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The Other Side Of Hanauer: A Plutocrat For Poverty

Tyler Durden's picture




 

Submitted by James E. Miller of Mises Canada,

In America, and to a certain extent in Canada, rich businessmen are seen as savvy at their craft. After building an empire of wealth, it’s hard to challenge a successful person’s view of market economies. Business owners have to make payroll and navigate through government regulations. They have firsthand experience with the ins and outs of making sure consumers are satisfied. Driven by profit, they have little need for onerous tax collectors and do-goody bureaucrats standing in the way. Therefore, when an affluent businessman speaks, his word is typically taken as the unvarnished truth.

Things are not always that straightforward however. Not every capitalist prefers capitalism. Not every entrepreneur wants a free market. Not every Ayn Rand-like figurehead wants the government to adhere to strict and limited principles.

That’s exactly the case in a recent Politico Magazine article penned by Seattle investor Nick Hanauer. Titled “The Pitchforks are Coming…For Us Plutocrats,” the piece is written exclusively to the “.01%ers” who aren’t too busy from their day job to read the webzine version of a political gossip hub. What I mean to imply is that the article isn’t written for men and women who have their hands full putting billions of dollars to work in the economy. It’s written as a self-assurance tract for progressives who want to justify their “eat the rich” hankerings.

Hanauer starts out by hammering on the favorite trope of all leftists: inequality. He points out that a few decades ago “the top 1 percent controlled about 8 percent of U.S. national income” while the “bottom 50 percent shared about 18 percent.” Now in 2014 he claims, “the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.” With this kind of divergence in wealth ownership, it’s just a matter of time before the people on the bottom rise up and reclaim what’s theirs. Hanauer writes that it’s impossible for society to “sustain this kind of rising inequality.” Before long, “the pitchforks are going to come for” him and his fellow super rich.

Now there is certainly a case to make that much of the economic inequality we have is unjustified. When governments dictate large portions of the economy, much as they do now, it has the effect of cementing the politically-connected on top. Small businesses and entrepreneurs have a more difficult time breaking into the marketplace when big players can keep them out via state mandates. The big banks, auto companies, large department stores, and software companies with loads of patents all take advantage of the government’s legal use of force to suppress competition. Their profits go up as a function of not necessarily satisfying consumers, but by not having to innovate as much.

Hanauer addresses none of this. He goes into the great need for the wealthy to start working with the government to chisel down the difference between the haves and have-nots. One recommendation he makes is for the moneyed to adopt the approach “Franklin D. Roosevelt did during the Great Depression” in order to help the middle and lower class. The idea that FDR was a boon to the poor is, of course, fiction. Roosevelt’s capricious New Deal regulations did nothing to cure the Depression; rather they elongated the downturn for over a century. Not only that, but the fascist cartelization of the economy through the National Industrial Recovery Act restricted many small businesses from even getting off the ground. There was also the blatantly racist housing policies that purposefully created inner-city ghettos by diverting tax subsidies away from urban centers.

In true ignorant fashion, Hanauer addresses none of the unintended consequences of government economic regulation and goes right for a direct solution: forcefully raising wages. He isn’t alone in this crusade. Large companies like Wal-Mart and McDonald’s have already embraced raising the minimum wage for putatively humanitarian reasons. Hanauer is just going off of their lead, and advocating for the Henry Ford approach to selling cars. The myth goes that Ford paid his employees an exorbitant, unprecedented wage – $5 a day back in 1914 – so that they, too, could afford the cars coming off the assembly line. This wage policy decimated Ford’s competition. He could afford to pay wages his competitors could not. This boost in take-home pay attracted better talent, which in turn lead to more production, and thus more profit.

The business approach was not meant to last however. When the Depression set in, Ford attempted to pay his employees at least $7 an hour. Instead of increased orders, the number of cars purchased fell. Employees ended up accepting lower wages and fewer work hours. Ford blamed company owners who only emphasized “profit motive” over wages. His reasoning was nonsense; if simply paying your employees more ensured higher employment and purchasing power, his original solution would have worked. Instead, the opposite occurred. Once again, one of America’s premier capitalists had the rules of economics completely backwards.

As Henry Hazlitt wrote in Economics in One Lesson, the logic behind the “enough to buy back the product” practice is completely flawed. The promoters of the purchasing-power theory, such as Mr. Hanauer, can’t expect “the makers of cheap dresses should get enough to buy back cheap dresses and the makers of mink coats enough to buy back mink coats.” In modern terms, it can’t be enough for the baristas at Starbucks to make enough to buy a $2 cup of coffee. They have to want something more. The only way Ford’s train of thought works is for everyone to work in industries that produce expensive goods.

