The Most Revolutionary Act

Diverse Ramblings of an American Refugee

Dr Stuart Jeanne Bramhall

Dr Stuart Jeanne Bramhall
Location
New Plymouth, New Zealand
Birthday
December 02
Bio
Retired psychiatrist, activist and author of 2 young adult novels - Battle for Tomorrow and A Rebel Comes of Age - and a free ebook 21st Century Revolution. My 2010 memoir The Most Revolutionary Act: Memoir of an American Refugee describes the circumstances that led me to leave the US in 2002. More information about my books (and me) at www.stuartjeannebramhall.com

NOVEMBER 14, 2012 11:23PM

America's Nonexistant Free Market

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The clip below is a recent talk by former World Bank economist Joseph Stiglitz on his recent book The Price of Inequality: How Today’s Divided Society Endangers Our Future.

The main premise of Stiglitz's presentation (and book) is that the US is the most unequal of advanced industrialized countries. In other words, they have the largest gap between rich and poor, with the upper 1% controlling 40% of the nation’s wealth.

In my view, the most important point of the whole talk is that economies with extreme inequality are always extremely inefficient. This, in turn seriously hampers economic growth.

The other important point Stiglitz makes is that America’s extreme inequality does not result from “free market” forces, but from deliberate government intervention that favors their wealthy elite and “rent seeking.” Although other industrialized countries also operate according to so-called “free market” principles, they don’t have such extreme income inequality because they don’t allow the same level of government interference in the operation of their markets.

Stiglitz defines rent seeking as wealth accumulation resulting from “ownership” claims rather than effort – in other words the production of goods or performance of services that add to their overall wellbeing of society. Because rent-seeking doesn’t contribute to overall economic wealth, it merely serves to shift it from the 99% to the 1%. Some specific examples he gives include monopolies (which decrease real wealth by limiting production to increase production), predatory lending, abusive credit card practices and derivatives speculation (which crashed the global economy).

He drives the point home by reminding us that the richest Americans aren’t the inventors or researchers whose products and discoveries have massively enriched are lives. The richest Americans are corporate CEOs. This fact isn’t lost on our most talented university students, who overwhelmingly choose careers in business and banking, rather than science.

Specific examples he offers of America’s pro-corporate government regulation:

  1. Federal bankruptcy laws – recent changes which give precedence to holders of derivatives (rewarding the type of speculation that caused the financial crash) in dissolving a bankrupt business and which prevent students from discharging student loan debt in bankruptcy.
  2. More than $15 trillion in bank bailouts in 2008-2009.
  3. Federal law requiring the government to pay corporations more than the fair market price for their products (e.g. the Medicare drug benefit).
  4. Federal law requiring the government to sell national assets (e.g. oil and mining rights) below market.
  5. Federal corporate laws that deny shareholders into CEO salaries (unlike Australia and the UK which have Say on Pay laws).
  6. An extremely unequal federal tax system in which billionaires like Warren Buffett pay at a lower tax rate than their secretaries.

Here’s a link to the Vanity Fair article Stiglitz mentions in his talk: The Top One Percent

 If video won’t play go to http://www.youtube.com/watch?v=gKOJqnAET9A

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OK, he's a professional economist with a PhD, a distinguished record of scrupulous, analytical achievement, and a Nobel Prize but he's not a no-nothing pundit on Fox News so he can't know anything, right?
(That's what the conservatives will say).
Stiglitz lacks on a larger forum, a bigger audience, in order to educate people. He, like Krugman, has an ability to explain complex concepts in everyday language. He knows the simple-but-ignored truth that "free markets" and "private property" are the creation of government. They didn't really exist until governments shaped, defined, legitimatized, and regulated them. [r]
America doesn't operate under free market principles. If we did, the banks that failed would have failed and not been bailed out by the government.

With the Auto Industry, there are national security concerns in allowing that sector to collapse, and so we needed to prop them back up, but there was no such concern with the Banking Industry...except they're runnin' the show.

When risk is eliminated, decisions are compromised and you have the kind of short-term profit grabbing to the detriment of long term stability that you see in America today (knowing you're gonna get bailed out would be risk elimination...).

Accountants and auditors don't seem to be doing their jobs either...nor government regulators (who, John Stossell notwithstanding, are important when it comes to corporations).
So that's what a Nobel Prize winner in economics thinks of the situation in the US?

Sheesh! He should have been reading the dozens - perhaps hundreds or thousands - of blogs here on OS that have dealt with this subject, drawing the exact same conclusions, for YEARS!!

But he lacks one wee tiny thing. A thing that only a few here on OS have offered, but a thing that is essential. That thing is a solution. What needs to be done? How is it to be done? Who is to do it? What will make them do it? What end result do we want to achieve?

It's all very well to point out, ad nausium, what is wrong with how our system works, BUT...... just exactly what is to be done?

Surely it's time to say, "Fine; that's how it works now and it stinks, but most of us already know that. We're living it, fer pete's sake. So let's hear from those who can suggest the kind of social and economic systems that we ought to see if we can develop and ways to try to put such systems in place. Preferably ways that don't get a lot of people killed and that don't tear down the wonderful modern things that we've created with our blood, sweat and tears."

