Tapping Out

Have you ever watched mixed martial arts or cage fighting? Brutal. There are basically no rules, just to beat the crap out of the other person. Katlin Young from my school, the Minnesota Taekwondo Center, was the first woman ever to be broadcast in a mixed martial arts fight on network t.v. (Katie looks and is really tough, but she's also one of the sweetest people you could ever meet.) She got beat up really bad in this fight, but she didn't "tap out." Tapping out allows you to quit the fight when the pain is so excruciating that you can't go on any longer. You simply tap your hand on your body.

When competitors get in the ring, they are well trained-- and crossed trained. Katie started in taekwondo, but if she has no grappling skills in the ring and gets taken down, it's all over. Imagine what would happen if someone with little physical prowess and skill got put into the ring with Katie. They wouldn't last two seconds.

I'm increasingly picturing our economy and society as a cage fight. Earlier this week I moderated a pair of meetings hosted by the Family Housing Fund and the Northwest Area Foundation about a growing phenomenon: unscrupulous investors buying up homes in neighborhoods and then basically acting like slum landlords. This of course is made possible by all the previous predatory and subprime lending and the resulting spate of foreclosures. A report on this topic with a story by Steve Brandt of the Strib carried a startling fact: black and Latino families have lost an estimated $200 billion in equity in the foreclosure crisis.

I always wondered where the money went. I asked a respected economist this once, and he told me, "There was no money. It was all on paper." But wait a minute. If I hold on to my home and there is no transcation, then yes, my losses cancel my gains. But the foreclosure crisis was brought about by hundreds of thousands of transactions. In each case, the seller could have taken cash home and stuck in under their mattress. There were real money gains and losses involved. And sure enough, as I mentioned in my last blog post, lots of money was made on Wall Street.

And here we come to the uneven cage fight. We want "free" markets, but the problem is that "no rules" is a rule. It's a rule that allows the advantaged to take advantage. Wall Street made money hand over fist, in all sorts of ways. They are trained, have connections to money and power; they can shape markets, and with every transaction make a buck that turns out to be pretty risk free. How does the hard working person with only their measly hourly wage compete against this?

Their only recourse is to tap out. The question is, what happens when there's no one left to tap out?