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Walter Scheidel: The Great Leveler

Having myself written a book on civilization spanning inequality (Capitalism as Oligarchy: 5,000 years of diversion and suppression), I was naturally interested in reading what Harvard historian Walter Scheidel had to say in his new book The Great Leveler: violence and the history of inequality from the stone age to the twenty-first century.

Before starting, though, I want first to suggest that the word ‘inequality’ in our political / economic discourse is problematic. This is so because it expresses only an end-point condition that lacks any sense of human agency. It’s a cold, neutral term that ignores the hot and violent dynamism underlying it. In my view, the essence of inequality is best understood as a structure of power, the concentrated power of a small minority over the majority. It’s a system of minority rule and not a stale statistic or a mere side-effect of something else. It’s structural violence, a direct conflict of interest on the same plane as predator against prey or parasite against host. The opposite of inequality, i.e. minority rule, isn’t equality; it’s majority rule—democracy.

With this in mind, let’s turn to the book. While I found it a well-written summary of the history of inequality, the core of the work is deeply ideological. By tightly associating equality with violence and suggesting it’s best to submit to inequality, Scheidel puts his Harvard brand in service to the interests of the powerful. Read more…

Inflation as an ideological construct

Why is it we so easily accept the framing of inflation as somehow a force of nature? Or in ‘economic’ terms, as an extraordinarily complex interplay of supply and demand? A blind force that ebbs and flows without direct human agency.

I think this is self-evidently untrue. It’s not at all controversial to see the system as an oligopoly of gigantic corporations, an immense force that’s amplified even further by extensive links of hard to decipher cross ownerships, partnerships, and strategic alliances. This massively fortified consolidated network of concentrated wealth has near full pricing power and uses it to maintain profit margins.

It’s grossly misleading therefore to merely say that inflation is rising at an annual pace of x% for to leave it there implies the price level is being set by fair market processes. Far more accurate to say that the forces of wealth, through the power of its consolidated corporate network, is raising prices at an annual rate of x% in order to offset wage growth and maintain profit margins.

Inflation isn’t a matter of productivity, bottlenecks, or wrongly set interest rates. The corporate network determines prices and thereby output levels. It’s illuminating to consider what would happen if wages grew but prices remained the same. Populations of the world would then have more to spend and their spending would flow right back to the corporate network as revenue. Profits would thereby be completely unaffected, although profit margins and the relative power of the ownership class would decline. The issue, we can thereby see, isn’t profit per se but power.

Price setting is one of the most important powers in the oligarchic system and it’s crucial for us to pierce the ideological pretense that it’s somehow carried out in a non-hostile neutral ‘economic’ way.

Marching toward WW3

This is pure craziness! The US / NATO expands into former Soviet Republics, refuses to admit Russia into NATO, has its sights on Ukraine and Georgia, and now stands ready, with the bellicose support of the NY Times, to march us right into WW3.

Sanity demands immediate de-escalation. Why can’t Russia become part of NATO? Why can’t all NATO countries then move toward substantial disarmament? Why, then, have NATO at all?

It’s so Orwellian. The system requires the perpetual enemy. What would it do without the ‘evils’ of Russia, China, Iran, and North Korea?

The Democratic Party’s ‘Better Deal’

After decades of seemingly endless neo-liberal attacks on the American people, one of the two monopoly parties of Wall Street, Big Business, and the military-intelligence state has just awoken in horror to discover it’s not very popular with the people and may actually need to offer something a bit better. To this end and presumably after much study, it came out yesterday with a shiny new product it calls The Better Deal®.

It is, of course, grossly and unsurprisingly inadequate given the forces ruling the party and I therefore fear I’m wasting my time writing about it. I nevertheless think it may be worthwhile to use this opportunity to observe the gaping chasm between the solutions offered by the ‘progressive’ wing of the duopoly with what’s actually needed for a prosperous and peaceful world. Read more…

Against equality: Michael Huemer’s ‘Pareto Argument’

Those arguing in favor of inequality face an imposing burden. This is because they have chosen to defend a pathological state of power in which one group rules over another. It contravenes not only democracy but widely held notions of human value and fairness.

