Wednesday, September 17, 2014

Should We Go or Should We Stay Now: Can Scotland Escape the Status Quo Trap?


Two days to go before the Scots will decide in a referendum whether to create their own independent country or to continue as part of the United Kingdom.
Apparently, the upcoming result is too close to call.  Although the "No" side had a substantial lead six months ago, the "Yes" vote has increased substantially as the date of the referendum approaches.

But is it enough?

I'm very sad to say that I don't think so.

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The arguments to create a new independent country free from the dysfunctional governance of Westminster and the City couldn't be clearer.  I would highly recommend George Monbiot's excellent op-ed piece, "A yes vote would unleash the most dangerous thing of all -- hope".

But these reasons to vote yes are not sufficient to carry the day.  Unfortunately, there exists in Scotland a large bias towards the status quo that is simply part of human nature.

In short, better the devil you know than the devil you don't.

It's that simple.

Forget the value of the oil in the North Sea, whether an independent Scotland could continue to use the pound, and what happens to Scotland's share of the UK's accumulated debt.

The real ballot box question is whether independence is worth the bother.

If the Scots decide yes, they'll have to deal with a lot of shit that is now being decided for them at Westminster and in the City.  Certainly, things will become a lot riskier for the Scots and there are no guarantees that life will become better.

So, given the uncertainty, why not let the status quo remain?  Life ain't all that bad.  Have a cuppa and watch a wee bit of what's showin on the tele.

Robbie Burns must be rolling in his grave.







Wednesday, September 10, 2014

The American Rentier Economy: Has the US Become a Failed Nation?



 
When I first started to write this blog five years ago, to make the point about how the concept of the economy is used to the detriment of the vast majority of the population I distinguished between the real economy and the zombie economy.  Essentially, those who derive their wealth from non-productive financial practices prey upon the living who exchange real goods and services in the real economy.
 
To be more precise, I now prefer to use the term rentier economy because although the practice of wealth extraction is still the same, the term rentier has been used for a great many years in traditional economic discourse.

In a great article posted on the web, The Age of Rentier Capitalism, Guy Standing asserts:

Rental income enables people to make money simply through the possession of scarce assets. Sometimes assets may be “naturally” scarce: if fertile land is owned by a few landlords, they need not work themselves but can rent it out to others for a high price. This income is rent, not profits from a productive activity, as the landlords do nothing to earn it aside from owning the land.

These days, rental income is mainly derived from “contrived scarcity.” This is explained by the Lauderdale Paradox, named after the eighth Earl of Lauderdale, who in 1804 observed that as private riches grew, public wealth fell. This is because the more the rich own, the more they can limit the availability for others, driving up the price. Today, such contrived scarcity has become pervasive and global, which is paradoxical, since globalization should have resulted in a surge of extra goods and services.

While there are indeed more goods and services than ever, the means of obtaining rental income have multiplied. They include control of natural resources by a few corporations and plutocrats, a new intellectual property regime, a system of state subsidies that go to asset holders, and myriad mechanisms that entrap people in debt.

Importantly, today there is a greater return on investment from seeking rents and the exchange of financial securities than from the profits generated from the exchange of goods and services.  This means that there is less money that gets invested into economic activities that require human labour.

 
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For instance, entrepreneurs who become billionaires as a result of their business acumen no longer need to maintain their entrepreneurial skills once their accumulated financial assets generate more profits than their businesses. 
 
Once this happens they can successfully cash in their chips by selling off their shares in their business adventures and live in extreme comfort from the rents that their financial portfolios generate.

Moreover, the CEOs of America's biggest corporations earn more from their stock options and their subsequent manipulations than they do from salaries generated from the profitable management of real assets in the real economy.

As a result, corporations now imitate the members of the rentier class.  Just as the
ultra-rich transfer their financial assets to offshore tax havens to avoid paying taxes in the countries where they reside, corporations now transfer the location of where they are legally incorporated, moving the legal entity offshore to as well avoid paying taxes in the countries where they first prospered.

