OECD Fears Middle Class Civil Unrest Is Coming

Tyler Durden's picture

Submitted by Martin Armstrong of Armstrong Economics blog,

tax it

This idea that we live in a world where government cares about us is just the biggest propaganda ever. Everyone one will only pursue their own self-interest. The OECD has interesting come out and warned that if governments are unable to stop the transfer of wealth to a small financial elite, the displeasure of the dispossessed middle class could easily turn and go against the prevailing governmental systems. The OECD has claimed to have discovered the existence of a veritable “lumpenproletariat” in the supposedly rich Germany. Even though the systems attempt to provide citizens with bread and circuses in the traditional Roman style to keep them quiet, such  tactics they warn may have now become obsolete after the ultimate circus is over – the World Cup.

The problem with all of these studies is the look at class warfare and not at the consumption of government. They do not follow the breadcrumbs. What if you take everything from the elites? Who will start businesses to create jobs? Who will be left to take as government pensions keep ticking away. In Germany, it has now surpassed 50% of the average persons labor goes to taxes.
 
There are a host of books coming out all about just taxing the rich more ignoring reducing the cost of government. The German bestseller “The plunder of the world” presents just another socialist agenda arguing that the rich get richer even in times of crisis, while the consequences of a crisis are always carried by the lower-income groups and the middle class. It fails to explain that the rich get richer from investment, not wage income. This is an argument to effective tax investment substantially to even out the disparity? But who then creates the jobs that produce anything? Is it that those who invest unfairly make money when the others pay too much in taxes and do not invest? Anyone who thinks that these books are real must be insane. If you think for one second raising the taxes on the rich will mean your taxes will decline – good luck. In Germany, Tax Freedom Day has passed the 50% and even in Canada it is now June 9, 2014. In the United States it is April 21st for 2014.
 
In France, the magazine Challenges has determined that the richest Frenchmen saw their assets in 2013 rise by 15% since they benefit from the profits in foreign companies. There is no discussion that government consumes too much – EVER!
 
German Debt Int%
 

The consequences of unequal distribution of wealth in the world is becoming the tipping point argued and funded by governments to blame the rich – never government. Nobody seems to be doing the math that if you confiscate all that wealth you end up with communism with taxation and government just keeps growing until it consumes everything. We borrow with no intent of paying anything back and that about 70% of the national debts is all interest that built no schools, reduced nobody’s tax bills, and did nothing for the middle class. This is fairly consistent in all major countries. Governments are trying to push interest rates exceptionally lower to reduce their deficits exploiting the middle class creating a disincentive to save even for retirement when it pays next to nothing.

The OECD is now warning like Picketty that a growing gap between rich and poor will erupt into revolution – not that government is taxing too much. According to the words of the OECD Secretary General Jose Angel Gurria, the problem since the global financial and economic crisis has exacerbated massive. “In the first three years of crisis, inequality increased more than in the twelve years before, “he told the Business Week”. On average across OECD countries, the top 10% of the population now earn 9.5 times as much as the lowest 10% but fail to explain this is from investment. Inequality has grown by 35% because stock markets are rising to escape from the craziness of government. The higher they rise, the greater the disparity.

The OECD claims this is clearly felt in the USA more so than Europe omitting the fact that the disparity comes from investment not wages. They they compare that to Europe claiming there is no welfare state in Europe so somehow this is implied to be better. The OECD then highlights supposedly rich Germany as a dangerous development with a rising disparity stating this is “namely that it is a lumpenproletariat, a very poorly trained and poorly paid part of the Arbeiterschich.

The argument now is the middle class civil unrest they know is coming is simply because they have not confiscated the wealth of the investors they call the financial elites. So if you invest and make any money, you are the new financial elites – sorry it is anyone who now invests. Michael Maier’s The plunder of the world is another book released to justify plundering the financial elites without actually identifying who they are. Sorry – it is you.

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smacker's picture

I agree with the thrust of this article. Martin Armstrong must know that what he describes is socialism, the most deadly cancer known to man.

The socialists aim has always been to get more and more people sucking at the teet of The State  - aka "The Dependency State" - so they will never aim their fire at government for fear of having their free stuff stopped, but at "the rich" who are greedy and prevent the teets being kept filled.

BruntFCA's picture

This article is apologetic bollox for the super rich.

Gee I wonder if having access to ultra leverage at zero percent has anything to do with the rich getting richer? How about if you fail, turning over your toxic garbage to the central bank at par. Yeah baby, Dispossesing the Greeks of their entire country in a firesale asset sale must be fun if you've got the cash.

Meanwhile average Joe has to give his inside leg measurement to get even a crappy loan at ludicrous rates.

