Uncommon Sense

June 11, 2021

The Rent’s Too Damned High

Economic myths dominate our political belief systems. Cory Doctorow recently addressed a number of them (on renting and home ownership) here.

Very much worth reading!

Here’s a taste:

The American middle class didn’t emerge thanks to property ownership — property ownership came about as the result of wage gains due to strong (and hard-fought) labor rights, and as a result of public subsidy for private homebuilding (the GI Bill). Homeownership is a good way to covert gains from the a worker-friendly labor market into something durable and insulated — but it’s no substitute for workers’ rights.

It only took a generation for the dream of homeownership to become a nightmare. Trading labor rights for asset appreciation meant that guaranteed pensions became market-based 401(k)s, turning American workers into the suckers in the financial markets’ casino. As these older workers retire, they are forced to supplement their wholly inadequate pensions by liquidating, remortgaging or reverse-mortgaging the family home. Social Security helps, but not much — without a powerful organized labor movement to defend Social Security, the program has withered, offering a sub-starvation cushion.

May 24, 2021

It is a Dirty Word! Don’t Use It!

The dirty word is “redistribution.” To the wealthy this means “rob from the rich and give to the poor.” This means “take from the deserving and give to the undeserving.” This is an abominable thing, redistribution, they say.

Of course, they have been doing it for the past 40 plus years now, and now that they have succeeded, they are, as they say, pulling the ladder up so no others can use it. The wealthy of course have been using every tool at hand to redistribute earnings from the less rich to the more rich. They have manipulated tax laws, labor legislation, social media, you name it in their quest to become even richer than they were. They have used some of their newly acquired wealth to double down and now “own” much of the legislatures and judiciaries in the U.S. Those bodies will not act in any way before running their possible actions by the rich and powerful, aka “donors.” (When the rich ask each other whether they are “donors” they are not talking about organ donations, they are talking about political donations, aka bribes.)

A recent study, however indicates that the strategies employed by the rich to get richer are counter production. They looked at an example for which there was enough data, starting in 1989, though 2019, and found that:

“Downward redistribution appears to make everyone quite a lot wealthier, faster – especially (no surprise) the bottom 80%. Economic activity, annual spending, increases even faster. Taking the leftmost bars as an example: with an annual 1.5% downward transfer, greater spending would have resulted in a 549% total wealth increase, versus actual 421%. (To put that 1.5% downward transfer in context: the compounding annual growth rate on a passive wealth holder’s 60/40 stock/bond portfolio over that thirty years was about 7.5%. That’s all unearned income, received simply for holding wealth.)

“Most of that extra wealth growth would have gone to the bottom 80% (wealth growth of 527% vs. actual 295%), while top-20% wealth growth would also have been slightly higher than actual (526% vs. 499%). The top-20% share of wealth would have remained unchanged, versus the actual share increase, from 61% to 71%.

“With 1.5% in downward redistribution, 2019’s total consumption spending — a pretty good index or proxy for GDP — would have been 52% higher. Total wealth would have been 16% higher.” (Source: How Redistribution Makes America Richer, www.nakedcapitalism.com, May 24, 2021)

Of course the wealthy deny such findings as they conflict with their worldview, “Reality, pfft, what is it really?’

May 13, 2021

The GOP Brain Drain May Kill Christianity in the US

There are many Republicans decrying the $300 per week unemployment payments that were prompted by the COVID-19 pandemic. They claim that people will not work if they were being paid so lavishly not to work. Of course this is nonsense, typical Republican nonsense. If you use a 50 work week year, $300 per week equates to $15,000 per year. That is not even half of the average individual salary that people make. Would any of those complaining Republicans quit their jobs for that oh, so, easy 15 grand a year dole? I don’t think so.

On the flip side of this argument are those same Republicans who are pushing the idea of the U.S. being a Christian nation. This is different from being a nation of mostly Christians, but that there is some official role for Christianity as the official religion of the U.S. These people argue constantly for more and more special treatment of clergy and churches, more exemptions from taxes and compliance with labor and discrimination laws, etc.

