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December 18, 2015 | cepr.netDean Baker:
Working Paper: : In the years since 1980, there has been a well-documented upward redistribution of income. While there are some differences by methodology and the precise years chosen, the top one percent of households have seen their income share roughly double from 10 percent in 1980 to 20 percent in the second decade of the 21st century. As a result of this upward redistribution, most workers have seen little improvement in living standards from the productivity gains over this period.This paper argues that the bulk of this upward redistribution comes from the growth of rents in the economy in four major areas: patent and copyright protection, the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals. The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to this rapid rise in inequality, as for example argued by Thomas Piketty.
Flash | PDFRC AKA Darryl, Ron said in reply to Fair Economist, December 18, 2015 at 11:34 AM
RC AKA Darryl, Ron said in reply to RC AKA Darryl, Ron, December 18, 2015 at 11:42 AM"...the growth of finance capitalism was what would kill capitalism off..."
"Financialization" is a short-cut terminology that in full is term either "financialization of non-financial firms" or "financialization of the means of production." In either case it leads to consolidation of firms, outsourcing, downsizing, and offshoring to reduce work force and wages and increase rents.
Consolidation, the alpha and omega of financialization can only be executed with very liquid financial markets, big investment banks to back necessary leverage to make the proffers, and an acute capital gains tax preference relative to dividends and interest earnings, the grease to liquidity.
It takes big finance to do "financialization" and it takes "financialization" to extract big rents while maintaining low wages.
[THANKS to djb just down thread who supplied this link:]pgl said in reply to RC AKA Darryl, Ron, December 18, 2015 at 03:25 PMhttp://www.democraticunderground.com/10021305040
Finance sector as percent of US GDP, 1860-present: the growth of the rentier economy
[graph]
Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades, in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.
Financialization is a term that describes an economic system or process that attempts to reduce all value that is exchanged (whether tangible, intangible, future or present promises, etc.) either into a financial instrument or a derivative of a financial instrument. The original intent of financialization is to be able to reduce any work-product or service to an exchangeable financial instrument... Financialization also makes economic rents possible...financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics...
Companies are not able to invest in new physical capital equipment or buildings because they are obliged to use their operating revenue to pay their bankers and bondholders, as well as junk-bond holders. This is what I mean when I say that the economy is becoming financialized. Its aim is not to provide tangible capital formation or rising living standards, but to generate interest, financial fees for underwriting mergers and acquisitions, and capital gains that accrue mainly to insiders, headed by upper management and large financial institutions. The upshot is that the traditional business cycle has been overshadowed by a secular increase in debt.
Instead of labor earning more, hourly earnings have declined in real terms. There has been a drop in net disposable income after paying taxes and withholding "forced saving" for social Security and medical insurance, pension-fund contributions and–most serious of all–debt service on credit cards, bank loans, mortgage loans, student loans, auto loans, home insurance premiums, life insurance, private medical insurance and other FIRE-sector charges. ... This diverts spending away from goods and services.
In the United States, probably more money has been made through the appreciation of real estate than in any other way. What are the long-term consequences if an increasing percentage of savings and wealth, as it now seems, is used to inflate the prices of already existing assets - real estate and stocks - instead of to create new production and innovation?
Your graph shows something I've been meaning to suggest for a while. Take a look at the last time that the financial sector share of GDP rose. The late 1920's. Which was followed by the Great Depression which has similar causes as our Great Recession. Here is my observation.Peter K. said in reply to RC AKA Darryl, Ron, December 18, 2015 at 11:50 AMGive that Wall Street clowns a huge increase in our national income and we don't get more services from them. What we get is screwed on the grandest of scales.
BTW - there is a simple causal relationship that explains both the rise in the share of financial sector income/GDP and the massive collapses of the economy (1929 and 2007). It is called stupid financial deregulation. First we see the megabanks and Wall Street milking the system for all its worth and when their unhanded and often secretive risk taking falls apart - the rest of bear the brunt of the damage.
Which is why this election is crucial. Elect a Republican and we repeat this mistake again. Elect a real progressive and we can put in place the types of financial reforms FDR was known for.
djb said..." and it takes "financialization" to extract big rents while maintaining low wages."
It takes governmental macro policy to maintain loose labor markets and low wages. Perhaps the financialization of the economy and rising inequality leads to a corruption of the political process which leads to monetary, currency and fiscal policy such that labor markets are loose and inflation is low.
RC AKA Darryl, Ron said in reply to djb, December 18, 2015 at 12:03 PMhttp://www.democraticunderground.com/10021305040
I don't know about the last couple years but this chart indicates a large growth in financials as a share of gdp over the years since the 40's
[Anne gave you FIRE sector profits as a share of GDP while this gives FIRE sector profits as a share of total corporate profits.]Puerto Barato said in reply to RC AKA Darryl, Ron,*
[Smoking gun excerpt:]
"...The financial system has grown rapidly since the early 1980s. In the 1950s, the financial sector accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to a peak of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown disproportionately more profitable. In 1950, financial-sector profits were about 8 percent of overall U.S. profits-meaning all the profit earned by any kind of business enterprise in the country. By the 2000s, they ranged between 20 and 40 percent...
[Ouch!]
[Now the whole enchilada:]
If you want to know what happened to economic equality in this country, one word will explain a lot of it: financialization. That term refers to an increase in the size, scope, and power of the financial sector-the people and firms that manage money and underwrite stocks, bonds, derivatives, and other securities-relative to the rest of the economy.
The financialization revolution over the past thirty-five years has moved us toward greater inequality in three distinct ways. The first involves moving a larger share of the total national wealth into the hands of the financial sector. The second involves concentrating on activities that are of questionable value, or even detrimental to the economy as a whole. And finally, finance has increased inequality by convincing corporate executives and asset managers that corporations must be judged not by the quality of their products and workforce but by one thing only: immediate income paid to shareholders.
The financial system has grown rapidly since the early 1980s. In the 1950s, the financial sector accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to a peak of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown disproportionately more profitable. In 1950, financial-sector profits were about 8 percent of overall U.S. profits-meaning all the profit earned by any kind of business enterprise in the country. By the 2000s, they ranged between 20 and 40 percent. This isn't just the decline of profits in other industries, either. Between 1980 and 2006, while GDP increased five times, financial-sector profits increased sixteen times over. While financial and nonfinancial profits grew at roughly the same rate before 1980, between 1980 and 2006 nonfinancial profits grew seven times while financial profits grew sixteen times.
This trend has continued even after the financial crisis of 2008 and subsequent financial reforms, including the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Financial profits in 2012 were 24 percent of total profits, while the financial sector's share of GDP was 6.8 percent. These numbers are lower than the high points of the mid-2000s; but, compared to the years before 1980, they are remarkably high.
This explosion of finance has generated greater inequality. To begin with, the share of the total workforce employed in the financial sector has barely budged, much less grown at a rate equivalent to the size and profitability of the sector as a whole. That means that these swollen profits are flowing to a small sliver of the population: those employed in finance. And financiers, in turn, have become substantially more prominent among the top 1 percent. Recent work by the economists Jon Bakija, Adam Cole, and Bradley T. Heim found that the percentage of those in the top 1 percent of income working in finance nearly doubled between 1979 and 2005, from 7.7 percent to 13.9 percent.
If the economy had become far more productive as a result of these changes, they could have been worthwhile. But the evidence shows it did not. Economist Thomas Philippon found that financial services themselves have become less, not more, efficient over this time period. The unit cost of financial services, or the percentage of assets it costs to produce all financial issuances, was relatively high at the dawn of the twentieth century, but declined to below 2 percent between 1901 and 1960. However, it has increased since the 1960s, and is back to levels seen at the early twentieth century. Whatever finance is doing, it isn't doing it more cheaply.
In fact, the second damaging trend is that financial institutions began to concentrate more and more on activities that are worrisome at best and destructive at worst. Harvard Business School professors Robin Greenwood and David Scharfstein argue that between 1980 and 2007 the growth in financial-industry revenues came from two things: asset management and loan origination. Fees associated either with asset management or with household credit in particular were responsible for 74 percent of the growth in financial-sector output over that period.
The asset management portion reflects the explosion of mutual funds, which increased from $134 billion in assets in 1980 to $12 trillion in 2007. Much of it also comes from "alternative investment vehicles" like hedge funds and private equity. Over this time, the fee rate for mutual funds fell, but fees associated with alternative investment vehicles exploded. This is, in essence, money for nothing-there is little evidence that hedge funds actually perform better than the market over time. And, unlike mutual funds, alternative investment funds do not fully disclose their practices and fees publicly.
Beginning in 1980 and continuing today, banks generate less and less of their income from interest on loans. Instead, they rely on fees, from either consumers or borrowers. Fees associated with household credit grew from 1.1 percent of GDP in 1980 to 3.4 percent in 2007. As part of the unregulated shadow banking sector that took over the financial sector, banks are less and less in the business of holding loans and more and more concerned with packaging them and selling them off. Instead of holding loans on their books, banks originate loans to sell off and distribute into this new type of banking sector.
Again, if this "originate-to-distribute" model created value for society, it could be a worthwhile practice. But, in fact, this model introduced huge opportunities for fraud throughout the lending process. Loans-such as "securitized mortgages" made up of pledges of the income stream from subprime mortgage loans-were passed along a chain of buyers until someone far away held the ultimate risk. Bankers who originated the mortgages received significant commissions, with virtually no accountability or oversight. The incentive, in fact, was perverse: find the worst loans with the biggest fees instead of properly screening for whether the loans would be any good for investors.
The same model made it difficult, if not impossible, to renegotiate bad mortgages when the system collapsed. Those tasked with tackling bad mortgages on behalf of investors had their own conflicts of interests, and found themselves profiting while loans struggled. This process created bad debts that could never be paid, and blocked attempts to try and rework them after the fact. The resulting pool of bad debt has been a drag on the economy ever since, giving us the fall in median wages of the Great Recession and the sluggish recovery we still live with.
And of course it's been an epic disaster for the borrowers themselves. Many of them, we now know, were moderate- and lower-income families who were in no financial position to borrow as much as they did, especially under such predatory terms and with such high fees. Collapsing home prices and the inability to renegotiate their underwater mortgages stripped these folks of whatever savings they had and left them in deep debt, widening even further the gulf of inequality in this country.
Moreover, financialization isn't just confined to the financial sector itself. It's also ultimately about who controls, guides, and benefits from our economy as a whole. And here's the last big change: the "shareholder revolution," started in the 1980s and continuing to this very day, has fundamentally transformed the way our economy functions in favor of wealth owners.
To understand this change, compare two eras at General Electric. This is how business professor Gerald Davis describes the perspective of Owen Young, who was CEO of GE almost straight through from 1922 to 1945: "[S]tockholders are confined to a maximum return equivalent to a risk premium. The remaining profit stays in the enterprise, is paid out in higher wages, or is passed on to the customer." Davis contrasts that ethos with that of Jack Welch, CEO from 1981 to 2001; Welch, Davis says, believed in "the shareholder as king-the residual claimant, entitled to the [whole] pot of earnings."
This change had dramatic consequences. Economist J. W. Mason found that, before the 1980s, firms tended to borrow funds in order to fuel investment. Since 1980, that link has been broken. Now when firms borrow, they tend to use the money to fund dividends or buy back stocks. Indeed, even during the height of the housing boom, Mason notes, "corporations were paying out more than 100 percent of their cash flow to shareholders."
This lack of investment is obviously holding back our recovery. Productive investment remains low, and even extraordinary action by the Federal Reserve to make investments more profitable by keeping interest rates low has not been able to counteract the general corporate presumption that this money should go to shareholders. There is thus less innovation, less risk taking, and ultimately less growth. One of the reasons this revolution was engineered in the 1980s was to put a check on what kinds of investments CEOs could make, and one of those investments was wage growth. Finance has now won the battle against wage earners: corporations today are reluctant to raise wages even as the economy slowly starts to recover. This keeps the economy perpetually sluggish by retarding consumer demand, while also increasing inequality.
How can these changes be challenged? The first thing we must understand is the scope of the change. As Mason writes, the changes have been intellectual, legal, and institutional. At the intellectual level, academic research and conventional wisdom among economists and policymakers coalesced around the ideas that maximizing returns to shareholders is the only goal of a corporation, and that the financial markets were always right. At the legal level, laws regulating finance at the state level were overturned by the Supreme Court or preempted by federal regulators, and antitrust regulations were gutted by the Reagan administration and not taken up again.
At the institutional level, deregulation over several administrations led to a massive concentration of the financial sector into fewer, richer firms. As financial expertise became more prestigious than industry-specific knowledge, CEOs no longer came from within the firms they represented but instead from other firms or from Wall Street; their pay was aligned through stock options, which naturally turned their focus toward maximizing stock prices. The intellectual and institutional transformation was part of an overwhelming ideological change: the health and strength of the economy became identified solely with the profitability of the financial markets.
This was a bold revolution, and any program that seeks to change it has to be just as bold intellectually. Such a program will also require legal and institutional changes, ones that go beyond making sure that financial firms can fail without destroying the economy. Dodd-Frank can be thought of as a reaction against the worst excesses of the financial sector at the height of the housing bubble, and as a line of defense against future financial panics. Many parts of it are doing yeoman's work in curtailing the financial sector's abuses, especially in terms of protecting consumers from fraud and bringing some transparency to the Wild West of the derivatives markets. But the scope of the law is too limited to roll back these larger changes.
One provision of Dodd-Frank, however, suggests a way forward. At the urging of the AFL-CIO, Dodd-Frank empowered the Securities and Exchange Commission to examine the activities of private equity firms on behalf of their investors. At around $3.5 trillion, private equity is a massive market with serious consequences for the economy as a whole. On its first pass, the SEC found extensive abuses. Andrew Bowden, the director of the SEC's examinations office, stated that the agency found "what we believe are violations of law or material weaknesses in controls over 50 percent of the time."
Lawmakers could require private equity and hedge funds to standardize their disclosures of fees and holdings, as is currently the case for mutual funds. The decline in fees for mutual funds noted above didn't just happen by itself; it happened because the law structured the market for actual transparency and price competition. This will need to happen again for the broader financial sector.
But the most important change will be intellectual: we must come to understand our economy not as simply a vehicle for capital owners, but rather as the creation of all of us, a common endeavor that creates space for innovation, risk taking, and a stronger workforce. This change will be difficult, as we will have to alter how we approach the economy as a whole. Our wealth and companies can't just be strip-mined for a small sliver of capital holders; we'll need to bring the corporation back to the public realm. But without it, we will remain trapped inside an economy that only works for a select few.
[Whew!]
"3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5"
~~RC AKA Darryl, Ron ~Growth of the non-financial-sector == growth in productivity
Growth of the financial-sector == growth in upward transfer of wealth
Ostensibly financial-sector is there to protect your money from being eaten up by inflation. Closer inspection shows that the prevention of *eaten up* is by the method of rent collection.
Accountants handle this analysis poorly, but you can see what is happening. Boiling it down to the bottom line you can easily see that wiping out the financial sector is the remedy to the Piketty.
Hell! Financial sector wiped itself out in 008. Problem was that the GSE and administration brought the zombie back to life then put the vampire back at our throats. What was the precipitating factor that snagged the financial sector without warning?
Unexpected
deflation
!Gimme some
of thatpgl said in reply to djb...
Rock O Sock O Choco said in reply to djb... December 18, 2015 at 06:26 PMPeople like Brad DeLong have noted this for a while. Twice as many people making twice as much money per person. And their true value to us - not a bit more than it was back in the 1940's.
JEC - MeanSquaredErrors said...
tew said...Wait, what?
Piketty looks at centuries of data from all over the world and concludes that capitalism has a long-run bias towards income concentration. Baker looks at 35 years of data in one country and concludes that Piketty is wrong. Um...?
A little more generously, what Baker actually writes is:
"The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to **this** rapid rise in inequality, as for example argued by Thomas Piketty." (emphasis added)
But Piketty has always been very explicit that the recent rise in US income inequality is anomalous -- driven primarily by rising inequality in the distribution of labor income, and only secondarily by any shift from labor to capital income.
So perhaps Baker is "correctly" refuting Straw Thomas Piketty. Which I suppose is better than just being obviously wrong. Maybe.
cm said in reply to tew...Some simple math shows that this assertion is false "As a result of this upward redistribution, most workers have seen little improvement in living standards" unless you think an apprx. 60% in per-capita real income (expressed as GDP) among the 99% is "little improvement".
Real GDP 2015 / Real GDP 1980 = 2.57 (Source: FRED)
If the income share of the 1% shifted from 10% to 20% then The 1%' real GDP component went up 410% while that of The 99% went up 130%. Accounting for a population increase of about 41% brings those numbers to a 265% increase and a 62% increase.Certainly a very unequal distribution of the productivity gains but hard to call "little".
I believe the truth of the statement is revealed when you look at the Top 5% vs. the other 95%.
pgl said in reply to tew...For most "working people", their raises are quickly eaten up by increases in housing/rental, food, local services, and other nondiscretionary costs. Sure, you can buy more and better imported consumer electronics per dollar, but you have to pay the rent/mortgage every months, how often do you buy a new flat screen TV? In a high-cost metro, a big ass TV will easily cost less than a single monthly rent (and probably less than your annual cable bill that you need to actually watch TV).
Are you trying to be the champion of the 1%? Sorry dude but Greg Mankiw beat you to this.
anne said...
anne said in reply to anne...In the years since 1980, there has been a well-documented upward redistribution of income. While there are some differences by methodology and the precise years chosen, the top one percent of households have seen their income share roughly double from 10 percent in 1980 to 20 percent in the second decade of the 21st century. As a result of this upward redistribution, most workers have seen little improvement in living standards from the productivity gains over this period....
-- Dean Baker
anne said in reply to don...http://www.census.gov/hhes/www/income/data/historical/household/
September 16, 2015
Real Median Household Income, 1980 & 2014
1980 ( 48,462)2014 ( 53,657)
53,657 - 48,462 = 5,1955,195 / 48,462 = 10.7%
Between 1980 and 2014 real median household income increased by a mere 10.7%.anne said in reply to anne...I would be curious to know what has happened to the number of members per household....
http://www.census.gov/hhes/www/income/data/historical/household/
September 16, 2015
Household Size
2014 ( 2.54)
1980 ( 2.73)[ The difference in household size to real median household incomes is not statistically significant. ]
cm said...http://www.census.gov/hhes/www/income/data/historical/families/index.html
September 16, 2015
Real Median Family Income, 1948-1980-2014
1948 ( 27,369)1980 ( 57,528)
2014 ( 66,632)
57,528 - 27,369 = 30,15930,159 / 27,369 = 110.2%
66,632 - 57,528 = 9,1049,104 / 57,528 = 15.8%
Between 1948 and 1980, real median family income increased by 110.2%, while between 1980 and 2014 real median family income increased by a mere 15.8%."protectionist measures that have boosted the pay of doctors and other highly educated professionals"
Protectionist measures (largely of the variety that foreign credentials are not recognized) apply to doctors and similar accredited occupations considered to be of some importance, but certainly much less so to "highly educated professionals" in tech, where the protectionism is limited to annual quotas for some categories of new workers imported into the country and requiring companies to pay above a certain wage rate for work visa holders in jobs claimed to have high skills requirements.
A little mentioned but significant factor for growing wages in "highly skilled" jobs is that the level of foundational and generic domain skills is a necessity, but is not all the value the individual brings to the company. In complex subject matters, even the most competent person joining a company has to become familiar with the details of the products, the industry niche, the processes and professional/personal relationships in the company or industry, etc. All these are not really teachable and require between months and years in the job. This represents a significant sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree portable between companies, but some company still had to employ enough people to build this experience, and it cannot be readily bought by bringing in however competent freshers.
This applies less so e.g. in medicine. There are of course many heavily specialized disciplines, but a top flight brain or internal organ surgeon can essentially work on any person. The variation in the subject matter is large and complex, but much more static than in technology.
That's not to knock down the skill of medical staff in any way (or anybody else who does a job that is not trivial, and that's true for many jobs). But specialization vs. genericity follow a different pattern than in tech.
Another example, the legal profession. There are similar principles that carry across, with a lot of the specialization happening along different legislation, case law, etc., specific to the jurisdiction and/or domain being litigated.
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Dec 15, 2015 | The Fiscal Times
White House spokesperson Josh Earnest described Donald Trump as "offensive and toxic," though that only begins to describe the corrosive effect his bigotry, divisiveness, and xenophobia have on our society. It is at odds with our values as a nation.
It's also bad for the economy.
A divided society cannot function optimally, especially when the divisions erect walls between groups that are difficult to cross. There are all sorts of attempts to divide us right now, but I want to focus on something other than the bigotry that has been on display in the Republican race for the presidential nomination, the division into winners and losers.
It might seem at first that this is exactly what capitalism does. It uses competition to separate people into various income classes, decide who gets the best jobs, who gets to live in desirable locations – it decides who wins and who loses. Some people, hopefully those who have earned it, do well and others fall behind. This drive to be a winner, it is argued, is the driving force behind capitalism.
To some extent that's correct, but competitive capitalism is not divisive. In fact, it is just the opposite. Competition is a great leveling force.
For example, when a firm discovers something new, other firms, if they can, will copy it and duplicate the innovation. If a firm finds a highly profitable strategy, other firms will mimic it and take some of those profits for themselves. A firm might temporarily separate itself from other firms in an industry, but competition will bring them back together. Sometimes there are impediments to this leveling process such as patents, monopoly power, and talent that is difficult to duplicate, but competition is always there, waiting and watching.
Competition also drives us forward individually and as a nation. It is a source of new innovation and new technology as people and firms try to find ways to do better than others, to earn higher incomes, gain more popularity, to escape from the pack. People pursue education and other ways to improve themselves not just as a source of knowledge, but also as a way to distinguish themselves.
However, any successful strategy will be followed. There are differences in talents and abilities, of course, that prevent a full leveling, but to the extent possible people will copy anything that leads to success. The fact that this is true – that capitalism will take away gains and differences if it can – is what drives people to continue to try to get ahead. If you rest on your laurels, they will be taken away.
But there is an essential feature in the system that makes it work, and this takes us back to the attempt by Trump and the Republican Party more generally to erect walls between groups of people. The system works best when people have the freedom to enter a new business (if they have the means and are willing to take the risk). It works best when people compete for jobs on equal footing, have access to the same opportunities, when there are no artificial barriers in society that prevent people from reaching their full potential.
Inequality erects those barriers as those who have been fortunate try to protect themselves from capitalism's inherent tendency to erode away their superior position. They feel threatened by competition and do all they can to avoid it once they have found success. And it's not just the wealthy. Even the middle class will attempt to erect roadblocks – social, legal, whatever it takes – if it feels threatened from competition from traditionally disadvantaged groups.
When those barriers exist, talent is wasted and we are worse off as a nation. How many great ideas will never be known simply because some people never had the education or opportunity needed to draw the ideas out?
But it's not just the children of poorer households that are disadvantaged by inequality. The children of the wealthy have no incentive, in many cases, to reach their full potential. Why struggle, take risks, do the hard work that is needed to come up with a new and useful idea when your needs are already taken care of? How much talent is wasted because of this?
It is not inequality that drives innovation and economic growth--it is the attempt to escape the leveling forces of capitalism. If we truly wanted to produce the most economic growth, everyone should start off equal to the extent possible. That way, everyone would have the incentive to differentiate themselves from others, and the means to do so. Inheritance taxes would be 100 percent; schools would be assigned randomly to ensure there's an incentive to equalize resources, and so on, and so on.
Of course, that will never happen. As we're seeing in the presidential election, those with means are trying to make the divisions larger rather than break them down. They tell us inequality drives our economy, when in fact inequality is an outcome, the driving force behind it is the desire to escape the equalizing forces of competition. Inequality as a starting point takes away opportunity from the children of the poor, and it dulls incentives for the children of the rich. It's not hard to understand why recent research has found that high and persistent inequality is associated with lower economic growth.
Separating the winners from the losers is okay if it is based on merit. If we start equally, and have the same chance to get ahead, then unequal outcomes are less of a concern. The problem is that some people are born "winners" even though they have done nothing to earn it, and others have little chance to win due to our unwillingness to truly embrace what equal opportunity means.
And, as Republican campaigns for the presidential nomination are making abundantly clear, that's just the way some people want it.
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Dec 14, 2015 | Economist's View
Syaloch said in reply to cm...
So you think that offshoring does not eventually increase living standards in the destination countries? That's odd. What's your evidence?
Automation may not be the first response, but it's always in the equation:
CEO: "Those pesky foreign workers are asking for more again! Machines are so much easier to work with. Can we replace them with machines yet?"
CTO: "Let me check... No, not yet, but a lot of smart people are working on it."
CEO: "OK, then let's look for another offshoring partner with more complacent workers for now and revisit this later."
The answer to this automation question only has to be yes once to permanently change the playing field.
reason said...
I actually think that the bigger effect is not just offshoring, but a vicious circle relating to increasing inequality. After all, most of the economy today is services, but if normal people can't afford the services anymore, then that will of course stagnate, forcing down wages decreasing the affordability even more (or causing substitution of inferior automated or remote services).
That is why the one employment bright spot is medical services which are subsidised (one way or the other) almost everywhere. We really have to investigate more the distribution of the circulation of money, how the concentration of money in a few hands means that money circulates through relatively hands. I don't know of anybody who actually investigates this. You could say, it is the disaggregation-is-important problem.
reason said...
One thing that really annoys with political discussion today is the dominance of money illusion. This is particularly extreme in the Euro area today where Germans keep complaining that so and so will be taking "our tax money". No one ever seems to stop and think, "where does the money come from in the first place", and yet, in macro-economics, this is absolutely the most important question. Nobody even seems to notice that both deleveraging and bankruptcy actively destroy money and that money needs to be replaced.
RC AKA Darryl, Ron said in reply to pgl...
"...the empty suits running GM and Ford were both greedy and incompetent..."
[Yep!]
http://www.amazon.com/The-United-States-Toyota-Squandered/dp/1592993028
The United States of Toyota: How Detroit Squandered Its Legacy and Enabled Toyota to Become America's Car Company
September 11, 2007
by Peter M. DeLorenzo
The United States of Toyota is many stories in one. First and foremost, it is a business story, detailing the decline of the American automobile industry - and the simultaneous rise of an Asian manufacturer to take its place. It is also a history book, providing an intimate portrait of the larger-than-life personalities and cars that led the American auto industry through its glory days and down the path toward extinction. It is a political/current affairs piece, presenting the rise of a Japanese company - Toyota - not just in terms of its sales success but also in terms of its cultural success, as it works to assimilate into American society. And finally, it is a never-before-seen primer on Detroit - The Motor City - a town and a region dominated by the auto companies, their suppliers and their ad agencies - and by a mindset and culture all its own. In commentary that is as accurate as it is blunt, Peter De Lorenzo presents the players and the action in the auto business in a way not seen before in print. His voice is unique and refreshingly candid. His provocative analyses and assessments - grounded in personal experience and a lifelong immersion in all things automotive - present a compelling picture of the state of the auto business - how it used to be, what it has become and where it is headed. From the arrogance and short-sightedness of the Detroit manufacturers to the acumen and relentlessness of Toyota, The United States of Toyota paints an insightful portrait of an iconic American industry as it struggles for survival in the early years of the 21st century.
http://www.amazon.com/The-End-Detroit-American-Market/dp/0385507704
The End of Detroit: How the Big Three Lost Their Grip on the American Car Market
September 21, 2004
by Micheline MaynardAn in-depth, hard-hitting account of the mistakes, miscalculations and myopia that have doomed America's automobile industry.
In the 1990s, Detroit's Big Three automobile companies were riding high. The introduction of the minivan and the SUV had revitalized the industry, and it was widely believed that Detroit had miraculously overcome the threat of foreign imports and regained its ascendant position. As Micheline Maynard makes brilliantly clear in THE END OF DETROIT, however, the traditional American car industry was, in fact, headed for disaster. Maynard argues that by focusing on high-profit trucks and SUVs, the Big Three missed a golden opportunity to win back the American car-buyer.
Foreign companies like Toyota and Honda solidified their dominance in family and economy cars, gained market share in high-margin luxury cars, and, in an ironic twist, soon stormed in with their own sophisticatedly engineered and marketed SUVs, pickups and minivans. Detroit, suffering from a "good enough" syndrome and wedded to ineffective marketing gimmicks like rebates and zero-percent financing, failed to give consumers what they really wanted - reliability, the latest technology and good design at a reasonable cost. Drawing on a wide range of interviews with industry leaders, including Toyota's Fujio Cho, Nissan's Carlos Ghosn, Chrysler's Dieter Zetsche, BMW's Helmut Panke, and GM's Robert Lutz, as well as car designers, engineers, test drivers and owners, Maynard presents a stark picture of the culture of arrogance and insularity that led American car manufacturers astray. Maynard predicts that, by the end of the decade, one of the American car makers will no longer exist in its present form.
*
[Like the executives of the US steel industry before them, the management of the big three (plus one) US automakers possessed legendary inabilities when it came to product development and production quality control. One can only imagine that their golf games must have been better than their understanding of auto making.]
pgl said in reply to RC AKA Darryl, Ron...
Exactly - products designs that were better than our. Lean production which we were slow to adapt. And there are those Jan commercials. Toyotas are selling like crazy. But at least Ford and GM is finally under new management.
sanjait said in reply to pgl...
A few decades later ... Ford and GM do indeed look to be getting their act together. I'd buy a car from either one of those companies today.
lower middle class said...
Paging Dr. Proteus... Dr. Paul Proteus!
cm said in reply to lower middle class...
That was automation, not offshoring.
Syaloch said in reply to cm...
In the end that's a distinction without a difference.
Julio said in reply to Syaloch...
Yes, I see offshoring as a transitional stage while foreign workers are cheaper than machines.
RC AKA Darryl, Ron said in reply to Julio...
Machines could not open up SE Asian markets to US firms in the way that offshoring could.
Syaloch said in reply to RC AKA Darryl, Ron...
Suppose we visited those factories from Player Piano and discovered that the few highly educated workers remaining were not overseeing automated machines, but rather shipping raw materials over to a foreign country where goods were produced by low-wage laborers. In terms of the domestic economy, would that make any difference?
Large-scale offshoring was enabled by machines that made the exchange of goods and information between remote locations possible. Whatever residual labor component is involved is merely an automation problem that hasn't been solved... yet.
RC AKA Darryl, Ron said in reply to Syaloch...
MNCs wanted their capital investment to have access to the markets with the most growth potential. Regulatory and FOREX arbitrage helped. Labor costs were low on the totem pole.
Syaloch said in reply to RC AKA Darryl, Ron...
That's more true with offshored manufacturing than with services. US companies aren't sending call center jobs to India because they hope to serve the Indian market.
But even with regard to manufacturing labor costs are obviously a major consideration. Just watch any episode of "Shark Tank" and listen to the sharks explain how stupid anyone is for trying to manufacture anything here in the US. Are t-shirts sewn in Bangladesh because of the huge growth potential in apparel sales there? Were the Mexican maquiladoras set up to have better access to the Mexican market?
lower middle class said in reply to cm...
The plot was about automation, but the moral was about humanity. :)
"The main business of humanity is to do a good job of being human beings," said Paul, "not to serve as appendages to machines, institutions, and systems."
― Kurt Vonnegut, Player PianoSyaloch said in reply to lower middle class...
Toward the end of Player Piano the Shah of Bratpuhr asks a very good question: What are people for?
When I first read Player Piano I also happened by pure chance to be reading a collection of essays by Wendell Berry titled "What Are People For?"
The eponymous essay from Berry's collection was a great complement to Vonnegut's book.
lower middle class said in reply to Syaloch...
Time for me to visit the library, thanks Syaloch!
reason said...
New Deal democrat
Yes, it is part of your name (and was copied then throughout the Western world). Then of course there was the Russian and Chinese revolutions, which at least initially were very egalitarian.New Deal democrat said in reply to reason...
I think you misunderstood my point, which was about liberalizing international trade. I'm not 100% sure, but I don't think that was a really high priority of the Russian and Chinese revolutions. :)
pgl said in reply to New Deal democrat...
I studied Russian history. Free trade was not exactly what drove Lenin. And it is certainly not what drives Putin.
PPaine said in reply to New Deal democrat...
There was a significant debate about trade early on with bukharin advocating. Two way openness. And Lenin a two way state monopoly. Lenin anticipated what happened to russia after the wall fell ....70 or so years later.
He had a keen insight into MNCs free for all tactics. Unfortunately state concessions which he supported faced a tacit constriction.
Despite notable exceptions including Pater Koch
reason said...
P.S. New Deal democrat
It is not the PRODUCERS who have a huge incentive to make sure it never happens. Au contraire, they want their consumers to have more money. It is the OWNERS who want to make sure it never happens because that would dilute their power.
RC AKA Darryl, Ron said in reply to reason...
Yep. Capital gains... and gains... and gains, until there is little left for labor gains.
pgl said in reply to RC AKA Darryl, Ron...
Nike makes obscene profits. And for what? Designing new shoes? They don't make anything - their third party Chinese manufacturers do the hard work at low wages. BTW - the US does not get to tax those Nike profits as they end up in Bermuda.
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Economist's View
Syaloch said in reply to anne...
In other news, here at home we're shrinking too.
http://www.pewsocialtrends.org/2015/12/09/the-american-middle-class-is-losing-ground/
The American Middle Class Is Losing Ground
No longer the majority and falling behind financiallyAfter more than four decades of serving as the nation's economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.
Peter K. said...
I don't believe I've seen DeLong talk this way before. He and Krugman often focus on the Republicans or the European VSPs, with good reason.
But if Hillary doesn't move the ball down the field despite Republican opposition, increasing inequality will make politics worse and worse.
Live from Evans Hall: I would merely point out that the out-of-touch elite is not confined to the Republican Party. There are substantial elements within the Brookings-Third Way wing of the Democratic coalition that would rather cut Social Security than establish a sensible retirement-income system, and that would rather cut Medicare than improve the efficiency of health care finance and delivery, after all.
As all of the authors of the Brookings-AEI joint "consensus plan for reducing poverty and restoring the American dream" write:
there are reasonable ways both to cut spending and to raise revenue that are consistent with our core values. For example, Social Security spending is projected to consume over one percentage point more of national income in 2040 than it does today...
Why a one-percentage-point rise in the GDP share of Social Security is something that calls in any technocratic sense for cuts to the Social Security system is something that eludes me. What cutting Social Security has to do with reducing poverty eludes me. But it is something that all fifteen of the authors thought was so obvious as to require no explanation or justification whatsoever...
Paul Krugman: Empowering the Ugliness: "The story is quite different in America...
Continue reading "" "
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Dec 10, 2015 | naked capitalism
David Carl GrimesAccording to the Credit Suisse Global Wealth Report, the middle class makes up only 38% of US adults. The poor make up 50%!
https://www.credit-suisse.com/ch/en/about-us/research/research-institute/publications.html
CliveThe only real population growth in the US is at the extreme lower end. Nowadays we see fewer and fewer white baby boomers working. For now employers can hold their prices up somewhat because the baby boomers still consume and the employers now can profit because their labor gets less and less money. This will only last until the baby boomers die out. The replacement workforce and the workforce for the future is brown and sees minimum wage as a huge improvement over the situation in their native countries. The US is in the midst of transforming itself into a much lower wage environment for all employers. This study should be combined with a demographic analysis. My suspicion is that the "middle class" is simply dying off to be replaced by third world refugees who are going to earn a lot less.
Where I live most of the houses around are the definition of "middle class" for England, and it has been a middle class neighbourhood for about a century. You can tell this from the houses types - starting at Edwardian villas with an attic for one (two at the most) live-in maids which would have been the bottom-run of middle class at the time, through to post-war medium sized houses, townhouses, a couple retirement bungalows then some more recent building from the mid-1990's. Nothing is much over 2000 sq. ft. and most are a little less than that. The majority of residents have lived here for 20+years (until recently, it had an extremely stable population base) and their occupations are, again, what you'd have thought of as being text-book middle class (teachers, local government mid-ranking managers, skilled manufacturing, some semi-skilled such as CNC machine operators but no unemployed households or people who are forced to rely on social security.
Now the most telling part: Of the households with children in their twenties (a mixture of high school only and graduates in an approximately 50/50 mix of the two) none - absolutely none - can afford to live in the same style as their parents did. I will emphasis again, this is not historically 1%'er or even a 10%'er neighbourhood. Up until the last 20 years, it was the middle of the middle. Those will college educations (most have had to return to their parents' houses, which is a social issue in itself) are having to wait until they - so they hope - get pay significant rises from their starting salaries to find a place which is not so far down the level they have been accustomed to or else move in with a partner (which again is a social issue because relationships are more difficult to sustain if they begin to be forced by the need to find suitable accommodation).
Those with no college degree are having, again, to live with their parents until they can afford somewhere to rent. This sounds ridiculous (the whole point of renting should be that you don't need to tie up capital or much savings) but because rents are so high this close to London, such a significant portion of their likely incomes will be tied up in rent that they need a cash cushion to survive the inevitable periods where work is not easy to come by and they have to take whatever is offered. Either that or, again, they need to be in a relationship and have someone to split the rent with. But founding a relationship is kind-a hard while living with your folks.
Traditionally, parents might have been able to help their kids with a loan deposit. But many parents already cleared themselves out of their own savings paying tuition fees and the worst excesses of their children's student loans so they would at least not end up starting out Ł30-Ł50k in debt. Even if they hadn't done that, a 10% deposit comes in at Ł25k on the sorts of housing which the middle classes expect to be living in - the kids' parents have been so hollowed out over the last two decades that they don't have that sort of money lying around. Oh, and even if they did, a Ł225k mortgage is - rightly - outside of most mainstream lender's mortgage criteria for those on a "middle class" job/salary combination as huge salary multiples are no longer available.
Even with college educations, while people in their twenties might be fairly able to get a job in London and the Home Counties paying, say, Ł30k pa. before taxes, they will have travel costs of Ł3-5k a year which takes a big chunk out of that before they've even started. Student loan payments will take another couple of thousand out of pre-tax income. If they live link monks (or nuns), they might just about be able to save Ł5 to Ł10k a year. Which means it will be another 5 to 7 years before they can achieve any sort of financial or family-life independence - they'll be pushing 30 in other words.
Without college, they are facing renting very poor accommodation for the rest of their days, with no viable option to improve their lot.
So it's RIP the Middle Class, in South East England anyway. If it's died here, I can't think where it might still have any hope of being alive. I've not even mentioned pension provision here, so old age will hold no succour whatsoever.
The FT piece was a Panglossian interpretation of this reality.
perpetualWARJust wanted to say I appreciated this comment. I see the realness of what you have described in Central Ohio, USA myself. Thank you.
I am a former 6-figure earner who has been fighting foreclosure on my house for six years. Right before the last go-round with the bank, I lost the job I got in 2010 (after a year and a half of unemployment.) So, rather than getting a job, I fought the foreclosure pro se for two years.
Just got new employment and am earning $14/hr.
BTW, my former career was marketing to architects. The gal in Atlanta is crazy to think that the newest construction boom will keep her employed. During my employment in 2010, I would ask architectural firms how the Greatest Depression affected their office. Most never responded to that question, however I will never forget one pricipal replied, "Eight out of our ten employees lost their homes to foreclosure."
You just can't bounce back after losing everything in middle age.
allanDamn those neo-liberals, damn them to hell!
PraedorIn 1997, some guy wrote this about the effects of globalization:
Critics of the global economy invariably reply that America may be creating lots of jobs but that they are tenuous because of the prevalence of downsizing, which is a reaction to international competition (a line of reasoning that also provides a good excuse for companies undertaking layoffs).
Come again? Newsweek ran a story last year, titled "The Hit Men," about executives responsible for massive layoffs. The chief executives of AT&T, Nynex, Sears, Philip Morris and Delta Air Lines were high on the list. Of course, international competition plays a role in some downsizings, but as Newsweek's list makes clear, it is hardly the most important cause of the phenomenon. To my knowledge there are no Japanese keiretsu competing to carry my long-distance calls or South Korean conglomerates offering me local service. Nor have many Americans started buying their home appliances at Mexican stores or smoking French cigarettes. I cannot fly Cathay Pacific from Boston to New York. …
Many on the left dislike the global marketplace because it epitomizes what they dislike about markets in general: the fact that nobody is in charge. The truth is that the invisible hand rules most domestic markets, too, a reality that most Americans seem to accept as a fact of life. But those who would like to see us revert to a more managed society in all ways hope that popular unease over the economic influence of people who live in far-off places and have funny-sounding names can be used as the thin end of an ideological wedge.
If a vanishing middle-class is the price that needs to be paid for the triumph of Econ 101, so be it. /s
The ONLY reason these corporate scum downsize is to artificially drive up "productivity" numbers, not real growth in anything, just productivity (because fewer workers NOW have to do the work of 3, and THAT for less pay than before! Instant explosion in productivity!). This only serves to bump up share prices which don't actually reflect anything of value or even approach reality on its own terms. They get to say, "See? Massive increase in productivity, so pay me a bazillion damn dollars in 'bonus'".
Every pay cut, every job loss should be legally tied to a requirement to lay off a proportionate number of execs AND a proportional cut to top pay and compensation. The income of the top MUST be hard-locked to pay for workers. Worker pay and compensation decreases, then so MUST executive pay and compensation.
If we reasoned similarly in physics, we should probably discover that weights possessed the property of levitation. It is the economist's definition of wealth that is at fault …
Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT, p. 78
As Ruskin said, logical definition of wealth is absolutely needed for the basis of economics needed for the basis of economics if it is to be a science.
ibid, p. 102
"But the securities of American millionaires can be exchanged in a flash for any currency in the world, for land, for other stocks and bonds. The wealth of the Indian princes is immobile, static; the wealth of their American counterparts is mobile, dynamic. In the money markets of the world the feudal wealth of the Indian princes is of no consequence."
Ferdinand Lundberg, "America's 60 Families", The Vanguard Press, New York, 1937, p. 7
Multiply that 'wealth' by the leverage a country's bankers are able to create with fractional reserve lending and you get:"Finance is the new form of warfare - without the expense of a military overhead and an occupation against unwilling hosts."
http://michael-hudson.com/2010/10/why-the-imf-meetings-failed/
America's and Europe's middle class is dying because:
a. time marches on. We don't need armies of workers laboring day and night to create REAL, NEEDED wealth
b. the world's 0.01% would rather continue "doing God's work" than share the wealth created by advances in science and technology with their "laboring cattle". A leisure class with a genuine clue about what real needed wealth is and what is really happening in the world constitutes a genuine threat to the established order and to all that 'wealth' the 0.01% has piled up in the form of money. (See graph above)All those jobs this country has off-shored with all the technology and education it takes to perform them ARE real wealth – along with things like renewable energy.
If it really is such a big surprise that countries like China are becoming relatively more wealthy and powerful than the U.S. then the world's rich really are as stupid as many of us believe they are.
KeithWell, I'll throw in a socialist comment and hope I'm not flamed.
Isn't it the case that everyone needs a roof over their heads, food and clothing? Perhaps a bicycle too. These things and free education are the minimum a government should supply to its people.
America was a young country full of opportunity, like China a decade or two ago. As a nation matures the wealth concentrates without strong progressive taxation and high inheritance taxes. Now US social mobility is on a par with the UK, putting it at the second lowest in Europe which is pretty bad. Our privately educated elite are an obvious cause of low social mobility in the UK and perhaps private universities are doing the same job in the US.
If we want equality of opportunity we should think what a meritocracy would look like.
"What is a meritocracy?"
1) In a meritocracy everyone succeeds on their own merit.
This is obvious, but to succeed on your own merit, we need to do away the traditional mechanisms that socially stratify society due to wealth flowing down the generations. Anything that comes from your parents has nothing to do with your own effort.
2) There is no un-earned wealth or power, e.g inheritance, trust funds, hereditary titles
In a meritocracy we need equal opportunity for all. We can't have the current two tier education system with its fast track of private schools for people with wealthy parents.
3) There is a uniform schools system for everyone with no private schools.
Thinking about a true meritocracy then allows you to see how wealth concentrates.
Inheritance and trust funds are major contributors.
When you start off with a lot of capital behind you, you are in life's fast lane.
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.If the trust fund/inheritance is large enough then you won't need to work at all and can live off the rentier income provided by your parents wealth and the work of an investment banker.
If you are in life's slow lane, with no parental wealth coming your way, you will be loaded up with student debt, rent, mortgages and loans.
To ensure the children of the wealthy get the best start we have private schools to ensure they get the best education and make the right contacts ready for the race of life.
