The Very Angry Tea Party (Part 7)

Dear Julian,

An excellent reply. Thank you!

As always, we agree more than we disagree, but our disagreements are coming into sharper focus.

You inspired nearly 8000 words of reply. I do cover a lot of ground, hopefully 8000 words’ worth. It unfortunately takes a very dark turn at the end. Someday I’ll have to write something on where my hopes do lie. They do not lie in politics.

Let’s agree to drop the Tea Party for now. As an informal collection of people without charter, platform, or even philosophy, anything said about it, pro or con, is unfair. I find your ideas far more interesting, anyway.

We are both using heavily-freighted, politically-ruined terms. I think we both need to stop that, because it miscommunicates.

“Limited government” is very different from “crippled government.” I’m finally understanding that you aren’t opposed to a strong government, you merely want its domain circumscribed. We seem to agree that within its proper domain, it needs teeth.

“Deregulation” has come to mean “we’ll look the other way,” and as such represents a corrupt abrogation of a fundamental government responsibility. We seem to agree about that responsibility. I’m finally understanding that, as you are using the term, it merely means stripping the vast Mishnah of regulatory minutiae from the law, while at the same time strengthening enforcement of the core principles underlying those regulations, such as anti-fraud, anti-racketeering, anti-negligence. I have no issue with that. There’s a desperate need for that kind of deregulation.

“Redistribution” is also a trigger word that seems to cause issues. I will avoid its use when I discuss this below.

Finally, I’m going to stop referring to Republicans or Democrats, but instead to Corporate Fascists and Populist Fascists, in the interests of clarity.

We’ve come to mostly common ground on the nature of government, but there are some areas of disagreement. I have a few questions and comments before I move to the disagreements.

First, you bring up the Gulf Oil moratorium.

I note that the entire Gulf situation is driven by the free market doing what it does best. Demand for oil continues to rise, supply faces peak production. Oil recovery is moving to deeper coastal waters by necessity, which raises costs and increases risks. Raising prices to cover costs and risks will make the oil uncompetitive or destroy demand. So all of the oil companies are skimping on contingency planning and safety to cut costs. If they’re consistently lucky, safety is wasted money anyway — that’s the nature of any contingency fund or plan.

When they lose their gamble, however, the nature, location, and magnitude of the consequences make it a national security threat.

What do you think the government response to this national security threat should be?

Second, you object to “the bailout.” Let’s distinguish between the financial bailout and the stimulus spending. The former was given directly to the banks through the Fed. The latter (as I understand it) was distributed through the state governments, most of which used it to cover state budget shortfalls.

Are you equally opposed to both of these, or only one (or the other)? From a strictly utilitarian perspective, why? By which I mean, please paint for me the financial consequences you see flowing from both of these actions — a fiscal prediction.

Third, the distinction between a hedge and a public good is useful. The distinction between a public good and social welfare is not clear to me — the terms are synonymous (public = social, good = welfare).

Every society has a permanent or semi-permanent class of people who cannot contribute economically. Call them “the poor” and “the sick” and “the old” and “the incompetent.” It increasingly includes “the obsolete.” As individuals, they come and go. As a class, they are always there, and within modern technological society, it is a growing class, particularly “the obsolete.” What do we do with them?

The free market has a clear answer. If you’re not useful, you aren’t of any interest to us at all. Go die. Or find someone who cares to sponge from. We aren’t running a charity.

What should we do, as a society, with the economically useless? Particularly when we actually have the capacity to support them?

Thoughts related to NASA.

The Corporate Fascist cant is that “government doesn’t create jobs, the private sector creates jobs.” Apart from being literally nonsense — since when is being a policeman not a job? — the more insightful statement might be “industries create jobs, government creates industries.” More correctly, government creates marketplaces. This is often done by spending large amounts of money on a “boondoggle” like NASA or the Internet backbone or the interstate highway system, which overcomes the activation energy required to get entrepreneurs into the game with more modest funding. Examples through history are numerous, from Columbus and Isabella, through Japan’s “coddling” of their infant auto industry, through virtually all military funding of technology since the time of Archimedes. Most of these boondoggles are called “Someone’s Folly” by the pundits unless/until they pay off. Not all of them pay off.

This is merely an extension of the government role in creating and maintaining the marketplace.

NASA opened space during the Age of Oil. Without government funding, this would not have happened. The dream of spaceflight has been around for a very long time, and in 1950 Robert Heinlein published a novella, The Man Who Sold The Moon, which echoes many of Rand’s themes of government and private enterprise. You’d like it. He points out correctly that the primary barrier to space travel is cost. In his fictional account, this is (barely) within reach of private fortunes. In reality, it is not within reach of private fortunes, nor in the 1960’s was there any sane or rational justification for investing that kind of private money in space. There is barely enough justification now, even though satellites are the foundation of our global communications and modern navigation.

