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●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive, and the motive is the gap.
[The single most important problem facing our economy is the growing GAPs, between the various income/power levels, particularly the GAPs separating the upper .1% from the rest of us. These GAPs have changed U.S. and world economies.]
TROPHIC CASCADE: An ecological process by which the top of the food chain affects all levels, down to the base. It changes an entire ecosystem
All animals and plants compete for food and space, and in competing, they affect other animals and plants.
A trophic cascade can occur when top predators are strengthened or weakened. Strengthening top preditors can reduce the abundance of, and/or change the behavior of, their prey. This, in turn, can reduce the abundance of, and/or change the behavior of their prey, and so on down the line.
Weaker top predators can allow prey immediately below them to grow, often to the detriment of succeeding ecological layers.
A trophic cascade can have unexpected results. For example, trophic cascades in Yellowstone National Park changed the abundance of wildlife, of plant life and even changed the course of Yellowstone’s rivers.
The first trophic cascade lasted for centuries, as U.S. farmers and ranchers (two of our more ecologically destructive business groups), killed gray wolves for sport and to protect livestock.
This killing was so effective that by 1920, gray wolves, the area’s top predator, essentially vanished from Yellowstone.
With the top predator gone, deer and elk overpopulated and overgrazed. Grasses and trees began to disappear, and with them went smaller mammals, bears, beavers, bison, birds, reptiles and many species of fish.
Yellowstone began to die from the absence of its top predator.
Then, in 1995, a second trophic cascade began. Wolves were reintroduced to the Park.
Despite their small number, the wolves benefited the other animals, plants and the land itself. Not only did wolves seeking sustenance, cull the deer, but the threat posed by wolves changed the habits of their prey. The deer began to avoid valleys, where they could be trapped by wolf packs.
This allowed the valley grasses and trees to return and flourish. Small rodents returned, which attracted hawks and eagles. The trees attracted beavers, whose dams created ponds for fish, which in turn attracted many fish-eating animals. The trees produced berries, which attracted bears. Several species of songbirds returned. The roots of the flora stabilized river banks, creating even more ponds for fish.
In turn, the avoidance actions of the deer steered the wolves, which followed wherever their prey led.
[At this point, I urge you to watch: a wonderful 4 ½ minite video describing how trophic cascade changed Yellowstone.]
In American economics, the “top of the ‘food chain,’” is occupied by the U.S. government. The government is the top predator. Like wolves, the government’s existence, direction and sustenance depends upon and guides the desires, actions and motivations of the layers below.
The “next layer below,” and providing the most sustenance to the government, are the billionaires – the wealthiest individuals and largest corporations. They are the big political contributors, made even bigger by recent Supreme Court decisions. Like the wolves following the deer, the government follows where the upper .1% leads.
And below the .1% are all the rest of us – the less rich classes, the upper middle classes, the middle-classes, the medium-to-small businesses, the lower classes and the impoverished.
As the top “predator,” the government not only derives its nourishment from the .1%, but through its actions, controls the entire economic food chain.
And just as the absence of wolves allowed the deer to overgraze – much to the detriment of the entire Park – the lack of government “predation” (i.e. laws restricting the .1%) allows the billionaire individuals and corporations to “overgraze,” (i.e. take too many economic resources for themselves) which is destructive to the rest of the “food chain” (i.e. the entire economy.)
Until now, I had believed and preached that closing the GAP, between the rich and the rest, required lifting the rest, while not punishing the rich. I preached against a “Robin Hood” approach, but rather encouraged increased federal spending, a “high tide lifts all boats” plan.
A proposed “Nine Steps to Prosperity” was created in that vein. Nearly all steps involve direct benefits to the “not-rich,” the so-called 99.9%, with only step #9 (federal ownership of all banks), providing some control of the billionaires.
In ecological terms, this would be tantamount to continually re-planting grasses and shrubs and repeatedly laying out food for the deer and all the remaining animals, while not re-instating the wolves. .