The children of the poor are born in poor areas where schools are typically below average and they are handicapped before they have even started the race of life.
Wealth concentrates because the system is designed that way.
A meritocracy gives everyone equal opportunity but that is the last thing those in charge want for their children
It is easier to see what is going on if we put things in a historical perspective. Is Capitalism the first social system since the dawn of civilisation to trickle down?
Since it is based on self-interest this seems highly unlikely. It would be drawn up in the self-interest of those that came up with the system, i.e. those at the top.The 20th Century saw progressive taxation to do away with old money elites and so looking at the playing field now can be rather deceptive. Today's ideal is unregulated, trickledown Capitalism. We had unregulated, trickledown Capitalism in the UK in the 19th Century. We know what it looks like.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child LabourImmense wealth at the top with nothing trickling down, just like today.
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and child labour. At the end of the 19th Century, with a century of two of Capitalism under our belt, it was very obvious a Leisure Class existed at the top of society. The Theory of the Leisure Class: An Economic Study of Institutions, by Thorstein Veblen The Wikipedia entry gives a good insight. This was before the levelling of progressive taxation in the 20th Century.
It can clearly be seen that Capitalism, like every other social system since the dawn of civilisation, is designed to support a Leisure Class at the top through the effort of a working and middle class.
After the 20th Century progressive taxation the Leisure Class probably stay hidden in the US. In the UK, associates of the Royal Family are covered in the press and show the Leisure Class are still here with us today.
It was obvious in Adam Smith's day.
Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."
With Capitalism it's better hidden:
The Rothschild brothers of London writing to associates in New York, 1863:
"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."
Everyone works in their own self interest even economists.
- Malthus – supports the vested interests of landlords and so finds nothing wrong with parasitic landlord rent extraction.
- Ricardo – supports the vested interest of bankers coming from a banking family, sees problem with feudal landowners but not bankers that create money out of nothing
- The Austrian School – Austrian aristocrats, of the European Leisure class, support investor's interests. Anti-Government as they are trying to do away with the old European aristocracy. Give preference to those with money:
You are free to spend your money as you choose.
No money, no freedom.
Money is freedom.Most classical economists differentiated between earned and unearned wealth. The Austrian Aristocrats benefit from inherited wealth and hide the distinction. As members of the European Leisure class, they liked to invest and make money from the hard work of others while doing very little themselves.
A monetary system devised by bankers where they create money out of nothing and lend it out charging interest to make a profit. When you come up with a system you make sure it works for you.
How is the legal system loaded? Why do people use expensive barristers/legal teams? It increases your chance of winning the case. What if you can't afford expensive barristers/legal teams? You decrease your chance of winning the case. It's loaded.
Our current wealth distribution is more the product of meritocracy than of inheritance. Harvard decided to go meritocratic back in the '50s. The average IQ of the incoming freshman class skyrocketed. There were still legacies, of course, but the whole Ivy League opened up to highly motivated, highly intelligent strivers. The result, in my view, and in the views of 'The Bell Curve' and 'The Revolt of the Elites' was a cognitive elite taking all the best jobs. Ivy league dominance of the most desirable positions in the FIRE sector, government, and the judiciary is far more pronounced today than it was in 1950.
What would the smartest strivers of the last sixty years have been doing if they hadn't gone to the Ivies? For one thing, they'd probably be living in the Heartland, or wherever they were from. They might have gone to a local college. IQs at local schools have dropped as IQs at the Ivies have risen. They might have worked at a union job. Losing people in the top 1% of intelligence to the Goldman Sachs and McKinseys of the world has been a terrible blow to those segments of society whose interests needed to be protected from unfettered capitalism.
I wish the terminal lefties here at Naked Capitalism would stop trotting out the tired old horse of wealth being perpetuated across generations. By and large, in the United States, it is dispersed over time. Europe may be a different story. There are still wealthy Fuggers, etcetera. But in the US it tends to get dispersed. Only one member of the Forbes 400 of which I am aware has a tie to a great 19th century fortune: David Rockefeller, and he worked at Citigroup. See Rob Arnott's take on wealth dispersion, and Dr. William Bernstein's.
"I wish the terminal lefties here at Naked Capitalism would stop trotting out the tired old horse of wealth being perpetuated across generations. By and large, in the United States, it is dispersed over time."
There is a very narrow sense in which this is true. We do not enforce a system of male primogeniture among a landed aristocracy here in the United States. The fact that some of my ancestors once owned large estates, in New Holland and New York, doesn't entitle me to life as a lord of the manor today. What it did do for me however, was give to my maternal grandparents the easy circumstances necessary to pursue their own interests with no desperate struggle for survival. This allowed my parents to pursue careers in philosophy and linguistics. My generation saw my brother become a physicist and myself a medievalist. We will never be as wealthy as our great-great grandparents were. Yet, because of their wealth, (even much dispersed over time) we were given opportunities to pursue interests that are simply not often available to many others.
I always hear how Bill Gates was a "self-made" man. Really? His mother, Mary Maxwell House Gates was on the board at First Interstate Bank of Washington, and his father William H. Gates, II, was a wealthy attorney and philanthropist.
I know that not all DuPonts, Rockefellers, Whitneys, Vanderbilts, Sharpes, Hutchinsons, Van Rensselaers, etc. are super wealthy today. Yet the vast majority of them are at least comfortable, just as Bill Gates would have been– even if he had never worked a day in his life.
You don't seem familiar with the actual data. The US is more unequal than any other major industrialized nation on the planet. By a lot. And it's not a leftist thing. When Americans are surveyed about their desired wealth distribution, the mainstream – not leftist – viewpoint is that the ideal distribution looks roughly like Sweden.
Also, in a meritocratic society, the socioeconomic status of the parents would have no material impact on the child. In the US, by contrast, the parents are highly predictive of the child. Google the general term social mobility if you are interested in this. For example, we can predict that some kids will be arrested by police more than others simply by looking at the zip code of the parents at the time of birth. Stuff like that is nuts and completely incompatible with a merit-based hypothesis.
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Dec 11, 2015 | Crooked Timber
on December 10, 2015
Thomas Piketty's Capital in the Twenty-First Century is an important and valuable contribution to political economy, both empirically and philosophically. Piketty grounds his theory in vast empirical data,rather than settling for elegant mathematical models. He courageously embraces the fact that economic theory is inevitably value laden, and proposes a theory of the historical dynamics of wealth accumulation in order to offer an updated moral critique of capitalism. Grounding his prediction in the historical data and profoundly simple mathematics, Piketty projects that economic inequality is likely to increase and to favor those who own inherited capital over time. He advances the normative judgment that rising inequality is unjust and must be contained. Although Piketty raises important concerns about the possibility of growing wealth inequality, he fails to normatively ground or argue for his presupposition that this inequality is unjust. Since relative poverty can coincide with high levels of objective or subjective well-being, this presupposition is brought into question. However, there are causes of inequality (including wealth inequality) that clearly can be shown to be unjust. By considering other forms and causes of inequality and oppression, we can distinguish between those forms of wealth inequality that are unjust and those that are normatively benign. In this way Piketty's concerns about growing wealth inequality from inheritance can be partly justified, though of course not empirically verified. Piketty's argument for the injustice of growing economic inequality has two parts. The first part is an empirical, economic argument for the claim that returns from inherited wealth will far outstrip income. This argument can be summarized as follows. Let r be the rate of return on capital, and g be the growth rate of the annual flow of national income.
- If r>g, then (wealth) inequality will grow over time.
- Individuals who own a greater amount of capital earn a larger r.
- Growth, g, is likely to be slower in future.
- If r is great enough and g is low enough, then there will be ever more capital from older, inherited wealth, than from wealth saved from income.
- Hence, (wealth) inequality will increase, and inherited wealth will make up the greatest amount of capital. [click to continue…]
T 12.10.15 at 4:24 pm
"To show that income inequalities are unjust, they also have to be shown to derive from injustice or to lead to injustice." First, thank you for taking the time to join the group blog. Second, it seems that high income and high wealth individuals have been very effective in tilting the tax, regulatory, and legal environment even more in their favor thereby increasing the inequality that you may argue was not originally unjust. Do you think those behaviors lead to unjust income inequality? Do you think those behaviors are a necessary consequence of increased wealth and income inequality?Rakesh Bhandari 12.10.15 at 4:29 pm 2
Interesting and challenging comment which will take several readings to understand and evaluate the many different arguments being made.Here is why Piketty thinks a rentier society contradicts the meritocratic worldview of democratic societies:
"…no ineluctable force standing in the way to extreme concentration of wealth…if growth slows and the return on capital increases [as] tax competition between nations heats up…Our democratic societies rest on a meritocratic worldview, or at any rate, a meritocratic hope, by whichI I mean a belief in a society in which inequality is based more on merit and effort than on kinship and rents. This belief and hope play a very crucial role in modern society, for a simple reason: in a democracy the professed equality of rights of all citizens contrasts sharply with the very real inequality of living conditions, and in order to overcome this contradiction it is vital to make sure that social inequalities derive from ration and universal principles rather than arbitrary contingencies. Inequalities must therefore be just and useful to all, at least in the realm of discourse and as far as possible in reality as well…Durkheim predicted that modern democratic society would not put for long with the existence of inherited wealth and would ultimately see to it that the ownership of property ended at death." p. 422I understand Cudd to be raising a neo-liberal point discussed in Raymond Plant's book on neo-liberalism -- that if a fortune has been made through no injustice to a concrete other and its gifting and bequeathing does no concrete injustice to another, then there is no coherent ideal of social justice (Hayek's idea that social justice is mirage) that would allow us to condemn the resulting distribution of wealth, as fantastically concentrated as it may be.
Yet a rentier society would actually undermine social utility by reducing the incentives for entrepreneurial exertion; the largest incomes also could not be justified in terms of meritocratic principles; and rentiers would be in a position to use the political process to extract not what Piketty calls rent in terms of the income of a rentier but what most economists mean by rents. The last would have no justification in terms of welfare economics (of which Cudd gives an eloquent defense in her book on capitalism). Piketty is correct that to the extent that citizens understood the nature of a rentier society they would rise in opposition to it.
Plus, the wealth concentration of a rentier society would not be accepted in a Rawlsian original position and to the extent that some wealth is needed to exercise one's capabilities would be unjustifiable from Sen's and Nussbaum's capabilities theory. Piketty expresses sympathy for both normative political theories.
Now Cudd also notes that Piketty argues that the astronomical pay of super-managers cannot be justified in meritocratic terms; his argument is more developed than she lets on–it involves cross-sectional comparison and econometric analysis, controlling for luck and other factors in company performance outside the control of a supermanager as well as the inapplicability of marginal productivity theory to the unique jobs that a CEO does. Plus, he gives an institutional analysis of the way in which CEO's can capture boards and how their incentive to do so rose with lower marginal tax rates. Of course that Piketty undermines this justification does not necessarily mean that such compensation is unjustified, but he does undermine the meritocratic justification that is given for it.
MPAVictoria 12.10.15 at 4:34 pm 3
"When wealth inequalities stem from unjust inheritances"Is there any inheritance anywhere in the world that is not an "unjust" inheritance? Serious question...
Bruce Wilder 12.10.15 at 4:34 pm 4
Piketty treats economic inequality stemming from return on capital . . . as a zero sum sort of situation, but that is clearly not true. Investment of capital creates improvements in standard of living for all."that is clearly not true" seems a bit emphatic for a proposition that should not be clear at all. It might be the case that an instance of capital investment improves the standard of living or it might be immiserating. A wealthy investor might invest in a payday loan operation with a remarkable return on investment. A corporation might invest in automation of a production process and bargain for a reduction of wages for the now less numerous and "less-skilled" workforce.
The emblematic condition of Piketty's work, r > g, ought to imply something about the balance at the margin. If the income share claimed by capital is rising faster than total income, it cannot be the case that all capital investment entails a positive-sum bargain in which the net gain is distributed.
We can certainly hope for the kind of capital investments that result in economic growth that exceeds the return to the owners of capital, but that's not the world Piketty is worried about.
Bruce Wilder 12.10.15 at 4:47 pm 5
Piketty argues that top managers today are paid unjustifiably large salaries because it is too difficult to assess the marginal productivity, and in the absence of any information they are able to manipulate their own and each other's wages. A market failure is not an injustice . . .Calling an exercise of power and authority in a bureaucratic hierarchy "a market failure" is an error of ideological obduracy, since hierarchies are not "markets". Hierarchies of authority make economic use of social domination, which is, at least, potentially problematic for justice.
Bruce Wilder 12.10.15 at 4:53 pm 6
A significant cause of income inequality is the differences in human capital developed through education. Piketty notes that the educational systems in Europe and especially the US tend to prevent rather than promote social mobility, and instead transmit privilege. 'Parents' income has become an almost perfect predictor of university access.' (p. 485) Piketty's explanation seems to be that it is because wealthy parents buy places for their children in universities, but I think this overestimates the corruption in university admissions and it underestimates the degree of stratification of the developed academic abilities of college age students. Wealthier families are better able to invest in developing children's abilities and talents to prepare them for college, and have better schools in their neighborhoods. Especially elite universities in the US compete very hard to find and attract low income and minority students, but the competition is stiff for qualified students who will not need remediation in order to succeed.Demand for low-cost tokens is outrunning supply.
Trader Joe 12.10.15 at 5:03 pm 7
I struggle a lot with the concept of inheritance and when/when not justified. Its easy to see how its unfair/unjustified when the amounts are signficant, far less so when they are not.If I'm a Rockefeller and hand over the emprire to my children, its easy to see an undeserved conferred advantage.
If I'm farmer Joe who has worked my farm all my life, own it outright through my labor and savings and then want to pass that to my children, who have also worked it all their life(s), so that it can sustain them the same way as it sustained me – it seems far more fair though it still confers on them an advantage of priveldged and if they successfully manage that advantage they should be able to make it grow. Over some number of generations, the differences would collapse.
I think its a very natural instinct for a parent to want to transmit advantage to their children. Teaching them and nurturing their character are never criticized though no less an asset than dollars or farms.
I can see how the provision of an elite education transmits priveledge, but I'malso hard pressed to suggest a child should be denied the best possible education that they can get. If a child has intellectual talent it should be developed regardless of whether they come from a rich or poor family.
One take away from Picketty could be the best possible biological strategy is to try to get as rich as you possibly can because that's the best possible insurance for perpetuating your DNA. Probably not the policy prescription being encouraged, but certainly supported by the data.
Paul 12.10.15 at 5:21 pm 8
All property rights are oppressive; they amount to the restriction of the freedom of the non-property owner. Unless one wants to go communist (and argue that it is possible to create a society without property rights) or libertarian (and argue that property rights somehow exist a priori of society), any society is necessarily oppressive and unjust. The goal is to minimise this injustice without creating others or destroying the ability if society to function.So I think the OP is wrong in asserting that any allocation of property rights should be assumed just in the absence if evidence that the distribution is "oppression". Property rights are (probably necessary) oppression, almost by definition.
notsneaky 12.10.15 at 5:43 pm 9
"Is there any inheritance anywhere in the world that is not an "unjust" inheritance?"So… if I work hard all my life, say three minimum wage jobs, to put my kid through college, their college education is "unjustified"?
MPAVictoria 12.10.15 at 5:55 pm 11
"So I think the OP is wrong in asserting that any allocation of property rights should be assumed just in the absence if evidence that the distribution is "oppression". Property rights are (probably necessary) oppression, almost by definition."Yep. Property is violence. Maybe beneficial violence in the utilitarian sense but violence all the same.
Ze K 12.10.15 at 6:34 pm 12
Nothing is a priori just or unjust; Thomas More had slaves in his Utopia. However, when a socio-economic arrangement reaches a phase where its fairness is commonly questioned, that's a sure sign that the dominant ideology fails to convince, and the system is in trouble. Doesn't mean it's going to collapse tomorrow, obviously.Rakesh Bhandari 12.10.15 at 6:45 pm 13
It could be argued that entrepreneurial behavior is already individually irrational -- see Kahneman and Tversky. But it is often motivated at least partially by the dream of creating dynastic wealth and glory. Otherwise, it would make little sense to do the hard labor of thinking of new ways of doing things, convincing financiers of the worthiness of the project and giving up more secure incomes. One could worry that Piketty has exaggerated the importance of inherited wealth even in the face of his own evidence (only a small fraction of the top 1% receive most of their income as rentier rent IIRC) and that he has under-estimated its importance as an economic incentive for entrepreneurial labor and that he has also underestimated the extent to which great fortunes dissipate over time due to the growth of heirs and reasonable taxation.MPAVictoria 12.10.15 at 6:51 pm14
"Nothing is a priori just or unjust"He said as he foreclosed on the poor family and cast them out to starve in the street.
cassander 12.10.15 at 6:51 pm 15
>If r>g, then (wealth) inequality will grow over time.If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake.
> Wealthier families are better able to invest in developing children's abilities and talents to prepare them for college, and have better schools in their neighborhoods.
Large American urban school districts are not just the best funded in the country, they're the best funded in the world. And what Bruce says about market failure applies equally well here. people have voted massive amounts of money for urban schools, when those state run schools fail to perform well despite these resources, the failure cannot possibly be attributed to market forces.
> In the 19th century the top 10% most wealthy owned 90% of capital, the middle 40% owned 5% and the bottom 50% owned 5%.
In a perfectly equal society where no one inherited anything, everyone got exactly the same starting salary, saved the same amount, got the same raise every year and earned the same rate of return, the richest 1/5 would still control 66% of the wealth just due to cohort effects. This simple characterizations of wealth inequality by quintiles or deciles do more to conceal than to reveal. what matters is not snapshots, but lifetime expectations. These, however, are harder to calculate and make for much less snappy talking points
Paul 12.10.15 at 6:51 pm 16
This is an interesting paper about the dissipation of wealth: What is the True Rate of Social Mobility in Sweden? Suggests that the tendency of fortunes to fade away is generally underestimatedPaul 12.10.15 at 7:00 pm 17
My reading of r>g is that its piketty's attempt to put an overarching intellectual framework over his results and that its the least successful part of the work, although Brad Delong has made pretty good sense of it herehttp://www.econ.hit-u.ac.jp/~makoto/Piketty_readings/Delong_2015.pdf
But even if you consider it in error its the conclusion more than the foundation. The data speaks for itself.
Cassander @15: I read your comment as "even a pretty equal society would be pretty unequal". The definition if a " pretty equal" society us surely one where the richest 20% only control a little more than 20% of the wealth, surely? After all, the tallest 20% do not account for 66% of the total height in the population.
Layman 12.10.15 at 7:13 pm
If we are to complain that Piketty fails to demonstrate that income inequalities originate from or lead to injustices, can we not also complain that he fails to demonstrate that the sun rises in the east, or that night follows day, or that it is quite difficult to put the toothpaste back into the tube? While this is not as bad as complaining that he fails to discuss 20th- and 21st- century novels, it approaches that degree of badness.cassander 12.10.15 at 7:49 pm 21
@Paul>This is an interesting paper about the disspation of wealth:
I just skimmed it, but that the paper argues that there's a great deal of dissipation of wealth, just that it's well below 100% dissipation.
>The definition if a " pretty equal" society us surely one where the richest 20% only control a little more than 20% of the wealth, surely? After all, the tallest 20% do not account for 66% of the total height in the population.
If everyone was born 2 feet tall and got 10% taller a year, then the tallest 20% would have 80% of the height. the point of the math I laid out is precisely that "a society where everyone has the same amount of stuff" and "a society where everyone gets the same amount of stuff" are not the same, despite our basic instinct that they should be.
T 12.10.15 at 7:52 pm 22
@16This and other studies using unique surnames tends to suggest that mobility may be overstated.
http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Sweden%202012%20AUG.pdfengels 12.10.15 at 7:53 pm 23
Apologies if I've misunderstood but does the OP really think that someone who affirm's Paine's maxim that'Social distinctions can be based only on common utility, must believe that someone's inviting different numbers of people to two different dinner parties is unjust?
Paul 12.10.15 at 8:02 pm, 24
@cassander
But a world where everyone is born poor and steadily becomes rich is also a pretty unequal world, is it not? And piketty's shows that 50% of people in most western societies own nothing, which suggests a lot of people are not accumulating.I can see your point that headline numbers can be misleading, but piketty also shows a clear trend, that wealth is becoming more concentrated. Unless the metrics are somehow a deteriorating representation if reality that's a real thing.
cassander 12.10.15 at 8:55 pm 25
@Paul>But a world where everyone is born poor and steadily becomes rich is also a pretty unequal world, is it not?
For some definitions of unequal, yes, but I say those framing are not particularly useful We are all born ignorant and spend a lifetime accumulating knowledge, but we do not lament the "knowledge gap" between old and young. A world where everyone made X dollars a year, except for their 20th year when they make 1000X would not have a Gini score of 0, but I would call that world equal.
> And piketty's shows that 50% of people in most western societies own nothing, which suggests a lot of people are not accumulating.
It shows that most people aren't accumulating YET. In the real world, people do not save X percent of their income a year, they they consume a larger share of their income when young (consume much more than their income, actually) and save more as they age, for obvious reasons. That's why you have to look at wealth over lifetimes, not in snapshots.
Peter K. 12.10.15 at 9:15 pm 26
@ 15 Cassander">If r>g, then (wealth) inequality will grow over time.
If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake."
It's not saying that wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class).
Trump. Warren Buffet. George Soros. Bill Gates. Mark Zuckerberg. Oprah Winfrey.
These people need the financial sector to put their money to work. And as we've seen the last 100 years, the fiancial sector grows and grows as many of the newly rich are financiers.
Peter K. 12.10.15 at 9:21 pm 27
And the one percent also effect politics and policy through their generous campaign contributions (Koch brothers); sponsorship of think tanks; ownership of mass media (think Rupert Murdoch); etc. etc.Politics and policy can effect both *r* and *g.*
http://www.nytimes.com/2015/11/30/us/politics/illinois-campaign-money-bruce-rauner.html
"Around the same time that Mr. Rauner began running for governor, a group of researchers based at Northwestern University published findings from the country's first-ever representative survey of the richest one percent of Americans. The study, known as the Survey of Economically Successful Americans and the Common Good, canvassed a sample of the wealthy from the Chicago area. Those canvassed were granted anonymity to discuss their views candidly.
Their replies were striking. Where merely affluent Americans are more likely to identify as Democrats than as Republicans, the ultrawealthy overwhelmingly leaned right. They are far more likely to raise money for politicians and to have access to them; nearly half had personally contacted one of Illinois's two United States senators.
Where the general public overwhelmingly supports a high minimum wage, the one percent are broadly opposed. A majority of Americans supported expanding safety-net and retirement programs, while most of the very wealthy opposed them. And while Americans are not enthusiastic about higher taxes generally, they feel strongly that the rich should pay more than they do, and more than everyone else pays.
"Probably the biggest single area of disconnect has to do with social welfare programs," said Benjamin I. Page, a political scientist at Northwestern University and a co-author of the study. "The other big area has to do with paying for those programs, particularly taxes on high-income and wealthy people.""
Soru 12.10.15 at 9:40 pm 28
One thing is that in reality, setting 'the wealth of a new born' as zero is rather arbitrary. In one country they might get , by right of citizenship, X dollars of security, legal, health and welfare services. In another, Y dollars..Both have no money, but if X >> Y, then they are going to have very different average expected life outcomes.
At a high zero point, you get cops and judges who uphold the law, at a low one you can hire some bodyguards. At high zero point you can go to a library, at a low one hire a hack to write your autobiography.
You can extend that to cases of active oppression by giving that a dollar equivalent and a minus sign. After all, even slavery could usually be escaped from, in theory, by buying yourself…
Thing is, the _potential_ floor of wealth in a modern society _could be_ as far above active oppression as room temperature is above absolute zero.
And raising it never stops being a good.
T 12.10.15 at 9:53 pm 29
@27
Exactly. Regardless of how how rich got that way there is no question that they are using their wealth to increase and capture economic rents and to take actions that diminish income and wealth mobility. To the extent the economy veers to increased rent seeking, it could very well lower future growth by diverting resources to non-productive activities. If this behavior is baked in as inequality reaches a certain threshold, then it is inherently unjust. To the extent its not always baked in, it has certainly had that effect in the US over the last 30 years. Consequently, we can conclude that current levels of US inequality are unjust.Mike Furlan 12.10.15 at 10:27 pm 30
An interesting snapshot of where we are.http://www.nakedcapitalism.com/2015/12/demise-of-the-us-middle-class-now-official.html
cassander 12.10.15 at 10:31 pm 31
@Peter K.>It's not saying that wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class).
That's explicitly the argument pikety makes with R>G, that the rich get richer by virtue of being rich, not that the moderately well off occasionally become rich by some other means. None of the people you mention got rich by sitting on accumulated capital, nor did any of the fortune 500.
>And as we've seen the last 100 years, the fiancial sector grows and grows as many of the newly rich are financiers.
getting rich by playing financier with other people's investments is not what pikety is talking about. Warren Buffet's fortune, and almost every other financial fortune I can think of, was made by taking a percentage of the profit he got from investing other people's money, not his own.
js. 12.10.15 at 10:50 pm 32
However, the equality presumption is false; it is a fallacy akin to the principle of insufficient reason, which assumes equiprobability of events where there is no reason to assign another probability. But there is also no reason to assign equal probability rather than any other, and thus rationality cannot demand that. By the same token, morality cannot demand equal shares of a good (or bad) in the absence of a reason for it. I take this to be a point of logic, not morality.
This is almost bizarrely unconvincing. You seem to be using "inequality" in a purely formal sense-a sense in which "4 > 2" counts as an inequality. In this sense of the word, it may well be true that there is no presumption of equality. But that fact has no bearing on whether or not a presumption of equality is plausible in the case of interest, namely social and economic inequalities. In this particular case, if there is a widespread moral intuition in favor of the presumption of equality (as I think there is), you can't simply hand-wave away the presumption as a "matter of logic". You need to either (a) show that there is in fact no such widespread intuition, or (b) provide some sort of error theory for this intuition. And until one of these arguments is forthcoming, I'll continue to think that the presumption of equality has quite a bit going for it.
Tabasco 12.10.15 at 11:05 pm 33
wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class). Trump. Warren Buffet. George Soros. Bill Gates. Mark Zuckerberg. Oprah WinfreyGates is giving his money away. Buffet and Zuckerberg say they are going to give away their money. So, no dynasties there.
T 12.10.15 at 11:32 pm 34
@33As for dynastic wealth, there are 4 Waltons, 3 Mars, and 2 Kochs among the top 18 richest Americans. That's 50%. Pinketty is forecasting a future of dynastic wealth, the Forbes 400 in 30 years. It's the kids of today's plutocrats that will be the beneficiaries.
UserGoogol 12.10.15 at 11:50 pm 35
Paul @ 8: I'd push against that in multiple directions. Even without property per se, some degree of excluding people from using resources is inevitable just from being an organism living in a world of limited resources. If I eat some food, I exclude others from eating that food. Property gives people rather extensive abilities to exclude others from using resources far beyond what is strictly necessary in a state of nature, but any existence involves curtailing the freedoms of others. The only way to have absolute freedom is to be God.But by the same token it seems kind of vacuous and silly to call that injustice. Minimizing the amount of suffering (or keeping the suffering within "reasonable" bounds) seems like a more sensible way of defining that word.
To get back to the actual point you were making instead of making vague philosophical rumbling, property certainly ipso facto causes some degree of restriction of freedom and this is something deserving of critical attention. But I don't think you can usefully say that they're oppressive by definition.
F. Foundling 12.10.15 at 11:52 pm 36
The OP's notion of justice is not explained in the text, but it seems to be different from mine, and, I think, from that of many others. I think most people would agree that a just distribution is a distribution in accordance with the merits and/or needs of the individuals. Any deviation from such a distribution, for whatever reason, is unjust (it 'harms others' in the sense that the same resource could have been allocated to others more deserving of it based on their merits/needs, and the fact that more wealth has been created doesn't change anything as long as that new wealth is not distributed according to the same principle). This means that inheritance-determined distribution is inevitably unjust, just as any other distribution that is not deliberately made to reflect the merits and/or needs of the individuals can be reasonably assumed to be unjust by default, for the same reason that any random lottery ticket can be assumed not to be winning the jackpot, and any random sequence of body movements can be assumed not to result in the making of a sandwitch.The equality presumption is basic to most people's sense of justice: most people, when asked to divide a loaf of bread 'justly' between two complete strangers of whom they know nothing, will split it into two equal parts unless there is an obvious criterion by which to differentiate (size, age, gender, caste, etc.). Indeed, even when the bread is distributed unequally in accordance with one or more of these characteristics, the very fact that the difference in share size is made proportionate to the difference in the chosen characteristic(s) shows that no other inequality is assumed apart from the one explicitly entailed by the characteristic – i.e. equality is assumed by default 'other things being equal'. Yes, it is very unlikely that these two random strangers really are *precisely* equally good and deserving; the point is that we have no *right* to assume otherwise, and as humans they have a *right* to be treated equally unless there is a specific reason for the contrary.
Bruce B. 12.11.15 at 12:26 am 37
It's worth noting that in a lot of cases where a particular family dynasty falls apart, a great deal of the money doesn't travel far. It goes to co-owners of shared enterprises, colleagues and rivals, and others in the same stratum. Cash can flow out quickly, but lots of assets hang around, and get used by someone close at hand.If the principle that "since I didn't set out to harm anyone, you have no right to tax my stuff" were taken seriously in general, we wouldn't have laws against pollution or having your car run over someone because you didn't set the parking break. The idea sounds appealing widely at first hearing, but it doesn't take much of a context to establish how incompatible it is with a bunch of other moral reasoning.
John Quiggin 12.11.15 at 12:41 am 38
The OP seems to be completely misconceived. As Cudd concedes, Piketty presents a positive analysis predicting that inherited wealth will become dominant, and doesn't spell out any theory of justice, though it's obvious that he thinks this is a bad thing.So, Cudd makes up a theory of justice, imputes it to Piketty and then says it hasn't been proven. What's more she writes as this topic is being addressed for the first time. She doesn't mention any of the vast number of people who've written on equality and whose arguments might be relevant here.
The closest actual engagement with Piketty is her reference to the epigraph 'Social distinctions can be based only on common utility,' which would most naturally be interpreted in utilitarian terms (that's the default assumption for an economist anyway). So, Piketty can be taken to say that a combination of slow growth and increasing inequality is unlikely to promote common (aggregate) utility. There are plenty of arguments that can be made for or against this, but Cudd doesn't even bother. Having cited the epigraph, she never again mentions utility.
js. 12.11.15 at 1:02 am 39
UserGoogol @35 - I'd make it even simpler: if you've got a conception of "justice" such that any possible social arrangement is unjust, i.e. justice is actually impossible, then whatever you've got is not a conception of justice.engels 12.11.15 at 1:05 am 41
I agree with other posters. The OP 'reconstructed' an argument Piketty never made about a topic he didn't address, and then complained about how bad it is (and for really unconvincing reasons). It's not often you see someone lose an argument so badly with a straw man of their own construction.Robb Lutton 12.11.15 at 1:16 am 42
…In the US today, top 10% own 25% and the next 40% own 25% of capital,…This cannot be true else there would be no inequality as it would mean the bottom 50% would have 50% of capital.
Markos Valaris 12.11.15 at 1:51 am 44
js, UserGoogol, I suspect Paul is after something somewhat different, which is the idea that using force to exclude others from some resources must *either* be backed by good reasons *or* count as oppressive/unjust. This doesn't seem crazy, and it would generate the kind of request for justification the OP puzzles about.LFC 12.11.15 at 2:06 am 45
I haven't read the comment thread with great care but I have the read the OP.It seems to be the basic argument of the OP is roughly this:
1) Absolute poverty (in today's world) is always unjust, but relative poverty resulting from economic inequalities is not necessarily always (or even presumptively) unjust. Some economic inequalities are unjust, others aren't, and one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust. This point strikes me as fairly uncontroversial.
2) Economic inequalities resulting in or reflecting relative (not absolute) poverty are unjust when they are caused by (or transmit) oppression and/or discrimination, or when they 'stigmatize' and thereby cause psychological harm to an identifiable group. This point I think is more controversial but interesting and defensible, at least with a more elaborate account, which I take it the author of the OP has given elsewhere.
As for where the OP directly engages with and criticizes Piketty, I'm not well-placed to get into this, but ISTM the passage where the OP criticizes him for ignoring the factor of oppression, e.g. w/r/t women in particular time periods, can be taken as a reasonable criticism.
When read with some care, the OP seems not anywhere near as hostile to some kind of egalitarian position, istm, as some commenters here apparently think.
LFC 12.11.15 at 2:27 am 47
One last thing: the criterion of "stigma" is arguably not that far from the Rawlsian criterion of 'self-respect' (which came up in the thread on Chris B's post), or at least it might be related… If one feels stigmatized or is objectively stigmatized by a particular situation of ec. inequality, then the social bases of self-respect are not being met. The OP refers to "social psychology" as tool of empirical investigation here, whereas in the other thread we were talking about moral psychology, but obvs. there's a common element: psychology.LFC's reconstruction of the post strikes me as not only charitable, but pretty much obviously right. I'm pretty surprised, and sorry, to see the comments mostly get on the wrong foot and not address what's interesting in the post.John Quiggin 12.11.15 at 4:20 am 49
'Surely not the case for women'. This is far from obvious. 40 per cent of female headed families live in poverty. http://www.epi.org/publication/female-headed-families-children-poverty/This is an absolute poverty line set in the early 1960s, so the position of these families relative to the median household is considerably worse. Relative to the top 1 per cent of households, the gap has grown enormously.
The poverty rate for female headed households has barely changed since the 1970s, but (I think) the proportion of such households has increased substantially. On the other side of that equation, the proportion of couple households with two high incomes has also risen.
So, while it's certainly true that the wages of employed women have risen relative to those of employed men, that doesn't mean that gender based inequality and poverty have declined.
I haven't got a conclusive answer on this, but if it's going to be the central point of a critique it deserves more than a handwaving "surely".
F. Foundling 12.11.15 at 4:31 am 50
@js. 12.11.15 at 1:02 am
> if you've got a conception of "justice" such that any possible social arrangement is unjust, i.e. justice is actually impossible …A banal point, probably, but AFAICS, everything is unjust compared to perfect justice, and perfect justice is impossible, because perfect anything is impossible. Not a reason not to keep 'perfecting' things. It's what humans do.
@LFC 12.11.15 at 2:06 am
> the OP seems not anywhere near as hostile to some kind of egalitarian position'Some' does a lot of work here.
>Some economic inequalities are unjust, others aren't, and one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust. This point strikes me as fairly uncontroversial.
The problem is that the OP's idea of what it takes to prove an inequality to be unjust is highly restricted. Not only is inequality assumed to be just until the opposite is proven, but it is argued that even if an inequality demonstrably, as Piketty claims, lacks any basis in merit (a blatant example being the case of inheritance), this is still not sufficient to make it unjust. That inequality per se does not even need to be justified by merit, or in any way at all, is a position so radically and counterintuitively anti-egalitarian that even right-wingers usually won't take it openly (rather, they'll insist that there is, in fact, a merit that justifies it). You see, only some very specific reasons such as certain proof of the presence of what the author calls 'stigma' and 'oppression' might potentially convince the author to deign to care about wealth-induced unequal outcomes in a way roughly comparable to the way the author cares about gender-induced and race-induced unequal outcomes. Personally, I don't think convincing the author is worth the trouble.
js. 12.11.15 at 4:35 am 51
Hey Markos, it's Jamsheed. I think I see what you're saying-maybe. If that's what Paul was getting at, fair enough. But if I'm understanding you correctly, I think it still ends up turning on the "equality presumption" bit, on which see below.LFC - I agree with you that Cudd is sympathetic to egalitarianism in the post-and her points about gender inequality are well taken. I didn't mean to imply otherwise. It just seems to me that she's given up a good direct argument against inequality for a considerably more circuitous one-for reasons that remain utterly opaque to me. (For one thing, all those old homilies about the "gentler and fairer sex" can be taken as ways to defeat the equality presumption, which would militate against gender inequality; one could of course find more modern equivalents too.)
Anyway, this still seems wrong to me:
one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust
I really think it's the other way around. One never needs to justify why an inequality is unjust-one only ever needs to justify the inequality itself. Of course, one sees plenty of arguments for why some inequality is unjust and why we need to fix that, but I think these are really arguments for disrupting existing social arrangements so as to make them more egalitarian, rather than arguments for the justice of equality per se, which again is something that's rarely needed an argument, it seems to me.
LFC 12.11.15 at 4:44 am 52
Matt @48
Thanks.
(Btw, in re-reading my comment @45, I see there are typos in the first two lines - sorry.)9JQ @49: I said that "could be" a reasonable pt of criticism of P., but I don't/didn't know the empirics, so wasn't endorsing.
A H 12.11.15 at 4:46 am 53
I read Piketty as being a reformist liberal similar to Keynes. The reason wealth inequality is bad is because it threatens meritocratic liberal capitalism with either a return to feudalism or political upheaval. So any normative critique of Piketty needs to start with meritocracy.Any distribution of income in a society requires the consumption of resources to maintain itself. That distribution which requires the least consumption of resources to maintain itself is the most 'natural.' It is the most efficient, as well as the most robust economy.A greatly unequal society requires a great amount of resources to maintain its inequality, and thus itself. (A perfectly equal society also requires a large amount of resources just to maintain equality.) This consumption of resources, merely to maintain inequality, reduces the amount of resources available to actually operate the economy. That is, it reduces the efficiency of the economy. If the efficiency of the economy is sufficiently reduced, the economy cannot maintain itself.
But I suppose the survival of the economy is beside the point.Paul 12.11.15 at 6:51 am 57
UserGoogol @35: If you stop a hungry person picking an apple from a tree, it may be just (there may be a hungrier person who has planted and tended the tree, for example), but it's hard to argue that it isn't oppressive. But I concede this is a silly argument.The serious argument is that property is so deeply engrained in our society that it tends to get a free pass. I suspect that most people's conception of justice is based on the idea of "everyone has the right to their own stuff" ignoring completely how arbitrary our moral claims to owning anything as individuals actually are. What I dislike about the OP is that it effectively works from the position that existing claims on property are to be considered valid unless demonstrated otherwise; and doesn't make this argument directly, but instead makes it implicitly by making egalitarianism prove its case.
John Quiggin 12.11.15 at 7:12 am 58
Rather than imputing a theory of justice to Piketty based on hints from Capital in the 21st Century, it would have been more helpful to respond to the explicitly normative analysis in his work with Saez, which leads to a call for a top marginal tax rate of around 70 per cent.This gives a clear answer to the "burden of proof" question raised in the comments above. In the absence of welfare-relevant differences between people, the utility derived from a given aggregate income is maximized when that income is distributed equally. So, any inequality needs to be justified, either on the basis of welfare-relevant differences, or on the basis that it is needed to generate a larger aggregate income.
Again, the OP does none of this. There's no sign that the author is even aware of Piketty's large body of work leading up to Capital in the 21st Century
The article is poorly argued and based on irrelevant speculation.Bruce W 4: "The emblematic condition of Piketty's work, r > g, ought to imply something about the balance at the margin. If the income share claimed by capital is rising faster than total income, it cannot be the case that all capital investment entails a positive-sum bargain in which the net gain is distributed."
In the light of our discussion in the other thread, I am a bit surprised. You are now admitting that Piketty's argument is based on capital's share of total income rising but clearly, that share cannot rise indefinitely or else it would swallow up all of production. This is what I have argued and you, if I remember correctly, called that "idiotic". So which is it?
"a country that saves a lot and grows slowly will over the long run accumulate an enormous stock of capital (relative to its income)." (Piketty)This kind of argument really drives me to despair. If that stock of capital is productive capital, it is a good, not a bad thing for a society to have accumulated an "enormous stock" of it. As of ownership, a lot of our accumulated capital is actually publicly owned and actually makes people's lives better. Piketty makes no difference between productive capital and unproductive wealth and none between publicly and privately owned capital. Piketty makes it sound as if public investment in productive infrastructure is a bad policy because we really shouldn't be accumulating so much capital. Exasperating.
Ze K 12.11.15 at 10:52 am 61
The justice thing is tricky. In the current western worldview, as I understand it, the only 'just' way to distribute a loaf of bread is to negotiate and sell it.Capitalist inequality doesn't need to be justified, because it's not explicitly postulated (quite the opposite: 'all men are created equal'), but is merely a side-effect of a much more fundamental concept, the right to own property, also known as 'freedom', 'liberty'.
Social distinctions can be based only on common utility, but wealth, according to our worldview, can be legitimately acquired by luck. Inheriting wealth is one example of such luck.
Questioning these assumptions (again, in our current worldview) makes one a supporter of totalitarianism.
Richard M 12.11.15 at 11:45 am 62
> If that stock of capital is productive capital, it is a good, not a bad thing for a society to have accumulated an "enormous stock" of it.That seems a failure of charitable reading. You can't get publicly owned utilities as a consequence of private savings. So by 'capital', he clearly means money, i.e. ownership rights, not the things that money buys.
Some interesting back-of-envelope calculations from link below suggest that there is two-to-three times as much ' investable capital' as 'capital required to run the economy'. Which explains why so much of it is spent trying to play zero-sum-except-in-case-of-fraud financial games. And why every-time someone does come up with a semi-valid new thing, they end up a billionaire.
http://continuations.com/post/134920840275/capital-is-no-longer-scarce
"You can't get publicly owned utilities as a consequence of private savings."But Piketty ("a country that saves a lot" etc.) doesn't make any of these distinctions. Is it really uncharitable to take him literally?
reason 12.11.15 at 1:22 pm 64
There are some very controversial points raised in the OP.This "even though human capital can create great wealth in a single lifetime, as Bill Gates's example would attest." is clearly fallacious (Bill Gates great wealth came from Intellectual Property not human capital).
reason 12.11.15 at 1:27 pm 65
"It seems that Piketty treats economic inequality stemming from return on capital or income as a zero sum sort of situation, but that is clearly not true."I know Bruce W addressed this before @4, but to take another tack – it is also empirically not true since wage rates have been falling for 30 years at the same time as inequality has increased (not to mention that capital investment, at least since the invention of the joint stock company, is not an exclusive imperative of the wealthy).
reason 12.11.15 at 1:32 pm 66
Where do the figures from
" In the 19th century the top 10% most wealthy owned 90% of capital, the middle 40% owned 5% and the bottom 50% owned 5%. In the US today, top 10% own 25% and the next 40% own 25% of capital, while in Europe the top 10% own 60% and the next 40% own 35% of capital. " come from (there is no source given).The figure for the US today looks simply odd:
http://inequality.org/wealth-inequality/ suggests the top 10% today own 75% of the wealth.reason 12.11.15 at 1:45 pm 67
"Piketty claims that 'economics is a subdiscipline of the social sciences, alongside history, sociology, anthropology, and political science.'"I regard this as rather unfortunate. I think economics is much closer in content and style to ecology and should be seen as a subset of ecology. If it saw itself that way, it would be much better.
MPAVictoria 12.11.15 at 2:19 pm 68
Paul I think you may find this article by Matt Bruenig interesting as it relates to many of the points you have made here:http://www.demos.org/blog/6/3/14/lesson-grab-what-you-can
engels 12.11.15 at 2:27 pm 69
Lfc, speaking only for myself the problem with the OP of not that it's 'hostile to some kind of egalitarian position' but that it's making bad arguments against a set of made-up claims.LFC 12.11.15 at 2:49 pm 70
reason @64
This "even though human capital can create great wealth in a single lifetime, as Bill Gates's example would attest." is clearly fallacious (Bill Gates great wealth came from Intellectual Property not human capital).I think Cudd's point here in the context of the post is the fairly banal one that not all fortunes are inherited, even today: Gates did not inherit his wealth (though presumably he came from a middle or upper-middle class background) but made his fortune via inventing stuff in a garage etc and then turning it into a corporate empire, helped *greatly* of course by intellectual-property laws once the software etc hit the market. I agree the sentence should be tweaked, but the 'human capital' reference here is to the fact that he and others he worked with were able to come up w/ whatever they came up with in the first place. Anyway, it's sort of a side issue because the post is not about the legal, socioeconomic, and 'luck' conditions that allow some inventors to get wealthy and others not, and it was really a point just made in passing.
reason 12.11.15 at 2:54 pm 71
LFC @70
None the less the value of his human capital is what an employed programmer would have been paid to do what he did. And such a basic error, may not change the argument substantially, but along with some other errors (notably the incorrect wealth distribution figure quoted) gives the whole OP less authority than it otherwise might have had.LFC 12.11.15 at 3:07 pm 72
JQ @58
In the absence of welfare-relevant differences between people, the utility derived from a given aggregate income is maximized when that income is distributed equally. So, any inequality needs to be justified, either on the basis of welfare-relevant differences, or on the basis that it is needed to generate a larger aggregate income.But "welfare-relevant differences between people" frequently exist, so at this level of generality that mostly kicks the can down the road, so to speak. Piketty and Saez's call for a top marginal tax rate of around 70 percent is presumably based on a combination of their normative leanings and their empirical judgment that such a tax rate would not harm economic growth in a major way so as to offset its redistributive or other benefits. Assuming that judgment is correct, I'm still not sure it's reasonable to expect Cudd, who is a philosopher not an economist, to grapple with it. But I take the point that the OP as it's presented infers (or imputes) a normative analysis on P.'s part w/o noting what he had written in that vein before the book.
