[Vision2020] The Nation, 6/30/08

[Andreas Schou]

On Tue, Jul 29, 2008 at 12:26 PM, Kai Eiselein, Editor
<editor at lataheagle.com> wrote:
> Human nature is human nature.
> Chances are, most of the "have nots" would blow their windfall purchasing
> things they could have never afforded before.
> Without thinking of the future, many people would blow right through it.
> Once gone, they would wind up selling many of the things they purchased
> because they didn't save any of it for neccesities.
> Many of the "haves" would see opportunities and try to make the most of
> their windfall, gaining wealth.

A great deal of this is a reflection of the way in which the economy
rewards labor and capital. The high transportation and communication
costs of the postwar economy (combined with the decimated industrial
capacity in Europe) rewarded local production and local consumption.
This allowed the unprecedented development of a blue-collar middle
class. The economy, in other words, was structured to reward labor
over capital.

The modern has low transportation and communication costs and spare
industrial capacity even in third-world nations. Manufacturing
capacity, except for high-value items, has essentially been rendered
fungible. Consequently, the bottom has dropped entirely out of the
blue-collar middle class: even skilled workers have been forced to get
jobs in the service economy.

At the same time, conservative reforms have lowered capital-gains
taxes and stripped away the estate tax -- both important mechanisms to
reduce the concentration of wealth and reduce the self-rewarding
nature of capital. Efficiency gains caused by the changes in the
modern economy have sent corporate profits through the roof. CEO
compensation, which is largely denominated in corporate stock, has
consequently risen.

The US is in a perverse economy where work doesn't make you money;
money makes you money. This has nothing to do with your ass-backward
moralizing about budgeting and more to do with corporate kleptocracy.

-- ACS