When it comes to funding energy R&D, the Age of Oil is coming to an end. It’s possible that additional research will find a “magic bullet” solution if we throw enough money at it, but that isn’t the point. There are a lot less fanciful things that need to be done, and they require vision and unattractive low-yield, long-term investment that does not attract the private sector.

The distributed energy of the future will not be liquid fuel — as you point out, nothing compares with oil. It will most likely be electricity. Battery research is incremental, and would certainly benefit from an influx of money. High-speed flight will become prohibitively expensive without breakthrough improvements in battery energy density and weight, which may not be physically possible: high-speed rail is an obvious replacement for flights over land, and a national effort to establish a high-speed rail network would allow private investors to move in and exploit it efficiently. The aging US electrical grid needs an overhaul, especially to accommodate reverse-current electrical systems, such as home solar panels that can feed the network and sell power to the electric company; such a network would allow all kinds of new market activity, right down to the individual household. Government money could be well spent on energy.

You make rather bizarre leaps from time to time trying to tie the government to deleterious acts of the free market.

I’ve been working in and around the electronics business for decades, and there are no “government policies” driving the export of jobs to the Far East and India. The only thing driving that is the market. The only thing that would bring jobs back is a) cutting wages to Far East / Indian levels in the US, or b) government barriers that made it illegal to export jobs. We both know what the latter would do to export of American goods.

The real difference is that people in the Far East can live on a dollar a day, because they are still living close to their food supply, in “subsistence” environments, and virtually all their “income” can be applied to discretionary spending. Each place US jobs have been exported to has suffered the same fate as the US job market. Electronics manufacturing initially went to Japan. As the Japanese “standard of living” rose — meaning as the Japanese became more dependent upon their corporate income — pay had to increase, and those same jobs then migrated to Singapore. From Singapore (I’m working from memory here) they went to places like Kuala Lumpur. If/when the US goes back to subsistence living, those jobs will come back. Until then, they won’t.

This has nothing whatsoever to do with government.

On to the real differences.

We have very different concepts of wealth, investment, growth, capital, and other “economic” concepts. These differences are deep enough that I can’t simply respond to your comments — I need to back up and cover some preliminaries.

I note that modern courses and books on economics often start of with a preliminary chapter on “how economists think,” which I presume is necessary to get the appropriate suspension of disbelief and buy-in to the mindset. I do not approach this subject as an economist. I’m not educated in that field. I’m also not impressed by the practical results of economics, and I have some core “sanity-check” objections.

The most damning thing about economics is that we have economists who say that the best thing to do for our current economic disaster is to dump large amounts of borrowed government money into it. We have other economists who say this is the worst thing we can possibly do. I’m appalled by a “science” that cannot come to an even approximate accord on such basic matters. It is like a form of physics where one school says an apple released from the hand will fall, while another school says it will rise into the air, while a third says it will explode and kill you. That isn’t a science at all.

Let’s go back to some real basics.

All economic theories seem to support the idea of “wealth creation,” as if wealth can somehow be conjured out of nothing. For instance, I find a forest. I buy it. I discover a use for trees and exploit them — say, for paper. I “create wealth” by building a paper mill, which exports product to other countries, employs local people, adds substantially to the GDP, etc. Wealth creation is the foundation of our expectation of economic growth.

This is simply bad accounting.

Consider: the Earth is an essentially closed system. Negligible mass arrives from space. A lot of energy arrives in the form of sunlight, but every photon needs to be either sequestered, or re-radiated into space, else the Earth would heat without limit, and very quickly. The entire system is in balance.

As soon as I touch the forest to “exploit” it, I alter its natural balance. The wealth I obtain by turning forest into product is not created, it is simply transferred from one place to someplace else. Every property of a raw material that is available for me to exploit was already being exploited in its natural environment, but for a different purpose. Total wealth is always conserved. Because of bad accounting, we never account for the natural wealth we’ve destroyed to create economic wealth.

When done on a small scale, or done by reversible (sustainable) processes, this isn’t such a terrible mistake. When I cut down a small forest, the forest animals can move elsewhere. The soil damage is limited, the loss of oxygen production and moisture transpiration is negligible. The forest will eventually grow back. Every living thing on the planet upsets the local balance to some extent in the process of living, and my small-scale harvesting is no different from squirrels who interfere with the reproduction of trees by eating acorns. Because the whole system adapts so smoothly, we feel we can afford to ignore the natural wealth we destroyed.

However, when humans start harvesting the entire equatorial rain-forest, or stripping the oceans of all the larger fish, or filling the atmosphere and water with synthetic compounds that destroy the ozone layer and entire food-chains, or converting vast tracts of land to monoculture, this economically neglected wealth-destruction becomes significant.

