Comments by "coolmodelguy" (@coolmodelguy6304) on "The Rational National"
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Patrick Shelly - Good question. The problem that I see is this: Prior to the Reagan era and the infamous Powell Memo, there was a high marginal tax rate. The economy was doing good, more or less. There was however, a massive shift in capitalism when industrialists started to move heavy industry jobs out of the USA in favor of low-wage areas of the world. This move gave rise to what we now call multi-national companies and their ability to exploit labor outside the influence of U.S. law. At the same time, these industrialists started a massive campaign to undermine labor unions in the USA . . . and they succeeded in gutting unionization.
Skip to the current era. The power of the worker has been gutted while at the same time the FIRE sector of the economy has expanded exponentially. Our citizens who are workers who gain no advantage from the Finance industry, the Insurance industry has turned into a wealth extraction platform, and the Real Estate industry has been taken over by speculators whose activities have increase the cost of housing several hundred percent while wages are stagnant for the worker. Each one of these industries which comprise the FIRE sector of the economy is essentially a playground for the wealthy, and the so-called gains contribute nothing to the real economy. I will forgo touching on the bailouts this sector received from the U.S. Treasury in order to simplify my answer.
High marginal tax rates did not stop the wealthy from creating undue governmental influence in our economy back in the 1960's, 70's and 80's, thus creating the income inequality problem we have today. High marginal tax rates will only slow, but not eliminate the speculation (gambling) industry which is so appealing to those with excessive wealth. Speculation was a contributor to the Great Republican Depression (FDR's name for that era) and is the major contributor to the excessive wealth accumulation of today. Speculation is what caused the Great Recession of 2008, and that behavior has only ramped up since then. Extraction economics is what happens when the real economy fails to perform and the wealthy have to achieve their gains through other means. This will not stop unless a mechanism is put in place to curb these financial behaviors.
Here is the big picture: In 1984, the income from rents, dividends and interest payments exceeded the income from wages in the USA. Rents, dividends and interests payments to create income and greater wealth is a form of extraction economics, none of them contribute to the real economy. In the current year, rents, dividends and interest payments exceeded all profits from every company and corporation world wide. This is unsustainable and will lead to an unrecoverable economic crash at some point. The only mechanism I can discern which can prevent or moderate an economic crash of that magnitude is a cap on wealth and income.
The thought experiment my daughter and I performed was applied to a family of four, and left out critical components such as the eventual empty nest and inheritance. We agreed that a 100 million dollar wealth cap was substantial enough for a good life, but not enough to buy politicians or to influence votes other than ones own vote. There is no justifiable reason whatsoever for the existence of billionaires, the hoarding of wealth has the same effect on the economy as the loss of blood circulation has on the human body.
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Patrick Shelly - Perhaps the sequence of events should be everything that you have laid out, followed by a cap on income and wealth. The laws and regulations laid down during FDR's administration dealing with banking and finance have been all but rolled back or eliminated, these need to be restored.
I agree that campaign finance reform is a necessity in this age, it is an uphill battle with a great deal of resistance.
The real problem is this, while there were laws in place which enabled the "Golden Age of Capitalism" from the 1950's to the 1980's, the tools enabling the dismantling of these laws were left in place by FDR when the New Deal was enacted. The tools I refer to is concentrated wealth. Without doing something about that specifically, no reform will ever hold. We have seen this happen repeatedly since the Gilded Age.
Right now we have entrenched wealth in the hands of 20% of the global population, more so at the top 1% of the global population than in the remaining upper 19%. Hoarded wealth inhibits or even reverses economic growth. Capitalism demands growth, yet without capital circulation that growth is not possible without expansion into arenas where that expansion is unwelcome or even detrimental. Without the capital that is being hoarded by the wealthy, the consumer and worker class does not have access to capital which is needed to make purchases that are required to continue growth.
This situation has lead to anomalous national policies such as the purposeful asphyxiation of the Venezuelan economy by the USA. The USA conspiring with Saudi Arabia to overproduce oil to lower the price, concurrent with the USA levying economic sanctions against Venezuela. The choking of Venezuela's economy was purposefully orchestrated from outside Venezuela with one goal in mind, the seizure of Venezuela's natural resources by multi-national oil companies in order to continue the expansion of capitalism by artificial means.
The expansion of capitalism in this manner is not natural and is an economic cancer on the world. The only way we can salvage the situation and possibly restore balance to a global economy (which is quite ill) . . . is to limit the wealth any individual, family, company or corporation can accumulate, while simultaneously eliminating the practice of tax avoidance and international tax havens.
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@aureliusp1330 - I need to do further work on my messaging, because by no means did I intend to imply that such wealth growth benefits our people. The truth is, that while our economy grew, our wages did not. Wealth grew enormously, because most of it was stolen from us or looted from the government. The theft and looting happened because the wealthy own the government and wrote laws to benefit and protect itself. The long term planning I referred to began before World War Two, was codified in the late 1940's and was initiated in the late 1950's and early 1960's. The basic framework was to grow wealth by arranging rate of returns on "investments" to be greater than the growth of the economy.
