Category Archives: Corporate Welfare

Freedom Rider: How the billionaires rule

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Predatory capitalism has driven down wages and created a dystopia for workers.

By Margaret Kimberley

Source: Intrepid Report

President Calvin Coolidge said, “The business of America is business.” The expression is memorable because it always rang true. But nearly 100 years later an old trite saying has taken on an ever more terrifying meaning.

The ruling class wield their power more blatantly than ever. There is little effort to conceal their determination to rule over the people and to control the politicians who are now little more than their personal minions.

When the people get a little help, as happened with additional stimulus funds for the unemployed, politicians across the country took up arms for the ruling class and turned down free money just to stay in the good graces of their bosses.

Currently 25 states out of 50 have rejected additional help for the unemployed. The money came from the federal government and didn’t impact state budgets, but politicians know who calls the shots. When called upon to help struggling people they chose to do just the opposite. They helped their exploiters and, in the process, made a mockery of what passes for democracy.

There is no labor shortage in this country. Instead, there is a shortage of jobs that pay a living wage and that is because of the power of capitalists. They have grown richer precisely because they have forced workers to live in a constant state of precarity, and now it is quite literally better to stay home than to work for a pittance.

Of course, the richest man in the world, Amazon’s Jeff Bezos, is a master at coming up with new ways to subjugate workers. Any reports of job growth should be viewed with a very jaundiced eye as predatory capitalism has driven down wages and created a dystopia for workers. Bezos has mastered squeezing the most and giving the least.

Amazon warehouse workers suffer from injuries at higher rates than other employees in similar jobs but the injuries are part of the cost of doing business. It is expected that the grueling working conditions will create high turnover which is exactly what Amazon wants. A revolving door of employees serves their needs quite nicely. Bezos made a big deal about a $15 per hour starting salary but he could certainly afford to pay a lot more, a real living wage. The tight-fisted billionaire who could potentially become a trillionaire got rich the old fashioned way. He cheats workers.

Bezos also comes up with new and ingenious ways to spread the suffering. Amazon Flex delivery drivers are hired by apps and fired by algorithms. They have no interaction with human resources or any humans at all and they must pay a $200 fee to contest terminations that are rarely decided in their favor.

Even when American workers lose their jobs they are still at the mercy of corporate giants. ID.me contracts with states to provide public access to web sites such as those used for unemployment claims. Their facial recognition software doesn’t verify everyone properly and desperate people wait days and weeks for their unemployment payments to arrive. As with Amazon there is no one to speak to for help. But state governments turn over millions of dollars to ID.me in order to cheat people out of benefits they have earned. Currently 30 states contract with ID.me to make sure that the most vulnerable are kicked while they are down.

The algorithm hirings and firings and the facial recognition technology problems are not bugs in the system. They are features. They are doing precisely what they are intended to do, keep workers poor, desperate, and at the mercy of capitalists. Cruelty is the point.

One might ask who speaks for the people. Workers in several states had their unemployment saved by court decisions but those are few and far between. Politicians are as blatant as their corporate bosses and openly side with them against their constituents.

There is no way to reform this system. Democrats and republicans are equally eager to act at the behest of corporate interests. The people either vote in hopes of change that never comes or are apathetic because they see that the odds are against them.

The workers who refuse low pay under dangerous conditions are moving in the right direction. Whether they know it or not they are potentially building a new movement. A general strike is what the country needs. Of course that is why the hammer fell in an attempt to nip any resistance in the bud and get the cogs back into the machine. But the direction we must move in is clear. There is no salvation from a Biden or a Harris or any other name being floated. The people will have to move in a different direction if they are to save themselves.

There is More to BlackRock Than You Might Imagine

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By F. William Engdahl

Source: New Eastern Outlook

A virtually unregulated investment firm today exercises more political and financial influence than the Federal Reserve and most governments on this planet. The firm, BlackRock Inc., the world’s largest asset manager, invests a staggering $9 trillion in client funds worldwide, a sum more than double the annual GDP of the Federal Republic of Germany. This colossus sits atop the pyramid of world corporate ownership, including in China most recently. Since 1988 the company has put itself in a position to de facto control the Federal Reserve, most Wall Street mega-banks, including Goldman Sachs, the Davos World Economic Forum Great Reset, the Biden Administration and, if left unchecked, the economic future of our world. BlackRock is the epitome of what Mussolini called Corporatism, where an unelected corporate elite dictates top down to the population.

How the world’s largest “shadow bank” exercises this enormous power over the world ought to concern us. BlackRock since Larry Fink founded it in 1988 has managed to assemble unique financial software and assets that no other entity has. BlackRock’s Aladdin risk-management system, a software tool that can track and analyze trading, monitors more than $18 trillion in assets for 200 financial firms including the Federal Reserve and European central banks. He who “monitors” also knows, we can imagine. BlackRock has been called a financial “Swiss Army Knife — institutional investor, money manager, private equity firm, and global government partner rolled into one.” Yet mainstream media treats the company as just another Wall Street financial firm.

There is a seamless interface that ties the UN Agenda 2030 with the Davos World Economic Forum Great Reset and the nascent economic policies of the Biden Administration. That interface is BlackRock.

Team Biden and BlackRock

By now it should be clear to anyone who bothers to look, that the person who claims to be US President, 78-year old Joe Biden, is not making any decisions. He even has difficulty reading a teleprompter or answering prepared questions from friendly media without confusing Syria and Libya or even whether he is President. He is being micromanaged by a group of handlers to maintain a scripted “image” of a President while policy is made behind the scenes by others. It eerily reminds of the 1979 Peter Sellers film character, Chauncey Gardiner, in Being There.

What is less public are the key policy persons running economic policy for Biden Inc. They are simply said, BlackRock. Much as Goldman Sachs ran economic policy under Obama and also Trump, today BlackRock is filling that key role. The deal apparently was sealed in January, 2019 when Joe Biden, then-candidate and long-shot chance to defeat Trump, went to meet with Larry Fink in New York, who reportedly told “working class Joe,” that, “I’m here to help.”

Now as President in one of his first appointees, Biden named Brian Deese to be the Director of the National Economic Council, the President’s main adviser for economic policy. One of the early Presidential Executive Orders dealt with economics and climate policy. That’s not surprising, as Deese came from Fink’s BlackRock where he was Global Head of Sustainable Investing. Before joining BlackRock, Deese held senior economic posts under Obama, including replacing John Podesta as Senior Adviser to the President where he worked alongside Valerie Jarrett. Under Obama, Deese played a key role in negotiating the Global Warming Paris Accords.

In the key policy post as Deputy Treasury Secretary under Secretary Janet Yellen, we find Nigerian-born Adewale “Wally” Adeyemo. Adeyemo also comes from BlackRock where from 2017 to 2019 he was a senior adviser and Chief of Staff to BlackRock CEO Larry Fink, after leaving the Obama Administration. His personal ties to Obama are strong, as Obama named him the first President of the Obama Foundation in 2019.

And a third senior BlackRock person running economic policy in the Administration now is also unusual in several respects. Michael Pyle is the Senior Economic Adviser to Vice President Kamala Harris. He came to Washington from the position as the Global Chief Investment Strategist at BlackRock where he oversaw the strategy for investing some $9 trillion of funds. Before joining BlackRock at the highest level, he had also been in the Obama Administration as a senior adviser to the Undersecretary of the Treasury for International Affairs, and in 2015 became an adviser to the Hillary Clinton presidential bid.