I now believe I was wrong.
I disagree with the right wing’s claims that the rich (the so-called “makers”) should be pampered and allowed to run free without restriction, because “they are the ones who create then jobs.”
Unless the population of “deer,” (the billionaires and billionaire companies), is controlled, our economy cannot fully recover. There always would be far too few resources, causing far too many impoverished, for economic health.
How then are the billionaires to be controlled? Here are some initial thoughts. I invite you to suggest others:
I. All banks should be owned and operated by the federal government (Step #9). No private banking. For the rational, see Step 9: Federal ownership of banks
II. Increase federal taxes on inheritances. Large inheritances widen and perpetuate the GAP. I suggest a progressive tax as much as 77% (See III) on total inheritances, adjusted for future inflations.
III. Progressively higher federal income taxes on high incomes, while eliminating federal taxes on lower incomes. Step 7, in the “Nine Steps to Prosperity” reads, “Increase the standard income tax deduction annually.
Additionally, the progressive income tax top rate should rise again. We might consider something along the lines of 1964 tax rates, where the highest income bracket was about $3 million and taxed at 77%.
Further, all income – salaries, capital gains, gifts, inheritances, etc., should be taxed at the same rate.
Ultimately, those earning up to $500K annually would pay no federal taxes, and those above that level would pay 60%+, adjusted for inflation.
IV. Minimum / maximum wage relationship. In any organization, the highest paid could receive no more than 50x the lowest full-time worker, or be taxed at 100%..
WHAT ARE THE PROBLEMS WITH THESE APPROACHES?
1. All federal taxes remove dollars from the economy, which is recessionary.
However, if deficit spending on social benefits continues to increase, more dollars will be pumped into the economy than removed, which will narrow the GAP..
2. Taxes on the rich could reduce motivation for accomplishment.
This type of response understandably might be given by the very rich. However, it is improbable that being taxed on $500K annual income, gifts, inheritances, etc., would reduce the motivation to earn and to be productive.
On the contrary, to paraphrase Paul Ryan, excessive compensation can become, “a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” (He actually was talking about aid to the poor, but in reality, the statement applies far more accurately to aiding the rich.)
3. There are many devils in the details. The very rich are adept at finding ways to circumvent the law, just as the deer have evolved to become more adept at hiding from, or outrunning, the wolves.
This would be true of all laws that attempt to narrow the GAP. That said, we must persist in our efforts.
Bottom line: The deer (i.e. the very rich) are out of control. The wolf (the U.S. government) not only has been absent, but has been feeding the deer and encouraging them to breed. The very rich are “overgrazing the economy,” leaving too little for the rest of us.
As a result, our American economy is dying.
On balance, weakening the rich and powerful, while increasing benefits to the 99.9% would benefit the entire nation.
For that reason, I am adding a simple #10 to what now will be called, “The 10 Steps to Prosperity”:
10. Tax the very rich (.1%) more, with much higher, progressive tax rates on all forms of income.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)
10. Tax the very rich (.1%) more, with much higher, progressive tax rates on all forms of income.
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
THE RECESSION CLOCK
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise. Federal deficit growth is absolutely, positively necessary for economic growth. Period.
17 thoughts on “–TROPHIC CASCADE: How Yellowstone National Park opened my mind”
I kind of liked the fairness, but 0.1% is a pretty small increase. I always thought that the job creators were the consumers, however, Larry Ellison clearly created one job:
“The Oracle chief has had basketball courts on at least two of his yachts, said Tom Ehman, who handles America’s Cup matters for Mr. Ellison. He said Mr. Ellison liked to relax by shooting hoops on these courts, and has had someone in a powerboat following the yacht to retrieve balls that go overboard.”
It shows how compassionate he is. He could have had people swimming for the balls.
Rodger says that the single most important problem facing our economy is the growing GAPs, i.e. inequality. I agree, because everything and everyone now exists to grow the various gaps, especially between the rich and the not-rich. This has crippled society worldwide.
