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Yves here. If you haven’t had the chance to read it yet, a seminal text on the origins of our “liberal” economic system is Karl Polyani’s The Great Transformation. Notice that this post takes “the economy” as the organizing principle for society as a given. That assumption need to be challenged more often.
By Tim O’Reilly, the founder and CEO of O’Reilly Media Inc. His original business plan was simply “interesting work for interesting people,” and that’s worked out pretty well. He publishes books, runs conferences, invests in early-stage startups, urges companies to create more value than they capture, and tries to change the world by spreading and amplifying the knowledge of innovators. Twitter: @timoreilly. Adapted from WTF?: What’s the Future and Why It’s Up to Us, with permission from HarperBusiness; cross posted from Evonomic
Future economic historians may look back wryly at this period when we worshipped the divine right of capital while looking down on our ancestors who believed in the divine right of kings.
Business leaders making decisions to outsource jobs to low-wage countries or to replace workers with machines, or politicians who insist that it is “the market” that makes them unable to require companies to pay a living wage, rely on the defense that they are only following the laws of economics. But the things economists study are not natural phenomena like the laws of motion uncovered by Kepler and Newton.
Right now we’re at an inflection point, where many rules are being profoundly rewritten. Much as happened during the industrial revolution, new technology is rendering obsolete whole classes of employment while making untold new wonders possible. It is making some people very rich, and others much poorer.
I am confident that the invisible hand can do its work. But not without a lot of struggle. The political convulsions we’ve seen in the United Kingdom and in the United States are a testament to the difficulties we face. We are heading into a very risky time. Rising global inequality is triggering a political backlash that could lead to profound destabilization of both society and the economy. The problem is that in our free market economy, we found a way to make society as a whole far richer, but the benefits are unevenly distributed. Some people are far better off, while others are worse off.
Many discussions of our technological future assume that the fruits of productivity will be distributed fairly and to the satisfaction of all. That is clearly not the case. Right now, the economic game is enormously fun for far too few players, and an increasingly miserable experience for many others.
As the incomes of ordinary consumers stagnated, companies kicked the can down the road a few decades by encouraging them to pay for goods on credit, but that short-term strategy is crashing down. In The Marriage of Heaven and Hell, written during the most hellish days of the first industrial revolution, the poet William Blake issued what might well be a rule as certain as those issued by any economist: “The Prolific would cease to be Prolific unless the Devourer, as a sea, received the excess of his delights.”
We can wait for the push and pull of the many players in the game to work things out, or we can try out different strategies for getting to optimal outcomes more quickly. As Joseph Stiglitz so powerfully reminded us in his book of that name, we can rewrite the rules.
The barriers to fresh thinking are even higher in politics than in business. The Overton Window, a term introduced by Joseph P. Overton of the Mackinac Center for Public Policy, says that an idea’s political viability depends mainly on whether it falls within the window framing a range of policies considered politically acceptable in the current climate of public opinion. There are ideas that a politician simply cannot recommend without being considered too extreme to gain or keep public office.
Once we’ve pushed the Overton Window wide open, we can start working toward more desirable futures, in which machines don’t replace humans, but allow us to build a next economy that will elicit the WTF? of astonishment rather than the WTF? of dismay.
Asking the Right Questions
I’m not an economist, a politician, or a financier equipped with quick answers as to why things can or can’t change. I’m a technologist and an entrepreneur who is used to noticing discrepancies between the way things are and the way they could be, and asking questions whose answers might point the way to better futures.
Why do we have lower taxes on capital when it is so abundant that much of it is sitting on the sidelines rather than being put to work in our economy? Why do we tax labor income more highly when one of the problems in our economy is lack of aggregate consumer demand because ordinary people don’t have money in their pockets? When economists like former Treasury secretary Larry Summers talk about “secular stagnation,” this is what they are referring to. “The main constraint on the industrial world’s economy today is on the demand, rather than the supply, side,” Summers wrote.
Why do we treat purely financial investments as equivalent to real business investment? “Only around 15% of the money flowing from financial institutions actually makes its way into business investment,” says Rana Foroohar. “The rest gets moved around a closed financial loop, via the buying and selling of existing assets, like real estate, stocks, and bonds.” There is some need for liquidity in the system, but 85%? As we’ll see in the next chapter, this great money river is accessible only to a small part of our population, and relentlessly directs capital away from the real economy.
