Economic Articles from 2017
How our banking system destroys the free market
By Chris Kanthan
Posted November 6, 2017
It will be shocking to many Americans that our free market system is deeply and fundamentally flawed. Many people understand that we have crony capitalism that creates loopholes to benefit those at the top. The financial crisis of 2008 and the following bailouts also exposed the rotten financial system and the rigged Wall Street. But there’s something else that’s even more significant and innate in the corruption of our economy: the Federal Reserve Bank. This is an arcane issue that puts most people to sleep, so let’s make it easy and fun by story-telling. It’s about a small town called Murika.
One fateful day, Murika changed forever! That’s when a woman named Janet came to Murika and told the people she had an amazing solution to bring unimaginable prosperity. She talked in really complex jargons that nobody understood, which only convinced them that she was really smart. They agreed to turn over their banks and money to Janet.
Janet’s miracle was a money-printing machine! She told Murikans that nobody will stop them from their dreams. You want to buy a house or a car? Janet will give you the money you want! Want to start a restaurant or even a factory? Come to Janet. Forget the old, cranky bankers. This is the new and improved Murika! More…
It’s Time to Rewrite the Rules of Our Economy
By Tim O’Reilly
Posted November 2, 2017
Future economic historians may look back wryly at this period when we worshipped the divine right of capital while looking down on our ancestors who believed in the divine right of kings.
Business leaders making decisions to outsource jobs to low-wage countries or to replace workers with machines, or politicians who insist that it is “the market” that makes them unable to require companies to pay a living wage, rely on the defense that they are only following the laws of economics. But the things economists study are not natural phenomena like the laws of motion uncovered by Kepler and Newton.
Right now we’re at an inflection point, where many rules are being profoundly rewritten. Much as happened during the industrial revolution, new technology is rendering obsolete whole classes of employment while making untold new wonders possible. It is making some people very rich, and others much poorer. More…
Good Debt; Bad Debt
by David Korten
Posted October 31, 2017
The debt-based money system that is the foundation of Wall Street’s control of the economy and society is based on an underlying logic. So long as its practice is true to that logic, the debt model of money creation can be a driving engine of real-wealth production—up to the point at which the economy encounters the limits of the planet.
Driven by greed and blinded by hubris, Wall Street forgot the logic and created a debt bomb that guaranteed economic and financial collapse.
The logic of a debt money system assumes that the financial system receives the savings of working people and in turn lends those savings to entrepreneurs and enterprises to finance capital investment projects that expand society’s pool of real wealth. More…
How CEO Stock Buybacks Parasitize the Economy
by Ralph Nader
Posted October 28, 2017
Hyper enrichment of a handful of radical corporate state supremacists wasn’t what classical capitalism was supposed to be about. The monster of economic waste—over $7 trillion of dictated stock buybacks since 2003 by the self-enriching CEOs of large corporations—started with a little noticed change in 1982 by the Securities and Exchange Commission (SEC) under President Ronald Reagan. That was when SEC Chairman John Shad, a former Wall Street CEO, redefined unlawful ‘stock manipulation’ to exclude stock buybacks.
Then after Clinton pushed through congress a $1 million cap on CEO pay that could be deductible, CEO compensation consultants wanted much of CEO pay to reflect the price of the company’s stock. The stock buyback mania was unleashed.
Its core was not to benefit shareholders (other than perhaps hedge fund speculators) by improving the earnings per share ratio. Its real motivation was to increase CEO pay no matter how badly such burning out of shareholder dollars hurt the company, its workers and the overall pace of economic growth. In a massive conflict of interest between greedy top corporate executives and their own company, CEO-driven stock buybacks extract capital from corporations instead of contributing capital for corporate needs, as the capitalist theory would dictate. More…
How to Fund a Universal Basic Income Without Increasing Taxes or Inflation
by Ellen Brown
Posted October 22, 2017
In May 2017, a team of researchers at the University of Oxford published the results of a survey of the world’s best artificial intelligence experts, who predicted that there was a 50 percent chance of AI outperforming humans in all tasks within 45 years. All human jobs were expected to be automated in 120 years, with Asian respondents expecting these dates much sooner than North Americans. In theory, that means we could all retire and enjoy the promised age of universal leisure. But the immediate concern for most people is that they will be losing their jobs to machines.
That helps explain the recent interest in a universal basic income (UBI) – a sum of money distributed equally to everyone. A UBI has been proposed in Switzerland, trials are beginning in Finland, and there is a successful pilot ongoing in Brazil. The cities of Ontario in Canada, Oakland in California, and Utrecht in the Netherlands are planning trials; two local authorities in Scotland have announced such plans; and politicians across Europe, including UK Labour Party leader Jeremy Corbyn, have spoken in favor of the concept. Advocates in the US range from Robert Reich to Mark Zuckerberg, Martin Luther King, Thomas Paine, Charles Murray, Elon Musk, Dan Savage, Keith Ellison and Paul Samuelson. More…
Challenging the Dollar: China and Russia’s Plan from Petroyuan to Gold
by Federico Pieraccini
Posted October 21, 2017
As seen in my previous article, US military power is on the decline, and the effects are palpable. In a world full of conflicts brought on by Washington, the economic and financial shifts that are occurring are for many countries a long-awaited and welcome development.
If we were to identify what uniquely fuels American imperialism and its aspirations for global hegemony, the role of the US dollar would figure prominently. An exploration of the depth of the dollar’s effects on the world economy is therefore necessary in order to understand the consequential geopolitical developments that have occurred over the last few decades. More…
Puerto Rico Without Electricity, Wifi, ATMs Shows Importance of Cash, Gold and Silver
By Mark O’Byrne
Posted October 16, 2017
Puerto Rico should be a warning to us all. No matter how wealthy your country, how “sophisticated’ your central bankers and central banking system and how technologically advanced your infrastructure, we can all be rendered poor overnight by the power of Mother Nature.
‘Cash Only’ is reportedly a common phrase across many of the retailers on the territory. The majority of gas stations and grocery stores are only accepting cash payments. Citizens have little choice but to try and find cash.
However, shoppers have the same problem retailers do – they can’t get the cash they need. Fewer than half of Puerto Rico’s bank branches and cash machines are up and running, still crippled by diesel shortages, damaged roads and severed communications lines. Bank officials say they are struggling even to find employees who can get to work when there is no public transportation and gasoline is hard to find. More…
This story should serve as a stark warning to all those advocating and embracing the idea of a cashless society.
The Necessity of a Living Wage: When Corporations Don’t Pay, the Public Does
By Marilyn Katz
Posted October 16, 2017
Most people think that programs like Medicaid, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families and subsidized housing typically serve the unemployed. In fact, they are needed and used by individuals who work full-time for employers who don’t pay them enough for the bare necessities of life.
These critical programs cost taxpayers billions of dollars. Of this, $1.098 billion is paid directly by Illinois residents and the rest through federal taxes. This is dramatically higher than the estimated cost of the soda tax that has created so much controversy.
The most well-known beneficiaries are, of course, fast-food companies like McDonald’s or Burger King, which cost Illinois taxpayers an estimated $368 million a year. There is also Walmart, which employs more than 50,000 people in the state for a taxpayer cost of $222 million. More…
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