Control of the rich is a form of regulation. We must have regulation, or else Rodger’s Nine Steps could not be effective. The need for regulation is universal. It applies to all systems. From the orbit of electrons to the orbit of galaxies, to the functioning of our own body, when regulation breaks down, the system self-destructs. The 1% and the financial economy are unregulated. They are out of control. They are a malignant and growing cancer. We must regulate them.
Regulation also means that some industries must never be privately owned or controlled on a for-profit basis. Banks, police, prisons, utilities, the military…I can think of others.
What about Rodger’s call for taxing the rich? I agree, but let’s be clear. Since tax policy can be used to widen or narrow the gap, it should be geared toward narrowing it. Rodger says an example would be an inheritance tax. I’ll go with that, but only when we speak of extreme wealth. Let’s say that inherited wealth above $100 million is taxable. (That’s an arbitrary and debatable number).
I agree on the need for caps on the minimum / maximum wage ratio. When there are no caps, the top executives focus only on increasing their wealth at the expense of the company.
Furthermore we must regulate the private equity scammers such as the Pete Peterson. That is, we must outlaw the process of buying and destroying companies for personal profit.
Bottom line: we must stop the growth of inequality, or else life will not be worth living.
== Off topic == Off topic ==
IT’S YOUR FAULT, LOSER
Concerning regulation, I often say that the financial economy is a parasite on the “real” (or industrial) economy. The corporate media pretends that this is not so. Media outlets pretend that there is only one “economy,” and that, therefore, the real economy (the host) is booming along with the financial economy (the parasite). The truth is that the real economy remains in a depression. The stronger the parasite, the weaker the host.
Corporate media outlets deny this fact in order to justify the continual widening of the gap between the rich and the rest, and to justify the subjugation of the host to the parasite, i.e. the subjugation of the real economy to the (rigged) “markets.” The media outlets claim that we are enjoying a “recovery.” And since everyone around you is in a “recovery,” it is YOUR fault if you are unemployed, or chained to a minimum-waged job, or you are otherwise crushed by the growing gap.
Looked at another way, if ten people on Wall Street collect $20 billion each, then the USA’s “per capita GDP” increases by thirty-one dollars for every man, woman, and child in the USA (even though only ten people get the cash). So what are you whining about, loser?
I mention all this again because I keep seeing articles in the corporate media which claim that the U.K. “economy” is in a “recovery.”
Some articles claim that the “recovery” proves that austerity is good for the “economy.” Other articles claim that the “recovery” does NOT prove that austerity is good. All articles, however, claim that there is a “recovery.” They only disagree on the reason for this “recovery.” (It’s like liberals and conservatives, who both agree to uphold the Big Lie.)
Larry Summers, for example, was a long-time champion of austerity, but now he criticizes austerity…sort of. Yet Summers too claims that the U.K. economy is in “recovery.” He says, “The British economy has experienced the most rapid growth in the Group of 7 over the past several months.”
IT’S ALL LIES.
I’ve visited England, and I don’t need to visit again to see if there is a “recovery.” Under no circumstances can the real economy EVER have a recovery as long as the government imposes austerity, and supports the supremacy of the financial economy.
Therefore, don’t believe the corporate media regarding the so-called “economy.” If there is an actual recovery in the real economy, then you will see it firsthand. You will feel it in your own life.
This lie about the “recovery” takes several forms. Here’s an example…
FACT: the extinction of the middle class means the extinction of suburbia. Therefore, across the USA, affluent people are moving back downtown, driving rents and sale prices sky-high. Landlords make way for these rich people by forcing previous tenants out of their apartments. Landlords do this by refusing to do repair work, or refusing to accept the rent, or by telling tenants that they must leave because the tenants are in “violation” of something in the rental contract. The landlords know they can rent the apartment for three or four times the current rent.
The process is called “gentrification,” and it is yet another example of the ever-widening gap between the rich and the rest. However the corporate media uses the overheated city centers to falsely claim that the overall housing market is improving across the USA.