Who will create the jobs? A re-hash of trickle down 1980s economic bollox. Fuck you Martin Armstrong, the only thing that will be trickling down will be blue blood.

skeeterpi's picture

Envious of the rich much?

Reagan lowered marginal tax rates and the rich put more of their money to play in the system, instead of hiding it in tax free investments and off shore trusts.

Guess what the economy grew. People prospered.

If I were the 1% I would do the same. They are just smarter than you and the government.

bunnyswanson's picture

Globalization/outsourcing/downsizing/mergers/acquisitions and the rise of developing nations has changed the scenery from the Reagan years.  Money outside of the US does little good to the country and it's people.  Globalization is a sieve which wealth flows from 1st world/developed nations.  Protectionism is all that can save America now but the 1% would never here of it; they'd let their country collapse and see their wealth confiscated by the IRS before that would happen (and make no mistake, American elite will pay for the debt of this nation and be left penniless by the time it is over...there will be no getting away from bail-ins when For The Good Of The Nation.

skeeterpi's picture

Bunny,

Outsourcing is occuring because of our massive administrative state. It costs too much to run a business today. The alphabet agencies are fascistic and make business go overseas. I know, I run a business. You want a great depression, just get what you wish for.

bunnyswanson's picture

Is that the only solution? 

JR's picture

Dr. Paul Craig Roberts says that by saving the rich, the bankers lost the economy, both in the United States and Europe. And the people are suffering. To make matters even worse, "pressed by Wall Street for higher profits, US corporations relocated their factories abroad." And the rich got richer and the poor just got poorer. Blame it on a banker-bought Congress, bunny.  The solution is to pull out the current Congress and replace it with one that represents the American people, not the international bankers.

Roberts wrote in late 2011 that: "Economic policy failed for three reasons:  (1) policymakers focused on enabling offshoring corporations to move middle class jobs, and the consumer demand, tax base, GDP, and careers associated with the jobs, to foreign countries, such as China and India, where labor is inexpensive; (2) policymakers permitted financial deregulation that unleashed fraud and debt leverage on a scale previously unimaginable; (3) policymakers responded to the resulting financial crisis by imposing austerity on the population and running the printing press in order to bail out banks and prevent any losses to the banks regardless of the cost to national economies and innocent parties…

As reported by Manufacturing and Technology News (September 20, 2011) the Quarterly Census of Employment and Wages reports that in the last 10 years, the US lost 54,621 factories, and manufacturing employment fell by 5 million employees.  Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent.  US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent.  http://www.manufacturingnews.com

“These losses are net of new start-ups. Not all the losses are due to offshoring. Some are the result of business failures.”

Wrote Roberts: “It is US corporations that move their factories abroad, thus replacing domestic production with imports. Half of US  imports from China consist of the offshored production of US corporations.”

While: “All the while, the US government allows in each year one million legal immigrants, an unknown number of illegal immigrants, and a large number of foreign workers on H-1B and L-1 work visas. In other words, the policies of the US government maximize the unemployment rate of American citizens.”

http://www.counterpunch.org/2011/09/26/saving-the-rich-losing-the-economy/

BruntFCA's picture

Exactly, but this benefits the ultra rich as opposed to a mere entrepreneur or millionaire.

BruntFCA's picture

Skeeter, I never said high taxes were good. You should know that the super rich don't pay taxes; it's offshore or in tax exempt vehicles. The super rich merely play with representations of wealth, and given how rotten the system is you only get there if you curry favour with certain agendas and suck up to executive.

Currently the number of representations of wealth (unfunded liabilities and debt) far outweigh the real economy. The super rich are merely grabbing as many of these representations as they can, and then funnel it into real assets (which often times they've ripped off the middle class through fire-sales) since they know the dollar could be on its last legs. The ultra rich have access to inside information, and almost free money, it's an open Plutocracy.

Your statement that the rich or elites are smarter than the government is naive, they are the government! Note blue blood is not the blood of an entrepreneur or a mere millionaire; it belongs to a psychopathic, narcissistic, entitled aristocratic sub-class.

Pareto's picture

This is something Larry Kudlow would say.  But it skirts the issue.  The rich - the investor class - have acquired ill-gotten gains through coercive market distortions - certainly not by hleping people move from a less to a more desired state.  And in the process have evicerated the middle class through ZIRP, QE, et al programs that solidify the rich while impoverishing further, the poor.  And don't kid yourself - Reagan's term served to amass the largest government ever.  An increasing measure of wealth is concetrated in the hands of the 1% and that spread widens daily.  Lowering tax rates won't change the damage already done.

JR's picture

The fly in the ointment here is the definition of “rich.” 

Obama and the Democrats set the dividing line at a couple earning $250,000, whether they live in high cost areas such as New York City or San Francisco or low cost Pueblo, Colo., or Norman, Okla.

