Where Did Money Go?

Plutocracy Rising

Plutocracy Rising

This graph says it all. Yet, I showed it to a PhD in physics, who told me it was not understandable “because the axes are not labelled“. I was floored. After I pointed out that all the information needed was on the graph, my friend got very upset. (Yes, surprisingly, I still have a friend or two.)

Thanks to the clash with that friend, I realized that, although this sort of graphs, where two, or more, data streams are compared for relative change, are common in economics and finance, it’s not the case in physics!

So let me be very explicit for the plebs, educated ot not, out there: the picture above shows that, although productivity, that is, basically, GDP, kept on climbing, since 1980, those producing the augmentation of the GDP, the workers, did not see payments commensurate to that augmentation they caused. Money was produced, but it did not go to the average compensation.

How to interpret this graph then? The graph says that people at the top have been making all the supplementary riches produced ever since president Reagan came to power to implement the notion that the rich created the world. And that they would create some more of the world, if only they got even richer. That is, if only the wealthy got more of the world for themselves to keep, they would make more of it.

Strange mathematics, weird economics. Hey, nobody said that Reagan was an intellectual!

Money circulates, Reagan, his goons and clowns correctly argued. Right. So it had got to come back, somehow, the goons gloated. Right, money comes back. Owned by others. How does it come back?

Well by having the plebs, the rabble, the commons down below, those who serve the Rich and make the world worthy and beautiful for the Rich, BORROW BACK the money who had been stolen from them, when productivity was stolen from them.

Thus, thanks to Mr. Reagan tweaking of society and the tax code, most of the population was forced to borrow money instead of earning it.

An example is education: by making, de facto, public universities private, Reagan and the plutocratic sycophants who succeeded him, forced the student of the USA to borrow ever more. Now the total student debt, in the USA, is around a trillion dollars. An argument I know the Obamas understand (because they lived through it).

But there are other examples: by dismantling the public federal psychiatric system, Reagan decreased public spending, while allowing the crazies to roam the streets (that the plutocrats don’t mind, as they live in gated communities!).
Then, of course, Nixon had already created the Health Maintenance Organization system, a public financing of the for profit health care (something reminiscent of Obamacare).

This is the exact same mechanism that created the European Feudal system. By 600 CE, everybody was a Frank. By 658 CE, the slave trade was outlawed in the Imperium Francorum, slavery became irrelevant. Soon all and any religious establishment was forced to provide all and any child with secular education.

By 800 CE, Charlemagne, who lived very modestly for such a great emperor, pushed further for universal education. Although Charlemagne was the most warring emperor known until then, he was surrounded by top philosophers, some of them even from the British Isles, and that made him one of the most progressive emperors, in 5,000 years of historical civilization. This situation of deliberate progressivism perdured for at least two generations, until the reign of Charles the Bald.

So how come, if the Frankish empire, for centuries strived towards equality, five centuries after Charlemagne, Europe had turned into a monstrous plutocracy, with so called “aristocrats” all over, and the commons, equal in the eyes of the law, often treated worse than dogs?

Borrowing. Massive borrowing.

Frankish Europe had fallen into one conceptual trap, while simultaneously invaded by savages from all over. So Frankish Europe had plenty of excuses. The trap was European disunion. The savages, the Islamist Terrorists, the Vikings and the Mongols (“Avars”) attacked, attracted by the riches of Europe: after 800 CE, per head, Europe was the richest, and, consecutive to over-democratization, was not as well defended as its riches called for.

The reaction was to develop a military-industrial system centered around hyper trained, heavily armored knights, the sort no other country had, the sort that had devastated the fleeing Muslims after Poitiers (732 CE) and crushed light Muslim cavalry at Narbonne (737 CE). Militarily, it worked: Frankish knights were unstoppable: they rolled back the Muslims over the entire Mediterranean, and put an end to Constantinople’s independent Roman power (1204 CE). They were so unstoppable, that even the Huns, after suffering heavy losses in Hungary, decided to leave Francia alone, and made military alliances instead with the Franks in the Middle East (fall of Damascus, and Baghdad).

Thus the rise of plutocracy in the European Middle Ages happened for a very good reason: when one confronts unfathomable evil, as invaded Europe did, invaded on three fronts, one does better with a bigger Pluto on one’s side. Still the Franks of Clovis would have disagreed: although they had consented to give Clovis the powers of a Roman imperator (something crucial to destroy the Goths at the battle of Vouille’, 507 CE, for example), they drew the line of the Gini index (the inequality index) at that point.

