Why the US Economy Won’t Fully Recover

Yves here. It almost seems quaint to think that someone (in reality, large swathes of the investor and orthodox economics community) thinks the US economy will someday bear a passing resemblance to its former bubble-stoked vigor. I agree wholeheartedly with one of van Onselen’s cause for concern, that of low wage growth in the US (which is probably more accurately described as an unduly high profit share of GDP), and have doubts about the other, an expected rise in the dependency ratio. As regards the latter, demographic forecasts are fraught. The US was predicted to show a decline in population due to a decline in the birth rate, in keeping with advanced economy norms. The 2000 Census showed the demographers to have been all wet, due to a combination of a modest rise in the birth rate plus immigration.

The fallacy of the dependency ratio concern is that it does not allow for adaptations in the average age of labor force entry and exit. While I know many people who retired early, some voluntarily, many not, I also know lots of people who plan on working or actually have worked past the age of 65. Similarly, with the payoff of a debt-funded college education looking dubious, we may see more young people foregoing that, with a result in the average age of entry into the workforce falling. A college education was once seen as a guarantor of a middle class lifestyle if you were also reasonably diligent and organized about finding a job. If that’s no longer the case because college costs are wildly out of whack and the middle class is going the way of the carrier pigeon, why should we expect the same proportion of young adults to go to college as now (believe me, I think this trend is a disaster, but making college so costly has meant that many students can’t afford to treat is as an exercise in self-betterment that will work out without them thinking too much about it). The discussion of demographic trends also points to a rise of McJobs replacing better-paid work, which suggests that the picture of stagnant wages has the potential to morph into declining wages if present trajectories are not reversed.

So while I have no doubt we’ll wind up at pretty much the same place, I suspect there will be some changes in workplace norms that will alleviate the impact of an aging workforce on labor force participation rates. Perversely, not having enough decent jobs is likely to prove to be the stickier problem.

Finally, I am hearing from well-placed sources that the war on drugs will be wound down (apparently as much as Wackenhut enjoys having loads of young men, mainly non-whites, in prison, the consensus in the Beltway is moving towards decriminalization of some now-controlled substances and different approaches to others, which in the next 10 to 20 years should lower the percent of working age adults in prison).

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

The Wall Street Journal (WSJ) has produced two excellent reports shining a light on why the US economy will continue to struggle and won’t produce a full-fledged recovery.

In the first of these reports, the WSJ looks at average real US wages, which have fallen since 2009 and are erroding the purchasing power of consumers, denting consumption expenditure:

Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation’s economic growth.

All told, Patrick Newport, an economist at IHS Global Insight, expects real wage growth of only 1% by the end of 2014. That is “good news for employers,” he said, “not-so-good news for workers.”

Consumers remain the biggest driver of the U.S. economy, but without more money coming in, it will be difficult for them to spur robust growth.


The second report examines the ageing of the US population, which will shrink the relative size of the working-aged population, reducing potential growth of GDP and incomes in the process:

New research by two economists, Richard Burkhauser of Cornell Universityand Jeff Larrimore of Congress’s Joint Committee on Taxation, suggests things may get even worse in coming years—thanks to two basic population trends. After supporting the economy during their peak earning years, America’s Baby Boomers are starting to retire, which will mean higher numbers of lower-income older individuals. Second, the researchers argue, relatively high-earning whites are over time being replaced by minority workers, especially Hispanics, who tend to make less money.

Burkhauser and Larrimore project these two factors will reduce growth in median incomes by about 0.5% per year through 2030.

Demographic trends used to support income growth. The median household income rose about 9% between 1979 and 1989 and 13% between 1989 and 2000, the researchers note. A key driver was the increased employment and earnings of women.

But in the mid-2000s incomes slumped. Many Americans apparently took this in stride since home values were climbing significantly, boosting wealth, and credit was easy to get. To offset stagnant incomes, Americans took on more and more debt, which made the Great Recession that much worse, according to a separate paper by New York University economist Edward Wolff. As the crisis took hold, net worth plummeted. At the same time, median household income dropped about 7% from 2007 to 2010, more than the 3.5% fall seen between 2000 and 2004 and a 4% decline between 1989 and 1992.

The demographic pressures facing the US are being played-out right across the developed world (and in China). While the workforces of many Euro countries have been in relative decline for more than a decade:


It is a relatively new phenomenon for the Anglospehere nations:


Overall, population ageing is a key reason why growth rates in the US (and elsewhere) are likely to underwhelm in the decades ahead.

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  1. Jeff

    The Workers per Dependent chart shows a massive bust in Canada. Not so much for anyone else. Well it looks bad, but Canada looks like it is heading for a distater in the next 15 years.

  2. Gerard Pierce

    If things stay the same, they will stay the same.

    The are a lot of areas of the US economy that need to be redesigned and that can happen if we give up on waiting for the 1% to make it all better.

    There are going to be any number of accredited non-competitive colleges and universities that go “poof”. Taking over one of these just before it goes bankrupt would provide a group with the ability to provide real degrees minus the 90% cost of administration. Some adjunct professors might be able to make a living without beggaring their students.

    You can’t run a trade school this way, but you could provide some studenst an actual old-time education.

    The solution to a lot of our problems is to elbow the 1% out of the way and set up institutions that work for us.

    1. nonclassical

      …Yves channeling Gore Vidal, who in 2008 stated that this would be a “Japan-like” 20 year economic disaster, while U.S. economics would never again be the same…

    2. Hugo Stiglitz

      I think they will require considerably more than “elbowing”, but I get your point.

      The old-time education (if I am understanding what you mean), or much of it, can and should be provided BEFORE college, certainly be the end of High School. But that is a whole different can of worms.

      Like every other institution in the US, higher education has become a racket. Most people do not need a university education, certainly not to perform most jobs that are necessary in the economy. The idea that education exists merely for creating better workers is a big part of the problem with education at all levels. People are not just workers and consumers. *sshhhh!* economists might be listening. ;-)

      1. nonclassical


        ..”Most people do not need an education?!”…not unless actually “competing” in a world marketplace, where the majority DO “need an education”…

        U.S. grads from 4 year university or vocational equivalent hover today around 18% of American high school grads…

        Compared to European societies where I instructed also, over 70%…

        Of course GOALS are completely different-grading on CURVE in U.S. guarantees a few “winners”, a few “losers” and majority mediocrity=cheap labor force…and, as you note, university is expensive..earlier NC article noted 80% of new jobs do not require-remunerate university grads..

        Yet education is scapegoated as “provider of opportunity”…(actually, it’s ECONOMIC opportunity, isn’t it?))

        While In Europe the GOAL is creation of lifetime taxpayers….

        …there is also the fact that extensive post secondary education, of various form, does provide the foremat-ability to learn how to think, rather than what to think…

        what do you think?

        1. Hugo Stiglitz

          I think people DO need an education, a much better education that they are getting, in public K-12 schools preferably. I was remarking mainly that a lot of people do not need 4-year university degrees. Many people in university would be better served going to a tech or vocational school where the skills learned are more targeted for specific career paths. Much of what students learn, at least in a liberal arts education, could and should be taught better in public schools, and much more cheaply.
          The notion of providing essentially free education for qualified students is great, especially if there are provisions that channel the student toward jobs that suit them AND careers that have a future. This is not the case in the US. Most students at universities have little or no guidance to help them choose majors, courses etc. Then they are saddled with debt and often a skill set that is not particularly useful, at least not in the job market.