Why do productive and nonproductive investments get the same capital gains treatment? Holding a stock for a year is not the same as working for decades to create the company that it represents a share of, or investing in a new company with no certainty of return.
John Maynard Keynes recognized this problem eighty years ago during the depths of the Great Depression that followed the speculative excesses of the 1920s, writing in his General Theory of Employment, Interest, and Money: “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”
Keynes continued, “The spectacle of modern investment markets has sometimes moved me towards the conclusion that to make the purchase of an investment permanent and indissoluble like marriage, except by reason of death or other grave cause, might be a useful remedy for our contemporary evils. For this would force the investor to direct his mind to the long-term prospects and to those only.” Warren Buffett has proven that this is actually a very good strategy. Yet our policies don’t favor the kind of value investing that Buffett practices.
A financial transactions tax calibrated to eliminate all the benefits of front-running and other forms of high-speed market manipulation would be a good place to start, but we could go much further in taxing financial speculation while rewarding productive investment with lower rates. Larry Fink, the CEO of BlackRock, suggests that at a minimum, long-term capital gains treatment should begin at three years rather than one, with a declining rate for each additional year that an asset is held.
We could even institute a wealth tax such as proposed by Thomas Piketty. And if we were to tax carbon rather than labor, rather than starting by substituting a carbon tax for income taxes, it might be better to substitute a carbon tax for Social Security, Medicare, and unemployment taxes. These rule changes might be costly to some capital owners but might well benefit society overall.
These are political decisions as much as they are purely economic or business decisions. And that is appropriate. Economic policy shapes the future not just for one person or one company, but for all of us. But we should realize that it is in our self-interest to improve the rules we are now playing under. In his article about income inequality, Joseph Stiglitz explained how Alexis de Tocqueville, a Frenchman writing about American democracy in the 1840s, considered “self-interest properly understood” to be “a chief part of the peculiar genius of American society.”
“The last two words were the key,” Stiglitz wrote. “Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest ‘properly understood’ is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.”
Throughout history and across continents, economies have played the game using different rules: No one can own the land. All land belongs to kings and aristocrats. Property is entailed and cannot be sold by the owners or heirs. All property should be held in common. Property should be private. Labor belongs to kings and aristocrats and must be supplied on demand. A man’s labor is his own. Women belong to men. Women are independent economic actors. Children are a great source of cheap labor. Child labor is a violation of human rights. Humans can be the property of other humans. No human can be enslaved by another.
We look back at some of these rules as the mark of a just society and others as barbaric. But none of them was the inevitable way of the world.
Here is one of the failed rules of today’s economy: Human labor should be eliminated as a cost whenever possible. This will increase the profits of a business, and richly reward investors. These profits will trickle down to the rest of society.
The evidence is in. This rule doesn’t work. It’s time to rewrite the rules. We need to play the game of business as if people matter.
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Pulling out their “curves and formulas” to create the appearance of scientific rigor is what lures society into unquestioning deference to the opinions of economists, giving them undue weight and influence. As the author points out, calling the opinions of economists “laws” is a misnomer whose destructive effects go beyond just mere inconvenience or unfortunate nomenclature. We confer infallibility to economists when they speak on matters relating to the economy, a sin many of our politicians are guilty of, and this has put society on a slippery slope to economic perdition, if we are not already there…
The dismal scientists rely upon numbers cooked to order and produce fancy graphs and charts proving that said numerals justify their existence as money savants, but they’re just willing accomplices for subterfuge & deceit.
I would argue economists confer “expertise” on themselves by creating an arcane language and allied mathematics and credentialing clearly designed to inhibit non-“expert” input and critique. Whether or not most economists realize that this “professionalization” has resulted to a profession where Koch Bros economics and politics is firmly in the mainstream is an open question. The economists I know personally are almost all “liberal” in the American political sense.
I think we ought to go (generally) with Nassim Taleb’s description of Economists as the academic equivalent of Astrologers.
Clearly there are a handful of exceptions who see reality as it is, e.g., Stiglitz, Keen, Hudson, etc.