In a clever move of obfuscation, Hanauer cites the growth of small business payroll in Seattle and San Francisco – two progressive paradises with the highest minimum wages in the country – to back his claim that higher government-mandated wages boost job creation. What he either forgets or purposefully hides is the effect of large businesses like Microsoft, Amazon.com, Wells Fargo, Google, and Twitter that are all headquartered in both cities. These businesses aren’t paying their employees a wage slightly above the minimum threshold. They’re doling out big salaries because of their ability to produce cutting-edge products and please consumers. The rise in small businesses around these industry giants is a result of the latter’s success – not the other way around.

If Hanauer really wants to test out his theory, I propose this to him: shed your billions of dollars and give the money directly to your employees. Drain your bank accounts and give the proceeds to the spend-happy middle class. If consumer demand truly grows the economy, then the profits will come roaring back. There will be no time gap between having to adjust capital investment to make sure goods reach store shelves. There will be no inability to purchase raw materials or pay employees while waiting for the finished product to hit the market.

As any basic economics student will tell you, that’s all patent nonsense. There is not getting around the fact that if you raise the price of labor, you will get less of it. Demand curves always slope downward. The minimum wage is always a creator of unemployment, no matter how many entrepreneurs or business owners say otherwise. Hanauer is right that economic inequality can create resentment. But he doesn’t see the real culprit: a government that insists in meddling in the marketplace. His solutions don’t fix the problem; only exacerbate it.

 

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Wed, 07/02/2014 - 19:17 | 4919577 Skateboarder
Skateboarder's picture

I thought we already talked shit about Hanauer.

Here's a complimentary 'fuck you' anyway, Nicky boy.

Wed, 07/02/2014 - 19:27 | 4919592 knukles
knukles's picture

"Dead broke.  Will lie about Benghazi for cash"
    - H R Clinton

Wed, 07/02/2014 - 19:33 | 4919615 Beam Me Up Scotty
Beam Me Up Scotty's picture

Sure, just like Warren Buffet. Argue for higher taxes all the while disputing a billion dollars the government says he owes. And taking full advantage of loopholes .gov created for him to pay less taxes as a % of his income than people who make far less. Fuck them. Pay your employees more then, it's pretty simple. All the government does when it redistributes is take a big cut.

Wed, 07/02/2014 - 19:40 | 4919636 jbvtme
jbvtme's picture

way the fuck too many chumps go through life thinking making money is all there is

Wed, 07/02/2014 - 20:13 | 4919726 Anusocracy
Anusocracy's picture

"What he either forgets or purposefully hides is the effect of large businesses like Microsoft, Amazon.com, Wells Fargo, Google, and Twitter that are all headquartered in both cities."

There are a number of cities that are in the catbird's seat because of finance or high tech - as Detroit was in the catbird's seat for car manufacturing 50 years ago.

Wed, 07/02/2014 - 20:14 | 4919732 cifo
cifo's picture

I thought it's Groundhog day.

Wed, 07/02/2014 - 20:17 | 4919737 Anusocracy
Anusocracy's picture

For Detroit, whack-a-mole.

Wed, 07/02/2014 - 21:02 | 4919863 localsavage
localsavage's picture

You don't get billions by being normal.  Normal people cash out and enjoy the money long before they reach a billion.  It takes a special kind of sociopath to keep it up when he could be in any number of countries banging the hottest young tail there is.

Wed, 07/02/2014 - 21:12 | 4919886 PeeramidIdeologies
PeeramidIdeologies's picture

So what is your definition of a sociopath?

Thu, 07/03/2014 - 00:55 | 4920421 Anusocracy
Anusocracy's picture

Here's mine.

A person who manipulates, controls, or uses other people as objects.

In other words, someone who doesn't think that another person is a person.

Thu, 07/03/2014 - 01:44 | 4920488 tolivian
tolivian's picture

Let's simplfy: a politican or government bureaucrat. While perhaps not all, certainly covers most.

Fri, 07/04/2014 - 12:39 | 4924748 Anusocracy
Anusocracy's picture

Definitely. Government is a playground for psychopaths.

Wed, 07/02/2014 - 21:26 | 4919926 SofaPapa
SofaPapa's picture

What I remember about Hanauer's original article was that he pointed out that he wasn't the smartest guy in the room and didn't have inventions to his credit.  Instead, he said, he had a gift for seeing trends in the future and the confidence to invest in those trends.

What he didn't say is that there's a simple word for that activity: speculation.  It's a polite word for gambling, but it sounds more polite, because it's not gambling, it's "investing".  The reason Hanauer and his friends are so rich is that speculation is the activity that government policy has favored for the past thirty years.  Because he and his friends had money and connections to get into schemes early, they were first in line at the printed money spigot.  Thus the printed money multiplied for them.  But they contributed nothing (as he himself admits) except the seed money.  Money begat money, and nothing more.

