At Foreign Policy Emile Simpson sees a major political realignment taking place throughout the developed world:
Brexit and Trump were not anomalies, accidents of political history that can be explained away to maintain the integrity of the inherited notion that “normal†politics involves competition between a center-left party and a center-right party. Rather, in my view, they are symptomatic of a paradigm shift in the configuration of Western political life, one which has only just started.
Consider the familiar political category of left and right, which since 1945 has provided the basic organizing category of political differentiation in Western democracies across the vast majority of issues. Although the language of left and right dates to the French Revolution, the category started to take substantial political meaning in the late 19th century, and was forged over the following decades on the anvil of intense political fights over industrialization in the West, and all the changes in economic, social, and political relations that came in its wake.
The crucial point is that left and right are symbiotic, because they represent both sides of the argument over the problem of industrialization, over which there are good arguments to be made on either side. It is the interaction of these arguments set up by the mediation of the left-right categorization that produced sensible compromises across a whole range of issues.
I’m not entirely sure that’s what’s going on. I think what we’re seeing has more to do with the nature of greed.
Greed has no limits but the rate of economic growth does. When there’s lots of economic activity the desires of the powerful go barely noticed. It’s not that they’re not greedy. It’s that the greed is hardly noticed.
But when economic activity slows the underlying avarice that was there all along stands out more starkly. The entire developed world has experienced more than 50 years of great economic activity. There have been ups and downs but the trend was up.
But now that’s slowed down. Maybe the brakes are only on temporarily. Maybe it’s permanent. The guys at the top still demand their cut. A hundred million here and a hundred million there and pretty soon you’re talking about real money.
I’ve been thinking a lot about the endless pressure to cut costs and produce more with less. It just wasn’t that way 40 years ago. We were supposed to be so efficient with new technologies freeing us from the endless drudgery of labor by now. Why are we not?
I blame the one who is the worst, most demanding, impossible to please boss of all boss’s. CAPITAL.
We used to work for men, now we work for quarterly earnings reports that MUST exceed expectations quarter after quarter eternally or stock will be sold, and CAPITAL will flee.
I don’t know anything about the stock market, but I believe it needs rule changes to slow down transactions so that the allocation of financial resources makes more sense.
Those have always been factors but I agree with you that they have additional intensity today.
I think there are two factors behind that. By far the most important is the role of stock values in executive compensation. That began about 25 years ago, a consequence of a change in tax law during the Clinton Administration. Top managers have greater financial incentives to goose stock values than to make their businesses grow and the quick fix for that is cutting costs, particularly payrolls.
The second is that forty years ago we didn’t have nearly as much international competition.
@Gray Shambler
What you are experiencing is the result of a financialized economy. I agree with @Dave Schuler, but it is the credit backed dollar which makes a financialized economy possible. In a financialized economy, increasing profit margin not output of goods and services is the goal.
In the hard money world, increasing output will increase the actual profit, and this requires expanding the means of production as well as improving efficiency. In a financialized economy, costs are cut to increase the profit margin, even if it will decrease output.
The entire economy is reliant upon money supply + credit supply increasing. This is why the stock market and Wall Street financiers must become richer. They are the ones who increase the money and credit supply, and therefore, the economy is dependent upon them.
The economy is a giant pyramid scheme, and like Bernie Madoff on steroids, it needs new “investors” to grow. These “investors” are the financiers who create new “money” which is how the economy grows. With hard or semi-hard money, the economy grows primarily by increasing output which requires increasing the means or efficiency of production. (The quotes denote concepts I have expounded upon in quite some length.)
President Obama, the Democrats, and the progressives are all trapped in an economic system they require for their social programs, and this is why the rich have gotten fabulously richer under President Obama.
The Republicans, conservatives, and libertarians base their economic rhetoric on sound money principles, but they too support this system. The difference is that they claim otherwise.
Keynesian economics requires credit backed dollars, and without them, it is not possible. Credit backed dollars are “free stuff” for the financial institutions. Republicans, conservatives, and libertarians claim to be against both of these. Therefore, they should be against credit backed dollars, but you will have to pry their credit backed dollars from their cold dead hands.
