Monday, April 18, 2011

Sometimes it's Worth Saying the Obvious

It took a while, but now it is generally accepted that the United States of America is a world Empire. There are references to "US Empire" on mainstream magazine covers, numerous books lay out the history in detail and now we even hear references to the US Empire in decline.

What isn't as widely acknowledged, but should be generally accepted is that the United States, and the World for that matter, is in the midst of a class war. Sadly, some of the inertia in the class war resides in common people who perpetuate the notions that 1) government is inherently bad and 2) that if we are going to have taxes at all, then the taxes on the wealthy class should be very low so they can invest and create jobs.

A government of the common people can be a very beneficial thing. Ask someone with Veterans medical care, someone who benefited from the GI Bill who wouldn't have been able to go to college without it, someone with a monthly social security check or someone with medicare. I could go on with the highway system, which some smart people would deride that saying the car corporations pushed the US government to fund the highways and that we should have invested in mass transit instead, but you get the idea; if we the people have a shared vision, we can efficiently and effectively use our government to pool the resources to do it. That great American "can-do" thing. So, future visions of a Utopian anarchism aside, a government of the people, as opposed to "of the corporations", is a good thing.

"But if the government spends the money it will displace it from being spent in private sector and distort the free market." Frankly, the private sector does a fine job of distorting the free market with speculations that have no connection to the real economy and do not provide jobs. The tax cuts for the rich don't just go to buying McMansions and Hummers, that money chases the next speculative bubble and distorts commodity prices in ways that make it impossible for dairy farmers to buy the grains they need. The private sector isn't investing to avoid and manage the next environmental disaster or rehabilitate our crumbling sewers, bridges and other infrastructure. Lots of money chasing the next bubble, but not investing in world class broadband digital infrastructure. Why? Investments in tangible things that affect the real economy are difficult, and many "rich people" want to get richer quicker "in the market", not get their hands dirty with long term investments difficult and risky things like developing new innovations. The magic of the "invisible hand" of wealthy people is more a myth than a reality.

So, it is becoming passe' to say that the Wall Street class caused the problem, were bailed out by middle-class tax payers, are continuing to get tax cuts and the cost is falling on middle class tax payers. We see it in "austerity" plans and "debt control" plans that are taking the form of cuts to programs that help the lower and middle class people, cuts that forestalled investment in infrastructure maintenance, environmental restoration and much more. And we're told that we cannot raise taxes on the wealthy 1% of the people who now hoard 40% of the nation's wealth.

There is a phrase that describes the struggle surrounding this situation and it's "class war."

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Tuesday, April 12, 2011

Wealth Gap and Revolution

Lately I've been dwelling on the social strains caused by the wealth gap in the US. Everyone should know the difference between "income gap" and "wealth gap;" income being the annual revenues and wealth being the accumulated revenues or savings. The wealth gap is actually more pronounced than the income gap, but both have been growing for several decades. A recent statistic on wealth gap:

The top 1% of Americans own 40% of the wealth.

The word hoarding comes to mind as does a famous quote:

There is, inherent in the capitalist system, a tendency to self-destruct. - Schumpeter, 1942.

We see it happening before our very eyes playing out in the Washington budget debate. The notion, that giving the wealthy class, or owner class, tax cuts to spur growth is a widely held belief in our society. But this simplistic rule only makes sense when money is tight and production capacity at factories is tight and in need of investment to expand, neither of which hold today; we don't need any more production capacity and even if the owner class were to produce more, the commoners don't have the money to buy the stuff.

What we face is a market that is saturated with production capacity, but no money among we the little people, because the money is being hoarded and used for non-productive speculation. Buying commodities, like grains, industrial metals, oil & gas, have become disconnected from the real economy and turned into a gambling playground for the wealthy (not just Americans).

The tendency is for this kind of hoarding to create social instability (dare I say "revolution"?).
People are catching on to this, and the big questions are 1) will we get to the point where enough people become so destitute that they don't have anything, and thus don't have anything to loose if they rise up? 2) will the honest, wise wealthy people change policies before this happens, if only to save themselves?

Stay Tuned.

Sources:

Show Me the Money, Zine, Autumn, 2001, Tony Honeycut.

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