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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.
As we have repeated endlessly, politicians are bribed by the rich via campaign contributions and promises of lucrative employment later.
Chicago’s former mayor, Richard M. Daley, the latest in a long line of Chicago mayors leaving office under a cloud, accepted a lucrative “job” (i.e. “thank you” gift) from the law firm, Katten Muchin Rosenman (which not coincidentally, had received many millions of dollars in fees from the Daley administration.)
During Daley’s 5-term, 22-year tenure (a poster child for the need to impose term limits), Daley spent so much taxpayer money buying votes, the city’s debt became unsustainable. To cover part of the debt service, Daley began selling city assets (aka “privatizing”) – assets that formerly had provided income to the city.
Most notably, he sold a busy tollway and Chicago’s parking meters to rich business people, immediately after which Chicagoans were forced to pay much higher tolls and much higher parking fees, instituted by the wealthy new owners.
None of that money, formerly income to reduce taxpayer debt, will go to Chicago’s taxpayers for the next 99 years. Before Daley retired, he was negotiating to sell Chicago’s Midway Airport, the #2 airport in the region. His successor, Rahm Emanuel, continues the negotiation.
It was as though Microsoft had decided to sell the Windows patent, in order to obtain some quick cash.
The twin excuses for privatization are:
1. The private sector is more motivated, smarter and more creative than is the public sector, so will provide better service at a savings to the taxpayers.
2. We need quick money today, more than we’ll need income tomorrow.
In the cases of cities, states, euro nations and other monetarily non-sovereign entities, excuse #1 generally is a lie, because:
A. There seldom are savings to taxpayers. In fact, taxpayers lose the income they would have received from the assets. And,
B. The real motivation of the private sector is profits, not service. This especially is true for monopoly businesses like parking meters, toll roads, airports, jails, etc. While public officials are forced to provide at least a modicum of service, lest they be voted out of office, private monopoly CEOs feel no such obligation.
Excuse #2 always is a lie for Monetarily Sovereign governments (i.e. the federal government), which have the unlimited ability to create their own sovereign currency, so do not need income.
In the rarest of circumstances, perhaps excuse #2 could be true for some monetarily non-sovereign governments (state and local governments), if the reasons for the excessive debt have been cured and will not repeat. (But, really, does this ever happen?)
Privatization is nothing more than a payoff by politicians to the wealthy, at taxpayer expense, in exchange for which the politicians expect those above-mentioned campaign contributions and lucrative employment, later. Privatization is the ultimate sweetheart deal, paid for by the electorate, hiding graft and inefficiency from the public, and benefiting no one but the rich and the politicians.
Here are some examples: First, privatized prisons:
Private prisons are not beneficial to the country as a whole because of the negative effects on prisoners caused by the way they are run, the artificial situations private prisons use to boost business, and the low wages and benefits employees in private prisons receive.
Ever since the 1970s, there has been an increased interest in the privatization of public services.
The claim is that private companies seeking a profit can perform many services cheaper and more effectively than the public sector, which is perceived to be unmotivated, ineffective, and inadequately able to fulfill the public’s needs and demands.
Yes, that is the usual excuse given by crooked politicians, who sell government assets they themselves don’t own, in exchange for private campaign money, votes and personal employment. Politicians simply steal government assets and sell them for personal gain.
During the 1980s and early 1990s, the change in political climate favoring tax reductions and limited government. In addition, the increase in mandatory prison sentences from the start of the “war on drugs” resulted in an extraordinary increase in federal and state prison populations.
The prison population rose from 315,974 in 1980 to 883,656 in 1992, a 180% increase.
This demonstrates the criminality of austerity and the futility of the “endless war on drugs.”
Private prisons have negative effects on prisoners because they cut funding on security and educational programs which have been shown to drastically reduce recidivism rates.
These cuts make prisons more violent places resulting in the release of violent people into society.
By showcasing some of their private prisons, the private sector gives the public an inaccurate picture of how private prisons are generally run. In addition, private prisons are willing to sacrifice security to maximize their profits.
There is no proof that prison privatization saves taxpayer dollars. Even if private prisons save taxpayers money, the savings don’t offset the safety risks and low-budget security practices associated with private prisons.
Private correctional companies also increase corruption within our government by lobbying for policies that keep more prisoners locked up for longer periods of time.
They also cut corners by hiring under-qualified staff and providing them with inadequate training.
The prison system is something that should remain under the control and discretion of the government because it is prone to unprecedented levels of corruption if turned over to the private sector. It is for these reasons that prison privatization is harmful to society as a whole.
Chicago is monetarily non-sovereign, so is limited in its ability to spend, and always must seek sources of income. Italy, too, is monetarily non-sovereign, having surrendered its sovereign currency, the lira, and adopted the “alien” currency, the euro:
Italy set to launch privatisation drive with Fincantieri
By Rachel Sanderson in Milan
Italian state-owned shipbuilder Fincantieri will apply to list in Milan as early as Tuesday, firing the starting gun for what officials predict will be Italy’s largest privatisation programme since the 1990s, with a plan to raise €12bn.
