Monday, June 27, 2011

But we call it Capitalism

Greece has accepted its fate and will institute draconian austerity measures mandated by the IMF including massive layoffs and pay cuts designed to destroy their economy. The more permanent damage however will be done by a new “independent” agency set up to  liquidate any public assets the transnational corporations find attractive.

This isn’t a new scam, the IMF has been looting and pillaging the third world for more than thirty years but this is its first big haul in Europe. The right wingers are constantly squawking about how we must learn from the failure of Greek socialism and institute austerity here or become just like Greece. “They ran up huge debt you know!” In fact their debt is only 50% of GDP which is lower than most countries in this “modern financial services” dominated world economy. [ people are pointing out that the current "official" percentage of debt is 143% but this includes paying 18% interest that has ballooned the debt and a shrinking GDP that drives up the ratio]

The rude awaking for the right (and really for most Americans) would be to find out that the thing we have in common with Greece is not “socialism” but that we too have a phony debt crisis brought on by the same Wall Street criminals. The goals are the same, the same austerity is already being forced upon us with the goal of crashing the economy and here too public assets are being sold off to transnational corporations.

The most likely scenario is that they will pull back from the brink of total collapse in the US and simply maintain as much pressure on the middle class as will be tolerated but no real recovery will be allowed. Middle class wealth will continue to drain away and the average standard of living will continue to decline until the whole concept of a “middle class“ will go down the memory hole. (the chocolate allotment has always been 2.5 grams)

Even now almost no Americans grasp the concept of wealth. A house (even if you can afford one) is not an asset but really a liability and a 401(k) is a cruel joke. They sold these things as a substitute for the pension plan and all they are is a way for Wall Street to harvest more middle class wealth passing it to the rich and to the “managerial class“ (remember that term).

In the olden days before 1981 the average American aspired to real wealth. To own a business or a farm, to become a professional with their own practice or a tradesman with ongoing business that could be passed on to the next generation. If one chose to work for a big company or the government then a pension could be counted on. Today the entire country is being Walmartized where nobody holds any real wealth and considers themselves lucky to make enough to live on until being cast aside.

This will also be a rude awaking for many of the Republican base who sold the family business after generations in exchange for a large stack of paper. They may be living well now but only until the next flash crash wipes them out. If they are still hanging onto real wealth they might consider what happened to all the car dealers wiped out in the “reorganization” of GM and Chrysler. The Republican plan was that all of them would be wiped out, Obama saved most of them but they still won’t vote for him, he’s a socialist.

The “managerial class” I mentioned earlier are the well paid people who make all this happen. The hedge fund managers, the corporate executive who oversees Mergers & Acquisitions, the media celebrities who get 8 figure salaries to lie to us convincingly that we are all capitalists and the liberals who built this country are “dangerous” and “hate America”. History is rewritten on a daily basis and facts are just opinions to be contradicted with talking points.

 The Soviet Union had a “managerial class”, technically there were no “rich” people in the USSR but the people at the top lived like they were rich while working people got uniform poverty and called it socialism. Here the “managerial class” is well on its way to having everything under the control of the “corporate state” as opposed to the “Soviet State” but the outcome is the same. The working people will have the same uniform poverty but call it “capitalism”.


Anonymous said...

In terms of public assets, I am assuming Social Security is the corporatists' "bucket number 6?"

Then what, our national parks?

Anonymous said...

While I agree with many of your points, especially the notion that there is a huge gap (growing wider) between "real wealth" and the "perception of wealth", I hav eto dissagree with some of your more utopic assertions. Especially with this notion that somehow "in the old days" pensions could be counted on. Did you ever notice that those "old days" only lasted as long as it took for those people to start demanding the pensions they were owed? And how many of these so called "counted on" pensions have been slashed, reduced, or lost all together because their companies sold out, went bankrupt, or forced labor unions to re-negotiate their terms in order to avoid the first two?

Second, I think the notion that the debt crisis is phony is little more that a left wing talking oint made to counter the right wing talking point that we have to gut every social program and governemnt service to fix it.

As far as I can tell (and this is re-enforced by the examples in your article) the ONLY REAL ECONOMIC CRISIS in this world right now is debt. Whether it is the micro-debt of a personal credit card or the macro-debt of an entire coutry that is in danger of defaulting on its loans, debt is the engine driving almost all of the problems that you are talking about. By it's very nature it robs the poor and middle class and gives to the wealthy.

Anonymous said...

Greek protesters haven't learned to wear gas masks to avoid tear gas probably waiting for welfare/nanny state to supply freebies.

prairie2 said...

