Home > neoclassical economics, Political Economy, The Economics Profession > Unequal austerity and its economics

Unequal austerity and its economics

from Peter Radford

Inequality is much discussed nowadays. Pundits of all political stripes are weighing in on its causes and on its effects. As usual there is no agreement. So, also as usual, I suspect there will be no action.

This is not a new problem, nor is it trivial. The steadily increasing privilege afforded capital – higher profits, dividends, and rents, and the consequent steady erosion of the rewards to work – wages and salaries, have been accumulating beneath the surface for decades. I believe that in the years ahead the emergence of our highly unequal society will be the hallmark of the entire Reaganite era.

I don’t think this problem is as complicated as some people make it out to be. It is a direct consequence of the shift in the dominant economic theory that infuses our decision making across all relevant domains of activity in our economy. It was an intentional consequence. It was not, as Bill Gross tries to make sound, a happy accident of being alive at the right moment. If you’re  capitalist that is. If you’re a regular worker, then tough.

What happened?

Well, back before the shift took place the dominant economic theory guiding decision making was the post-war version of Keynesianism. It seemed to explain things well, and seemed to produce excellent results: the western world bounced back from its wartime trauma and produced a golden age of growth that propelled living standards, wages, and profits all together.

Then it hit a snag. The stagflation of the late 1970′s didn’t fit well within its theoretical structures. Change was due. And, as usual, economists can always be relied upon to have alternative theories ready to roll out. A new theory was available on the shelf, one that offered a different path and one that fitted well with the right wing reaction to that stagnation.

This is the key to unlocking the door to a solution our own problem: it was a change in the political landscape that allowed the switch in economic theories to have an impact. Economics by itself doesn’t much matter. Its theories are simply armament for politicians. Those theories chug along happily with a team of economists ready to proselytize at any opportunity. No one particularity cares about those theories outside of academic economics until one is needed to give intellectual heft to a new political position.

In the case of the great switch back in the late 1970′s the change in politics was the re-emergence of a more activist right wing political temperament and the rise of activist corporate influence in the form of newly established think tanks and the establishment of lobbying in Washington.

This is why Gross is so wrong. The switch was entirely deliberate and manufactured. It wasn’t a happy accident. Big business wanted to break the post-war social contract. Right wingers did too. The alliance they created still forms the basis of what we nowadays call mainstream Republicanism. Back then it wasn’t so mainstream: it had to overthrow the Eisenhower version of Republicanism that to our contemporary eye would look slightly left of center. Eisenhower and Nixon – yes event Nixon – governed along similar lines. They preserved the post-war social contract and were, if anything, biased towards expanding rather than reducing social programs. It was the emergence of Reagan as heir to the right wing, and his ability to sell that right wing tilt as acceptable, that altered the political and cultural landscape, and which then was the channel through which right wing economics was able to do its pernicious work.

Right wing economics being what is commonly called neoclassical and the many variants of Austrian economics, with the neoclassical version in the vanguard. The ideological content of these kinds of economics is manifest: they are designed from the ground up to justify market based solutions to every problem and to reject both the need for, and the efficacy of, government interference in the economy. The key point being that these theories are indifferent to the plight of workers, embolden right wing political attempts to limit government, emphasis supply side considerations, and are easily bent to protect capital.

Hence what became known as “trickle down” economics, where a focus on allowing market based freedom to the few and big business was supposed to have beneficial knock-on effects for everyone else. Remember all the talk about “a rising tide lifting all boats”? Apparently most boats were fixed in the mud.

In the very long run there is no doubt, or ought not to be, that a decentralized economy produces better results than a centralized one. It can adapt better. It can innovate better. And it can thus grow better. What it cannot do, necessarily, is to allocate better. Yet, and this is the truly pernicious nature of modern orthodox economics, it is precisely it allocative power that modern theory lauds.

Why is this?