          Also, this might seem to contradict what I just said, but the sole purpose of education should NOT be merely to produce workers and consumers for an economy, though that is of course an important part of it. Universities in particular should be producing thinkers, creators, citizens, people who understand concepts of virtue, beauty, truth, etc. In this regard, the American system fails utterly, and this probably explains to an extent, why so much of the nation has gone to hell in that past few decades.

        2. swendr

          Higher education is the modern version of the old European peasant’s ticket for passage to the new world. In both cases, they were at one time accurately regarded as a sure path to upward economic mobility. Over time, both ended up nothing more than a path to debt slavery with a middle-man siphoning off any extra income that may result from the transformation.

          Until people realize that economic events are always a result of political decisions, naive optimism will continue to lead people into these traps. I also believe education is crucial, but not just to get a good job. I think it’s crucial for a properly functioning political system.

    3. proximity1

      “The are a lot of areas of the US economy that need to be redesigned and that can happen if we give up on waiting for the 1% to make it all better.”

      Read more at http://www.nakedcapitalism.com/2013/08/why-the-us-economy-wont-fully-recover.html#tsk2DWlUbMoUe4Ir.99

      The 1% aren’t just waiting for us to wait for them to “make it better.” They work(ed) hard to corrupt a system, and they don’t rest on their “laurels.” Perhaps they no longer (if they ever did) have to break a sweat to maintain this ugly machine, but they do understand that it requires constant maintainance and attention–for which they pay, using the money they got from honed and perfected corrupt and dishonest means.

      Completely corrupting the judicial system from top to bottom was a major accomplishing, a watershed moment in the effort to thoroughly debauche a mainstay of civilized society.

      So, yes, let’s do that, let’s Elbow these movers and shakers “out of the way”–you go ahead, please and show us how that is done in a system in which a guy who tells some plain truths has to become a fugitive from the law.

      We should know not only that the 1% have no intention of “making things better,” but also that they make and maintain a rotten system because they like it this way.

      There already are alternative schools & colleges–in fact, most of them serve the needs and interests of the same 1%.

      So, why have I objected to your naive recommendation to “elbow out of the way” the power structure? Because before that could ever happen a number of essential prerequisites must be achieved. There is no indication that these are even being delineated, much less actively addressed. And you don’t delineate them either. You simply call for us to get on with the work of “elbowing” as though there’s not very serious resistance to anyone’s doing that successfully.

      The race riots and civil violence of the 1960s were samples of what it took just to budge slightly a deeply rooted corrupt system to yield up a some symbolic gestures and a few real openings to whole populations systemically shut out.

      Black Americans as a whole did achieve some real gains but the more general scourge of poverty which cuts across all racial lines was not seriously addressed; instead, we now have a maldistribution of wealth and resources the obscene likes of which have not been seen since the pre-1929 depression.

      The idea that the poor are primarily responsible for their poverty, that they simply lack initiative, drive, determination, that eveyone who “really tries and works hard” is bound to succeed–this simple stupidity is one among many which are deeply subscribed in the most fundamental mythology of Americans–yes, even today, with all these “wonderful” high tech gadgets–we remain hostage to gross, gross stupidity and fatuous myth.

      Go on, let’s see those elbows move.

        1. nonclassical

          ..as oft-stated, Moneta,

          your observation does not apply equally to Wall $treet “financial sector” who actually destroyed U.S. economy for over 7 years already…and whom FED has
          bailed out, all documented here=why expect the VICTIMS to pay for their rapaciousness??:

          “The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill.

          Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.

          …Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

          What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

          The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

          Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious –the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.”

          The list of institutions that received the most money from the Federal Reserve can be found on page 131of the GAO Audit and are as follows..

          Citigroup: $2.5 trillion ($2,500,000,000,000)
          Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
          Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
          Bank of America: $1.344 trillion ($1,344,000,000,000)
          Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
          Bear Sterns: $853 billion ($853,000,000,000)
          Goldman Sachs: $814 billion ($814,000,000,000)
          Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
          JP Morgan Chase: $391 billion ($391,000,000,000)
          Deutsche Bank (Germany): $354 billion ($354,000,000,000)
          UBS (Switzerland): $287 billion ($287,000,000,000)
          Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
          Lehman Brothers: $183 billion ($183,000,000,000)
          Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
          BNP Paribas (France): $175 billion ($175,000,000,000)



          Read more at http://www.nakedcapitalism.com/2013/08/stephanie-kelton-the-good-society-lessons-not-yet-learned.html#8MRY4z5HCTAhlu2s.99

          1. Moneta

            bailed out, all documented here=why expect the VICTIMS to pay for their rapaciousness??
            Do I like it? No.

            Why I expect it? Because the victims are currently not doing anything (in time anyway) that will avoid them from paying for the rapaciousness.

          2. craazyboy

            I very much doubt that this statement is true:

            “The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.”

            ZIRP, yes – but not paid back???? The official story is these were short term collateralized loans. That also is the only legal way the Fed can do it, as well. The collateral also has to be AAA rated, FWIW.

            Then this should also appear on the Feds balance sheet – I think there is some law about that too. The balance sheet is presently still a tad below $4T, including all the QE.

            Maybe I missed something, but I still hope a $16 trillion bank heist would not go undetected by all.

            1. psychohistorian

              I am sure our president will assure us that while it looks bad, it is entirely “legal” to steal 16 trillion dollars so when the SHTF the plutocrats can come to the table with all these trillions and expect to retain control over the world of finance.

              Remember now, that 16 trillion is not inflationary because the CPI doesn’t reflect it….and gold is worthless……/snark

              When is the US dollar bubble going to pop? Methinks soon now.

              1. craazyboy

                /sarc_on If it don’t move the MMT meter…no problem

                Don’t know when the dollar dies. All I know is I’ll be gone whenever it happens.

            2. MikeNY

              I believe you are correct. I believe the vast majority of these loans were made when interbank rates spiked and the CP markets collapsed; banks had no ST funding access, so they accessed the Fed window. The loans were not interest-free, and they were repaid.

              1. nonclassical

                Mike-These “loans” have NOT been “repaid”…read the links…check out WHO the
                “loans” went to:

                The list of institutions that received the most money from the Federal Reserve can be found on page 131of the GAO Audit and are as follows..

                Citigroup: $2.5 trillion ($2,500,000,000,000)
                Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
                Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
                Bank of America: $1.344 trillion ($1,344,000,000,000)
                Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
                Bear Sterns: $853 billion ($853,000,000,000)
                Goldman Sachs: $814 billion ($814,000,000,000)
                Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
                JP Morgan Chase: $391 billion ($391,000,000,000)
                Deutsche Bank (Germany): $354 billion ($354,000,000,000)
                UBS (Switzerland): $287 billion ($287,000,000,000)
                Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
                Lehman Brothers: $183 billion ($183,000,000,000)
                Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
                BNP Paribas (France): $175 billion ($175,000,000,000)



                Read more at http://www.nakedcapitalism.com/2013/08/why-the-us-economy-wont-fully-recover.html#Yl2Jd5t1VVttIATZ.99

            3. nonclassical

              ..yes…there are those who find it difficult to believe Ron Paul Jim DeMint, Alan Grayson, Bernie Sanders…

              You could always follow along-read the entire bill-it’s included in links…

              1. craazyboy

                I actually like those people, but can you direct me to anywhere that they claim 16 trillion was not re-paid?

                If it’s true I would think we have Ben on a treason charge, and I wanna know why not?????

        2. F. Beard

          Your gold standard mentality is showing.

