Sunday, April 5, 2015

Eat the Rich

There's an article on the Scientific American website which points out that income inequality in America is much worse than we feared, and social mobility is worse too.  The richest 20% of the population own more than 85% of the wealth.  The income of a 1% CEO is 340 times greater than the income of a minimum-wage worker, let alone someone on Welfare or Social Security.  A single family -- the Waltons, of Wal-Mart fame -- own more than 42% of the rest of the population.

Worse, they who make these incredible incomes do not create jobs, nor produce useful goods and services, nor work a useful industry.  They're managers in the financial "business" -- money-farmers.  "They toil not, neither do they spin";  they only manipulate the value of money.  They do nothing real or valuable to earn that wealth -- unless you think that buying elections and suborning governments, for their own purposes, does anything of value for the rest of us.

Now a brief diversion: "money" isn't exactly "wealth".  Money, as I've written elsewhere, is just a receipt, a useful shorthand, for services and goods -- things done and things made.  The only "money" that's worth anything by itself is coins made of useful and valuable metals -- gold, silver, and copper -- and precious little of the world's money is made of that anymore. Paper money is just a paper receipt, and electronic numbers on a credit card or a bank computer's memory is even less than that.  Real wealth is in the goods, services, and the territory where the raw material for the goods can be found.

Now territory, usually land, is almost worthless except in its potential to produce useful raw materials; a howling wilderness may produce wild game and useful plants, but these are useless to humans unless they go hunt that game and gather those plants -- in other words, put in labor.  The wilderness does produce clean air to add to what we breathe, but that's it;  everything else is potential, not actual.

So let's look at services;  those are all labor, in varying degrees of skill.  Their value is all in the usefulness of the labor.

Likewise, the value of goods is partly in the raw materials, but mostly in the labor needed to gather those materials and process them.  Consider: suppose you're walking through a howling wilderness when a healthy wild apricot tree chooses the moment you're walking under it to drop its fruit.  Wow, windfall -- literally.  You got the fruit, all that excellent food, (almost) for free.  But still, to make use -- get value -- out of that fruit, except for what you sit down and eat right then and there, you've got to put out the labor of gathering up all that fruit, stuffing it in whatever container you can come up with, and carrying it home.  Once you've got it home, you have to put in the labor of washing the fruit and storing it in a place safe from bugs and mold.  If you want to do more with it -- dry it, make jelly of it, process it into wine or brandy -- you have to put in still more labor.  Or if you're strolling through the howling wilderness and come across a riverbank full of fine potter's clay, you have to put out the labor of digging up the clay, hauling it home, and sculpting it into pots.  In short, the value of goods is primarily in the labor required to make them, even if the raw material is free.

So, most of the value of any useful goods and services is labor -- the more skilled, the more useful.

Bosses, from the beginning of history, have done their best to devalue other people's labor and inflate the value of their own.  They've evolved a million tricks for doing it, but it's basically the same old theft.  As the old IWW saying goes, anytime somebody has a dollar he didn't earn, somebody else earned a dollar he didn't get.  The triumph of the 1% is a colossal robbery -- of the value of everybody else's labor.

Now I'll be first to admit that not all labor has the same value.  An hour of the skilled labor of, say, a brain surgeon is easily worth 10 or 20 times an hour of the labor of, say, a fast-food cook.  But I really don't believe that the labor a paper-shuffling money-manipulator is worth 340 times the labor of that cook.  The cook at least produces real food.  What does the money-manipulator produce except corrupt politicians, bad laws and inflation?

The usual argument of the super-rich and their apologists is that they're The Job Creators;  without their investments there would be no factories or farms or mines or other businesses to hire working people. This is a transparent lie, for anyone who chooses to look.  Wherever the super-rich have a free hand, they reduce the number of jobs -- say, by replacing laborers with machines, or moving industries off to poor countries where labor is much cheaper -- in order to funnel more money back to themselves.  The real job-creators are the middle class and working class.  The working single mother who hires a babysitter is a job creator.  The mom-and-pop shop that hires a stock-boy is a job creator.  The farmer who expands his dairy and hires a milkmaid is a job-creator.  These are people who perform real work, which requires real workers -- which means real labor.