Layman 12.11.15 at 3:09 pm 73
"Gates did not inherit his wealth (though presumably he came from a middle or upper-middle class background) but made his fortune via inventing stuff in a garage etc"I think this is the wrong myth. Perhaps you mean Jobs?
engels 12.11.15 at 3:10 pm 74
His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way. Gates's maternal grandfather was JW Maxwell, a national bank president. Gates has one elder sister, Kristi (Kristianne), and one younger sister, Libby. He was the fourth of his name in his family, but was known as William Gates III or "Trey" because his father had the "II" suffix.engels 12.11.15 at 3:25 pm 75
Apropos of nothing where does being called Miles Fraser V or whatever place you in American class system: 1% or merely upper-middle class?LFC 12.11.15 at 3:31 pm 76
js. @51
One never needs to justify why an inequality is unjust-one only ever needs to justify the inequality itself. Of course, one sees plenty of arguments for why some inequality is unjust and why we need to fix that, but I think these are really arguments for disrupting existing social arrangements so as to make them more egalitarian, rather than arguments for the justice of equality per se, which again is something that's rarely needed an argument, it seems to me.The main issue here though is not inequality in general but inequality of wealth and income. And no functioning economy in the real world can maintain a *completely* equal income distribution over time without a degree of micromanagement from someone that would be unworkable; probably not even a socialist utopia is going to have a *completely* equal distribution.
So there *will be* some inequalities of income and wealth. If you want to start from the position that all of those inequalities have to be justified on a case-by-case basis, so to speak, that's fine with me, I guess. But you're not going to end up w complete equality of income, empirically b.c is it's not sustainable over time in any kind of minimally dynamic economy, and normatively b.c there are always going to be "welfare-relevant differences between people" (JQ's phrase), e.g., those with particular disabilities, etc etc.
F Foundling @50
only some very specific reasons such as certain proof of the presence of what the author calls 'stigma' and 'oppression' might potentially convince the author to deign to care about wealth-induced unequal outcomes in a way roughly comparable to the way the author cares about gender-induced and race-induced unequal outcomes. Personally, I don't think convincing the author is worth the trouble.It depends partly on how broadly 'oppression' and 'stigma' are defined. If inherited wealth plays an ever-increasing role in an economy and if the result is a caste-like society which effectively stigmatizes those excluded from the top caste by denying them access to, e.g., anything like equal educational or employment opportunities, then on the OP's reasoning that would be grounds for restricting inheritances.
LFC 12.11.15 at 3:45 pm 78
@66, @77There's a simple explanation: it's a typographical error. "25%" at that point should read "75%". Pretty obviously, the top 10% in the U.S. today don't own a mere 25% of the 'capital'. It's a typo.
que_es 12.11.15 at 3:57 pm79
cassander at 15:>If r>g, then (wealth) inequality will grow over time.
"If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake. "
Every Kennedy? Huh? A wealthy person today is perfectly free to leave all of his/her wealth to the eldest son. But wealthy families today are not stuck with primogeniture. They can design their own custom wealth preservation plans and impose restrictions on the use of family wealth for generations after the death of the patriarch/matriarch. Perhaps most importantly, they can and almost always do impose restrictions on the free alienability of that wealth that restricts the rights of third parties in ways that entrench the wealth within the family.
JimV 12.11.15 at 4:11 pm 80
A minor digressive point about Bill Gates (based on reading the unauthorized biography "Gates"): he came from a wealthy background and as a result went to a school which had a computer club which had access to a PDP-11 mini-computer, at a time when most high schools did not have computer clubs. He and Paul Allen (illegally) copied the Basic Interpreter program of that computer, received slaps on the wrist for it (not that I think it deserved much more, but kids of a different social class might have been treated more severely), and later used it as the basis for their first commercial success, a Basic Interpreter for the first home micro-computer.He and Paul Allen are very smart people, but there were probably at least 10,000 other kids as smart or smarter from poor or middle-class backgrounds in the USA at that time, but who did not have the same opportunities.
In conclusion, not a case of capital accumulation only, but it played a part – which I think is all that is necessary, just a a small fitness advance will raise a species to domination over time.
LFC 12.11.15 at 4:19 pm 81
Ze K @61…wealth, according to our worldview, can be legitimately acquired by luck. Inheriting wealth is one example of such luck.
Questioning these assumptions (again, in our current worldview) makes one a supporter of totalitarianism.
Rawls TOJ 1971, p.15, emphasis added: "Once we decide to look for a conception of justice that nullifies the accidents of natural endowment and the contingencies of social circumstance…, we are led to these principles [of justice]."
So Rawls was "a supporter of totalitarianism"? One could easily get the impression from reading certain things on the Internet and elsewhere that he was a squishy milquetoast liberal. My, my. Live and learn.
js. 12.11.15 at 4:20 pm 82
LFC @76 - Oh, I don't think each inequality needs to be justified on a case by case basis-something like the Difference Principle would do the trick.Maybe I'm not being clear, but I mean to make one specific point: Cudd is wrong to think that the equality presumption is false, or at any rate she hasn't given any argument that would convince me otherwise.
This isn't a blanket criticism of her post or anything like that. For example, I think a lot of the stuff about oppression is interesting and worth thinking about. I just picked the one thing I disagree with (as one does).
LFC 12.11.15 at 4:29 pm 84
js. @82:
I get it. Fair enough.Now we can get back to the burning question of whether people who support 80% inheritance/estate taxes and 70% top marginal tax rates are Stalinists or merely Trotskyites. ;)
Ze K 12.11.15 at 4:33 pm 85
"So Rawls was "a supporter of totalitarianism"? "Yeah, sounds like it, according to this excerpt, unless it's ripped out of context. "nullifies the accidents of natural endowment and the contingencies of social circumstance" sounds more radical than stalinism, it's practically pol-potian.
LFC 12.11.15 at 5:24 pm 86
@85
well, since the bk quoted from is 600 pp. long, it was necessarily out of context. (R's first principle protects/prioritizes "basic [political] liberties".) Anyway, the pt was I don't think challenging inherited wealth equals Pol-Potianism. But this is just a minor eddy here, so we can agree to forget it.LFC 12.11.15 at 5:40 pm 87
engels @75
where does being called Miles Fraser V or whatever place you in American class system: 1% or merely upper-middle class?My hunch/sense is that this is not a particularly reliable index of class position. There are probably some very non-affluent African-American families today with people w names like Jones III or Smith IV, etc.
On the other hand, when you see names with clear references to 17th or 18th cent. (hypothetically, something like "John Hancock V"), you pretty much know the person is from an old-line WASP family that's been in the U.S. a long time. Which doesn't *necessarily* mean wealthy, though it could well mean that
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Dec 11, 2015 | Crooked Timber
on December 10, 2015
Thomas Piketty's Capital in the Twenty-First Century is an important and valuable contribution to political economy, both empirically and philosophically. Piketty grounds his theory in vast empirical data,rather than settling for elegant mathematical models. He courageously embraces the fact that economic theory is inevitably value laden, and proposes a theory of the historical dynamics of wealth accumulation in order to offer an updated moral critique of capitalism. Grounding his prediction in the historical data and profoundly simple mathematics, Piketty projects that economic inequality is likely to increase and to favor those who own inherited capital over time. He advances the normative judgment that rising inequality is unjust and must be contained. Although Piketty raises important concerns about the possibility of growing wealth inequality, he fails to normatively ground or argue for his presupposition that this inequality is unjust. Since relative poverty can coincide with high levels of objective or subjective well-being, this presupposition is brought into question. However, there are causes of inequality (including wealth inequality) that clearly can be shown to be unjust. By considering other forms and causes of inequality and oppression, we can distinguish between those forms of wealth inequality that are unjust and those that are normatively benign. In this way Piketty's concerns about growing wealth inequality from inheritance can be partly justified, though of course not empirically verified. Piketty's argument for the injustice of growing economic inequality has two parts. The first part is an empirical, economic argument for the claim that returns from inherited wealth will far outstrip income. This argument can be summarized as follows. Let r be the rate of return on capital, and g be the growth rate of the annual flow of national income.
- If r>g, then (wealth) inequality will grow over time.
- Individuals who own a greater amount of capital earn a larger r.
- Growth, g, is likely to be slower in future.
- If r is great enough and g is low enough, then there will be ever more capital from older, inherited wealth, than from wealth saved from income.
- Hence, (wealth) inequality will increase, and inherited wealth will make up the greatest amount of capital. [click to continue…]
T 12.10.15 at 4:24 pm
"To show that income inequalities are unjust, they also have to be shown to derive from injustice or to lead to injustice." First, thank you for taking the time to join the group blog. Second, it seems that high income and high wealth individuals have been very effective in tilting the tax, regulatory, and legal environment even more in their favor thereby increasing the inequality that you may argue was not originally unjust. Do you think those behaviors lead to unjust income inequality? Do you think those behaviors are a necessary consequence of increased wealth and income inequality?Rakesh Bhandari 12.10.15 at 4:29 pm 2
Interesting and challenging comment which will take several readings to understand and evaluate the many different arguments being made.Here is why Piketty thinks a rentier society contradicts the meritocratic worldview of democratic societies:
"…no ineluctable force standing in the way to extreme concentration of wealth…if growth slows and the return on capital increases [as] tax competition between nations heats up…Our democratic societies rest on a meritocratic worldview, or at any rate, a meritocratic hope, by whichI I mean a belief in a society in which inequality is based more on merit and effort than on kinship and rents. This belief and hope play a very crucial role in modern society, for a simple reason: in a democracy the professed equality of rights of all citizens contrasts sharply with the very real inequality of living conditions, and in order to overcome this contradiction it is vital to make sure that social inequalities derive from ration and universal principles rather than arbitrary contingencies. Inequalities must therefore be just and useful to all, at least in the realm of discourse and as far as possible in reality as well…Durkheim predicted that modern democratic society would not put for long with the existence of inherited wealth and would ultimately see to it that the ownership of property ended at death." p. 422I understand Cudd to be raising a neo-liberal point discussed in Raymond Plant's book on neo-liberalism -- that if a fortune has been made through no injustice to a concrete other and its gifting and bequeathing does no concrete injustice to another, then there is no coherent ideal of social justice (Hayek's idea that social justice is mirage) that would allow us to condemn the resulting distribution of wealth, as fantastically concentrated as it may be.
Yet a rentier society would actually undermine social utility by reducing the incentives for entrepreneurial exertion; the largest incomes also could not be justified in terms of meritocratic principles; and rentiers would be in a position to use the political process to extract not what Piketty calls rent in terms of the income of a rentier but what most economists mean by rents. The last would have no justification in terms of welfare economics (of which Cudd gives an eloquent defense in her book on capitalism). Piketty is correct that to the extent that citizens understood the nature of a rentier society they would rise in opposition to it.
Plus, the wealth concentration of a rentier society would not be accepted in a Rawlsian original position and to the extent that some wealth is needed to exercise one's capabilities would be unjustifiable from Sen's and Nussbaum's capabilities theory. Piketty expresses sympathy for both normative political theories.
Now Cudd also notes that Piketty argues that the astronomical pay of super-managers cannot be justified in meritocratic terms; his argument is more developed than she lets on–it involves cross-sectional comparison and econometric analysis, controlling for luck and other factors in company performance outside the control of a supermanager as well as the inapplicability of marginal productivity theory to the unique jobs that a CEO does. Plus, he gives an institutional analysis of the way in which CEO's can capture boards and how their incentive to do so rose with lower marginal tax rates. Of course that Piketty undermines this justification does not necessarily mean that such compensation is unjustified, but he does undermine the meritocratic justification that is given for it.
MPAVictoria 12.10.15 at 4:34 pm 3
"When wealth inequalities stem from unjust inheritances"Is there any inheritance anywhere in the world that is not an "unjust" inheritance? Serious question...
Bruce Wilder 12.10.15 at 4:34 pm 4
Piketty treats economic inequality stemming from return on capital . . . as a zero sum sort of situation, but that is clearly not true. Investment of capital creates improvements in standard of living for all."that is clearly not true" seems a bit emphatic for a proposition that should not be clear at all. It might be the case that an instance of capital investment improves the standard of living or it might be immiserating. A wealthy investor might invest in a payday loan operation with a remarkable return on investment. A corporation might invest in automation of a production process and bargain for a reduction of wages for the now less numerous and "less-skilled" workforce.
The emblematic condition of Piketty's work, r > g, ought to imply something about the balance at the margin. If the income share claimed by capital is rising faster than total income, it cannot be the case that all capital investment entails a positive-sum bargain in which the net gain is distributed.
We can certainly hope for the kind of capital investments that result in economic growth that exceeds the return to the owners of capital, but that's not the world Piketty is worried about.
Bruce Wilder 12.10.15 at 4:47 pm 5
Piketty argues that top managers today are paid unjustifiably large salaries because it is too difficult to assess the marginal productivity, and in the absence of any information they are able to manipulate their own and each other's wages. A market failure is not an injustice . . .Calling an exercise of power and authority in a bureaucratic hierarchy "a market failure" is an error of ideological obduracy, since hierarchies are not "markets". Hierarchies of authority make economic use of social domination, which is, at least, potentially problematic for justice.
Bruce Wilder 12.10.15 at 4:53 pm 6
A significant cause of income inequality is the differences in human capital developed through education. Piketty notes that the educational systems in Europe and especially the US tend to prevent rather than promote social mobility, and instead transmit privilege. 'Parents' income has become an almost perfect predictor of university access.' (p. 485) Piketty's explanation seems to be that it is because wealthy parents buy places for their children in universities, but I think this overestimates the corruption in university admissions and it underestimates the degree of stratification of the developed academic abilities of college age students. Wealthier families are better able to invest in developing children's abilities and talents to prepare them for college, and have better schools in their neighborhoods. Especially elite universities in the US compete very hard to find and attract low income and minority students, but the competition is stiff for qualified students who will not need remediation in order to succeed.Demand for low-cost tokens is outrunning supply.
Trader Joe 12.10.15 at 5:03 pm 7
I struggle a lot with the concept of inheritance and when/when not justified. Its easy to see how its unfair/unjustified when the amounts are signficant, far less so when they are not.If I'm a Rockefeller and hand over the emprire to my children, its easy to see an undeserved conferred advantage.
If I'm farmer Joe who has worked my farm all my life, own it outright through my labor and savings and then want to pass that to my children, who have also worked it all their life(s), so that it can sustain them the same way as it sustained me – it seems far more fair though it still confers on them an advantage of priveldged and if they successfully manage that advantage they should be able to make it grow. Over some number of generations, the differences would collapse.
I think its a very natural instinct for a parent to want to transmit advantage to their children. Teaching them and nurturing their character are never criticized though no less an asset than dollars or farms.
I can see how the provision of an elite education transmits priveledge, but I'malso hard pressed to suggest a child should be denied the best possible education that they can get. If a child has intellectual talent it should be developed regardless of whether they come from a rich or poor family.
One take away from Picketty could be the best possible biological strategy is to try to get as rich as you possibly can because that's the best possible insurance for perpetuating your DNA. Probably not the policy prescription being encouraged, but certainly supported by the data.
Paul 12.10.15 at 5:21 pm 8
All property rights are oppressive; they amount to the restriction of the freedom of the non-property owner. Unless one wants to go communist (and argue that it is possible to create a society without property rights) or libertarian (and argue that property rights somehow exist a priori of society), any society is necessarily oppressive and unjust. The goal is to minimise this injustice without creating others or destroying the ability if society to function.So I think the OP is wrong in asserting that any allocation of property rights should be assumed just in the absence if evidence that the distribution is "oppression". Property rights are (probably necessary) oppression, almost by definition.
notsneaky 12.10.15 at 5:43 pm 9
"Is there any inheritance anywhere in the world that is not an "unjust" inheritance?"So… if I work hard all my life, say three minimum wage jobs, to put my kid through college, their college education is "unjustified"?
MPAVictoria 12.10.15 at 5:55 pm 11
"So I think the OP is wrong in asserting that any allocation of property rights should be assumed just in the absence if evidence that the distribution is "oppression". Property rights are (probably necessary) oppression, almost by definition."Yep. Property is violence. Maybe beneficial violence in the utilitarian sense but violence all the same.
Ze K 12.10.15 at 6:34 pm 12
Nothing is a priori just or unjust; Thomas More had slaves in his Utopia. However, when a socio-economic arrangement reaches a phase where its fairness is commonly questioned, that's a sure sign that the dominant ideology fails to convince, and the system is in trouble. Doesn't mean it's going to collapse tomorrow, obviously.Rakesh Bhandari 12.10.15 at 6:45 pm 13
It could be argued that entrepreneurial behavior is already individually irrational -- see Kahneman and Tversky. But it is often motivated at least partially by the dream of creating dynastic wealth and glory. Otherwise, it would make little sense to do the hard labor of thinking of new ways of doing things, convincing financiers of the worthiness of the project and giving up more secure incomes. One could worry that Piketty has exaggerated the importance of inherited wealth even in the face of his own evidence (only a small fraction of the top 1% receive most of their income as rentier rent IIRC) and that he has under-estimated its importance as an economic incentive for entrepreneurial labor and that he has also underestimated the extent to which great fortunes dissipate over time due to the growth of heirs and reasonable taxation.MPAVictoria 12.10.15 at 6:51 pm14
"Nothing is a priori just or unjust"He said as he foreclosed on the poor family and cast them out to starve in the street.
cassander 12.10.15 at 6:51 pm 15
>If r>g, then (wealth) inequality will grow over time.If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake.
> Wealthier families are better able to invest in developing children's abilities and talents to prepare them for college, and have better schools in their neighborhoods.
Large American urban school districts are not just the best funded in the country, they're the best funded in the world. And what Bruce says about market failure applies equally well here. people have voted massive amounts of money for urban schools, when those state run schools fail to perform well despite these resources, the failure cannot possibly be attributed to market forces.
> In the 19th century the top 10% most wealthy owned 90% of capital, the middle 40% owned 5% and the bottom 50% owned 5%.
In a perfectly equal society where no one inherited anything, everyone got exactly the same starting salary, saved the same amount, got the same raise every year and earned the same rate of return, the richest 1/5 would still control 66% of the wealth just due to cohort effects. This simple characterizations of wealth inequality by quintiles or deciles do more to conceal than to reveal. what matters is not snapshots, but lifetime expectations. These, however, are harder to calculate and make for much less snappy talking points
Paul 12.10.15 at 6:51 pm 16
This is an interesting paper about the dissipation of wealth: What is the True Rate of Social Mobility in Sweden? Suggests that the tendency of fortunes to fade away is generally underestimatedPaul 12.10.15 at 7:00 pm 17
My reading of r>g is that its piketty's attempt to put an overarching intellectual framework over his results and that its the least successful part of the work, although Brad Delong has made pretty good sense of it herehttp://www.econ.hit-u.ac.jp/~makoto/Piketty_readings/Delong_2015.pdf
But even if you consider it in error its the conclusion more than the foundation. The data speaks for itself.
Cassander @15: I read your comment as "even a pretty equal society would be pretty unequal". The definition if a " pretty equal" society us surely one where the richest 20% only control a little more than 20% of the wealth, surely? After all, the tallest 20% do not account for 66% of the total height in the population.
Layman 12.10.15 at 7:13 pm
If we are to complain that Piketty fails to demonstrate that income inequalities originate from or lead to injustices, can we not also complain that he fails to demonstrate that the sun rises in the east, or that night follows day, or that it is quite difficult to put the toothpaste back into the tube? While this is not as bad as complaining that he fails to discuss 20th- and 21st- century novels, it approaches that degree of badness.cassander 12.10.15 at 7:49 pm 21
@Paul>This is an interesting paper about the disspation of wealth:
I just skimmed it, but that the paper argues that there's a great deal of dissipation of wealth, just that it's well below 100% dissipation.
>The definition if a " pretty equal" society us surely one where the richest 20% only control a little more than 20% of the wealth, surely? After all, the tallest 20% do not account for 66% of the total height in the population.
If everyone was born 2 feet tall and got 10% taller a year, then the tallest 20% would have 80% of the height. the point of the math I laid out is precisely that "a society where everyone has the same amount of stuff" and "a society where everyone gets the same amount of stuff" are not the same, despite our basic instinct that they should be.
T 12.10.15 at 7:52 pm 22
@16This and other studies using unique surnames tends to suggest that mobility may be overstated.
http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Sweden%202012%20AUG.pdfengels 12.10.15 at 7:53 pm 23
Apologies if I've misunderstood but does the OP really think that someone who affirm's Paine's maxim that'Social distinctions can be based only on common utility, must believe that someone's inviting different numbers of people to two different dinner parties is unjust?
Paul 12.10.15 at 8:02 pm, 24
@cassander
But a world where everyone is born poor and steadily becomes rich is also a pretty unequal world, is it not? And piketty's shows that 50% of people in most western societies own nothing, which suggests a lot of people are not accumulating.I can see your point that headline numbers can be misleading, but piketty also shows a clear trend, that wealth is becoming more concentrated. Unless the metrics are somehow a deteriorating representation if reality that's a real thing.
cassander 12.10.15 at 8:55 pm 25
@Paul>But a world where everyone is born poor and steadily becomes rich is also a pretty unequal world, is it not?
For some definitions of unequal, yes, but I say those framing are not particularly useful We are all born ignorant and spend a lifetime accumulating knowledge, but we do not lament the "knowledge gap" between old and young. A world where everyone made X dollars a year, except for their 20th year when they make 1000X would not have a Gini score of 0, but I would call that world equal.
> And piketty's shows that 50% of people in most western societies own nothing, which suggests a lot of people are not accumulating.
It shows that most people aren't accumulating YET. In the real world, people do not save X percent of their income a year, they they consume a larger share of their income when young (consume much more than their income, actually) and save more as they age, for obvious reasons. That's why you have to look at wealth over lifetimes, not in snapshots.
Peter K. 12.10.15 at 9:15 pm 26
@ 15 Cassander">If r>g, then (wealth) inequality will grow over time.
If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake."
It's not saying that wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class).
Trump. Warren Buffet. George Soros. Bill Gates. Mark Zuckerberg. Oprah Winfrey.
These people need the financial sector to put their money to work. And as we've seen the last 100 years, the fiancial sector grows and grows as many of the newly rich are financiers.
Peter K. 12.10.15 at 9:21 pm 27
And the one percent also effect politics and policy through their generous campaign contributions (Koch brothers); sponsorship of think tanks; ownership of mass media (think Rupert Murdoch); etc. etc.Politics and policy can effect both *r* and *g.*
http://www.nytimes.com/2015/11/30/us/politics/illinois-campaign-money-bruce-rauner.html
"Around the same time that Mr. Rauner began running for governor, a group of researchers based at Northwestern University published findings from the country's first-ever representative survey of the richest one percent of Americans. The study, known as the Survey of Economically Successful Americans and the Common Good, canvassed a sample of the wealthy from the Chicago area. Those canvassed were granted anonymity to discuss their views candidly.
Their replies were striking. Where merely affluent Americans are more likely to identify as Democrats than as Republicans, the ultrawealthy overwhelmingly leaned right. They are far more likely to raise money for politicians and to have access to them; nearly half had personally contacted one of Illinois's two United States senators.
Where the general public overwhelmingly supports a high minimum wage, the one percent are broadly opposed. A majority of Americans supported expanding safety-net and retirement programs, while most of the very wealthy opposed them. And while Americans are not enthusiastic about higher taxes generally, they feel strongly that the rich should pay more than they do, and more than everyone else pays.
"Probably the biggest single area of disconnect has to do with social welfare programs," said Benjamin I. Page, a political scientist at Northwestern University and a co-author of the study. "The other big area has to do with paying for those programs, particularly taxes on high-income and wealthy people.""
Soru 12.10.15 at 9:40 pm 28
One thing is that in reality, setting 'the wealth of a new born' as zero is rather arbitrary. In one country they might get , by right of citizenship, X dollars of security, legal, health and welfare services. In another, Y dollars..Both have no money, but if X >> Y, then they are going to have very different average expected life outcomes.
At a high zero point, you get cops and judges who uphold the law, at a low one you can hire some bodyguards. At high zero point you can go to a library, at a low one hire a hack to write your autobiography.
You can extend that to cases of active oppression by giving that a dollar equivalent and a minus sign. After all, even slavery could usually be escaped from, in theory, by buying yourself…
Thing is, the _potential_ floor of wealth in a modern society _could be_ as far above active oppression as room temperature is above absolute zero.
And raising it never stops being a good.
T 12.10.15 at 9:53 pm 29
@27
Exactly. Regardless of how how rich got that way there is no question that they are using their wealth to increase and capture economic rents and to take actions that diminish income and wealth mobility. To the extent the economy veers to increased rent seeking, it could very well lower future growth by diverting resources to non-productive activities. If this behavior is baked in as inequality reaches a certain threshold, then it is inherently unjust. To the extent its not always baked in, it has certainly had that effect in the US over the last 30 years. Consequently, we can conclude that current levels of US inequality are unjust.Mike Furlan 12.10.15 at 10:27 pm 30
An interesting snapshot of where we are.http://www.nakedcapitalism.com/2015/12/demise-of-the-us-middle-class-now-official.html
cassander 12.10.15 at 10:31 pm 31
@Peter K.>It's not saying that wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class).
That's explicitly the argument pikety makes with R>G, that the rich get richer by virtue of being rich, not that the moderately well off occasionally become rich by some other means. None of the people you mention got rich by sitting on accumulated capital, nor did any of the fortune 500.
>And as we've seen the last 100 years, the fiancial sector grows and grows as many of the newly rich are financiers.
getting rich by playing financier with other people's investments is not what pikety is talking about. Warren Buffet's fortune, and almost every other financial fortune I can think of, was made by taking a percentage of the profit he got from investing other people's money, not his own.
js. 12.10.15 at 10:50 pm 32
However, the equality presumption is false; it is a fallacy akin to the principle of insufficient reason, which assumes equiprobability of events where there is no reason to assign another probability. But there is also no reason to assign equal probability rather than any other, and thus rationality cannot demand that. By the same token, morality cannot demand equal shares of a good (or bad) in the absence of a reason for it. I take this to be a point of logic, not morality.
This is almost bizarrely unconvincing. You seem to be using "inequality" in a purely formal sense-a sense in which "4 > 2" counts as an inequality. In this sense of the word, it may well be true that there is no presumption of equality. But that fact has no bearing on whether or not a presumption of equality is plausible in the case of interest, namely social and economic inequalities. In this particular case, if there is a widespread moral intuition in favor of the presumption of equality (as I think there is), you can't simply hand-wave away the presumption as a "matter of logic". You need to either (a) show that there is in fact no such widespread intuition, or (b) provide some sort of error theory for this intuition. And until one of these arguments is forthcoming, I'll continue to think that the presumption of equality has quite a bit going for it.
Tabasco 12.10.15 at 11:05 pm 33
wealthy dynasties don't fall apart. They often do. But new dynasties are formed (often from well-off families, not the lower middle class). Trump. Warren Buffet. George Soros. Bill Gates. Mark Zuckerberg. Oprah WinfreyGates is giving his money away. Buffet and Zuckerberg say they are going to give away their money. So, no dynasties there.
T 12.10.15 at 11:32 pm 34
@33As for dynastic wealth, there are 4 Waltons, 3 Mars, and 2 Kochs among the top 18 richest Americans. That's 50%. Pinketty is forecasting a future of dynastic wealth, the Forbes 400 in 30 years. It's the kids of today's plutocrats that will be the beneficiaries.
UserGoogol 12.10.15 at 11:50 pm 35
Paul @ 8: I'd push against that in multiple directions. Even without property per se, some degree of excluding people from using resources is inevitable just from being an organism living in a world of limited resources. If I eat some food, I exclude others from eating that food. Property gives people rather extensive abilities to exclude others from using resources far beyond what is strictly necessary in a state of nature, but any existence involves curtailing the freedoms of others. The only way to have absolute freedom is to be God.But by the same token it seems kind of vacuous and silly to call that injustice. Minimizing the amount of suffering (or keeping the suffering within "reasonable" bounds) seems like a more sensible way of defining that word.
To get back to the actual point you were making instead of making vague philosophical rumbling, property certainly ipso facto causes some degree of restriction of freedom and this is something deserving of critical attention. But I don't think you can usefully say that they're oppressive by definition.
F. Foundling 12.10.15 at 11:52 pm 36
The OP's notion of justice is not explained in the text, but it seems to be different from mine, and, I think, from that of many others. I think most people would agree that a just distribution is a distribution in accordance with the merits and/or needs of the individuals. Any deviation from such a distribution, for whatever reason, is unjust (it 'harms others' in the sense that the same resource could have been allocated to others more deserving of it based on their merits/needs, and the fact that more wealth has been created doesn't change anything as long as that new wealth is not distributed according to the same principle). This means that inheritance-determined distribution is inevitably unjust, just as any other distribution that is not deliberately made to reflect the merits and/or needs of the individuals can be reasonably assumed to be unjust by default, for the same reason that any random lottery ticket can be assumed not to be winning the jackpot, and any random sequence of body movements can be assumed not to result in the making of a sandwitch.The equality presumption is basic to most people's sense of justice: most people, when asked to divide a loaf of bread 'justly' between two complete strangers of whom they know nothing, will split it into two equal parts unless there is an obvious criterion by which to differentiate (size, age, gender, caste, etc.). Indeed, even when the bread is distributed unequally in accordance with one or more of these characteristics, the very fact that the difference in share size is made proportionate to the difference in the chosen characteristic(s) shows that no other inequality is assumed apart from the one explicitly entailed by the characteristic – i.e. equality is assumed by default 'other things being equal'. Yes, it is very unlikely that these two random strangers really are *precisely* equally good and deserving; the point is that we have no *right* to assume otherwise, and as humans they have a *right* to be treated equally unless there is a specific reason for the contrary.
Bruce B. 12.11.15 at 12:26 am 37
It's worth noting that in a lot of cases where a particular family dynasty falls apart, a great deal of the money doesn't travel far. It goes to co-owners of shared enterprises, colleagues and rivals, and others in the same stratum. Cash can flow out quickly, but lots of assets hang around, and get used by someone close at hand.If the principle that "since I didn't set out to harm anyone, you have no right to tax my stuff" were taken seriously in general, we wouldn't have laws against pollution or having your car run over someone because you didn't set the parking break. The idea sounds appealing widely at first hearing, but it doesn't take much of a context to establish how incompatible it is with a bunch of other moral reasoning.
John Quiggin 12.11.15 at 12:41 am 38
The OP seems to be completely misconceived. As Cudd concedes, Piketty presents a positive analysis predicting that inherited wealth will become dominant, and doesn't spell out any theory of justice, though it's obvious that he thinks this is a bad thing.So, Cudd makes up a theory of justice, imputes it to Piketty and then says it hasn't been proven. What's more she writes as this topic is being addressed for the first time. She doesn't mention any of the vast number of people who've written on equality and whose arguments might be relevant here.
The closest actual engagement with Piketty is her reference to the epigraph 'Social distinctions can be based only on common utility,' which would most naturally be interpreted in utilitarian terms (that's the default assumption for an economist anyway). So, Piketty can be taken to say that a combination of slow growth and increasing inequality is unlikely to promote common (aggregate) utility. There are plenty of arguments that can be made for or against this, but Cudd doesn't even bother. Having cited the epigraph, she never again mentions utility.
js. 12.11.15 at 1:02 am 39
UserGoogol @35 - I'd make it even simpler: if you've got a conception of "justice" such that any possible social arrangement is unjust, i.e. justice is actually impossible, then whatever you've got is not a conception of justice.engels 12.11.15 at 1:05 am 41
I agree with other posters. The OP 'reconstructed' an argument Piketty never made about a topic he didn't address, and then complained about how bad it is (and for really unconvincing reasons). It's not often you see someone lose an argument so badly with a straw man of their own construction.Robb Lutton 12.11.15 at 1:16 am 42
…In the US today, top 10% own 25% and the next 40% own 25% of capital,…This cannot be true else there would be no inequality as it would mean the bottom 50% would have 50% of capital.
Markos Valaris 12.11.15 at 1:51 am 44
js, UserGoogol, I suspect Paul is after something somewhat different, which is the idea that using force to exclude others from some resources must *either* be backed by good reasons *or* count as oppressive/unjust. This doesn't seem crazy, and it would generate the kind of request for justification the OP puzzles about.LFC 12.11.15 at 2:06 am 45
I haven't read the comment thread with great care but I have the read the OP.It seems to be the basic argument of the OP is roughly this:
1) Absolute poverty (in today's world) is always unjust, but relative poverty resulting from economic inequalities is not necessarily always (or even presumptively) unjust. Some economic inequalities are unjust, others aren't, and one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust. This point strikes me as fairly uncontroversial.
2) Economic inequalities resulting in or reflecting relative (not absolute) poverty are unjust when they are caused by (or transmit) oppression and/or discrimination, or when they 'stigmatize' and thereby cause psychological harm to an identifiable group. This point I think is more controversial but interesting and defensible, at least with a more elaborate account, which I take it the author of the OP has given elsewhere.
As for where the OP directly engages with and criticizes Piketty, I'm not well-placed to get into this, but ISTM the passage where the OP criticizes him for ignoring the factor of oppression, e.g. w/r/t women in particular time periods, can be taken as a reasonable criticism.
When read with some care, the OP seems not anywhere near as hostile to some kind of egalitarian position, istm, as some commenters here apparently think.
LFC 12.11.15 at 2:27 am 47
One last thing: the criterion of "stigma" is arguably not that far from the Rawlsian criterion of 'self-respect' (which came up in the thread on Chris B's post), or at least it might be related… If one feels stigmatized or is objectively stigmatized by a particular situation of ec. inequality, then the social bases of self-respect are not being met. The OP refers to "social psychology" as tool of empirical investigation here, whereas in the other thread we were talking about moral psychology, but obvs. there's a common element: psychology.LFC's reconstruction of the post strikes me as not only charitable, but pretty much obviously right. I'm pretty surprised, and sorry, to see the comments mostly get on the wrong foot and not address what's interesting in the post.John Quiggin 12.11.15 at 4:20 am 49
'Surely not the case for women'. This is far from obvious. 40 per cent of female headed families live in poverty. http://www.epi.org/publication/female-headed-families-children-poverty/This is an absolute poverty line set in the early 1960s, so the position of these families relative to the median household is considerably worse. Relative to the top 1 per cent of households, the gap has grown enormously. The poverty rate for female headed households has barely changed since the 1970s, but (I think) the proportion of such households has increased substantially. On the other side of that equation, the proportion of couple households with two high incomes has also risen. So, while it's certainly true that the wages of employed women have risen relative to those of employed men, that doesn't mean that gender based inequality and poverty have declined.
I haven't got a conclusive answer on this, but if it's going to be the central point of a critique it deserves more than a handwaving "surely".
F. Foundling 12.11.15 at 4:31 am 50
@js. 12.11.15 at 1:02 am> if you've got a conception of "justice" such that any possible social arrangement is unjust, i.e. justice is actually impossible … A banal point, probably, but AFAICS, everything is unjust compared to perfect justice, and perfect justice is impossible, because perfect anything is impossible. Not a reason not to keep 'perfecting' things. It's what humans do.
@LFC 12.11.15 at 2:06 am
> the OP seems not anywhere near as hostile to some kind of egalitarian position'Some' does a lot of work here.
>Some economic inequalities are unjust, others aren't, and one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust. This point strikes me as fairly uncontroversial.
The problem is that the OP's idea of what it takes to prove an inequality to be unjust is highly restricted. Not only is inequality assumed to be just until the opposite is proven, but it is argued that even if an inequality demonstrably, as Piketty claims, lacks any basis in merit (a blatant example being the case of inheritance), this is still not sufficient to make it unjust. That inequality per se does not even need to be justified by merit, or in any way at all, is a position so radically and counterintuitively anti-egalitarian that even right-wingers usually won't take it openly (rather, they'll insist that there is, in fact, a merit that justifies it). You see, only some very specific reasons such as certain proof of the presence of what the author calls 'stigma' and 'oppression' might potentially convince the author to deign to care about wealth-induced unequal outcomes in a way roughly comparable to the way the author cares about gender-induced and race-induced unequal outcomes. Personally, I don't think convincing the author is worth the trouble.
js. 12.11.15 at 4:35 am 51
Hey Markos, it's Jamsheed. I think I see what you're saying-maybe. If that's what Paul was getting at, fair enough. But if I'm understanding you correctly, I think it still ends up turning on the "equality presumption" bit, on which see below.LFC - I agree with you that Cudd is sympathetic to egalitarianism in the post-and her points about gender inequality are well taken. I didn't mean to imply otherwise. It just seems to me that she's given up a good direct argument against inequality for a considerably more circuitous one-for reasons that remain utterly opaque to me. (For one thing, all those old homilies about the "gentler and fairer sex" can be taken as ways to defeat the equality presumption, which would militate against gender inequality; one could of course find more modern equivalents too.)
Anyway, this still seems wrong to me:
one needs to make an argument about why particular inequalities (when we're talking about relative and not absolute poverty) are unjust
I really think it's the other way around. One never needs to justify why an inequality is unjust-one only ever needs to justify the inequality itself. Of course, one sees plenty of arguments for why some inequality is unjust and why we need to fix that, but I think these are really arguments for disrupting existing social arrangements so as to make them more egalitarian, rather than arguments for the justice of equality per se, which again is something that's rarely needed an argument, it seems to me.
LFC 12.11.15 at 4:44 am 52
Matt @48
Thanks.
(Btw, in re-reading my comment @45, I see there are typos in the first two lines - sorry.)9JQ @49: I said that "could be" a reasonable pt of criticism of P., but I don't/didn't know the empirics, so wasn't endorsing.
A H 12.11.15 at 4:46 am 53
I read Piketty as being a reformist liberal similar to Keynes. The reason wealth inequality is bad is because it threatens meritocratic liberal capitalism with either a return to feudalism or political upheaval. So any normative critique of Piketty needs to start with meritocracy.Any distribution of income in a society requires the consumption of resources to maintain itself. That distribution which requires the least consumption of resources to maintain itself is the most 'natural.' It is the most efficient, as well as the most robust economy.A greatly unequal society requires a great amount of resources to maintain its inequality, and thus itself. (A perfectly equal society also requires a large amount of resources just to maintain equality.)
This consumption of resources, merely to maintain inequality, reduces the amount of resources available to actually operate the economy. That is, it reduces the efficiency of the economy. If the efficiency of the economy is sufficiently reduced, the economy cannot maintain itself.
But I suppose the survival of the economy is beside the point.Paul 12.11.15 at 6:51 am 57
UserGoogol @35: If you stop a hungry person picking an apple from a tree, it may be just (there may be a hungrier person who has planted and tended the tree, for example), but it's hard to argue that it isn't oppressive. But I concede this is a silly argument.The serious argument is that property is so deeply engrained in our society that it tends to get a free pass. I suspect that most people's conception of justice is based on the idea of "everyone has the right to their own stuff" ignoring completely how arbitrary our moral claims to owning anything as individuals actually are. What I dislike about the OP is that it effectively works from the position that existing claims on property are to be considered valid unless demonstrated otherwise; and doesn't make this argument directly, but instead makes it implicitly by making egalitarianism prove its case.
John Quiggin 12.11.15 at 7:12 am 58
Rather than imputing a theory of justice to Piketty based on hints from Capital in the 21st Century, it would have been more helpful to respond to the explicitly normative analysis in his work with Saez, which leads to a call for a top marginal tax rate of around 70 per cent.This gives a clear answer to the "burden of proof" question raised in the comments above. In the absence of welfare-relevant differences between people, the utility derived from a given aggregate income is maximized when that income is distributed equally. So, any inequality needs to be justified, either on the basis of welfare-relevant differences, or on the basis that it is needed to generate a larger aggregate income.
Again, the OP does none of this. There's no sign that the author is even aware of Piketty's large body of work leading up to Capital in the 21st Century
The article is poorly argued and based on irrelevant speculation.Bruce W 4: "The emblematic condition of Piketty's work, r > g, ought to imply something about the balance at the margin. If the income share claimed by capital is rising faster than total income, it cannot be the case that all capital investment entails a positive-sum bargain in which the net gain is distributed."
In the light of our discussion in the other thread, I am a bit surprised. You are now admitting that Piketty's argument is based on capital's share of total income rising but clearly, that share cannot rise indefinitely or else it would swallow up all of production. This is what I have argued and you, if I remember correctly, called that "idiotic". So which is it?
"a country that saves a lot and grows slowly will over the long run accumulate an enormous stock of capital (relative to its income)." (Piketty)This kind of argument really drives me to despair. If that stock of capital is productive capital, it is a good, not a bad thing for a society to have accumulated an "enormous stock" of it. As of ownership, a lot of our accumulated capital is actually publicly owned and actually makes people's lives better. Piketty makes no difference between productive capital and unproductive wealth and none between publicly and privately owned capital. Piketty makes it sound as if public investment in productive infrastructure is a bad policy because we really shouldn't be accumulating so much capital. Exasperating.
Ze K 12.11.15 at 10:52 am 61
The justice thing is tricky. In the current western worldview, as I understand it, the only 'just' way to distribute a loaf of bread is to negotiate and sell it.Capitalist inequality doesn't need to be justified, because it's not explicitly postulated (quite the opposite: 'all men are created equal'), but is merely a side-effect of a much more fundamental concept, the right to own property, also known as 'freedom', 'liberty'.
Social distinctions can be based only on common utility, but wealth, according to our worldview, can be legitimately acquired by luck. Inheriting wealth is one example of such luck.
Questioning these assumptions (again, in our current worldview) makes one a supporter of totalitarianism.
Richard M 12.11.15 at 11:45 am 62
> If that stock of capital is productive capital, it is a good, not a bad thing for a society to have accumulated an "enormous stock" of it.That seems a failure of charitable reading. You can't get publicly owned utilities as a consequence of private savings. So by 'capital', he clearly means money, i.e. ownership rights, not the things that money buys.
Some interesting back-of-envelope calculations from link below suggest that there is two-to-three times as much ' investable capital' as 'capital required to run the economy'. Which explains why so much of it is spent trying to play zero-sum-except-in-case-of-fraud financial games. And why every-time someone does come up with a semi-valid new thing, they end up a billionaire.
http://continuations.com/post/134920840275/capital-is-no-longer-scarce
"You can't get publicly owned utilities as a consequence of private savings."But Piketty ("a country that saves a lot" etc.) doesn't make any of these distinctions. Is it really uncharitable to take him literally?
reason 12.11.15 at 1:22 pm 64
There are some very controversial points raised in the OP.This "even though human capital can create great wealth in a single lifetime, as Bill Gates's example would attest." is clearly fallacious (Bill Gates great wealth came from Intellectual Property not human capital).
reason 12.11.15 at 1:27 pm 65
"It seems that Piketty treats economic inequality stemming from return on capital or income as a zero sum sort of situation, but that is clearly not true."I know Bruce W addressed this before @4, but to take another tack – it is also empirically not true since wage rates have been falling for 30 years at the same time as inequality has increased (not to mention that capital investment, at least since the invention of the joint stock company, is not an exclusive imperative of the wealthy).
reason 12.11.15 at 1:32 pm 66
Where do the figures from" In the 19th century the top 10% most wealthy owned 90% of capital, the middle 40% owned 5% and the bottom 50% owned 5%. In the US today, top 10% own 25% and the next 40% own 25% of capital, while in Europe the top 10% own 60% and the next 40% own 35% of capital. " come from (there is no source given).
The figure for the US today looks simply odd: http://inequality.org/wealth-inequality/ suggests the top 10% today own 75% of the wealth.
reason 12.11.15 at 1:45 pm 67
"Piketty claims that 'economics is a subdiscipline of the social sciences, alongside history, sociology, anthropology, and political science.'"I regard this as rather unfortunate. I think economics is much closer in content and style to ecology and should be seen as a subset of ecology. If it saw itself that way, it would be much better.