          Your focus on suffering implies that if we only whip ourselves that good will come. I think that’s been tried and that isn’t the way things work.

          Instead, wisdom, justice and mercy should be our guide.

          1. Bapoy

            Does that mean forcing someone else to do something? Or just letting good ol’ god and nature handle matters?

            I’m sure god was the forcing type, don’t you think?

            Jesus was right, money is the damn root of all evil. And where have we gone, from a mentality of the majority being slaves to the majority thinking they are kings and queens and deserve their food on a silver plate.

            I’m sure that’s not in the bible, is it?

        3. A Real Black Person ?

          No,We have a large majority of people who think everyone can “have it all” and all efforts and sacrifice can and will lead to success in a closed system with limited resources.

          For someone starting at the very bottom they have to make much more painful sacrifices to succeed than someone who has more resources.

    4. proximity1



      (molto sotto voce)

      The 99% aren’t a solidified ‘class’ with a set of unifying interests and ambitions. It is simply not the case that ‘it’s the 99% versus the 1%.’

        1. nobody

          No, the left is hopeless. It’s the challenge for those who see through the left/right paradigm, who see beyond those old-paradigm, last-millennium categories.

          1. nonclassical

            …yup…”the left is hopeless”….all they-we have going is TRUTH..a lot of which is being told here…

            and the historical perspective? Seems most unaware, historically, no “change” till everyone, including Wall $treet perpetrators of “criminogenic accounting fraud” (WK Black-Michael Hudson) lose everything, along with everyone else..

            let’s remember banksters, 30’s depression era, asked FDR to nationalize them..

            let’s also remember (yes, I went to Occupy-Seattle-Tacoma) Occupy was too involved with process-ISSUES were not elucidated…I carried a “Naked Capitalism” sign, with elucidated issues=”follow the $$$$”…

            TRUTH is, truth has been kept from ameriKan people…whose 30 year mortgages are the TRUTH they are dealing with daily…

      1. porge

        The “99%” is just a slogan.

        In reality it is more stratified on a power law with a ratio of .1 to .2

        .001 to .002 represent the true owners of the global system who are descendants of old inherited fortunes.

        .01 to .02 are the figure head puppets that everyone THINKS runs things. This includes politicians, CEOs, etc.

        .1 to .2 are the mangers. This is the most important group and they are the enablers of the oppressive hierarchy. This group largely identifies with the class above them and stands to lose a lot if the system fails. These are the people that need to be changed.

        .8 to .9 are the disenfranchised. This group is owned and considered livestock.

        Until the situation is framed in these terms we will get no where. The 10 to 20% enablers are the key and they will fight just as hard as the few above them in the pyramid to keep their position.
        This is the reality that I witness everyday.

        1. nobody

          In Occupy, I tried to make this point again and again and again, but never saw any glimpse of comprehension. Instead, a different critique of “the 99%” as a slogan took hold — that it papered over huge differences of social situation and privilege. For a lot of people, “the 1%” seemed to mean “the middle-aged middle-class white men we’re all pissed off at,” and the specific individuals who came to stand as the representatives of this “1%” weren’t even upper-middles.

        2. Nathanael

          The top 0.1% (.001) have mostly decided, for reasons of stupidity, to abuse and crush the top 10%. I don’t think this is wise on their part, but they’re doing it, and that will bring about revolution like clockwork.

        3. washunate

          Awesome comment porge. While there are valiant exceptions, the ‘system’ of administration is set up specifically so that a professional managerial class acts as a buffer between the bottom 80% or so and the very top. A prosecutor or judge or police chief or university administrator or hospital executive or defense contractor with a $100,000 salary is in the top 10% of all wage earners. A $250,000 salary is in the top 1%!

          In contrast, 80% of workers make less than $60K.

  3. psychohistorian

    Recover? Hell, the slope downward is just going to get steeper unless big things change.

    If trade goes forward like now or planned under the new rape rules Americans will be competing world wide for all jobs that will pay less than now while the cost of living stays the same or increases. And if the social safety nets are reduced/eliminated like it is looking then a lot of folks are going to be in a position of having little to lose by taking the world down with them.

    Is demand for consumables going to increase? Not likely in the US and unlikely anywhere else……so even fewer jobs….who is going to buy the next pet rock?

    I can hear the faith breathers now……lets just blow it all up and let Gawd decide…..a fitting solution for a species that could not evolve past the Enlightenment.

  4. Cassiodorus

    I don’t see why there won’t be another economic downturn. Don’t the elites have it as their goal to make US wages “competitive” with Chinese wages? Another downturn will make even cheaper labor possible here. And then there’s this little problem of screwing up the planet, that reaches the American consciousness in a half-baked manner every time it reflects upon “dependency upon foreign oil.” Planet Earth isn’t infinite you know.

    1. Yancey Ward

      “Don’t the elites have it as their goal to make US wages “competitive” with Chinese wages?”

      No. The Chinese have that goal, as do the Vietnamese, as do all poor people around the world.

      1. proximity1


        “Don’t the elites have it as their goal to make US wages “competitive” with Chinese wages?”

        No. The Chinese have that goal, as do the Vietnamese, as do all poor people around the world.

        Read more at http://www.nakedcapitalism.com/2013/08/why-the-us-economy-wont-fully-recover.html#feyxw1uxQuM3gK3y.99

        Which sort of Chinese and Vietnamese want U.S. wages to fall to levels comparable to (and thus competitive with) their nation’s average wage-earners’ wages?

        Could you explain that to us? I’d think that to the extent that U.S. average wages are higher relative to those of the Chinese (or others in question), the Chinese (and others) have a comparative advantage in the price of labor for producing the products concerned. In this case, why would Chinese people favor falling and eventually drastically lower (i.e. competetive) average U.S. wages?

  5. Moneta

    Lately, some analysts have been looking at the US population pyramid and telling us that, pheeew, everything will be all right because there are plenty of young.

    The thing is that the group that supports the dependants is usually the 35-50. That group will be shrinking for a while. Also, when you look at the growth over the last decade, that group has gotten eviscerated… hard to drive when your fuel tank is empty.

    Finally, over the last 2 decades, a large chunk of the population growth has been coming from the poorest segments of society for which the US has done a poor job of integrating.

  6. Antifa

    We’re still talking about the 1% within their paradigm.

    Let’s change that right now:

    1. The 1% have no wealth. They have our wealth.
    The current paradigm funnels far more of the profits on produced goods to the 1% than is their ethical share. On this hungry planet, with fewer resources every day to go around, what individual needs or deserves 7 houses, a couple of yachts, and hundreds of millions of dollars hidden in offshore accounts — more stolen money than they can spend in twenty lifetimes?

    That was and is our money.

    Solution: All personal wealth over $10M is taxed at 100% and used for free education, infrastructure, healthcare, housing and a base income for every citizen.

    In a more and more automated world, it is already clear that not everyone has to work 40 or more hours a week. It is also clear that our species needs to live more gently on this planet, more like caretakers than gang rapers.

    Removing the mad struggle for money and subsistence from the 99% through ethical sharing of the profits of production will go a long way to accomplish this. When no one can live above a certain level of wealth, distinction as an individual will come not from excess but from personal accomplishment. That’s a much more human measure of your humanity.

    2. The 1% have no political power.
    They do most certainly have the full attention of every level and branch of our government from the Federal on down to the smallest towns, because they have all our money, which they donate a pittance of to our politicians in order to bribe them to do their bidding.

