Archive for October, 2009

Not taxing the rich

Posted: 31 October 2009 in Uncategorized
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According to Bruce Bartlett, “Generally, the higher up you are in the economic pecking order the more flexibility you have to arrange your affairs to make the form of your income fit the tax rules.”

And, as we’ve seen, it works, especially when the rules themselves are changed to favor those who receive distributions of the surplus:

tax breaks

Capital strike

Posted: 31 October 2009 in Uncategorized
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Capital has lots of different options when things don’t go its way. One of them is to go on strike, by decreasing investment expenditures. The result is a decline in economic activity and an increase in unemployment, which—via lower wages and government stimulus programs—(perhaps) restore the conditions of profitability.


(The chart is from the Cato’s Chris Edwards, who blames the decline of private investment on fears of “higher taxes, inflation, health care mandates, increased labor regulation, and other profit-killers coming down the road from Washington.” He seems not to understand that (a) capital’s strike began long before Obama was elected and (b) much of capital wants health-care reform precisely to restore the conditions of profitability.)

Happy Halloween!

Posted: 31 October 2009 in Uncategorized
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New Marxian crisis theory

Posted: 30 October 2009 in Uncategorized
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What promises to be an intellectually stimulating and politically invigorating event—a variety of new Marxian perspectives on the current crises of capitalism—at the University of Massachusetts Amherst, next Thursday, 5 November, at 8 pm. . .

Cartoon of the day

Posted: 30 October 2009 in Uncategorized
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Quote of the day

Posted: 29 October 2009 in Uncategorized
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This is serious business. In this country, we used to manufacture things — skyscrapers, the V-8 engine. Now we’re No. 1 one for toilet paper and bacon. We do have the best toilet paper in the world. And bacon — you go to France and they think they know what they’re doing. . .It’s a good product, but it’s not bacon. We’ve got this down. Chicago needs to claim this. We’re the Hog Butcher to the World.

John Manion, chef at Goose Island Brewpub

Connecting the dots

Posted: 29 October 2009 in Uncategorized
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Angry Bear’s Spencer notes that, during the so-called Great Moderation, labor’s share of the economic pie (i.e.,  nonfarm business output) fell ten percentage points.

If you really want to raise a stink you could look at this as a great example of the Marxist immiseration of labor that Marx believed was one of the internal contradictions of capitalism that would eventually lead to its self destruction.

OK, let’s raise a stink: the rate of exploitation rose.


Interfluidity’s Steve Randy Waldman, in turn, notes the relationship between the shift in the distribution of income and the asset bubble:

Follow the money. Whether an economy generates asset price inflation or consumer price inflation depends on the details of to whom cash flows. In particular, cash flows to the relatively wealthy lead to asset price inflation, while cash-flows to the relatively poor lead to consumer price inflation.

Why? In Keynesian terms, poorer people have a higher marginal propensity to consume. The relatively poor include people who are cash-flow constrained — that is they cannot purchase what they wish to purchase for lack of green, so their marginal dollar gets immediately applied to the shopping list.

And the role of the monetary authority?

In “good times”, central bankers actively suppress the median wage (while applauding increases in the mean wages driven by the upper tail). During the reset phase, policymakers bail out creditors. There is nothing “natural” or “efficient” about these choices.

Slowly but surely, we can begin to connect the dots: a falling wage share (indicating a rising rate of exploitation), increasing wage inequality (indicating increased distributions of the surplus to the highest tier of “wage-earners) led to asset price inflation (as wage-earners turned to credit to make durable purchases and recipients of the surplus bid on financial assets), while the state actively supported all three activities.