Irradicating the "Economics of Exploitation"

A great blog from the Renegade Economist ... which makes the case for a new economics ...

"While unearned wealth is both a symptom and a driver of economic injustice, the objective of transformative social change is not to soak the rich, but to create an environment in which economic opportunities are more widely distributed among the population ...

The recent riots and looting in London and other English cities are symptomatic of deep economic dysfunction. The social fabric is straining under the weight of an economics unable to offer any possibility of a different, better future.  The social contract is under greater pressure than at any time since the 1930s. But there is a crucial difference between the world then and the world today: a transformation in our collective moral aspirations that offers a spark of hope for the future, the kind of spark that in the dark days of the mid-20th century it took a world war, and the horrors of the holocaust, to ignite.

A just economy will not emerge from the tired debate between left and right, or endless arguments over whether free markets or state control of the economy deliver the best outcome. Justice requires that we transcend these stale and failed dialectics. Neither the contemporary vision of a free-market economy, nor a state-socialist or Keynes-inspired social democratic model can deliver a just economy; each is too riven by conflicts and compromises to get anywhere close.

Nothing short of fundamental reforms to the three pivotal institutions of the modern economy will do. Without substantial changes to the tax system; the financial system and the monetary system, a just economy will remain beyond reach.

Foundations of a New Social Contract

While a smaller, less expensive, state is perfectly achievable once everyone is permitted a viable stake in the economy, the state will still have an important function for which it will need to raise revenue through taxation. But it should tax the use of land and natural resources, things that are limited supply, rather than wages and profits. Taxing the output of economic activity discourages entrepreneurship and penalises hard work.

Financial markets must be reformed so that their sole purpose becomes the channelling of investment capital to the real, productive economy; activities that create the goods, services and experiences that people need to live decent lives, and the extras that promise the possibility of fulfilment and happiness.

Alongside these changes we need a new system of money creation; one that ensures stability in the money supply and that sufficient credit is available to fund every viable new business start up, or sustainable plan for expansion. Money should no longer be created as debt, as this places an unnecessary and counterproductive burden on both business and the economy as a whole.

Economic Renaissance for the Majority

These measures would curtail the minority enjoyment of unearned wealth and bring the benefits of a dynamic, opportunity-rich economy within reach of many more people. It’s perhaps not easy to imagine such a future economy, and it’s probably impossible to model the precise impact of these changes in terms that conventional economics demands, but such modelling is not necessary. These reforms would have to be implemented gradually so they can be fine-tuned as their impact becomes evident. And a great deal more research is required, especially into the impact that changes in each of these spheres will have on the other two: the mechanisms of the tax, financial and monetary systems are complex and interdependent.

If such changes are to be successfully implemented, they will have to be coordinated internationally. This may seem an impossible goal, but it’s not so very different in scale or complexity to the changes unleashed by the process of economic globalisation over the last thirty or so years; it’s just better motivated.

Over to You…

But none of this can happen without the commitment of a critical mass of people. Where that tipping point lies is impossible to know but it is out there. What we need now is the most successful marketing campaign in history. Central to that campaign should be the message that transformative change to economic structures and institutions is possible, and if such change were achieved, the life experience of the vast majority of human beings would be dramatically improved.

Next week, in the final article in this series, I shall look at the prospects for this campaign, and at the importance of established democratic structures in the process of revolutionary economic change"

"Nothing in the world... not all the armies... is as powerful as an idea whose time has come." Victor Hugo 

... This is a great article. IMHO the current form of 'economics' is a mixture of Poweromics (the 'economics' of exploitation, self interest and greed) and little will change until Ignoromics reduces (as suggested in the last paragraph ... 'over to you').

For instance over the last few days the banks have made a conserted and co-ordinated effort (with the CBI - the "Voice of Banks" - not the "Voice of Business" - as they are most bankrolled by the Banks) to strike fear in the public and threaten the Government not to split retail banking away from investment banking (nb which is being brought in to stop taxpayers having to bailout reckless bankers again). Creating fear is a common tactic used by those in Power (remember the Iraq war and those 'weapons of mass destruction'?) ... and the banks are using the 'destruction of the economy' as their 'weapon of choice' (even though it is they that destroyed the economy in the first place)! 

The Liberal Democrats say the want to press ahead with reform, but David Cameron and George Osborne are taking the opportunity (i.e. comments about the threats to the economy) to say they would like to 'park the reforms in the long grass' until the economy is stronger (anything to do with the 'backhanders', lobbying and their ultra-rich friends perhaps?) Just have a guess where these guys are likely to go after they leave Politics ... and I am sure it will be, just like Tony Blair before them, to lucrative jobs in the City!

The problem with the current economics is that it is not just the financial system that is corrupt, but it is all the other essential pillars of society too ... such as Government, the Media (remember Murdoch and the News of the World) and the Judiciary.

