Grantham: ‘Twas capitalism that killed capitalism

From the always essential Jeremy Grantham’s latest note:

An extraordinary, large exit poll run by Reuters/Ipsos in which 45,000 people participated took place in the early evening on election day in the US. To say this was a detailed poll is an understatement. The spreadsheet for each question in small print runs the length of a generous dining room table, 11 feet! It will tell you how the American Hindu sample of 172 voted. The poll’s early results of 9,0002 inputs also revealed on the night before the election, when the bookies’ odds 3 against Trump were 5 to 1, that the odds were wrong. The critical statement polled, in my opinion, was this: “America needs a strong leader to take the country back from the rich and powerful.”

From my perspective, the pushback against the rich and powerful for several decades has been very unexpectedly wimpy. “Occupy Wall Street” aside, the average voter had sat still for a series of major tax cuts for the higher tax brackets and on capital – capital gains and dividends. The lowerincome workers had paid the cost of outsourcing and labor-saving technology but had received no material help, while corporations and corporate officers and owners were the beneficiaries. In fact, money spent on worker training and education declined relative to foreign competitors. This shows up clearly in declining educational standards where today the US global rank is, to be friendly, mediocre. Most scarily in this regard, the average Chinese 20-year-old now ranks 2 full years ahead of his American counterpart in math proficiency! So, all in all, we can say that global forces pushed wages down and politics pushed them deliberately lower. The combined result is shown in Exhibit 1: The share of GDP going to labor hit historical lows as recently as 2014 and the share going to corporate profits hit a simultaneous high. Similarly, Exhibit 2 shows that the share of all income going to the top 0.1% rose well beyond any previous record and approached 100% of all the recovery in total income since the lows of 2009!

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The “rich and powerful” not only increased their share of income and capital at an unprecedented rate in recent decades, but they also increased their grip on politics through a rising tide of political spending, including lobbying and the new Super PACs, courtesy of the Supreme Court’s ruling in Citizens United. Even before this ruling, Princeton University Professors Gilens and Page had reported4 on the complete lack of influence that voter opinion had on the probabilities of any bill passing through Congress. If favored by the public the average 31% chance of passing rose to a dizzying 32%. If not favored, it fell to 30%, justifying the nickname given to the influence of the average citizen: “Gilens’ Flatline.” When favored by the richest 10%, bills passed at a 65% rate – there is inertia after all. But when opposed by the wealthier and supported by inertia, the passing rate was essentially nil. Those hoping that there is any life at all left in representative democracy have to hope that some critics of this work are right when they claim that the data is complicated to sort out and the conclusions may be overstated. Anecdotal evidence on such issues as the minimum wage and gun laws, though, suggests that majority opinion is, shall we say, easily offset. Scarily, Gilens’ work does not include the post Citizens United data on political spending that is shown in Exhibit 3. I could not resist throwing in political contributions from unions, which are often cited by right-wingers as somehow balancing the books. And once upon a time they did. But, as unions have been severely weakened by the same combination of global forces and politics previously described, political contributions from unions have become a rounding error, offsettable by a mere handful or less of billionaires.

2

The Citizens United ruling reminds me of what a good ally of the “rich and powerful” and corporatism the Supreme Court’s majority has recently been, particularly in its strange assumption that corporations are human and deserve the same constitutional protections as we humans. It turns out, though, that humans are quite often cooperative and altruistic for no apparent self-advantage. Corporations, tied as they are these days to the single-minded goal of profit maximizing, seem to be close to saying that altruism, or the common good, when it compromises profitability, is a dereliction of their duty. In a human this would be considered pathological. (I wonder what the Founding Fathers would really have thought of this odd idea of corporate humanity. Or the equally odd idea that unlimited spending by corporations on elections is the moral equivalent of free speech.)