If you are trying to build an ideological defense of a particular worldview – in this case that markets ought to be left alone to get on with it – it is prudent to defend its weakest points mostly actively. This is the brilliance of neoclassical economics. Its entire edifice is built around ideas that make it appear as if markets will always outperform alternatives in the allocation of society’s resources. It does this by inventing and deploying specialized uses for common concepts like “efficiency”, and then restricting the set of assumptions used in the theory to ensure that it achieves its goals. Outside of academia most people don’t realize the extraordinary effort needed to distort the real world into conformance with neoclassical theory, they simply accept that, somehow, economists have “proved” the superiority of markets. They accept economics as being a sort of science, and that it has intellectual sincerity or objectivity.

It may be sincere, but it isn’t objective. It is the handmaiden of capital. Which is odd when you reflect on its emphasis on market magic. So severe are the lengths it has to go to retain its internal consistency, logic, and so on that it is a strange bedfellow for big business.  Modern corporations are the living epitome of centralized economies with their top down decision making processes, tightly constrained internal resource allocations, and defiance of outsider or shareholder influence.  Yet the executives of these cop rations prattle on in public about the huge benefits of markets, apparently unaware of the irony that markets – in the sense economists talk of them – are supposed to make their corporations unnecessary or at least minimally profitable.

Not that they care about the economics. What they care most deeply about is the politics. Which is a politics that looks at every problem through a lens that privileges capital at the expense of labor. To pile on further irony: that most large corporations have short lives – measured ind evades rather than centuries – is precisely because they are centralized and suffer from all the issues that centralization brings. Notably a poor record in adaptation.

So hegemonic, though, has right wing economics become, and so successful was the rightward shift in our political landscape, that all discussions about our current problems are conducted through that self-same lens. Take the deficit and the national debt. They are treated almost axiomatically as being problems to be solved only in one direction: made smaller. That this will hurt millions of people and diminish their futures drastically is never mentioned. Or, if it is, any comment about their plight is accompanied by a severe statement about the need for sacrifice. So the people who have been clobbered the most by the failure of right wing economics are being asked to sacrifice in order to shore up its protection for those who were not clobbered at all.

Which returns me to the beginning.

If our current policies, based on right wing economics  as they are, are asking the neediest to make the largest sacrifices, then they will make inequality worse not better. Indeed practically all austerity policies have the largest impact on those who rely on the government as a defense against the predation of the market. This is despite the fact that our crisis began as a failure of the market not a failure of the government. We are correcting the wrong thing.

But before we can fix inequality we mist fix our politics, and only then choose a new economic theory.  There’s plenty of economics waiting to be deployed to help. There always is.

  1. Lyonwiss
    November 7, 2013 at 12:15 pm

    The word “inequality” lacks intellectual precision, because equality may be neither possible nor desirable. Without going into a long philosophical discourse on the distinction, equity or fairness is much more reasonable and achievable.

    One could assume that extreme inequality would imply inequity. Normatively, the society should consider at what level of income inequality is the inequity intolerable. Economists should determine what level of income inequality may lead to inadequate aggregate demand or economic inefficiency according to Keynes.

    • Philip
      November 7, 2013 at 10:53 pm

      “Normatively, the society should consider at what level of income inequality is the inequity intolerable.” Wherever that line is we’re a helluva long way past it. So far past it that debating its precise location is rather absurd.

    • Vilhelmo
      November 8, 2013 at 2:28 am

      I think it relates to the issue of remuneration.
      What principles & norms of remuneration should a society adopt?

      It is a question of moral judgement.

      Do we deem all gains equally legitimate however they may have been got.
      That you get whatever you can take.
      Those who do share the values of Feudalism.

      Or do we distinguish between earned & unearned income, between those gains derived from work & those derived from privilege?
      Do we espouse the values of Capitalism against those of the Rentier. Do we seek not only to defeat but to euthanize the Rentier?

      The ideal that I espouse is that people should be remunerated according to effort & sacrifice, by work, not by privilege.

  2. Podargus
    November 7, 2013 at 7:35 pm

    And to fix your politics you must first remove big money from your political processes,particularly the election process.

    The government should fund dissemination of the various policies and bios of candidates,nothing else.No massive TV and other media campaigns.
    Candidates can get out on the streets and public halls and push their barrows if they are so inclined.

    Succeed in that and you have made a good start to fixing your politics.

  3. Jeff Z
    November 7, 2013 at 11:19 pm

    Fairness, inequality, equity – not interchangeable terms by any stretch, and ALL lacking intellectual precision.