As to solutions full or partial, I have offered them before in other threads.
I was going to add this elsewhere, but I will add it here. The housing bubble was dependent upon not only the US’s financialized economy but also the US’s trade deficit. The free trade arguments are never about trade. They are about importing goods, and not mentioned is the trade deficit.
In a hard money world, it would be impossible to run a trade deficit year after year with no unwanted effects, but with a credit backed currency (dollars), a trade deficit can continue forever as long as credit creation continues. (The last part is vital.) Also, fractional reserve lending math is not constrained by the rules of conventional math.
The free trade faction either fails to mention or is totally ignorant of what occurs with those extra offshore dollars. Some of them are used among other countries as trading currency, but other trade deficit dollars are actually used to offset the trade imbalance. These trade deficit dollars do not purchase US goods or services. These trade deficit dollars are used to purchase US credit instruments.
The credit instruments are used to extend debt to US consumers, and in the case of the housing bubble to homeowners.
Regarding your union membership: As far as I can tell, most union leadership got into bed with the management, and while they were working in their (company & union management), the union membership thought it was peachy-keen. If you got screwed, it is not my fault, and I accept no blame. You need to put on a safety pin and whine with the other progressives.
I do not have a problem with non-government unions, and personally, I think management should be able to unionize. Too many companies are trying to be slick and get over on their employees. The problem is that in a financialized economy (yeah, again) unions do not function the same.
With the formation of the Fed, the world of the old “robber baron” industrialists ended, and while not totally obsolete, unions were on their deathbed. Government unions are different because they do not have a financial basis.
Old time, hard money, industrialist era unions are obsolete in our financialized economy because human workers are obsolete. Humans are the weakest link in the profit margin chain. Eliminating humans is or should be the highest priority of any competent management team, and eventually, management should be eliminated or minimized as much as possible.
This makes unions meaningless, but it also circles back around to your observation about stock prices and my tie-in of a credit backed dollar. Stock prices are a function of available currency (credit backed dollars) and profit margin (fantasy profit). The economy and stock market are like the housing boom – an illusion.
Your union was negotiating wages and benefits for you based upon hard money concepts in a financialized economy. Their counterparts could agree to anything because, like Bernie Madoff, as long as the economy was expanding they could pass along any additional costs, and when the economy stagnated or contracted, the union membership would be eliminated through layoffs, firings, or attrition.
The way that things were going there was no way to stop the inevitable, and unless the eventual President Trump does something to dramatically change course, things will only get worse. You have the misfortune to live in these times, but your children and grandchildren may be even more unfortunate.
Unregulated or almost unregulated government guaranteed credit created through fractional reserve lending backed currency leads to unlimited or almost unlimited asset inflation based upon the the further creation of currency using the asset’s inflation increased value as collateral for the next round of credit creation. At some point, the magic spell is broken, and as each layer collapses, it pancakes onto the lower layer causing a cascading failure.
Because the system was designed to expand quickly, it could not be robust as well. There could not be many safety measures to limit or isolate the failures because these would cause the overall growth be much slower. Hence, politicians had to urge and endorse policies to loosen borrowing standards. Otherwise, much of the credit being created would sit idle like the houses it was meant to finance.
At some point, somebody or something tripped, and everything came tumbling down. The know-it-alls are trying to re-inflate the economy, but they do not understand how it works. In response to certain stimuli, they would perform rituals and chant incantations. After this, the economy would respond in an expected manner.
This would be similar to a person patting their head and saying “sham, sham, boo, boo” before going through an automatic door, and during a power outage, they would still expect the ritual to work. The economists and other elite experts are standing before the unpowered automatic door performing the ritual, and they keep trying variations on the ritual to make it work.
At some point, the power will come back on, and they will be convinced that they did it. They should be called by their proper name – priests, but they will be hailed as experts.
This is rather long-winded, and I am sure it is well beyond what most people really care about. I realized this a long time ago, and if I had voted, I would have cast my vote for Hillary Clinton. Frankly, I think you all still need the heat turned up to get your minds right.
I forgot I was going to leave this topic alone.