Musings on the Coast: The Economic Determinist

By Michael Ray.

By Michael Ray.

As I perambulate about the community, I often am asked what I do, as in, who are you? My kids are not certain, since I do not seem to have a normal job with normal hours like other fathers. Yeah, I go to meetings and talk on the cell and text and email. I’m on boards. I write enough to sometimes say I’m a writer. I travel a lot and I’m a waterman. And my extended and rambunctious family supports each other in our involvement in myriad community activities. I publish my own economic blog, which started out as words on paper that was mailed.   And so on.

But what I really am is an economic determinist, like Karl Marx, the inventor of Communism, whose real contribution to economic philosophy is not Communism (which is a failure), but rather the idea that the economic structure of a society precedes its social structure.

In this, he was profound.

Prior to that, the economics department of any university resided within the philosophy department, as though economics was simply another philosophical whimsy and not worthy of its own separate and equal study.

Still reading? Good, because now comes the part where I tell you if you are an economic determinist you must also be a cynic. Its premise is to recognize that almost all social and societal behavior is predicated upon personal gain. There are no exceptions. It is Darwinian. It is predictable.

That is where religion comes in, and government, and police departments and armies, and…oh my, cultural values. They place governors on expected selfish behavior.  They trump it.

There is only one exception: the personal excesses of those who do the governing. Those privileged few exempt themselves.

Which brings me to our big banks.  There are a half dozen deemed Too Big To Fail.   You know the names.  Back in the day, I worked for one, Citibank, in its world headquarters in NYC.   It was on Park Avenue.  I lived two subway stops away.   We thought we were the best and we were arrogant.

Our chairman, Walter Wriston, was a legend. Repeated presidential administrations offered him positions like Secretary of Treasurer, and his repeated reply was, why would he give up real power for something transitory in government?

He knew he was the wave of the future.  Citibank was changing what a bank was.  But it threatened other big banks.   Either change too or become extinct.

Flash forward to the near de-regulation of the banking industry by 2004. It occurred through both Democratic and Republican administrations.   Both were bought.

You already know the results. It was the biggest financial meltdown since the Great Depression, except for those banks deemed Too Big To Fail.  The United States government saved them by turning them into de facto agencies of the U.S. Government.  This is called nationalization, also socialism.

Now it has taken a truly sinister turn.  Too Big To Fail has become Too Big To Jail.  Read the direct quote below from Attorney General Eric Holder at a recent Senate Judiciary Committee hearing:

“I am concerned, that the size of some of these (banking) institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy.”

Yeah, I am an economic determinist.   Rules governing aberrant behavior do not apply to those who make the rules. They will always rip you off.

Even President Obama, who Wall Street loved to hate in the last election, has been rolled.   His administration has confirmed if you are big enough, there are no consequences.  None.  If you break the bank, the government will rescue you.  If you break the law, the government will not prosecute.  You are immune.

But hey, remember I am an economic determinist.  I also am a landlord and let me tell you, giant banks pay us the most rent and we covet their occupancy at our various spaces.  It is the same as renting to the United States government.   They pay the highest rates and are socialistic and nothing can ruin them, ever.

I am not even guilty of hypocrisy.  Only of cynicism.


Michael Ray grew up in Corona del Mar and now lives in Laguna Beach.  He makes a living as a real estate entrepreneur and  is involved in many non-profits.

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