The system is rigged

gamblingNow I don’t mean to sound like a conspiracy theorist or wild-eyed ¬†hippie. But if we’re going to try to work the system, we need to understand how the system works. And by now I hope you’ve figured out that the game isn’t rigged in your favor.

The Occupy movement understood this well. Unfortunately they didn’t understand how to build a long-term movement, but that’s a story for another day.

Here is my oversimplified view of how the American capitalist system works and how it traps workers into long lives of servitude.

First let’s look at the organizing principle of the U.S.: It’s right there in the first words of the Constitution:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Does that sound anything like the place we live today? Let’s break it down:

Our Founding Fathers are rolling in their graves at how this country has begun corrupted. As a dear friend of mine once said: “Everything here has to be a business”.

Don’t get me wrong, I love this country and the good that we’ve done here and around the world is breathtaking. But it’s clear we’re not living up to our ideals. We’ve become a capitalist machine, eating up our own citizens for the sake of profit.

The way the system really works is pretty simple once you step back and take a look at it:

  • Ensure the labor force is always much larger than the work that needs to be done. This gives business leverage to keep labor costs down.
  • Destroy labor unions to keep that leverage strong.
  • Pay workers just enough to stay relatively comfortable and fed (don’t want them get violent), but not enough to stop showing up to work.
  • Use the allure of easy credit to keep control of the masses.
  • Provide low-cost entertainment so the people don’t have time to think about their situation.
  • Drench folks in advertising that leaves them with an unquenchable desire for more ¬†stuff.
  • And just for good measure, use powerful propaganda to convince people they’re doing the right thing for themselves and the country.
  • Oh, and as if that wasn’t enough, we’ll dole out shitty health care coverage to those that feed the system with their labor.

There’s a reason a mortgage is 30 years, right? They want to own you right up until those working years are over. Creating a way to pay for homes under very long term loans makes housing prices go up. It didn’t make $500,000 houses affordable, it moved housing prices up to $500,000. Cheap interest rates exacerbate the effect, driving housing prices even higher. Notice that what the typical family pays for housing stays fairly static in percentage of their income (and real dollars quite often) as interest rates move up and down. (Note, however, that another trap has been the move to double income families — both paychecks now cover the same percentage of family housing cost as one income used to — and sometimes more. But that’s a good story for another day.)

How can anyone escape the clutches of such a powerful system? Do you have to be wealthy? I believe there’s a way out of this trap and the younger you are, the easier it will be for you. Personally, I still have some distance to go, but I think I can get there. Stay tuned!

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5 Thoughts on “The system is rigged

  1. Crazy….but I agree with it…How to beat the system?
    Savvy Financial Latina recently posted…Carnival Cruise on the Western CaribbeanMy Profile

  2. Great post! Hopefully we can all work our ways out of this broken system.
    Lisa E. @ Lisa Vs. The Loans recently posted…May 2013 Net WorthMy Profile

  3. While the system may be rigged, it takes a disturbingly small amount of money to have the entire system work for you.

    Myself, a career starving-artist (treated with the low pay and dis-respect I so sorely deserve) has amassed a meagre pittance, which thank to my bountiful lack of gigs, gave me the time to figure out how to generate/extract gains from the capital markets month after month after month, let me put the money to work using a very low-risk options strategy.

    From which, my monthly bills are paid for myself and my family.

    You sound sufficiently cynical to be able to capitalize on my strategy too. Provided you can get your head around the options market!
    The Starving Artist Canada (@blerghhh) recently posted…Today’s trade report: Starbucks and ColgateMy Profile

  4. Thanks for giving a name for what I am…”pretired”. You have that understanding of the labor
    economy and servitude that seems too rare in the average “consumer”.Desparation in yes-men employees is good, and I didnt have enough of it in 2009 when I got fired.(The mortgage
    paper burning celebration was 1994) At 47 I pretired. Go Seahawks.

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