Wheels within wheels.

[David Horn]

(12-17-2018, 03:09 PM)Mikebert Wrote: Well last cycle we dealt with similar problems while keeping capitalism intact. Capitalism doe snot *have* to generate high inequality. From 1946 to 1978 inequality fell dramatically, yet our economy was still capitalist throughout that period. You lived through most of it.

Considering how much WORK still needs to be done, I don't see why an SC capitalism won't find lots of things for workers to do.

Economics is part of culture. When you have very high taxes, it does not make sense of pay executive huge compensation, so they don't. But if your compensation is limited by externally opposed taxes rather than the financial return you provide shareholders why would you continue to bust your ass maximizing financial return for shareholders? You won't. Rather you would aim to achieve greatness in the eyes of your peers by building the great business empire. In a work in which the stock market is not central, you cannot use your high-priced stock to BUY growth created by others, rather your will have to conquer new markets by hiring the sales force and the development and production people needed to succeed. So your bring bodies on board and keep some slack during downtimes so when opportunities arise you can jump on them right away instead of wasting time staffing up.

Folks who do this are exponents of "stakeholder capitalism" (SC) those who focus on financial return for shareholders are holders of "shareholder primacy" (SP) culture. These concepts date from a debate in 1931-32.  SC was more common in the pre-1980 world. SP has been dominant over the past 2-3 decades. I wrote a paper in which I model the trends in inequality over 1913-2017 using a cultural evolution model using these two kinds of capitalism. I found that the key parameters that correlated with these trends was labor activity (measure by strike frequency) and top tax rate  with r-squared = 0.84.

So a good approach would be to raise taxes to the roof and bias federal government policy towards labor. However this only works if you can hang on to power. SO first you need the economy to collapse after a financial crisis, so you can come in with a massive stimulus to get people working (this will give you short-term support). This should raise real fear on the Right of inflation, which you address with the high taxes. You also have to neutralize the Fed, to prevent them from fighting inflation (Presidential jawboning in the face of crisis should work)

David Horn Wrote:For argument's sake, let's agree that the terminal transition phase is still a long way off.  The history of elites shows no reason to suspect that they will relinquish their favored position willingly, so this next crisis will only indicate the path that will be followed later.

Um, Republicans were heavily defeated in 2008 and the depression was averted.  Why not let the American people feel the full effects of Republican policy without any Democratic intervention to soften the blow?

I agree that a total collapse would be the best possible motivation for real change, but think about the cost?  We need a return to a non-elite focus, but I'm not sure we can afford that path, even with much higher taxes.  In any case, I doubt that business will refocus on hiring human beings in large numbers, and even less certain the business community will feel the need to pay higher wages.  Automaton is just too enticing.  The 1930's solution may be out of reach this time.

Something that may very well be within reach is a sovereign wealth fund (SWF), funded by high corporate taxes and high taxes on top marginal wealth (using the 1930-50's  approach).  It will take a while for the fund to be meaningful, but having a commanding share of corporate shares controlled by some quasi-government entity might have a better shot at fixing what's broken inside the private sector than any direct action, and it could provide a steady stream of dividends to fund social programs.  Eventually, the taxes could be lowered, but the SWF would still exist to guarantee social funding.

To be honest, it's hard to know how a society that has little need for labor will operate, but there's decades to work through that.  AGW is a lot more urgent.  So is our crumbling infrastructure, which may be paired with the AGW response.  For instance, we're not getting high speed rail any time soon, but electric airplanes are only a decade away.