A proper study of economics would include the fact that a “growing economy” based on an expanding human population is not a good thing. A good thing is a steady-state economy that does not need to grow at all. In fact, it should be able to grow and shrink freely, since there are true economic compensations on both sides.

More prosaically, much of economic wealth-creation is simply money moving around in a circle, counting one side and not counting the other (or as in the case of the GDP, counting both sides as a gain). When a corporation gets a government contract, its profits supposedly represent wealth creation, but it has destroyed taxpayers’ wealth in the process. When business sells to the public, it destroys consumers’ wealth. The profits realized by a merger or acquisition are directly offset by the destruction of jobs and capital equipment deemed redundant. Although the field of economics originated the acronym TANSTAAFL (there ain’t no such thing as a free lunch), it doesn’t seem to follow through on that concept.

This blind-spot seems to permeate economic thinking. A real economy is a zero-sum game. It is impossible for everyone to become richer, when “everyone” encompasses the thermodynamic entirety of Earth, and usually not even when “everyone” encompasses merely all the economic players.

You can “create wealth” by owning slaves if you do not see slaves as persons. As soon as you view a slave as a person, it’s immediately apparent that your slave-wealth is based on theft, where your gain is the slave’s loss. You can “create wealth” by exploiting beasts of burden if you do not see the beasts as having their own reason for existence, from which you have diverted them. You can “create wealth” by harvesting trees if you devalue the role trees were already performing by standing there.

The free market promotes efficiency strictly on the basis of its accounting, which is flawed. We can look at British Petroleum as an example. To BP, the entire Gulf Shoreline issue is merely a public relations annoyance that has nothing to do with their business of extracting and selling oil. As a company, they do not care about destroying lives, livelihoods, port cities, wetlands, species, oceans, nations. These things do not appear on their balance-sheet, nor do they directly affect their profitability. They are of concern only as a potential legal liability, and they have many strategies for limiting this liability which are much less costly than contingency preparation.

This is why I fear both the unrestrained free market and corporations. They have a single focus — short-term profit, based on bad accounting. They do not care how much collateral destruction they cause in that pursuit. If it isn’t on the balance-sheet, it isn’t important — and they are accountable to no one (other than those checking the balance-sheet), particularly not a crippled government riddled with Corporate Fascists.

Life, Liberty, and the Pursuit of Happiness are not on any corporate balance sheet.

Government may be corrupt, but at least Life, Liberty, and the Pursuit of Happiness are part of the charter.

A brief expansion on the issue of “economic growth” that is required by economists and politicians. It is expressed as a percentage, as in 3% annual growth of the GDP.

Percentage growth, also called “proportional growth,” is mathematically equivalent to geometric growth, exponential growth, and doubling growth. People generally have no sense of what this means.

Let’s assume we have spacecraft of the sort the aliens had in the movie Independence Day, and that we rip through the galaxy “harvesting” entire worlds. Let’s assume we can build as many of these ships as we want, and we can send them out in an expanding sphere at the speed of light. Let’s assume they can harvest a world the instant they fly past, leaving behind a fully-industrialized, sustainable garden-planet that continues to provide resources for our expanding empire at a constant rate forever, and we can build “stargates” to move the resources around within the empire instantaneously.

Our resources expand only as the cube of the time we spend doing this. That isn’t “proportional” growth. It isn’t even close. So, as our empire expands under these idealized conditions, our annual growth drops from 1000% to 100% to 10% to 1% to a number that becomes very close to zero. To sustain a steady 1% growth, our fleet of ships would have to increase their speed exponentially over time.

People are fond of taking credit for things they had nothing to do with. Our Superior American Economic Growth of the 1900’s has had nothing whatsoever to do with democracy, capitalism, cleanliness, or godliness. It has had to do with two things only — the fact that we found ourselves with an extremely small population on a large continent of enormous natural wealth, and the fact that after two world wars, our principal economic competitors (the nations of Europe) had punched themselves silly and couldn’t stand on their own feet. For a short time, our population and our economy could expand exponentially.

We’re back in a world of serious competitors, however, and we’ve squandered our natural wealth in more ways than I can count as we’ve pursued this exponential “economic growth.” Our way of life isn’t sustainable, and we are seeing this in the numbers, which is one reason our economic measures are doctored so heavily. Inflation is a big part of hiding the truth, because inflation is exponential. Since 1960, general prices have gone up by a factor of about ten, which is a relentless five percent inflation per year, on the average. Subtract five percent from all of the economic growth figures over the last fifty years, and you’ll quickly see that most of our economic “growth” has been entirely fictitious.

