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90 comments on UK Inflation: the only way is up, baby
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A the risk of being labelled a 'Marxist' I'll try to clarify once more. As an aside, it's ridiculous to pretend that Karl Marx invented the concepts of 'social class' 'inequality' or that his critique of capitlism and the free market was unique to him or to socialists. It's perfectly possible to have read and appriciated Marx without necessarily turning into a 'Marxist', whatever that means.
All I was doing in my post was trying to confront what I perceive as a dangerous dogma, a quasi-religious faith, in the rule and effacy of the marketplace and it's solutions to the distribution of wealth in society. Or is the idea that wealth is unevenly distributed in society regarded as 'Marxist' too?
I am not against markets per se, markets are usful, but perhaps they should be confined to the 'marketplace', allowing them to swallow society whole and that the attitudes and values and practices of the marketplace should take over almost every aspect of human behaviour, is surely questionable and open to debate? Exactly how big and powerful should the market become?
My point about the role of government isn't that it controls the market, it's the reverse, that the market increasingly controls the government. That we are moving towards a form of corporate state, where power in society is being concentrated in the hands of those who benefit and serve market hegenomy. Surely no one can allege with a straight face that the UK is becoming more democratic and that power and wealth aren't being concentrated in fewer and fewer hands and that ordinary people aren't being 'screwed'?
If one believes that gross inequality is justified and massive disparities of wealth and power, can be defended in a democracy, then go ahead and try! Clearly there are always going to be differences in wealth in society, but it's the current scale of the differences that is so striking and has profound implications for democracy. And what is democracy historically? It's an attempt by the many to enter politics and attempt to introduce social justice and share in the wealth and power they create for society, or are we supposed to deny that historically it's the many who have created the wealth enjoyed by the few? Maybe it's so, maybe multi-millionaires who actually support the millions of people who work for them, in much the same way that the peasants needed the aristocracy to provide them with land and labour, is that what people really believe?
The real point of all this is, that if one has a society with huge disparities of wealth and power, and massive diffences in lifestyle, then it's going to be very difficult to introduce the changes required by the challanges of global warming and peak oil, because the consequences connected with these problems are also disproportionally distributed throughout society. When the rich and powerful, who rule the world, live lives so different from the great mass of humanity and their problems, what incentive do they have to promote change?
I will take that challenge. :)
Yes. The large scale discrepancies are necessary for the proper functioning of an economy. This is clearly evidenced in pretty much all functioning economies. In theory, the labor class "produces" products and wealth, however, lacking a "capitalist" class to provide the large investment long payoff facilities in which to do so, the working class lacks a place to work. Many many of the functions performed by the current world economy involve very large outlays of capital with large risk and long payback times. Those projects are simply not possible int he absence of the super-rich. It may be the case that the more technologically advanced a civilization gets, the greater the disparity must be between the highest income and the lowest in order to continue functioning smoothly.
This is not meant to imply that anyone need starve to death or be required to live in "unliveable" conditions, and in fact in the US and europe, the minimum living conditions are well into acceptable territories. It is only in the undeveloped world, primarily territories that lack any form of viable market economy due to the absence of the "wealthy" in sufficient numbers where you find wholesale starvation and real poverty.
Also.... I would challenge the notion that the lives of the wealthy are that different to the lives of the masses of humanity within a set. It is distinctly inappropriate to compare the life of bill gates to the life of a displaced farmer in Zambia. They are not part of the same game. To properly compare different wealth levels, you need to stay within a rule-set (for example the US). So a more apropriate comparison is between bill gates and joe teamster. Joe teamster has medical insurance, is able to afford a home, food, a car, tv, medicaal care, raise children, and essentially live his life. Bil gates has a larger home, but essentially he lives the same type of life. He survives within the same medical technology, eats the same food, grows old and dies just like the rest of us.
There are occasions on which mandatory redistribution schema are appropriate. One example of that is nations with large oil wealth. Oil has a very small labor requirement relative to the wealth it produces, so in the natural course of events it would result in ALL the money going into one bank account through no fault of anyone. This is one of the very few occasions where it is appropriate to redistribute. In an industrial society, such as the US used to be, redistribution is almost always a bad idea because it reduces the overall competitiveness of the nation on the world markets and thus reduces the overall wellbeing of every citizen in it. However, the impacts are slow, and are only now preparing to be felt.
fordprefect,
I hardly know where to start! Are you really sure you actually mean what you've written? I don't mean to sound partronizing. I'm just puzzled. You seem to be describing a kind of liberal, formally correct, simplified, economic utopia, that doesn't exist in the real world. Do you really believe you've accurately described the way the economy works? I'm sure you do, unless you're being satirical and pulling my leg? Are you just pulling my chain for fun as a kind of exercise?