Nice try getting the right wing talking points in through the back door.

Actually pensions worked fine until the regulations were weakened and M&A began tearing apart companies and the pension plan is the first thing to go. The pension "crisis" this created allowed the creation of the 401(k).

Debt is entirely a creation of the rich. (who do think loans the money) The untaxed rich are loaning trillions to the government and to consumers and the middle class get suckered or often forced into going into debt as their income falls.

Stop and think, a relative handful of people can loan the government a trillion dollars every year. You do the math.

macnow said...

The rich are loaning back our money in the trillions, back to us. They rarely put their money in jeopardy, and when they do (bond holders etc.) they work their political connections to get tax funded (from us the middle and lower class) bailouts first, in full and many times over what actual bond worth is, through selective accounting tricks only aloud in that rarefied air.

Truly the layer cake.

Ya and I agree, nice try wingnut.

Anonymous said...

Please put down your political BS blinders. I know it's tough to talk to someone who can think for themselves when you spend all day shilling a political agenda against the right wing masses, but believe me, I'm not here to re-enforce any right-wing agenda.

Why were the regulations weakened?

Why were companies being torn apart?

On top of that the fact is that you didn't deny the timing, only the cause, so is the timing just coincidence?

Are you familiar with Stagflation? (rhetorical, I know you are)

Political change like that doesn't happen in a vacuum, and it doesn't happen because people all of a sudden want change for the sake of change. It happens in response to some crisis, and make no mistake, the stagflation of the 70's and early 80's was a crisis.

Debt may be a creation of the rich (undoubtedly made more powerful by Reaganomics), but in this modern society it has become, without question, the favorite opiate of the masses.

And did you stop to think what would happen if those people stopped lending money?

It's easy to blame the crack dealer for all of the crackheads, but after you take the dealer off the street you still have to deal with a bunch of crack adicted people who think they will die without their crack, and who will commit all manner of crimes and pay almost any amount of money to get more. In our economy credit has become crack.

I think we both see the same problems, I think the big difference is that you see debt as a symptom, and I see it as the cause. I think that you have to adress the problem of debt on every level in order to start adressing these major problems like income inequality. You simply can't create "real wealth" for individuals by taking it form the wealthy and redistributing it, the crackheads will just use it to buy more crack. There has to be a fundamental change in the way people view credit and debt in this country or I think you are absolutely right, we will simply find ourselves working in uniform poverty for our benevolant creditors.

prairie2 said...

Seriously, this a batch of particularly lame right wing crap. I was around before any of this Reagan voodoo economics became normal. People did fine without credit since they were paid that money instead of having it loaned to them. You can't create money from nothing, there has to be goods created and the people who created them shouldn't need to borrow money from rich people to buy them.

Anonymous said...

Maybe the troll could take time and actually read a book or two on this subject. SMU economist Ravi Batra explains the debt situation rather easily-even a right winger can comprehend. Basically after Reagan's election in 1980, supply-side created a gap between supply and demand because all the productivity increases were going to the top. This gap needed to be filled. Since workers' wages could not do it, debt was needed to fill this gap.

Now I know you know all this Bruce (and then some), but I think Mr. Wingnut needed to learn something he won't find on CNBC, Foxnews or Fox Business.

Green Monkey said...

Question: What do you know of or think will happen with respect to a recent remark you made about 3rd world countries allowing one currency to be used locally and another to be used by foreigners for international trade. I know this is the case in Cuba but have never heard an explanation as to why such a system would be implemented, seems complicated, what does it protect?
Thanks, Chris in Nanaimo.

prairie2 said...

What I was referring to wasn't a duel currency but a situation more like Iraq where the local currency is only accepted in Iraq. Post USD as the world's reserve currency would either require a new USD or maybe we could trade with Yuan but we don't have much to sell except for raw materials so there won't be that much trade anyway. Of course this inn't inevitable, it could all be fixed if the right people were in charge.

Anonymous said...

How disappointing, and lame indeed.

"supply created a situation where people didn't have nay choice but go into debt."


And calling me a troll, as if no reasonable person could possibly disagree with the master... nice, and a sure sign of a well read mental midget.

If you will, tell me what about my statements agreeing with your basic premise that there is massively disparate social inequality that is getting worse, and that Reagan was a much to blame for it as anybody, but arguing that the cause is in fact debt rather than the other way around, is part of some standard right wing talking point? Please point me to that right wing pundit/candidate, I really have to know who this person is.

So spare me your anecdotal "I was around back when this was this and that was that.." followed by the usual lecture about what should be and what shouldn't.

