Category Archives: The destruction of the middle class

Michael Hudson: Piketty vs. the Classical Economic Reformers

Yves here. This post by Michael Hudson is one entry from an issue of a journal critiquing Thomas Piketty’s Capital in the 21st Century. Hudson argues that even though Piketty’s findings about wealth accumulation over the centuries are useful, he nevertheless has done a great disservice by treating “wealth” as an undifferentiated lump. By contrast, classical economists differential between rentier behavior (such earning income from economically unproductive activities such as land ownership), financialization, and leveraged speculation on asset prices. Hudson argues that Piketty’s failure to probe the types of wealth and the impact of income-generation strategies for various types of wealth, as well as his failure to incorporate legal and political arrangements means his book tacitly supports the status quo. Inequality for him is a state of nature, not a function of how our economy is organized.

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Rob Johnson on the Uber Rich: Top 400 US Billionaires’ Wealth Equals Brazil’s GDP

Yves here. Real News Network features a vivid discussion between Rob Johnson, Director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute and a member of the UN Commission of Experts on Finance and International Monetary Reform, and Paul Jay on the short-sightedness of the uber-rich.

Although many of the themes of this talk will be familiar to Naked Capitalism readers, Johnson, who is also a long-standing political insider, is blunt.

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Masaccio: The Shaky Foundation of Neoliberal Economics – Life-Cycle Savings

ves here. Readers may know that we regularly savage neoliberal economics, which we often refer to as “mainstream economics.” For instance, that’s why we so often take aim at Paul Krugman, who despite his leftist inclinations, never takes them very far because he is intellectually hostage to a flawed, destructive orthodoxy.

Here masaccio makes a point that the many enthusiastic reviewers of Piketty’s Capital in the 21st Century have skipped over, namely, that his book indicts orthodox approaches and conclusions. Masaccio then focuses on a glaring example of where neoliberal economic theory does not match up with real-world behavior, in its life cycle savings theory.

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Mark Ames: Why Finance is Too Important to Leave to Larry Summers

Welcome to the world of running a small website. The estimable Mark Ames, who is as much a litterateur as journalist, promised, promised, promised us a fundraising post, but told us he just can’t deliver the piece. I know Mark didn’t do this casually; he was a publisher himself, at The eXile in Russia and then with its US incarnation, The eXiled.

But Mark did give us a hard-to-beat post three years ago, and it deserves being reprised. So enjoy!

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Media Giving Corporate Executives a Free Pass on Their Value Extraction

Executive rentiers and their media lackeys are invoking the canard that they can’t find decent investment opportunities. The truth is that they’ve exhausted the first and second lines of value extraction, that of labor-squeezing and disinvestment, and aren’t prepared to accept the lower but still attractive returns of taking real economy risks.

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For-Profit Colleges as Factories of Debt

Yves here. The American higher education system has been sucking more and more of the economic life out of the children that supposedly represent our best and brightest, the ones with intelligence and self-disipline to do well enough to be accepted at college.

But even though the press has given some attention to how young adults, and sometimes their hapless parent/grandparent co-signers, can wind up carrying huge millstones of debt, there’s been comparatively less focus on the for-profit segment of the market. While their students constitute only 13% of the total college population, they account for 31% of student loans. Why such a disproportionately high debt load? As this post explains, the for-profit colleges are master predators, seeking out vulnerable targets like single mothers who will do what they think it takes to set themselves up to land a middle class job. This is the new American lower-class version of P.T. Barnum’s “a sucker is born every minute.” These social aspirants are easy to exploit because they haven’t gotten the memo that the American Dream is dead.

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Bill Black: The New York Times’ Coverage of EU Austerity Remains Pathetic

Yves here. Bill Black shellacks a New York Times article that gives a big dose of unadulterated neoliberal propaganda supporting austerity. To give you a sense of the intellectual integrity of this piece, it including citing a Peterson Institute staffer without cluing readers in to the fact that the Institute has what is left of the middle class in its crosshairs.

Black stresses that one of the major lies behind the continuing for more, better hairshirts for long-suffereing Europeans is that the explosion in debt levels in Europe was the result of overly-generous social safety nets. In fact, as in the US, the tremendous rise in government debt levels was the direct result of the crisis. Tax revenues collapsed due to GDP whackage (and the costs continue as GDP is well below potential). And any economist worth their salt will also say that social safety nets ameliorated the severity of the damage, that those automatic stabilizers increased government spending when it was needed most, at the depth of the implosion, and prevented a spiral into a much deeper downturn.

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Class Bigots: Finding Themselves On Third Base and Thinking They Hit a Triple

Yves here. I’m featuring this post from Angry Bear because it presents a vivid example of an increasingly common form of economic hatred: that of seeing anyone lower on the income ladder as fully deserving of their lowly status and a potential, if not actual, social parasite.

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Are Advanced Economies Mature Enough to Handle No Growth?

Economists occasionally point out that societies generally move to the right during periods of sustained low growth and economic stress. Yet left-leaning advocates of low or even no growth policies rarely acknowledge the conflict between their antipathy towards growth and the sort of social values they like to see prevail. While some “the end of growth is nigh” types are simply expressing doubt that 20th century rates of increase can be attained in an era of resource scarcity, others see a low-growth future as attractive, even virtuous, with smaller, more autonomous, more cohesive communities.

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All in the Family: How the Koch Brothers, Sheldon Adelson, Sam Walton, Bill Gates, and Other Billionaires Are Undermining America

Yves here. Even though monied dynasties have long had outsized influence in the US, Steve Fraser contends that billionaires and their scions like the Koch brothers, the Walton heirs, and Sheldon Adelson wield far more power than their predecessors and are in the process of remaking America.

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Matt Stoller: 5 Reasons for the Zephyr Teachout Phenomenon, and 5 Reasons Andrew Cuomo Is Still Governor

“New York’s a small town run by 1,000 decision-makers.” So says Hank Sheinkopf, a consultant in New York politics for more than 40 years and bouncer for the billionaire-fueled New York Democratic establishment. So how did Zephyr, who was not one of those decision-makers, have such an impact? I’ll try to answer that question and offer some observations her campaign and what it meant.

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