Friday, May 5, 2017

The “deep state” as a tool for redistribution of income in favor of the rich. Review of Mike Lofgren’s “The deep state”


An economist looks at Mike Lofgrens's The Deep State.
We should, it seems, stop thinking of government spending as the opposite of private spending. This is because government spending has two radically different constituencies and two very different objectives. One part of government spending (the one that we traditionally emphasize) serves the needs of the middle class and the poor: social security, Medicare, Medicaid, unemployment benefits. This is the part that, from the point of view of the deep state, should be cut. The second part of government spending is support (when needed) of the financial sector and military spending. There, the beneficiaries are the people from the other end of the income distribution: the financiers, owners and managers of large military supplier companies, telecommunications, private security firms and the like. When we think of government in this way, the apparent paradox of Republicans (and many Democrats) being at the same time in favor of smaller government, and TARP and larger military spending vanishes. We are really witnessing a struggle over a quarter of GDP that is redistributed through the federal government: will most of that money go to the pockets of the rich, or to the pockets of the middle class and the poor?

What Lofgren argues is that the deep state has effectively kidnapped the government. Its objective is to use this enormous money-churning machine to help its own members. But the deep state was able to kidnap the government because it was able to kidnap the Congress, that is to make sure that majority of the members of Congress vote the way that the deep state wants. They were able to do so thanks to an electoral system where winning is practically synonymous with having access to more money than your opponent. This is why Lofgren in the last chapter, where he discusses the changes that need to be done, puts the reform of electoral funding (“ Eliminate private money from public elections”) as the number 1 priority. It all starts there, and then logically unfolds further.
As I have been saying, get the money out of politics, shut down K Street (lobbying), and lock the revolving door between the top level of the public and private sectors.

Global Inequality
The “deep state” as a tool for redistribution of income in favor of the rich. Review of Mike Lofgren’s “The deep state”
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

34 comments:

Andrew Anderson said...

Not to mention that the fiat and credit creation systems are welfare for the richer at the expense of the poorer and are a major cause of the need for welfare in general?

"Ya can't cheat an honest man"? Then how about we have honest fiat and credit creation systems?

I almost despair. It's like trying to explain color to a blind man to advocate an ethical banking system though it's dead obvious (100% private banks with 100% voluntary depositors).

Noah Way said...

'Kidnap' is the wrong word. Purchase is more accurate.

Tax wealth - not just high income but wealth itself - and eliminate the ability to purchase government. There should be no such thing as billionaires.

Neil Wilson said...

"Tax wealth - not just high income but wealth itself - and eliminate the ability to purchase government."

Doesn't work.

It's precisely the same as assuming you can remove the eggs from a cake by just reversing the process.

Once you are wealthy you are in the club. If you try and remove the wealth that doesn't remove them from the club. You're already there and have access, via the network, to power.

You can't unmake it by waving the Taxation juju stick. You have to reach an accommodation. And the way to do that is to divide and conquer.

You will never get the power to deploy the juju stick. So talking about it is just another form of 'come the revolution'.

Bob said...

Lop off their heads. Worked for awhile last time.

James said...

Not to mention that the fiat and credit creation systems are welfare for the richer at the expense of the poorer and are a major cause of the need for welfare in general?

This is what really irritates me. All the talk about money, and banks is irrelevant without acknowledging the fact that the STATE is responsible for every single penny in existence, you can perform as much mental gymnastics as you please to get to point where you have convinced yourselves that the technocrats in banks are the only men wise enough to decide which direction OUR money travels, you can talk of making banks fairer, nicer, smarter. You can even put layer, upon layer, of pseudo science on top, in an attempt to further entrench the nonsense, but it still won't change the fact that money is a creation of the STATE, and what follows that is a nothing more than an act of enclosure, and just like the enclosure of land, it's sole purpose is to pander to the excesses of a very small minority, at the expense of the necessities of the many.

The underclass, especially, are on the end of a continual robbery, and if that wasn't bad enough, those same anti-state crackpots who are enjoying gilded lives as a result of that theft, demand those people become another source of profit for them, through private prisons, or the other cons they're running, bleeding the system through government contracts.

As for MMT trying to palm people off with a job guarantee, give me a fucking break, more technocrats telling people what's good for them is the last thing anyone wants.

Andrew Anderson said...

James,

You share my indignation. Speaking of a job guarantee, every time the banks ruin the economy and themselves some minions of Satan (what else to call defenders of injustice?) rise to save the banks from themselves.

