Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Monday, October 15, 2018


I have been worrying about the dual economic disaster threatening America:

1. The skyrocketing federal deficit: In 2018, the federal government is spending over one trillion dollars more than it makes. Its cumulative debt has reached $22 trillion, which is 105% of its GDP. This year, the government spends about $315 billion dollars in interest to finance its growing debt. This is 8% of the total federal budget. Imagine how much our government could do with all this money - schools, infrastructure, health care, scientific research, space exploration, saving the environment, etc.

And of course, each year the finance charge increases. In time, financing the debt will become the government’s largest obligation. Eventually, the (near) TOTALITY of the government’s budget could be spent on interest payments. In sum, utter and total bankruptcy. This happens to countries from time to time - France before its 1789 revolution, Argentina, Greece and other countries more recently, etc. America is in a vicious downward spiral.

2. The country’s obscene maldistribution of income and wealth: We have by far the largest number of billionaires of any country, and also a poor underclass unmatched by most other advanced nations: Among the 36 OECD countries (the countries most comparable to the US), we rank 5th in income equality, as measured by the Gini Index. Only Chile, Israel, Mexico and Turkey are worse than we are! (See List of Countries by Income Inequality).

 So here is how this dual problem could be solved:

The first thing that comes to mind is simple: Raise taxes massively and progressively, so as to bail out our broke government, and so as to place the greatest burden on those who can most afford it. To be sure, this would only have to be temporary- say 20 years or so. Once the government’s $22 trillion debt has been retired, taxes can be reduced.

* * * * * * *

But I have another idea.

I have been playing with some numbers:

There are about 560 billionaires and multi-billionaires in the US, plus 11 million (multi-) millionaires.

First, let’s talk about the (multi-)billionaires:
These people’s wealth could be sharply reduced, while still enabling them to continue to sustain lives of unimaginable opulence.
Take Jeff Bezos, Amazon’s founder and chief executive. He is currently the richest individual on the planet, at an estimated $162 billion. This fortune is greater than the GDP of 155 countries, i.e. 80% of the world’s countries. Only about 20 countries in the world have total national economies that are larger than Jeff Bezos’ net worth (See List of Countries by GDP).
Were the government to confiscate 99% of his wealth, it would still leave him with $1.5 billion, certainly a comfortable amount, no?

Now you scream: Horror! Marxism! Communism! Yep. Call it expropriation too, if you wish. Or confiscation. Whatever. Even the ancient Roman concept of Proscription comes to mind. Back then, when Roman dictators such as Sulla and Augustus needed to raise cash to bail out the state, they picked up a few hundred wealthy patricians, expropriated them, and for good measure also murdered them all.

Of course, we don’t want to carry out bloodbaths in the 21st century. We could merely carry out some form of (partial) expropriation. We would treat Bill Gates (Microsoft; $93 billion), Warren Buffet (Berkshire Hathaway, $87 billion), Mark Zuckerberg (Facebook, $78 billion), Larry Ellison (Oracle, $60 billion), the Koch brothers (David and Charles, each $60 billion), Michael Bloomberg ($50 billion), Larry Page (Google, $49 billion), Sergey Brin (Google, $48 billion), Rob, Jim and Alice Walton (Walmart, each worth $46 billion), Sheldon Adelson (Las Vegas Sands, $40 billion), Steve Ballmer (Microsoft, $40 billion) and the other multi-billionaires the same way - let them keep 1% of their wealth.

Take for instance Larry Ellison, founder of Oracle, net worth $60 billion. He owns the island of Lanai, which he bought for $300 million. I have been there, it’s a nice island. Not all that small. There is a town, churches, harbors, a school and maybe some stores, I presume. It’s a bit difficult to see how Larry can own all of this; sort of like a king? But hey, he might as well keep Lanai.

These top 15 richest Americans are together worth a total of $965 billion = nearly 1 trillion = .9% of total American wealth. The combined wealth of all Americans is $110 trillion (See Wall Street JournalThe average net worth of these 15 individuals is $64 billion.

