Yves here. Lynn Fries of GPE Newsdocs sat down with Michael Hudson to discuss the Covid-19 economy. Hudson describes how our present form of capitalism has distorted the role of government and how that is increasing general and Covid-related misery.
By Lynn Fries. Originally published at GPE Newdocs
LYNN FRIES: Hello and welcome. I’m Lynn Fries producer of Global Political Economy or GPEnewsdocs. I am delighted to have Michael Hudson joining us today. He will be discussing how under a neoliberal shift from industrial to finance capitalism, today’s most pressing economic conflict is not simply between labor and employers. It is a conflict in which rentier interests have the upper hand over labor, industry and government together. This is the political economy in which the COVID-19 economic shock is playing out with dire consequences.
Michael Hudson is a research professor of Economics at the University of Missouri, Kansas City, and research associate at the Levy Economics Institute of Bard College. A prolific author, Michael Hudson’s latest book is …and forgives them their debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year. Welcome, Michael.
MICHAEL HUDSON: Good to be here, Lynn
FRIES: Michael, It has been argued that every successful economy has been a mixed economy, where the public sector places checks and balances on private sector power; specifically on the financial sector’s power to indebt society in ways that impoverish it. Yet this kind of role for the public sector is being vilified under finance capitalism. So, what is your take on that?
HUDSON: Well ever since the Bronze Age you had the temples and the palaces providing basic needs. Because if you leave this to the private sector, then you’re going to have a situation where the private supplier has a chokehold on the economy and can say: your money or your life.
There are certain things that governments are supposed to supply and which industrial capitalism wanted government to supply. Because they didn’t want employers or their employees to have to pay for them. These are a number of things. Governments obviously have to supply military defense. You can’t leave that private people but also healthcare, for instance. The conservative party in England, Benjamin Disraeli said: health is everything; we have to spend on health.
And you don’t want to, in principle, make money off crime. But in America we’re privatizing the penal system, the jail system. So you have increasing pressure on government, on governors, to arrest people, put them in jail especially on drug use, where you can employ them at 10 cents an hour. And lease them out to companies as low priced labor.
But most of all, government is supposed to provide the infrastructure: the transportation, the communication, the telephone system. And the idea is that if you leave like cable TV to private suppliers, they are natural monopolies. The idea throughout history from classical Greece and Rome, medieval times in Europe is that natural monopolies should be in the public domain.
Because you don’t want to provide opportunities for monopoly rent. Because monopoly rent, like land rent and natural resource rent, is not a necessary cost to production. You want the necessary cost of production to be the material costs and normal profit. Because obviously you need people to have some incentive to do things. But the incentive is supposed to be normal profit, not super profits, not just a free lunch.
And so if you let transportation become privatized, then it is going to cost the workforce much more money to get to work and to get to a job. If you let the oil industry be privatized and the profits from the natural resource, and that’s the patrimony of mineral rights, oil and gas is all going to go to the private financial sector not to be used as the tax base.
And if you have the land rent, essentially if the government, for instance, in New York City, they spent let’s say a billion dollars on extending the second Avenue subway line up along the wealthy Upper East Side. That increased land values for landlords all by about twice the amount by about $2 billion. Because people now we’re closer to the subway station, they didn’t have to walk. They had better transport. All of this increase in land prices could have financed the extension of the subway and still been able to lower the subway fares for the rest of new Yorkers. Instead, the city let the landlords keep all of the gains in land value. And they just raised the income taxes and went into debt to pay for the subway.
So, you have a privatization of wealth that is not created by landlords, not created by individuals. Certainly the oil companies don’t create the oil in the ground. And the mining companies don’t create the mineral resources. All of these things are given away freely. The United States lets forestry logging companies and mining companies get whatever they can take from the public domain for free instead of getting the results of this publicly owned land to finance the public budget.
Taxes in the United States could be drastically reduced on wages and on profits, if you would just tax the unearned monopoly rent, the economic rent that is not necessary for production.
So, if you look at what Adam Smith wrote, John Stuart Mill, all of the classical economists said: this is how capitalism is going to evolve. Because if the government doesn’t have to levy an income and profits tax and just the rent tax, then it’s going to be a low-cost economy. And the more socialized and the more mixed an economy is the lower the cost structure is going to be and the more competitive it will be. And so it will force other countries to de-financialize and to free themselves from their rentier class. Free themselves from their absentee landlord class, free themselves from, you know, the foreign mining class and essentially be low cost economies, low tax economies as a result. Well, that was their idea of a free market.
And the neoliberals have essentially tried to take control of the minds of economics students and how people think about the economy to say: No, no a free market is free to make as much as you want. A free market is free from taxation on rent. A free market is where it doesn’t matter how you make your income. Anybody can just keep whatever they make, no matter how they make it whether it’s by predatory exploitative means or un-exploitative means.
So you’ve had a whole transformation of how populations understand how the economy works. So that, they don’t understand how to solve and re-industrialize the economy And they don’t even understand how they’re being painted into a financial debt corner as a result of debt deflation.
FRIES: Talk more about the aims of finance in this private sector-public sector mixed economy.
HUDSON: The financial sector essentially is of the 1% or the 10% that holds the rest of the economy in debt. The financial sector makes its money by getting the rest of the economy indebted to itself and making money off asset price gains. In the past, the financial sector made its money by getting interest. But now, with almost zero interest what it’s after is capital gains because capital gains basically are either untaxed or taxed at very, very low rates.
So, the financial sector essentially makes its money not by being part of the production and consumption economy but by siphoning off as much money from the production and consumption economy as it can for real estate, for insurance and for debt service and banking services. The insurance, of course, would include the health insurance.
The result is that Americans have to spend so much of their money now on housing. Up to 40% to 43% of their income goes for housing as opposed to 25% back in the 1940s,’50s and ‘60s . They have to pay huge amounts for medical insurance.
And the taxes have been shifted off real estate, off of finance onto labor and industry. So you have America really being unable to revive its industry today. Because how can you create an export industry or even compete with foreigners when you have to pay such high housing costs, such high medical insurance and healthcare costs instead of the government taking over, such high debt service. If you got all of your clothing and food and basic needs for nothing you still couldn’t compete with foreigners because of all of these FIRE sector – finance, insurance and real estate – costs.
Now the job of the government under industrial capitalism was all spelled out in the late 19th century in the United States. For instance, by Simon Patten, who was the first Professor of Economics at the first business school, the Wharton School at the University of Pennsylvania. And Patten said that public infrastructure was a fourth factor of production. And the role of the government was to provide basic needs like healthcare, education, transportation and other basic services at very low price so that you lower the cost of doing business. You lower the cost of living so that the private sector will be able to compete with foreign countries.