And that is a nice segue into investment.

I have no complaints with someone who works hard (or smart) and earns a million dollars. If he can live comfortably on a hundred thousand per year, he has earned ten years of ease. If he can live on ten thousand a year, he’s bought himself a century of ease and an inheritance for his family. Good for him. But I fail to see why possession of a million dollars justifies a lifetime of ease with no need to spend even one dime of that million dollars.

This brings us to the financial concept of usury, or proportional (exponential) growth of wealth through investment, and there is a whole essay to be written on this. The short summary of that essay is this: such a scheme is an unsustainable pyramid scam, and all the “free money” that comes to the investor through usury comes at the expense of something else, because real economics is a zero-sum game. That free money comes from destroying natural wealth, or it steals from the labor or capital of others, or it is purely imaginary and comes from an inflating money supply, which steals from everyone. There are no other places for investment return to come from. One way or another, usury — and investment — represents theft.

An investor is as big a leech on society as any welfare queen, and more dangerous because the investor’s appetites increase geometrically. We are willfully blind to this, because our culture has an almost religious love affair with proportional gain, usury, and investment capital. Turn the clock back 700 years in Europe and this wasn’t the case.

Talk to capitalists who have dealt with investment money. “Leech” is very polite language. I’ve personally met no experienced capitalist who wants anything to do with investors, for the same reason no individual wants to deal with a loan shark. They’d much rather work with banks and straight business loans. Investment capital is a last resort because it is so destructive to profitability.

Because of our fixation on capital growth, which is increasingly locked up in the hands of the investment class, we’ve become stuck on the idea that we need to entice the investment class to put that capital back into the economy with promises of high-yield exponential gain.

As an alternative to offering an investor returns, consider the von Misean concept of demurrage. I believe this has been tried only with cash, but it effectively taxes stagnant money. You have to get your cash stamped periodically, and you pay a fee for the demurrage stamp, which is a percentage of the face value of the currency. If you want to spend the cash, it’s invalid unless its stamps are up-to-date. It means that if you hoard cash, it loses value over time — so there is a strong incentive to put it back into circulation as quickly as possible. There is no reason that a similar system could not apply to investment capital — you simply tax stagnant (non-working) net worth. That would “free” investment capital in a big hurry, even if there were no investment yield at all.

Or, there’s the tried-and-true method of taxing the living shit out of high incomes. This has the advantage that it doesn’t touch earned capital — my million dollars is and remains mine, and I can spend it down as I wish without being continuously taxed on it. The downside is that it doesn’t address hoarding of capital at all, and unless it goes to 100% marginal taxation, it only slows the drain of wealth out of the general economy and into the investment class.

And that is a nice segue into taxes.

The whole theory of “trickle-down” and Reagan’s voodoo economics was based on the idea that freeing up investment capital through lower taxes would free investors to re-invest their capital in the US economy. You make this comment several times yourself.

Investors in general did not re-invest in the US economy in the 1980’s. Instead, they indulged in high-stakes gambling. They turned to mergers and acquisitions, the financial fad of the 1980’s. They turned to “creative mortgage lending” that resulted in the first housing bubble of my lifetime. They turned to high-yield tech IPOs in extremely short-lived, volatile markets. They turned to foreign investments. They turned to day-trading. They turned everywhere except where trickle-down was supposed to go, which was into the core American economy. And most of them did very, very well. For themselves. They loved trickle-down.

The Reagan/Bush years were great for the investment class — they were utter shit for the US economy as a whole. You’re what, in your mid-thirties? So in the early 1980’s, you’d have been around ten. I was in my twenties and dealing first hand with the crappy job market (twelve percent unemployment, until Reagan slashed it to six percent overnight by counting military as “employed”), mortgage interest around twelve percent (up to twenty for some of the “balloon” mortgages, and I had close friends facing default and eviction), and significant inflation — the infamous “stagflation” of the Reagan years. What won Clinton the election in 1992 was his line, “It’s the economy, stupid!” after twelve years of the clueless Reagan/Bush fiscal mismanagement.

Mismanagement it certainly was. If their voodoo theory was right, then their execution was so terrible that it overturned all of the theoretical advantages they started with. But I don’t believe the theory.

To make a credible case for this theory of tax cuts, you and the Libertarians have a formidable set of hurdles to leap.

First, and most significantly, we have a relatively peaceful laboratory experiment right in front of us, and it flatly contradicts the tax cut claims. This theory demands that the period from 1945 to 1982 be a period of utter economic stultification from the extremely high tax rates on high income. Similarly, the theory demands that the period from 1982 to the present be a relative economic golden age, owing to the drastically lower tax rates on high income. Both claims are ridiculous. Indeed, all evidence indicates the exact opposite is true.

