Perennial article about plutocracy and managed capitalism

We've all noticed, those of us denizens of twitter, commenters on newspaper comment spaces and the like, that any time a vague and distant hint arises that the rich in America might be oh, oh, slightly too… rich in some newspaper column, expressed by some leftleaning politico, etc., twitter, comment section, and pundit spaces in the NYT are reliably flooded by screeds against socialism and for the American way.

It makes me long for a snappy way to point out that capitalism was not abolished in the U.S. in the fifties, nor was the Reagan tax cut on the wealthiest the second coming of Adam Smith in the eighties. What is funny about the rabid defense of the wealthy is that I imagine it often comes from the non-wealthy. It isn’t like billionaires are into making comments in comment boxes. Or even, save for Elon Musk and Trump, tweeting themselves - they've got factotums for that.  But what they are defending is, of course, absolutely against their interests. It is the great American paradox: the almost saintly disinterestedness of the American householder in defense of systematic greed.

There are a number of ways to redistribute wealth down. Imagine, for instance, that unions had been strong enough, back in the eighties, to peg earnings to the ratio between upper management and the lowest paid functionaries in a company. Back then, the ratio was about 70 to 1 – today, it averages something like 300 to 1. If the unions had done this and the CEO level had succeeded in extorting the pay packages they had today, we would be living in a utopia in which the merest entry level receptionist would be taking home 150-200 thou. This would be excellent – except of course that corporations would no longer make profits. Instead, they’d be pouring all their cash into paying their workforce. Still, at the 70 to 1 ratio, upper management’s efforts to increase their compensation packets would have significantly pulled the earnings up of the entire workforce.

Unfortunately, when you don’t have powerful unions, you have to rely on the countervailing powers of the state. You have to work, then, to raise the taxation on the upper tier considerably. You have to do this not only because you need to pay for public investments, but because there is a macro good to great income equality. For one thing, it discourages economic activity that is, in reality, mere churning. Looking at the mortgage mess, one can see more and more clearly how the fantastic, Pirenesian structure of false economic activity has worked since 2001. It has allocated money not to the most productive, but to the most churnful. For another thing, more equality now means more equality latter. As the gap widens between the resources of the rich and the not-rich, it becomes exactly what we socially reproduce. Those non-rich who, for instance, decided that the death tax, otherwise know as the estate tax, was just terribly unfair to their children actually screwed their children terribly, because they are not leaving the kids fortunes, whereas the fortunate few are – thus aggravating the already unfair structure that separates rich from non-rich children. The cost of abolishing the estate tax is borne by the non-rich in such areas as trying to get their kids into top schools and the like.

But what most impresses me about expropriating a good share of the wealth of the wealthy is its environmental impact. As anybody with the eyes to see can see, the last twenty years have been years of great GDP growth in many countries. In fact, the whole Tom Friedman-esque economy is oriented towards steroiding GDP. Why? Because if you are going to have increasing inequality, growth is the way that the middle income sector – the vastly more numerous non-rich – can, at least, maintain their lifestyles. But GDP growth could also be called the Diminishing Environmental Return. DER is the natural result of overexploiting a system that is limited in many ways. Put up a zillion towers for cell phones, and you can say bye bye to songbird populations – make your McMansions of tropical wood, and strew them with the kind of wiring that gives you 24/7 instaconnectoinstamaticinstatubelivegirlsxxxxpronomatic action, and you can say bye bye to the environment of Sumatra. Down the intertubes it goes. It is an incredible waste of resources, which is the total result of the elite decision to grossly exacerbate the wealthiest’s share of the wealth. With a greater equality of income, of course, GDP doesn’t have to grow as fast. The drift of our current society into endless war, endless stupidity, an endlessly degraded public sector, the unwinding of all those hard fought democratic gains of the last one hundred years, is the direct result of a simple arithmetic ratio. To repair this – to go back to the managed capitalism, as Kuttner calls it, of the past – isn’t socialism – it is the self interest of the vast mass of American citizens.

Unfortunately, all of these arguments keep coming up against the odd argument that the rich "earn" their wealth. And the answer is always - no, in capitalism, wealth is created by the producers, i.e. the workers. 