And what's truly galling is we claim to have free markets! What's free about being forced to lend to a bank, credit union, etc? What's free about not even being able to use one's Nation's fiat except (for the moment) for grubby, unsafe, inconvenient physical fiat, aka "cash", but instead must work through a usury cartel?

Justice IS coming; the pertinent question is who will survive it's coming.

Matt Franko said...

"who will survive it's coming."

Looks to me like not you if you keep on spewing your rules based OT garbage....

Andrew Anderson said...

Not rules, Franko, PRINCIPLES such as "Thou shall not steal" nor oppress the poor.

Your problem is you defend a system that does both.

I suggest you well consider Matthew 7:21-27. Note the false prophets had enough faith to cast out demons and work "many miracles." The Lord does not dispute this but says He will declare "I never knew you; depart from Me, you who practice lawlessness."

Faith is essential, to be sure, but not in order TO SIN, but rather as a means to ESCAPE the power of sin.

Matt Franko said...

Well in your prayers, you better correct the Lord here then:

"for ALL have sinned and fall short of the glory of God," Rom 3:23

Newsflash to AA: It didn't work, they ended up killing Him... Hello...

Tom Hickey said...

Once you are wealthy you are in the club. If you try and remove the wealth that doesn't remove them from the club. You're already there and have access, via the network, to power.

Marx & Engels, Lenin, and Mao concluded that the only successful way to address the issue is to burn down the clubhouse.

Noah Way said...

burn down the clubhouse

Make sure all the members are inside first.

Tom Hickey said...

That's the idea.

Actually, a lot of the not-Bolsheviki emigrated, and Chang Kai-Shek and the Nationalists fled to Taiwan.

BTW, most people don't realize that the Taiwanese people were first oppressed by the Japanese that invaded them, and then subsequently by the Nationalist Chinese that fled to the island and assumed control of the island post WWII.

Andrew Anderson said...

That's the idea. Tom Hickey

One should not blame those who took advantage of an inherently crooked fiat and credit creation system to get rich but those who set it up and those who continue to support it.

Looking at you Neil and Franko.

Matt Franko said...

Tom imo they would still to this day like to go up there and kick Japan's ass to get even... they can't stand Japan...

Bob Roddis said...

MMT is the greatest tool for redistribution ever invented. Let's make sure that the "deep state" is not revenue constrained!

Oh, and let's wonder why the powers-that-be continue to act like we are still on a pseudo gold standard.

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.

http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html

Andrew Anderson said...

So Roddis, where are you on deprivileging the banks since they create most of the money supply?

Or is a stupid, shiny metal your solution to injustice?

Tom Hickey said...

Tom imo they would still to this day like to go up there and kick Japan's ass to get even... they can't stand Japan...

And much of the non-white world feels the same about the white world for similar reasons.

Bob Roddis said...

Andrew Anderson: I’m certain that all of you believe in private property in the sense of your house, your apartment, your body, your dog, your bank account, your car. You believe that people should be honest and should fulfil their contractual promises. So do I. There is no justification for the initiation of violence. When people are safe in their person and property, they will do what they think is best in living their life. They can use any type of money they like. It’s not complicated.

Bob Roddis said...

And much of the non-white world feels the same about the white world for similar reasons.

I've owned "Endless Enemies: The Making of an Unfriendly World" by Jonathan Kwitny since 1984. It's a good thing our meddlesome military is not revenue constrained.

http://tinyurl.com/l2a9zt6

Andrew Anderson said...

They can use any type of money they like. It’s not complicated. Roddis

Not when it comes to taxes. In that case, inexpensive fiat is the ONLY ethical choice or do you believe the taxation authority and power of government should be misused to prop up the value of some shiny metal? Call that honest, do you?

Bob Roddis said...

do you believe the taxation authority and power of government should be misused to prop up the value of some shiny metal

Governments do not prop up and do not need to prop up “the value of some shiny metal” which historically had organic value for the masses without coercion. Plus, we’ve already established that fiat funny money is used by state to transfer wealth to insiders and the powerful without the public understanding what has happened.

You obviously cannot make the case for fiat funny money and you know it. Otherwise, you wouldn't perpetually obfuscate regarding simple definitions.

Andrew Anderson said...

Plus, we’ve already established that fiat funny money is used by state to transfer wealth to insiders and the powerful without the public understanding what has happened. Roddis

There's nothing funny about prison and/or asset confiscation for tax evasion ... I doubt you'd be laughing much at fiat then.

Also, it's government privileged banks that are responsible for most unjust* wealth transfer. Where's your advocacy that citizens should be allowed to bypass banks via accounts of their own at the central bank? Hmmm? Or must we still be forced to work through banks or carry bags of easily stolen gold around?

