Economic inequality and capitalist crisis

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Friday July 07, 2017 · 1:22 PM PDT

2017/07/07 · 13:22

Economic inequality is high today. It was also high 100 years ago. Fifty years ago, it was much lower, meaning that the high levels of a century ago had declined(and have since risen). How did this decline happen (and how could it be replicated today)? This paper(see link) argues that high inequality caused a reduction in aggregate demand that led to capital producing less output per unit that it did in the past, which led to reduced capital profitability and hidden overvaluation on the stock market--a “stealth bubble”, that when it popped, resulted in the Great Depression.

This phenomenon is called a capitalist crisis. Solution of the crisis required that inequality be reduced, which was not something capitalist elites would readily agree too, since it meant accepting high taxes and other economic policies that favored workers over investors/management. When it finally became clear that this was necessary they acquiesced without fomenting an armed rebellion, as elites in their position had done in past had done in previous episodes of inequality-generated crisis. The paper describes how this happened, and implies that the Democratic party, by forming a tacit alliance with Labor and contributing to the solution, gained a near half-century of political dominance.

http://escholarship.org/uc/item/42p5m46m

Tax policy and financial crisis

Mikebert

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Tuesday December 02, 2008 · 4:18 PM PST

2008/12/02 · 16:18

What we saw in October was an old fashioned Panic. A couple of generations ago, schoolchildren learned about them in history class. The US had Panics in 1819, 1837, 1857, 1873, and 1893 resulting from real estate bubbles. And Panics in 1884, 1907 and 1932 due to bubbles in other asset classes.

Bubble cause Panics. No amount of regulation can stop bubbles from happening. It's not like they didn't try. After the bubble of 1720 derivatives and short selling were actually banned for decades (yes they had derivatives nearly four centuries ago--there is no true innovation in finance; the same old stuff gets recycled with new names.)

Mikebert

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Saturday September 20, 2008 · 1:53 PM PDT

2008/09/20 · 13:53

I've been trying to argue this meme with no success. It seems obvious to me that the cause of the current problems is the real estate bubble.

Mikebert

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Wednesday September 17, 2008 · 3:33 PM PDT

2008/09/17 · 15:33

Why is no one discussing the cause of our economic problems explicitly? We refer to generic Republican policies, but do not point out the elephant in the room.

Mikebert

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Sunday September 14, 2008 · 5:05 PM PDT

2008/09/14 · 17:05

Obama's economic plan addresses a number of fundamental problems with our economy. A key feature is his tax plan which features major increases in taxes on the rich.

Republicans claim that Democrats believe you can "tax your way to prosperity", while they favor tax cuts which will stimulate economic and employment growth. And many intelligent people appear to accept the idea that tax cuts will (usually) give stronger growth. But it's simply not empirically true.

Mikebert

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Friday May 30, 2008 · 12:43 PM PDT

2008/05/30 · 12:43

As we enter a period of suboptimal economic performance we should recall that this has happened before, in the 1930's and in the 1970's. Below the fold is a table providing growth rates in GDP divided by total employment or GDP/worker, which can be considered as a crude definition of productivity.

Mikebert

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Monday January 07, 2008 · 5:41 PM PST

2008/01/07 · 17:41

The frustrating thing about universal health care is that a system like the French have is clearly superior to anything that has been proposed, but implementing a system is considered politically impossible. In this article I explore why such a system is politically impossible.

Mikebert

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Thursday December 06, 2007 · 4:17 PM PST

2007/12/06 · 16:17

Why haven't we seen a Democrat making an argument like this (or have I missed it)

Let's pull the troops in Iraq, Afghanistan, Europe, Korea and Japan back to the USA. Instead of building bases in Iraq to "fight them there" let us build bases on our Southern border to "stop them there".

We haven't been able to get Osama bin Laden because he is hiding in Pakistan with the Taliban. To go after him would mean invading a sovereign nation (with nuclear weapons) which we can't do. Yet the Pakistanis can't get him either because, simply put, they aren't really sovereign over their western border with Afghanistan.

BUT, can we really complain about Pakistan? Millions of undocumented immigrants have entered our country illegally over the years. We are no more sovereign over our borders than is Pakistan. Terrorists can walk into our nation at will to do us harm. And, right now, we can't stop them. This is why, if I am elected president, we will bring our overseas troops home and put them on the border defending America.

Assuming we end the war, we need to make sure the Rethugs don't start another.

Mikebert

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Tuesday November 27, 2007 · 1:30 PM PST

2007/11/27 · 13:30

Hillary Clinton frequently takes the more hawkish position on foreign policy debates in this campaign. If we are to believe what she says, those of us who desire an end to the Iraq war are right to be concerned. But is she really hawkish? Might Clinton’s hawkish views be like her husband’s 1992 middle class tax cut in the face of massive deficits.

Mikebert

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Sunday November 25, 2007 · 3:42 PM PST

2007/11/25 · 15:42

Recently I wrote a diary on liberalism and populism. I received a lot of comments, many of them informative. In particular, I was asked to define was I meant by populism. Here I give an example of a populist approach to the Social Security "crisis" issue.

Mikebert

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Saturday November 24, 2007 · 10:32 AM PST

2007/11/24 · 10:32

Both liberals and populists support the rights of the common man, but populists also argue for the wisdom of the common man. As such, populism can feel more democratic than liberalism and can have appeal to progressives.

Yet, the record of populism is one of failure. Most of the goals of populists were right and proper things to desire, but they weren't achieved by populists. Because of this, I argue that progressives who wish to achieve change should embrace liberalism and not populism.

Mikebert

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Sunday November 04, 2007 · 8:10 AM PST

2007/11/04 · 08:10

In a previous diary I proposed a Democratic philosophy that lies behind Kos’s slogan "Democrats are the party for people who work for a living". I received a number of comments that I will address in this diary. One noted that economics is not philosophy. My use of philosophy referred to the common use of the word (e.g. a philosophy of life) and not philosophy as a field of intellectual endeavor. A better word might be a worldview or paradigm that to various extents is held by people who consider themselves Democrats.

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Economic inequality and capitalist crisis

Tax policy and financial crisis

Bubble-promotion and bailouts

The cause of our economic turmoil

Supply-side tax cuts are actually anti-growth

The Conservative Legacy

Universal Health Care

A quagmire for the GOP

Why should Clinton really be a hawk?

More on liberalism and populism

Why populism is wrong for progressives

The political principle of opposition