    If I make incomes equal, then I MUST live with inequalities elsewhere. These may be inequitable or unjust, just as equality of income might be. Inequalities of income and wealth certainly seem to be a basis for the lack of real equality BEFORE THE LAW, particularly here in the U.S.

    Economic efficiency is not an independent yardstick. You must ask efficient for what? Lyonwiss is very clear that the relevant yardstick for Lyonwiss is aggregate demand or some measure of efficiency according to Keynes. Such efficiency may not capture all the relevant factors we may want to discuss – since we could say that an equitable distribution of income and wealth somehow defined is one of the things we want to achieve.

    A strict reading of the idea of efficiency as put forth in the neoclassical first and second theorems of welfare economics is compatible with many distributions of income – some equal, some not.

    In other words, the idea of efficiency may lack a bit of precision itself, when used outside the physical sciences.

  4. charlie
    November 7, 2013 at 11:31 pm

    the fact is that fairly quickly the shift in equity began to emerge as capital and therefore those who have the means to accumulate wealth diverged from the working, majority population. It is near nonsense or at least quibbling over words that have imprecise meaning when the data clearly show what has been happening for 30 years. The word inequality does not lack precision, the data clearly show that is what has happened.

    • Lyonwiss
      November 8, 2013 at 7:06 am

      Inequality is a fact (mostly quantifiable) which is not in doubt. The lack of intellectual precision refers to the statement of inequality as an economic or even a moral problem.

      Unequal pay is a fact of life. The CEO of a company or the head of a government department will never have equal pay as their subordinates (in reality, such inequality exists even in communist countries).

      Most people would not consider as inequitable if a CEO of an organization earns 10 times the average salary of its employees. But inequity would probably be considered evident if that ratio goes to 1,000 times or higher. The problem is to determine when inequality becomes inequity and needs to be addressed.

      “All men are created equal” refers only to justice and politics, and not to economics, because there will always be economic inequality in the sense discussed. The problem is not inequality, but inequity.

  5. November 8, 2013 at 10:23 am

    Peter, I do not trivialize the problems of people who lack sufficient resources to care for themselves. But the basic thing you’re talking about here, whether with precision or not are that some people and groups of people have more resources (money, property, tools, opportunity, etc.) than other people and groups of people. That’s not a new thing. It’s been happening for thousands of years. Hundreds of wars, rebellions, protests, ultimatums, etc. have resulted from same. In other words differences in resources have been a fundamental source of conflict among people for all of recorded history. Peter, you seem to be upset about the current round in that story because you think it results from politicians, businesses, and ideologues using an economic theory you don’t agree with to justify and support it. So what’s new about that? FDR certainly did it; as did LBJ and JFK. Even Lincoln and Washington did it. It is rather sad however that current economics’ greatest claim to fame appears to be as a shill for guys who want to grab ever more control over the political process and allocation of resources. As to how this latest round of the resource wars came about empirically speaking your story is consistent with most research on financialization, industrial policy, and labor policy after 1980.
    If you want to change how professional economic theory and research aids and abets resource allocation then I suggest you do as Greenspan, Laffer, Friedman, etc. did. Develop a theoretical/policy consensus in economics that can be used to aid and abet a redefinition in academics and policy of how resources ought to be allocated and how that allocation should be carried out. Then you can begin the process of signing on sponsors who can fund and shepherd such theories into policy. Be deliberate, manufacture a new economy. I know I make this sound simple when it is anything but. However, as I mentioned already it had been done before.
    I have bones to pick with you on a few other items. First, what scientists do as a scientist is not objective, in the general sense that word is used today. In fact, to be a scientist is to do just the opposite. In order to have a chance (a slime one at that) to see the objects of scientific study in how they exist and act the scientist must engage as passionately and completely as possible. This is why Friedman, Laffer, Galbraith, etc. are not scientists, brilliant as they may be. They choose to attach their passions to a particular theory or view of economics rather than economics itself. It’s also why you will not be a scientist when you construct the edifice you prefer to replace the one they have colluded in building. Second, the view you express of large/top, or whatever you call them corporations is naïve at best. Those who run these corporations have less use and respect for economists and economics than the average undergraduate. Focused on winning they will use economists and economics as they can to achieve that end. But they will also attack and oppose economists and economics if they show any signs of impeding accomplishment of this goal. A few I’ve met take a little broader perspective but not many. And they certainly have little respect or need for markets. Markets make the eventual winner uncertain. To corporations focused on winning a market is anathema. Finally, on government as Thomas Jefferson noted, people usually get the government they deserve. Somewhere along the line the policies you say created our present inequality mess were voted on and approved “by the people.” The people got what they approved.

