Article 43

 

Wednesday, March 24, 2021

Imagining a Real American Rescue

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On the one hand we are called to play the good Samaritan on life’s roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring.
- A Time to Break Silence, Martin Luther King Jr.

[T]he size of the workforce in each state that is struggling financially is much higher than traditional federal poverty guidelines suggest.
- ALICE, Third World USA Part 11

Economic recovery is now treated as consistent with declining standards of living. Lowered expectations and acquiescence in long term working-class hardship are now built into what we are told to regard as recovery.
- Still Trapped In Unemployment

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Imagining a Real American Rescue

Zero Hour
March 11, 2021`

The latest recovery plan for the latest financial crisis going into it’s second year is called the AMERICAN RESCUE PLAN.

Professor Richard Wolff talks about it for half an hour in the VIDEO below:

image: zero hour

Transcript

RJ And we are back on the Zero Hour.  I, as always, am your host Richard R.J Escow. Of course the bill that was passed the so-called American Rescue Plan is the big story of this time period, and will remain a big story for some time to come I suspect, so, I was looking forward to talking about it with my next guest RICHARD WOLFF, who is a regular on the program.  I’m sure you know him from his other work as well, Richard Wolff is an economist and an economic historian. He’s a professor , there’s a bunch of places I want to get to, so I’m not going to list the full credentials now, but trust me he’s qualified and his latest book is THE SICKNESS IS THE SYSTEM which I recommend.  So Richard Wolf, as always, welcome to the program.

RW Thank you R.J., I’m glad to be here.

RJ It’s always great to have you, and I’m still processing.  I’m still processing this bill and i really wanted to get your thoughts about it. Obviously it has a number of provisions to it. Maybe I’ll start at the highest, you know sort of conceptual level, which is I keep hearing it describe the headlines, keep calling it a stimulus bill. And while I’m sure it will have stimulus effect for the economy at least temporarily to me that shows a kind of conceptual misguidance on the part of our political, and you know, commentary at society because to me the urgent need is saving lives, keeping people safe in homes and residences, making sure people have enough to eat, and to me, that is not a feat of economic engineering it’s a it’s an active decency that should be automatic for us.  So I always short circuit when I hear this term stimulus. What do you think am I off base?

RW No. I think I would say the same thing. I might say slightly differently.  A stimulus carries with it the implication that the basic structure and the basic organization of what you’re trying to stimulate is not the problem. In other words - use it in the human body if your body is basically okay. You have a heart, and you have the circulation, and your lungs and all the rest of it, but you have a problem, then the medical profession can talk reasonably about stimulating, or getting this otherwise good machine to function - because something has interrupted or compromised it. 

I don’t believe that. I don’t believe it for one minute. I don’t think we’re at that point. I think what the economy needs is a radical transformation and before I explain it, let me tell you that I believe the quote was from Nancy Pelosi, but certainly from one of the other major leaders who pushed this whole bill through - who referred to it as quote unquote “transformative”. I read that quotation repeatedly. Well, that’s what I think is needed - a transformation of the economy.  but to say that this bill - which is rightly called the stimulus, is then somehow much more than that transformative, think is substituting wish for the thought for the reality for the analysis and that’s what we call a promise which I don’t believe can be kept.

In 2009 Mr Obama, then the president, gave us a, which he called a STIMULUS PROGRAM worth roughly 840 billion dollars.  We have had over three three trillion dollars in 2020 to stimulate.  Now we have another two trillion to stimulate. It’s very hard not to get the impression that the stimuli aren’t enough.

Now, let me unpack just a little bit.  We are in a crisis which these people keep wanting to minimize, and they do that by celebrating a recovery before we have one, celebrating - if you’re honest enough to say we don’t have one - well then it’s coming real soon, as if you can predict the future.

I don’t believe any of that. We have an unprecedented level of crisis in this country, really I’ve never seen it, and I’m a student of American economic history.  I’ve never seen it in my lifetime, and I have gray hair just like you, so here it is we have the worst crash in economic crash in at least a century.  The only comparable thing to what we’re going through now is the great depression of the 1930s, but unlike then, we are now simultaneously working through the worst public health disaster in at least a century. We’ve never had two of those at the same time, and that’s at a time when we know we have unresolved problems with climate change. We have unresolved problems with race relations.  We have unresolved problems with gender relationship. We have a fractured and split political system. and we have the most serious economic competitor in the People’s Republic of China than this country has faced in a long long time.  I could go on, but that’s enough to give you an idea we are not ready for another stimulus or to say it the other way A stimulus again is too little and too late not in itself it’s bigger than anything we’ve done before no doubt but it’s not adequate to the level of problems we have which are in their cumulative effect, better and bigger than anything I have ever seen and I don’t get a sense that this is understood at all.