Now, most countries now provide free healthcare. Because if they didn’t, then the employers and the laborers would have to pay healthcare. Their cost of production would be much higher. And America has not done that. America has the highest cost of production in the world. Not because it’s technologically inefficient. The technology is all available and there.
The reason is all of these extra costs that are paid by labor and by employers that are borne by governments in other countries. So as long as essentially America’s dismantling the government, what you’re dismantling is the basic means of subsidizing industrial production and manufacturing. And that’s what’s left America in a high cost position and driven American industry abroad without any idea of how to create a national economy that makes it profitable to invest in industry here.
So most of the American cost structure has nothing to do with the cost of production and therefore nothing to do with industry or industrial capitalism. It’s a fall back into a kind of post-medieval rentier economy.
FRIES: Michael, in the rentier economy banks have allied with landlords and monopolists. Comment more on banks and monopolies.
HUDSON: Well, banks have always been called the mother of trusts. Back in the 19th century, you had the great fortunes on Wall Street being made by creating the steel trust, the copper trust. The function of banks is to lend money to companies to essentially create monopolies in the markets which can control the prices and extract super profits. Namely, economic rent over and above the actual cost of production and normal profits.
And when you have a trust, a monopoly, you can get monopoly rent over and above the normal rate of profit. Banks said: well, look, we can work with companies to let a few companies like, Carnegie takeover the steel industry. You had agriculture, agribusiness in this country, really turned into a trust with two firms sort of monopolizing all of the distribution of agricultural products. It goes all the way up. You’ve had essentially, Amazon becoming a monopoly. You have the information technology sector turning into a monopoly.
And the function of these monopolies… the reason their stock prices are going up so much is because they’re setting the price without any anti-monopoly legislation such as you had under the Sherman Antitrust Act of 1890 and then Teddy Roosevelt as a trust Buster. Essentially, since the 1980s you have not had any anti-monopoly prosecutions at all.
So, the economy has been more and more concentrated in the hands of a few large companies that have been able to get the credit from the banks to buy potential rivals. Facebook has been buying its rivals. You have the cable companies buying rivals. So people’s cable rates continue to go up and up without any actual cost increase.
You have a dissociation of price from the cost of production. Price is whatever the market will bear. There is no longer that reference to the cost of production. And hence as profit is understood under industrial capitalism as a rate of return on the cost of production and the capital investment. You have essentially prices being dictated by a financially organized trustification and monopolization of the economy most conspicuously in the United States of course.
FRIES: We should also note pharmaceutical monopolies.
HUDSON: That’s the most obvious. When you have prices of drugs here so much higher than you have in Canada and other countries. President George W. Bush said: we’re not going to bargain with the firms. We’re not going to have what every other country does wherever the government gets to buy in bulk. The whole idea is if you buy in bulk, you get a low price. George Bush says: we’re going to pay the retail price. And then a little bit more because after all they’re his campaign contributors.
Under the Obamacare you had a huge giveaway written, essentially written by the pharmaceutical industry. And the people that Biden has appointed as the health czars were the lobbyists and the heads of the pharmaceutical companies. So you’re going to have a very vicious pharmaceutical monopoly squeezing the population here.
Already in Idaho, where there’s a very heavy COVID issue, people are now being put in jail for medical debts. If you can’t pay the hospital, you can be arrested, put in jail and then you die as everybody in jail gets COVID.
So it’s like a financial death star has hit America. And the death star isn’t COVID itself. COVID is all over the world. Other countries have been able to cope. It’s the financial death star that’s really killing people in the United States.
FRIES: So, Michael, how is that industrial capitalism ended up in the stage you describe, one of pro-rentier finance capitalism?
HUDSON: Well, nobody really expected industrial capitalism to enter the stage we’re in now which is finance capitalism. This was not a necessary stage of industrial capitalism because you think of a stage as a kind of natural evolution, Darwinian style where the most efficient stage or form wins out. But what’s happened is instead of evolution, you have a devolution. You have a move backwards. The whole idea of industrial capitalism as explained from Adam Smith to David Ricardo to the John Stuart Mill to Marx, the whole idea was that the destiny of industrial capitalism was to get rid of the remnants of feudalism.
To get rid of the landlord class, of economic rent of natural resource rent. And the idea was to make everybody basically only earn money in proportion to what they contributed to production. Industrial capitalism was supposed to clear away the whole overgrowth of absentee landlordism, of unproductive credit or usury capital.
And that seemed to be happening by the late 19th century. In the field of finance, for instance, you had German and Central European industrial banking creating credit only to create new means of production, to build factories, to create a steel industry.
The Lower House of governments throughout Europe, for instance and the House of Commons over the House of Lords in Britain, in 1909, there was a constitutional showdown in Britain where they passed the land tax law to sort of get rid of landlordism. And the House of Lords vetoed it; constitutional crisis for a whole year. And they passed the law that never again could the House of Lords, the Upper House, veto a revenue bill in the House of Commons.
In every country, the Upper House in government was created and run by the rentier interests. That is by the landlords and the wealthiest interests. And the whole idea of industrial capitalism was to push democratic reform in order to sort of over overthrow the old rentier class.
World War I changed all that. Since World War I, the rentier class began to fight back. Before World War I you finally had the United States pass an income tax law that really only 1% of the American population was liable for the income tax law because there was a cut off point. You had to be fairly rich to pay the income. And most of the income of wealthy people was from either rents or stocks or bonds or financially from loans.
After World War I, all of this was changed. Instead of taxing real estate, instead of taxing the oil and gas industry, they were made pretty much income tax exempt. You had a shift of tax onto labor and industry. And you had industrial capitalism lose out to finance capitalism, not as a step forward but as a lapse backward. As the old post-feudal landlord class and the financial class fought back and sort of took over the development.
And that was greatly increased in the 1980s with Ronald Reagan and Margaret Thatcher. And since then the whole Western world has been characterized by really a kind of neoliberal meaning a pro financial, a pro-rentier economy. And the result is that we have a financial view of the world, not industrial view of the world.
FRIES: Earlier in the conversation, you explained the financial sector essentially makes its money not by being part of the production and consumption economy but by siphoning off as much money from the production and consumption economy as it can. How is the unprecedented income and wealth that rentier interests have extracted from the real economy being redeployed?