    Solution: Even in this extremely topsy-turvy “government by bribery” paradigm, the 1% cannot stand for an instant against the onslaught of all our votes to kick them and their stolen money right out of government, to the Nth degree. It will probably take massive civil disobedience to get this point across, but we could have the undivided attention of Congress, the President and the Supreme Court within a year or two by forcing them to accept only public funding for campaigns.

    The new rules would be: absolutely no private or corporate campaign contributions, gifts, or career benefits given to politicians at any level. No lobbying by corporations, and no lobbying by former politicians, ever.

    Lobbying will be replaced by every bill introduced in Congress or at City Hall being subject to public scrutiny for 30 days prior to any vote. Lobbying can take place in the newspapers and over the internet. Every citizen is involved this way, if they feel the need to speak up.

    Imagine how much more quickly the Trans Pacific Partnership treaty could be resolved to the benefit of all citizens if we could see the goddamned thing and comment on it. Or maybe it wouldn’t even come up.

    3. The 1% do no work.
    And that’s okay. Why would a person set for life need to work? But they must be recognized for what they are. Such people, and their heirs, are called rentiers — a word that should be on the tip of everyone’s tongue from now until we restore America to the best educated, most highly progressive and productive nation on earth.

    Rentiers own land, assets, factories, funds and other means of production. They claim this ownership entitles them to take nearly all the profits away from those who do the actual work. They often claim this ownership proves they are smarter, wiser, all around better people than workers. They are special people who know what’s best for everyone, always, in every situation. Matters of culture, politics, economics and other weighty subjects are therefore best left to them to decide. And they really do have your best interests at heart at all times.

    You know, aristocrats. Doing God’s work.

    This theft of profits, unrestrained, is a crime against humanity, for it causes and commits the violence of endemic poverty upon countless millions, who go without nutrition, education, shelter, medical care, and hope.

    This theft of profits, restrained, is healthy capitalism, for it spreads wealth around society like manure in the garden, so everything blossoms.

    Capitalism restrained means that once you are set for life, you let others have a chance as well. Hoarding more wealth than you can reasonably spend in your lifetime makes you a genuine danger to others, since you are preventing them from having what you have merely so that you can have multiples of the same. It’s gluttony.

    Right now, Bill Gates meets regularly with venture capitalists and other people to come up with dozens of new patents to file every month claiming ownership of techie ideas they never make any effort to produce on. They just want to suck money out of anyone who comes along and wants to use the idea to produce something useful. Now, if these fellows were still building a nest egg for themselves to see to their retirement, one could forgive this behavior perhaps. But given the staggering wealth already in the hands of Bill and his venture capitalist friends, this pathological grasping for ever more money is obscene.

    Solution: Limit the total of profits, wages, and other perks and rewards to owners, management, shareholders, banks, rentiers of every kind to no more than 25 times the income of the lowest paid worker. This allows capitalism to blossom as it can when done right, when every worker has real wages, and every worker can become an investor themselves, rentiers who eventually need do no work if they choose.

    Everyone is still subject to the overall $10M wealth limit. At a certain wealth point ($10M), your investments and wages are for the benefit of all citizens, not just you.

    What about children? If you gift $10M to each of your children as they grow, you may earn another $10M for you, and $10M for your spouse. You may bet your $10M on the Mets for the pennant, just for the thrill of getting out there and earning another $10M. But the upper limit on personal wealth always applies. Your wealth goes to your heirs at death, unless they don’t want it. They might prefer to go get their own, thank you very much.

    4. The 1% are not Americans.
    Not any more. The mere fact of having so much of our money channeled into their hands through theft of profits from workers means they are inevitably internationalists, since money knows no nation as home. With nearly all profits from our work handed over to the 1%, they must then hand it all over to people on Wall Street or in the City or elsewhere to be used all over the world for speculation and government bribery and resource stripping that further impoverishes us all, and gives even more of our money to the 1%.

    Solution: Restrain rentiers and speculators by the above $10M personal wealth limit, and by getting donated bribery money out of government entirely. When investment income is best obtained by investing in productive enterprises that properly share the profits between rentiers and workers, the mad frenzy to create mountains of money to hide offshore goes away.

    The most you can accumulate personally is $10M. After that, you might as well go take a walk, learn to paint, write a book of poems, give your money to NASA or return to your work knowing you are making human lives better because you feel like doing that. Or spend it all on a really wild month in New Orleans or Tibet so you can come back and earn another $10M. Whatever floats your boat, monkey. But once you hold $10M in wealth, you work for the benefit of the rest of us. You work for fun, for satisfaction, for progress, for achievement, for love of what you do well.

    I think a lot of our best and brightest people will be absolutely happy to do just that.

    1. as promised

      While I find your list of problems and solutions laudable there and s one huge component lacking: the means. The means to pull it off and enact it.

    2. Mickey Marzick in Akron, Ohio

      While I don’t disagree with your proposals/solutions, I suspect the 1% won’t look upon tem too favorably which brings me to the real question:

      How much coercion/repression will be required to bring this about?

      And I’m not talking about the 1% only as many individuals in the 99% subscribe to their value system which we seek to replace. But make no mistake about it, some coercion/repression will be required even under the most favorable, benign circumstances.

      It’s about raw power or what might be deemed the legitimate use of coercion/repression to make change, something which many on the LEFt do not understand. Until we come to grips with power and learn how to wield it for “good” your proposalss/solutions remain just that.

      1. Antifa

        Our politicians answer only to money now. The only raw power in the country that can force them to answer only to the common citizens is civil disobedience.

        Civil disobedience on such a scale that they cannot suppress it, imprison it, or continue to govern our cities, states or country while it goes on. And it will go on and on until we get our way.

        Now, what could cause such widespread refusal to cooperate?

        In specific terms, it will be some seemingly minor event, but it will be the thing that coalesces an ocean of rage in response.

        In strategic terms, it will be the inability of the 1% and their politicians to stop taking from us all to stack their hoards of fiat money ever higher.

        They can’t help but keep on with their insults to the populace, their thieving, their war on women, on blacks, on the poor, on schools, on hungry kids, on education. They’re just stoking a powder keg the while.

        Things are pretty hot just under the surface out here. When you make fools of Americans, when you put them against the wall, they get mad, and they get even, and they set things right. You can push ’em pretty far, but only so far.

        What sets it off will surprise everyone. In Tunisia it was a vegetable cart being tipped over. It won’t take much more than that when it happens here.

        We’re likely to see the Republicans shut down our Federal government in mid-October. We might be in a shooting war any time now with Syria and their allies Iran, Russia and China. The youth are back on their college campuses now, paying more every year for tuition, books, housing and meals for degrees that won’t get jobs for two thirds of them. Who knows what will set it off? Some pepper spray, some beatdown of peaceful protesters, some bad job numbers, who knows?

        Yves was right last week about sensing something coming. A turning moment, a point of no return, a line crossed. You can smell it in the air.

        The fan is going full blast, and the shit is stacked pretty high. What comes next?

        1. Mickey Marzick in Akron, Ohio

          You didn’t answer my inital question.

          And after the civil disobedience who will pick up the pieces? Anger and frustration are not instruments of governing.

          Who will govern and how will they make decisions enforceable on the rest of us. And if some of us refuse to obey how will we be dealt with? How much coercion are you willing to employ?

          1. psychohistorian

            When you are up to your ass in alligators, if may be hard to remember that your original intention was to drain the swamp.

            I am willing to move forward with uncertainties and believe others are too.

