A defense of crank economics

Economics is the art of pretending that the dots are unconnectable. Although in God's own time, we will see that they form the image of a balance - equilibrium being the divinity's one and only aim. Crank economics – of which I am a proud purveyor on this here site – is the art of claiming that the dots are so infinitely connectable that you have to be blind, heartless or bribed not to see it.

"In 2010, as the nation continued to recover from the recession, a dizzying 93 percent of the additional income created in the country that year, compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those with at least $352,000 in income. That delivered an average single-year pay increase of 11.6 percent to each of these households.
Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of these additional earnings went to just the top 0.01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent."
To round out the crime in another way: “The bottom 99 percent received a microscopic $80 increase in pay per person in 2010, after adjusting for inflation. The top 1 percent, whose average income is $1,019,089, had an 11.6 percent increase in income.”
Now, of course, we are to believe, on the best authority, that this kind of thing has nothing to do with politics, and everything to do with, oh, free trade, or the talent premium, or IQ, or whatever story your favorite press or think tank brownnoser thinks best. 
What we are not going to be told is this:
This is the outcome you get when you loan 16 trillion dollars to the financial sector, in which the wealthiest of the wealthy have concentrated their fortunes, at one percent or less, while the ninety nine percent have to content themselves with paying off their ARM mortgages, credit cards, and student loans at interest rates of between 5 to 10 percent. Back of the envelop estimates for the point spread between the interest on that amount of money that the Fed (with the cooperation of the treasury) lent to the financial sector, and by implication the top 1 percent, and what it would have cost coming from the private sector comes to something like 600 billion dollars. A nice little gift for the wealthy. And that gift keeps on giving, for the leverage it gives makes it all but certain that the wealthy will increase their share of the national income using all the greasy tools at their disposal.
Add to the comedy of the political economic debate the fact that it has been staged, in our public consciousness, as if there were only two rings to the three ring circus. In the one right stands the libertarian liquidationist, a moral stooge for the plutocrats whose rhetoric they welcome (if only we hadn’t been rescued by the government!) while they gobble down government largesse. The other ring is the plutocrat Keynesians, who insist on easy money as well as lunch money for the lower 99 percent – unemployment benefits, for instance. No peep about, say, perhaps the state loaning money at that nice one percent to the 99 percent, using the easy to create vehicle of a state financial institution, a sort of state superbank, into which the people could also park their retirement money. Even tax free. For a more sure rate than they would get from the kites and carrion eaters on Wall Street.
That kind of idea is way off limits, because our rulers insist on a tworing circus only. I urge you, my few readers, to embrace crank economics before Pluto-economics embraces and crushes you, and sucks your marrow.


Ed said…
I don't think this was sunk in. As the country's economic policy moved more and more to the right over my lifetime, my nightmare scenario was the government taxing most of the public and mailing checks directly to the wealthy. And then this actually happened! OK, there are some thin disguises, but its now government policy to guarantee the wealth of the wealthiest people in the country.

Once something like this happens I think its beside the point to talk about political policy or economic policy. For ordinary members of the public, its time to start thinking about survival, or shielding yourself from a government that is obviously off the rails.

I also agree that what now seems the consensus "left" position, lets take on more even more debt but maybe spend some of it on the poor, is almost insulting.
roger said…
Yeah, I think that it hasn't sunk it, because it is pretty much unreported. No headline announced it. It is as if the Titanic's onboard newsletter had a small story about cold weather to cover the inconvenient meeting with the iceberg.