Thus, once again, the media outlets claim that we are in a “recovery.” If you are not personally enjoying this (false) “recovery, it is YOUR fault! Everyone around you is enjoying a “recovery,” so what’s your problem, loser?
The technical acronym for this crap is B.U.L.L.S.H.I.T.
Here’s another example of the “recovery” in England…
In the U.K., a rapidly increasing percentage of workers are on a “zero hours contract,” meaning they are “on call” to the employer. The worker-slave is at the disposal of the master. The slave might get twenty hours of work this week, or ten, or nothing. The slave can be called in or sent home at any time without warning, and will be terminated for any failure to obey an order, or obey a random summons. Therefore it is impossible for the slave to pay for a mortgage, or support a family.
And now, in what Employment Minister Esther McVey calls “welfare reform,” anyone who collects any form of unemployment benefits will lose those benefits if he or she turns down a zero-hours offer to work. Ms. McVey justifies this by claiming that worker-slaves can be on-call for two or three employers at the same time. This is another lie, because when two or more employers summon the worker, the worker must choose which employer to obey, and which job to lose for not showing up.
And yet, the U.K. economy is in a “recovery.”
In addition to gentrification, we also have privatization (i.e. sell national assets to the rich at bargain prices.)
The UK is in that mode, now.
Ever since the Depression the rape publicans have been trying to dismantle the New Deal and its profit robbing regulations on business. Of course the 1% loves the wild west’s unrule-iness. And of course they have proven they cannot be trusted to self regulate–fox in the henhouse!
I can only accept that they would rather make money up the ying yang and let the world go to hell. OH just give us watered down regs, pretty please. We elitists promise to behave ourselves. We’re not like daddy and grandpa.
One way to get back to the real manufacturing economy is mass produced scientifically designed and engineered housing. The old hammer and nail match boxes have been around for a century. They still blow over, use too much energy and cost too much. Mass produced and engineered, modern to ultra modern housing selling for around $40K (mass produced) would stimulate all sectors of economy the same way oil prices effect all sectors of the market. Housing is one of those needs, like energy, that affects the whole system and not negatively like fossil fool production.
“They would rather make money and let the world go to hell.”
Yes, the rich only care about widening the gap between themselves and the masses. Nothing else.
If a giant asteroid was about to destroy the earth, the rich (despite their enormous power) would do nothing to stop it, unless they were sure than doing so would widen the gap still further. For the rich, widening the gap is more important than anything, even their own lives. Pete Peterson, for example, will be 80 next month, and STILL the only thing he cares about is widening the gap. What a wretched life these bastards lead! They are utterly useless, contributing nothing to society except pain and poverty. They are vampires. They are cancer. They are “takers.”
Bring on the guillotines, and send the bastards back to hell.
BINGO. And by doing so, the cost of housing (aka “the rent is too damn high”) will be greatly reduced due to supply exceeding demand. No more artificial scarcity of housing!
You said the rich “take too many economic resources for themselves”. Which economic resources are those – dollars? Dollars that depend on future production anyway?
Having alot of money is synonymous with an insurance policy. You have the ability to purchase things in the future, yet to be produced in most cases. And to top it off, the rich eat less than the not so rich. But the story is definately saying something and it is accurate.
I think that you fail to see the moral of the story, you yourself tell. Let the rich be rich, let the economy be the economy, let banks flour, let banks fail, let CEO make billions, let the poor work for any way they are willing to accept. And by the way, CEOs would not be making as much if not because of cheap money sponsored by the government.
Men thinks he can control everything and in the end controls nothing.
“There are many devils in the details. The very rich are adept at finding ways to circumvent the law, just as the deer have evolved to become more adept at hiding from, or outrunning, the wolves.
This would be true of all laws that attempt to narrow the GAP. That said, we must persist in our efforts.”
