Week-end Wrap – Political Economy – July 4, 2021
by Tony Wikrent
Strategic Political Economy
Techno-Feudalism Is Taking Over
Yanis Varoufakis [Project Syndicate, via Naked Capitalism 06-30-2021]
Then, after 2008, everything changed. Ever since the G7’s central banks coalesced in April 2009 to use their money printing capacity to re-float global finance, a deep discontinuity emerged. Today, the global economy is powered by the constant generation of central bank money, not by private profit. Meanwhile, value extraction has increasingly shifted away from markets and onto digital platforms, like Facebook and Amazon, which no longer operate like oligopolistic firms, but rather like private fiefdoms or estates.
That central banks’ balance sheets, not profits, power the economic system explains what happened on August 12, 2020. Upon hearing the grim news, financiers thought: “Great! The Bank of England, panicking, will print even more pounds and channel them to us. Time to buy shares!” All over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares (whose prices have decoupled from profits). Meanwhile, digital platforms have replaced markets as the locus of private wealth extraction. For the first time in history, almost everyone produces for free the capital stock of large corporations. That is what it means to upload stuff on Facebook or move around while linked to Google Maps.
“Democrats Raise Ethical Concerns Over GOP Donor’s $1 Million Funding of Border Deployment”
[Military.com, via Naked Capitalism Water Cooler 7-1-21]
“A billionaire’s $1 million donation to fund a South Dakota National Guard mission to the U.S.-Mexico border has raised questions of whether the military is effectively for hire, and Democrats in the state are investigating the legality of the issue, Military.com has learned. Willis and Reba Johnson’s Foundation, helmed by billionaire Willis Johnson, pledged $1 million to South Dakota to cover the estimated cost of deploying some 50 guardsmen to the border for up to two months, according to a state government email reviewed by Military.com.”
This is exactly why I advocate replacing liberalism with civic republicanism, which is compelling in its clarity and simplicity: the rich are as much a danger to a republic as a standing army.
As James Madison wrote in his notes preparing for the Constitutional Convention: “If the minority happen to include all such as possess the skill and habits of military life, & such as possess the great pecuniary resources, one third only may conquer the remaining two thirds.”
Under liberalism, any individual has the “right” to amass as much property as they can. The rights of the community are decidedly secondary. Under civic republicanism, a properly functioning government breaks up any and all concentrated wealth, precisely because wealth, like power, corrupts, and, as we know too damn well, wealth buys power. Benjamin Franklin observed, “”There is nothing in its nature to produce happiness. The more a man has, the more he wants. Instead of its filling a vacuum, it makes one. If it satisfies one want, it doubles and trebles that want another way.” In laying down “good whig principles,” Franklin recognized the insidious nature of concentrated wealth to corrupt politics, and wrote “the poor man has an equal right, but more need, to have representatives in the Legislature than the rich one.”
Remember the liberal reaction to AOC’s comment that all billionaires is a failure of policy?
The true purpose of taxation in a republic, therefore, is not to fund the government, but to tax away excess wealth, and maintain a semblance of economic equality among the citizens. Under no circumstance is any citizen to be allowed to become so wealthy that he or she feels they can afford a “donation” that determines the deployment of either state or federal military forces. Or steers the destiny of legislation. Or determines the effect of regulation.
Clear and simple.
After all, isn’t that, when you boil it down, what the slavery oligarchy did to drag the country into Civil War? And it’s where the reactionary rich, and their conservative and libertarian movements, are dragging us again.
Can Biden Build Back Better? Yes, If He Abandons Fiscal “Pay Fors" — Yeva Nersisyan and L. Randall Wray
[Levy Institute of Economics, via Mike Norman Economics, July 1, 2021]
President Biden’s proposals for investing in social and physical infrastructure signal a return to a budget-neutral policymaking framework that has largely been set aside since the outbreak of the COVID-19 crisis. According Yeva Nersisyan and L. Randall Wray, this focus on ensuring revenues keep pace with spending increases can undermine the goals internal to both the public investment and tax components of the administration’s plans: the “pay-for” approach limits our spending on progressive policy to what we can raise through taxes, and we will only tax the amount we need to spend.
Nersisyan and Wray propose an alternative approach to budgeting for large-scale public expenditure programs. In their view, policymakers should evaluate spending and tax proposals on their own terms, according to the goals each is intended to meet. If the purpose of taxing corporations and wealthy individuals is to reduce inequality, then the tax changes should be formulated to accomplish that—not to “raise funds” to finance proposed spending. And while it is possible that general tax hikes might be needed to prevent public investment programs from fueling inflation, they argue that the kinds of taxes proposed by the administration would do little to relieve inflationary pressures should they arise. Under current economic circumstances, however, the president’s proposed infrastructure spending should not require budgetary offsets or other measures to control inflation in their estimation.