HUDSON: Well, the 1% makes most of its money by lending money to the 99% and making the 99% pay debt service do itself. The 1% on most of the bonds of banks, meaning ownership of the banks. And they essentially use their income to buy more and more assets. They don’t use their income to buy new factories or to make new means of production. They may buyout a company and then they’ll downsize the labor force. They’ll wipe out the pension obligations. They’ll dismantle the factory and turn it into a gentrified housing.
For instance, New York City used to be a manufacturing city. What is now Tribeca, below Canal Street, and the Wall Street area there used to be low cost electronic stores there, the dairy industry. Now all of these buildings have been torn down or closed down and turned into luxury loft apartments for the financial people making enormous financial salaries to buy and drive out the rest of the economies from New York and paying very little money, very little taxes for this.
So instead of the progressive taxation that you had under say President Eisenhower in the 1950s, you have essentially regressive taxation. You’ve slashed the taxes on the upper incomes, very low. And you’ve made most of the upper income money tax exempt. If you’re making money by financial speculation, you only have to pay 15% of your gains, not the full income tax that used to be 90% of the gains.
So essentially you’ve shifted the taxes off speculators, off the 1% that makes its money by capital gains on stocks and bonds and rising real estate prices. And you’ve, burdened employers and employees with it.
And that’s the legacy of debt inflation that’s leading to an accelerating shrinkage today without either political party making any discussion of how this is occurring. And without the economics curriculum even discussing debt.
Almost all the economic theories that have been sponsored by the business schools – the University of Chicago, Harvard – they treat the economy as if it all operates on barter. They’re only looking at current costs. They’re not looking at the balance sheet of the economy. They’re not looking at the financial claims – the stocks, bonds, and loans – the whole superstructure of financial wealth that is extracting money from the economy. The whole way in which the Gross National Product, the national income accounts are created are not breaking out the distinction between making money by industrial capitalism or making money by finance capitalism.
And so people are not even aware of why they’re being more and more squeezed, why they’re getting poorer. The result is suicide rates are going up. Lifespans are shortening now for the lower incomes because people are blaming themselves. The whole doctrine of personal responsibility means it’s not the system that’s making you poor. It’s not finance; it’s your responsibility to survive. And so people who believe this actually look at themselves as failures. And you get very depressed and go on anti-depressants or sedatives as we see with OxyContin and end up dying.
That’s what happened in Russia after the neoliberals did their reforms in the 1990s. It’s what happened in Greece after the Eurozone insisted on Greece paying the IMF and the Eurozone for fraudulent depths that were run up by the financial class. It’s something that’s happening all over the world and yet this doesn’t appear as an object lesson for countries to look at and say: do things really have to be this way? Is there really no alternative? And if you think there’s no alternative, you’re not going to look at all the alternatives you have.
There’s very little discussion of what China is doing. And how did China pull ahead? It pulled ahead by very heavy government spending on building up buildings on subsidizing real estate and in paying for most of the costs of living and doing business that are privatized in the United States and have to be paid by employers. So there’s a reason why China is becoming the largest economy in the world overtaking the U S.
And there’s no discussion of that. That’s, well that’s communism, you don’t want that. What it is, is industrial capitalism. So industrial capitalism is now called communism. I mean, that’s the irony of the whole thing. Because that was where industrial capitalism was evolving towards. Is an attempt to minimize the cost of production and create an efficient economy.
FRIES: You published a book as a dictionary or a Guide to Reality in an Age of Deception titled J is for JUNK ECONOMICS. And in the book you define There Is No Alternative or TINA as: The neoliberal principle that if one can censor awareness of policy alternatives to austerity, people will believe that poverty, inequality and economic polarization are natural, not man-made. What else do pro-finance advocates mean in saying There Is No Alternative?
HUDSON: Well, when Margaret Thatcher said There Is No Alternative, and that was her famous quote, TINA, There Is No Alternative what she meant is the financial sector has put depth charges into the economy saying there’s no alternative if you want to avoid a breakdown.
And the breakdown is right now the economy is a debt deflation. So much of American industry is closing down because of debt. For instance, let’s look at the legacy of the coronavirus which has only catalyzed and accelerated that debt deflation. Imagine the restaurants that are closed since last March, the gyms, the bars. They haven’t done business. So they have not been paying rent. And their employees have not been getting an income to pay their rent.
So what’s happened is that let’s say in January everything is going to go back to normal, although they say here, it’s going to be a March or April. Well, the landlords are going to say: okay, we haven’t been collecting rent for the last year and now you’re going to have to pay all these rent arrears. Well, there is no way that a restaurant or a gym or a bar can pay a year’s back rent and make enough profit to cover it.
So they’re going to say: why should we work for the landlord without getting any pennies for ourselves? We’re just going to go out of business. And so the restaurants are closed down. This again is a reason for the stock market booming. If you close down the privately owned restaurants and the privately owned bars, this is going to let the big food chains come in and take over the whole market. Just like Amazon took over much of the market for books and for things that people buy, the big restaurant chains will come in now that maybe 70% of the restaurants in New York City are expected to go out of business. [Inaud] are going to go out of business.
So, the only way to avoid all of this is to say: okay,we the government are suspending all of the debt service, all the taxes, and all the rents owed during the period when nobody can earn an income to pay.
If you don’t wipe out the arrears of the debt that have accumulated for the back rent, people running into debt in order to live while they’re unemployed, running up their credit card rates, borrowing from the banks or borrowing against the house; if you don’t wipe out this debt, then you’re going to have the economy shut down with debt deflation. Because there won’t be any money to buy goods and services and it’ll be just an accelerating unemployment and a shrinkage of markets.
Now, when Margaret Thatcher said there was no alternative what she meant was: well, wait a minute. If you don’t pay the debts to the banks, they’ll have to lose money. The richest 1% has made a trillion dollars in gains since the virus hit last spring. They’ve made a killing. In the last 10 years all of the growth in the American economy has accrued to the top 5%. All the growth in GDP, Gross Domestic Product, has accrued to the top 5%. Since Obama took office, GDP for the 95% of the population has actually gone down.
And the banks are saying: well, wait a minute; we’ve made a lot of money. We don’t want to have to lose any of it. And they are saying that: well, if you cancel or write down the debts, then we’re just going to close up shop. And we’ll pull out all of the connections of the economy and the banks will go under. They pretend that this is a crisis.
Actually, this is a great opportunity to save the economy. Sheila Bair said in 2009 that the most badly run bank and crooked bank was Citi,Citibank. She wanted to close it down and take it over by the FDIC. There was plenty of money in Citibank to pay all of the insured depositors.