The fact that three of the most influential economic appointees of the Biden Administration come from BlackRock, and before that all from the Obama Administration, is noteworthy. There is a definite pattern and suggests that the role of BlackRock in Washington is far larger than we are being told.

What is BlackRock?

Never before has a financial company with so much influence over world markets been so hidden from public scrutiny. That’s no accident. As it is technically not a bank making bank loans or taking deposits, it evades the regulation oversight from the Federal Reserve even though it does what most mega banks like HSBC or JP MorganChase do—buy, sell securities for profit. When there was a Congressional push to include asset managers such as BlackRock and Vanguard Funds under the post-2008 Dodd-Frank law as “systemically important financial institutions” or SIFIs, a huge lobbying push from BlackRock ended the threat. BlackRock is essentially a law onto itself. And indeed it is “systemically important” as no other, with possible exception of Vanguard, which is said to also be a major shareholder in BlackRock.

BlackRock founder and CEO Larry Fink is clearly interested in buying influence globally. He made former German CDU MP Friederich Merz head of BlackRock Germany when it looked as if he might succeed Chancellor Merkel, and former British Chancellor of Exchequer George Osborne as “political consultant.” Fink named former Hillary Clinton Chief of Staff Cheryl Mills to the BlackRock board when it seemed certain Hillary would soon be in the White House.

He has named former central bankers to his board and gone on to secure lucrative contracts with their former institutions. Stanley Fisher, former head of the Bank of Israel and also later Vice Chairman of the Federal Reserve is now Senior Adviser at BlackRock. Philipp Hildebrand, former Swiss National Bank president, is vice chairman at BlackRock, where he oversees the BlackRock Investment Institute. Jean Boivin, the former deputy governor of the Bank of Canada, is the global head of research at BlackRock’s investment institute.

BlackRock and the Fed

It was this ex-central bank team at BlackRock that developed an “emergency” bailout plan for Fed chairman Powell in March 2019 as financial markets appeared on the brink of another 2008 “Lehman crisis” meltdown. As “thank you,” the Fed chairman Jerome Powell named BlackRock in a no-bid role to manage all of the Fed’s corporate bond purchase programs, including bonds where BlackRock itself invests. Conflict of interest? A group of some 30 NGOs wrote to Fed Chairman Powell, “By giving BlackRock full control of this debt buyout program, the Fed… makes BlackRock even more systemically important to the financial system. Yet BlackRock is not subject to the regulatory scrutiny of even smaller systemically important financial institutions.”

In a detailed report in 2019, a Washington non-profit research group, Campaign for Accountability, noted that, “BlackRock, the world’s largest asset manager, implemented a strategy of lobbying, campaign contributions, and revolving door hires to fight off government regulation and establish itself as one of the most powerful financial companies in the world.”

The New York Fed hired BlackRock in March 2019 to manage its commercial mortgage-backed securities program and its $750 billion primary and secondary purchases of corporate bonds and ETFs in no-bid contracts. US financial journalists Pam and Russ Martens in critiquing that murky 2019 Fed bailout of Wall Street remarked, “for the first time in history, the Fed has hired BlackRock to “go direct” and buy up $750 billion in both primary and secondary corporate bonds and bond ETFs (Exchange Traded Funds), a product of which BlackRock is one of the largest purveyors in the world.” They went on, “Adding further outrage, the BlackRock-run program will get $75 billion of the $454 billion in taxpayers’ money to eat the losses on its corporate bond purchases, which will include its own ETFs, which the Fed is allowing it to buy…”

Fed head Jerome Powell and Larry Fink know each other well, apparently. Even after Powell gave BlackRock the hugely lucrative no-bid “go direct” deal, Powell continued to have the same BlackRock manage an estimated $25 million of Powell’s private securities investments. Public records show that in this time Powell held direct confidential phone calls with BlackRock CEO Fink. According to required financial disclosure, BlackRock managed to double the value of Powell’s investments from the year before! No conflict of interest, or?

A Very BlackRock in Mexico

BlackRock’s murky history in Mexico shows that conflicts of interest and influence-building with leading government agencies is not restricted to just the USA. PRI Presidential candidate Peña Nieto went to Wall Street during his campaign in November 2011. There he met Larry Fink. What followed the Nieto victory in 2012 was a tight relationship between Fink and Nieto that was riddled with conflict of interest, cronyism and corruption.

Most likely to be certain BlackRock was on the winning side in the corrupt new Nieto regime, Fink named 52-year-old Marcos Antonio Slim Domit, billionaire son of Mexico’s wealthiest and arguably most corrupt man, Carlos Slim, to BlackRock’s Board. Marcos Antonio, along with his brother Carlos Slim Domit, run the father’s huge business empire today. Carlos Slim Domit, the eldest son, was Co-Chair of the World Economic Forum Latin America in 2015, and currently serves as chairman of the board of America Movil where BlackRock is a major investor. Small cozy world.

The father, Carlos Slim, at the time named by Forbes as World’s Richest Person, built an empire based around his sweetheart acquisition of Telemex (later America Movil). Then President, Carlos Salinas de Gortari, in effect gifted the telecom empire to Slim in 1989. Salinas later fled Mexico on charges of stealing more than $10 billion from state coffers.

As with much in Mexico since the 1980s drug money apparently played a huge role with the elder Carlos Slim, father of BlackRock director Marcos Slim. In 2015 WikiLeaks released company internal emails from the private intelligence corporation, Stratfor. Stratfor writes in an April 2011 email, the time BlackRock is establishing its Mexico plans, that a US DEA Special Agent, William F. Dionne confirmed Carlos Slim’s ties to the Mexican drug cartels. Stratfor asks Dionne, “Billy, is the MX (Mexican) billionaire Carlos Slim linked to the narcos?” Dionne replies, “Regarding your question, the MX telecommunication billionaire is.” In a country where 44% of the population lives in poverty you don’t become the world’s richest man in just two decades selling Girl Scout cookies.

Fink and Mexican PPP

With Marcos Slim on his BlackRock board and new president Enrique Peña Nieto, Larry Fink’s Mexican partner in Nieto Peña’s $590 billion PublicPrivatePartnership (PPP) alliance, BlackRock, was ready to reap the harvest. To fine-tune his new Mexican operations, Fink named former Mexican Undersecretary of Finance Gerardo Rodriguez Regordosa to direct BlackRock Emerging Market Strategy in 2013. Then in 2016 Peña Nieto appointed Isaac Volin, then head of BlackRock Mexico to be No. 2 at PEMEX where he presided over corruption, scandals and the largest loss in PEMEX history, $38 billion.

Peña Nieto had opened the huge oil state monopoly, PEMEX, to private investors for the first time since nationalization in the 1930s. The first to benefit was Fink’s BlackRock. Within seven months, BlackRock had secured $1 billion in PEMEX energy projects, many as the only bidder. During the tenure of Peña Nieto, one of the most controversial and least popular presidents, BlackRock prospered by the cozy ties. It soon was engaged in highly profitable (and corrupt) infrastructure projects under Peña Nieto including not only oil and gas pipelines and wells but also including toll roads, hospitals, gas pipelines and even prisons.

Notably, BlackRock’s Mexican “friend” Peña Nieto was also “friends” not only with Carlos Slim but with the head of the notorious Sinaloa Cartel, “El Chapo” Guzman. In court testimony in 2019 in New York Alex Cifuentes, a Colombian drug lord who has described himself as El Chapo’s “right-hand man,” testified that just after his election in 2012, Peña Nieto had requested $250 million from the Sinaloa Cartel before settling on $100 million. We can only guess what for.