Whining about the problems with our systems does absolutely nothing to solve them. Or do the whiners expect that if they whine long enough and loudly enough and get enough others to whine with them, that "somebody" will come along and fix things?

The point is that any "somebody" who has the responsibility to fix things, is not, in this system, doing so. It ought to be pretty clear by now that they won't do so. And guess who that leaves? Yup..... us.

Those who are sitting on top of the world under our present systems, are not unhappy with how things have worked out. They're doing just fine, thank you very much.

"You? Who cares about you?! You're nobody. We, the elite, know that we can ignore you. You're so stupid that you're sitting under your dripping roof whining and waiting for somebody else to fix it. And stupidest of all, you're waiting for us - the elite, to care about your plight! Idiots! You deserve to get wet."

The time has come for us to design the socio-econmic systems that will get us to the kind of world that we want to have. If we are not as stupid as the elite thinks us, then we've got to stop letting them have all the benefit of the wealth that we create by our hard labour and industrious minds. It is necessary that we devise a system that works for us all. THEN and only then, will we be ready to topple that elite. It serves no purpose to do so at this time because we have NOTHING to put in place of the present system! Nothing that will cause the kind of society we'd like to leave to our kids to come into being.

As long as we just sit here whining and waiting for "somebody" to come along and fix things, we're proving that this is really all that we deserve. I think that we deserve better...... much better!
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For all practical purposes there are also federal laws requiring workers to compete with the people in the most authoritarian parts of the world while corporations are allowed to collude and divide the market so they can avoid competition.
SkyP, it's not a Nobel Prize winner's opinion, but probably because Nobel hadn't made his fortune from blowing shit up by the time this cat hit the scene...

" What country ever existed a century and a half without a rebellion? And what country can preserve it's liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it's natural manure."

- Thomas Jefferson
@Malcolm,
I'd love to agree with you (and Jefferson) but I can't. Jefferson lived in a different time and was, himself, sitting in the high branches not living down at the roots as most people live.

Whenever I hear someone talk about something "being worth the loss of a few lives," I have one thing to say to them, "OK. You go first."

None has done so to date.........

;-)
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Power doesn't give it up without some kind of struggle. If it's not a bloodshed, it's economic warfare.

I don't think the latter is a winnable war. The former might be, and I will be first in line to fight, should that day come. The only noble war is one against tyranny. I will fight for no other reason, ever, but I will fight forever for that reason.
@Malcolm,
While it is likely much more time consuming to win a bloody, physical war than an economic one, I'll still opt for the economic one in this case. Mankind has had too damned many physical wars. We've never gained anything much by them.... never.

The devastation to our infrastructure, one we are dependent upon to a far, far greater degree than our ancestors who lived primarily in agrarian societies, would kill more of us than any revolutionary war.

We would not recover with the next planting of crops. We would be set back hundreds of years. By the time our progeny got back to where we are now, technologically speaking, we'd have the same damn oligarchy we have now too. Net gain? Zero. Net loss, tens of millions of lives. I don't see this as a good bargain.

The elite are nearing their dream of owning everything they think is worth having - all the money and all the shares in corporations that fills their bank accounts with dividends.

I say, "let them have it". We cannot win a bloody confrontation with them. Let's just go around them. Join co-ops. Build co-ops. Get involved in the 'grey economy' (as it's called). Are you aware of how strong such an alternate economy already is?! In some countries it is 80% of the national economy! Even in the US it is said to be about 10% or 11% of the economy. If we help to build that grey economy it will grow and grow.

Eventually we can just withdraw from the economy of the elite. We can ignore them and their "money". Do you know how much their 'money' will be worth if it won't buy our labour? Or our goods? Nada. Zip. Nothing. They can wipe their fat asses with their currency and paper their walls with their share certificates. We won't need them or their "wealth." We'll have our own.

Certainly this will take much longer than a bloody revolution. But it will work. And it will do so without destroying the high tech infrastructure that modern people depend upon for survival. And it will do so with very little bloodshed.

The elite will be frogs in a pot of slowly heating water, not knowing that they are being boiled alive until it's too late. Remember, all those cops and soldiers come from our ranks - they're our children. Raise our children right and they won't be at all anxious to obey the orders of the elite to attack and crush us.

Patience and education are the order of the day in these circumstances.... NOT revolution, but evolution. We already KNOW (from a long and bloody history) that revolution will gain us little, if anything.

It's time to try evolution, don't you think?

;-)
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Yoiks!
That first line should read ".........much LESS time consuming........"
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Oops!

That first line should read ".........much 'less" time consuming......"

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[r] How can we possibly combat such overwhelming odds against us all? Thanks for this, stuart! best, libby
What Ayne Rand called 'free market' sane people call anarchy.
Those who claim that Stiglitz hasn’t offered any solutions remind me of the vapid cocktail party phonies who chatter about books they haven’t read.