Following the listing of Fincantieri, the government aims to sell 40 per cent of postal services operator Poste Italiane and 49 per cent of air traffic controller Enav.
Separately, Cassa Depositi e Prestiti (CDP), the Treasury-controlled financing agency, plans to sell minority stakes in Sace, an export credit agency.
Also to go are the government’s 4 per cent holding in energy group Eni; a 13 per cent stake in STMicroelectronics, a semiconductor manufacturer that is partially owned by the French government; Grandi Stazioni, which manages Italy’s largest railways stations; and CDP holdings in Snam and Terna, operators of gas and electricity grids.
Slowly, Italy sells pieces of itself, a finger here, a toe there, then a lung, a kidney . . . and the fiscal crises, brought on by the euro, are not solved, only delayed. And the rich assume more and more control over former Italian assets.
But what about a Monetarily Sovereign nation like England?
In historical context, privatisation seems to answer a number of dilemmas for the Tories. By spreading market incentives, it erodes the public sector basis for Labourist politics. . . And by reducing the power of public sector workers, it suppresses wage pressures, thus in theory making investment more appealing.
Above all, perhaps, in shifting the democratic to market-based principles of allocation, it favours those who are strongest in their control of the market, and who also happen to represent the social basis of Conservatism.
Conservatives, more than liberals, favor the rich, so privatization is their perfect tool. It reduces the size of government (which hurts the middle-classes and the poor). It suppresses unions and wages. It favors the rich and widens the GAP between the rich and the rest.
And that is why the CATO Institute, a Koch Brothers mouthpiece, simply loves privatization:
Chris Edwards, CATO
Governments on every continent have sold off state-owned assets to private investors in recent decades. Airports, railroads, energy utilities, and many other assets have been privatized.
The privatization revolution has overthrown the belief widely held in the 20th century that governments should own the most important industries in the economy. Privatization has generally led to reduced costs, higher-quality services, and increased innovation in formerly moribund government industries.
And of course, as usual, CATO mouths the BIG LIE.
The presumption that government should own industry was challenged in the 1980s by British Prime Minister Margaret Thatcher and by President Ronald Reagan. But while Thatcher made enormous reforms in Britain, only a few major federal assets have been privatized in this country.
Conrail, a freight railroad, was privatized in 1987 for $1.7 billion. The Alaska Power Administration was privatized in 1996. The federal helium reserve was privatized in 1996 for $1.8 billion. The Elk Hills Petroleum Reserve was sold in 1997 for $3.7 billion. The U.S. Enrichment Corporation, which provides enriched uranium to the nuclear industry, was privatized in 1998 for $3.1 billion.
And there was not one penny of benefit to U.S. taxpayers, but billions to the rich, who purchased U.S. assets at bargain prices.
And ask yourself, why would the U.S. have helium and petroleum reserves, but now has given control to private, for-profit companies? Does the word “defense” come to mind?
There remain many federal assets that should be privatized, including businesses such as Amtrak and infrastructure such as the air traffic control system. The government also holds billions of dollars of real estate that should be sold.
The benefits to the federal budget of privatization would be modest, but the benefits to the economy would be large as newly private businesses would innovate and improve their performance.
That is what the rich would like you to believe. But the lie should be obvious, if one gives even the most cursory thought to the profit motivations of a business vs. the motivations of an entity with unlimited access to money and no need for profits.
Privatization of federal assets makes sense for many reasons. First, sales of federal assets would cut the budget deficit.
To the detriment of the economy.
Second, privatization would reduce the responsibilities of the government so that policymakers could better focus on their core responsibilities, such as national security.
Congress ,the President and the 1000 federal agencies have too many responsibilities — like giving away assets to the rich.
Third, there is vast foreign privatization experience that could be drawn on in pursuing U.S. reforms.
No one needs to go to foreign countries to see the results of privatization. Just come to Chicago.
Fourth, privatization would spur economic growth by opening new markets to entrepreneurs. For example, repeal of the postal monopoly could bring major innovation to the mail industry, just as the 1980s’ breakup of AT&T brought innovation to the telecommunications industry.
Er. . . Ah . . . The breakup of AT&T was not privatization. But why worry about details.
Here is what CATA (aka Koch Brothers) says should be privatized (direct quote):
“end subsidies to passenger rail and privatize Amtrak;
privatize the U.S. Postal Service and repeal restrictions on competitive mail delivery;
privatize the air traffic control system;
help privatize the nation’s airports, while ending federal subsidies;
help privatize the nation’s seaports;
privatize federal electricity utilities, including the TVA and PMAs;
privatize parts of the Army Corps of Engineers, such as hydroelectric dams; and
sell excess federal assets, including buildings, land, and inventory.
These are some of the high-profile reform targets, but federal departments should be scoured for other large and small activities to transfer to new owners in the private sector.”
Hey, why not sell Yellowstone and Yosemite? Surely, we can trust the super rich not to build too many condo buildings in front of Old Faithful or cut down too many Giant Sequoias . . . on the privatization Road to Perdition . . . in the United States of Koch.
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. (Click here)
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.