Which is why arguments that tend to go to sports stars or musicians are really besides the point. The same amount of work and ingenuity can be valued by the "market" - or by the various devices by which one gets into the market - in wildly differing ways. Ayn Rand's Fountainhead was refused by a number of publishers, and she was about to let it go into the desk drawer, when some editor at Bobbs Merrill decided he'd fight to get his company to publish the book. Unpublished or published, it was the same book. What we call earning is a social act. It is, of course, not a one to one act. I may eat my spinach by myself - the eating and digestion are individual. But I never earn money by myself - it is an infinitely mediated act.

All of which is a philosophical point that is besides the point. If a countervailing power to plutocracy exists within a state that can cause the levying of a heavy, heavy tax on the wealthy - it should do so pronto. There is no enjoyment people get from money they aren't using to live on - the enjoyment is in the power it gives them. And the power it gives their children and allies. Fine. In the power struggle, the vast majority can use democracy to severely limit that power.

The economic effects of this we can observe empirically. Is it really the case that a high marginal tax rate on the wealthy keeps the wealthy from fullfilling the roles that they are lauded for - investing and managing? Will the middle class or the working class or the poor be hurt because the wealthy are divested of a considerable part of their wealth? Empirically, the answer is obviously no. The only argument the wealthy have is that the economy grows quicker when they are allowed to retain their wealth. I think this is a very poor argument.

Robert Reich has an excellent idea: instituting a 70 percent marginal tax on those incomes over a million per year. Do it! This, too, will become full of holes - and the holes will have to be plugged up. Taxation is not a one time only process. But there is ample proof that a high tax rate does work on expropriating wealth from the wealthy. It is for this reason, of course, that the wealthy oppose it. 

Neoliberal notes: 1

Ellen M. Wood's "The Retreat from Class" , published in 1983, is uncannily predictive of the course of neo-liberalism. Though she is pretty highhanded with us epigoni of French Theory, what she says about the disappearance of class within political discourse – and cultural discourse in general - is totally correct, at least in the Anglosphere.

Of course, class only disappears in the minds of the bien-pensants, not from their daily lives. Class as lived experience is overwhelmingly present, from the counter people at the sandwich shops where David Broder checks in on the proles to the shores of the mini-mansion subdivision universe.
Neoliberalism is neo because, unlike classical liberalism, it proceeds logically from the dismantling of the labor theory of value. In terms of class, this means writing out the working class, and substituting as its pertinent tri-fold structure the wealthy, the middle class, and the poor. The wealthy are described as wealth makers. The middle class are economically autonomous, and the poor are government dependents.
Within neo-liberalism, then, taxing the wealthy is justified by the government services provided for them, and not as a countermeasure to the level of exploitation that creates that group. The middle class, if it demands something from the government, is displaying moral culpability: how dare, for instance, middle class kids demand free secondary education? Obviously, they simply want bribes. And the poor never work – the goal is to get them to work. Then we can pull away government support for them.
Class, which used to indicate a position in the spheres of production and circulation, becomes, in neoliberalism, a proxy for income.
Politically, income is a very weak guarantor of solidarity. The search for solidarity turns elsewehere – to various identities, which, in the absence of a robust sense of production and circulation, take on the primary roles in structuring our lives, and thus the politics concerning our lives.
It is interesting to me that Marx talks about life, not about economics, when speaking of what determines our consciousness. Life is at the center of his thinking, yet it is consistently read out of his thinking. When we read that Marx doesn’t accord enough force, or accords no force, to ideas, the people saying this are usually at work. They are usually academics writing ideas in books that, among other things, will gain them tenure. The ideas that they are talking about come from the great names. They are not talking about the ideas of the sandwichmaker at Subway. Why?
Read the rest at Willetts Magazine

The Breakup of Britain: on Fintan O'Toole's Heroic Failure

This is a part of a review I wrote for Willett's Mag. 

