California’s worsening financial condition

Zap posted a link to a wonderful article by an amazing economist. I just cut out part of it because it’s too long to post the whole thing. There are so many interesting points in that article, it should be mandatory reading. Here are just a few tid bits but the whole article is great:

“You never get paid what your labor is worth. Your produce a surplus, which is what your employer gets. In a corporation, hundreds of people work millions of hours to produce a surplus which is gathered by the board of directors and used to keep the system going. It works because the workers are basically ignorant of the reality, and teaching young people the reality would raise profound challenges to the operations of the machine.

The appropriators of the surplus are not stupid, and to keep it going, they make sure the political system is properly managed. They buy the system, to make sure we have the best democracy money can buy, ensuring that questions about the system itself are never raised, though the problem itself is the system. They take a portion of the surplus and use it control the political discourse, using foundations to shape and direct the discourse, dishing out neologisms along the way.

Where did all the money come that led to the massive indebtedness? From the surplus produced by labor itself [and, we would add, a fiscal system that creates money from debt].

As for the wars, it is in a sense a testimony to what I have said: Afghanistan, Iraq, Afghanistan, and Libya. The money to cover the Greek crisis amounts to two days’ military costs currently directed to the war efforts. But in the United States, we’re undercutting education at American universities. To cut back on the quality of education in those public institutions is to cut back on the quality of the American workforce, which is literally insane.”

{further down in the article}

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“This crisis comes after 30 years of extraordinary development in the United States. Three decades ago, the United States was on the least unequal advanced industrial economies in terms of distribution of income and wealth. Today we are one of the most unequal. Produced enormous wealth for those at the top while we wiped out the middle.

The solutions debated in Washington are limited to how much to cut from Social Security, Medicare, and public education, instead of taking some back from those who have gained so much. How is that possible?

Last time we faced this system, in came Roosevelt on a program of balanced budgets, but when things got worse, Mr. Roosevelt underwent a transformation — not because of change of belief, but because he felt the heat, which came from beneath. The CIO organized millions, whose response was expressed in the rise of a militant Left, with membership surges in the Socialist and Communist parties.

Roosevelt’s response to unemployment was for government to create jobs, 11 million of them, providing decent incomes ensuring people kept up their mortgages payments, paid for by the corporations and the rich. And they did. At the end of WWII, federal government relied on taxing individuals and corporations. In 1945, for every dollar the federal government got from taxing individuals, it got $1.50 from corporations. Today, for every dollar the federal government gets from individuals, it gets from corporations — are you ready? — twenty-five cents. That is a massive shift of the burden of taxation off of corporations and onto yourselves.

But that’s only half the picture. Roosevelt went to the rich people and said, “I’m not just going to tax the corporations to pay for the jobs program. I’m going to tax all of you rich people. And he really went after them. First, in the Thirties he said “Im going to raise the rates of taxation on rich people. You’re going to pay a lot more than middle class people and low income people. A lot more. The rates were jacked up into the 90 percentile. In 1942, the war is already beginning, Roosevelt makes an even more dramatic proposal: A maximum income of $25,000 a year. The wealthy rebelled, and the Republican Party threatend to cap the national debt as the country was moving into war. FDR dropped the cap in exchange to raising the maximum tax rate to 94 percent, and the Republicans went along. 91 percent in the two decades after the war, now 35 percent.”

Thanks Zap, really good article.