Now, to follow up on the last blog, What Matters ..., I present an excerpt from Charles Hugh Smith's latest blog, Our Phantom Middle Class. And most of us are the phantoms Smith is talking about.
Recall that in What Matters we presented Smith's concept of financialization:
Financialization is the commoditization of debt collaterized by previously unsecuritized assets, a pyramiding of risk and speculation that is only possible in a massive expansion of low-cost credit and leverage for those at the top of the wealth-power pyramid: financiers, banks and corporations.
The result of the transformation of the economy under the influence of financialization is seen in some of the phenomena that Trump's populism was intended to combat:
Globalization and financialization have been the two engines of soaring wealth inequality. ...In other words, globalization is the result of those at the top of the wealth-power pyramid shifting borrowed capital around the world to exploit lower costs of labor, commodities, environmental regulations and taxes.This manifests as offshoring of jobs, the stripmining of forests, minerals, etc., the degradation of local ecosystems, the decline of tax revenues derived from capital and the explosive rise in stock market valuations as wages stagnate or decline.
Of the many things we cannot bring ourselves to admit, one of the most consequential is that our vaunted middle class is illusory, a phantom of our imagination rather than a reality. The reality is the vast majority of the nation's wealth and income has been diverted from the middle class to those at the pinnacle of the wealth-power pyramid and the technocrat / financier insider class (the top 10%) that serves the interests of those at the pinnacle.
This transfer has accelerated rapidly in the 21st century as virtually all the real income gains of the past 20 years have flowed to the top 0.1%. This RAND study found that America's elites siphoned $50 trillion into their own pockets in the past two generations: Trends in Income From 1975 to 2018. (Please look at the "Fruits of Financialization" chart below.)
The earnings of the top 0.1% grew 15 times faster than the earnings of the bottom 90% (See chart below)...
...as wages' share of the economy continues its 50-year decline...
As for wealth: the top 0.1% own more than the bottom 80% (see chart below) and the top 1% own 40% of all private wealth and the top 10% own 90%.
If the top 10% own 90% of the wealth and has captured virtually all the income gains of the past 20 years, then isn't it obvious America has no middle class? What the traditional middle class--generally defined as the 50% between the bottom 40% and the top 10%--own is debt and a feeble grasp on very thin reeds of capital.
The point to all this is the question: Having rid themselves of Trump--as I presume--how will our Globalist Power Elite or Ruling Class deal with the consequences, now that their Uniparty his in full control again? How will they deal with a possibly massively recalcitrant populace that will likely will slowly begin to recognize the series of hoaxes that have been played on them? What other consequences could flow from the unraveling of our financialized economy?
In considering these questions, recall where this train of thought began for me. The issue that sparked it was Secession--raised as an issue in the aftermath of the historic Big Steal--and the claim that national prosperity is dependent largely on the Blue counties remaining in control of the levers of power that govern the economy for an undivided nation.
I'm sure that you meant "really took OFF with the Reagan Revolution:"ReplyDelete
When Smith is at his best, he's very good!
"slowly begin to recognize the series of hoaxes".
If this election result holds, this recognition of the hoaxes may be rather more rapid, than is implied here.
I was very young when I heard Reagan's "trickle down economy".Delete
It sounded unreal and condescending to my young ears then, and I've never forgotten it.
I think there are three important caveats to keep in mind, though I don't think these defeat the ultimate claim being made about the ultra-rich having an outsized influence on politics:ReplyDelete
1) One has to adjust for inflation, and it's really challenging to adjust for it accurately.
2) One has to include non-wage benefits (insurance, retirement, etc).
3) One has to make sure the data is following individuals rather than groups over time, as there may be much better income *upward mobility* when looking at individuals over time, rather than groups.
for more information, see these three videos:
I might have written about this subject (here, I think) a week or two ago, but I guess there's no way for a commenter to search comments, is there?
In any event, if you are reviewing the history of financialization and globalization, you must consider the 'contributions' of Messrs Summers, Rubin and Greenspan (the hilariously nicknamed Committee to Save the World) in the latter days of the Clinton Administration. They were deified by Time Magazine for their brilliance and contributions to the Greatness of America, but really they were just setting the stage for an epic redistribution of wealth (to themselves and their acolytes) which ushered in the hollowing out of America, the destruction of our manufacturing base, the Opioid Crisis, and numerous other features which led to the unprecedented power and supremacy of the Elites and the 'Phantom Middle Class', and then the backlash which is now underway, championed by none other than...Donald J. Trump.