Like rentiers, American corporations are now sitting on huge piles of cash, estimated at more than two trillion dollars, with no intention of investing in real economic activity, which has effectively reduced the cash flow into investments that would generate jobs.

The economic term that describes this state affairs is "secular stagnation",  a condition of negligible or no economic growth in a market-based economy, a term, in my opinion, as hollow as "collateral damage" which is used to describe the unintended civilian casualties caused by a military operation.

In this case, the civilian casualties are those unlucky enough to be living and working in the real economy.  The damage inflicted upon their lives results from the unbridled greed of those who profit from the machinations of the rentier economy, which, however, is anything but unintended.

Given this state of affairs, it makes me wonder whether the US is heading down the road to become a failed nation, one in which extractive economic practice overwhelms any attempt to bring about inclusive economic policy.

I don't think that it would take much to convince the estimated 46 million people living on food stamps in the US that the nation has already failed them.                                  
















Friday, August 15, 2014

The Bright and Shiny Lumpen Professional Class of the Post-Industrial Age

For Karl Marx, the lumpenproletariat -- I love the sound of the word, "lumpen" -- is the lowest stratum of the industrial working class, including also such undesirables as tramps and criminals.

The members of the Lumpenproletariat—this “social scum,” said Marx—are not only disinclined to participate in revolutionary activities with their “rightful brethren,” the proletariat, but also tend to act as the “bribed tools of reactionary intrigue.”

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I wonder what he would think of those well-paid, well-educated, employees of the state, usually with defined benefits pension plans, that make the system run and are as about inclined to bringing about any meaningful change to the present status quo as the "social scum" of Marx's day were inclined to participate in his so-called revolutionary activities.

Just as the lumpens of olden days gave no second thought to the well-being of the population at large, the same could be said of the bright and shiny lumpens of the post-industrial age.

Marx got it wrong.  Capitalism is much more resilient than he ever dreamed of.  There is no inevitability to its collapse in the foreseeable future.  Instead, increasing productivity brought on by technological change drives a deep wedge into what he believed to be the existing solidarity of the so-called working class.

Pay those who would otherwise "rouse the rabble" well enough so that the gulf between classes separates those who make the system run, (elected officials, school administrators, senior bureaucrats, doctors, lawyers, etc.) from those that the system is supposed to serve, the vast majority of those who have to work for a living, and you have figuratively cut the head, those who could lead, from the body politic.

Those who are able to climb the rungs of our meritocracy are much more inclined to pursue the material rewards that their taxpayer-funded salaries afford than to serve the real interests of those whose lives are affected by the quality of the social services that the state offers.

In other words, make the system run, not so that it runs well -- that would require a significant redistribution of wealth -- but that it runs well enough so that nothing emerges that would challenge the ever increasing share of the nation's wealth that is destined for those who never have to work for a living.

In exchange, the bright and shiny lumpen get a much cheaper and much more scaled down version of the lifestyle that the haute bourgeoisie enjoy, especially if two of the bright and shiny lumpens decide to marry and raise a family.

In this case, the lumpen couple can afford to live in a neighbourhood that offers a social milieu very favorable to the development of their children: daycare, schools, summer camps, access to private schools if necessary, and family vacations abroad, which gives them a huge advantage in performing well in our meritocracy.

Just as material wealth is transferred from generation to another, so are the soft skills and competencies that enable people to earn higher salaries.

Indeed, research shows that the only factor that is of importance in the prediction of the child’s educational attainment is the education of the parents. Most importantly, the children of parents with less than high school education are much less likely to proceed beyond high school than are the children of parents at other educational levels. And the children of parents with university degrees are much more likely to complete university themselves than are the children of parents with lesser education.

In general, people don't tend to marry others with lower socio-economic status.  As a result, those who could make a difference to the plight of Marx's proletariat don't make a difference.  They are too busy looking after themselves and their own.

With regard to being effective agents of social change, the bright and shiny lumpen professional class is as about as useless as Marx's lumpenproletariat for the former will never bite the hand that feeds it.