The move away from taxing jobs/profit to taxing unearned income/wealth (e.g. land values, gambling, financial transactions etc) is IMHO a 'no brainer' ... as is taxing the extraction of limited natural resources ... and making illegal the electronic counterfeiting of money (which the legal system allows the banks to do every day - i.e. creating money out of thin air, loaning it out and charging interest on it!) as well as the reckless and deliberate destabilising activities of banks (e.g. shorting, and the creation of 'toxic products' such as credit default swaps).

Current economics is unfortunately proving itself to be more about the movement of money/resources to wherever Governments allow them to exploit/profit from people the most ... a form of 'economics' contrary to 'growth' and 'well-being' ... and more about the "Economics of Exploitation". 

Tax the Rich more and the Poor less ... say the Rich in France

Following on from similar comments by US Billionaire Warren Buffett, the rich people of France have called upon their Government to tax them more in order to turn the economy around ... 

... in a letter, signed by some of France's most high-profile chief executives, said: "We, the presidents and leaders of industry, businessmen and women, bankers and wealthy citizens would like the richest people to pay a special contribution ... in a spirit of solidarity" and the French Government is acting accordingly (with an extra tax of 3% on income over 500,000 euros) ...

So why in Britain do we have George Osborne, Boris Johnson and the rest of the Conservative party trying to argue that to escape from our economic problems we need to tax the rich less (i.e. they want to get rid of the 50% tax rate for incomes over £150,000) and tax the poor more (whilst helping them a lot less) ?  

Is it that they know 'better' ... or is it pure selfishness and greed on behalf of themselves (they are all millionaires) and their rich friends?  IMHO this isn't a hard one to work out ... pretty obvious really ... however the problem is most people in the UK are either ignorant or apathetic about it ... so these corrupt 'spin-doctors' (who are trying to push the 'ultimate con' - namely 'trickle-down' economics) think they can get away with it!

The Conservatives try to tell us we "are all in this together" (whilst the truth is in fact the complete opposite) whilst the French don't just talk about, they stand-up to be counted, speak out about solidarity and what is needed to really turn things around, and act upon it!

The 'Four Horsemen' are coming ...

The trailer of a forthcoming documentary by The Renegade Economist.

The Four Horsemen is an independent feature documentary which lifts the lid on how the world currently works ... 


Those in power are "controlling the money ... and controlling the way we think" ... to make sure they "stay in power" ... and to make sure that "capital and power concentrate further" ... 


"They're getting away with all kinds of legal thievery" and "people are beginning to get angry, but not nearly enough"

Directed By: Ross Ashcroft

Featuring: Joseph Stiglitz, Michael Hudson, Prof. Herman Daly, Gillian Tett, Noam Chomsky, Max Keiser,  Dr. Ha-Joon Chang, Simon Johnson, Colonel Lawrence Wilkerson, John Perkins, Tarek Al Diwany, Camila Batmanghelidjh, James Turk, David Morgan, Hugo Salinas Price and more ...


Coming soon: Autumn 2011

Tax the Rich more and the Poor less ... says US Billionaire

Warren Buffett has today called for the US to make him and his "mega-rich friends" pay more income tax. In an article for the New York Times newspaper, the billionaire investor and philanthropist said the rich should do more to help plug the deficits.

He called for a tax rise for those earning more than $1m (£600,000), and a higher rate for those on over $10m.

In a rebuttal of arguments made by Republicans, he said tax rises would not hurt investment or jobs in the US and he told the Government to "stop coddling the super-rich".

"Our leaders have asked for 'shared sacrifice'," he wrote. "But when they did the asking, they spared me."

Mr Buffett explained that, like many top earners, his income came entirely from investments rather than from employment, which are subject to lower taxes in the US. He said last year he paid an effective tax rate of 17.4%, less than the 33% to 41% paid by the employees in his office.

He dismissed arguments made by senior Republicans, including John Boehner, speaker of the House of Representatives, that taxing higher earners more would damage investment and job creation in the US.

"I have yet to see anyone... shy away from a sensible investment because of the tax rate on the potential gains," he said, adding "People invest to make money, and potential taxes have never scared them off". 

He pointed out that the effective tax rate paid by the highest earners was much higher in the 1980s and 1990s than in the last decade, and yet job creation was much higher in the earlier decades.

His proposed tax rises would not affect 99.7% of taxpayers, he claimed, adding that a 2% payroll tax cut passed in December should stay in place to help the poor and middle classes.

Warren Buffett's message is clear ... tax the rich more and the poor less ... and tax investments more (an example of 'money from nothing') and cut the tax on jobs ... as recommended in my last post ... and Buffett's message is the complete opposite to, and pours total scorn upon, Boris Johnson's and George Osborne's demands to cut the top rate of tax too. 

Their request is nothing to do with boosting the economy ... but everything do with lining their own pockets (they are both multi-millionaires) and the pockets of their ultra-rich friends ... at the expense of everyone else. Buffett's comments also show the hypocrisy of these people, especially when they also use a strap-line like we are 'all in this together' ....

Ignorance is unfortunately not bliss and, as we saw last week, is only going to create more trouble ...

Lack of Opportunity and Lack of Responsibility

Riots flared up last week as thousands of people (mostly young people) took to the streets and looted shops. 