  6. robert r locke
    November 8, 2013 at 4:26 pm

    “Somewhere along the line the policies you say created our present inequality mess were voted on and approved “by the people.” The people got what they approved.”

    Nonsense, Ken, conservatives in America have done everything to undo democracy throughout our history. It isn’t the democracy that is the problem but a legal and governmental framework that anti-democratic forces (proslavery advocates, opponents of civil liberties, advocates of managerialis, etc.) exploit regularly to deny the people a voice in the country’s future.

    • Ken Zimmerman
      November 8, 2013 at 11:39 pm

      Robert, I don’t want to belabor this point. But did or did not people in every state elect their members of the US House of Representatives and US Senate? Did these same folks not elect Ronald Reagan, George Bushes, Bill Clinton, and Barack Obama to the office of US President? Imperfections, uncertainties, lies, and deception all rolled in the people elected their leaders. And these leaders took us down the path to economic ruin and explosive inequality, so you say. Is that what the people wanted to happen when they voted? Not likely. Would they change their votes if asked today? Some, maybe, but not all. My only point is that the situation today was not imposed on the nation by a cruel Chinese, Russian, German, etc. dictator, or even by a mad American one. We made it. We’ll have to be the ones to change it, assuming you can get enough votes and money to make such changes. You don’t like how things work today and want to change it! Get on with it. The “right wingers” certainly have. To hell with objectivity, honesty, and truth. This world sucks. Time to make a new one!

  7. robert r locke
    November 9, 2013 at 2:43 am

    You’re not so naïve as to think that the institutions in the US don’t block democracy. Just look at the Supreme Court: the Dread Scott decision, striking down Child Labor Laws, etc. get with it and don’t lecture an old-timer about how the us government works. China, Germany, Russia, don’t have anything to do with it. It’s

    • Ken Zimmerman
      November 9, 2013 at 11:14 pm

      Robert, yes it’s American Apple Pie. But those actions you mention were struggled against and eventually changed. I hate to quote clichés but as the bumper stickers put it, “Freedom Isn’t Free.” Human history is a history of domination, dictatorship, monarchy, and slavery. Nor easily changed. But my point remains, for all its flaws and imperfections, Americans did vote into office the persons who set up the economics you say is wrong and is or already had ruined the country (maybe the world). So for me at least the more relevant and interesting question is how and why did Americans choose to vote as they did?

      • robert r locke
        November 10, 2013 at 9:30 am

        No sense continuing, we both understand each other. But in the case of Gore’s lost election, the Americans voted against the winner.

      • November 10, 2013 at 11:12 am

        Thanks for the talks.

  8. davetaylor1
    November 9, 2013 at 11:29 am

    Seems to me you are both missing the point. Had you worked with other people in a factory you might have realised that people don’t just get on and make something, they make something already designed, and they need the design to coordinate what they make by assembling part. The problem is at the design phase, and the science comes before that: not, as Ken suggests, after the object has been made and you can’t see what has been kept out and the crap beneath the styling. Inviting non-scientific crooks to redesign the system and sell their crap to honest non-scientific workers as something good, as Machiavelli did, makes life difficult for scientific redesigners. Workers cannot see, e.g., that the science of thermodynamics, though misleading as an explanation of trade, is as relevant to the current engines of a bus, truck or car (both complicated two-strokes or complex but more intelligible four-strokes) as it is to a steam engine; so which do you want to make? And gas is dirty and running out, so shouldn’t we be making sun-powered electric vehicles?

