The Globalized Company Store
Well-meaning lefties sincerely ask "Does the economy serve the people, or do the people serve the economy?"; as if asking that question will put the 1% on the defensive. But, clearly, the economy has been reduced to the stock market, the stock market has been reduced to a handful of massively overvalued tech companies, and the central banks supply zero-interest liquidity to keep those stock prices in the stratosphere. The real world? The massive unemployment, the crumbling infrastructure? The school to private prison (with guaranteed profits) pipeline? That is no longer part of the equation in economics, or in politics.
So, the answer to the question is: The economy serves the 1%; the 99% serve the economy
If you are a member of the 1%, every time wages are driven down and/or workers fired, your net worth goes up. Every time public infrastucture that you dodge, with your private planes and self-contained estates, is starved of maintenance, your net worth goes up. Every time public assets are privatized, you get them for pennies on the dollar; and that gives you another opportunity to squeeze the last drops of blood out of the 99%.
Corporate media stories about the economy uniformly repeat the average-vs-median canard (i.e., "Bill Gates walks into a bar, and the average income in the bar makes everyone a millionaire.") The CM completely ignore the lopsided (i.e., bimodal) distribution of income, a distribution that keeps growing as the superrich buy all of politics and rewrite the rules to literally loot the 99%.
This story about Detroit spells out the details.
...investment and dispossession are not two separate phenomena. They are two elements of the same process. Downtown revitalization doesn’t go on in spite of neighborhood deprivation — it depends on these deprivations. In short, the problem is not that there are Two Detroits. The problem is that there is One Detroit that operates according to the needs of business...
Three examples showcase this phenomena. First, in 2013, the city published the Detroit Future City Strategic Framework (DFC), “a blueprint for Detroit’s future.” The DFC suggested cutting services in the city’s poorest neighborhoods in order to pay off creditors or free up resources for more “viable” areas. In short, the most impoverished would bear the costs of crisis and shoulder the burden of revitalization.
A second example: Gilbert has received $250 million in public subsidies for the Hudson’s site project and other new developments. The “browning legislation” he helped write has legally enshrined this transfer of wealth from poor to rich. According to the law, all development on “blighted” land is eligible for public subsidies, and developers are allowed to capture sales and income taxes from their commercial projects.
The devastation wrought by the previous generation of fleeing investors has therefore become a goldmine for today’s capitalists. And the wealth won’t trickle down. Detroit elites have created a closed circuit in which the profits from downtown development largely remain in the pockets of a handful of wealthy investors.
The Detroit case is just one example of the overall hijacking of government by the private sector - most egregiously by e-commerce, click-thru licenses, forced arbitration, forced denial of class action lawsuits. Corporations are now so powerful that either, like Detroit, they write the laws directly; or, they do as they please because they have brought government regulation of the internet ecvonomy to a standstill, with insane ideologues or outright crooks masquerading as politicians.
The whole process is called "functional sovereignty".
...major digital firms are no longer market participants. Rather, in their fields, they are market makers, able to exert regulatory control over the terms on which others can sell goods and services. Moreover, they aspire to displace more government roles over time, replacing the logic of territorial sovereignty with functional sovereignty. In functional arenas from room-letting to transportation to commerce, persons will be increasingly subject to corporate, rather than democratic, control...
With online platforms, it’s not a simple narrative of “best service wins.” Network effects have been on the cyberlaw (and digital economics) agenda for over twenty years. Amazon’s dominance has exhibited how network effects can be self-reinforcing. The more merchants there are selling on (or to) Amazon, the better shoppers can be assured that they are searching all possible vendors. The more shoppers there are, the more vendors consider Amazon a “must-have” venue. As crowds build on either side of the platform, the middleman becomes ever more indispensable...
these maneuvers...mark a faster transfer of power from state to corporate actors. The mayors are in a weakened position because their tax revenues are not high enough to support high quality municipal services, and now they’re succoring a corporate actor with a long history of fighting to push taxation even lower.
This increasing domination of (product) search (by Amazon) proposes a rather bleak choice for most of the rest of the merchants. Either they join Amazon's Marketplace or they try to go it alone. By joining Marketplace, they have to abide by Amazon's rules, and as we explained in a previous article, this confers Amazon with a host of leverage, tilting the whole playing field in its advantage.
The Amazon economy (seeking alpha)
The bottom line here is that retail politics (i.e., the party formerly known as Democratic) has handed control of the economy over to corporations.