There are so many assumptions in what you say and premises based on liberal ideology and dogma that only partially and narrowly explain and describe how the 'economy' functions. Honestly, I didn't really think people actually believed this kind of stuff anymore. I keep thinking your not really serious and playing Devil's advocate.
I wasn't really concentrating on pure economics, or what's good for the economy, at least I don't think I was?! I think I was attempting to draw an outline of changes and dangers to society of the evolution of a form of capitalism which is anti-democratic and totalitarian in nature. The state and capitalism merging into one all-powerful entity - a veritable Leviathan towering over us. I don't think I'd put the needs of the economy before the requirements of a democractic society.
You seem not only to be arguing that inequality is good for society, but that the the more inequality there is the better it is for society as a whole. That vast disparities of wealth are almost an indication of how economically successful a society is. Are you sure this is what you mean?
You also substantially underestimate the detremental effects of vast differences in wealth and power on society as a whole. In fact you don't deal with the thorny issue of power at all, almost as if it doesn't matter in a democracy. You seem to put great store on the economy and how it functions optimally, yet you don't seem all that interested in how democracy functions, are these two connected? Vast differences in lifestyle and wealth and power distort society on so many different levels, surely this is obvious?
However, you deny this, by bringing up the third world, which I didn't mention. I didn't compare Bill Gates to some farmer in Africa, where did you get that idea from? Isn't that the classic 'strawman' style of argument, where do people learn this stuff? You also then to support you're argument try to contend that the differences between the lives of the super-rich and the average person aren't that great after all. That the rich have lives pretty much the same as most other people in Western countries.
You can not be serious, surely? How do you know so much about the lifestyle of Bill Gates and what he eats and where he lives and his level of medical care, do you know him personally? How many super-rich people do you actually know? I'm not super-rich, and I don't want to be, but my lifestyle is vastly different from the average person. I eat far better and expensive food. I have better clothes. I will probably live ten to fifteen years longer than the average person. I have a secure and very generous pension plan. I have a substantial investment portfolio. I have three homes. I don't have to worry about what things cost. My children go to private school and are receiving a very expensive elite education. You are substantially underestimating the collosal differences between the wealthy and the average working man.
There's a basic contradiction in your argument, probably because it really doesn't have much to do with reality. One the one hand you praise and justify inequality as necessary for the proper functioning of the economy, yet then you put the breaks on for some reason, and argue that even the super-rich are pretty much just like most people in their habits and lifestyle, so the egaliarian principle sneeks in by the backdoor so to speak. So one then wonders why we even aspire to become super-rich if they really live mostly like the rest of us and they don't really exist as a distinct group apart from the rest of us. So what motivates them, why do they bother, if it isn't for the financial reward and the lifestyle wealth brings? So maybe we don't actually need a capitalist class at all then?
:) To some degree I was yanking your chain. Mostly in the phrasing and glib characterization as opposed to the actual point, but still. I don't believe the actual economy functions as I have laid it out, For one thing, the existence and over application of government throughout my lifetime has badly distorted any economic theory.
OH! BTW, it is conservative ideology and dogma, not liberal (at least here int he US, I don't know where you are from) :)
One of the most dangerous misconceptions is that government is an effective tool to reign in corporations. In practice, regulation *always* favors the existing big corporations by erecting barriers to entry for new smaller players. Case in point, the pharmaceutical companies, Pfizer could not be the monolithic corporation it is in the absence of the FDA and the draconian approval process required by it.
You have it backward about the income disparity/health of economy thing. I wasn't saying that a high income disparity means a healthier economy, I was saying that high *technology* ventures require a high income disparity. High technology manufacturing plant is *expensive* and virtually impossible to construct without someone REALLY rich backing it.
As for the lifestyle differences, the advantages of wealth are not unclear. The wealthy get the best that society has. However, they still live in the same society, at generally the same level of technology. The difference in quality of life between joe teamster and for example... Alexander the great is far far greater(vastly favoring joe teamster) than the difference between myself and bill gates.
I never said that you compared gates to zambian farmer. You DID however compare the super-rich to "the great mass of humanity". The bulk of the people on the planet live pretty primitive lives, more comparable to the zambia farmer than to joe teamster. That's where I drew the inference that that was the lower endpoint you were using. However, since the zambian farmer does not engage in any meaningful commerce with any portion of the outside world, the separation is reasonable. If you had something else in mind by "the great mass of humainty" then I stand corrected.
