I felt compassion watching U.S. auto CEOs beg for bailouts last week.

So they’re incompetent, shortsighted and venal – nobody’s perfect. And at least they produce items you can use to get to the mall or the cottage, if a more suitable foreign car is unavailable. You can’t say that for the titans of banking and finance, proud devisers of credit instruments, collateralized debt obligations, swaps, etc., literally ad nauseam. (I mean "literally" literally.) They are the villains here. They gave us the uneconomy.

Yes, you need banking and credit to make an economy work. But their alternate universe shaved to infinitesimal levels the relations between their financial gimmicks and the real world of housing, food, health care, transport – then ground them into tinier bits with even less connection to reality, and multiplied the scraps magically into huge profits. It worked on paper, for a while. Twenty years ago, I read about these boys with their toys in books like Michael Lewis’s Liar’s Poker. They were disgusting, but that’s all. It didn’t occur to me they could wreak havoc on a whole planet.

Yet where does empathy and aid go? To the uneconomy. In the trillions.

"My focus is on the financial sector," said U.S. Treasury Secretary Henry Paulson. Auto makers ask for a mere $25-billion and get smacked.

Where did this notion come from, that you don’t need to make anything people use?

I’ll tell you: free trade and globalization. You "offshore" everything imaginable because desperate foreigners will work for far less. Among the few things you can’t offshore are natural resources – so Canada is in relatively better shape – and housing, which leaves it as a rare "real" source of wealth in the United States.

What’s left to do? Reap the profits, for which you need some financial gimmickry that somehow moves the wealth now being created elsewhere into your pockets.

What happens to the mass of American workers in this script? There’s not much left to make; it’s all been offshored. So their task becomes to consume, not produce. But they make little money at the pathetic, part-time jobs they can still scavenge, so they must consume on credit. It’s the uneconomy all over again, but at the bottom end.

The U.S. work force and its elite weirdly mirror each other. They’re both engaged in finance and credit – none of them produce anything useful.

This decouples production and consumption. It’s the opposite of Henry Ford paying his workers enough to buy the cars they made. Yet all they’re trying to do in the United States now is to re-enable consumption by freeing up credit, for those at top and bottom, piling on more credit to buy things often made in China, which then recycles it into more debt at home, amplifying the crisis. This isn’t about comparative advantage unless you think America has a natural genius for financial gimmickry and debt. What happens when your role in the global division of labour is only to borrow and consume? At some point, the other guys may decide to eliminate the middleman and produce for themselves, like Ford and his workers.

I suppose there’s a certain sense to expecting the few people still productive here, like auto and forestry workers, to take the biggest hit. Hey, they’re still making things and get decent wages, let’s put an end to that!

So I’m glad my part-owner, BCE, may have lost the financially complex buyout it planned for itself. They had already fired workers to cover the debt load. Now they’ll have to spend some of that found money building (!) phone lines and wireless networks. Experts say a problem at Bell was always that those at the top found it boring. They wanted to make deals. But hey, people talking on phones? What’s boring about that? Look around you in the street!


Rick Salutin

Rick Salutin is a Canadian novelist, playwright and critic. He is a strong advocate of left wing causes and writes a regular column in the Toronto Star.