MPAVictoria 12.11.15 at 2:19 pm 68
Paul I think you may find this article by Matt Bruenig interesting as it relates to many of the points you have made here:http://www.demos.org/blog/6/3/14/lesson-grab-what-you-can
engels 12.11.15 at 2:27 pm 69
Lfc, speaking only for myself the problem with the OP of not that it's 'hostile to some kind of egalitarian position' but that it's making bad arguments against a set of made-up claims.LFC 12.11.15 at 2:49 pm 70
reason @64
This "even though human capital can create great wealth in a single lifetime, as Bill Gates's example would attest." is clearly fallacious (Bill Gates great wealth came from Intellectual Property not human capital).I think Cudd's point here in the context of the post is the fairly banal one that not all fortunes are inherited, even today: Gates did not inherit his wealth (though presumably he came from a middle or upper-middle class background) but made his fortune via inventing stuff in a garage etc and then turning it into a corporate empire, helped *greatly* of course by intellectual-property laws once the software etc hit the market. I agree the sentence should be tweaked, but the 'human capital' reference here is to the fact that he and others he worked with were able to come up w/ whatever they came up with in the first place. Anyway, it's sort of a side issue because the post is not about the legal, socioeconomic, and 'luck' conditions that allow some inventors to get wealthy and others not, and it was really a point just made in passing.
reason 12.11.15 at 2:54 pm 71
LFC @70
None the less the value of his human capital is what an employed programmer would have been paid to do what he did. And such a basic error, may not change the argument substantially, but along with some other errors (notably the incorrect wealth distribution figure quoted) gives the whole OP less authority than it otherwise might have had.LFC 12.11.15 at 3:07 pm 72
JQ @58
In the absence of welfare-relevant differences between people, the utility derived from a given aggregate income is maximized when that income is distributed equally. So, any inequality needs to be justified, either on the basis of welfare-relevant differences, or on the basis that it is needed to generate a larger aggregate income.But "welfare-relevant differences between people" frequently exist, so at this level of generality that mostly kicks the can down the road, so to speak. Piketty and Saez's call for a top marginal tax rate of around 70 percent is presumably based on a combination of their normative leanings and their empirical judgment that such a tax rate would not harm economic growth in a major way so as to offset its redistributive or other benefits. Assuming that judgment is correct, I'm still not sure it's reasonable to expect Cudd, who is a philosopher not an economist, to grapple with it. But I take the point that the OP as it's presented infers (or imputes) a normative analysis on P.'s part w/o noting what he had written in that vein before the book.
Layman 12.11.15 at 3:09 pm 73
"Gates did not inherit his wealth (though presumably he came from a middle or upper-middle class background) but made his fortune via inventing stuff in a garage etc"I think this is the wrong myth. Perhaps you mean Jobs?
engels 12.11.15 at 3:10 pm 74
His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way. Gates's maternal grandfather was JW Maxwell, a national bank president. Gates has one elder sister, Kristi (Kristianne), and one younger sister, Libby. He was the fourth of his name in his family, but was known as William Gates III or "Trey" because his father had the "II" suffix.engels 12.11.15 at 3:25 pm 75
Apropos of nothing where does being called Miles Fraser V or whatever place you in American class system: 1% or merely upper-middle class?LFC 12.11.15 at 3:31 pm 76
js. @51
One never needs to justify why an inequality is unjust-one only ever needs to justify the inequality itself. Of course, one sees plenty of arguments for why some inequality is unjust and why we need to fix that, but I think these are really arguments for disrupting existing social arrangements so as to make them more egalitarian, rather than arguments for the justice of equality per se, which again is something that's rarely needed an argument, it seems to me.The main issue here though is not inequality in general but inequality of wealth and income. And no functioning economy in the real world can maintain a *completely* equal income distribution over time without a degree of micromanagement from someone that would be unworkable; probably not even a socialist utopia is going to have a *completely* equal distribution.
So there *will be* some inequalities of income and wealth. If you want to start from the position that all of those inequalities have to be justified on a case-by-case basis, so to speak, that's fine with me, I guess. But you're not going to end up w complete equality of income, empirically b.c is it's not sustainable over time in any kind of minimally dynamic economy, and normatively b.c there are always going to be "welfare-relevant differences between people" (JQ's phrase), e.g., those with particular disabilities, etc etc.
F Foundling @50
only some very specific reasons such as certain proof of the presence of what the author calls 'stigma' and 'oppression' might potentially convince the author to deign to care about wealth-induced unequal outcomes in a way roughly comparable to the way the author cares about gender-induced and race-induced unequal outcomes. Personally, I don't think convincing the author is worth the trouble.It depends partly on how broadly 'oppression' and 'stigma' are defined. If inherited wealth plays an ever-increasing role in an economy and if the result is a caste-like society which effectively stigmatizes those excluded from the top caste by denying them access to, e.g., anything like equal educational or employment opportunities, then on the OP's reasoning that would be grounds for restricting inheritances.
LFC 12.11.15 at 3:45 pm 78
@66, @77There's a simple explanation: it's a typographical error. "25%" at that point should read "75%". Pretty obviously, the top 10% in the U.S. today don't own a mere 25% of the 'capital'. It's a typo.
que_es 12.11.15 at 3:57 pm79
cassander at 15:>If r>g, then (wealth) inequality will grow over time.
"If this were true, every Kennedy alive today would be richer than Joe Kennedy was. This is not the case. It is not the case because people eventually die and fortunes get divided up. It's not a statement of how feudalism works under primogeniture, but it doesn't describe modern economies. Everything Pikety says is built on this fundamental mistake. "
Every Kennedy? Huh? A wealthy person today is perfectly free to leave all of his/her wealth to the eldest son. But wealthy families today are not stuck with primogeniture. They can design their own custom wealth preservation plans and impose restrictions on the use of family wealth for generations after the death of the patriarch/matriarch. Perhaps most importantly, they can and almost always do impose restrictions on the free alienability of that wealth that restricts the rights of third parties in ways that entrench the wealth within the family.
JimV 12.11.15 at 4:11 pm 80
A minor digressive point about Bill Gates (based on reading the unauthorized biography "Gates"): he came from a wealthy background and as a result went to a school which had a computer club which had access to a PDP-11 mini-computer, at a time when most high schools did not have computer clubs. He and Paul Allen (illegally) copied the Basic Interpreter program of that computer, received slaps on the wrist for it (not that I think it deserved much more, but kids of a different social class might have been treated more severely), and later used it as the basis for their first commercial success, a Basic Interpreter for the first home micro-computer.He and Paul Allen are very smart people, but there were probably at least 10,000 other kids as smart or smarter from poor or middle-class backgrounds in the USA at that time, but who did not have the same opportunities.
In conclusion, not a case of capital accumulation only, but it played a part – which I think is all that is necessary, just a a small fitness advance will raise a species to domination over time.
LFC 12.11.15 at 4:19 pm 81
Ze K @61…wealth, according to our worldview, can be legitimately acquired by luck. Inheriting wealth is one example of such luck.
Questioning these assumptions (again, in our current worldview) makes one a supporter of totalitarianism.
Rawls TOJ 1971, p.15, emphasis added: "Once we decide to look for a conception of justice that nullifies the accidents of natural endowment and the contingencies of social circumstance…, we are led to these principles [of justice]."
So Rawls was "a supporter of totalitarianism"? One could easily get the impression from reading certain things on the Internet and elsewhere that he was a squishy milquetoast liberal. My, my. Live and learn.
js. 12.11.15 at 4:20 pm 82
LFC @76 - Oh, I don't think each inequality needs to be justified on a case by case basis-something like the Difference Principle would do the trick.Maybe I'm not being clear, but I mean to make one specific point: Cudd is wrong to think that the equality presumption is false, or at any rate she hasn't given any argument that would convince me otherwise.
This isn't a blanket criticism of her post or anything like that. For example, I think a lot of the stuff about oppression is interesting and worth thinking about. I just picked the one thing I disagree with (as one does).
LFC 12.11.15 at 4:29 pm 84
js. @82:
I get it. Fair enough.Now we can get back to the burning question of whether people who support 80% inheritance/estate taxes and 70% top marginal tax rates are Stalinists or merely Trotskyites. ;)
Ze K 12.11.15 at 4:33 pm 85
"So Rawls was "a supporter of totalitarianism"? "Yeah, sounds like it, according to this excerpt, unless it's ripped out of context. "nullifies the accidents of natural endowment and the contingencies of social circumstance" sounds more radical than stalinism, it's practically pol-potian.
LFC 12.11.15 at 5:24 pm 86
@85
well, since the bk quoted from is 600 pp. long, it was necessarily out of context. (R's first principle protects/prioritizes "basic [political] liberties".) Anyway, the pt was I don't think challenging inherited wealth equals Pol-Potianism. But this is just a minor eddy here, so we can agree to forget it.LFC 12.11.15 at 5:40 pm 87
engels @75
where does being called Miles Fraser V or whatever place you in American class system: 1% or merely upper-middle class?My hunch/sense is that this is not a particularly reliable index of class position. There are probably some very non-affluent African-American families today with people w names like Jones III or Smith IV, etc.
On the other hand, when you see names with clear references to 17th or 18th cent. (hypothetically, something like "John Hancock V"), you pretty much know the person is from an old-line WASP family that's been in the U.S. a long time. Which doesn't *necessarily* mean wealthy, though it could well mean that
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Dec 10, 2015 | Economist's View
Throw the middle class a bone to get their vote, then take even more away later.The Tax Policy Center analyzed Jeb Bush's tax plan. Paul Krugman reacts:
Pandering to Plutocrats: ...Most of the headlines I've seen focus on the amazing price tag: $6.8 trillion of unfunded tax cuts in the first decade. But it's also important to realize the extent to which this is tax-cutting on the rich, by the rich, for the rich. Here's the change in after-tax income resulting from the plan:
Huge benefits for the super-elite. And if you are tempted to say that the middle class gets at least some tax cut, remember that the budget hole would force sharp cuts in spending..., this means sharp cuts in programs that benefit ordinary Americans, probably swamping any tax cuts.So, huge tax cuts that would massively increase debt, with the benefits going to the very highest-income Americans. And this is the "responsible", moderate candidate.> Dan Kervick said...Same as it ever was. Republicans pretend to be against deficits, but are really just against spending. So they propose tax cuts to raise deficits (which they sometimes initially pretend won't materialize because of supply side effects), and then they push for the spending cuts to counter the deficits they created. This is the old Norquist strategy, and it still has political legs.pgl -> Dan Kervick...Are they against spending? Reagan increased defense spending. Everyone of the current clowns want to do it again. Republicans are for shifting the tax base to the little people even as they slash their Social Security benefits. Take from the poor and give to the rich.likbez -> pgl..."Are they against spending? Reagan increased defense spending. "pgl -> likbez...Good point. They are against non-defense spending, so for them the role of the state is limited to military industrial complex support.
And I would not discard completely the value of defense spending (aka Military Keynesianism). It is probably one of the most powerful drivers of technological progress that mankind has outside wars.
So you agree with Christie and Trump? Declare war on China and all of the Middle East. That will work well. Ahem.likbez -> pgl...Don't be so simplistic. What I stated is "It is probably one of the most powerful drivers of technological progress that mankind has outside wars."anne said...My point is that wars, such as WWII or Vietnam, or Iraq war accelerate technical progress. That does not mean that I am warmonger like Hillary.
http://krugman.blogs.nytimes.com/2015/12/09/the-banality-of-trumpism/pgl said in reply to anne...December 9, 2015
The Banality of Trumpism
By Paul KrugmanBrian Beutler has a good piece about the liberal reaction to Trumpism * - which is that the phenomenon
"was neither unexpected nor the source of any new or profound lesson."
But I think he casts it a bit too narrowly. The basic liberal diagnosis of modern conservatism has long been that it was a plutocratic movement that won elections by appealing to the racism and general anger-at-the-other of whites; there's nothing too surprising about an election in which the establishment candidates continue to serve plutocracy ** while the base turns to candidates who drop the euphemisms while going straight to the racism and xenophobia.
Beutler says that:
"The only people who claim to be befuddled by the Trump phenomenon are officials on knife-edge in the party he leads."
But surely the people most taken by surprise, least able to handle the phenomenon, are the self-proclaimed centrists, the both-sides-do-it crowd, who denounced the plutocrats-and-racists diagnosis as "shrill," insisting that we are having a real debate with just a few fringe characters on either side. Some of those people are still trying to portray the parties as symmetric: Bernie Sanders calling for single-payer health insurance is just like Trump calling for mass deportations and a ban on Muslims.
That was always a silly position. And as Beutler says, those of us who were clear-headed about conservative politics are almost bored by the repeated revelations of what we already knew.
* https://newrepublic.com/article/125353/trump-proves-liberals-right-along
** http://krugman.blogs.nytimes.com/2015/12/09/pandering-to-plutocrats/
Nixon's Southern Strategy. Pretend to be racist so you get the votes of stupid white people. BTW - I grew up in Georgia so I lived this garbage as a kid. Trump is and always has been a disaster.likbez said in reply to pgl..."Nixon's Southern Strategy"anne said in reply to anne...Or may be Trump is sensing the shift to the right of population of Western countries that we also observed recently in France and before that in Hungary and Poland.
From my perspective, the person who should be read and properly considered and credited for describing the general politics experienced in Western Europe and the United States in the wake of recession is Naomi Klein.anne said in reply to anne...That economists so easily turn away from or unknowingly ridicule the "Shock Doctrine" ideas of Klein, ideas that are so sadly reasonable today, really troubles me. Joseph Stiglitz and Paul Krugman were respectful, but what other economists?
http://delong.typepad.com/sdj/2010/04/hoisted-from-the-archives-tyler-cowen-thinks-naomi-klein-believes-her-own-bulls------grasping-reality-with-tractor-beams.html#tpe-action-resize-122anne said in reply to anne...October 4, 2007
Tyler Cowen Thinks Naomi Klein Believes Her Own Bulls---
He reads her book. He doesn't think it meets minimum intellectual standards. I think he is right: now I can borrow Tyler's ideas and have an informed view:
"Shock Jock": *
* http://www.nysun.com/arts/shock-jock/63867/
-- Brad DeLong
http://delong.typepad.com/sdj/2010/04/hoisted-from-the-archives-tyler-cowen-thinks-naomi-klein-believes-her-own-bulls------grasping-reality-with-tractor-beams.htmlApril 8, 2010
Hoisted from the Archives: Tyler Cowen Thinks Naomi Klein Believes Her Own Bulls---
He reads her book. He doesn't think it meets minimum intellectual standards. I think he is right: now I can borrow Tyler's ideas and have an informed view.... *
* http://delong.typepad.com/sdj/2007/10/tyler-cowen-thi.html
October 4, 2007
-- Brad DeLong
anne -> anne...
http://krugman.blogs.nytimes.com/2013/05/16/the-smithkleinkalecki-theory-of-austerity/anne -> anne...May 16, 2013
The Smith/Klein/Kalecki Theory of Austerity
By Paul Krugman
Noah Smith recently offered an interesting take * on the real reasons austerity garners so much support from elites, no matter how badly it fails in practice. Elites, he argues, see economic distress as an opportunity to push through "reforms" - which basically means changes they want, which may or may not actually serve the interest of promoting economic growth - and oppose any policies that might mitigate crisis without the need for these changes:
"I conjecture that 'austerians' are concerned that anti-recessionary macro policy will allow a country to 'muddle through' a crisis without improving its institutions. In other words, they fear that a successful stimulus would be wasting a good crisis....
"If people really do think that the danger of stimulus is not that it might fail, but that it might succeed, they need to say so. Only then, I believe, can we have an optimal public discussion about costs and benefits."
As he notes, the day after he wrote that post, Steven Pearlstein ** of the Washington Post made exactly that argument for austerity.
What Smith didn't note, somewhat surprisingly, is that his argument is very close to Naomi Klein's "Shock Doctrine," with its argument that elites systematically exploit disasters to push through neoliberal policies even if these policies are essentially irrelevant to the sources of disaster. I have to admit that I was predisposed to dislike Klein's book when it came out, probably out of professional turf-defending and whatever - but her thesis really helps explain a lot about what's going on in Europe in particular.
And the lineage goes back even further. Two and a half years ago Mike Konczal *** reminded us of a classic 1943 (!) essay by Michal Kalecki, who suggested that business interests hate Keynesian economics because they fear that it might work - and in so doing mean that politicians would no longer have to abase themselves before businessmen in the name of preserving confidence. This is pretty close to the argument that we must have austerity, because stimulus might remove the incentive for structural reform that, you guessed it, gives businesses the confidence they need before deigning to produce recovery.
And sure enough, in my inbox this morning I see a piece more or less deploring the early signs of success for Abenomics: Abenomics is working - but it had better not work too well. **** Because if it works, how will we get structural reform?
So one way to see the drive for austerity is as an application of a sort of reverse Hippocratic oath: "First, do nothing to mitigate harm." For the people must suffer if neoliberal reforms are to prosper.
* http://noahpinionblog.blogspot.com/2013/05/why-do-people-support-austerity.html
** https://www.washingtonpost.com/news/wonk/wp/2013/05/14/the-case-for-austerity-isnt-dead-yet/
**** http://qz.com/85282/abenomics-is-working-but-it-had-better-not-work-too-well/
What Smith didn't note, somewhat surprisingly, is that his argument is very close to Naomi Klein's "Shock Doctrine," with its argument that elites systematically exploit disasters to push through neoliberal policies even if these policies are essentially irrelevant to the sources of disaster. I have to admit that I was predisposed to dislike Klein's book when it came out, probably out of professional turf-defending and whatever - but her thesis really helps explain a lot about what's going on in Europe in particular....ilsm-- Paul Krugman
GOP/thuggee appeal to the varied fears, hate and prejudice of poor people aka the base:likbez -> ilsm...http://krugman.blogs.nytimes.com/2015/12/09/the-banality-of-trumpism/?_r=0
The get the fearful bigots to vote for plutocrats' interests the GOP/thuggee promise to make sure [more of] "those" people have less than the base.
"GOP/thuggee appeal to the varied fears, hate and prejudice of poor people aka the base"Not only. Those tricks are just a small part of the strategy. The part which is typically called wedge issues politics. See for example "What's the matter with Kansas" https://en.wikipedia.org/wiki/What%27s_the_Matter_with_Kansas%3F)
=== quote ===
Frank says that the conservative coalition is the dominant coalition in American politics. There are two sides to this coalition, according to the author. Economic conservatives want business tax cuts and deregulation. Frank says that since the coalition formed in the late 1960s, the coalition has been "fantastically rewarding" for the economic conservatives. The policies of the Republicans in power have been exclusively economic, but the coalition has caused the social conservatives to be worse off, due to these very economic policies and because the social issues that this faction pushes never go anywhere after the election. According to Frank, "abortion is never outlawed, school prayer never returns, the culture industry is never forced to clean up its act."
He attributes this partly to conservatives "waging cultural battles where victory is impossible," such as a constitutional amendment banning gay marriage. He also argues that the very capitalist system the economic conservatives strive to strengthen and deregulate promotes and commercially markets the perceived assault on traditional values.
Frank applies his thesis to answer the question of why these social conservatives continue to vote for Republicans, even though they are voting against their best interests. He argues that politicians and pundits stir the "Cons" to action by evoking certain issues, such as abortion, immigration, and taxation. By portraying themselves as champions of the conservatives on these issues, the politicians can get "Cons" to vote them into office. However, once in office, these politicians turn their attention to more mundane economic issues, such as business tax reduction or deregulation. Frank's thesis goes thus: In order to explain to the "Cons" why no progress gets made on these issues, politicians and pundits point their fingers to a "liberal elite," a straw man representing everything that conservatism is not. When reasons are given, they eschew economic reasons in favor of accusing this elite of simply hating America, or having a desire to harm "average" Americans. This theme of victimization by these "elites" is pervasive in conservative literature, despite the fact that at the time conservatives controlled all three branches of government, was being served by an extensive media devoted only to conservative ideology, and conservatives had won 6 of the previous 9 presidential elections.
=== end of quote ===But the problem is much deeper. They dictate the rules, the rationality by which we live. This is a complete ideological victory and complete defeat of New Deal ideology by neoliberal ideology.
=== quote ===
- Under the guise of 'free' markets, what was created was an alternative set of rules and practices rigged to serve capital owners and executives at the expense of ordinary workers, retirees, and young people. Let us count the ways.
- IP monopolies have been strengthened worldwide. So-called 'free' trade deals have replaced labor-protecting tariffs with steeply increased capital-protecting IP regulations. Copyright terms have been extended far beyond any credible incentive effects.
- Central banks across the OECD have practiced austerity, or failed to make unemployment reduction a priority, thereby gratuitously increasing unemployment to serve capital interests. Fiscal policy, too, has kept demand for labor weak, even while profits have soared. That r>g is due in part to g-depressing monetary and fiscal policies.
- Laws and regulations regarding credit and bankruptcy have been rewritten to favor creditors. In the U.S., bankruptcy no longer fully discharges personal debts for many people. Millions of college students in the U.S. labor under mountains of undischargeable student debt. Usurious payday and title loans reinforce the cycle of poverty for more millions. Many creditors' business models are predatory, in which profits are generated by terms that trap people into spirals of debt, default, and accumulating fines and fees, and are deliberately designed to prevent people from paying off the loan, so they must pay interest and fees for a longer period. Regulators failed to reduce the principal owed on home loans after the financial crisis, gratuitously extending the length of the recession. In the EU, too, German-led monetary policy has strongly favored creditors over debtors, leading to recession and mass unemployment in the peripheral Eurozone countries.
Antitrust enforcement has weakened, increasing the dominance of big firms that exploit their market power, fattening profits and executive compensation.- Financial deregulation has driven capital away from growth-supporting investment, toward speculative trading that increases financial instability. It has also led to a diversion of talent and energy into negative value-added activities such as high-frequency trading, frontrunning, and LIBOR manipulation. The rise of banks 'too big to fail' has led to a culture of impunity and lawlessness in the financial industry. Notwithstanding massive fraud in the mortgage industry and serial criminality on the part of major banks such as J. P. Morgan, virtually no guilty bankers have been prosecuted for their roles in the financial crisis, and fines capture only a small fraction of profits from illegal dealings. All of this has increased inequality.
- On the labor side, in the U.S., basic employment laws are unenforced or carry penalties too low to deter, leading to massive wage and tip theft, forced work off the clock, and numerous other violations, especially at the low end of the wage scale. Employees are routinely misclassified as independent contractors, as a way to escape requirements to provide benefits, pay social insurance taxes, and fob business expenses onto workers. Young workers performing useful services for their employees are routinely misclassified as interns, so they don't have to be paid at all.
- The rise of contingent and temporary labor and labor subcontracting has also enabled corporations to shed responsibilities for providing decent pay, benefits, and working conditions–a pure shift of income from labor to capital (or, for nonprofits such as universities, a pure shift of income from contingent workers such as adjunct faculty to the pockets of top-level administrators). Franchising performs similar functions, whereby the franchisor imposes costs and pricing structures on individual franchisees that all-but-guarantee that the latter cannot clear a profit without violating labor laws. Outsourcing abroad, including to enterprises that exploit forced and defrauded workers, magnifies these problems. These practices are due to a failure of employment law to close loopholes that empower firms to pretend that their employees are someone else's responsibility.
- U.S. law has systematically failed to protect workers' contractual pension rights. During stock booms, firms are permitted to skim supposedly excess profits in their pension funds for distribution to shareholders. In the inevitable bear market that follows, they dump now severely underfunded pension funds as hopelessly insolvent. Public pensions, too, have been underfunded or raided for decades.
- The shift from defined-benefit pensions to defined-contribution retirement plans has put the onus on naive investors to invest their savings. Yet financial advisors are free to peddle high-fee low-return investments to them, pretending to act in their interests, leading to returns on 401(k) plans for the ordinary investor that are well below r. While regulations have been proposed to end this practice in the U.S., its prevalence represents a pure shift of income and wealth from labor to capital, and from ordinary workers to high-paid financiers.
- In the U.S., labor laws protecting the right to organize have been violated with impunity at least since the 1980s. The decline of labor unions, in turn, has led to a decline in labor's political influence for all policies affecting workers, whether they are unionized or not.
- In the U.S., the minimum wage has not kept up with inflation. Without the backstop of a minimum wage, much of the incidence of publicly provided benefits to low-wage workers, such as food stamps and the earned-income tax credit, accrues to major corporations, who don't have to pay as high wages to induce the same labor supply.
http://crookedtimber.org/2015/12/07/the-politics-behind-piketty/
=== end of quote ===
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December 7, 2015 | Crooked Timber
Thomas Piketty traces widening inequality in rich countries since the early 1970s to increasing shares of income claimed by the top 1%. This trend is decomposed into the increasing share of income accruing to capital ownership, and the increasing share of labor income claimed by corporate executives and financiers. Piketty shows that the increasing share of labor income claimed by the top 1% is neither deserved nor economically useful, in the sense of stimulating better products and services, increasing economic growth, or providing other benefits to the 99%. Because he defines r, the return on capital, as the pure return to passive ownership (excluding returns to capital that could be traced to entrepreneurial activity or business judgment), it is evident that capital's share of income is also undeserved. But is it economically useful? Piketty misses an opportunity to connect his analysis to a critique of the ideology and associated politics that have driven increasing inequality since the early 1970s. While he rightly claims that the distribution of income and wealth is a deeply political matter, and connects increasing economic inequality to the increasing political clout of the top 1%, he does not identify political decisions, other than cuts in marginal tax rates on top incomes, that lie behind inequality trends. Filling in the ideological and political stories gives us some clues as to policy instruments, other than the tax code, needed to reverse the ominous trends he documents.On the ideological front, several theories served to rationalized policy shifts in favor of increasing capital shares and top labor incomes. The stagflation of the 1970s was successfully blamed on Keynesian economics, fiscal irresponsibility, a bloated welfare state, militant labor unions, state regulation of the economy, and supposedly incentive-destroying high marginal tax rates on capital incomes and the rich. At the same time, the ideology of maximizing shareholder value took hold. Corporate executives who formerly lived merely like an especially comfortable middle class, and who gained prestige from sharing rents widely among corporate stakeholders, narrowed their focus to serving capital interests exclusively, and obtained compensation packages that tied their fates to that goal alone.
All of this might have made sense were it true that the only way to increase profits is to do things that add net value to the economy in which everyone else claims shares. But that's the hard way to increase capital's share of income, and thereby the income of top executives. It's much easier for the top 1% to make money by creating and exploiting opportunities to gain at the expense of everyone else. Under the guise of 'free' markets, what was created was an alternative set of rules and practices rigged to serve capital owners and executives at the expense of ordinary workers, retirees, and young people. Let us count the ways.
- IP monopolies have been strengthened worldwide. So-called 'free' trade deals have replaced labor-protecting tariffs with steeply increased capital-protecting IP regulations. Copyright terms have been extended far beyond any credible incentive effects.
- Central banks across the OECD have practiced austerity, or failed to make unemployment reduction a priority, thereby gratuitously increasing unemployment to serve capital interests. Fiscal policy, too, has kept demand for labor weak, even while profits have soared. That r>g is due in part to g-depressing monetary and fiscal policies.
- Laws and regulations regarding credit and bankruptcy have been rewritten to favor creditors. In the U.S., bankruptcy no longer fully discharges personal debts for many people. Millions of college students in the U.S. labor under mountains of undischargeable student debt. Usurious payday and title loans reinforce the cycle of poverty for more millions. Many creditors' business models are predatory, in which profits are generated by terms that trap people into spirals of debt, default, and accumulating fines and fees, and are deliberately designed to prevent people from paying off the loan, so they must pay interest and fees for a longer period. Regulators failed to reduce the principal owed on home loans after the financial crisis, gratuitously extending the length of the recession. In the EU, too, German-led monetary policy has strongly favored creditors over debtors, leading to recession and mass unemployment in the peripheral Eurozone countries.
- Antitrust enforcement has weakened, increasing the dominance of big firms that exploit their market power, fattening profits and executive compensation.
- Financial deregulation has driven capital away from growth-supporting investment, toward speculative trading that increases financial instability. It has also led to a diversion of talent and energy into negative value-added activities such as high-frequency trading, frontrunning, and LIBOR manipulation. The rise of banks 'too big to fail' has led to a culture of impunity and lawlessness in the financial industry. Notwithstanding massive fraud in the mortgage industry and serial criminality on the part of major banks such as J. P. Morgan, virtually no guilty bankers have been prosecuted for their roles in the financial crisis, and fines capture only a small fraction of profits from illegal dealings. All of this has increased inequality.
- On the labor side, in the U.S., basic employment laws are unenforced or carry penalties too low to deter, leading to massive wage and tip theft, forced work off the clock, and numerous other violations, especially at the low end of the wage scale. Employees are routinely misclassified as independent contractors, as a way to escape requirements to provide benefits, pay social insurance taxes, and fob business expenses onto workers. Young workers performing useful services for their employees are routinely misclassified as interns, so they don't have to be paid at all.
- The rise of contingent and temporary labor and labor subcontracting has also enabled corporations to shed responsibilities for providing decent pay, benefits, and working conditions–a pure shift of income from labor to capital (or, for nonprofits such as universities, a pure shift of income from contingent workers such as adjunct faculty to the pockets of top-level administrators). Franchising performs similar functions, whereby the franchisor imposes costs and pricing structures on individual franchisees that all-but-guarantee that the latter cannot clear a profit without violating labor laws. Outsourcing abroad, including to enterprises that exploit forced and defrauded workers, magnifies these problems. These practices are due to a failure of employment law to close loopholes that empower firms to pretend that their employees are someone else's responsibility.
- U.S. law has systematically failed to protect workers' contractual pension rights. During stock booms, firms are permitted to skim supposedly excess profits in their pension funds for distribution to shareholders. In the inevitable bear market that follows, they dump now severely underfunded pension funds as hopelessly insolvent. Public pensions, too, have been underfunded or raided for decades.
- The shift from defined-benefit pensions to defined-contribution retirement plans has put the onus on naive investors to invest their savings. Yet financial advisors are free to peddle high-fee low-return investments to them, pretending to act in their interests, leading to returns on 401(k) plans for the ordinary investor that are well below r. While regulations have been proposed to end this practice in the U.S., its prevalence represents a pure shift of income and wealth from labor to capital, and from ordinary workers to high-paid financiers.
- In the U.S., labor laws protecting the right to organize have been violated with impunity at least since the 1980s. The decline of labor unions, in turn, has led to a decline in labor's political influence for all policies affecting workers, whether they are unionized or not.
- In the U.S., the minimum wage has not kept up with inflation. Without the backstop of a minimum wage, much of the incidence of publicly provided benefits to low-wage workers, such as food stamps and the earned-income tax credit, accrues to major corporations, who don't have to pay as high wages to induce the same labor supply.
From an ideological point of view, much of this can and has been peddled to the public as 'free' markets and 'deregulation.' The reality exposes the vacuity of these very ideas. In any advanced economy, the state must be involved in promulgating the constitutive rules of the economy. It can no more get out of the business of regulating the economy than the Commissioner of Baseball can get out of the business of promulgating the rules of Major League Baseball. The only real question is, in whose interests are the rules designed?
Ideology matters for politics. Once people have acquired income or wealth through the market, they feel strongly entitled to it. In the U.S. and increasingly in the rest of the OECD, the population at large, taken in by such representations, is reluctant to tax. Redistributing income and wealth by means of taxation, as Piketty proposes, becomes harder once people have it in their hands. We need to scrutinize the rules by which income and wealth get generated through the market, before it is taxed. They have been changing in a plutocratic direction for the past 45 years. The rule changes have not only increased r (at least for the top 1%), but also depressed g, by increasing monopoly power, shifting savings from real investment to speculation and scams, shifting top talent from production to value-extraction, and depressing aggregate demand.
Getting this story out is critical to changing politics. For plutocracy still must nod to what we might call 'weak' Rawlsianism: that inequality cannot be justified without showing that it delivers some benefits to the 99%. (It's not for nothing that one of the leading arms of plutocracy is called the Club for Growth.) Exposing the ways the game is rigged, as Elizabeth Warren has been doing, should open more levers to change than focusing on taxes alone–levers that should also help limit the pace of increasing inequality by raising g.
Rakesh Bhandari 12.07.15 at 5:50 pm
I think that this comments misses the force of Piketty's inequality r>g. Even if intellectual property laws were weaker (and rents thereby smaller) and and labor laws and Keynesian policies stronger (and thereby g higher) and even if small savers had a bit higher rate of return, the Piketty inequality would still be in operation (and big savers would still have much relative returns), giving us the uncanny return of a rentier society.
In short, this comments seems to me to miss the force of the r>g inequality.Dan Cole 12.07.15 at 6:12 pm
I don't think it's a case of either or. it's true that Piketty does not pay sufficient attention to institutions and institutional changes that have increased returns to capital and reduced intergenerational economic mobility (up or down the ladder). His model stands on its own, but of course the returns to investment depend heavily on the kinds of institutions Prof. Anderson discusses.I do think, however, she might add one to her list: the decline of the Rule Against Perpetuities (in the US) and the re-emergence of dynastic trusts, which lock in wealth across generations. This is still very much an institutional change in progress, state by state. Its probably will not begin to significantly affect social mobility statistics significantly for a generation.
Rakesh Bhandari 12.07.15 at 6:23 pm
I don't agree that Piketty ignores institutional changes or changes in property laws, e.g. the end of human chattel, the operation of war commissions, the evolution of minimum wage laws, the weakening of collective bargaining, and the "stakeholder" nature of Rhenish capitalism. Piketty is aware of all this, but he still reasons on the basis of his r>g inequality that the return of a rentier society is most likely except through a global tax on wealth. The principal reason: even if through institutional reforms r is reduced a bit, g is likely to revert to historical averages even with the right Keynesian policies. That gives us a r>g inequality great enough to yield an actual rentier society (not the petit rentier one we now have).An On 12.07.15 at 7:38 pm
I'm sympathetic to the direction of this argument, but does a list so focused on the US provide an adequate explanation of a global phenomenon?chris arnade 12.07.15 at 8:08 pmA wonderful list; which in many ways can be summarized (not to diminish the longer version) as various forms of, "The wealthy have been allowed to write rules that work best for them"This has meant diminished rules, and the enforcement of rules, for Wall Street and large corporations, sold under the free market notion that individual liberty is collectively beneficial.
Yet at the same time increased and aggressive regulation has been applied to poorer folks (Broken Windows policing and the War on Drugs) under the theory that individual liberty can collectively be corrosive.
The latter hasn't just been a moral outrage, it has also helped to devalue labor. It is harder to increase human capital when you are subjected to onerous rules and regulations.
T 12.07.15 at 8:32 pm
Hot off the presses, today's example of rent seeking in trillion dollar markets: http://www.nytimes.com/2015/12/07/business/a-revolving-door-helps-big-banks-quiet-campaign-to-muscle-out-fannie-and-freddie.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region®ion=top-news&WT.nav=top-newsRobert 12.07.15 at 9:15 pmRobert Reich's new book, Saving Capitalism, is basically a longer statement of the thesis of this post, albeit not as a comment on Piketty. Krugman has a review in The New York Review of Books.krippendorf 12.07.15 at 9:41 pm
see also work by Grusky and Weeden, who have been pushing the line that rents are ubiquitous throughout the labor market, and not just in the top 1%, for quite some time.But, they are sociologists, so they are easily ignored by Stiglitz, Reich, and other economists who are trying to make rent-based arguments for rising income inequality.
Peter K. 12.07.15 at 9:53 pm 10
I am excited about this seminar and discussion.What I believe Piketty has said is that *r* remains remarkably constant despite how one would think that the laws of supply and demand would mean that an oversupply of capital and slower growth would decrease *r* but it remains high because of a variety of factors.
Piketty discusses how Depression and Wars changed the dynamic so that inequality decreased in the post-war years. The list of policies here describe the many reasons why inequality has increased again and growth has slowed down.
As Jared Bernstein wrote "…since the late 1970s, we've been at full employment only 30 percent of the time (see the data note below for an explanation of how this is measured). For the three decades before that, the job market was at full employment 70 percent of the time."
I believe macro policy (monetary, fiscal, trade) explains a large part of why growth has slowed and inequality increased since the 1970s.
Deregulatory "free market" policies pushed by rich financiers and conservatives have made the economy more volatile and prone to the boom-bust cycle. During the boom, most of the gains accrue to the top, and after the bust, macro policy has been insufficient to bring about a swift recovery, again exacerbating inequality.
Tabasco 12.07.15 at 10:38 pm, 11
Central banks across the OECD have practiced austerityFor nearly a decade central banks across the OECD have kept their policy interest rates at or near zero. In a couple of countries they are less than zero.
Whatever this is, it is not austerity.
Rakesh Bhandari 12.07.15 at 10:57 pm 12
From the phone. Even if r on average falls from 6 to 4 pc. and growth goes from 1.5 to 2pc you will still get a rentier society. Remember also wealthy will have higher average return m, say in this ex 6 pc. Then you have wealth growing 3 x the rate of income. I earlier argued that we should distinguish P's critique of rentier society from the Reich/Stiglitz critique of monopoly rents. P's whole point is that rentier society arises out of even competitive capitalismRakesh Bhandari 12.07.15 at 11:01 pm 13
What piketty does not analyze is nature of ideological hegemony in a rentier society. I already pointed to Bukharin's critique of rentier ideology in the economic theory of the leisure class. It makes for a fascinating comparisonFrank Wilhoit 12.07.15 at 11:35 pm 14
Chris Arnade @ 6:A. "…the theory that individual liberty can collectively be corrosive…." is merely a cover for sadism.
B. "onerous rules and regulations" are only complained of by entities who do not wish to be held accountable.
bob mcmanus 12.07.15 at 11:44 pm 15
What piketty does not analyze is nature of ideological hegemony in a rentier societyAs I read him, he doesn't need to, because it's irrelevant.
What Piketty's numbers prove is that it wasn't ideology or politics or unions or social movements and programs that gave us the Great Compression and decreased inequality but revolution, depression, and catastrophic war. Certainly history shows that every catastrophic war etc did not necessarily led to greater equality, but there is very little evidence for increases in equality without radical social disorder. Piketty explicitly says toward the end that moderate tax increases or redistributive social programs have had little effect, that the lower baseline after WWII was determining.
What is taken from the above can be up for discussion, perhaps the best can be done during peacetime is ameliorative efforts within a context of rising inequality, and ideology can help with those besides preparing for the inevitable collapse. But effective demand management will quickly fail for political reasons, see Kalecki.
If the above looks like Marxian praxis, it's no coincidence. Piketty's recommendation, taxing global wealth at confiscatory rates, should be understood as a practical recommendation. I think we all understand what it would take to tax away 40-50% of gross Saudi or Brunei or American wealth to distribute to Africa and South America, and Piketty surely was not unaware.
bob mcmanus 12.07.15 at 11:52 pm 16
I apologize, Piketty only asks, although I think he says "initially," for a lower global wealth tax rate, perhaps a few percent to counter r>g. I will dig out my copy. I am not at all bothered if Piketty details no clear process to confiscating global wealth, he surely doesn't have to, and it would get in the way of his message: that paths to equality are radically limited.Peter T 12.07.15 at 11:54 pm 17
What struck me most about Piketty's data was the near constancy of r over centuries. This suggests to me that it is not a matter of balancing supply and demand for capital, but a structural feature (perhaps the return necessary to sustain the hierarchy of production?). So r, in itself, has little to do with the distribution of return: it could be spread across a large middling to wealthy class, or concentrated in the 0.1%, as political factors dictated.I will add that the underlying mental model in much of economics seems to be the gentleman's estate. There is land, income for investment or consumption as prudence and virtue dictate, the lump sum in consols…with the ideal the improving landlord. That categories such as "capital" or "labour" do not stretch to countries does not seem to cross the imagination.
Mike Furlan 12.08.15 at 12:13 am 18
N. Taleb criticizes Piketty on mathematical grounds:Rakesh Bhandari 12.08.15 at 12:27 am 19"What is worse, rejection of such theories also ignored the size effect, by countering with data of a different sample size, effectively making the dialogue on inequality uninformational statistically."
http://arxiv.org/pdf/1405.1791.pdfI thought Piketty addressed this issue, for instance in looking at countries with relatively constant populations over time like France, and admitting that less could be learned from looking at a United States that grew from 3 to 300 million. But I'm sure that I'm missing many important aspects of this question.
@18 If population is growing at a fast rate and therefore g as well, the fundamental inequality will be attenuated, and it will be difficult to see the long-term consequences of r>g in such a society. France gives us a better laboratory to see the likely effects of the fundamental inequality going forward than the US has hitherto provided.Rakesh Bhandari 12.08.15 at 12:29 am 20@15. I don't think this is quite right. Piketty thinks a fundamental problem with rentier society is in fact ideological, viz. that it cannot be squared with the meritocratic values that provide normative support for competitive markets. This raises the question of what the elements of a rentier ideology are. The only one I know to have provided an answer is Bukharin.Rakesh Bhandari 12.08.15 at 12:52 am 21
@17 raises difficult questions. Some economists have claimed that r>g is just what you would expect from dynamically efficient economy, but this needs to be spelled out. Piketty has a complex section which I have not yet fully understood on why r being positive, and greater than g, cannot be explained in terms of a psychological theory of time preference. Perhaps another way of thinking about this would be: what would happen if r were to fall below g? Would there be mechanisms to restore Piketty's fundamental inequality? Piketty, I think, is saying "yes". So I shall re-read that section to get a better understanding of his argument.John Quiggin 12.08.15 at 1:01 am 22
"Central banks across the OECD have practiced austerity"As Tabasco observes, this point is loosely phrased. Austerity is a fiscal policy, not a monetary policy. But central banks can enforce austerity by refusing to accommodate government budget deficits. The ECB has clearly done this (as it was set up to do). In other cases, governments and legislatures have imposed austerity, with the support of central banks.
The US Fed is one example where the central bank has been less supportive of austerity than the legislature.
ZM 12.08.15 at 1:25 am 23
A question for the more economically minded – Would one reason that r is reasonably stable over a considerable time frame be because it is determined not by the most wealthy holders of capital (who presumably could afford to take a lower rate of return on a long term basis), but by the less wealthy who depend on a higher rate of r as otherwise their smaller investments wouldn't be financially rewarding?For instance, in Australia workers have compulsory employer paid superannuation investments, and if the rate of return on these was lower I don't know that the policy of moving people to self-funded retirement by superannuation as opposed to government pensions would be feasible?
Peter K. 12.08.15 at 1:37 am 24
"Central banks across the OECD have practiced austerity"I think that is right. They've not supported quick recoveries and have been overly fearful of phantom inflation.
http://cepr.net/blogs/beat-the-press/paul-krugman-larry-summers-and-the-fed-s-unused-ammunition
Sebastian H 12.08.15 at 1:39 am 25
I'm very sympathetic to much of the list of bad policies. I have a question about this though: "On the ideological front, several theories served to rationalized policy shifts in favor of increasing capital shares and top labor incomes. The stagflation of the 1970s was successfully blamed on Keynesian economics, fiscal irresponsibility, a bloated welfare state, militant labor unions, state regulation of the economy, and supposedly incentive-destroying high marginal tax rates on capital incomes and the rich."What should it have been blamed on?
[I'm very open to the idea that the lessons of the 70s were overlearned–i.e. just because too much inflation is bad doesn't mean we should worry about it when it is below 5%. But this comment suggests that something else entirely was going on]
Rakesh Bhandari 12.08.15 at 1:56 am 26
@25 in regards to the quote from Anderson who, along with many others, is missing in my opinion Piketty's main thesis of how the normal operation of competitive or even social democratic capitalism or of course monopoly capitalism yields a rentier society in the absence of wealth and corporate taxation. Does not Piketty argue that the return to rentier society was underway before the Anglo-American neo-liberal turn (though it did obviously accelerate it) and has been happening even in societies not as neo-liberal as the Anglo-American ones? I read @5 as making this important point.jake the antisoshul soshulist 12.08.15 at 1:56 am 27
I am not an economist, but the source of the blame was political. I have heard that the primary causes of "stagflation" were "printing money" to cover the debts from the Vietnam War, increased oil prices and supply issues driving up costs, and economic competition from Japan reducing demand. The economic elites saw an opportunity to
take advantage of the crisis and blame it on policies they did not like. And push to replace them with policies that were advantageous to those elites. Ronald Reagan was a very successful salesman for this.Rakesh Bhandari 12.08.15 at 1:59 am 28
Maybe the American left is so focused on the critique of bad Republicans like Ronald Reagan and H.W. and W. Bush and so excited about Warren and Sanders–these political choices setting the limits of theoretical analysis – that it cannot countenance Piketty's deeper structural critique?Peter T 12.08.15 at 2:29 am 29
Piketty uses "capital" or "wealth" to refer to any asset which provides a stream of income. This is, in my view, correct. This is quite distinct from "capital" in the ordinary economic sense. Much – in fact most – economic capital does not yield income (roads, schools, food crops…) and so does not count. There is no reason to believe that wealth in the first sense does or should correspond to capital in the second sense. Our collective capital dwarfs wealth, while much wealth is simply extractive. To count a claim on tax revenues (a government bond) in the same class as a terraced field is a major mistake.From the late C19 on much private "capital" was withdrawn into the public spheres (eg private tolls or offices), a move that accelerated in the wars. Since 1980 this trend has reversed. Discussion of the amplitude or scarcity of capital should note that it is a legal and political category subject to large arbitrary changes.
