Submitted by Charles Hugh-Smith of OfTwoMinds blog ,
The fundamental problem facing the global economy is not slow economic growth but political inequality.
It's striking: as economies stagnate, the top tier is living even larger while the low-income masses sink further into marginalized poverty. I call this widening divide between the vested interests/wealthy and the rest of society prosperity amidst the ruins.
How can the top slice prosper while the rest of the populace suffers from higher taxes, stagnant wages and a collapse of employment/enterprise opportunities?
Just as Greece led the way in the sovereign debt crisis a few years ago, it is also leading the way in showing how oligarchies can expand their wealth and power even as their populace slides deeper into poverty. A recent article, Misrule of the Few: How the Oligarchs Ruined Greece , lays out the key dynamics.
It is self-evident that these same dynamics are playing out in the rest of Europe, the U.S., Japan, China and most if not all of the developing world.
Writer Pavlos Eleftheriadis pulls no punches:
"Greece has failed to address (rising wealth/income inequality) because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families -- an oligarchy in all but name -- has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held."
This is the same script being used by vested interests everywhere:
1. Control the media so it focuses exclusively on manufactured "good news" ("the stock market hit a new high today, blah blah blah") and ignores the perverse incentives built into the system and the destructive consequences of crony-capitalism/crony socialism.
Anything that undermines the dominant narrative (i.e. thanks to your political-financial elites marvelous management, we have self-sustaining "growth") is buried, discredited or ignored.
2. Buy political favors and influence to insure that "reforms" are superficial public relations exercises rather than than actual reforms that change the power structure.
3. Rig the accounting, regulations and reporting so any scrutiny is misdirected or blunted. This enables the status quo to continue on unfazed, despite the erosion of the economy's fundamentals and the widening gap between those with power and those who are powerless, i.e. the middle class and the marginalized poor.
This simple script is working in China, the U.S. Japan--everywhere.
The vested interests have obscured the cold reality of rising inequality by focusing obsessively on "growth" as the fix-all to inequality.
But this is exactly backward. As Eleftheriadis observes:
"The fundamental problem facing Greece is not slow economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country -- and the rest of Europe."
All the blather about "growth" and GDP is just propaganda to misdirect our attention from the real problem: the total domination of governance and finance by a class of vested interests and mega-wealthy cartels/oligarchies.