            Extinction is a cold mother driver and if you don’t think we are starring at that you are not paying attention. The next step towards extinction brought to us by Fukushima may be the straw that forces change, albeit, possibly too late for many of us.

            I like Antifa’s suggestions and would rather discuss possible futures now than endless dissection of the cancerous beast.

            1. nonclassical

              “draining the swamp” is as simple as recognizing fundamentalist supreme court
              is nothing but a corporate mouthpiece…and that “Citizen’s United” is absolute proof…

              to “drain”, all that needs doing is end ALL campaign contribution-influence of “the people’s representative government”…

              funny-no matter how many times I say this-no matter that noone ever attempts to contrast, debate the obvious, people run around wringing their hands as though they have no idea what to do about it…

    3. Jonas the Bold

      I’ll know we are making progress once we have term limits.

      To eliminate the corruption and self-interest from politics, just eliminate the career politicians.

      Term limits are the one thing that most people agree on, yet they seem impossible to achieve.

      If we had reasonable representation, this “will of the people” would be a slam dunk.

      Until then, we are wasting words.

      1. nonclassical


        “term limits” allow corporatocracy to control “the people’s representative government” ever further…

        it is the $$$$=influence of “the people’s representative government that is at fault..bought and sold legislation-for example, 2004 when bush-cheney empowered credit card lobbyists to write new bankruptcy laws…what did you think?

        We thought millions of ameriKans were going to go bankrupt…and communicated with many who could see same writing on wall..

        end the $$$$ in political system-we end our problems…Canada did so some years ago-still have their problems, but minute compared to Wall $treet evisceration of U.S. economy…

        1. down2long

          I agree with you on the BK front. But we must NEVER forget Joe Biden carried the water for the credit card companies in the U.S. Senate to make sure the BK laws were as draconian as possible since most credit card companies have their headquarters in Delaware. Delaware is like Switzerland: Delaware has made it’s living on providing ample legal cover for the oligarchs/corporations to inflict the maximum financial financial misery on the populace, with the least legal interference.

          It’s why not only most credit card companies are headquartered in Wilmington (of course, South Dakota tried to be Switzerland 2.)

          Joe Biden, while personally appealing, has been the cause of untold suffering in this last financial crisis. I speak as someone who had to operate under the new BK laws. Further, as a personal debtor who owed more than $1 million dollars, I was in the unenviable position that 700 unlucky Americans find themselves in yearly: Filing a personal Chapter 11.

          You get all the paper/punishment of Chapter 11 without the perks in place for “corporate Chapter 11’s” And you get the joy of dealing with judges who keep referring to your “staff” as if you had a building somewhere full of compliance people, accountants, lawyers.

          I kept having to say, “Your honor, with all due respect.There is just me. I am bankrupt. I do not have staff. Me and one worker are trying to right this ship, and I am sinking under paperwork instead of being able to finish the construction I need to finish to make this reorg work.”

          In keeping with my new paradigm toward politicians who are not held properly accountable: F**K Joe Biden. He is a silver-tongued whore.

        2. proximity1

          RE: “term limits” allow corporatocracy to control “the people’s representative government” ever further…

          Read more at http://www.nakedcapitalism.com/2013/08/why-the-us-economy-wont-fully-recover.html#3BgFEvxPZcl3G2KK.99


          “Term-limits” = “New and Improved!” It’s a great idea tailored for suckers. Besides, as long as the media/military/corporate/research/corrupt officialdom collude in a phony pre-selection of primary candidates, all the rest is shadow-play.

          Al Gore or John Kerry, or Hilary Clinton, or Barack Obama, or Ricahrd Gephardt, John Dean, Wesley Clark?

          Newt Gingrich, or Ron Paul or John McCain, or Sarah Palin or Mitt Romney or Mike Huckabee, or Rick Santorum?

          Those are choices and we have nothing even remotely resembling a working democratic system.

          We have the high-tech modern society’s version of Voodoo politics and Voodoo economics. Our society is no less embroidered with absurd myth and fable than is a tribe of Stone Age primatives.

    4. Beppo

      As a comment on the pittances it takes to bribe our elected officials. Reportedly, the US arranged for Yeltsin to get 100 million as a reward for not reversing the ‘market reforms’ that were at that moment destroying Russia.

      How much does it cost to own a senator or a president? A few thousand dollars.

    5. Bapoy

      Very good theory. Just get every country to agree and we are set.

      Your math also stinks. Do you know how much wealth Microsoft created after the first 10 million?

      Can anyone find someone, one single person, willing to work for free. One?

  7. Yearning to Learn

    “Second, the researchers argue, relatively high-earning whites are over time being replaced by minority workers, especially Hispanics, who tend to make less money.”

    This irkes me.
    What do they think will happen when a white high-earning worker retires? Do they think the job just goes away?

    No, if there are no whites to take the opening they will fill it with (tah-dah!) a minority.

    Or is it their contention that
    1) the minority will make less doing the same job because they are a minority?
    2) no minorities can do the jobs that a white person can?

    The true dynamic here has little to do with race. The dynamic is that the higher income person will be replaced with a robot, or the position will be outsourced, or the position will be replaced by a worker who makes less.

    but race has little if anything to do with it.

    Sheesh… talk about mixing up causalities.

    1. Moneta

      I had the same reaction when I read this.

      But race has something to do in the sense that they are not given the same opportunities and tools while they are growing up… so it is hard to see them picking up the baton.

    2. anon y'mouse

      those jobs are not being refilled, if at all possible. they are being eliminated. the retiree had pension, benefits, job security yadda yadda.

      –jobs outsourced if at all possible
      –next hiree just doesn’t get all the perks and so on.
      –technology has moved on, and now a “technician” with a year or two of vocational does the same job for less than half the price, overseen by a manager in the professional class, with almost no way to move up between them due to credential barriers. (can a pharmacy tech ever become a full pharmacist? probably not, considering pharmacists go to college+school for 7 years, and vocational “Morlock TV” for-profit school gets you out the door with the minimum 1-2 years).

      when the boomers retire, their jobs will also be retired en masse. welcome to the “new” economy.

        1. neo-realist

          The pensions that were available for the previous generation will be eliminated for future ones.

          1. nonclassical

            shame…”underfunded pensions” were promised in lieu of wage increases when
            $$$$ were flowing like water…couldn’t possibly do raises…

            a certain element of Poly-Sci adherents knew this is where it was going, even before Naomi Klein elucidated here “Shock Doctrine-Rise of Disaster Capitalism,
            as we knew the history of South-Central America, 70’s-80’s, when the same Milton Friedman, Rand, Greenspan advocates destroyed these economies…having assassinated or intimidated leaders, and disappeared those
            who stood against…(and their children). Nice bunch of (Chicago) boys…

            All documented here:

            http://www.thriftbooks.com/viewdetails.aspx?isbn=1567510523 William Blum’s, “Killing Hope”;

            (Written by a former State Department employee, the author’s wealth of knowledge and experience are thoroughly impressive, and this book is very easy to read and follow. Beginning at the end of WWII, the author lists, by country, US military involvement in chronological order. Readers will find the consequences – some of which are being seen today – profoundly interesting.)