All right, so the super-rich are thieves and parasites who are impoverishing the rest of us.  What can be done?  Taxing the super-rich at 90% rates would be only a stop-gap (even assuming you could get enough politicians to do it, or that next year's election wouldn't bring in a crop of them that would drop those taxes again in the names of St. Reagan and St. Bush).  A revolution to overthrow the rich and confiscate their holdings would be costly, in poor people's lives, and there's no guarantee that the confiscated wealth would be fairly distributed.  The real solution is to put an end to the money-farming "industry" itself.  How do we do that?

Well, here's an idea.  Flog the politicians (until they fear for their lives as well as jobs) to pass a simple but draconian national law which says: "No person (including corporations) shall loan money at interest unless he/she/it/they has already and previously owned and managed a business providing goods and/or services to the public which has produced enough profit to cover the loan.  Said business shall not be in banking, brokering, insurance or investing."  Think of the change that would make.  Nobody could be purely -- or even primarily -- a money-farmer.  Think of Joe's Bank and Grill, or Mor's Furniture and Loans, or Ford Motors and Mortgages.  Oh, and also abolish a lot of the restrictions on unions -- labor and consumer -- so as to restrict the bosses' ability to devalue the labor of their employees, or to falsely inflate the value of their goods and services.  And it wouldn't hurt to teach investigative journalism, logic, and critical thinking in the schools, either.  Can anybody think of other safeguards to add?

--Leslie <;)))><                


Ori Pomerantz said...

I suspect that a lot of the paper wealth owned by the super rich is just that - paper wealth. They couldn't translate more than a tiny bit of it to actual goods and services without losing most of it.

Leslie Fish said...

How much can we go back to straight barter? Anyone trying to produce their own valuable-metal currency gets slapped down by the govt., and collecting valuable metals isn't much help either. What else can we do right now?

--Leslie <;)))><

Aya Katz said...

Seriously, Leslie, you're against the money lenders? I'm disappointed. I can assure you that I am not one of the one percent, but I have lent money for interest on more than one occasion and made a profit at it, and helped someone else achieve their goal.

I used to do it by depositing money in the bank and getting a fair return. Now that that is impossible, since the interest rate is practically zero, I sometimes lend money to people who are planning to buy a house, but don't have the purchase price in hand. Do you want that to be illegal?

Do you really think that someone who has money should let it be eaten up by inflation? It doesn't matter how little money that is, when it's your own, you want to keep it. Have you never had a positive bank balance and wondered what to do to keep it worth the same thing next year -- to preserve its purchasing power?

Can't you see that this is one reason why our economy is in the state that it's in?

Aya Katz said...

I blogged about your blog post today:

I included a link to your post in mine.

Leslie Fish said...

Thanks, Aya!

No, your kind of "banking" shouldn't be illegal, since you earned your money with honest goods-and-services *labor*. One reason (besides the govt. printing funny-money) for inflation is that what printed money we have is backed up by less and less goods-and-services, material-and-labor, real wealth. That's my whole point; money-manipulating does *not* produce real G&S/M&L wealth, so that con-game should be stopped.

Aya Katz said...

It should not matter whether I earned it or somebody else earned it and gave it to me -- money is money.

We don't need any restrictions on interest rates -- we need free competition between different lending institutions. Stop giving the Fed special privileges and let it compete in the free market, with all the other banks and with independent lenders who are just ordinary people.

There is no reason to be afraid that somebody will make an unfair profit if there is free competition.

The problem with today's one percent is not that they earn too much interest -- it's that they are getting huge interest free loans at our expense thanks to people who campaign against usury.

Leslie Fish said...

I'll happily agree with you about ending the Federal Reserve! That's a perfect example of the money-manipulating scams I was talking about. I don't think interest rates are the problem; in a real free market, one money-lender would be happy to undercut his competition by offering better rates than the other. What I'm complaining about is devaluing the currency by devaluing the labor and materials that back it up. ...Say, would that be a good excuse for the govt. to go after the super-rich: devaluing the currency? Not that the govt. would ever really do it, of course...

windmills said...
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