The well-financed masters of this dark art have concocted a number of approaches to their Herculean task and each, by necessity, requires subterfuge to hide the stark truths underling their position. Since inequality is a system resting on a false world-picture, all arguments in its favor must correspondingly be false. A key job for an egalitarian is to confront these arguments and show how they lack rational foundation.

I seek in this post to examine the so-called ‘Pareto Argument’ of right-libertarian philosopher Michael Huemer as presented in his published paper Against Equality and Priority. He seems to think rather highly of it, claiming not only that it “provides us with grounds for denying Egalitarianism” but even that “unless some further, independent grounds for denying one of the argument’s premises are forthcoming, we should reject… Egalitarianism”. Read more…

Power is always evil

Krishnamurti goes to the heart of our situation.

Power is always evil and it is this evil that corrupts society”. “Knowledge is mechanical and functional; knowledge, capacity, used to acquire status, breeds conflict, antagonism, envy. The cook and the ruler are functions and when status is stolen by either, then begin the quarrels, snobbery, and the worship of position, function and power. … The psychological importance of function breeds the hierarchy of status. To deny hierarchy is to deny status; there is hierarchy of function but not of status.”

July 4th

Most of us on the left have mixed feelings on the 4th of July. Speaking for myself, the root problem is the contentious meaning of the imagined community we call the United States, one that directly parallels our great political divide.

The right wing has long asserted a monopoly on nationalism, or more accurately, nationalism has long been a central ideology of the right. It is linked with a fascist-like acceptance of established power hierarchies, hardline Christianity, a white ethnicity, intolerance of others, and an adoration of all things military. Those opposing it are implicitly or explicitly branded as un-American traitors. People of goodwill everywhere reflexively reject this kind of imagined community for it’s a nightmare of hate, intolerance, and ignorance.

While we reject this kind of community, though, we still have a need to replace it with something positive. Humanity evolved in groups and a sense of community, fraternity, rootedness, and identity is central to who we are. Where can we find this if not in nationalism?

The answer, I believe, must transcend the nation. Marx was right when he said back in the nineteenth century that workers have no country and it has never been truer than today. The system is oligarchy and it’s played on a global board. Working people everywhere are but pawns in this brutal game and have no real home to count on. The system at heart is not inter-national, it’s inter-class and its global extent means there are no nation-level solutions. It is an illusion to think otherwise.

Workers have no country but this is also true of our elites. They have no country for they have no need for one—their country is the world. They are the transnationally diversified owners of the planet and national borders have little real meaning. The US elites are the primary designers of the current globe spanning oligarchic system built out of the ashes of WW2 and we see it evidenced in the many treaties on global trade, investment, banking, and the various formal and informal transnational institutions. Expansionism is a central dynamic of oligarchy and it has been the guiding light of US policy going all the way back to the end of the Civil War, first in this huge country and then around the world.

No one today, neither workers nor the empowered elites, actually has a country and, to the extent this is internalized, it is actually cause for hope. Nationalism is a dangerous emotion that has perpetually misled peoples into war. It’s a relic that must be transcended. The future of humanity demands we extend our imagined community so that it encompasses all mankind.

In this sense, the best that is in the United States, as is also in the European Union, should be celebrated as an important step in the right direction. What makes America great is that, more than any other place, its population reflects the world. Especially in its cities, it’s a nation of immigrants, a melting pot and it’s a beautiful thing.

The imagined community I celebrate is global and it partially and very imperfectly exists today in the United States. It is diverse, multicultural, multiracial, radically democratic, anti-authoritarian, anti-war, anti-hierarchical, anti-military, anti-oligarchic, and above all, anti-nationalist.

Why does the US left accept the real estate tax?

It’s odd, I think, that the real estate tax escapes major public criticism from the left. Real estate, after all, is the only significant form of wealth held by the middle and lower classes yet it alone is somehow singled out for taxation. Stocks, bonds, gold, and other assets held almost entirely by the upper class are untouched by wealth taxation. This is extraordinarily regressive and especially unconscionable given the home is a basic necessity.

Let’s compare two families who put their life holdings into the purchase of their home, one $5,000 down for a $100,000 unit with the remainder financed and the other $500,000 down on a $1,000,000 home. If the tax rate is 1.5 percent of home value, then the effective wealth tax rate for the first family is 30 percent (tax of $1,500 / $5,000 wealth) while for the second, it’s only 3 percent ($15,000 / $500,000). The wealthier the family, the lower the effective wealth tax.