But then, she was overruled by Obama and Tim Geithner, the lobbyist for Wall Street who was connected to Citibank in a shameful conflict of interest. And they didn’t close it down. And Sheila Bair wrote in her biography about this. She found out it was all about the bond holders.
The 1% are the bond holders of the banks and they’re refusing… they would rather have the economy shut down and 10 million more people thrown into the street than lose a single dollar. All of this is what the classical Greeks called wealth addiction, the love of money. They said that the more money you have, the more addicted you are to get more and more.
Now the good thing about canceling the debt is that you cancel savings on the other side of the balance sheet. And the savings are all this immense amount of money that’s accumulated by the rentier sector since Obama took office, really since the 2008 & 2009 crisis. And you’d restore balance to the economy. You would restore a much more equal distribution not only of income but of wealth by having the wealthy people bear the costs of the economy being shut down for the virus.
The rentier sector opposes all of this. And in fact, Biden has already said that because of the huge $8 trillion give away to the financial sector by the Federal Reserve under Trump, we’re going to have to balance the budget.
The cities and States are near bankruptcy. In New York City they’re talking about cutting down the subway system to maybe only 40%. It’ll be very crowded. You’ll be risking your life to go on it because of the virus. The Washington subway system has been closed down on weekends and I think many stations have been closed down.
You’re going to have a breakdown of state and local finance because the landlords are not able to pay the property tax. The cities and states are not getting the income tax because of the unemployment.
You’re going to have a spreading a financial crisis. And again, finance capital firms are going to be able to come in. And you can make, it’s much easier to make a billion dollars off a crisis than it is off a boom. Most of the big fortunes have all been made when the rest of the economy are in crisis. Because everybody’s in distress, you can buy assets at distressed prices.
And that’s why the crisis that’s coming to the United States almost engineered by Wall Street as a grab bag. And it’ll be a grab bag where they’re expecting 50,000 New Yorkers to be homeless. They’re going to be out on the street. Where are they going to go? Crime is already rising here.
You’re having a disaster. And it’s a disaster that is welcomed by the government that is refusing to do any bail out for the cities and states. Refusing any support of the infrastructure system, the transport system. That is only providing money to support the stock and bond holders so that they don’t lose money. And to support the banks so that they remain solvent with quantitative easing, money creation. But without any attempt to revive the industrial economy, the restaurant owners, the few factories that remain and of course the labor force.
FRIES: What do you think is in store for the US barring some sort of progressive change in US political leadership?
HUDSON: The donor class, mainly the financial class and the rentier class controls who’s nominated for the Presidency and their campaign contributions determine who’s elected to Congress. And so at the beginning of the epidemic here, they said: well, we can see that the economy’s going to be closed, you know, pretty much closed down. The first thing to do; it’s okay to close down the economy. It’s okay for people to be fired but we want to make sure that the stock and bond and the bank’s real estate market is supported.
So, Donald Trump’s, the Republican plan created $10 trillion. $2 trillion was given just to the population at large and 8 trillion was put into the stock and bond and real estate market. And so the result since the pandemic began is this is a wonderful victory for finance capitalism.
This is the buying opportunity of a generation. You’re going to have in January, 5 million renters thrown out onto the streets. They’re not able to pay the rent. You’re going to have massive foreclosures. Venture capital companies are going to be able to come in and buy real estate just as cheaply as they were able to do when the junk mortgage crisis crashed in 2009.
And Obama did not write down the junk mortgages to the realistic value but threw out 10 million families. Well, 10 million families are going to lose again; about 5 million renters and a lot of low income families who bought houses on mortgage but have lost their jobs or lost their income are going to be defaulting.
So the Biden administration is going to begin just where the Obama administration left off with huge evictions. That’ll end as in the case of the Obama administration, most of the victims will be black and Hispanic lower income people. So you can say that Biden is going to continue the anti-black, anti-Hispanic policies that Obama pioneered so strongly.
Which makes it all the more amazing to me that the blacks and Hispanics supported the Democrats in the election. It’s like identity politics has succeeded in blinding the population to the fact that you can have Blacks and Hispanics in office spending their time fighting viciously against the Black and Hispanic voters who elected them.
That’s the irony of what’s happening now, but it’s what’s in store for the economy. In just one more month when the Biden administration comes over, the evictions begin, the foreclosures begin, and the medical deaths are going to be increasing.
FRIES: As the foreclosures begin and the medical deaths increase, how would you define a centrist position? In other words, what’s a centrist?
HUDSON: A Centrist is somebody who looks at all problems as being marginal, not structural and so you can only have a little change. So a centrist is a right wing, neoliberal supporter of the financial sector and implicitly anti-labor and anti-industry. A centrist is someone who doesn’t want any change in the system and just goes with the status quo. Because they can’t imagine that every economy tends to polarize naturally between wealthy people at the top impoverishing the 99% at the bottom. And the centrist doesn’t realize that. A centrist thinks that economies tend to move towardsequality and equilibrium. And the reality is economies move towards this dis-equilibrium, polarization and then there’s a crash. Polarization and then there’s a crash. But a centrist says: don’t do anything at all. So essentially you should just stand aside and let Obama and Biden and the rest standby while the financial sector monopolizes the economy and impoverishes it.
FRIES: Michael Hudson, thank you.
HUDSON: Thank you
FRIES: And from Geneva, Switzerland thank you for tuning into this episode of GPEnewsdocs.
49 comments
Comments are closed.
And thanks to Trumps narcissism and laziness and the Democrats commitment to capital over people, we’ll have a continued and strengthened stranglehold over our lives. Not even a pandemic requiring a public response can change the course well spelled out here by Hudson and reminding me of Simon Johnsons Atlantic article from the last crisis:
https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
Great interview, thanks. Dr. Hudson is an international treasure.
I am not sure that rental property in a rough neighborhood is going to be profitable for anyone, even bloodsuckers like Blackstone. I suspect we will see abandonments, instead of gentrification.
It is my impression that many of the families who suffered from foreclosure in 2009-2012 were still able to find a place to rent. I am scared that this time, the victims of a housing squeeze will have no ability to pay rent at all.
“am not sure that rental property in a rough neighborhood is going to be profitable for anyone, even bloodsuckers like Blackstone. I suspect we will see abandonments, instead of gentrification.”