RJ You know, let me reflect on that a little bit if I may Richard. Well so in a sense basically you’re saying this stimulus is like an electric jolt to a patient that really needs a new heart and and along those lines one of the things that I keep hearing, and it’s a quote from I believe in national tax center or something like this - did the calculation that people in the lowest quintile of income - household in the lowest quintile in the United States - if they have three children - will see out of this bill a 20% increase in income. Well for a temporarily - which gets left off a lot of times but just for one year we’ll see a 20 increase in income and this has been a big part of the celebration of the bill it’s been repeated constantly and as I mentioned on social media the by the same centers calculations before the pandemic uh the lowest quintile the average income was 13,000 something, so what you’re celebrating is that a household 20% of the households in this country uh some of whom have three children are trying to get by on less than fourteen thousand dollars and you’re going to give them a 20% boost uh one time but the quote that came to mind for me was that of that famous democratic socialist Martin Luther King jr who said uh you know true compassion is not flinting coins to beggars but recognizing the edifices that make it necessary to beg in the first place am i being unfair here because it seems to me next year these people are going to be back at 13 000 five or whatever uh trying to raise three kids and maybe they’ll be up to 15 if we can keep some of these provisions, but that to me reflects a horrible condition that we are permitting and even accepting by celebrating this, that one in five households will live this way

RW Yeah it’s unbelievable. Because if 14,000 is what we’re talking about for the bottom quintile - and they get improved by twenty percent that’s twenty eight hundred dollars.  Most of those people could not possibly change the basic conditions of their life with twenty eight hundred dollars and everybody in America who pays any attention to their finances knows that.  The the level of self delusion you have to be normally engaged in to get really excited that you’re giving a family that lives on fourteen thousand dollars twenty eight hundred dollars more let’s assume an extra big promise I’m not sure many of them will even get it, but let’s assume they do that’s not going to change anything but they’re going to be as unable to send their kid to college as they always were they’re going to be as unable to live the so-called AMERICAN DREAM as they always were the gap between how they live and how rich people live will be as jarringly immense after this as it was before again you’re not changing this country’s problem the inequality has gotten much worse over the last 50 years every statistic shows it we’ve had a massive redistribution of wealth from the bottom and the middle to the top.  All this bill does is make a very modest return to some of the most agrievously hurt in the last 50 years. That’s all it isn’t going to change anything or again if I’m quoting Nancy Pelosi correctly, this is not transforming anything, and the idea that the poor of this country should fall all over themselves because you’re giving them a one-shot 20% boost, which happened by the way at the same time, That what you might have done is actually lift the horrific level of wages these people are required to live on from the seven dollars and 25 cents an hour federal minimum - one of the lowest in the world of of industrial advanced countries to 15 by 2025 you chose not to do. That it’s as if you’re saying “we’re not going to do anything to change the basic horror that makes a CEO in this country currently earn roughly 300 times the median wage of the people he employs”, you’re not changing any of that. You’re leaving that exactly the way it was which was awful and you’re giving them a one-shot stimulus. I like your image.  It’s like you know that there have been serious heart problems for this patient but instead of dealing with those in a comprehensive way including the possibility of a transplant. You’re just gonna hit him with another electric shock - stimulate them - as if you didn’t know that all of the problems that come with people in a family trying to live on fourteen thousand dollars a year in today’s America. As if you didn’t know what that meant look most of the people in congress either are millionaires or close to it and the simple understanding that those folks may very well have forgotten if they ever knew what it’s like to live on fourteen thousand dollars a year begins to make sense, because if you don’t ascribe it to their kind of not understanding then you’d have to think that it is SHEER EVIL expediency pandering to the rich who support them with donations and let the rest of the country just shrink into the poverty ridden country that we used to thought think we only see on national geographic television shows.

