Tag Archives: Wealth Gap

Brexit Is What Happens When the Pie Is Shrinking

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By Charles Hugh Smith

Source: Of Two Minds

This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies.

A great many narratives are drifting around the Brexit pool: a return to sovereignty, class war, “controlled demolition,” nothing-but-another-political-Kabuki- spectacle, end of the European Union, etc.

I think it boils down to something much simpler: the pie is shrinking, and the illusion that it’s about to start growing has been shattered. For many communities in the developed world, the pie started shrinking in the 1970s, and has been shrinking (despite the narrative of “45 years of strong growth”) since then.

Labor’s share of the GDP has been declining for 45 years. Occasional blips higher during debt-fueled bubbles quickly fade when the bubble du jour pops, and the decline of labor’s share of the economy resumes its trendline decline.

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Since 2008, the only group who feels the pie is growing is the class that has benefited from the unparalleled expansion of debt and leverage, financialization, globalization and central planning–roughly 20% of the work force, with the top 5% gathering most of the gains in income and wealth, and the top .1% gathering most of the increase in wealth. (See chart below)

For seven long years, the citizenry has been told the economy is expanding and therefore they’re “doing better.” But this narrative is not supported by their actual lived experience. Inflation is woefully under-reported by official statistics, and the rosy “rising employment” narrative is based largely on part-time jobs in hospitality and food services (bartenders, waiters, etc.) that are highly contingent on the spending of the top 10%.

While supporters of the status quo are quick to deride supporters of Brexit, the cold reality is the economic pie is shrinking, and Brexit is a direct result of that reality.

A shrinking economic pie generates widespread insecurity that pressures every status quo arrangement as people circle the wagons in an attempt to protect their remaining slice of the pie from others’ claims for a larger piece of the dwindling pie.

The general media line is that the Brexit vote arose out of anger with the status quo’s inequalities and asymmetries of wealth and power. While this is largely self-evident, it isn’t the most fundamental dynamic at work. I see Brexit as a reflection of our naturally-selected defensive response to insecurity and instability: circle the wagons.

By circle the wagons, I mean our tendency to withdraw into an internally cohesive group with defined membership and boundaries.

The largest such political group is the nation-state, and so it is natural for people with strong national identities to circle the wagons around their national identity.

We can also expect people to circle the wagons around ethnic, religious, localized and economic-social class identities. (Some people might feel more kinship with other fans of Manchester United than they do with any religion, ethnicity or state.)

As people identify themselves as members of the class that has not benefited from neoliberal/globalized crony capitalism, the ruling Elites become the “other,” i.e. “foreigners” with whom we have little contact, people who “aren’t like us”– in effect, an “enemy class” that is inherently opposed to our self-interests.

This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies. No wonder populations are dividing into camps of increasingly angry people with little interest in compromise. Our instinct is to seek clear delineations of “us” and “them” and to seek the relative comfort of “us,” which in a multicultural nation, can contain quite a mixed bag of people who nonetheless feel a shared identity.

Much to the chagrin of political parties whose success is based solely on “identity politics,” the emerging group identities are not conforming to the political classes’ conventional fault lines. “Us” for many people includes everyone who isn’t a protected insider of the status quo, and “the enemy” is any protected insider of the status quo.

That includes virtually the entire political class, the entire class of state nomenklatura/technocrats, the entire banking sector and the wealthy class that’s benefited so handsomely from the globalized, debt-leverage bubbles and state / central bank support that characterize this era of neoliberal/globalized crony capitalism.

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A Radically Beneficial World: Automation, Technology and Creating Jobs for All is now available as an Audible audio book.

 

A Universal Basic Income Is The Bipartisan Solution To Poverty We’ve Been Waiting For

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What if the government simply paid everyone enough so that no one was poor? It’s an insane idea that’s gaining an unlikely alliance of supporters.

By Ben Schiller

Source: FastCoexist.com

There’s a simple way to end poverty: the government just gives everyone enough money, so nobody is poor. No ifs, buts, conditions, or tests. Everyone gets the minimum they need to survive, even if they already have plenty.

This, in essence, is “universal minimum income” or “guaranteed basic income”—where, instead of multiple income assistance programs, we have just one: a single payment to all citizens, regardless of background, gender, or race. It’s a policy idea that sounds crazy at first, but actually begins to make sense when you consider some recent trends.

The first is that work isn’t what it used to be. Many people now struggle through a 50-hour week and still don’t have enough to live on. There are many reasons for this—including the heartlessness of employers and the weakness of unions—but it’s a fact. Work no longer pays. The wages of most American workers have stagnated or declined since the 1970s. About 25% of workers (including 40% of those in restaurants and food service) now need public assistance to top up what they earn.

The second: it’s likely to get worse. Robots already do many menial tasks. In the future, they’ll do more sophisticated jobs as well. A study last year from Carl Frey and Michael Osborne at Oxford University found that 47% of jobs are at risk of computerization over the next two decades. That includes positions in transport and logistics, office and administration, sales and construction, and even law, financial services and medicine. Of course, it’s possible that people who lose their jobs will find others. But it’s also feasible we’re approaching an era when there will simply be less to do.

The third is that traditional welfare is both not what it used to be and not very efficient. The value of welfare for families with children is now well below what it was in the 1990s, for example. The move towards means-testing, workfare—which was signed into law by Bill Clinton in 1996—and other forms of conditionality have killed the universal benefit. And not just in the U.S. It’s now rare anywhere in the world that people get a check without having to do something in return. Whatever the rights and wrongs of this, that makes the income assistance system more complicated and expensive to manage. Up to up to 10% of the income assistance budget now goes to administrating its distribution.

For these reasons and others, the idea of a basic income for everyone is becoming increasingly popular. There has been a flurry of reports and papers about it recently, and, unusually, the idea has advocates across the political spectrum.

The libertarian right likes basic income because it hates bureaucracy and thinks people should be responsible for themselves. Rather than giving out food stamps and health care (which are in-kind services), it thinks people should get cash, because cash is fungible and you do what you like with it.

The left likes basic income because it thinks society is unequal and basic income is redistributive. It evens up the playing field for people who haven’t had good opportunities in life by establishing a floor under the poorest. The “precariat” goes from being perpetually insecure to knowing it has something to live on. That, in turn, should raise well-being and produce more productive citizens.