Right now, there is no reason to call onto Hades, Pluto, Satan and a satanic organization of society. Historical examples, all the way back to Pharaonic Egypt, Crete, Classical Greece, and Rome, let alone the Franks themselves, show that an equalitarian republic is the most militarily capable society. (So why did the Franks develop an aristocracy centered on heavy cavalry, starting in 732 CE? Well, emergency. Charles Martel knew the Arabs of the Damascus Caliphate were going to be back, and he set up an enormous cavalry in 5 years.)

However, right now the West is militarily dominant (thanks to heavy taxes in a couple of countries, including, first of all, the USA and France). Thus there is no existential excuse for what is going on today.

All what is going today is a pure plutocratic effect, when the rich have got so rich that they can buy the republic. Fortunately, we are still at a point where the plutocratic effect can be rolled back.

Eleven countries of the European Union, following France and including Germany, have just passed a financial transaction tax (all other transactions are taxed, so why not the financial ones? All the more since the financiers are the richest!).

Now, miracle of miracles, Obama seems to have unchained himself. A bit. The Justice department is suing Standard and Poors (the rating agency owned by Warren the big Buffet plutocrat) for fraud in its ratings. OK, it’s only a civil lawsuit, not a criminal one.

When Django got unchained, he fired big bad guns on big, bad guys. Now Obama is unchained, look at him, firing his water pistol. *Sigh*.

So where did all the money go? To the rich, their mansions, their private jets, their guarded communities, their bodyguards. How is it coming back? By paying feudal servitude to the lords, same as 1,000 years ago.

Where is money not going? It is not going to true health, education, science. Some will scoff: nothing new under the sun, plutocracy comes and goes.

Yes, right, plutocracy has come and gone, like an evil tide, in 5,000 years of epistolary civilization. Civilizations rose, degenerated into plutocracy, and other civilizations, younger, cleaner, more democratic, gobbled them up.

However, this time is different. We are in a situation similar to Rome, just way worse.

We desperately need more science to get out of the predicament we are plunging the biosphere into.

Instead this morning I got a message from the AAAS (American Association for the Advancement of Science) saying:
“It seems inevitable that there will be reductions in federal spending, but will these cuts be allocated in a way that devastates science research and education, threatens future economic growth, and erodes America’s competitiveness in the world?”

Well, if it were just a question of letting the USA sink, that would be only just desserts. But actually the fate of the biosphere is at stake.

All of this because the wealthiest of the wealthy are splurging, while starving the rest.
***
Patrice Ayme

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29 Responses to “Where Did Money Go?”

  1. Mike Says:

    Hi Patrice – would you please contact me? I would like to correspond with you if possible, re: republishing to a new audience.

    Thank you!

    • Patrice Ayme Says:

      Mike: Thanks. I will be delighted to re-publish to a new audience. So I will contact you. However, in the next 20 hours or so, I am extremely busy with various obligations, from business dinner to various duties with my three year old daughter. And I have to run, just now. So I may be a bit slow to contact you, but not from lack of interest!
      PA

  2. Casey Weston Says:

    Is it evident to you that the US stockmarket may yet collapse because it is hollowed -out….that this surge in the DOW is just another bubble?…

    • Patrice Ayme Says:

      Casey: I don’t know. The markets have long been very manipulated by the plutocrats, so… (I’m not completely ignorant of this area, BTW, but pretty disgusted by the manipulations…) The Obama administration is nearly, perhaps, maybe, going to prosecute the criminals at RBS, so we will see… They manippulated both the the up and downs in the past you see, like Buffet going long and short of Greece, according to his dog, S&P…
      PA

  3. Dominique Deux Says:

    Your analysis is spot on but maybe too US-centered. Blaming Reagan for a worldwide and ongoing heist on the proceeds of the economy may be unfair to a poor sap who was merely a local enforcer. What happened is neatly summed up by Warren Buffet: “There has been a class struggle, and we won”. Worldwide.

    It would be interesting to complement your graph with the evolution of consumer credit. I deeply feel that what made possible the large scale confiscation of productivity gains without popular resistance was the parallel access to painless finance. As long as the plebs are kept in housing, cars and flat screens, who cares if they end up owned (and disowned…) by the banks? And the beauty of the trick is that, where a worker can and will organize with his brethren for better wages, his personal debt is a personal shame he’ll endure in silence, fearing for his job and shrinking wages. A truly brilliant pincer strategy that has been implemented worldwide. “We won’t give you the money we owe you for your work, but not to worry, we’ll lend it to you. So now you owe it to us.”

    Don’t get me wrong, there probably was no strategic conspiracy to achieve this. Serendipity, as is often the case, decided the battle. But the battle is decided.