Obama’s kind of thinking is that we have to have big money to line the bankers’ pockets and to supply the manna to all the hungry socialist special interests that support him. Thus, Obama, to appeal to his socialist voter mob in 2007, defined the “rich” as people who earn $97K a year.

Alan Dunn, Forbes, wrote in March of 2012: “The average annual income of the top 1 percent of the population is $717,000, compared to the average income of the rest of the population, which is around $51,000. The real disparity between the classes isn’t in income, however, but in net value: The 1 percent are worth about $8.4 million, or 70 times the worth of the lower classes.

“The 1 percent are executives, doctors, lawyers and politicians, among other things. Within this group of people is an even smaller and wealthier subset of people, 1 percent of the top, or .01 percent of the entire nation. Those people have incomes of over $27 million, or roughly 540 times the national average income. Altogether, the top 1 percent control 43 percent of the wealth in the nation; the next 4 percent control an additional 29 percent.”

Incredibly, the wealthiest 400 Americans have the same combined wealth as the poorest half of Americans — over 150 million people.

The US is an oligarchy ruled by powerful rich interest groups. -- conclusion of Professor Martin Gilens at Princeton University and Professor Benjamin Page of Northwestern University in Perspecitives on Politics

pupdog1's picture

They rejected my inside leg measurement.

 

 

pakled's picture

"There is no discussion that government consumes too much – EVER!:

 

Feed me. Feeeeeed me!!

 

/whatever the name of that movie was

Nimby's picture

That was Little Shop of Horrors wasn't it?

skeeterpi's picture

Though they never mention the bigger government gets the smaller the middle class gets, the more wealth the wealthy get, the greater the number of poor.

Their answer: Transfer wealth of the middle class to the welfare state.

Milestones's picture

The Game of History is played by those at the top and bottom of society over the heads of those in the middle.  Eric Hoffer " The True Beliver" .             Milestones

monad's picture

Historically the most egregious crimes have been played by those at the top and bottom of society with the heads, labor & assets of those in the middle. ME

NOTaREALmerican's picture

A great book.   Considering how long ago it was written it shows nothing can be learned.  

TheABaum's picture

So this is why towns in Iowa are getting army surplus MRAVs.

gcjohns1971's picture

Take a week off.

 

If you work a private job you have AT LEAST 3 people riding on your back, one working age and two either older or younger.

Atlas...  You have to shrug them off.

 

The whole engine of iniquity people complain about can be solved non-violently.  Just shrug, in unison.  Even if it is only for a day.

Nick Jihad's picture

That's it. Every year, the rewards of working are lessened, and the benefits of slacking increase. If you were working full-time in order to hold onto medical insurance, Obamacare removes that motivation. And Obamacare's proponents actually think that's a good thing, without realizing how they are sawing away at the branch they are sitting on. 

Yes_Questions's picture

 

 

you know what, if my wage was sufficient and I could carry those three people, I could give a FUCK!

 

but that's not our problem, is it.

 

What if work actually paid and the slime that issued credit money to the most likely to default, "students", had to eat that shit in a bankruptcy court, maybe the "taker" ratio could be widdled down a little?

 

no, instead, the REAL TAKERS who expect flows of INTEREST on their credit get to feign respectability on the backs of their slaves.  

 

nice.

 

sorry, not directed at you.  Just venting.

 

 

kurt's picture

You say over and over "who will create the jobs?"

I say, dumb shit... who will create the jobs?

                As you say in your diarrhea, twice, If we tax the rich... bla bla JOBS?

 

IT'S NOT WORKING! At this point it would please me JUST to watch the mighty fall. How many paid shills fit on the head of a pin?

abcd0210's picture

" the displeasure of the dispossessed middle class could easily turn and go against the prevailing governmental systems"

 

Not going to happen. That is why we have the most scientifically advanced propaganda controlling the public mind. Decades of psychological research has produced propaganda with total control of the masses.

NOTaREALmerican's picture

As long as the Trash Class has enough food, entertainment, and bling nothing will change (or needs to change, really) because of what you said.   Manipulating humans will bullshit is not all that hard, and automobile company advertisements prove it every day.  

bunnyswanson's picture

You don't understand, it's the straw the breaks the camel's back, not the load.  For instance, today, went for a walk with my dog which carries a backpack.  It was hot and I unhooked the front to give her air, and when running across the street, it slipped off (carrying 2 ice cooler blocks on each side of this large dog back pack/vest.  I was 4 houses away when I realized it, turned around and saw a van with a person jumping out of it, grab the back pack and while I am waving to them that it is ours, they do a U-turn and speed away like they just found stolen loot. 

