To the editor: Nicole Gelinas rightly maligns the toxic influence of the megabanks on the American economy, but she shies away from the broader implications of her argument. What would a less leveraged America look like? ("The real reason for Washington's derivatives gift to banks," Op-Ed, Dec. 24)
The answers to deleveraging are uncomfortable, which is precisely why Democrats and Republicans don't paint that picture for us. Deleveraging, at the very least in the short term, means fewer new homes and cars, fewer new clothes and fewer dinners out. Deleveraging implies a shift from an economy of spending and consumption to an economy of savings and production.
Will America erect tariffs to protect fledgling industries and foster new ones? Will the federal government assume the role of debtor in lieu of the megabanks and embark on a Keynesian spending spree to boost employment and wages where the private sector fails to meet our expectations?
"Higher wages" are always good, but wages alone will not transform an economy that outsources production to the developing world and depends on the transactional largesse of the financial industry to meet our expectations for the good life.
Kurt Hofer, Altadena
To the editor: I am flabbergasted. Nicole Gelinas, who contributes to the conservative Manhattan Institute's City Journal, has joined unions, liberals and lefties like myself in identifying the immediate cause of our domestic debt crisis: "American workers are not earning enough."
Americans borrow not because Wall Street corrupts, she argues, but because they can't otherwise pay for decent housing, schools, healthcare and college for their kids.
Is the drop in real income and rise in "unsustainable debt" since the early 1980s related to the concomitant erosion of social programs, progressive taxes, living wages, public health, and to the unregulated pursuit of profit at home and overseas? Do the "far deeper economic problems" that Gelinas invokes lead us to the super-rich who have hijacked our democracy?
Andrew Apter, Santa Monica