The technology elite, like Netscape’s Marc Andreessen, also likes the idea. “As a VC, I like the fact that a lot of the political establishment is ignoring or dismissing this idea,” Albert Wenger, of Union Square Ventures, told a TED audience recently, “because what we see in startups is that the most powerful innovative ideas are ones truly dismissed by the incumbents.” A minimum income would allow us to “embrace automation rather than be afraid of it” and let more of us participate in the era of “digital abundance,” he says.

The exact details of basic income still need to be worked out, but it might work something like this: Instead of welfare payments, subsidies for health care, and tax credits for the working poor, we would take that money and use it to cover a single payment that would give someone the chance to live reasonably. Switzerland recently held an (unsuccessful) is planning to hold a referendum on a basic income this year, though no date is set. The proposed amount is $2,800 per month.

But would it actually work? The evidence from actual experiments is limited, though it’s more positive than not. A pilot in the 1970s in Manitoba, Canada, showed that a “Mincome” not only ended poverty but also reduced hospital visits and raised high-school completion rates. There seemed to be a community-affirming effect, which showed itself in people making use of free public services more responsibly.

Meanwhile, there were eight “negative income tax” trials in the U.S. in the ’70s, where people received payments and the government clawed back most of it in taxes based on your other income. The results for those trials was more mixed. They reduced poverty, but people also worked slightly less than normal. To some, this is the major drawback of basic income: it could make people lazier than they would otherwise be. That would certainly be a problem, though it’s questionable whether, in the future, there will be as much employment anyway. The age of robots and artificial intelligence seems likely to hollow out many jobs, perhaps changing how we view notions of laziness and productivity altogether.

Experiments outside the U.S. have been more encouraging. One in Namibia cut poverty from 76% to 37%, increased non-subsidized incomes, raised education and health standards, and cut crime levels. Another involving 6,000 people in India paid people $7 month—about a third of subsistence levels. It, too, proved successful.

“The important thing is to create a floor on which people can start building some security. If the economic situation allows, you can gradually increase the income to where it meets subsistence,” says Guy Standing, a professor of development studies at the School of Oriental and African Studies, in London, who was involved with the pilot. “Even that modest amount had incredible effects on people’s savings, economic status, health, in children going to school, in the acquisition of items like school shoes, so people felt in control of their lives. The amount of work people were doing increased as well.”

Given the gridlock in Congress, it’s unlikely we’ll see basic income here for a while. Though the idea has supporters in both left and right-leaning think-tanks, it’s doubtful actual politicians could agree to redesign much of the federal government if they can’t agree on much else. But the idea could take off in poorer countries that have more of a blank slate and suffer from less polarization. Perhaps we’ll re-import the concept one day once the developing world has perfected it?

The 1 Percent’s Houses Are Getting Bigger and Swankier While Average Americans Struggle To Make Rent

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For a view of the inefficiencies of the free market, there’s no clearer view than the U.S. housing market, where there are as many as 29 empty homes for every homeless person.

By Bob Larson

Source: In These Times

Today’s gigantic class cleavages bring to mind Matthew 8:20, where Jesus describes his persecution: “The foxes have holes, and the birds of the air have nests, but the Son of man hath not where to lay his head.” This description could increasingly also apply to the wrong end of our lopsided capitalist society, which shows itself nowhere more clearly than in housing.

The Wall Street Journal has characteristically thorough reporting on the current housing market, in which it observes “a severe shortage of midtier apartments,” meaning those “aimed at the working class.” This “dearth of lower-priced apartments” has driven up rents for lower- and middle-income-earners, with a market segment average of $845 a month—a daunting figure for many of today’s part-timers and even full-timers.

The reason for this “severe shortage” is pure market economics: “Construction costs are generally too high to justify building new complexes for low- and middle-income tenants. …The difference in costs between installing granite countertops and stainless-steel appliances is so slight compared to buying land and installing elevators that economists say developing a luxury apartment and a midtier one comes out roughly the same.” This has meant that “the supply of less expensive apartments…had decreased 1.6% since 2002. Over that time, high-end apartment inventory has increased 31%.” Not surprising, since rents for the higher-income occupants average $1,702. This isn’t exactly a glowing review of capitalism’s alleged ability to meet consumer demand, regardless of income level.

These market dynamics are especially important for today’s generation of young “millennials,” as the business press observes they tend to rent more, “younger Americans either can’t afford to buy a house or don’t want to.” They’re willing to accept small apartment sizes also, and for reasons that reflect the economic realities of the new generation: “They have diminished expectations, less access to financing and a strong desire to stay in cities.” The tendency for normal working families to be squeezed by high rents out of safe neighborhoods, or into tinier spaces, is another example of the invisible hand giving the finger.

Condo or castle?

On the other hand, a convenient place to observe how the other side of the market works is “Mansion,” a weekly section of the elite-oriented Wall Street Journal, which profiles various different playground properties of elite management and the 1%. Like a lot of print and online media that cover housing, it’s part journalism of lifestyle trends and part naked sales pitch. But the window it provides on the day-to-day life of the ruling class is fascinating.

A conspicuous Mansion headline, “Masters of the Universe,” refers to the infamous phrase used to describe Wall Street power-brokers. But this reference is to the incredible scale of high-end master suites, “With square footage that rivals the average American home.”

The features are gobsmacking: “Amenities have included everything from small kitchens to beauty salons and pedicure stations. Some clients have requested private pools just off the master, separate from the home’s main pool.” At another development, private suites have separate “laundry rooms, small gyms or Pilates areas and ‘super closets’ within the master.” These super closets are their own embarrassment of riches: “closets have evolved from utilitarian storage spaces to showpieces modeled after designer stores, with fireplaces, seating areas and separate dressing rooms.” Illustrated with enormous color photos (often software-generated in the small print), you can easily see that several of these condo and mansion designs have bedroom suites that alone exceed the median modern US house size of 2300 square feet.

Elsewhere, the Mansion section observes that in New York City’s always record-setting property market, “At least two new developments in Manhattan are asking $1 million for a single parking spot,” not failing to notice that this is “about four times the cost of an average single-family home in the U.S.” Spaces can be had for less, but these particular concrete patches are associated with units sporting super-high price tags themselves.

