jasfourth401

This is a great thread. It raises many issues. My two cents.

Capitalism runs in boom and bust cycles. The gilded age full of robber barons ended due to government intervention (e.g. breakup of Standard Oil) and market forces (29 crash). This will happen again.

Our world of capitalism has changed. It is not US driven. It is driven by global conglomerates playing countries against each other. That won't change. It also, in my opinion is the primary driver of the destruction of the middle class.

Technology has destroyed many routes to a comfortable lifestyle. Gone are the days of admins, middle management and many assembly line tasks. This will only accelerate. Growth areas are now reserved for small clusters of high tech folks, service industry jobs and jobs catering to an aging population. The medical industry is in a bubble and unsustainable. The other routes for many "in the middle"...government...will continue to shrink as well.

Energy independence is the big driver for the future of this economy. It is significantly under estimated and under appreciated.

Our tax code is not equitable. Why are wages below the social security cap taxed at higher rates? Why are capital gains taxed at lower rates than earned income? Why are the primary drivers of tax deductions (mortgage interest, capital loss offsets) reserved primarily for the wealthy?

The cost of healthcare will bankrupt this country. It doesn't matter who pays (government for medicare/medicaid), private companies and individuals for "free market" coverage. The issue is cost. And costs must come down for rich, middle and poor.

This country's staggering debt load (public, private secured/mortgage/student loan, and unsecured/credit card) can only be resolved in three basic ways (or a combination of them). You inflate. You deflate. You default.

History is littered with out of touch upper classes failing to grasp the "angst of the populace". From French kings, to Russian Tzars to South American dictators, it isn't much of a stretch to see this level of anger surface here...because when people go hungry, everyone, and everything is fair game.

In the end, it is in the best interest of the upper classes to heed the needs of those less fortunate. Capitalism will always have winners and (more losers). I firmly feel it is patriotic to be grateful from top to bottom, to assist those who have fallen behind and focus on the benefits of any system, instead of its flaws. Because as my accountant likes to say, "Be grateful you pay a lot in taxes. It means you are doing well."

alabuck Loc: Tennessee

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Very well thought-out and very well written. Excellent post! Thanks!

There isn't much anybody of either political persuasion can argue regarding the fiscal mess were in. Once the politicians and the talking heads can shut-up long enough to actually see that all of their yelling and finger-pointing doesn't do one dam thing to help turn this mess around, we can come together to find some workable solutions.

The biggest loser in all of these decades of partisan fighting has been the American people. This has been brought on by our loss of the ability to compromise. Contrary to the belief of some, compromise isn't a dirty word. If it wasn't for compromise, the US would've never come into existence. Compromise doesn't mean someone wins and someone loses. It means that both sides have given up something for the betterment of the whole, not just their side.

Compromise is essential to social and geo-political survival. Without compromise, our world couldn't survive. Nor could our nations, our states, our counties, our cities, our villages, our institutions, and, even our families.

J Anthony Loc: Connecticut

Of course Obama's willful complicity in a r****d system is maddening. But if you think everything was on the up-n-up during the Reagan, Bush, and Clinton years, then you have to be kidding. For a century now wh**ever party has been in power will use their leverage to benefit themselves and their allies; "pick winners and losers" , as you say. This did not start with the current president. Reagan's administration especially really went to work obliterating our protections from rapacious Wall St. greed. Just one example, because I'm not going to write you an essay: The Plunge Protection Team (PPT), formally called the Working Group on Financial Markets.Created by Reagan's Executive Order 12631 in 1988 in response to the Oct '87 stock market crash, the WGFM includes the President, the Secretary of the Treasury, the Chairman of the Federal Reserve, Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity Futures Trading Commission. Its stated purpose is to maintain "the integrity, efficiency, orderliness and competitiveness of our Nation's financial markets and maintain confidence". According to the Order: "To the extent permitted by law and subject to the availability of funds therefore, the Dept Of Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of it's functions." In plain English, taxpayer money is being used to make the markets look healthier than they are. Treasury funds are made available, but the WGFM is not accountable to Congress and can act from behind closed doors. It not only can but it must, since if investors were to realize what was going on, they would not fall for the bait. "Maintaining investor confidence" means keeping investors in the dark about how shaky the market really is. Back during a stock market crisis in 1989, a guy named Robert Heller-who had just left the Federal Reserve Board- suggested that the government rig the stock market in times of dire emergency. Instead of fixing the problem in the economy, the PPT would just "fix" the investment casino that is Wall St. And this is just a single policy out of many similar ones. I ask you, is this honestly an example of "true capitalism" to you?

