Tuesday, October 21, 2014


One can say this because not only are there few people who could afford them any more, nobody is manufacturing any here worth buying anyway. 

The elites could afford them certainly but they stopped thinking they needed such things a long time ago. They have sacred economic dogma to rely upon and, to the extent that it has made them a lot fatter in the last couple decades or so, you could understand their perceptive intransigence.

The real problem here is the inherent contradiction of money, commodities, and perceived value. As Mr. Dayen makes clear here commodities are deflating because demand is down. The are several reasons for this, of course, but one of the biggest is the fact that the rest of us can't afford to buy sh_t anymore. Not only that, but government can't afford to buy sh_t either because nobody want's to pay for it with taxes. And not only are the elites significant in that last factor, they also hate the idea of the government creating more money, either by direct debt, or simply by letting the Federal reserve pump more counters into the servers of banks around the nation.

Doing that, you see, puts doubt into the elite mind as to whether the counters have value any more; or at least the same value they had when their accumulations were tallied the previous quarter.

A curious mind might then ask: Well... Why don't they create jobs that would pay wages that would allow the rest of us to be able to consume important commodities? And to that you have to start scratching your head. There are, after all, some elites who do try to do this, but their numbers don't seem to be anywhere near sufficient. Why isn't a larger portion of the money elite doing the same thing (you might ask)?

The simplest answer is that it is far less risky to put accumulated wealth into financial instruments than it is to try to go the route of competitive production. So many are involved in that around the globe these days that it's hard to stand out, even if what you produce is good. And so most of the producers try to compete by being not only good, but with low cost as well and that is where we really start running into trouble. 

The people who man or woman the productive process are also the largest group that might be able to purchase it. Making it cheap and keeping significant profit margins means cutting back on either the number of actual bodies involved, and/or the amount you pay those bodies.

Thus we come back to the fact that, here in America, at least, there are not only fewer places actually making things, those that are face the limits of what they can pay their workers. If that's not a contradiction I don't know what is. The service economy expands as the manufacturing diminishes, as ever more of us live from pay check to pay check.

The clue that the elites need to buy is simply this. You have to pay workers a decent living wage no matter what the work is if you are expecting to continue with a competitive commodity economy. That means living with considerably less profit. The only other alternative is to eliminate competition via market monopoly by a few, cooperating giants, and then resorting to authoritarian governance to keep the workers working. Neither is sustainable in the long run because of greed on the one hand, or the desire for liberty on the other, won't allow it. 

This is why Capitalism is obsolete. You ignore this clue at your peril. 

The Salon article:
America's ugly economic truth: Why austerity is generating another slowdown