Part I: Wealth, huh, good God. What is it good for?
Thesis:
Wealth does not create more jobs; need does. In a healthy
capitalistic system, one which creates a long term economic stability,
satisfying the needs of the bottom 90% of workers provides the greatest
stability. Wealth becomes a byproduct of employment. Guarantying high
levels of wealth to the top 1% creates an overall unstable economy for
the vast majority of Americans, the bottom 90%. Wealth in the hands of
the plutocrats, plutonomics, is a hindrance to stable high employment
and sustained new job creation.
Definitions
Plutocracy: An elite or ruling class of people whose power
derives from their wealth. Government controlled by the wealthy.
(Basically, the richest 1% of U.S. Households)
Plutonomy: A term coined in 2005 by Citicorp's Ajay Kapur to
describe the economy of the past three decades. Economy controlled by
Plutocrats; Economic system run by and for the benefit of the
Plutocracy.
Five years after Kapur created the term
Plutonomy, the
plutonomic system has become so entrenched that its dominance will soon, if it hasn't already, turn into permanence. That's not good.
According to Kapur, understanding this new economy and the importance
of preserving it is simple. "The World is dividing into two blocs - the
Plutonomy and the rest. The U.S.,UK, and Canada are the key Plutonomies
- economies powered by the wealthy. Continental Europe (ex-Italy) and
Japan are in the egalitarian bloc."
Kapur's contention is that the plutocracy (the economic ruling class)
drives the economy and, thus, needs to be protected. However, the other
side of this economic protection is the diminished importance of the
"average consumer," and that is not a pretty picture; it means
unemployment and depressed wages for a huge portion of Americans (the
bottom 90%), the "average consumer."
Actually, it's even worse than
that. For Kapur and the plutocrats, "There is no "average consumer" in a
Plutonomy. Consensus analyses focusing on the "average" consumer are
flawed from the start. The Plutonomy Stock Basket outperformed MSCI AC
World* by 6.8% per year since 1985. Does even better if equities beat
housing." Note that his focus is on who is winning the financial market
and not the health of the job market.
(*The MSCI World is a stock market index of 1500 'world' stocks. It
is maintained by MSCI Inc., formerly Morgan Stanley Capital
International)
Though we, the bottom 90%, weren't aware of it, we have been the
magician's assistant in a vanishing act that probably will not reappear.
We are invisible to the
plutocrats. We don't count in their
plutonomy
because an "average consumer" is no longer necessary to create wealth
for the top tier. We just don't matter and neither does our employment.
They just need enough of us working to create the luxury items that they
wish to purchase and the services they need to use. (If we don't wake
up, we're all going to be vying for the honor of mowing their lawns and
dusting their lladros.)
Since the wealthy have the bulk of - well - the wealth - ("the top 1%
of households also account for 33% of net worth, greater than the
bottom 90% of households put together. It gets better (or worse,
depending on your political stripe) - the top 1% of households account
for 40% of financial net worth, more than the bottom 95% of households
put together.") and they purchase luxury items and employ domestic
workers and gardeners, production and services trend toward those areas.
Therein lies the obvious problem. 1% of the population buys far fewer
items than the 90%. That logic is obvious. From there too many people
seem to drop the economic thread that would allow them to understand how
stable employment is attained. Nonetheless, the logic is not difficult
to follow. It takes fewer people to produce goods and services for the
1% than it does for the bottom 90%. Think of it this way:
it's the
employment power (which is not the same as purchasing power, i.e. money)
of 1 million households versus 60 million households. The wealthy have
more purchasing power by virtue of their money, but they have far less
employment power.
Most Americans, at the urging of economic media pundits, make the
mistake of thinking that the health of the financial markets creates
long term stable employment, but the markets are a major factor in
creating wealth in a plutonomic system for the top 1%, the plutocrats,
not long term stable employment for the bottom 90%.