So the first hurdle is explaining why the results were the opposite of what was predicted under voodoo theories. Either taxation has a relatively weak effect and something else was (and is) the gorilla in the room driving the economy, or the theory is just plain upside-down. I’m open to hearing what the gorilla might be, but the burden is upon you to explain it. And then, as follow-up, why Libertarians aren’t focusing on the gorilla rather than the tax cuts, since tax cuts are obviously ineffective while the gorilla rules.

Second, how low do you want to go? In 1979, taxes sat at 70% for the top tax bracket, down from 91% in 1963. In 1982 it dropped to 28%, and it hasn’t risen above 40% since. It was at 35% in 2008.

What number do you want? Zero? So it makes sense to tax only the poor and the middle class? Even if the tax cut reinvestment theory were correct (which I’m not buying), there has to be some law of diminishing returns — dropping from 90% to 35% would surely show a much larger effect than cutting from 35% to 30%. Yet the Corporate Fascists and the Libertarians alike carry on as if that five percent is utterly destroying the economy. You need to explain this hysterical screaming about taxes — why dropping from 35% to 30% is going to make any positive difference at all, especially since dropping from 90% to 35% either had no effect (given the as-yet unidentified gorilla in the room), or actually caused the current mess because the theory is upside-down.

Third, there are all kinds of statements floating around about how taxation quenches reinvestment and drives away investment capital, and this makes no logical sense at all. Investors invest capital, not earnings. Capital is not taxed — earnings are taxed by income tax (and capital gains are taxed on gains). Heavy taxation on earnings isn’t going to drive investment capital out of the US. Heavy taxation on earnings will drive investors out of the US. The Bahamas have always been a favored tax shelter for wealthy expats looking to get out of paying federal taxes, and Jackson Hole in Wyoming is popular because Wyoming has no state income tax. Their choice of where to live is simply their choice. It costs whatever it costs, and it doesn’t affect their investment decisions at all. Their money will remain in the US if yields are good, and will flee if yields are bad.

Fourth, you need to explain why reducing the tax rates would result in reinvestment, this time, rather than the gambling we saw through the 80’s, the 90’s, and the ought-noughts. Why would investors put their money into low-yield bonds for power grid upgrades in the US, rather than putting their money in high-yield short-term Chinese opportunities? Or naked shorting of toxic derivatives? Or carbon cap-and-trade futures?

Why, for that matter, would any sane investor invest in any US business, or in the US markets at all? Lowering taxes merely frees more capital to flee the country. Which, given the level of dishonesty in politics, may actually be the intent.

So at last we come to the distribution of wealth. I’ll try to avoid the term “redistribution.”

To discuss this, we need to make distinctions between simple labor capitalism, simple resource capitalism, investment, and corporatism.

Simple labor capitalism — exchange of labor for other items of value — is an excellent means of distributing wealth. It is egalitarian, self-adjusting, adaptive, robust, and reasonably fair. Its flaws are relatively minor. We have no arguments of any sort here. I’m very much in favor of simple labor capitalism.

Simple resource capitalism — exchange of natural resources for other items of value — can prey upon third parties, which includes the natural wealth itself. A great deal depends on the accounting used. Individuals who have a long-term living ownership stake in the natural wealth being traded away generally do pretty good accounting, unless they are complete idiots — it is possible to sustainably farm land, manage a forest, cultivate herds and wild game, or fish, particularly when the people doing this want to pass the resource on to their grandchildren as a continuing asset. Strong laws are needed to prevent predation on other owners, else this quickly breaks down into tribal conflict.

In both cases of simple capitalism, inequity is natural but tends to be self-limiting and self-correcting.

Investment and corporatism, however, are both intended to accumulate and concentrate wealth without limit, using self-serving bad accounting. Neither is egalitarian, self-adjusting, adaptive, robust, or even approximately fair.

Investors don’t add to the economy, they subtract from it. Every dollar invested is as a yo-yo that comes back to the investor with more wealth attached: it’s a sticky dollar on a string. It increases the investor’s personal concentration of capital, making it less available to the rest of the economy. The higher the yield, the faster wealth gets sucked out of the economy.

One way this could be sustained is if the investment class, as a whole, made no money: if every gain were eventually offset by losses so that the total pool of investment capital remained a fixed fraction of the total economy.

The only other way this could be sustainable is if the economy were growing exponentially at an equivalent or greater rate than the investment class is drawing wealth out. Investment would be beneficial only if investment caused the rate of an exponentially-growing economy to increase more than the drain it imposed: if investments are yielding ten percent, investment would have to be causing more than ten percent growth in the economy. But an exponentially-growing economy is an artifact of bad accounting, not a reality. The real economy is zero-sum: so every dime that does into an investor’s pocket came from somewhere else. If the investment class is getting wealthier, someone is getting poorer.

