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The Borrowed Comfort: A Collimate Reality of Capitalism

By Zinnia Aurora

The God emperor hurtled the Land of Stripes and Stars into the lap of the world on July 4, 1776, the prospective chamisal of cathedralized freedom and liberty. It was one to connundrate the future of simplicity and emphatic living. With a healthy democracy (post the Tecumseh- induced horror of the Civil War), a system of far-reaching civil liberties and a good economy, this federation stood afresh, ready to collude its Darwinism with an innuendo struck charity towards the world.

The country here - the United States of America - a conglomerate of materialism that stood on a fragile scaffolding of insatiety had a gargantuan task of learning and persevering post-independence. With a pragmatic policy of Isolationism in the initial years, followed by a rogue policy of harbinging the will to save every nation-state’s democracy , the United States moved from self-sufficiency to all-round sufficiency, so much so that it retrieved itself into a state where it took being unsatisfied as an art form to cherish and thereafter, conquer (to no good of course).

Post WWII, standing as the sole deal breaker for the world, it held the reins to the existence of a global order that could either bring stability or abhorrence, to say the least. Before entering the global fora, when green pastures of the Industrial boom flowered the Springs of the confederation, the US had been able to secure its citizens - the poor, rich, super rich and super super rich - the basic necessities which included a wholesome Turkey on thanksgiving and what not. The nation, from far-quarters, seemed to be living the life and this dreamful nightmare was tagged the American Dream. A modern, hard working man with a dedicated passion to rise above the normalcy of commonness is as free to achieve a Dollar compared to a Wolf fleshing out money on Wall Street is what this dream is about. It constructs in you, a robust internalization of rendering yourself to the service of the almighty penny, like a slave to the tottering bliss of the fat man’s plate. Keeping this in mind, your average Liam or Noah was seen culturing himself with books, breeding with the library’s pearls to the extent that he forgot himself and his own opinions and rationality, imitating the manufactured understanding of being a success story. Little did he know that he was slaving himself to the kaputalist way, one that he was made to conceive himself into and help the kaputalist buy another one of his Beverly Hills’ massacre-ornament. This is how America works, this is what America is.

The point of focus is that prosperity for the pseudo-superpower of the day rests in demand. The US is often referred to as a Demand Economy, a phenomenon of sorts that is unique to the nation and has been seen to contagiously infest upon others who have followed it.

Demand is generally seen as a healthy indicator of the economic prowess of a nation because it essentially reflects the industrial size and purchasing power. This demand is constituted of an individual’s willingness and ability to buy a good or a service at a given price. The two main constituents here - willingness and ability - have been foraged by the American understanding to the extent of a toxification of the economy. Let us understand the two realms individually first.

The willingness of an individual is created through a hierarchical pattern of needs which, after a particular point transform into wants. Abraham Maslow cradles with this idea through his Hierarchy of Needs. He expounds a ranking of sufficiency achieved on different levels of satisfaction.

Maslow's Hierarchy of Needs is often cited as a possible basis for a fuller understanding of the individual's needs, particularly with regard to Quality of Life.

A large number of middle class Americans and lower-middle class Americans are seen to enjoy the Physiological and Safety needs, which implies that the cohesive availability of the basic amenities like food and shelter are available to most, even if it’s a rented lease of life. The needs (other than the bottom two) or what one could categorize as wants, owing to their contingency lying more upon the state of the individual rather than external aid and positive provision of resources, are schematized. Belonging, love, self-esteem and self-actualization are moduses of singular efforts and mentality of the individual and not the flippant breezes and storms of overt stimulus. But, this stands modified in the States, more so across the globalized North. Commodification of ubiquity is the new trend of the vibrantly B&W West. Demand for an individual is externally created rather than a self genesis of it. You are made willing to swipe right and Chanel-ise your wardrobe. A sense of depravity is composed into the being of the poor so much so that this post-scarcity civilization of the States creates needs to facilitate resources rather than supplying resources for completion of needs.

“I suppose one answer is that Americans have succumbed to rampant consumerism. Go back to a home built before we had to have everything, for instance, and check out the size of the closets. Our house in Cambridge, Massachusetts, for example, was built in 1890. It has no closets whatsoever. Houses in the 1940s had closets barely big enough to stand in. The closet of the 1970s was a bit larger, perhaps deep enough for a fondue pot, a box of eight-track tapes, and a few disco dresses. But the closet of today is a different breed. "Walk-in closet" means that you can literally walk in for quite a distance. And no matter how deep these closets are, Americans have found ways to fill them right up to the closet door.”

Conglomeratism of thought, no different than the propaganda model, swivel our buoyant equilibrium into a fallacious equilibrium that parasitically closes in on our satisfactorily unsatisfied nature. We normalize the unsatisfied as a way of life, there’s always something one does not have. One jumps from a loaf of bread to a sandwich to a croissant to aascargo board of unlimited wants. What is different here, however, is that these are supplied and facilitated by resources(remember- post-scarcity?). Even if you do not need it, you want it. If you do not have it, you pain yourself through scenarios of halted living, metamorphosing(or is it the other way round) into a doom of devastation. Hence, now that one is ready to give it his all, just to own that life-saving ostentation, you have succeeded in advertising him/her into willingness.