Oliver’s army is here to stay

Oliver’s army are on their way

And I would rather be anywhere else

But here today – Elvis Costello

In 2009, I became a great fan of Fintan O’Toole’s column in the Irish Times, where he served as an appalled guide to the meltdown of the Irish banks, which were riding down the sudden and traumatic slump in real estate prices. O’Toole was full of savage indignation at the sheer wanton and meanminded greed of it all, and it was a thrill to see him unloose the vials of his wrath on incompetent government honchos, the party of Fianna Fáil, the popinjay plutocrats, and their collaborators, a gang of looters pathetically incapable of covering their tracks. I was rooting from the far seats, ’cause I knew that the fight in Ireland was the same as the fight in the U.S. and the EU – the fight of the working people against the rip off artists who rule them. At the same time, O’Toole was funny. Funny! Righteous and funny is a hard combo to pull off, and requires a deal of literary reference. All of these are qualities I revere. As well, he didn’t turn out to be a reactionary crank (many were the critics of the banksters who turned out to be supporters of something even worse), but, recognizably, a democratic socialist type, or social democrat type, whatever.  Which I, a lukewarm Marxist, think is the best we’ll get in my lifetime.

In some of the reviews of Heroic Failure – especially those written by conservatives – O’Toole is accused of an uncritical, admiring attitude towards the EU. This is of course not true. As he wrote in a recent column:

… the other way to be [a] bad European is obsequiousness to the demands of the technocratic elites in Brussels and Frankfort. If the EU in not a community of vibrant, challenging, skeptical democracies, it will wither. The meek will inherit nothing.

I could do some picking at the idea that France, Italy, Hungary or Poland have vibrant democracies at the moment – but you get the drift. With this viewpoint, O’Toole is a natural Remainer, but no EU soft soaper.  More than that – what his conservative critics miss, flailing away at the fun he has at their expense – is that his analysis, which concentrates on the social forces behind the Leave position, concedes to Leave a dialectical complexity that lifts the book out of the zone of mere denunciation. This is an exemplary study of the culture, or part of the culture, of contemporary England – the England that is confusedly starting to address its identity as the British nation-state complex breaks up. Its is a comparatively fast decline-and-fall, taking not hundreds of years but decades. And we are in the midst of it.

Pseudo-keynesian winter: a tale from the end of civilization

I am a great fan of shoebox economics - done by amateurs at the feet of the policymakers, smelling their stinky toes, Das Kapital in hand.

Which is why, yesterday, I suddenly thought of a way of explaining to myself the governing class's economic policies for the last thirty to forty years.

The policy has three legs. But calling them legs doesn't quite give one the picture of how they are inter-related; metaphors always have their shortcomings. But bear with me, ladies and germs.

The first leg - let's call it the bond trader's threat - is the moral pressure on governments to cut their deficits. This pressure is asymmetrical: it does not call for governments to return to the tax policies of the immediate post-war years of last century, when corporate and wealth taxes went up. It instead calls for those deficit-driven cuts to be made in "entitlements" - in other words, in public goods and services: education, healthcare, retirement, the environment, and the whole regulatory structure of government.

The second leg - which is dynamically connected to the second one - is for deregulation and privatization. This is a tricky leg. Although it might seem, on the surface, that this is a demand for a return to pre-keynesian economics, it is really caught in the whole Keynesian paradigm of managing demand. Privatization means that public goods, like higher education, increasingly reflect the price system controlled by private entities. De-regulation means, among other things, that not only are markets deregulated, but that the consumer's access to credit is also de-regulated. The total effect of this is to shift public deficits onto individual households. In other words, bondholders who get 2 percent, say, on U.S. bonds are now looking at a market in which mass individual debts can be pooled, with the debts paying anywhere from 5 percent to whatever. Since tax cuts to the wealthy in order to encourage investment usually just result in vast cash reservoirs swirling around, here's the perfect place to put that cash. Thus, the financial sector experiences really incredible growth. From another viewpoint, this growth is cancerous. Just like any good or service, the prices of financial goods should be going vertiginously down: due to the internet and software such as, say, excel spreadsheets, the real cost of financial transactions has deflated over the last thirty years. But the cost of stocks and the various species of shadow finance financial instruments - derivatives and such - keeps booming (before they bust). This is due partly to direct class pressures - the lifting of usury limits, wage stagnation, and the massive increase in laws to administer a punitive regime of debtor surveillance - and partly to the massive influx of money from the state, in terms of tax cuts.

