By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is KILLING THE HOST: How Financial Parasites and Debt Bondage Destroy the Global Economy
To paraphrase Mark Twain, everyone complains about inequality, but nobody does anything about it.
What they do is to use “inequality” as a takeoff point to project their own views on how to make society more prosperous and at the same time more equal. These views largely depend on whether they view the One Percent as innovative, smart and creative, making wealth by helping the rest of society – or whether, as the great classical economists wrote, the wealthiest layer of the population consist of rentiers, making their income and wealth off the 99 Percent as idle landlords, monopolists and predatory bankers.
Economic statistics show fairly worldwide trends in inequality. After peaking in the 1920s, the reforms of the Great Depression helped make income distribution more equitable and stable until 1980.[1] Then, in the wake of Thatcherism in Britain and Reaganomics in the United States, inequality really took off. And it took off largely by the financial sector (especially as interest rates retreated from their high of 20 percent in 1980, creating the greatest bond market boom in history). Real estate and industry were financialized, that is, debt leveraged.
Inequality increased steadily until the global financial crash of 2008. Since then, as bankers and bondholders were saved instead of the economy, the top One Percent have pulled even more sharply ahead of the rest of the economy. Meanwhile, the bottom 25 percent of the economy has seen its net worth and relative income deteriorate.
Needless to say, the wealthy have their own public relations agents, backed by the usual phalange of academic useful idiots. Indeed, mainstream economics has become a celebration of the wealthy rentier class for a century now, and as inequality is sharply widening today, celebrators of the One Percent have found a pressing need for their services.
A case in point is the Scottish economist Angus Deaton, author of The Great Escape: Health, Wealth, and the Origins of Inequality. (1913). Elected President of the AEA in 2010, he was given the Nobel Economics Prize in 2015 for analyzing trends in consumption, income distribution, poverty and welfare in ways that cause no offense to the wealthy, and in fact treat the increasingly inequitable status quo as perfectly natural and in its own kind of mathematical equilibrium. (This kind of circular mathematical reasoning is the criterion of good economics today.)
His book treats the movie The Great Escape as a metaphor. He deridingly pointed out that nobody would have called the movie “The prisoners left behind.” Describing the escapers as brilliant innovators, he assumes that the wealthiest One Percent likewise have been smart and imaginative enough to break the bonds of conventional thinking to innovate. The founders of Apple, Microsoft and other IT companies are singled out for making everyone’s life richer. And the economy at large has experienced a more or less steady upward climb, above all in public health extending lifespans, conquering disease and pharmaceutical innovation.
I recently was put on the same stage as Mr. Deaton in Berlin, along with my friend David Graeber. We three each have books translated into German to be published this autumn by the wonderful publisher Klett-Cotta, who organized the event at at the Berlin Literaturfestival in mid-September.
In a certain way I find Deaton’s analogy with the movie The Great Escape appropriate. The wealthy have escaped. But the real issue concerns what have they escaped from. They have escaped from regulation, from taxation (thanks to offshore banking enclaves and a rewriting of the tax laws to shift the fiscal burden onto labor and industry). Most of all, Wall Street banksters have escaped from criminal prosecution. There is no need to escape from jail if you can avoid being captured and sentenced in the first place!
A number of recent books – echoed weekly in the Wall Street Journal’s editorial page – attribute the wealthiest One Percent to the assumption that they must be smarter than most other people. At least, smart enough to get into the major business schools and get MBAs to learn how to financialize corporations with zaitech or other debt leveraging, reaping (indeed, “earning”) huge bonuses
The reality is that you don’t have to be smart to make a lot of money. All you need is greed. And that can’t be taught in business schools. In fact, when I went to work as a balance-of-payments analyst at Chase Manhattan in 1964, I was told that the best currency traders came from the Brooklyn or Hong Kong slums. Their entire life was devoted to making money, to rise into the class of the proverbial Babbitts of our time: nouveau riches lacking in real culture or intellectual curiosity.
Of course, for bankers who do venture to “stretch the envelope” (the fraudster’s euphemism for breaking the law, as Citigroup did in 1999 when it merged with Travelers’ Insurance prior to the Clinton administration rejecting Glass-Steagall), you do need smart lawyers. But even here, Donald Trump explained the key that he learned from mob lawyer Roy Cohn: what matters is not so much the law, as what judge you have. And the U.S. courts have been privatized by electing judges whose campaign contributors back deregulators and non-prosecutors. So the wealthy escape from being subject to the law.