Gun and ammo sales are through the roof this year, with some of it going to populations with less of a history of gun ownership. In the future if there is less state security (some urbanized areas are already avoided by police, pre-covid, from what I understand), its might become increasingly very difficult for companies to own these assets at a distance if people in said accomodations become more willing to shoot back. Anarcho-Capitalism is not a thing that works. Unless companies like Blackstone start recruiting hired teams with guns to start evicting people, in which case they will essentially be replacing the state…
I hope the next decade goes better for society than I’m expecting. I’m honestly becoming afraid what might happen otherwise. I’m not sure financial polarization can go on indefinitely with no increase in civil strife, especially during a long financial crisis or, worse, a more longterm continuation of the Corona crisis in addition to the aforementioned economic crisis.
If you think Michael Hudson is overstating his case, read the Blackstone article.
For sure. The fear of 5 million people being thrown out on the street will create a perfect opportunity for a deal where eviction moratorium is exchanged for fast-track new housing deregulation, so that more high density income properties can be built for huge landlords like Blackstone. And more subsidized housing for big “job” creators like the FAANGS (see jefemt below).
California Apartments Association is making sure of that, and we all saw the freeway-teardown article that made sure to have a queer POC spokesperson on board.
I’m all for freeway teardowns and walkability, AFTER the kinks of production are worked out and AFTER Blackstone is disgorged. The incentives are too muddy and too gamed to make huge transformations that will create MORE POLLUTION, devastation, and misery IN THE SHORT TERM FOR VULNERABLE POPULATIONS.
I keep getting the feeling that big financial entities like Blackstone are focused on setting themselves up as government housing agencies. Surely they know that after the fall of capitalism, with industrial capitalism being a thing of the past, they will be a sort of public-private-partnership to provide housing at government expense. For a very long time. Makes me wonder what the game plan is for the Medical Industrial Complex – it will insinuate itself (for its own financial benefit) into every stage of a national “healthcare” program and be another and even more egregious PPP. The monopolies become the government.
They’re already acting like governments. Amazon, for example.
https://www.theguardian.com/commentisfree/2020/mar/28/who-needs-crisis-government-when-youve-got-amazon-coronavirus
(Article from last March but still germane.)
Did the huge housing projects/ tower blocks in the New York boroughs bring anybody out of poverty who lived there? They are transit-adjacent and don’t have parking spaces; eminently walkable. Sorry, I don’t see it.
Oops, sorry Susan, this was a tag-on comment to my own above. I agree with your comment and Carla’s.
Some positive notes: conversion of idle commercial and big box properties instead of much-more-costly new construction. On the other hand, I guess it says something about the return of small shops. Yikes
https://www.publicceo.com/2020/12/time-for-local-governments-to-get-assistance-and-a-breather/
Which Other Unfinished 2020 Housing Bills Will Return? During the 2020 session, numerous high-profile land use and housing bills stalled, but many were reintroduced in Legislature’s organizing session:
SB 6 (Caballero) Facilitates the conversion of underutilized commercial properties to mixed use and affordable housing, while retaining some local control and input. Appears to be a reintroduction of SB 1385 (Caballero) from 2020.
SB 7 (Atkins) Provides CEQA streamlining for affordable housing projects over $15 million. A reintroduction of SB 995(Atkins) of 2020.
SB 8 (Skinner) Proposes a variety of changes to Density Bonus Law. Some changes may replicate proposals included in SB 1085 Skinner of 2020.
SB 9 (Atkins) Requires local governments to approve two housing units on a single-family lot, and lot splits. Appears to be a reintroduction of SB 1120 (Atkins) of 2020.
SB 10 (Wiener) Authorizes locals to waive local ordinances and voter-approved measures to zone for up to 10 units. Appears to be a reintroduction of SB 902 (Wiener) of 2020.
SB 15 (Portantino) Requires HCD, upon appropriation, to offer annual grants for seven years to those local agencies that voluntarily convert idle big box and commercial shopping sites to workforce housing. Appears to be a reintroduction of SB 1299 (Portantino) of 2020.
Real estate taxes have not been shifted away, in my little world of resort hot spot nestled in Bumphuc fly-over. They are escalating in a ‘hidden ‘ inflation beyond even my cynical imagination of possibility. Owners and/or tenants are paying the increase.
Our local town council wants to increase City property owners real property taxes to clean up a post-and-pole PENTA treatment facility, now a state superfund brownfield, so developers can ‘have their way’.
No affordable work-force housing due to white-flight-covid flight to the boonies driving up prices from non-locally sourced wealth. Air bnb and VRBO short-term have taken up rental spaces.
The town fathers now want to offer a bond against local property owners to subsidize low income housing for workforce for capitalist employers.
Socialize costs, privatize profits.
There was only so much in my pocket, and its gone.
Thank goodness wages are keeping pace!
Pentachlorophenol is nasty stuff. Did anybody try to sue predecessor or successor companies under CERCLA? Did the pole treating company mainMy sell to / work on behalf of one or only a few utility company/ies who may have had some oversight, specifications, control over the management and processing? They can be invited to the party, too. Mayor of Kenosha WI about 20-25 years ago was great at brownfield remediation recoveries and redevelopment back in the day.
Now the good thing about canceling the debt is that you cancel savings on the other side of the balance sheet. Michael Hudson
Government privileges for private credit creation not only drive people and businesses into debt, they cheat non-borrowers too, especially the poor, the least so-called “credit worthy.”
So what does Michael Hudson’s plan do for a poor but debt free rent slave? Nothing that I can see while giving home “owners” their homes.
Better is Steve Keen’s “A Modern Jubilee” (equal fiat distributions to all citizens) combined with new credit restrictions on the banks for no net increase in the money supply (since the repayment of existing bank credit destroys bank deposits).
If Biden really does want to “balance the budget” – which sounds just like him, i.e. mindless – then doing it Steve Keen’s way might be too lavish for him. But it’s really sixes as long as the economy is rebalanced. I don’t see how “the budget” has anything to do with a functioning economy as long as it is run properly. The government under Biden is not likely to do any industrial plan; any comprehensive plan of any kind. But if this does happen it makes sense that all incomes should be leveled out at a well-being acceptable to all. It was interesting how Hudson referred to the irony of industrial capitalism, saying that the neoliberals think it is tantamount to communism. The thing the world should do is form a pact to maintain a very narrow range of fluctuation in the value of all currencies. Based on some constant value of nature. Fat chance.
