Junk Economics

 

Over the weekend, the US Senate passed the most drastic rewrite of America’s tax system since the Reagan administration, which is expected to mostly benefit the wealthiest Americans.

This new tax cut legislation should provide further proof that the United States is hardly a republic and is instead ruled by a tiny number of the super-rich, against the concerns and interests and needs of everyone else.

Which leads to a question–After 40 years of tax cuts enacted by Republicans with the promise of trickle-down economics, how is it in this day-and-age of runaway inequality that anyone believes this shit?

In my opinion, Americans do not take seriously enough the influence of propaganda upon their lives. The elite that rule our country have created an entire economic language that’s designed to deceive. In order to manufacture consent for the retrograde economic policies that favor bankers and financial interests, they need Americans to internalize the logic that if they aren’t rich it’s their own damn fault. There is no fact-based reason to believe this whatsoever, but because America is saturated in these propaganda narratives, they believe it.

In his new book, J is for Junk Economics, heterodox economist Michael Hudson provides support for this argument and claims that junk economics provide the justification for the rich to loot and pillage the rest of us. He  says this has happened because the wealthy and the think tanks and economists that work for them have seized the language of economics, in the process deceiving millions of Americans who expected the new economy — the global economy, the digital economy, the service economy, the sharing economy — to produce new jobs, better jobs.  And it did generate enormous wealth, but mostly for a narrow, highly urbanized slice of the population. Income inequality has increased so dramatically that the American world now resembles the nineteenth-century

We can watch junk economics in real time with the recent tax cut legislation, with Republican lawmakers arguing that tax cuts for the wealthy and corporations they control will result in a torrent of new investment, in the process creating jobs.

However, corporations are not investing nor planning on investing because shareholders pressure managers to deliver immediate returns and because industries are so consolidated that dominant firms don’t actually need to invest or innovate to remain competitive. Private investors are not putting their money into productive new enterprises, but rather are earning their returns from the sky-rocketing value of assets—stocks, financial products, real estate, art—that can be passed down to future generations.

For the rest of us, wages haven’t kept up with the cost of living and debt has been substituted.

Hudson goes further and says that our economy has become financialized and that debt is used as a method of control. He draws a clear distinction between productive and extractive economies, and says that the bought and paid for corporate economists have succeeded in blurring the two together. This has helped bring about a financial oligarchy in the US that extracts payments, in the form of rents, interest and dividends. Most of the cost of living of average Americans is made up housing (rising rents and mortgage debt service), healthcare costs, monopoly products such as pharmaceuticals, and bank debt (including exploding student loans which can’t be discharged in bankruptcy). Hudson describes this arrangement as–neofeudalism.

Looking ahead, consider Hudson and J is for Junk Economics an inoculation against the oncoming swarm of bullshit.

As the tax cut legislation goes to reconciliation and Republicans threaten a government shutdown over the budget, there is no doubt in my mind that you will be confronted with junk economic theories promulgated by politicians and the corporate media.

One of the most pernicious of the junk economic falsehoods out there is the one that goes like this:“Our government is just like your household and the most important thing we can do to bring about economic growth is to balance our budget.” 

It will be only a matter of time before this whopper will be trotted out.

Shortly after that that the Democrats will decry the deficit (created by the tax cuts) and agree, reluctantly, to join with the Republicans in a bi-partisan gesture to cut “entitlements” for the good of the country.

Count on it.

Update: That didn’t take long.

Republicans Plan to Cut Food Stamps as Homelessness Rises in the US

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