Although no moviegoers wanted to see the heroes of the Great Escape movie captured and put back in their prison camp, a great many people wish that the Wall Street crooks from Citigroup, Bank of America and other junk-mortgage fraudsters would be sent to jail, along with Angelo Mazilo of Countrywide Financial. Little love is given to their political lobbyists such as Alan Greenspan, Attorney General Eric Holder, Lanny Breuer and their hirees who refused to prosecute financial fraud.
Deaton did cite “rent seekers” – but in the sense that his predecessor Nobel prizewinner Buchanan did, locating rent seeking within government, not real estate, monopolies such as pharmaceuticals and information technology, health insurance, cable companies and high finance. So any blame for poverty falls on either the government or on the debtors, renters, unemployed and not-wellborn who are the main victims of today’s rentier economy.
Deaton’s Great Escape sees some problems, but not in the economic system itself – not debt, not monopoly, not the junk mortgage crisis or financial fraud. He cites global warming as the main problem, but not the political power of the oil industry. He singles out education as the way to raise the 99 Percent – but says nothing about the student loan problem, the travesty of for-profit universities funding junk education with government-guaranteed bank loans.
He measures the great improvement in well-being by GDP (gross domestic product). Lloyd Blankfein of Goldman Sachs notoriously described his investment bank’s managers and partners of being the most productive individuals in the United States for earning $20 million annually (not including bonuses) – all of which is recorded as adding to the financial sector’s “output” of GDP. There is no concept at all that this is what economists call a zero-sum activity – that is, that Goldman Sachs’s salaries may be unproductive, parasitic, predatory, and the rest of the economy’s loss or overhead.
Such thoughts do not occur in the happy-face views promoted by the One Percent. Deaton’s praise-hymn to the elites assumes that everyone earns what they get, by playing a productive role, not an extractive one.
An even more blatant denial of rent-seeking is a new book by one of the founders of Bain Capital (Mitt Romney’s firm), Edward Conard, The Upside of Inequality attacking the “demagogues” and “propagandists” who claim that the winnings of the One Percent are largely unearned. Curiously, he does not include Adam Smith, David Ricardo or John Stuart Mill as such “propagandists.” Yet that is what classical free market economics was all about: freeing economies from the unearned rental income and rising land prices that landlords make “in their sleep,” as John Stuart Mill put it. This propaganda book thus misrepresents the program that the major founders of economics urged: public ownership or collection of land rent, natural resource rent, and pubic operation of natural monopolies, headed by the financial sector.
For Conard, the reason for the soaring wealth of the One Percent is not financial, real estate or other monopolistic rent seeking, but the wonders of the information economy. It is Josef Schumpeter’s “creative destruction” of less productive technology, by hard working and dedicated innovators whose creativity raises the level of everyone. So the wealth of the One Percent is a measure of society’s forward march, not a predatory overhead extracted from the economy at large.
Conard’s policy conclusion is that regulation and taxation slows this march of economies toward prosperity as led by the One Percent. As a laudatory Wall Street Journal review of his book summarized his message: “Redistribution – whether achieved through taxation, regulatory restrictions, or social norms – appears,” he asserts, “to have large detrimental effects on risk-taking, innovation, productivity, and growth over the long run, especially in an economy where innovation produced by the entrepreneurial risk-taking of properly trained talent increasingly drives growth.”[2] His solution is to lower taxes on the rich!
My friend Dave Kelley notes the policy message that is being repeated ad nauseum these days: the assertion that “progressive moves like taxation end up hurting the economy rather than helping it. This ‘I would feed you but you might become dependent on food’ theory is central in showing how consumer societies like ours are returning to feudal distributions of wealth.” This seems to be the policy proposal of the three leading candidates for U.S. President – in our modern post-Citizens United world where elections are bought in much the way that consulships were back in the closing days of the Roman Republic.
________
[1] Anthony B. Atkinson, author of Inequality: What Can Be Done? coined the phrase “Inequality Turn” to describe when economic inequality began to widen around 1980. He was a mentor of Thomas Piketty, and together they worked with Saez to create an historical database on top incomes.
[2] Richard Epstein, “The Necessity of the Rich,” Wall Street Journal, September 15, 2016. The libertarian reviewer’s only criticism is hilarious: “Mr. Conard overlooks vast numbers of possible reforms. He never, for instance, discusses the weakening of patent law (a real inhibitor of innovation), or the arduous compliance culture that has grown up in the wake of Dodd-Frank and ObamaCare, or how zoning, rent stabilization and affordable-housing laws strangle the housing market. By ignoring the threat that regulation increasingly poses to the economy, his case for the upside of inequality is far weaker than it should be.”
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The rich trying to convince the middle-class that sacrificing the poor to the “Market Gods” is a sign of sophistication.