But what they are arguing for is that Christian churches be put on the dole.

Aren’t they afraid that that would have the same repercussions as the “getting paid for not working” unemployment insurance does? Actually a recent study, published in the journal Sociology of Religion indicates that as governmental support for Christianity increases, the number of Christians declines significantly. It took ten years to do this study as they looked at data from 160 countries.

More and more I find myself wanting the old Republican Party back, the one which could actual think. I remember when the GOP had a liberal wing, and a cadre of public intellectuals who shared their thinking on ideas near and dear to the GOP. Now there seems to be only political hacks and Trump trolls in the rank and file of Republican leadership. Can they not see that they are attacking Christianity by demanding more and more government support and recognition?

If churches are put on the dole, where will the incentive come for the clergy to proselytize, and keep people in the pews? They will get fat and lazy, sitting around waiting for their government checks. Why do these conservatives want this future?

The GOP also don’t want black and brown people voting because they think they will vote to take away money from white people and give it to unworthy people (aka black and brown people). Aren’t they afraid that if they empower the clergy that they will rile up their congregations to pass legislation giving more and more to Christian churches, making them more and more dependent, and losing more and more Christians, leading to . . . a Muslim takeover!

Think about it. If the numbers of Christians decline, and the numbers of Muslims increase, couldn’t we then become a Muslim majority country (as so many others have) and then the Muslim clergy would be cashing those checks, and. . . .

Don’t they see? Most of Europe is rapidly becoming secular because of the support given by the various countries to their churches. We could be next.

Addendum If you want to read more, there is this: The Biggest Threat to Christianity.

April 26, 2021

The Flaws of Capitalism

Filed under: Business,Economics,Morality,Politics,Reason,The Law — Steve Ruis @ 11:09 am
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The major flaw of capitalism, that it has no limit of even a brake on greed, I have pointed out before, but there are others. Here are a few.

It is claimed that capitalism provides the most efficient distribution of resources. That may or may not be true, but capitalism sure doesn’t do diddly-squat for the distribution of production wastes. There are a spare few examples in which capitalism did have an effect upon waste. A steel company was drawing some heat from the amount of waste they were producing. This waste stemmed from the “pickling acid” (actually hydrochloric acid) used to reduce corrosion of newly poured iron ingots. The acid “passivated” the iron but it also dissolved a bit of the iron and so “wore out” its ability to perform that task. They were dumping that liquid waste, some legally, other not so much and were drawing heat from the federal government (too much regulation, my ass). A consultant told them that their “spent” pickling acid contained a great deal of iron(III) chloride which could be sold on the market and much of the unused acid could be recycled. The sale of the iron(III) chloride and reuse of the acid reclaimed paid for the processing and, in fact, made a profit. Ta da! A capitalism success story. Unfortunately such stories are rare. Dumping of waste is the lazy and cost effective way to deal with it and has been for a very long time.

A capitalism horror story involved a battery recycling plant near Oakland, CA. This plant took car batteries, broke them down, and recycled the lead in them to make new car batteries. Sounds cool, no? Well, part of the process involved emptying the old batters of the fluid in them which was heavily acidic (sulphuric acid, stronger even than hydrochloric acid) and had a great deal of dissolved lead in it as well. So, how did they dispose of this nasty liquid? They poured out on a bare patch of ground out back behind their buildings . . . for decades. Evidence of this waste process was discovered many tens of miles (hundreds even) away as the ground water system spread it out to cover a large part of central California. We do not possess the resources or the techniques to clean this up. The company? Oh, they declared bankruptcy to avoid any liability on the part of those who did the deed.

Basically, capitalism abuses “the commons,” that is those things we hold in common: the air, our waterways, the ground and all of the systems operating therein. Capitalists pollute it, we clean it up. (We are still spending tax money to clean up Superfund sites from decades ago.)