It is data like this that has led me over the last 10 years to believe that this country does indeed need to be saved from “the rich and powerful”; to believe that corporate interests were coming to dominate the public good; to believe that when in conflict corporations would, perhaps under the usual career risk pressure we all know so well, choose short-term profit maximizing over the well-being of workers. Nowhere was this better demonstrated than in their dispensing with the jewel in the crown of the old social contract, the defined benefit plan. This was done on the stated grounds of unaffordability even as corporate profits hit unprecedented high levels of GDP. Pensions that guaranteed a share of final salary were always going to be expensive and in hindsight we should perhaps consider it remarkable that it was ever voluntarily done at all…a testimonial to the old days when labor, cities, and countries of origin were also considered to be stakeholders of corporations. Worse yet, when deciding between their grandchildren’s well-being in a climate-controlled world or maximizing profits in a climatedamaging world, so far at least, they have collectively chosen short-term profits. In fact, the erosion of democracy began in earnest in the mid 70s when Senator Lawton Chiles (D. Florida) began his successful crusade to shine light in the dark places of government. His “Government in the Sunshine” legislation opened the door to vastly more effective lobbying by those with the means to pay, because the spotlight his legislation cast on government work, such as Committee mark-ups of Congressional bills, enabled lobbyists to pay fully only for loyalty they could actually observe.

The data on rising inequality also led me to check what others had thought and written on this issue and made me realize that a self-destructive streak in capitalism had been well-noted in the past. A particular surprise to me was Schumpeter – he of “creative destruction fame” – who believed capitalism in its current form would eventually fail through overreaching, using its increasing power to dispense with regulations designed to protect the public good (that has a painful echo today doesn’t it?) until pushback FDR style (or Teddy Roosevelt style) results in a more controlled mix, which Schumpeter called socialism. There was also a suggestion in his work and that of Keynes that excessive corporate power would weaken the demand from ordinary workers and hence weaken the economy. This last point is also emphasized more recently by Mancur Olson, who argued that “Parochial cartels and lobbies tend to accumulate over time until they begin to sap a country’s vitality. A war or some other catastrophe sweeps away the choking undergrowth of pressure groups,” as The Economist rather eloquently summarized his thinking in his obituary of March 1998.

To promote a pushback against excessive corporatism (and elements of oligarchy) one needs first of all to recognize the problem. Given the rather apathetic response from what used to be called “the workers” to the last 30 years of relative slide, there appears to have been no such recognition. But then on the eve of the election I realized that the point had finally been made. For an astonishing 75% of those first 9,000 polled agreed that, yes, we did indeed need to be saved from the rich and powerful. From now on, in my opinion, we live in a different world from the one we grew up in. A world in which a degree of economic struggle between the financial elite, perhaps 10% but more likely 1%, and all the rest is finally recognized. The wimpy phase is probably over. The question now is which path will this struggle take? Will it be a broad societal effort through established political means to move things back to the 1950s to 1960s when a CEO’s pay was 40x his average employee’s pay and not today’s over 300x; when corporations never dreamt of leaving the US merely to save money; when investment banks set the standard (and a very high one) of ethical behavior? Or do we try to do it through the other historically well-used method, and a much more dangerous one – that of resorting to a “strong leader?” Strong leaders work out just fine if we end up with a Marcus Aurelius, the mostly benevolent and wisest of Roman Emperors. But when things go wrong, as they often do, we could more easily end up with Caligula.

As I read the poll on election night, “recapturing the country from the rich and powerful” seemed a long overdue cry from the broad public. The kick in the stomach, however, was the “strong leader” bit. On feeling that kick, a more dynamic betting man than I would have realized how wrong the 5 to 1 odds against Trump were and would have made a big wager on him. He not only would have scored higher on the “strong leader” bit than his rival, but despite his personal wealth, the words “rich and powerful” were much more closely aligned with “establishment” for candidate Clinton, almost a “Ms. Establishment 2016” in the minds of supporters and opponents alike.

I felt the pain from the “strong leader” bit because, like almost all in my age cohort, I am fanatically well-disposed to democracy. We were born, after all, at a time that overlapped the trio of nightmarish, strong leaders of the 1930s and 1940s, Hitler, Mussolini, and Stalin. But I believe this fanaticism has weakened in other age cohorts born less close to these three as they have receded steadily into history. A recent report5 captured this decline: Of those born, as I was, in the 1930s, fully 75% gave a 10 out of 10 for extreme support for democracy. But each younger cohort felt less enthusiastic: 62%, 57%, 50%, and 43% for each younger cohort by decade until by the time we get to those born in the 1970s, the 40-year-olds, extreme support is down to 32%! And this is not the worst of it. The same report listed those who were actually against democracy as a “bad” or “very bad” way to “run this country.” Shockingly, in the period from 1995 to 2011, the percent of each age group agreeing to that proposition doubled. From 5.5% to 12% for those over 65 rising to a frightening 24%, up from 12.5% for the 16- to 24-year-olds.