This is your best point. And Quas allow me to apply for the blade sharpening position; all those vertebrae will be hard on the edge.
Seriously, I think MMT and MS have a VERY slippery slope. Once you let the cat out of the bag you’ll set off a chain reaction of “hey, we can afford anything…there’s no need for taxes… at any level….we can create out of thin air and keystrokes all we need for infrastructure, the jobless, the hurricane-tornado-flood-crop-illness-epidemic and disease damage.”
Who among the media or politics dare risk their job and reputation? Only on the internet and writing “radical” columns and books can you get away with this. The cat WAS let out of the bag on nationwide TV when Bernanke (CBS interview with Scott Pelley) said, “If we can find enough electrons we can find the money.” And Greenspan said on Meet the Press, “The federal government cannot go broke.”
Why didn’t it catch on to the millions of viewers? Because they didn’t think they “heard it right” or because Greenspan/Bernanke must have meant something else I’m not privy to. But there’s another reason. They didn’t continue to pound it home. They didn’t say, in future public speaking engagements (or a book) as a follow up, “You heard me right! You’re not mistaken; I said it and it’s true! ” So it withered and died on the media vine.
And the wealthy aren’t about to become the Black Sheep of their club, a traitor to the cause of their fellow clubbers who no doubt will club them into shame and persona non grata.
Our only hope is this internet and the work of UMKC and other institutions with a big assist from worsening and increasingly costly physical/environmental breakdown. And one more item: women in politics. It is a fact that they’re naturally more closely allied to life and to cooperation than men. I’m not talking about the selfish Sarah Palin types, but the Elizabeth Warren types. And not just a smattering. When more women are involved men tend to listen better. It could be that the fairer sex is one of the keys to unlocking the strangle hold wealthy well-connected men have on our (their!) representatives.
As we’ve said before, there is but one limit: Inflation. It’s the limit politicians and mainstream economists exaggerate, when they argue against MS/MMT.
The limit is real, but it’s controllable and a long way distant.
“And one more item: women in politics. It is a fact that they’re naturally more closely allied to life and to cooperation than men. I’m not talking about the selfish Sarah Palin types, but the Elizabeth Warren types. And not just a smattering. When more women are involved men tend to listen better. It could be that the fairer sex is one of the keys to unlocking the strangle hold wealthy well-connected men have on our (their!) representatives.”
Amen to that! The late, great Buckminster Fuller would certainly agree. He believed that men tend to see war and scarcity as inevitable, and thus it becomes a self-fulfilling prophecy, while women tend to reject such an outdated notion. And that women would (and should) eventually rule the world. (Of course, he was not talking about the Sarah Palin types.)
I am now in a state of euphoria seldom reached. Finally others are waking up!! One thing you failed to mention, well you may have in a round about way, the DOJ must be purged of corporate lackeys who refuse to prosecute the CEO’s for the control frauds they have perpetrated for the last three decades.
The DOJ “lackeys” are doing exactly what the President and Congress want them to do. Replacing these lackeys with new lackeys will solve nothing.
Notice, for instance, how the Republican’s “big” scandal is what Obama said one day after Benghazi, with hardly a word about the real scandal, unprosecuted banksters.
Both parties are bribed by the rich.
Rodger, I admire you for being willing to reconsider your position and change your mind. 🙂
That’s called “learning.”
No this is wrong, the economy is not a closed eco system which is what you describe in your nature analogy.
Because the supply of money is unlimited we only need to regulate the rate at which money is added. Taxing the rich or anyone and then telling them that federal taxes pay for nothing is just punitive.
You are correct that the economy is not a closed system, but I’m not sure why that is relevant to the recommendations.
We need to regulate not only the Supply of money but also regulate the Demand (via interest rates).
As for “Taxing the rich . . . and then telling them that federal taxes pay for nothing being just punitive,” I agree.
But we already tax the rich (and the poor) and federal taxes do pay for nothing. So yes, federal taxes are punitive.
But shall we keep that information a secret?