All of which would be acceptable if they were to lose when their bets went south.  But that didn't happen.  From the 1990s on, Greespan, Bernanke, and now Yellen assured that if there were to be a serious housecleaning where the speculators would realize the losses they made when their "investments" failed, that housecleaning was / is prevented, at whatever cost was / is required.

A fundamental inequity such as this cannot be treated with upping the minimum wage.  It requires fire.  A major fire that burns everything.  That is why the pitchforks are coming out, Mr. Hanauer, and you are not going to be able to bribe the masses out of it when it comes.

Thu, 07/03/2014 - 14:20 | 4922249 ConfederateH
ConfederateH's picture

"Money begat money, and nothing more."

let me fix that

"Money and corrupt connections begat money, and nothing more."

Wed, 07/02/2014 - 19:16 | 4919579 ronron
ronron's picture

o/t where the fuck is banzai?

Wed, 07/02/2014 - 19:28 | 4919606 wisefool
wisefool's picture

I miss him too. I hope he is well. If so, it will be worth the wait when he gets back.

Wed, 07/02/2014 - 20:43 | 4919811 disabledvet
disabledvet's picture

Not the first of our disappearances in these here parts. "The list is long in the Blog of Death."

And of course while all of us are targets The Commentariat strikes yet another fatal blow at the clap trap and gobbley-gook from above.

"In a world of deceit merely saying the word truth is punishable by death" not just the idea of truth...let alone that truth exists.

So all we are left is A Battlefield and the Fog of War. "If the separation between man and woman rises high enough we can simply eliminate desirability itself."

No one "wins" these things. Biologically and rhetorically speaking we are hard wired to think in these terms...to enter into matters where it is "we" that matter most. ("We" the rich. Or "we the poor." Or "we the blessed" or "we the announced."). But in the end it is "you"...all about you and only you...doing what you're told, being beaten, left by the roadside to die...without even your soul intact.

"To win we must accept that we are everywhere and always the loser" and proceed from there.

Wed, 07/02/2014 - 19:18 | 4919581 TeamDepends
TeamDepends's picture

Better yet, give the billions to Obama.  He'll redistribute that wealth like the socialist champion he is.

Wed, 07/02/2014 - 20:18 | 4919747 Anusocracy
Anusocracy's picture

Ten billion dollars, spent over two decades, would probably cure the most deadly of all diseases: aging.

Thu, 07/03/2014 - 01:49 | 4920503 tolivian
tolivian's picture

As I was tooling around the freeways (ok, stopping and starting and cursing other crivers) I learned via radio that Californians are not "happy" with the distribution of wealth in state. If that doesn't scare you, you are beyond fear. Of course that assumes that you actually earn a living rather than suck a living out of the productive sector. CA probably leads the country in number of government workers.

Wed, 07/02/2014 - 19:18 | 4919583 Da Yooper
Da Yooper's picture

Is this the same "Hanauer" who is pushing & backing $$$$$ gun control ?

Wed, 07/02/2014 - 20:25 | 4919765 Anusocracy
Anusocracy's picture

I'm all for gun control - as long as it only applies to government employees.

Wed, 07/02/2014 - 19:21 | 4919589 fonzannoon
fonzannoon's picture

This guy Hanover is a putz with the minimum wage. The discussion needs to move past raising minimum wage for bullshit service jobs and graduate to just sending everyone 3k a month. Everyone else is jumping on board

http://news.ca.msn.com/canada/guaranteed-dollar20k-income-for-all-canadi...

 

 

Wed, 07/02/2014 - 19:36 | 4919626 Beam Me Up Scotty
Beam Me Up Scotty's picture

Just send everyone a million. We could all be rich!!

Wed, 07/02/2014 - 20:50 | 4919829 tickhound
tickhound's picture

You unknowingly highlight the catch 22.

This article is Clash of the Titans... Two fucking losers.

Wed, 07/02/2014 - 19:20 | 4919590 Gumbum
Gumbum's picture

"The minimum wage is always a creator of unemployment"

You can say that all the way down to the sweatshops in Bangladesh or even about the slaves who build the pyramids in Egypt. Doesn't make it right...

There is no good economic reason to why a small elite should hoard everything.

