This week on the anniversary of the financial crisis, there has been a flurry of talk about the bailout. We often talk about the bailout in terms of the increase in the national debt and the lack of transparency at major banks. Rarely do we discuss it in terms of the jobs and opportunities lost as a result of it.
This bailout was literally financed on the backs of working-class people, since it cost $6,500 per family. However, it has done little to help working-class people, as the "Bailout Watchdog" Neil Barofsky has pointed out several times in detailed analyses. His and Elizabeth Warren's work show that most of the money from the bailout went to acquiring smaller banks and paying off debts, and did little to promote the lending necessary to put people back to work and get the economy moving again.
Why not take $700 billion and invest in stuff that literally gives people jobs?
$32 billion was spent on bonuses alone, and created relatively few jobs. The money from those bonuses contributed nothing to our economy and, instead, went toward lining Swiss bank accounts and the harbors of West Hampton.
On the other hand, the IMPACT Act, which costs only $30 billion, would create 2.5 million green jobs and jump-start our new green economy.
The IMPACT Act would do this by providing loans to small manufacturers - the type of businesses that have had trouble getting them from the big banks we bailed out. The government would provide loans directly to businesses that intend to create jobs, instead of to bankers that use the money for little other than living lives of luxury most of us could hardly imagine.
With just $30 billion ,almost equal than the amount the government gave away in the form of executive bonuses, we could create 2.5 million jobs in manufacturing, erasing the nearly two million manufacturing jobs that have been lost since the recession began in 2007.
Imagine what we could do to our economy with 700 billion dollars? We wouldn't be talking about unemployment; we would be talking about companies having trouble finding enough workers.
We responded to the financial system's crisis by propping it up. Why not prop up manufacturing, which has been disappearing at a stunning rate from this country over the last 30 years?
Manufacturing is the real backbone of our economy, not speculation and mounting up huge cycles of debt. As author Dave Johnson has argued, you either manufacture or borrow (until you can't anymore):
When it comes down to it, you can't have a healthy service sector unless you are manufacturing items to sell and trade. You can't pay for the restaurant bill or the insurance or the hotel room or the lawyer or even the doctor if you don't make something to sell and trade. And you can't keep buying the things made elsewhere. You can only borrow for so long.
Unlike almost every country, the United States has no real current policy to
promote domestic manufacturing. When Italy bailed out Fiat, they did on the condition that Fiat would commit to keeping its factories in Italy open. When we bailed out GM, we did it on the condition that they move factories to
Mexico.
As President Obama has said repeatedly, we can't go back to a country built on 40 percent of the profit coming from finance. Otherwise, we will slip into a cycle in which we are constantly investing in financial bubbles in order to produce wealth. The only winners we have seen in this cycle are the CEOs of big banks. Average workers will always be the losers.
If American people wish to make it as a country, we must make something.