Friday, October 14, 2011

The Swamp We're In -- came from NOT TAXING THE RICH

Seems to me that the 53% of us who pay taxes -- and especially those like you who are  in the middle third of that bracket -- are the ones who really got screwed by the cockeyed Trickle Down scheme for not taxing the Rich and the Super Rich at all -- or maybe only at half the rate their secretaries pay.  So our current tax scheme probably needs an adjustment it won't get.

You might spend some time parsing Paul  Krugman, who has many interesting takes  on why continuing to think inside the box will get us deeper into the swamp.

Of course, Krugman  won't go for the Trickle Up! Economics miracle that would actually pull us out of the mess fairly quickly.  The problem now is that there's no liquidity at the bottom of the system.  The top's doing fine ....

Sometimes it seems to me that all economic theory is just cleverly disguised  political theory aimed at promoting the interests of a particular class at the expense of the others.  We've mostly been fascinated by one variant or another of eitehr Keynesian economics or Trickle Down economics since the thirties -- since, in fact, Keynes proposed it.  And the result has been that 37% of this country is stuck below the poverty line, while 10% of the country owns 90% of the wealth producing assets. The "middle class" -- YOUR 53% -- has been shafted by the R&SR clique, and even worse, the "middle class" by and large has bought into the notion that "cutting the deficit" will somehow ameliorate our current economic malaise.  The  ill-gotten gains enjoyed by the super rich combined with a climate of financial de-regulation and two long-running very expensive foreign wars to  produce, first -- the housing bubble and (2) now a self-defeating spiral into what  seems long-lasting, if not a terminal recession.

Quite a lot of the smart money went over to China during the last 20 years --  chasing high returns  in Chinese industries blessed with very low wages and a government that provides neither health care, health insurance, a social safety net, financial regulation nor any pollution controls.  Without those blessed benefits of the pirate/slave economy, bolstered by Western investment, your iPhone never would have happened at a cost-effective price, and Steve Jobs would have continued floundering along like he did with the NEXT.

Jeffrey Sachs has argued persuasively that general prosperity won't return to America during my lifetime because there has been little  investment in education, worker training, infrastructure ... and without a balancing overhaul of the tax code, we're all down the tube anyway.

My favorite part of the Chinese swindle over the last 20 years is  the reverse mergers scam -- 18 Billion dollars worth of good ole American dollars contributed  mostly by medium and small investors.

You could simplify it all by opining that Trickle Down economics and/or Keynesian economics produced disproportionate prosperity for  the rich and the super rich, who invested in China.   But at least we can all be glad we sent the pollution overseas and got back some really cool gizmos that make it easier to send email and take pictures.  That was a fair trade, right? mmmmmm  ...

You might loke at Oliver Stone's documentary South of the Border if you'd like a clearer understanding of how difficult it is to change the corporatist economic policies that prevent real general prosperity. Those policies were part of the American hegemony that impoverished most of Latin America.

More of the same will only get us more of the same.

Sunday, October 9, 2011

Writing and the Internet

Three important notions apply:  1.  Color Screen Addiction;  2.  The rat experiment demonstrating that the absence of an expected reward produces increasingly frantic performances of the conditioned task (rat pushes button frantically even though no reward appears; and finally -- a basic concept equally applicable to rats, adults and children:  3.  Internet (and television) usage should be rationed or even prohibited while working.  And while writing.  If you're working on a long piece, don't look at the net before you begin or even during a break.  Interacting with a color screen is rarely a creative act.  Turn on the typewriter sounds and go go back to composing in Word.  Better yet, order some new Palomino Blackwing 602 pencils and write your draft by hand, then retype it -- seems clunky, I know, but often it's the only way to get your focus back.   If all else fails, start a chapbook and copy passages from your favorite and most inspirational writers for 5-7 minutes to reset your mind from "watch naked color pictures dancing on the screen" to "Write It Now."  

Wednesday, October 5, 2011

The Swamp! Let's get out!

A sensible and fair tax policy creates prosperity. Trickle Down Economics, on the other hand, created a plutocracy by impoverishing 37% of Americans. Trickle Down gave us an unending cycle of boom and bust, plus endless expensive foreign wars. Printing money is not the answer: nor is lending money to corporations and stock brokers. Lending money to human beings, on the other hand, as an advance against future tax refunds during prosperous times, will work very well. See note below regarding Trickle Down Economics. It's time to get out of the swamp!


Money belongs in the pockets of the people. -- Thomas Jefferson

Written in 2011.

Paul McCulley did a good job at PIMCO before the economy got stuck in the current liquidity trap. But based on a discussion reported by John Mauldin, McCulley can't really think outside the box. The liquidity trap results from America's 40 year war on the working class. This war solidified the position of the American Plutocracy -- 10% of the people own 90% of the wealth; 37% of the people are living below the poverty line. The result of 40 years of Trickle Down Economics: an endless cycle of boom and bust, along with a continuing series of expensive foreign wars. Right now the bottom of the economic spectrum -- the bottom third of all taxpayers! -- doesn't have enough money to spend.
That is the trap we're in, and it is the swamp from which flow all our other stagnating ills. The solution is Trickle Up Economics: 

1.  The IRS can loan every individual who has filed a tax return in the last five years $20,000 in equal monthly installments to as an advance against future tax refunds -- to be repaid over the next 20 years, all money to be spent on items produced by American labor. 

2.  The minimum wage can be doubled in three increments of 33% over the next 18 months -- or, just double the minimum wage. 

3.  Payouts on all entitlement programs -- Social Security, Railroad Retirement, welfare and food stamps can be doubled, with a requirement to spend the extra money on goods produced by American labor (penalties, with rewards for whistle blowers to be built in). 

4.  The renminbi can be revalued upward to a rational level, and at the same time we can put a substantial tariff on Chinese imports -- this will raise enough money to upgrade our airports and roads.  And put a tariff on all imports from countries that don't have health, retirement and environmental protections -- a tariff sufficient to level the playing field.

5.  All legally constituted operating companies doing business in or producing goods in America, whether corporations or partnerships, that have been in business for at least three years (unless their main business is investing in the stock market), can receive a $1 million dollar loan from the IRS to be repaid over the next 20 years. 

6.  And certainly, the Rich can pay taxes at the same rate as their secretaries, no matter how much they lost at the Wall Street Casino last year.  Will these measures cause some inflation? Let's hope so. We need the money at the bottom -- for small businesses and the people those businesses employ. We don't need more money poured on the top -- that won't stimulate aggregate demand. But Trickle Up Economics will do the job handily. It's time for McCulley to stop flapping his hands and saying "I hope I'm wrong." He's not wrong. The current game is rigged against American prosperity -- which means the prosperity of the working classes. America is prosperous when grocery baggers and assembly line workers can make enough money to live on working one job, and by working two jobs or a job and a half can make enough money to save up to get into a properly-valued house. 

7.  Finally, it's time to tax shares directly -- in kind, at the same rate as real estate is taxed -- on average -- around 2 or 3%. A hundred years from now the dividends on the investments held in trust will pay all our healthcare and infrastructure expenses.