If either of these sustainable scenarios were the case, concentration of wealth would be constant or decreasing. However, concentration of wealth is increasing rapidly, specifically within the investment class. This says, unambiguously, that the investment class is looting the general economy. And the general economy, as we know too well, is draining the natural wealth at an alarming rate.

Corporations are more complex. There are different sizes and types. My LLC-of-one is technically a “corporation,” as is the local brewpub, as is Hewlett-Packard, as is British Petroleum.

However, all businesses with a separate ownership class involve moving wealth upward to the owners. As owner of a company, when you hire an employee you expect a portion of their labor to go into your pocket. That’s why you hire them — to make money for you. There are alternative models of both ownership and wealth-distribution, such as cooperatives, employee-owned corporations, loose networks of private contractors, etc. The corporate model takes for granted that the “owners” automatically get a portion of the employees’ labor. In return, they provide tailored access to the marketplace.

For small businesses, this upward-pumping effect is barely distinguishable from simple labor capitalism: it tends to be self-regulating and it is spread out over a large number of owners, who come and go as businesses succeed and fail. Most small business owners are an essential part of the middle class. I don’t see a systemic problem in this.

That changes when the corporation ownership becomes mixed with the investment class, either by accumulating enough capital to feel the need to “diversify their portfolio,” or by becoming a public corporation that trades on the stock market.

It also changes when the corporation begins to prey on simple resource or labor capitalism through its effective monopoly on market access. We have, for instance, WalMart’s “take it or leave it” negotiation on pricing, which is similar to the infamous GM practice of “negotiating” such low prices from captive suppliers that their suppliers would be forced out of business, leaving GM with no parts to make their cars. Such corporations often enter into collusion with governments to forcibly strip resources from the people who are managing those resources conservatively using good accounting. It has been common practice in most corporations to pay exempt salaries for skilled labor based on a forty-hour work-week, while demanding fifty- or sixty-hour work-weeks. One of the (many) reasons I contract is so that I get paid hourly.

Of particular concern are the “locust” corporations, such as mining and oil. Their business model is limited by production peaks — they’re inherently short-timers, with no long-term interest in the properties they “own” whatsoever. In most cases, they don’t live there, either. Sweeping in, extracting the “cheddar” (as in the film Avatar), and destroying everything in their path is simply not a problem. Even such things as commercial fisheries and commercial farming have become locusts, through overfishing and monocropping.

When corporations turn these corners, they become — like investment — a machine for pumping wealth into the hands of the corporate ownership class (which is typically the same people who are already in the investment class.)

So we have two mechanisms moving wealth upward into the hands of the few, and the movement is automatic. How does wealth move back down? If it doesn’t move back down, it continues to accumulate in the investment and corporate ownership classes until the middle class is obliterated. And that is dangerous to the system as a whole.

You have said “capitalism, sound money, and limited government.” If you want to add two more items, we’re now pretty close to being on the same page: eliminate proportional investment returns, and eliminate or limit corporatism. If you don’t add those, then I don’t see what countervails the wealth-pump that moves wealth into the investment and corporate ownership classes, and the system is unstable.

I want to point out that high marginal tax on high income — under the Populist Fascists — does provide some downward relief from the upward-pump.

This is why I believe the tax-cut theory is simply upside-down. The New Deal flow of wealth into the lower and middle classes is what created the American consumer economy, by creating the American consumer. It fueled a burst of demand for manufactured goods that supported the entire post-War industrial expansion.

If we tried that again, it would revitalize demand in the US, but since most manufacturing has gone elsewhere, all that money would flow straight out of the country rather than rebuilding industry here. Not that this changes anything, since investment money is also flying.

The best thing to do, IMO, would be to raise taxes, perhaps back to 90% on top income, and put the tax money into boondoggles — a national high-speed rail system, just to throw one idea out there — that look forward to rising oil prices and create new marketplaces that are tied to US soil and are not exportable. In other words, infrastructure (meaning free stuff that can be exploited by entrepreneurs for modest investments) that isn’t attractive to investors — what the Corporate Fascists would call a Big Waste of Taxpayer Dollars.

This brings us around to the two political parties.

Though we have a national obsession with trying to be fair to both sides in an argument, there are some fundamental asymmetries between the Corporate Fascists and the Populist Fascists.

I have personally known only the Corporate Fascism of Reagan and the Bushes, and the Populist Fascism of Clinton and Obama. I was becoming vaguely politically aware at the time of Nixon, Ford, and Carter — Johnson and Kennedy were childhood figures to me, and people like Goldwater and Humphrey were merely names the grownups threw around.