Bruce Wilder 12.08.15 at 2:56 am 30
Piketty's deeper structural critiqueDoes Piketty have one? 'Cause then I missed it. It seems to me that Piketty is presenting the challenge of facts. He takes care to outline how the facts he documents are logically related, as in the analysis of how changes in the share distribution of income (between labor and capital) relates to economic growth and to the value of accumulated wealth as a stock. That's not "deep" or structural, though it is certainly necessary if we are to understand the facts as facts.
The first striking thing to me in Piketty's work is what Peter T discusses above at 2:29 am (@ 29): the distinction between wealth and capital, confusion about which powers the ideologies of more than a few economists and others. Just maintaining that distinction, while discussing the wild swings in the share of income going to capital over long periods of time forces attention to the politics. Is that "structure"?
notsneaky 12.08.15 at 4:06 am 31
@Rakesh – but the whole r vs. g thing in Piketty, while central to his book, is also the part that makes the least sense. It's made up, theoretically unsound, and with no evidence to back it up. It's junk. An accounting relationship is not a "law".And it's really Piketty's single minded focus, based presumably on his desire to provide a grand "one size fits all" explanation for the phenomenon he's discussing, which leads him to sideline all the possible institutional explanations, such as the ones enumerated above (not that I agree with all or even most of them)
notsneaky 12.08.15 at 4:18 am 32
In terms of r vs. gIn linear production model – r > or or or g always but capital's share in income is constant. Taxing capital doesn't matter for distribution.
In Ramsey model with endogenous saving and non-Cobb Douglas production – r > g but same criticisms as above imply.
The only one story about r vs. g out of the whole book which sort of makes sense is that if r > g then capital income can become more unevenly distributed (even as capital total's share stays constant). But even that is based on some sketchy assumptions and relaxing these even slightly can completely flip the result.
The Journal of Economic Perspectives V 29/ N 1, 2015 has a symposium on the topic and it pretty much consists of various polite ways of saying "good data, but the r vs. g thing is nonsense"
Omega Centauri 12.08.15 at 4:39 am 33
I've argued before that the conclusion that the simple inequality r>g leads to unlimited inequality is wrong -or at best incomplete. There are multiple ways that concentrations of capital can be, and are dissipated (i.e. broken up into smaller bits owned by more people). Taxes, and "death-taxes" is only one mechanism to accomplish this. Having on average more than one inheritor is another. Think for example of the Saudi Royal family, which controls great deal of the wealth of the Kingdom. It isn't all concentrated in one nuclear family, there are now thousands of princes, after not too many more generations a plurality of the country will be able to claim royal inheritance. Also there are other mechanisms, that can dissipate wealth concentrations, including luxury goods: Maserati is distributing some wealth from the super rich, to its shareholders and employees… Major donations to charity is any other. Still another comes from the application of the saying "a fool and his money are soon parted": some of the progeny, will be separated from their inheritances. One can't just use a simple theory of the evolution of the distribution of wealth and income, if you ignore wealth dissipation effects you will get a wildly wrong result.So in order to control or reverse the tendency towards ever increasing inequality, there could be deployed multiple strategies, all of which are aimed at increasing the dissipation of concentrations of wealth.
Omega Centauri 12.08.15 at 4:46 am 34
I also think there exist mechanisms in the economy which tend to stabilize R. The most obvious is that there are only so many profitable investments available at any given time, and supply/demand effects should lead to lower R if the amount of available capital gets too high or to increase it if there is less capital than investment opportunity. Also the tendency to spend wealth on immediate consumption versus investment changes as the expected return on investment changes. These effects should usually lead towards returning R towards some long term sustainable value.
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www.nakedcapitalism.com
VatchroadriderJKF? I didn't know that the historian John King Fairbank was assassinated.
skkThen I guess you have solid evidence to account for the actions of Allen Dulles, David Atlee Phillips, William Harvey, David Morales, E. Howard Hunt, Richard Helms, James Angleton and other CIA personnel and assets who had
1) perhaps the strongest motives to murder Kennedy
2) the means to carry out the crime, namely, their executive action (assassination) capability and blackmail the government into aiding their cover up and
3) the opportunity to carry out such a plan given their complete lack of accountability to the rest of the government and their unmatched expertise in lying, deceit, secrecy, fraud.
Because if you actually took the time to research or at least read about their actions in this matter instead of just spouting bald assertions that you decline to back up with any facts you would find their behavior nearly impossible to explain other than having at, the very least, guilty knowledge of the crime.
skkRuby claimed he was injected with cancer in jail, which ultimately rendered his second trial (after winning appeal overturning his death sentence) moot. It sounded crazy, but so did the motive proffered at his first trial-- that he wanted to save Mrs. Kennedy the anguish...
that is such an amazing story.. i've yet to watch the video of Lyndon Johnson's swearing in - where Marr states he's seen to be winking and smiling etc -
Jim Marrs - Kennedy Assassination Lecturethose who wish - Pick it up at around 12 minutes. actually in that lecture he may well be showing videos of it - I wdn't know cos just listen to the audio.
JFK is the one 'safe' conspiracy to talk about without getting the extreme whacko label.
fascinating "lectures" - British Humanist Society and all - still you gotta listen to everything especially the other side:
https://www.youtube.com/embed/V6s_Jw3RU9g?feature=oembed&wmode=opaque&list=PL44BEE83ED9D841A8Make a note of the names - rising stars in the I'm "left" but I'm not a conspiracist gaggle - ist a standard gaggle - Chomsky, Monbiot are in it ( to win it of course - their fabled "socialist" kingdom" ) - yeah yeah its BritLand so yeah why I care I suppose.
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finance.yahoo.com
DavidThey say they are for transparency. In 2013, President Obama boasted, "This is the most transparent administration in history." But watch what his administration does.cafeToday, it will issue new rules exempting a key administrative office that handles issues such as request for access to government email records from the Freedom of Information Act. That law is specifically designed to allow private parties to look at government documents that aren't privileged or involve national security.
Hillary and Obama are the most deceitful and dishonest people in America and neither of them should be in an office representing the United States of America.
My question is whether Huma Abedin had to sign the exit document specifying that she would ensure that all of her electronic documents were given to the State Department when she left her position at the same time that Hillary Clinton did.Bob from Cape CodIn fact, did all of Hillary's staff sign this document? It has been shown that Huma and other staff members have email addresses on the Clinton email server which validates the measures to have that server turned into the government!!!!
All of them need to be served subpoenas and this server need turned in!
According to other stories on Yahoo today, the State Dept said she did not sign the form. This speaks to the ineptness of this Administration.Mister KarmaWhat I'm thinking is: She did, but told Obama if it were released that she did sign it, she would spill the beans on all the inside B$ that would hurt Obama.
This way she gets to escape perjury charges and still keep the private server and keep deciding by herself what she will release and what she will not.
And her KoolAid drinking minions will accept everything she says.
Hillary...In the news- Factual HistoryTerryAs a 27-year-old staffer, she was fired from the Watergate committee for fraud and unethical behavior. Her former boss, Jerry Zeifman, finally spoke out in 2008:
"Because she was a liar," Zeifman said in an interview last week. "She was an unethical, dishonest lawyer. She conspired to violate the Constitution, the rules of the House, the rules of the committee and the rules of confidentiality.".....From a June 2000 article in the Los Angeles Times:
There is "substantial evidence" that First Lady Hillary Rodham Clinton lied under oath in denying that she played a role in the 1993 White House travel office firings, independent counsel Robert W. Ray reported Thursday....
On Sept. 11, 2012, Ambassador Chris Stevens and 3 other Americans were murdered by Islamic militants in Benghazi, Libya. Originally the attack was blamed on outrage due to an anti-Muslim You Tube video, and then-UN Ambassador Susan Rice made the rounds to all the Sunday shows to denounce the hate speech. For weeks, Hillary adamantly supported the ridiculous notion that these were "spontaneous demonstrations," despite overwhelming evidence that she knew from the beginning that this was simply false...
....... The truth is that Hillary has a long, checkered career, full of scandals and lies.
If in fact she did sign it, then why doesn't she just say YES? And if she didn't, then why doesn't she just say NO? Because, either way she broke the law. She's guilty if she did, and she's guilty if she didn't. When are the Billary fans going to realize, that she's the mistake by the lake. This is a Conniving, Scheming, Narcissistic, non Feeling or Caring poor excuse of a humanbeing. This is one nasty women, and I'm amazed that so many people don't see it. Don't let Oh-Bummer happen to us 3 times.Justa NobodyI'm so disappointed with our government. Isn't it time for voters from all parties to send a message that We The People want and expect open and transparent government.
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Economist's View
Friction is now between global financial elite and the rest of us, The Guardian:
... ... ...
But the standard explanation, as well as the standard debate, overlooks the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs. ...
Dan Kervick said...
"This means that the fracture in politics will move from left to right to the anti-establishment versus establishment."
I think this is probably right, but the established parties are doing their best to prevent it. Each of them has an interest in continuing to divide people along various cultural, religious and ethnic identity lines in order to prevent them from achieving any kind of effective solidarity along class lines.
Anyway, I fear we may be headed toward a turbulent and very unpleasant future.
Kenneth D said...
"Rethinking the Global Political Economy" By Jeff Faux April 24, 2002
In most cases, international agreements are negotiated by elites that have more in common with each other than with working people in the countries that they represent. As a retired U.S. State Department official put it to me bluntly a few years ago, "What you don't understand," he said, "is that when we negotiate economic agreements with these poorer countries, we are negotiating with people from the same class. That is, people whose interests are like ours – on the side of capital."
Accordingly, the fundamental purpose of the neo-liberal polices of the past 20 years has been to discipline labor in order to free capital from having to bargain with workers over the gains from rising productivity.
But labor is typically at a disadvantage because it usually bargains under conditions of excess supply of unemployed workers. Moreover, the forced liberalization of finance and trade provides enormous bargaining leverage to capital, because it can now threaten to leave the economy altogether.
Moreover, unregulated globalization in one stroke puts government's domestic policies decisively on the side of capital. In an economy that is growing based on its domestic market, rising wages help everyone because they increase purchasing power and consumer demand – which is the major driver of economic growth in a modern economy. But in an economy whose growth depends on foreign markets, rising domestic wages are a problem, because they add to the burden of competing internationally.
Both the international financial institutions and the WTO have powers to enforce protection of investors' rights among nations, the former through the denial of financing, the latter through trade sanctions. But the institution charged with protecting workers' rights – the International Labor Organization (ILO) – has no enforcement power.
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Nov 06, 2015 | Economist's View
Health is a Key Component of Inequality
In terms of welfare (under standard assumptions on the welfare function), the elimination of the left tail of mortality would have a beneficial impact that is about 60 percent larger than full consumption equalization.
What are the policies that might eliminate the lower tail of the life-expectancy distribution? This remains a topic for further discussion. However, we observe that the increase in life expectancy that we need to achieve the elimination of the lower tail is not unprecedented. Over a span of twenty years, life expectancy increased on average by three years across U.S. counties, which would be sufficient to raise the lower tail substantially.
DrDick said...
Low life expectancies in the South have been widely documented for decades. I would note that most of the high mortality areas in Montana are associated with Indian reservations. The one in the NW corner is anti-government survivalists and libertarian whackaloons. Objectivist jerky indeed.
djb said...
methodology has advantages in that is it is doable, but limitations in that it was divided into quintiles solely by average income in the zipcode. Top quintile income group was 48000 average bottom quintile 22000. Of course the debt load was going down more for lower income zip codes compared to higher income zip codes, which goes counter to JohnH's assertions about monetary policy
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derinsular.com
This paper argues that Mancur Olson's theory of distributional coalitions largely explains this network's raison d'ętre. The paper first outlines the main tenets of the theory, and then examines the historical roots of the Turkish deep state, as well as the paradigm shift its exposure caused in the public opinion. The network's
- exclusive character,
- impacts on the workings of the Turkish society, and finally
- efforts to sustain its dominating influence, which is manifested especially in its attempts to reverse the country's democratization process,
demonstrate that the emergence, influence, and the incentives of the Turkish deep state confirm the fundamental assumptions of Olson's theory.
The Theory of Distributional Coalitions Mancur Olson's theory of distributional coalitions holds that, as societies establish themselves, group interests become more identifiable, and subsets of the society organize in an effort to secure these interests. Since these interests are best served by coordinated action, institutions emerge. Yet, such institutions tend to be exclusive by nature, and pursue only the interests of their own members, who account to a very small minority.
This exclusivity factor is of special importance in the way these rent-seeking (or special-interest) groups operate, since, unlike highly-encompassing organizations, exclusive organizations do not have an incentive to increase the productivity of the society. This is due to the disproportion between the sizes of the exclusive organization and the population. To use Olson's idiom, such organizations are in a position either to make larger the pie the society produces or to obtain larger slices for their members.
"Our intuition tells us," Olson says, "that the first method will rarely be chosen."2 Because, on the one hand, it is very costly to increase the productivity of society as a whole, and on the other, even if this is achieved, the The Rise and Decline of the Turkish "Deep State": The Ergenekon Case 101 members of the minuscule organization will accordingly reap only a minuscule portion of the benefits.
Therefore, exclusive groups aim to present their own interests as being the interests of their constituencies, and to use all of their organizational power for collective action in that direction.
That is still the case even when the organization's cost to the society is significantly more than the benefits it seeks for its members. Such behavior is not at all unexpected of exclusive organizations, since it is the very policy of exclusion itself that enables the group to distribute more to its members.In that respect, disproportional allocation of resources goes hand in hand with barriers to entry into the favored areas of the special-interest group.
Yet the existence of barriers to entry further damages the society by reducing the economic growth.
When coupled with the interferences of the special-interest groups with the possibilities of change in the existing state of affairs, the level of the reduction in economic growth can be large.
In order to achieve their goals, special-interest groups engage in lobbying activities and collusion – both of which, by creating special provisions and exceptions, further increase not only inefficiency but also (1) the complexity of regulation, (2) the scope of government, and (3) the complexity of understandings.
The Formation and the Evolution of the Turkish Deep State The genesis of the Turkish deep state is traceable to the Committee of Union and Progress (CUP, İttihad ve Terakki Cemiyeti), a secret society founded in Istanbul in 1889 by a group of medical students who had a passion for reform in the Ottoman Empire.3 The CUP organized so extensively that, in less than two decades, it became a revolutionary political organization with branches inside and outside the Ottoman Empire.4 Within the organization existed numerous factions, and the body of membership was ethnically and even ideologically diverse.
Yet it was the commonly-shared goal of changing the regime rather than conformity that bound the members together, and they successfully achieved that goal with the Young Turk Revolution of 1908, which restored the Constitution of 1876 (Kanun-ı Esasi) that restricted the powers of the Sultan, and made the Ottoman Empire a constitutional monarchy again after 32 years of absolutism.
The genesis of the Turkish deep state is traceable to the Committee of Union and Progress, a secret society founded in Istanbul in 1889 by a group of medical students who had a passion for reform in the Ottoman Empire SERDAR KAYA 102 What makes the CUP extraordinary as a case is that it never fully transformed into a genuine political party even after the revolution it brought about.
Instead, it continued to operate as the secret committee it always was.5 Back then, in reference to this fact, some of the critics of the CUP had coined the phrase "invisible people" (rical-i gayb).6 In the end, this code of conduct rendered the committee as a clandestine force that exerted influence by informal means in order to change the course of affairs the way it saw fit.
The reflections of that proclivity are traceable in many of the major occurrences of the time.
In what is today commonly referred to as the coup of 1913, for example, a group of CUP operatives broke into the Sublime Porte as the Cabinet was in session, murdered the minister of defense and two prominent government officials, and forced the Grand Vizier, the head of the Cabinet, to resign immediately.
The coup of 1913 is also important in that it set a precedent in the country for military interventions and ultimatums, the latest of which occurred on April 27, 2007.
A second example to the code of conduct of the CUP may be the clandestine activities of the Special Organization7 (Teşkilat-ı Mahsusa).
Although the CUP established the Special Organization in 1913, ten months after the coup of 1913, it was in fact the continuation of the Fedaiin, the secret organization the CUP established in 1905 – that is, before the Young Turk Revolution of 1908.
The CUP used the Fedaiin to have its political opponents assassinated, among other things, and later on, employed the Special Organization in the mass killings of the Ottoman- Armenians in 1915.8 The CUP disbanded in 1918, a year that also marked the beginning of the dissolution of the Ottoman Empire after World War I.
However, many of its members as well as the political culture it created survived within the Republic of Turkey.
To this day, "Unionism" (İttihatçılık) has persisted in the political culture of Turkey, and has manifested itself primarily in (1) ultranationalism, (2) military involvement/ intervention in politics, and (3) justification of extrajudicial activities and violence in the name of the fatherland (vatan).
Nevertheless, different aspects of this political culture have gained primacy in different periods, and with the influence of the changes in the domestic and international conjuncture, it more or less evolved. For example, during the One Party Era (1925-45), the influence of interwarperiod fascism further radicalized the nationalist ideology of the ruling cadre. Then, in the 1960s, variations of the same Unionist background found expression The Rise and Decline of the Turkish "Deep State": The Ergenekon Case 103 in the rightist and leftist political movements, which, unsurprisingly, entered into violent conflict in the 1970s.
In the mid-1980s, the Kurdish question reemerged with the terrorist activities of the Kurdistan Workers' Party (PKK), the separatist guerilla group, which became a source of instability in the southeast region of the country, and in so doing, provided a new fertile ground for the clandestine operations of the Turkish deep state.
Of particular importance among these clandestine operations were those by the Gendarmarie Intelligence and Counter-terror Unit (JİTEM, Jandarma İstihbarat ve Terörle Mücadele), which is allegedly responsible for thousands of extrajudicial executions and assassinations of PKK sympathizers and supporters.
Yet the same decade also marked the time period in which Turkey opened its borders and started to integrate with the rest of the world. As a result, after the 1980s, new social, political and economic perspectives started to emerge. However, this new West that Turkey came to closer contact with during and after the 1980s was fundamentally different from the West of the interwar period in that the former was democratic, and the latter fascist.
The increasing interaction with the West did not instantly trigger the demands for democratization in the country. It was the Susurluk scandal and a combination of other events that occurred approximately a decade later that started to dramatically shift the prevalant paradigms. On the one hand, these experiences created a more profound societal cognizance of questioning authority, and on the other, in line with these experiences, people came to attach new meanings to the nature of the state-society relations in Turkey in a manner which provided a more convenient ground for the democratization process in the country.
Apparently, these paradigm shifts also coincided with the developments since the Helsinki European Council of 1999, where the European Union (EU) formally referred to Turkey as a candidate and thus invigorated the country's accession process.
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February 21, 2014 | billmoyers.com
Rome lived upon its principal till ruin stared it in the face. Industry is the only true source of wealth, and there was no industry in Rome. By day the Ostia road was crowded with carts and muleteers, carrying to the great city the silks and spices of the East, the marble of Asia Minor, the timber of the Atlas, the grain of Africa and Egypt; and the carts brought out nothing but loads of dung. That was their return cargo.
– The Martyrdom of Man by Winwood Reade (1871)
There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power. [1]
During the last five years, the news media has been flooded with pundits decrying the broken politics of Washington. The conventional wisdom has it that partisan gridlock and dysfunction have become the new normal. That is certainly the case, and I have been among the harshest critics of this development. But it is also imperative to acknowledge the limits of this critique as it applies to the American governmental system. On one level, the critique is self-evident: In the domain that the public can see, Congress is hopelessly deadlocked in the worst manner since the 1850s, the violently rancorous decade preceding the Civil War.
Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country…As I wrote in The Party is Over, the present objective of congressional Republicans is to render the executive branch powerless, at least until a Republican president is elected (a goal that voter suppression laws in GOP-controlled states are clearly intended to accomplish). President Obama cannot enact his domestic policies and budgets: Because of incessant GOP filibustering, not only could he not fill the large number of vacancies in the federal judiciary, he could not even get his most innocuous presidential appointees into office. Democrats controlling the Senate have responded by weakening the filibuster of nominations, but Republicans are sure to react with other parliamentary delaying tactics. This strategy amounts to congressional nullification of executive branch powers by a party that controls a majority in only one house of Congress.
Despite this apparent impotence, President Obama can liquidate American citizens without due processes, detain prisoners indefinitely without charge, conduct dragnet surveillance on the American people without judicial warrant and engage in unprecedented - at least since the McCarthy era - witch hunts against federal employees (the so-called "Insider Threat Program"). Within the United States, this power is characterized by massive displays of intimidating force by militarized federal, state and local law enforcement. Abroad, President Obama can start wars at will and engage in virtually any other activity whatsoever without so much as a by-your-leave from Congress, such as arranging the forced landing of a plane carrying a sovereign head of state over foreign territory. Despite the habitual cant of congressional Republicans about executive overreach by Obama, the would-be dictator, we have until recently heard very little from them about these actions - with the minor exception of comments from gadfly Senator Rand Paul of Kentucky. Democrats, save a few mavericks such as Ron Wyden of Oregon, are not unduly troubled, either - even to the extent of permitting seemingly perjured congressional testimony under oath by executive branch officials on the subject of illegal surveillance.
These are not isolated instances of a contradiction; they have been so pervasive that they tend to be disregarded as background noise. During the time in 2011 when political warfare over the debt ceiling was beginning to paralyze the business of governance in Washington, the United States government somehow summoned the resources to overthrow Muammar Ghaddafi's regime in Libya, and, when the instability created by that coup spilled over into Mali, provide overt and covert assistance to French intervention there. At a time when there was heated debate about continuing meat inspections and civilian air traffic control because of the budget crisis, our government was somehow able to commit $115 million to keeping a civil war going in Syria and to pay at least Ł100m to the United Kingdom's Government Communications Headquarters to buy influence over and access to that country's intelligence. Since 2007, two bridges carrying interstate highways have collapsed due to inadequate maintenance of infrastructure, one killing 13 people. During that same period of time, the government spent $1.7 billion constructing a building in Utah that is the size of 17 football fields. This mammoth structure is intended to allow the National Security Agency to store a yottabyte of information, the largest numerical designator computer scientists have coined. A yottabyte is equal to 500 quintillion pages of text. They need that much storage to archive every single trace of your electronic life.
Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an "establishment." All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State's protectiveness towards its higher-ranking personnel that allows them to escape the consequences of their frequent ineptitude. [2]
How did I come to write an analysis of the Deep State, and why am I equipped to write it? As a congressional staff member for 28 years specializing in national security and possessing a top secret security clearance, I was at least on the fringes of the world I am describing, if neither totally in it by virtue of full membership nor of it by psychological disposition. But, like virtually every employed person, I became, to some extent, assimilated into the culture of the institution I worked for, and only by slow degrees, starting before the invasion of Iraq, did I begin fundamentally to question the reasons of state that motivate the people who are, to quote George W. Bush, "the deciders."
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Cultural assimilation is partly a matter of what psychologist Irving L. Janis called "groupthink," the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town's cool kids drop those ideas as if they were radioactive. As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said, "It is difficult to get a man to understand something when his salary depends upon his not understanding it."A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness of it all once you have planted yourself in your office chair for the 10,000th time. Government life is typically not some vignette from an Allen Drury novel about intrigue under the Capitol dome. Sitting and staring at the clock on the off-white office wall when it's 11:00 in the evening and you are vowing never, ever to eat another piece of takeout pizza in your life is not an experience that summons the higher literary instincts of a would-be memoirist. After a while, a functionary of the state begins to hear things that, in another context, would be quite remarkable, or at least noteworthy, and yet that simply bounce off one's consciousness like pebbles off steel plate: "You mean the number of terrorist groups we are fighting is classified?" No wonder so few people are whistle-blowers, quite apart from the vicious retaliation whistle-blowing often provokes: Unless one is blessed with imagination and a fine sense of irony, growing immune to the curiousness of one's surroundings is easy. To paraphrase the inimitable Donald Rumsfeld, I didn't know all that I knew, at least until I had had a couple of years away from the government to reflect upon it.
The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. Also included are a handful of vital federal trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where sensitive proceedings in national security cases are conducted. The final government component (and possibly last in precedence among the formal branches of government established by the Constitution) is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the members of the defense and intelligence committees. The rest of Congress, normally so fractious and partisan, is mostly only intermittently aware of the Deep State and when required usually submits to a few well-chosen words from the State's emissaries.
I saw this submissiveness on many occasions. One memorable incident was passage of the Foreign Intelligence Surveillance Amendments Act of 2008. This legislation retroactively legalized the Bush administration's illegal and unconstitutional surveillance first revealed by The New York Times in 2005 and indemnified the telecommunications companies for their cooperation in these acts. The bill passed easily: All that was required was the invocation of the word "terrorism" and most members of Congress responded like iron filings obeying a magnet. One who responded in that fashion was Senator Barack Obama, soon to be coronated as the presidential nominee at the Democratic National Convention in Denver. He had already won the most delegates by campaigning to the left of his main opponent, Hillary Clinton, on the excesses of the global war on terror and the erosion of constitutional liberties.
As the indemnification vote showed, the Deep State does not consist only of government agencies. What is euphemistically called "private enterprise" is an integral part of its operations. In a special series in The Washington Post called "Top Secret America," Dana Priest and William K. Arkin described the scope of the privatized Deep State and the degree to which it has metastasized after the September 11 attacks. There are now 854,000 contract personnel with top-secret clearances - a number greater than that of top-secret-cleared civilian employees of the government. While they work throughout the country and the world, their heavy concentration in and around the Washington suburbs is unmistakable: Since 9/11, 33 facilities for top-secret intelligence have been built or are under construction. Combined, they occupy the floor space of almost three Pentagons - about 17 million square feet. Seventy percent of the intelligence community's budget goes to paying contracts. And the membrane between government and industry is highly permeable: The Director of National Intelligence, James R. Clapper, is a former executive of Booz Allen Hamilton, one of the government's largest intelligence contractors. His predecessor as director, Admiral Mike McConnell, is the current vice chairman of the same company; Booz Allen is 99 percent dependent on government business. These contractors now set the political and social tone of Washington, just as they are increasingly setting the direction of the country, but they are doing it quietly, their doings unrecorded in the Congressional Record or the Federal Register, and are rarely subject to congressional hearings.
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Washington is the most important node of the Deep State that has taken over America, but it is not the only one. Invisible threads of money and ambition connect the town to other nodes. One is Wall Street, which supplies the cash that keeps the political machine quiescent and operating as a diversionary marionette theater. Should the politicians forget their lines and threaten the status quo, Wall Street floods the town with cash and lawyers to help the hired hands remember their own best interests. The executives of the financial giants even have de facto criminal immunity. On March 6, 2013, testifying before the Senate Judiciary Committee, Attorney General Eric Holder stated the following: "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy." This, from the chief law enforcement officer of a justice system that has practically abolished the constitutional right to trial for poorer defendants charged with certain crimes. It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice - certainly beyond the dreams of a salaried government employee. [3]The corridor between Manhattan and Washington is a well trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street: Robert Rubin, Lawrence Summers, Henry Paulson, Timothy Geithner and many others. Not all the traffic involves persons connected with the purely financial operations of the government: In 2013, General David Petraeus joined KKR (formerly Kohlberg Kravis Roberts) of 9 West 57th Street, New York, a private equity firm with $62.3 billion in assets. KKR specializes in management buyouts and leveraged finance. General Petraeus' expertise in these areas is unclear. His ability to peddle influence, however, is a known and valued commodity. Unlike Cincinnatus, the military commanders of the Deep State do not take up the plow once they lay down the sword. Petraeus also obtained a sinecure as a non-resident senior fellow at the Belfer Center for Science and International Affairs at Harvard. The Ivy League is, of course, the preferred bleaching tub and charm school of the American oligarchy. [4]
Petraeus and most of the avatars of the Deep State - the White House advisers who urged Obama not to impose compensation limits on Wall Street CEOs, the contractor-connected think tank experts who besought us to "stay the course" in Iraq, the economic gurus who perpetually demonstrate that globalization and deregulation are a blessing that makes us all better off in the long run - are careful to pretend that they have no ideology. Their preferred pose is that of the politically neutral technocrat offering well considered advice based on profound expertise. That is nonsense. They are deeply dyed in the hue of the official ideology of the governing class, an ideology that is neither specifically Democrat nor Republican. Domestically, whatever they might privately believe about essentially diversionary social issues such as abortion or gay marriage, they almost invariably believe in the "Washington Consensus": financialization, outsourcing, privatization, deregulation and the commodifying of labor. Internationally, they espouse 21st-century "American Exceptionalism": the right and duty of the United States to meddle in every region of the world with coercive diplomacy and boots on the ground and to ignore painfully won international norms of civilized behavior. To paraphrase what Sir John Harrington said more than 400 years ago about treason, now that the ideology of the Deep State has prospered, none dare call it ideology. [5] That is why describing torture with the word "torture" on broadcast television is treated less as political heresy than as an inexcusable lapse of Washington etiquette: Like smoking a cigarette on camera, these days it is simply "not done."
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After Edward Snowden's revelations about the extent and depth of surveillance by the National Security Agency, it has become publicly evident that Silicon Valley is a vital node of the Deep State as well. Unlike military and intelligence contractors, Silicon Valley overwhelmingly sells to the private market, but its business is so important to the government that a strange relationship has emerged. While the government could simply dragoon the high technology companies to do the NSA's bidding, it would prefer cooperation with so important an engine of the nation's economy, perhaps with an implied quid pro quo. Perhaps this explains the extraordinary indulgence the government shows the Valley in intellectual property matters. If an American "jailbreaks" his smartphone (i.e., modifies it so that it can use a service provider other than the one dictated by the manufacturer), he could receive a fine of up to $500,000 and several years in prison; so much for a citizen's vaunted property rights to what he purchases. The libertarian pose of the Silicon Valley moguls, so carefully cultivated in their public relations, has always been a sham. Silicon Valley has long been tracking for commercial purposes the activities of every person who uses an electronic device, so it is hardly surprising that the Deep State should emulate the Valley and do the same for its own purposes. Nor is it surprising that it should conscript the Valley's assistance.
Still, despite the essential roles of lower Manhattan and Silicon Valley, the center of gravity of the Deep State is firmly situated in and around the Beltway. The Deep State's physical expansion and consolidation around the Beltway would seem to make a mockery of the frequent pronouncement that governance in Washington is dysfunctional and broken. That the secret and unaccountable Deep State floats freely above the gridlock between both ends of Pennsylvania Avenue is the paradox of American government in the 21st century: drone strikes, data mining, secret prisons and Panopticon-like control on the one hand; and on the other, the ordinary, visible parliamentary institutions of self-government declining to the status of a banana republic amid the gradual collapse of public infrastructure.
The results of this contradiction are not abstract, as a tour of the rotting, decaying, bankrupt cities of the American Midwest will attest. It is not even confined to those parts of the country left behind by a Washington Consensus that decreed the financialization and deindustrialization of the economy in the interests of efficiency and shareholder value. This paradox is evident even within the Beltway itself, the richest metropolitan area in the nation. Although demographers and urban researchers invariably count Washington as a "world city," that is not always evident to those who live there. Virtually every time there is a severe summer thunderstorm, tens - or even hundreds - of thousands of residents lose power, often for many days. There are occasional water restrictions over wide areas because water mains, poorly constructed and inadequately maintained, have burst. [6] The Washington metropolitan area considers it a Herculean task just to build a rail link to its international airport - with luck it may be completed by 2018.
It is as if Hadrian's Wall was still fully manned and the fortifications along the border with Germania were never stronger, even as the city of Rome disintegrates from within and the life-sustaining aqueducts leading down from the hills begin to crumble. The governing classes of the Deep State may continue to deceive themselves with their dreams of Zeus-like omnipotence, but others do not. A 2013 Pew Poll that interviewed 38,000 people around the world found that in 23 of 39 countries surveyed, a plurality of respondents said they believed China already had or would in the future replace the United States as the world's top economic power.
The Deep State is the big story of our time. It is the red thread that runs through the war on terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic social structure and political dysfunction. Washington is the headquarters of the Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to "live upon its principal till ruin stared it in the face." "Living upon its principal," in this case, means that the Deep State has been extracting value from the American people in vampire-like fashion.
We are faced with two disagreeable implications. First, that the Deep State is so heavily entrenched, so well protected by surveillance, firepower, money and its ability to co-opt resistance that it is almost impervious to change. Second, that just as in so many previous empires, the Deep State is populated with those whose instinctive reaction to the failure of their policies is to double down on those very policies in the future. Iraq was a failure briefly camouflaged by the wholly propagandistic success of the so-called surge; this legerdemain allowed for the surge in Afghanistan, which equally came to naught. Undeterred by that failure, the functionaries of the Deep State plunged into Libya; the smoking rubble of the Benghazi consulate, rather than discouraging further misadventure, seemed merely to incite the itch to bomb Syria. Will the Deep State ride on the back of the American people from failure to failure until the country itself, despite its huge reserves of human and material capital, is slowly exhausted? The dusty road of empire is strewn with the bones of former great powers that exhausted themselves in like manner.
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But, there are signs of resistance to the Deep State and its demands. In the aftermath of the Snowden revelations, the House narrowly failed to pass an amendment that would have defunded the NSA's warrantless collection of data from US persons. Shortly thereafter, the president, advocating yet another military intervention in the Middle East, this time in Syria, met with such overwhelming congressional skepticism that he changed the subject by grasping at a diplomatic lifeline thrown to him by Vladimir Putin. [7]Has the visible, constitutional state, the one envisaged by Madison and the other Founders, finally begun to reassert itself against the claims and usurpations of the Deep State? To some extent, perhaps. The unfolding revelations of the scope of the NSA's warrantless surveillance have become so egregious that even institutional apologists such as Senator Dianne Feinstein have begun to backpedal - if only rhetorically - from their knee-jerk defense of the agency. As more people begin to waken from the fearful and suggestible state that 9/11 created in their minds, it is possible that the Deep State's decade-old tactic of crying "terrorism!" every time it faces resistance is no longer eliciting the same Pavlovian response of meek obedience. And the American people, possibly even their legislators, are growing tired of endless quagmires in the Middle East.
But there is another more structural reason the Deep State may have peaked in the extent of its dominance. While it seems to float above the constitutional state, its essentially parasitic, extractive nature means that it is still tethered to the formal proceedings of governance. The Deep State thrives when there is tolerable functionality in the day-to-day operations of the federal government. As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e., secret) budgets get rubber-stamped, special tax subsidies for certain corporations are approved without controversy, as long as too many awkward questions are not asked, the gears of the hybrid state will mesh noiselessly. But when one house of Congress is taken over by tea party Wahhabites, life for the ruling class becomes more trying.
If there is anything the Deep State requires it is silent, uninterrupted cash flow and the confidence that things will go on as they have in the past. It is even willing to tolerate a degree of gridlock: Partisan mud wrestling over cultural issues may be a useful distraction from its agenda. But recent congressional antics involving sequestration, the government shutdown and the threat of default over the debt ceiling extension have been disrupting that equilibrium. And an extreme gridlock dynamic has developed between the two parties such that continuing some level of sequestration is politically the least bad option for both parties, albeit for different reasons. As much as many Republicans might want to give budget relief to the organs of national security, they cannot fully reverse sequestration without the Democrats demanding revenue increases. And Democrats wanting to spend more on domestic discretionary programs cannot void sequestration on either domestic or defense programs without Republicans insisting on entitlement cuts.
So, for the foreseeable future, the Deep State must restrain its appetite for taxpayer dollars. Limited deals may soften sequestration, but agency requests will not likely be fully funded anytime soon. Even Wall Street's rentier operations have been affected: After helping finance the tea party to advance its own plutocratic ambitions, America's Big Money is now regretting the Frankenstein's monster it has created. Like children playing with dynamite, the tea party and its compulsion to drive the nation into credit default has alarmed the grown-ups commanding the heights of capital; the latter are now telling the politicians they thought they had hired to knock it off.
The House vote to defund the NSA's illegal surveillance programs was equally illustrative of the disruptive nature of the tea party insurgency. Civil liberties Democrats alone would never have come so close to victory; tea party stalwart Justin Amash (R-MI), who has also upset the business community for his debt-limit fundamentalism, was the lead Republican sponsor of the NSA amendment, and most of the Republicans who voted with him were aligned with the tea party.
The final factor is Silicon Valley. Owing to secrecy and obfuscation, it is hard to know how much of the NSA's relationship with the Valley is based on voluntary cooperation, how much is legal compulsion through FISA warrants and how much is a matter of the NSA surreptitiously breaking into technology companies' systems. Given the Valley's public relations requirement to mollify its customers who have privacy concerns, it is difficult to take the tech firms' libertarian protestations about government compromise of their systems at face value, especially since they engage in similar activity against their own customers for commercial purposes. That said, evidence is accumulating that Silicon Valley is losing billions in overseas business from companies, individuals and governments that want to maintain privacy. For high tech entrepreneurs, the cash nexus is ultimately more compelling than the Deep State's demand for patriotic cooperation. Even legal compulsion can be combatted: Unlike the individual citizen, tech firms have deep pockets and batteries of lawyers with which to fight government diktat.
This pushback has gone so far that on January 17, President Obama announced revisions to the NSA's data collection programs, including withdrawing the agency's custody of a domestic telephone record database, expanding requirements for judicial warrants and ceasing to spy on (undefined) "friendly foreign leaders." Critics have denounced the changes as a cosmetic public relations move, but they are still significant in that the clamor has gotten so loud that the president feels the political need to address it.
When the contradictions within a ruling ideology are pushed too far, factionalism appears and that ideology begins slowly to crumble. Corporate oligarchs such as the Koch brothers are no longer entirely happy with the faux-populist political front group they helped fund and groom. Silicon Valley, for all the Ayn Rand-like tendencies of its major players, its offshoring strategies and its further exacerbation of income inequality, is now lobbying Congress to restrain the NSA, a core component of the Deep State. Some tech firms are moving to encrypt their data. High tech corporations and governments alike seek dominance over people though collection of personal data, but the corporations are jumping ship now that adverse public reaction to the NSA scandals threatens their profits.
The outcome of all these developments is uncertain. The Deep State, based on the twin pillars of national security imperative and corporate hegemony, has until recently seemed unshakable and the latest events may only be a temporary perturbation in its trajectory. But history has a way of toppling the altars of the mighty. While the two great materialist and determinist ideologies of the twentieth century, Marxism and the Washington Consensus, successively decreed that the dictatorship of the proletariat and the dictatorship of the market were inevitable, the future is actually indeterminate. It may be that deep economic and social currents create the framework of history, but those currents can be channeled, eddied, or even reversed by circumstance, chance and human agency. We have only to reflect upon defunct glacial despotisms such as the USSR or East Germany to realize that nothing is forever.
Throughout history, state systems with outsized pretensions to power have reacted to their environments in two ways. The first strategy, reflecting the ossification of its ruling elites, consists of repeating that nothing is wrong, that the status quo reflects the nation's unique good fortune in being favored by God and that those calling for change are merely subversive troublemakers. As the French ancien régime, the Romanov dynasty and the Habsburg emperors discovered, the strategy works splendidly for a while, particularly if one has a talent for dismissing unpleasant facts. The final results, however, are likely to be thoroughly disappointing.The second strategy is one embraced to varying degrees and with differing goals, by figures of such contrasting personalities as Mustafa Kemal Atatürk, Franklin D. Roosevelt, Charles de Gaulle and Deng Xiaoping. They were certainly not revolutionaries by temperament; if anything, their natures were conservative. But they understood that the political cultures in which they lived were fossilized and incapable of adapting to the times. In their drive to reform and modernize the political systems they inherited, their first obstacles to overcome were the outworn myths that encrusted the thinking of the elites of their time.
As the United States confronts its future after experiencing two failed wars, a precarious economy and $17 trillion in accumulated debt, the national punditry has split into two camps. The first, the declinists, sees a broken, dysfunctional political system incapable of reform and an economy soon to be overtaken by China. The second, the reformers, offers a profusion of nostrums to turn the nation around: public financing of elections to sever the artery of money between the corporate components of the Deep State and financially dependent elected officials, government "insourcing" to reverse the tide of outsourcing of government functions and the conflicts of interest that it creates, a tax policy that values human labor over financial manipulation and a trade policy that favors exporting manufactured goods over exporting investment capital.
Mike Lofgren on the Deep State Hiding in Plain Sight All of that is necessary, but not sufficient. The Snowden revelations (the impact of which have been surprisingly strong), the derailed drive for military intervention in Syria and a fractious Congress, whose dysfunction has begun to be a serious inconvenience to the Deep State, show that there is now a deep but as yet inchoate hunger for change. What America lacks is a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with surprising speed.
[1] The term "Deep State" was coined in Turkey and is said to be a system composed of high-level elements within the intelligence services, military, security, judiciary and organized crime. In British author John le Carré's latest novel, A Delicate Truth, a character describes the Deep State as "… the ever-expanding circle of non-governmental insiders from banking, industry and commerce who were cleared for highly classified information denied to large swathes of Whitehall and Westminster." I use the term to mean a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.
[2] Twenty-five years ago, the sociologist Robert Nisbet described this phenomenon as "the attribute of No Fault…. Presidents, secretaries and generals and admirals in America seemingly subscribe to the doctrine that no fault ever attaches to policy and operations. This No Fault conviction prevents them from taking too seriously such notorious foul-ups as Desert One, Grenada, Lebanon and now the Persian Gulf." To his list we might add 9/11, Iraq, Afghanistan and Libya.
[3] The attitude of many members of Congress towards Wall Street was memorably expressed by Rep. Spencer Bachus (R-AL), the incoming chairman of the House Financial Services Committee, in 2010: "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."
[4] Beginning in 1988, every US president has been a graduate of Harvard or Yale. Beginning in 2000, every losing presidential candidate has been a Harvard or Yale graduate, with the exception of John McCain in 2008.
[5] In recent months, the American public has seen a vivid example of a Deep State operative marketing his ideology under the banner of pragmatism. Former Secretary of Defense Robert M. Gates - a one-time career CIA officer and deeply political Bush family retainer - has camouflaged his retrospective defense of military escalations that have brought us nothing but casualties and fiscal grief as the straight-from-the-shoulder memoir from a plain-spoken son of Kansas who disdains Washington and its politicians.
[6] Meanwhile, the US government took the lead in restoring Baghdad's sewer system at a cost of $7 billion.
[7] Obama's abrupt about-face suggests he may have been skeptical of military intervention in Syria all along, but only dropped that policy once Congress and Putin gave him the running room to do so. In 2009, he went ahead with the Afghanistan "surge" partly because General Petraeus' public relations campaign and back-channel lobbying on the Hill for implementation of his pet military strategy pre-empted other options. These incidents raise the disturbing question of how much the democratically elected president - or any president - sets the policy of the national security state and how much the policy is set for him by the professional operatives of that state who engineer faits accomplis that force his hand.
Mike Lofgren is a former congressional staff member who served on both the House and Senate budget committees. His book about Congress, The Party is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted, appeared in paperback on August 27, 2013.
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- Anonymous
Another attribute of the "Deep State" is that is highly nepotistic. Entry into it relies on connections rather than skill. Many positions within it exist simply to provide suitably lucrative work for the children of the ruling class.