Nickolai

Read Wealth "And Democracy " The History of American wealth, by Kevin. Phillips to see how closely the creation of wealth is associated with the government. From the Erie Canal to the t***scontinental railroad to the Panama Canal to the development of computers, to the inner state highway system to the internet the wealth of the nation the government was behind it. Those. Who are making their fortunes now a days life the founder of face book owes his good fortune to those that came before.

CDM Loc: Florida

You go to the heart of the matter. I do not believe too many economists understand capitalism, crony or otherwise. Working people have a much greater understanding.

I will read Mr. Piketty's book. I am having some trouble getting past the possible oxymoronic undertone of 'French economist' (lighten up, it's humor). In the meantime a question or two come to my humble but ever curious mind;

How many successful, emphasis on successful, pure socialist, socialist/c*******t, c*******t or dictatorial governments/countries do not include a capital generation system with the components of production, employment and taxation?

To dampen the subjectivity to some extent lets say successful = unemployment less than 10% true, everyone has enough money to live without undue stress, the social welfare system is less than 30% of GDP and there is incentive to propagate the work/reward system if one so chooses.

How many of these countries (forget China) are greater than 100 million population and not culturally indoctrinated to socialism over generations?

How many of these successful countries provide for 100% of the protection of their sovereignty from possible aggressors without some dependance on the U.S.? (Ahemmmm...parlez-voux wienerschnitzel, Mr. Piketty?

Is there evidence that any socialist, c*******t or dictatorial country has achieved and maintained successful governance directly related to taxing their wealthy 40, 50 or 60% or more?

Is there any successful country meeting these criteria where a minority of the population does not, in the end, hold the lions share of the wealth? For example I cannot find any socialist, c*******t or dictatorial governments where the leadership, wh**ever form they take, are not wealthy. And don't give me the Pope...he isn't exactly starving.

As I said, I will read Mr. Piketty's book. I have a feeling though that I have seen it before. What is really missing is balance. No system devised by man or nature will work without it. And America has lost it's balance. We need the people of the country to restore the balance before we need Mr. Piketty to tell us how to create an equal and opposite imbalance, in my humble opinion. Perhaps reading his tome will change my view...

rickdri

I agreed with you. I also said that all presidents pick their favorites. I also know about the plunge team. The difference between what happened in the 80's and 90's is the economy. Our economy soared during these years with minimal interference from the government. Yes they did prop up the market for a very short time. It was not needed any longer because the economy was too strong.
Today our economy is a complete opposite of the 80's and 90's. We have an extremely weak job market that is being made worse with the ACA. This law is making it extremely hard for small businesses to compete or even stay afloat. He has kept drilling for oil and gas on federal lands nearly non existent. He continues to delay the Keystone pipeline. Now I read an article about a possible reason. Tom Steyer, a liberal political donor has offered $100 million to the democrat party for campaign contributions if the keystone pipeline is not built.
Was there cronyism in the 80's and 90's, sure? I said there was. However it was not to the extent we see now. As I stated Obama has wasted billions of dollars on a failed g***n e****y industry while the average American has struggled mightily. This type of cronyism was not seen at that time. Tax payers did not lose millions or billions on crony capitalism as they do now!
Was it true capitalism they practiced? To an extent it was. The measure of true capitalism is measured by how many people are helped, how many good jobs were produced, and the extent of the expansion. During this time we saw the longest peace time expansion ever. More good jobs were created during this period than at any time in history. Yes we had a minor recession in the early 90's. That is expected. This recession was extremely minor and lasted a very short time. I guess what I am trying to say is that the economic policies put forth during this time period were far superior to the policies that are being put forth now!