(What follows is a simple, even simplistic explanation of the fallacy
that wealth creates jobs. Don't have a cow. I know there are holes in
it.) If the number of workers needed to make a luxury car versus the
number needed to make a normal car is roughly the same then the "average
consumers'" purchases would generate far more employment. (If the
bottom 90% had the money to purchase new cars - which, increasingly,
they don't.) The
plutocrats (the 1 million wealthiest
households) may buy as many as 4 cars at $80,000 to $200,000 each, but
the number of workers needed to make the 4 million cars is a fraction
(6.7%) of what it takes to make 1 car for each of the 60 million
households, the bottom 90%.
However, that logic is the last thing the
plutocrats want the bottom 90% to realize.
They want us to believe that their wealth, not our needs, creates the
jobs. However, businesses criterion for creating jobs has far less to do
with wealth than they would like us to believe. The notion that
increased profits result in increased employment and/or wages is
inaccurate. No businesses that wishes to stay solvent base their
expansion on profits. They base it on the need for their product or
services. Premature expansion has killed many businesses. It is true
that money is needed to expand a business when it wants to meet
increased demand, but readily available cash on hand is not a necessity.
In fact, tapping into cash reserves is not necessarily wise, arranging
additional financing is preferable. The business may need the reserves
for survival if things go bad.
Right now there's still a lot of wealth in the economy, enough to
revitalize the economy, but it is in the hands of the wealthy, and there
are just not enough of them (1%) to create enough need that would
result in a healthy level of stable employment. So there's far less
employment and the bottom 90% suffers. Wealth does not create more jobs;
need does. Satisfying the needs of the bottom 90% creates a healthy
sustainable economy.
Wealth, huh, good God
What is it good for
Absolutely nothing
Listen to me
Part II: "Taxes? We don't want no taxes. We don't need no taxes! I don't have to show you any stinkin' taxes!"
Thesis:
Wealth does not create more jobs; need does. In a healthy
capitalistic system, one which creates a long term economic stability,
satisfying the needs of the bottom 90% of workers provides the greatest
stability. Wealth becomes a byproduct of employment. Guarantying high
levels of wealth to the top 10%, and especially 1% creates an overall
unstable economy for the vast majority of Americans, the bottom 90%.
Plutonomics is a hindrance to stable high employment and sustained new
job creation.
Definitions
Plutocracy: An elite or ruling class of people whose
power derives from their wealth. Government controlled by the wealthy.
(Basically, the richest 1% of U.S. Households)
Plutonomy: A term coined in 2005 by Citicorp's Ajay Kapur
to describe the economy of the past three decades. Economy controlled by
Plutocrats; Economic system run by and for the benefit of the
Plutocracy.
The main impetus for
business people and companies is the attainment of wealth. Rarely is it
the pure pleasure of creating or expanding a product or service. They
are in business to make money. If the only or fastest way to make more
money is through expansion to meet demand then that's what a business
will do; however, if people and businesses can make that money through
tax breaks, then they can moderate or forgo the risk of expansion. The
huge increase in wealth over the past three decades has not resulted in
high employment and increased wages because that wealth has gone to the
wealthy. In fact the bottom 90% are worse off now as a result of the
wealth or rather of the distribution of the wealth.
My point is this:
tax breaks, especially huge tax breaks for the
wealthy, are a disincentive and counterproductive. Tax breaks tied to
increasing wages is fine. Tax breaks tied to expanding a business to
employ more people is fine, but tax breaks just so the wealthy, the
plutocrats, can have more money is counterproductive. They are
more likely to gamble it on the stock market or buy a luxury car or a
house in the Hamptons and live off capital gains. That is dead money; it
employs few people if any.
That same tax break shifted to the bottom 90% will be spent on
necessities. The increased purchases require more goods to be made to
meet the increasing need; thus, more people must be employed. When
employment is high, money chases workers and wages and salaries rise.
That in turn gives more people more money and a healthy employment
cycles ensues. Money in the hands of the wealthy does not have that
effect because there are a lot fewer of them. They have more purchasing
power than the bottom 90%, but they have far less employment power. (If
the money that the big corporations spend on lobbyist to garner greater
tax breaks were given to their workers, it would do a lot more for the
economic well-being of the country. I know. I'm dreaming.)
