Re:U.S. GDP Shrank in Q1 2015
by eli_gottlieb on Friday May 29, 2015 @12:25PM
(#9625532)
>Aside from these core issues, I'd also speculate that a tremendous quantity of money is trapped in financial instruments. If it's in a financial instrument, it isn't exactly employing people or building goods or creating demand for goods. The same could be said about the billions of dollars held close to the chest by the oligarchy.
We can further unpack the huge amounts of money trapped in financial instruments. There are really two functions for financial instruments: investment in productivity growth, and rent extraction. The pool of capital for private-sector productivity growth is glutted; in fact, it's being held back by stagnant consumer demand and high rents.
So beyond stagnant consumer demand, we've got a lot of rent-extraction (asset and real-estate bubbles being created to extract resource, information, and land rents as debt-service or legal expenses) and a major dearth of productive public-goods investment (public health (ie: vaccination and disease prevention), infrastructure, education, etc.) loading down the economy with dead-weight losses.
(We can also simplify our model by construing capital/labor bargaining as capital owners extracting a rent from laborers for usage of their capital, ie: money, machines, land, etc.)
>There's a huge opportunity here to have a government public works program or some other major initiative to mobilize the underclasses, but it won't be taken.
The basic problem is that many, possibly even most, of the rent-extractors adding dead weight to the economy are using their wealth to buy themselves government policies favorable to rent extraction rather than wealth creation and distribution, ie: further neoliberalism.
Let's be frank: an economy in which the workers are healthier and more educated, the work is more mechanized, and collective problems (like transit, urban development, and disease control) are handled collectively is more productive! It outputs more stuff! So you don't have to be a socialist like me to realize that reducing the net output of the economy to enrich a few people at the top is a bad idea!
You just have to use accounting metrics that don't count increased rents as growth.
We can further unpack the huge amounts of money trapped in financial instruments. There are really two functions for financial instruments: investment in productivity growth, and rent extraction. The pool of capital for private-sector productivity growth is glutted; in fact, it's being held back by stagnant consumer demand and high rents.
So beyond stagnant consumer demand, we've got a lot of rent-extraction (asset and real-estate bubbles being created to extract resource, information, and land rents as debt-service or legal expenses) and a major dearth of productive public-goods investment (public health (ie: vaccination and disease prevention), infrastructure, education, etc.) loading down the economy with dead-weight losses.
(We can also simplify our model by construing capital/labor bargaining as capital owners extracting a rent from laborers for usage of their capital, ie: money, machines, land, etc.)
>There's a huge opportunity here to have a government public works program or some other major initiative to mobilize the underclasses, but it won't be taken.
The basic problem is that many, possibly even most, of the rent-extractors adding dead weight to the economy are using their wealth to buy themselves government policies favorable to rent extraction rather than wealth creation and distribution, ie: further neoliberalism.
Let's be frank: an economy in which the workers are healthier and more educated, the work is more mechanized, and collective problems (like transit, urban development, and disease control) are handled collectively is more productive! It outputs more stuff! So you don't have to be a socialist like me to realize that reducing the net output of the economy to enrich a few people at the top is a bad idea!
You just have to use accounting metrics that don't count increased rents as growth.