By this time some readers may be asking for a profile of the 74% of the final 45,000 who voted against the rich and powerful. Who are these people? Well, they are us. All of us. I have never heard of a vote so uniform: whether Republican 72% or Democrat 77%; Male 74% or Female 75%; White 75% or Black 74%; Rich 70% or Poor 79%; Christian 74% or Muslim 72%; Graduates 68% or not 76%; they all agreed. They have all had it with the rich and powerful. And as for me, I don’t blame them. I think capitalism has lost its way. And has badly diluted the value of democracy along the way. We can only hope it is very temporary.

Trump recognized this streak of strong opinion and played to it, clearly stating his intention to look after the forgotten workers. Clinton diffused her message as looking after almost everyone and, I suppose, that includes you workers – as it were. To move the dial in the right direction is very important: Measures of income equality are correlated positively with everything valuable in a cohesive society. Exhibit 4 shows nine of these clear correlations, for which the US shows poorly in all! How far away this is from the widely-held belief that the US is best or nearly best at everything that matters. The way to improve this situation, though, is fortunately straightforward: Increase taxes on capital and on the very rich, perhaps slowly over a number of years, and increase the effort on worker training and education. These actions will by no means be a total cure for long-term job displacement but they would be a great and necessary improvement.

4

The real challenge in promoting less inequality is to increase the share of GDP going to labor. Almost certainly, for any given increase in their share of GDP there must be a decline in the share going to corporate profits. How does the program of the new strong leader stack up on this one? He is surrounded by capitalists and billionaires who, to further advantage corporations and the super rich, are apparently prepared to wage war on the already sadly diminished regulations that defend ordinary people (and, yes, with no regulations corporations would make more money). The war would also include direct tax cuts for the rich and corporations, which would further increase the share of the pie going to corporations. This is a strategy that if successful in the long-run – despite its current market appeal – could not possibly be worse for the workers if he tried. Perhaps they, the workers, will feel betrayed as their share drops in order to further fatten corporations. Perhaps they will be bamboozled enough not to notice the betrayal. For bamboozlement of the working poor has become an art form in the last 30 years, with bamboozlement defined as an ability to persuade people to vote against their own economic interest for one reason or another. For example, 62% of voters do not like the sound of “death tax,” which in the form of estate tax is paid by only 1-2% of American families. An astonishing 35% of those earning less than $10,000 a year do not approve of increasing taxes on the rich. Does it get any richer than that? It has been called the Homer Simpson effect,6 whereby the poor voter reacts negatively to the idea of tax, which like death has little appeal, but does not get the point that a tax decrease for the rich has unpleasant implications for them. But, the gods willing, you probably can’t bamboozle enough of the people enough of the time. And the Reuters/Ipsos poll clearly shows that the worms have turned. The lack of class war or economic war in the US has always been a fiction, but it has been mostly hidden, and deliberately so, by the side so completely winning the undeclared war. Perhaps the 74% vote was indeed a public declaration that the war is now official.

Post Script

The Republican Administration seems to feel that it received a broad mandate and perhaps it did. But my guess is that this poll provides the real mandate that waits to be addressed. And it is a narrow, focused one: Save me, oh leaders, from the rich and powerful! It looks so far as if this point has been largely missed. If it has been, there will likely be powerful and sustained pushback from the poor and not yet quite powerless.

Spot on, as usual.

Comments

  1. No mention in there, of the distinction between the returns to productive capital, versus the returns to “capital” in the form of unproductive zero-sum capital gains on assets, particularly land.

    The ignorance of the great mass of people, likely leading to destructive political choices, is bad enough. But the “experts” like Grantham, and Piketty, and goodness knows who else, all represent the perversity that Henry George lamented over 100 years ago. Financiers and land owners are making a killing, inequality is increasing, and the cry goes up, “get those evil employers of labour”!