A few people have asked me why I have stopped commenting on American party/electoral politics. The answer is simple: we know what the state of affairs is, we know the elements that have produced it, we know what has to be done – and we know that it manifestly is not being done. There is no mystery about any of this...So, what’s the point of repeating what was written a year or two or three ago? If those of us who share a certain perspective have made not the slightest impression on the American body politic, and if that is due to the overwhelmingly powerful forces that have warped its sense of reality, then another couple of thousand words cannot make a difference.
The great political anomaly of our political times is that Republican electoral successes – at local, state, and Congressional levels as well as managing to put a Trump in the White House – occur despite the locus of national opinion on most issues coinciding with the positions of the Democrats. Indeed, on some critical ones (like health care) it is well to the left of the party leadership.
The great corrective in a democratic system is supposed to be the presence of an opposition competing for power. Today, in the United States we don’t have a viable opposition. Let’s face it, the Democrats have been committing political suicide for a couple of generations...Their only salvation has been the Republicans’ own suicidal impulses. That is what gave them a couple of Presidencies. (Remember Sarah Palin?)
The list of what ails the party is a long one – an obvious list of basic flaws. Its dominant corporatist wing is fatally compromised on socio-economic matters; it is corrupt; it is controlled by self-absorbed careerists; it has passively allowed the Republicans to set the terms of discourse on just about every issue except gay marriage; it is intellectually lazy; and – not least – it’s dumb. To be perfectly blunt, its senior figures are, for the most part, second-rate hacks. Given the huge opportunities that they have been given over the past year, they have done little but beat the dead horse of Russian electoral interference. Is “hack” too severe?
On the Futility of American Politics
Given the complete political powerlessness of the 99%, what is next on the menu for the 1%? To confiscate everyone's cash and replace it with instantly hair-cuttable electronic currency. And then to replace all government programs with an e-cash handout called "basic income". Of course, "basic" will be redefined to "utterly inadequate" five minutes after it is passed into law.
Essentially, e-currency is the scrip at the globalized company store. The store where the company pays the workers in scrip only good at the company store, then it inflates the prices in the store to claw back anything beyond basic sustenance. With credit card usury being legal, this old song is more relevant than ever:
EDITED TO CORRECT THE LYRIC
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
0.01% capitalists on Wall St. are nothing more than high stakes gamblers playing with other people's money and all the advantages they can rig for themselves, like high frequency trading (a.k.a. digital front-running). The whole bitcoin craze is a no-lose proposition for the 1%. Being able to hire the sharpest talent, and having access to the fastest trading platforms, they can speculate like mad. If bitcoin crashes, they will be first out the door with their winnings. If, instead, bitcoin crashes the value of government fiat currencies, then the 1% will own all the money. They can't lose. It is financial disruption on a global scale.
The average person has no clue how completely rigged Wall St. is. However, stock market analysts posting at ZeroHedge quite clearly see what is going on:
financial markets are no longer a mechanism for price discovery and the pricing of risk of capital allocation decisions. Markets have been made into a utility. More to the point, they have been made into a political utility, a tool for ensuring wealth and stability of our political structures. The easing tools we dabbled in to stabilize prior business cycles were brought to bear instead as tools for propping up and expanding financial asset prices...
Markets have also rapidly become a social utility, an inextricable part of every contract between governments and the governed. Underfunded pensions and undersized boomer 401(k) accounts mean that ownership of risky assets is not a choice driven by diversification or relative return expectations, but by the fact that it is the only asset they can buy that has any potential of meeting the returns they would need to be adequately funded.
The takeaway is that the 1% already has complete control over Wall St. Add that to the increasing control over the economy by global retailers like Amazon, and all that is left to obtain the global company store is to get rid of cash.
Banks will call the shots in the future, on your personal economy and that of the state. They are globalized, following the same principles of deregulation worldwide. They are in collusion with globalized corporations. They will decide whether you eat or become enslaved. They are one of the tree major weapons of the 0.1 % to beat the 99.9% into submission...Banking deregulation has become another little-propagated rule of the World Trade Organization (WTO). Countries who want to join WTO, must deregulate their banking sector, prying it open for the globalized money-sharks.
with a cashless economy, our accounts are vulnerable to be invaded and robbed by the state, by thieves, by the police, by the tax authority, by any kind of authority – and, of course, by the very banks that have had your trust for all your life. ..Bail-ins will become common practice for any bank that has abused its greed for profit and would go belly-up, if there wouldn’t be all those deposits from customers. Even shareholders are not safe. This has been quietly decided some two years ago, both in the US and also by the non-elected white-collar mafia, the European Commission.