- Nisswapaddy
Lofgren has certainly provided a good overview of the situation, although what he postulates is by no means original thinking. However, it is particularly heartening to have this analysis come from a fellow who could easily have sold his soul like David Petraeus, to name just one in an endless line of the well connected who have cashed in. Yet I believe our situation is more dire than even Lofgren suggests. As the philosopher John Ralston Saul characterized it, we have undergone a coup d'etat in slow motion and now live, not in a constitutional democracy but 'Democracy Inc.' (described in detail in a book by the same name by Prof. Sheldon Wolin). LIke Lofgren, neither of these thinkers sees some carefully contrived conspiracy at work. It is merely the inevitable result of following a rigid ideology that allows unfettered corporate capitalism to have its way unopposed and essentially unregulated. Now that massive corporation have taken control of all the levers of power (as Lofgren summarizes above) it will be very, very difficult for 'the people' to take them back. Remember what Upton Sinclair observed over 100 years ago:
"It is difficult to get a man to understand something when his salary depends upon him NOT understanding it."
I give you men like Dave Petraeus, or Jamie Dimon or (fill in the blank) who are subject to this 'lack of understanding'. They are not co-conspirators, at least not in any active, conscious sense. However, the corporations they work for, whose only function is to maximize profits for the benefit of their shareholders and investors and to 'externalize' any and all costs and expenses possible, are, by definition, sociopaths. And those corporations, run by men and women simply doing their jobs and going home to a loving family, also have a 'lack of understanding'. When the corporation you work for has only reason for being, to make a profit 'come heck or high water', and that corporation and hundreds of others with the she mission, control the executive, congress, the judiciary and their regulators (who are now required to call the corporations they supposedly regulate "their customers" ) it doesn't take much imagination to see how we got where we are. Nor how it is that corporations get what they need, the rest of us be dammed. In short, the 'deep state' Lofgren shines a light on is much deeper than he indicates. And it will take more than spats between large corporations to bring it to an end.
- William Jacoby
Good essay but everybody should know this by now. In the next elections, in which good candidates will by definition not be viable because they won't be bankrolled by the Deep State, we must use the alternative media to coalesce around a few non-negotiable demands. Things like prosecuting Clapper for lying, immediate prohibition of the intelligence community's revolving door, nationalization of companies like Booz Allen, creation of public banks as suggested by Ellen Brown and nationalization of banks too big to fail, a student loan debt strike, and a constitutional amendment overturning Citizens United. Failure to grant these demands must be met with withdrawal from the two-party system; go Green or go Libertarian, whichever you prefer, but put a monkey wrench in the system. Keep using the alternative media, defend them from the Deep State, educate yourself, network with the growing numbers of people who are onto the Deep State, or the National Security State, or whatever you want to call it. But get over talking about how the Constitution is in danger; it's dead, and if there's anything you liked about it, you'll have to bring it back from the graveyard. Take action, and support others who do.
- cross1242
Unfortunately, I don't see anything changing the Deep State or the government in Washington until there is some kind of revolution. That revolution might be bloodless but nothing guarantees that. If the Deep State ultimately feels threatened, it will defend itself with all the national security forces at its command.
Yes. An example. Paper granted PhD's are "promised" suitably lucrative work in academia. So it's not just corporate.
- http://twilightirruption.blogspot.com/ abbeysbooks
Time for you to read Foucault's Discipline and Punish and all the rest of his work. Include Virilio, Baudrillard and the rest of Continental Philosophy. Lofgren is just catching up with a long way to go. Check out Zizek.
- Kibik
Look up "Bohemian Club" too.
- Peter Michaelson
The fact that an invisible government of elites is in charge of our democracy is entirely predictable. This political arrangement simply depicts the state of our psychological development. We have a "Deep State" within our unconscious mind. Our thoughts, desires, aspirations, and beliefs are all under the influence of this inner "Deep State." Through our ego we're each like a puppet prince, thinking we're in charge of the show. Both liberals and conservatives have too much invested in self-image and are afraid of facing what amounts to an inner tyranny. We're too egotistical and narcissistic; we don't want to be humbled by inner truth. We've produced superficial psychologies (behavioral, positive, cognitive, etc.) that refuse to face the inner reality. We'll have real democracy in America and the world when we establish inner democracy. It can be done, and it needs to be done soon. Start by tossing out all the so-called "scientific psychology" that academic psychologists are pedaling. Go back to Freud and understand what he's really saying, that we'll go on generating suffering and self-defeat until we become more conscious of our inner conflicts, psychological defenses, and entanglements in negative emotions.
- Anonymous
As has been mentioned the greatest power is the people. Without the cooperation of the people none of the pathological behavior described would be possible. The West Coast Strike of 1934 is an example of what can be done. A major way that the 1% control the 99% is through debt. That control could actually be reversed. What would happen if only 10% of the 99% decided to no longer to pay their debts? A movement like that could rapidly escalate once people realize that there is no system that could cope with massive non payment of debt.
What would happen if the pilots, truck drivers, rail workers and dock workers decided to strike? or the telecommunication workers? All or any of those could be implemented peacefully. No need to hit the streets. Just stay home and contribute nothing to the deep state. Imagine how long it could survive the massive non cooperation of the 99%. There is a multitude of possibilities.- Charles Shaver
'How can I thank thee [Bill Moyers], let me count the ways…' and now, too, Mike Lofgren. For some time I've been thinking that vastly superior aliens from deep space might be holding the U.S. Government hostage and causing all of the recent illegal, immoral, unconstitutional and just plain stupid national self-destruction. What a relief to learn it is only too-typical low IQ humanity that is responsible. Seriously, now, that which gives me the audacity and courage to comment on these things about which I personally know so little, is my lay acquired understanding of the basics. To me, in early 2014, these are mere, obvious, matters of the hierarchy of law, relevant laws and violations thereof.
Ignoring most of the basics and my personal lack of qualifications, suffice it to say for now that above and beyond the laws of man are those self-evident in nature. Insightfully, since August of 1975, I have observed not only do the higher laws apply to both machine and man but the U.S. Constitution is imbedded with them, intentionally or not. So, to finally get to the point, when Mike Lofgren says 'Groupthink' I think of The Universal Law of Order: "Whenever two or more individuals unite to form an organization the survival of the organization becomes paramount to the survival of the individual." and how the Constitution was ignored again. When someone says 'there's nothing I can do' I think of The Third Rule of Human Behavior: "Self-determination shall prevail." and how the Constitution was ignored again. Deep space, or 'Deep State,' it 'don't look good' for us when a vast majority keeps enabling a selfish minority to impose rule. Now, it will probably take a paradigm shift to fix what's broke but, fortunately, naturally, 'shift happens.'
- http://leisureguy.wordpress.com Leisureguy
Magnificent article-greatly extends the range of my awareness, since I was just starting to get a glimpse of this.
It should definitely be noted in the article that Senator Barack Obama pledged and promised that he would vote against telecom immunity and then he voted in favor of it. That did not auger well, albeit accurately.
- http://leisureguy.wordpress.com Leisureguy
This is why bloody revolutions happen: the course of last resort would certainly be violence, which hurts everyone. Elections were supposed to allow an orderly way to bring about change without violence, but once that mechanism is jammed and will no longer respond, violence is lapping at our heels.
- http://leisureguy.wordpress.com Leisureguy
I have the same feeling. We thought we had a mechanism that would enable us to respond to the need for revolutionary change in an orderly way, but that mechanism has been deliberately broken. That is very, very bad.
Although one must allow that much of this is driven by our deep nature: social animals acting as social animals do, with all sorts of social-driven instincts and responses. Biology is destiny?
- rleighton27
I am not part of the hallelujah chorus greeting this article. Some, if not most of it, smacks of the apologia of a professional bureaucrat who suddenly has found a conscience. Also, his claim that President Obama was itching to start a war in Syria, but was only held back from doing so by "overwhelming Congressional skepticism"…as if that wasn't a daily occurrence to be dealt with from day one of his tenure. I am convinced that it was part of his strategy from the outset…to rattle sabres loudly enough to frighten a bellicose Putin, who knew his own military prowess was hampered by an ill-trained and poorly equipped manpower pool, into making his lapdog Assad stop playing nasty with his population–and it worked. I agree with much of the article's commentary about the "boys in the back room" who, in fact, have commandeered the running of the country out of the hands of elected officials, but condemn it's tone of "it really doesn't matter who's in charge." It does matter. Articles of this type just encourage voter apathy, and that plays into the schematic laid out by the Powell Memorandum for the usurping of Democracy, placing it into the hands of the ALEC/Koch consortium of Plutocratic traitors.
- http://leisureguy.wordpress.com Leisureguy
This helps me understand why such an intensive effort is underway to destroy our educational system and the low value we seem to place on education. I'm thinking of privatization, charter schools, constant pressure to pay public money to religious schools, defunding of higher education, closures of departments of humanities and non-applied science and art-that sort of thing. And now I get it: the last thing the corporate state wants is people "wasting" time and effort on a bunch of abstract principles and reasoning and critical thinking, especially since it just causes trouble in the workplace and makes people question orders. Better to do away with that: turn the focus to what will make the most money, and your problem's solved. And then you can cut costs-always the imperative-by closing departments that seem to create the most troublemakers. Two birds, one stone.
- Bob Baldock
Peter Dale Scott articulated this first, and has it deeper and darker. Check his website.
- Anonymous
As I read the final sentence,
"What America lacks is a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with surprising speed."
I remembered the demise of individuals who fit "figure with serene self-confidence"…..
John F. Kennedy
Martin Luther King
Robert Kennedy
Malcolm X
Paul Wellstone- Joan Harris
It's been awhile since I have had anyone refer to Freud. Never mind the "new age" psychology. Defenses have always been the problem. In a perfect world we would all live consciously and greed and prejudices would give way to peace and harmony. In the meantime we must address all the ills, if for no other reason then to prevent us from becoming complacent. I shall retain a little healthy cynicism until the world is healthy.
- I. Spoke Umbra
Let's be clear about what the "group-think" means when speaking about the NSA:
As someone who was once in the bowels of the NSA beast, I observed a number of disturbing traits permeate every nook and cranny of the operation. If those traits were applied to an individual, they would be considered a very serious characterological disorder, perhaps warranting hospitalization:
1. Paranoid
2. Obsessive compulsive
3. Sociopathic
4. Grandiose
5. Narcissistic (self-rationalizing)
6. Uber-patriotic (self-justifying)The groupthink scenario in that place is as toxic as it can get for a human enterprise. It is a clear and present danger to the security of Democracy as we know it.
- Pamela Zuppo
This was no stroke of genius, this was Greenspan, Reagan, and the Bush clan. The better term for contemporary capitalism is "disaster capitalism" as coined by Naomi Klein. The big question is what are we to do about this? Do what Kiev has done? Due to "group think", or brain-washing of the masses who have lost their own control via their televisions, it seems the zombies outnumber the enlightened. It's clear to me something must be done.
- SufferinSuccotash,Pivoting
Randolph "War is the Health of the State" Bourne is also worth a read. Not to mention Jack London's The Iron Heel. These All-American doods had the National Security-Oligarchy State pretty much nailed down a century ago. Why people concerned with our current predicament skip over these Progressive Era radicals in favor of Continental Philosophy (which reminds me of a skimpy breakfast) is beyond me. I've been watching the emancipatory elements in this country floundering around for the past four decades now and it's pretty depressing, especially the seemingly chronic inability to connect with the USA's radical past. No historical knowledge=no sense of history=no political judgement=the Bad Guys keep on winning.
Ukrainians are my favorite people at the moment and you can bet that their sense of history is pretty sharp.
This concludes this Sunday morning rant.- Joseph Brant
It is commendable to preserve hope among reformers, but hopes do not solve problems.
While security agencies can serve democracy when better regulated, the failure to regulate is the result of failed democratic institutions which have not themselves been "vulnerable to a vigilant public." The dark state invisible power corrupts invisibly, but gold is the invisible power which had already corrupted the visible institutions.
We need more than a "self-confident figure" to tell us that "national security and corporate power are outworn dogmas" so that "the people themselves will unravel the Deep State." The "deep…hunger for change" was deeper in 2008 when so easily destroyed by its self-confident Obama by simply not mentioning what "outworn dogmas" he would change. The hawkish Hillary is not about to "unravel the Deep State" and mere self-confidence will not finance campaigns or buy media support to do more than split the vote of reformers. The media and elections must first be freed of gold, and the people cannot do that without free media and free elections.
While history is full of surprises, the succession of cold-war fearmongering by global war upon diffuse "terrorist" backlash and political opposition to half-witted right wing imperialism does not suggest a passing reaction, nor that any lesson was learned from three generations of failed military adventures with no relationship to the declared national principles. The cancerous dark state has grown in proportion to the failure of right wing foreign policy, the failure of its own rationales. It is the triumphant institution of right wing tyranny as the immune sovereign over a failed democracy.
Democracy may make further ultimate progress in China than in the US, or may survive only in micropowers of no interest to the right wing. But we must have faith in the power of the people, or we lose hope and take no action.
- Barbara Mullin
I call it vulture capitalism.
- jrdel
Since the People of United States overthrew British ruling class government of our country and after the revolution, through wise government, and luck we got out from under the thumb of any rulers whether clerics, nobility, landlords, businessmen, political dictators, banks, etc. etc. these forces have been working to reestablish their control over our lives and by gradual steps have done so. Great Americans turned back the tide here and there for a while, Jackson ended the national bank, T. Roosevelt broke up monopoly corporations, F. Roosevelt supported efforts for economic democracy, etc. but the enemies of liberty never rest and always find new ways to undermine it.
So every few generations the People are faced with another fight if they are to keep their liberties. This time the odds look particularly bad, Enemies stronger, richer, more devious, more insidious, more corrupt; the People weaker, more divided, confused, distracted. What the hell do we do? Voting just doesn't do much. Big money floods the media with their point of view. The People, relatively poorer than ever; don't have enough money to reply.
Petitions, reforms, protests, revolution? All impractical, or impossible (imagine a revolution in the streets against the power of the U.S. military.) The days when we can grab our muskets and go out and make a revolution have long gone folks.
I think humanity will have to wait for another age, and another nation to see real liberty and real democracy in control of the world again.- SufferinSuccotash,Pivoting
Given that back in his day "merchants" were often interchangeable with "bankers" Smith certainly scored a bulls-eye with that one. The perfect Horrible Example in the 1770s was the East India Company, which couldn't govern Bengal without trashing its economy and couldn't keep off the financial rocks either. Eventually the British government put the Company on a shorter leash and still later the Company lost its monopoly over East Indian trade. But one short-term measure to bail out the Company was to give it a monopoly over selling tea to the dumb colonists over in America. Oops. That was a real "tea party", not some bogus affair staged by geezers in funny hats.
- SufferinSuccotash,Pivoting
Of course. I spent quite a few years rationalizing and pretending that Everything Was Pretty Much OK In These Here United States myself. The problem with being a history teacher–at least in this case–is that the past, which as William Faulkner famously said wasn't only not dead but not even past, can catch up with you. This country is paying and will continue to pay pretty heavily for decades of folly which anyone with a sense of history could have predicted at least 40 years ago.
- joanne
We have had millenia to "cage the beast", tame the beast, train, heal, and/or defang the beast. Predatory behavior is mediated, never extinguished. The Deep State is both institutionalized predation and paradoxically, a grotesque attempt to protect itself from itself.
- Anonymous
The ideology is hinted at throughout the article. Capitalism; The premise that money is a form of commodity and the winner is whomever has the most. Unfortunately money is a contract and while such notional promises seemingly can be manufactured to infinity, through the creation of the other side of the ledger, debt, their underlaying value is dependent on the increasingly precarious solvency of those taking on that debt. It is what is referred to in hindsight as a bubble. If you want to see the future of the US in about fifty years, it will likely be in the states and regions.
- J Timothy
The US military-intelligence-industrial aparatus is filled with loyal American patriots who love this country and have sworn to uphold the US Constitution. Unfortunately, they don't seem to understand that the system is extremely expensive and is impoverishing the middle class of America. We have nine air craft carrier groups while the next closest military has just two. Air craft carriers are incredibly expensive.
In my opinion, the next revalation to hit the mainstream media will be that SOME of the covert, clandestine, black budget projects have been financed via securities fraud. They've done it before. Arms for hostages, Hmong drug running in Vietnam, etc, are examples of this. Catherine Austin Fitts has also made a great point that HUD, of all agencies, has funded some black budget procurements.
Clearly, either the CIA or the NSA are at the center of the cabal. So, what is the justification for all of this secracy? What is soooo important that the adult eagle scout christians of America can't tell us? What could it be? Terrorism? Russians? Soverign citizens? Shoe bombers?
Here is where i will lose most people over 50 years old. IN MY OPINION, a the core of the military industrial aparatus and its wall street enablers is a desperate race to achieve near technological parity with….(pregnant pause) (dramatic pause) other entities, species, e.t. collectives, etc, who are visiting sol 3 (earth). This effort is extremely expensive and involves spending trillions of dollars covertly to build spacecraft and weapons systems based on both advanced human originated technology and also technology from the reverse engineering of recovered alien vehicles.
Many people belive that securities fraud funds this effort. It sounds crazy, but, YES, building trillion dollar weapon systems and spaceships is at the core of the secrecy cult. Nothing else makes sense. What else could possibly require siphoning trillions out of the US economy? Many many authors are written on the subject and it is most definitely NOT a joke. Yes, Bill, lets ask the awkward questions.
Is there a secret space program funded via securities fraud? Have we received help from ET visitors?
One man who asked the awkward question was Congressman Steve Schiff of New Mexico. He asked the Congressional General Accounting Office to inquire about the alleged Roswell alien craft recovery. He got the USAF to give us a third story – (first was a disc, second a weather baloon and third was project mogul) This all took place in the mid 90's.
He was only about 50 yrs old when he caught agressive skin cancer. He resigned from congress and was dead soon after. He was 51.
- aTomsLife
I disagree that Mr. Lofren's article provokes apathy. It sheds light on the duopoly that is the two-party system and encourages voters to seek an alternative, namely a more libertarian, decentralized form of government.
"Overwhelming Congressional skepticism" to Syria included party-line Democrats as well: Unlike the usual D vs. R bickering, it was D's and R's forced to contradict the military industrial complex. It was a powerful moment.
Syria proved the American people - and perhaps only the American people - are capable of muzzling the Deep State. The only reason we didn't intervene there was because constituencies throughout the country stood united, not because of potential international condemnation. The irony of Putin's victory is that he achieved it because he had the backing of the American people. He morphed into our de-facto representative.
Even for the plutocrats, Putin represented the the lesser of two evils. It would have been a catastrophic loss of face to have to admit that D.C. remains beholden to the American people when, united, we're unwilling to follow the script.
Until there's meaningful campaign finance reform, "it really doesn't matter who's in charge." That's the simple truth. But it's a reason to become more engaged in politics, not less.
- J Timothy
One of the problems with dealing with the intelligence services is that they have people embeded within the media to get their point of view across. So, when Moyers talks about asking "Awkward Questions" he underestimates how difficult this is.
Ed Bernays and Walter Lippman were the gentleman geniuses who showed us that marketing and propaganda could be used to manage public opinion without limits.
Yes, lets ask the awkward questions. What is so important to the military-industrial-complex that it needs to siphon, literally, trillions of dollars out of the US economy?
One man asked an awkward question. His name was Congressman Steve Schiff. After he asked his question, he died of agressive skin cancer. He was 51 years old. Sure. It cold have been coincidence. But he was the only one asking awkward questions at the time and he was the only one who got agressive skin cancer. Meanwhile, the CIA's top spooks like George HW Bush and Kissinger are still alive into their 90's. Go figure.
- http://daybrown.org Dale H. (Day) Brown
Mother Nature bats last. When we look at the list of empires crashed because bad weather ruined crops, we see it includes all of them. People will put up with appalling corruption- until they are hungry. The Deep State has not picked up on the risk of unusual weather on agriculture, altho the price of crop insurance rose dramatically. Agribusiness will do fine with govt checks, but people cant eat insurance.
Part of the problem is that ag policy is set to reduce the cost of the hobby operations of politicians, like Bush's ranch, but failing to support the backbone of American agriculture, the family farm. The average age of farmers now is over 60, and because of land speculation by friends of elected representatives, the next generation cant afford to buy farms. The result is land owned by absent aristocracy and worked by men whose only interest is their immediate benefit and not the condition of land to be inherited by sons.
Another of the many reasons we need a Gnu Party not run by lawyers.
- Thomas Milligan
Can't blame you for feeling ripped off. You have been. We all have been, except for those in the very top income brackets. Lofgren does a pretty good job of detailing the forces that have perpetrated the heist. I've come to call it The Money; it includes the actors Lofgren details, plus billionaire types like the Koch brothers and Richard Mellon Scaife, plus the mainstream media (even much of PBS, unfortunately), which has become the Ministry of Propaganda for The Money. All Is Well. The USA Is Number 1. The Government Is Keeping Us Safe from Terrorism. Buy More Stuff. Whistleblowers Are Traitors. The Economy Is Recovering. Buy More Stuff. If Things Aren't Getting Better for You It's Because You're a Loser. So Buy More Stuff.
Don't romanticize the '50's too much. The discontent that exploded in the 60's was just under the surface even then. To the extent that it was "better" then it was because the prosperity of the nation *was* more broadly shared. A single "breadwinner" (usually Dad) could feed a family, with enough left over to save for old age, and Mom was available to nurture the kids. Do you know *any* families for whom that could be true today? And the mainstream media was populated by actual journalists rather than mouthpieces for The Money who look good in suits and understand what their owners want said. Bill Moyers, obviously, is an exception to this rule. One of the few.
I'm surprised you're not angry. You have every reason to be.
- Thomas Milligan
Mr. Lofgren does a pretty good job of detailing the forces that have perpetrated the sad parody of self-government into which our nation has devolved, but he left out a couple. I've come to calling the whole thing "The Money." It includes the actors Lofgren details, plus billionaire types like Scaife and the Koch brothers, plus the mainstream media (even much of PBS, unfortunately), which has become the Ministry of Propaganda for The Money and the so-called "Washington Consensus." Where once we had journalists, now we have (with the almost-sole exception of Bill Moyers) pretty people who look good in suits and like to be on TV, reading the scripts they're given.
- Anonymous
Well, that's rather a 'rose colored glasses' view of the Tea Party given their current platform position. While I agree there are some redeeming qualities – not because I deem them to be but because they do contribute to the discussion – But, by-n-large the solutions offered by the Tea Party platform will only serve to weaken any hopes of salvaging the Democracy. One such example is this meme that 'all Govt. is bad' which only someone disingenuous would suggest does not prominently inhabit the TP. Another would be the position on so called 'entitlements'. Yet another would be the Tea Party backing of the likes of Ted Cruz or Rand Paul who adopt a position on health care that is antithetical toward a robust Democracy. (And spare me the notion that private enterprise provides better health care etc. – it's simply untrue and there's no evidence to support these fictions.).
One has to examine a few things about the Tea Party – It is quite clear why individuals such as the Koch brothers have gone to great lengths to fund the Tea Party because it is the entrenched Plutocrats and Corporate elite who benefit the most from a weakened Govt. Many TP members see their quality of life eroding and have chosen to go after the wrong entity why? Well, those reasons are numerous – for some it is fear, for others racism, others an inability to grasp the weight of their decisions, etc. and Irrespective of their reasons the actions of the party, quite ironically, will only strengthen the grasp of the very problems you wish to suggest they will address. While a nice sentiment to feel the Tea Party could work with others the reality is much different.
- Anonymous
Wow, how do you create such a canvas of revisionist history? I also found it quite tragic that you espouse 'we need to stop this R vs L' dichotomy but you make every effort to assault the left – exclusively. While that would be with merit if it were true (indeed both parties have played a role in where we now sit) it becomes quite another matter when viewed against, oh idk, the backdrop of reality. A.) Historically it is regulation that keeps corporate interests in check and deregulation promotes the 'crony capitalism' you mention. It's hysterical to assume the inverse. B.) Progressive policies have, again in reality, led to the greatest moments of growth and prosperity in this country. I"m sorry you don't believe those facts. And, why didn't you mention the inequality gap on steroids since Reagan? or the Bush tax cuts that benefitted the richest Americans? Or the subsidization of big pharma. and big oil? Both parties have no interest in representing people without money and every incentive not to. But, don't prattle on this nonsense about the dangers of progressivism. it's ill-thought and smells of ideological belief hungering to trump facts and history; it smells.
- Anonymous
It is quite disheartening and the road forward most uncertain. I'm fairly confident those you allude to will not act from a position of reason and evidence that is fact based. I cannot, for the life of me, imagine circumstances in which those guided by fantasy, belief, and hate (one or all) will shift ideological positions and address the problems that inhabit this country by the corporate state. Individuals like Ted Cruz, Jamie Dimon (more subtly), the Koch brothers are gifted in their cunning ability to take advantage of these, what Thom Hartmann calls 'low information voters' – I've little reason for optimism and plenty of evidence for pessimism without hope.
- Anonymous
After reading this all I can say God help us. I think I can speak for millions of Americans who grew up in a different country. We use to believe that hard work, play by the rules and everything would work out for the Middleclass American. All could share in the American dream. Those beliefs are not what I hear anymore. Apathy and fear are rampant..I fear for the country my children with inherit.
- fenway67
yeah, i don't think that is his main point. it's the corporations and the banks that have infiltrated and that is the fault of both sides of the aisle. The author notes that the bipartisan divide is mostly noise obscuring the bigger picture.
- fenway67
i am hopeful that firstlook.org will be a source of honest journalism. Scahill, Poitras, Greenwald and Taibbi are real journalists working toward finding the truth.
- Anonymous
Wars forced us into debt slavery to the Big banks that financed them, thus we are slaved to the NWO BANKS and corporations Federal Reserve Banks buys and owns most of our debt, they are international now We are controlled by the bankers and the secret NWO financial network running the governments of the world. Everything trickles down from these taskmasters. Follow the money and everything is controlled by where it leads. Globalization, one financial system running the world into their vision of one world government controlled by their big money. They been ruling us for a long time now. CAMPAIGN FINANCE REFORM would fix us election process and would scare them knowing they can't put their bag men in office anymore.
- Anonymous
So you believe the blame for big government lies only with the liberals? Give me a break. Here are just four Presidents who expanded Government. They are named Nixon, Ford, Reagan, and Bush. Flaming liberals to you I would assume.
- John Gregor
Looking forward to odering some of those books. Have read all Foucault's books. The author wrote quite a nice essay about contemporay American politics. Our majot export seems to be Dollars, like manure they have some value, but I imagine alot of the people who are getting them are not entirely happy
- Anonymous
I saw Mike on c-span Sunday and enjoyed his comments, and now reading this piece I have trouble with a GOP former congressional analysis troubled about how the govt is working or not working beginning in 2009.
As with many of former GOP legislators or analysts never do they dig deeper into the underlying problems that cause the congress to not work. Mentioning the Deep State reminds me of Washington Post investigation exposing the 2nd govt in DC. It's where all the retired legislators or lost elections legislators, the congressional staff, the retired military generals go. They pop up in media (tv, radio, newspapers) spewing out a talking point for their respective 2nd govt think tank in DC. C-span is a major platform that they use, and 99% of them promote some corporation dealing with the 1st govt.
Too bad we don't see the name tags of the corporations they represent. Now that we have citizens united we're back into the age of the Robber Barons.
- Andrew Kloak
This insightful essay shows that Silicon Valley is not be what it claims to be. Neither is Wall Street or the massive build-up of federal government power around Washington, D.C.
The article also alludes to the notion that these companies in Silicon Valley are waking and trying to resist Deep State regime. California can't save American society. We are only 12% of the entire population. Plus, they don't want to, they have to answer to shareholders. Profit is the highest good for companies and government. They want influence and money.
All this is like marionette theatre. James Clapper from the NSA used misdirection when reporters started to zero-in on the scale of the deception and breach of trust last Fall. Enormous change is just ahead but not without enormous turmoil. People intuitively know that national security and corporate power are worn out dogmas.
There is an urgency to all this. Many of these people in these positions of power have no soul. It doesn't have to be this way, it just is. I think they want it this bad because they profit and garner influence when it is this ineffectual.
The biggest changes are within anyway. We have to go deeper in ourselves. That shift in consciousness is already underway. The confluence of forces will sweep away these external constructs. The hidden factors not discussed in the article are the unconscious forces (emotion). Once people are more aware of the light and darkness in themselves things will open up. There is dynamic tension (a good thing) in each person. Self-awareness, integrity and connection to others will change everything.
This article makes interesting connections to something that is hidden in
plain sight. It will change.- richard anderson
I have been giving the political system another chance since Vietnam. Each time we have an election I hear some good things. But when these people are in office they change. When Ralph Nader ran for office he was kept out by various means and not allowed to debate. The system is rigged. This talk of voting for the right person is not going to cut it. With the problems this deep and the protection that has been set up to keep this system in place there is NOT a way to change it. In other words voting will not work. Something more is needed. Demonstrations don't work either. Just look at how long the Vietnam war was protested and when Bush stumped for invasion of Iraq. They didn't care. Resistance may be the answer.
- Anonymous
Rothschild family made their banking trillions beginning from financing Napoleon's wars up until now. Their family owns media houses, governments, etc and their influence knows no bounds. You will never see their family listed on Forbes richest people lists because they own the media and do not want to see their names or advertise their wealth. The Bankers truly own the world and War debt was the fastest way to do it.
- Anonymous
lol. good comment and link.
I will be interested in seeing what First Look does, but I really don't trust the bazillionaire who is starting it up – or at least his motives. Once a plutocrat, always a plutocrat. I predict it will start like Arianna Huffington's HuffPo, initially game changing and valuable, then slowly just another click generating tabloid profit machine with a bubble like mentality forced on contributers, moderators and commentors alike. Time will tell.
- Ellie
We have all this information, but nothing ever comes of it! No one goes to jail The laws are changed to help the criminals . We still have a two party system which is a joke. Unless people are hungry and cold and willing to die for a cause nothing is going to change in this country.
- J.G. Sandom
We have become almost as much a plutocracy as our former Cold War nemesis, Russia. Tech, Big Oil and Wall Street oligarchs, combined with the military-industrial complex (which Eisenhower tried to warn us against) collude (in spirit, if not in actual boardrooms) to keep the people's power in check via libertarian deregulation, union-busting, Citizens United (and other activist SCOTUS rulings), privatization of the Intelligence Community (IC), the opiate of digital media that pushes the idolatry of money & all things celebrity to distract us, and our collective fear of terrorism (hence our perpetual war footing). This is what my forthcoming novel, 404, is all about-not just how IP tech is invading our lives, but how this invasion is a metaphor for the larger invasion. (HAL2, in my book, IS what Mike Lofgren calls the Deep State.) Wake up, America! Our country is being stolen from us in plain sight. Thank you Bill Moyers, and thank you Mike Lofgren for helping to alert the American public. You are 21st century Paul Reveres! Al Qaeda is less of a threat to America because of some future possible terrorist threat, and more because the collective American fear it engenders helps the Deep State sink its claws more effectively into our national flesh.
- Anonymous
What rings clear is we now have a non-elected government operating outside our constitutional government and is purposely gridlocked. Our government and judicial system have been hijacked and steps must be taken to remove Big Hidden money that is controlling our constitutional government. Great interview Bill, thanks as always!
- Jack Wolf
Mike forgot something. There is a simple fact that rules the deep state, the reformists, and the declinests, whether they accept it or not: Natural Law. Abrupt climate change can not be controlled now. To suggest that any of these groups are in control or have the ability to make substantial change belies what is really going on. From now on, all these groups can only react and as far as I can tell, today will be the best day of the rest of our lives. It's all downhill from here and there is irreversible.
- Thomas Milligan
Oh, I know about those guys and I love what they do. The trouble is, somehow *their* work doesn't, as a rule, get picked up, amplified and developed in the mass media the way, say "Watergate" was back when we had real journalists. Meanwhile every load of BS that comes out of the Heritage Foundation, Cato et. al. somehow becomes received wisdom. I'm also a bit concerned that by going off on their own they're setting themselves up to be marginalized and ignored. Trees may fall, but very few people will hear them.
- Thomas Milligan
Somehow your response above… to *my* response… to your original post… got posted under a *separate* post I offered… scroll down far enough, you'll find your original post & my response.
Can't blame you for wanting to shield your children. The thing is, you can't, neither from the anger nor from global climate change. I have grandchildren and grieve when I look at them for the world they're apparently going to inhabit.
One last thing: it's possible… theoretically at least… to have anger without hatred. Anger at what's been done can be a spur to action… and effective action could be taken while still treating the perpetrators with the compassion we know all sentient beings deserve. I'm not sure *I* could manage it because truth to tell I'm not a very good Christian… or Buddhist either… but it's at least theoretically possible.
- Thomas Milligan
Good point about our old nemesis, The Evil Empire.
I always found it ironic that as the Soviet Union was collapsing, the United States was moving toward one-party rule. You can write the Nov. 5 headline right now: "Republocrats Win Yet Again!"
- fenway67
Agreed, the MSM has a vested interest in having their product on the shelf at eye-level and it's hard for the little guy to buy space in this market. I'll be doing my part by re-posting and tweeting important stories that they cover and I just hope the quality will get them noticed. I'm sure the smear campaign against them will begin soon.
- fenway67
I wasn't aware of his motives beyond providing a platform for real journalists. What have you heard? I am hopeful that the high quality work of the people he has hired so far will keep it in the same company as the Moyers people.
- Kenneth Killiany
This is an issue that concerns me greatly actually. Both sides have adopted policies that have fed it. I find it interesting that you mention Allen Drury, who was my uncle. Al was a dogged reporter, uncovering, in his day, the Manhattan Project, which he did not report on because of World War II. Should he have? He never doubted his judgment. However, he was very concerned about how the State just grew and operated on its won. You can see mentions of it in ADVISE AND CONSENT and MARK COFFIN, where he discusses the whole public-private daisy chain and how irresponsible it is. It's true, you can't get drama out of it, but he mentions it, but in PENTAGON, he wrote a whole book about a bureaucracy can be diverted from what it is meant to do by concerns for its own prerogatives. A&C and MARK COFFIN have just been re-released, and PENTAGON will follow next year. This kind of reporting in your article is the kind he admired and it is a great service.
- freelance-writer
A.k.a.:Ukraine 2014. Though there are many factors and stake-holders at work in the Ukraine issue, it behooves the citizenry of all western nations tainted by the same `deep-state' tyranny to bear witness. It will take bricks against bullets to resolve this global crisis once and for ever.
- Mary Brown
The only terrorists we have to face in the USA are our own government and the ones that government is purposely importing to continue their reign of fear. Problem is a large part of America is now well armed and a terrorist would die rather quickly long before any government police forces arrives.
- Len
Most of us frogs are in a pot of water that is getting hotter and hotter and we don't feel it. As quoted from this essay "After
a while, a functionary of the state begins to hear things that, in another
context, would be quite remarkable, or at least noteworthy, and yet that simply
bounce off one's consciousness like pebbles off steel plate". Replace "a functionary of the state" with "we the people".This essay was terrific.
- Anonymous
I am worried that the boiling pot will lead to the elimination of Social Security. For years now politicians been saying it will end to each generation. When it does, a very high percentage of Americans will be at poverty level. I don't want to be living in American cities when that happens, crime and robberies will be common place.
- Anonymous
Yes, this is not a new development… The funny thing is that Bill Moyers' Iran-Contra era expose entitled "The Secret Government" actually covers this subject better than the piece we are commenting on. And iirc, he interviews Peter Dale Scott about the CIA in that report…
- Anonymous
There is a world of difference between bailouts and nationalization. I cannot begin to quantify the folly of calling this system "Marxist" when the party on the left of the two party system has moved so far to the right as to make Eisenhower seem like Trotsky by comparison.
- Anonymous
For Gods sake, not this again. What Banking family who made the bulk of their fortune from War debt and being worth $500 Trillion dollars are you referring to? Everybody is afraid to print anything on these influential banking members. Their influence in this world has no bounds. As we all know Bankers always protect their money and are devising new ways to make more money. If you naively think that Bankers in this world are Godly benevolent people, you better look around the state of the world again and formulate a revised opinion. but there you go, I got my opinion and you have yours and we will respectfully leave it as that. Thanks for your comment!
- Anonymous
Last time I looked capitalism is buying and bought our election process. In fact, in the past the main focus of our government has been on business priorities and concerns. Doesn't look anything as Marxism to me.
- Jimmy Solomon
I read this article and watched your interview. Both are most enlightened. What happened, however, on the eleventh day of the ninth month thirteen years ago was clearly a result of this deep state and it is too bad you won't recognize this glaring example of the corruption of which you write.
- Anonymous
"the party on the left of the two party system"
There is little or no difference between the two faces of the party of state power. They use different words, and then enact the same policies.
Politics is about power, nothing more. There is no "left" or "right", only power.
- Antonio Germano
Again, what filibusters? You have provided no examples. Except for the (unfortunately) pathetic attempts of Cruz, Paul and Lee to derail Obamacare and the recent debt ceiling/government shutdown (I wish) affair, where has there been any effective Republican opposition to any of Obama's agenda?
You are typical of the person who blames one side for our problems, when it's both sides (i.e., the government) that is the problem. Both sides are playing their respective constituencies like a Stradivarius. get over your obsession with partisanship and see the real issue – the whole system is corrupt and needs to be abolished.
Your pining for 'majority rules' is a recipe for tyranny. The filibuster rules were put into place to prevent temporary majorities from steam-rolling temporary minorities. I think it should be even harder to pass laws, not easier, so mischief is avoided.
I repeat – the State is the enemy of us all. get over blaming one side or the other. You are being played.- Anonymous
amazing that such a powerful article was written. too bad its several years too late, and ever so slightly off the mark. you need to let go of the rhetoric of bipartisanship. the DNC and GOP establishments are both operating on the same basic policies. while they offer crumbs to their bases, they are both pushing the agenda of the deep state.they are both to blame, and until people declare that both have no clothes, the powers behind the curtain will continue to rule.
- Anonymous
Thanks, well said.
There's also the "Shallow State" of American campaign consultants like David Axelrod and Mark Penn who make big money in places like Ukraine and Georgia because the locals assume they wield influence over their clients in Washington. If American foreign policy became less aggressive, foreigners wouldn't pay them so much money:
- Auntie Analogue
"F]inancialization, outsourcing, privatization, deregulation and the commodifying of labor."
Yes, "commodifying of labor" thanks to Teddyquiddick pushing the 1965 Hart-Cellers act that began the importation of million Third World unskilled laborers per year, thanks also to the Deep State paralyzing all efforts of us, the People, to force our so-called "representatives" to close, fortify, and defend our borders – to stop the massive flow of scores of millions of illegal immigrants. Immigration has done more to stagnate and reduce Americans' wages and to destroy what had been our historically unprecedented middle class affluence and economic-political power.
Objective One for those of us who would dismantle the Deep State and restore our democracy is obvious: Stop All Immigration. Accomplish this by these measures: one, end birthright citizenship (and thus also end birth tourism); two, abolish State Department power to import refugees and government funding of NGO's that "resettle" refugees; deport all illegal aliens; impose massive, draconian fines on employers that hire illegal alien labor. Why are these measures Objective One? Simple: when we allow our Dear Rulers to displace and dispossess us on our own soil, we forfeit – we surrender – our power to control our representatives and their appointees and their wealth transfer from ourselves to foreigners.- Mil
This is just a small list. But it at least provides some of the examples you are asking to see.
http://www.sanders.senate.gov/newsroom/recent-business/bills-blocked-by-republican-filibusters
- rgrisham
This is not a revelation. Noam Chomsky has been pointing this out clearly for the past 40 years… There a couple public documents that might help explain to the educated class exactly what has been going in the U.S. for the past 40 years… The Powell Memo written by Lewis Powell in 71 and the Crisis of Democracy a document publicly published by the Trilateral Commission in the mid 70's these are both damning omissions by powerful groups that control both the business world and governments at all levels of governance. These two documents that we know about are internal look at the dogma of the ruling class.. Neo Liberalism is the term they used but it sure aint new and it sure aint liberal. It just another way for the ruling class to re-institute Feudalism.
- Anonymous
What you say is essentially true. Fascism by definition is the merger of corporations and the military. Another amusing quote: "A capitalist will sell you the rope you hang him with." Vladimir Ilyich Lenin
These Deep State proponents will succeed in fully displaying their stupidity when the global environment collapses under the weight and consequence of their actions and humanity becomes extinct. In the meantime, they will be having fun and braying like jackasses as they descend into the abyss.
- Anonymous
What about the level of organization required to create the Trilateral Commission and its formal takeover of the US executive branch when Carter took office? The majority of the cabinet (all but one) were Trilateralists in the newly created group of only 300 worldwide members. Trilateralists were placed in high level international corporate and political positions and this paradigm holds today. Scholars Antony Sutton and Patrick Wood wrote extensively on this international power dynamic with its influence now extending to every part of the globe. It was Trilateralist Larry Summers, former US Secretary of Treasury and Goldman Sachs executive, who was sent to Russia when it's economy imploded to advise Putin on how to privatize the Russian peoples' state owned assets leading the to rise of eight powerful oligarchs with internationalist sensibilities, a very deliberate centralization of capital and a means to control Russian political power players. From the beginning of the transfer of the US manufacturing sector to China, it became Brzezinski's model Technocracy, Brzezinski being the a founder of the Trilateralists, Carter's National Security Adviser, and author of The Grand Chessboard. (reference: Patrick Wood's augustforecast.com) These actions and the concomitant level of organization goes beyond the Deep State model.
- Anonymous
.. if there were no abuses by the IRS, then why did IRS official Lois Lerner plead the fifth ? If my boss asked me to explain possible abuses of power at my job and I pleaded the fifth, my new office would be on the curb.
- Anonymous
The meetings happen in Rancho Mirage and other places for Koch Brothers, and ALEC, etc. They are the ones paying the Pols and they definitely meet and plan conspiracies to disenfranchise voters. And, William Pepper wrote a book that reveals the conspiracies within those security agencies that control pols. It is great the Lofgren is talking about the Deep State. But, to deny the conspiracies within it is naive. The crashing of the Obama garden party by Robert Gates associates is a case in point. The Supreme Court ultimately is the last point of call to stop this Deep State within all the branches. They have judicial oversight, and they are not using it.
- scratphd
The great swamp philosopher Pogo got it right. "I have meet the enemy and he is us."
A complacent America.- Christanne
Lofgren: What America lacks is a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with surprising speed.
This essay echoes Ivan Illich's "Tools for Convivality," which, although written in the '70s is even more applicable today. This is not new. Lofgren is an important wedge to cauterize the deep state and dispell delusions of unending "progress." However, I don't see any evidence for his assertion that the people themselves will unravel the Deep State. What we've done so far is just buy a new toy, both literally and figuratively, even when so many of us are going hungry.
- Anonymous
Excellent essay. A very good (semi-) insider's look at happenings within the Beltway. However, my instinct tells me that the real nexus of power doesn't lie there, but that the Deep State operatives are allowed to continue their game-playing at public expense in order to serve a larger agenda–the ultimate bankrupting of the US and the ushering in of a new world order which has been in the making for centuries by the real powers-that-be. Uber-conspiratorial? Maybe, but I just can't shake the feeling.
- The One
There is no doubt that the great american experiment has ended in ruin. There is hope on the horizon though. Due to technological progression and its rapid increase in power, the very fabric of society will change. Our social and economic models must change radically due to technological improvements. There is no end in sight to the technological pace we have been blazing at, and if there is an end it seems to be distant. The tremendous benefits of creative AI and the automation of white and blue collar workers must be built into a new social and economic model in which the benefits are distributed evenly and equally among the peoples of planet earth. Even now, if we used our technology wisely, we could unshackle large swaths of the labor markets with automated robots.
The current state of unimaginable corruption which is inflicting the world, not just the US, is a dying last grasp for air as the oligarchies face a new powerful threat, the connection of all things. The internet has the power to upend these corrupt power structures which lie at the heart of society, and thus at the heart of every human life on this planet. Our current economic model is not situated in reality. I can't say if the market will be up or down tomorrow, but what I know for certain is that earth is 196.9 million square miles. Which is a finite space. Not a good place for an economic model which requires economic expansion for survival. The labor markets will be greatly dis-stressed due to technological displacement. The current scientific revolution is unlike any that has ever happened on the surface of this planet. Even highly skilled workers such as surgeons have the capacity to be replaced by highly advanced robots specializing in surgery. People will see awaken to the fact that this "annoying high unemployment" is actually the new normal and will only get worse. This REQUIRES a new economic model.
If a business refused to integrate their business with the latest automation technology, a rival that had enough foresight to not oversee this would drive his competitor out of business. Then, in our current economic model, that rival that just won the market would reap all the rewards. BUT, it will also be in the best interest of that company, if in some new economic manner, a portion of those profits would go into a general citizens fund which would provide all humans with a basic income. This type of model will be absolutely necessary due to mass unemployment. This leaves the motive for profit intact which also leads a motive for innovation, creation, and competition that humans need. With scarcity gone, and universal income for all, the future will look very very bright for our young human species. The seas of interstellar space beckon.
