The facts of (political) life

Writing in the New Yorker, George Packer dissects America’s political conundrum:

[T]here’s a reason to look up as well as down the economic ladder, and it has nothing to do with envy or with punishing the rich. Economic stratification, and the rise of a super-wealthy class, threatens our democracy. Americans are growing increasingly separated from one another along lines of class, in every aspect of life: where they’re born and grow up, where they go to school, what they eat, how they travel, whom they marry, what their children do, how long they live, how they die. What kind of “national community” built on “mutual obligation” is possible when Americans have so little shared experience? The Princeton economist Alan Krueger has demonstrated that societies with higher levels of income inequality are societies with lower levels of social mobility. As America has grown less economically equal, a citizen’s ability to move upward has fallen behind that of citizens in other Western democracies. We are no longer the country where anyone can become anything.

Read his piece here.

Why tax the ultra-wealthy?

Interesting numbers from the New York Times:

The top 1 percent includes about 1.13 million households earning an average income of $2.1 million.

Raising their total tax burden to, say, 40 percent would generate about $157 billion in revenue the first year. Increasing it to 45 percent brings in a whopping $276 billion. Even taking account of state and local taxes, the average household in this group would still take home at least $1 million a year.

If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.

That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Mrs. Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal prekindergarten.

Read more here.

Labor Day – or Assets Day?

Econ4’s Doug Smith writes for Naked Capitalism on the hypocrisy of celebrating Labor Day while screwing workers:

You, my friends, are truly champion asset creators! Your long-suffering self-denial of working for crap wages contributes to massive corporate profits that executives tap to buy-back company stock in order to keep those asset values high. Your low-to-no wages give you as consumers the God-given freedom to borrow and, thereby, fund securitized assets. And, when those asset values get threatened, your taxes come to the rescue through bailouts and mumbo jumbo (“quantitative easing”).

Read his piece here.

Nature Rx

Price is not the same as value. Check out this un-drug commercial:

Source: http://www.nature-rx.org/

Value creation v. value extraction

Bill Lazonick writes in the Harvard Business Review:

The debate over how to reverse ever-increasing income inequality has moved front and center in the Democratic presidential campaign. In speeches on July 13 and July 24, front-runner Hillary Clinton first outlined and then elaborated upon her policy agenda for combating what she calls “quarterly capitalism.” In emphasizing the need for value-creating business investment in an economy in which value-extracting financial interests are driving corporate resource-allocation decisions, the Clinton economic reform package is novel and refreshing for a Democratic presidential contender….

But perhaps the most elegant solution is one Clinton has not yet advocated: simply banning corporations from making open-market repurchases of their shares.

Read Lazonick’s piece here. See Econ4’s Jerry Epstein take on this issue here.

All-American socialism

Econ4’s Gar Alperovitz and Thomas Hanna write in the New York Times:

THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.

The bulk of the left never took up Schumpeter’s argument. But in an oddly fitting twist, these days the mantra of public control in exchange for lower taxes has been embraced by a surprising quarter of the American political leadership: conservatives.

The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents….

Read their oped piece here.

How health care works (or not) in the United States

Econ4’s Gerald Friedman spells out the ABC’s of the health care economy in the U.S. [Viewer discretion advised: The information in this video may tick you off.]

Source: justenoughinfo.org.

It’s Our Economy

The “It’s Our Economy” project works for economic democracy:

It’s Our Economy is dedicated to changing the dynamic of the current economy designed for the wealthiest to an economy built on principles of equity, cooperation, and sustainability. An economy that puts people and the planet before profits would reduce the wealth divide while giving people more control over their economic lives. We believe that a more just, modern, and restorative economy would involve the people in economic decision-making in both their communities and the nation more broadly.

This basic idea is economic democracy.

Check out their website here.

Grexit time?

It’s time for Greece to exit the euro, if not the EU, writes Simon Jenkins in the Guardian:

Sometimes the small voice of economics should rise above the shrieking hysterics of politics. The laws of bankruptcy were invented by the Victorians not to stick plaster over capitalism’s wounds. Insolvency and limited liability lay at the core of commercial enterprise. Borrower and lender alike had to accept risk for capitalism to thrive. Greece within the eurozone was allowed to borrow riskily and was lent to riskily. Any fool (except a eurofool) knew it would end in disaster.

The IMF last week admitted Greece’s debts were “unsustainable”. But such is the political arthritis now afflicting Europe’s “technocratic” rulers that they ignored the fact. They concentrate on their one concern: somehow extending Greece’s repayments so German, French and British banks could have even larger loans underpinned. It is bankers, not Greeks, who are being “bailed out”. They want Greek taxpayers to go on paying interest even if the principal is as beyond reach as a tsarist bond.

Read his piece here.

Also Eduardo Porter’s recent New York Times piece on Germany’s own debt write-down after World War II.

What’s in a trade agreement?

These days trade agreements are not just about imports and exports. They’re also about undermining the power of governments to protect public health and the environment by regulating corporate behavior – via provisions slipped into trade agreements in the guise of “Investor-State Dispute Settlement” (I.S.D.S.), as James Surowiecki explains in the New Yorker:

In the old days, aggrieved American investors would call on the Navy to protect their interests—thus the phrase “gunboat diplomacy.” How much better that now they just call their lawyers.

But these days signing such agreements is risky for countries. I.S.D.S. lawsuits used to be rare, but they’re becoming a growth industry. Nearly a hundred have been filed in the past two years, as against some five hundred in the quarter century before that. Investor protection, previously a sideshow in corporate law, is now a regular part of law-school curricula. “We’ve also seen an expansion in the types of claims that have been brought,” Lise Johnson, the head of investment law and policy at the Columbia Center on Sustainable Investment, told me. I.S.D.S. was originally meant to protect investors against seizure of their assets by foreign governments. Now I.S.D.S. lawsuits go after things like cancelled licenses, unapproved permits, and unwelcome regulations.

To learn more about what’s in a trade agreement, read his story here. For more, see blog entries on TripleCrisis here.