But there are another 545 billionaires and multi-billionaires in America. Their total number is 560.
(See List of Americans by Net Worth).  These remaining 545 (multi-)billionaires are worth another $2 trillion. Altogether, America’s 560 (multi-)billionaires are worth $3 trillion = nearly 3% of all US wealth.

And what about the next wealth brackets? America’s 11 million (multi-)millionaires own 70% of the country’s wealth = $84 trillion (See Wealth Inequality in the United States)

So here is how the confiscation/expropriation/proscription could go:

1. (Multi-)billionaires: 99%. This would leave even the poorest (multi-)billionaire with a wealth of $10 million. Not so terribly paltry, right?

2. As to the 11 million (multi-)millionaires: Here, confiscation could be graduated, with a maximum of 50%. Thus, no (multi-)millionaire would be left with less than half a million, while many would remain far wealthier than that, since this group contains all individuals whose worth ranges from $1 million all the way up to $999 million.

The total expropriation package would deliver $42-$44 trillion into the hands of the government. Presumably mostly in the form of investments.

Now remember, the obligations which the government has been unable to meet are twofold: (A): a $22 trillion accumulated debt and (B) annual deficit spending of $1 trillion.

If the government now invests this windfall and makes an annual profit of, say, 6%, that would amount to $2.5 trillion per year, which could be used as follows:

1. Fully fund a zero-deficit annual budget (no longer suffer a typical annual shortfall of $1 trillion).

2, Use the remaining $1.5 trillion to pay down the debt, wiping it out entirely in 15 years.

Voila, problem solved.

* * * * * * *

PS: You may say that this article is delusional, and you may be right.

However, remember this: At this very moment, the British Labour Party is proposing EXPROPRIATING all companies of 10% of their equity, for starters (See The Economist, Sept.-Oct. 2018: 16).

As to INCOME redistribution: Policies at least as drastic as what I propose  have been in effect, and not just under radical Bolshevik regimes, but in the good old USA: By the end of the Great Depression and during World War Two, the marginal tax rate of income above today’s equivalent of $3 million was 94%! (See: When Income Was Taxed at 94%: How FDR Tackled Debt and Reckless Republicans). Today, respectable economists such as Thomas Piketty are perfectly comfortable with redistribution schemes of such a magnitude.

© Tom Kando 2018;All Rights Reserved

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Wednesday, June 27, 2018

How to Make America Great (Again)

Here are three competing political and economic agendas. (1) Liberal, (2) Radical Socialist and (3) Conservative:


1. The economy: The problem:

The federal government is on a trajectory towards bankruptcy. Sooner or later, Social Security and Medicare will become insolvent.

Each year, the share of the federal budget that is spent on financing the debt grows. Obama  managed to reduce the government’s annual deficit to around $400 billion, but the new Republican tax cut for the rich is predicted to cause this to rise to $1 trillion. In addition, interest rates have been at an unprecedented low for years, and they are bound to rise soon. Gradually, financing the debt will crowd out other expenditures - health and human services, unemployment, infrastructure, housing and transportation, science and education, food and agriculture, energy and the environment, veterans and even the military.

The Trump administration is already proposing to cut food stamps. Stingy as our safety net and assistance to the needy are compared to other advanced social democracies, they will be reduced even further, as our government goes broke.

The solution:

A. Full retirement age for social security should be raised. Life expectancy has risen, so this makes sense. Raising the age at which dozens of millions of Americans begin to collect benefits will save the government BILLIONS. Read more...

Sunday, December 17, 2017

Kando's Dogma

I’m sick and tired of hearing how very unpopular “liberal” has become in America.

I’m sick and tired of America’s extreme rightward drift. Don’t be mistaken about it: We are THE most conservative country in the world today!

I am sick and tired of the cliché “we are the richest country in the world.” I can think of a dozen countries that are richer (see List of Countries).