RJ You know Richard well there are people out there as you well know, who will say of upeople like you and me that we should be celebrating this more. That this is, you know, wonderful breakthrough and certainly if given a choice between this or nothing I would pick this, but I just briefly again - to quote Dr King - he says “on the one hand we are called to play the good samaritan on life’s roadside but that will only be an initial act one day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway,” so this is, a you know, people are patting themselves on the back. This as if this were obviously I’d rather have that one-time payment than not, but as if this were an act of magnanimity rather than you know, a band-aid on a fundamental injustice, so i guess one of the questions I keep coming back to in our conversations - yours and mine - is how do we advance this awareness so that the people who are doing a victory dance right now - and I’m talking about voters.  I’m talking about you know, working people. How do we explain that while this is certainly not a bad thing it’s a good thing that our problems are much deeper and the solutions must be more bold

RW Well, I would answer them two ways. Number one the reality that we’re describing is going to be teaching masses of Americans exactly what we want them to understand; that their choice is between going backwards with the republicans or going forward at a snail space barely with the democrats, and that that choice is awful. When I teach it in my classes, I try to suggest what would you do if you were walking down a dark street and suddenly a scary person jumped out of the bushes and said to you “You can either die by me stabbing you, or you can die by me shooting you.” But i believe in free choice, so you choose the person who starts and looks at the sky and looks at the ground trying to agonize over that choice - is a person who needs psychological help because the only rational answer is I don’t accept that choice. I don’t accept that you give me. I’m not going to waste my time choosing because i reject the proposition that I’m in. That’s what the American people have to do. They have to come to terms with the fact that as long as they permit this old two-party monopoly to give them a choice between lousy and even worse they’re going to end up either lousy or even worse which they kind of know and they can be distracted for a while by not facing this situation by being distracted to be angry at immigrants or the Chinese or trans people having access to bathroom sure for a while these are distractions like watching tv when your life is a shambles it’s a distraction but in the end the program is over the distraction fades and you’re right back up against it. That is happening to the American people it’s one of the reasons audiences for you for me and folks like us are rising around the country. I’m like you, I wish you were going faster. I wish it were settling in deeper, absolutely, but I mean, you know, people are cautious, people are scared, people are worried, all of signs of a system that is not working and I think you’re seeing more and more shocks.  The people of California were shocked when they had no power because a company saved money made more profits by taking risks that they then paid for. I think the people of TEXAS have just learned it again when they allowed private electric companies to go unprepared for cold weather and deprive them of water deprive them of electric my goodness and here’s another one that perhaps you can devote a program to over the last several months the price of food around the world has gone dramatically up, and there’s no end in sight. Well the poorer you are, the bigger the portion of your income you have to spend on food so rising food prices is a particularly heavy get ready now tax on the poor give you an example in the month of February just over food prices i believe here in the united states rose a couple of percent. Well that’s 10% of the 20% this bill is supposed to give them over the rest of the year and if food prices keep rising - which all predictions suggest they will - much of what they’re going to get - if they’re lucky - will be eaten up by the price of food. Why?  Because covid-19 and the global crash and the trade war launched by Mr Trump against china and several other things like ecological shifts are impacting farming around the world.  To deal with that you need a coordinated global attack on the problem of food which is as basic as anything you can get kind of like, I don’t know, covid fighting a virus and feeding yourself a kind of fundamental life-saving activities . Nothing is being proposed like that. There are countries already so in trouble with the price of food, I’ll give you one example, India, that the government there has taken a major part of the government budget to provide subsidies to masses of Indian people so they can afford enough food not to starve to death. And you’ll notice that in the American rescue plan just passed there’s an extension of the food stamp program as a recognition that food insecurity - that’s the euphemism for hunger - has been going up in the United States too. Well, you put all that together and here’s my conclusion - too many problems many from the past kicked down the road so they’re here with us now a whole bunch of new ones, you’re not seeing anything like the response that this scale of difficulty requires and the self-congratulations of the democrats with this bill that they’ve passed, pales - it’s kind of embarrassing - against the problems this cannot and will not solve. Yes it’s better than nothing, but for the democrats to accept that as the standard for what they’re doing, tells you a lot.