There are probably millions of economists who are not liberal and can see reality, including me and many others who come here for the truth
William K Black…(another), Billy Bob…
..truth being found in historical documentation, issue by issue, perpetrator by perpetrator, Socratic Method, basis of U.S. law…(according Washington State prosecuting attorney)…
People ask the question, “Why has the economy sucked for most people over the last 20-30 years?’ I think that they actually have this backwards. For many large, complex societies, there has been a tendency for power to become more concentrated over time. Powerful people are often able to use that power to secure more power for themselves and their children. In capitalist societies, there is a very great correlation between power and money. So the predictable course IS for the rich to get richer, and for the lot of the majority of people to slowly decline over time. All of this is a long way of saying that the question that we SHOULD be asking is “What was so unusual about the post-WWII period in the US? Why was the period from the end of the war until about 1970 characterized by rising wages for the majority of Americans and relatively stagnant growth in the wealth of the 1%ers?”
The assumption by many seems to be that the economy was growing fast enough that everybody could have a piece of the pie. But I think that the past few years show that a rising GDP does NOT invariably lift all boats. I think that the Great Depression and the World War that it was one of the root causes of, did much to convince the wealthy that they had be willing to share the wealth. We truly ARE all in the same boat, and if you want to keep it off of the rocks, you have to share some of the food with the oarsmen.
And THIS is something that we need to talk about. I had a coworker once who said “Wouldn’t it be nice if you could buy a robot to do your job?” “No, that would be TERRIBLE.” I told her. “Once the price for a robot to do your job came down to 5 times your income, your company would buy it and you’d be out of a job. They’re going to be able to afford to purchase your replacement long before you can.”
You’re right about the healthy fear engendered in the elite by social upheaval in the early 20th century. But, the upheaval that really taught them to value the commonweal was the Russian revolution in 1917. And the vast expansion of international Communism after WWII.
Well, for one, we reached peak domestic oil in about 1970, more or less as Mr. King Hubbard predicted. Which, incidentally coincided with the famously mysterious divergence of worker productivity and wages.
Is it all about inexpensive surplus energy?
If it was, one could in theory show causation and not just correlation.
While I meant to say “lack of inexpensive energy” may be the problem, your point is a good one.
How would you define prosperity amongst a population? I would argue that a surplus of wealth after necessities are taken care of is one key indication.
It seems pretty uncontroversial to note that in the early days it took very little energy to bottle that oil:
It only took a few units of energy to pump & distill hundreds of dollars worth of energy in those days.
That Energy Returned On Energy Invested (EROIE) has fallen seems evident. Once out of the ground the expenses are only beginning: Truck or pipe to the nearest refinery, process the increasingly sour pertroleum (pollution control is expensive) and then get the fuel distributed to where it can actually be used.
I think you can see where this is going. What we increasingly lack is surplus energy, exactly what is needed to rebuild in the wake of multiple disasters.
That’s my opinion, but I could be wrong.
One thing that was unusual compared to today was the approximately 90% tax rate for the top tax bracket until at least the Eisenhower administration if I’m remembering correctly.
Yes, tax policy was different and we were the “last man standing” so to speak in terms of industrial economies following WWII. Everybody else’s factories and infrastructure were devastated after the war.
If you look at the balance of trade though, things are relatively stable all the way up until the late 70’s although I’m not 100% sure of the policies that caused our previously stable balance of trade to drop off around this time.
https://tradingeconomics.com/united-states/balance-of-trade
Commenteriat?
…truth…of “policies”: https://www.youtube.com/watch?v=ORapPwla7fs (David Talbot-“The Devil’s Chessboard”…
Rules are made to be broken as any lawyer will tell you. Polanyi’s great insight was that the modern liberal order was the consequence of the disembedding of economy from society. An unrecoverable breach that will finish us.
…and “broken rules” to be held accountable…the missing ingredient, from bush 1, through clinton (gingrich-texas senator phil gramm-senate banking chairman, brought down “Glass-Steagal” and enabling portions of “Commodities Futures Act”), through bush 2, and obama…
no accountability…
(documentation of Phil Gramm key player, 2007 Wall Street frauds):
Phil Gramm
“As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington’s most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street. He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.”
http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877330,00.html
You know, its hard to take this serious. He opens it with there’s a new era and needed new thinking, but there’s not one new thought. As someone who has followed Tech and interacted with many over the years, I can say, to a person, they have no political thought. But of course, that’s not just a problem with Tech, it’s a critical problem of our culture — our politics are dead. O’Reilly is representative of the supposed “best and brightest” of his generation, a “technologist and an entrepreneur” who abandoned the political system. No, he’s not a “politician,” but he was and is a citizen, whose generation is leaving this republic in a much degraded position, overwhelming brought about by simple disregard, but also a fair degree of hubris and open hostility.
