1 billion.
This means that a billion dollars of taxpayer money went to ensure that Paulson was able to collect his gambling jackpot. ... So Paulson not only helped spark the financial collapse—with its ruinous repercussions for millions around the world—but he made off with $1 billion of the public's money for his role in what appears to be a crooked gambling scheme. (2)
These are the new heroes. Antiheroes who are able to garner admiration for destroying countless lives. And who we are being told we must give more of our money to, if we hope to survive. Pull out that public trough and gather the wealthy. Slurp, slurp, slurp.
It reminds me of the Irish genocide, dubbed the "potato famine". While people were starving, eight shiploads of produce a day, was leaving the island in export. The hungry masses would gather while the ships were being loaded, hoping to grab a few carrots or ears of corn that fell from the overloaded carts. But if they were caught, they were beaten or sometimes imprisoned.
That is exactly where our society is headed if we don't smarten up.
But What Does John Paulson Have to do With Us?
In 2006, while Paulson was cooking up his scheme, peddling subprime mortgages to unsophisticated would-be homeowners, on a notion that every American had the "right" to own a home, Jim Flaherty was also rubbing his hands together and frothing at the mouth, over his scheme that he said would “result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership...”
But an investigation by the Globe and Mail revealed:
... as the subprime mortgage crisis was exploding in the United States, a contagion of U.S.-style lending practices quietly crossed the border and infected Canada's previously prudent mortgage regime. New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down.
The mushrooming of a Canadian version of subprime mortgages has gone largely unnoticed. The Conservative government finally banned the practice last summer, after repeated warnings from frustrated senior officials and bankers that the country's financial system was being exposed to far too much risk as the housing market weakened. Just yesterday, Finance Minister Jim Flaherty repeated the mantra that the government acted early to get rid of risky mortgages. What he and Prime Minister Stephen Harper do not explain, however, is that the expansion of zero-down, 40-year mortgages began with measures contained in the first Conservative budget in May of 2006. (3)
And like Paulson and his ilk in the United States, there were legions of the unscrupulous, targeting the vulnerable in this country.
"The subprime lenders trashed the market. They were doing loans that no one else would do and people were shaking their heads saying, 'What are these guys doing?' " The data also revealed that scores of wealthy individuals dabbled in subprime lending at a time when many believed the real estate market was on a never-ending ride. Doctors, lawyers, stockbrokers and former bankers offered high-interest-rate mortgages to debt-laden homeowners, many of whom are now facing foreclosure proceedings." (4)
And it could very well hit us in the same way, as the Globe again revealed in 2009:
Since the subprime mortgage meltdown in the United States, Canadian leaders have assured the public that a similar tidal wave of foreclosures can't hit here. They have cited the prudence and market dominance of Canada's five most prominent banks, the conservatism of Canadian consumers and the tiny, 7-per-cent market share of subprime lenders, which is much lower than their 22-per-cent market share in the United States. Just four days ago in a speech, Prime Minister Harper said: "We have avoided the extreme of the unregulated, or barely regulated, financial and mortgage industries that has caused such grief around the world."
However, The Globe's investigation shows that while Canada's real estate sector hasn't suffered as much as its counterpart in the United States, the Prime Minister and others have grossly underestimated the impact of that small portion of subprime lenders.
... The number of subprime lenders who have initiated foreclosure proceedings isn't a surprise to anyone in the business, said Kap Hiroti, the owner of Foreclosurelist.ca, one of the companies that tracks foreclosures and supplied data for this story. "It was almost as if the lenders didn't see the big picture".... (4)
Or were they like Paulson, and did see the big picture? Flaherty allowed AIG (3) to insure our mortgages. Is there a Canadian John Paulson out there, now stuffing their pockets with our money, seeing as how the Canadian taxpayer was forced to bail out the banks when the crisis first hit?
Of course there are. In fact, many I would imagine. These people are not earning their money. They are con-artists and Canadians are being robbed at both ends.
We need to get back to our middle. During the post-war years the middle class began to thrive, often due to good paying union jobs. The rich still got richer, but we were OK with that, unless they got rich by stealing or trickery, and then they went to jail.
People bought homes and raised families, and governments could focus on issues that improved society. Public schools, healthcare, women's rights, equal rights ... All of the things that moved us toward a Just Society.
By suggesting that people like Rob Ford represent the middle class, suggests that the middle class don't care about the environment or poverty, only making a buck. How out of touch the media are.
Many lost good paying union jobs, and are now forced to work two or three part-time jobs, at minimum wage just to make ends meet. This keeps them from their families longer, and for young couples, they put off starting a family until they can afford it, which may be never.
Neoconservatives want to abolish unions altogether, instead allowing corporations to determine wages and employee standards. Many will boast that they are the children of factory workers and labourers who have made it on their own, forgetting that those factory workers were unionized, and their wages and benefits helped to keep them off the streets. And public healthcare and public education gave them the hand up they needed.
No one is really "self-made". We all had a hand in it.
The "Revolt of the Rich" is over. It's time for a revolt of the middle. But even when we vote out the neocons, we can't stop fighting.
And we have to remember that no political party and no politician has all the answers. What we need is a government that never stops questioning, and an informed public that does the same.
THINK!
Sources:
1. The Rights Revolution: CBC Massey Lectures, By Michael Ignatieff, Anansi, 2000, ISBN: 978-0-88784-762-2, pg. 111
2. The Trouble With Billionaires, By Linda McQuaig and Neil Brooks, Viking Canada, 2010, ISBN: 978-670-06419-9, Pg. 93-99