Capitalism does a lousy job of distributing wages. As a prime example, CEOs in the 1950’s made 20-30 times what their average worker made. Today, more than a few CEO’s make 300-400X what their average worker makes. Wow, did CEOs increase productivity, knowledge, customer satisfaction, anything that much? Nope. If one could track CEO productivity (and that would be hard to do), I am sure that CEO salaries have rocketed ahead of any productivity measurement you could some up with. How is this so? It is so because the CEOs packed their own boards of trustees with friendly faces and when the issue of “CEO salary” came up they vote for “raise” every damned time. Some of these CEOs return the favor by serving on their friend’s boards so they could get unwarranted raises, too. Unwarranted salaries paid out to CEOs doesn’t end up in shareholder’s pockets, so how could this happen? Capitalism basically doesn’t care.

In this country we have come to view capitalism as a thing in itself, rather than a tool we wield. We think “it” does this and “it” does that when it is we who do everything. It is very, very (very) clear that unregulated capitalism is disastrous. So, why does one of our two major political parties campaign all of the time on a “less regulation” is better and “no regulation” is best platform? Shouldn’t we be searching for the best regulation and if not that, better regulation? Why would capitalists campaign against the thing that makes capitalism viable? Oh, it’s the greed thing again. Even rabid anti-socialist politicians will vote for corporate socialism almost every time and the reason they do? They are being paid generously, by capitalists, to do so. Apparently politics doesn’t limit greed either.

April 23, 2021

Greed, Capitalism, and Fixing It

I will start by quoting myself:

The Achilles Heel of capitalism is that there is no limit to greed. (Me)

This is hardly a novel position. As evidence I offer:

“No bound is set on riches for men” (Solon)

“Money is like sea water: The more you drink, the thirstier you get.” (a Roman proverb)

“Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income.” (Ecclesiastes 5:10)

The problem at the core of this problem is that wealth translates into political power. People with great wealth can use their wealth to buy political attention to their needs. Those needs always address their interests, the primary of which is maintaining and expanding their wealth.

So the big question is: “How do we fix this flaw” in the grand American experiment in self-governance? If greed results in the collapse of our society, as history shows that it will, how do we address it?

At first I was thinking of a bottom-up solution constructed of social pressures. One idea was that when people earn certain levels of wealth we would slap titles on them. Say, one a millionaire we would refer tot hem with the title of A Really Big Deal or Fat Cat. As their wealth increased with would come up with more and more disparaging titles that we would use publicly. Maybe at the ten million dollar wealth plateau, they would be Rich Assholes. At the Jeff Bezos level, maybe Filthy Rich Money-grubbing Obnoxious Asshole.

I have decided this won’t work as people have the attention spans of gnats nowadays and would be distracted by Brittany Spears news or something equally irrelevant, and stop following through.

There is a method that has worked for us and could work again and that is progressive taxation. During World War 2 the highest income tax bracket was close to 100%. Now, to clarify, that taxation rate was on earnings over $100,000 dollars when the average worker was making about $1885 per year (1942 figure). So, two points: this tax rate didn’t kick in until one had made $100,000 and only applied to the money earned after that $100,000 was earned. And $100,000 represented 53 times what the average worker made!

We generally craft tax brackets so there are small jumps in the tax rate between any two categories but that isn’t necessary. It could be 39% and then after $250,000 it could jump to 95%.

The consequences of doing this were made obvious when we had this system deployed. One consequence was that CEO salaries were about 20 time that of the average worker in their corporations instead of the 250-350 times we see now. And, instead of paying their CEOs ever more money, stock options, etc. They were treated with the trappings, or as they called them the perquisites, of their offices. They had lavishly decorated offices, with very expensive art work on the walls. They had company cars and trips on company airplanes, clothing budgets, and on and on. Many of these are now necessary to be declared as “income” for tax purposes, but they were not necessarily back then.