Can only assume that the Scottish dude never stayed around for the ending of ‘The Great Escape’. Yeah, most were caught(irony), three escaped, the others were shot. Just saying…
My new ending to the film, coming to a reality near you soon, is they all get caught, lined up and shot, their ill-gotten wealth confiscated and given back to those it was stolen from.
What differentiates our age of outrageous greed from past similar eras? Absolutely nothing. And its safe to say it will end in similar ways as well.
Again and again we run headfirst into the main problem with capitalism as a means to efficient resource allocation: the tendency towards monopoly as an end state. As it turns out you don’t need to have a monopoly on a market, just the money it runs on.
Actually the mature end form of capitalism is not just monopoly, but rather fascism.* As even a casual look at the present structure of political and economic power in the US will verify.
*Fascism as defined by it’s originator, Mussolini. — The merger of the Corporation and the State
I’m glad people like Hudson have the patience, commitment, and intelligence to debunk, time and again, the obvious economic horseshit and oligarch propaganda. I think my forehead would long ago have turned to a bloody pulp from all the desk-banging.
Excellent point! I would add that in my own experience, observing wealthy families, the brightest tend to take advantage of the rapacious money-grabbing of their slower-witted relations– using some of their ill-gotten gains to pursue intellectual or artistic interests.
“The less you are, the less you express your own life, the more you have, i.e., the greater is your alienated life, the greater is the store of your estranged being. Everything which the political economist takes from you in life and in humanity, he replaces for you in money and in wealth.”
— Karl Marx
I believe the word isn’t “greed” but “tenacity”. You should get with the program /s (in case that was missed).
Might I suggest that the key to making a lot of money in the FIRE sector is being smart about how to manipulate both the political and educational spheres of social organization.
What they’ve been able to do—since 1980—is get the political class to lower the top marginal tax rates of the 1%-5%. Pretty much all of the extra disposable income that this gave to rich people ended up in banks. Flush with extra loanable cash, bankers were provided with an incentive to take on increasingly higher levels of risk, to drive up their profits.
Money that was not actually ‘saved’ by rich people was thrown at the asset markets, which of course simply ignited a burst of utterly wasteful inflation in those markets (and that quite obviously was the intention of Wall Street all along in seeking the tax cuts for rich people).
So were they ‘smart’ in how they were able to enrich themselves? Yes, but not in a way that deserves any kind of approval within our social order.
Their manipulations did not improve the productive capacity of the economy, nor did they improve the welfare of common citizens in any direct manner (the improvements would have occurred even if the tax cuts had never been granted).
So yes, I’m willing to concede that they were ‘smart’, but only in a way that deserves the scorn of society at large. They deserve the same level of respect that we accord to confidence men who have been successful in swindling some unwitting victims.
Yes, both the Deaton and Conard books represent a renewed effort by self-selected minions of The Oligarchy to depict the big winners of Wall Street and Finance as being thoroughly deserving of their great fortunes.
The assumptions upon which they derive their conclusions are rightfully challenged by both Hudson and various readers here in the comments. I myself have argued (above) that the arguments they advance are utterly specious constructions which do not hold up under scrutiny.
But when it comes to the essential philosophical question of whether or not income inequality is something that should be tolerated, I think it is important for all of us to realize that income inequality on some level is unavoidable for one very simple reason: relative scarcity.
There is only so much beach front property. There are a limited number of the Best Restaurants, the Best Entertainment options, the Best panoramic views of the valley below. These “experiences” are limited in supply, but considered by most to be highly desirable. It is the ultimate reason why there will always be rich people: cuz there just ain’t enough of those ‘scarce desirables’ available for everyone to experience them.
With a market economy, the people who get to experience them are those who have the most disposable income/wealth. This, because they are able to outbid all others for the right to experience them in the marketplace’s daily auctions.
From my perspective, there is nothing wrong with this basic arrangement. Limited supplies must be rationed in some manner, and the markets seem to do a reasonably good job of doing that based on disposable dollars alone.
(No, it is not an approach to rationing that is flawless, for many of the buyers of luxury experiences did nothing special to deserve their ability to outbid others, or worse, acquired their ‘bidding advantage’ through illegal or unscrupulous behavior or were merely ‘lucky.’)
The point I’m making here is that it is not possible to eliminate the inequality ‘of experience’ that is ultimately governed by the limited supplies of The Best. It is for this reason that ‘The Rich will always be with us.’
The problem is not that there are rich people. The problem is that some rich people—the 1%—are able to hoard all of the scarcest ‘desirable experiences’ for themselves, instead of allowing for a more general distribution of ‘rights’ to these scarce desirables among the near-rich.