Additionally, economic stability, which high employment and a more
even distribution of wealth creates, is disadvantageous for the wealthy
because the opportunity to accumulate property and stocks at bargain
prices decreases. When this economic fiasco finally calms, they will
have far more wealth than before. Some already have made enormous
profits. (Note that the major financial institutions are larger than
they were before the crisis because some of them, with the aid of the
fed, merged. Too big to fail is now way too big to fail and far too big
to control. During the financial crisis, too big to fail was really too
big not to be a plutonomy.)
However, regardless of how damaging plutonomy is for the working
class, there is no indication that this plutonomic system will change
soon or maybe at all; in fact, it will get worse because the money and
power brokers are hard at work trying to get those in the 90% that are
still employed to accept the concept of the jobless recovery.
Why such a grand effort? High unemployment works to the advantage of
plutocrats (the rich and powerful) because it drives wages down. In bad
times people accept that because they are just happy to have a job.
Decreased wages mean fewer purchases and that means fewer workers are
needed. And the cycle continues, except for the wealthy. The stability
of the top 1% is not negatively effected. The bonuses and exorbitant
salaries don't change and their life style doesn't change.
End of Part II: Tomorrow Part III: Won't somebody please help that poor man?"
Definitions
Plutocracy: An elite or ruling class of people whose
power derives from their wealth. Government controlled by the wealthy.
(Basically, the richest 1% of U.S. Households)
Plutonomy: A term coined in 2005 by Citicorp's Ajay Kapur
to describe the economy of the past three decades. Economy controlled by
Plutocrats; Economic system run by and for the benefit of the
Plutocracy.
Why doesn't our government do something about plutonomics?
They have. They've adopted it. They love it. They can't get enough of
it. It has become clear that, for several reasons, plutonomy is now the
economic system preferred by the majority of congress, the previous
four presidents, and possibly our current president. It's easy to
understand why. First, it provides members of congress with a readily
available source of large campaign contributions (with the Supreme
Ruling, even larger in the future). It is the lifeblood of their
reelection, their further employment, their continued affluence, and
their growing influence. Second, protecting the plutonomy is a guarantee
of a place in the sun after resignation, electoral defeat or
retirement. Terms in congress have become internships for corporate
boards of directors, lobbying firms, think tanks, well paid corporate
positions, lucrative speaking engagements and paid gigs at main stream
media outlets. Third, and not insignificantly, they are lifted into the
upper echelons of high society. They get to breathe the rarified air of
the rich, powerful and famous. Fourth, they wanted to get rich and at
the same time believe the bottom 90% would be alright. That way they
wouldn't have to nudge their conscience from its thirty year nap; so,
they decided to ignore the obvious.
For wishful politicians plutonomy
was a case of, "please be true, please be true, please be true - whoops -
well, I'm rich, too bad for you." Then to hold their job they took a
page or scene from "How to Succeed in Business Without Really Trying."
They blustered, blew hot air, stirred emotions and created mush. It's
really not hard to understand; it's just hard for the working class to
justify.
Thus, Libermann's support for the public health insurance option
vanishes as he approaches retirement and looks to position himself for a
seat on the board of directors of an insurance company. It wasn't a
change in position over principle; it was an audition. Since 1989 Chris
Dodd has received $13.9 million from the finance, insurance and real
estate sector. After Dodd announces his retirement he no longer has to
pretend to support strong financial regulation. He declares a two man
regulatory finance subcommittee, then cuts it in half and pushes to
replace the proposed independent, standalone Consumer Financial
Protection Agency with a weak Bureau of Financial Protection inside the
Treasury. It is a Wall Street job interview.
Why don't the invisible "average consumers" do something about plutonomics?