A more old-world example comes from the Financial Times, where a recent edition of its high-living Town & Country section profiles a Scottish Duke with a fair-sized castle in the Argyles. The Times is eager to show a self-effacing, status-disregarding picture of the Duke, encouraging us to see the particularly ludicrous institution of Anglo-Scottish aristocracy with Downton Abbey post-status charm. But the local history is more realist: “To the distress of some Inveraray residents, the whole town was moved in the 1770s to give the castle a more secluded setting.”

Today His Grace is most concerned with fending off the increasingly left-leaning Scottish National Party’s proposals to increase the tax on landed estates like his, and split up the great family fortunes—although estates managed through corporations are exempt. But while he hopes to avoid any splitting of his assets, the Duke also confesses he seldom uses his castle’s two-story library: “I’m just not a book person.”

For the urbane London CEO needing a break from city noise, the WSJ Magazine recommends the “Soho Farmhouse,” actually a fantastically expensive members-only rural retreat with a country club, ice rink, horse stable, football field, event barn, boathouse and tennis courts. To ease rich members into their relaxation time, “a hidden camera scans license plates as guests enter the property,” and “guests are handed cocktails as their vehicles are whisked away…guests can specify their height and foot measurements when checking in online to ensure that they are given properly sized bicycles and Wellington boots for their stay.”

Knowing its audience, the magazine mentions an “Added bonus: If guests don’t want to make their own cocktails, they can summon one of two 24-hour roving milk trucks that have been converted into portable bars with bartenders on hand.” Look, no one appreciates the appeal of a roving bar more than me. But 160,000 kids will die from cheaply-treatable diarrhea-related diseases this month, and these fun cash-burning novelties are pretty obscene to African mothers watching their kids die from conditions that could be cured for far less than an executive’s artisan cocktail.

No vacancies, more vagrancies

But the gaping chasm in housing classes is most dramatically seen by comparing the often-mentioned number of empty houses and apartments, relative to the number of homeless citizens living on the streets or shelters around the United States. Real numbers can be looked up—the Census Bureau’s homeownership survey found that in the first quarter of 2015, 17.3 million housing units were vacant, excluding properties only vacant for part of the year. (Notably, the Mansion survey of gigantic master suites notes that these condos and mansions will often “most likely be a second residence for the potential buyer.”)

The number of homeless Americans is of course somewhat harder to pin down, with the Department of Housing and Urban Development in its Annual Homeless Assessment Report for 2014 (the most recent available) finding 578,424 people homeless on a given night. However this HUD number is considered to be at best incomplete, as its “point-in-time” data reporting tends to underestimate the issue. Nonprofits and advocacy groups like the Urban League approach the number in a longer time frame, trying to estimate how many people experience homelessness over the course of a year. The numbers found through this approach are startlingly different, with older research suggesting numbers around 2.3 million, reflecting high turnover among the homeless population.

The most gross calculation from this data would suggest a ratio of 17.3 million year-round vacant units to 2.3 million homeless, or about 7.5 units per homeless individual. Using the HUD’s more conservative “Homelessness measured on a single night” data would give us an even more insane 29 homes or apartments for each homeless person!

Obviously, numbers anything like these point to a hugely irrational economic system, where people, including families with kids, are spending the nights in dangerous shelters or on the streets while millions of empty apartments and houses sit silently still.

This staggering inefficiency of housing markets throws the irrationality of capitalism into stark relief. Much like crumbling bridges and the unemployed construction workforce, the market economy’s failure to bring these economic factors together is pretty damning. Were Christ to return in our capitalist epoch, He’d need to ante up a lot more than the Word to find a place to lay His head—unless He, like other young Americans, had “diminished expectations” for housing.

About the Author

Rob Larson is Professor of Economics at Tacoma Community College in Washington State, and author of Bleakonomics: A Heartwarming Introduction to Financial Catastrophe, the Jobs Crisis and Environmental Destruction. Follow him on Twitter: @ironicprofessor.

The Rise of “Criminal Capitalism”

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By James Petras

Source: Dissident Voice

About 75% of US employees work 40 hours or longer, the second longest among all OECD countries, exceeded only by Poland and tied with South Korea. In contrast, only 10% of Danish workers, 15% of Norwegian, 30% of French, 43% of UK and 50% of German workers work 40 or more hours. With the longest work day, US workers score lower on the ‘living well’ scale than most western European workers. Moreover, despite those long workdays US employees receive the shortest paid holidays or vacation time (one to two weeks compared to the average of five weeks in Western Europe). US employees pay for the costliest health plans and their children face the highest university fees among the 34 countries in the Organization for Economic Cooperation and Development (OECD).

In class terms, US employees face the greatest jump in income inequalities over the past decade, the longest period of wage and salary decline or stagnation (1970 to 2014) and the greatest collapse of private sector union membership, from 30% in 1950 down to 8% in 2014.

On the other hand, profits, as a percentage of national income, have increased significantly. The share of income and profits going to the financial sector, especially the banks and investment houses, has increased at a faster rate than any other sector of the US economy.

There are two polar opposite trends: Employees working longer hours, with costlier services and declining living standards while finance capitalists enjoy rapidly rising profits and incomes.

Paradoxically, these trends are not directly based on greater ‘workplace exploitation’ in the US.

The historic employee-finance capitalist polarization is the direct result of the grand success of the trillion dollar financial swindles, the tax payer-funded trillion dollar Federal bailouts of the crooked bankers, and the illegal bank manipulation of interest rates. These uncorrected and unpunished crimes have driven up the costs of living and producing for employees and their employers.

Financial ‘rents’ (the bankers and brokers are ‘rentiers’ in this economy) drive up the costs of production for non-financial capital (manufacturing). Non-financial capitalists resort to reducing wages, cutting benefits and extending working hours for their employees, in order to maintain their own profits.

In other words, pervasive, enduring and systematic large-scale financial criminality is a major reason why US employees are working longer and receiving less – the ‘trickle down’ effect of mega-swindles committed by finance capital.

Mega-Swindles, Leading Banks and Complicit State Regulators

Mega-swindles, involving trillions of dollars, are routine practices involving the top fifty banks, trading houses, currency speculators, management fund firms and foreign exchange traders.