Now comes the ability. Ability here is the availability of means to correspond one’s willingness to the possession of the product desired. The Diners’ Club is the one to credit for the exponential increase in the creation of the ability aspect for Americans- the start of credit cards. This can simply be understood as a temporary loan available to you in your pocket, an instrumentality of utilitarian economy which rises above rationality. The easy availability of loans and credit cards led to a debt driven ability to afford the willingness incorporated in people through the good old fashioned advertising, one that deconstructs the basic ethos of monetary awareness into titters and tatters of converting extravagance into needs. Hence, the increasingly easy availability of loans, bonds and credit cards, especially after the Glass-Steagall Act was repealed, was seen as the genesis of ability. The consequences were a temporary gumption of deep pockets and then, the 2009 crisis.

The Glass-Steagall Act, part of the Banking Act of 1933, was landmark banking legislation that separated Wall Street from Main Street by offering protection to people who entrust their savings to commercial banks. Millions of Americans lost their jobs in the Great Depression, and one in four lost their life savings after more than 4,000 U.S. banks shut down between 1929 and 1933, leaving depositors with nearly $400 million in losses. The Glass-Steagall Act prohibited bankers from using depositors’ money to pursue high-risk investments, but the act was effectively undercut by looser restrictions in the deregulatory environment of the 1980s and 1990s.

“Another answer—the other half of the problem—is the recent explosion in consumer credit. The average American family now has six credit cards (in 2005 alone, Americans received 6 billion direct-mail solicitations for credit cards). Frighteningly, the average family debt on these cards is about $9,000.”

Ability and willingness, combined with a given price gives DEMAND, something so deliciously desired in the commercial market. This demand, as previously explained, operationalizes a debt-driven demand which runs on borrowings and mortgages and credit, a severely hazardous debt trap, if you will. As the demand increases, debt increases. As debt increases, your EMI increases and as that increases, your prospective demand shivers itself down to the broiled mass of confusion and bankruptcy. Before people realise that it's time to pay back, the economy peaks until people start taking too many loans which leads to a pathetically sad left shift (could have just made it right in the first place). This is how the business cycle functions except it is not always easy for an economy to resurrect itself with the power and might it had or enjoyed previously. It becomes a joke on the poor and a Henry Paulson-blessing in the form of the enormous bailout in Troubled Asset Relief Program for the rich, the ones responsible for devastation. The goal of TARP was to mend the financial situation of banks, strengthen overall market stability, improve the prospects of the U.S. auto industry and support foreclosure prevention programs. With $700 Billion in its kitty, TARP was used extensively in the Repurchase of eight most preferred banks and four other major areas

$82 billion was set aside to bolster the auto industry ($2 billion of this was cancelled)

$70 billion was to be used to support the American International Group (AIG) ($2 billion of this was cancelled)

$46 billion was committed to help Americans avoid foreclosure

$27 billion was dedicated to programs to restart credit markets

The overly generous executive compensation and the bonuses that were paid to top executives when the bailout funds were needed to make the economy stand on itself were viewed in a bad light by the nation. It garnered polemical views and the Treasury was bashed for its lax attitude since the hard earned money of the taxpayers was handed over in the form of ‘TARP Bonuses’ to those who were not in need of the same.

"According to the Treasury, the government’s investments in TARP earned more than $11 billion for taxpayers. The government also contends that TARP saved more than 1 million jobs and helped stabilize banks, the auto industry and other sectors of business. As with most government programs, TARP also sparked criticism. Some opponents believe too much money was pumped into the plan and that funds weren’t used wisely. Critics also say the program gave banks a free pass for their financial mismanagement."

What came out of this was a self-evident and catastrophic (purposely or otherwise) lackadaisical attitude of the government’s financial watchdog. Various economists like Gary Gorton term this collateralized debt obligation as a menace that could have been easily avoided or even escaped had proper intentions and management been in place. A similar trend was seen in India in 2019 when the Reserve Bank of India looked into possible measures to avert the Non-Banking Finance Companies crisis combined with the Non-Performing Assets’ disaster. Reserve Bank of India (RBI) intended to establish special-purpose vehicles akin to the Federal Reserve’s Maiden Lane instruments created to rescue Bear Stearns Cos and American International Group Inc., or AIG. Other measures discussed included creation of a land bank and refinancing maturing loans to lubricate the economy. What one gathers from this is that the ubiquitous shadow baking culture has taken a toll on economies of developed and developing nations. What is interesting to note, however, is that one is still not ready to learn. Lessons remain mistakes until they’re corrected.

Barack Obama termed this as the ‘culture of irresponsibility’, one that has not significantly been changed afterwards either.

The problem does not end here. With the cosmic plethora charading recognition to this domino effect, the sole voluntary contender of globalization (the US of A) has ensured that the entirety of the world gets pulled into opened markets and bashed economies, exception being the former G-8 nations (G-7 post the Crimea annexation). These economies, with their vast fiscal simony and colluding hegemony at the international financial and monetary organisations, have managed to shun all boundaries in vast markets like India and the Latin American nations. Once the economies open up, a systematized structure of the Demand Economy (read Debt Economy) arises. The resurrection of protectionism is, however, not in a position to fend for itself. Its weakened economic strength and heavily powerful political disposition makes it an instrument of destruction, making it repel the status quo. The hands of nations are tied by the rising borrowings, especially since the pestilence has begun.

Foraging flames of fortunes past have been taken over by Long Lost limber living aghast. The trending trail of a loaned life has reached all parts of the world with Adam’s hands coercing the world’s mind, body and soul into a blithering garth of perdition. Ergo, prosperity is seen to crystallize itself into borrowed comfort, one that does not last long but trickles into the figuratively needy as the elixir of survival (excluding food, shelter, health of course).


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