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A thread: Things I've learned about economics
1) Poverty is mostly about the disparity in wealth between the morbidly rich and everyone else.
2) This disparity is due more to policy than to inherent economic forces.
3) A huge component of that is institutionalized bigotry.
1) Poverty is mostly about the disparity in wealth between the morbidly rich and everyone else.
2) This disparity is due more to policy than to inherent economic forces.
3) A huge component of that is institutionalized bigotry.
4) That means, even if we fix the policies exacerbating disparities in wealth, bigotry will still result in poor minorities and poor women.
5) The modern middle class was created by policies enacted in the 1940s-1960s. It's being destroyed by policies begun in the Reagan era.
5) The modern middle class was created by policies enacted in the 1940s-1960s. It's being destroyed by policies begun in the Reagan era.
6) Most economic theorists prior to the 21st century saw macroeconomics as an unstoppable progression leading inevitably to either disaster or utopia, depending on the personality of the theorist.
They were *all* wrong.
It isn't fate. It's policy.
They were *all* wrong.
It isn't fate. It's policy.
The major problem they had in creating their theories was due to a lack of data. They based their ideas on what they saw around them, colored by their religious preferences, not on any compendium of facts. Facts alone are not enough, but without facts, it's all drivel.
Fact without theory is trivia.
Theory without fact is bullshit.
The necessary data on long-term economic reality wasn't available until ~ 2010. Thomas Piketty has managed to amass enough data to take a stab at understanding how economics really works.
hup.harvard.edu/catalog.php?is…
Theory without fact is bullshit.
The necessary data on long-term economic reality wasn't available until ~ 2010. Thomas Piketty has managed to amass enough data to take a stab at understanding how economics really works.
hup.harvard.edu/catalog.php?is…
This leads me to another vital realization:
7) Most people (at least, most Americans) have no idea what the term "capitalism" means.
Hint: If you work for a living as an employee of someone else, you're not a "capitalist".
7) Most people (at least, most Americans) have no idea what the term "capitalism" means.
Hint: If you work for a living as an employee of someone else, you're not a "capitalist".
Capitalism is based on "capital", which is the stuff that makes money--land, factories, intellectual property, and so on. Capitalists are people who own capital.
If you support capitalism it means you favor the banks, the people to whom you pay rent, or the people you work for.
If you support capitalism it means you favor the banks, the people to whom you pay rent, or the people you work for.
The morbidly rich are capitalists. You're not.
That doesn't mean you're a socialist. Those aren't the only two options. There isn't a word for people like you and me, other than "laborers."
We used to be called "serfs" or "tenant farmers." Or sometimes, "slaves."
That doesn't mean you're a socialist. Those aren't the only two options. There isn't a word for people like you and me, other than "laborers."
We used to be called "serfs" or "tenant farmers." Or sometimes, "slaves."
There is a strong force that works to increase disparity in wealth. This is Piketty's great insight, gleaned from a careful analysis of centuries of macro- and micro economic data. It can be summed up this way:
r > g
Write that down. It matters.
r > g
Write that down. It matters.
"r" is the rate of return on capital, that is, the income produced by things owned by capitalists.
"g" is the general rate of growth of the economy as a whole.
r is greater than g.
When left alone, the rich get richer at a rate faster than the economy grows.
"g" is the general rate of growth of the economy as a whole.
r is greater than g.
When left alone, the rich get richer at a rate faster than the economy grows.
This means wealth is accumulated at the top. The gap between the rich and the non-rich tends to increase.
This isn't inevitable. Tax policy, education, public spending, things like that can reverse--or exacerbate--this trend.
This isn't inevitable. Tax policy, education, public spending, things like that can reverse--or exacerbate--this trend.
Following the shocks of the Great Depression and the World Wars, most nations took steps to reverse the trend of capitalists acquiring wealth at a rate faster than the growth of the world economy.
Starting in the 1980s, many "advanced" nations killed those policies.
Starting in the 1980s, many "advanced" nations killed those policies.
Trumpism is Reaganism on steroids. The Republican Party is today dedicated to creating a neofeual world order consisting of A) a small cabal of hereditary lords and B) the great mass of desperately poor serfs who work in the mines.
I could go into more detail, describing the policies that created the middle class, and the changed policies that are impoverishing us and enriching the manor lords.
But be aware: racism, sexism, and other bigotries are a big part of how this works as well.
But be aware: racism, sexism, and other bigotries are a big part of how this works as well.
The massive vote suppression and Russian psyops campaign of 2016--still happening today--are part of the policy changes created to worsen our standing and enrich the feudal overlords.
It isn't inevitable. It's policy. We can change that.
It isn't inevitable. It's policy. We can change that.
This is the central point I wanted to make. Democracy (literally, "rule by the people") was created to take power away from capitalists, and put it into the hands of the serfs.
But we can only keep that power if we use it.
But we can only keep that power if we use it.
Any muscle, if not regularly used and kept in tone, decays.
Important insight here.
One advantage of the medieval guild system is that an Apprentice could become a Journeyman and eventually a Master, having his or her own business. Serfs could become capitalists.
One advantage of the medieval guild system is that an Apprentice could become a Journeyman and eventually a Master, having his or her own business. Serfs could become capitalists.
Good brief thread/response on one example of how sexism works to enhance the wealth disparity I described above.
This is an example of the idea that policy changes impact the basic truth that r > g.
Tax policy changes whether the gap between the rich and the non-rich increases.
Tax policy changes whether the gap between the rich and the non-rich increases.
