13 May 2013

Obamanomics and Structural Inequality

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Charles Hugh Smith discusses the popular liberal meme of widening inequality, and comes to the conclusion that inequality is widening alright, but the beneficiaries of this inequality are actually thoroughly and completely in cahoots with the leftwing administration which, on the one hand, makes political hay using class warfare rhetoric about inequality, while, simultaneously on the other hand, managing economic and central bank policy ruthlessly in pursuit of the interests of the financier sector at the expense of the general community.

Individuals are not powerless to change their circumstance. This is the basis of the American Dream (and also the Chinese Dream, Mexican Dream, Iraqi Dream, etc.) The question then becomes: how is the system “wired,” i.e. what are the obstacles, incentives and disincentives presented to individuals who are trying to better their circumstance?

It’s important to ask this question, and to be honest in our assessment of victimhood, oppression and individual responsibility.

The widening chasm refers to both the income chasm between the financier class (1/10th of 1%) and the 99.9%, and the chasm between the real economy and the official narrative of the economy. The essence of propaganda is to substitute an officially conjured narrative for independent critical thinking.

In the American propaganda narrative, the central state and bank are admirably supporting a “recovery” that though uneven in places is soundly on the path to widespread prosperity.

The primary support of this narrative is ginned-up statistics (bogus unemployment rate, etc.) and asset bubbles inflated by easy credit to the masses and unprecedented low-cost credit to the financier class. These are the basic tools of propaganda: choose a metric that you can control or game, and make that the measure of success.

In the Vietnam War, the body-count of enemy combatants was the metric chosen by the propaganda machine to measure success. Unsurprisingly, stacks of dead civilians were duly counted to boost morale and to mask the failure of the war’s managers.

Nowadays the unemployment rate is the new body-count: a metric that can be gamed to reflect an illusory success. Just erase tens of millions of people from the workforce, count every 4-hour a week job and dead-reckon a few million jobs were created outside the statistical universe (the Birth-Death Model of small business creation) and voila, the unemployment rate magically declines even as the economy and the job market stagnate.

The other metric of choice is the stock market, which has been inflated by central bank policies and identified as the gauge of recovery by a political class anxious to deflect inquiries into its systemic corruption and monumental policy failures.

The official narrative carefully leaves the kleptocracy, crony-capitalism and cartel rentier arrangements firmly in place. As noted above, those benefitting from the cartel-state neofeudalism defend their perquisites as “natural,” i.e. the result of meritocracy. This adds another layer of propaganda persuasion to the official narrative.

An independent, critical account of the American economy would soon raise questions about the structural causes of inequality by asking cui bono, to whose benefit is the system arranged?

If we can honestly say that the system’s primary source of inequality is a dynamic economy that rewards the top 10% who are best able to deploy skills and capital, then that suggests one set of potential remediations.

If however we find the system is unequal largely as a result of its cartel-state structure, then that suggests a political and financial reset is needed to clear the deadwood of corruption, malinvestment and state/central bank manipulation of statistics, finance and credit.

We had to destroy the economy to save it. Indeed.

Read the whole thing.

Via Tyler Durden.

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One Feedback on "Obamanomics and Structural Inequality"

SDD

In a free market, the degree of inequality would be determined by how unequal individual economic production was. Once you posit that that distribution should instead reflect some arbitrary notion of outcome, you invite — practically insure — pernicious distortions. Those distortions will be shaped not by economic factors, but by how much political influence one has. Who has more political influence than the Banking-Congressional cabal?



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