Nickolai

I respectfully disagree the economic policies began during the Reagan Administration furthered by H Bush and carried forward by Clinton came full circle under G W Bush. Things like that take years to play out. The Collapse of the S&L's was a harbinger of things to come and the Resolution trust picked up the S&L losses. I fully expected that a crash would occur and thought that the dot com. bust might be It but the Fed with Greenspan at the helm lowered interest rates and kept eeking it out. They it going on so long that It fooled me, I was beginning to think maybe I was wrong , that maybe trickle down would work then all hell broke loose. I was about six seven years off. When the soviet Union collapsed in 1991. The thought came to mind " now that capitalism doesn't have the soviet union to compete with it will only be a matter of time before capitalism collapses from it's excesses ala the 1920's " Maybe 20 years at best.

rickdri

What you've seen collapse is crony capitalism. As I stated some of the policies put forth during this time were crony capitalism. It was only a small fraction as to what we are seeing today. The real economy boomed during this period. However you are right in that it takes time for these policies to come into full effect. Some of the policies enacted during this period did have an effect. The S&L bail outs were especially troublesome in that it set a precedent. I did not agree with this. However they did not harm the economy to the extent that all of these bailouts we have seen recently have. We would have been much better off letting these banks fail, the auto industry should have went into bankruptcy. We should not have bailed out any of these failed businesses. This has set a terrible precedent worse than the S&L bailouts. Had we let all of these fail, other non corrupt banks would have picked up the slack, other auto companies would have built the cars that GMC and Chrysler would not build. The slack would have been picked up by other honest businesses. Sure we would have gone through a very tough period. This period would have lasted a much shorter time than what we are experiencing now.
There is no such thing as a command and control economy. We are seeing evidence of this now. We should have let the economy purge itself of all of these corrupt businesses. Government should not have spent trillions of dollars saving these criminal enterprises. These businesses have gone on to create a worse situation than what we experienced in 2008. All with the help of our corrupt government leaders. Our next stumble will be the worst we have ever dealt with. It will cause a world wide depression worse than the 1930's. All because we were too afraid to fail in 2008. Had we let the system reset we would have had a booming economy with very little debt by now. Our leaders and the elite don't want to let go of power. They are going to d**g us all down into abyss if they are not stopped.
I respect your views and even agree with you on some points. It's just that if we could ever run true capitalism without all of the cronyism we could become a strong and efficient economy and nation again! Have a good evening!

Ricktloml

You are wrong there is a greater disparity now under Obama than ever before, it is his policies and corruptions that have made a non existent recovery. And every single time throughout history this system has been employed it has failed miserable, so what if it is couched in finer terms than before, class envy is what is being sold, it would seem quite a lot of people are infected with it

Nickolai

Again I respectfully disagree The S&L crises was just a harbinger of much bigger things to come. Over 1000 people spent some time in prison for that debacle And that the resolution trust shifted the losess on to the taxpayers is shamefull. But the abyss the world was staring into in the fall of 2008 had the potential to be 10 times worse than the collapse of capitalism in 1929 not just in the US but a world wide calamity, Fortunatly the fed chairman Bernanke had studyied the great depressioin of the 1930's and knew well that the fed had screwed up and tightened crfedit a natural reacation in time if crises. It had the effect of deepening the depression causing massive bank failures, farm foreclosures, and 25 % unemployement and those employed had their wages slashed as the bubble collapsed. It took the demand for war goods and the subsequent government deficit spending to finaly end the depression .