The Populist Fascists may or may not represent a slippery slope into serfdom. That’s an opinion, and a prognostication. I don’t know how that will work out.

The Corporate Fascists, however, are a clear and present danger to the nation.

I know that you have a great concern for individual freedoms, yet you brush off as merely “appalling” the shredding of the Bill of Rights by the Corporate Fascists.

The only “right” that the Populist Fascists have ever gone after, peripherally, is the one embedded in the second amendment. Given that we’ve allowed Congress to felonize individuals for what they carry in their pockets, and thereby strip them permanently of the right to vote, it doesn’t seem unreasonable to me to require a license and training to own a gun — the stated purpose is, after all, a “well-ordered militia.” Most countries that have citizen militias also have compulsory military service where the citizens are trained to use the gun, and they each get a free (tax-paid) weapon when they are discharged.

By contrast, Corporate Fascists have gone after most of our rights with a machete. They have allied themselves with the Religious Right, which wants to overturn the first amendment entirely and establish Christianity as the official state religion. It was Bush who established “free speech zones” and “embedded press” in military actions. Reagan trashed the fourth amendment, and Bush savaged the remains with warrantless wiretapping and surveillance of ordinary citizens going about their peaceful business. The right to a swift and impartial trial has been rescinded, as well as right to legal counsel and habeas corpus. Every overtly regressive and odious proposal against the Bill of Rights that has been introduced to Congress in my lifetime has come from the Corporate Fascists, from flag burning amendments to restrictive marriage amendments to attempts to use government to override individual conscience in matters like abortion. It was Bush and the Corporate Fascists who turned “terrorism” into a six-year political campaign, and who used it to create the infrastructure for an actual Orwellian surveillance state, available for Obama or any future president to use. Cheney said he expected Obama to thank him for that. You blame Obama for inheriting it.

This comparative civil rights record for the two parties should by itself be enough to bury the Corporate Fascist party as fundamentally anti-American, anti-Constitutional, and Abhorrent. It is baffling to me that people like yourself, with such a finely-tuned sensitivity to individual rights, simply let this slide because the alleged “slippery slope into serfdom” is somehow worse.

We add to this overt abuse of power the fact that the Corporate Fascist party is a one-trick dog, lowering taxes. You sent me the links to the Ron Paul site during our discussions of health insurance, and I was intrigued right up to the point where he started boasting about his “solutions” to the problem — tax cuts. Nothing else. Just tax cuts. Corporate Fascists are like the religious converts they’ve taken into their party, for whom the answer to every question is “Jesus.” I don’t believe in the tax cut theories of voodoo economics, as I’ve indicated above; even if I did, there needs to be some connection between government taxation and whatever problem you are trying to solve. The Corporate Fascist response of “cut taxes” appears to be purely reflexive and thoughtless.

This impression is reinforced by the complete absence of alternative policy coming from the Corporate Fascist party right now. Their one trick, cutting taxes, is currently out of favor, and they have nothing else to offer. So they lock arms and simply try to block everything the Populist Fascists try to do. Their “reasoning” is bizarre, and reminds me of the “reasoning” my children used to justify punching each other. The “deficit” is such a huge problem that we can’t possibly extend unemployment benefits, but it isn’t so big that we shouldn’t lower taxes some more?

The Populist Fascists may be misguided by your lights, but on the whole they are at least still trying to govern under the Constitution, and particularly the Bill of Rights. The Corporate Fascists over the last thirty years have reminded me more and more of the Renaissance Popes. “Since God has seen fit to grant us the Papacy, then let us by all means enjoy it.” They don’t seem to believe in governance at all, beyond meddling in the morality of private lives. Their vision of government is merely a series of glory wars, and funneling borrowed taxpayers’ money into preferred corporate interests — including their own.

The question I have for you is this: of what value to me is my freedom to make unlimited profits, when I am under 24-hour universal surveillance searching for evidence of “domestic terrorism” that can get me whisked off to a non-US prison where I am denied counsel, trial, and face torture to get me to confess to crimes I never committed?

I’d like to close by coming back to reality. Or maybe it should be called black pessimism.