INRE democracy/economy. Wealth in and of itself has very limited impacts on the functioning of a proper democracy if the citizens are being responsible citizens. However, we haven't had one of those in quite a long time. Democracies require several things from the citizens. For example,
a) Education on the issues under discussion... anyone think that's been being practiced?
b) Compromise on issues. YAH. Right, that's been happening.
c) Lead, follow or get out of the way. Democracy requires that the outvoted party STFU. Hasn't been happening.
Only when the requirements of citizenship are met by the bulk of the populace does it even make sense to discuss the impacts of wealth on democracy.
I DO however, certainly agree with you that when the capitalist institutions and the government start playing ball together it's all over. It seems to me that it is the responsibility of "we the people" to prevent that, or failing that, to press reset and get a new government.
Gotta say though that if the options are *either* democracy OR economy, I'd prefer to live in the nation with a functioning economy over the one with the functioning democracy. "we the people" are phenomenally stupid, and will frequently vote for measures that are simply stupid. Democracy is not the holy grail. Nor is a strong economy. The holy grail is "can't we all just get along?" and the answer unfortunately is "NO".
Im slightly concerened that I need to put effort into defending democracy against the obvious anti-democratic tendencies in our own society.
Whilst I can see the logic behind the few defending their position and interests against the many, and therefore they fear democracy, I have difficulty understanding why on earth ordinary folk, with ordinary incomes and wealth, support the rich and inequality. Is it because they really believe, against all the odds, that they too have a realistic chance of becoming rich themselves? But they'ed have more chance of winning the lottery than becoming rich. To accept inequalities for themselves and their families, for their entire lives, in the vane hope that they too one day will strike it rich, is delusional. That apparently significant numbers of ordinary people have internalized and accepted the values and attitudes of the rich and powerful has always puzzled me. That people actually seem to believe in 'trickle down' economics is beyond me.
There's also the 'paradox' that people seem to believe in two contradictory forms of incentives at work in society. Put simply, that the rich perform and contribute to economic growth if one 'pays' them handsomely, whilst at the bottom end, the opposite applies. But surely there is form of sliding scale at work here? That, in reality, the reverse is true. At some point the rich are saited and the benefits of pampering them begin to fall off, whereas directing the same portion of wealth towards the lower end of the scale will have a far more positive overal effect on society, or is that deemed 'socialism' too?
One could examine the current economic crisis in the United States as an example. Vast inequlaities have distorted the economy to almost breaking point. The super-rich, who, after all, are in charge, have run the country into the ground. This pattern seems to repeat itself over and over again. It is a myth that the elite know what they are doing and are more able and competent to steer the economy. What they do is follow their narrow 'class' interests over the cliff and drag everyone else with them. Why do they do this time after time? Simply because they can. The economic system in the United States disproportionally favours the interests of an elite in opposition to the well-being and interests of the majority of Americans. Now, I'm not sure this is a 'Marxist' analysis or not. Is it wrong to use the concept of social class and conflicting interests, is that it?
Surely one can't argue that social classes exist in the United States and people have hugely different lifestyles and access to resources? I can appriciate that one can argue that enormous inequalities in society don't really matter, and even that inequalities are positive and are what makes society dynamic; but to deny that inequalities of wealth and power exist is something else.
How then is the United States going to get out of the slump it's moving into? Well, it isn't, not unless one adopts a whole new set of solutions which are currently not even on the table. What's happened is that the United States has 'chosen' to saw off the branch it sits on. The corporations, what I call the super-rich or aristocracy, have moved American industry overseas to places wheere they can score bigger profits, fine for them, but not exactly beneficial for ordinary Americans who are forced to remain in the US, unlike their disappearing jobs and futures!
Just for starters what one needs is a fundamental tax reform, shifting the burden from ordinary folk and onto the wealthy. Ordinary Americans have seen their share of national income fall, now they are unable to borrow more, in deadly debt and can no longer afford to buy what's on offer. What's required is a type of New Deal. A massive programme of government financed public works to get people back into productive employment and put real and higher wages in their pockets, because otherwise the downward spiral will just go on and on and down and down. The American working-class and middle-class need support, not the rich, they have received more than their fair share over the last thirty odd years. Redistributing wealth to the lower end of society will have a far greater and more positive effect on the economy than pampering the rich even more. This is simply stuff. We need to rebuild the American economy from the bottom up. Unfortunately, this flies in the face of the dogma and interests of the elite minority that owns and controls the United States. The wealthy elite have the system 'sown up' and the democratic majority are disunited, fragmented, brow-beaten, hamstrung and without leadership, or anyone to fight for their corner and interests, the poor sods don't even have a political party to represent them. So implimenting the reforms necessary to get America moving again is going to be real uphill struggle and things are going to get a lot worse before they begin to get better, if they ever do.