Even I can't search comments, which is a source of great frustration to me.Delete
And the rest of us end up bailing these people out periodically.
They privatize the gains and socialize the losses and then claim that "capitalism" failed.Delete
It is possible to indirectly search comments, via duckduckgo.com (or any search engine).Delete
Just put the site address and the keywords together in the search box.
When analyzing the Hollowing Out of America which has led to the Phantom Middle Class it is easy to focus on the relative increase in income and wealth of the Elites (the top 1% and the top 0.1%) compared to the Middle Class (however defined) as measured and shown in the charts in Charles Hugh Smith's excellent article.Delete
But Smith also identifies the loss of 'agency' as an important factor in the plight of the Middle Class in 21st Century America. He writes,
"Broadly speaking, the key assets of the middle class are capital and agency, with capital being defined as financial, intellectual and social capital that generates income, earned and unearned, and agency defined as control over one's life and options and having a say in public decision-making."
This latter factor is enormously important in understanding what has happened to and what is happening to, the 'rest of us'.
Robert Sapolsky, a brilliant Stanford neurobiologist, has studied stress, power and control in humans and other primates and posits that the feeling of being in charge of one's own life more than makes up for the greater amount of responsibility that accompanies higher rungs on the social ladder. In other words, more power means more control over one's life and less stress. Less stress means less chronic disease and illness (both mental and physical) and more happiness.
For an extremely interesting video explaining Sapolsky's views on the impact of loss of autonomy/agency there is this excellent video from 2008: https://www.youtube.com/watch?v=eYG0ZuTv5rs
It is well worth watching. Don't be put off for one second by Sapolsky's appearance. The man is a scholar and a genius and I believe he confirms what Smith is saying about our loss of agency.
If the Elite have their way, the Middle Class will have relatively less wealth and relatively less control.
To Cass' list of Fed chair, names, let's add "Helicopter Ben" Bernacke, who helped push thru the '08 bailouts.Delete
To Codevilla, those travesties were the real beginning, of the mood that became Trumpism.
Spelling error: Benanke, not Bernacke.Delete
I took Kirk's suggestion and found a post of yours last March where we discussed financialization and globalization...where I expanded a little on my thinking about the Committee to Save the World:
For those not overly inclined to get into the weeds of 'financialization' and 'globalization' I can simplify. It's all about greed.
Ah, thanks for looking that up. We have touched on various aspects from time to time.Delete
Off subject but this is the best investigating reporting on the election fraud Epoch time I have watched.ReplyDelete
I walked the streets to get H Ross Perot on the Texas ballot. What’s ironic is that, at the time, Democrats everywhere were the supposed champions of the working man/middle class and that Perot’s sucking sound of jobs going away was BS. It really didn’t matter who won in that election, the die was caste a long time ago.ReplyDelete
"How will they deal with a possibly massively recalcitrant populace that will likely will slowly begin to recognize the series of hoaxes that have been played on them? What other consequences could flow from the unraveling of our financialized economy?"ReplyDelete
Easy answer. Look to China. My theory is that sometime in the 90s the Establishment bought the idea that the CCP had figured out the perfect blend of crime families disguised as political party that could reap unimaginable wealth and power while keeping a population dumb and complacent. Everything in American politics since then can be summed up as the pursuit of the 'China Model' (or China Racket), capturing ever more elements of American power in a bipartisan crime syndicate that brooks no dissent. Trump in 2016 was a nasty shock to them but 2020 is their ultimate play for permanent CCP like power.
"Trump in 2016 was a nasty shock to them but 2020 is their ultimate play for permanent CCP like power."Delete
Ye,s very much so. Unfortunately, the hoity-toity, once again, has forgotten to take into account the nature of an armed populace. They'd have to destroy the country in order to make it theirs.
One other point, the Phantom Middle Class has a majority of the military in it's ranks. They will not begin to start shooting patriotic Americans just because someone says to, rather the one's trying to do the taking will be in for a very rude awakening. The "elites" better keep their Gulfstreams topped up, warmed up and have a pilot on standby 24/7 or they may not make it out. Think Saigon, 1975.