    • Patrice Ayme Says:

      Dear Dominique: Yes, I was aware that I opened my flank to being too USA centered, but I had some French (in personal communications) telling me I was too French centered. OK, I plead guilty, as convicted. One has to start somewhere. The USA being the main head of the plutocratic hydra, I may as well strike there, as often as needed.

      Anyway I am sure the same graph shows up in the main countries of the West. (Consider Germany with one Euro/hour compensations for the plebs…)

      Fact is, R. Reagan, as governor of California, introduced tuition at the University of California (which had been created by Pat Brown speciafically to be public), and now the tuition movement has spread worldwide. They may as well charge tuition for public primary school… Even the Carolingians, before Charlemagne would have been furious!

      A lots of things American spread worlwide, except for Johnny Halliday (an inside Franco-French joke)… Because of the hummongous size and monolithic influence of the USA.

      I think your analysis that people got seduced by easy credit away from compensation is spot on. Whether there was conspiracy or just serendipity is a subtle point. I know personally some plutocratic circles, and I believe in the conspiracy approach. Be it only from just the way those people talk, their little theories, and the hatred some of the owners have developed against me, really on fumes. I am personally totally unwelcome in some (vast) gated communities, where I used to be welcome as a pet, and even “family” would charge me hundreds of dollars, while their hyper wealthy friends (not related except in money) would go free (in the same otherwise unoccupied enormous mansion).

      That pincer strategy was used, consciously, and even deliberately, when the feudal order was instituted. I believe it’s deliberate and consncious now. Silicon Valley types who avoid nearly all taxation for decades from borrowing know perfectly clearly what they are doing. Just like when the USA government does not tax the likes of GE, or pursue with rage Internet activists, while making the Jobs’ widow, who has never paid significantly taxes, quasi-sit in Michelle Obama’s lap during the latest state of the union.

      Deliberate strategies are used, such as the latest tac about “climate sensitivity”, where the plot is to present as reasonable and moderate what is perfect for the fossil fuel lobby. Whereas in truth it has all to do with sun output. As I detailled, years ago.

      And the battle may have been decided, but the war is not over. To start with, the financial (sub)conspiracy is untenable with a financial transaction tax (just passed in 11 EU countries).
      PA

      • EugenR Says:

        Yes the US tax reward system is deformed. Very low taxation on consumption products, (no VAT), subsidies on fuel consumption, (even if not direct, but by not penalizing the environmental damage it creates), encouragement of consumerism by credit, by the way financed by the supplier of the consumer products, China.
        It seemed to me, after 2008 all this will change, but nada.
        Anyway one day the Chinese may say, we had enough of all this. Then the world economy will collapse again and US economy will shrink like the Greek one.
        Or maybe the luck will work overtime for all of us. With all this cheap gas and energy source developed. And lets not forget most of the rich Chinese want to live in the US. Conclusion, as one economist said once; If to predict, so lets predict the past. Still to base economic policy on luck? This politicians are big gamblers, the problem is they endanger our tokens.

        • Patrice Ayme Says:

          Dear Eugen: The world could blow up at any moment. Thanks to the installed political plutocracies. For example China and Japan could be at war tomorrow. (Although in the very latest developments, China finally seemed to be backing off a bit.)

          Citizens of the USA would be the first to say that the European tax system is intolerable. They have been conditionned that way. Never mind that the upper margin tax rate in California is 52% (worse than France now).The hyper rich still don’t pay tax (there are well known tricks). Obama is navigating for himself, or so he thinks. Much of what he did has been under the banner of Pluto: invisible, and not what it appears. The left is slowly realizing it has been had. Yet, the problem is that Obama is not even the worse among the pseudo-progressives. I view Krugman and Stiglitz as pseudo-progressives. That puts them on the left of the leadership of the Demoncratic party.

          BTW, Obama was told in no uncertain terms in 2008, by some of his closest oldest friends, the ones before he went to Chicago, that he had to do the reforms you allude to above. And he spoke as if he would. But he had seen the danger, and could not be general and army to start with. Once elected he decided to follow the likes of Warren Buffet, instead of his unknown friends who he has had for decades. The seduction of power, the fear of the unknown ruled.

  4. hazxan Says:

    Good article! A couple of points, Patrice. Are you aware of the recent decline in productivity in the UK and possible other Western European nations? Occasionally we get some article about this ‘paradox’ with unconvincing explanations by typically out-of-touch-with-reality economists.
    I wonder how you can measure the ‘productivity’ of so much of what we do, anyway. Are economists more or less productive than they used to be?
    My instinct is that much of these figures – GDP, GNP. employment, prodictivity etc are fictions anyway. How could they ever be reliable? You can only measure quantity, not quality and at every stage, in my experience, people pass on figures to their bosses to make themselves look good. I guess so long as the distortions are consistent, you could see a vague trend, but that’s about the limit.

