Inequity kills economies: economies now run countries

“Principles have no real force except when one is well fed.” Mark Twain

Politicians used to understand this. Promises of a better tomorrow, with jobs, a standard of living higher than it is today- were standard campaign promises. Now, we have “hope” and “change” with no promise whatsoever.

If we likened life to a game of Monopoly– where the goal is to acquire as much money and real-estate as possible, with a finite amount of both (and like it or not- the planet has a finite number of resources in some ways and can only support so many players)- we’ve done a really great job of it.

Just remember this- when you own all the real estate  and have all the money when playing Monopoly, game is over.

To start the game again, wealth is redistributed. We start from scratch.

If it’s not and you want to continue to play- someone has to rob the winner  to continue.

When the debt load on the 99% combined with banking fees, taxes, gasoline costs, health-care costs, welfare costs  and taxes exceed the 99%’s ability to pay- the country goes into crisis. Like it or not- that’s where we are now, we just keep fooling ourselves that “recovery” is happening as one data point or another is manipulated for a government report: unemployment, productivity, factory orders etc.

Congress can’t seem to get our government spending under control- but wants to blame the little guys for the crisis. Yet, when the wizards of Wall Street went belly-up, there was no bankruptcy or foreclosure- just the taxpayers stuck with the bailout bill while the billionaires went off scot-free. Yet, steal food to feed your family- and you’ll go to jail, directly to jail.

The “super-committee” can’t cut its way to financial fixes and even raising taxes on the rich won’t solve the problems. We need systemic changes in the way we distribute wealth in this country- and I’m not talking about socialism. Monopoly is a game with rules- where everyone gets the same deal- the United States has let the rich write the rules to favor them, and it’s made the game so lopsided that we’re all screwed.

What the rich running the country and paying off our politicians haven’t been able to reckon with is the fact that their game of Monopoly gets very boring in the last rounds, when the barons of Park Place with a hotel clean you out and you succumb.

From BusinessWeek:

Somehow it just doesn’t seem right that so many Americans struggle while a handful prospers. What many are missing is the actual impact rising inequality is having on the U.S. economy. Hint: It isn’t good.

Since 1980 about 5 percent of annual national income has shifted from the middle class to the nation’s richest households. That means the wealthiest 5,934 households last year enjoyed an additional $650 billion beyond what they would have had if the economic pie had been divided as it was in 1980, according to Census Bureau data.

The typical U.S. household, meanwhile, has yet to regain the ground it lost during the recession. The median income of $49,445 at the end of 2010 remains a shade below the level reached in 1997, adjusted for inflation. “Income inequality in this country is just getting worse and worse and worse,” says James Chanos, president and founder of money managers Kynikos Associates. “And that is not a recipe for stable growth.”

In the 1960s economists such as the late Arthur M. Okun, who was chairman of the White House Council of Economic Advisers, believed that societies could emphasize equality or growth, not both. Today, when the quality of the workforce plays a larger role in determining who prospers, many economists—including Federal Reserve Chairman Ben S. Bernanke—now believe that equality and growth are linked. As Branko Milanovic, a World Bank economist, wrote in September: “Widespread education has become the secret to growth. And broadly accessible education is difficult to achieve unless a society has a relatively even income distribution.”

Thus the growing chasm in the U.S. between the haves and the have-nots has serious consequences. Societies that manage a narrower gap between rich and poor enjoy longer economic expansions, according to research published this year by the International Monetary Fund. Income trends in the U.S. mean that future U.S. expansions could last just one-third as long as in the late 1960s, before the income divide began widening, says economist Jonathan D. Ostry of the IMF. The average postwar economic boom lasted 4.8 years, according to the National Bureau of Economic Research. The current expansion, which is just 27 months old, may peter out within a few months. Goldman Sachs (GS) said on Oct. 3 that the U.S. would be “on the edge of recession” by early 2012.

via How Inequality Hurts the Economy – Businessweek.

So no matter what the latest news report says, we’re still not going to dig out of debt (and the “super-committee” was only tasked with ending the deficit- with no impact on our national debt) without making some fundamental changes.

While the #Occupy movement isn’t giving us a soundbite solution to fix the system- they are doing a great job of clearly stating the problem: the 1% are collecting all the money and real estate at an increased pace and without stopping them, no one will want to play monopoly (life as we know it) anymore.

When people aren’t well fed- the rule of law goes out the door, people. You’ve been warned before.

So while our government at all levels seems to enjoy mocking the movement- and applying its “rules of law” on peaceful protests in tents in public spaces (as the local idiots of the Montgomery County Commission and the Dayton City Commission did yesterday through their paid proxies: County Administrator Deb Feldman and Dayton City Manager Tim Riordan) they are ignoring the alternative and what will inevitably come next. Riots, guns, survival of the fittest. All this while we have the smallest police force in Dayton history.

