The Republican End Game

The Republican “end game” would be everything owned by big corporations not necessarily aligned with nations as entities but freely enriching shareholders from anywhere avoiding tax as their earnings are processed where there are no taxes.

If these mega corporations are able to employ everyone for a pittance then we are buying into a return to slavery.

Is this essentially the same model that makes China appear successful? Enslavement of the majority for the benefit of the few. The problem with the Republican End Game is the loss of what America is – the most rewarding economy for invention. As these corporations become less answerable to Government, they become more able to break the covenant of fairness. The Murdoch empire is a case in point. A corporation which supported a culture of law breaking that believed it could do this with impunity, which it did for twenty years before a single case sharpened public revulsion with the practice. That is what democracy does, it pitches the majority against the business interest and belief of an individual who learns that the end justifies the means time and again.

Democracy allows for peaceful revolution. An absence of democratic principles as in the case of Libya demands more severe responses. The essential problem here is a duality where both sides are destructive to each other. A unified system that causes progress according to long term principles appears have delivered stable growth in China for the last 3 decades by enforcing cheap exports to the world while the West has been experimenting with Freedman’s economics, gambling as though it were an addict. When cronyism and corruption abide, and capital exists only for its own maintenance, there are economic distortions that will result in disasters.

The West can rescue itself by very progressive and specific Government spending on the correct programmes. Education for all, being the most important. Obama decided to invest in rescuing mortgages and jobs but with poor returns. The Republicans want to reduce taxes and spending and leave America a first world city state in a third world country.

See also: Huffington Post

It’s a stupid economy

While the rich executives of bailed out banks get enormously richer they are laying off staff the bank can not afford to keep. The award of ridiculously huge bonuses is justified by a government scared that these talented market manipulators will go and work overseas. The lack of any real wage growth for the broad middle class is a festering sore on the economic fortunes of the world. If the only customers that can afford your product are 0.5% of the economy then you had better be selling a very high priced item. This creates a scarcity of reasonably priced items when there are increasing numbers of middle class debtors who both owe and now own the banks.

It is a stupid economy. It is not improving the lives of the many, it is rewarding greed and extraordinary indulgence by those who believe they deserve wealth because of manipulations of the market and capital. The result of this free market economy is massive capital flows, debt leveraged and re-leveraged into Government securities and the economic imbalances inflicted upon the East by the West is being replayed back. This is the action of a highly organised Politburo that has longevity of planning over the power of a Western democracy that changes direction and elects officials without sufficient economic acumen to understand the long term risks of excessive debt to one’s very currency, fully expecting that an assumed survival of the fittest aspect of nature will win against careful management for economic survival and economic growth on a scale that is bound to eclipse the West sometime sooner than the West thought possible.

Economics is not a science of certainties. It is the art of fluid dynamics in maybe eight dimensions with all sorts of constraints and purposeful transfers of capital liquidity. It is no longer practical to lug pounds of gold across hallways as there is more money than there is security. If a massive default were to occur, with America owing the rest of the world trillions, world trade could cease up for many countries reliant upon American trade as a major market. The international depression that would follow would mean China could never be repaid. So what would that mean, exactly?

It would mean the wholesale takeover of American assets by people who do not live in America, exploiting Americans who are hungry for jobs. When the public sector is reduced to a slither of its former self in the UK, we could be similarly vulnerable, which is why the conservatives decided they would deconstruct government spending in a hurry, so that what assets the British had left, business and property wise, would remain in British hands.

But instead of that result we see a fear that bankers will go to richer pastures and huge bonuses going to many investment capitalists (including those who caused the vacuum that keeps current capital in a collapsed state). Why does someone need to be paid tens of millions of pounds?

Is it because the Government believes that investment capitalists will naturally more likely invest this capital into British companies than the middle classes would with all that Government spending supporting future generations and universal health.

Economic growth follows if you make children into employable well educated adults. A system that does not ensure mobility is less likely to allow for any real growth. Increasing the presence of excessive capital into property or shares creates a bubble that may attract foreign exchange but real value is transferred by people making things work.

Government Spending is the buffer that allows growth after a recession because all the supportive structures have not been neglected. The next generation is prepared to take the reigns.

See also:
Paul Krugman in the New York Times
Fiscal U-turn would be a tricky manoeuvre

Stimulus Irony

…the very quickly bailed out financial institutions see hope in the fact that people may stay in their jobs through the progress of the crisis their inventions created. That they have confidence in the bailout – that the fruits of capital investment are given a little kick by putting money in the hands of their customers – is logical but quite ironic.

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