You can create money from nothing, it literally happens every day. I would think a fine NPR listener like yourself would know that by now...

And people don't have to buy anything, but what they have bought, hook line and sinker, is this notion that the American Dream means that you are entitled to have the what everybody else has even if you can't afford it. For some things I believe that should be true, everybody should have access to health care, education, and other institutional services, but nobody is entitled to an iPhone or a 4 bedroom house.

The problem wasn't with supply, it was with demand (hence the inflation part of stag-flation), Americans demanded more, more than they could pay for, and they got it. Supply side economic policy was just fuel for the fire.

SgtWok said...

"And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

REP. HENRY WAXMAN: You found a flaw in the reality...

REP. HENRY WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?

ALAN GREENSPAN: That is -- precisely. No, that's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Anonymous said...

Imo, property ownership is still the best way to create personal wealth and the only way for the vast majority of the population to do that is to go into debt.

prairie2 said...

In North Dakota the state owned bank loans money to people to start businesses and such. Wall Street bankers don't get a cut. Enforcing the Anti Trust laws would create millions of opportunities for personal wealth creation. Buying a house doesn't create any wealth, okay a little for the guy who builds it but if he gets away with hiring Mexican corn refugees then not so much for the rest of us.

Anonymous said...

In the end, the thrifty will own the debtors. ... so keep on raising that debt ceiling. .. wait, there is no debt ceiling at all because it can be raised. In my house, spending more than I make is a way to bankruptcy. Therefore, I refrain.

Anonymous said...

"Today the entire country is being Walmartized where nobody holds any real wealth and considers themselves lucky to make enough to live on until being cast aside. ..."

What? In the last 30 years I have had 7 different careers, been laid off 5 times. Quit once. Taken giant pay cuts 3 times. Yet, some how, some way, without resorting to the phony"credit card" millionaire lifestyle. I have am in excellent financial shape. With a solid passive income producing portfolio. Zero debt. Amazing how some financial education (free to all at the library) and common sense applied to everyday life can give great results no matter how "bad" life has been the past 30 years.

Anonymous said...

"Middle class wealth will continue to drain away and the average standard of living will continue to decline until the whole concept of a “middle class“ will go down the memory hole.

Ipods, Ipads, HDTV, cars, gizmos, cell phones, GPS, kindle, gadgets, internet, computers, cable TV, video games, bigger houses, longer life spans, better medicine, ect., ect., ... yeah, the middle class has it much worse than 30 years ago. Ask them to give all the innovations of the last 30 years. and see the reaction. The standard of living has never been so good. Wake up.

Anonymous said...

Let's see-multiple income households, no pensions (401k's ARE NOT pensions), too expensive to send kids to college (conversely kids assume massive debt to go to college), longer hours for less REAL wages, no mandatory vacation time or maternity leave (like everywhere else in the industrialized world), health care too expensive unless lucky enough to get through an employer (ditto), manufacturing jobs nearly nonexistent. Hmmm.

When I was growing up back in the 1970's, one income was enough to support a family. My father had a defined benefit pension (not defined contribution 401k). You could work a job at McDonald's AND afford to attend college. Health care costs were tame because much of it was non-for-profit. My father was allowed vacation time-and could more than afford to take us on a trip once a year. A high school grad who didn't want to go to college could find a union job in manufacturing and live quite comfortably.

Now even though the economy wasn't that great during the 70's (two oil crises, stagflation, etc.), looking back on it, life for the average middle class American was fine. You think I-Pods and cell phones really add more value than having enough income so your wife can be "stay-at-home" mom? You think owning a computer or a flat-screen high-def TV is a step-up versus having a guaranteed pension that will provide a steady stream of income throughout retirement? Those better drugs you talk about-are those the ones big Pharma is allowed to markup 1000, 2000, 5000 percent over cost? !

Sorry, technological progress doesn't necessarily equate to social and economic progress. Is it really a benefit to little Johnny who graduates from high school that he can afford an I-phone, but can't pay for college? Or how about the sixty-five year old who's 401k has been evaporated by the 2008 crash now has to work until he dies. With the help of some great new drugs though, he can be working into his eighties!

I really hope you are one of the top one percent. Otherwise, just keep playing that powerball. You and the rest of your tea bagging ilk are the biggest suckers for buying into the right wing talking points the rich throw at you. "Gee, can't afford college, plant is closed, and only Wal-Mart is hiring. However, forty hours $7.50 an hour gets me enough to buy that new I-phone. God do have so good-much better than those losers 30 years ago."