And as to the distribution of wealth, well in that regard we are doing worse than nearly ALL other developed countries. Our still relatively high per capita income obfuscates the fact that we have more obscenely rich and also more devastating poverty than most other western nations. Among OECD countries (the 35 largely more developed countries of the world), the US has the fourth highest Gini coefficient of inequality, after Mexico, Chile and Turkey! We are in good company! (See Inequality) Our relative income poverty is nearly 17%, the third highest among these 35 countries. And with the new Republican tax package, things are about to get a lot worse. Read more...

Wednesday, June 7, 2017

The Dubious Friends of Donald Trump

 With Additional Research by
The title of this article is borrowed from a Dutch film which documents or alleges a worldwide web of criminal activities, with ties to the Trump organization. See The Dubious Friends of Donald Trump. These activities involve many men from the former Soviet Union (several said to be tied to or part of the “Russian Mob”). A helpful article is the Sacramento Bee, May 30, 2017; McClatchy Washington Bureau, Other sources include Mafia-linked Figures, Felix Sater, Forbes Billionaires, Trump and the Oligarch ‘Trio’ and The Diplomat.

What emerges is an incredibly colorful and complex worldwide net of criminal activities by shady characters from Kazakhstan, Russia, Israel, the Netherlands, the United States and elsewhere. These transactions involve billions of dollars in dozens of countries all over the globe.

The story reminds me of the Tintin capers I enjoyed so much as a boy, or intrigue a la James Bond and Jason Bourne, with a tinge of Don Corleone thrown in. I suppose this topic should be taken very seriously. But for now, just enjoy:

According to the McClatchy Washington Bureau, two fugitive oligarchs are accused of laundering Kazakh money in US real estate, some of it owned by Donald Trump. Read more...

Tuesday, May 30, 2017

Let's Raise Taxes Already!

The Trump disaster is upon us. More specifically, the Trumponomics disaster is upon us. That is, the President and his Republican goons are going to try to pass a massive tax cut to benefit the super rich.

You don’t have to be an economist to see why this is a disaster. And I am not even talking about the immorality and  the injustice of making the rich even richer and the poor even poorer. No, what I am talking about is what this is going to do to the federal budget and the national economy.

One of America’s most obstinate problems is that its government is increasingly broke. It is broke  the same way that you would be broke if you kept increasing your debt year after year, and kept spending more and more of your income to finance your debt,  i.e. on  interest payments.  Each year you would have less  money left over to buy things. This is a vicious circle. Currently, Uncle Sam spends each year nearly  half a trillion (!) dollars  more than it collects  in taxes. Read more...

Sunday, October 18, 2015

Is Democracy for Sale? The Problem with Paid Petitioners

Push to listen

Today was one of those 'Oh, wow' days in my life. Something happened that put a permanent dent in the armor of naivete with which I usually view the world.

Because I feel strongly about animal protection, I volunteered to gather signatures for a new ballot initiative in Massachusetts which would curb extreme confinement and lifelong immobilization of animals at industrial-style factory farms.

There I was, standing at the entrance of the local super market, boldly approaching strangers, ignoring my natural shyness for the sake of a lofty cause. I watched the shopping cart retriever maneuver his catch, like a long metal snake, as he was trying not to collide into the walls. Ha, so that's how it feels to be anonymous - you know, when nobody pays attention to you. As we exchanged looks, this older man pushing his long trail of carts and I, we had a moment of 'understanding'. Read more...

Monday, May 11, 2015

Why Does Wisconsin Hate the Poor?

I came to America many moons ago and although I never got used to the utter lack of care for people who are in need, I tacitly came to see it as 'a fact of life'. But now, an attempt by conservative politicians to further humiliate poor people has gotten me so enraged, that I had to write something about it.

There is a hot new trend in several states to try to limit what type of food people on Food Stamps are allowed to buy and at the vanguard of this food-policing idiocy, is Wisconsin's Governor Scott Walker.

Under the guise of benevolently steering ignorant food stamp recipients towards a healthier diet, the Wisconsin Legislature has introduced Assembly Bill 177, to override a Federal rule that prohibits such restrictions. If you are poor and you live in Wisconsin, expect to be spied on by fellow shoppers, store managers and government undercover agents to make sure that you don't carry offensive items in your shopping cart.

