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Wednesday, November 26, 2014
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Real Stimulus vs. Corporate Plundering

Articles & Blogs - US Commentary

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Regular readers are familiar with my harsh criticisms of the faux “stimulus” initiatives put forth by the Obama regime (and other Western governments) over the past 2 ½ years. Stuffing countless $billions into the vaults of large, multinational banks and corporations is not “stimulus”. Rather, it is simply more of the same “wealth re-distribution” (i.e. stealing) which has been occurring at an accelerating rate in our economies for the past 40 years.

From a theoretical standpoint, giving money to large (well-capitalized) corporations is the worst thing that any government could do with a dollar of stimulus – from several standpoints. First of all, what 2+ centuries of modern capitalism has shown us is that these corporations use such capital to reduce their number of employees by adding more labour-saving (but expensive) capital equipment.

Indeed, at the Dawn of the Industrial Revolution the average “work week” was 7 days a week, 12 hours a day – or more than 80 hours/week. The reason why our current work week is only 40 hours long is because new technology always eliminates jobs faster than it creates new opportunities, and so our governments have been forced to shorten the work week every few decades.

Currently there are approximately 50 million people in Western economies who are not allowed to work. This massive structural unemployment exists for only one reason, because our corrupt governments refuse to shorten the work week. It has been frozen at 40 hours/week for well over half a century, despite the fact it will never again be possible to have “full employment” with a forty-hour work week.

Allowing corporations to get larger and larger simply accelerates the transition to ever more capital-intensive (and low-employment) business models. Stuffing taxpayer dollars into the pockets of these corporate Oligarchs just so they can reduce employment even further is not “stimulus”. Of course I’m being unfair here. When the Obama regime showered these corporations with $100’s of billions they did create jobsin China.

Similarly a tax cut for the wealthy is the second worst thing that one can do in pretending to “stimulate” an economy. Give a rich person a dollar and he/she will likely hoard it. If they do choose to spend it, it would very likely be on something like a vacation in the Bahamas, or buying a painting from some artist who has been dead for centuries.

This is what is known as “trickle-down economics”: give a dollar to the wealthy and (hopefully) a few pennies will slip through their greedy grasp and “trickle down” to the masses below. There has never been a successful example of the implementation of such a policy in all of history. It is nothing but a morally/intellectually bankrupt lie to justify the plundering by those on top of those on the bottom.

The obvious alternative to this top-down plundering of our economies (masked as “stimulus”) is real “stimulus”: bottom-up investments in our economies. When a poor person or a middle-class person receives a dollar, we know two things about what they will do with that dollar. First they will spend a much larger portion of that dollar than if the same dollar was given to a wealthy person. Secondly (and even better) they will almost certainly spend that money locally – not on some exotic vacation in a foreign country or some “masterpiece” of art.

The same is true when money is funneled into small businesses (versus Big Business). Give a dollar of stimulus to a small business and they are not going to build a new manufacturing facility in China, or buy an expensive piece of capital equipment so they can get rid of more of their workers. In fact, the most likely thing that a small business would do with that dollar is hire a new worker.

Surprisingly, a recent article appeared on CNN extolling the virtues of such “bottom-up economics”. The writer pointed to a comprehensive stimulus program of this nature – currently being implemented in that juggernaut of capitalism, Armenia. She also noted how the same strategy had previously been employed successfully in the U.S., as well.

There are no “secrets” or “revelations” here. Every election (while pandering to get our votes) our political leaders will tell us that small business is the growth engine of the economy and the source of most new employment. Amazingly, these same political leaders then all succumb to an epidemic of “amnesia” immediately after being elected – and instead of our tax dollars finding their way into the hands of hard-working (and needy) small businesses, they end up in the pockets of the wealthy and large corporations. By remarkable coincidence, these are the very same individuals/entities who stuff large bribes into the “campaign coffers” of these politicians each election.

Despicably, if today one was to propose some comprehensive (and legitimate) bottom-up stimulus initiative in any of these cowardly/corrupt Western regimes, the response from politicians, academics, and other “experts” would be the same: “there is no money for legitimate investment in our economy”.

Why do I consider this to be such a reprehensible response? Because every day in the media we hear two themes being regurgitated on a daily basis: large corporations “have never been sitting on so much money” and “the very wealthy have never been wealthier”. So while the 85% of us on the bottom have suffered from decades of corrupt “mal-investment” of our tax dollars (i.e. theft), the thieves are sitting there hoarding the $trillions they have plundered. Tax it back!

Because so many Western governments are literally teetering on the verge of bankruptcy, and because these individuals/entities have been relentlessly plundering our economies for decades, an immediate “10% wealth surtax” on the assets of all corporations with market-caps in excess of $10 billion and all individuals with net worth in excess of $5 million would be a decent starting pointing.

This would provide sufficient capital to temporarily restore solvency to our governments, and still allow funding of necessary (and long overdue) real investment in our economies. Over the long term, I’ve already detailed how we permanently put an end to our reverse-Robin Hood economies, which relentlessly steal from the poor to give to the rich. We must put an end to “income taxation” which is the primary vehicle for this stealing, and replace it with a flat wealth tax.

Over time, this will gradually recirculate the $10’s of trillions being hoarded by ultra-wealthy individuals and corporate Oligarchs and restore life to our completely hollowed-out economies. What is apparently beyond the grasp of any (so-called) “economist” is that there is a huge difference between having most of our wealth sitting in idle hoards, versus having it in the hands of ordinary working people – where that money is spent and re-spent again and again.

Apparently these learned economists don’t even understand their own jargon, since this does nothing more than express one of the most important principles of economics: the “velocity of money”. It is impossible to obtain an economics degree without having it hammered into one’s head that a healthy economy requires a high “velocity of money”. Yet again and again we have these hypocrite-charlatans endorsing various forms of “trickle-down economics”, which (as I already explained) must reduce the velocity of money.

Greek philosopher Plutarch espoused the principle that “an imbalance between rich and poor is the oldest and most fatal ailment of all Republics”. Obviously this wasn’t “socialism”, since he made his statement more than 1500 years before the birth of socialism. Rather it was nothing but an elementary expression of the principle of the velocity of money: to have a healthy economy, most of the wealth must be held by most of the people – not some tiny minority of Oligarchs.

It’s time the Obama regime (and all Western governments) stopping plundering our economies and started (really) “stimulating” them.

Comments (2)Add Comment
Jeff Nielson
written by Jeff Nielson, August 27, 2011
Hi Samix.

Actually I started directly submitting my stuff there at the beginning of the year. Yes, I've gotten to know Bill Murphy of GATA - so that certainly helps on that front!
written by samix, August 27, 2011
hey jeff, did you know that your articles are published in the memebers section of ?

This site is really informative and run by one of the founders of GATA.

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