0311, I think we're missing something here. There are two issues we need to recognize (just from the hip, here). One, there is a large percent of folks totally fooled (my sweet, but pathetically gunho Bernie supporters) or at least willing to take part in destroying what they aren't invested in (America). Second, while over the last 60 yrs, those same people have slowly inched us closer and closer to a socialist regime. It will continue, perhaps a bit faster now, in incremental steps. I genuinely wonder if there are enough awake, and then even willing to actually stand in the gap as our founders did; and all those men and boys at Valley Forge, and the women of unbelievable fortitude who kept the homefires burning.Delete
We are in one heck of a sorry predicament.
I read something that suggested Trump has been sitting on his hands as if he was told to stand down (though he could make all the noise he wants for appearance sake). I do wonder why he's been so nonchalant about things.
Kind of like Q. "it" tells you to wait and watch. Well, we do that till the very end and then there's no time to do anything to remedy the situation.
Sidney P is saying she's being hindered. Sounds like a coup even among his inner circle. Do we need Blackwater to rescue him or something!?! What the heck is happening/going on?
Here is a recent quote (story in Epoch Times today) by Senator John Thune: "I'm hoping in the end that all senators will conclude that this election needs to be over with and it's time to move on." Move on where, Senator? Let me guess: back to nap time in the Deep State while the Middle Class gets the mushroom treatment. Stirring stuff John, right up there with Churchill and the Battle of Britain. Not. And I'm supposed to send money to the Republicans in the Georgia Senate races? Sorry, Senator Thune, I have decided to take what is left of my money and move on. Neil in SDReplyDelete
"the traditional middle class--generally defined as the 50% between the bottom 40% and the top 10%"ReplyDelete
I was referring to this phenomenon the other day in the comments section.
I'm afraid, there is nothing traditional with an inflated 50% middle class. It appeared as a fluke in America, right after WW2, due to all other industrial economoies' destruction, at the expense of the rest of the world. Remember average American used to produce 3x the waste compared to the rest of the world in 90s.
The actual middle class (bourgeoisie) was probably about 10% in average in Europe after the steam engine, and even less before then.
I'm afraid the society is going back to its original settings. Trump as a nationalist wants the lion share from the 10% globally, for its shrinking middle class, so he can keep the 50% middle class in US. But the globalist 1% wants a more manageable, less risky for them, homogenous distribution of the new middle class all over the world.
On the long term, it won't really matter whether Trump serves a second term or not, because the rest of the world has been catching up in knowhow, technology and in arms (e.g. bioweapons, AI and drones, hypersonic missiles). The bottom 90%, being totally useless for the top 1% anymore, will have to shrink. Humanely of course, because we can't have wars after the invention of the atomic bomb. Humanely as in extinguishing stray dogs by putting and feeding them in kennels after sterilizing them, bottom 90% will be offered UBI, in exchange of sterilization. And for those who refuse, well RNA vaccines such as the new rushed and not much tested Covid vaccine, are always an option. This is not a conspiracy theory, money in exchange for voluntary sterilization has already been publicly discussed and offered in India, no doubt it will materilaze before long. Similarly China had its single child policy, which didn't work as expected (ended up with millions of male bachelors which is a ticking social bomb now). They will have to come up with something more efficient using their social credit system.
The 9% new middle class, will still continue serving their symbiotic relationships with the top 1 %, at least until Real General AI appears (Kurzweul estimates 2045), probably even after that to keep the gene pool rich and prevent decay.
And that sounds more likely because it keeps population at 10% of current level preserving natural resources for the longer term enjoyment of top 10%, reducing risk of turmoil and revolution as well. It's a happy ending for the top 1% and the middle 9%. It's the entropic death for the 90%, slowly but surely.
Of course unless they revolt right about now, before its too late.
Totally (mostly) OT, been reading a Polk biography, some interesting stuff about Texas:ReplyDelete
1. Prior to annexing Texas, the country had added territory via treaty (read: 2/3 vote of Senate for Louisiana and Florida).