One of the many foods that would be verboten by the Wisconsin food police, are any type of shellfish. As if a person who is allocated $1.40 per meal would want to spend it on such an expensive food item. Another 'no no' is one of Wisconsin's most abundant products, cheddar cheese. The insanity of it all boggles the mind. Have a look at this glossy pamphlet of WIC approved foods. The amount of man hours put into its production could have fed quite a few needy families. According to a study, it would cost the state of Wisconsin $56 million, to put this new proposal into effect. Nobody knows where this money is supposed to come from, but $56 million could provide food stamps for an additional 37,000 low income residents. Read more...

Saturday, April 25, 2015

Universal Basic Income: An Idea whose Time has Come

The Universal Declaration of Human Rights, adopted by the United Nations in 1948, is the first global expression of rights to which all human beings are inherently entitled. It includes the most obvious right of all, that we are all born free and equal and have a right to life, liberty and security of person.

But how can we be secure without having the means to meet our basic needs? Or do those basic human rights not apply to the homeless, the working poor or the children who suffer from food insecurity? Rising income inequality and the loss of jobs puts more and more people in that category.

Trading work for income seems to be harder and harder to implement. From self-check in at airports to self-cleaning toilets, automation has replaced human labor, to the point where 'work' has acquired a new meaning. In some areas of the economy, it is no longer connected to activities that traditionally provided 'income, which means that less and less people benefit from economic growth. (The Rise of Robots – and Decline of Jobs – Is Here)

Over the past four decades wages have been flat, because substituting capital for labor through automation is increasingly attractive to companies. Owners of capital are getting richer, while workers are getting poorer. Even in areas that we think require the 'human touch', like teaching or cutting hair, if broken down into small enough steps, automation is gaining ground. Taxi drivers, airline pilots and journalists might soon be a thing of the past. Read more...

Monday, March 9, 2015

In Varietate Unitas?

Once upon a time there was a large family with lots and lots of children. They were always fighting with each other and causing a lot of trouble. One of the children, whose name was Germaine, was a little bigger than the others and quite aggressive by nature. She wanted all the other children’s toys, so she broke into their respective rooms, beat up the children and stole their toys.

A distant uncle by the name of Sam, didn’t like what was happening in that family and decided to put an end to it. He went over there and kicked some ass until Germaine had to run back to her room with her tail between her legs, so to speak.

After Germaine was duly punished, the children realized that they had made a mess of things, always fighting and breaking things. It would be in everyone’s best interest if they were nicer to each other. So three of the children by the name of Ben, Ned and Lex started a Fan Club. At first only a few of the children joined, but as they saw that being a member of the Fan Club had many advantages, like access to good restaurants, good sports clubs and good hospitals, many of them wanted to join. Read more...

Tuesday, March 3, 2015

Net Neutrality: A Good First Step

The Federal Communications Commission's recent ruling to reclassify broadband as a public utility under Title II of the Telecommunications Act, is a step in the right direction, but probably will not break the stranglehold that the major ISP's have over our entire nation.

The FCC's new ruling prevents an ISP from offering 'paid prioritization', i.e. slow and fast lanes, depending on how much the content provider pays the ISP. Before Netflix gave in to the bullying tactics of Comcast, the largest ISP in America, streaming a Netflix movie was a pretty bad experience. This is a typical example of the consumer paying the price when network operators argue over money. Throttling and blocking are two other no-no's under the new rules and for the first time, open Internet rules will be fully applicable to mobile devices. In other words, the FCC now can regulate some aspects of how major ISP's conduct their business.

But one of the most important causes of the deterioration of broadband access in America, is the lack of competition. FCC chairman Tom Wheeler did not seem to have the stomach to confront that issue.