These ‘white collar’ crimes have hurt hundreds of millions of investors and credit-card holders, millions of mortgage debtors, thousands of pension funds and most industrial and service firms that depend on bank credit to meet payrolls, to finance capital expansion and technological upgrades and raw materials.

Big banks, which have been ‘convicted and fined’ for mega-swindles, include Citi Bank, Bank of America, HSBC, UBS, JP Morgan, Barclay, Goldman Sachs, Royal Bank of Scotland, Deutsche Bank and forty other ‘leading’ financial institutions.

The mega-swindlers have repeatedly engaged in a great variety of misdeeds, including accounting fraud, insider trading, fraudulent issue of mortgage based securities and the laundering of hundreds of billions of illegal dollars for Colombian, Mexican, African and Asian drug and human traffickers.

They have rigged the London Interbank Official Rate (LIBOR), which serves as the global interest benchmark to which hundreds of trillions of dollars of financial contracts are tied. By raising LIBOR, the financial swindlers have defrauded hundreds of millions of mortgage and credit-card holders, student loan recipients and pensions.

Bloomberg News (5/20/2015) reported on an ongoing swindle involving the manipulation of the multi-trillion-dollar International Swaps and Derivatives Association (ISDA) fix, a global interest rate benchmark used by banks, corporate treasurers and money managers to determine borrowing costs and to value much of the $381 trillion of outstanding interest rate swaps.

The Financial Times (5/23/15, p. 10) reported how the top seven banks engaged in manipulating fraudulent information to their clients, practiced illegal insider trading to profit in the foreign exchange market (forex), whose daily average turnover volume for 2013 exceeded $5 trillion dollars.

These seven convicted banks ended up paying less than $10 billion in fines, which is less than 0.05% of their daily turnover. No banker or high executive ever went to jail, despite undermining the security of millions of retail investors, pensioners and thousands of companies.

The Direct Impact of Financial Swindles on Declining Living Standards

Each and every major financial swindle has had a perverse ripple effect throughout the entire economy. This is especially the case where the negative consequences have spread downward through local banks, local manufacturing and service industries to employees, students and the self-employed.

The most obvious example of the downward ripple effect was the so-called ‘sub-prime mortgage’ swindle. Big banks deliberately sold worthless, fraudulent mortgage-backed securities (MBS) and collateralized debt obligation (CDO) to smaller banks, pension funds and local investors, which eventually foreclosed on overpriced houses causing low income mortgage holders to lose their down payments (amounting to most of their savings).

While the effects of the swindle spread outward and downward, the US Treasury propped up the mega-swindlers with a trillion-dollar bailout in working people’s tax money. They anointed their mega-give-away as the bail out for ‘banks that are just too big to fail”! They transferred funds from the public treasury for social services to the swindlers.

In effect, the banks profited from their widely exposed crimes while US employees lost their jobs, homes, savings and social services. As the US Treasury pumped trillions of dollars into the coffers of the criminal banks (especially on Wall Street), the builders, major construction companies and manufacturers faced an unprecedented credit squeeze and laid off millions of workers, and reduced wages and increased the hours of un-paid work.

Service employees in consumer industries were hit hard as wages and salaries declined or remained frozen. The costs of the FOREX, LIBOR and ISDA fix swindles’ fell heavily on big business, which passed the pain onto labor: cutting pension and health coverage, hiring millions of ‘contingent or temp’ workers at minimum wages with no benefits.

The bank bailouts forced the Treasury to shift funds from ‘job-creating’ social programs and national infrastructure investment to the FIRE (finance, insurance and real estate) sector with its highly concentrated income structure.

As a result of the increasing concentration of wealth among the financial swindlers, inequalities in income grew; wages and salaries were frozen or reduced and manufacturers outsourced production, resulting in declines in production.

Employees, suffering from the loss of income brought on by the mega-swindles, found that they were working longer hours for less pay and fewer benefits. Productivity suffered. With the total breakdown of the ‘capitalist rules of the game’, investors lost confidence and trust in the system. Mega-swindles eroded ‘confidence’ between investors and traders, and made a mockery of any link between performance at work and rewards. This severed the nexus between highly motivated workers, engaged in ‘hard work, long hours’ and rising living standards, and between investment and productivity.

As a result, profits in the finance sector grew while the domestic economy floundered and living standards stagnated.

Financial Impunity: Regulatees Controlling the Regulators

Despite the proliferation of mega-swindles and their pervasive ripple effects throughout the economy and society, none of the dozens of federal or state regulatory agencies intervened to stop the swindle before it undermined the domestic economy. No CEO or banker was ever arrested for their part in the swindle of trillions. The regulators only reacted after trillions had ‘disappeared’ and swindles were ‘a done deal’. The impunity of the swindlers in planning and executing the pillage of hundreds of millions of employees, taxpayers and mortgage holders was because the federal and state regulatory agencies are populated by ‘regulatory administrators’ who came from or aspired to join the financial sector they were tasked with ‘regulating’.

Most of the high officials appointed to lead the regulatory agencies had been selected by the ‘Lords of Wall Street, Frankfurt, the City of London or Zurich.’ Appointees are chosen on the basis of their willingness to enable financial swindles. It therefore came as no surprise on May 28 2015 when US President Obama approved the appointment of Andrew Donahue, Managing Director and Associate General Council for the repeatedly felonious, mega-swindling banking house of Goldman Sachs to be the ‘Chief of Staff’ of the Security and Exchange Commission. His career has been typical of the Washington-Wall Street ‘Revolving Door’.

Only after fraud and swindles evoked the nationwide public fury of mortgage holders, investors and finance companies did the regulators ‘investigate’ the crimes and even then not a single major banker was jailed, not a single major bank was closed down.

There were a few low-level bond traders and bank employees who were fired or jailed as scapegoats. The banks paid puny (for them) fines, which they passed on to their customers. Despite pledges to ‘mend their ways’ the bankers concocted new schemes with their windfalls of billions of Federal ‘bailout’ money while the regulators looked on or polished their CV’s for the next pass through the ‘revolving door’.

Every top official in Treasury, Commerce and Trade, and every regulator in the Security Exchange Commission (SEC) who ‘retired to the private sector’ has ended up working for the same mega-criminal banks and finance houses they had investigated, regulated and ‘slapped on the wrist’.