It is indeed ironic that the near rich (roughly, the top 15%-20% minus the top 1%-4%) have been the most supportive of a tax code which allows those at the very top to keep depriving them of an enhanced standard of living. In real terms, they ‘suffer’ more than everyone else (except those unemployed souls at the very bottom of the ladder) from a lack of steeply progressive income tax rates directed at the top 1%-4%.
Certainly, there are winners and losers in our Casino economy. But it doesn’t have to be anywhere near the catastrophy that it has become. Because, in the end, it’s not just about money, it’s about a larger social setting.
In California the many miles of beach front property (much of it State Parks) are protected by the 1972 Coastal Act and the Coastal Commission to protect the scenic, wildlife, and public accessibility to this public resource (the larger social setting).
The Coastal Act is regulation. Something that is diminished in the financial sector.
Deaton’s book dates from 2013, not 1913. (Michael Hudson probably was thinking of the annus horribilis when the Federal Reserve was formed.)
Angelo Mozilo for Fed chair — give Da Bronx a chance against dem Brooklyn guys!
Nice description of the economists who flack for the 1%. Thanks for this post.
don’t hear much about “judicial activism” these days
…”the key that he learned from mob lawyer Roy Cohn: what matters is not so much the law, as what judge you have. And the U.S. courts have been privatized by electing judges whose campaign contributors back deregulators and non-prosecutors. So the wealthy escape from being subject to the law.”
So Conard’s definition of wealthy is:
:innovative, creative person
Merriam-Webster’s Simple Definition of wealthy:
: having a lot of money and possessions
You have to bend the semantics a lot to defend inequality
innovative creative person: because artists are all getting rich.
My very first grad economics class happened to be history of economic thought. The prof went around the room and asked each student what they thought was the purpose of the field of economics. I answered that the real purpose and work of formal economics was to give intellectual cover to the rentier class, and that the work of the few radical economists was the rare exception that proved the rule. He was aghast.
The reason why “He was aghast” is that he had never read Karl Marx.
I wonder if Deaton or Conard ever come right out & name the concept they seem to be praising & promoting – it’s called Social Darwinism.
Waaay back when I was a college student (mid ’70’s, UMKC), Social Darwinism was viewed in the same light as fascism or Stalinism. I guess it’s AOK now as log as you don’t call it that.
Geez. Ye Olde “We are smarter and work harder” gambit so we “deserve” to engage in criminal activities to rip off everyone and everything possible.
The other side of the coin is that most of the .001% won the sperm and egg lottery by being born to wealthy parents. Nothing like being born on Third Base but pretending it’s a level playing field for all. Silver spoons and legacies make a huge difference in how one fares in life, but let’s pretend the USA is a totally fair meritocracy.
I guess the authors of those books get big buck$ from their wealthy lords and masters to write such drivel. I’m not sure who benefits from it other than the hack writers. Does anyone actually believe this hype anymore?? I don’t know anyone who does.
I’m sure that their world involves including their parents who worked hard too to get them to where they need to be. This thinking infects both the left and right (well, those on the left close enough to the center).
Where their hard work argument breaks down… all their dependants did not work hard so why should they benefit?
They’re pushing the same old “trickle down” fantasy. The imagery of a leaking catheter provides an accurate metaphor for the behavior of the ultra rich.
‘The reality is that you don’t have to be smart to make a lot of money. All you need is greed.’
You can also study hard and enter a high earning profession. Or start a business that becomes successful. Delivering needed, high value goods and services will often help you make a lot of money.
But actually, it’s not how much you make, it’s how much you keep. People of Scottish descent are five times more likely to become millionaires than other other Americans, though they tend to earn only 85% of what those of English descent earn. This, according to ‘The Millionaire Next Door,’ is because they are thrifty.
“Or start a business that becomes successful. Delivering needed, high value goods and services will often help you make a lot of money.”
Which is why over-compensated propagandists like Deaton continually cite the Silicon Valley elite as their belle ideal of 1%ers. Problem is, our society has reached the point at which they are more the exceptions which prove the rule, rather than exemplars of the rule itself.
Most large fortunes made during the past ~30 years outside of IT were not made on the basis of improving the lives of the majority. They were made by cornering markets or industries, and purchasing the legal framework needed to retain anti-competitive advantage. Even within IT, purchase of anti-competitive advantage has been a key factor in the development of “winners” and “losers”. Eulas, patent trolling, collusion to depress engineers’ salaries, anti-competitive secret agreements to keep from hiring talent from the other big players…… the lords of Silicon Valley have been party to the destruction of our civic, civil political economy during the past 3 decades. The people who praise them most loudly commonly are very ignorant of the tech sub-culture, and it’s history.