- Anonymous
"…another thing" – yup – if they changed the rule so they could get what they claimed was their agenda passed, the Reps might have been able to do the same – however the Reps could do that anyway themselves if they regained power –
In any case, what does that say about a Party that would refuse to advance a decent agenda just so the other party couldn't advance its own at another date – in essence, cutting off our noses to spite the Reps face – they could have done what they knew we sent them there to do, and they refused, hiding behind rules they could have changed – more and more folks are waking up …
ISTM it oughta be obvious by now that this "struggle" between the Reps and the Dems isn't about principle or ideology and it certainly isn't about representing us – it is about who gets to be in charge of handing out the perks and who gets the perks – those in power are the ones who get both ….
- Charles Shaver
Nice to keep learning of a plethora of ambiguous symptoms but, short of too costly general strikes or domestic insurrection, only voting proved corrupt politicians of both major parties out of high office every other November will eventually restore legal functionality to the U.S. Government. So, vote in every general election and vote against those who stray. 'How to know' one might ask? Simply vote 'out with the old; in with the new,' every time, until we have the kind of America the Founders prescribed in the Preamble to the U.S. Constitution.
- Anonymous
It only depends on your definition of "the US." Yes, a panel of CEOs famously declined Ralph Nader's invitation to join him in the Pledge of Allegiance, but in the State Department memo that outlined the policy of containment of the USSR, George Kennan said the vast wealth disparity between the US and the rest of the world must be maintained, while civil rights and democracy could be neglected.
By then, the post-World War One idealists who'd joined calls for socialism and one-world government, to prevent another such catastrophe, had seen things differently once Russia turned Eastrrn Europe into a barricade against further invasions from the West. They could not bring themselves to reb against their banker fathers, but they still believed in a one-world government – it would simply be the government of the United States. The entire world would be brought into the economc system we ran, no matter what citizens and their elected governments wanted.
During the Cold War, NATO was used to bring European intelligence agencies and militaries under domnance by the CIA and the Pentagon. Putting ordnance, money and men in place to resist a Soviet takeover made perfect sense, but it operated in peacetime to keep left-wingers out of Continental governments. We overthrew an Italian government, for example. Not by ourselves, of course: the secret "stay-behind" troops were nitorious right-wing fanatics, who could be trusted to carry out their missions regardless of law, Constitutionality or morality. False-flag shootings and bombings in public squares and supermarkets killed many innocent civilians and were blamed on leftist radical groups which had been thoroughly penetrated already anyway. This was to win public support for stricter security policies and, perhaps, punish citizens for voting in liberal-to-left governments. This was admitted in the Italian parliament by the Prime Minister in 1990. Operation GLADIO, as it was called, involved every NATO country. Investigations were promised, but were aborted or came to mothing.
This is what Putin knows will happen if Ukraine joins NATO, for instance, so don't expect him to take it lying down. He operates a Russian version.
In the US, a group of Wall Street financiers discussed literally overthrowing FDR in order to end the New Deal regulatory state, but didn't get past the talking stage. The Senate held hearings but J. Edgar Hoover declined to investigate becayse "no crime was committed." This is the same FBI director who opened pressure dossiers on citizens who carried protest signs or wrote letters to newspapers or the government opposing our war policies, and tried to get Martin Luthed King to commit suicide.
Note the secrecy surrounding current trade-agreement negotiations, and accompanying high security. This dates back to the fiaco of the world trade talks in Seattle some years ago, when street protests neatly brought them to a halt. An Italian citizen was killed during protests against trade talks in Genoa yeats later.
- Anonymous
This was a superb essay–one I have been awaiting for years. One minor addition: there is another non DOD component to the aforementioned group, which is DOE. Admittedly,
it's rather easy to forget about them–but one should not. Ever.- Anonymous
But I really wonder if voting is a sufficient tool for the citizenry to tell the government what it thinks.
Elections are not very frequent, they are deeply manipulated by complex "strategists" (look at the connection between the now-slowly-debunked gay marriage referenda and the re-election of Bush Jr).
Though I find it tedious and at times inefficient I wouldn't mind being part of a citizenry like France that literally shuts the country down until the government says "uncle".- Anonymous
I believe the fourth estate and the way the US government interacts with it have a lot to do with the opacity of the veil I find floating between myself and whatever happens inside the beltway.
The US government keeps journalists begging for the tiniest crumbs. No one is willing to leak anything for fear of being caught.
When I asked a friend in the diplomatic corps what was the most striking about his stint in DC he said the depth at which government officials changed with each new administration compared to other countries. DC's moving business is booming beyond anything imaginable. This is also a tidy way to keep a tight grip on "messaging" – a skill each administration seems to get better and better at.
There is a reason wikileaks has emerged and parody has replaced the stale format of the evening news.
- Charles Shaver
Voting is still an effective tool. Unfortunately, statistically, a majority of manipulated voters will only dirty their hands to install and re-install soluble Democrats and Republicans when seeking water tight integrity; insane, by Einstein's definition. Now is well past the best time to make some real repairs but, perhaps, not yet too late to save a sinking ship. And, shutting the engine down won't plug the leaks.
- Pat Kittle
We Americans are already plenty overcrowded, but Israel lobby billionaires want open borders and they've paid big bucks to both Republicans & Democrats. So open borders and endless population growth it is, ecological sustainability be damned.
And don't give me that "anti-Semitic" hooey, I'm just stating facts.
Zuckerberg, Bloomberg, Soros, Gelbaum, Adelson, etc., etc., Israel lobby, all of them.
No serious discussion of the "deep state" would ignore that elephant in the living room.
- Anonymous
This is not a valid critique. The Deep State serves organized wealth and works to further increase inequality and social stratification. Thus the Deep State represents entrenched right-wing power. It is a matter of state capture. Both parties support this consensus and are thus supremely conservative. The same goes for the media which is owned by these same centers of organized wealth.
- Matt P.
It's not a matter of keeping one's mouth shut, but actions speak louder than words. Being angry and contentious all the time is not the same as being productive about the issues you believe in. Whenever I see an inequality in the street, on the subway, or at a party I react. I stand up for the person, I intervene and get involved. The rest of the time I do keep my mouth shut because there's nothing to say. It doesn't help anyone to spread unhappiness around. In fact it drains your energy so you're not ready or as effective for the next opportunity.
- Sean Kurnow
I get a laugh at people who yell, whine and complain about politicians and party politics….It's like yelling at a ventriloquist dummy instead of the person controlling it. America became a plutocracy in 1913 when the Federal Reserve was created. Since then, we all know that special interest groups control almost every aspect of government policy.
- Anonymous
I will assume you simply did not understand what I wrote or what 'slouching' wrote – ironic eh?
Lets remove Thom Hartmann from the equation, as it seems to be where you flew off the rails…what then is your defense of the idiots we allude to?- Anonymous
I well understand the argument about brainwashing – have heard it a gazillion times ….
The "idiots" you refer to – who are these folk? And while the corp media was brainwashing them, what were the rest of us doing? Sitting on our hands?
- Bill Wesley
well for once I have no comment, its not required in that the writer has made the case with expert precision, I find no flaws, no omissions, no theory or dogma obstructing the writers view. Its nice to see such well presented intellectual compitance, it allows me to feel relief, I can take a break since others are seen to be on the ball
- FroboseTF
Charles:
Voting used to be an effective tool. Unfortunately with the advent of "Electronic Voting Machines" which must be "Programmed", and leave no paper trail to allow a recount; I fear that if the truth be known our elections are probably rigged on a regular basis to reflect the will of those in actual power now.I believe it was Joseph Stalin who said "It's not who casts the votes that's important. It's who counts them.
- Anonymous
Actually, it was a Mossad (Israeli Intel)/US Intel op. US organized it and funded the Al Qaeda end of it via Paki intel officer General Mahmoud Ahmed, while the Mossad prepped the US targets and ran the anthrax mail op. I'm not sure that Mossad didn't dream it up in the first place, but, whatever the details, Al Qaeda was definitely just a bit player in the op with the real culprits being our own fearless leaders.
- Reuben_the_Red
Winner-takes-all elections (as opposed to proportional representation) and the Electoral College are inherently undemocratic and present the illusion of voter participation without the danger of undue voter influence.
- Reuben_the_Red
Excellent discussion of the intersection of money, power, and early 21st century technology in the US today. Food for thought, especially paired with Moyer's recent documentary about ALEC.
One caveat: Paragraph 21 starts out saying, "the Deep State is so heavily entrenched, so well protected by
surveillance, firepower, money and its ability to co-opt resistance that
it is almost impervious to change," but in paragraph 22, "there are signs of resistance to the Deep State and its demands." Paragraph 21 has already made the case that resistance is irrelevant and impotent in the face of the Deep State apparatus, power/wealth reserves, and democracy-subverting methodology. And that's probably true. There may be no way to actually extricate the Deep State from The Superficial State.We are left in the final few paragraphs with a series of reasons that the Deep State might reverse course voluntarily, or unravel of its own accord, but in the end what we really need is "a figure with the serene self-confidence to tell
us that the twin idols of national security and corporate power are
outworn dogmas that have nothing more to offer us": in other words, some kind of charismatic, messianic Jesus-person, to save us from ourselves. I don't object to the author trying to end with a hopeful note of optimism, but how would this person reach us with that message? Are there not already a host of people who have been saying exactly that for decades, from Noam Chomsky to Angela Davis, from Daniel Quinn to Arundhati Roy, from Mark Twain to John Lennon? Have we not managed to ignore and disregard a notable and widely-published list of people trying to tell us that national security and corporate power are outworn dogmas that do nothing to elevate humanity nor the human condition?"Thus disenthralled,
the people themselves will unravel the Deep State with surprising speed." It seems clear that we will be forever enthralled with our credit scores and our televised sporting events and other televised virtual realities until the government of the US actually collapses due to a variety of currently known and unknown factors (economic, ecological, etc). And that's not gonna be pretty either. And even then there is the further possibility that in such an event of complete destabilization (not unthinkable, has happened throughout history, around the world), the Deep State could become simply The State.- Reuben_the_Red
Agreed. Presumably there is no incentive in the Deep State to undermine the omnipotence of the Deep State.
There are ways to increase voter participation (non-participation fines and penalties as I understand Australians are subject to; make voting day a federal holiday or even better a three-day weekend; give the right to vote back to felons and inmates alike; etc.) but wouldn't we still be left to choose between Tweedledum and Tweedledee?
- Charles Shaver
I haven't voted for Tweedledee or Tweedledum for President since Ronald Reagan and, since learning of Gramm-Leach-Bliley in 2012, I don't vote for either for Congress. I'd rather take a chance on a third, fourth or fifth party unknown, a blank ballot or a write-in candidate than on another known destroyer from one of the two major parties. Participation alone is not enough; it has to be informed participation, referenced against the clear, plain and simple language of the U.S. Constitution. So, how do we get the word out?
- Reuben_the_Red
It would have been a very different election in 2012 if the Republican establishment and the corporate media machine had not colluded to rig the primaries so that Mitt Romney was the nominee, and not the one that the majority of voting Republicans wanted, Ron Paul, who ran on a platform that ironically appealed to many leftists, because of his insistence that foreign military interventions and US global military incursions cease immediately.
It's possible that the realistic threat of a viable third party candidate on the outer fringe of the left or the right could be enough to force that respective party to yield to those fringe demands, incorporating those demands into a mainstream platform, more or less like the Tea Party did with the Republican party in recent years, threatening to take their votes elsewhere.
At the same time, more Americans voted for left wing platforms than right wing platforms in 2000, but due to the winner-takes-all elections, we didn't get a government that was 5% Nader, 45% Gore, 45% Bush, majority leftist reflecting the vote. We got 100% Bush. We got corporate welfare, tax cuts for the uber wealthy which did not result in higher employment, we got two decade-long unprovoked foreign wars riddled with war crimes, and we got persistent recession. Some of these things, if not all of them, would not and could not have happened under a Nader/Gore-led government. The Deep State expanded massively with the Bush/Cheney administration's complicity. I wish that it was worthwhile to vote for third-party candidates, but we can expect them to receive no media coverage, few votes overall despite the possibly broad appeal of their platform, and in the end it would be irrelevant because of the Electoral College. If I live in Oregon and vote for Romney my vote is thrown away as surely as if I live in Utah and vote for Obama.
In answer to your question, how do we get the word out, I think the only answer is media ownership. Our lives are more consumed by media today than ever before in the history of the world, and all of the media is concentrated in fewer hands, with more consensus among those few hands, than ever before.
- Charles Shaver
It would be a very different election every time, and nation, if the majority would simply quit believing in the now defunct two-party system, corporate owned media and an extremist capitalist system that values the gains of the uber wealthy over the lives and limbs of workers and the poor. It's okay to question the status quo, ignore corporate media, do independent research, vote totally independent of family tradition and elect questionable strangers (as opposed to proved bipartisan failures) to defund the Deep State. Need a little more direction? Review the Preamble to the U.S. Constitution. It pretty well sums it all up in rather clear, plain and simple English, if you keep in mind that not just millionaires, billionaires and multi-national corporations (allegedly) are 'people.' Good conversation.
- jeffries
Mike Lofgren wrote the essay. Bill Moyers was allowed to interview him. PBS has its hands tied by the "deep state" too. If you doubt this talk ask PBS why they pulled the plug on the Koch Brothers expose.
- jeffries
The "deep state," like a parasite, will continue until its host is dead. My guess is they are in a state of panic-their host is on life support. The party is over- the rest of the world has had enough of the U.S. The petro dollar has been broken. The dollar will be dethroned as the world reserve currency and the torch will be passed to China no later than 2018. The players of the "deep state" will not be able to infiltrate and latch onto this new host and so they will fight to the death, more accurately our sons and daughters death, to keep the U.S. in its position. Resist war is all we can do and not buy into the steady stream of propaganda that will be bombarding us at every turn.
- Hatha Sunahara
I haven't read all 328 comments so far, but I just wonder if anybody has picked up on the reason the deep state has developed. I think it's development stems from the evolution of the United States from a Republic into an Empire. No empire can exist with restrictions on its power like those put on the United States by the Constitution. So, instead of discarding the Constitution, the United States was subsumed into an 'extra-constitutional government'. Of course, nobody bothered to tell the people of the United States that their power had been usurped by a lawless Imperial overlord. Responsibility for that egregious oversight can be laid to the mainstream media, which is owned by the owners of the extra-constitutional government. These are the global media corporations.
If you view politics this way, it explains a lot of things. Empire relies on it's military power and the acceptance of its money. Anyone who does not accept the empire's money generates hostility from the empire. The empire wages war without any declaration of war. The extra constitutional government allows that. The empire cannot tolerate privacy because that would allow people to plot against the empire without interference. So the empire puts everyone under surveillance. The empire cannot tolerate resistance or disobedience, so it develops a police state to instil fear and obedience in people. There are many many more examples of how empire rules America and usurps the US government–which exists for the people of the United States. Americans, and the people of the other countries in the world understand this viscerally, but are unable to express this in coherent thought because their language has been corrupted by the forces of empire. Mike Lofgren doesn't make this connection because iit violates the rules of political correctness. Everyone's career is tied to strict adherence to political correctness, and
- Anonymous
And many of the voters have been brainwashed by the 5 or 6 corporations that control the media. Fear entertainment.
- Anonymous
After I read Top Secret America I came to the conclusion that since 9/11 Homeland Security has become so incredibly humongous and so political it will keep growing until the US is bankrupt. The was the goal of Benladen. Europe did not fall for it be we did.
- Anonymous
Some contemporary books Blackwater, Bloodmoney, and especially Confessions if a Economic Hit Man. Also Top Secret America.
- Charles Shaver
I think a better name for 'Homeland Security' is 'elitist money addict insecurity.' And, it and treasonous corporate media propaganda will keep growing until we as an injured people finally 'Just say NO!' to the 'perpetraitors.' Thanks for commenting, above and below.
- Anonymous
There is a small very readable book written by John Perkins named Confessions of an Economic hit Man. This is the way the Corporatocracy has used the IMF and World Bank to take over the assets of less developed countries. And if their leaders do not agree to go along well then read what happens to them.
- Anonymous
In many states felons are legally allowed to vote if they have served their sentences. And if they moved to Florida their vote was legal. But Jeb Bush broke the law and did not allow their vote to count in the Bush/Gore election. The Republicans also paid a fortune to a company named Choice Point to scrub the polls. They also did this in the latest election for Governor. How can they get away with these tactics? The tactics that are being used in North Carolina lately are extremely difficult to counteract.
- Anonymous
Funny (not ha ha) when I try to tell friends what is going on within Homeland Security (the redundancy, the extreme size of it and the number of government and private buildings all around the Washington suburbs) they respond by stating that they approve of all this. Homeland security is so political that this state if affairs will be sucking up our tax dollars forever.
- Neil Kitson
"These men, largely private, were functioning on a level different from the foreign policy of the United States, and years later when New York Times reporter Neil Sheehan read through the entire documentary history of the war, that history known as the Pentagon Papers, he would come away with one impression above all, which was that the government of the United States was not what he had thought it was; it was as if there were an inner U.S. government, what he called 'a centralized state, far more powerful than anything else, for whom the enemy is not simply the Communists but everything else, its own press, its own judiciary, its own Congress, foreign and friendly governments – all these are potentially antagonistic.
It had survived and perpetuated itself,' Sheehan continued, 'often using the issue of anti-Communism as a weapon against the other branches of government and the press, and finally, it does not function necessarily for the benefit of the Republic but rather for its own ends, its own perpetuation; it has its own codes which are quite different from public codes.
Secrecy was a way of protecting itself, not so much from threats by foreign governments but from detection from its own population on charges of its own competence and wisdom.' Each succeeding Administration, Sheehan noted, was careful, once in office, not to expose the weaknesses of its predecessor. After all, essentially the same people were running the governments, they had continuity to each other, and each succeeding Administration found itself faced with virtually the same enemies.
Thus the national security apparatus kept its continuity, and every outgoing President tended to rally to the side of the incumbent President.
"Out of this of course came a willingness to use covert operations; it was a necessity of the times, to match the Communists, and what your own population and your own Congress did not know was not particularly important; it was almost better if they did not know…"
David Halberstam
The Best and The Brightest- Charles Shaver
Very typically, you appear to be better informed and better read on some aspects of our failed and failing nation-state than I. Admittedly, I don't have all the answers. Briefly, though, respective of all you cite, I find the vast majority of Americans just don't want to be burdened any more with good citizenship (e.g., election statistics). Most recently, another symptom of the underlying problem was highlighted when the billionaire owner of a mere commercial (as opposed to 'professional') basketball team in a society that tolerates abject poverty and illegal war was severely chastised and sanctioned for only elitist, racist remarks. Summarily, let me say that my America took a big turn for the worse when the 'Pied Piper' was bribed to play the National Anthem. Nope, not 'ha ha' funny, at all. And, I don't know whether to dread or rejoice the day when the coerced laughter finally ends, and the music dies.
- Anonymous
During the 2nd Bush administration I started to notice all the books listed in the Washington Post book section about his administration. After awhile I thought maybe I should start reading. The first page turner was one by Bob Woodward about the lead up to the Iraq war. It showed me that we were not getting truth from the media so I kept on reading books. First about Iraq-Fiasco, The man who got is into the war Amad Chalabi, Blackwater, Bloodmoney and many others. I keep telling people to read more but they choose not to. They are either working too hard or if retired playing too hard. They just want to be spoon fed and are addicted to outrage entertainment. I continued my reading on economics, finance, climate change and understand much more than I did before. Keynes vs Hyeck explains the history of the two economic theories. Also how the shift to the right happened during The Reagan and Thatcher administrations. Age of Greed explains how a few very greedy men influenced congress to repeal laws and pass laws in their favor. Tim Flannerys book The Weather Makers explains Climate change. And there are too many books written on income disparity and the danger to democracy. What is happening is out of control and a nightmare. I don't think people understand that when a government service for the commons is privatized it becomes a corporation with lobbyists that influence Congress and that we taxpayers must pay their employees at a much higher rate. Like the army contractors, prisons and so on. People do not put on their thinking caps. Sorry for the rant.
- Charles Shaver
Interesting, impressive; different paths, one destination; better a rant than a sell-out or surrender. Beware of putting too much faith in the opinions of others, myself included. We all are products of our past and there is a natural tendency for the adult progeny to emulate the parent; the student to mimic the teacher; the reader to quote the author. I find the U.S. Constitution is the best source of information about how America should function but I don't hear or see much of that from any of the so-called 'experts.' If electrical engineers treated Ohm's Law like authors, bankers, government, lawyers and the 'people' treat the U.S. Constitution, you'd be reading this in script on parchment by candlelight, if at all. And, don't let me discourage you; where I fail you may succeed. Let reason prevail. Thanks for the stimulating conversation.
- Anonymous
Yes we all have the tendency to read whatever validates our worldview. I read Gretchen Morgensterns book named Reckless Endangerment about Fannie Mae. Saw her talk on Cspan book channel. Needed to get to the bottom of that mess. Jim Johnson was and still is a very shady character. It is strange however that the Republicans reduced the entire 2008 recession down to two sound bites Fannie Mae and the CRA (I think that is the acrynom) for the program to stop the redlining. No one knows anything about the history and purpose of Fannie Mae and it's original purpose until Johnson got his hands on it. If one has critical thinking one can sift out the truth. I just cannot believe that people will believe a sound bite without any hesitation.
- Charles Shaver
Been 'deep thinking' a lot more about the Deep State but, without yesterday's lost credentials or celebrity (good or bad), there's not much I can presently do. One clever sound-bite might do the trick but none I've composed and tried so far have caught on. Still, probably, is tomorrow.
- Anonymous
I actually thought of a really good sound bite and communicated it to the White House. No one took me up on it. Wish I could remember what it was. If you have any you could try. But they are not very confrontational.
- Charles Shaver
I liked candidate Obama's words but never voted for him, because he already belonged to one of two already proved dysfunctional major political parties. Writing the Obama White House and even getting a few generic replies while watching him fail the office, too, I do not regret 'wasting' my vote on a 'green' third party candidate. After rereading The Anatomy of the Deep State, today, I'm sure I could read more and probably phrase things better but am still confident in my decades of working-class experience-based conclusions and suggestions.
- sorval
"Land of the Free, Home of the Brave"
has become
Land of the "Free", Home of the "Brave".
- johnnyomaha
Privatization of the US constitution to serve the elite…..
- http://www.rrstevens.net/ Robert Stevens
… OR is it "Land of the Greed, Home of the Knave" -- Let's sing it all together before the next Football Game and Circus: ♫ "o'er the Land of the Greed …" ♫
- Anonymous
Where's the who, what, when, where, and why? Collected everyday simple observations will awaken one to the existence of a higher controlling entity. No more problem identification or descriptions, thank you very much. We need 1) facts and 2) solutions.
- unheilig
Lofgren gives both. Did you read the article? Confirmation is easy enough too: all you need is a browser and a few hours searching off-off-lamestream information sources.
- Jocelyn Hawley
To both dn7904 and Charles Shaver, I read your back and forth discussion and realize that I so crave that type of intelligent, informed and aware discussion within my interactions in my daily life, but none can really exist. Most people are so concerned with the outcomes of the game, or fantasy football, or the latest t.v. series, and how on earth to pay rent and other minutia. The little bit of news comes from prime time networks like Fox, NBC and CNN and they think they know what is happening in the world, but don't actually want to know what is really happening. The trick to an article like this one, is not yet how we change the problem, but how we get people to notice, be aware and to care. That is the real question and the first- most prominent problem to be solved.
- Anonymous
I think there are more creative ways for the citizenry to communicate their discontent than to wait four years for the next highly-funded election.
I remember being in an international conference and the minister of Health from a major developed country came on stage just days after making a very unpopular move. One person stood up and simply turned her back on the Minister, then another, then a dozen, then the whole auditorium of major players in the scientific community.
It made headlines.
I resent the fact that a movement like MoveOn now just asks me for money like all the other PAC's. They used to send out flyers and have photos posted of people all over the country holding the same flyer.
What comes to mind is that we remain the developed country in which the fewest people take vacation. How can we possibly stop and think about creative democracy? Ironically the revolutionary thought that was the spark that set off the flames of this country came from the leisure class who had plenty of time to think and write about things like freedom and liberty.- Charles Shaver
Thank you for prodding me to do some additional 'Deep Thinking.' The harm is done. Thanks to the apathetic and/or ignorant majority of a voting minority, the balance of power in the U.S. has now been transferred from the left hand of organized crime to the right hand, for the next two years. At least the majority is consistent in its failure to self-govern by voting, and voting wisely.
While (if) still allowed, voting wisely is the only reasonable solution. Creative protesting (e.g., 'occupy' them, pass out flyers, shout them down, turn your back or throw them a shoe) means nothing when the final vote is counted to determine who actually makes and enforces the rules. Not omniscient or perfect, either, I'm open to suggestions but with very little to work with after several decades of too-typical abuse, betrayal, exploitation and oppression, served in the pseudonyms of loyalty, patriotism, sacrifice and service. If mere reasoning worked then Bill Moyers and 'company' would have already solved most of the major problems. Don't let me discourage you, though, keep on with your own deep thinking.
- John Schoneboom
Two flaws jump out at me from this otherwise rather good and useful article. The first is that Mr. Lofgren implies that the Deep State is mainly a Republican thing. In the picture he paints, it's the Republicans who want to pay the national security state, while the poor hapless Democrats just want to increase social spending. Similarly, he makes excuses for Obama in footnote 7. (Presidents are surely mostly puppets, but Obama's 2008 FISA vote as Senator betrays his own predilections well enough.) At best, this is the farcical veneer of Deep State Theatre. I suspect Mr. Lofgren knows better and didn't mean to imply otherwise.
Secondly, government shutdowns and budgetary problems may be an inconvenience to the Deep State, but no accounting of the Deep State is complete without figuring in off-the-books revenue from the global drug trade. International partnerships and oil interests also help diversify the income stream nicely. There are many billions feeding this thing that have nothing to do with the US budget.
It's also somewhat criminal not to name-check Peter Dale Scott in this subject area. But I'm nitpicking. I'll not bother criticizing the piece for not addressing Deep State ties with terrorism, that kettle of fish deserves its own barrel. Like I said, nice piece, useful, well done, thank you.
- Douglas Harris
does no one see there is a reason for the immense defense spending as America becomes #2 in world economy and the dollar might be replaced as the reserve currency?
The Chinese own enough treasury paper to close the American economy, alone or with several willing partners. BUT…America even as a declining economic dictator will still have the arms to maintain world control…- Anonymous
I had no real a-ha moment reading this well written piece. Nothing jumped out at me as something foreign or unknown. Instead, I had the sense of deja vu, the kind of deja vu I'd rather not have. All these things have been known if the consumer of this good piece has been paying attention to the not-mainline press. What is so exciting about this is the writer put all the information in one place and drew out the connections that weren't always so obvious. Though Mr. Lofgren paints a somewhat plausible picture of how this State may rather suddenly crumble, I'm a bit dubious.
What seems missing are the global links among many of these actors especially the oligarchs reach and connection to many things terrorism. What I'm saying is that I'm not terribly optimistic that a leader will come along who is sufficiently unbeholden to the state and who can remain un-co-opted and call this state for what it is thus raising our fellow Americans sustained interest and desire to see through the mess it will take to overthrow this Deep State.. In any case, thanks so much for such a thoughtful and creepy picture.
- Anonymous
None of this is news. A President who cared could smash the Deep State in, probably, nine months. The key lockhold the Deep State has at the moment is on the nomination process, which is used to filter out any Presidents, and most Congressional nominees, who show signs of independent thought. They've been doing this since Reagan (Carter was the last President with independent thought; Reagan was ideal, being an actor with Alzheimer's and so not thinking much at all.) There are two ways this can play out: either they lose their lockhold on the nomination process, or the entire system is discredited and we get a revolution.
The Deep State is actually very fragile due to their fundamental incompetence. But they're quite capable of wrecking our existing system, at which point there will be an opening for a Caesar or a Napoleon or a Lenin who *is* competent. That is the true danger moment. The worst scenario is revolving-door coups, such as Mexico suffered for decades in the 18th and 19th century.
- Anonymous
The American Empire is, however, in decline phase. You can identify that by the inability to conquer territory and the slow loss of territory from the edges. The peak of the American Empire was actually in the late 19th century… A collapsing empire follows a weird trajectory. Many comparisons have been made to the Roman Empire. That worked out poorly.
- Anonymous
You could also read the much older "War is A Racket" by Smedley Butler.
The IMF/World Bank scam was working for a while. It doesn't work any more: South American countries simply reject it. And the US has no power to muscle South American countries any more; I'm not quite sure how they managed to become immune to US military intervention, but they have. They have had about 200 years of trial and error in figuring out how.
Now, the rest of the world just needs to copy the South American model and the US IMF/World Bank scam becomes untenable.
- Anonymous
Proportional representation is critical, but I haven't figured out how to get anyone to pay attention to it. Even at the local level, where the deep state has no traction because it's paying no attention.
- Anonymous
Thankfully the fight against electronic voting machines is already pretty strong. This is something people understand viscerally and this is a key plank for whatever party is going to dethrone the Rs & Ds. Basically, if electronic "voting" machines are delegitimized (as they should be), this means people will actually fight for their paper ballots…
- Anonymous
I think you're wrong about how most Americans will react. The levels of disillusionment are very, very high now and you can measure them in polls.
Just before the Civil War, we saw the same dynamic: most of the country was completely disillusioned about the "slavocracy", as they called the corrupt US government dominated by slaveholders. This led to the election of Lincoln, the destruction of the Whig Party, and finally, the Civil War.
This is the sort of situation we have now. The Deep State can't win; it will be smashed as Americans unite behind a Lincoln-like figure. The only questions are when this will happen, and more importantly *what comes next*. Things are wide open after that happens: Sun Yat-Sen led (unfortunately) to Mao.
- jeffries
Well it will be interesting how the Greece situation plays out. It seems strange we don't hear much or read much in main stream media about it. They are challenging the status quo. At first the banks gave them until the 28th and then cut it to 10 days. It would be in everyone's best interest if this was the beginning of the end for the EU. Diffused power is the best power. If the EU fails we won't be pressured into a union with Canada and Mexico. I think that was the plan of the global deep state. Aggregate nations into regions and then larger regions and then it would not be such a jump to global government.
- Anonymous
"….. Americans sustained interest…."
Lack of interest is the real killer of all empires.
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January 20, 2015 | Homeland Security Watch
That's the question Michael J. Glennon asks in his book "National Security and Double Government."
His answer: national security policy is determined largely by "the several hundred managers of the military, intelligence, diplomatic, and law enforcement agencies who are responsible for protecting the nation and who have come to operate largely immune from constitutional and electoral restraints." The president, congress and the courts play largely a symbolic role in national security policy, Glennon claims.
You can read a Harvard National Security Journal article that outlines Glennon's argument at this link: http://harvardnsj.org/wp-content/uploads/2014/01/Glennon-Final.pdf. The paper is not an especially easy read, but I found it to be well researched and – for me – persuasive.
His book adds more analysis to the argument, using (from Graham Allison's Essence of Decision) the rational actor model, the government politics model, and the organizational behavior model. Glennon extends that framework by discussing culture, networks, and the myth of alternative competing hypotheses. The book is richer, in my opinion. But the core of Glennon's position is in the paper.
This link takes you to a video of Glennon talking about his book at the Cato Institute: http://www.cato.org/events/national-security-double-government (the talk starts at the 5:20 mark).
From the Cato site:
In National Security and Double Government, Michael Glennon examines the continuity in U.S. national security policy from the Bush administration to the Obama administration. Glennon explains the lack of change by pointing to the enervation of America's "Madisonian institutions," namely, the Congress, the presidency, and the courts. In Glennon's view, these institutions have been supplanted by a "Trumanite network" of bureaucrats who make up the permanent national security state. National security policymaking has been removed from public view and largely insulated from law and politics. Glennon warns that leaving security policy in the hands of the Trumanite network threatens Americans' liberties and the republican form of government.
Some blurb reviews:
- "If constitutional government is to endure in the United States, Americans must confront the fundamental challenges presented by this chilling analysis of the national security state."
Bruce Ackerman- "Glennon shows how the underlying national security bureaucracy in Washington – what might be called the deep state – ensures that presidents and their successors act on the world stage like Tweedledee and Tweedledum." John J. Mearsheimer
- "National Security and Double Government is brilliant, deep, sad, and vastly learned across multiple fields–a work of Weberian power and stature. It deserves to be read and discussed. The book raises philosophical questions in the public sphere in a way not seen at least since Fukuyama's end of history." David A. Westbrook
- "In our faux democracy, those we elect to govern serve largely ornamental purposes, while those who actually wield power, especially in the realm of national security, do so chiefly with an eye toward preserving their status and prerogatives. Read this incisive and richly documented book, and you'll understand why." Andrew J. Bacevich
- "…Michael Glennon provides a compelling argument that America's national security policy is growing outside the bounds of existing government institutions. This is at once a constitutional challenge, but is also a case study in how national security can change government institutions, create new ones, and, in effect, stand-up a parallel state…." Vali Nasr
- "Instead of being responsive to citizens or subject to effective checks and balances, U.S. national security policy is in fact conducted by a shadow government of bureaucrats and a supporting network of think tanks, media insiders, and ambitious policy wonks. Presidents may come and go, but the permanent national security establishment inevitably defeats their efforts to chart a new course…."Stephen M. Walt, Robert and Renee Belfer
I've spoken to three people I consider to be members of the "shadow national security state." One person said Glennon's argument is nothing new. The second told me he's got it exactly right. The third said it's even worse.
William R. Cumming, January 20, 2015 @ 8:38 am
ah! the deep state analyzed correctly imo!
and imo only the nuclear priesthood rivals the deep state but not exactly part of it yet its original source!
like the mayan priests only those in it know how accurate this book is in its analysis!
and a congress marches on in complete ignorance!
Mike Mealer, January 21, 2015 @ 7:48 pm
Great article. Read it a few months ago. I didn't know whether I should feel more secure or afraid. Looking the items I highlighted and a few standout.
"The dirty little secret here," a former associate counsel in the Bush White House, Brad Berenson, explained, "is that the United States government has enduring institutional interests that carry over from administration to administration and almost always dictate the position the government takes."178 P34
Its cohesion notwithstanding, the Trumanite network is curiously amorphous. It has no leader. It is not monolithic. It has no formal structure. P32
The maintenance of Trumanite autonomy has depended upon two conditions. The first is that the Madisonian institutions appear to be in charge of the nation's security. The second is that the Madisonian institutions not actually be in charge. P34
Public opinion is, accordingly, a flimsy check on the Trumanites; it is a manipulable tool of power enhancement. It is therefore rarely possible for any occupant of the Oval Office to prevail against strong, unified Trumanite opposition, for the same reasons that members of Congress and the judiciary cannot; a non-expert president, like a non-expert senator and a non-expert judge, is intimidated by expert Trumanites and does not want to place himself (or a colleague or a potential political successor) at risk by looking weak and gambling that the Trumanites are mistaken. So presidents wisely "choose" to go along. P70
John Comiskey, January 22, 2015 @ 7:14 am
Civic Education 101
Glennon laments as did Justice Souter, the pervasive civic ignorance of the citizenry. Democracy requires an informed and engaged citizenry. The recent and ongoing debates about the role the police in society raise similar question and doubts about our social contract and governance for the 21st century.
Where to from here?
A national conversation about civics and K-12 civic education.
What is the proper role of citizens in society?
What is the proper role of our polity?William R. Cumming, January 22, 2015 @ 8:53 am
Again interesting thread and comments. The use of the term "Trumanite" is unfortunate and totally inaccurate IMO! Truman reluctantly signed the National Security Act of 1947 to resolve the documented failures of Jointness between the Army and Navy in WWII [the Secretary of War and the Secretary of the Navy--Stimson and King]! Truman was personally opposed to the establishment of the CIA for many good reasons.
What is the real failure is the creation of the Nuclear Priesthood which largely failed to guard its secrets from other Nation-States and individuals and the warping into the DEEP STATE [the better term than DOUBLR GOVERTNMENT]!
And now IMO the DEEP STATE is about to DEEP SIX the Career military in the US as it organizes violence and the SURVEILLANCE STATE outside the ARMED FORCES.
A close study of the overturning of the ALIEN AND SEDITION Acts of 1798 which destroyed chances for a second term for John Adams and created the first real Presidential Election in the USA, the Presidential Election of 1800, which brought into officer Jefferson, but almost brought Aaron Burr to real power.
Study of James Madison so-called VIRGINIA RESOLUTION opposing the ASA is fully warranted. Too bad John Yoo did not know this history.
William R. Cumming, January 22, 2015 @ 2:43 pm
I need to mention that I did read the article and listened to the Cato Institute Panel.
The Panel presentations might lead one to argue that Double or nothing or the DEEP STATE what difference does it make past, present, or future?
My short answer is that Government of the people, by the people, and for the people [the Lincoln formulation] probably expired with the dead of Hiroshima and Nagasaki! Perhaps not but until argued and proven otherwise that is my conclusion! Perhaps wrong and hoping so!
Jack, January 24, 2015 @ 2:47 pm
A fascinating and needful argument, though I think we could make as much of the supine legislature that lends weight to Glennon's argument as he does the "permanent" executive agency security apparatus. If they're to be properly responsive to public will, executive agencies need better written laws.
The Critical Infrastructure Protection Act or CIPA, which passed the house in 2014, would, "require the Assistant Secretary of the National Protection and Programs Directorate to: (1) include in national planning scenarios the threat of electromagnetic pulse (EMP) events…" (emphasis mine). The national planning scenarios were rescinded in 2011, making CIPA either a very easy or very hard law to execute.
Likewise, the Biggert-Waters flood insurance reform act of 2012 altered regulatory definitions for "substantial damage" and "substantial improvement" by misunderstanding the way field damage assessments are performed under the National Flood Insurance Program.
Which means, I suppose, that we need more able legislators…which may be unlikely if more Americans don't know Publius from Curly.
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JAN. 25, 2015 | The New York Times
The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.
In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today's dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.
But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.
This social upheaval helps explain why the president focused on reviving the middle class, offering a raft of proposals squarely aimed at concerns like paying for a college education, taking parental leave, affording child care and buying a home.
"Middle-class economics means helping working families feel more secure in a world of constant change," Mr. Obama told Congress and the public on Tuesday.
Still, regardless of their income, most Americans identify as middle class. The term itself is so amorphous that politicians often cite the group in introducing proposals to engender wide appeal.
The definition here starts at $35,000 - which is about 50 percent higher than the official poverty level for a family of four - and ends at the six-figure mark. Although many Americans in households making more than $100,000 consider themselves middle class, particularly those living in expensive regions like the Northeast and Pacific Coast, they have substantially more money than most people.
"I would consider middle class to be people who can live comfortably on what they earn, can pay their bills, can set aside something to save for retirement and for kids in college and can have vacations and entertainment," said Christine L. Owens, executive director of the National Employment Law Project, a left-leaning research and advocacy group.
... ... ...
In recent years, the fastest-growing component of the new middle class has been households headed by people 65 and older. Today's seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age. More than eight million, or 19 percent, were in the labor force in 2013, nearly twice as many as in 2000.
As a result, while median household income, on average, has fallen 9 percent since the turn of the century, it has jumped 14 percent among households headed by older adults.
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Amazon
J. Roth on October 14, 2015
A Groundbreaking Resource, Second Only to "JFK and the Unspeakable"
A tremendous resource of breathtaking depth and clarity. Talbot builds on the now decades-old body of research - initiated by investigative reporters Tom Mangold ("Cold Warrior") and David Wise ("Molehunt"), and largely developed by assassination researchers James DiEugenio and Lisa Pease ("The Assassinations") - and adds groundbreaking new information.
Talbot focusses extensively on James Jesus Angleton, the shadowy counterintelligence figure at the heart of the domestic assassinations of the 1960s, and examines the inner-workings of Dulles' ambitious (and dastardly) plot to consolidate and control global political power. "The Devil's Chessboard" is a startling and revelatory masterwork. In terms of easy-to-access assassination research, this book is second only to James Douglass' "JFK and the Unspeakable." In terms of biographies of Dulles and Angleton, two of history's most infamous figures, this work is second to none.
Note: Be wary of one-star reviews for this book. Some trace back to commissioned-review services, the same services that give five-star reviews to shady/suspicious health and beauty products. Go figure.
James Norwood on October 14, 2015
The Shadow Government of Allen Dulles: Organized Irresponsibility
To read this magnificent book by David Talbot is to understand how the JFK assassination occurred and how the truth was concealed by officialdom in the Warren Report. Unlike his brother, John Foster Dulles, the younger Allen Welsh Dulles rarely makes it into American history textbooks. In this extremely detailed study, the singular importance of Allen Dulles is demonstrated as being central to a watershed period in the American Century.
First and foremost, "The Devil's Chessboard" is a beautifully written and meticulously researched volume. Talbot drew upon archives at Princeton University, where the Allen Dulles papers are housed. He also conducted research in other archives across the country. The documentary work is buttressed and amplified by interviews with the surviving daughter of Dulles, as well as interviews with the children of Dulles' colleagues and over 150 officials from the Kennedy administration. Nearly forty pages of notes serve to document the author's sources.
One of the most revealing moments about Allen Dulles was when he was ten years old and spending time at the family's lake home in upstate New York. After his five-year-old sister fell into the lake and was drifting away from him, Allen stood stock still, "strangely impassive. The boy just stood on the dock and watched as his little sister drifted away." (p. 19) Fortunately, the child was rescued by the mother. The behavior of young Allen is representative of a lifelong predilection for observing the imponderables of life as an insider while looking to others to "risk their skins." For this little boy, the world was already forming into a chessboard with pawns to manipulate for his self-serving needs. Talbot describes Dulles' rogue actions in allowing Nazi war criminals to avoid prosecution at the Nuremberg Trials in these chilling words: "Even in the life-and-death throes of wartime espionage, Dulles seemed untouched by the intense human drama swirling around him." (p. 120)
In one of the most riveting moments of the book, Talbot describes an interchange between Dulles and researcher David Lifton at a colloquium on the JFK assassination at the campus of UCLA in 1965. Lifton came prepared to challenge Dulles on major deficiencies of the Warren Report. By the end of the evening, the students attending the session were more interested in Lifton's findings than Dulles' unsuccessful attempts to deflect the tough questions. In retrospect, Lifton apparently claimed that he "was in the presence of 'evil' that night." (p. 591)
A heretofore unanswered question about the JFK assassination is what was Allen Dulles was doing between the time he was fired by JFK as Director of the CIA in 1961 until the moment of the assassination on November 22, 1963. A related question is how was it conceivable for Dulles to have been appointed to the Warren Commission that eventually produced the conclusions that are still accepted by mainstream historians and the media? Talbot's intensive research helps to shed on light on those questions by tracing the arc of development of the career of Allen Dulles as a high-powered attorney at the center of the elitist East Coast establishment, his shocking collaboration with the Nazis while working in the OSS, and his career in clandestine activities at the CIA
Talbot's research probes not merely the activities of Dulles as Director of the CIA, but explores the broader context of his function over three decades as a power broker, whose "efforts were directed not against hostile governments but against his own." (p. 3) Talbot cites revelations from the Columbia University sociology professor C. Wright Mills about the secret government of Allen Dulles, which was comprised of a "power elite" and based on the anti-Constitutional premise of "organized irresponsibility."
In many ways, "The Devil's Chessboard" is a companion volume to Talbot's essential study "Brothers," which focuses on the relationship of John and Robert Kennedy, the assassination of JFK, and the aftereffects on RFK. But the more recent book on Dulles covers the broader scope of how the American government was transformed into the national security state in the years following World War II. Talbot's goal in preparing this book is to demonstrate the urgency of coming to terms with our past and how "it is essential that we continue to fight for the right to own our history." (p. xii) An excellent place to begin that quest is to own this book.
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Sep 25, 2015 | www.gatesnotes.com
October 13, 2014 | gatesnotes.com
A 700-page treatise on economics translated from French is not exactly a light summer read-even for someone with an admittedly high geek quotient. But this past July, I felt compelled to read Thomas Piketty's Capital in the Twenty-First Century after reading several reviews and hearing about it from friends.