    One more thing, on Reagan. It’s not just him alone. Neo liberal ideology is endemic throught the people even now. You don’t mention unions, but that money grab by the plutocrats that you highlight, coincides with the destruction of unionism. Refighting the battles the unions won, yet gave away in the 1980’s, is the only way I see to change.

    Yet suggest the word “union” to the very majority of people who every year work harder and get worse off and they treat you with utter contempt.
    In fact, those same people fully support tax cuts for the rich, removal of employment protections, reduction of any social securities etc etc.

    Ironically, in the UK at least, productivity increased more in the 1950’s – 1970’s when we were stronglt unionised, than it did from 1980 to now, when unions had little or no power.

    Which just underlines your message, Patrice, that these policies are an ideology that has nothing to do with an economy that benefist the majority.

    • Patrice Ayme Says:

      Dear Hazxan: Lots to say about the subjects you broach. I have written that economy needs to be entirely reformulated with completely new notions, centered around energy. as it is, economy is founded around money, a non linear anthropocentric notion based in part on trust. Earth is not anthropocentric.

      Energy can be defined precisely, as is done in physics.

      So I agree with you that the usual notions have to be taken with a grain of salt. Or even with an ocean of salt. Yet, there is something to the usual notions, they can be used for first order reasonings. As I did on the productivity thing. What I am truly targetting are economists on the American pseudo-left, who are giving somewhat poisoned advice. Indeed they are Reaganites in disguise: watch Stiglitz deploring inequality, because the poor save less (so, if the poor was a bit richer, demand would improve. Yeah, true, but not the main points my dear Stiglitz!)

      Infection by plutocratic thinking is indeed global. Yet, the 11 EU nations financial transaction tax is a good step forwrd: the most abusive part of the financial system cannot function with it, IF the tax is high enough (as Merkel agreed to it, I wonder if it’s high enough…)

      Good point about UK productivity (I know nought about recent evolution thereof). Present economic policy in Britain has some good ideas, but execution is lamentable (see the stupid EU referendum idea, which will have the same effect in Britain as the sequester in the USA now, namely businesses don’t enjoy Damocles swords…)
      PA

  5. Dominique Deux Says:

    Dear Hazxan

    I have half a theory on that productivity decline trend. Based on experience, mind you.

    Decades ago I was in Mali investigating the internal trade in staple foodstuffs. The country was starving, village granaries were empty, speculators were thriving (or so went the story i was to look into). Mali on your TV screen looks like unpromising desert, but that’s only the North. The lush (and beautiful) South and center once was the foodstore of French West Africa, thanks in part to large scale irrigation works around the Niger river. So what sent the country into destitution?

    The easy answer was “the French left and their achievements petered out”. But Mali had been more than self-sufficient, a wealthy empire, way before colonization. A Malian king made the Hajj pilgrimage in medieval times, leaving the dirt-poor locals around Mecca amazed at his munificence and generosity with his gold.

    Mali in the seventies was under the boot of a greedy military junta, brutal and corrupt to the core, which relied on the Soviet-Mao alliance for international respectability. The lowest ranking Army officers sported those new Seiko digital watches with bright red LEDs which cost a fortune at the time. But the officers were not filthy rich – for them, too, the country was barren, no bonanza for sure.

    In neighboring countries with the same (or worse) weather conditions, the usual pattern of peasants growing more than they needed, happily trading it and keeping a full two year consumption in village granaries, went on unabated. The clincher was when I noticed that tribes with the same cultural backgrounds erected their granaries in full sight in those countries, and built them in remote, hidden locations in Mali.

    The pervasive looting of peasant food reserves (under old Leninist principles) by the military had in fact led the peasantry not only to hide the granaries, but to STOP GROWING any food beyond their immediate needs. This was, I concluded, a farmer country on strike. Not under any “union” leadership – the junta was ruthless – but out of a general productivity lassitude. You also could say the country’s farmers had reached the upper end of the Laffer curve and no amount of pressuring would elicit a pound of rice any more.

    A similar phenomenon could very well be at work in developed economies, only they are not farmer countries. The workforce is reaching the end of its Laffer curve. How amusing that the plutocrat-serving media, always eager to point out how the Laffer magic is destructive to the rich’s benevolent economic activity, never ever dreamed that the hoi polloi also would be given to such defensive reaction! These plebs really don’t know their place. Next thing you know, they’ll eat roast chicken and go on vacation. What is the world getting to be!