Friday, November 7, 2014

The Cornivore's Dilemma

In his 1951 post-apocalyptic novel 'The Day of the Triffids', John Wyndham writes about a plague of blindness that befalls the whole world, allowing the rise of an aggressive species of plants. Bioengineered by the USSR, Triffids are carnivorous super plants that can walk and talk and are trying to take over the world.

We have a similar situation happening in real life, where the invasion of the giant tropical grass known as 'corn' is invading our farms, our food supply and our bodies. You might say: 'Well, what's wrong with that? I like corn, it's healthy and it tastes good.' But the corn that we produce in such abundance is not grown for direct consumption; it is grown to feed cattle, to produce ethanol for our cars and as additives to processed foods.

In his book 'The Omnivore's Dilemma', Michael Pollan explains how this real life Triffid has been able to take over our food supply. Modern corn, already having a natural advantage because of its efficiency at using sunlight to grow, has made itself doubly attractive by tolerating many climates. 'The plant gratifies human needs, in exchange for which humans expand the plant’s habitat, moving its genes all over the world and remaking the land, clearing trees, plowing the ground, protecting it from its enemies, so it might thrive.' (from: When Corn Becomes King). Read more...

Thursday, June 19, 2014

Thomas Piketty: Capital in the 21st century

Piketty has caused an international panic. The camps are predictable: he has been criticized vehemently by the Right, including the London Financial Times and the Wall Street Journal, and he is being defended by progressives, for example by Paul Krugman. Clearly, Piketty is a threat to the plutocracy. But as you will see, I agree with Krugman that Piketty is fundamentally correct.

Thomas Piketty is the author of the voluminous 'Capital in the 21st Century', a book on economics and the growing inequality between the rich and the poor. This unassuming professor, who looks more like a schoolboy than a formidable economist, has taken the world by storm. His book contains an incredible collection of historical data that shows that the extreme concentration of wealth that was so typical of the 19th century, the Belle Epoque (1871-1914) is coming back in full force to haunt us in the 21st century. Read more...

Sunday, March 30, 2014

Does Culture Breed Poverty?

Republicans and Conservatives are of course wrong on just about every issue, including abortion, equality, sex, public health care, homosexuality, guns, race, the environment, crime, foreign policy and everything else. But the Number One reason why I loathe them is that they want to grab all the money. The desire to be rich at the expense of others is the defining characteristic of the capitalist, it is at the core of the political Right.

Congressman Paul Ryan recently said that “we have this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working and learning the value and the culture of work, and so there is a real culture problem here that has to be dealt with.”

Saturday, February 1, 2014

Are there no Social Classes in America?

Photo: Dorothea Lange

Until the 1930s, the prevailing myth was that unlike Europe -  from which America descended -  this country had no social classes. We were the land of opportunity, of the American Dream,  of Horatio Alger, of American exceptionalism.

Then, shortly before World War Two,  sociologists such as W. Lloyd Warner “discovered” social class in America. This was a first. Perhaps the sociological study of social class was one manifestation  of America’s  increased   social consciousness resulting from the Great Depression.

For the following half century, common sense prevailed:  The scholarly literature,  the  mainstream media, politicians  and public opinion all felt comfortable discussing social class.

The study of social stratification and social inequality  became  one of Sociology’s core areas. Read more...

Thursday, January 23, 2014

The Bad Drives out the Good

The basic difference between my conservative friends and myself is that they all subscribe to maximum economic freedom, that is: classical liberalism. Here is a quick list of the chief “markers” of classical liberalism and American-style capitalism:

● The foundation of classical free-market economic theory was laid by Adam Smith (1723-1790).

● One metaphor used by Smith was that of the “invisible hand:” He used this image to describe the self-regulating behavior of the marketplace.

● According to classical liberal theory, the economy that works best is the economy that is left unregulated. To express this, classical liberals such as Adam Smith adopted the expression “laissez-faire” from earlier French economists with similar views.

● By the early and mid 20th century, classical liberal economics were mostly associated with the so-called Austrian school, notably Ludwig von Mises (1881-1973) and Friedrich Hayek (1899-1992). The baton was then transferred to American economist Milton Friedman (1912-2006) and his disciple Alan Greenspan (1926- ), who served as chair of the Federal Reserve from 1987 to 2006.