The starting gun was The Taft-Hartley Act of 1947, weakening unions. By 1965, the growth of financial assets already equaled almost half of our GDP. To grow more and faster the economy would have to change. In 1971 our dollar was decoupled from gold. In 1974 pensions were decoupled from employers, the ERISA Act bringing all that retirement money into the stock market. In the 1980's Reagan stopped enforcing anti-trust acts which allowed him to then destroy unions. NAFTA, the Gramm-Leach-Bliley Act of 1999 (which destroyed the Glass-Steagall Act) were part of the 1990's action to extract more wealth from us.
This has been a long steady march to a beat we did not create. When FDR refused to confiscate the riches of the wealthy after the Great Republican Depression, he left the oligarchy with the means to dilute and undermine the New Deal. The wealthy were angry with FDR and essentially swore an oath to take down the New Deal and put in place a government/economic structure that allowed them to take it all (god-given right to rule and all that BS). We are now living in the era when society itself unravels under the strain, both the economic strain and the strain caused by the lies the oligarch indoctrination has woven into our societal culture.
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@theflyingpotato5601 - So you believe that when someone has money, they deserve more free money. They don't have to work for that free money, it just comes to them because they already have money. Sorry Buddy, but that just does not wash anymore. Love the way you spell Bud, clever is now "cleaver"! Ha ha!! Now, lets get down to business. I don't have a problem when Bill Gates creates Microsoft and makes several million dollars. However, I do have a problem when he puts millions into a so-called "investment" account which pays out an interest rate that is higher than annual economic growth. Nor is it good for the economy for Bill Gates to charge "rent" on every single financial transaction that uses Microsoft software, especially since users have to buy that software in the first place. You don't know very much about the "rentier class" evidently. Here is the description: Rentier capitalism is a term currently used to describe the belief in economic practices of monopolization of access to any kind of property and gaining significant amounts of profit without contribution to society.
Your head if filled with the propaganda these oligarchs put out to confuse poor souls like you into defending their thievery. Every year wealth is drained from you, me and every family in the world, just to pay free money to those who already have too much. Times are changing, so if you want to continue this futile defense of the indefensible, just make sure you have some padding so you don't damage yourself while hitting you head against that stone wall.
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@theflyingpotato5601 - You are correct of course, but this system has lead to the downfall of every empire in history. The problem we have today is that capitalism must always grow. Because of this, the savings people have is no longer in hard currency or precious metals (actual metals, not paper based assets). Instead, savings are inextricably tied to ever expanding debt through asset securities and this binds up the market. Free market capitalism really does not exist any longer. Debts cannot be forgiven because those debts represent someone else's savings. The problem is, with the exponential growth of both debt and wealth, at some point in the next century, the entire earth will be owned by one person. Have you read Michael Hudson's paper on the history of compounded interest? My favorite passage demonstrates the folly of our finance system:
"It was in reference to Britain’s war debts that one of Adam Smith’s contemporaries, the Anglican minister and actuarial mathematician Richard Price, graphically explained the seeming magic of how debts multiplied exponentially. His 1772 Appeal to the Public on the Subject of the National Debt described how “Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of the imagination. _One penny, put out at our Saviour’s birth at 5% compound interest, would, before this time, have increased to a greater sum than would be obtained in a 150 millions of Earths, all solid gold_. But if put out to simple interest, it would, in the same time, have amounted to no more than 7 shillings 4½d.” In his Observations on Reversionary Payments, first published in 1769 and running through six editions by 1803, Price elaborated how the rate of multiplication would be even higher at 6 percent: “A shilling put out at 6% compound interest at our Saviour’s birth would . . . have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit.”"
Every fallen empire or nation in our world's history has fallen because of compounded interest, the Roman Empire being a prime example. The same will happen to our own empire, unless we make changes, but that will rely on people like you and I to understand what has happened before us.
The Mathematical Economics of Compound Rates of Interest: A Four-Thousand Year Overview Part II
https://michael-hudson.com/2001/04/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-ii/
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@bradleejones9959 - So you believe that when someone has money, they deserve more free money. They don't have to work for that free money, it just comes to them because they already have money. Sorry Buddy, but that just does not wash anymore. Furthermore, you need to brush up on your history because there was loads of "government intervention" after the 1917 crash (which only lasted eight months). What do you think all of the tariff's and tax cuts were all about? The actions of Harding, Coolidge and Hoover doomed the United States to suffer the worst economic depression in history until now.
I don't have a problem when Bill Gates creates Microsoft and makes several million dollars. However, I do have a problem when he puts millions into a so-called "investment" account which pays out an interest rate that is higher than annual economic growth. Nor is it good for the economy for Bill Gates to charge "rent" on every single financial transaction that uses Microsoft software, especially since users have to buy that software in the first place. You don't know very much about the "rentier class" evidently. Here is the description: Rentier capitalism is a term currently used to describe the belief in economic practices of monopolization of access to any kind of property and gaining significant amounts of profit without contribution to society.
Your head if filled with the propaganda these oligarchs put out to confuse poor souls like you into defending their thievery. Every year wealth is drained from you, me and every family in the world, just to pay free money to those who already have too much. Times are changing, so if you want to continue this futile defense of the indefensible, just make sure you have some padding so you don't damage yourself while hitting you head against that stone wall.
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