If you can stand to hear a very hard, fact-based view of the culture contemporary IT, talk to a real old retired IBMer. They don’t open up much on the matter, and many have kids in the contemporary tech economy, but they tend to deplore it’s ugliness. And they remember when we led the world in it, without being a pack of quasi-libertarian, sybaritic assholes.
Does the book’s author just assume that the skinflint Scot stereotype is true and then pull a phony “five times more likely” statistic out of thin air? I’m guessing the answer to my question is yes.
If not, please share with us the source of the data, and methodology used in analyzing the data, that supports this unlikely factoid.
One of the most deeply impoverished regions in the U.S. is Appalachia, which just so happens to have a much larger concentration of people with Scots-Irish ancestry than anywhere else in the country.
Or inherit money which is the easiest path to riches.
What is the social utility of much of modern IT? Making the already spoiled lives of the wealthy even more convenient (while doing nothing more than extracting fees from those doing the work). Silly toys. Ways to encourage further monopolization and further loss of labor value.
Great take. Thanks for the Mills quote. 1913?
Because of their ignorance of history among many other things, the neoliberal economist toadies for the oligarchs are attempting to reestablish a feudal economic order. They have not considered how that ended. Think kings and oligarchs getting their heads chopped off and a lot of chaos.. The better movie to refer to would be one about the French Revolution.
It is pathetic that he didn’t even research his movie analog, The Great Escape, enough to realize that most of the escapees were killed. According to the wiki, only 3 out of 70 escaped, 50 were killed outright, the rest were recaptured.
Mr. Deaton must have not done too well when he was studying probablility and statistics.
1996. I got more out of ‘The Millionaire Mind,’ by the co-author, Thomas Stanley.
https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474
Because I live around a number of people of Scots-Irish descent, I know many stories such as are recounted in the books. Bus drivers, janitors, government employees and others who became millionaires several times over by working hard and investing intelligently. They didn’t even have to have a successful business, and were often not highly educated. And not greedy, just thrifty.
What’s the point of being especially thrifty? Is accumulating vast amounts of currency and end in itself? The old maxim is true : It’s not how much money have that is important. It’s how well you live. Enjoy your money!!!
Being thrifty is an end in itself only in that it is a wonderful skill to help one navigate hard times. I absolutely agree that one should enjoy one’s money.
The Left is always railing about Wall Street, while descending punitively on ‘Millionaire Next Door’ types, who don’t necessarily have lobbyists, highly paid accountants, and lawyers at their beck and call.
Since “its” emergence, the dismal “science” seems to have a track record of peddling dogma by extrapolating from dubious data, mostly by sycophantic apologists. IMO, of the more insidious tenets would be that of “meritocracy”, which presupposes a justification for inequality. Stanley’s genre are lullabies for sleepwalkers…somnambulation nation being devoured by parasites.
Of course many more prisoners worked in various ways on those escapes than the few that got to USE the tunnels to try and escape.
Oh, now I finally get it, and everything is clear: those who would restrain the rich in any way are Nazis!
“…He singles out education as the way to raise the 99 Percent”
Is it mathematically possible to ‘raise the 99%’?
Only if gains are shared, which they aren’t. This alone should destroy any credibility he hoped to maintain. And he’s a Nobel* winner, which tells us everything we need to know about him. It’s a contest that can only be won by self-serving careerists.
The reality is more like the NFL (or NBA or…) …in order to get in someone has to be kicked out. The loser takes a place in the 99%.
Also known as the dog-bone economy, with 10 dogs chasing 8 bones.
* Economic Nobels are awarded by bankers. No strings attached. Really.
I agree with every word of this post. Nevertheless, I still want a 10-bagger. But I’m not greedy and I don’t want to preside in ego-gorging glory over a mangy mob of minimum wage workers — and by minimum wage I mean up to $150K/year.
Why would anybody want to be in charge of anything? That’s the problem. The people in charge are the wrong people — because they want to be in charge. The people who should be in charge are the people who don’t really want to be. Then they’d solve every problem peacefully and without the slightest perturbation. Because they just want to go home and lay around.
In the meantime, the 10-bagger is for self defense purposes only. So I don’t have to do anything for even one of these people. That’s it.
Sometimes they go outside and lie around.
“He measures the great improvement in well-being by GDP (gross domestic product)”
Bill Gates walks into a bar with 20 patrons with an average income of $50k. Instantly the average income of the room rises by 47,600%. Is anyone better off?
Only if Bill buys everyone a round.