            “Is the United States a force for democracy? In this classic and unique volume that answers this question, William Blum serves up a forensic overview of U.S. foreign policy spanning sixty years. Remarks from the previous edition: “Far and away the best book on the topic.”—Noam Chomsky “A valuable reference for anyone interested in the conduct of U.S. foreign policy.”— Choice “I enjoyed it immensely.”—Gore Vidal “The single most useful summary of CIA history.”—John Stockwell “Each chapter I read makes me more and more angry.”—Helen Caldicott “A very useful piece of work, daunting in scope, important.”—Thomas Powers, author and Pulitzer Prize–winning journalist “A very valuable book. The research and organization are extremely impressive.”—A.J. Langguth, author and former New York Times bureau chief For those who want the details on our most famous -actions (Chile, Cuba, Vietnam, to name a few), and for those who want to learn about our lesser-known efforts (France, China, Bolivia, Brazil, for example), this book provides a window on what our foreign policy goals really are.”

  8. Saddam Smith

    Another data point supporting the End of Growth theory. Peak everything includes population growth. The money system, powered as it is by compound interest and double entry bookkeeping (credit money ‘disappears’ when repaid requiring constant and growing new debt), is a Ponzi scheme, especially as it is a kind of partner to corporate growth, a legal requirement of the corporation. We could also argue that civilisation is a Ponzi scheme in that it appears to collapse when it isn’t growing. It grows and grows, can’t stop, overextends, destroys its supporting environment, then collapses.

    Thus the End of Growth means the need for a new economics in which there are no more ‘jobs’ as we currently have them, where work and pleasure blur, where there is a guaranteed income, where abundance is the watchword (alongside thrift and environmental concern, a neat but not impossible trick to pull off), and of course a new money system, a new education system, and much else besides. Because this means upending virtually all vested interests, it’s unlikely to be happening any time soon. If history is anything to go by, it will take collapse to even give us the chance of building something truly new. Though even then the more probable outcome will be either a drastic reduction of human population followed by the slow rebuild of what we had before (more or less).

    1. Malmo

      That was depressing. But I think you’re probably correct in you assessment. I don’t think 7 billion people will ever “freely choose” the sustainable path going forward. It’s going to most likely be an ugly and collective race to the bottom for all nations. Honestly, how could any thinking person, given all the converging catostrophes, not be a pessimist? Still, I just can’t bring myself to throw in the towel:


      1. Saddam Smith

        Apologies. No intention to depress, but durable optimism needs to deal with the situation as is. Expect the best, prepare for the worst. That sort of thing…

    2. nonclassical

      ..overpopulation is new rightwing mantra to change the subject from their own
      empowerment of Wall $treet economic destruction..when they can’t get away with scapegoating VICTIMS, they go for distraction based on even that which they attempt to condemn-science-environmental destruction…

      an area already accepted by their opposition as reality…think tank heaven…

      1. Saddam Smith

        Various experts have wildly different ideas about how many humans planet earth can sustainably host. But carrying capacity is not why I mentioned peak population. Population growth slows as women become freer to choose and as affluence spreads (I suspect both have to be true, but that the former is more significant than the latter). And I think there might be left wing fanatics who also believe the planet’s human population is due a dramatic reduction. There are certainly primitivists who believe so. Personally, I don’t bother with the details of that particular debate because there are more pressing issues, but carrying capacity is something we need to understand. All civilizations fail and overreach appears to be the primary cause. Because Western Civilization is global, its collapse threatens to take down much else with it, so we are almost obliged to wise up. Whether or not we do is another matter entirely.

        But I agree. Nowadays it’s hard to trust any information at all there’s so much disinformation and agenda ‘out there’. I agree with another commenter on this thread who says further analysis of the cancer is unhelpful (though proper understanding of its causes is essential). It is alternatives rooted in a good understanding of the causes of the current quagmire we need to be examining. There are many to consider.

    1. Nathanael


      The obscenely rich need to have their money taxed away from them. If you do that, capitalism starts working again.

  9. Andrea

    GDP per capita has been sinking for a long time in the US, see e.g. link 1, Gordon, PDF. (Interesting for other reasons as well.)

    In a way what we see now is compensatory mechanisms coming to their end or slowly failing.

    These were: outsourcing abroad for cheaper labor and laxer laws — taking on more debt (private and public) — liberalizing and privatizing, generally freeing regs and restrictions — dropping or postponing investments of all kinds (health, education, infrastructure, transport, innovation, research, etc.) The causes of all this are another topic: energy, socio-politics, etc. The effects: less jobs, and indirectly, lower wages.

    I don’t buy the demographic argument. (As Yves throws up..) The trend in the charts exists, sure.

    But the labor force participation in the US is low (link 2, BLS.) Too low, and sinking inexorably, both as viewed from the outside, or as is evident from inside > ppl scrambling for jobs. At 63% it is abysmal. (The black economy in the US is negligible to small.) Countries like Switzerland have a rate of over 80% with the non-working being home parents or other family care-taking or some just taking a break plus a small % of the chronically unemployed (1.5%?)

    If the population of working age shrinks with more dependents hanging about, indeed the picture changes, provided that the working age ppl are …well… working! Note the number of dependents is not only, in RL, age defined, but rests on various socio-economic conditions. Nothing stops a 15 year-old from earning part of his keep, or a 67 year-old continuing loved work or opening up a small business…provided the jobs and opportunities are there.



  10. charis

    How should the US-economy “recover” as long as the numbers of food aid recievers grow;How should be anyone be able to “contribute” to the economy (by tax or consuming) while he is not able to feed himself:

    One question to my friends in the US..is this number true;Over 100 million;


    This would be the biggest “panem et circenses” party in mankinds history.Even Nero would get green by envy.

    1. Spring Texan

      Well lots of workers get food stamps — because THEY DON’T EARN ENOUGH. Raise wages and then this situation will be improved.

  11. susan the other

    I think the “1%” already understand the no-growth future. We don’t have any time left to do anything but mitigate global warming and all our toxics, like Fukushima. So time is another factor. We have no population growth; no manufacturing growth; and no time left. So we have no potential for profit, so we have no capital. We can’t expect to resurrect demand. But there is no reason why we cannot produce what we need. Take what is left of the world we knew; distribute it fairly and pitch in to clean it up. In order to do that interest on debt will have to be made illegal. And existing debt either forgiven or extended infinitely. That will be a better world. No more frantic derivative deals designed to be the ultimate escape vehicle for the banksters.

    1. nonclassical

      …Wall $treet’s debt has been “forgiven”=QE 1,2,3=$80 billion per month from FED buybacks of their own fomented “toxic securities” and MBS..

      again, originally, mortgages were supposed to be attended to, in bailouts-which is how legislators largely were influenced to vote for…before bush-paulson bait and switch, documented here:


      A Reverse Holdup

      “The intention of Congress when it passed the bailout bill could not have been more clear. The purpose was to buy up defective mortgage-backed securities and other “toxic assets” through the Troubled Asset Relief Program, better known as tarp. But the bill was in fact broad enough to give the Treasury secretary the authority to do whatever he deemed necessary to deal with the financial crisis. If tarp had been a credit card, it would have been called Carte Blanche. That authority was all Paulson needed to switch gears, within a matter of days, and change the entire thrust of the program from buying bad assets to buying stock in banks.”

    2. susan the other

      Just thinking about that glut of mansions, yachts, ferraris, and penthouses hitting the market all at once. The 1%’s version of the housing crash. The government will have to step in like the new Wall Street and do some bundled securitizations of all this bling, and issue T-bills. The stuff can eventually be sold or given to various enterprises, from public transportation companies, to housing authorities, to junk and parts dealers and recyclers. Eminent domain.

    3. Nathanael

      “I think the “1%” already understand the no-growth future”

      They don’t. I mean, sure, some like Al Gore might, but on the whole *they just don’t understand it*.