In an interview with Paul Jay posted June 2nd, Michael said, “Folks, you can bail out of the stock market, give us your junk bonds. That’s sort of like the Statue of Liberty for wealthy people. Give us your stocks. Sell your bonds. We’ll buy them all up at Federal Reserve expense and will purchase them. And we’ll also do our own forward buying to manipulate the stock market by promising to buy our stock, so the higher price in the forward market.’’ So it sounded like insiders were bailing out of stocks and bonds, in anticipation that the market will drop precipitously in the near future. Then in a more recent interview, I cannot remember the date of which, IIRC he said the stock market was going up in anticipation that the monopoly companies and mega business like Apple, Amazon, Mcdonalds etc would be the only survivors left after the death of small business in America. So when the crash comes, will stocks of these companies crash along with real estate, or will they remain high in anticipation of a bonanza of business directed solely at themselves in the near future? Or are the insiders still bailing out of paper assets in order to transfer that wealth into hard assets like real estate and gold?
It doesnt seem that the stock market can crash. Too much money has no better place to go.
That doesnt mean anything good though. Unless you have lots of stock already that has appreciated marvelously.
With interest rates pegged near zero — money has no where else to go except assets including stocks and bonds. The stock market could crash if anyone ever opens up that can of sardines, but it seems likely the Government would do something to bail out the stock market. We’re already past “fool me twice”. The CARES Act suddenly appeared out of nowhere and did that trick. There’s no telling how long the Government can keep up its levitation act.
This is how I understood what Michael Hudson has been saying:
I thought many Corporations were selling Corporate bonds to convert their cash flows to lump sums they used to pay dividends and buy their own stocks — driving up the share price. The Corona pandemic caused Corporate cash flows to collapse, evaporating demand for new Corporate bond issues as Corporate defaults and bankruptcies threatened. The CARES Act enabled the Fed to keep the music playing so that Corporate America could continue to dance — Nathan Tankus covered the details but I got lost in those details. I don’t think “insiders were bailing out of stocks and bonds, in anticipation that the market will drop precipitously in the near future.” But if the Fed hadn’t ‘levitated’ the stock and bond markets there would have been a precipitous crash. I am not sure who owns the stocks other than the large mutual funds like Vanguard or firms like Goldman Sachs and indirectly anyone who owns shares of Vanguard.
Hudson “said the stock market was going up in anticipation that the monopoly companies and mega business like Apple, Amazon, Mcdonalds etc would be the only survivors left after the death of small business in America.” I believe the Fed’s largess was allocated to the large Corporations through various means, while the small and medium enterprises were essentially stiffed or helped too little and for too little time — like the unemployed, underemployed, and self-employed. Many small and medium enterprises, like many individual renters, are facing a huge back rent overhang and no one knows what Congress will do — if anything — to help. The large Corporations are building war chests to buy up any plums left after small and mediums enterprises close their doors, and buy up any large competitors weakened by the Corona pandemic thereby effecting further consolidation of their Corporations as the eradication of small and medium enterprises leave markets wide-open for fuller exploitation and higher profits.
I will have to listen to this audio cast again and also some of Michael Hudson’s previous audio casts like the one from last June.
Modern society depends on the active cooperation of the populace.
when you make it brutally clear to a large percentage of your subjects that there is no place for them, that they have no stake in society, they will act as though they have no stake in society.
It doesn’t matter how draconian the laws become or how efficient a surveillance state you have, once you reach a tipping point things stop working and you get chaos.
The Nashville bomber is a case in point, one irrational pissed off old man built that bomb out of commonly available materials, there was no conspiracy to track.
And I do mean commonly available, if you are a homeowner and a gardener you have the materials to build a bomb laying around…
It won’t be a boring 4 years.
Does that explain the rash of Telsla, Masarati, luxury car keyings, tire slashings and grafitti on high end housing around here?San Carlos, California. Eventually it will get to the point where an old beater will be the only car that any rich person will dare drive.
“Taxes in the United States could be drastically reduced on wages and on profits, if you would just tax the unearned monopoly rent, the economic rent that is not necessary for production.”
If he’s talking about federal taxes, this may well not be true. According to MMT, federal taxes are there for the sole purpose of reining in inflation. And that primarily means taxing ordinary households that tend to spend most of their incomes and drive up demand that might overstress productive capacity, leading to inflation. Of course, at the local and state level it’s an entirely different matter.
MMT advocates (and I’m a fan) make the point that MMT is neutral politically but then go on to explain what it can mean for more progressive policies, such as a federal job guarantee. That’s fine. But I also like to explore how MMT could be used by the right to argue for things like a flat federal income tax and lower or zero taxes on investments and profits.
Speaking of the federal job guarantee, I have a bone to pick with Stephanie Kelton in her book “The Deficit Myth.” In a later chapter, she argues for a job guarantee at $15 an hour. Why? First of all, if the minimum wage had kept pace with inflation over the past 40 years, it would be $22 an hour now. And the official inflation calculation grossly understates the actual cost of living for most of us. So why $15?
Moreover, take the case of private-sector job loss that I’m intimately familiar with but isn’t at all unusual. Joe Blow began his career making close to minimum wage but over the years worked his way up the ladder, acquiring along the way a modest middle-class life with a home, a wife and kids. Finally in middle age, about 2010, he was making about $50 an hour plus generous benefits. Then, due to technological changes over which he had no control, he lost his job. In fact, his industry covering a broad spectrum of products and services was virtually eliminated, leaving him with no skills with any value in the marketplace.
Ah, but here comes Kelton’s federal job guarantee at $15 an hour to the rescue. But it’s not much of a rescue for Joe Blow, with the slashing reduction in pay undermining everything he had ever worked for. The problem is that under MMT, there’s no earthly reason Joe shouldn’t be paid 100% of his previous compensation. It wouldn’t be inflationary, and the government can simply credit his bank account for the same amount regardless of whatever job he is given. (And since the majority of jobs that well-compensated people do are either frivolous or counterproductive — read David Graeber’s book on Bullshit Jobs — chances are Joe’s new federal job will be more beneficial to society than what he was doing before, even if the new job is just sweeping sidewalks.)
Finally, if a federal job guarantee is limited to some pittance of compensation, the basic message to working people — given the true but disastrous counsel we receive that every worker should expect to change careers 6 or 7 times over the course of a working life — is that you should never leave your parents’ basement.
Apparently Hudson does not see a people’s MMT riding to the rescue.
I don’t understand why MMT will not bow to the golden rule of “he who has the gold makes the rules”.
Just as the various rescue packages for Covid-19 had a small percentage of the package allocated to the “Joe Blows”, I’d expect that a people’s MMT would be politically hijacked similarly if it started to gain strength.