2. The Dems were never able to get close to 2/3 of the Senate, since wiser people respected Mexico's interest in Texas
3. Therefore, despairing of this high bar of consensus, the Dems
3a: claimed a mandate with Polk's election (49% vs 48% with splinter abolitionists - i.e., against Texas - making up the difference in a third party candidate)
3b: contrived to change debate from a treaty to a simple-majority resolution, essentially thumbs up/down on Texas joining union, and let pesky details be worked out later
Here's a great quote from Polk's inauguration address:
"the question of annexation [belongs] exclusively to the United States and Texas" in other words it was not the concern of Great Britain or France and it was certainly no concern of Mexico. With the country's stated purpose of peace, "to enlarge its limits is to extend the dominions of peace over additional territories and increasing millions." (Walter Borneman, pg142)
The quality of reasoning by Polk is worthy of today's Dems, and the talk of expansion and all its political purpose and geological effects is certainly timely.
Sorry, Mark. This is off topic.ReplyDelete
For lack of one of your Briefly posts i wanted tk pass this along to see what you make of the Nashville operation. This linked article and embedded video suggests that the RV explosion was simply a cover for some type of precision missile strike to take out an alleged NSA spy hub or other sensitive data center.
Likely that the truth is quite something else but there are so many oddities and red flags that the media coverage of some lone wolf attack (don't the Bad Guys ever get tired of using this story line?) is certainly a cover or disinformation.
The targeting of the data center at a time when data gathering is critical to Trump is too coincidental. The bizarre warning system deployed for something like 15 minutes before the explosion reeks of a government op to minimize casualties. The damage to the data center contrasted to the lack of a bomb crater is curious. The fact that the FAA shut down the airspace around Nashville is inexplicable for only a RV bomb but fits in with a missile or DEW strike, especially if there was a concern that the attackers might try to finish the job. The lack any Trump tweets about this and lack of a national response in general when everything these days is cause for national angst (e.g. Michael Floyd, Trayvon Martin,..) is the proverbial dog that doesn't bark. More worrisome, it's far from clear who carried out the attack. If it's the White Hats...why? Doesn't seem to fit. But if the Black Hats, the use of aircraft or other platform to launch a missile or DEW implies that this cyberwar has just gone hot and the fighting is already started. We may not make it to January 6th at this rate.
Precisely, Mark. All very convenient that this mystery man seemingly dies in the act. Geee whiz...reminds me of the Las Vegas shooter.Delete
Wait, I must've missed the definitive explanation for the LV shooting ...Delete
Official version: some right-wing white extremist gun-nut did something. End of story, move along.Delete
Right. That was part of my point--- the Las Vegas shooter was yet another one if these mysterious lone wolf types that even today has not been explained or adequately investigated. We will never get anything definitive about that shooter or the soon to be named Nashville Bomber. This has Deep State all over it.Delete
See everyone in DC on 1.6
Meet up for favorite scotch at the Marriott on the 5th.Delete
Karl Denninger is quite struck, by the bomb's trashing of cell service "all over the area, including into both Kentucky and Alabama -- and as far east as Knoxville... whoever did this had inside knowledge along with intent, and knew to hit that specific place.... it smells like a warning."Delete
See https://market-ticker.org/a... .
The whole KD URL isDelete
The fact that it was announced in advance, and it targeted a somewhat seemingly less important data hub, might mean it was a diversion.Delete
If you want to hack into a system in AT&T, such diversion could be very helpful to distract security systems and personnel. While they are scrambling, infiltrating the system via a backhole (like Solarwind), and copying data out is easier.
That also makes sense regarding the outage the attack triggered. I read it wasn't right after the bomb, but sometime later. Probably the distracted security realized the real attack is coming via internet and they shut everything down to immediately stop the breach.
NOT but I thought this humorous:ReplyDelete
Elections of 2022 and beyond.
Mark, et al, I assume you have seen Jen Dyer’s first stab at Nashville? And while we’re at it, I went back and reread her Dec 21 post on the cyber dimension of the electoral fraud. It gives much more hope than Rudy’s recent podcast. And it perhaps explains why that mediocre tenor sang Nessun Dorma at the WH after the convention. It’s a spectacular aria, in which the hero against all odds is confident he will prevail. Vincera! Vincera!ReplyDelete