Hail to the Thief

Neal and I went to see Michael Moore's Capitalism: A Love Story last night. As you'd expect, it was witty, entertaining, thought-provoking (the Goldman Sachs coup is stunning) but not entirely ideologically or economically sound - plus the usual lazy scenes of making fun of security guards. That said, it was the closest a modern American will ever come to promoting socialism.



The most striking elements were the revelations about Dead Peasant insurance: your employer may take out life insurance on you, based on actuarial calculations of employee mortality rates so that early deaths will make them a profit. 'Dead Peasants' is the term used in the industry. The other revelation was the sheer insulated arrogance of bankers, depicted by quotations from this Citigroup document (part 2 here) which exults in the replacement of democracy with 'plutocracy': rule of a nation by and for the super-rich.

Some choice quotations:

The US, UK and Canada are the key plutonomies - economies powered by the wealthy. Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.

In plutonomies the rich absorb a disproportionate chunk of the economy and have a massive impact on reported aggregate numbers, like savings rates, current account deficits, consumption levels, etc. This imbalance in inequality expresses itself in the standard scary 'global imbalances'. We worry less.

We project that the plutonomies… will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven profitability, and globalization.

The earth is being held up by the muscular arms of its entrepreneur plutocrats, like it or not.

It gets better (or worse, depending on your political stripe) - the top 1% of households account for 40% of financial net worth, more than the bottom 95% of households put together. [2000 statistics]. The rich in the US went from coupon clipping, dividend-receiving rentiers to a Managerial Aristocracy indulged by their shareholders.

Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share. The Managerial Aristocracy… needs to commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot. 

When the rich take a very high share of overall income, the national household savings rate drops, and vice versa. The behavior of the exceptionally rich drives the national numbers… We want to spend little time worrying about these (non)issues…

At the heart of plutonomy is income inequality. Societies that are willing to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy.

…the fruits of those profits could be taxes… we struggle to find examples of this happening. Indeed, in the U.S., the current administration's attempts to change the estate tax code and make permanent dividend tax cuts, plays directly into the hands of the plutonomy. 

The wave of globalization that the world is currently surfing, is clearly to the benefit of global capitalists… it is to the disadvantage of developed market labor, especially at the lower end of the food chain. There are periodic attempts by countries to redress this imbalance… But in general, on-going globalization is making it easier for companies to either outsource manufacturing… or "offshore" manufacturing.

Problems

Low-end developed market labor might not have much economic power, but it does have equal voting power with the rich. We see plenty of examples of the outsourcing of labor being attacked as 'unpatriotic' or plain unfair. Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Pluto-participant. Why kill it off, if you can join it? In a sense, this is the embodiment of the "American Dream". But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich. There are signs around the world that society is unhappy with plutonomy… But as yet, there seems little political fight. 

The rest of the document explains that democracy is a side issue, and advises its super-rich clients to 'play plutonomy' by buying shares in 'companies that make the toys that the Plutonomists enjoy'. There's no concern for the lives of the workers in any economy - simply advice on how to maintain the plutocratic system - sometimes by buying off the workers and suborning government - and how to reinforce it. The activities of the rich, it says, actively damage the lives of the others: and they like it this way. They don't even care about their countries any more: 'there are rich consumers and the rest, the rich are getting richer… and they dominate consumption', wherever they are ('Surely, then, it is the collapse of plutonomy, rather than the collapse of the US dollar, that we should worry about… If plutonomy continues, which we think it will, if income inequality is allowed to persist and widen, the plutonomy basket should continue to do very well')

the richest 10% of Americans account for 43% of income, and 57% of net worth… The rich are in great shape, financially. We think the rich are likely to get even wealthier in the coming years'. 

…we think that global capitalists are going to be getting an even greater share of the wealth pie over the next few years, as capitalists benefit disproportionately from globalization and the productivity boom, at the relative expense of labor. 

'What could go wrong? Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was - one person, one vote (in the plutonomies). At some point it is likely that labor will fight back… and there will be a political backlash… We don't see this happening yet…

So there you have it. In the US, UK and Canada, the mega-rich are to be admired and encouraged. The major problem is democracy: the idea that the poor have an equal vote. What's the solution for people like you and I? I'm moving to Scandinavia. They're rich countries which spread the wealth - they don't play 'beggar thy neighbour'. Oh, and don't vote Tory (or New Labour). They're the mouthpieces for Murdoch, Branson, hedge fund traders, Bob Diamond and associated scum, despite recent platitudes about fairness.

These guys, according to these documents need you to stay poor and they're not afraid to say so.

Oh god, I'm so depressed.