22 March 2017

Wealth Gap Series

This series explores the widening Wealth Gap and its impact on class and race relations, excerpting heavily from Thomas Piketty, Professor at the Paris School of Economics, who has explored the structural cause of the wealth gap in his book Capital in the Twenty-First Century published in 2014. He created quite a stir, getting both rave reviews and harsh critiques. He brought the issue of a widening wealth gap to the limelight and has shown how war mitigated extreme wealth gaps in the past. And without a discussion and resolution, war may again mitigate the current wealth gap extreme.

Capital in the Twenty-First Century by Thomas Piketty, Professor Paris School of Economics, 2014, Excerpts
The central thesis of this book is that a small gap between the return on capital and the rate of income growth can in the long run have powerful and destabilizing effects on the structure and dynamics of social inequality.

The concentration of wealth and prospects for economic growth lie at the heart of political economy. The main driver of inequality – the tendency of returns on capital to exceed the rate of income growth – generates extreme inequalities that stir discontent and undermine democratic values.

There is no fundamental reason why we should believe that growth is automatically balanced. We should put the question of inequality back at the center of economic analysis and begin asking questions first raised in the nineteenth century. For far too long, economists have neglected the distribution of wealth.

Ultra-rich protect wealth with spread of 'family offices'
16 Mar 2017
The ultra-rich in London are increasingly protecting their wealth through the use of "family offices", says research from the London School of Economics. These are teams of professionals - such as lawyers, financiers and psychologists - employed to ensure the "dynastic wealth" of the super-rich, they support a "bunkered" and "fortified" way of life of the "global super-rich". The growth of extreme wealth, alongside poverty and low-income families, means that there needs to be more analysis of how such wealth is perpetuated, the study suggests.

Obama’s Farewell Address, Excerpts
10 Jan 2017
Our democracy won’t work without a sense that everyone has economic opportunity. Our economy doesn’t work as well or grow as fast when a few prosper at the expense of a growing middle class, and ladders for folks who want to get into the middle class.

Stark inequality is corrosive to our democratic idea. While the top 1 percent has amassed a bigger share of wealth and income, too many of our families in inner cities and in rural counties have been left behind. Convinced that the game is fixed against them. That their government only serves the interest of the powerful. That’s a recipe for more cynicism and polarization in our politics.

If every economic issue is framed as a struggle between a hardworking white middle class and an undeserving minority, then workers of all shades are going to be left fighting for scraps while the wealthy withdraw further into their private enclaves.

Britain's inequality map - stark and growing
02 Dec 2016
Andy Haldane, the Bank of England's chief economist is not only worried about the inequality of those on the lowest incomes versus the very rich, but also with those regions which have fallen behind in the race for economic growth since the financial crisis. Most concerning for a government which has pledged to make the economy work "for all" - which presumably means across geographies as well as income bands - is that the issue is becoming more acute.

UK one of the most unequal countries, says Oxfam
13 Sep 2016
The richest 1% of the UK population owns more than 20 times the wealth of the poorest fifth, according to Oxfam. That made Britain one of the most unequal countries in the developed world and contributed to the vote for Brexit, the charity said. The report said many people in the UK felt locked out of politics and economic opportunity. Rachael Orr, head of Oxfam's UK Program, said: "Inequality is a massive barrier to tackling poverty and has created an economy that clearly isn't working for everyone."

Wealth Over Work
23 Mar 2014
It seems safe to say that “Capital in the Twenty-First Century,” the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year — and maybe of the decade. Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,” in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.

Wikipedia: Wealth inequality in the United States
The rich are accumulating more assets while the middle and working classes are just getting by. Currently, the richest 1% hold about 38% of all privately held wealth in the United States while the bottom 90% held 73% of all debt. According to the New York Times, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent".

The distributive nature of tax policy has been suggested by some economists and politicians such as Emmanuel Saez, Thomas Piketty, and Barack Obama to perpetuate economic inequality in America by steering large sums of wealth into the hands of the wealthiest Americans. This claim has created much controversy and debate within the academic and political spheres.

Racial disparities: There are many causes, but inheritance might be the most important. Inheritance can directly link the disadvantaged economic position and prospects of today's blacks to the disadvantaged positions of their parents' and grandparents' generations.

In Capital in the Twenty-First Century, French economist Thomas Piketty argues that "extremely high levels" of wealth inequality are "incompatible with the meritocratic values and principles of social justice fundamental to modern democratic societies" and that "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is headed.

14 March 2017

Civilizations and Usury

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

Credit is sometimes considered a modern device or even a modern vice. It is true that a few new credit forms have been developed in our century and statistics reflecting the growth of the volume of credit during recent decades are impressive. But a glance through the pages of financial history will dispel the notion of novelty. Credit was in general use in ancient and medieval times. Credit long antedated industry, banking and even coinage; it probably antedated primitive forms of money.

For example, about 1800 B.C., Hammurabi, a king of the first dynasty of ancient Babylonia, gave his people their earliest formal code of laws. A number of chief provisions of this code regulated the relation of debtor to creditor. The maximum rate of interest was set at 33 1/3% per annum for loans of grain repayable in kind, and at 20% per annum for loans of silver by weight.

