Michael Hudson — Trade Advantage Replaced by Rent Extraction

Must-read on financialization and economic rent.

Michael Hudson
Trade Advantage Replaced by Rent Extraction
(h/t Yves Smith at Naked Capitalism)

Riverdaughter — Ok, here’s my theory about why the Masters of the Universe want to kill the social insurance programs

BUT, if you raise the retirement age and keep a lot of older people working, they will be forced to put their money back into the market. Well, they won’t be able to retire until they’re much older than their parents were at retirement. If they have any hope of ever taking time out to go travel or garden, they’re going to have to risk their money in the market, hope that it will pay off so they can get out of the job market before they’re dead and forget about social security.

My theory is that raising the retirement age forces more savings to stay in the market longer and that with a pool of people who can’t retire yet still working, the amount of money going into 401Ks and IRAs is going to go up. Stripville!

The Confluence
Ok, here’s my theory about why the Masters of the Universe want to kill the social insurance programs
Kim

(h/t Naked Capitalism)

Joseph Stiglitz — The Price of Inequality

A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights).

Likewise, part of the wealth of those in finance comes from exploiting the poor, through predatory lending and abusive credit-card practices. Those at the top, in such cases, are enriched at the direct expense of those at the bottom....

Rent-seeking distorts the economy. Market forces, of course, play a role, too, but markets are shaped by politics; and, in America, with its quasi-corrupt system of campaign finance and its revolving doors between government and industry, politics is shaped by money.

Read it at Project Syndicate
The Price of Inequality
by Joseph Stiglitz

This gives new meaning to "The rent is too damn high."

Both Joe Stiglitz and Jamie Galbraith are pounding on inequality. This meme is gaining steam.

What's emerging is that what used to be the American dream is now the American Empire. The Great Experiment is failing.

Daron Acemoglu and James Robinson — Who Are the Extractive Elites?

Key to our argument in Why Nations Fail is the idea that elites, when sufficiently political powerful, will often support economic institutions and policies inimical to sustained economic growth. Sometimes they will block new technologies; sometimes they will create a non-level playing field preventing the rest of society from realizing their economic potential; sometimes they will simply violate others’ rights destroying investment and innovation incentives.

An interesting article in The Economist’s Buttonwood column asks: Who are these rapacious elites in today’s Western economies?

Read it at Why Nations Fail

Who Are the Extractive Elites?

by Daron Acemoglu, Killian Professor of Economics at MIT, and James Robinson, David Florence Professor of Government at Harvard University

(h/t Mark Thoma)