By ComoKate
This is the problem I have with how the stock market has been sold to the public as a retirement vehicle. Prior to about 1986, half the U.S. working population had a pension of sorts from their employer.
I had an Aunt who worked at an upscale department store in Detroit
("Hudsons") as a salesclerk in the women's department. She retired in her mid 60's with a small pension which, combined with modest social security payments, allowed her to live simply, but comfortably, in the small home she and my grandmother shared.
The idea of "starter homes," of constantly moving to "upgrade" your lifestyle was not known when I was growing up. For most people, a modest home in a safe area, one that could be paid off before/at retirement was the goal.
You didn't look at your home as a personal ATM, nor did you look at it as an "investment." It was a place to live, raise children, and hopefully be shielded from the rising costs of housing/rents due to inflation.
Loyalty, good work, and a good work ethic were qualities prized by employers. They wanted to attract good workers and keep them , with decent wages, health care/vacation benefits, and pension plans. It was a win-win situation for both employers and workers.
It was a winning situation for families, neighborhoods and cities as well. Gainfully employed homeowners have an investment in their communities. They expect safe neighborhoods, good schools, roads, shops, restaurant and entertainment venues.
In short, gainfully employed members of our communities employ other members of the community. The wealth is shared, transferred about, and everybody benefits from it.
What has occurred in the last 30 years has been the transfer of wealth in only one direction. The glorification of extravagant lifestyles began in the 1980's and was promoted by our media in television shows like "Dallas," "Dynasty" and "Falcon Heights," further enhanced by a Hollywood president who threw glamorous parties for the world's jet set.
Don't discount the power of television and images. In a nation that has no real cultural or traditional base from which to draw from, we have at least two, if not three generations that have taken their cues on almost every aspect of their lives from our media. Media which has become increasingly corporate owned.
Home sizes increased dramatically, as did the purchase of items once thought of as luxuries. Wages began to stagnate but this fact was initially masked by the influx of women into the work force.
Two wage earners in the home allowed for indulgences and the feeling that all was well. Soon companies began to sell their employees on the idea that a self-funded retirement plan was their ticket to joining the millionaires club.
How many of us old enough to remember that time can still remember the slick sales pitch of “financial advisers” in spinning this dream?
What they failed to mention, glossed over, found only in the tiny print on back pages, were the risks involved with an often fickle and volatile market. They failed to mention that there was no guarantee that when you most needed your retirement dollars, they would be there for you.
The dreams were spun and employers were more than happy to no longer fund their worker’s pension plans. And so, many millions of Americans, voluntarily gave up a sure thing for a dream.
It was so covert. So easily done. Where did this new-found corporate wealth go?
The idea of off-shoring low skilled jobs began to take hold. Who wanted to make paper clips? Let someone else do the dirty work. We were told future jobs would be in service sectors, information and technology.
Everyone would go to college and be a “white collar” worker. No more manual labor! And so, the first wave of jobs were swept away to foreign shores, and few tears were shed.
Housing prices were rising and everyone felt richer; homes were now considered “investments." Demographics were ignored (what would happen in the future when boomers needed to cash out their "investments" ?).
The economy seemed to grow even as manufacturing continued to shrink.
Wages continued to stagnate, but with cheap food and fuel costs, the loss of purchasing power was masked. Housing prices began to rise giving a false sense of financial security to home owners.
Mortgage brokers and bankers began to encourage home owners, often with mass mailings of unsolicited offers, to “tap” the ever growing equity in their homes for everything from vacations and automobiles to paying for their childrens college tuitions.
But who, really, could afford these new loans? For the first time home buyer, with housing prices a minimum 4 times (often more) their annual income, how could they attain the American Dream?
This was a question banks were too happy to provide a “solution” for; sub-prime mortgages with exotic payment arrangements. The dream continued to be spun and mortgage brokers were employing seemingly anyone with a beating heart.
Banks began to slice up loans in pieces to be sold, repackaged into unrecognizable products sold on the stock exchange. The redistribution of wealth continued. But this time, the flow only went in one direction.
The housing bubble burst, as only it could. The American worker began to watch not only his “retirement” money disappear from his self-funded plan, but the equity in his home drop as well.
Consumers began to consume less due to survival. More jobs were lost. Now the spin doctors and ream weavers had to come out in earnest.
Monthly and quarterly data is released telling Americans that everything is rosy on Main Street; there has been a RECOVERY gosh darn it!! The headlines declaring it have been printed in bold; how could you miss it?
The “data” proves it (data, which is often revised in very small fonts). Anyone stating otherwise is labeled mentally deficient, anti-American, or worse.
But where is this “recovery” in fact? It certainly hasn’t been on Main Street. A walk down Main Street will show vacant homes, families displaced by job loss, businesses once serving those families boarded up. The small businesses of America have been feeling the pain as well.
So where has the money gone? Not into the pockets of American wage earners and their families. Not into the pockets of the small business owner.
Working class and poor Americans have been told “we all have to make sacrifices.” Unions are being vilified. We are being told that cuts to social security, public schools, medicare and unemployment benefits are necessary.
Our elderly, disabled, children, our sick and displaced workers are being told they must make sacrifices.
All of the programs, these safety nets for Americans, are funded by public tax monies, tax dollars paid by working Americans to ensure their elderly will not be destitute, their children will have a good education, their sick will not die on the streets, that emergency help is available to those whose jobs are lost to corporate greed.
Corporate America has seen record profits during this recession. Multi-national banks have been bailed out repeatedly. CEO bonuses continue for those that sack American workers.
Where is the sacrifice on their part? Or is the sacrifice to be confined to the working class and poor? The transfer of wealth continues.
