And This, Kids, Is Why We Can't Have Nice Things

It's not just that governments don't tax enough. It's that they don't tax big incomes and big wealth nearly enough. Economist and professor Richard Wolff argues that modern global capitalism is theft on a massive scale.

In modern capitalism, governments routinely borrow money. They do this to finance budget deficits that occur when governments raise less in taxes than they spend. Governments also borrow to invest in long-term projects of economic development. The swindling occurs when the lenders and borrowers—usually private financiers and career politicians—negotiate loans that serve their own particular interests at the expense of the taxpayers who eventually cover the costs of repaying the government’s loans plus interest on them. 

If governments raised enough taxes to cover their desired levels of spending, they would not need to borrow. Taxes imposed on the wealthiest corporations and individuals would be the most equitable strategy. The corporate wealthy protest, of course, threatening that if taxed, they might reduce their contributions to the economy (investing less, etc.). Most government politicians sympathize with those protests. Many come from the ranks of the wealthiest corporations and individuals (or aspire to join them). They share similar ideologies and depend on campaign donations from them. Compliant politicians typically exaggerate the negative aspects of taxing corporations and the rich. They rarely compare them to the negative effects of the alternatives: taxing middle and lower income people more or cutting government spending.

I can't quite explain it but I just keep coming back to a finance minister, a really rich guy, working for a trust fund boss, who blithely consigns the public to a future of "job churn." What was his name?

...
Deficit finance—the polite veneer for this swindle—deepens inequality in the United States and everywhere else it is practiced. It redistributes wealth from the mass of people (taxpayers) to the richest who “save” by means of lower taxes and then “invest” those “savings” in government loans. In transferring money from the many to a few, deficit finance operates like a lottery.

Keep these thoughts in mind when the major impacts of climate change arrive and we can no longer afford to ignore them. By then we'll be playing a deep game of "catch up" and the costs we have so successfully fended off will be far greater. That's when you'll see the PPP scam, the public-private-partnership game at full bore.

I know, I know - the photo identifies Wolff as a Marxist economist. Well, unless you've had your head buried in the turnip patch, you should know that a good bit of what Marx wrote and we angrily denounced for decades, is coming to pass.  Even prominent, mainstream economists such as Nouriel Roubini admit as much.

Roubini - When the Next Crash Comes

Economist Nouriel Roubini skyrocketed to fame as the first to foretell the crash of 2007/2008 (a claim that overlooks the even earlier warnings from Stiglitz and Krugman).

In 2011 Roubini sparked controversy by writing that capitalism was self-destructing, much as Karl Marx predicted.



Now, writing in The Guardian, Roubini warns of what may befall us in the anticipated crash of 2020. This time there'll be no repeat of 2007-8. Back then governments were relatively flush and able to fund bailouts and stimulus spending. Today, they're broke, their treasuries bare.

Roubini can't predict what our governments will do when the public demands they 'do something NOW, but he warns that "'crazy' policy will become a foregone conclusion." The only question is whether they'll do more harm than good.

In other words, we're heading for a crap shoot.

The Rehabilitation of Marx. Happy 200th, Karl!

Tomorrow is the 200th anniversary of the birth of Karl Marx.

I first encountered the Communist Manifesto in officer school. I understood almost none of it but I discovered that dismissing it as "Commie crap" was enough for a passing grade. Small mercies.

It was almost seven years ago that I posted a Wall Street Journal interview with American economist, Nouriel Roubini, in which he maintained that Marx has been proven right, capitalism will destroy itself through the destructive transfer of income from labour to capital leading to an economic death spiral.



In recent years there's been something of a consensus built around the idea that Marx may have been radical but he was probably right. Today's New York Times has a feature op-ed, "Happy Birthday, Karl Marx. You Were Right!"

Even though Karl and his kin rest in north London's Highgate Cemetery, for most of his dirt nap he's been scorned as a subversive, a threat to the natural order of free enterprise. It's nice to see him rehabilitated. After all, it looks like he was right.

"Workers of all lands unite" indeed.