Wealth goes far beyond money and possessions. It consists, at its roots, of the power to mobilize and direct the energies of other people. That’s why extreme inequality is so deplorable, because the losers are induced to expend their daily effort to the benefit of a very few, and generally to their own detriment.
If you think this is not so, ask yourself who defends the possessions of the rich, who builds and sustains the pyramid of society, culture and services upon whose summit the wealthy recline?
“The people in charge are the wrong people — because they want to be in charge. The people who should be in charge are the people who don’t really want to be.”
Did Yossarian say this? I don’t remember. Great!
Michael Hudson forgot to mention criminal conspiracy, financial fraud and other malfeasance like money laundering drug revenue as the Bush-Clinton Crime Family has been doing for decades..
I understand that Bill Gates stole various software programs then cobbled them together to “create” Microsoft while disguising the origin.
That’s the origin of these fortunes…
And don’t forget the Clinton Foundation which stole “large” as they used to say.
According to reports they stole at least $6 Billion (that’s with a B) from the Haiti rebuilding funds.
The President of Haiti noted that the Clinton Foundation tried to bribe him but he allegedly refused
But what can you expect if the world is really run by Satanist Pedophiles?
Remember there’s no “theory” in criminal conspiracy…
Bill Gate’s mother was on the Board of The United Way with the President of IBM who complained to her about the new wave of personal computers that was undermining the mainframe. Upon hearing this Bill dropped out of Harvard and bought the DOS operating system which was imposed on corporate America when two superior operating systems were available, Unix and Apple. Windows was an operating system designed by lawyers because it copied the MacIntosh User Interface. Apparently the Apple operating system wasn’t butch enough for the corporate apparatchniks. Windows consisted of vapor ware. Billions of man hours were lost programming this abominable operating system, witness the malware Vista and Windows 10 which everybody is dreading to adapt, clinging to the unsupported Windows 7, which kinda works.Every time there is a new upgrade you have to buy new printers and scanners to get them to work. Talk about planned obsolescence! This exemplifies the “creative” work of the copyright trolls that Bill Gates, the ultimate insider, represent, namely rent extraction for innovations he had nothing to do with creating, but because of his connections was able to control and extract huge profits from, meanwhile holding back the IT systems by decades. Was Bill Gates more creative and innovative than the rest of us? No just better connected and more ruthless. Now he is using his ill gotten gains to undermine public education in this country and around the world, a totally despicable human being, like the rest of his psychopathic class. The only way they can measure their worth is by degrading the rest of humanity because they do not have any intrinsic worth. The definition of narcissistic personality disorder. Q.E.D.
Last night on Halt & Catch Fire one of the “Protagonists” turns to the camera and Says, “I stole everything the company is founded on.” When software was selling for 250 dollars out of the new store on 5th ave, it was selling not long later for 3 dollars & 50 cents in Africa. I thought of how US consumers just paid for everything.
What does it cost to make these things? CDs were so expensive the kids just stole the music. Radio was playing the stuff free.
In my business movies & music, everything in Russia & China was stolen from Hollywood. I was attempting to break into distribution at the time. No point to it. Free propaganda for the American way.
Howard Coble a North Carolina Republican was head of the Committee for Intellectual Property. Hey, Thanks a Lot!
Feudalism worked, and neofeudalism works better.
Liberalism and Free Trade ideology was just cover for the lazy, made lazy on purpose by parents who did not want their children to suffer from work.
Just when Rochdale English people had created the Co-Ops to deal with dependency on capital by 1840s England, Free Trade, Liberalism, and India was where the stuff was made. Finance & all was gambled away. WWI and the British Empire was a paper tiger, ghost, of anything real. Nice Flag. Pomp, Circumstance.
The Royals must hate it that Kim’s big but beats them in the ratings. What’s her name with the royal baby and hats, more hats.
What good is the Fed? What good is Goldman Sachs? That they create debt from the Treasury, our Treasury, I can live with out that hobble as labor, a dumb animal.
& I read that Goldman Sachs in creating SETLcoin created such obviously a conflict of interest selling US Treasury Securities & Bonds, actually snuck ahead to make it legal.
Why can’t our US Treasury work for us without giving so much of our money for sale to the world to Goldman Sachs? What is the Treasury doing?
Bill Black said put your money in a Credit Union. Bill Black also said we ought have USPO Service banking.
This is when it comes round to Marx. Those Industrial Service banks make a lot of sense.
And in a world of Globalism, the Workers of the World had better get to Uniting. Telling them to use the new instant translator on the phone so BAs (Business Agents) know what the wages in each nation ought be so it is a fair competition, is something I have done. Twitter. Telling the BA for the Union I had a card in? I don’t know.