Keynes was an amazing mind, one of the greatest of the 20th century and sure some of his critiques of industrial capitalism are as relevant today as they were almost a century ago. But if Keynes were alive today, he wouldn’t be offering the same solutions.
There are a number of fundamental problems looking at politics today. One is the complete dismissal of technology as a definer of politics. Industrial capitalism was created by industrial technology, the new quantum/biological technologies are creating a new environment, it will need new political structures and processes.
Another is the massive environmental problems caused by two centuries of industrialism, which makes the idea that any part of the solution includes stoking demand a complete non-starter. Certainly Keynes would recognize this.
Finally, we have a government architecture two centuries old, that funnily enough is from the agrarian era, and always had great problems dealing with industrial era. That we can’t conceive of politics today without pimarily tying it to a broken and dysfunctional election system, concerned with switching, few for that matter, those sitting in the chairs of elected office, is a major problem.
In the end, I’ll give O’Reilly credit at least for acknowledging the problem, far too few are even there, but his thoughts are all still in the categories of industrialism, most importantly, that of labor. It’s important for all liberals to understand their great concern for labor, which was created by industrialism, starts by defining and categorizing a class that by its very definition is 2nd tier — inequality a priori. Let’s talk not about labor, but citizens and not just rights, but responsibilities, and how society is organized for both. That is a beginning for politics of the 21st century.
I find this essay useful in part, but nevertheless overall misguided due to its silence on the biophysical limits to growth. For example, by quoting Larry Summers, ‘“The main constraint on the industrial world’s economy today is on the demand, rather than the supply, side,” the author gets things backwards, in my view. See this essay for a contrasting view from the ecological economics perspective: “Secular Stagnation and the Failed Growth Economy” by Kent Klitgaard.
Thanks. It’s time for the quote that’s attributed to the economist Kenneth Boulding:
Although still smallish, an ever greater percentage of the economy these days is digital, Music, movies, video games, etc…..These parts of the economy can expand as fewer workers are needed to cater to our desires for physical objects. And said expansion does not put much additional demand on finite physical resources.
I am thinking that whether “demand” equates with resource exhaustion would depend very much on what’s being demanded. Moar iPhones? Or reworking the energy infrastructure to renewables? Fast fashion or more small veg gardens in vacant lots? That kind of thing. Dismantling a military base and reusing stuff for housing. . . Hey, a person can dream…
I think it depends on how you interpret the words ‘constraint’ and ‘today’ in Summers’ quote. If you mean by ‘today’, for instance, this point in the broad sweep of history (i.e., something like the current date +- 50 years) then I think you are right. If you mean by it the last few years of global recession, then I think that Summers is right. We are rapidly approaching the biophysical limits of our planet, but we are not yet constrained by them (which is exactly the problem, in a way—we don’t want to actually reach and cross those limits or we will be very sorry). What we want is to set legal constraints on our activities before we reach the actual physical constraints because one cannot sustain production at the limit in biophysical systems. What happens at the limit is systems collapse. Daly is very clear in Beyond Growth that we need an optimal (as opposed to a maximal or infinitely growing) scale of economy which progresses in a steady state at sustainable levels (i.e. an optimal level below the limit of physical constraint).
The thing about O’Reilly’s business model is that a lot of the people who need to collect, order, organize, and synthesize the data to better assess biophysical limits will be learning from materials developed, distributed, and made available by O’Reilly Media. IMVHO, part of the reason the biophysical aspects have been ignored is due to really crappy economics, which mis-prices biophysical resources.
