Week 28
In the developed world, we need policies that reduce the inequality at the top. It is sometimes said these are very difficult policies to devise. I’m not sure that’s true. What we’re really talking about is a degree of redistribution similar to that experienced in the decades after the Second World War, combined with policies that prevent the international rich person’s sport of hiding assets from taxation. This was one of the focuses of Thomas Piketty’s Capital, and with good reason. I mentioned earlier that assets and liabilities always balance – that’s the way they are designed, as accounting equalities. But when we come to global wealth, this isn’t true. Studies of the global balance sheet consistently show more liabilities than assets. The only way that would make sense is if the world were in debt to some external agency, such as Venusians or the Emperor Palpatine. Since it isn’t, a simple question arises: where’s all the fucking money? Piketty’s student Gabriel Zucman wrote a powerful book, The Hidden Wealth of Nations (2015), which supplies the answer: it’s hidden by rich people in tax havens. According to calculations that Zucman himself says are conservative, the missing money amounts to $8.7 trillion, a significant fraction of all planetary wealth. It is as if, when it comes to the question of paying their taxes, the rich have seceded from the rest of humanity [..]
Effective legal instruments to prevent offshore tax evasion are incredibly simple and could be enacted overnight, as the United States has just shown with its crackdown on oligarchs linked to Putin’s regime. All you have to do is make it illegal for banks to enact transactions with territories that don’t comply with rules on tax transparency. That closes them down instantly.
There
Michael Hudson
[From The Bubble and Beyond, 2012]
Much like in a radioactive decay process, we are passing through the short-lived and unstable phases of a Bubble Economy and casino capitalism that now threaten to settle into leaden austerity and debt deflation.
This situation confronts society with a choice: either to write down debts to a level that can be paid (or indeed, to write them off with a Clean Slate), or to permit creditors to foreclose, concentrating property in their own hands (including whatever assets are in the public domain to be privatized) and imposing a combination of financial and fiscal austerity on the population. This scenario will produce a shrinking debt-ridden and tax-ridden economy.
The latter is the path that the Western nations are pursuing today. It is the opposite path from that which classical economists advocated and which Progressive Era writers expected. Their optimistic focus on technological potential was thwarted by the political stratagems of the vested rentier interests fighting back against the classical idea of free markets and economic reforms to free industrial capitalism from the legacy of medieval and even ancient privileges and essentially corrosive, antisocial behavior.
This is not a natural or inevitable form of evolution. It is a detour from the kind of economy and indeed free market that classical economists sought to create. With roots in the 13th-century Schoolmen discussing Just Price, the labor theory of value was refined as a tool to isolate economic rent as that element of price that had no counterpart in actual or necessary costs of production. Banking charges, monopoly rent and land rent were the three types of economic rent analyzed in this long classical tradition. These rentier charges were seen as unnecessary and exploitative special privileges carried over from the military conquests that shaped medieval Europe. A free market was defined as one free of such overhead [..]
Chapter 1 [..] describes the long line of analysis that has recognized that there are many ways to structure financial markets — productive rather than parasitic ways. [.. T]his paper describes the tradition of steering banking systems to finance industrial capital formation with productive credit. [..]
I was unable to convince the attendees at the Norwegian meeting to include the financial dimension of industrial reform in their canon, so this paper is published here for the first time. I had no greater success in getting commercial publishers to accept the history of banking and finance that I was writing. [...]
Academically, I ran into the fact that the long tradition distinguishing between productive and unproductive credit and indeed the role of debt has been excluded from the economics curriculum. The anticlassical school has replaced Progressive Era financial analysis with a happy-face view in which finance only adds to economic activity by providing credit, never corrodes it with debt — as if one party’s credit were not another’s debt!
Yes
Comment
They loaded Toy's R Us with debt, they destroyed it
No
TrU was in a bad condition in 2004, an equity firm did a leveraged buyout, then put that debt on their books. So it was as-if Toy's R Us went to the bank itself, and took that debt, put it on their own books. They could not, at the time, apparently, so in a way Bain used its credit-worthiness to take credit for TrU. From their POV this was a buy-low sell-high menauver. Ultimately TrU went under but it could have gone under years ago.
It is sad, of course, TrU had nice stores, kids loved going around in them.. but things change.. I'd like to see disco balls and perm hair making a comeback. Will it happen? Probably not.
"I still have issues with the baker case.. why could the baker not serve the gay couple?"
Here is a good analogy
Imagine you are a Jew. Would you go to a baker who you suspect is a neo-Nazi?
Peter Schiff makes the point well. Use some common sense; why go to a baker, force him to serve you...? U know he'll shit in there, do all kinds of funky stuff to your cake if you do that. So stay away. C'mon.
Isaac Asimov
[From It's Been A Good Life] About 600 C.E., a Turkish tribe, the Khazars, lived in what is now southern Russia. They established an empire that reached its peak about 750 C.E., [and] about that time, the Khazars adopted Judaism as the stat religion, [probably] to keep from falling under the influence of either the Byzantine Christians or the Arab Moslems, who were busily engaged in the first part of their centuries-long duel.
