June 11, 2018
There are two types of income: earned and unearned, aka economic rent.
Economic Rent = Price — Instrinsic Cost Value
Economic rent is the portion of earnings obtained not through one’s work, but via monopoly privilege (eg. land ownership).
There are two economies, the “real” economy and the rentier/parasite economy.
We are trending towards neufeudalism, where more and more of the disposable income in the real economy must be paid out to the parasite overclass to maintain the same standard of living. The is borne out through increasing cost of living and doing business. (The rising costs of land, education, healthcare etc. squeeze not only the 99%, but the businesses who must pay for their real estate, health insurance policies, etc).
43% of income goes to mortgage debt service in America. 10–15% go to healthcare. Student loans are another 5–30%, then there’s automobile debt, 10–20% going to taxes, etc. This means that over 2/3 of one’s income is siphoned off to the parasite overlords. This shrinks the real economy, forcing it into greater austerity and debt while the rentier sector enjoys the gains.
80% of bank lending in the U.S. and Britain is mortgages. Debt, and specifically mortgage debt, is effectively the bank’s primary product. Since banks can effectively print money out of thin air, they’re only constrained by their ability to meet minimum reserve requirements.
Bank lending inflates asset prices, forcing people/businesses into more debt to obtain the same assets (eg. real estate, education), increasing bank profits but sucking money out of the real economy. As asset prices increase and interest payments accrue, debt grows exponentially, eventually outpacing the debtor’s ability to pay and leading to default/foreclosure and a market crash. At this point the creditors are bailed out while 10 million Americans lose their homes to creditors via foreclosure.
During the recent 2008 financial recession, we bailed out the big banks and investors, or the 1%, rather than the 10 million Americans who lost their homes, 8 million Americans who lost their jobs, and 2.5 million businesses shut down.
It’s time to end trickle-down economics. Instead of saving the failed fraudulent investments of the wealthy, we should save the people. Instead of trying to artificially prop up bad debts, write them down (debt jubilee). Instead of subsidizing banks via quantitative easing, spend that money on the American people.
Again, 43% of income goes to mortgage debt service in America. This is money that could be directed towards the purchasing of goods/services or entrepreneurship in the real economy, but is instead siphoned off to the parasite overlords.
Inflated cost of living also reduces a country’s competitiveness in the international market, moving industries and jobs overseas. The U.S. has seen a decimation in its manufacturing sector due in part to this, which it has been able to get by with in part due to the U.S. dollar being propped up due to it being the international reserve currency.
We need to ease zoning and eliminate laws and unnecessary regulations that restrict housing supply.
Tax policy discussion often centers around income and sales tax — both labor taxes, while completely ignoring capital gains which is how wealthy people make most of their money.
In 1930 about 75% of state and local finances came from the property tax, and now it’s about 16%. Landlords are paying less of the tax burden while workers are paying more.
Unearned income should be the primary source of tax revenue because it doesn’t negatively distort markets. We should institute a land value tax.
Contrary to popular belief, 97% of money is printed by private banks, not governments or the Federal Reserve. Private banks primarily use this power of money creation to speculate, drive up asset prices, and saddle everyone in as much debt as they can get away with.
There’s no reason that money creation can’t be in the hands of the public with credit democratically allocated.
It’s time to stand up for ourselves against our neofeudal parasite overlords. If labor doesn’t organize to end the pillaging and debt peonage of its people and the hemorrhaging of the real economy, then nobody else will.
(Most of the mainideas here were borrowed from Michael Hudson’s work. This was my attempt to summarize his work, but I also added in some of my own thoughts as well so not everything here is associated with his name. In any case I highly recommend checking out his work on his website: http://michael-hudson.com/)
Written by Jeremy Bernier who left the NYC rat race to travel the world, work remotely, and find the meaning of life.