Well said. I actually get more out of Richard Wolff while listening
to his lectures using JAWS. In the Flesh, Richard Wolff sounds very
much like my old high school history teacher. Condescending.
Carl Jarvis
On 2/1/20, miriamvieni@xxxxxxxxxxxxx <miriamvieni@xxxxxxxxxxxxx> wrote:
Richard Wolff: Global Capitalism Is Theft
Economist and University of Massachusetts, Amherst, professor Richard
Wolff.
(YouTube screenshot)
In modern capitalism, governments routinely borrow money. They do this to
finance budget deficits that occur when governments raise less in taxes
than
they spend. Governments also borrow to invest in long-term projects of
economic development. The swindling occurs when the lenders and
borrowers-usually private financiers and career politicians-negotiate loans
that serve their own particular interests at the expense of the taxpayers
who eventually cover the costs of repaying the government's loans plus
interest on them.
If governments raised enough taxes to cover their desired levels of
spending, they would not need to borrow. Taxes imposed on the wealthiest
corporations and individuals would be the most equitable strategy. The
corporate wealthy protest, of course, threatening that if taxed, they might
reduce their contributions to the economy (investing less, etc.). Most
government politicians sympathize with those protests. Many come from the
ranks of the wealthiest corporations and individuals (or aspire to join
them). They share similar ideologies and depend on campaign donations from
them. Compliant politicians typically exaggerate the negative aspects of
taxing corporations and the rich. They rarely compare them to the negative
effects of the alternatives: taxing middle and lower income people more or
cutting government spending.
Government borrowing to cover budget deficits has its own negative effects
on the economy. Many variables influence the impacts of taxes and deficit
borrowing. Because those variables' effects cannot be known or measured for
years into the future, no one can know which is better or worse for the
economy in the long run. When the corporate rich and their political allies
stress the negative effects of taxes on the rich they usually carefully
neglect the other side of the story as when advertisers mention only the
positive side of whatever they are paid to promote. Their goals are simply
more profits and less taxes.
The class swindle embedded in government borrowing is the none-too-subtle
mechanism whereby the richest sectors of modern capitalism avoid or replace
taxes levied on them with interest-bearing loans to the same government.
The class swindle goes deeper than one-sided untruths about taxes. This
becomes clear when we identify who lends to borrowing governments. Banks,
big corporations, the 5% wealthiest individuals and other governments are
the chief lenders. They are the same economic groups (excepting foreign
governments) that press for and get tax cuts such as the Trump/GOP tax
reduction of December 2017. That particular tax cut increased the federal
budget deficit to over $ 1 trillion in 2019. The same politicians who
facilitate tax reductions for banks, big corporations, and the wealthiest
individuals likewise then facilitate government borrowing money from them.
The class swindle embedded in government borrowing is the none-too-subtle
mechanism whereby the richest sectors of modern capitalism avoid or replace
taxes levied on them with interest-bearing loans to the same government.
What a deal for the rich who thus exchange taxes (assets lost) for loans
(assets and income gained)! And what a deal for their political servants:
leaders who can spend more to buy votes and secure donations without having
to tax anybody because they can borrow instead. And by the time the mass of
taxpayers watching all this grasps the swindle perpetrated on them, those
leaders have moved up their political ladders. Their replacements will then
respond to popular anger by ostentatiously raising taxes less or maybe even
cutting them in favor of, yet again, borrowing. As this can gets kicked
down
the road, its explosive potential builds.
Deficit finance-the polite veneer for this swindle-deepens inequality in
the
United States and everywhere else it is practiced. It redistributes wealth
from the mass of people (taxpayers) to the richest who "save" by means of
lower taxes and then "invest" those "savings" in government loans. In
transferring money from the many to a few, deficit finance operates like a
lottery.
A different but parallel sort of swindle occurs when governments,
especially
in "emerging economies" (Asia, Africa, Latin America, and so on), borrow
from banks and other lenders in the "advanced industrial economies." Here
the perpetrators are, on the one side, bankers and other lenders eager to
make profitable loans to foreign governments. On the other side are
government politicians eager to borrow. The latters' eagerness flows from
two sources. The first is the need to secure their political careers by
funding economic development projects that could not otherwise occur
because
those politicians fear the electoral results of using taxes to pay for the
projects. The second is their ability to divert, legally or otherwise,
sizable portions of the loans they procure to finance themselves and their
parties in addition to (or even instead of) their development projects.
These lenders and borrowers gather easily in expensive hotels to negotiate
wondrous "development loans" nicely serving both their needs. The loans are
backed, of course, by the borrowing country's ability to tax its citizens
and/or sell its natural resources and/or sell its government operations to
pay off the loans and the interest on them. Given such loans' high
profitability, they can and often do run for years before outraged local
citizens revolt and refuse to keep paying. Then the country declares
bankruptcy amid threats and lamentations on all sides. Eventually, what
remains of the loan is partly or wholly forgiven. No problem: the lenders'
profits were already reaped, the career benefits achieved. Soon the whole
process begins again.
The organization and manipulation of government debts (to finance budget
deficits and development projects) have been core components of world
capitalism's real history for centuries. The system fosters those swindles.
The system also rejects or ignores the critics of those swindles including
Modern Monetary Theorists, Marxists, and "populists" of varying
persuasions.
Change comes when finally the swindle's critics and its victims merge to
end
it.
Richard Wolfe
Richard Wolff /