My “International” well Locals compete for the work and if the Canadian government fixes currency rates to benefit their Locals over the ones in the US, that is great.
There are a few things I can figure out and solve. I do not believe in Fiat currency. I just see that as Force, as weapons making the deal. And I see the Petrodollar as dead in Yemen. Sachs and whomever sold the Saudis the US Debt till the President bows his head when Prince F promises to ruin the US if some grieving souls want to sue them and theirs for death and destruction seeded by propaganda for a religion founded by a thief who shared.
Enough, I will say people do take better care of what they view as their own. At least normal people do that. Psychopaths, what, those at Sachs, well it is theirs that is theirs and yours that is theirs too.
I made up my own currency out of the understandable Insurance. Real businesses have insurance. That is the Transcendia Insurodollar. I say it gets around the flaw of Communism creating wealth, private wealth, for each citizen instead of taking it all for the state.
That didn’t help with Communism as how people got paid with elitism, access to everybody else’s wealth?
My neck hurts, gotta go.
Killing the Host is a very very important book. All it really means is we need more violence to raise wages. Violence & the Sit in worked. Where to sit? I don’t know anymore.
Robot repair facilities?
Wasn’t Edward Conard the guy who argued that the predator class earns every penny, because he was personally involved in the tapering of aluminum cans? Yes, that was his crowning achievement: not a wind turbine, not a supersonic jet, not the curing of a disease, but a tapered can of beer. Bow down to the tapered can. That is greatness. Here is a little piece from back in 2012 when Conard was a topic for his shameless elitism.
“All you need is greed” …. and I think a peer-group of consenting adults who share your greed and will promote it so long as you promote theirs.
You certainly cannot engineer a boom or bust alone. Its a team effort such as we teach in sports.
Let these 1% carry on like this and we will get to a ‘Let them eat cake moment’ when they will get their just desserts! I am watching this movie from the sidelines…
Thank you for this piece, especially for your take on Angus Deaton.
Re. 1% = rentiers vs innovators :
Would be very interesting to see the data. What exactly do the upper (by income) 1.6 million US residents do?
I am concerned though that rentier versus innovator is not the most suitable dichotomy (for the intended purpose).
Is protectionism included in rent seeking? Does it include Bill Gates’ efforts to corner the market for PC operating systems, penalizing hardware makers for providing a superior and cheaper (free) alternative to Macroshaft Windows? Is Bill Gates (primarily) a rentier? If so, are MS employees rentiers?
Personally I believe that Bill Gates’ company significantly held back technological progress on this planet. But the rentier vs innovator dichotomy does not properly separate and capture his kind.
MS blocked Unix, Linux, & X-Windows (all in free circulation) to extract payment for a much inferior product. The latter has since been developed to an approximately equal level, which entailed some ‘innovation’. Thus BG et al are innovators and rentiers. And the 99% would probably now be much better off if MS had never happened.
Hat tip to FluffytheObeseCat who brought up the broader issue of protectionism (broadly defined) in IT. And I agree with Fluffy that the average Joe has a false impression about the role of ‘innovation’ – largely due no doubt to media adulation and demagoguery.
Kudos as always to Michael Hudson for his lessons in economic enlightenment.
The Great Escape will be when the 99+% escape from the Wall Street/EU/Neoliberal/Shock Doctrine prison…
A large number of admirer of Microsoft and Apple doesn’t know the history of these two Corporations. Both of these Corporation thrived on technologies which were not innovated by themselves but stolen from Xerox (source: Movie “Pirates of Silicon valley” which is described as reasonably accurate by both Bill Gates and Steve Wozniak) . Regarding them as epitome of innovations is stupid. However , they do make excellent example of current mutilated form of capitalism.
“A large number of admirer of Microsoft and Apple doesn’t know the history of these two Corporations. Both of these Corporation thrived on technologies which were not innovated by themselves but stolen from Xerox”
This is somewhat accurate; Xerox came up with a technology that they didn’t realize would revolutionize modern computing (the mouse), and Gates basically just strong armed them off of the product by under selling its capabilities within an OS GUI framework.
It’s essentially the modern day European explorers buying Manhattan from the Native Tribes (who owned the land) for the equivalent of $24 (it’s actually around $951, if you consider the guilders that were also offered to the tribes; semantics, either way). Was it technically illegal? No. But was it amoral, even bordering off of immoral? You betcha, and that’s what capitalism is all about: profits using amoral means (because immorality isn’t necessarily wrong…it just LOOKS bad, according to a capitalist).
It’s the top 10-20% vs the rest of us. And we are getting our asses kicked WHILE those who prtect the 20% are arming up, literally (police state) and figuratively (lobbyists and legislative control).