Of course to change the tax codes along these lines we would need to take back control of our Congress, but no matter what solution we come up with that task will be at the core, otherwise the wealth of the rich will result in laws undermining any system we set up.

And as part of the results of that “natural experiment” in economics that were our progressive tax rates after WW2, we found out that American corporations could be lead by leaders to become pre-eminent in the world without making 200 times or even 50 times, what their average worker made. CEOs have gamed the system to their benefit, not their corporations and not ours.

And, as you might not know, President Franklin Roosevelt brought the “captains of industry” and their ilk to the White House to strong arm them into accepting the high marginal tax rates with little to no protest using the scare of the Socialist Party of America, then one of the the largest socialist organizations in the world, and Labor Unions to make his point. They had to be given something otherwise labor chaos would result. (No business type likes labor chaos.).

Of course, priority one for the fat cats after WW2 was the destruction of the Socialist Party of America, which ceased operations on December 31, 1972 (and not because their goals had been met—Note another Socialist party rose from the ashes, in 1973, but it was and still is much smaller and almost entirely without political influence). And, as you probably know, union jobs in the US have shrunk from about a third in the 1950’s to around 7% today. This is due to a concerted effort on the part of the rich to de-fang labor unions, Our neighbor Canada still has the same level of union jobs as they had in the 1950’s, likewise about 33%, but they had no organized political effort to disempower their unions.

April 20, 2021

The Invention of Whiteness

Filed under: Culture,Economics,History,Race — Steve Ruis @ 10:02 am
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This is an excerpt from The Invention of Whiteness: The Long History of a Dangerous Idea in today’s The Guardian that renders the idea that religion is harmless a lie.

If you asked an Englishman in the early part of the 17th century what colour skin he had, he might very well have called it white. But the whiteness of his skin would have suggested no more suitable basis for a collective identity than the roundness of his nose or the baldness of his head. If you asked him to situate himself within the rapidly expanding borders of the known world, he would probably identify himself, first and most naturally, as an Englishman. If that category proved too narrow – if, say, he needed to describe what it was he had in common with the French and the Dutch that he did not share with Ottomans or Africans – he would almost certainly call himself a Christian instead.

That religious identity was crucial for the development of the English slave trade – and eventually for the development of racial whiteness. In the early 17th century, plantation owners in the West Indies and in the American colonies largely depended on the labour of European indentured servants. These servants were considered chattel and were often treated brutally – the conditions on Barbados, England’s wealthiest colony, were notorious – but they were fortunate in at least one respect: because they were Christian, by law they could not be held in lifetime captivity unless they were criminals or prisoners of war.

Africans enjoyed no such privilege. They were understood to be infidels, and thus the “perpetual enemies” of Christian nations, which made it legal to hold them as slaves. By 1640 or so, the rough treatment of indentured servants had started to diminish the supply of Europeans willing to work on the sugar and tobacco plantations, and so the colonists looked increasingly to slavery, and the Atlantic-sized loophole that enabled it, to keep their fantastically profitable operations supplied with labour.

The plantation owners understood very well that their cruel treatment of indentured Europeans, and their even crueler treatment of enslaved Africans, might lead to thoughts – or worse – of vengeance. Significantly outnumbered, they lived in constant fear of uprisings. They were particularly afraid of incidents such as Bacon’s Rebellion, in 1676, which saw indentured Europeans fighting side-by-side with free and enslaved Africans against Virginia’s colonial government.

To ward off such events, the plantation owners initially sought to protect themselves by giving their “Christian” servants legal privileges not available to their enslaved “Negroes”. The idea was to buy off the allegiance of indentured Europeans with a set of entitlements that, however meagre, set them above enslaved Africans. Toward the end of the 17th century, this scheme witnessed a significant shift: many of the laws that regulated slave and servant behaviour – the 1681 Servant Act in Jamaica, for example, which was later copied for use in South Carolina – began to describe the privileged class as “whites” and not as “Christians”.