Larry Fink and WEF Great Reset

In 2019 Larry Fink joined the Board of the Davos World Economic Forum, the Swiss-based organization that for some 40 years has advanced economic globalization. Fink, who is close to the WEF’s technocrat head, Klaus Schwab, of Great Reset notoriety, now stands positioned to use the huge weight of BlackRock to create what is potentially, if it doesn’t collapse before, the world’s largest Ponzi scam, ESG corporate investing. Fink with $9 trillion to leverage is pushing the greatest shift of capital in history into a scam known as ESG Investing. The UN “sustainable economy” agenda is being realized quietly by the very same global banks which have created the financial crises in 2008. This time they are preparing the Klaus Schwab WEF Great Reset by steering hundreds of billions and soon trillions in investment to their hand-picked “woke” companies, and away from the “not woke” such as oil and gas companies or coal. BlackRock since 2018 has been in the forefront to create a new investment infrastructure that picks “winners” or “losers” for investment according to how serious that company is about ESG—Environment, Social values and Governance.

For example a company gets positive ratings for the seriousness of its hiring gender diverse management and employees, or takes measures to eliminate their carbon “footprint” by making their energy sources green or sustainable to use the UN term. How corporations contribute to a global sustainable governance is the most vague of the ESG, and could include anything from corporate donations to Black Lives Matter to supporting UN agencies such as WHO. Oil companies like ExxonMobil or coal companies no matter how clear are doomed as Fink and friends now promote their financial Great Reset or Green New Deal. This is why he cut a deal with the Biden presidency in 2019.

Follow the money. And we can expect that the New York Times will cheer BlackRock on as it destroys the world financial structures. Since 2017 BlackRock has been the paper’s largest shareholder. Carlos Slim was second largest. Even Carl Icahn, a ruthless Wall Street asset stripper, once called BlackRock, “an extremely dangerous company… I used to say, you know, the mafia has a better code of ethics than you guys.” 

USA 2021: Capitalism For The Powerless, Crony-Socialism For The Powerful

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By Tyler Durden

Source: Zero Hedge

The supposed “choice” between “capitalism” and “socialism” is a useful fabrication masking the worst of all possible worlds we inhabit: Capitalism for the powerless and Crony-Socialism for the powerful. Capitalism’s primary dynamics are reserved solely for the powerless: market price of money, capital’s exploitive potential, free-for-all competition and creative destruction.

The powerful, on the other hand, bask in the warm glow of socialism: The Federal Reserve protects them from the market cost of money–financiers and the super-wealthy get their money for virtually nothing from the Fed, in virtually unlimited quantities–and the Treasury, Congress and the Executive branch protect them from any losses: their gains are private, but their losses are transferred to the public. The Supreme Court ensures the super-rich maintain this cozy crony-socialism by ensuring they can buy political power via lobbying and campaign contributions–under the laughable excuse of free speech.

Cronies get the best political system money can buy and you–well, you get to carry a sign on the street corner, just before you’re hauled off to jail for disturbing the peace (and you’re banned by social media/search Big Tech, i.e. privatized totalitarianism, for good measure).

The Federal Reserve is America’s financial Politburo: cronies get a free pass, the powerless get nothing. While the three billionaires who own more wealth than the bottom 165 million Americans can borrow unlimited sums for next to nothing thanks to the Fed (i.e. Crony-Socialist Politburo), the 165 million Americans pay exorbitant interest on payday loans, used car loans, student loans, credit cards and so on.

Capitalism (market sets price of money) for the powerless, Crony-Socialism (nearly free money) for the powerful–thanks to America’s Crony-Socialist Politburo, the Fed. Consider the “free market” plight of America’s working poor: earning low wages that are rapidly losing their purchasing power makes them a credit risk, i.e. prone to defaulting, so lenders (i.e. capital’s exploitive potential) charge high interest rates on loans to the working poor.

Since they pay such high rates of interest and earn so little, they default on their debt at higher rates–just what the lenders expected, and what the lenders created by charging sky-high rates of interest: gee, you’re having trouble paying 24% interest? Too bad you’re poor. You see the point: low wages, poverty and exorbitant rates of interest are mutually reinforcing: a primary driver of defaults and poverty is paying sky-high rates of interest and all the late fees, bounced check fees, etc. that go with 24% interest rates.

The Crony-Socialists have a much different deal with the Fed and its crony-bankers: the super-wealthy arrange for the corporations they own shares in to borrow billions of dollars to fund stock buybacks (which in a less exploitive era were illegal market manipulation). The super-wealthy Crony-Socialist’s personal wealth rises by $100 million thanks to the stock buybacks, and then the super-wealthy Crony-Socialist borrows $10 million for next to nothing against this newly conjured “wealth” (thanks, Fed!) to fund living large.

Crony-Socialist corporations pay no income tax thanks to loopholes and the Crony-Socialists who own the shares report $1 in salary and zero income because they borrowed their living expenses against their Fed-conjured wealth. Do you discern the difference between capitalism for the powerless and crony-socialism for the super-wealthy?

If you can’t yet discern the difference, then ask yourself: can you borrow $1 billion from the Fed’s cronies to buy back shares of your own company, and then borrow $10 million for near-zero rates of interest against the newly conjured “wealth”? You can’t? Well, why not?

If you answer “I don’t have enough collateral,” you missed the key point here: thanks to America’s Crony-Socialist Politburo (the Fed), the super-wealthy have no exposure to the market price of money. The Fed manipulates the cost of money to near-zero, and then funnels unlimited sums of this nearly-free money to corporations, financiers and the super-wealthy.

Collateral is unnecessary in Crony-Socialism; that’s just a excuse given to the powerless. Crony-Socialists borrow $1 billion for next to nothing, buy Treasuries with the free money, put the Treasuries up as collateral (but wait, didn’t they borrow the money? Never mind, it doesn’t matter), originate some financial instruments (CDOs, etc.), post those as collateral, and then leverage up another bet on that fictitious collateral.

If the bets all go bad, the Crony-Socialist claims the whole fraud is now a systemic risk and so the losses are transferred to the public / taxpayers to “save the financial system from collapse.” Isn’t Crony-Socialism fantastic?

Just as the rich kid caught with smack gets a suspended sentence and probation while the powerless kid gets a tenner in the War on Drugs Gulag, the super-wealthy Crony-Socialists avoid all the consequences of their gambles and frauds. America’s Crony-Socialist Politburo (the Fed) takes care of its cronies and the powerless bear the brunt of predatory exploitation that’s passed off as “capitalism.”

The only dynamic that’s even faintly “capitalist” about America’s Crony-Socialism is the price of political corruption is still a “market”: what’s the current price of protecting your monopoly or cartel from competition? It’s moving up fast, so better get those bribes (oops, I mean campaign contributions for the 2022 election) in now before the price of corrupting “democracy” goes even higher.

ARCHITECTS OF POWER: HOW THE GLOBAL ELITE PROFIT FROM EXTREME INEQUALITY & PRE-EMPT THE BACKLASH

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By Dr. Tim Coles

Source: Waking Times

There is a new, mega-rich global elite consisting of a small number of billionaires and multibillionaires. Many of them made their money in the technology sector. Others play financial markets or inherit fortunes. They are wealthier and more powerful than some entire nation-states.

The British Ministry of Defence (MoD) says:

“Whilst there have always been differences between the wealthier, better educated and the less privileged, these differences appear likely to widen in the coming decades.”