    (My power cycle analogies are with “supply and demand” vs “family roles” economies, while “i/c or electrics?” suggests the more fundamental issue of whether to continue to interpret money as a carrier of non-shareable (so local and attractive) power, or to make the paradigm shift to see it as carrying freely shareable (because honest) information: understanding of the negative value of freely available credit eliminating any incentive to theive and hoard it).

    The crooks are defending the status quo by confusing the workers in economics: denouncing real science as crap, and selling their crap as science. Most of us have been left with no clear idea of what needs to be done, so we haven’t yet got together for the necessary stages of deciding what’s needed, developing alternative ways of achieving them with familar technology, evaluating and choosing from the alternatives, then working together to design, sell and start production of it. To do that, Ken, we need to start with a proper understanding of science and how specialization in it fits “four-stroke” capabilities to roles.

    • davetaylor1
      November 9, 2013 at 11:37 am

      Afterthought. Two-stroke engines have been largely abandoned in favour of four-stroke ones because they are dirty and noisy. Isn’t it time to do the same with “supply and demand” economics?

      And at line 4, an ‘s’ has gone missing: one of course makes assemblies by “assembling parts”.

    • Ken Zimmerman
      November 9, 2013 at 11:04 pm

      Dave, let me make this easier for us both.

      I have worked in factories, lots of them.

      Are you saying an engine can be designed that ignores what we know of thermodynamics? Seems impossible to me. If one conclusion of scientists (e.g., that electric motors can be operated solely via solar energy) is put aside in favor of another (that internal combustions engines can operate on oil (of various sorts), natural gas, biofuel, etc.) then regulators need to and do check out how such conclusion is reached. All the regulators I work with do exactly that.

      The greater and more open information sharing the better, recognizing that full sharing will NEVER happen.

      Dave, I have real problem if you’re suggesting that science should “tell” us what decisions to make, or even be a final determining factor. In this regard science has proven as dangerous, maybe more so than the “crooks” you mention (which I assume is the usual list of villains for this blog). Plus science is not quite as simple to nail down as your comments suggest. In 2008 the American Physical Society set-up a committee of its members to develop a conclusive definition of science to counteract the “pseudoscience” the APS saw popping up everywhere. The APS rejected the Committee’s report, which essentially concluded that no final and conclusive definition of science is possible, based on the many scientists interviewed and research reviewed. But I like the cooperative and interactive picture of science you present. It was until the big build-up in science beginning after WWII (big money, big labs, big and expensive equipment) quickly produced a solid hierarchy of scientists and projects which has only gotten stronger and more rigid over the years. I challenge you as a non-specialist scientist to effectively debate any of the top tier scientists/specialists (e.g., physics. Astronomy, biology, climate, etc.). Don’t think you can do it.

  9. Lyonwiss
    November 10, 2013 at 11:46 am

    Your assumption “that our crisis began as a failure of the market not a failure of the government” is totally off the mark, because it was the government interfering in the markets which caused market failure. The proximity cause of the financial crisis was the collapse of US housing bubble.

    The US government through the Community Reinvestment Act interfered with house lending to the poor, which was partly responsible for the sub-prime mortgage crisis. The Fed lowering interest rates helped to fueled the housing bubble, with Greenspan encouraging households to take out variable interest rate loans. Krugman recommended a housing bubble to take over from the collapse of the dot-com bubble.

    The Fed and other regulators had the responsibility to regulate lending standards of banks and other financial institutions, but chose to ignore the possibility of a housing bubble. The government (Larry Summers and others) repealed the Glass-Steagall Act to enable explosion of the shadow banking system and to allow unregulated gambling with over-the-counter derivatives.

    Instead of letting the market operate to reward successes and punish failures, the government again interfered to bail-out bank failures. The list of government action goes on. The truth is the government has always controlled and manipulated markets and market failures are actually government failures.

  10. November 10, 2013 at 10:28 pm

    Arguments over inequality tend to get derailed into indirect arguments about resources. We then hear that the absolute amount of resources increases through growth so inequality is moot.

    That is a mistake. Inequality matters directly, for two reasons. More accurately two classes of resources:

    – Resources provided by nature such as space to live, recreation space, the environment, quality materials, etc. These do not increase with growth, or not nearly as much as industrial goods. Inequality radically reduces some people’s access to these resources.