One of the more plausible explanations for this change, made by Rugemer and the historian Katharine Gerbner, among others, is that the establishment of whiteness as a legal category solved a religious dilemma. By the 1670s, Christian missionaries, including the Quaker George Fox, were insisting that enslaved Africans should be inducted into the Christian faith. The problem this posed for the planters was obvious: if their African labourers became Christians, and no longer “perpetual enemies” of Christendom, then on what legal grounds could they be enslaved? And what about the colonial laws that gave special privileges to Christians, laws whose authors apparently never contemplated the possibility that Africans might someday join the faith?

The planters tried to resolve the former dilemma by blocking the conversion of enslaved Africans, on the grounds, as the Barbados Assembly put it in 1680, that such conversion would “endanger the island, inasmuch as converted negroes grow more perverse and intractable than others”. When that didn’t work (the Bishop of London objected) they instead passed laws guaranteeing that baptism could not be invoked as grounds for seeking freedom.

But the latter question, about privileges for Christians, required the colonialists to think in a new way. No longer could their religious identity separate them and their servants from enslaved Africans. Henceforth they would need what Morgan called “a screen of racial contempt”. Henceforth, they would need to start thinking of themselves as white.

April 5, 2021

Why Are the Rich So Hot For School Choice?

Everywhere in this land the rich, the 1%, are finagling for more charter schools, more vouchers, more support for private schools and less, ugh, public schools. Why?

I think the answer is multifaceted.

Back when I was a youngin’ it was an unvarnished truth that free public schooling was a pillar of our democracy. What would we have if citizens went uneducated? By this logic we accepted public schooling as a “collective responsibility,” not just an individual responsibility. But, also in my childhood, I heard from people arguing: “I don’t have any children, so why should I be paying school taxes?” This argument confused individual and collective responsibilities. We all benefit from the education of the citizenry, so we all pay for it (unless you are a church). Some of the rich expanded upon this argument and asked “I pay a great deal of money to have my children educated in the finest private schools, so why should I also have to pay for the public schools. Again, this argument confuses individual and collective responsibilities. I do not actually think they were confused on that issue, I think they were just making an argument, any argument, that might reduce their taxes. (It is interesting that those with the most money, worry about how much money they have more than others do.)

Some of the very richest consider all taxes to be “theft.” These extremists got their wish when a town out in the boondocks (of Montana? Idaho?) voted in a cadre of people who thought like that. They thought being a low tax zone would attract all kinds of businesses, but when they reduced or eliminated the vast majority of taxes, they lost their police department, their fire department, their road maintenance department, and even their city hall. (The town council, in fact the whole city government, now works out of a single wide trailer.) Businesses not only didn’t flock to their city they ran, screaming, the other way.

More recently, the filthy rich have recognized that they have cornered almost all of the sources of wealth in this country: mineral extraction, construction, communications, financial “instruments,” etc. and then turned their gaze upon the pile of money spent every year on public schools. This amount of money dwarfs the revenues of many of the other wealth sources in the US combined. So, there was money to be made in supplanted the “public schools.” They even figured out how to extract large profits from “non-profit charter schools.” It was ridiculously easy. First create a school. Then hire a “management company” to run it, a company which has no restrictions on making profits at all. Often the two entities were the same people. Have you ever wondered why there are so may charter school scandals? The answer is easy: the founder’s motivation was greed and with little to no oversight (aka guvmint regulayshun) greed overwhelmed any restraint every time.

It is somewhat amazing how it is that ordinarily intelligent business people can decide to create a business in a certain place because it has a “large pool of quality workers” and then turn around and undermine the process that produces those workers.