RJ Well, and let me Richard Wolff talk about another aspect of this plan one that you know I have more personal familiarity with in terms of health economics from the health insurance industry. It expands the affordable care act so that for example a 64 year old who - this is according to the New York Times - 64 year old earning $58,000 will see his monthly payments for a health plan declined from thousand seven hundred, I’m sorry, one thousand seventy five dollars to four hundred and twelve dollars, but what the Times does not explain is that there are then large deductibles and considerable co-pays in affordable care act plans and plans you buy on the exchange, and what’s being celebrated here is a premium it’s not OUT-OF POCKET COSTS but premiums for upper middle income Americans as they are defined will cost no more than 8.5 percent of an individual’s modified adjusted gross income. Now I don’t know how many middle class people - even upper middle class - who generally can writeoff pretty much one dollar in every 10 that they make to insurance that doesn’t cover them in times of extreme need P do know that the actuarial for Millermann estimated that a family of four with quote-unquote good coverage will pay more than eleven thousand dollars a year in out-of-pocket costs of various kinds that to me suggests not only gross inequality - which we talked about earlier - but a broken health care system that is being addressed in this bill primarily by funneling more money from the public economy to the private insurance sector, so that will trickle down to people uh in marginal ways, but we will still have Americans dying because they can’t afford the $20 co-payment for their flu antibiotic. Am i reading that wrong?

RW No. It’s again, you know, marginal adjustments leaving in place the basic absurdity of not providing a national affordable health. Look, I’m an economist, so let me put my economics hat on.  The test of an economy is how well it serves the people living in and under it. In order to have adequate food adequate shelter adequate clothing - there has to be an appropriate match between the prices those things cost - if you’re going to use a market system - and the incomes that people earn with which they buy those things. If the prices are too high relative to the income, or the income too low relative to those prices, your economy is failing.  That’s its job is to do.  That throwing up your shoulders. Well, you know, the people can’t afford it. That’s your problem. That’s not your answer. That’s the problem. You have failed to do what an economic system into which all these individuals are born naked as babies you either have it set up for them, or you don’t and our society doesn’t and the medical care is the same. Let me get at it one more way: recently my doctor - I live here in New York City - recently my doctor came to me as he did to all of his patients and he said to me “I am developing a concierge service.” I had no idea what he was talking about. I thought concierges are people who work in in residential buildings and help you get a cab or tickets to a show or something.  No no no. It’s a new phenomena in the medical profession. It’s been around a few years I’ve learned that now basically he says “I’m paring down my practice and I’m going to only have concierge people.” What’s that you pay an annual fee and uh to me and you pay that every year no matter what you do or do not use in the way of my services if you have a simple need to get checkup that’s included but anything that takes my time beyond that which is virtually everything i will still charge you various fees that are normally the fees in my specialty but you will have access to me 24x7. I will have a as he listed what i will have i pointed out to him as politely as i knew how that i already had that with him or thought i did he giggled and said well um there will be a few people who can’t afford to be a concierge i will still keep them but they will not be able to get me 24x7 and they will not be able to get a phone call back within an hour and then he rattled off all the things they wouldn’t get that i would get if i became a congress this is the privatization of further privatization of an already private system here’s the second example one of the biggest growth areas is called “private power grid” - what this is and you can imagine it is exploding in Texas and California - if you want to know that your business or your home will have uninterrupted electrical service, and you know, you cannot rely on the publicly available provider you can now install solar or wind - a whole system to gather the electricity hooked up to batteries in your basement that will store the electricity so that you will not be this is the cost $40,000, very expensive, but for rich people you will now be able to provide what we all thought we once had like a doctor namely the security of knowing a well-maintained electric system in a house that is fully electrified. You’re seeing what’s happening.  The people at the top are rearranging the services of our society for them, and the rest of us will live with whatever is left over it is really the perfect analogy to a dickensian novel about mid-19th century england with a wonderful food being served at the elegant dinner table when whatever is left is scraped off the plate into a little bag that is taken outside and left on the steps so that the poor people in the neighborhood can come by later and quietly eat, because otherwise they’d have nothing at all.

RJ Well i know you have to go but you know you’re what you’re describing in the words of an old reggae song “it’s harvest uptown famine downtown is the future they’re trying to build” and I’ll add one more example to it is my old employer - AIG in San Diego - when they had the fires years ago private - fire service, private fire you know they came with their their home insurance at a large premium the fire trucks would come to your insured house while your neighbor burned down and then these people come out of their enclaves and announce to the rest of the world that they’re backing candidate x, because after all we’re all in this together.

RW. Yes we’re all fighting it’s a war said Mr Trump we’re all fighting the covid together, only he’s doing it from Mar-a-lago and we know where lots of the American people are doing it

RJ So we’ll have to, unfortunately I know you’re short for time, and we’ll have to leave it there but there’s so much more we could talk about about just the urescue plan but but do you have any closing thoughts before I let you go to your next meeting?