    • Patrice Ayme Says:

      Dear Dominique: So you have lived in the ex-AOF? (Meaning French Occidental Africa)… Small world, no wonder. No wonder, because Africa forces one to (re) think in depth lots of the things taken for granted in the west, or wherever… Just like you did.

      In any case, excellent analysis, Dominique! EXPLOITATION MITIGATION SCHEMES are many. The most famous one: when serfs ran away to the cities and woods in the Middle Ages. Going into vacation or taking ten breaks per day is one way. Now, of course, that’s why there is a private sector, to fire the lazy ones.

      The so called “Laffer Curve” should be renamed, because it’s extremely old (as Arthur Laffer himself said). It’s the TAX OPTIMIZATION curve. Exactions and
      exploitation, indeed, can act like taxation, they are a form of taxation. And people can flee inside themsleves, if nothing else, one of the reasons why plutocracy reveal themselves to be underperforming in war, and on the run, like the not so charming invaders of Mali… A woman in Tombouctou was saying:”No, no, no, the French should stay, they should stay 100 years…” or how Africa was won… Fast forward to Tunisia or Egypt, for further edification…
      PA

  6. Old Geezer Pilot Says:

    All interesting comments to an interesting essay. FWIW, Karl Marx wrote about the “surplus value problem” 150 years ago. The question, of course, is how to allocate the “surplus value” of an enterprise. Reagan’s first move as President was to bust the Air Traffic Controller’s union, starting the long slide in union membership in the USA from 25 % when he came in to under 7% today. I am not praising the ATC union, or any other union in particular, but there is nobody to prevent capital from devouring ALL OF THAT SURPLUS themselves.

    Which is precisely what they have done.

    To keep the workers “happy”. they have loaned to them what they have stolen in unpaid wages, as you have noted.

    And now that the bubble has burst, we are all in a pickle.

    Marx would not be happy, but he would be quietly smiling.

    • Patrice Ayme Says:

      Dear Old Geezer Pilot: A few remarks. 1) You are very right about the ATC strike, Reagan had them chained, hand and foot. It was truly shocking, a scene from the Middle Ages.

      2) “CAPITAL” is accused, always, das Kapital, aber… But that ought not to be the real target.
      First, of course, the modern states are the biggest capitalists. Not just the vast holdings of the French state(s), or the National Health service (of Great Britain), or the Norway Fund ($600 billion+), but also the USA’s Dep. Of Defense, etc… All of this represents huge capital.

      Median and average shareholders are also getting the short straw, too. The CEO class, part of the plutocracy, is in power, not shareholders… Shareholders, as a class have lots of capital, and close to zero power (nowadays).

      Plutocracy is different from capital. Capital is the fruit of what I call AWE, Absolute Worth Energy. Plutocracy is the rule of the Dark Side (in contrat to the USAGE of the Dark Side).

      I have (a little bit of) capital (otherwise I could not write, as I would be working in the salt mines all day long, chained by Reagan). However I am neither a plutocrat, nor a plutophile. I have seen people will little capital, who are extremely plutophile. Plutocracy would be nothing much without plutophiles and their plutomania. So what really counts is which emotions one decides to be led by, or esteem the most.

      The real problem of democracy nowadays is how to we assign energy to the variable dimensions we can endow the economy with. As you insisted with Solar Energy (which could indeed be developed more). BTW, Washington State has huge (rather clean) hydro, but there are not enough power lines to pipe it south… An obvious target for the USA gov.

      3) Not only they have devoured the surplus, but they leveraged that indigestion. Now time has come for them to exercise in the courtyards of private prisons of their owen making, hoisted on their own petard…

      4) Once again, BO seems to have folded and RBS will pay only a fine (instead of having the Principals go to trial for LIbor rigging…)
      PA

  7. Hazxan Says:

    Dominique,

    I think it’s true that the ‘working class’ are not putting as much effort in. One of the huge problems with communism, so they say, is that the “state takes the fruits of your labour”. And this is obviously demotivating.Many variations on these theme, all with the “fruits of your labour” being taken against your will. Seemed reasonable to me, until I found that in a capitalist society, the worker doesn’t get the “fruits of their labour” either”! No, the biggest portion goes to the owners, who will no doubt be on a far away beach.I frequently work on contracts worth many 100,000’s, I;m sure there’s nothing exceptional about that. What is interesting is that only a few thousands are given to myself and colleagues. The remaining progit goes? Well, it seems each level in the heirarchy takes more, for arguably less work.

    Not to deny that communism is a failure, but to add that capitalism seems to have the same end result for those who actually get off their butts and do the work! Too much emphasis on ‘investment’ as being more valuable than work, and completely spurious stories of plutocrats “taking more risks”. Which is just not true. A pile of money never did anything by itself!