The mega-rich deliberately order the world in ways that guarantee their wealth by institutionalising inequality. Occasionally, this is admitted. In 1997, a book published by the Royal Institute for International Affairs in the UK acknowledged:

“The present international order may not be the best of all possible worlds, but for one of the ‘fat cats of the West’ enjoying a privileged position in an international society that is structured and organised in ways which perpetuate those privileges, there are good reasons for not pursuing radical change.”

This is also true of internal policymaking. The third richest man in the world, Warren Buffett (worth over $80bn), confirmed this: “There’s been class warfare for the last 20 years, and my class has won.” This echoes his statement in 2006, just prior to the global financial crisis: “There’s class warfare all right… but it’s my class, the rich class, that’s making war, and we’re winning.” Around the same time, the liquidity firm Citigroup circulated an investor memo, stating: “Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share.” More recently, the UK MoD admitted: “In the coming decades, the very highest earners will almost certainly remain rich, entrenching the power of a small elite. Vested interests could reduce the prospect of economic reforms that would benefit the poorest.”

Consider the enormous concentration of wealth and power that results from this imbalance.

Ever-Increasing Power

Global and national inequality is staggering and getting worse. By 2011, a mere 147 – mainly US and European – corporations owned and controlled 40% of world trade and investment. Just four corporations influence the profitability and power of these 147: McGraw-Hill, which owns Standard & Poor’s ratings agency; Northwestern Mutual, owner of the indexer Russell Investments; the CME Group, which owns 90% of the Dow Jones market index; and Barclay’s bond fund index. Evaluative decisions by analysts at these firms affect the wealth and performance of each of the 147 giants.

That’s corporate wealth concentration. But what about wealth concentration among individuals?

There are 7.7 billion people in the world. Of those, just 2,153 are billionaires. According to Forbes, their combined wealth totals $8.7 trillion. The list of billionaires reflects where power is most concentrated: in the US. While China and Europe’s number of billionaires declined in the previous 12 months, the US and Brazil gained billionaires. The US is home to 607 billionaires or 0.000001% of the population. It is worth noting that President Donald Trump was a billionaire before he came to power. Trump has cut taxes for his fellow billionaires. As an indication of continued wealth concentration, consider the wealth disparity among the billionaire class itself. He Xiangjian, founder of the Midea Group, is the joint-50th richest person, worth over $19.8bn. Jeff Bezos, by comparison, the founder of Amazon, is the richest man in the world, worth over $131bn – more than six times He Xiangjian.

Part of the problem has been the US-led imposition of an economic dogma called “neoliberalism” (which is neither new nor liberal) on much of the rest of the world.

Neoliberalism can be roughly defined as:

1) Financialisation, i.e., allowing investors to make money from money as opposed to tangible things;

2) Deregulating financial services;

3) Taking out government insurance policies so that working people bail out financial institutions;

4) Cutting taxes for the wealthy;

5) Privatising public services to reduce social mobility;

6) Imposing austerity to make markets more attractive to investors.

Neoliberalism has cut taxes for the super-rich, enabling them to hold onto their wealth at the expense of others. According to Oxfam, the average rate of personal income tax for the wealthy was 62% in 1970. In 2013, it was 38%. In the UK, the poorest 10% pay a higher proportion of their income in taxes than the richest 10%. Global GDP, i.e., how much money there is in the world, is $80 trillion. But, of this, $7.6 trillion is untaxed. In the decade since the financial crisis, the number of billionaires doubled. This reveals that the system rewards greed. In 2017, 43 people owned as much wealth as half the world’s poorest. In 2018, the number was 26.

To put all this into perspective, Jeff Bezos owns as much wealth as the poorest fifty countries. When it comes to more ‘developed’ nations, Bezos’s wealth equals the entire GDP of Hungary. Consider how Bezos makes his money. Amazon is a corporation that primarily advertises and delivers products. The innovation, design, and investment in and of those products is the work of others. Amazon treats “workers like robots” by spying on them, discouraging unions, offering insecure contracts, and encouraging long hours. Amazon is also notorious for paying little or no corporation tax. Amazon is an online retailer. The Internet was developed by the US Defense Department in the 1960s as ARPANET, with public money. The satellites that enable online transactions are first and foremost military hardware. Not only did Amazon take advantage of state-funded innovation, but it also rewards government investors by selling the CIA cloud technology and the Pentagon artificial intelligence.

Bezos is far from being the only one. Bill Gates’s Microsoft and the late Steve Jobs’s Apple, which became the first trillion-dollar company, also enjoy low taxes, technologies developed with government grants, and procurement contracts.

Consider also the immoral activities of other hi-tech nouvelle méga riche. Without making it clear to users, Facebook founder Mark Zuckerberg (worth $66bn) has made his money by selling personal data to insurers and advertisers. Scientists have used Facebook in social media experiments without the knowledge or consent of users in an effort to see how memes affect mood.

Other mega-rich, including the hedge fund manager Robert Mercer of Renaissance Technologies, used Facebook to market political candidates. Other tech billionaires include Google founders Larry Page and Sergey Brin. Google technology was funded by the CIA’s venture capital firm In-Q-Tel. Also relying on technologies developed by the Pentagon with workers’ tax dollars, the company cooperates with the National Security Agency to spy on citizens and it has even enabled US assassination programmes.

Consequences

How do the billionaires get away with it, and what are the social and political consequences? The examples below are from the US, but it should be noted that the US exports its mega-wealth model.

A study by Martin Gilens and Benjamin I. Page on plutocracy (government by the rich) notes that the rich buy political parties. Politicians draft and/or vote for laws that help the rich. The authors analysed 1,779 policy issues in the US and conclude that “average citizens and mass-based interest groups have little or no independent influence.” Unlike the public, “economic elites and organised groups representing business interests have substantial independent impacts on US government policy.” Other research into wealth inequality in the US finds that “[c]ertain policies, such as the decreased support for unions and tax cuts favouring the relatively well-off and corporations, have benefitted a small minority of the population at the expense of the majority and have thus contributed to widening income inequality.”

At the turn of the last century, 9% of American families owned 71% of the nation’s wealth. The elite of the day included familiar names: John D. Rockefeller (oil), J.P. Morgan (banking), W. Averell Harriman (industry), and so on. Things balanced out after the Second World War, with the majority of Americans becoming middle class. Gradually, state controls over the economy were removed, and the situation reverted to the inequality of bygone centuries.

Since the 1970s, the US middle class has been shrinking. Until recently, the middle classes of Asia grew, precisely because strong Asian economies (notably China, South Korea, and Singapore) either retained some state controls or refused to adopt the US neoliberal model.

Alan B. Krueger, a labour economist and key Obama advisor, explains that, “since the 1970s income has grown more for families at the top of the income distribution than in the middle, and it has shrunk for those at the bottom.” Between 1979 and 2007, the top 1% ((multi)millionaires and (multi)billionaires) enjoyed a 278% increase in their after-tax incomes. But 60% of Americans saw their incomes rise by just 40%, which when adjusted for rising living costs means stagnation. Krueger notes that during that period, $1.1 trillion of annual income was moved to the top 1%. “Put another way, the increase in the share of income going to the top 1% over this period exceeds the total amount of income that the entire bottom 40 percent of households receives.”

The exportation of this model means that Australia, Britain, and Canada became what the billionaire-dollar liquidity firm Citigroup calls “plutonomies,” economies in which the rich drive luxury goods markets such as jewellery, fashion, cruises, and sports cars: hence the recent entry of celebrity Kylie Jenner into the billionaire class. The Citigroup document also notes that in plutonomies the top 1% owns 40% as much wealth as the bottom 95%. No matter where you live, you can’t escape the institutional structures that create inequality.