Consequently that was the reason Hank Paulson moved so quickley t ocongress for the TARP program and the 11 trillion dollars of loans and garrantees of trillions of credit default swaps to the big banks. If the US Treasury department and the fed hadn't moved as quickley as they did. There is no way of telling how bad things c ould have gotten. There were some 60 trillion in credit default swaps held by who knows how many investors around the world all of them esentially worthless. If the US Treasury and the fed hadn't goosed liquidity half the population might have starved to death before things could recover. Frankly I'm surprised that the recovery has been so fast. We've been lucky

rickdri

We are not lucky! All that has happened is that the financial crisis of 2008 and the actions taken by the Fed have pushed our day of reckoning off into the future. All of those QE's and bailouts have not fixed the problems that created the meltdown in the first place. We have a derivatives market much larger and more toxic than the one the caused the 2008 financial meltdown. Warren Buffet stated that derivatives are weapons of mass financial destruction. He is right. Only this time the government and the federal reserve will not be able to rescue the economy. They have printed so much money that the dollar is getting closer to losing it's world reserve currency status. This is the only thing that has kept us from a depression.
The recovery you think we have had is an illusion that was manufactured by the Federal reserves money printing scheme. It is responsible for inflating the stock market. If you would look at the true unemployment numbers you would see that we have an actual unemployment rate well into the double digits. Small businesses are afraid to hire for fear of what new tax or regulatory law that may come down the pike so to speak. The main businesses that are hiring are the low wage retailers, restaurants, and temporary services. Many companies are only hiring part time and are cutting employees hours back to less than 30 hours in fear of the ACA. Full implementation of the ACA has been illegally postponed numerous times by Obama, he knows the damage that is coming for folks losing their healthcare insurance and having to pay more in premiums. This is why he has illegally postponed the employer mandate to past the 2014 mid term e******ns.
As I said this so called recovery has been an illusion brought to you by our government and federal reserve. Please don't fall for the lies and deceptions both parties continue to spread. However I do respect your right to the facts as you see them. However look into what I have just posted for yourself if you choose. See for yourself if I am right or not! I believe I am. You can still reject my comments, only take a look for yourself! Good luck to you in your future endeavors!

jasfourth401

The successful example you seek does not exist. Any capitalist, c*******t, socialist, monarchist, dictatorship or other hybrid will be run by flawed leaders. Those in charge, by our very nature as humans, will seek advantage and exploit. I suppose you could point to the Nordic countries...possibly Holland or Germany, as examples where private sector success and public welfare strike a positive balance...for now. But the key phrase is "for now." All governmental systems must evolve to accommodate current needs (and future expenditure). This country's problem is short sightedness and the willingness to assume one side or the other is to blame for all of it. Extreme opinions on both sides are unproductive. Centrist policy is by far the most efficient way to move forward, because when everyone is in the pool, we all look for the sharks together.

Patty

"Piketty's Solution is like believing in the Easter bunny it is impossible within the U.S., never mind the world, as the top .1% own the political machinery. Why would anyone who owns the political process agree to tax themselves?

As a result, any wealth tax will fall not on the super-wealthy with billions of dollars of unearned rentier income but on the upper-middle class who worked, saved and invested to build a nestegg. In other words, a wealth tax will fall on the same tax donkeys who are already paying the majority of income taxes.

If I have contributed anything to the wealth ine******y issue, it is the proposition that we live in a neofeudal, neocolonial economy (the New Feudalism), ruled by a New Nobility. In my analysis, neofeudalism arises from these characteristics:

1. Debt is the enforcement mechanism of feudal fealty. Debtors--those with mortgages, student loans, vehicle loans, credit card balances, etc.--are obligated to fund the rentier income of their financial masters, the New Nobility. This is the essence of a feudal arrangement.

Others have different definitions of neofeudalism.

In my analysis, the rise of neofeudalism is a direct consequence of the financialization of the economy, in which essential assets (homes, for example) and processes are commoditized into financial instruments that can be sold, leveraged, pyramided and traded globally. Once an asset or process has been commoditized, it loses all connection to individuals, communities, companies or nations: it is the perfection ofrootless capital, free to be bought and sold anywhere, any time, with no connection to the real world other than a chain of claims.

2. Society and the economy are organized so only the wealthy do not need to go into debt, which is serfdom in a neofeudal arrangement. The illusion of choice is thus maintained, a sibling of the illusion of democracy in which both party candidates are in thrall to the New Nobility.