I was delighted to see O’Reilly’s essay turn up at Economics, and I’m even more thrilled to see it here ;-)
…”invisible hand” works, only insofar as it is subject legislation to make it “work” for all…even Rand postulated equal access for all…(front running, anyone?? Credit default swaps?? Collateralized debt obligations??) history defines those (JP Morgan – railroads, for example) had no intention make “it” work for others…
It was same monopolists who similarly corrupted steel industry, then finance = inventing Wall $treet…
..interestingly, today we witness distraction – attempt scapegoat google, apple, Facebook, (new tech) for economics destroyed 2007 by Wall $treet “control accounting frauds”, kicked down road by bush-cheney-obama…(still destroying U.S. economics – financial engineering…somewhere neighborhood of 2-3% of U.S. economy was financial sector prominence, 2001. Today’s numbers quoted between 13-20%…wonder where jobs went? Product, manufacturing, shipping, warehousing, all unnecessary with financialization…
(anyone having closer numbers than 13-20% financialization of economy, do tell..)
Looking at the BEA’s GDP table, the FIRE sector (finance, insurance, real estate, rental, and leasing) was 20.5% of GDP in 2016: $3.8 trillion of “product” out of total GDP of $18.6 trillion. And this would not include the finance operations of corporations nominally in other sectors.
On the other hand, whether or not GDP accurately measures “product” in this sector, or even what “product” in this sector is, is an open question.
…nor does it include what appears having gotten away from everyone but Gretchen Morgenson, regarding gas prices quadrupling, 2001-2004…when Wall $treet banks controlled 48% of world oil futures, while not being “end user”…meaning, speculating.
Morgenson showed that banksters were playing the old “pork bellies” scheme; trading futures back and forth, intending drive prices…
Imagine how much they made-how much they cost americans? Morgenson was good enough to also elucidate how Wall Street caused prices to drop in time for November, 2004, bush-cheney election… Now imagine how much they add to cost of food – commodities today…those of us who travel internationally see…
I guess I am a broken record on this but I have an instinctive dislike for posts that emphasize “we” without specifying who “we” are.
The only part of this that “fails” is the part about trickle down. But if eliminating labor increases profits and rewards investors, why wouldn’t they do it? Esp. with 99% of professional economists arguing that maximizing profits is exactly the right thing to do for “all of us.” I would argue neither the business people, the investors, nor the economists nor the politicians in thrall to the others are part of the “we.”
The author of the post asks a series of “why are things like this” questions. The answer(s) seem obvious: because those who benefit from that arrangement have been able to bring it about. But he never says that and it isn’t clear in his “we” talk that he is interested in opposing those who have created the current situation or just “convincing” them to see the error of their ways. Taking policy advice from Larry Fink on capital gains treatment suggests to me the latter.
Of course it would not take a very high financial transaction tax to make front-running and automated trading much less profitable. That would help even the odds just a little bit between the average investor and the wizards of Wall Street. Which is why the big Wall Street banks will fight tooth, nail, and checkbook to prevent this from happening. “Never give a sucker an even break,” should be the motto for those guys.
Didn’t Bernie propose just such a tax to finance free public higher education?
Also, I seem to remember Bernie had said that such a tax already does exist in the UK.
UK readers, can you confirm?
Buffet is more than just a “value” investor. He acquires control of companies to make them dominant by lobbying for rules/laws that benefit his bottom line. See: Nevada Energy or Burlington Northern RR.
He may declaim the irony of his secretary paying more taxes than he does, but does little to effect that change.
> Buffet is more than just a “value” investor. He acquires control of companies to make them dominant by lobbying for rules/laws that benefit his bottom line. See: Nevada Energy or Burlington Northern RR.
On Burlington Northern, evidence?
Warren Buffett opposed the Keystone pipeline, presumably because his railroad transports a lot of fossil fuels.
https://www.fool.com/investing/general/2015/03/08/obama-did-warren-buffett-railroad-stocks-huge-favo.aspx
A very stimulating read on this topic is James Livingston NO MORE WORK:
https://www.uncpress.org/book/9781469630656/no-more-work/
Just ask yourself the following question: what would people really do if everyone had a guaranteed income large enough to eliminate fear of material want from people’s lives? Seems like a no-brainer, right?
They would search for bases for identity other than professional or work-related. Try religion and nationality. Those always work.
Keynes in 1914 wrote:
“He could “order by telephone, sipping his morning tea in bed, the various products of the whole earth ….. he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises in any quarter of the world”
One minute to midnight before the end of the last globalisation phase.