First, part of it has been the great selling job
that the Republicans and many Democrats have done. In fact, even though
he sent this snowball rolling down hill, some Democrats still admire
Ronald Reagan, the sacred icon of the Republican party. On second
thought, many Americans are unaware of his responsibility for the debt,
demise of unions, depressed wages and decreased services. They see him
as the nice old man sitting atop his steed with a smile and his hat
stylishly cocked to one side. His promise of a good life for everyone
was too tempting to ignore. The promise that we could have it all was an
allure that we couldn't resist.
Second, they gave us an enemy. Never mind that it
was our own government. The presentation of a scapegoat for our failures
was soothing. It wasn't us; it was them, them out there. Government is
not the solution; it's part of the problem. They let us separate America
from the government of the United States. They were able to separate
the Constitution from the government that the Constitution set up. We
had found the enemy and it was us, no them - wait - we're not too blame.
As my daughter humorously says to every mistake, "I didn't do it." We
had separated ourselves from our government. It was no longer what they
did, it was what they were and we had nothing to do with it. All we had
to do was convince ourselves that we didn't live in a democracy; so,
even though we elected these people, we yelled, "Tyranny." Even though
we could replace them we shouted, "Sic Semper Tyrannis." Very clever
self deceit.
Third, we admire the wealthy. We are 90% of the
population, and although we are more angry, we continue to grovel at the
feet of the powerful and wealthy and to be used by them. With the
Supreme Court ruling on corporate political contribution, we could be
groveling even more. Too many people in this country still worship the
wealthy because they worship wealth. They want to be them, so they dare
not attack them. It's the same psychology that causes people to buy
Inquirer, Star, and People and tune into a tour of an athlete's "crib."
Fourth, we don't know what's going on until its
already gone on. We really don't know who these politicians are before
we elect them; so, it's hard to know how important their personal wealth
is compared to their constituents well-being. To top it off, they have
no compunction about lying to us about the importance of wealth or the
extent of their personal wealth. Add our gullibility and carelessness to
that, and artful politicians know that we can be swayed by clichés, and
cleverly crafted sound bites that edge the truth aside. We have allowed
politicians to sell bribery as lobbying. The main stream media's
reliance on advertising from the plutocrats has made their judgement
unreliable. They are part of the plutocracy and are dependent on a
vibrant plutonomy. While we say that we don't trust politicians, we keep
trying to. Their reelection is almost assured. We let media labels and
revelations about their personal lives influence our decisions about
their qualifications as lawmakers.
Fifth, We are easily distracted by side issues that
have no effect on our economic well-being. We vote based on abortion,
stem cell research, gun control, illicit affairs, religion, gay-rights,
immigration, marijuana legalization.
Sixth, We're just f'n lazy. We do not take the time
nor put out the effort necessary to find out the truth. The information
is available but it is up to us to look because MSM has a vested
interest in believing the information of the plutocrats.
We need to grow up. The childish admiration of the plutocrats (the
wealthy and famous) is an insidious distraction. It blinds us. It
prevents us from seeing what is really happening, and if we can't see,
we can't act. Time is running out if we want our children to have a
prayer for a decent life. They deserve it more than we do. We are
letting this happen.
This brings me back to my thesis. Wealth does not create more jobs;
need does. In a healthy capitalistic economy, one which is satisfying
the needs of all the people (even the outcaste 90%), wealth is a
byproduct of employment, and it rightly should be. A capitalistic system
that does not create products and services intended to satisfy the
increasing needs of the vast majority of people does not create stable
employment; thus, it results in an unstable economy for the bottom 90%.
We need to replace the Plutonomy with Populonomy, a populist
economy based on the needs of the 90%, an economy that benefits the 90%.
Money needs to be shifted from the top 1% of wealthy people and
corporations to the 90%. That means a return a the 1940's and 1950's
graduated income tax scale and an increase in capital gains taxes. Only
then will we see a true change in the employment and spending power that
will stabilize the economy.
A final note: In this disastrous economy,
raising taxes on wealthy people and corporations is not redistribution
of wealth. It is re-employment. It is money for job creation.
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