07-10-2017, 10:16 PM
(07-10-2017, 09:05 PM)ChrisP Wrote:(07-07-2017, 03:31 PM)Mikebert Wrote: My second published paper. This one is about the inequality turnaround of a century ago that was completed during the last 4T.
It does not yet bring the S&H theory into the mix, (this is for the third paper that I am still working on).
http://escholarship.org/uc/item/42p5m46m
I enjoyed the paper. Why do you believe the next recession will necessarily lead to an extremely large stock market correction (55%)? Why can't economic rents accruing to the market power of large corporations continue keeping profits elevated above historical means (correcting for recessionary effects, of course), as well as the Fed buying up debt, equities and who knows what else to keep the ship from sinking?
Rents are to a large extent a premium that the poor pay for living in the same world as wealthy landlords. To the extent that they are not simply a return on investment (making an allowance for costs of insurance and taxes that landlords pass onto tenants) as on investments in securities, they are almost private taxes that people pay for living where the opportunities are good. Rents are incredibly cheap in Youngstown, Ohio and brutal in San Jose, California. Want to be rich in Silicon Valley? Don't be a software engineer, someone who does high-level intellectual work that creates genuine wealth; instead be born into a family who owns rental properties that one leases to people like software engineers. As a landlord you will collect perhaps as much as half of what the software engineer earns, and software engineers make very good money. Subtract insurance, depreciation, property taxes (property taxes can be very low in California for the value of real estate because of Proposition 13 that froze many property taxes at 1978 levels -- it's no wonder that California schools are below average, well suited to turning out restaurant and retail workers brought up in the middle class, people who would be priced out of the area except that they can live with parents until the parents are 60 or so) -- and you can see where the money goes.
Landlords are not most people's favorite capitalists. They aren't innovators; they sell the same thing over and over. Media bigwigs must create new intellectual property. Car companies must upgrade car models. Energy companies must explore for new resources of fuel. They simply take a bite out of earnings of people who may be a captive clientele. That's in a good place. In a bad place like Gary, Detroit, or Newark they are slumlords.
Economic imbalances do not last forever. People cope in the short term, but in the long term they make choices that make things better. Maybe we will need more decentralization of economic activity so that people don't pay such high rents. There are parts of Michigan that are very attractive -- the lake-shore areas. The difference between Michigan's shorelines and California's ocean beaches? Michigan has a real winter and no good nearby ski slopes (the closest good ones are in New York or West Virginia). Costs of living are much lower, and (outside of such social cesspools as Detroit, Flint, and Saginaw) K-12 education is far better -- so your kids will have a chance. So you will need three wardrobes for living in Michigan, at the least: summer, winter, and fall/spring. OK, there is nothing like San Francisco...
Should America have an FDR-like President (and Donald Trump is the antithesis of such a President), then a high priority will be the alleviation of poverty. Count on huge investments in the poorest parts of America in the alleviation of poverty. Remember that the Tennessee Valley Authority had its focus in the Middle South, then one of the poorest parts of America.
After only the speculative profits of the boom that went bust, economic rents are the first sorts of profits to vanish -- and stay vanished -- in a long depression. It may be that the best thing for the long-term heath of American society in 2009 would have been a second Great Depression that would have leveled economic results as did the first Great Depression and would have improved America by forcing a humbling of multitudes of narcissists. We came out of the recovery of the Little Depression much worse in character. It's not that Obama was an incompetent, dishonest, venal blunderer; he wasn't. But Donald Trump is as incompetent, dishonest, and venal a blunderer as America has ever had for President and he has plenty of companions enabling his incompetence, dishonesty, venality, and blundering. Whether we fault President Obama or not, the political companions of Donald Trump mostly arrived in their roles while Barack Obama was President.
Just imagine someone like Donald Trump being elected President in 1940 because the economic elites recover first as in this decade and get their old power back to enforce an anti-human economic agenda. The world would be very different. A hint on such a world: there might be places in America with names as infamous as Dachau, Buchenwald, and Auschwitz, where Jews, blacks, and political offenders met their doom. April 20 (birthday of you-know-who) would be more important than July 4, the latter having lost all meaning. We are just lucky now that the closest thing to Hitler or Tojo is some punk kid in North Korea.
National character matters greatly in a Crisis... and the character of our political, cultural, and economic leadership is deep in a sewer.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.