The fiendishly Orwellian brilliance of neofedualism is this: present-day serfs opt into serfdom, just as free citizens opted into the protection of feudal lords' estates as the Roman Empire crumbled around them. It was a false choice; remain free and face ruinous taxes, or choose serfdom on a lord's estate. The present economy offers an equivalent false choice for all but the most dedicated, disciplined few who reject debt by rejecting consumerism, "growth" and the endless spew of neofeudal propaganda.

Want a college education? You freely choose the servitude of debt.

Want a house? You freely choose the servitude of debt.

Want a new vehicle? You freely choose the servitude of debt.

Neocolonialism is tightly bound to neofeudalism in my model.

3. The essence of neocolonialism is the "company store," which extends credit that can never be paid off as wages are stagnant. In a neocolonial economy in which only the top Caste of Managers, Technocrats and Professionals (the top 10%) can expand their income and wealth, debt-serfs are impoverished by servicing debt. As the real (inflation-adjusted) incomes of the bottom 90% decline or stagnate, debt service consumes an increasing amount of disposable earned income.

Debt service is guaranteed in the neocolonial model. In the old colonial model, marginalized populations were recruited to work on plantations with the false promise of wages, which never quite exceed the cost of servicing debt.

This arrangement was much neater than s***ery, as the marginalized need not be bought: they freely choose their servitude. Beneath this supposed free will is of course a false choice: there is no other way to earn cash income other than working on the debt-plantation.

In the old colonial model, only those ethnicities with an iron passion for saving regardless of income (for example, the Chinese, among others), were able to accumulate enough capital to escape the debt-bondage and establish small businesses.

I explain the basic structure of neofeudalism and the neocolonialism in The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

The problem with Piketty's solution to the intrinsic inequalities created by financialization, neofeudalism and neocolonialism is the super-wealthy might well agree to tax those beneath them, just to prop up the arrangement that benefits them so mightily. I can easily foresee a political movement, secretly funded by the New Nobility, that taxes all wealth above $1 million, but which magically excludes wealth-holders that just happen to be the top .1%.

The New Nobility might even agree to pay a modest wealth tax, which would fund millions more recipients of food stamps, Section 8 housing and other social welfare, in effect institutionalizing neofeudalism and neocolonialism by rendering the unemployed complicit in the arrangement.

If you owned $100 million, and were earning $5 million in rentier income annually, wouldn't you agree to a $1 million tax to fund social welfare programs that kept the rabble sedated with bread and circuses? It's a no-brainer.

The real problem with Piketty's taxation/social welfare solution to wealth ine******y is that it does nothing to change the source of systemic ine******y, debt-based neofeudalism and neocolonialism. Simply raising more taxes to fund more social welfare programs leaves the unjust, rapacious, and ultimately destabilizing Status Quo entirely intact.

I have laid out another path in my books: refuse serfdom, abandon participation in neofeudalism and neocolonialism, and build parallel systems of cooperation and wealth-building that are not debt-dependent."
http://www.zerohedge.com/news/2014-04-28/critique-pikettys-solution-widening-wealth-ine******y

Constitutional libertarian Loc: St Croix National Scenic River Way

Knowledge is the great economic equalizer and the internet has changed the way people obtain information forever.

Nickolai

Now with that I agree I meant to include that assessment in my last post but didn't. I believe the actions taken the Fed is just another band aid on a cancer. And does push the day of reckoning into the future. so on That I'm in full agreement. Actually I agree with every thing in your post here so In would assume including the reason for the stock marked soaring. I meant we are only lucky for the being and if the fed hadn't moved as quickly as it did the result would have been to horrible to contemplate. Of course those who remain unemployed or under employed are not so lucky

Every empire in history has had it's day of reckoning and there is no reason we wont have ours. So I guess the only point we disagree on is whether or not the US has ever experienced true capitalism and If we ever did it surely would have been during the last 40 years of the 19th century that produced the gilded age of the robber barons. This video about Jacob Riis and his (1890) book titled "How The Other HAlf Lives" Is a clear illustration of how true capitalism works

http://youtu.be/87SCTEsIufY