A people’s MMT does not have the army of politicians, lobbyists, academics, media types and think tanks pressing for its adoption, so I suspect it will continue to be on the sidelines of the US political system.
As my public high school civics teacher told the class “Whenever you hear a politician say he is for the common man, see who he plays golf with, see who he has dinner with. It’s not the common man.”
And the “common man” would be the prime beneficiary of Kelton’s MMT, not the vested powerful interests who have had THEIR customized MMT’s provided by various rescue packages over the last 20 years.
Thus a people’s MMT seems unlikely to cynical me.
I think you’ve nailed it. The MMT money floodgates are always poised to be opened for the right people. And the theory itself contains the reasoning behind that justification.
As I read this, at about 2/3rds through I caught the Case & Deaton notion. Then Hudson went on to describe what could best be called MMT Armageddon a la Mosler – what happens when the .02% owns everything? Complete economic meltdown and all that hoarded gunz-n-ammo will find targets.
Back in immediate reality, Hudson’s final comment re what to expect from Biden resulted in a scotch glass half empty: A Centrist is somebody who looks at all problems as being marginal, not structural and so you can only have a little change.
The core MMT proponents (Mosler, Mitchell and Wray) don’t put a number on the Job Guarantee wage — the term I have seen used is “socially inclusive wage.” Presumably this is to avoid a cardinal number that will soon be meaningless and “age” the text.
Kelton’s “The Deficit Myth” (which I have read and recommended to those new to MMT concepts) is what I would term a popularization of the core MMT concepts. I believe that she is using the widespread familiarity with “the fight for 15” as the rationale for using that number — I don’t believe that she calculated it as currently representing the “socially inclusive wage.”
@Pelham
The MMT Job Guarantee (JG) is not a wage replacement scheme. It is designed to maintain “loose full employment” and is primarily aimed at the low end of income earners who suffer the most from unemployment. In addition, and very importantly, it is the MMT scheme to control inflation by setting the minimum wage at a livable but fairly low level that does not compete with the private sector. Full benefits would be provided. Higher earners, those at $50/hr (i.e. $100,000 per year), would normally be able to find a better paying job than one at the JG wage. In addition the positive effect of the JG on demand should help provide more job opportunities for the $50/hr worker.
I understand that’s the theory. But reality, I submit, doesn’t square up with the theory. Worse, the underlying structure of the theory suggests that some of the remedies proposed by MMT’s proponents don’t go nearly far enough. And that in turn hints that MMT proponents either A) don’t really believe in their own theory, or B) are holding the whip of “moral hazard” over our heads, just like their putative opponents.
There are many, many examples of people working their way up in the middle class who, once they reach middle age, are pitched out on their ears. This is a feature, not a bug, in the current economy and needs to be addressed.
Also, why assign such priority and importance to a private sector that for at least the past 50 years has proved itself perversely antithetical to the health and well-being of ordinary working people? I see no reason that government shouldn’t take a strong hand in setting wage and work standards and societal priorities. For instance, it has been calculated that for every dollar that a supremely well-compensated investment banker makes, he subtracts $7 in real value from the economy. Wouldn’t it literally be better to put these characters to work sweeping sidewalks?
No, no, it IS intended to compete with the private sector! It is intended to get rid of jobs that pay below a living wage.
Pelham has made an important point that everyone should memorise.
MMT is neutral politically. It is a fact. MMT is not economic policy.
Is anyone’s reading of MMT the final reading? Aren’t new questions, new starting points or new highlights a forever, ongoing process of any doctrine?
Maybe we all just need to hide from ourselves how arbitrary everything actually is even though all of us (whether, radical, conservative or middle of the road) search for a point of anchorage.
MMT uses taxes to limit someone’s wealth. To rein in income inequality, for example. Or to open up fiscal space that the government wants to use for whatever–infrastructure expansion for example. MMT starts with an audit of resources available for whatever Congress wants to accomplish, and this audit informs Congress as to the likelihood of inflation. That’s the sequence. The actual budget is the last item to sum. $15 $22 whatever. Kelton took the $15 figure, I suspect, because it has been in the news and adopted in a number of states. That it comes up in Pelham’s post is just confirmation that he’s working on the ‘can’t afford it’ angle, a neoliberal framework that MMT seriously modifies. The guarantee will pay a ‘socially responsible wage with benefits.’ As for those jobs, my guess is many would deal in environmental preservation types of efforts. Efforts that the capitalist won’t do because if they had to clean up their own messes, they’d not be profitable.
Nope, quite the opposite. I’m suggesting we can probably afford a lot more than $15 an hour. In fact, we can afford anything that doesn’t overstress our productive capacity. It’s the MMTers who suggest clearly inadequate wages of $15 an hour for any adult who appear to believe that there is some other kind of constraint — when their own theory says otherwise.
Semi-relatedly to help put things in perspective, USA Today some years back calculated what income a single-income family of four would need to support the most minimal middle-class life without going into unpayable debt. The figure came out to $130,000 a year, about double the actual income for households of four at the time. It would be somewhat more than that now. Anyway, $130,000 comes out to about $65 an hour — and doesn’t include benefits.
So $15 an hour in a federally guaranteed job would be a cruel fate for the many, many mid-career families who find themselves suddenly in need of precisely that kind of safety net from their government. But, again, according to MMT, much better than that is perfectly affordable. Really.
No, MMT says that taxes
1. Validate the currency
2. Control inflation
3. Can (not must) be used to provide incentives and disincentives. Redistribution is one possible but not required use.
I’m not wise in the ways of economics, but does:
this mean that capital will feel more comfortable making riskier bets as it’s wins are now a larger proportion wrt to losses? Ie if I invest 10 here and 10 there, now I can stomach a larger potential loss on there because I’m keeping more from here?
Unfortunately the historical shift from industrial capitalism to finance capitalism is more complex than Hudson’s apparent assumptions about the seemingly inevitable bifurcation between private interests and the state.
Katharina Pistor in her recent book “The Code of Capital,” has argued that you can’t really reindustrialize the U.S. economy without first understanding that capital tends to rule because capital is inextricably linked to law and state power. She maintains that wealth and assets (especially financial assets) would not exist without the law and the state.
For instance, she believes that the concentration of wealth and the evasion of state attempts at its capture through taxation does not happen by escaping the law and the state but through the law and the state–especially by projects of legal encoding through trusts and the positioning of asset pools.
.
