Economics

Before We Lost, The Billionaires Won

It’s been over 10 years since the “great recession.” Since then, we had a period of modest growth, followed by a depression. Let’s catch up with the Billionaires and how they have been doing since 2009. Like this Russian family, who tried to get richer just before the pandemic struck.

  • In 2009, the world had 793 billionaires with a combined wealth of $2.4 trillion. There were 98 members of a more exclusive club: $5 billion or more.

  • As of 2019, the world had 2,153 billionaires with a total net worth of $8.7 trillion. Membership of the $5 billion club quadrupled since 2009 to 424, and 166 people now have at least $10 billion.

  • To qualify as one of the world’s 100 richest people, you now need a minimum net worth of $14.4 Billion. Ten years ago it was $4.9 Billion.

Karl Marx pointed out in Das Kapital the capitalism  was the most successful  economic  system yet devised, if measured by the ability to create vast quantities of  wealth. It was in distribution of wealth that capitalism  failed spectacularly . Only when government  heavily taxes concentrated  wealth, and redistributes  it through public programs  like universal health care , free public education through  college, massive, job-creating infrastructure spending and the like, does capitalism produce a system in which every social class sees a steady rise in income and living standards. The United States had such a  system for both corporations and individuals between 1945 and 1980. The rich, as always,  got richer, but a huge middle  class was created,  and with relatively few exceptions, the general standard of living improved in every category. This period came to a crashing end with Reagan, who pursued an unambiguous policy of transferring  wealth to the very top of the income scale through huge tax cuts, the evisceration of  labor unions, and draconian cuts in redistribution  programs. And so here we are. The wealthy waged war on the rest of us, and they won.

In the Trump years, corporations were known for having too much cash and too few investments. It wasn’t a big economic boom as the GOP says. It was a time of amassing cash and not hiring people.

The French economist, Thomas Pickety, wrote a well received book a few years ago that thoroughly analyzed the reasons that capitalism tends to create ever greater wealth and income inequality. The short answer is because, absent a tax policy directly aimed at redistribution, the investor class will do what it's currently doing. Unchallenged by strong unions, which would give workers some leverage in demanding higher wages and benefits, and coddled by a tax cutting and corporate contribution dependent government, investors can simply keep more and more of the earnings that increased productivity and inexpensive labor created. Of course the capitalists keep nearly all of the wealth created in the economy. It isn't taxed for redistribution to the society that makes it possible, and it doesn't go to increased wages and salaries, because workers have no bargaining power. The rich inevitably get richer, and that will not change unless fundamental social and political changes take place. Between 1945 and 1980, the west kept taxes, especially on the rich, very high, and pursued policies which strengthened unions and redistributed wealth through increased home ownership and educational opportunities. But with Reagan and Thatcher, all that changed. Massive tax cuts benefited the already rich, unions were deliberately decimated, good jobs were shipped to low wage countries, and the inherent tendencies of capitalism toward ever greater concentration of wealth at the top reappeared. As Yogi Berra once said, it's like deja vu all over again.

Is It Posh Assholery Or Projection?

Niall Furguson is perhaps the closest thing the UK has to Ann Coulter. He's not a real economist or historian, despite his teaching privileges at Harvard. He's a right wing television commentator with a particular mean spirited, provocative style. He loves to push the buttons of his political and academic opponents.

On May 2nd, speaking to over 500 financial advisors at the Tenth Annual Altegris Conference in Carlsbad, California, Mr. Furguson once again attacked the greatest, most influential economist of the 20th Century. No transcript is available, but he essentially said that the motivation behind Keynes' famous quote, "In the long run, we are all dead," stems from his being both gay and childless. The argument that Keynes' alleged homosexuality weakens or invalidates his economic theories has been a staple of anti Keynes criticism for seven decades.

This is not Ferguson's first homophobic slur against Lord Keynes. As long ago as 1995, in an article for Spectator, Furguson asserted that Keynes opposed the 1919 Treaty of Versailles (which formally ended WWI) because he was sexually attracted to the German representative at the negotiations. That was to argue that Keynes was literally gay for Germany. Then, famously in a 1999 book, he accused the greatest economist of the twentieth century of picking up young men in London.

What is it with all these personal attacks on a man who can't defend himself? Could it be projection? Isn't it always?

I noticed that the Harvard History Department was unavailable for comment on Ferguson's latest nasty remarks. Apparently his nose is broken because the American public refuses to embrace the imperial project he believes the Unites States must pursue in order to be true to its destiny. Poor Niall.

New York's Middle Class Has Shrunken

The penthouse at 15 Central Park West, which was purchased by the Rybolovleva family in December 2011 for the full asking price of $88 Million. Their 22 year old daughter, Ekatarina, now lives there following her stint at Harvard.