    Speculation on other causes of productivity decline: change to a “service” in contrast to “manufacturing” economy. It’s much harder to improve the productivity of a service than it is the productivity of a product. Anecdotally, the quality of most services is declining all around us too – the latest NHS scandal in the UK, it now can take 2 weeks to connect a phone line to a new house, it took 2 days 20 years ago. Hour after hour speaking to machines and call centres. Public transport that is profitable but takes longer than the equivalent 100 years ago. etc etc

    Maybe all this has a knock on effect on the real productivity?

    Many people in the west are demoralised and fed up of the plutocracy. Not enough people, but a steadily growing amount. Unlike fundamentalists, we have no outlet (oh, apart from some increase in extreme right and fascist groups) . Maybe we “slow down” a bit at work as we now suspect we’re just buying our directors yet another house with out work.

    The next decades will be interesting as ever!

    • Patrice Ayme Says:

      Dear Hazxan: A few remarks I always do, and i am sorry if it’s sound boring, because I am pretty repetitive:

      1) A civilization without capital can’t be. Actually the fact of capital is as old as heavy clothing, at least. That means at least 2 million years old (there were Homo Ergasters in Georgia, they have got to have been clothed, between the Lesser and Greater Caucasus… Clothing is capital).

      2) Even a countries such as the USA, or Singapore, are, to some extent communist. Marx did not invent whatever he tried to invent. Rome, even the imperial plutocratic Principate had a massive welfare system.

      3) So the debate capitalism versus communism is a bit like a conflict between air and wind: whatever their merits, we have got both, anyway.

      4) A drag overall is caused by problems with energy: it’s getting ever more expensive on face value, but even more so in full cost (as the biosphere is being destroyed).

      5) The plutocratic effect calls for the pleasures suffering brings (preferably the sufferings of others). So organizing a painful society is of the essence. Watch Reagan self contented rictus… Torturing Air Traffic Controllers…

      6) Communism and Capitalism are already around. Plutocracy wants sadism to be our future… hence the fascination with guns in the USA, instruments used to shoot one’s own families and significant others, statistics show…
      PA

  8. Dominique Deux Says:

    Hazxan,

    first, thank you for debunking the rather obscene claim that huge profits are the fair reward of risk taking. That may have been true when failed investors found themselves jailed, destitute or diving from windows. But now the built-in risk every investment carries with itself has been carefully farmed out from the boardroom to the shop floor. When the boss fvcks up, his bonus levels out while the rank and file gets the pink slip.

    Yes, it is possible that the rank and file is putting less and less effort into its task. It is not necessarily a matter of conscious or unconscious slacking. One very simple mechanism would be that, with very short term work contracts now becoming the norm, people spend quite a lot of time (including during their work hours) planning for their next assignment. Not to mention that an important factor of dedication at work (and therefore productivity), individual loyalty to the firm, is neatly put out of the equation. True, our masters hoped that the fear of losing one’s job would be spurring enough; but when that fear is sure to materialize anyway and regardless of effort, it is not that efficient.

    • Patrice Ayme Says:

      Dear Dominique: Agreed on all.
      A related matter, on a much larger scale, of mental hazard (a generalization of “moral hazard”) has been providing banks with sure means to make profits (“Quantitative Easing”, “Twist”, etc…)… without getting engaged into what they are there to start with, as para-governmental organizations, namely providing money for projects in the economy.

      To see the financiers making as much money as they did, as they still do, because of their relationship with the government, can only be demotivating for the masses. Let alone the fact the masses are not provided with financing to work.

      My preferred example is the lack of powerlines to bring electricity out of Washington state. OK, I hate powerlines, which disfigure the Alps, however…
      PA

  9. Dominique Deux Says:

    Patrice, on power lines – there is no such thing as a pristine landscape; even deep European forests are mostly artifacts. And from a purely aesthetical viewpoint, I would say that the intricate lacework of power lines and their pylons, or the punctuation of slender white windmills, or even the tapered hulks of large nuclear plant exhaust chimneys, are much better additions to the countryside than the ubiquitous advertising boards or commercial malls. Maybe ancient Roman aqueducts were eyesores in the eyes of Virgil or Lucretius! I confess that as an engineer I am sensitive to such works’ power and beauty. The Eiffel Tower, a masterpiece of computation for all to see, once was deemed ugly and there were plans to cover it in carved stucco… yecchh.

    • Patrice Ayme Says:

      Dominique: I have a friend, an engineer in Italy, who did powerlines, especially next to the Milano-Torino Very high Speed rail line. He told me the of the intricacies of giant power lines, as when they heat up, come closer to the ground, to the point of, well, grounding, or zapping the innocent farmer below, etc.

