I’m working my way around to the INET talks that I missed, and this one by Jamie Galbraith is very much worth viewing. It takes a while to build up steam, so be patient.
Galbraith has marshaled a great deal of cross country data over time, and shows how changes in equality happened in a very large number of economies in parallel. He explains, persuasively, that the most plausible culprit is changes in the financial regime.
Given the considerable evidence that inequality is costly even to the wealthy, Galbraith’s analysis provides another reason for reining in the major dealer banks.
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Inequality is similar to the word imbalance. If we have an imbalanced system of monetary policy then we should have aninequality of living standards amongst the populace. People which are oriented towards economics/finance must work towards creating a balanced monetary system in order to create a more positive society.
Some key imblances in monetary policy are the fact that the central bank only conducts policy through the financial sector and not the broader economy. It is also unfair that profit driven banks have the priviledge of creating money.
The 23nd century counterpart to Kevin Phillips will find this book especially useful.
“”To begin with, there was a popular sense of national decay, with economic, moral, and patriotic components. Rome and the later three [the Spanish, Dutch, and British empires] all had that discomfort, although the lower orders and their sympathizers worried more about the decline of economic livelihood, treatment, and opportunity, while conservatives deplored national erosion more in terms of patriotism, family, virtue, and morality…. Each time, finance rose at the expense of industry, agriculture, and other earlier forms of economic activity. This alone could fill an entire book. The provincial parliaments of Spain complained about how wealth was being taken away by foreign bankers, lenders, and merchants. Holland’s example worried Britons who were all too well aware of it, but the United Kingdom ultimately followed a similar path.” (Emphasis added.)
Phillips’s thesis, essentially, is that when moving money around becomes the engine of a great power’s economy, it’s a sure sign of decline and fall.
http://www.minnpost.com/politics-policy/2009/02/dean-baker-v-kevin-phillips-reining-financial-sector
I’d like to read that. In Hume’s essays on money and public credit, avoiding the experience of the Dutch Republic is in the background.
Thanks beowulf for the link and the quote. History has been rhyming for millenia and it seems to always come as a surprise.
It’s quite depressing that we seem to be living in the modern version of this “Empire succumbing to decadence” phenomenon. As a species we have serious blind spots.
I’ve called it decadence for decades, whereas Steven Covey (7 Habits of Highly Successful People) called it the growth of “style over substance” after WW2. The birth of public relations and “spin” were a part. — I personally saw it in aerospace industry management as “all about ME” rather than “it’s all about the job.” Focusing on the job requires teamwork and realizing we are all a community. Focusing on “ME” is all about resume building and “what’s in it for me.”
Since the 1980’s this creeping decadence has, in my opinion, been pretty much a national (global?) cultural process; and not restricted merely to financial and political spheres.
My question is, bluntly, how did the British find a “soft landing” compared to the Romans/Spanish/Dutch?
I think there are several aspects:
(1) They dismantled most of the Empire voluntarily rather than waiting for revolutions to oust them;
(2) They elected first David Lloyd George’s Liberals, and then Clement Atlee’s Labour Party, both of whom engaged in redistributive policies.
If you want to go earlier, you can also look at the Victorian-era nationalization of the East India Company.
These thoughts lead to a third thought:
(3) Just enough of the elites were willing to keep financiers under the thumb of the people’s demands. Now, it absolutely does benefit the elites to do this, but too many of the elites don’t seem to *recognize* that it benefits them to keep financiers under control.
Though actually I suspect being an island helped Britain too. Once things started falling apart, it was far less prone to opportunistic invasion than most other places.
The British had a relatively friendly common-language/culture heir to hand Empire off to: the USA. We won’t be handing anything over to China so smoothly, although Nixon and Clinton, for example, in hindsight explicitly worked to pave the way.
reining in the major dealer banks
What does this mean? Do what to them?
Here in Canada, people don’t seem to grasp that there is inequality now approaching US levels. Because real estate is still going up, people don’t realize how wobbly their situation is.
Most people don’t understand how money is injected in the system and seem to believe that people making 500K “deserve” that money.
When people making 70K believe that those making 500K “deserve” their money, it is very easy for them to feel empathy when the rich complain about paying too many taxes.
They don’t seem to realize that a large percentage of those making 500K are directly benefiting from the money printing and the credit bubble. And if they are making easy money, they should be paying easy taxes.
For some reason, the average Joe here in Canada has been brainwashed into believing that those making 500K work harder than those making 70K. Go figure.
I wonder if those feelings will remain when the real estate bubble finally pops.
500K is big money, eh? Canada has a lot to learn….
Slightly less than $500,000 in income is the start of the 1 percenters in the US. It is a big deal
The bottom of the top 1% are much closer to the top of the bottom 30% than they are to the top 0.01%.
The slogan shouldn’t be taken so literally.
Why stop with the major banks? Why not ban all credit creation and bailout the entire population equally (Steve Keen’s “A Modern Jubilee”) till all credit debt is paid off?
We can have a modern economy without stealing purchasing power (“credit creation”) and for that matter even without much honest lending of existing money for interest. A combination of fiat simply spent into existence and genuine private money supplies should provide all the money our economy needs.
If you understand money as a tool for conveying decision…
It becomes immediately clear that:
1. Inequality not only leads to instability…
2. but also to a reduction in the ability of the group to produce effectively
3. That credit creation is a fundamentally political act (and should end the fantasy that political influence is avoided by conveying the function to a private, narrow group)
4. Wealth/income concentration equates to political decision concentration and forms a feedback loop producing a narrowly focussed groupthink further tearing the social body apart.
5. The role of ‘financial services’ in an economy should be minimized and de-centralized… it’s not the ‘brains’ of the social body… nor the blood… its the blood vessels. We certainly need them… but their job is to serve the brain and blood… NOT THE OTHER WAY AROUND.
Decision Technologies: Currencies and the Social Contract
Issues in Scaling Civilization: The Altruism Problem
Just trying to look at things in a little different way… never know what a different perspective can bring.
And it seems to me that the brief argument I make re the altruism problem… which is really a simple scientific observation and not an idological view at all… pretty much obliterates rationalizations for Randian Objectivism and laissez fairre economics.
3. That credit creation is a fundamentally political act (and should end the fantasy that political influence is avoided by conveying the function to a private, narrow group) Tom Crowl [emphasis added]
Well said. Government (hopefully a democratic one) is the ONLY institution that should be allowed to commandeer resources and labor. Private credit creation in a government enforced monopoly money supply DOES commandeer resources and labor and thus should be abolished. How? Either forbid private credit creation OR abolish the money monopoly.
inequality is costly even to the wealthy
That is only if you measure cost to the wealthy in terms of dollars or real wealth. Not really, proximately. Only ultimately, but they, as Marxian avatars of capitalism, don’t, can’t, care about that. Yes, if the wealthy ran a country sensibly, they would make themselves absolutely bigger fish in a bigger pond, by feeding the prey enough to survive, or thrive. But that ain’t what they want, what standard capitalist econstupidity makes them want.
As a class, the wealthy usually act to make themselves relatively bigger fish in a smaller pond, and never let the little fish live, or get bigger. They usually do this to the extent that they exterminate their prey, the poor, and thus eventually destroy themselves in a classical predator/prey cycle. But usually that takes several generations. So the descendants of the brilliant oligarchs ultimately end up saying: “Oh, shit!” with everybody else, maybe just a little later.