RW All I would do is remind people that as we’re talking about this bill for 325 million American citizens, 600 billionaires - that’s all we have in this country - roughly 600 BILLIONAIRES - SAW THEIR WEALTH LAST YEAR GO UP BY BY A TRILLION DOLLARS.  If you took away the gain in their wealth, there’d still be the 600 billionaires in our society. They wouldn’t be any poorer relative to the rest of us, but half the cost of what the democrats just passed, would be taken care of, or to say it another way, you could give 50% more of a solution than you’re doing if you just said to those billionaires “enough is enough. You already have more than everybody. You are the richest 600 people in this country, and probably part of the richest one-tenth of one percent in the world. You don’t need during a pandemic - when we’re all in it together - to be rich when the mass of people are supposed to be grateful for getting $2,800 more on their $14,000 annual income.”

RJ It boggles the mind of any viable morality or ethics that I can think of. Well we’ll have to leave it there but as always Richard Wolff thank you so much for your insights, and people can find more, can hear more from you at Economic Update on Tuesday evenings on free speech tv and elsewhere. I encourage them to do so and as always thanks for coming on the program.

RW Thank you R.J. and I look forward to our next time.

RJ As do I. And we’ll be right back after this. I’m Richard R.J. Escow and this is the Zero Hour.

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Bandaging the Corpse
Biden’s bailout will not alter the structural inequities and other fundamental underpinnings of America’s death spiral.

By Chris Hedges
Scheerpost
March 12, 2021

The established ruling elites know there is a crisis. They agreed, at least temporarily, to throw money at it with the $1.9 trillion Covid-19 bill known as American Rescue Plan (ARP). But the ARP will not alter the structural inequities, either by raising the minimum wage to $15.00 an hour or imposing taxes and regulations on corporations or the billionaire class that saw its wealth increase by a staggering $1.1 trillion since the start of the pandemic. The health system will remain privatized, meaning the insurance and pharmaceutical corporations will reap a windfall of tens of billions of dollars with the ARP, and this when they are already making record profits. The endless wars in the Middle East, and the bloated military budget that funds them, will remain sacrosanct. Wall Street and the predatory global speculators that profit from the massive levels of debt peonage imposed on an underpaid working class and loot the U.S. Treasury in our casino capitalism will continue to funnel money upwards into the hands of a tiny, oligarchic cabal. There will be no campaign finance reform to end our system of legalized bribery. The giant tech monopolies will remain intact. The fossil fuel companies will continue to ravage the ecosystem. The militarized police, censorship imposed by digital media platforms, vast prison system, harsher and harsher laws aimed at curbing domestic terrorism and dissent and wholesale government surveillance will be, as they were before, the primary instruments of state control.

This act will, at best, provide a momentary respite from the country’s death spiral, sending out one time checks of $1,400 to 280 million Americans, extending $300 weekly unemployment benefits until the end of August and distributing $3,600 through a tax credit for children under the age of 6 and $3,000 per child ages 6 to 17 starting on July 1. Much of this money will be instantly gobbled up by landlords, lenders, medical providers and credit card companies. The act does, to its credit, bail out some 1 million unionized workers poised to lose their pensions and hands $31.2 billion in aid to Native communities, some of the poorest in the nation.

But what happens to the majority of Americans who get government support for only a few months? What are they supposed to do when the checks stop arriving at the end of the year? Will the federal government orchestrate another massive relief package? I doubt it. We will be back where we started.

By refusing to address the root causes of America’s rot, by failing to pump life back into the democratic institutions that once gave the citizen a voice, however limited, and make incremental and piecemeal reform possible, by not addressing the severe economic and social inequality and dislocation that afflicts at least half the country, the anomie and ruptured social bonds that gave rise to a demagogue like Donald Trump will expand. The American empire will not staunch its disintegration. The political deformities will metastasize.

When the next demagogue appears, and the Republican Party has banked its future on Trump or his doppelgnger, he or she will probably be competent. The Republican Party in 43 states has proposed 250 laws to limit mail, early in-person and Election Day voting and mandate stricter ID requirements, as well as reduce the hours at voting sites and the numbers of voting locations potentially disenfranchising tens of millions of voters. The party has no intention of playing by the rules. Once back in power, cloaked in the ideological garb of Christian fascism, the new or the old Trump will abolish what little is left of democratic space.