Tuesday, August 12, 2014

The Weight Loss Industry In North America Is Built Upon A Web Of Lies And Deceit


According to the data by Marketdata Enterprises, a market research firm that specializes in tracking niche markets, Americans spend north of $60 billion annually to try to lose pounds, on everything from paying for gym memberships and joining weight-loss programs to drinking diet soda.

Considering that as of 2012, the US led the way in obesity rates among OECD countries with Mexico a close second and Canada sixth, it would appear that the potential profit within this industry is, for lack of a better word  -- enormous.

How is that so many people could become so overweight and have such difficulty shedding the unwanted pounds, so many dollars spent with so little to show with regard to sustained weight loss?

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Well to begin, when it comes to food choices, the North American public was told one of, if not the biggest lie in the history of public health.  In short, they were told that if they wanted to avoid cardiovascular disease, they should eat a diet low in saturated fat and cholesterol.  As a result, North Americans reduced their consumption of saturated fat and at the same time increased their consumption of trans fat and the simple carbohydrates proffered by the food industry, even though that research demonstrates that neither saturated fat nor cholesterol correlates with increased levels of morbidity.

To say the least, this change in the North American diet was an unmitigated disaster for the population at large, but was most certainly a boon for the weight loss industry. 

For example, between 1980 and 2000, obesity rates doubled among adults in the United States. About 60 million adults, or 30% of the adult population, are now obese.


Similarly since 1980, overweight rates have doubled among children and tripled among adolescents – increasing the number of years they are exposed to the health risks of obesity.
Direct health costs attributable to obesity have been estimated at $52 billion in 1995 and $75 billion in 2003.
In other words, there is a ton of money to be made once the population gets fattened up: some of it goes to the health care industry while another share makes it way to the weight loss industry.
Once declared obese, an individual is then subjected to the bogus promises of the benefits of following the latest diet or dietary supplement.
First, another deceitful line of reasoning must be planted into the unsuspecting mind:
when it comes to body weight, calorie intake minus calorie expenditure equals calories stored.
No shit Sherlock!  That's like saying that rich people are ones that make more money than they spend. 
Here comes the kicker: surrounded by tempting foods, we overeat, consuming more calories than we can burn off, and the excess is deposited as fat.
The simple solution is to exert willpower and eat less, which is another way of saying "go on a diet, you fat fuck!"
The problem is that this advice doesn’t work, at least not for most people over the long term.  According to Dr. Mark Hyman, the average person gains five pounds for every diet that they go on.

Even worse, when the lose weight, they lose muscle and fat. When they regain the weight, they gain back all fat. And since muscle burns seven times as many calories as fat, their metabolism is slower than when they started the diet, meaning that for 95% of those that set out on this course of action will be worse off than when they started.

Talk about repeat customers. 

Having been set up to fail, the average person, convinced that it is just a question of willpower and finding the right miracle diet, oblivious of the effect that dieting has on his or her endocrine system, is easily duped into buying the latest weight loss method endorsed by a celebrity spokesperson.
Too bad, we don't often hear the rather simple method of maintaining a healthy weight: be physically active (10,000 + steps a day) and eat a balanced diet like the Mediterean diet.

Such sound advice with so few takers.

Not enough hype.






Wednesday, August 6, 2014

Truth Be Told: The Rich Don't Give A Shit About The Economy That You Live In


It never ceases to amaze me that we continue with the charade of watching how the economy performs.  Last week, we learned that the American economy grew by a whopping four percent during the last quarter.

Whoopee shit!

Am I supposed to fall off my chair thinking about what a great job those in charge are doing in managing the economy?

Yeah, pretty much.  That way you don't give much thought to what really matters: for the last 35 years the vast majority of Americans have been shafted royally.

Think about it.  Since 1980 the US economy has grown roughly 4% annually.

Yet, during the same time the population at large faces what is at best an uncertain future.

Three things strike me to be a lot more important than the rate of annual economic growth.