A far more equitable tax would be on total wealth with an allowance for basic housing. In the example, a wealth tax rate of 3.27 percent would yield the same total tax revenue (total tax revenue of $16,500 / total wealth of $505,000 = 3.27%) and the poorer family’s tax bill would drop from $1,500 to $163 (3.27% x $5,000). It would drop even further if the tax rate were progressive and had a basic housing allowance.

It’s not about cutting taxes for the rich

In a recent blog post, Paul Krugman branded the healthcare bill as “pure class warfare, with extra contempt” and said it’s really “all about the tax cuts”. While he’s certainly right about class warfare, I think he overstates the brutality of this particular battle versus the great many preceding it. What I’ll quarrel with here, though, is the idea that the central goal of the conservatives is as simple as cutting taxes for the rich. I believe the driving dynamic is not about monetary taxes but is instead deeply fundamental to the system itself. It is very old.

Oligarchy is a system of concentrated minority power over the majority which, in its current phase, is justified through ideologies of individualism. The existential enemy to the propertied minority is, and must always be, the threat of the propertyless majority. The enemy is collectivism and the age-old war against the population is widely (and reasonably) viewed in terms of a ‘slippery slope’.

‘Give him an inch, and he’ll take an ell’ is a 16th century saying that captures the spirit of what’s happening. The masses won’t be satisfied with the inch of healthcare, give them that and they’ll just come back asking for even more. Before you know it, “individualism” will collapse into socialism and we’ll be ruled by the mob. The dynamic, then, isn’t about tax cuts for the rich, it’s about denying the majority the power of agency in society.

The ‘slippery slope’ meme expresses the prime forward defense strategy for holding the mob at bay and it has been in place throughout all of civilization. It’s instructive to consider a few examples of the basic mindset.

Aristotle: “if you are remiss in your discipline [of slaves] they grow insolent, and think themselves upon an equality with their masters; and if they are hardly used they are continually plotting against you and hate you.”

Cicero: “You may distribute, indeed, some show of power to the people, as Lycurgus and Romulus did, but you inflame them, with the thirst of liberty by allowing them even the slightest taste of its sweetness.”

Popular 18th century British writher Arthur Young: “Everyone but an idiot knows that the lower classes must be kept poor, or they will never be industrious”.

Frederick Douglass: “Beat and cuff your slave, keep him hungry and spiritless, and he will follow the chain of his master like a dog; but feed and clothe him well, work him moderately, surround him with physical comfort, and dreams of freedom intrude. Give him a bad master, and he aspires to a good master; give him a good master and he wishes to become his own master. Such is human nature.”

1975 report to the Trilateral Commission, an organization formed by billionaire David Rockefeller and others associated with the elite Council on Foreign Relations, entitled “The Crisis of Democracy: report on the governability of democracies to the Trilateral Commission”: “Instead of appeasing tensions, material progress seems to have exacerbated them…”. “The incorporation of substantial elements of the population into the middle classes has escalated their expectations and aspirations, thereby causing a more intense reaction if these are not met in reality.”

To conclude, we miss the entire point if we think the issue is taxes. It’s not taxes, it’s power.

The risk-free interest rate should be zero

Isn’t it strange we so easily accept the idea that central banks should pay a riskless return on money? For doing absolutely nothing and taking absolutely no risk, a so-called ‘investor’ receives today a guaranteed $22,790 per million of wealth for ten years. That’s about twice what the average retiree gets in social security. The bonanza’s even greater in poorer countries. In Mexico, it’s $67,100, over 13 times the median household income. How is this justified?

Ideology has it that riskless returns to wealth are needed to control inflation. But this is counter-intuitive. It would seem that giving riskless handouts of money to a particular class would actually do the reverse and spur inflation. The standard response, though, is that higher riskless rates also increase the cost of bank borrowing and thereby slow the economy via reduced investment spending.

From a democratic perspective, this all smells pretty fishy. The riskless interest rate should be fixed at zero—wealth holders should not be given free money. I think this is plain common sense. If the monetary authorities want to slow the economy for some reason, there are many democratic ways they could do so. They could, for instance, institute a tax on new investment, an action which would functionally be about the same as higher bank interest rates except that the income from the higher rates would flow to public coffers rather than bank profit.