Guillotines maybe the only way out, IMO.
Gates? Microsoft had zero concept for a “OS GUI framework”. Jobs, Wozniak, et al were allowed access to Xerox Parc to hijack tech. Apple used the tech for the Macintosh. Researchers at Xerox knew what they had, but Management (as usual) had no vision, and were ready to write off as sunk costs. Gates did what parasites always do, and copied the copy Apple swiped from Xerox.
Xerox vision was not just the mouse, it was the whole GUI concept.
Redistribution is what the plutocrats have been applying for the last 40 years. Taxes have been redistributed off of corporations and rich people and onto individuals and the middle class. Laws have been redistributed to favor the rich. Political money has been redistributed so that it comes from the wealthy so the political class serves only the wealthy. And they have the gall to deride “redistribution” as if it only worked against them.
We can look at the OECD stats. to see social mobility in the US and UK are really bad.
In the developed world they both come in second worst after Portugal (I don’t know what is going on there, it must be awful).
http://www.oecd.org/centrodemexico/medios/44582910.pdf
Nearly everyone at the top in US comes from private Ivy League Universities.
Nearly everyone at the top in UK comes from private schools.
A two tier education system and wealthy parents are the route to the top.
They are not going to tell you that and like to make out they are something special.
Don’t believe it.
40 years ago, most economists and almost everyone else believed the economy was demand driven and the system naturally trickled up.
Now most economists and almost everyone else believes the economy is supply driven and the system naturally trickles down.
Economics has been turned upside down in the last 40 years.
This was done on the basis of Say’s Law “Supply creates its own demand”.
It looks increasingly like “Supply creates its own demand” was something Say said rather than being any sort of law, as we are living in a world of chronic over-supply that is not creating its own demand.
Trickledown seems to have just been the wishful thinking of US billionaires looking for lower taxes. There is no evidence this is true and, in fact, all the evidence points to the system flowing upwards in a raging torrent.
China believed the new economics and invested massively but supply never did create its own demand. Those at the top became fabulously wealthy and almost nothing trickled down to spur consumption in China.
If only China had discovered Keynesian Capitalism rather than this rather silly new version that doesn’t create any demand.
Chinese consumption is impacted by high inequality, low wages and no welfare state.
Western savings rates have approached zero due to the welfare state safety net.
Western consumers can spend nearly everything they earn.
China has high savings rates because there is almost no welfare state and they need to save for a rainy day.
The wealthy Chinese are out blowing top end property bubbles in major cities around the world, leaving a legacy of dark towers of unoccupied, investment property.
This does nothing for China.
Using the old economics …….
High taxes on the wealthy to provide a welfare state for those lower down the scale would have boosted China’s economy.
Re-distribution would have kept the wealth within China and boosted consumption.
Free public services to maximise spending into the economy.
Higher wages and lower profits following Adam Smith’s observation:
“But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”
The nation’s hard work generated wealth, that was fed to the few, that then took it abroad.
Great!
With the new economics, the prosperity of China’s boom has been passed onto the global elite outside China.
It has further inflated global asset bubbles in top end property, fine art and classic cars.
As the boom fades the Chinese workers return to their farms and the world has some more oligarchs looking for new places to feed.
Don’t panic, all the signs suggest this system is collapsing of its own accord.
The global consumer has been too impoverished and the IMF are worried about global aggregate demand.
Policymakers are now talking of helicopter money, fiscal stimulus and redistribution through taxation.
Redistribution through taxation even came from the free-market fundamentalists at the IMF.
The IMF knows this baby is going down.
In our wonderful new, supply side, trickle down world we have taken our eye off the global consumer.
How is the global consumer these days?
1) The once wealthy Western consumer has had nearly all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
The IMF knows this baby is going down.
Reminds of a scene in The Wire.
The true innovators toil.
Perhaps this is asking the wrong question. Shouldn’t it be “Is the economy good for the people?” That is, shouldn’t the economy serve the people, not the other way around?
http://canonicalthoughts.blogspot.com/
I know it’s late to comment, but one reader just reminded me of a comment that I wish I’d been able to remember on the podium:
The great majority of escapees in The Great Escape get machine-gunned at the end.
Whats that other war time flick where the wealthy are on the run carrying what portable wealth they can, furs, gold, jewels, et al and think they have an escape sorted after bribing a few Nazis for a river passage on some derelict boat….. then are unceremoniously machine-gunned down whilst boarding….
Disheveled Marsupial… if memory serves they just let them all sink in the river and burnt the boat… wealth and all…
PS. love your work, but, slightly troubled by Austrians and a few others attempting to hijack it, bent it, to their narrative….
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