The US military exists, in part, to maintain the unjust status quo. Yet, it acknowledges the dangers of dominance: “A global populace that is increasingly attuned and sensitive to disparities in economic resources and the diffusion of social influence,” thanks in part to the very technologies that enrich the rich, “will lead to further challenges to the status quo and lead to system rattling events,” like Brexit or the Yellow Vest protestors in France.

The mega-rich and international think tanks and forums they sponsor are beginning to reluctantly accept that their status quo political puppets might get voted out of office and give way to so-called far-left or far-right parties unless they address wealth inequality.

New Paradigms of Control

The question, then, is how to deal with the restless and disaffected majority while not radically altering the system and taking away the privileges of the elite. In 1961, US President John F Kennedy said: “If a free society cannot help the many who are poor, it cannot save the few who are rich.” In the 1980s, World Economic Forum founder Klaus Schwab said: “Economic globalisation has entered a critical phase. A mounting backlash against its effects… is threatening a very disruptive impact on economic activity and social stability in many countries… This can easily turn into revolt.” More recently, he said: “Today, we face a backlash against that system and the elites who are considered to be its unilateral beneficiaries.” Likewise, the billionaire Johann Rupert of Cartier jewellery (one of the many luxury services driving plutonomies) said: “We are destroying the middle classes at this stage and it will affect us.” Similarly, the British MoD discusses “[m]anagement of societal inequalities,” as opposed to the elimination of social inequality.

Many of the new elites make people redundant by automating the workplace. While Amazon still relies on human shelf-stackers and delivery drivers, it uses an increasing number of physical robots to stack shelves and algorithmic robots to assist online customers. Likewise, Facebook and Google’s content filters rely on heavy automation. This is creating precarious employment conditions. According to the Washington Post (which is owned by Bezos): “…the modern emerging workforce of tech, urbanised professionals, and ‘gig economy’ labourers all represent an entirely new political demographic.” Politicians then “focus more on education, research and entrepreneurship, and less on regulations and the priorities of labour unions.”

But there are many problems. For one thing, the financial services economy, which markets everything, has made “education” a form of unsustainable debt. The quality of US education is notoriously low by world standards, and many young people are “overqualified” for menial jobs, like delivering for Uber or stacking shelves in Amazon warehouses. The UK MoD acknowledges that, “Freelance work is… often low-paid, lacking the benefits and security of formal employment and, therefore, the growth of the gig economy could increase inequality.”

The crisis of what to do with a young, indebted, restless population automated out of steady work by – and competing with – algorithms and physical robots has been considered for at least 50 years.

Traditionally, ‘education’ meant brainwashing children to work in menial jobs for life in adulthood. But as the economy changes and employment becomes less stable, new methods of ‘education’ for re-skilling adults are required. In the late 1960s, future political advisor Zbigniew Brzezinski authored a book in which he advocated for lifelong learning as a way of re-skilling an aging population that finds its employment opportunities diminished, as small-to-medium-sized businesses get overtaken by tech giants. Around the same time, the British Labour Party (when it was a real labour party) introduced the Open University with the aim of providing lifelong learning. Likewise, in the 1980s, futurist Alvin Toffler envisaged an “electronic village” in which flexible working hours and lifelong learning would be required in a hi-tech economy.

To keep the poor from rioting while trapping them in a system that works for those who design it, today’s multibillionaire elites help to privatise public services and education by offering scholarships and infrastructure investments. In doing so, they train poor people to work for their system by developing others’ technology skills while hiding their own taxable wealth in charity foundations.

Howard G. Buffett is the son of Warren. While enjoying largely tax-free wealth that further impoverishes the global poor, the Buffetts, via Howard’s foundation, invest in dams and irrigation in the poorest nations of Africa. Bezos’s foundation awards scholarships for STEM courses (Science, Technology, Engineering, Mathematics). Zuckerberg’s foundation seeks “to find new ways to leverage technology, community-driven solutions, and collaboration to accelerate progress in Science, Education, and within our Justice & Opportunity work.”

Conclusion

By using free online services, we have allowed ourselves to be the products that tech giants sell to advertisers. By not organising to raise taxes on the mega-wealthy, we have underfunded our public services. By not keeping an eye on who’s funding what, we’ve allowed our political parties to hoover up donations from elites. By failing to understand the economy, we’ve allowed a new normal of instability and political uncertainty to flourish to the advantage of asset managers and hedge fund investors. As the US pursues global domination, this model will continue to be exported. It’s time to wake up.

The American Terror State

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By Donald Monaco

Source: Global Research

On February 26, 2021, imperial President Joe Biden ordered the bombing of “Iranian backed militias” in Syria. Biden’s action was rationalized as “retaliation” for rocket attacks on American troops in Iraq that killed a mercenary contractor and injured a U.S. soldier.  

Missing from coverage in the corporate media was any mention of the illegal U.S. military occupation of Iraq and Syria.  The occupation was simply airbrushed from discussion.  By so doing, reality is inverted.  Victim is portrayed as aggressor and aggressor as victim.

From the standpoint of international law, aggressive military action taken by occupation forces cannot be termed self-defense.  Yet political elites and media propagandists finesse basic truths by detaching U.S. forces from the context of illegal invasion and occupation.  They assume the military has a ‘right’ to be deployed anywhere in the world.

Paradoxically, the militias assaulted by the United States have been fighting ISIS, once again exposing the ‘war on terror’ as a massive lie.  The same militia forces Biden attacked were once led by Iranian General Soleimani, who was assassinated by Trump, further demonstrating the genuine purpose of military deployment which is to destabilize regimes targeted as unfriendly, meaning not subservient to the Washington.

Almost simultaneously, the Biden administration signaled that there would be no punishment of Saudi crown prince Mohammed bin Salman, who was identified by the CIA as having given the order to assassinate Washington Post journalist, Jamal Khashoggi.

Also, unsurprisingly, the Biden administration announced that it would appeal a British magistrate’s decision not to extradite Julian Assange to the United States for prosecution under the espionage act.  Assange languishes in a British prison pending the appeal.  His transgression? Exposing U.S. war crimes in Iraq.

The pattern is clear.  Any action that supports U.S. global hegemony is justified, while any opposition is criminalized and repressed.

The core mission of the American terror state is to make the world safe for U.S. corporate profiteering.  A corollary imperative is to prevent any challenge to U.S. global domination.

First, the United States is a permanent warfare state that fights perpetual wars for perpetual profits.  The profits accrue to the “merchants of death” who sell their wares within the iron triangle of a military-industrial-complex that guarantees a massive return on capital investments.  The process is known as “military Keynesianism.”  Corporations such as Lockheed Martin, Raytheon, General Dynamics, and Boeing provide the arms for a global military empire to defend the global corporate empire.  Profits also flow to members of congress who own stock in the defense industry.

The permanent warfare state also allows profits to accumulate for corporations that exploit the world’s land, labor, and resources by protecting their access to foreign markets.  Corporations such as World Mineral Inc, Peabody Energy, Rio Tinto, General Motors, Lithium Americas, AES, and Blackberry Ltd in the mineral extraction industry, Exxon Mobile, ConocoPhillips, and Chevron in the energy industry, Apple, Amazon, Alphabet, and Microsoft in the technology industry, General Motors, Ford, and Tesla in the automotive industry, Johnson & Johnson, Merck, and Pfizer in the pharmaceutical industry, and Walmart, Amazon, and Costco in the retail industry all operate in the global market.