      They got rich by luck and/or a specialized type of cunning. They are *NOT*, on the whole, wise or thoughtful people. Most of them do not understand a great number of obvious things.

        1. Bapoy

          So corporations are some mystical diabolical creatures that exist to extort purchasing power from the population. But wait, a shoemaker can produce by himself – and he is representative of a corporation. If he gets enough demand, he can hire another person, which would not sell his labor unless the pay is more beneficial than if he did not work. Is the shoemaker paying more than the government handouts?

          Or perhaps corporations are just creatures that only survive due to those same people. Perhaps they also live in a system (fiat??) which by design pulls demand forward (is that not what credit/debt systems do). And that when the crapper hits the fan, the government will try to prop up prices, because if they fall it destabilizes the government’s ability to borrow and survive intact. But leaving prices high requires destroying purchasing power, as it has. And was it not your government that, by force on a cold December day in Jekyll island, established the system while the populous were busy enjoying Christmas.

          The government is the root of the issue, and if you look close enough in the mirror, you may be lucky to see someone you know very well. What we need is awaken individuals.

          1. skippy

            Corporations are no different to the temples of antiquity… rent extractors.

            skippy… btw purchasing power is a bull shite quasi religious nomenclature to befuddle the rubes.

            1. Bapoy

              Rent extractors that provide housing…. What do free loaders provide?

              Work is not a difficult word to say or spell.

  12. TomDority

    The entire financial system can be rectified through the incremental increase in taxes upon private and corporate incomes derived from rentier activities. Since wealth is created by labor and real capital – producing real goods – then that should be incremental de-taxed.
    At some point, land tax should be introduced (the only reason land has value is that people give it value) and that revenue used to provide services etc. Meanwhile, the portion that was built upon the land should be un-taxed…..key word built (requiring labor to produce wealth)
    Tax (noun)
    1. sum of money paid to a government
    2. burdensome duty
    (transitive verb)
    1. to impose a tax
    2. to burden
    3. to accuse
    Tax (burden) those activities that are destructive to the economy and, unburden wealth creation.

    Neo-classical economics set out, and succeeded to destroy the vocabulary and distinction between land and capital.

    enter JOHN B. CLARK” by erasing the classical distinction of land and capital. His method was to endow capital with a Platonic essence, a deathless soul transcending and surviving its material carcass. Some characterize Clark’s concept as “jelly capital”, some as “plastic,” some as “putty,” but those concrete images rather trivialize the abstract, even spiritual element, and the power of mystical traditions he
    could marshal to support it. There was an element of reincarnation, evoking Hinduism, transcendentalism, and Rosicrucianism. Clark even uses “transmutation,” evoking alchemy. Capital was an immaterial essence, a
    spiritual thing, that flowed from object to object.
    There is nothing inherently mystical about noting that capital turns over: every storekeeper and banker experiences that routinely. A remarkable quality of Clark’s capital, however, is that it can ooze (“transmigrate,” in
    Clark-ese) into land, becoming land itself. That is the only apparent reason for the mysticism, smoke and mirrors.
    Clark’s capital being deathless it is just like land, and theorists after Clark have made land just another kind of machine. The economic world was thenceforth divided into just two elements, labor and capital. “…that
    destroys the equality of capital to accumulated savings, and dismisses all Ricardian and Malthusian problems in one fell swoop” (Tobin, 1985). He might have added, it dismisses all Georgist, conservationist, spatial, temporal and environmental questions. It put blinkers on economic theorists which they wear to this day.”

    “Land values are the product of demand for location; they are marked by continuity in space.”

    “In the process of succeeding, however, they emasculated the discipline,impoverished economic thought, muddled the minds of countless students,rationalized free-riding by landowners, took dignity from labor, rationalized
    chronic unemployment, hobbled us with today’s counterproductive tax tangle, marginalized the obvious alternative system of public finance, shattered our sense of community, subverted a rising economic democracy
    for the benefit of rent-takers, and led us into becoming an increasingly nasty and dangerously divided plutocracy.”

    “Once a paradigm is well-ensconced it becomes a power in itself, a set of reflexes to sort the true and false. Any exception spoils the web of interpretation through which art seeks to make human experience intelligible.”

    “To date,
    capital theory in the Clark tradition has provided the basis for virtually all empirical work on wealth and income” (Dewey, 1987: 429; cf Tobin, 1985)”

    Neo-classical economics uses – “”TANSTAAFL” (There Ain’t No Such Thing As A Free Lunch) is the slogan and shibboleth. Whatever you want, you must give up something good. As an overtone there is even a hint that what one person gains he must take from another. The theory of gains from trade has it otherwise, but that is a heritage from the older classical economists.”

    “Here are some dismal dilemmas that neo-classicals pose for us today. For efficiency we must sacrifice equity;
    to attract business we must lower taxes so much as to shut the libraries and starve the schools; to prevent inflation we must keep an army of unfortunates unemployed; to make jobs we must chew up land and pollute the world; to
    motivate workers we must have unequal wealth; to raise productivity we must fire people; and so on.”

    Of course the politicians follow the neo-classical “They scolded the public, and they called for sacrifices, as leaders always do when they lack ideas.”

    “An army of neo-classicalists preach dourly that we
    must sacrifice equity and social justice on the altar of “efficiency”. They need that thought to stifle the demand for social justice that runs like a thread through The Bible, The Koran and other great religious works.”

    Neo-classical Economics as a Stratagem
    against Henry George
    Mason Gaffney

    No- doubt – read the whole thing

    1. nonclassical

      “Here are some dismal dilemmas that neo-classicals pose for us today. For efficiency we must sacrifice equity;

      (publicly financed infrastructure, for example-to be “Shock Doctrine-Rise of Disaster Capitalism”) sold off to private profiteers, just as Milton Friedman “Chicago Boys” perpetrated all over South-Central America, 70’s-80’s, all documented here-Perkins’, “Confessions of An Economic Hit Man”:

      http://www.thriftbooks.com/viewdetails.aspx?isbn=1576753018 ($3.97 free delivery)

      “John Perkins started and stopped writing Confessions of an Economic Hit Man four times over 20 years. He says he was threatened and bribed in an effort to kill the project, but after 9/11 he finally decided to go through with this expose of his former professional life. Perkins, a former chief economist at Boston strategic-consulting firm Chas. T. Main, says he was an “economic hit man” for 10 years, helping U.S. intelligence agencies and multinationals cajole and blackmail foreign leaders into serving U.S. foreign policy and awarding lucrative contracts to American business. “Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars,” Perkins writes. Confessions of an Economic Hit Man is an extraordinary and gripping tale of intrigue and dark machinations. Think John Le Carré, except it’s a true story.
      Perkins writes that his economic projections cooked the books Enron-style to convince foreign governments to accept billions of dollars of loans from the World Bank and other institutions to build dams, airports, electric grids, and other infrastructure he knew they couldn’t afford. The loans were given on condition that construction and engineering contracts went to U.S. companies. Often, the money would simply be transferred from one bank account in Washington, D.C., to another one in New York or San Francisco. The deals were smoothed over with bribes for foreign officials, but it was the taxpayers in the foreign countries who had to pay back the loans. When their governments couldn’t do so, as was often the case, the U.S. or its henchmen at the World Bank or International Monetary Fund would step in and essentially place the country in trusteeship, dictating everything from its spending budget to security agreements and even its United Nations votes. It was, Perkins writes, a clever way for the U.S. to expand its “empire” at the expense of Third World citizens.”