Yah, it really chaps me when some disgruntled pundit describes some looting behavior that impoverishes and kills lots of people or nails down another opportunity to further concentrate wealth/power, but then just shrugs and says “But after all, it is all perfectly legal.” As if “the law” is some floating essence that exists in splendid perfection, apart from institutions.
Just like it chapped me that the professors at the law school I attended peddled the idea that “the law” was some web of wisdom that had rules that applied equally to all. Almost all of them — one taught a course entitled ‘The Legal Process,” which showed in great detail the real underbelly and dirty basement of “the law,” and just how unfairly it was weighted and how arbitrary it actually was.
Yes, Pistor’s book also discusses this aspect of how capital instruments are created, and how the participants influence the law which in turn governs that creation.
It’s regulatory capture and arbitrage on steroids.
From Buckminster Fuller’s book “Critical Path”-
“The transnationally operating LAWCAP (lawyer-capitalism) in the early ’50s resurrected the twenty-year-dead FINCAP (finance-capitalism) and its “capitalist” world and left only its American-flag-flying storefronts in the U.S.A. to cover its comprehensive financial withdrawal from the U.S.A. LAWCAP silently and invisibly moved capitalism’s big-time operations into the any-legally-propitious-elsewhere. With its invisibly operating CIA (Capitalism’s Invisible Army), LAWCAP exploited the unwitting citizens of the U.S.A. in order—they hoped—to destroy socialism.”
Great post. Thank you.
An aside: This opening remark by Prof. Hudson caught my attention:
There are certain things that governments are supposed to supply and which industrial capitalism wanted government to supply. Because they didn’t want employers or their employees to have to pay for them.
Yes. The reason this caught my attention is because the so-called Great Reset – 4th Industrial Revolution (4IR) that the World Economic Forum (WEF) is promoting specifically declares industrial capitalism is past its economically useful time in rich countries. The next great thing for money making (according to the WEF) is data and “information capitalism”. ( I read a silly horoscope section in a New Age-ish magazine recently to see what the stars “foretell.” Said horoscopes declared the Great Conjunction of Saturn and Neptune, the so-called Christmas star, means the age of industrial capitalism has come to an end and the age of data capitalism was beginning. Amazing where this WEF 4IR propaganda show up! )
There’s no hint of a mixed economy in the 4IR imagined future. There’s very little hint that govts are needed for anything except giving “information/finance capital” a free rein. It’s a Faustian bargain for govts: “We data monopolies will let you govts use our power and resources and in exchange you will give us rights to do what you govts’ used to do. We will hand you new imagined power (which we control) in exchange for your real powers to regulate in the public interest (which we don’t control).” imo.
“because the so-called Great Reset – 4th Industrial Revolution (4IR) that the World Economic Forum (WEF) is promoting specifically declares industrial capitalism is past its economically useful time in rich countries”
Larry Summers memo E.g. developed countries [enlightened] took on the toxic burden [legacy costs of profit] of up lift and its time the undeveloped [savages] did their part for the team effort.
“Said horoscopes declared the Great Conjunction of Saturn and Neptune, the so-called Christmas star, means the age of industrial capitalism has come to an end and the age of data capitalism was beginning. Amazing where this WEF 4IR propaganda show up! )”
Bill Gates Frictionless Capitalism where the ever present frictions [tm] imposed on humans by nature can be shrugged off so individuals can achieve their personal potential [spiritual/profit captains pick] thus being closer to thee – like he did.
“There’s very little hint that govts are needed for anything except giving “information/finance capital” a free rein.”
Most of what constitutes information wealth is at the bottom of the seas and oceans. Not that many years ago an under sea land slide wiped a few billions out in a few hours, just due to lack of information flows, which has a parallel to the VoM condition in setting price. This makes the whole south China seas situation so interesting, its a physical and information trade hot spot, many see this ass over reach, from an expansionary perspective [time and space], but seems more defensive in both applications.
Super gross about the horoscope with the WEF 4IR propaganda.
The most recent conjunction was between Saturn and Jupiter. Is there also a Great Conjunction of Saturn and Neptune?
Great comment. Sadly, it looks like that’s where it’s going with the 4IR.
The term ‘rentier’ needs to be something else.
IF you want to increase the likelihood of ever gonna get regular old working stiff people off the sidelines.
Do NOT explain with 70 words or 70 sentences why it is accurate – so what. The phrase doesn’t work, you gotta think about it and translate it.
IF you’re explaining, you’re losing.
MMT simply says that in a sovereign economy the sovereign currency is the only means to pay taxes. The rate of taxation is a political issue. Whether or not a policy is based on that is a political issue. The rate of taxation is a political issue. All countries use deficit policies to fund wars, infrastructure, social befits, etc. MMT is politically neutral.. It is a very simple idea.
Spend 29minutes and 8 seconds to watch the YouTube presentation
by J D Alt from a long time ago.
MMT is politically neutral?
Are you saying that there is not any type of power assertion within the doctrine of MMT?
Doesn’t simply saying “…that in a sovereign economy the sovereign currency is the only means to pay taxes,” contain within it a phenomenal assertion of power?
I
The Sovereign always has power over all things within its legal boundaries or are your suggesting a higher power dictates outcomes. Never the less its what rolls around in the political class and their money base that dictates how administration is applied, not the nature of money in of itself.
The eighth paragraph of Hudson’s comment starts out, “So, you have a privatization of wealth that is not created by landlords, not created by individuals.” Should this read, “So, you have a privatization of wealth that is created by landlords, not created by individuals.”?
Re Gulag’s comment above, once MMT is admitted as true, then everything else is political and therefore up for discussion. Policy is political and ideologically driven as well as being socialy driven.
Yves, a couple other thoughts. First, as Mr. Hudson says, the states that are in the worst financial distress, CA, NY, MI, IL, are all industrial based states. Since finance is not an economic system, there’s no real way to transition them to finance economies from industrial.
Second, Mr. Hudson also talks about pensions & health care having to be included in wages, thus driving up wages. But, he assumes this is going to continue. I believe it’s not. The master plan is to continue to push those items out to employees to deal with. The employer will provide the health plan, but the employee must figure out how to pay for it. A wage will be a wage. You will get $20 an hour and its up to you to figure out how to pay for health, save for retirement, all the fun debts. But that’s the American way! You r on your own to figure out how to pay for all that stuff. & of course there will be 1 example they will rub in our faces of how “John” worked late & went to school at the same time & now is a millionaire, retiring at 37. So that we will feel guilty & blame ourselves for our misery instead of blaming the system. And when the suicide rate goes way up, we can just say its because we don’t have enough Star Wars TV shows on Disney+.