Wed, 07/02/2014 - 19:26 | 4919599 knukles
knukles's picture

Pyramids and Egyptians?*

 

*  "You didn't build that"
     - Khufu

Wed, 07/02/2014 - 19:40 | 4919635 Beam Me Up Scotty
Beam Me Up Scotty's picture

The minimum wage debate is a waste of time. Prices just get raised to compensate for the higher wages. You gain nothing. Only way out of a minimum wage lifestyle is to get a job that pays more than minimum. You might have to work a bit harder or think a bit harder though. Some people don't like to work or think though.

Wed, 07/02/2014 - 19:41 | 4919640 fonzannoon
fonzannoon's picture

Scotty what if you could actually pull it off? What if you could get every adult 3k a month and balance it out so you don't have to hyperinflate. You think this country would ever be up for trying it? What if Canada goes for it and pulls it off?

Wed, 07/02/2014 - 19:55 | 4919668 PeeramidIdeologies
PeeramidIdeologies's picture

How would that be possible? Everyone suddenly has a guaranteed check for life? Every good and service would have to be under such strict regulation that you wouldn't even notice the extra money. If you were allowed to spend the money it would be such a boom in commerce there would be no turning back. Free shit to the end of the world!.... Which doesn't sound that bad to be honest... Let's do it!

Wed, 07/02/2014 - 21:57 | 4920026 putaipan
putaipan's picture

walmart wage - less. than 10$/hr. costco - 20$ /hr. you do the math.

anyway- regardless of this guy's agenda ....fuck you mises.org! and all that think like this too.

this guy, and pickety, are getting milage 'cause somebody likes their message, but i'll take michael huson and wash.'sblog for my analysis of the problems of 'ineaquality' not some neo-austrian who feeds at the trough of 'austerity'

Wed, 07/02/2014 - 20:52 | 4919822 tickhound
tickhound's picture

Egyptians as to the Pyramids:

No, we didn't build that...

Science

Wed, 07/02/2014 - 20:45 | 4919797 Anusocracy
Anusocracy's picture

"There is no good economic reason to why a small elite should hoard everything."

Sure there is. Government creates the operational framework for the economy and the elites run the government.

Of course, the elites, being the magnanimous beings that they are, create a system where the wealth can trickle down to the lower and middle classes.

Thu, 07/03/2014 - 02:34 | 4920543 tolivian
tolivian's picture

If you think the porblems in Bangaldesh and Egypt are due to a few fat cat businessmen paying low wages while chuckling at their employees, then  you understand virtually nothing about how the world works. The "rich" in these countries are government officials pocketing the goods while stifling indiviudal freedom or effort or entrepeneurialship that would change the picture. Much like many of the rich here whose good fortune is due to governmentn helping them by eliminating competition, stilfing innovation with mindless regulations, and just generally being a typical thuggish incompetent brual government.

Here in good ole CA they just raised the minium wage to $9 largely supported by big companies. Let's push those pesky little competitive bastards out of business. 

In'N Out, a fast food hamburger franchise out here that is a cut or 2 above Macs. just raised the prices on combo meals and other items $1 the day the minimum wage went up.

Doesn't sound like much unless you couldn't afford it before. 

Great idea this minimu wage increase that appeals to you soft headed liberals. It's the same principal as the economic "seen & unseen" discussed elsewhere today. Some few will get higher wages for

awhile but jobs will be lost as they won't hire replacements, not because the Scrooge business owners are twirling their mustaches and chortling as they count their filthy lucre behind the closed doors. No fewer

will be hiiered because the business will fail if it doesn't make a profit. So let's see, putting a caompny of of business because to the very concept of "profit" is evil. Profits be damned. Let's put everyone out

of work rather than just trim a job here or there, because we don't want anyone to make a profit. 

Most likely, the hamburgr flippers will be raplced with computers and robots. Some local grocery stores have almost eliminated cashiers - often over the protests of union thugs. I remember walking through a few of those picket lines wondering what the hell they expected when the last contract forced wages for your basic dullard way too high to justify with any reasonable business model. 

Thanks for all the touchy feely liberal garbage, Bet you feel so much better about yourself. You and your fellow statists are pushing the low skilled, low information, low educated guys and gals right to the 

sidewalk and/or gutter while patting yourself on the back congratulating cretins like Hanauar. Thanks for the feeling so good about yourself without understanding the harm you are doing to the very people you are pretend to be so desirous of "helping." Moron. Try talking to someone who actually has a business and must meet payrolls, pay taxes and put up with bureaucrats so dumb they shouldn't be let out on their own. 

Wed, 07/02/2014 - 19:22 | 4919595 Barry Freed
Barry Freed's picture

Better he spent his billions on millions of pitchforks, torches, and anonymous masks if he wants real change.

Wed, 07/02/2014 - 20:14 | 4919731 what's that smell
what's that smell's picture

if my cat doesn't bury her hanauer, it stinks up the house.

bury the hanauer.

