Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.

The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU, ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.

Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks. Yet the planning privilege of credit creation and allocation turns out to be even more centralized than that of elected public officials. And to make matters worse, the financial time frame is short-term hit-and-run, ending up as asset stripping. By seeking their own gains, the banks tend to destroy the economy. The surplus ends up being consumed by interest and other financial charges, leaving no revenue for new capital investment or basic social spending.

This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history. Debts mount up exponentially, absorbing the surplus and reducing much of the population to the equivalent of debt peonage. To restore economic balance, antiquity’s cry for debt cancellation sought what the Bronze Age Near East achieved by royal fiat: to cancel the overgrowth of debts.

Tags: Debt, banking, democracy, Peonage, Roman Empire, tyrants, Aristotle

Dean Baker has an excellent column on fixing the budget deficit.

I believe, however, that he needs to address the balance-of-payments problem, as well. Other nations—China being the most obvious—are maintaining their employment level by running positive balance-of-payments levels. This has also vastly enriched American corporations, who, with the assistance of low foreign wages and a high dollar, are able to manufacture goods overseas cheaply and sell them to Americans extremely profitably. That policy, however, is destroying our middle class and impoverishing almost all of us not in the top 1%.

Baker has written about the overpriced dollar and the so-called “free trade agreements” as part of the problem, but I haven’t read any discussion about how it relates to the domestic budget deficit. If the current account (balance-of-payments) were perfectly balanced, that is, if we were selling goods overseas equal in value to the ones we purchase from overseas, we would have literally millions of additional jobs in this country, many of them in manufacturing, where wages tend to be decent.

With millions more employed, tax revenues would increase and the budget deficit would not seem so overwhelming.

The foreign trade deficit may seem abstract next to the budget deficit, but its effect on Americans is far greater. One of the reasons that stimulative measures have limited value is the tendency of so much of the stimulus to go overseas, since so much of what we buy comes from overseas.

The only reason that the current account deficit hasn’t already been fixed, I suspect, is due to the fact that corporations and individuals who are profiting the most from the current arrangement possess the political power to squelch any ameliorative actions in Congress or the executive branch. Wall Street depends upon a strong dollar to draw investments from overseas. Virtually all major manufacturers have moved their manufacturing facilities overseas, a process that began in the ‘70s, and accelerated when the Reagan administration actively encouraged offshoring.

Michael Moore, in his latest book, “Here Comes Trouble: Stories from My Life” tells of a meeting of manufacturing executives he attended in Acupulco, while posing as a small auto parts maker from Michigan. With the not-so-tacit blessings of Reagan’s Department of Commerce, he heard them planning to move their factories wholesale overseas to avoid paying decent wages and to escape environmental regulation. The executives were assured that the exportation of manufacturing and the jobs they represented had the full support of the Reagan administration.

That process has continued with a vengeance under NAFTA and other trade agreements that make it profitable to export jobs, rather than goods. No president or Congress has attempted to change any of this, which makes me believe that they are actually comfortable with it. Obama has made little noise about the current account deficit. The Republicans seem to have a pathological obsession with the budget deficit, the reduction of which would bring about a sharp recession (as it did in 1937 under Roosevelt), which would, of course, make the deficit even worse.

It’s hard to be hopeful in the middle of such craziness.

I came across this story while cleaning out some folders on my hard drive. it’s a bit anachronistic, in that Governor Kirk Fordice passed away quite a while ago, but it also addresses current affairs. I’m publishing it on the Jackson Progressive site, since it belongs with that collection. Close the tab or window to return.

Tags: Fordice

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

Tags: Krugman

Tags: Perry, Red States, blue states

The above health care policies are the natural result of a health care system based on the principles of private profit. Corporate profits demand that companies provide the least amount of health care services at a minimal cost. From this vantage point, health care is a commodity that is bought by those who can afford it, instead of it being the human right of every person, as the U.N. Universal Declaration of Human Rights asserts. Europe has already proved that a nationwide, single payer system is vastly superior when it comes to quality, cost, availability, and results.

The single payer system did not come into existence from the benevolence of kind governments, but from the demands of people in the street. Organized workers must fight to maintain their benefits; unorganized workers must organize to fight for better insurance; and older workers/retirees must fight to maintain and expand Medicare. The logical end to such struggles would be to demand a Medicare For All system, financed by taxing the wealthy and corporations.

Tags: Medicare, Medicaid, Medical Insurance, Conservatism

"To live in this process is absolutely not to be able to notice it—please try to believe me—unless one has a much greater degree of political awareness, acuity, than most of us had ever had occasion to develop. Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must some day lead to, one no more saw it developing from day to day than a farmer in his field sees the corn growing. One day it is over his head.”

Tags: Milton Mayer, Germany, WWII

Tags: Fukushima, Meltdown

Tags: issa, NLRB

Indeed, the manufacturing sector is also where the world’s middle classes take shape and grow. Without a vibrant manufacturing base, societies tend to divide between rich and poor – those who have access to steady, well-paying jobs, and those whose jobs are less secure and lives more precarious. Manufacturing may ultimately be central to the vigor of a nation’s democracy.