Economic Faults and Faultlines

 One good thing about my current mindset is that I am happy disengaging from economic life. I also can take a more objective view, being outside the hamster wheel of capitalism.

The Guardian published two book reviews this week that are the basis for this post. The Non-fiction book comes first, and then the fictional one. The way I read them, is that we have economic inequality and it is poisoning our society. Piketty offers a solution but one unsatisfactory to the reviewer.

The Piketty review brought to mind an old idea, one first propounded by our Massachusetts Puritans - that wealth indicates a moral worth. Perhaps, this is why our conservative politicians get on their knees before billionaires? The politicians can portray these billionaires as wiser than the herd, as even anointed by their favorite Deity to lead the herd through the wilderness of modern life and hope for campaign contributions.

Elon Musk seems intent on disproving the intelligence and business savvy of our oligarchs.

Nature, Culture, and Inequality by Thomas Piketty review – mind the gap

Piketty’s latest book is almost exactly the opposite. Not only is it much shorter, based on a lecture given to the Société d’Ethnologie in his native France, its key message is: “It’s a lot more complicated than that.” Like Capital, it discusses the evolution of income and wealth inequality over history. But it emphasises historical contingency and, most of all, the role of politics and of collective mobilisation.

Piketty rejects the thesis – implicit in the way economics is often taught in our universities, and explicit in the way some economists and many conservative politicians and commentators discuss policy issues – that very large inequalities are the inevitable outcome of a well-functioning market economy. That idea – that great disparities are somehow “natural”, because ability or entrepreneurialism is unevenly distributed across individuals (or countries, or ethnic groups) – is also used to argue that efforts to reduce inequality will either be ineffective or reduce growth and prosperity, or both.

Piketty points to familiar counterexamples: Sweden, where social democratic policies led to a country that had been highly unequal as recently as the interwar period becoming one of the most equal in the world, while at the same time becoming one of the richest. And the US, where very large tax cuts during the Reagan era led to spiralling inequality, but without any commensurate improvement in economic performance. In both cases, the key drivers were political and historically contingent.

Entitlement by Rumaan Alam review – the American dream gone wrong

Longtime readers of Rumaan Alam will recognise the formula deployed in his fourth novel, Entitlement. As in 2018’s That Kind of Mother and 2020’s Leave the World Behind, narrative thrust depends on interactions between white and Black characters: in this case, the 33-year-old Brooke Orr (Black), a disillusioned former teacher, and her new employer, a billionaire named Asher Jaffee (white), who in his winter years has decided to give away his fortune via an eponymous foundation. In the early stages of their relationship, Asher imparts to Brooke advice that will damn her for the rest of the novel: “Demand something from the world. Demand the best. Demand it.” He dubs her his protege.

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Before long, we find Brooke neglecting, even hurting, friends and family in favour of chauffeured drives to expensive lunches with Asher, spending sprees on the company card, and the pursuit of an apartment she cannot afford. Such behaviour, of course, is bound to end badly. Indeed, the culmination of Entitlement’s plot rests on an exquisitely ugly case of mistaken identity. Much of the fun after reading lies in teasing out how much of Alam’s excoriating gaze is aimed at his characters, and how much at the structural inadequacies of a nation that institutes private wealth as a means of survival. How culpable, in other words, can we find Brooke? A less daring book might say, not at all.

One thing learned in prison: those in power think authority gives them the wisdom of Solomon. The reality is they are bureaucratic morons.

 Adam Smith recognized the need for regulating businesspeople.

The economy is to serve the community and not the community does not exist to serve the market.

Democratic socialism has morality on its side, but we are immoral creatures. Capitalism is here to stay. We need to decide how to keep our economic system closer to the moral - that is where it does not make slaves all of us, led by overweeningly arrogant and moronic billionaires.

Closer home is Holcomb joins GOP ‘energy choice’ coalition to address energy prices. How does he address this?

“I hope that America continues to lean heavily into innovation, not just a regulatory fix and setting artificial demands that are, I think, lofty, sound good on paper, don’t get there and then ultimately lead to higher prices and a disgruntled populace,” Holcomb said.

Read innovation as let us leave it to the market; artificial demands being government mandates.

He said some renewable mandates are ideological statements not based in reality.

“Let’s invest in innovation and let’s not set goals that are out of reach,” he said. “I’ll continue to advocate for more investment, like we’re doing here in the state of Indiana, to embrace alternative sources. Add, so it’s addition to our portfolio, and that then encourages competition, and that hopefully would lead to a lowering of cost.”

Where there is no goal that imposes a cost on alternative energy creators, there is no reason to innovate quicker than the next quarter's profits.

Clean energy advocates say mandates are not behind the spike in prices. A report from think tank Energy Innovation says the drivers behind electricity rate increases are spikes in fossil gas prices, rising costs to maintain and rebuild aging and stressed grid infrastructure, and a utility business model that incentivizes big capital investments that customers have to pay off over decades.

The Governor does not want to antagonize the big-money boys by directing change that might benefit those who are just getting by.

sch 9/22