As one banker, who insists on anonymity, told me: ‘The most successful swindlers are those who investigated financial transgressions’.

Conclusion

Mega-swindles define the nature of contemporary capitalism. The profits and power of financial capital is not the outcome of ‘market forces’. They are the result of a system of criminal behavior that pillages the Treasury, exploits the producers and consumers, evicts homeowners and robs taxpayers.

The mega swindlers represent much less than 1% of the class structure. Yet they hold over 40% of personal wealth in this country and control over 80% of capital liquidity.

They grow inexorably rich and richer, even as the rest of the economy wallows in crisis and stagnation. Their swindles send powerful ripples across the national economy, which ultimately freeze or reduce the income of the skilled (middle class) employees and undermine the living conditions for poor working-class whites, and especially under and unemployed Afro-American and Latino American young workers.

Efforts to ‘moralize’ capital have failed repeatedly since the regulators are controlled by those they claim to ‘regulate’.

The rare arrest and prosecution of any among the current tribe of mega-swindlers would only results in their being replaced by new swindlers. The problem is systemic and requires deep structural changes.

The only answer is to build a political movement independent of the two party system, willing to nationalize the banks and to pass legislation outlawing derivatives, forex trading and other unnatural parasitic speculative activities.

James Petras is author of Extractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer) and The Politics of Empire: The US, Israel and the Middle East. Read other articles by James, or visit James’s website.

Billionaire Fears The Poor RIsing Up Against The Rich

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By Stephen D. Foster Jr.

Source: Popular Resistance

A billionaire finally had a epiphany and told all his wealthy friends about it.

Johann Rupert is the filthy rich owner of Richemont, a luxury goods company that serves as parent company to jeweler Cartier. His net worth tops out at nearly $8 billion making him part of the 1% of wealthy people who are greedily taking control of most of the world’s wealth to the detriment of poor people and the middle class.

According to Oxfam, an organization that fights poverty, the richest one percent are on pace to control more global wealth than the rest of the 99 percent combined by 2016. And it doesn’t show any signs of stopping.

Unsurprisingly, most of the billionaires in the world live in the United States, where they hire armies of lobbyists to influence the passage of government policies that help them keep their vast wealth and keep it growing. Meanwhile, other nations, despite having a few billionaires, have more regulations designed to narrow the income inequality gap.

Nevertheless, the system that allows the rich to keep getting richer isn’t doing anything for the rest of humanity as most people around the world continue to struggle to make ends meet. While the wealthy continue to make more money, everyone else is making less, which is starting to cause social unrest and upheaval that worries Johann Rupert.

Rupert now fears that the greed of the 1 percent has gone too far, and the thought that one day the rest of the world will grab their pitchforks and torches makes sleeping more difficult for him.

How is society going to cope with structural unemployment and the envy, hatred and the social warfare? We are destroying the middle classes at this stage and it will affect us. It’s unfair. So that’s what keeps me awake at night.

Rupert revealed his terror at the Financial Times Business of Luxury Summit in Monaco, and frankly, he is right to fear this scenario.

There are 7 billion people in this world and only a few hundred grotesquely wealthy people. As people become more desperate to care for themselves and their struggling families in a world where rich people are making more money they don’t need off the backs of the working poor, it won’t be long before people get so fed up that they literally band together to bring down the greedy assholes who care more about owning the world than they do about everyone who lives in it.

That especially applies here in America as income inequality has cast millions of Americans into a never-ending cycle of poverty that becomes harder to escape year after year while the super-wealthy continually try to roll back policies such as minimum wage laws and other benefits in order to engineer a cheaper workforce through legislation. In other words, wealthy businessmen are treating the rest of the world as nothing more than slave labor put on this Earth to keep themselves rich.

Eventually, people will get sick and tired of the game that rich people are playing. They will rise up like Rupert fears and come for them. And then they will wish they had shared the wealth instead of hoarding it all for themselves.

Yes, Global Wealth Inequality is Unjust

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Income-Inequality

By Jessica Flanigan

Source: Bleeding Heart Libertarians

Jonathan Anomaly asks, “Is global wealth inequality unjust?” Anomaly and Dan Moller suggest that global wealth inequality may be less unjust than a lot of people think because rich countries have good political institutions and cultures that encourage social and scientific experimentation, not because they are actively harming poor countries.

Moller’s argument is that if wealthy countries did not cause global poverty they have no duty to provide aid. His main targets seem to be Richard Miller and Thomas Pogge, who argue that the system of global trade, which is imposed on everyone in the world, does cause poverty in poor countries. I agree with Moller that if anything, the system of global trade has made everyone better off, though it has made some much better off than others. And like Moller, I don’t think inequality is necessarily a moral problem. But like Pogge and Miller, I do think it is a moral problem if a system of property is imposed on everyone and it leaves some people so desperately poor they don’t have enough.

This argument is the same as my argument for the basic income. As Harry Frankfurt writes in one of my favorite papers, we should care about everyone having enough rather than an equal share. It is much easier to calculate an equal share than to calculate what counts as enough, but enough is what matters. Though it requires a further moral argument to say what enough is, I think most of us could agree that conditions extreme poverty do not give a person enough, whatever enough means. More than a billion people live in extreme poverty, and their lives are governed by a global property system that they have no choice but to participate in. My intuition is that just as domestic property systems should provide citizens with a basic income, a similar argument can be deployed to support limited duties of assistance for people in extreme poverty if we could know that assistance could make a meaningful difference.

I imagine a lot of BHL readers will be pretty unsympathetic to this argument. Some libertarians will object to my claim that property systems are coercive in ways that require providing everyone who is coerced by a property system to have enough. Some libertarians seem to think that the existing system of global capitalism is just everyone exercising their natural pre-political property rights without violating anyone else’s entitlements. Or, some people think that assistance would just do more harm than good, and people aren’t owed assistance if it would make the global rich worse off without making anyone better off. Of course it’s hard to know what would be enough assistance. Aid may not work. If aid works, it’s hard to know why. It’s hard to know how to make aid better too. But there are amazing researchers who are working to find the answers to these questions. Some worry that aid is paternalistic or infantilizing, but it doesn’t have to be. Just because we don’t know how best to improve the lives the global poor doesn’t mean we should stick to the current system of basically not trying at all.