Last week's New York Times story about nealry one third of New York city’s income going to the top one percent of the city's earners is not surprising. What was once the leading manufacturing city in the United States has been transformed into a huge financial casino, with the gamblers at the top reaping all the rewards. Who cares if they nearly brought the economy to its knees, and blighted the lives of millions of Americans? And who is really concerned that they’ll do it again if they’re not prevented? How fitting that Mike Bloomberg should preside over this carnival!

PhDs In Climatology

All it takes is a few February snowstorms to send the wingnuts into a frenzy over climate change.

But not only climate change.  They also went into a frenzy about the weather's impact on job data.  Educated people who have been paying attention to business news since 1990 or so realize that stormy weather has been proven to have both micro- and macroeconomic consequences.  Weather effects earnings, consumption, spending, production, and everything connected to them in our economy.

They probably don't remember nor care that Enron, once a poster child for 21st century corporate America, developed one of the world's first electronic weather derivatives markets - in which investors and institutions both speculated on what the weather would bring, and also hedged their weather-related exposure.  And now the wingnuts are in denial that a series of strong snowstorms can slow hiring?  They are hysterical, excitable, violent, dim-witted, anti-intellectual liars.

John Stewart vs. CNBC / Jim Cramer, Part III

The extended version of the Jim Cramer appearance on the Daily Show. Jon Stewart destroyed him. And Megan McArdle seems annoyed by it all. How dare primetime TV transcend empty entertainment?

Working For Free?

If you're good at something, never do it for free. - The Joker

I try not to write about myself because first, this is supposed to be a blog about my team's interests, and not necessarily a blog about us personally. Second, I fear that any discussion of economic hardship that I'm going through while still living in Manhattan will make me sound a lot like Megan McArdle, a person I and others loathe.

The small business I work for had a nightmare day yesterday. Their AMEX card is frozen. Their bank accounts are frozen. They can't do payroll (payday was last Thursday). They owe hundreds of thousands to various shady suppliers. And one character owes the store money, but his last check bounced, in what might have been a retaliation for checks that bounced in the other direction.

So I ask a veteran salesman here when was the last time he was successfully paid (without the check bouncing). He told me five weeks. He explained that he was patient because he considers himself close friends with the family that owns the business.

But the question to myself is - how long do I work for free? Friends say that now is the time to go on 'strike.' But I am getting some decent experience updating content on the store's web site. And it is fun selling rocks (yes, one month in, I admit it).

Am I insane, or will working for free become a common experience in this economy? Now if a corporation missed payroll, it would be finished. But small businesses can cheat a little. And then there's the unemployment insurance issue. If I go on 'strike' I can't resume collecting NY State unemployment insurance. My understanding is that either I have to be laid off, or the company has to go under first.

So here I am, working for free at a small company that seems to be on the edge of Chapter 11, wondering if I can continue to hold on until either my next paycheck or the closing of the store.

In the meantime, I continue to read Paul Krugman's blog. In my opinion, he has been correct in his predictions for over 12 months now. So I urge everyone to rely on him as your macroeconomic weatherman.

Bloody Monday: Over 70,000 Layoffs Announced On January 26th

Most economists have agreed that the US recession will continue through June 2009. But today's news proves that many more months of bleeding will occur before we have a chance to recover (and let's not forget that our recovery could be handicapped or delayed further by a continued global credit crunch). Today's news of over 50,000 announced layoffs, revised tonight to over 70,000, is just stunning. We were averaging over 200,000 layoffs a month, but at this rate, we could soon see half a million per month.

For the best analysis and forecasts, I continue to read Paul Krugman's blog and columns for the NY Times. He's been busy writing and spending time on TV defending Barack Obama.Defending Obama is admirable, but it is not Krugman's job. While I think that Obama has asked Krugman to be an unpaid advisor (heck, just reading Krugman's blog and articles would be more valuable than any paid economic advisor's words), Obama needs to find more surrogates and defenders who can do television interviews regularly.

The $700 Billion Robbery


Today the men who run our country for the next three months, Ben Bernanke and Richard Paulson, formally asked the American taxpayers to bend over and take a platinum phallus to their anuses. Think I'm exaggerating?

They are demanding $700 Billion for the public to purchase worthless mortguages, or else, they say, the country will suffer greatly.

'Give us the money or the country gets it!!'

But the treasury does not have the cash. If this goes through, the US would have to borrow $700 Billion.

If this mortgage bailout plan passes through Congress, we're beyond screwed. How, you ask? Here are some well-informed opinions:

Paul Krugman, NY Times (registration required): Cash for Trash

Sadly, No!: Light 'Em Up, 4 reasons why the package should not be approved.

Dave Lindorff:
The Bailout Will Kill The Dollar

Sadly, No!: Forget buying a banker. Buy a Progressive.

Bernie Sanders:
No Bailout on the backs of the middle class.

Henry Blodget: Bernanke and Paulson - Here's why we're screwing you.

Howard Rodman: Buffet will make money on his investment in Goldman Sachs, but we won't.