4.12.2013 Leave a comment
Filed under News Tagged with Austerity, Austerity Politics, Barack Obama, Chained CPI, Class Politics, Class War, Consumer Price Index, Economic Predation, Federal Reserve System, Government debt, Medicaid, Medicare, Michael Hudson, Neoliberalism, Party Duopoly, Paul Jay, Politics, Real News Network, Social Security
1.2.2013 Leave a comment
Wage Slavery plus debt peonage — these are the fates awaiting the ‘better off’ members of the 99%, Alan Simpson’s “lesser people.” The ‘worst off’ shall continue to find themselves existing on city streets, squatting in vacant land and buildings, suffering one of the many prisons which pockmark the body politic or dying from untreated illnesses. These fates — wage slavery, debt peonage and social outcaste — should not be considered accidents of history. They have obvious systemic causes. The economist Michael Hudson explains in the second of a four-part series:
Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.
Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.
The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.
What is truly astonishing about this situation is the nature of contemporary finance capital. In essence, it is functionless. It does not exist to generate capital for investment in the real economy. It does not provide safe storage for pension funds, insurance monies, personal savings, etc. It does not even provide the common investor with rational investment programs. Rather, finance capital today is just a system specific mechanism (or, better, set of mechanisms) which extracts massive quantities of wealth from the world. Profit taking — that is its sole purpose. Moreover, it is omnivorous and perpetually famished. It cannot be satiated. Its appetites thus put everyone at risk. It lacks a home, a national identity. It cares not for people, their cultures, societies and well-being. It is everywhere and nowhere.
It is, in a word, the vampire about which so many Americans fantasize.
- Open thread for night owls: Oligarchs promote ‘Big Lie’ to secure creditor control over economy (dailykos.com)
- The Finance Industry Has Pried into Every Sector of the Economy, and Has Ended Up Running the Whole Show (alternet.org)
- America’s deceptive fiscal cliff – Part I (rwer.wordpress.com)
- Book of the Day: The Road from Industrial Capitalism to Finance Capitalism and Debt Peonage (p2pfoundation.net)
12.29.2012 Leave a comment
This pro-austerity mythology [which animates orthodox economics and economic policy in the United States and elsewhere] aims to distract the public from asking why peacetime governments can’t simply print the money they need. Given the option of printing money instead of levying taxes, why do politicians only create new spending power for the purpose of waging war and destroying property, not to build or repair bridges, roads and other public infrastructure? Why should the government tax employees for future retirement payouts, but not Wall Street for similar user fees and financial insurance to build up a fund to pay for future bank over-lending crises? For that matter, why doesn’t the U.S. Government print the money to pay for Social Security and medical care, just as it created new debt for the $13 trillion post-2008 bank bailout?
The answer to these questions: Banks and other financial institutions want to keep as much of their income as they can. Transaction fees, regulations, oversight, taxes, etc. — these consume profits. America’s banks want to transfer these costs to others, namely, to those individuals who lack the political power to defend their standard of living. This cost transfer project amounts to a hidden and sometimes obvious tax the government levies on the 99%. When coupled to a system of risky and fraudulent financial transactions, elite looting and private debt creation, this cost transfer project amounts to little more than a predatory political economy.
The ridiculous fiscal cliff debate which now dominates America’s public life is but a crude expression of this predatory political economy.