You're a tool of the banks, Roddis, unless you advocate that all citizens be allowed to use their Nation's fiat in account form and not be forced to work though private depositary institutions.

Obfuscate? I'm not the one who says justice requires a silly metal. You have heard of idolatry, no?

*Or do you blame the victims of the banks for not dying quietly in a corner somewhere rather than taking welfare?


Andrew Anderson said...

Speaking of theft, your silly, lazy, wicked (cf. Matthew 25:14-30) Austrian economists desire to profit by deflation - another form of theft - as the population and economy grows but the money supply doesn't keep pace.

Joe said...

"Burn down the clubhouse" and "Lop off their heads" - and in the most perverse irony of all, the country that famously separated heads from bodies is about to elect an investment banker, virtually guaranteeing bigger problems down the road. sigh...

Andrew Anderson said...

and in the most perverse irony of all, the country that famously separated heads from bodies is about to elect an investment banker, Joe

One reason is because the banks have interposed themselves, quite unnecessarily, between the monetary sovereign and its citizens.

If/when physical fiat, aka "cash," is ever totally abolished this will be 100% evident to all and perhaps then, if not before, we shall have fundamental, PRINCIPLED, genuine reform. Till then we are in danger of the banks and their supporters and additionally the shiny metal idolaters as a red-herring to genuine reform.

Bob Roddis said...

The claim that I support banks which create fiat funny money loans is preposterous. Again, no MMTer has the slightest familiarity with Austrian School concepts or analysis and they like it that way. It's not clear to me how someone can reject ideas which they have never actually encountered or engaged but you guys seem to be proud of that.

Andrew Anderson said...

The Austrian economists support abolishing the central bank rather than expanding it to include all citizens. That means the Austrian economists are tools of the banks too.

Btw, I used to be an Austrian and have corresponded with Gary North, Lew Rockwell and other notables. Their addiction to gold and deflation eventually turned me off permanently ... that and their misunderstanding of the banking system as they kept screaming about impending hyper-inflation.

They're a misery loving lot - to "purge the malinvestments", they say. But God demands justice, not misery and that does not include punishing the victims. But Mises, not Moses, is their authority.

Matthew Franko said...

"Btw, I used to be an Austrian"

shocking...

"Matthew 25:14-30) Austrian economists desire to profit by deflation - another form of theft"

Wow didnt know Jesus was monetarist either....

Andrew Anderson said...

shocking... Franko

That was before a personal tragedy drove me to finally read the entire Bible. And like Jesus says: “... If you continue in My word, then you are truly disciples of Mine; and you will know the truth, and the truth will make you free.” John 8:31-32

and

"Sanctify them in the truth; Your word is truth." John 17:17

So I read the truth and it set me free from bitter, misery loving, gold worshiping non-believers.

Matt Franko said...

All Disciples were Israelite and discipling is an active methodology... "works" or "learn by doing"... e.g. "take these 3 fish and feed these 5,000 and then collect the leftovers and blah blah blah...."... oh brother...

Salvation is not exclusive to only those practicing an active methodology...

Don't get confused by the different teaching methodologies depicted between the Lord dealing with Israel and Paul dealing with the nations...

The teaching methodology used has nothing to do with whether one is justified or not...

Bob Roddis said...

1. The deflation afflicting HDTVs is just killing me.

2. The fundamental Austrian concept is economic calculation. I see no evidence that the concept is understood by non-Austrians or even allegedly former Austrians.

Andrew Anderson said...

1. The deflation afflicting HDTVs is just killing me. Roddis

The proper way to fight deflation beyond deficit spending for the general welfare by the monetary sovereign would be equal fiat distributions to all citizens, i.e. a citizen's dividend. That way, prices need not fall for all citizens to benefit from material progress.

Btw, deflation is a known killer. Do you want a blood-stained HDTV or would you rather watch with a clear conscience that you aren't profiting off the misery of others?

2. The fundamental Austrian concept is economic calculation. Roddis

By measuring everything against a shiny metal? By limiting the growth of the money supply and thus the economy to the mining rate of gold? By destroying the environment to dig up gold only to rebury it in bank vaults?

Andrew Anderson said...

That way, prices need not fall for all citizens to benefit from material progress. AA

Rather: That way, prices need not fall so that only SOME citizens benefit from material progress at the expense of OTHER citizens but instead ALL citizens benefit from material progress.

Andrew Anderson said...

An Austrian might think of equal fiat distributions to all citizens as a gently rain of gold dust falling evenly upon them all.

Then what's not to like? The lack of misery? The lack of environmental destruction?