For libertarians who are skeptical of wealth redistribution though, here is another reason that global wealth inequality is unjust—borders. As my co-blogger Chris writes, there’s no such thing as a closed border libertarian. As far as I know, Pogge doesn’t mention the global system of borders in his argument for eradicating systemic poverty and Moller doesn’t discuss immigration in his article either. This is a striking oversight. Both Moller and Anomaly emphasize the non-zero sum nature of trade. Moller considers and responds to the objection that the rich got rich by unfair trade practices, but does not include borders on the list of unfair trade practices.

I’m not saying that rich countries got rich by turning poor people away at the border. I suspect the opposite is true, and that rich countries got rich when they had a lot of migration (like the US in the 19th century) and continue to get rich despite immigration restrictions. But one thing is clear, poorer people are poorer because of the border system. As Jason Brennan points out, opening the borders would not only respect people’s freedom of movement and association, it would also add trillions to the world economy and benefit rich and poor countries alike.

So yes, global wealth inequality is unjust. Not because rich countries cause poor countries to be poor, but because coercive property rules and borders trap people in conditions of extreme poverty. For these reasons, even libertarians should support policy reforms that improve the lives of the global poor—especially open borders.

5 Reasons Why Anarchy Would be an Improvement in Human Governance

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By Gary ‘Z’ McGee

Source: Waking Times

“Give a man a gun and he’ll rob a bank. Give a man a bank and he’ll rob the world.” –Unknown

Give people just a little bit of knowledge and courage and they will track down those greedy-ass bankers and hold them accountable. All we need is just a little courageous anarchy. The problem, the crux, the fly in the ointment: most people are not courageous enough, and most people don’t want to learn anything that attacks their all-too-precious worldview. Yes, the very worldview that is keeping people indebted to an immoral, unhealthy, unsustainable, unjust system of human governance, is precisely the worldview that the majority of people are clinging to. Indeed, most people, even though they would probably say otherwise, would rather be kissed with a lie than slapped with the truth. They would rather deny facts that tarnish their worldview than reject the deceit that upholds it. But as Martin Luther King, Jr. said, “Human progress is neither automatic nor inevitable. Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.”

Healthy human evolution requires authentic vigilance. It requires a consistent upheaval of the status quo. This requires proactive human beings who are willing to be authentically vigilant and consistently rebellious. It requires courageous interdependent individuals who dare to recondition the status-quo-junky original condition. It turns out that the wisdom gained from anarchy is precisely the ability to distinguish between sacrifice that is transformative and healthy from mere suffering caused by the state that we’ve allowed because we were too cowardly or too unimaginative to think of a healthier way to live. Like Stefan Molyneux said, “Never, ever underestimate the degree to which people will scatter themselves into a deep fog in order to avoid seeing the basic realities of their own cages. The strongest lock on the prison is always avoidance, not force.”

Here are five reasons why anarchy will improve human governance and thereby cultivate a healthy human evolution.

1.) It Has Inherent Checks and Balances

“Failure shows us the way –by showing us what isn’t the way.” –Ryan Holiday

This one alone is reason enough to give anarchy a try again. The other four are just icing on the cake. I say “again” because human beings lived in hunter-gatherer groups that were characterized by what anthropologists call Fierce Egalitarian Anarchy. They not only shared things, they demanded that things be shared: meat, shelter, and protection… this was simply the best way to mitigate risk in a survival context in a world with limited resources.

Fierce egalitarianism and primal politics (tribal anarchy) worked exceptionally well for the human race for 95% of our existence on this planet. Indeed, it’s one of the only reasons why we’ve survived as long as we have.

In an amazing game theory study by Duéñez-Guzmán-Sadedin on the topic of police corruption, they concluded that once a police system becomes entrenched, nothing can stop it from eventually becoming corrupt, with the result being a population of gullible sheep and hypocritical overlords. But they didn’t stop the study there. They decided to tweak it ever so slightly. In the words of Suzanne Sadedin: “The results were startling. By making a few alterations to the composition of the justice system, corrupt societies could be made to transition to a state called ‘righteousness’. In righteous societies, police were not a separate, elite order. They were everybody. When virtually all of society stood ready to defend the common good, corruption didn’t pay. Similarly, as it turns out, social norms in hunter-gatherer societies are enforced by the whole group rather than any specially empowered individuals.”

This is a critical aspect of anarchy: that everyone is free to be as moral, or as amoral, as they need to be in order to maintain a healthy cosmic, ecological, and social order. Freedom is primary. Health is secondary. Understanding how everything is connected is third. And immorality is not tolerated.

The monumental problem with our Statist society is that we are not taught to be as moral or as amoral as we need to be in order to maintain a healthy cosmic, ecological, and social order. In fact, statism purposefully forces whatever the state decrees to be healthy, as healthy, whether or not it is actually healthy according to cosmic law. This creates an exorbitant amount of problems.

2.) It Would Nullify Debt Slavery and Eliminate Poverty

“When plunder becomes a way of life for a group of men living in a society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” –Frederic Bastiat

How does our legal system authorize plunder? It allows banks to create fiat money out of thin air and then charge interest on it, which keeps the poor wallowing in poverty, and entrenches the rich in corruptible power structures based upon immoderate wealth.

How does our moral code glorify plunder? It pushes militarization, creates profit prisons, creates “war heroes” out of violent psychopaths, and makes war itself a profitable endeavor. It puts profit over people, equity over equality, transforms elections into auctions, and creates a fundamentally unsustainable and unhealthy money first, human heart second, mentality. Like Naseem Nicholas Taleb said, “Those who do not think that employment is systematic slavery are either blind or employed.”

How does anarchy flip the tables on the authorization and glorification of plunder? It prevents plunder from ever becoming possible because anarchy-based modes of governance are engineered in such a way that groups never get to the point of concentrated centers of power. The monopolization of power never gets to the point to where it becomes corrupt, because of controlled leveling mechanisms such as reverse dominance and wealth expiation. Like Jim Dodge said, “Anarchy doesn’t mean out of control; it means out of their control.” Whoever “they” may be: monopolizing corporations, overreaching governments, tyrants.