Commercial banks such as JP Morgan Chase, Citigroup, Bank of America in the banking industry, Wall Street investment firms led by JP Morgan, Goldman Sachs, and Morgan Stanley in the financial industry, and private equity firms such as The Blackstone Group, The Carlyle Group, Kohlberg Kravis Roberts Co, and TPG Capital in the investment management industry finance global corporate transactions.

U.S. Fortune 500 companies made $14.2 trillion in revenues during 2020 and held an estimated $2.6 trillion offshore to avoid paying taxes.  The largest American corporations made billions of dollars in profits while laying off thousands of workers during the coronavirus lockdown.  Billionaires Jeff Bezos, Elon Musk, Warren Buffett, and their cohorts increased their net worth by half a trillion dollars during a pandemic that saw 8 million people join the ranks of 38.1 million poor Americans.  Another 93.6 million live close to the poverty level in the richest nation on earth.

Second, any country that wants to control its own land, labor, and resources by implementing an agenda of economic nationalism becomes a barrier to free trade, globalization, and the neoliberal economic paradigm that emphasizes privatization and deregulation of economies for the benefit of private capital.  Countries that do not throw themselves open to foreign investment are punished by crippling economic sanctions imposed by the U.S. Department of Treasury.

Third, the neoliberal economic agenda of free market privatization drives the neoconservative political agenda of American global hegemony as justified by Bush Jr.’s “Preemptive War on Terror,” Obama’s “Humanitarian Intervention,” Trump’s “America First,” and Biden’s “Advancement of Democracy” ideologies.

Neoconservatives dominate the foreign policy establishment.  Besides protecting U.S. empire, they are rabidly pro-Israel.  The neocons conflate the interests of the United States with the interests of Israel, ignoring George Washington’s admonition to avoid “foreign entanglements.”  They want the United States to go to war with Iran, as they understand that the destruction of resistance to Zionist colonization in Palestine can only be accomplished by defeating Tehran.

Other Middle Eastern and North African countries that supported the Palestinian cause and had large reserves of oil coveted by empire, were decimated by implementation of a neoconservative plan to attack seven Muslim countries in five years, beginning with Iraq and ending with Iran.

George W. Bush, the Texas oil man, Dick Cheney, former Chief Executive Officer of Halliburton, and a rat’s nest of neoconservatives led by Paul Wolfowitz, Douglas Feith, Richard Perle, and I. Lewis Libby decimated Iraq.

Barack Obama, the University of Chicago law professor and Nobel Peace Prize winner and neoconservative Secretary of State Hillary Clinton, destroyed Syria and turned Libya into a failed state that resulted in the enslavement of Black Africans.

Donald Trump, the real estate mogul and celebrity show host and Mike Pompeo, neoconservative war hawk and Secretary of State, continued the occupations of Syria, Iraq, and Afghanistan, supported Saudi Arabia’s genocidal war in Yemen, recognized Israel’s annexation of the Syrian Golan Heights, moved the U.S. embassy to the occupied city of Jerusalem and offered the Palestinians the “Deal of the Century” that was promptly rejected.

Despite his rhetoric, Trump failed to stand-up to the military-industrial-complex by ending ongoing U.S. wars.

Finally, Joe Biden, a self-professed Zionist, supported every U.S. war to come down the pike during his tenure as U.S. senator and vice-president, making him a warmonger.

The policies of empire are planned in the corridors of the Council on Foreign Relations, Heritage Foundation, Rand Corporation, Center for Strategic and International Studies, American Enterprise Institute and a myriad array of pro-war institutes that function within the policy formulation network financed by the corporate rich.

The matrix of power in the United States is strikingly transparent.  The corporate rich own the country.  The political class protects their property and their empire by pursuing the interests of oligarchic masters as defined by ‘experts’ in the policy formulation network.  Academic and media elites rationalize the need for an empire that is never called by its proper name.

The costs of empire paid by the American people are staggering.

A study conducted by the Watson Institute of International & Public Affairs at Brown University concluded that the United States has spent $6.4 trillion on war since 9/11.

The National Defense Authorization Act of 2021 allocated $740 Billion for the military and prohibited President Trump from withdrawing troops from Afghanistan and Iraq.  Joseph Biden works within in the same institutional framework that enmeshed his predecessor.  The Biden administration is considering troop re-deployment to confront Russia and China.  But no return of troops to the United States is contemplated.

The United States currently has over 1.3 million active-duty troops, with 450,000 stationed on over 800 military bases in 70 countries around the world. Special military operations are being conducted in 141 countries.  U.S. global military presence escalated under both the Obama and Trump administrations.

As U.S. military presence increases around the world, so do the crimes of empire.  Obama prosecuted drone warfare that killed approximately 5,000 innocent civilians.  Trump escalated drone strikes.   Obama launched 1,878 attacks during his eight years in office.  Trump ordered 2,243 strikes during his four-year tenure in the White House while concealing deaths that occurred as the result of attacks.

Since 9/11 the U.S. has killed an estimated 6 million people in wars in Iraq, Afghanistan, Pakistan, Libya, Syria, Somalia, and Yemen.  At least 37 million people have been displaced by U.S. wars.  The U.S. has bombed 9 countries since 9/11 adding to the list of 24 other nations it bombed after World War II.  Exactly 80 countries have been subjected to U.S. counter-terrorism operations during the “war on terror.”  Behind the statistics lies an ocean of human suffering.

The monumental questions of peace and war in the United States will not be decided by an election.  They will ultimately be decided by a revolt.  The shell-game of American politics wherein populist rhetoric is used to conceal plutocratic governance is bankrupt.

The United States is a militarized terror state.  The magnitude of violence perpetrated by the U.S. government has become so routine that perpetual war is normalized.  The question remains, how long will the American people continue to be slaves of a terror state?

Lee Camp: It’s Time for Major Wealth Redistribution — Yes, I Mean It.

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No need to be all apologetic about it, either, since we would just be reclaiming the trillions taken by the billionaires.

By Lee Camp

Source: ScheerPost.org

It’s time for wealth redistribution. There, I said it.

I know it’s the third rail of politics, but I’m not running for a damn thing, which makes me free to speak the truth. (Well, I am running for president of my neighborhood elementary school’s PTA, but I’m pretty sure I’ll win easily since my campaign slogan is “Extend the school day to 20 hours because we don’t want to deal with those little monsters. You take ‘em!” . . . Well, I’ll win as long as they don’t find out I don’t have a child.)

Anyway, we desperately need wealth redistribution. And before anyone starts yelling something about Joseph Stalin, here’s the part that’s going to blow your mind — in the United States we’ve already had wealth redistribution for decades.

Fifty trillion dollars has been redistributed from the poorest Americans to the top one percent over the past several decades. That’s right, a new study shows the richest people in the world have stolen trillions from average Americans. To put this in easier to access terms — you know how mad you get when someone takes the last donut? Well, imagine that multiplied by 50 trillion. (Quick reminder: If you make $40,000 a year, it would take you 1.25 Billion years to make $50 trillion.)

The new study reveals, “…that the cumulative tab for our four-decade-long experiment in radical inequality has grown to over $47 trillion from 1975 through 2018. At a recent pace of about $2.5 trillion a year, that number we estimate crossed the $50 trillion mark by early 2020.”