What’s even more discouraging is that our nation still thinks we have the right to sit in judgment on other countries- telling them to allow peaceful protests, advocating freedom of speech, protesting how their elections are rigged. We’re total hypocrites:

Obviously, what we call for in other countries isn’t what we call for here.

Besides the need to stop selling our elected offices to the highest bidder, it’s time to reevaluate and reorganize our entire country if we want to continue to exist as a sovereign nation. That’s right- the current system has us dangerously close to being owned, lock, stock and barrel by the Chinese who have more of our money than we do.

credit default swaps are betsRestoring banking controls that were enacted after the last great depression would be a good start. But, we need to look at what’s critical right now- jobs that pay enough to continue our standard of living.

It’s not about taxing the rich, as much as it is about tying great rewards directly to job creation. It’s time to reward people for employing U.S. citizens and paying them well- instead of for gambling on financial markets.

When a U.S. company like Standard and Poor’s or Moody’s has the ability to destroy a sovereign nation with the stroke of a pen by downgrading their credit rating- instead of the old-fashioned method of having a standing army invade and play capture the flag- we really should be reassessing the need for a military at all- unless it it is to subdue people from living as they wish.

The “Wealth of Nations” is a farce anymore. The entire value of a countries’ social capital, natural resources and even the infrastructure is nothing more than a piece of property on a global Monopoly board- with values set by a banker. Does this seem wrong to you?

The financial “instruments” that bankers have created, the transaction models that have been authorized by our corporate puppet politicians have destroyed the entire concept of money as a tool to engage in trade. It’s now a weapon and the most powerful people on the planet aren’t presidents, generals, prime ministers or kings- but the money brokers who seem to be outside the control of any country- or governing body.

While you may not know what a “Ladbroke’s betting slip” is, the picture I took of a posting  in London outside the Occupy LSX camp next to St. Paul’s 2 days before the camp was dismantled explains the reason the system collapsed- and it wasn’t because of the bad loans to poor people, it was how those bad loans were monetized after they were made.

If you are paying attention to Congress right now, we see a role reversal taking place- with Republicans against extending the payroll tax cuts putting more dollars in the hands of the people who still make their money through a paycheck (the 1% make their money through financial transactions). The Republicans claim that taxing the 1% isn’t fair either. Easy solution- put a transaction fee on every single financial market transaction on any trade that’s made that is for less than a year. (When playing Monopoly- there are no derivatives, flash trades, or options and you have to wait your turn to act).

Having access to public stock markets- and diversifying risk for large corporations is a huge competitive advantage, but the practice of letting those companies allow a few executives to make decisions like laying off workers to boost share prices – putting the costs of unemployment on the U.S. taxpayer- it’s time to put a halt to it. We need to tie the fortunes of the traders to the fortunes of the workers that they are exploiting at a ridiculous rate. We have to link pay to performance and stock values to real value- not the whims of Standard and Poor’s if we want to see a system that will continue to function. The alternative is riots and anarchy.

Yes, there can still be winners and losers in life- but, the proportion and scale needs to change. Monopoly is fine to play with a few friends for a few hours- but, it doesn’t work as a system to run the planet. It’s time to change the game.

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5 Responses

  1. Bob VL December 1, 2011 / 12:38 am
    YOU stated David:
    While the #Occupy movement isn’t giving us a soundbite solution to fix the system- they are doing a great job of clearly stating the problem: the 1% are collecting all the money and real estate at an increased pace and without stopping them, no one will want to play monopoly (life as we know it) anymore.

    The problem is – and I do not think that any OWS has EVER clearly stated the 99% “slogan” – it is catchy, but not valid and not as simple as a game of Monopoly.  You are correct about one thing, game over?
    Bob

    Brilliant or Bozo? Thumb up 4 Thumb down 1

  2. Gary December 1, 2011 / 3:46 pm

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Bozo: Thumb up 3 Thumb down 7

  3. truth December 1, 2011 / 4:00 pm
    @Gary…

    Good call.  If people actually did their homework, they may find that small stores may have a wee bit higher price on items, but the consumer is getting a better deal.  For example….go buy a roll of duct tape or party streamer (something on a roll) at your local big chain dollar store.  Then, go to a locally owned company that carries a similar item.  There is a good chance that similar item may cost a little bit more, but I will bet that the product you buy is of higher quality and the quantity on said roll is more.

    Consumers are duped because they are stupid and don’t do their homework.  I know this as my family owns and runs a successful mom and pop business.  People are blinded by the “Roll Back” pricing mentality and forget about value and quality.

    Brilliant or Bozo? Thumb up 0 Thumb down 0

  4. Bill Daniels (pizzabill) December 1, 2011 / 4:18 pm
    Most small businesses will provide better service, too (I said most here, not all).  The prevailing attitude toward customers in American seems to be: “Price, Quality, Service: Pick two”.  Look for the rare gem of a business that can give you all three, and I’ll bet it’s going to be a small business.

    Well-loved. Brilliant: Thumb up 6 Thumb down 0

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