I think all this is based upon the rich man’s fallacy: namely that their wealth is a sign of their superiority. That they were able to become rich is their qualification. The “other people” are lesser beings, not worthy of their attention. This meme is so entrenched in the minds of the rich that they all consider themselves to be “self-made men.” I laughed at Mitt Romney making this claim. You see when Mitt graduated from college, his father gave him $2,000,000 of seed money and access to all of his contacts (his father was President of American Motors and a heavy hitter in the Republican party). Do you know how much money I made in my almost 40 years as a college professor (at about the same time span)? It was $2,000,000. Mitt Romney was given, in effect, the amount of my career earnings to “get started” in business. But Mitt Romney did it all himself. He even dialed his own phone from time to time, I am sure.

March 15, 2021

The Anti-American Big Corporations

When it became clear to corporate leaders that the rest of the manufacturing world was catching up, what was their response? If you believed their rhetoric, it would have been to double down on American workers. These leaders would have reached out to labor unions and partnered with them to devise ways to shove American productivity, then the highest in the world, even higher. This was necessary, it is said, because while other workforces were nowhere near as productive as ours (most were not even close), the low cost of the labor in many of those countries allowed for that lack of productivity and still allowed for very healthy profit margins.

So, the segment of our society we call “corporate leaders” saw the writing on the wall and did . . . what? They lifted up themselves on their own ideology (“My Country Right or Wrong” “This is the greatest country in the world!” “American exceptionalism is what guides commerce.” etc.), rolled up their sleeves . . . and moved their factories to countries with cheaper labor.

Not long after this “movement” swept the bulk of American manufacturing jobs overseas, it was shown that the lower productivities, the difficulty of managing factories from far away, and the increased transportation costs (for both raw materials and finished goods) ate up all or most of the so-called savings harvested by moving production facilities overseas.

So, why did they do it? Mostly, it was for purposes of tax avoidance. Tariffs were low, so not much had to be paid to import those “American Made” goods (yes, they still claimed they were American made because they were made in American owned factories). But by running their “earnings” through shell corporations in low tax countries they could reduce the taxes they paid substantially.

So, this country was still their country, right or wrong, but they didn’t want to pay for any of it in either case.

We tend to exalt these corporate tycoons, but based upon their behaviors, they should be seen as pariahs instead. The taxes they avoided have been picked up by others (the rest of us and in the form of national debt). They have used political power, through bribes, er campaign donations, to gut American labor laws even after hiring new labor forces in other countries. They hate unions, just hate them. It used to be that corporate power was opposed only by labor unions and the government (remember anti-trust actions?). They eliminated the labor unions by changing the laws protecting them and protecting workers. They eliminated the government opposition by bribery, er campaign donations, and co-opting regulators (who often go to nice jobs in the industries they regulated after they leave government).

We could eliminate tax havens with a stroke of a pen, by changing the tax laws that allow for them. That does not happen because the legislators have been bought off. We could disadvantage companies who move overseas, but we don’t (guess why).

All we have the power to actually do is to change their social standing. Instead of idolizing the Jeff Bezoses and Elon Musks of this country, we should call them out on their abuses of their workers and our tax laws. These are far from nice people, we shouldn’t give them elevated social status to further inflate their already inflated egos. We should, instead, elevate what they owe to the culture and country that made what they have done possible. We should demand a higher level of civil virtue the bigger they get (. . . from those according to their ability . . . , btw this is not just to be found in Marx, but also Christian scripture). Instead we expect them to only manifest the worst of us . . . greed. Corporations have been sold the bogus idea that they should direct their efforts only to maximizing shareholder value. (Gee, I wonder who promoted that bogus idea? Step One: Find an economist needing a bit of money. Step Two: have them promote your bogus idea. Step Three: Spread a bit more cash around in economic circles to get the idea discussed. Done.)

These are the same corporations that have been making money hand over fist during the pandemic and who supported a government approach to the problem that guaranteed that the pandemic would last longer than anyone thought. Never let a good catastrophe, er opportunity, go to waste.

We are reaping what we have allowed to be sown.

February 25, 2021

The China Hustle

If you needed more ammunition to support the belief that the stock markets need to be shut down, do watch the documentary “The China Hustle” on various streaming services.