    There is a small but increasing number of economists who have correctly identified the problem, mostly in response to Piketty’s mistaken recommendations. In reality, the returns to productive capital have remained static or even fallen, and the last thing we need is further disincentives to investment in it. Productive capital is ultimately the only means by which the pie in which everyone is to share, can be grown.

    “…Trump recognized this streak of strong opinion and played to it, clearly stating his intention to look after the forgotten workers…”

    This is missing the point. Trump gets it, that to look after the forgotten workers, you also need to look after the forgotten industries, not shoot the common interest in the foot by getting all punitive at the wrong class of capitalists. Now Trump may be wrong about the benefits of trade, but he is not against productive capital, which is an encouraging sign. Piketty’s prescriptions made no distinctions and would harm productive capital and in all likelihood do nothing to address the game-rigging devices by which the zero-sum capital gainers, speculators etc are chiselling away at the wealth and income of everyone else. Including the investors in productive capital, the employers of labour, and the risk-taking, value-providing entrepreneur.

    We don’t need special wealth taxes; what really intelligent experts would be recommending are Tobin taxes, land taxes, a change to the ticket-clipping role of the banking sector in monetary expansion, and the abandonment of insane “QE” as the opportunistically preferred (by the powerful) means of “stimulating the economy”.

    Corporate profits retained for investment in productive capital, and even ploughed into stock-in-trade and debtors, should not be taxed at all. This is already over-reach in the wrong direction, the ultimate spite tax, a de facto tax directly on the only means of economic growth. Corporate profits not distributed as income to shareholders, are not even “income” to anyone, and the time to tax “corporate” profits is when they are distributed as income.

    EDIT: oh, and as the economists who have criticised Piketty have generally pointed out, there should be a total ban on urban planning regulation that rations the supply of land for urban growth. There are fiscal approaches that directly target the indicators alleged to be the basis for this kind of planning, that do no harm and do not increase inequality.

    • “We don’t need special wealth taxes; what really intelligent experts would be recommending are Tobin taxes, land taxes, a change to the ticket-clipping role of the banking sector in monetary expansion, and the abandonment of insane “QE” as the opportunistically preferred (by the powerful) means of “stimulating the economy”.”

      Yes, yes, yes. Go after the rents AND encourage the reinvestment of capital into productive means.

    • Great post and insight, thanks Phil.

      Who are some of the economists you mention that are writing about productive capital? I read Martin Armstrong daily. Was planning to start on Piketty’s book soon.

      • Check out evonomics (website), Michael Hudson (economist) and groups like Prosper Australia (tax reform group) and Fair Money Australia (financial reform group).
        They all are promoting change that would, hopefully, decrease inequality while promoting capitalism.
        Even if you don’t end up agreeing with them, their ideas are good grist for the mill of the mind.

      • This is the best work so far on the role of urban land prices in rising inequality:

        http://www.bis.org/publ/work572.pdf

        On the share of returns from productive capital, to the capital owners and labour respectively, I believe the only analysis that has been done is one in French, by Remy Prud’Homme.

        LE PARTAGE DE LA RICHESSE PRODUITE ENTRE TRAVAIL ET CAPITAL ET SON EVOLUTION

        What you need to do, is Google Prud’Homme’s site: Accueil – Site de Rémy Prud’homme

        In the search results, his site is number one: hit “translate this page”.

        With his site now on your screen in English, go to the “Publications” page, and you will find the paper about halfway down. – Prud’homme, Remy. 2010. “The sharing of the wealth produced between labor and capital”. Google translate is good enough that you will at least get the gist.

        I learned some interesting things from Piketty’s book, but was infuriated that he explicitly dismissed, even scoffed at, the very point that I am making. That is, he anticipated the argument that some returns on capital are zero-sum economic rent while others are profits from actual production and sales in competitive markets – and he dismisses any need to bother with the distinction – “just tax wealth, period”, he says. He doesn’t bother to even start on causes for rising zero-sum transfers of economic rent; I encounter many people engaged in deep economic analysis who have this blind spot, it is as if you are born with a certain kind of brain that won’t ever get it.

