Anemic? Just Give More Blood

Let me get this straight. Corporate capitalists have convinced the world that if we just give them everything they want, they will take perfect care of us. How’s that working out? Far as I can tell, ** THEY ** are in great shape. Yes indeed. The free-market prophets have given them plenty of free-market profits. As god intended.

Regulations? Government supervision? They don’t need no stinking limits! Markets just want to be free! Greed is great, selfishness is a virtue! What could go wrong? Just trust them, for they have all the economic truth. They must have — since they have all the money and power. Incontrovertible proof of divine favor.

And if there is ever a problem … well obviously, it’s never their fault! It’s all those feckless governments and stupid poor people causing trouble. But it’s easy to fix everything — just lower their taxes and stop spending money on pointless shit like feeding poor people. Just tighten those belts and it’ll all turn out fine! Believe, and be healed!

But … so many of us are not fine. Austerity? Maybe I’m just too dim to understand it. Yet I keep picturing something like this. An over-confident surgeon has just sliced your femoral artery. As blood spurts everywhere, he’s cursing his assistants for not having enough leeches on hand to stop the hemorrhage. Bring in the vampires, stat!

And it looks as if we mere poor folks are a commodity at best to the rich and powerful. Toxic assets to be exploited; bundled, leveraged, hedged against, repackaged and traded to the unwary, sold for pennies on the dollar, and left to pollute the landscape when we’ve been bled white and sucked dry.

But I must have it all wrong. Again. For they have our best interests at heart … just ask them. It must be my fault — oh me of little faith.


The great austerity shell game
Here’s how the capitalist scam works: let government borrow for crisis bailouts, then insist cuts pay for them. Guess who loses
Richard Wolff
Comment is free |
Monday 4 November 2013 08.00 EST
Center-right governments in Britain and Germany do it. So do the center-left governments in France and Italy. Obama and the Republicans do it, too. They all impose “austerity” programs on their economies as necessary to exit the crisis afflicting them all since 2007. Politicians and economists impose austerity now much as doctors once stuck mustard plasters on the skins of the sick.
Austerity policies presume that the chief economic problems today are government budget deficits that increase national debts. Austerity policies solve those problems mainly by cutting government spending, and secondarily, by limited tax increases. Reducing expenditures while raising revenues does cut governments’ deficits and their needs to borrow.
National debts grow less or drop depending on how much each government’s expenditures decrease and its taxes increase. Obama’s austerity policies during 2013 started 1 January, when he raised payroll taxes on everyone’s annual incomes up to $113,700. Then, on 1 March, the “sequester” lowered federal expenditures. Thus, 2013’s US deficit will drop sharply from 2012’s.
Obama will likely impose more austerity: cutting social security and Medicare benefits to compromise with Republicans. Similarly, European governments maintain their “austerity” programs. Even France’s government, officially “anti-austerity” and “socialist”, has a new budget with typical austerity cuts in social expenditures.
The accumulated evidence shows that austerity programs usually make economic downturns worse. Why, then, do they remain the preferred policy for most capitalist governments?
When capitalist economies crash, most capitalists request – and governments provide – credit market bailouts and economic stimuli. However, corporations and the rich oppose new taxes on them to pay for stimulus and bailout programs. They insist, instead, that governments should borrow the necessary funds. Since 2007, capitalist governments everywhere borrowed massively for those costly programs. They thus ran large budget deficits and their national debts soared.
Heavy borrowing was thus capitalists’ preferred first policy to deal with their system’s latest crisis. It served them well.
Borrowing paid for government rescues of banks, other financial companies, and selected other major corporations. Borrowing enabled stimulus expenditures that revived demand for goods and services. Borrowing enabled government outlays on unemployment compensation, food stamps, and other offsets to crisis-induced suffering.
In these ways, borrowing helped reduce the criticism, resentment, anger, and anti-system tendencies among those fired from jobs, evicted from homes, deprived of job security and benefits, etc. Government borrowing had these positive results for capitalists – while saving them from paying taxes to get those results.
Nor is that all. Corporations and the rich used the money they saved by keeping governments from taxing them to provide the huge loans governments therefore needed. Middle- and lower-income people could lend little if anything to their governments. Corporations and the rich, in effect, substituted loans to the government instead of paying more in taxes. For those loans, governments must pay interest and eventually repay them.
Government borrowing rewards corporations and the rich quite nicely. It amounts to a very sweet deal for capitalists.
Yet, that sweet deal raises a new problem. Where will governments find funds, first, to pay interest on all the borrowing, and second, to pay back the lenders? Corporations and the rich worry that they might still be taxed to provide those funds. They are determined to avoid such taxes – just as they avoided being taxed to pay for stimulus and bailout programs in the first place.
Austerity is thus capitalists’ preferred second policy, a second way to avoid higher taxes as governments struggle with economic crises. Corporations and the rich promote austerity by loudly insisting that today’s key economic problems are not unemployment, lost job security and benefits, home foreclosures, and record-breaking inequalities of income and wealth. Rather, the key problems are government deficits and rising national debt. They must be cut.
To do that, taxes should be raised modestly or not at all (to avoid “hurting” the economy). The key solution is thus to cut government outlays on jobs, social benefits, and providing social services. Money saved by those cuts should be used instead to pay interest on the national debt and reduce it.
Capitalism’s way of dealing with its recurring crises is thus a remarkable two-step hustle. In step one, massive borrowing funds stimulus and bailout programs. In step two, austerity pays for the borrowing.
This hustle shifts most of the costs of capitalist crises onto the backs of middle- and lower-income people. The shift occurs through the higher unemployment, lower wages, and reduced government services achieved by austerity programs. It occurs as well in the sustained minimization of tax increases – especially on corporations and the rich.
With few exceptions, major political parties everywhere have imposed capitalism’s two-step hustle. Only when mass opposition from middle- and lower-income people is sufficiently organized to possibly threaten capitalism itself do capitalists waver and split over borrowing and austerity. Some capitalists then collaborate with that opposition to support “New Deals”, instead of austerity.
Even then, once past the immediate crisis, capitalists revert to their preferred policies of borrowing and austerity. US history from 1929 to the present teaches that lesson well.
Capitalists know their system is unstable. They have never yet prevented recurring crises. They rely instead on policies to “manage” them. The two-step hustle – borrowing for stimulus and bailouts and then austerity – usually does the job. Keynesians promote the borrowing and then seem surprised, even outraged, when austerity follows.
Corporations and the rich should not have escaped taxation in the first place because they helped to cause the crisis; they enriched themselves the most in the decades before the crisis; and they can best afford to pay to overcome the crisis. Had they been taxed to pay for stimulus and bailout, no need would have arisen for borrowing or austerity.
Taxing corporations and the rich would have consequences too, but they would generate far fewer social costs and fall mostly on those best able to cope with them.
But any organized opposition strong enough to make corporations and the rich pay for capitalism’s crises would likely also question capitalism itself. Emerging from nearly six years of crisis, the question “can’t we do better than capitalism?” pushes forward, demanding discussion, debate, and democratic decision.