    – Social attention is a resource. It affects how likely people are to serve your needs, ranging from doctors to product designers; how much your opinion affects politics; where and with whom you can socialize. It means the difference between having a personal story and standing in society and being marginalized.

    Human beings are not machines that eat the products of industrial production. Nature and social attention are essential resources and inequality affects access to those directly.

  11. November 10, 2013 at 10:35 pm

    As for markets, they do one thing well. Specifically “bazaar” type markets do networking well. They do a good job of matching diverse needs with diverse demand and thus opportunities for production. Planning cannot compete with the bazaar due to complexity. he Western world was more fun than Soviet Russia because of bazaar type markets.

    Other markets, especially “exchange” type markets, are boring. They do work closer to ideal models, at least some of the time, but all they do is optimize a clearing price. They may be resistant to capture but they’re prone to volatility and manipulation, so their performance relative to bureaucratic planning is debatable.

  12. Bruce E. Woych
    November 10, 2013 at 10:44 pm

    What’s in a name? Austerity by any other name would be…”conquest” by default! Or maybe if Obama named it… a “compromised addiction and withdrawal syndrome?” or “Domestic Imperialism” or my favorite personal term: “asymmetrical economies of scale”

    Economic Coup d’Etat: Debt and Deficit as Shock Therapy
    By Ismael Hossein-zadeh
    Global Research, November 02, 2013

    “When Naomi Klein published her ground-breaking book The Shock Doctrine (2007), which compellingly demonstrated how neoliberal policy makers take advantage of overwhelming crisis times to privatize public property and carry out austerity programs, most economists and media pundits scoffed at her arguments as overstating her case. Real world economic developments have since strongly reinforced her views.
    Using the unnerving 2008 financial crash, the ensuing long recession and the recurring specter of debt default, the financial oligarchy and their proxies in the governments of core capitalist countries have embarked on an unprecedented economic coup d’état against the people.”

    “What is regrettable, however, is the liberal/Keynesian economists’ and politicians’ glaring misdiagnosis of the plague of austerity economics…

    ….Evidence shows, however, that the transition from Keynesian to neoliberal economics stems from much deeper roots or dynamics than pure ideology [2]; that neoliberal austerity policies are class, not “bad,” policies,…

    …. Indeed, it could be argued that, due to his uniquely misleading status or station in the socio-political structure of the United States, and equally unique Orwellian characteristics or personality, Mr. Obama has served the interests of the powerful financial oligarchy much better or more effectively than any Republican president could do, or has done—including Ronald Reagan. By the same token, he has more skillfully hoodwinked the public and harmed their interests, both in terms of economics and individual/constitutional rights, than any of his predecessors.”

    This is class domination process of cold war tactics applied to entire domestic economies through the monetary system and financial controls of its supply. George Soros proved that an entire monetary system could be manipulated at massive levels of exploit and in doing so exposed the raw nerve of monetary exploit. Now we are also insidiously seeing the government of the USA continue to deregulate the protections from these threats…particularly in their abstract forms called derivatives (http://dealbook.nytimes.com/2013/10/30/house-passes-bill-on-derivatives/?_r=1,) the process of setting up dangerous levels of derivative trading has just taken a turn for the worse. And Austerity is what is left.

    • Ken Zimmerman
      November 13, 2013 at 11:17 am

      A fictionalized exchange between F. Scott Fitzgerald and Ernest Hemingway that expressed their actual attitudes goes like this:
      Fitzgerald: The rich are different than you and me.
      Hemingway: Yes, they have more money.
      Taking the Hemingway position, we see the only difference of the rich from you and me is that they have more money. As Hemingway also later pointed out this is both advantage and disadvantage. It is disadvantage as it tends to make the rich less adept in their skills and less understanding of not being rich. It is advantage in that the rich can buy more of whatever money can buy.

      This said, it should come as no surprise that the rich and the non-rich will always be in conflict and misunderstand one another. The below is a bit oversimplified but generally captures the basics of how things exist and operate today, and a little on how that came to be.