Self-aware critical thinker beware: political propaganda, especially in regards to war, money, government, and law, are designed to keep you conditioned and brainwashed into believing whoever is in power is being moral and just with their power. But as George Orwell warned, “Political language is designed to make lies sound truthful and murder respectable, and to give an appearance to solidity to pure wind.”

Have no illusions: within the current systems of human governance, poverty is a business. Profits are made on the labor of the poor, the consumption of the poor, and the debt of the poor. Anarchy is a system of human governance built to lift people out of poverty and into freedom. It gives people hope for a more balanced future of human prosperity. Like Raymond Williams advised, “To be truly radical is to make hope possible rather than despair convincing.”

3.) It Would Be Eco-Morally and Ecologically Healthier and More Sustainable

“The best teachers are those who show you where to look, but don’t tell you what to see.” –Alexandra K.Trenfor

Authority tells you what to see, and therefore must be questioned. Authority is telling you that it’s okay to live immoderate, over-indulgent, violent, ecocidal lifestyles. It’s not okay, because it is fundamentally unhealthy and leads to unsustainable devolution. In a system of human governance that is systematically transforming livingry into weaponry, it is the supreme duty of all healthy, moral, compassionate, eco-conscious, indeed anarchist, people to question authority to the nth degree.

Such audacious questioning has the potential to create robust eco-centric communities based upon permaculture, wellness, creativity, and a sacred economy that takes the interconnectedness of all things into deep consideration. It incentivizes individuals who value human flourishing, environmental flourishing, permaculture, sustainable building, alternative education, and nature-based wellness.

The cornerstone of anarchist modes of human governance is the deep understanding of the interdependence of all living things. As Nikola Tesla proclaimed, “Every living being is an engine geared to the wheelwork of the universe. Though seemingly affected only by its immediate surroundings, the sphere of external influence extends to infinite distance.”

An anarchist society divorced from the oppressive Big Brother bitch-slap of Statism, reveals a society that is capable of preserving the moral Golden Mean and the middle-way, as opposed to the immoral, suffocating greed of state politics. It will uncover a society that exemplifies the Golden Ratio of nature, as opposed to the state’s expropriation of nature and nature-based cultures.

4.) It Would Result in the Expiation of Power and Wealth Through an Ethics of Reciprocity

“A freedom that is interested only in denying freedom must be denied.” –Simone De Beauvoir

The ultimate leveling mechanism inherent within anarchist modes of human governance is the ethics of reciprocity combined with the expiation of power.

Anthropologist Christopher Boehm has proposed a social theory that anarchist, egalitarian hunter-gatherers maintained equality through a leveling mechanism he calls Reverse Dominance: a social system of checks and balances that maintains egalitarian ethos while preventing a dominance hierarchy from forming. Reverse dominance hierarchies are broken down into four different leveling mechanisms: public opinion, ridicule, disobedience, and ostracism. These mechanisms work because human beings are social creatures and hugely influenced by peer pressure and social acceptance.

Anarchist modes of human governance are largely based upon shame as a regulatory method. Within such a society individuals are socially, morally, and ecologically compelled to expiate their power and reciprocate wealth because the alternative is the risk of shaming, ridicule, and/or ostracism. Like A.C. Grayling explained it, “The first task is to win something; the second, to banish the feeling that has been won; otherwise it is a burden.” In order for power and wealth not to become a psychological burden within anarchist systems, the powerful and the wealthy must be able to expiate and reciprocate their power and wealth, lest people become oppressed, and entire systems become corrupt.

But this does NOT mean that skill, courage, intelligence and perseverance are not rewarded. Anarchy does not imply socialism. Ours is a cultural problem. We’ve been raised to believe in the false ideal of greed. We’ve been conditioned to own. Our culture has become ego-centric, as opposed to eco-centric. It has become ownership-based, as opposed to relationship-based.

But prestige and merit can still be highly strived for values within an anarchist society that practices expiation of wealth and the ethics of reciprocity.

As I wrote in Breaking out of a Broken System, “Eco-moralism tames capitalism through holistic checks and balances. Ego-moralism jumpstarts communism through proactive citizenry. What we’re left with is a healthy anarchism with an egalitarian ethos which is less about capital and one-upmanship and more about respect for what is borrowed. It is less about ownership and more about relationships. It is ethical, spiritual, and diverse; as opposed to egotistical, religious, and homogenized by nationalism. Eco-moralism helps us pierce through the smoke and mirrors of hyper-reality and into the way reality actually is: interconnected and interdependent. Ego-moralism helps us become more motivated by revealing that our egos are actually tools towards leveraging a healthy balance between cosmos and psyche.”

Anarchists are crazy enough to think they can change the world, which is precisely why they will.

5.) It Would Create Compassionate, Humble, but Courageous Leadership

“To really understand something is to be liberated from it. Dedicating one’s self to a great cause, taking responsibility, and gaining self-knowledge is the essence of being human. A predatory capitalist’s greatest enemy, and humanity’s greatest ally, is the self-educated individual who has read, understood, delays their gratification, and walks around with their eyes wide open.” –The Four Horsemen, documentary

Anarchist modes of human governance create precisely the type of self-educated, autodidactic individual that predatory capitalist’s and pacifist socialist’s fear. As Louis G. Herman wrote, “When individuals try to balance self-interest with a consideration of the bigger picture, they discover, as Socrates did, that deep self-interest actually includes concern for the good of the whole.” An individual (ego) acting on the good of the whole (eco) is a force of nature first, a person second, which provides them the phenomenal power of standing on the shoulders of giants while also wearing a wide array of masks of self-mastery.

If we can combine fierce egalitarian primal politics along with the type of progressive self-interested people who are capable of considering the bigger interdependent picture, then we have a recipe for a healthy, prestigious anarchic leadership. We have a blueprint for authentically venerated and wise leadership that has the potential to transform the currently unlivable human world into a livable one. Like MLK Jr. said, “The hope of a secure livable world lies with disciplined nonconformists, who are dedicated to justice, peace, and brotherhood. The trailblazers in human, academic, scientific, and spiritual freedom have always been nonconformists. In any cause that concerns the progress of mankind, put your faith in the nonconformist.”