Wed, 07/02/2014 - 19:28 | 4919605 Shizzmoney
Shizzmoney's picture

Large companies like Wal-Mart and McDonald’s have already embraced raising the minimum wage for putatively humanitarian reasons

No they haven't.  It's a lie and a scam and its lol you believe it

Wed, 07/02/2014 - 19:30 | 4919611 Notsobadwlad
Notsobadwlad's picture

I get tired of the "so called" self-made billionaires, who are in fact nothing of the sort. They were born with a silver spoon in their mouth and daddy through his connections and loyalty to the power got them into the position to be anything at all.

I really had never heard of Hanauer ... a jewish scion who never had to do any real work in his life. I have heard of Bill Gates, Warren Buffet and Mark Zuckerberg... all similar stories. They are what they are, because they were made through connections, not created by them, but those who managed them... a shall we call it "a select and cohesive group".

The American dream is as much a fraud as the American government.

Thu, 07/03/2014 - 09:32 | 4921132 pathetic looser
pathetic looser's picture

not trying to argue with you just wondering what kind support zuckerberg had. i thought he did it (ethically or not)  all himself. could you let me know?  

Wed, 07/02/2014 - 19:35 | 4919623 knukles
knukles's picture

I'd suggest not naming a girl Swallow

Wed, 07/02/2014 - 19:39 | 4919632 jbvtme
jbvtme's picture

or a son Woodcock?

Wed, 07/02/2014 - 19:35 | 4919624 billwilson
billwilson's picture

More Mises drivel..  Bring on the pitchforks.

Wed, 07/02/2014 - 19:35 | 4919625 JR
JR's picture

The rich, trying to tell the truth about inequality such as found in Hanauer’s mainstream media piece, need our encouragement to step forward. But James Miller touches on the core truth and it is not only government meddling that is the problem; it is the cartel of oligarchs that control the government. They have shut off the air supply for America’s economic future.

It’s now clear; no economic incentives are available to Americans in this central bank shoot-off.

The Fed strategy -  a mixture of Keynes’ philosophy and John Dillinger’s bravado - is to force all assets into the blind canyon of high frequency snipers who stand on the ridge line shooting the helpless and hapless savers, homeowners, college students, and small investors and businessmen.

The people’s only play here is to constantly try to hide their assets from the rustlers, moving and running from place to place as the central bankers hunt them down and attack, much like Stalin’s Red Army running rods through the walls of the peasant shacks looking for hidden food.

Wed, 07/02/2014 - 20:43 | 4919812 Anusocracy
Anusocracy's picture

A while ago, America reached a fork in the road. One way was labeled 'Freedom and Prosperity', the other was labeled 'Detroit'.

America chose 'Detroit'.

Wed, 07/02/2014 - 22:37 | 4920123 Ned Zeppelin
Ned Zeppelin's picture

JR you are a good writer

Wed, 07/02/2014 - 19:38 | 4919631 exomike
exomike's picture

 A guillotine for Mr. Miller.

Wed, 07/02/2014 - 19:43 | 4919643 Miffed Microbio...
Miffed Microbiologist's picture

This is about as stupid as when Starbucks sold these " Job Bracelets". For 5 bucks you bought this cheesy bracelet to help create jobs. Plus you then could show all your friends how much you cared by wearing the damn thing and inspiring idiot others to do the same. Probably the same people have a " Coexist" bump sticker on their car.

Miffed;-)

Wed, 07/02/2014 - 20:07 | 4919700 knukles
knukles's picture

Coexist bumper stickers!
YES!

God, people in California* are so fucked up.  I know a lady who has one on her Prius.  She speaks about love, diversity, local agriculture, inclusiveness and all the "right words" but listen to her rail on about Republicans or Christians...
OMFG....

I asked her why she didn't have a Volt.

* The vanguard of all America, leadership in thinking and trends.  The fuckers on the East Coast are no better, BTW.  They just ride in limos instead of electric hybrid eagle killing propeller dependent machines

Wed, 07/02/2014 - 20:49 | 4919825 Anusocracy
Anusocracy's picture

Naturally, her diversity doesn't include people with different mindsets.

Like anarchists.

Wed, 07/02/2014 - 21:00 | 4919857 Miffed Microbio...
Miffed Microbiologist's picture

The funniest one I saw was a " Tolerance" bumper sticker right next to an " Impeach Bush" sticker. At first I thought she was being provocatively contrary but after observing her getting out of her car covered in tattoos and piercings with this haughty, know it all attitude I changed my mind. I guess tolerance is ultimately selective in some people's minds.