        The many land tax advocates make good arguments, but I think they over-estimate the potential for land taxes to remedy market distortions that underlie rent-seeking and its magnitude. The evidence suggests that the extent to which land is taxed, reduces the level of rent in it somewhat – but the underlying order of magnitude is determined by the abundance (or not) of land allowed to be changed between uses. Urban growth boundaries, depending on the duration for which they have existed, inflate urban land values “tens of times” within the first property cycle, and after a few decades the factor, over a benchmark, can be in the hundreds. Paul Cheshire and colleagues at the LSE have been analysing the effects of the UK’s 1947 Planning system, for more than 3 decades now. There are clear benchmarks in the USA, from which UK cities diverged shockingly from 1947 onwards.

        Land taxes may have an effect of making the inflation a few percent less, that is all. But strangely, the kind of mind that land tax advocates have, also seems to be mostly blind to the ability of a monopolistic scheme of supply, to completely overwhelm any purely tax-based “remedy”. The obvious remedy is to remove the monopoly.

      • @Mike
        A respectful word of advice: start with Henry Hazlitt’s, Economics in One Lesson. A short and very readable book. Few understand economics like Hazlitt does — and it’s a genuinely good read because he was a journalist and a thus a decent wordsmith. Reading most academic writing is like poking your own eyes out with a sharp stick. Read J.M. Keynes’ General Theory and you’ll see what I mean.

        Neo-classical economists tend to be advocates of either Keynes and/or Friedman, the two people most responsible for dragging modern economics into the realms of eye-popping quackery. Piketty is among those, although he is not alone — the ‘establishment’ is brimming with his kind, which perhaps explains why his book has received such widespread praise. A classic circle jerk, if ever there was.

    • Totally agree Phil.

      Imagine you could build a house anywhere you want, in any way you like. You would have the option of borrowing your 1-3 million bucks from the bank for a house in Sydney, or you could just say no thanks, I’ll hire my own builder, and build my own house on some empty land down at Jervis Bay for 200k. The economic growth would be amazing, as would the lifestyle benefits. The only reason you can’t do this is government regulation.

      Granted you might have some overdevelopment problems in that scenario, but there has to be a happy medium in there somewhere.

      • Re overdevelopment – there have been colossally damaging episodes of overdevelopment under a runaway bubble scenario. Spain in the run-up to 2007 is the obvious modern example. The lazy, ignorant narrative about that, is that the market “must have been too free” and the solution is to ration development more strictly in future.

        But there were massive differences between the process in Spain, and the process in the States of the USA that were impervious to the so-called “US housing bubble”. The process of development in Spain was regulated to the max at every stage; the housing-supply pipeline was estimated to be 7 years long. It is true that the regulators ended up permitting “too much”, but they were fooled, as everyone else was, by the speculative pressures building up. It was assumed that all those apartments being built, were going to be occupied by immigrants from the rest of Europe, there appeared to be insatiable “demand” for them. And of course the “planners” love apartments, don’t they, because they “save the planet”!

        Plus, under these conditions of a supply of land progressively “released” by planners as speculative pressures mounted, local government became greedy about fee income, which became an incentive to permit more.

        Politicians imagining today – eg in NZ – that they are “addressing the housing crisis” by cutting special deals here and there with developers and large landowners to “get housing units built” – while leaving planners growth boundaries in place – are ignorant fools. The prices continue to inflate regardless of the “increased supply”. There is a basic principle of economics involved here. “Free market supply” of a kind that provides competitive pricing as we are familiar with it today, always includes that potential supply is superabundant and accessible to anyone who wants to enter the market as a supplier. Any quota system violates this condition, even if it appears to be a “generous” quota system.

        In fact in housing markets operating under these conditions of price inflation AND oversupply, both driven by speculative frenzy, and quota allocators being tricked by the frenzy, the cycle-end crash is much more severe than in markets like the UK where the planning is so strangulatory that chronic undersupply remains at all times. In fact the cycle-end crash in Spain, can be likened to 1929 in its destructiveness and the aftermath can be likened to the Great Depression.

        It is a shockingly little-understood fact that the severity of busts relates mostly to urban land market volatility, and stocks, shares and financial instruments are relatively insignificant. Again and again in modern history, there has been dire predictions about stock market busts, and yet little effect on the lives of ordinary people. This led economists to become complacent, and none of them understood how the return of urban property market volatility because of planning fads, would reinstate the severity of busts known in 1929 and earlier.