Twelve hundred years later, around 600 B.C., the legal history of classical Greece began with the laws of Solon. Drastic reforms were then called for by an economic crisis in Athens stemming in part from excessive debt and widespread personal slavery for debt.

The Romans also began their legal history with a body of laws regulating credit. This, too, was forced by a crisis characterized by excessive debt.

These three examples from the earliest days of historic Babylon, Greece and Rome are enough to support the conclusion that credit at interest was widespread enough to create major political problems before the emergence of written history.

Usury, or interest, was fundamental to the economics of these great civilizations, driving its unsustainable growth and eventual collapse. Modern civilization has the same trappings of past fates.

The Dance of Death by Chris Hedges
13 Mar 2017 
The graveyard of world empires—Sumerian, Egyptian, Greek, Roman, Mayan, Khmer, Ottoman and Austro-Hungarian—followed the same trajectory of moral and physical collapse. Civilizations in decline, despite the palpable signs of decay around them, remain fixated on restoring their “greatness.” Their illusions condemn them. They cannot see that the forces that gave rise to civilization are the same forces that are extinguishing it. Their leaders are trained only to serve the system. And when the last moments of a civilization arrive, the degenerate edifices of power appear to crumble overnight.

Those who rule at the end of empire are psychopaths, imbeciles, narcissists and deviants, the equivalents of the depraved Roman emperors Caligula, Nero, Tiberius and Commodus. The ecosystem that sustains the empire is degraded and exhausted. Economic growth, concentrated in the hands of elites, is dependent on a crippling debt peonage imposed on the population. The bloated ruling class of oligarchs, priests, courtiers, mandarins, eunuchs, professional warriors, financial speculators and corporate managers sucks the marrow out of society. Capitalism ruthlessly commodifies human beings and the natural world to extract profit until exhaustion or collapse. Culture is degraded to patriotic kitsch. Education is designed only to instill technical proficiency to serve the engine of capitalism. Historical amnesia shuts us off from the past, the present and the future. Those branded as unproductive or redundant are discarded and left to struggle in poverty or locked away in cages. State repression is indiscriminant and brutal.

The elites’ myopic response to the looming collapse of the natural world and the civilization is to make subservient populations work harder for less, squander capital in grandiose projects such as pyramids, palaces, border walls and fracking, and wage war. Increasing military spending and taking the needed funds out of domestic programs typifies the behavior of terminally ill civilizations. When the Roman Empire fell, it was trying to sustain an army of half a million soldiers that had become a parasitic drain on state resources.

07 March 2017

In which countries is Coca-Cola not sold?

Tamil Nadu: Traders ban Pepsi, Coca-Cola to support local products
01 Mar 2017

Traders in the southern Indian state of Tamil Nadu have banned the sale of Coca-Cola and Pepsi in favor of local products. The associations say that soft drinks firms take too much water from rivers, leaving farmers struggling to irrigate their land at a time of severe drought. "Drinks like Pepsi and Coca-Cola are not good for your health because of their high sugar and chemical content. We are promoting Indian soft drinks, and will encourage better sales of fruit juices."  The Indian Beverage Association (IBA) said the ban "was against the proven fundamentals of robust economic growth.” More than a million shopkeepers are expected to comply with the ban. Pepsi and Coca-Cola have not commented on the ban.

Coca-Cola opens its first plant in Burma for 60 years
04 Jun 2013
Coca-Cola has opened a bottling plant in Burma - the first time it has had a production facility there for more than 60 years. The world's largest soft-drink maker is one of the first US firms to invest in Burma following Washington's decision to suspend sanctions against the country. Coca-Cola has pledged to invest $200 million, and create thousands of jobs. There are now only two countries where the company does not do business. It left Cuba after the revolution, when Fidel Castro's government began seizing private assets, and it has never operated in North Korea.

In which countries is Coca-Cola not sold?
11 Sep 2012
After almost 60 years, Coca-Cola is on sale again in Burma. It's one of the world's most recognized brands, so are there any countries where the drinks giant still remains unsold? There are now just two countries in the world where Coca-Cola cannot be bought or sold - at least, not officially. They are Cuba and North Korea, which are both under long-term US trade embargoes (Cuba since 1962 and North Korea since 1950).

Coca-Cola's entry into any country is a powerful symbol, says Tom Standage, author of A History of the World in Six Glasses. "Coca-Cola is the nearest thing to capitalism in a bottle.” Not all countries have embraced the American-ness that seems to be embodied by Coca-Cola. It was the French who first coined the pejorative term "coca-colonization" in the 1950s. Trucks were overturned and bottles smashed as protesters saw the drink as a threat to French society. During the Cold War, Coca-Cola became a symbol of capitalism and a fault-line between capitalism and communism.

In 2003, protesters in Thailand poured Coca-Cola onto the streets as a demonstration against the US-led invasion of Iraq, and sales were temporarily suspended. Iran's president Mahmoud Ahmadinejad has threatened to ban Coca-Cola and Venezuela's Hugo Chavez recently urged people to drink locally-made fruit juice rather than drink Coca-Cola or Pepsi.

Coca Cola announced plans to invest a record $4 billion in China between 2012 and 2014. It is the company's biggest ever China investment following the $2 billion it invested in the country in 2009.