Indeed, it is typically the nonconformist who is the one testing the outer limits of the human imagination: stretching comfort zones, shattering mental paradigms, and flattening status quo boxes that those hooked on conformity so desperately try to think outside of. As Henry David Thoreau said, in true anarchist leadership form, “I was not designed to be forced. I will breathe after my own fashion. Let us see who is the strongest.”

 

Related video – This has to be the best 5 minutes ever aired on Fox News (that may seem like faint praise but it’s a rare treat to find such an on point rant anywhere on cable television):

Inequality Has Been Eliminated

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By Chad Hill

Source: the Hipcrime Vocab

Have you heard? Inequality has been eliminated.

What? You didn’t know that? Well, certain “professional” economists have proved it is true.
You may wonder, when you drive around your town, why formerly occupied strip malls lie abandoned, and the only local businesses are Cash-For-Gold, Payday Loans, Dollar Stores, and tattoo parlours. You may ignore the people standing near freeway exits with signs begging for work or money (these have exploded where I live), or the people rolling around shopping carts with all their worldly possessions, or the people living in their cars. It’s all an illusion. Detroit? Chicago? Merely a mirage.

You may wonder at all the empty, shuttered factories, or the fact that the Wal-Mart Super Store is the town’s biggest employer, or that “help wanted” signs seem to appear only in the local Arby’s or Home Depot (or my favorite “owner operators wanted”). You may puzzle at the foreclosed homes stripped of copper and being overgrown with weeds that litter towns from coast to coast. The entire neighborhoods that lie empty and abanadoned? Another mirage, silly. The crumbling roads and local governments “tightening their belts?” Not happening.

Not happening. Nope, none of it.

You may have heard stories about people thirty or forty years ago with high-school educations being able to get jobs that supported families, allowed them to buy a house and save money. You may have heard about people able to save up enough to go to college by just working a summer job. You may have heard of people twenty or thirty years ago with full-time jobs that had benefits such as paid vacations and health care, which are now being stripped away job by job. You may have heard about something called a “union.”

False. All false. The world is getting more equal every day thanks to globalized corporate capitalism. The economists told me so.

You may even know people who have lost their job and are unable to find another one because employers discriminate against the unemployed. You may know someone with huge debt burdens because the cost to train workers is borne entirely by the workers themselves, and you have to go tens of thousands of dollars into debt just to get a job at all. Or you may know someone who was foreclosed upon, or drowning in debt due to an unforeseen circumstance or medical emergency. You might know people who’ve had to take jobs with much lower pay and benefits than the ones they had before. You may know people working brutally long hours, or denied extra work time so that they don’t qualify for health care benefits. You may know people who have used food stamps to feed themselves or their families, even though they work full time jobs. You may know older people who have to work because they can’t afford to retire.

They all deserve it. All of them. They’re all lazy. Laziness has exploded since 2008, don’t you know. Everyone gets exactly what they deserve. It’s never been  better time to be a worker under capitalism.

You may look on the outrageous fortunes spend by the rich and conclude that they are reaping more and more benefits by breaking wages and shipping jobs overseas. Don’t you believe it! Their riches are making everyone better off. Just look at Bill Gates! He gives money to poor people in Africa. And Steve Jobs. He invented the iPod in his basement, or something. Soaring CEO salaries are great. The bailouts were all paid back. And the soaring stock market prices will make everyone rich! Don’t worry about the costs for food, housing, education and transport. The “free market” will take care of it all and unleash abundance, but only if the “job creators” don’t have to pay taxes. Those trust fund kids getting unpaid internships and getting jobs downtown – that’s just a natural part of capitalism, it has nothing to do with inequality. The fact that entire cities are unaffordable for people making less than six figures? College and health care costs? Forget about it. Nothing to do with inequality, which, by the way, has been going down, not up. Besides, even if it were going up, inequality doesn’t matter, what matters is that life is getting better even for people even at the bottom. They love being in debt and working for minimum wage! And besides, the life for the average person is getting better and better the more riches the wealthy and powerful accumulate. After all we have smart phones. SMART PHONES!!!

All those people protesting around the world? They just don’t understand capitalism.

You may even have read books and articles asserting that we are a “winner-take-all” economy, a “servant economy,” or something like that. Not true! Those books and articles were all written by “leftists” and “liberals” who don’t understand science and statistics. Articles like this are just sensationalism by liberals who hate our freedom:

76% of Americans are living paycheck-to-paycheck (CNN)

The Middle Class Is Steadily Eroding. Just Ask the Business Community (NYT)

The Financial Vulnerability of Americans (House of Debt)

Employment Down, Profits Up: The Aftermath of the Financial Crisis in 1 Graph (The Atlantic)

‘Happy Days’ no more: Middle-class families squeezed as expenses soar, wages stall (Wall Street Journal)

A Dozen Facts about America’s Struggling Lower-Middle-Class (Brookings)

America’s Sinking Middle Class (NYT)

Why So Little Media Coverage of How the Rich Are Becoming Richer and the Middle Class Wages are Being Squeezed? (Naked Capitalism)

RIP, the middle class: 1946-2013 (Salon)

Yep, Being a Young, American Adult Is a Financial Nightmare (The Atlantic)

Ripping Off Young America: The College-Loan Scandal (Rolling Stone)

Median CEO Pay Just Topped $10M for the First Time (Slate)

Upgrade or Die (George Packer)

San Francisco’s Income Inequality Rivals that of Developing Nations (Vanity Fair)

Gap Between Rich And Poor In Manhattan “Rivals Sub-Saharan Africa” (Gothamist)

How did the economists come to this conclusion, you ask? Well, Piketty made a few spreadsheet errors. And thanks to that, the professional economist caste can breathe a sigh of relief that all of the things I named above don’t exist, and happily go back to their blackboards and spreadsheets in their corporate-funded free-market think-tank cubicles and university offices.

Because inequality is entirely dependent upon r being greater than g. That is, the rate of return to capital (yes, let’s just argue about what constitutes “capital,” that will make this whole thing go away), must be greater than g, the rate of growth of the economy. Because, heaven knows, it’s not like workers could ever get paid less than the growth of the economy, right?

Right?

Read the full article here: http://hipcrime.blogspot.com/2014/06/inequality-has-been-eliminated.html