I'm glad I did. I encourage you to read it too, or at least a good summary, like this one from The Economist. Piketty was nice enough to talk with me about his work on a Skype call last month. As I told him, I agree with his most important conclusions, and I hope his work will draw more smart people into the study of wealth and income inequality-because the more we understand about the causes and cures, the better. I also said I have concerns about some elements of his analysis, which I'll share below.
I very much agree with Piketty that:
- High levels of inequality are a problem-messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.
- Capitalism does not self-correct toward greater equality-that is, excess wealth concentration can have a snowball effect if left unchecked.
- Governments can play a constructive role in offsetting the snowballing tendencies if and when they choose to do so.
To be clear, when I say that high levels of inequality are a problem, I don't want to imply that the world is getting worse. In fact, thanks to the rise of the middle class in countries like China, Mexico, Colombia, Brazil, and Thailand, the world as a whole is actually becoming more egalitarian, and that positive global trend is likely to continue.
But extreme inequality should not be ignored-or worse, celebrated as a sign that we have a high-performing economy and healthy society. Yes, some level of inequality is built in to capitalism. As Piketty argues, it is inherent to the system. The question is, what level of inequality is acceptable? And when does inequality start doing more harm than good? That's something we should have a public discussion about, and it's great that Piketty helped advance that discussion in such a serious way.
However, Piketty's book has some important flaws that I hope he and other economists will address in the coming years.
For all of Piketty's data on historical trends, he does not give a full picture of how wealth is created and how it decays. At the core of his book is a simple equation: r > g, where r stands for the average rate of return on capital and g stands for the rate of growth of the economy. The idea is that when the returns on capital outpace the returns on labor, over time the wealth gap will widen between people who have a lot of capital and those who rely on their labor. The equation is so central to Piketty's arguments that he says it represents "the fundamental force for divergence" and "sums up the overall logic of my conclusions."
Other economists have assembled large historical datasets and cast doubt on the value of r > g for understanding whether inequality will widen or narrow. I'm not an expert on that question. What I do know is that Piketty's r > g doesn't adequately differentiate among different kinds of capital with different social utility.
Imagine three types of wealthy people. One guy is putting his capital into building his business. Then there's a woman who's giving most of her wealth to charity. A third person is mostly consuming, spending a lot of money on things like a yacht and plane. While it's true that the wealth of all three people is contributing to inequality, I would argue that the first two are delivering more value to society than the third. I wish Piketty had made this distinction, because it has important policy implications, which I'll get to below.
More important, I believe Piketty's r > g analysis doesn't account for powerful forces that counteract the accumulation of wealth from one generation to the next. I fully agree that we don't want to live in an aristocratic society in which already-wealthy families get richer simply by sitting on their laurels and collecting what Piketty calls "rentier income"-that is, the returns people earn when they let others use their money, land, or other property. But I don't think America is anything close to that.
Take a look at the Forbes 400 list of the wealthiest Americans. About half the people on the list are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). Contrary to Piketty's rentier hypothesis, I don't see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since. In America, that old money is long gone - through instability, inflation, taxes, philanthropy, and spending.
You can see one wealth-decaying dynamic in the history of successful industries. In the early part of the 20th century, Henry Ford and a small number of other entrepreneurs did very well in the automobile industry. They owned a huge amount of the stock of car companies that achieved a scale advantage and massive profitability. These successful entrepreneurs were the outliers. Far more people - including many rentiers who invested their family wealth in the auto industry - saw their investments go bust in the period from 1910 to 1940, when the American auto industry shrank from 224 manufacturers down to 21. So instead of a transfer of wealth toward rentiers and other passive investors, you often get the opposite. I have seen the same phenomenon at work in technology and other fields.
Piketty is right that there are forces that can lead to snowballing wealth (including the fact that the children of wealthy people often get access to networks that can help them land internships, jobs, etc.). However, there are also forces that contribute to the decay of wealth, and Capital doesn't give enough weight to them.
I am also disappointed that Piketty focused heavily on data on wealth and income while neglecting consumption altogether. Consumption data represent the goods and services that people buy - including food, clothing, housing, education, and health - and can add a lot of depth to our understanding of how people actually live. Particularly in rich societies, the income lens really doesn't give you the sense of what needs to be fixed.
There are many reasons why income data, in particular, can be misleading. For example, a medical student with no income and lots of student loans would look in the official statistics like she's in a dire situation but may well have a very high income in the future. Or a more extreme example: Some very wealthy people who are not actively working show up below the poverty line in years when they don't sell any stock or receive other forms of income.
It's not that we should ignore the wealth and income data. But consumption data may be even more important for understanding human welfare. At a minimum, it shows a different-and generally rosier-picture from the one that Piketty paints. Ideally, I'd like to see studies that draw from wealth, income, and consumption data together.
Even if we don't have a perfect picture today, we certainly know enough about the challenges that we can take action.
Piketty's favorite solution is a progressive annual tax on capital, rather than income. He argues that this kind of tax "will make it possible to avoid an endless inegalitarian spiral while preserving competition and incentives for new instances of primitive accumulation."
I agree that taxation should shift away from taxing labor. It doesn't make any sense that labor in the United States is taxed so heavily relative to capital. It will make even less sense in the coming years, as robots and other forms of automation come to perform more and more of the skills that human laborers do today.
But rather than move to a progressive tax on capital, as Piketty would like, I think we'd be best off with a progressive tax on consumption. Think about the three wealthy people I described earlier: One investing in companies, one in philanthropy, and one in a lavish lifestyle. There's nothing wrong with the last guy, but I think he should pay more taxes than the others. As Piketty pointed out when we spoke, it's hard to measure consumption (for example, should political donations count?). But then, almost every tax system-including a wealth tax-has similar challenges.
Like Piketty, I'm also a big believer in the estate tax. Letting inheritors consume or allocate capital disproportionately simply based on the lottery of birth is not a smart or fair way to allocate resources. As Warren Buffett likes to say, that's like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics." I believe we should maintain the estate tax and invest the proceeds in education and research-the best way to strengthen our country for the future.
Philanthropy also can be an important part of the solution set. It's too bad that Piketty devotes so little space to it. A century and a quarter ago, Andrew Carnegie was a lonely voice encouraging his wealthy peers to give back substantial portions of their wealth. Today, a growing number of very wealthy people are pledging to do just that. Philanthropy done well not only produces direct benefits for society, it also reduces dynastic wealth. Melinda and I are strong believers that dynastic wealth is bad for both society and the children involved. We want our children to make their own way in the world. They'll have all sorts of advantages, but it will be up to them to create their lives and careers.
The debate over wealth and inequality has generated a lot of partisan heat. I don't have a magic solution for that. But I do know that, even with its flaws, Piketty's work contributes at least as much light as heat. And now I'm eager to see research that brings more light to this important topic.
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Sep 24, 2015 | TheAntiMedia.org,
For decades, extreme ideologies on both the left and the right have clashed over the conspiratorial concept of a shadowy secret government pulling the strings on the world's heads of state and captains of industry.
The phrase New World Order is largely derided as a sophomoric conspiracy theory entertained by minds that lack the sophistication necessary to understand the nuances of geopolitics. But it turns out the core idea - one of deep and overarching collusion between Wall Street and government with a globalist agenda - is operational in what a number of insiders call the "Deep State."
In the past couple of years, the term has gained traction across a wide swath of ideologies. Former Republican congressional aide Mike Lofgren says it is the nexus of Wall Street and the national security state - a relationship where elected and unelected figures join forces to consolidate power and serve vested interests. Calling it "the big story of our time," Lofgren says the deep state represents the failure of our visible constitutional government and the cross-fertilization of corporatism with the globalist war on terror.
"It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street," he explained.
Even parts of the judiciary, namely the Foreign Intelligence Surveillance Court, belong to the deep state.
How does the deep state operate?A complex web of revolving doors between the military-industrial-complex, Wall Street, and Silicon Valley consolidates the interests of defense contracts, banksters, military actions, and both foreign and domestic surveillance intelligence.
According to Mike Lofgren and many other insiders, this is not a conspiracy theory. The deep state hides in plain sight and goes far beyond the military-industrial complex President Dwight D. Eisenhower warned about in his farewell speech over fifty years ago.
While most citizens are at least passively aware of the surveillance state and collusion between the government and the corporate heads of Wall Street, few people are aware of how much the intelligence functions of the government have been outsourced to privatized groups that are not subject to oversight or accountability. According to Lofgren, 70% of our intelligence budget goes to contractors.
Moreover, while Wall Street and the federal government suck money out of the economy, relegating tens of millions of people to food stamps and incarcerating more people than China - a totalitarian state with four times more people than us - the deep state has, since 9/11, built the equivalent of three Pentagons, a bloated state apparatus that keeps defense contractors, intelligence contractors, and privatized non-accountable citizens marching in stride.
After years of serving in Congress, Lofgren's moment of truth regarding this matter came in 2001. He observed the government appropriating an enormous amount of money that was ostensibly meant to go to Afghanistan but instead went to the Persian Gulf region. This, he says, "disenchanted" him from the groupthink, which, he says, keeps all of Washington's minions in lockstep.
Groupthink - an unconscious assimilation of the views of your superiors and peers - also works to keep Silicon Valley funneling technology and information into the federal surveillance state. Lofgren believes the NSA and CIA could not do what they do without Silicon Valley. It has developed a de facto partnership with NSA surveillance activities, as facilitated by a FISA court order.
Now, Lofgren notes, these CEOs want to complain about foreign market share and the damage this collusion has wrought on both the domestic and international reputation of their brands. Under the pretense of pseudo-libertarianism, they helmed a commercial tech sector that is every bit as intrusive as the NSA. Meanwhile, rigging of the DMCA intellectual property laws - so that the government can imprison and fine citizens who jailbreak devices - behooves Wall Street. It's no surprise that the government has upheld the draconian legislation for the 15 years.
It is also unsurprising that the growth of the corporatocracy aids the deep state. The revolving door between government and Wall Street money allows top firms to offer premium jobs to senior government officials and military yes-men. This, says Philip Giraldi, a former counter-terrorism specialist and military intelligence officer for the CIA, explains how the Clintons left the White House nearly broke but soon amassed $100 million. It also explains how former general and CIA Director David Petraeus, who has no experience in finance, became a partner at the KKR private equity firm, and how former Acting CIA Director Michael Morell became Senior Counselor at Beacon Global Strategies.
Wall Street is the ultimate foundation for the deep state because the incredible amount of money it generates can provide these cushy jobs to those in the government after they retire. Nepotism reigns supreme as the revolving door between Wall Street and government facilitates a great deal of our domestic strife:
How did the deep state come to be?"Bank bailouts, tax breaks, and resistance to legislation that would regulate Wall Street, political donors, and lobbyists. The senior government officials, ex-generals, and high level intelligence operatives who participate find themselves with multi-million dollar homes in which to spend their retirement years, cushioned by a tidy pile of investments," said Giraldi.
Some say it is the evolutionary hybrid offspring of the military-industrial complex while others say it came into being with the Federal Reserve Act, even before the First World War. At this time, Woodrow Wilson remarked,
"We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."
This quasi-secret cabal pulling the strings in Washington and much of America's foreign policy is maintained by a corporatist ideology that thrives on deregulation, outsourcing, deindustrialization, and financialization. American exceptionalism, or the great "Washington Consensus," yields perpetual war and economic imperialism abroad while consolidating the interests of the oligarchy here at home.
Mike Lofgren says this government within a government operates off tax dollars but is not constrained by the constitution, nor are its machinations derailed by political shifts in the White House. In this world - where the deep state functions with impunity - it doesn't matter who is president so long as he or she perpetuates the war on terror, which serves this interconnected web of corporate special interests and disingenuous geopolitical objectives.
"As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e., secret) budgets get rubber stamped, special tax subsidies for certain corporations are approved without controversy, as long as too many awkward questions are not asked, the gears of the hybrid state will mesh noiselessly," according to Mike Lofgren in an interview with Bill Moyers.
Interestingly, according to Philip Giraldi, the ever-militaristic Turkey has its own deep state, which uses overt criminality to keep the money flowing. By comparison, the U.S. deep state relies on a symbiotic relationship between banksters, lobbyists, and defense contractors, a mutant hybrid that also owns the Fourth Estate and Washington think tanks.
Is there hope for the future?
Perhaps. At present, discord and unrest continues to build. Various groups, establishments, organizations, and portions of the populace from all corners of the political spectrum, including Silicon Valley, Occupy, the Tea Party, Anonymous, WikiLeaks, anarchists and libertarians from both the left and right, the Electronic Frontier Foundation, and whistleblowers like Edward Snowden and others are beginning to vigorously question and reject the labyrinth of power wielded by the deep state.
Can these groups - can we, the people - overcome the divide and conquer tactics used to quell dissent? The future of freedom may depend on it.
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The American Conservative,It has frequently been alleged that the modern Turkish Republic operates on two levels. It has a parliamentary democracy complete with a constitution and regular elections, but there also exists a secret government that has been referred to as the "deep state," in Turkish "Derin Devlet."
The concept of "deep state" has recently become fashionable to a certain extent, particularly to explain the persistence of traditional political alignments when confronted by the recent revolutions in parts of the Middle East and Eastern Europe. For those who believe in the existence of the deep state, there are a number of institutional as well as extralegal relationships that might suggest its presence.
Some believe that this deep state arose out of a secret NATO operation called "Gladio," which created an infrastructure for so-called "stay behind operations" if Western Europe were to be overrun by the Soviet Union and its allies. There is a certain logic to that assumption, as a deep state has to be organized around a center of official and publicly accepted power, which means it normally includes senior officials of the police and intelligence services as well as the military. For the police and intelligence agencies, the propensity to operate in secret is a sine qua non for the deep state, as it provides cover for the maintenance of relationships that under other circumstances would be considered suspect or even illegal.
In Turkey, the notion that there has to be an outside force restraining dissent from political norms was, until recently, even given a legal fig leaf through the Constitution of 1982, which granted to the military's National Security Council authority to intervene in developing political situations to "protect" the state. There have, in fact, been four military coups in Turkey. But deep state goes far beyond those overt interventions. It has been claimed that deep state activities in Turkey are frequently conducted through connivance with politicians who provide cover for the activity, with corporate interests and with criminal groups who can operate across borders and help in the mundane tasks of political corruption, including drug trafficking and money laundering.
A number of senior Turkish politicians have spoken openly of the existence of the deep state. Prime Minister Bulent Ecevit tried to learn more about the organization and, for his pains, endured an assassination attempt in 1977. Tansu Ciller eulogized "those who died for the state and those who killed for the state," referring to the assassinations of communists and Kurds. There have been several significant exposures of Turkish deep state activities, most notably an automobile accident in 1996 in Susurluk that killed the Deputy Chief of the Istanbul Police and the leader of the Grey Wolves extreme right wing nationalist group. A member of parliament was also in the car and a fake passport was discovered, tying together a criminal group that had operated death squads with a senior security official and an elected member of the legislature. A subsequent investigation determined that the police had been using the criminals to support their operations against leftist groups and other dissidents. Deep state operatives have also been linked to assassinations of a judge, Kurds, leftists, potential state witnesses, and an Armenian journalist. They have also bombed a Kurdish bookstore and the offices of a leading newspaper.
As all governments-sometimes for good reasons-engage in concealment of their more questionable activities, or even resort to out and out deception, one must ask how the deep state differs. While an elected government might sometimes engage in activity that is legally questionable, there is normally some plausible pretext employed to cover up or explain the act.
But for players in the deep state, there is no accountability and no legal limit. Everything is based on self-interest, justified through an assertion of patriotism and the national interest. In Turkey, there is a belief amongst senior officials who consider themselves to be parts of the status in statu that they are guardians of the constitution and the true interests of the nation. In their own minds, they are thereby not bound by the normal rules. Engagement in criminal activity is fine as long as it is done to protect the Turkish people and to covertly address errors made by the citizenry, which can easily be led astray by political fads and charismatic leaders. When things go too far in a certain direction, the deep state steps in to correct course.
And deep state players are to be rewarded for their patriotism. They benefit materially from the criminal activity that they engage in, including protecting Turkey's role as a conduit for drugs heading to Europe from Central Asia, but more recently involving the movement of weapons and people to and from Syria. This has meant collaborating with groups like ISIS, enabling militants to ignore borders and sell their stolen archeological artifacts while also negotiating deals for the oil from the fields in the areas that they occupy. All the transactions include a large cut for the deep state.
If all this sounds familiar to an American reader, it should, and given some local idiosyncrasies, it invites the question whether the United States of America has its own deep state.
First of all, one should note that for the deep state to be effective, it must be intimately associated with the development or pre-existence of a national security state. There must also be a perception that the nation is in peril, justifying extraordinary measures undertaken by brave patriots to preserve life and property of the citizenry. Those measures are generically conservative in nature, intended to protect the status quo with the implication that change is dangerous.
Those requirements certainly prevail in post 9/11 America, and also feed the other essential component of the deep state: that the intervening should work secretly or at least under the radar. Consider for a moment how Washington operates. There is gridlock in Congress and the legislature opposes nearly everything that the White House supports. Nevertheless, certain things happen seemingly without any discussion: Banks are bailed out and corporate interests are protected by law. Huge multi-year defense contracts are approved. Citizens are assassinated by drones, the public is routinely surveilled, people are imprisoned without be charged, military action against "rogue" regimes is authorized, and whistleblowers are punished with prison. The war crimes committed by U.S. troops and contractors on far-flung battlefields, as well as torture and rendition, are rarely investigated and punishment of any kind is rare. America, the warlike predatory capitalist, might be considered a virtual definition of deep state.
One critic describes deep state as driven by the "Washington Consensus," a subset of the "American exceptionalism" meme. It is plausible to consider it a post-World War II creation, the end result of the "military industrial complex" that Dwight Eisenhower warned about, but some believe its infrastructure was actually put in place through the passage of the Federal Reserve Act prior to the First World War. Several years after signing the bill, Woodrow Wilson reportedly lamented, "We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."
In truth America's deep state is, not unlike Turkey's, a hybrid creature that operates along a New York to Washington axis. Where the Turks engage in criminal activity to fund themselves, the Washington elite instead turns to banksters, lobbyists, and defense contractors, operating much more in the open and, ostensibly, legally. U.S.-style deep state includes all the obvious parties, both public and private, who benefit from the status quo: including key players in the police and intelligence agencies, the military, the treasury and justice departments, and the judiciary. It is structured to materially reward those who play along with the charade, and the glue to accomplish that ultimately comes from Wall Street. "Financial services" might well be considered the epicenter of the entire process. Even though government is needed to implement desired policies, the banksters comprise the truly essential element, capable of providing genuine rewards for compliance. As corporate interests increasingly own the media, little dissent comes from the Fourth Estate as the process plays out, while many of the proliferating Washington think tanks that provide deep state "intellectual" credibility are similarly funded by defense contractors.
The cross fertilization that is essential to making the system work takes place through the famous revolving door whereby senior government officials enter the private sector at a high level. In some cases the door revolves a number of times, with officials leaving government before returning to an even more elevated position. Along the way, those select individuals are protected, promoted, and groomed for bigger things. And bigger things do occur that justify the considerable costs, to include bank bailouts, tax breaks, and resistance to legislation that would regulate Wall Street, political donors, and lobbyists. The senior government officials, ex-generals, and high level intelligence operatives who participate find themselves with multi-million dollar homes in which to spend their retirement years, cushioned by a tidy pile of investments.
America's deep state is completely corrupt: it exists to sell out the public interest, and includes both major political parties as well as government officials. Politicians like the Clintons who leave the White House "broke" and accumulate $100 million in a few years exemplify how it rewards. A bloated Pentagon churns out hundreds of unneeded flag officers who receive munificent pensions and benefits for the rest of their lives. And no one is punished, ever. Disgraced former general and CIA Director David Petraeus is now a partner at the KKR private equity firm, even though he knows nothing about financial services. More recently, former Acting CIA Director Michael Morell has become a Senior Counselor at Beacon Global Strategies. Both are being rewarded for their loyalty to the system and for providing current access to their replacements in government.
What makes the deep state so successful? It wins no matter who is in power, by creating bipartisan-supported money pits within the system. Monetizing the completely unnecessary and hideously expensive global war on terror benefits the senior government officials, beltway industries, and financial services that feed off it. Because it is essential to keep the money flowing, the deep state persists in promoting policies that make no sense, to include the unwinnable wars currently enjoying marquee status in Iraq/Syria and Afghanistan. The deep state knows that a fearful public will buy its product and does not even have to make much of an effort to sell it.
Of course I know that the United States of America is not Turkey. But there are lessons to be learned from its example of how a democracy can be subverted by particular interests hiding behind the mask of patriotism. Ordinary Americans frequently ask why politicians and government officials appear to be so obtuse, rarely recognizing what is actually occurring in the country. That is partly due to the fact that the political class lives in a bubble of its own creation, but it might also be because many of America's leaders actually accept that there is an unelected, unappointed, and unaccountable presence within the system that actually manages what is taking place behind the scenes. That would be the American deep state.
rehypothecator
"It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair
Martian Moon
https://www.youtube.com/watch?v=n3xgjxJwedA
Latest on 911 by James Corbett
Educate yourself
All Risk No Reward
This is all you need to know to prove, beyond all doubt, that the official pile driving narrative is false.
The reality is that anyone can OBSERVE that the top of the building DID NOT DO WHAT A CUE BALL DOES EVERY SINGLE TIME IT HITS ANOTHER BILLIARD BALL - the top of the building did not decelerate.
It did not decelerate because IT DID NOT HIT THE LOWER SECTION OF THE BUILDING. For if it had hit the lower section of the building, IT WOULD HAVE DECELERATED.
The official story never addressed this point. They wisely stopped their investigation at the initiation of collapse. That was no accident.
AitT - Sir Isaac Newton Weighs in on the World Trade Center North Tower Collapse Official Narrative
http://www.weaponsofmassdebt.com/index.php/blog/aitt-sir-isaac-newton-we...
Now, some people will attack either me or this factual, observable, and repeatable information based on their programmed "crimestop" response...
crimestop - Orwell's definition: "The faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. In short....protective stupidity."
http://www.newspeakdictionary.com/ns-dict.html
But what nobody will do - because they can't do it - is to explain a physics based scenario where the top of the building hit a structurally solid lower section of the building WITHOUT DECELERATING.
There are NO CONTRADICTIONS in reality. One leading blogger claimed he had done lots of research that showed the official story was correct.
But what he didn't do before he stopped the conversation (smart subconsciousness!) was to explain how the top of the building could have hit a structurally sound lower section of the building without experiencing marginal deceleration.
This is the video that needs to replace all the complex theories that are too easily dismissed by the masses.
No, make the masses exclaim the physics equivalent of 2+2=5 in order to continue believing in the Debt-Money Monopolist false narratives engineered to damage ordinary people across the globe.
NeoLuddite
Elections are just advance auctions of stolen goods.
junction
"Deep State" operatives killed Michael Hastings and Philip Marshall. Whether Paul Walker was also killed by the "Murder, Inc." - type agents of the "Deep State," to make flaming car crashes look normal, is an open question. When Tennessee Department of Motor Vehicles (DMV)employee Katherine Smith died in a flaming car crash in 2002, her death was called a murder (still unsolved) because a Tennessee state trooper driving behind her saw her car explode into flames before going off the road.
Smith was the DMV employee who sold driver's licenses to Arabs, licenses they used to identify themselves when they did work on the sprinkler systems at the World Trade Center before 9/11.
Sprinkler systems which all did not work on 9/11, even though they were ruggedized after the 1993 WTC truck bombing.
And who can forget the California policeman, on a 100% disability pension, who turned up in Orlando, Florida as the FBI agent who murdered a martial arts associate of Boston Bomber Tamerlan Tsarnaev. The guy murdered had just undergone knee surgery and could only walk with a cane, yet he supposedly lunged at this crooked FBI agent, illegally collecting a disabilty pension tax free of some $60,000 a year.
The initial report from the agent said this guy had a sword cane but that report was false.
doctor10
Politics is merely the entertainment wing of the MIC/Anglo-American Central Banking junta.
Has been since November 23rd 1963. Reagan required a 22 cal message to that effect after he thought he'd been elected President.
kliguy38
Of course I know that the United States of America is not Turkey. But there are lessons to be learned from its example of how a democracy can be subverted by particular interests hiding behind the mask of patriotism.
no of course its not Turkey......its a hundred times worse
Ms No
Turkey's deep state is our deep state with some local players. This is going global, I thought everybody knew that. Turkey has been a vassal for the Ziocons as long as anyone can remember and they are one of many. Most of our presidents seem to prefer the term The New World Order. It's funny how people snicker about that term but I didn't catch a grin off of any of our presidents going back to Bush I snickering about it when they mention it in their State of the Union addresses and this current clown is not an exception.
It's quite real and not at all funny. People need to take a look around they have even spelled it out for you. What do these guys have to do send us our own eulogies? Lets just hope that while everybody else is trying to figure this out that we don't end up getting too familiar with our torture state.
Majestic12
"America is in deep shit as are all governments run by central banks neo-Keynesian fascist economic policy."
I got you on the "deep shit" and "run by central banks", but lost you on "Keynesian Fascist economic policy".
ZH is full of half truths and obfuscation.
I do not agree with much of Keynes, but most here support Von Mises (the Rockefeller Foundation product) and the London School of Economics.
These "institutions" are profoundly contradictory, corrupt and were born of the 00001%.
At least Keynes decried relying soley on monetary policy and "supply side" economics.
Most here have only known "supply side" (Reagan and after), so they have nothing to compare it to.
Listen to boomers talk of the 60s and 70s...there were always jobs, it didn't take 2 earners, it didn't take a degree, everyone took vacation, and the "information" deluge ended at 11:00pm until the next morning.
And, you really didn't have to lock your doors, unless you lived in urban Chicago, NY, LA any other huge metropolis.
So, it was all "Keynes"'s fault?
Keynes, who promoted "demand-side" and "fiscal policy"...really? Fascist?
Remember, there are 94 Million people out of the work force...but the poulation is 100 million more than in 1977, and the dollar was worth 70% more.
Salah
Seminal piece on the US 'deep state': http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/
Why the Clintons & Obama are both CIA No-doubt-about-it.
2nd Big Question: why was the CIA rushed into existence (bill signed in an airplane at end of National Airport by Truman) 45 days after the crash at Roswell?
Freddie
David Rockefeller as a young man was an OSS officer in WW2. Mi6 is the Red Shield.
They are just instruments of terror used by the elites,
Majestic12
"2nd Big Question: why was the CIA rushed into existence 45 days after the crash at Roswell?"
I am glad you asked.....the CIA's involvement was temporary.
The NSA (who now administers the black space program) began as the Armed Forces Security Agency, just 2 years later in 1949.
... ... ...
unitwar
Bill Moyers? I wonder why he doesn't report on those Bilderberg meetings he attends? He reports what he is told to report. Everything he does is a limited hangout.
Usurious
JustObservingthe french called the guillotine the national razor.........just sayin...
monica jewinsky was a honey pot.....
IgnatiusThe Deep State runs everything in America since at least Nov 22, 1963. Kennedy promised to shatter the CIA into a thousand pieces and scatter it to the winds. Instead, the CIA shattered his brains into a thousand pieces.
The NSA spies on the Supreme Court, Congress and the White House and you.
The most extraordinary passage in the memo requires that the Israeli spooks "destroy upon recognition" any communication provided by the NSA "that is either to or from an official of the US government." It goes on to spell out that this includes "officials of the Executive Branch (including the White House, Cabinet Departments, and independent agencies); the US House of Representatives and Senate (members and staff); and the US Federal Court System (including, but not limited to, the Supreme Court)."
The stunning implication of this passage is that NSA spying targets not only ordinary American citizens, but also Supreme Court justices, members of Congress and the White House itself. One could hardly ask for a more naked exposure of a police state.
https://www.wsws.org/en/articles/2013/09/13/surv-s13.html
Essay: Anatomy of the Deep State
There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power.
http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/
Who rules America?
The secret collaboration of the military, the intelligence and national security agencies, and gigantic corporations in the systematic and illegal surveillance of the American people reveals the true wielders of power in the United States. Telecommunications giants such as AT&T, Verizon and Sprint, and Internet companies such as Google, Microsoft, Facebook and Twitter, provide the military and the FBI and CIA with access to data on hundreds of millions of people that these state agencies have no legal right to possess.
Congress and both of the major political parties serve as rubber stamps for the confluence of the military, the intelligence apparatus and Wall Street that really runs the country. The so-called "Fourth Estate"-the mass media-functions shamelessly as an arm of this ruling troika.
It's a big club, and we ain't in it.
jmcoombs
Institutions, left unchecked, eventually come to worship themselves. The Catholic Church during the Spanish Inquisition is a sterling example.
Majestic12
jcdenton"What happened to all those bags of money that were in Iraq that disappeared?"
That was only $8 BBBBBillion in cash....chump change.
Remember last year the DoD stated that they cannot account for $8.5 TTTTTTTTrillion.....
1 Billion = One Thousand Millions.
1 Trillion = One Thousand Billions.
If your head has stopped spinning, then please, tel me....what could they spend $8.5 TTTTrillion on?
Remember, all the wars to date are paid for in the "open" and "public" military budget...so this is "extra"....
Now maybe you can see why some of us here take whistle blowers seriously about a secret space program.
Engineers, secret construction hangars and bases ain't cheap....the shoe fits.
So, there are a shit load of "Amercians" taking a big paycheck to help the elite and off-world assholes plan our demise.
I don't know how you feel about "sell-outs", but they make me think of guillotines.
Some believe that this deep state arose out of a secret NATO operation called "Gladio,"
Well it's more than logical, more than plausible ..
This Deep State arose out of ........................ you figure it out for your own sake, and convince yourself. I'll just assist ..
Directive 166
http://www.veteranstoday.com/2013/09/22/fraud-on-the-u-s-supreme-court-b...
The Deutsche Verteidigungs Dienst (DVD)
http://www.veteranstoday.com/2015/05/04/neo-so-much-more-than-nukes/
http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...
Tesla's Assistant
http://www.proliberty.com/observer/20070405.htm
(do a quick search for "Jesuit" and see how many hits you get. Notice who the DVD answer to.)
Go here: https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp
Go to Rulers of Evil, pg. 170. Start reading from Adam Weishaupt. Now you know the purpose of the creation of the United States of America ..
Ms No
I think Hitler was right about one thing, most people cannot see the big lie, it just seems to complex to them and thus ludicrous. Just look at a small portion of a military you have cores, divisions, brigades, betallions, generals, colonals, companies, Air Force, Navy, Special Forces, intelligence, espionage, propaganda depts, indoctrination depts, etc, all under one umbrella of centralized control.
Is it really that hard to believe that a organized self serving entity who has had plenty of time and very little opposition can grow to a gargantuan empire that nearly global in scale?
Two good reads among at least a hunderd that prove otherwise Sibel Edmonds and Tales of an Economic Hit Man.
tumblemore
"most people cannot see the big lie, it just seems to complex to them"
I think it's more to do with not being sociopaths.
People tend to think other people are like them so say the average person can only tell level 6/10 lies before they feel ashamed then they have a hard time believing other people can tell level 10/10 lies. They couldn't do it themselves so it's hard for them to imagine other people being that shameless - hence the bigger and more shameless the lie the more likely it is to be believed.
Only part-sociopaths can see it.
Ms No
There maybe an element of that occuring because a psychopath can identify another path immediately which would lead one to believe they may be able to identify their activities as well but over all there is something else going on.
There most certainly is something different about people who can go against the grain and challenge common propaganda but it isn't a lack of empathy. Some people are more resistant to indoctrination and we really don't know why. We do know that there has been a large amount of research on and use of subliminal technology and trauma disassociation. I would hazard a guess that there has been a ton of research on this subject that we will probably never see.
tumblemore
JRThe thing about the deep state idea is generally they exist to keep the members in power *and* keep the state in question strong in the long-term so that power is worth something.
What's odd about the US deep state is it doesn't seem to care about the long term at all and seems only really interested in selling America piece by piece.
For example from their behavior it's pretty blatant now that lobbyists have bought the GOP's foreign policy position but the dark side of that is it probably means every other aspect of policy is for sale also.
It's like the US deep state is living off the capital rather than the interest.
"On 9/11/2001, America received its new Pearl Harbor"…to strike fear into the hearts of Americans and pave the way for the perpetrators' profitable and soul-destroying global "war on terror"... Enough is enough! "There are at least 8.5 trillion reasons to investigate the money trail of 9/11" and to end the perversion of law that has bolstered the power of those who hold the reins in Washington, DC, and use the law, perverted, as a weapon for every kind of global control and personal greed!
NEW VIDEO: 9/11 Trillions: Follow The Money
One of the best documentaries on 9/11... "The first suspects of a big crime should be those who benefit from it."
Published on Sep 11, 2015
TRANSCRIPT, SOURCES AND MP3: https://www.corbettreport.com/?p=16167
"Forget for one moment everything you've been told about September 11, 2001. 9/11 was a crime. And as with any crime, there is one overriding imperative that detectives must follow to identify the perpetrators: follow the money. This is an investigation of the 9/11 money trail."
https://www.youtube.com/watch?v=n3xgjxJwedA&feature=youtu.be
RichardParker
Engagement in criminal activity is fine as long as it is done to protect the Turkish people...
I call bullshit on this one. More like engagement in criminal activity is fine as long as it is done to preserve/enhance the Turkish government's power.
ddsoffice
Ja, diese ist eine gutte fragge. Aber, es ist wie die 'Jetzt Neue Deutschland' uber alles vielleicht seit WWI! (Yes, this is a good topic. But, it is like the 'New Germany Now' perhaps since WWI!)
(laughing now that I still remember some of my high school German lessons over 25 years ago.)
Eine Gutte Fragge. (A good topic)
Sehr Gut. (Very good)
Jetz Deuschtland ober alles. (Now Germany over all)
krage_man
There are various terms for this - deep state, elite, etc.
But ultimately, current political system so-called democracy is far from original definition of democracy. And I dont mean that original "greek" democracy is the better one.
This is a feature of modern democracy to pretend to be old-fashioned peoples democracy. This is to make sure people do feel their power to elect (ans they have it to a degree)
This is a feature of modern democracy to have 2-3 alternative parties. Each is more attractive to a certain human personality category. This way each can find something to associate with and be associated against. This means satisfaction of citizens with having a choice even though the choice is created for them based on 2-3 major types of their personalities.
All 2-3 parties are really backed by this deep state or elite institution which manages all things behand the curtain. For instance, foreign policy basixally ghe same no matter which party has power.
Political elected officcials do not really manage the affairs, they commmunicate but the final decisions are not theirs but come deep from the state departments which are receiving instructions from deep state.
Elected president is supervised by a vise president with direct access to deep state. He would take state affairs in his hands if the president is not cooperaring or incapacited ( could be related)
Deep state controls 95% of mass media via proxy corporations. A special mass-media department of the deep state issues directives to the editors of mainstream TV/news media. This department coordinates with other depaetments like one managing foreign affairs linked or even located in official state department. One may notice a delay when a certain major events take place and mass media delays reporting by 24-48 hours while waiting for the right spin of the reporting to the nation.
Latitude25
Interesting that Turkey is mentioned. When I was in college my room mate was a Turkish guy who was definitely from the .001%, second richest family in Turkey. He said that turkey has 100s of years of experience keeping the masses occupied with one war or another and that the economy could not run without it. He also liked chasing the most beautiful blondes he could find and with his money he sure found them.
Burticus
"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests." - Rothschild Brothers of London
withglee
Ordinary Americans frequently ask why politicians and government officials appear to be so obtuse, rarely recognizing what is actually occurring in the country.
Ordinary Americans are clueless ... witness less than 8% know anything about WTC7.
That notwithstanding, government officials "appear" to be obtuse to what is going on in the country because they "are" obtuse. At the Federal level, at best, a representative speaks for 500,000 people. He can't know those people and they can't know him.
Our system is a "fake" representative democracy. What we get is what we should expect from such a charade.
ISEEIT
"Deep State America"?
FRAUD is the singular truth. Deception, corruption.
"Rational actor" absent philosophically (and with increasing clarity, empirically via what little remains of classical scientific method)..a once socially respected 'norm' of ethics.
Morality has become hostage to maniacal narcissism. World "leaders" are simply apparatchiks of the now fully globalized machinations of failing souls.
History is repeating itself.
All indications are that death is just fine. Inevitable...
It's just the dying part that causes pain.
NuYawkFrankie
re In truth America's deep state (...) operates along a New York to Washington axis.
In an even bigger truth America's deep state (...) operates along a New York to Washington to TEL AVIV axis
- FIXED
Atomizer
Time to go to bed Zero Hedge family. Mrs. Atomizer is getting cranky for me to shut off the computer. I wanted to leave you with a Friday night boost of laughter. turn up the volume. See you bitchez in the morning!
Mortgage Thrift Shop (Macklemore WALL STREET parody ...
Usurious
good nite
John Coltrane
https://www.youtube.com/watch?v=TmD16eSy-Mg
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Sep 09, 2015 | Economist's View
From the last of several points on disability claims from Teresa Tritch at the NY Times:Busting the Myths About Disability Fraud: ... Disability claims are not skyrocketing. Rather, the population most likely to go on disability, those aged 50 to 64, is growing. The potential disability population is also larger now than in the past because today's older women are more likely to have worked enough to qualify for disability than in earlier generations. In any event, demographic pressures have already begun to subside. Adjusted for demographic factors, the share of workers on disability has gone from slightly below 4 percent in 2000 to slightly above 4 percent in 2014.The solution to fraud in the disability system is not to make it more difficult to qualify for disability or to question the usefulness of the system itself. The United States already has stricter eligibility requirements and stingier benefits than in almost all other advanced economies, according to the Organization for Economic Cooperation and Development.The solution to fraud is to prevent and detect it. So what has Congress done? It has refused to give the Social Security Administration the money it needs to keep up with fraud detection and maintain customer service. Since 2010, the agency's resources have declined in real terms, even as claims have increased due to the aging of the population. ...likbez
This is a powerful neoliberal wedge issue. Divide and conquer strategy in action directed toward instilling hostility in middle class toward lower class people. Which I would say is very successful (as a part of larger -- "they are leaches living at our expense" company.) Which strategists like Karl "Turd Blossom" Rove very skillfully exploit in elections.
Such things also serve for an important purpose of decimation of union power, which is a key part of neoliberal strategy of domination.
See What's the Matter with Kansas? for details.
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Sep 19, 2015 | Economist's View
Some preliminary results from a working paper by Alisdair Mckay and Ricardo Reis:
Optimal Automatic Stabilizers, by Alisdair McKay and Ricardo Reis: 1 Introduction How generous should the unemployment insurance system be? How progressive should the tax system be? These questions have been studied extensively and there are well-known trade-offs between social insurance and incentives. Typically these issues are explored in the context of a stationary economy. These policies, however, also serve as automatic stabilizers that alter the dynamics of the business cycle. The purpose of this paper is to ask how and when aggregate stabilization objectives call for, say, more generous unemployment benefits or a more progressive tax system than would be desirable in a stationary economy. ...We consider two classic automatic stabilizers: unemployment benefits and progressive taxation. Both of these policies have roles in redistributing income and in providing social insurance. Redistribution affects aggregate demand in our model because households differ in their marginal propensities to consume. Social insurance affects aggregate demand through precautionary savings decisions because markets are incomplete. In addition to unemployment insurance and progressive taxation, we also consider a fiscal rule that makes government spending respond automatically to the state of the economy.Our focus is on the manner in which the optimal fiscal structure of the economy is altered by aggregate stabilization concerns. Increasing the scope of the automatic stabilizers can lead to welfare gains if they raise equilibrium output when it would otherwise be inefficiently low and vice versa. Therefore, it is not stabilization per se that is the objective but rather eliminating inefficient fluctuations. An important aspect of the model specification is therefore the extent of inefficient business cycle fluctuations. Our model generates inefficient fluctuations because prices are sticky and monetary policy cannot fully eliminate the distortions. We show that in a reasonable calibration, more generous unemployment benefits and more progressive taxation are helpful in reducing these inefficiencies. Simply put, if unemployment is high when there is a negative output gap, a larger unemployment benefit will stimulate aggregate demand when it is inefficiently low thereby raising welfare. Similarly, if idiosyncratic risk is high when there is a negative output gap,1 providing social insurance through more progressive taxation will also increase welfare....
Posted by Mark Thoma on Saturday, September 19, 2015 at 12:23 AM in Academic Papers, Economics, Fiscal Policy, Social Insurance | Permalink Comments (15)
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More on income stagnation and inequality:The typical male U.S. worker earned less in 2014 than in 1973: The median male worker who was employed year-round and full time earned less in 2014 than a similarly situated worker earned four decades ago. And those are the ones who had jobs. ...What about women? Well, they haven't closed the pay gap with men, but the inflation-adjusted earnings of the median female worker increased more than 30% between 1973 and 2014... But back to men. Why are wages for the typical male worker stagnating? ... I contacted Larry Katz, the Harvard University labor economist. He identified three factors to explain the stagnation of men's wages:
1. Although this is not the major factor, workers have been getting more of their compensation in benefits as opposed to the cash wages that the Census tallies. ...
2. Labor's share of national income has been declining since 2000 and capital's share has been rising. Labor's compensation (wages and benefits) has not been keeping pace with productivity growth. ...EPI's Josh Bivens and Larry Mishel argue, " This decoupling coincided with the passage of many policies that explicitly aimed to erode the bargaining power of low- and moderate-wage workers in the labor market."
3. The "most important factor," Mr. Katz says, is the rise in wage inequality, the gap between the earnings of the best-paid workers and the ones at the middle and the bottom that has been widening steadily since about 1980. Economists differ over how much of this is the result of globalization, technological change, changing social mores, and government policies, but there is no longer much dispute about the fact that inequality is increasing.
... It's not hard to understand why so many voters ... are drawn to candidates who acknowledge this reality, lambast incumbents for not doing more to address it, and style themselves as outsiders with fresh approaches to one of the nation's most alarming economic problems.
To me, it's interesting how much the explanation for inequality has shifted away from the "skill-biased technical change" and technological based arguments and towards "changing social mores, and government policies." Even so, I think these types of arguments -- those that explain the decline in bargaining power in wage negotiations -- have more explanatory power than many people acknowledge. But even if we acknowledge that we aren't sure about the degree to which inequality can be explained by market-based versus institutional structure arguments, what seems clear to me is that the market won't solve this problem by itself. There do not appear to be forces within capitalism that necessarily push us toward an equal distribution of income. Thus, there is no assurance that heeding calls for government to get out of the way would help to reduce inequality, and it could make it worse. To me, policies that increase the ability of workers to bargain for a fair share of what they produce holds the most promise for solving the inequality problem (in a way that avoids direct redistribution). How to actually accomplish this is a difficult problem, unions have less power in a world where the threat of moving production to another country is very real (or a region within the US where the laws are more favorable), but at the very least we ought to ensure that new legislation does not make the highly unequal wage bargaining problem any worse (see Scott Walker).
Posted by Mark Thoma on Friday, September 18, 2015 at 12:32 PM in Economics, Income Distribution | Permalink Comments (51)
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The inflation-adjusted household income for half the US population is back at 1989 levels. Meanwhile the S&P500, which impacts the net worth of about 10% of the US population is six times higher than where it was in 1989. America has a problem.
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Sep 16, 2015 | Asia Times
... ... ...While the US imported 45.62 million barrels of oil every month from Saudi Arabia in 2005, the figure dropped to as low as 25.42 million in January 2015. In June 2015, the import figure went slightly high again, reaching 32.32 million barrels of oil per month...
The US' overall production jumped by 1.2 million barrels per day in 2014, to 8.7 million barrels per day...
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...For instance, the kingdom earned almost 1.05 trillion riyals in 2014. ...Saudi Arabia's budget deficit may rise this year to 20% of GDP, or $140 billion. Highly reduced oil revenues have already forced the Saudi authorities to issue two series of government bonds in a row this summer.
The Saudis were forced to tighten down to make up for the reserves they had used to the tune of $65 billion. These two series of bonds would help the Saudis earn $27 billion by year's. But this is far from adequately recovering their monetary loses.
... ... ...
Due to Saudi Arabia's direct and indirect involvement in various wars across the Middle East and beyond (funding right wing religious parties in Pakistan, for instance), it's defense spending is also reaching an all-time high. Saudi Arabia is now the world's largest importer of defense equipment. Its spending is expected to reach $9.8 billion in 2015.
... ... ...
Salman Rafi Sheikh is a freelance journalist and research analyst of international relations and Pakistan affairs. His area of interest is South and West Asian politics, the foreign policies of major powers, and Pakistani politics.