- People Tell Me to Go Look at Bridgewater’s Highly Successful Ray Dalio on How He Looks at the Economy (delong.typepad.com)
- ‘Give criminal bankers’ money to homeless people’ (dearkitty1.wordpress.com)
- What happens to Americas global image if it defaults on the debt? (zynkinnews.com)
- Should Big Banks Be Broken Up? A Debate (transcript) (reform-wall-street.org)
- Monetary Malpractice: Moral Malady (safehaven.com)
- Japan (metafilter.com)
- Jim Willie: The Coming Isolation of the US Dollar (silverdoctors.com)
- Why Insane Deficits and Insane Money Printing Will Continue (economicpolicyjournal.com)
Filed under Commentary Tagged with Austerity Politics, Casino Capitalism, Class Conflict, Declining Standard of Living, Economic Predation, Exploitation, Federal government of the United States, Fiscal Cliff Debate, Government Deficits, Late-2000s financial crisis, Michael Hudson, Neoliberalism, Occupy Wall Street, Party Duopoly, Politics, Social Security, Superexploitation, United States, Wall Street
11.11.2012 Leave a comment
In Obama’s America, each day is Halloween. The “lesser people” (Alan Simpson) should be afraid, very afraid! Why? Uncle Sam is bankrupt. He lives merely on the kindness of strangers. Only painful actions can remedy this situation.
Uncle Sam, you see, has long suffered from Affluenza. While the condition is often mistaken for a state of healthy well-being, the illness can be terminal. There are limits. They need to be respected. Austerity looms. The open question before Americans today: What kind of austerity will we have? The common answer amounts to this: Uncle Sam’s Affluenza would be fatal but for the remedies which a public commitment to fiscal austerity can provide.
The medicine is harsh and drastic, but necessary.
Or, so it is often claimed by a large fraction of America’s political and economic elite. Bob Urie, on the other hand, points out that:
The scare tactics being used to cut social insurance depend on the public’s misunderstanding of several related issues. In the first, the U.S. isn’t ‘broke’ because it can create money as needed — ask yourself: how were the bank bailouts funded? Next: what is an ‘entitlement’ when existing government policy overwhelmingly benefits the rich through favorable tax treatment, cost-plus government contracts, Federal Reserve bailouts and government guarantees of the banks. ‘Free markets’ have nothing to do with how the wealthy became so. The fight over ‘entitlements’ is over how government expenditures are allocated, not over their ‘scarcity.’
Urie suggests that the rich have prevailed in the democratic class struggle and now wish to deepen and intensify their exploitation of the “lesser people,” using the federal state and its fiscal situation as their hammer:
Social Security has an income ‘cap’ of $110,000 above which no deduction is made. A billionaire who became rich by sending jobs overseas — by firing and lowering the wages of labor, pays a smaller proportion of his or her income into Social Security than does the worker whose wages have been reduced. And by reducing the wages of labor, workers are left with less to pay in to these social insurance programs through payroll taxes. The problem with Social Security and Medicare is that a small group of connected plutocrats have ‘entitled’ themselves to far more of what labor produces. How often has the deficit ‘crisis’ been raised when there is a war to be fought for multi-national oil companies or a corporate welfare scheme like the bank bailouts to be paid for?
And this all ties back to Mr. Obama’s Affordable Care Act — if he and his corporate supporters were truly interested in fiscal discipline they would have pushed for far less costly ‘Medicare for all.’ Instead Mr. Obama pursued a deal with private health insurers that includes (sic) a ‘profit’ above the cost of a government program. Those wanting to argue the political infeasibility of Medicare for all are now confronted with a ‘liberal’ Democratic President who believes he can cut the programs that most of us have paid into under known terms for decades. If doing this is politically feasible while building a rational public health care system isn’t, we are truly doomed.
Ultimately Mr. Obama, like his ‘opponent’ Mitt Romney, is but an apparatchik in a class war launched by the rich against the rest of us. Left out of the contrived nonsense about an ‘entitlement’ society is who exactly is entitled. Were the government spending the rich live off of under the knife there would be no argument of scarcity — we have the wars, the bailouts and corporate welfare to prove it. But social insurance programs stand between over one hundred million of our citizens and destitution. And these are programs we have collectively paid for — they aren’t a ‘gift’ as the rich and their servants in government would have us believe.