The last great expansion of mankind before the inevitable contraction, a cycle that has repeated throughout history, the great civilisations and empires of history expand and then contract again.
This phase of globalisation has been laid low by economic secrets.
Monetary theory has been regressing since 1856, when someone worked out how the system really worked.
Credit creation theory -> fractional reserve theory -> financial intermediation theory
“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner
http://www.sciencedirect.com/science/article/pii/S1057521915001477
http://www.whichwayhome.com/skin/frontend/default/wwgcomcatalogarticles/images/articles/whichwayhomes/US-money-supply.jpg
M3 is going exponential before 2008, a credit bubble is underway (debt = money)
Ben Bernanke can see no problems ahead in 2007, he doesn’t know the money supply is equal to all the debt in the national system and can’t see a credit bubble has been blowing up.
The US and UK don’t know that bank loans create money and the apparent success of their economies is really just the money creation of loading the economy up with unproductive lending into real estate and financial speculation.
US:
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png
1929 and 2008 stick out like sore thumbs.
UK:
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png
The unsustainable real estate and financial speculation economy makes itself apparent.
They don’t know the difference between productive and unproductive lending.
These graphs highlight unproductive lending into the economy and it causes financial crises.
Productive lending goes into business and industry and gives a good return in GDP.
Unproductive lending goes into real estate and financial speculation and it shows up in the graphs above as it doesn’t give a good return in GDP.
No one knows the difference between “earned” and “unearned” income, wealth creation and wealth extraction. The US goes full tilt into building up a parasitic, rentier economy.
“Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel Prize winning economist, who only notices the problem when it is entrenched
The economic secrets that are bringing an end to this phase of globalisation.
With talk of the next financial crisis there is one more secret that only the FED seemed to know after 2008.
Central Banks can clear bad assets from the banks with money they create out of nothing.
The US banks at the epicentre of the crisis recovered the fastest.
Central Banks were created to backstop the financial system and have the power to reflate the national banking system after a crisis with money they create out of nothing.
After WW2, Japanese banks were in a terrible state and full of non performing war loans, they were technically insolvent. The BoJ bought their bad assets at full value and restored them, so they could get back to business. All done at no cost, the money came out of nothing and the bad assets went to die quietly on the BoJ’s balance sheet.
This is something Central Banks can do and are designed to do.
The people that unlocked the secrets and Japan 1989 was a great time to start for two of them that lived there at the time.
Steve Keen – Minsky moments and affects of debt on the economy
Richard Koo – After the Minsky Moment, studied 1929, Japan 1989 and 2008.
Richard Werner – Money and debt, bank credit and how it must be allocated for economic success, studying Japan around 1989
Michael Hudson – The history of economics, the difference between earned and unearned income
…see – hear…(the bubble pop..)
“quantitative easing” kicked the can down road…no accountability!
In the US they use the left hand side of the brain to get the best return on their investments and the right hand side of the brain to worry about the new multi polar world.
The left side of my brain tells me to invest in China for higher profits.
The right hand side of my brain worries about a powerful China
Never the twain shall meet.
The US uses the narrow, economics, rather than the broader, political economy of the past.
They used to study the broader “political economy” that looks at the nation as a whole.
Now we study the narrower economics, which looks to accumulate wealth for private individuals.
The US politicians surround themselves with lobbyists looking after private interests.
The interests of the nation and the interests of private individuals are not necessarily aligned.
Wall Street looks to boost its profits by investing in China, while the US suffers from the loss of investment capital at home.
Will they wake up before it’s too late?
There are physical limitations: the last time the world population was sustainable was about 1800 at 1 billion humans. It’s going back, either as a burned out shell with none left or with the billion that are left trying to figure out what to do with the dead bodies.
No amount of ignoring reality or wishful thinking will get around this. Capitalism is sustained by population growth…functions with the same rules as the churches and requires a growing population. This is why no one will (the Chinese have been the exception..the Indians tried) approach the real issue, nor have any effect whatsoever, for all the hot air of the progressives, liberals, neoliberals. Read Kingsnorth, Confessions of a Recovering Environmentalist. Read Oreskes…The Collapse of Western Civilization…pdf on the web. It’s coming.