You seem to be ignoring the chicken-and-egg nature of your argument. Maybe because it is convenient for you. But where did the "super rich" get their wealth in the first place. Maybe they stumbled upon a mountain of gold and claimed it for themselves, because God knows, if you find something, therefore you own it (sic.). If an individual swings a stick at a ball often enough, then invariably one is going to get good at it (most of the professional (sic.) sports people, movie stars, singers, ...) - the disparity in wealth is immoral.
Have you read at all, about all the people in the USA without health insurance, or maybe about the rate of home foreclosures and that the rate is increasing? The USA is going off a cliff, your comparison of "Joe Teamster" with Bill Gates is specious.
Chicken and egg nature of the argument: not ignoring it, just see no particular need to chase it back that far. Yes, the original capital came from somewhere. In many cases it was a criminal enterprise, an easy innovation, political favors from queen Isabella, or a lot of hard work. The fact still remains that a nation of joe teamsters will build no factories and mine no iron in the absence of a few capitalists to fund the ventures.
Yes, I AM one of the people in the US without health insurance. My business is purchasing and rehabilitating repossessed houses. My clientèle is primarily dolists. This isn't theory for me, it's my daily life. The dolists I rent to ALL have cable, health insurance paid for by the state, HEAP pays for 75 degree heating in the NY winter, the quantity of wal-mart plastic they leave behind when they move out is astounding. Their lives are crap, but that is most resoundingly their own decision making skills as opposed to lack of resources.
It is not a fact, it is your opinion. You are basically saying, that it is impossible to place an advert in a paper, or on TV, or rely on viral internet marketing, to raise substantial sums of capital - methinks that is exactly what Obama has just demonstrated. If you want to be beholden and kiss the ring of a 'few capitalists' then feel free.
So now your average 'Joe Teamster' has everything he needs in life, but you and the people you rent to, do not. Like I said, your comparison of 'Joe Teamster' to Bill Gates is specious.
Name one nation at any point in history that has or had a functioning industrial economy without a very wealthy class. The insistence that things that have never ever worked can work if we all behave better is one of the most dangerous in history and has been responsible for enormous evils throughout history. Capitalism works. It has always worked and it is the only thing that does. Periodically however, the tree of liberty needs water, and that's just life. The time to water the tree invariably comes about because government takes too much control and crashes the functioning of the nation. Whether it does so at the behest of the corporations, the people, or the spotted owls is irrelevant.
BTW, I have everything I need, as do all my tenants. The insistence that health insurance is a "need" is ignorance. The fact is that without health insurance, do you know what happens? You still get treated, you just don't pay the bill. It's as simple as that. It isn't your life that is in danger, it's just your credit rating.
I've given you one clear and substantive example where an individual has raised a considerable sum of money without reliance on a 'few capitalists'. You have ignored my line of reasoning and your argument has now changed to asking me to disprove a negative combined with an appeal to authority (the "tree of liberty" lol).
Your thinking appears stunted - "at any point in history" .... "industrial economy", tell me how many years have we been standing erect, and how long is recorded history, and how many hundreds of years have we had an industrial society (in the west)?
You might as well ask for an example of one nation that has a law where everyone wears pink on Monday.
Further, I have made no "insistence that things that have never worked, can work if we all behave better", and even if I had, your comparison that this "is one of the most dangerous in history and has been responsible for enormous evils throughout history" is outrageous. Hitler was evil, a line of reasoning is just that. Do you seriously think that your staggering exaggeration and inflammatory language constitutes a line of reasoning?
"Capitalism works", lol, today there is news that the FBI has arrested over 400 people in connection with the sub-prime crisis. These people were not colluding on some game-the-system forum. A large number probably have no knowledge of each other. This, Enron, et al. is an example of the system you are attempting to defend. Before your very eyes it is falling apart. How safe are savings when, on the one hand, the true rate of inflation is likely double that reported by the Government, and on the other hand, we have the Federal Reserve continually diluting the US dollar and setting base interest rates in low single digits. Seriously, how does this very broken version of capitalism help the ordinary saver? This is also happening in those other fine examples of 'working Capitalism' the UK and Europe.
Following your example of lets not argue the facts, lets try colorful metaphors; your reasoning appears to be flip-flopping on the deck like a fish out of water.