The New Rentier Class
While We Shovel Billions to the Rich, Forget Recovery
| What makes some rich? What else is wrong with wealth concentration? And are Americans ready to close the income gap? We trim, blend, and append three 2009 articles from: (1) Forbes Magazine, May 22, on rentiers by William Baldwin; (2) CounterPunch, posted on AlterNet June 2, on wealth vs. recovery by Pam Martens; and (3) Miller–McCune, May 29, on class war by Matt Palmquist. |
by William Baldwin, by Pam Martens, and Matt Palmquist
- The New Rentier Class
The term "rent-seeking behavior" (RSB) dates only to 1974, but the concept goes way back. RSB can be defined as the extraction of undeserved economic rewards from elected officials. In a free market, your reward would be a function of how much you contribute; in a regulated market, it’s from how much you contribute to politicians.
The effort supports a thriving class. A few centuries ago we had fawning courtiers at the court of Queen Elizabeth. Now we have Tom Daschle running around town in a limousine. Lobbying (the disclosed portion of it) is a $3.3-billion-a-year industry.
Even -- no, especially -- in a recession, RSB is big business. There's all that stimulus money. In the doldrums of New Haven CN a printer is putting up a windmill. It makes no economic sense, but he's paying only a sliver of the cost (taxpayers pay the rest).
Here are my favorite RSBs.
Farm subsidies.
Baseball stadium financing. George Steinbrenner gets welfare.
Public employee pay and benefits. When the privately owned BMT competed with the IRT, the New York City subways did not offer such nice pensions, or employ so many featherbedders.
UAW pay and benefits. These are being supported with $50 billion of federal money. We are taxing $30-an-hour schoolteachers to help out $59-an-hour autoworkers.
The tax code. Opera. Consumption by aristocrats gets help from the tax deduction for "charity”.
Why do we have a depletion allowance for spodumene, whatever that is -- or 70,000 pages of other peculiarities? To help members of the Joint Tax Committee get campaign donations.
Cap and trade. The clean way to limit carbon is with a tax. The dirty way is with a system of permits dished out in an arbitrary fashion. Guess which we'll get?
Transportation permits. Why is a NYC taxi medallion worth $600,000? That sum is monopoly rent (rigged fares), capitalized.
Academia. What explains the comfortable lifestyle of those economists? Not the economic value of liberal arts education, which is nowhere close to the $330 billion a year this sector consumes. The explanation is federal handouts.
JJS: When we flood a few with public revenue, our problems extend beyond fairness.
- While We Shovel Billions to the Rich, Forget Recovery
The elite typically own three or more homes, fancy cars, multiple country club memberships, airplanes, yachts, and numbered offshore bank accounts. However, all that buying is still less than how much thousands of other consumers would purchase. This leads to unemployment which leads to more wealth-deprived consumers leading to more layoffs, round and round.
Wall Street did not do anything worthy or smart in exchange for extracting that wealth from the system. Too many billions tied up in mansions and yachts means budding innovators and entrepreneurs lack adequate funds to create the breakthroughs that lead to new industries.
Wall Streeters lost trillions of the public’s savings. Add those trillions to the bailout trillions.
Four institutions -- Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup -- out of 8,246 control 35% of all insured domestic deposits ($7.5 Trillion) and 46% of assets ($13.5 Trillion).
The inherent cronyism of the Federal Reserve renders it utterly useless as a watchdog. The same is true of the US Treasury, which can't auction its own debt without the goodwill of its Wall Street primary dealers.
JJS: So, what will we do about it?
- What If There Was a Class War and Nobody Showed Up?
Class War? What Americans Really Think About Economic Inequality uses 70 years of opinion studies and surveys to conclude there's no class war because Americans just don't disagree enough to fight.
This book is written in a familiar, conversational style with chapters split into short snippets that keep the ideas moving quickly. The authors write they have "forsaken some of the conventions of academia, in the hope of communicating with general readers who might be put off by scholarly jargon or extensive discussions."
Page and Jacobs "confirm, update, or (in some cases) refute virtually all the main conclusions of previous researchers."
"Americans are both philosophically conservative and operationally liberal." The authors term this "conservative egalitarianism." That is, "The idea of government-guaranteed food, clothing, and shelter has been favored by large majorities of Americans since at least 1964, and is embraced across lines of class, race, and party.”
But examples of economic inequality abound in the United States. Hence, most Americans support a higher minimum wage, improved public schools, better access to universal health care. At the same time, the average American remains skeptical about the government's capacity to address these problems.
These ideas represent some common ground. It's up to us to see this "conservative egalitarianism" for the opportunity it represents.
JJS: Let’s advance a Citizens Dividend instead of “rent-seeking” and land dues instead of counterproductive taxes -- geonomics.
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Forbes -- AIG's Larceny
Should we reduce the temptation and control spending?
Shifting taxes and subsidies would make the economy serve us |
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