The third leg is cheap goods. This is the analgesic that keeps the working class from feeling the full extent of its pain. As the public goods disappear, a direct hit to the lifestyles and wealth of the working class household, and debt becomes seemingly more available, filling the gap between lifestyle and wage stagnation, the massive trade deficits of those countries that have adhered most closely to the deficit scold-tax break- deregulate and privatize paradigm - become noticeable. They are treated by economists as unexpected outcomes, but of course they are really the results of a policy choice. That choice freezes the inflation of consumer goods, even as life-cycle goods - education, healthcare, housing (and I would add here environmental "goods") inflate wildly.

Interestingly, these three legs are inevitable as long as the paradigm is in place. There's no reform that would make this more bearable. At the same time, the original justification for the Keynesian regime - that it moderates business cycles - becomes a parody. It actually speeds up and aggravates the severity of business cycles, but it removes the hurt of those cycles from the governing classes and Capital and puts it squarely on the working class.

Inevitably, the keynesian compact was eventually going to devolve into a weapon in the class war. And that is what the Great Moderation is all about. So when my child asks me, where were you in the Great Moderation, Daddy, I can at least have the satisfaction of saying, I was being screwed by shitheads, my child. That's about it, cause otherwise, what I have done, and what the working class has done collectively, is hide.

on the cereal box: morning meditation

Breakfast cereal is an emblem of the industrialized food system. If the system had a totem, surely the faces of Captain Crunch, Tony the Tiger, and Snap, Crackle and Pop would be displayed on it. The cereal box I opened this morning to feed my boy, Kellog’s Smacks – which features a froglike creature with big eyes, an open mouth, a startlingly human tongue, and human like hands, splashing about in milk and wheat stalks and larva shaped honey smacks, against a vivid red background – tells me that it provides me with “50 % Vit. D. Daily Needs”. I’m never sure if I should believe this kind of thing, or even really what it means – one bowl? The whole box? On the back it provides me with a printout of “ingredients” and”nutritional facts”. That the words are in English and Arabic points to the global system – this Kellogg’s cereal box has been somewhat vaguely routed or controlled by the Kellogg’s office in Casablanca.

This box is a marvel as well as, given the ecological tragedy of agribusiness, a horror. Marvels and horrors are the familiars of my ordinary life – and no doubt yours, reader. We flip between them with every app and every birdless sky.

The world of commerce, the system of global production and circulation which brought that box to my kitchen, seems, sometimes, to fill the world. It depends, however, on the act of giving. I give the cereal to my boy. My wife gave her time, labor and money to go out and get the box and bring it back home. My definition of neoliberalism is that cultural regime which attempts to completely embed the social in the economic (defined narrowly as capitalism, a market based system of goods and services controlled by capital); however, it is always limited by the fact that it depends, fundamentally, on what Georges Bataille called the “general economy” – the economy of unexchanged energy, generosity, sacrifice and giftgiving. The further neoliberalism digs into the general economy, the more it undermines itself. In this contradiction, myth is generated.

Read the rest at Willett's.

the sackler watch - V&A museum come on down!

Fans of justice, who’ve been given a battering over the last, say, 30 years, got a small peek into a better world this week when the National Portrait Gallery in London turned down a donation of 1.3 Million dollars from the  Sackler Trust. Britain is saturated in Sackler beneficiaries, from the Serpentine Sackler Gallery (I like to think that the devil crawled into that name, sticking his forked tongue out of Serpentine) to the V&A Museum Sackler entrance, they have slathered their tax deductible trust money on the art world to an incredible extent, creating a huge ethical dump. Up in Scotland, a Labour and a Scottish National politician both urged the Dundee branch of the V&A Museum to return a grant of 650,000 buckos, to which V&A returned the time-honored non-response that they’ve taken Sackler money before, as has everybody. This is known as the junkie defense. Appropriate, eh? In other news, Dame Theresa Sackler (about the Dame, no comment) has been served with a 500 million dollar suit for her “alleged” role in profiting from a company that was in the addict them, blame them, and deny business. I imagine that Sacklers are beginning, even, not to like the newspaper stories about them. So sad.