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First, the percentage of workers that have defined-benefits pension plans has shrunk from 60% in 1980 to about 11% today.  This represents a massive reduction in the quality of life for an aging population, especially when we consider the vast wave  of baby boomers that are and will be retiring in the next 25 years.

Second, the cost of a university education has created an emerging generation of wage slaves.  Since 1985, the overall consumer price index has risen 115% while the college education inflation rate has risen nearly 500%.  Pursuing the American dream by obtaining a higher education has become a debt trap.  Indeed, low paying, precarious employment does not generate the revenue to pay down the debt and to provide for a middle class lifestyle.  Consequently, a great many millennials do not have the means to move of their parents' basements in order to make it out on their own.

Third, income growth has stalled for most Americans.  At $51,017, the real median household income in 2012 is even less than it was at the end of the eighties ($51,681) and down from 9% from its high in 1999 ($56,080).  Conversely, during this period (2009 to 2012), 95 percent of all income growth went to the top 1 percent of income earners.

Clearly, something is amiss and it what needs to be pointed out is that the scale of the problem suggests that it's not just a question of not following the right economic policies as would the progressive economists like Paul Krugman and Robert Reich would have us believe.

What's really at issue is that the super rich, those who make it on the Forbes list of the top 400 wealthy Americans, are no longer dependent on the performance of the American economy to increase their wealth.

Yes, there is still a great amount of money to be made from selling goods and services to the top 20% of American income earners, more so since production can be sent off shore where wages are significantly less, and corporations can be inverted so that on paper they appear to be owned in jurisdictions where the tax rates are lower.

But over and above these ploys that leave the majority of Americans out of the wealth generating loop, even greater returns can be had in the financial sector.  After all, it makes much better sense to pursue a greater return on investment in a sector that is not exposed to the risks of unfavorable economic performance and, in fact, has the risk of failure (too big to let fail) underwritten by the government and the American taxpayer.

What a sweet deal!!!

Seen from this perspective, the latest economic reports are of little or no significance.  What matters is what happening in the investment portfolios of those at the top of the food chain. 

And let's face it, the game is rigged in their favor.  Hedge fund managers can only make billions if they are able to make even more for their clients while the little guy is left to fend for himself, trying to sell his labour in a market in which there are less and less buyers.

So why bother?

In short, it keeps the natives from getting restless.  As long as progress can be shown on the economic front widespread financial difficulties within the population can be dismissed as nothing more than personal failure.

In other words, as long as the majority of Americans give credence to the existing economic discourse they remain effectively sedated.

So much so, they are unable to oppose the massive wealth extraction that is taking place by means of sustained wealth redistribution enacted through the political process.

As well, the population through their tax dollars continue to fund the largest military force ever assembled to protect American interests (American capital) abroad.

The overclass in America has never has it so good.

All it takes is a little statistical smoke and mirrors.








 

Wednesday, July 30, 2014

By Now It Should Be Obvious: It Is Not An Invisible Hand But The Big Laughing Dick Of Wall Street That Runs Things


They say that a stiff prick has no conscience, but a stiff prick that laughs too is phenomenal*, especially when it laughs all the way to the bank after fucking you up the ass without any lube.

And that ladies and gentlemen is what has transpired in both the UK and the USA during the last ten years.  The wolves of Wall Street and the City have had their way and a bewildered population wonders what the fuck happened.

In the USA, for example, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom ninety percent became poorer.

Without question, the financially engineered Great Recession brought on the largest redistribution of wealth in a century.

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As Peter Van Buren notes in his wonderful piece, "Why Don’t the Unemployed Get Off Their Couches?", last year eight Americans — the four Waltons of Walmart fame, the two Koch brothers, Bill Gates, and Warren Buffett — made more money than 3.6 million American minimum-wage workers combined.

Moreover, the median pay for CEOs at America’s large corporations rose to $10 million per year, while a typical chief executive now makes about 257 times the average worker’s salary, up sharply from 181 times in 2009.