Even the ‘gifts’ of income transfers, support for education and public transportation, Medicaid, subsidized housing, occupational training, works programs, etc. are not lacking in social benefits which directly and indirectly improve the quality of life enjoyed by every American. Every American would benefit from a fair and humane society, from a better standard of living. Such a society serves a common and public good. Who, after all, wants to watch the homeless die on the street for want of food and medical care? How might the United States compete with the emerging Asian economic powers when its education system, long the envy of the world at large, falters because of a lack of fiscal and political support? Who wants to bring children into the world when they will intimately know insecurity and want?
But the Nobel Laureate Americans just reelected wishes to create neither a fair nor humane society. He is a system politician who serves his various masters. The latter are cruel and greedy. Americans of the lesser kind along with the world at large deserve much better than Barack Obama. They truly need a man much better than him.
- James Galbraith on Social Security ‘reform’ (atung.net)
- Social Security and Medicare are NOT “entitlements” (therightofway.net)
- Will the Democrats Tax the Rich to Avoid the Fiscal Cliff? by Shamus Cooke (zcommunications.org)
- Democracy Corps: Voters Want Jobs, Not Deficit Reduction (crooksandliars.com)
- Peter Orszag of Bank Welfare Queen Citigroup is Selling Catfood Futures Hard (nakedcapitalism.com)
- We Didn’t Vote For A Grand Bargain, And We Won’t Accept One (crooksandliars.com)
- Michael Hudson: My Take on Obama’s Big Win (nakedcapitalism.com)
- Washington Post Abandons More Journalistic Norms In Push to Cut Social Security and Medicare (my.firedoglake.com)
- First they came for welfare…. (my.firedoglake.com)First
Filed under Quote of the Day Tagged with Affluenza, Austerity Politics, Barack Obama, Catfood Politics, Class Politics, Democratic Class Struggle, Economic Predation, Economic Rents, Erskin Bowles, Exploitation, Food Insecurity, Homelessness, Inverted Totalitarian System, Medicaid, Medicare, Middle Class Welfare, Mitt Romney, Neoliberalism, Party Duopoly, Politics, Predator State, Social Security, Underclass Welfare, United States, Wealth Distribution, Welfare, Working Class Welfare
11.8.2012 1 Comment
Big Money has been gunning for Social Security, Medicare and Medicaid for decades — since the beginning of Social Security in 1935. The motives are partly financial: As one scholar once put it to me, the payroll tax is the “Mississippi of cash flows.” Anything that diverts part of it into private funds and insurance premiums is a meal ticket for the elite of the predator state.
And the campaign is also partly political. The fact is, Social Security, Medicare and Medicaid are the main way ordinary Americans connect to their federal government, except in wars and disasters. They have made a vast change in family life, unburdening the young of their parents and ensuring that every working person contributes whether they have parents, dependents, survivors or disabled of their own to look after. These programs do this work seamlessly, for next to nothing; their managers earn civil service salaries and the checks arrive on time. For the private competition, this is intolerable; the model is a threat to free markets and must be destroyed.
The main target of the austerity mongerers? Social solidarity or community.
And that is what the Objectivists in Congress cannot stand. Our sense of community is an obstacle to their power. And what they are determined to destroy, we must defend. There is much more to be said, about disaster relief, food assistance, housing and other threatened programs. But to begin, Congress should leave Social Security, Medicare and Medicaid alone.
11.8.2012 1 Comment
The Obama victory was less than 24 hours old when the Rubinite faction of the Democratic party was out full bore selling “reforming” Social Security as the adult solution to the coming budget impasse, giving it higher priority than any other measure on the table while simultaneously admitting that this is not even a pressing (let alone real) problem.
And the worse is that this snakeoil salesmanship, which comes from former OMB director, now Citigrgoup vice chairman of corporate and investment banking Peter Orszag, is almost certainly an Obama trial balloon. It’s no secret that Obama has long viewed cutting, whoops, “reforming” Social Security and Medicare, as one of his fondest goals. He made that clear shortly before he was inaugurated, in a dinner with conservatives hosted by George Will. He even volunteered in the debates that he and Romney were on the same page as far as these programs were concerned. So it’s reasonable to view Orszag as fronting for the Administration.