According to Bloomberg:

More than 500 U.S. cities and counties accused Purdue and eight members of Richard Sackler’s family of racketeering, claiming the company engaged in misleading and illegal marketing of OxyContin. It’s one of a handful of lawsuits to name the Sacklers as individual defendants in the sweeping opioid litigation.” Named in the suit are the following: Beverly Sackler, David Sackler, Ilene Sackler Lefcourt, Jonathan Sackler, Kathe Sackler, Mortimer Sackler and Theresa Sackler.

Art patrons all.

However, if there is one thing fans of justice have learned over the past thirty years, it is that America (and the EU and all the developed countries and every country with billionaires) have created a very deep system of immunity for the wealthy, architected by “de-regulatin’” politicos, in the pocket D.A.s, state legislators and, as a last defense, a solidly pro-plutocratic judiciary. So we don’t think that the Sacklers are shaking yet.

In an interview with the Washington Post last week, Purdue did say, in a totally totally non-menacing way, that bankruptcy was an option. What does that mean? Fuck if Im going to go into all of that. This Stat article covers it pretty well. But the happy news is that the company was pretty much a money pump for the Sacklers, so they have cash to spare, and I don’t see how bankruptcy would help them unless – unlikely event – the suits go to real trial, instead of some negotiated settlement thing.

In the meantime, Tufts, a big recipient of Sackler largesse – to say the least – is starting to find allegations “deeply troubling”. That was what their PR guy said. When asked if the University was still taking Sackler money, the word was: “[Unless] otherwise required by law we do not share data on our donors except for specific reasons as outlined in our policies…” That too was what the P.R. suit said. He didn’t seem to think this policy was deeply troubling.

What's really scary, and what isn't

Adam is learning to read – and, more impressively, reading in English and in French. Because he likes books and comics so much, this is something that is driven forward not so much by school – his mathematics is being driven forward by school – as by his long established desire to read by himself, out of shouting distance from his monitoring parents.

Now, we love this, up to a point. On the other hand, this desire to read and write is also enmeshed in Adam’s Goth side. Adam sometimes makes remarks about horror movies (which he hasn’t seen) in a familiar tone before other adults, and we have to explain that he hasn’t seen these movies – really, are we letting our six year old watch Jason in Halloween? – but that he has caught the drift that these movies are out there. Like other kids, Adam is very obsessed by series, by collections. To have cards for all the players on your favorite football team, or to have all the Goosebumps series of books, or to watch all episodes of the Pink Panther – I remember my own proto-encyclopedic desires. Although I don’t remember them manifesting so early. Like trees which now bloom earlier, due to climate change, children’s media acquaintance now blooms earlier, due to a world full of internet and cell phones. Thus, he wants to see all horror movies.

Being six – or being in primary school – means being stuffed with nominal knowledge: all the state capitals, all the presidents, etc. And children love to clamber over that nominal knowledge, as over monkey bars. Later, adult, we tend to let the nominal knowledge go. The 19th President of the U.S.? Look it up on Wikipedia. The capital of North Dakota? Are we going to North Dakota for some awful reason? All of this kind of thing – including trigonometry and those Latin classes you took in the 8th and 9th grade – go down the chute into the forgettery.

The nominal knowledge Adam has about horror movies – and his plans to see, say, Alien when he is seventeen, cause, Dad, it says on IMDB that I can see it when I’m seventeen – is in contrast with his real threshold of fright, which is pretty standard. Adam found the thuggish General Woundwort in Watership Down almost too scary to watch. He knows that something may be “too bloody and cruel” for him, and he’ll tell me that when talking about scary movies. He has a very strong grip on what’s really scary, as opposed to what is pretend, and I like to think that this knowledge puts him a mile ahead of our adult public opinion, where the arguments are still about whether climate change is real, and what is really scary is actresses (females!) taking all the roles in the remake of Ghostbusters. Adult public opinion at this historical juncture you can simply write off as pitifully cretinous, worldwide, from Brexit to the New York Times Opinion Page, whereas Adam is, hopefully, part of a generation that would recognize what is “too bloody and cruel”, and try to avoid it.

Hooray for those who come after us, and may they forgive us our moral vacuity.