        It is self-evident that the severity prior to 1929 was because “supply of land” for urban growth was non-competitive simply because people lacked the freedom provided by automobiles, to access it. It is the same old story as in the prices of, say, food, in the era of more primitive transport so that markets were only supplied from what could be produced on the land immediately adjacent and transported and stored without spoiling. Household budgets were taken up 50% by basic food needs in that era.

        Back to free-market housing supply and “overdevelopment” – there was an episode of overshoot of supply in Texas in the 1980’s but no price inflation. The already-reasonable prices – median multiple around 3.5 – fell to a median multiple of around 2.5 and the market cleared within months with a bit of earlier household formation and in-migration. Alain Bertaud tells me that in Texas, the necessary fluctuations in housing supply through each cycle are coped with by small tradesmen entering and exiting the industry. When a boom is winding down, the one-man-and-a-pickup truck operators pack up and go back to their joinery, alterations, repairs and maintenance, and whatever else they might do when they are not building new homes. The big operators just keep on churning out product at scale. The “supply chain” in Texas is apparently between 6 and 10 weeks long.

        The 7 years long supply chain in Spain, is the reason that the bust resulted in so many abandoned projects with partly completed development, and not to mention the swathes of land and sites unstarted but already the subject of speculative horse-trading. The bust under these conditions is severe because the prices have a LONG way to fall before ordinary young people can form households and clear the market; often the “housing” is the wrong kind anyway; and there are knock-on effects from a reversal of overemployment in the construction sector that send the whole economy into a tailspin.

        It should really, really bother the experts, that there are cities in Australia where the bubble resembles Spain in the 2000’s.

  2. So the prols elected a billionaire to appoint other billionaires to save them from the system that made them billionaires – that must rate as a special kind of stupid.

    • The special kind of stupid will come when the billionaires convince the proles to kill each other so as to decide which billionaires get to be trillionaires…and the proles agree to start shooting for their masters.

    • The special kind of stupid are the lefties who still don’t get it that Trump/Brexit/Hanson/etc is a revolt against corrupted democracy. Keep on skewing your leftie policies towards minority groups and foreigners, and then wonder why the masses vote the other way.

      • The revolt you refer to is in response to the outcomes produced by neo-liberalism which idealises the unfettered movement of capital and labour across nation-state borders and near total private ownership with only the barest minimum of government, resulting in all manner of social and economic problems which have been getting worse over time.

        When the shit hit the global fan in 2008, many (myself included) thought that it was the death knell of the neo-liberal brand. Dr Mark Bahnisch of Larvatus Prodeo was one of those who disagreed, arguing that no matter how badly the system failed, it would not go away because there was currently no broadly accepted alternative socio-economic narrative for people to turn to. Neo-liberalism’s victory has been so complete that all alternative ideologies have been crushed to dust and swept away. Most people simply can’t imagine anything other than what we have now.

        Bahnisch was right – instead of being replaced, neo-liberalism has rebounded from strength to strength.

        But discontent has been bubbling to the surface across the world and the left have failed to offer themselves as a credible alternative. The Trumps and Hansons of the world are capitalizing on this and more like them will continue to do so.

      • Ok, so you do get it… and I feel the same way btw. i.e. anti-neoliberalism.

        Where we differ is I don’t believe neoliberalism has won. They are just being made to look good for the time being by very inferior alternatives. If Labor were to tell the Greens to f-off, abandon this Third-Way malaki which reinforces globalism both socially and economically, they would win in a landslide.

      • Yes, I do think we are probably around some sort of tipping point now. The winner may be king for a long time but is always eventually de-throned. It might take some time for it to become apparent in a really major way, maybe another decade or longer. Or perhaps it will be sooner. Neo-liberalism is on it’s way out I think, how quickly I don’t know. As an alternative, the left are nowhere to be seen and the nationalistic right are gladly filling the void.

        My concerns are the possibility of the backlash empowering outright fascism.

      • My concerns are the possibility of the backlash empowering outright fascism.

        And they are well founded. Just look at the number of people praising Trump because “he’s a successful businessman”.

        It is hard to see a corporate figurehead running Government like a business as anything but the ultimate triumph of neoliberalism.

      • Yes, Trump represents the possibility of “out of the frying pan, into the fire risk” I think.