The established elites pretend that Trump was a freakish anomaly. They naively believe they can make Trump and his most vociferous supporters disappear by banishing them from social media. The ancien rgime, will, they assert, return with the decorum of its imperial presidency, respect for procedural norms, elaborately choreographed elections and fealty to neoliberal and imperial policies.

But what the established ruling elites have yet to grasp, despite the narrow electoral victory Joe Biden had over Trump and the storming of the capital on January 6 by an enraged mob, is that the credibility of the old order is dead. The Trump era, if not Trump himself, is the future. The ruling elites, embodied by Biden and the Democratic Party and the polite wing of the Republican Party represented by Jeb Bush and Mitt Romney, is headed for the dustbin of history.

The elites collectively sold out the American public to corporate power. They did this by lying to the public about the consequences of the North American Free Trade Agreement (NAFTA), trade deals, dismantling welfare, revoking Glass-Stegall, imposing austerity measures, deregulating Wall Street, passing draconian crime bills, launching endless wars in the Middle East and bailing out the big banks and financial firms rather than the victims of their fraud. These lies were far, far more damaging to the public than any of the lies told by Trump. These elites have been found out. They are hated. They deserve to be hated.

The Biden administration - and Biden - was one of the principal architects of the policies that fleeced the working class and made war on the poor is nothing more than a brief coda in the decline and fall, set against which is China’s rising global economic and military clout.

The loss of credibility has left the media, which serves as courtiers to the elites, largely powerless to manipulate public perceptions and public opinion. Rather, the media has divided the public into competing demographics. Media platforms target one demographic, feeding its opinions and proclivities back to it, while shrilly demonizing the demographic on the other side of the political divide. This has proved commercially successful. But it has also split the country into irreconcilable warring factions that can no longer communicate. Truth and verifiable fact have been sacrificed. Russiagate is as absurd as the belief that the presidential election was stolen from Trump. Pick your fantasy.

The loss of credibility among the ruling elites has transferred political influence to those outside established centers of power such as Alex Jones, celebrities and those, such as Joe Rogan, Glenn Greenwald and Matt Taibbi who were never groomed by the media conglomerates. The Democratic Party, in an effort to curb the influence of the new centers of power, has allied itself with social media industry giants such as Twitter, YouTube, Facebook, Patreon, Substack and Spotify to curtail or censor its critics. The goal is to herd the public back to Democratic Party allied news organizations such as The New York Times, The Washington Post and CNN. But these media outlets, which in the service to corporate advertisers have rendered the lives of the working class and the poor invisible, are as reviled as the ruling elites themselves.

The loss of credibility has also given rise to new, often spontaneous groups, as well as the lunatic fringe that embraces conspiracy theories such as QAnon. None of these groups or individuals, whether they are on the left or the right, however, have the organizational structure, coherence and ideological cohesiveness of radical movements of the past, including the old Communist Party or militant labor unions. They traffic in emotional outrage, often replacing one outrage with another. They provide new forms of identity to replace the identities lost by tens of millions of Americans who have been cast aside. This energy can be harnessed for laudable causes, such as ending police abuse, but it is too often ephemeral. It has a tendency to transform political debate into grievance protests, at best, and more often televised spectacle. These flash mobs pose no threat to the elites unless they build disciplined organization structures, which takes years, and articulate a vision of what can come next. (This is why I support Extinction Rebellion, which has a large grassroots network, especially in Europe, carries out effective sustained acts of civil disobedience and has a clearly stated goal of overthrowing the ruling elites and building a new governing system through peoples committees and sortition.)

This amorphous, emotionally driven anti-politics is fertile ground for demagogues, who have no political consistency but cater exclusively to the zeitgeist of the moment. Many of those who support demagogues know, on some level, they are con artists and liars. But demagogues are revered because, like all cult leaders, they flout conventions, are outrageous and crude, claim omnipotence and disdain traditional decorum. Demagogues are weaponized against bankrupt well-heeled elites who have stripped the public of opportunities and identities, extinguishing hopes for the future. A cornered population has little left but hate and the emotional catharsis expressing it brings.