Orszag’s Bloomberg piece is simply putrid. It starts out praising Obama for discipline during his campaign and insisting he need to show discipline on the budget front. But this is already a rhetorical bait and switch.
The first mention of discipline referred to the President’s team choosing to put in long hours to meet their objectives. By contrast, the discipline Orszag wants to see happen on the budget front is sort you inflict on children, animals, and submissives in S&M (actually worse than that, since submissives at least get off on being hurt). But Obama is into that: “I want fiscal restraint and order.”
Now it’s outside the scope of this article to address long form, but we will stop to remind readers that the budget hysteria is completely, utterly misguided. The last thing this economy needs is austerity.
James Galbraith characterized this kind of political work as economic predation. And it is just that. Fractions of big capital seek to capture sitting governments in order to use the power of the federal state to extract rents from the people as a whole. This rent-seeking politics long ago generated a complex system that persists — that retains a distinctive identity — through time. Sheldon Wolin identified this political system as an inverted totalitarianism, a democracy without citizens, a political system that serves the general and specific ends of the profit taking corporation.
Barack Obama is an agent of this system. Some of his supporters might be shocked to learn that he wants to cut Social Security and Medicare, that he will not seek peace or implement a peacetime army, that he will cut deals with the Republicans that harms the interests of the majority of Americans. This is what lesser evil voting in America brings into being — evil.
- White House Should Be Ready for a Debt-Limit Deal – Bloomberg (bloomberg.com)
- Economic Growth First Then Austerity, Orszag Says: Tom Keene – Bloomberg (bloomberg.com)
- The Diamond-Orszag Plan Changes the Structure of Social Security (my.firedoglake.com)
- Obama Campaign “Clarifies” Approach on Social Security (news.firedoglake.com)
Filed under Quote of the Day Tagged with Barack Obama, budget impasse, Economic Predation, Economic Rents, James Galbraith, Naked Capitalism, Neoliberalism, Pete Peterson, Peter R. Orszag, reforming social security, Sheldon Wolin, Social Security, social security and medicare, trial balloon, Yves Smith
11.7.2011 1 Comment
A record number of Americans — 49.1 million — are poor, based on a new census measure that for the first time takes into account rising medical costs and other expenses.
The numbers released Monday are part of a first-ever supplemental poverty measure aimed at providing a fuller picture of poverty. Although considered experimental, they promise to stir fresh debate over Social Security, Medicare and programs to help the poor as a congressional supercommittee nears a Nov. 23 deadline to make more than $1 trillion in cuts to the federal budget.
Based on the revised formula, the number of poor people exceeds the record 46.2 million, or 15.1 percent, that was officially reported in September.
Broken down by group, Americans 65 or older sustained the largest increases in poverty under the revised formula — nearly doubling to 15.9 percent, or 1 in 6 — because of medical expenses that are not accounted for in the official rate. Those include rising Medicare premiums, deductibles and expenses for prescription drugs. [emphases added]
Life will become even direr for America’s senior citizens and low-income wage earners when the Federal government finally and completely commits itself to imposing an austerity regime on the country.
- Number of US “poor” reaches record high under new census formula (guardian.co.uk)
- Poverty ensnares record 49.1M Americans (ctv.ca)
- Alternative Census Measure Indicates Poverty Higher Than Previously Thought (huffingtonpost.com)
- New Poverty High: Revised Census Formula Shows 49.1 Million (huffingtonpost.com)
- US poverty at new high: 16 percent, or 49.1M (seattlepi.com)
- U.S. poverty hits record high (business.financialpost.com)
- Number of Poor Americans Reaches 49 Million (usnews.com)
- Revised government formula shows new poverty high: 49.1M (usatoday.com)
- Revised govt formula shows new poverty high: 49.1M (sfgate.com)
- New census method puts US poor at 49.1 million (alternet.org)
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All Tied Up and Nowhere to Go by Stephen Zielinski is licensed under a Creative Commons Attribution 4.0 International License.