Miffed;-)

Wed, 07/02/2014 - 22:00 | 4920036 putaipan
putaipan's picture

" visualize wishful thinking "

Wed, 07/02/2014 - 19:45 | 4919645 Kina
Kina's picture

I propose giving hundreds of billions to banks so they can buy up the stock market. That will be good for the economy too.

 

Depends on the source of money. If a govt stimulates by simply returning some taxpayer dollars to people...then that can work short term (aka Australia)...but increasing govt debt to give to people is just the same as people borrowing to spend...it has got to be paid back, and with interest. So a short spurt gets replaced with a longer contraction.

 

Minimum wage of some kind are neccessary...some big business is predatory and have as their goal of reducing US income to that of the third world....thus the world is one single working pool. Inevitably that requires US stanadard of living to drop to that of a world average (aka India, China, Africa.....). And with Corporate ownership of Govt you might think their wet dreams would be of having the US working population do so for food and shelter only....aka slaves, or serfs.

 

 

 

Wed, 07/02/2014 - 19:46 | 4919650 orangegeek
orangegeek's picture

today, wealth is concentrated and because employment is scarce (6.X unemployment is bullshit, much like CPI, PPI, PMIs and ISM), there is little chance of flattening the curve

 

and wealth redistribution is just another contradictory term used by the the socialists to scream cause and pay their friends instead

 

the real answer is for the gewbermint to get the fuck out of the way - and  that's not going to happen

Wed, 07/02/2014 - 19:51 | 4919661 I need Another Beer
I need Another Beer's picture

Nothing thats ocurring is ultimately about money. Its about telling U and your family where u can live, what work u can do and how long u can live.

 

 

Marklevinapp.com

 

Learn about liberty and freedom

Wed, 07/02/2014 - 20:12 | 4919724 pachanguero
pachanguero's picture

He is right about one thing.  The pickforks are coming....and now he's made himself a target. Thanks ricky boy we got your number now. I say off with his head!   The gun grabbing socialist scammer!

Thu, 07/03/2014 - 01:46 | 4920491 bycatch
bycatch's picture

Yep, that'll do 'er! Really told him of didn't you?

Wed, 07/02/2014 - 20:19 | 4919749 Harriet Wanger
Harriet Wanger's picture

Jeez, here I was thinking that you couldn't be more full of shit than Hanauer.

Wed, 07/02/2014 - 20:25 | 4919763 ramacers
ramacers's picture

i'd easily settle for his head in a basket.

Wed, 07/02/2014 - 20:29 | 4919773 teslaberry
teslaberry's picture

there was nothign clever about his piece. it was transparent eat the rich bullshit coming from non other than some rich guy who feels entitle d to pontificate about his view of class politics. 

 

it was glaringly obvious he did not mention monetary policy, zero interest rate, wall stree pump and dump ipo and debt placement operations (largely responsible for the particular glut of his fortune) 

and the big black hole----the cancerours overgrowth of taxation and governance upon the middle and working class hidden by payroll taxes, inflation, regressive tax brackets, corporate shell games to avoid tax, burden shifting of tax upon individuals via 501c3 scheme which allows local insittutions to avoid paying proeprty and local income tax WHILE giving tax dedictions to the wealthiest, tax free bond and tax free product schemes for the ultra high network families, and other instutiotnalizing the costs of society upon the heads of the working , saving, and consuming classes. 

the 99.99%

 

Wed, 07/02/2014 - 20:29 | 4919777 BadLibertarian
BadLibertarian's picture

It doesn't matter how much currency is distributed and into which hands. What matters is the ratio of assets to debt, and in a debt based monetary system, you can damn well guarantee that the additional debt load required to create all of those new dollars needed to pay a higher minimum wage isn't going to be sitting on the balance sheet of the 1%.

Wed, 07/02/2014 - 20:34 | 4919789 cdskiller
cdskiller's picture

Specious, garbage reasoning. Show me one example of a free-market economy that did not exacerbate economic inequality. Show me one period in American history where markets were free and income was equally distributed. Show me one example globally where raising the minimum wage led to economic collapse.

Wed, 07/02/2014 - 20:57 | 4919850 Anusocracy
Anusocracy's picture

Show me an example of a free-market.

Wed, 07/02/2014 - 20:44 | 4919814 smcke0wn
smcke0wn's picture

Want to raise the minimum wage?  Stop having your minimum-wage laborers competing with effective slave labor in China and sweatshop labor across half the world, that should help.  The reason wages are going down in America is because the American manufacturing employee is "competing" with someone our imperialist corporate policies is forcing to work for $2 a day.

Wed, 07/02/2014 - 21:45 | 4919993 HastaLaVictoria...
HastaLaVictoriaSiempre's picture

and how would you reverse the globalization of cheap labor - trade barriers, encouraging the populace to buy local? There is no putting this genie back in the bottle.