The engine of our emerging dystopia is income inequality, which is growing.  This bill does nothing to address this cancer. The bottom 50 percent of households in 2019 accounted for only 1 percent of the nationҒs total wealth.  The top 10 percent accounted for 76 percent.  And this was before the pandemic accelerated income disparity.  More than 18 million American depend on unemployment benefits, as businesses contract and close.  Nearly 81 million Americans struggle to meet basic household expenses, 22 million lack enough food and 11 million say they can’t make their next house payment.  Only deep structural reforms accompanied by New Deal-type legislation can save us, but such changes are an anathema to the corporate state and the Biden administration.  History has amply demonstrated what happens when income disparities of this magnitude afflict a country.  We will be no exception.  Lacking a strong left, the United States will in desperation embrace authoritarianism, if not proto-fascism.  This will, I fear, be Biden and the Democratic Party’s real legacy. 

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Stimulus Addiction Disorder: The Debt-Disposable Earnings Pyramid

By Charles Hugh-Smith
Activist Post
March 15, 2021

For those who suspect the status quo is unsustainable but aren’t quite sure why, I’ve prepared a simple chart that explains the financial precariousness many sense. The chart depicts the two core elements of a debt-based, consumerist economy: disposable earnings, defined as the earnings left after paying for essentials which can then be used to service debt and debt.

In other words, if all the household earnings are spent on non-discretionary expenses (rent or mortgage, taxes, food, utilities, healthcare, etc.) then there is no money left to pay the interest and principal on a loan. Lenders consider this household uncreditworthy for the simple reason that their earnings cannot support the monthly nut of debt service (interest and principal).

Note the word earnings as opposed to income. Social entitlements such as Social Security are income but they are funded by taxes paid by those with earnings. (All of Americas social entitlements are pay as you goҖthe trust funds are PR fiction.) The investment income (interest) paid to owners of Treasury bonds is also paid by taxes on earnings.

All the interest and principal of debt is ultimately paid out of earnings, either private-sector debt paid directly out of wages or public-sector debt paid out of taxes which are paid out of earnings.

The problem with servicing debt out of income is two-fold: one, earnings of the bottom 95% have been stagnant for decades, which means earnings aren’t actually rising in terms of the goods and services they can buy, and two, the cost of non-discretionary expenses (essentials) has been rising, especially the big-ticket costs such as housing, healthcare and higher education.

You see the problem: since earnings are flat and the cost of essentials are steadily rising, there is less disposable earnings left every month to service debt. This is a problem in an economy like America’s that depends on debt-funded consumption to fuel growth. No increase in debt means no increase in consumption which means no growth.

In response, the status quo - the Federal Reserve and the federal government - have played two financial tricks to maintain the illusion that earnings can support more debt: one, the Fed has lowered interest rates to near-zero, reducing the costs of mortgages (but not the sky-high interest rates charged on student loans or credit cards, of course) so the same stagnant earnings can support a much larger mortgage, and two, the federal government has increased its own borrowing to fund various stimulus programs, most of which are corporate welfare to monopolies and cartels in the form of subsidies, tax breaks, government contracts, etc. But as the consumerist economy weakens, the government is increasing its stimulus to households as well - all with borrowed money that is theoretically serviced by taxes on earnings.

Alas, these tricks are not sustainable. Interest rates can֒t go lower than zero without bankrupting the banking sector, and federal spending is completely untethered from tax revenues.

The “solution” is obvious: borrow the money needed to service new and existing debt. This is the definition of a ZOMBIE ECONOMY comprised of ZOMBIE COMPANIES and zombie consumers that need to borrow more to sustain the illusion of solvency, i.e. that their disposable earnings are sufficient to service all their debts.

Notice that the debt-disposable pyramid is inverted: an ever-larger amount of debt is being piled on an ever-shrinking amount of disposable earnings. The trick of borrowing more to make the payments on the existing debt and fund new consumption results in a compounding of debt, not an arithmatic (linear) increase in debt: debt grows geometrically while the disposable earnings needed to service the debt remain stagnant.

The only “solution” left is Stimulus Addiction Disorder (SAD): the Fed must create trillions of dollars out of thin air to buy the Treasury bonds that are sold to fund trillions of dollars in stimulus, not once or twice, but from now on until the entire travesty of a mockery of a sham collapses under its own weight of flim-flammery and fraud.

Artifice, illusion and simulacra are not real, and what’s not real vanishes back into the air whence it came. One glance at this chart explains why the status quo is locked on run to fail and will implode in a spectacular collapse of the unsustainable debt super-nova. SAD, to be sure.

image: debt-earnings pyramid

SOURCE

Posted by Elvis on 03/24/21 •
Section Dying America • Section Next Recession, Next Depression
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