      Just in my Alpine redoubt, when I look far on a beautiful mountain, and I zoom, and a mighty pylon appears… I am not happy. In many paces, it means cutting lots of forests… Just along the right of way. The Eiffel tower is somthing else, as it’s clearly a piece of art made of steel… But OK, when I look to power lines, I will now tery to self hypnotize. Merkels’ little plan to do without nuclear has hit a reef, as the natives feel like me about power lines. But it is crucial to be able to carry wind energy from the north, to the south… That means much more power lines… Too much beauty!
      PA

  10. Beagle3 Says:

    Hello Patrice,
    j’ai découvert vos posts très récement, et je n’en suis toujours pas tout à fait revenu … Waouh !! Quelle somme de travail incroyable. Félicitation et merci pour votre inestimable contribution à une meilleure compréhension du monde. Je me permets de vous écrire en français, qui si il n’est pas parfait, et toutefois meilleur que ma maitrise de l’anglais.
    J’en viens maintenant à ma question : en regardant le graphique présenté en tête, une coincidence m’a frappée. Je constate que, au départ, les 2 courbes se suivent. En gros, de la fin de la seconde guerre mondiale au début des années 70… Ne serait-ce pas l’époque bénite baptisée en France “Les 30 Glorieuses”? Si mon coup d’oeil est juste, je suis abasourdi de constaté que l’on a qualifié de “glorieux” le fait de ne pas se faire spoiler de nos efforts. De la en découle une deuxiéme constatation, qui elle ne me surprend pas, car j’ai toujours été très méfiant des réelles motivations de nos gentils libérateurs soixante-huitards. Je peux, enfin, mettre la main sur une preuve factuelle de l’ignominie animant ces traitres au développement de nos sociétés “modernes”. J’avais, depuis des années, été surpris de constater que les grand frères manipulateurs des gamins, criant au départ des “vieux schnocks” sur les barricades de 68, étaient aujourd’hui les indéboulonnables maitres du monde inhumain qui nous consumme. Mais qui refusent de s’appliquer les règles qu’ils ont fait édictées… Les enfants de la guerre feront ils plus de victimes et de mal que la guerre elle-même? Ca en prend le chemin…
    Comme on dit : la pomme n’est pas tombée loin de l’arbre. Et malheureusement, cette fois, elle était bien pourrie.
    Mon raisonnement est-il hérétique, ou impitoyablement correct ?
    Thanks.

    • Patrice Ayme Says:

      Cher Eric: Merci de vos compliments. Surtout au sujet de mon “inestimable contribution à une meilleure comprehension du monde” … (Si apres cela je ne travaille pas encore plus dur…)

      Je suis d’accord qu’une partie de l’ideologie de 68 s’est trouvee beaucoup trop compatible avec la mentalite’ exploitative lancee (entre autres par) Reagan, et autres serviteurs de la plutocracy. 68’s thought’s Dark Side has been all about me me me. It arose from being too much obsessed with the self and self satisfaction (“I can’t get no satisfaction, but I try, and I try, and I try, and I do nothing else actuallly than trying trying trying to satisfy myself…”) But it works, that spirit, of self glorification in the service of power, is well rewarded by the powers that be, for all to see: Barack Obama wrote two autobiographies by his early forties, and got a Nobel Prize, just for being there, all about himself.

      Donc je suis d’accord que votre raisonement est correct; la “self indulgence” de la pensee post 68 found itself completely unable to resist the seduction of the plutocratic mood. That seems pretty clear to me each time my good friend BO reveals his inner core…

      (Et pour ce qui est de faire des photes d’ortografe, etc. et des raisonements hasardeux, c’est precisement un attrait d’Internet de mepriser ces details superficiels, et d’essayer d’aller direct plus profond, donc n’hesitez pas a apporter votre propres contributions inestimables, avec d’autres commentaires!)
      PA

  11. Hazxan Says:

    Patrice, interested by your comment on “civilization not possible without capital”. Of course “capital” is a very different concept to “capitalism”. Just as “nature” should never be confused with “naturism” :-)

    The problem is not “capital” per se, but who owns and controls it. Should the people employ capital or should capital employ the people, or some shade in between? Does capital always accumulate in a way that leads to plutocracy?

    Is civilization necessary for a high quality human existence? I would guess you know “Civilization and its Discontents” by Freud. I’m not keen on anything by Freud, but I did like this book. As if towards the end of his life, he finally came out with what he wanted to say all along”. But is it civilization in general that causes our discontent, or just our particular messed up brand of it?