After 965, the Khazars were through as an organized power, but Judaism may have remained, and it may well be that many East European Jews are descended from Khazars and the people they ruled. I may be one of them.
Ha Ha
So Jews (in this region) chose their religion for strategic reasons? For convenience?
They were not that into it?
That is really funny. What does that say about the ultra-conservative Jews today in Israel whose make-up contains a good amount of people from the Eastern Europe I am sure.
The TR connection is interesting too... for me.
A while ago I saw a genetic lineage paper, it said my peeps are genetically connected mostly to Brits and Fins in Europe.. It doesn't matter much of course, culture matters more and that has everything to do with the land, Anatolia, less to do with some distant jackasses who came in God knows when, whose effect was diluted over there years. But I never forgot it.. I subconsciously look for similarities sometimes, and I find it, but I am sure it is a biased look, simple amusement in this case.
With Israelis though, there are boat load of similarities, nothing amusing there. I mean, the way they treat Palestinians are not that dissimilar from the way my tiggers treat the Kurds... Or treated Armenians - if not at individual level, certainly at state level.
[From Listen, Liberal, on how the Dems' shift to professional class started] Then Frederick Dutton, Democratic Party power broker [..] identified workers, the core of the New Deal coalition, as “the principal group arrayed against the forces of change.” They were actually, to a certain degree, the enemy. [..]“In the 1930s, the blue-collar group was in the forefront,” Dutton recalled. “Now it is the white-collar sector.” Specifically: “the college-educated group.” That was who mattered in the future-altering present of 1971.
Put yourself in Dutton’s place, and you can perhaps understand where he was coming from. In the Sixties, labor unions seemed like big, unresponsive, white-dominated organizations that were far closer to the comfortable and the powerful than they were to the discontented. Changing Sources of Power appeared shortly after a disturbing presidential run by Alabama governor George Wallace, an arch-segregationist whose appeal was then thought to be greatest among working-class whites. The culture in those years was saturated with depictions of blue-collar bigots doing scary things like shooting the main characters in Easy Rider and rioting in support of the Vietnam War. Everyone back then knew what reactionary clods FDR’s old constituents had become; just look at All in the Family [..]
Although Dutton surely didn’t intend for matters to unfold this way, his reverence for the professional class and his contempt for the “legatees of the New Deal” opened the way for something truly unfortunate: the erasure of economic egalitarianism from American politics [..]
Democratic leaders decided to reorient the party after 1968 not because this was necessary for survival but because they distrusted their main constituency and had started to lust after a new and more sophisticated one [..]
The different schools of Democratic Party reform that I have briefly described here are usually regarded as separate if not mutually despising tendencies. Frederick Dutton and his fellow worshippers at the shrine of enlightened youth were part of what is called the “New Politics” persuasion; among other things, they were open to cultural radicalism and strongly opposed the Vietnam War. The Democratic Leadership Council, on the other hand, were a faction of hippie-punching white Southerners who loved free markets and who ultimately discredited themselves many years later by whooping it up for the Iraq War.
These factions appeared to be opponents, and yet there was a persistent habit of thought that united them: regardless of what it was they were demanding, they all agreed that what stood in their way was the legacy of the New Deal—the Democratic Party’s commitment to equality for working people. That was what had to end.
Here is where our story takes its remarkable turn: slowly but relentlessly, these different loser reform traditions came together, and as they did, the Democratic Party became a success. Bad ideas plus bad ideas turned out, in this case, to yield electoral victory.
The exact point where these trajectories intersected was occupied by one Bill Clinton, governor of Arkansas, a Rhodes Scholar and a McGovern campaign worker who had grown up to become the chairman of the DLC. He led the idealistic Sixties generation and he warred with the teachers’ union; he smoked dope and he never got high; he savored Fleetwood Mac and he got tough with welfare mothers. Here was the one-man synthesis of the grubby dialectic I have been describing, and he arrived in Washington to fulfill the sordid destiny of his class like Lenin arriving at the Finland Station.
Ha ha
A lot of forces seem to have arrayed themselves behind these so-called "new Democrats", who, for some reason developed a distaste for the unions (they supported the Vietnam War), didn't want to be restricted by New Deal politics wanted to rock'n roll, be hip, try to exude charisma by lip biting, second-rate Robert Redford impressions, not come across as working class. There is a parallel here with the professionalism displayed on Star Trek TNG, and the repeated "Picard face-palm" meme that goes around everytime libs are upset about something, and, dare I say some connections to the Third Wave systemology expounded upon at length here. The last two connections are mostly superflous however - Star Trek TNG takes place in a world without money, Toffler was not pro-globalization the way these poor lost souls are, constantly warning about the down-side of new tech, and about new social contracts to make it work. The DLC seem to have created a Frankenstein by combining unwanted / mismatched parts of all, and sell it through shoddy charisma that could only work in a post-Berlin Wall environment when everyone was confused about everything.
Bernard Lietaer: Money diversity
And here is your moment of Zen...
Thank You, Koch Brothers! #Bernie