About l. l. frederick

I'm pretty ordinary, so I find any number of things in the world interesting, among them: books, music, flowers, food, social justice, politics and (sometimes!) people. As for my writing, I've decided that I can be subtle and tasteful when our only problems are esthetic ones. Or when I'm dead, whichever comes first. In the meantime, read at your own risk.
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8 Responses to Anemic? Just Give More Blood

  1. tubularsock says:

    Well, one solution is to burn the castle down and eat the rich. Please pass the mustard.

  2. Linda,
    The “higher taxes hurts the job-creators” argument has been 100% debunked. It’s obvious that those who’ve repeated that mantra have mostly been the same people who sent operations overseas, those who are “job-creators” in China, Mexico, Myanmar, Vietnam, or whatever place on Earth offers the lowest cost labor. Wolff’s “tax the rich” in order to end the “hustle” makes obvious sense. How about a maximum wag of, say, $52,000,000 / year?

    • But Jerry, be reasonable! A measly $52 million? Don’t you think that’s a bit harsh? With the cost of limmos and lobbyists, caviar and Congressmen, … that might not be quite enough for a hard-working robber baron to scrape by on.

      Then again, we wouldn’t want to make them weak or dependent by offering handouts. Suffering is good for the soul, after all! That’s what they tell us, so it must be true. – Linda

      • A maximum wage would be a good thing that would weed out the “service to self” philosophers and identify them for what they truly stand for. Everyone knows wealth inequality is at depression-era levels and needs to be addressed. A maximum wage, combined with a hefty increase in taxes on high income brackets (no more capital gains tax of 15%) and a financial transaction tax would help. Throw in a public central bank to replace the abolished privately-owned Federal Reserve and now we’re getting somewhere.

        • Maximum wage, that sounds good. And coupling it in some way to the minimum wage, the unemployment rate, and to the average worker’s salary seems like a good idea too. So they might develop some interest in promoting prosperity for everyone, if only for their own sakes. – Linda

          • Along the same lines a while back Thom Hartmann suggested a $1 billion maximum wealth, a good idea. Then, how many people are aware of the tax haven industry? If you haven’t heard of the International Consortium of Investigative Journalists ( they broke the story on tax haven/avoidance industry. Hundreds of billions of tax dollars into complex accounting, off-the-shelf schemes by corporations and wealthy people around the world every year. Plenty of work for investigative journalists for sure.

            • I have heard of this work to expose tax cheats, but thanks for reminding us, Jerry. Tax havens in many ways epitomize the toxic power of money. Seems like it’s just not good for anyone to have too much of the stuff. A nation is good enough for people to live in, and/or to make their money in, but they refuse to contribute anything, they refuse to help keep it a decent place in which to live and work — deadbeat citizens and deadbeat human beings.

              And wealth caps sound entirely reasonable to me — can you even imagine why one person would need a billion dollars? I can’t……….. but then I don’t even like caviar.

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