And to be clear, this money has been stolen from nearly every American. Had income distribution and buying power remained the same as it was from the end of World War II to 1975, ” . . . the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in the year 2018 alone. That is … enough to pay every single working American in the bottom nine deciles an additional $1,144 a month. Every month. Every single year.”

The richest people in America are pilfering over $1,100 from you personally and everyone you know every single month of every single year. Just imagine what each living soul in America could do with an extra $13,700 per year — how many people that would feed, how much less stressful their lives would be, how many fewer foreclosures there would be, and how many more people would get the healthcare they need. Yet every time the most modest tax increases are proposed on the richest Americans, or every time someone so much as mumbles about putting in a public jungle gym or putting in filters to take the metal chunks out of the water or fixing the holes in our bridges that are bigger than the ones in Maria Bartiromo’s head — every time someone brings up these common sense solutions, the elites of our society (who own the media outlets and the levers of the state and the law enforcement and the courts) start screaming from their wine-soaked ski resort orgy balconies, “That’s wealth redistribution! That’s class war!”

Meanwhile, most so-called “progressives” tip-toe around this subject, saying things like, “Well, we just want to slightly increase the taxes on the giant swimming pools filled with money of the wealthiest people. It would only impact people with billions of dollars, which is only a few individuals. We’re sorry. We’re so sorry to ask for this, Mr. Boss Man. Please forgive us.”

Enough of the pussy-footing. It’s time to demand true, full-on wealth redistribution. It’s time to say to the billionaires, “We’re taking your shit, and we’re giving it back to the society you stole it from. We’re taking your cars and your marble statues of your own ass and your boats that park inside your other boats and your emerald bathtubs filled with naked man servants and your inbred cross eyed ugly-ass dogs! . . . But you can keep your children. We don’t want those sociopaths in training. But other than that, we’re taking your stuff because this level of inequality is what most rational economists call ‘fucking nuts’.”

I will however give one caveat to make this go smoother. We only take back everything over $10 million. It’s estimated that there are about 1.4 million American households who have over $10 million. So that means what I’m proposing would impact less than one-half of one percent of Americans. The average American has never even met someone with over $10 million unless they shook Jim Carrey’s hand one time on a sidewalk in New York.

So we — the 99 percent — would take everything over $10 million from the people who have over $10 million. And we would give it out with the bottom 50 percent getting the vast majority of it. This means 99.5 percent of Americans would benefit from this redistribution of wealth. So, before you argue against this idea — Remember: you benefit. You would receive money. Because I promise there is no one with over $10 million reading this column right now, unless one banker accidentally clicked on this because it was next to the Wall Street Journal in his Twitter feed.

Do you need more numbers to hammer home the point? The billionaires in this country have increased their wealth by over $1.3 Trillion, an increase of 44 percent, just since the beginning of the pandemic.

One out of every three people in America have had trouble paying their bills during this pandemic.

Nearly 15 million people have lost their healthcare coverage just since the beginning of this pandemic.

And if you are the one person with over $10 million reading this, don’t give me that horse shit about, “I worked for that money. I earned that money.” No, no, no, no, you did not earn over $10 million. I know you didn’t because that’s impossible. It’s madness. It’s Gary Busey inside Charlie Sheen inside Ted Nugent. Taking the laws of physics into account, there is no way you worked a thousand times harder than a janitor or a sanitation worker or a nurse or a busboy or a fluffer or a fluffer’s second assistant fluffer intern. It’s physically impossible that you worked a thousand times harder than every “essential worker.” (Yes, fluffers are essential.)

What you did was merely take advantage of a system that is set up to exploit the vast majority of the society while most people don’t even realize what happened. That’s what you did because you’re a sociopath. Indeed, most of the Americans with over $10 million are sociopaths. They would kick a puppy down a flight of stairs into the teeth of a wool thresher if it meant they could make an extra $1,000. But I will acknowledge that not all of them are sociopaths. Some of them are relatively okay people working inside a breathtakingly corrupt system. So for the ones who are sociopaths, why should we feel bad for taking their wealth — over $10 million — and redistributing it? (They’re sociopaths after all. Lest we forget: they kick puppies.)

And then for the other ones, who are not sociopaths but still have over $10 million, they’re not going suffer because at the end of the day, they still have ten million goddamn dollars! It’s not like they’d suddenly be scraping by, clothing their children with cardboard boxes painted to look like shirts and bow ties.

So the next time someone says to you, “You can’t raise the taxes on the top 1% because that’s class war. It’s redistribution of wealth,” don’t respond the way most squishy liberals respond — “Ummm, ahhh, errr, no, uhhhh, I’m sorry.” Instead respond, “You’re damn right it is! I want redistribution of wealth. I want a nonviolent class war — because it has been done to the rest of us for the past 50 years at least. We have been exploited and abused, beaten down and defeated, kicked and slapped and scratched and drained and sucked dry and extracted and even burgled!” (Oh man, do I hate being burgled.)

Now is our time to fight back against this terrible machine that has allowed this unbelievable level of exploitation. Screw this system that allows some people to have enough money to end world hunger (literally Jeff Bezos could end world hunger many times over) and yet never do it, while other individuals sleep on a bench hoping no one steals their one box of cereal in the night. To put my conclusion into more sophisticated academic language — Fuck that.

This is an abusive relationship, and it’s time to get out.

The Top 10% Is Doing Just Fine, The Middle Class Is Dying on the Vine

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By Charles Hugh Smith

Source: Of Two Minds

Please study these charts as a means of understanding the inevitability of economic stagnation and a revolt of the decapitalized middle class.

I’ve been covering the decline of America’s middle class for over a decade with charts, data and commentary on the social depression that has accompanied the decline.

While there are many mutually reinforcing dynamics in this 45-year decline–demographics, global energy costs, financialization and globalization, to name a few– one term describes the accelerating erosion of America’s middle class: decapitalization.

To understand decapitalization, we need to start with the fundamentals of any economy between labor (wages) and capital and between investment and speculation. Although it’s tempting to oversimplify and demonize one or the other of these basics (speculators bad! etc.), they each provide an essential role in a healthy economy, one which is in dynamic equilibrium, a state analogous to a healthy ecosystem with constantly changing interactions of numerous species, individuals and inputs (weather, etc.). This variability enables the order of fluctuations (to use Ilya Prigogine’s profound phrase), a dynamic stability / equilibrium.

If labor’s share of the economy drops too low, the workforce cannot consume enough to support their households and the economy as a whole. If capital can no longer earn an attractive return, investment dries up and production stagnates. If speculators are not allowed to take on risk, liquidity dries up and risk crushes investment. But if speculation becomes the foundation of the economy’s “growth,” then the inevitable collapse of speculative bubbles will crash the economy.

In modern social-capitalist systems, the core stabilizer of the system is the wage-earning middle class which provides the stable workforce driving production and the stable pool of consumers needed to borrow money and consume enough to soak up the production of goods and services at a profit to producers.

Without a stable, dominant middle class, capital has few opportunities to invest in productive capacity. Without a stable, dominant middle class, the economy stagnates and is prone to collapse as it is far from equilibrium.

The process of middle class decline is best explained as decapitalization because the middle class is fundamentally a means of transforming labor into capital via savings and investment. The traditional ladder of social mobility from the working class to the middle class is one of capitalizing work: time and savings are invested in higher education, in effect capitalizing future labor by increasing productivity.

Capital isn’t limited to cash, land or tools; in an information economy, knowledge and skills are also capital, as is the social capital of social networking and relationships formed with mentors, suppliers, lenders, colleagues, investors, etc.