We do not have a Liberal Party, nor a Progressive party, nor an Environmental party, and certainly no Conservative party. We are stuck with the Corporate Fascists versus the Populist Fascists, fighting perpetual legislative guerrilla warfare within a crippled (but not limited) government. We have an entrenched investment class that demands perpetual ten-percent return on their investments (doubling time of eight years), and they already own most of the wealth — deny them and they threaten to pick up their marbles and send them to China. We have entrenched and predatory multinational corporations fouling our waters, stripping our mountains, cutting down our forests, and emptying the oceans of life. We have a fundamentally trashed, jobless economy, a shrinking, disempowered, and demoralized middle class, and entrenched camps of theo-economists pointing in opposite directions like the Scarecrow in the Wizard of Oz. We have a nation full of dumbshit hicks inflamed by Fox News into hysteria over Death Panels while raging, “Keep the guv’mint’s hands off my Medicare!” We’re fighting two unsupportable, unwinnable wars in the Middle East, fueled by a huge military-industrial complex and a military mindset (War on Terror? What’s next, the War on War?) that won’t let us stop or wind down either war. We’re on top of Peak Oil, and everyone is chillingly silent about what that means — most people don’t even know the term, and can’t think clearly enough to see the consequences even if they did know. Every official source of information tells lies, everyone has an ax to grind, and everyone writes a book spewing the most incredible nonsense as fact. Even an educated, reasonable person cannot keep his footing in this quagmire of lies.

Your Libertarian ideals have no place in this pre-Collapse world. (Neither do my ideals.)

You want limited government, but you are asking legislators to do this? That’s asking them to piss in reverse. They spent serious money and made serious promises to serious people to get power in the first place, and the ones with the most power have the most investment in the way things are. They aren’t going to go backwards just because we ask them, pretty please.

Any sane rework of our currency is going to devastate the already-wealthy. In particular, it will destroy their primary source of income, which is based upon the usury built into the Federal Reserve and fractional-reserve banking systems, and the world currencies built upon the ever-inflating US dollar. You think Rupert Murdoch is going to jump right on this? Much less the Goldman-Sachs crowd that dictates economic policy in this country?

Our very vocabulary regarding “capitalism” has been corrupted to meaninglessness by blending it with investment, corporatism, and perpetual geometric growth. Most people think BP represents capitalism. Most people think Wall Street is about capitalism. The Corporate Fascist party seems to think the government itself should be privatized into US, Inc.

In short, any real Liberal/Libertarian reform (as you’ve described it) represents a complete overthrow of existing power structures and beliefs. That isn’t going to be pretty under any circumstances, and it would be nearly impossible to build anything remotely free or democratic in the aftermath of a violent overthrow.

In 1776, they could have their little war between Britain and the US, and most people could still eat — they had farms, families, and great hopes for the future regardless of how the politics worked out. The US leaders in 1776 were mostly Enlightenment idealists, and they believed a better world could be achieved through reason.

None of this is true now. Simply interrupting shipments of food to supermarkets would kill half the country (or more) within a month — the rest would be too busy burying the dead and trying to rediscover how to stay alive to worry about freedom. The ideals of Enlightenment are viewed as “quaint” and “unrealistic” in comparison to the brutal necessities of Realpolitik, and the marketing experts have discovered that (surprise!) people aren’t the least bit rational, though they are great at rationalizing. Any hint of organized revolt, could our irrational public be organized at all, and we’d be under martial law in ten seconds flat, eating rationed food under the automatic weapons of trained military and mercenaries. The degree of disinformation that would be spewed at that point through the corporate media would keep the survivors pointing fingers and fighting among themselves for generations.

I don’t see much more hope if we simply let the system destroy itself, which is where it’s headed. In collapsing, there is no enemy to fight, so an enemy will be manufactured. “Desperate times….” and all that. “Jews” played well in Nazi Germany, and “Islamic Terrorists” played well in 2001. We could place bets on what group will take the fall for the final collapse of the US. Maybe we can revive the Visigoths as an enemy. Nobody much liked them, anyway.

I see unavoidable tyranny on the horizon. Governments fall, and democracies are the most fragile of governments. There have been very few in history, and none has lasted more than momentarily.

FDR was almost granted dictatorship by both parties in Congress, did you know that? I didn’t until very recently. He chose instead to attempt the New Deal, which made him a bitter enemy of all his wealthy peers (particularly the Fascists, who greatly preferred a dictatorship to Rule by Idiots, as they saw it) — Corporate Fascists still spit when they hear his initials, and they’re still trying to destroy Social Security. A reporter interviewing FDR commented, “If this economic plan of yours works, you will be the most famous President in history!” He replied, “If it fails, I’ll be the last.”

We don’t have an FDR now, and we don’t have the unity in Congress to give him leeway to enact sweeping reforms as an alternative to dictatorship. Nor would a modern FDR have anything to work with in terms of core economic strength — the US economic core is drained. This government (and nation) will tear itself to pieces before very much longer, and what will replace it will be some form of tyranny.

Given that bleak vision, I think you might understand why I would prefer a socialist, European-style tyranny under the Populist Fascists, for as long as it lasts, to the free-market police-state under the Corporate Fascists where, as Reagan, Bush I, Bush II, and Sharon Angle have all repeatedly assured us, the unemployed are simply lazy.

— Themon

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