 

Wed, 07/02/2014 - 22:24 | 4920091 Ned Zeppelin
Ned Zeppelin's picture

I tried to follow the author's arguments, but could not.

Wed, 07/02/2014 - 22:36 | 4920121 trillionaire
trillionaire's picture

Mr. Hanauer never mentions sound money / a gold standard so whatever solution he proposes will fail.

Wed, 07/02/2014 - 23:13 | 4920207 Gas Ayn Rand
Gas Ayn Rand's picture

Hannauer is an obvious target. The suggestion that he give up all of his wealth to prove hsi veracity is as William Kristol recently said on MTP "a cute line". It must irritate the hell out of you that someone with all that wealth is speaking the turth. Just keep going with your empty talking points, and glorification of the 1%.

Thu, 07/03/2014 - 02:35 | 4920547 Magooo
Magooo's picture

THE PERFECT STORM (see p. 59 onwards)

The economy is a surplus energy equation, not a monetary one, and growth in output
(and in the global population) since the Industrial Revolution has resulted from the
harnessing of ever-greater quantities of energy. But the critical relationship between
energy production and the energy cost of extraction is now deteriorating so rapidly that
the economy as we have known it for more than two centuries is beginning to unravel.
 

http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

Thu, 07/03/2014 - 05:58 | 4920736 Frankie Carbone
Frankie Carbone's picture

James Miller's article does nothing to address the one critical flaw in unfettered capitalism and true to a person "who's got religion", blames the whole mess on too much government intervention. 

Well too much intervention in favor of the aristocracy certainly is an issue, this tired, worn out canard-like argument is necessary, but not sufficient. 

Barriers to entry to the market, set in place by connected aristocrats by their paid political Escorts in DC are indeed an issue, no doubt. But they do nothing to prevent the aggregation of all wealth into the hands of the most ruthless. 

They merely speed up the process. 

I don't like the word "capitalism" because in the end, it's failed everywhere it's been tried. I prefer "the freest" and "most accesible" markets instead. 

To wit comes the apparent contradiction to make them work: You have to have restrictions on the unfettered aggregation of wealth and power for "the freest possible" markets to exist. Otherwise the end game is always the same: Ruthless little fish eat up other fish, bite by bite, thus becoming bigger fish, which in turn progressively eat up even bigger fish until all you are left with are ADM, JPMorgan Chase, Delta Airlines, Exxon, and Wal-Mart. 

To make the fairest possible markets you need to following to occur (yes, markets should be fair, meaning an unbiased cop on the beat making sure that everyone plays ethically, particularly in honoring contracts and being responsible for both their positive and negative actions): 

1. Bust up to the corporate controlled media cartel. In the 1970's there were over 200 unique media companies in the US. Today, 6 control over 90% of information that the sheep graze on. Information is control, and control is power. 

2. This one is going to cause a shitstorm, and I welcome it: Limit aggregate wealth to 1 billion dollars. This limits the concentation of wealth, and hence power, in the hands of individuals or small, easily assembled cliques. Anyone that thinks that a 1B cap is unfair needs to be beaten bloody. Jesus Christ. How much is enough??? Another red herring bullshit argument against this is that it will stifle innovation. Bullshit. There are people like me, with decades of technical experience, just dying to get into the market with a start-up, that face incredible barriers to entry because of tycoons and their inordinate power. Limit them to a billion, and true, their incentive goes away. But I will fill the void, until I hit a billion, at which some other bright person with an idea will pick up the baton and carry it. I'd bet that there are probably 10 million PERSONS in this country (as opposed to mindless drones). That's a LOT of potential innovation if barriers are knocked down. 

3. To make parts of (2) happen, tear down all the dual-purpose laws designed to keep competition from getting into the market. How do you do this? I simply don't know how without a ctrl-alt-del. But two things are for sure, and the author hits correctly on the first one: Laws are written to prevent market entry, but some of those laws have legitimate first use cases, such as environmental protections. How to reconcile?

4. Another lightning rod: Nationalize the banking system and the financial system, while making it the most transparent system ever put in place, and implement a hard currency as a control. This will take a well written constitutional amendment that has to be as "lawyer-proof" as possible. Nationalize???? Why, that's S-O-C-I-A-L-I-S-M!!!!! Calm down Pavlov's dog. The media has programmed you well indeed.  If you take the profit out of the hands of Goldman, the FED's owners, HSBC, Barclays and others, the revenues would allow us to abolish ALL taxes, including sales tax, property tax, capital gains taxes, and income taxes. What's worse? Taking a sector that servers an elite aristocracy and giving its ownership to the electorate, or having in place a system of confiscation that takes half of everything you make and effectively turns you into a slave via the disincentives intentionally written into its code? God put money on Earth to serve people, not to have people serve money. For this to work though the entire financial system has to be transparent as hell and corruption at this level should be treated as a treasonous event. 