What this hustle comes down to is some “investors” saw that China recovered from the 2008 Great Recession very quickly and investing in Chinese companies might be a way to offset losses from the stock market crash. The only problem was most Chinese companies were not traded on American stock markets. So, a workaround was devised. They arranged for small Chinese companies to be merged with now defunct U.S. companies that had one crucial characteristic: they were already approved for trading of “their” stock on the U.S. exchanges.

So as to not spoil the documentary, let it be pointed out that lying to foreigners is not a crime in China. The upshot is that hundreds of billions of dollars were extracted from “investors” which then flowed into China through fraudulent descriptions of these “companies.” And, apparently, none of the usual “checks and balances and regulations” apply.

And it is still going on, because those who are making money off of the process don’t want “the problem” to be solved.

The stock market has no real purpose other than to be a giant casino where people gamble their money. That there are “losers” in the game is acknowledged, but only the winners are celebrated and because the “house” skims its fees off of the top, there is no impetus to close the casino.

This is a well-made documentary and well worth watching. If you wonder whether our democracy is strong enough to withstand all forces, you need to think again. If we fall, it will because of greed being our most serious failing.

 

February 12, 2021

It is Time to Do Away with the Stock Markets

A couple of recent stories surrounding the stock market are indicative of why we need to do away with it.

#1 “Collapsed revenues, astronomical losses, red-hot cash-burn, hellish new debt. Meanwhile, amid craziest markets ever, airline shares soared.”

#2 A stock buyback – a company purchasing its own shares to reduce the number openly available and so push the price up – is a form of market manipulation that was illegal in the US until Ronald Reagan decided that to ban it was to restrict market freedom. As a result, many corporations, instead of building factories, now plough money into their own shares.

It has helped raise the stock market to record levels and provided shareholders with a huge bonus. But few others have benefited. The pharmaceutical company Merck insists that it must charge exorbitant amounts for its medicines to help fund new research. In 2018, the company spent $10 billion on research and development – and $14 billion on share repurchases and dividends. One report suggests that had Wal-Mart diverted half the money it has spent on stock buybacks into wages, one million of its lowest-paid employees, many of whom live below the poverty line, could have had a 50% pay increase.

#3 A bunch of Reddit geeks on the online forum r/wallstreetbets, an investment discussion group that boasts more than 6 million users, decided to buy GameStop shares en masse. Perhaps they saw it as an investment, perhaps they were bored, perhaps they wanted to inflict pain on Wall Street. Whatever the reason, the consequence was to push GameStop’s share price up. And up. Once it became a global story, others piled in too, boosting the share price from about $40 to almost $400 in a matter of days. As a result, big investors lost big (billions of dollars reportedly), one hedge fund, Melvin Capital Management, even being forced to seek a rescue package. (They, of course, were “shorting” that stock looking to make money by providing, well, nothing to earn it. So sad.)

The “stock market” as you were taught about in school barely exists. Some companies do “go public,” selling pieces of their company to raise the money to expand, modernize, whatever. But this activity constitutes less than 10% of the activity of the American stock markets. Most of the “market activity” is what are called the “secondary market” in which people buy and sell stocks already existing. This benefits the companies not at all and, as you can see from point #2 above, it is not unusual for a company to buy and sell its own stock to manipulate their stock’s price (which is what stock brokers are complaining about in point #3, that manipulation not being done by the right kind of people, don’t you know).

The entirety of the stock market has been studied and shown to be a drain on the economy, so why do we allow this abomination to exist? Basically wealthy people are siphoning off money from the economy by pushing paper in the stock markets, contributing nothing in return. But because they are wealthy, and contribute much money to the campaign coffers of politicians, there is no serious movement to “defund the stock markets” as it were.

The time has come: either get rid of it or place a transaction tax upon the traders. That would at least discourage rampant secondary market stock trading which has no value for the American people (actually it has negative value).

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