Posts Tagged ‘Productivity’

Where Did Money Go?

February 5, 2013

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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