5. Make it an executable offense of any public official to hide behind "National Security" when what they are hiding is disclosure of information damaging to them and has nothing to do with national security. This one "trick" by monopolists used by their wholly owned government keeps the public in the dark with respect to graft, influence and corruption. Sunshine is sanitizing, and threat of a firing squad will be a great deterent (although certainly not a panacea - people will do ANYTHING for power, including risking it all). 

Here lies the oxymoron carried in the minds of every pure unfettered free-marketeer: They despise government, and rightly so. But that's only PUBLIC government. They're perfectly fine with PRIVATE and unaccountable government, or are willing to turn a blind eye to it ONLY UNTIL it affects them. A consortium of men/familes worth 5-50 billion dollars each will constitute a de facto private government over its subjects, and while governments are intrinsically evil, but a necessary evil (and therefore in need of strict control ), PRIVATE government is far more suffocating than public government. 

Think outside the box that you've been put in. I'm not saying that you can't make gobs of money in the markets. Just saying that the interest and fees from the financial system should serve the commons, not the elite few. 

Getting rid of the system of unapportioned taxes would spur on the greatest era of freedom that humanity has ever seen. Think about it. 

 

Thu, 07/03/2014 - 13:26 | 4922030 Vin
Vin's picture

Excellent idea about busting up the media cartels.  In addition, foreigners shouldn't be allowed to own any of them.

One other thing, we need to make clear that, legally, corporations are not people, and since elections are about citizens, only money from legal citizens should be permitted in election campaigns. This necessarily would excludes corporations since foreigners can own their stock.  Any foreign monies should be confiscated, and any citizen fronting for a foreigner should be arrested for treason.

 

 

Thu, 07/03/2014 - 06:02 | 4920751 Azannoth
Azannoth's picture

There is a country where Everybody is a Billionaire, .... it's called Zimbabwe

"His solutions don’t fix the problem; only exacerbate it" - holds true for All do-gooder Leftists.

Thu, 07/03/2014 - 06:11 | 4920755 Lea
Lea's picture

Does that dude Henry Hazlitt actually own a brain? His analysis on the "buy back the product" is worthy of a twelve years-old. Of course Ford wasn't meaning everybody that makes fur coats should be able to buy one, as that'd be plain dumb. He was speaking of basic goals like a house, a car (a Ford), food, school for the children, gasoline for the car, clothes to keep warm in the winter (not mink coats!), hopefully some health coverage, etc.

And Miller isn't any better. Unregulated free trade always ends up benefitting the mightiest player... of course, since it's a law of the jungle perspective. The weakest ape cannot hope to win over the strongest one.
"Small businesses and entrepreneurs have a more difficult time breaking into the marketplace when big players can keep them out via state mandates". Yes. They are lobbying and bribing like mad, and who's to stop them opening the purse strings to whoever is in power? You said "no regulation whatsoever", I heard you. So much for unregulated free trade.
So, what about no state at all? Wait a minute. Then, wouldn't big corporations like Monsanto or the war lobby be able to set their own rules and inflict them on us all without any restraint? Onwards to hell on earth!

Thu, 07/03/2014 - 13:19 | 4922010 Vin
Vin's picture

Good article.  I told Hanauer that the FDR idea was ludicrous and that if he really wants to do something, to use his money to help free the country from grip of the fascists as Soros does to enable them.

Additionally, we need to end the Fed Reserve (which is so obviously unconstitutional) in order to stop the madness. Therefore, we must confiscate all assets from the Fed and the major banks controlling the Fed.

Then in order to undue a tiny bit of the damage that been caused, we'll need to implement a one-time billionaire wealth tax of at least 50% to pay off a large chunk of the US debt.

Free the country, free our monetary policy, pay off a big chunk of debt, print our own currency and hang the fascist traitors.  

 

Sun, 07/06/2014 - 23:37 | 4930681 JB
JB's picture

The debt is fraudulent. 

No need to pay it back.

Mon, 07/07/2014 - 15:45 | 4932791 bvrulez
bvrulez's picture

you americans use every piece of paper to unjustify higher taxes for the rich. you are your own enemy, you are doomed, because you - as a people - dont get it. youre politicians and your neocons and your 0,01% owners of your country are exactly the kind of people YOU DESERVE, because you wish for them, you crave to have state regulations FOR them. you are stuipd as fuck.

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