        Essentially, Trump has brought the ethical standards of Wall Street – ie, none – to the leadership of the nation. As you allude to, he does not (unsurprisingly) seem to see any great difference between being the CEO of a corporation and being the president of a democratic(?) republic. A nation rises and falls with the quality of it’s leaders – in the first month of the new administration we have seen conflict of interest, abuse of presidential power, cronyism, nepotism and scandal. These things may be of little relevance on Wall Street but they matter a lot when you are setting the example as “leader of the free world” (so-called) and bear ultimate responsability for the welfare of countless millions.

        As long as the left remains missing in action, the discontents of neo-liberalism will continue to turn to the nationalistic right around the world.

    • GunnamattaMEMBER

      Maybe no mention but Grantham would know he is talking straight from the Marx playbook.

      For mine what we are going through is pure monopoly capitalism – over accumulation of capital to the point where investable opportunities of any sort are bid up (shares, houses, art anything remotely likely to bring a return), where this leads to epic levels of uneconomic capital misallocation, where the capital owners bend the national decisionmaking processes to support their dubious capital allocations, while the wider economy grinds to a near halt (pockmarked by crises) under the weight of capital misallocation, and eventually the polity can guarantee fewer and fewer of the interests that support it and brought it to power that they will be protected, then the polity breaks snaps collapses or implodes, and a reformist surge washes over the economy (with or without revolution or chaos depending on how events are played by those in power). Read Baran and Sweezy, JK Galbraith et al.

  3. Brett EdgertonMEMBER

    yeah am keeping this and Vimal Gor’s brilliant note (last week?) as keystone articles describing where we stand right now… perhaps for my boys’ financial education when old enough…

    still, impossible to feel pessimistic about the world today – took my eldest son to his first concert last night – The Boss & E Street band… he even played one of my faves – The River – after i yelled out my request… going to be floating on that cloud a while… my poor soon – his concert going career has only just begun but already peaked, and the many to follow will pale in comparison 🙂

    • Brett EdgertonMEMBER

      Was just reflecting on the irony that hearing a great song – even if melancholy – can lift your spirits… Then I started singing “The River” in my mind… Double irony

      “I got a job workin construction, for the Johnstone Company
      But lately there aint been much work, on account of the economy”

      (cue Grantham and Gor)

      “Now all those things that seemed so important, well Mr they just vanished right into the air
      Now I just act like I don’t remember, and Mary acts like she don’t care”

      But Trump does and he’s going to save them…

      Sadly I think Mr Trump and his band of billionaires are going to send them down to the river even though they know the river is dry

      • Was at the Melbourne concert…..Your rendition of The River (sung mentally by me) just sent shivers down my spine. No one connects better with the lyrics than The Boss!
        My favourite, Thunder Road.
        Bruce was even better this year than when he was here three years ago. Again no breaks playing non-stop for two and a half hours at 68 (I think).

  4. You never know, the second amendment may actually get call upon for its intended use one of these days… (just let the reality of that sink in for a moment)

    • I was just about to post: it’s lucky all those so called gun nuts are still armed….

      They might actually be needed to defend their liberty

      Craycray times folks

      • They’re just as likely to defend the people who have robbed them blind.

        Putin’s having a bit of a chuckle at the moment.

  5. “If favored by the public the average 31% chance of passing rose to a dizzying 32%. If not favored, it fell to 30%, justifying the nickname given to the influence of the average citizen: “Gilens’ Flatline.” When favored by the richest 10%, bills passed at a 65% rate.”

    How hypocritical calling this a democracy. No wonder voter turn out so low in the US.

  6. wrt the found fathers..I don’t think they’d have a problem with it. The vote was originally intended for landholders, not ‘everyone’.

  7. The Wall street bailouts are a transfer of wealth from taxpayers, via Washington, to the biggest and most well-connected banks.

    Somehow I don’t see that description anywhere in the definition of capitalism. Its more in line with socialism and cronyism.

      • I think I do know the definition of capitalism and its been around a lot longer than Wall Street and big banks and bailouts.

        Its mutually beneficial and voluntary exchanges between two parties.
        Its property rights, the right to do what you want with your property.
        Its the pursuit of happiness.

        Thats it.