Young people currently face a plethora of challenges, e.g. double the rate of unemployment, the stopping of Education Maintenance Allowances (EMA) and the tripling of tuition fees ... and on getting older they face a lifetime of debt slavery and paying of their mountain of debt (now estimated to be around £60k due to the tripling of tuition fees) and crippling house prices too (due to Government policy and corrupt bankers). The truth is they have been completely let down by Government and given little opportunity or hope ... partly because they were seen as an 'easy target' in the cuts (as most of them do not have a vote and those that do rarely vote anyway)!

Yet there is no excuse for young people doing this. Rather than protesting directly to those responsible for creating this mess (i.e. the self interest and greed of the politicians/bankers), they have also shown their own ignorance and greed ... by destroying their own communities and looting shops instead! This inexcusable ignorance, shown by a small minority, in effect condones the self interest and greed of those who actually created this mess (i.e. the politicians and bankers).

They did not loot Libraries/Waterstones for knowledge ... and they did not loot farmers fields because they could not afford to eat either ... instead they looted JJB, Carphone Warehouse and Dixons for trainers, blackberry's and flat screen TV's! ... All organised using social media ... and their expensive Blackberry's and iPhones! Greed and self interest has in effect bred yet more greed and self interest, destroying communities in the process.

A lack of responsibility, by Government, parents and the 'politically correct', has in effect led to a lack of accountability and responsibility in a growing number of young children, who uncorrected by their parents and the system, want to do nothing ... but expect everything (nb playing computer games doesn't count*)! Rather than an outward looking, helpful and hardworking society, Government over the last 20-30 years has overseen the creation of an inward looking, selfish and lazy society ... where 'value' is determined by "what you have", not "who you are" or "what you do" ... 

"Greed is Good" and "Money for Nothing" have become mantras for many ... which is why rising house prices has become a national obsession (e.g. look at the number of house programmes on TV) ... and is why financial services, such as banking and insurance (who create money from nothing - they counterfeit it, charge interest on it, and gamble it) was seen as the future for Britain ... whilst manufacturing (i.e. people actually adding value and making things) was classed as too 'hard work', boring and irrelevant (nb look where Germany is now, having taken the opposite view ... despite having to prop up the Eurozone, and having already had to absorb the problems of East Germany and the collapse of the Berlin Wall too).

We need to heavily tax the creation of money from nothing (including gambling and counterfeiting by bankers) ... and provide tax incentives for creating jobs. We need an economics where "People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect".

And we need to turn around the accountability and responsibility of young people, parents and 'leaders' (including politicians). Young people should be held accountable for their actions, and parents for their children. Politicians need to also be held accountable for their failure to reward the values any civilized society needs to be founded upon ... namely Trust, Honor, Responsibility and Respect. They should also reward 'People taking responsibility for adding value and continuously improving the situation for others', and heavily tax/outlaw those things that do not or do the opposite (which includes most of the practices of banks, insurers and parasitic no-win-no fee lawyers).

The Government are desperately trying to deflect blame onto Gangs and are calling in an ex-New York Police Chief to sort it out ... but the failure is a mixture of ignorance, a lack of morality, responsibility and social justice (nb the gap between the rich and poor has spiraled in the last 20-30 years). 

The current Government is deliberately dividing society, rather than bring it together, and trying to stop society turning its gaze on their immoral actions ... e.g. whilst all this is going on, George Osborne is looking to follow Boris Johnson and his call to cut the top rate of tax for the rich (which will make the gap between rich and poor even greater), whilst increasing taxes and cutting services for the young and poor! 

They both claim this is needed to 'boost' the economy - what a joke! ... the rich simply use their money to accumulate more money (e.g. by buying up and then renting houses, excluding young people from home ownership)! If they really wanted to boost the economy they would invest in young people and the future and providing tax incentives for job creation, not tax cuts for the rich! He would also boost tax revenues by taxing areas that generate 'money for nothing' too (e.g. land values, housing speculation, investment banking and insurance). 

Unfortunately ignorance is not bliss, and as seen last week, ignorance can result in actions that are totally misguided and counterproductive! Unrest will unfortunately continue to grow whilst power is unbalanced and self-interest and greed remain acceptable mantras in society** ... and for things to change for the better, looters need to be replaced by serious, responsible, and organized protesters, who are keen to see justice, trust, honor, responsibility and respect ... not just in society ... but from their 'leaders'.

* Many young people are today immersed in computer games, including 18 rated ones such as Grand Theft Auto, which involves them stealing, killing,  rioting and looting! Such games must make it harder for them to distinguish between good and bad, right and wrong, fiction and reality ... when doing all the wrong things is 'rewarded'!

** Cameron's comments about holding people to account, and fixing the morality in society, are I'm afraid mostly smoke and mirrors and spin (from an ex PR spin doctor) ... because the courts are doing very little in terms of sentencing, and his chancellor has yet again shown they are continuing with their plans to raid the poor for the benefit of the rich. Just like the NHS, Cameron/Osborne will try to push ahead quickly ... before any subsequent review is completed (just like he did with GP commissioning)!