      Klein understands and want things to operate as the non-rich would want. What Klein fails to recognize is that the rich have similar but opposite wants and understandings. She also fails to accept that the rich can be and for at least since WWII have been placed in inferior positions in terms of having the world fit their wants and understandings. After suffering the oppressions of early industrialism, the ravages of civil war, and the Gilded Age the non-rich through organizing, legislation, advertising, and public relations set the rich on their heels and set up a world very much to the liking of the non-rich (generally referred to as the middle class). Public buildings had inscribed words and pictures exalting the “common man” and the “common life,” laws were passed and enforced to protect workers in all sorts of industrial and workplace settings, utility rates and services were regulated, we began celebrating “Labor Day” each year, taxes on the rich were high, ministers preached against wealth and the wealthy, public schools grew and became better, etc. Generally called the “Progressive Era” it lasted to 1929 and then was reborn after WWII as returning veterans forced changes on reluctant politicians, Chambers of Commerce, and the rich in general. Well it was not progressive for the rich and certainly was not fair in terms of what they wanted the world to look like. Now the rich are back with a vengeance. They want Labor Day done away with, they want equal (or often more) time and space on public buildings and monuments, they want textbooks written to set the rich as the heroes, they want regulations and laws “attacking richness” stricken from the books, they want taxes lower or gone altogether for the rich, they want full choice to operate their businesses as they desire, they want profit elevated above all other things as an American ideal, etc. This of course upsets the non-rich, and Klein. Richard Nixon (who was not born rich) once remarked, “I will only sign laws that promote American business.” Today we could strike the “American” and have the neo-liberal position in a nutshell.

      My point, the conflicts between the rich and non-rich in America is not a “cold war” but a very hot one and it’s been going on since before the country was a country. The rich use and will continue to use just about any tactic they can invent and put into practice to see to it the world is organized as they believe it should be and as they see as preferable to all others. Are the rich (in neoliberal garb) piling on President Obama? Of course they are. Is he reluctant to reject them? Yes. And he’d better be if at this juncture in history he wants to survive as President and a man. But the rich have learned along the way not to press too hard, or risk dangerous backlashes, and to clothe their manipulations of everything from oil prices to national wars in populous language and with populous front-men (Tea Party). Will the rich continue to be successful? Doubtful, since like all ways of living this one will fail, from internal contradictions, outside attacks, and just plain stupid actions by those in charge today. Want to make it happen sooner? Now that requires I think smarter and more adept and committed opponents of the “rich world” than are around today. Most around today have either been coopted or are so angry at the way the rich have made the world they cannot stand still and think long enough to identify and line up the multiple ways that exist and are easily seen to bring down what the rich have made.

  13. Vilhelmo
    November 14, 2013 at 12:11 pm

    Lyonwiss :
    Inequality is a fact (mostly quantifiable) which is not in doubt. The lack of intellectual precision refers to the statement of inequality as an economic or even a moral problem.
    Unequal pay is a fact of life. The CEO of a company or the head of a government department will never have equal pay as their subordinates (in reality, such inequality exists even in communist countries).
    Most people would not consider as inequitable if a CEO of an organization earns 10 times the average salary of its employees. But inequity would probably be considered evident if that ratio goes to 1,000 times or higher. The problem is to determine when inequality becomes inequity and needs to be addressed.
    “All men are created equal” refers only to justice and politics, and not to economics, because there will always be economic inequality in the sense discussed. The problem is not inequality, but inequity.

    There will always be differences between individuals but should those differences be the cause of differences in remuneration?
    Should people be rewarded for what they are or for what they do?

    To reward a tall man for being tall doesn’t (can’t) provide any incentive for him to be taller. It’s not even something within his control.
    Nor did it require any effort or sacrifice on his part to be tall.

    For example, we run the same race with same group of runners over & over again & at the end of each race we total the finish times of every runner The goal of each race is to get a lower group time than the previous race. To do this we want each runner to run as fast as they can.
    What incentives would achieve this goal?

    To reward the top 3 runners, as is common in most races, doesn’t even encourage the 1st place runner to run his fastest but only faster than the 2nd place runner.

    We would need to reward each runner for beating his previous best time, for his effort & sacrifice rather than the gifts of nature.

  14. May 21, 2014 at 11:39 pm

    Reblogged this on nearlydead.

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