Sunday, January 19, 2014

What's So Great About Money?

 There is a new craze: Bitcoin. It’s a new online “currency.” You use it to pay for goods and services. You can buy bitcoins online, with real money, or you can create bitcoins through “mining.” Recently, one bitcoin was worth about $850 (Sacramento Bee, Jan. 17, 2014), but it is very volatile and insecure. While bitcoins are used for some regular transactions, this market is dominated by speculators and it is associated with criminal activity ( Early users have reaped great rewards, reminiscent of Ponzi. In sum, Bitcoin is a new form of gambling, and it is therefore bad and immoral, as all gambling is. Why is gambling bad and immoral?

In the first place, when you gamble, you generally LOSE. After you are done gambling, you have less money than when you started. Secondly, you have nothing to show for your losses - no new clothes, no new car, no fine vacation.

Sunday, January 5, 2014

Where is all the Money?

I just looked up (again) per capita GDP in various countries.  This is  well-known stuff. Everyone knows that most of the rich countries are in Europe and North America, and that the  poorest countries are  in Africa. I don’t want to retread this familiar ground.

I want to show you the fallacy of measuring national well-being through this indicator - per capita GDP. First, here is a table that ranks some of the world’s 197 countries by mean/average per capita annual GDP

Thursday, December 12, 2013

David and Goliath: The Power of the People

In a small corner of this big country, there is a battle going on. Unless you live in New England, you probably haven’t heard about this place, but the locals call it ‘the North Country’, a very rural and densely forested part of Northern New Hampshire. It is sparsely inhabited and because of its poverty level it gets federal assistance, like many Indian reservations. Mobile homes are aplenty and unemployment is high as the North Country’s traditional industries – paper mills and other wood products manufacturing – have largely collapsed.

For the past few years, this beautiful area has been the battleground for the establishment of a huge high-voltage transmission route, given the name "Northern Pass". The plan is to construct more than 1,100 visually jarring steel towers up to 155 feet tall through a 180-mile swath of the state in order to reach lucrative energy markets in Southern New England. Read more...

Tuesday, November 19, 2013

The Birth Pangs of Obamacare

All the problems plaguing Obamacare reminds me of a difficult delivery. Is Obamacare facing the wrong way? Is it going to be a stillbirth? Any newborn that enters a world so hostile to its arrival would make an immediate about face and want to return to the womb. But I, for one, am confident that Obamacare is here to stay.

The one problem with Obamacare that cannot be ignored is that it is so bloody complicated. Under normal circumstances, I wouldn’t bother with such a boring subject as health care, but this is a historical moment in US history, and I owe it to myself to understand the delivery process.

Comparing International Health Care Systems is the first step to guiding me through the muck of misinformation, most of it willfully created by the Republican Party. Ironically, it is Americans who should have the least difficulty recognizing all four models, since they are all part of the US’ fragmented health care system. Read more...

Thursday, October 31, 2013

Are Taxes a Form of Theft?

Are Taxes Theft? and

Tom’s previous post was blunt: Simple Solution: Raise taxes! Some readers commented that taxes should, in addition, be PROGRESSIVE. This means that the more you make, the greater PROPORTION of your income you should hand over to the government - not just a larger ABSOLUTE amount. Steve called himself an “Eisenhower Republican and a conservative.” He agreed with Eisenhower, during whose presidency the top marginal tax rate was over 90%.

We want to pursue this. For the sake of argument, let’s talk about a group, which we shall call the “$10 million+ a year club.”

Personally, if we were members of this club, we would be fine with what Steve, the “Eisenhower Republican” said, above. We wouldn’t mind handing over $9 million of our earnings each year, and live on the remaining one million.

How many people are there in the “$10 million+ a year club”? Anecdotally, we hear about the many NBA, NFL and MLB players who are there, along with dozens of Hollywood superstars, and of course thousands of business executives and assorted other professionals. Read more...