    On “wealth and risk”, there is psychological research that suggests the rich are much less risk adverse than the poor. Makes sense as they have more to lose. If only the rest of us could use “limited liability” for our gamblling and lottery spending! Buying a house is far more risky for the average person now, than the risks financiers have to their personal wealth.

    • Patrice Ayme Says:

      dear Haxzan: Same here, I don’t like Freud. I think he had sexual obsessions so strong he could not even understand that the world did not turn around them. Plus he was an horrendous sexist (funny, as his daughter succeeeded him…) I don’t remember the book at all, but that I was happily surprised he could make sense. But I saw no streak of genius there, or something worth meditating upon (whereas i chewed on Einstein forever).

      Plutocracy is a parasitic effect. It’s capital concentration getting out of control (as it tends to per the nature of the exponential, and interest).

      So capital, per se, is innocent. In modern democracies, we all have capital.

      The recent system is welfare for plutocrats. A violation if there ever was one.
      PA

  12. Hazxan Says:

    Sorry, I meant the rich are MORE risk averse than the poor….

  13. Beagle3 Says:

    Dear Patrice,
    yesterday, during i drive to the factory where i work, in order to help my boss being less poor, i heard a news, wich hurt my understanding. I’d like to share reflexion about it.
    ReDiGi versus EMI : a liar too far ?
    I think that plutocrats downstairs one more step, beyond the beyond, since I heard news about conflict between “ReDiGi” and “EMI”. Perhaps, a step too down …
    Music majors says that ReDiGi can’t re-sell mp3 of ordinary person, because all the dematerialized material don’t belong to those who pay for them. Yes, it’s not a sold contract, like for materialized LP records, but it look like location, for an endless time duration. What’s an incredible market model… never belonger …
    If I connect with your view, I conclude that we buy things witch in fact never belong, with our money that in fact we borrow. It’s seems to be an unreal world, a dream, or, rather, a nightmare world. But this time, for me the attempt was too far, too be bearable, like this famous bridge, during Market Garden operation.
    Cause, at one moment, whatever those plutocrats spin, they always back behind.
    I explain : I took a look to one of famous firm, (those with the crunched fruit) which propose mp3. And the word they use is : BUY. Not locate. Sure, if they use word LOCATE instead, nobody jump in. How can they convince us to be fool to this point? They can’t.
    Maybe, this time, they touch the invisible gate of madness. The insuperable gate.
    The law court will settle the problem.
    Be sure, they develop another way to make us more profitable for them.
    But this path looks as no way. Even for the lambs we are.
    The respite will be for a short time, unfortunately. But it will be . Enjoy ourselves : dishonesty don’t ever pay, and as you say : war isn’t over. Keep on thinking, keep on fighting!

  14. criolle Says:

    The two lines in the graph seem to separate just about the time when Nixon took the dollar off the gold standard.
    If I recall correctly, Reagan came into office in 1980, which is about TEN YEARS after that break point (roughly 1970).
    The president who presided over the critical period, which seems to be 1976-1980 would be Jimmy Carter, who enjoyed a party majority his entire term.

    • Patrice Ayme Says:

      Criolle: True the first divergence appears it seems at the time of Nixon, the removal from gold standard, the oil embargo of 1973, gas lines, the creation of HMOs, and the apparition of stubborn inflation. However the serious inflection point appears with the switch from Carter to Reagan. Not that I am trying to defend Carter, who I do not like very much. Carter nominated Volcker, head of the NY Fed, at Fed, and Volcker broke inflation with two deliberate recessions. Maybe the New York financiers knew what was coming down, and made money hand over fist? And maybe breaking inflation that way was not the best? Now Reagan pulled down the top tax rates and made no mystery that the USA had to become a welfare state. For the hyper rich.
      PA

  15. Dominique Deux Says:

    Sorry to come back to a long closed thread but this is on topic.

    I posted on The Economist forums regarding the rift between productivity and compensation, and the link with personal credit. I was perfectly understood by a reader who honestly shot back:

    “Why should I – as an employer – pay a worker more money to buy my product with cash when I know they will buy it on credit?”

    It’s refreshing to know where the enemy stands… I replied

    “That is truly the core question. Thank you for putting it bluntly. And the answer is – because of the long term. If sustainability is not an issue, you’re completely right. As I said the “productive” economy will sooner or later find itself on a very creaky limb, but nonetheless your rationality is unassailable. It makes perfect sense to take as much cash out of the machine as you can before it collapses, and then to retire and splurge – hopefully bowing out before there’s nothing left to splurge on.”

    but I certainly have no hope of converting him!

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