At the same time, the inflation-adjusted net worth for the typical household was $87,992 in 2003.  Ten years later, it was only $56,335, or a 36 percent decline.

Overall, 1% of Americans own more than a third of the country’s wealth.

According to Van Buren, none of this is accidental, some sort of invisible hand at work.

Importantly, by owning more of everything, rich people have a mechanism for getting ever richer than the rest of us, because the rate of return on investment is higher than the rate of economic growth.

In other words, money made from investments grows faster than money made from wages.

According to Thomas Piketty in his highly acclaimed book, Capital in the Twenty-first Century, the wealth of the wealthiest Americans is rising at 6%-7% a year, more than three times as fast as the economy the rest of us live in.

Let's face it, the economy is for chumps. 

Guided by an invisible hand?  Give me a fucking break.  The latest figures on GDP, unemployment rates, and balance of trade are nothing more than statistical sleights of hand that distract the clueless while their collective pockets are being picked.

Forget trying to manipulate the levers of the economy in order to rev it up towards full employment.  The very idea makes the laughing dick chuckle.  Instead, focus on raising the minimum wage ,taxing capital gains, getting corporations to pay their taxes, and implementing a real wealth tax.

That would make even a laughing dick suddenly go limp.



*The stiff laughing prick image is from Henry Miller's Tropic of Capricorn.












Thursday, June 26, 2014

Taking Back Sovereignty


Now, thanks to Thomas Picketty's highly influential study, Capital in the Twenty-First Century, we have historical confirmation that wealth begets wealth.  In other words, the rich are different from you and I.  Chances are that they were born into wealth and then used their resources not only to hang onto it, but to get a better rate of return than you and I could ever get on our meager savings.

The key to this process, of course, is to make sure that the masses keep their hands off of their stash.  To do this, it is absolutely essential that the redistribution of wealth be considered a mortal sin, and that it is more likely for a camel to pass through the eye of a needle than it is for an individual who thinks that wealth distribution is a good idea to get elected to a national assembly.

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Try as they may, progressives simply cannot garner enough votes to make a difference, especially when less and less people even bother to show up and vote.

Let's not be delusionally optimistic about this state of affairs in North America changing anytime soon. 

The playing field is not level.  The deck is overwhelmingly stacked to protect the status quo as a result of the electoral process.  If you want to get elected, you need money, and people who have money to give don't give their money to support candidates who propose to restrict their capacity to make it.

So, for those who know about such things as the common good and the social gradient with regard to health outcomes, it's time to get out of the electoral process altogether.

The Athenians figured this out about 2500 years ago when they set up the world's first democracy.  In order to prevent private interests from taking over, Athenians did not elect representatives.  They represented themselves in the citizens assembly and the officers of the assembly were rotated on an annual basis on the basis of a lottery.

Centuries later, the French political philosopher, Jean Jacques Rousseau, argued in his brilliant work, The Social Contract, that it is crucial that all the people exercise their sovereignty by attending legislated assemblies, for whenever people stop doing so, or elect representatives to do so in their place, their sovereignty is lost.

If sovereignty is lost by electing representatives, how can it be regained?

Do like the Athenians.  Refuse to elect representatives.  In the Age of the Internet, we no longer need them.

We already have the technology.  We can create a permanent assembly of citizens who meet and exchange their ideas and opinions and can vote for themselves on the issues that concern them directly in a virtual agora, free from the tyranny of private interests who more or less choose who will be the intermediaries that will distort the general will of the people in order to align it with their private gain.

A political party is nothing more than a corporation designed to transfer the sovereignty of the people to its executive body.  Once this is done, it is relatively easy for a privileged elite to influence their decision making.  This would not be the case if sovereignty remained in the hands of the people.

Put another way, a government of, by, and for the people only comes about when the people retain their sovereign right to vote directly on the matters that concern them.  Once sovereignty is transferred away, government becomes of, by, and for the wealthy, at the expense of the people.

As a result, if social outcomes are to change for the better, people need to stop shopping for the best political party they can find and get down to work on building a permanent citizens assembly in their electoral district.