 

Multiple that (being ripped off) by tens of millions of people...the anger and frustration we will feel from having our things stolen by the New World Order-created scavengers will be directed at the cause - the LEADERSHIP - who mismanaged the economy all the while being told over-and-over-and-over again this was a BAD IDEA.  They knew, in other words.  we all knew.  Now, the experts who brought us the designed-to-fail economy are here to warn us about it?  Wealthier than they ever were, because of it?  Fuck that.  Dead end is ahead and justice will be sought.

espirit's picture

Should the following comment make you feel uncomfortable, that is the intent and feel free to down vote me.

(I'm expanding bunnys post)

Refer to the Gospel where the father gave each son a stick and told them to break the stick.

Then he bound seven sticks and handed them to each son with the same instruction.

Strength in numbers with a common binder is the message, that which our LEADERSHIP is much against.

Find a binder, fast.

MASTER OF UNIVERSE's picture

Where do you think the 'rich' and 'wealthy' get their money to invest with shit-for-brains motherfucker, Martin Armstrong? They stole the fucking money from the skim they take off of the rigged fucking Wall Street

Global fucking PONZI scheme of fellow crony CORPORATISTS, MOTHERFUCKER.

GET FUCKING REAL Z/H i'm in no mood to read this swill de jour.

deepsouthdoug's picture

I'd have given you an up rating if you had a more motherfucking fucking fucks in the text. Try not to be so neutral next time. 

messymerry's picture

Fuck fuckety fuck fuck fuck   -- Cartman

WTFUD's picture

OECD = OLD EMPIRE CARRIER DIVISION

FUCK THEM

JRobby's picture

"Violence is the only thing that makes any sense" Ian Hunter-Mott The Hoople

RevRex's picture

In the sense that it's the only thing that gets noticed.....remember we fucking overthrew the gubbmint when they taxed tea too fuckin' high....what are we waiting for, until we are disarmed?

Nick Jihad's picture

Except that government has done the obvious thing, and focussed the taxes on a few, while distributing the benefits far more widely. If the USSR is any guide, it's only going to end when the benefits become spread so thinly, that even the FSA decide they would benefit from a change.

litemine's picture

Peacefully it was tried.....remember "OWS"..........To bad the focus was lost.

Nick Jihad's picture

I recall the lyric as "the only thing that will make you see sense".

pupdog1's picture

FMAITAAFHF.

 

Oh, I'm sorry Martin--you don't know what that abbreviation means?

Fuck Martin Armstrong in the ass and feed him fish.

RevRex's picture

Sounds kinds hoemoe to me.....

RevRex's picture

Let's file this under NO SHIT SHERLOCK!

Pareto's picture

This statement: Everyone one will only pursue their own self-interest, is really all he had to say.  One need'nt read much futher than that.

Whitehall's picture

A similar argument was used by progressives to justify the Constitution-bending programs of the New Deal:

"We needed to save the Republic by throwing out the rules!"

Watch for it!

Nick Jihad's picture

And the ever-popular "please think of the children!"

virgilcaine's picture

Don't forget 200-250 k for a debt based college education and no job when u graduate. Better to just go buy the beige khakis and red shirt now for Tar-get, bypass the degree.

I see khakis and red shirts.. lots of them..

https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTXxDU_mk44dV8ZzIW-...

yellowsub's picture

It'll either be those in gov't unions or those on EBT that will cause the civil unrest first.

CaptainSpaulding's picture

" It's you".... I thought it was me. What a relief. This calls for a drink.

Sick's picture

How many of these rich have obtained fortunes illegally?  One main problem we have is one set of laws for the rich and another set for everyone else.  We need to look back to see who has all the illgotten gains.

 

Next, change the tax code to have a much higher tax for offshore manufactured goods sold in the usa and a much lower corporate tax for domestic manufacturing.  That would be a good start.

Theosebes Goodfellow's picture

I think we're missing the point here. We're already living in a nanny state. Look, here's a simple test you can pull on most folks, (though I'm partial to government wonks and politicos). Ask them to quantify their answer.

"Do we have enough government now?"

If they answer yes, ask them if we have too much government.

If they answer no, ask them how much would be enough.

The true answer, as we know, is that we already have way too much government and need to reduce its size by at least half.

Humans are better at providing sustenance for themselves if they have no one else to count on to provide it. Starvation and privation are great motivators, even, (or especially), for former government employees.

For those of you who believe that the U.S. Dollar will continue along just fine after all the printing this government has done, I would strongly suggest you either make sure your funeral arrangements are in order or you take up gardening. Natural selection is a bitch.

Proofreder's picture

Starvation and privation are great motivators ...

And the root cause of Arab Spring, the rise of most dictators, and the coming revolution in the U$A.

HUNGER IS A BITCH!

BTW, this thread on the Hedge was down most of the night due to 'server issues'.  Hmmmmm  (cue crickets)