      (AFTER 911..intrinsic history, in “Disaster Capitalism”)

  13. nonclassical

    ..and here’s penetrating analysis of 911, by intelligence documenter extraordinaire, Paul Thompson, who was enlisted by “families of 911 victims” to
    aide their generation of 911 commission-testimony-inquiry, which is nowhere now to be found-least of all, in official “911 Commission Report”:


    “Thompson’s 9/11 timeline has long been the indispensable resource for those doing serious research into 9/11. But it has also served as an excellent introduction into problems with the official story. It does this simply by showing discrepancies between this story and hundreds of stories in the mainstream press (to which Thompson restricts himself). My own work on the subject began, for example, by studying the material provided by Thompson, and this material has remained my primary resource.

    It is great that this magnificent labor of love–love for the truth–is now available in book form, so that it is far more widely accessible. The Terror Timeline, furthermore, is not simply the material that was previously available on the Internet. Rather, Thompson made many last-minute additions, responding in particular to reports by the 9/11 Commission.

    One can never know, of course, what the effect of a book will be. But my guess is that if people begin reading The 9/11 Commission Report in conjunction with Thompson’s book, the Report will start getting fewer 5-star and far more 1-star reviews.”

    David Ray Griffin, author of The New Pearl Harbor: Disturbing Questions about the Bush Administration and 9/11

  14. clarence swinney

    How many Americans comprehend how the top 1% of wealth is buying up America.
    Art Pope millions are buying North Carolina education system And voting machines?
    Possible? Voting machines. How could it happen? I voted a straight D ticket but on my review all came up R.
    How Else did R take total control of North Carolina for the first time since 1896,

    1. nonclassical

      Clarence-and here’s the TRUE story on Cheney’s “computer programmer”, who threw Ohio (vote shunting), 2004:

      Michael Louis Connell (November 30, 1963 – December 19, 2008) was a high-level Republican consultant who was subpoenaed in a case regarding alleged tampering with the 2004 U.S. Presidential election and a case involving thousands of missing emails pertaining to the political firing of U.S. Attorneys. Connell was killed when the plane he was flying crashed on December 19, 2008







  15. Walter Map

    This is way more complicated than it needs to be. Besides, the posting is an analysis of the symptoms, rather than a diagnosis of the disease.

    Let me simplify it for you: the U.S. economy hasn’t recovered, isn’t recovering, and won’t recover because the favored few at the top are extracting wealth faster than the U.S. economy can produce it. The same way the sink won’t fill up if you open the faucet but leave the drain open.

    But in point of fact the economy has recovered – but only for that favored few at the top. And that’s all that matters, because policy dictates that the U.S. economy functions exclusively for their benefit, and that the whole purpose for having an economy at all is for the general population to produce wealth for the top 0.001% to extract. Members of the general population are by policy not entitled to profit from their own labor: only the wealthy are so entitled.

    Also as a matter of policy the general population is not entitled to so much as subsistence pay. This is why the minimum wage is only half what it reasonably should be – just enough to enable the worker to keep working and keep enriching the wealthy, and no more.

    I predicted in 2006 that the U.S. economy go into recession and would never recover for this very reason. It’s getting systematically liquidated. It’s getting cash-cowed for profit optimization – with minimal reinvestment, to maximize wealth extraction. Economic ‘recovery’ for the masses is not an objective. Long-term sustainability is not an objective. Education and infrastructure maintenance are not objectives, because you don’t increase investment in that which is nearing the end of it’s market cycle, you reduce it to maximize the extraction of whatever is left.

    No, the objective is to create large collections of ones and zeroes in accounts in Monaco and the Caymans as efficiently as possible and to export production to low-cost labor markets. Jobs are Amerika’s biggest export.

    The rich will continue to pillage the planet until there is nothing left to steal.

    Nothing personal. It’s just business.

    The plunder will stop
    when the fish are gone.

  16. Hugh

    “Why the US economy won’t fully recover,” where does “fully” even enter into it? Isn’t this like saying someone with stage 4 lung cancer won’t fully recover?

    As has been pointed out over and over again, all the gains of our so-called recovery and more have gone to the 1%. This means for most Americans there has been no recovery. They are still in recession, and if anything their situation has gotten worse.

    If workers shared in productivity gains and we did not live in a kleptocracy, dependency ratios would become totally irrelevant. But as we do live in a kleptocracy, they provide a convenient red flag to wave in efforts to gut programs like Social Security.

    Also as I pointed out yesterday, average hourly wages are not as good an indicator as average weekly wages (hourly wages X hours worked per week). This is not so big a deal going back a few years because hours have not changed much in the last couple of years, but it becomes more noticeable when we go back say to 2000 forward.

  17. Alexa

    Economists Burkhauser and Larrimore don’t need to be too concerned about a dearth of “Boomers” [or mature workers] in the workforce over the next decade.

    No siree Bob!

    Once this Administration (and/or the next one) passes and implements all of the cuts to Social Security and Medicare that are called for in the Fiscal Commission’s proposal, “The Moment Of Truth,” many millions of seniors will either be thrust back into the workforce, or forced to come out of retirement.

    The gouging of Medicare premiums for those seniors who carry a decent Medigap policy is absolutely unconscionable, IMO.

    Oh, and let’s not forget that the Dems and the Administration are strongly considering raising the Medicare eligibility age.

    Which would be just one more policy angled at preventing seniors who work in menial, back breaking, and low paying jobs, from being able to take an early retirement (age 62).

    It is also these same lower income Americans who often, at much sacrifice, carry more comprehensive Medigap coverage in order to mitigate the fact that they can’t come up with the Medicare deductibles and co-pays.

    I know that I’ll be watching to see which Dems cast a vote for the “Medicare premium surcharge.”. Tim Geithner testified before Congress that the Administration would “hold off” until they saw if the SCOTUS upheld the law.

    Either way–Bowles and Simpson’s proposal, if enacted, will very likely sharply reduce “early age” (age 62) retirements among “working class” Americans.

    From what I can decipher, this is likely the main reason for the proposed (deep) cuts to Social Security.

  18. Romeo Fayette

    Van Olensen is [lazily] settling for the easiest available data to support his case. He shows “real median wages” (via WSJ), but real median income is more significant. In addition, “workers per dependent” is a poor way to represent population ageing.

    I prefer this more holistic analysis: http://thebuttonwoodtree.wordpress.com/2013/08/19/unintended-consequences-of-qezirp-will-a-capex-deficit-lead-to-the-next-crisis/

    For a number of reasons, I’m also surprised Yves would let this go un-roasted: “the researchers argue, relatively high-earning whites are over time being replaced by minority workers, especially Hispanics, who tend to make less money.”

  19. Tom

    I don’t see the factors that are supposed to ameliorate the rise in the dependency ratio. The average age of youths entering the workforce is getting later, not earlier. The number of people who choose to continue working beyond retirement age is a small fraction of those who don’t.

    Boomer retirement really started just last year. TThe number of people who hit 65 in 2012 was up more than a third over 2011. That was the echo of the end of the war. There was surprisingly little reporting on it. The pace will likely accelerate another 20% between now and 2025. Meanwhile people are also living longer.

    The problem for the economy isn’t the loss of working-age population growth. Accelerating retirement is actually helping bring down unemployment, by opening up more positions and taking more of the long-term unemployed out of the labor force.

    The problem is that retired people spend less in the private sector while consuming more public sector resources. That will restrain private demand and squeeze non-retirement-related public spending. It’s going to be a very serious restraint on long-term growth of just about everything except medical.

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