The second way to capitalize work is to save earnings and invest the savings in assets that produce income or gain value: a house, land, rental property, small business and income-producing financial assets such as bonds or dividend-paying stocks.

Thrift, investing, long-term planning and deferred consumption are all essential to capitalizing work by turning that labor into income-producing assets. As the household’s ownership of these assets that yield unearned income rises, so does their income and wealth. These increase the financial security of the household and build a nestegg which can be passed down to the next generation, improving their security via inheritance of income-producing assets.

As long as productivity is increasing the value of their labor, the middle class can leverage future earnings into assets by borrowing money to invest in assets: to buy a house, a mortgage is borrowed against future earnings. As long as the mortgage is a fixed-interest loan and income can be expected to rise with productivity, then this is a win-win situation: capital earns a predictable, low-risk return from the mortgage and the middle class household has stake in a family home, an asset which acts as a savings mechanism as the mortgage slowly pays down the debt and increases the household’s home equity–a form of savings.

The processes of decapitalization have upended this entire structure. In the systems context outlined above, our economy is out of balance and far from equilibrium and thus prone to collapse.

For the bottom 90%, which of course includes the middle class however you define it, it’s increasingly difficult to capitalize labor into capital. There are a number of factors driving this decapitalization:

1. Wages’ share of the national income has continued a five-decade downtrend. (See chart below) National income since 1973 has shifted from labor (wages) to capital and more specifically, to debt and speculative gaming of the system, a.k.a. financialization.

Total household income in the U.S. in 2018 was $17.6 trillion. The decline in wages’ share of the national income from 1973 to 2018 is about 8.5%, which equals $1.5 trillion, the sum shifted from labor to capital every year. (See chart below)(source: https://www.statista.com/statistics/216756/us-personal-income/)

No, this is not a typo. As this RAND report documents, $50 trillion has been siphoned from labor (the lower 90% of the workforce) to the Financial Aristocracy and their technocrat lackeys (the top 10%) who own the vast majority of the capital (see charts below): Trends in Income From 1975 to 2018.

2. Within the workforce, wages have shifted to the top 10% who now earn 50% of all taxable income. (See RAND chart below) Financialization and globalization have decapitalized the skills of entire sectors of the workforce as automation and offshoring reduced the human capital of workers’ skills and experience and the value of their social capital. When the entire industry is offshored, skills and professional relationships lose their market value.

In a fully globalized economy, every worker producing tradable goods/services is competing with the entire global workforce, a reality that reduces wages in high-cost developed nations such as the U.S.

Financialization has heavily rewarded workers with specialized gaming the financial system skills and devalued every other skill as only the skills of financialization are highly profitable in a globalized, financialized economy.

3. As the high-wage jobs and capital shifted to coastal urban centers, middle class owners of homes and capital elsewhere saw the value of their assets decline. If a home valued at $100,000 in the late 1990s is now worth $150,000, the owners lost ground even with “official” inflation. In terms of real-world purchasing power, their home actually lost significant value in the past 23 years.

Meanwhile, middle class owners who bought their home in a coastal hot-spot for $100,000 23 years ago are now enjoying home valuations close to $1 million. Homes, along with every other asset, have been shifted into a casino where almost everyone is sorted into winners and losers, less often by skill and more often by luck.

For those who were too young to buy in 1997, sorry–the opportunity to buy a home for three times average middle class income is gone. The lucky generation who bought in the late 1990s in booming coastal magnets for global capital joined the top 10% and their colleagues in less desirable regions lost ground.

4. As capital siphoned off income and appreciation from labor (human and social capital), the gains accruing to capital accelerated. Those who already owned income-producing assets reaped both income and asset appreciation gains as yields on savings collapsed to near-zero as the Federal Reserve and other central banks dropped yields to near-zero in 2009 and kept them low for the following 13 years.

This had two devastating effects on the middle class: hundreds of billions of dollars that once flowed to savers and money markets disappeared, swallowed by the banks as a direct (and intentional) effect of the Fed’s ZIRP (zero-interest rate policy).

Since the Fed destroyed low-risk yields, anyone seeking any real yield (i.e. above inflation) would have to enter the casino and compete with hedge funds, insiders and the Financial Aristocracy. Very few middle class workers have the skills and experience to beat the pros in the casino, and so income and wealth accrued to those who already owned capital.

This is a key reason why the rich got richer and the poor got poorer. Those with capital accrued the majority of gains in income and wealth, leaving the bottom 90% in the dust.

A recent Foreign Affairs essay Monopoly Versus Democracy included these stunning statistics:

Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans. (emphasis added.)

The 3% of income from capital collected by the bottom 90%–which includes the middle class– is basically signal noise: the middle class collects inconsequential crumbs of income from capital.

Prior to the Fed’s ZIRP and financialization of the economy, the middle class could both collect income from capital they owned and they could afford to acquire assets that yielded low-risk solid returns. Now they can do neither. Even worse, the puchasing power of their labor continues to decline, leaving them less able to save and buy assets.

This is why The Top 10% Is Doing Just Fine, The Middle Class Is Dying on the Vine. Please study these charts as a means of understanding the inevitability of economic stagnation and a revolt of the decapitalized middle class.

 

As Millions Face Eviction, Senate Proposes Nearly $700 Billion for Pentagon

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By John Vibes

Source: Activist Post

As millions face eviction and line up at food banks throughout the country, waiting for another stimulus payment that will seemingly never come, the Senate Appropriations Committee is proposing a $696 billion Pentagon spending bill for the upcoming fiscal year.

According to The Hill, The Senate’s version of the fiscal 2021 Pentagon spending bill was released Tuesday along with 11 other annual appropriations bills.

Both Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi have said they want to pass an omnibus spending bill, and they will likely agree on the military budget, as Democrats overwhelmingly vote in favor of military spending when they have the opportunity, just as Republicans do.

In July, the House passed a $694.6 billion bill for Pentagon spending in July. The Senate version released this week includes $627.2 billion for the base defense budget and $68.7 billion for a war fund known as the Overseas Contingency Operations account, and also includes a 3% pay raise for troops.

However, the final Senate version of the bill left out a few causes that were championed by progressive Democrats, including the renaming of military bases that are named after Confederate leaders, and measures that were intended to block defense funds from being used on the border wall.

The Senate’s bill would also fund 96 F-35 fighter jets, which is an increase over the original bill and over the administration’s initial request. In addition to the fighter jets, the bill also gives the Pentagon $21.35 billion to build nine new battle force ships.

Meanwhile, millions of Americans are unemployed and many are now starting to get evicted. According to the most recent numbers there are 6.8 million, and this only accounts for the people officially collecting unemployment, this does not include the number of people who are not qualified for unemployment, or people who have been out of the work force for an extended length of time. The unemployment rate dropped slightly over the past two months, but is still at record highs.

According to estimates by the Princeton University Eviction Lab, 3.6 million people face eviction cases in a typical year. This year, up to 8 million people could be facing eviction, according to a tracking tool developed by the global advisory firm Stout Risius and Ross, which works with the nonprofit National Coalition for a Civil Right to Counsel.

It is also estimated that up to $32 billion in back rent will be due for tenants across the US once bans on evictions are lifted. Despite bans on evictions, many landlords in the US are still kicking people out of their homes, and in some cases, they have even challenged the eviction bans in court.

The people who are struggling financially in the US can’t count on much help from the government. Even the prospects of a new stimulus check are uncertain, and a payment will not be coming until next year at the very earliest, if it comes at all. Yet, the Pentagon is still able to claim nearly $700 billion in taxpayer money.