Neofeudal financialization and unproductive
State/corporate vested interests have bled the middle class dry, yet
we accept the officially sanctioned narratives. Why?
Let’s cut to the chase and generalize
“what’s fake”: everything that is officially
sanctioned: narratives, policies, statistics, you name
it–all fake– massaged, packaged, gamed or manipulated to serve
the interests of the ruling Elites.
Anything that might introduce a shadow of
skepticism or doubt about the sustainability, fairness and
transparency of the status quo (i.e. anything authentic and genuine)
is recast or repackaged into a fake that can be substituted for the
authentic when everyone’s gaze is distracted by the latest
fad/media sensation/scandal.
ObamaCare: fake, a simulacrum of insurance and
healthcare.
The National Security State: fake, a cover for
global Empire.
The Patriot Act: Orwellian cover for
state-corporate fascism.
Student loans: parasitic, exploitive
loan-sharking enforced by the Central State for often worthless
“higher education.”
And so on.
Yesterday
I explored the peculiar dynamic that motivates us to accept
forgeries, fakes and illusions as authentic: What’s
Real? What’s Fake?.
If the fake enables our fantasy (of free money, of owning an
authentic canvas by a famous artist, that rising wealth inequality is
just a side-effect of freewheeling capitalism, etc. etc. etc.), then
we want to
believe it so badly that we overlook all the evidence of chicanery,
forgery, illusion and fakery.
Consider our willingness to accept the
conventional narrative about why the Great American Middle Class has
been in decline since 1973: rising energy costs,
globalization, and the declining purchasing power of the U.S. dollar.
While these trends have certainly undermined
middle-class wealth and income, there are five other more
politically combustible dynamics at work:
1. The divergence of State/corporate vested
interests and the interests of the middle class
2. The emergence of financialization as the key
driver of profits and political power
3. The neofeudal “colonization” of the
“home market” by ascendant financial Elites
4. The increasing burden of indirect “taxes”
as productive enterprises and people involuntarily subsidize
unproductive, parasitic, corrupt, but politically dominant vested
interests
5. The emergence of crony capitalism as the
lowest-risk, highest-profit business model in the U.S. economy
The non-fake narratives are considerably
different from the status quo ones. Please consider two: The
Neofeudal Colonization of Home Markets and the Happy Marriage of the
Parasitic Central State and Crony Capitalist Cartels.
The Neofeudal Colonization of Home Markets
The use of credit to garner outsized profits
and political power is well-established in Neoliberal Capitalism.
In what we might call the Neoliberal Colonial Model (NCM) of
financialization, credit-poor developing world economies are suddenly
offered unlimited credit at very low or even negative interest rates.
It is “an offer that’s too good to refuse” and the resultant
explosion of private credit feeds what appears to be a “virtuous
cycle” of rampant consumption and rapidly rising assets such as
equities, land and housing.
Essential to the appeal of this colonialist
model is the broad-based access to credit: everyone and his sister
can suddenly afford to speculate in housing, stocks, commodities,
etc., and to live a consumption-based lifestyle that was once the
exclusive preserve of the upper class and State Elites (in developing
nations, this is often the same group of people).
In
the 19th century
colonialist model, the immensely profitable consumables being
marketed by global cartels were sugar (rum), tea, coffee, and
tobacco—all highly addictive, and all complementary:
tea goes with sugar, and so on. (For more, please refer to
Sidney Mintz’s landmark study, Sweetness
and Power: The Place of Sugar in Modern History).
In the Neoliberal Colonial Model, the
addictive substance is credit and the speculative consumerist fever
it fosters.
In the financialization model, the
opportunities to exploit “home markets” were even better than
those found abroad, for the simple reason that the U.S. government
itself stood ready to guarantee there would be no messy
expropriations of capital or repudiation of debt by local authorities
who decided to throw off the yokes of credit colonization.
In the U.S. “home market,” the government
guaranteed lenders would not lose money, even when they loaned to
marginal borrowers who could never qualify for a mortgage under any
prudent risk management system. This was the ultimate purpose
of Freddie Mac, Fannie Mae, and now the FHA, which is currently
guaranteeing the next wave of mortgages that are entering default.
In my analysis, the Status Quo of “private
profits, public losses” and the incentivization of gargantuan
household debt amounts to a modern financialized version of
feudalism, in which the middle class now toils as
debt-serfs. Their debt cannot be repudiated (see student
loans), their stagnating disposable income is largely devoted to debt
service, and their assets have evaporated as the phantom wealth
created by serial credit bubbles vanishes as soon as the asset/credit
bubble du jour bursts.
The Status Quo: A Happy Marriage of the
Parasitic Central State and Crony Capitalist Cartels
In broad brush, financialization enabled the
explosive rise of politically dominant cartels (crony capitalism)
that reap profits from graft, legalized fraud, embezzlement,
collusion, price-fixing, misrepresentation of risk, shadow systems of
governance and the use of phantom assets as collateral. This
systemic allocation of resources and the national income to serve
their interests also serves the interests of the protected fiefdoms
of the State that enable and protect the parasitic sectors of the
economy.
The productive, efficient private sectors of
the economy are in effect subsidizing the most inefficient,
unproductive parts of the economy. Productivity has been
siphoned off to financialized corporate profits, politically powerful
cartels, and bloated State fiefdoms. The current attempts to
“restart growth” via the same old financialization tricks of more
debt, more leverage and more speculative excess backstopped by a
captured Central State are failing.
Neofeudal financialization and unproductive
State/corporate vested interests have bled the middle class dry.
Yet we accept the officially sanctioned
narratives as authentic and meaningful. Why?Perhaps the truth is
simply too painful to accept, so we will reject it until we have no
other alternative.
Of related interest:
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