Cashless trials are going on elsewhere, especially in Nordic countries, where selected department stores and supermarkets do no longer take cash. Another monstrous trial has been carried out in India a year ago, in the last quarter of 2016, where from one day to another 80% of the most popular money bills were eliminated, and could only be exchanged for new bills by banks and through bank accounts. And this in an almost pure cash country, where half the population has no bank account, and where remote rural areas have no banks. People were lied to so that the sudden introduction had maximum effect.
Digitization also includes the cryptocurrencies, the blockchain moneys floating around – of which the most famous one is Bitcoin. It brings digitization of money to an apex. The system is complex and seems to lend itself only to ‘experts’. Cryptocurrencies are fiat money, based on nothing, not even on gold. Cryptos are electronic, invisible and highly, but highly speculative, an invitation for gangsters and fraudsters. It looks as if cryptocurrencies were designed for crooks and speculators.
Retrenchment, Robotization and Crypto-Currencies: The Runaway Train Towards Full Digitization of Money and Labor
The other half of the cashless/dole route to the enserfment of the 99% is Universal Basic Income (UBI).
UBI’s effects depend on the amount distributed and the conditions of its implementation...it “must provide a sufficient amount of income to live on.” If the payment isn’t high enough to let people to refuse work, UBI might push wages down and create more “bullshit jobs.”
Despite the fiscal effort that would go into implementing the new system — 6.5 percent of GDP, or nearly twice the share of GDP that the US currently spends on its military — the results are rather disappointing. Child poverty shrinks from 16 to 9 percent, but for working-age people it decreases less than 2 points (13.9 to 12 percent), and among pensioners it declines only 1 point (14.9 to 14.1 percent). The considerable sum of money mobilized has only a modest effect on poverty and doesn’t specifically benefit those who need it most.
This fact is even more striking when we consider that the cost of eradicating poverty in any developed country is around 1 percent of GDP. An individual unemployment benefit set at the poverty line (around $1,200 a month) and granted to all jobless individuals regardless of their place in the family structure would not only pull everyone out of poverty but also end workfare, challenge the normative dimensions of family structures, and fundamentally alter the labor market. All this, for somewhere between six to thirty-five times less money than a universal basic income.
No existing economy can pay for a generous basic income without defunding everything else. We would either have to settle for the minimalist version — whose effects would be highly suspect — or we’d have to eliminate all other social expenditures, in effect creating Milton Friedman’s paradise. Faced with these facts, we should question UBI’s rationality; as Luke Martinelli put it: “an affordable UBI is inadequate, and an adequate UBI is unaffordable.”
This essay has laid out the facts about the upcoming doom of the 99%. I see absolutely no way out of the coming cashless globalized company store. The 99% doesn't even have a political party that represents it. The Democrats have proven to be, and continue to be, corrupt creatures of Wall St. and the neocons. The 99%'s share of the economy has also been shrinking, as the 1% hoovers up every financial asset available, and even creates new ways to loot the public via various privatizations and commodificiatons of products and services that did not used to be part of the market.
The 99% do not seem to understand that, by using regulation-wrecking, wage-busting services like Uber and AirBnB or the omnipresent Amazon, they are digging their own graves. They also cluelessly snap on their own shackles by buying spyware like Alexa and the flood of almost-zero-value-add-for-anything-but-spying Internet of Things gadgets. They don't notice their corporatized newsfeeds are full of worthless celebrity news and gossip, including the latest bullshit scandals in Washington. They do not seem to miss what real news used to provide: useful information like who is looting the 99%, why is the US threatening seven countries and having bases in over 100 countries - and how much money is all that is wasting.
In short, the public has been infantilized.
We are headed towards a hydraulic despotism based on electronic cash and enforced by electronic surveilance. Any "rebellion" by the 99% has already been gamed out and will be defeated by a combination of internet surveilance, the militarized police, the corporate/government fusion centers, and the ability to simply turn off the money spigot to anyone or any city or region who is making trouble.
We will be serfs then until either
1) the environment collapses,
2) the China/Russia bloc manages to collapse our phony economy with gold/yuan oil contracts and One-Belt-One-Road carrots to lure away the few "allies" we have left, or
3) our batshit crazy MIC starts a nuclear war.
Of course, given the rate Trump is burning our alliances down (nuclear-armed Pakistan this week), that time may not be all that far away.