Class Warfare Blog

August 13, 2019

Have You Ever Heard of Unearned Income?

How do you describe “pure” socialism? For most people it is “the government” (aka “We The People” in the US) owns the “means of production.” So, the government owns all of the businesses, factories, etc. and we all work together to benefit one another. Unfortunately, this ideal too often became totalitarian socialism, in which a political elite took over the system and it served the elite much more than it served the people as a whole. In some modern countries, the idea of democratic socialism seems to be working better.

What brought this to mind is I was reading an interview of an author on the Naked Capitalism website and the interviewer, John Siman, stated and asked the following:


To unpack this (there is a lot going on) you need to know a few things. For one “rentiers” are not “renters” or even landlords per se, they are “people living on income from property or investments.” A good example of such are shareholders in a corporation. They receive dividends or profit on sales from that stock and that money was, for a very long time, referred to as “unearned income,” money earned by means other than the “sweat of one’s brow.” And, “political economy” was the original name for the study of economics, politics referring to interactions of people and economy being “involving money.”

You probably learned about feudalism in school. This was a system whereby “royals” owned the land and, basically, the people who worked it (serfs). They didn’t claim absolute ownership, but serfs were not free to pack up and leave, they were “tied to the land.” And even if they did pack up and leave, there were no “jobs” to be had in nearby locations. It strikes me that feudalism was a form of socialism. “The government” absolutely owned the means of production (including the serfs). This was not benign socialism, this was totalitarian socialism. (Not that the “rulers” didn’t ever do anything for the “ruled.” There were limits to what the “rentiers” could extract. Abuse your serfs/slaves too much, e.g. starve them by confiscating too much of the crops they raised, and they wouldn’t be able to work. And, please, do not try to convince me that having a local “central committee,” as in modern socialism, is substantially different from having a local earl or duke, the “government” in feudal times. “Remote and autocratic” describes both.)

So, as feudalism broke down, capitalism was created. And so was “economics” whose first fruits, apparently, were to craft a “liberation from feudalism, from greedy rentiers and so the freedom for the common man to enjoy the fruits of his own labor and for the enterprising man to undertake great business projects.” (Merchants were the first members of the “middle class,” that is between rich and poor, and widely despised by the elites.) And one of their first ideas was that “We should tax only unearned income!”

This practice balances the playing field, economically, between the rentiers and people who worked for a living. Selling one’s labor is a fine idea, but there is a limit: you only have so much labor to sell. But rentiers are unlimited in the amount of property or investments they can accrue. The well-to-do can become wealthy, the wealthy can become rich, millionaires can become billionaires and I assume we will soon see billionaires become trillionaires. Since wealth can be converted into political power, the scales of politics are tilted heavily in favor of the wealthy. To balance the scales, the early “political economists” established the idea of only taxing that rentier income and not taxing honest labor.

I have written recently (at least I think it was recently) on the disappearance of the term “unearned income” from public economics discourses. (Economists may still use it privately; I don’t know.) The term has basically vanished. And, out of sight, out of mind. The term is obviously connected to the core idea of those early economists, to only tax unearned income, and it flies in the face of the narrative of the wealthy that “they built it,” that they earned everything they have. My favorite example of this thinking was Mitt Romney, who claimed to have earned everything he owns, while at the same time his rich and powerful father (George Romney: chairman and president of American Motors Corporation from 1954 to 1962, the 43rd Governor of Michigan from 1963 to 1969, and the United States Secretary of Housing and Urban Development from 1969 to 1973, etc.) gave him two $2,000,000 “to get started” and access to his influential and wealthy colleagues. (I remember this figure because during my almost 40 years of work as a teacher, I earned about $2,000,000 (both numbers are uncorrected for inflation). If I had been given $2,000,000 to “get started” I would not have had the gall to make the claim Romney does.)

The disappearance of the term “unearned income” from public discourse was no accident. And, if you use the term now, most people will be confused by it. The elites have scammed the system so well, that they have managed to get earned income taxed at a higher rate than unearned income (through the capital gains tax and others)!

So, capitalism was created to protect us from “feudal socialism.” What now can we get to protect us from capitalism and its captive economists? (Economists aren’t evil people, but their field has been captured by the rich. Oppose the rich strongly enough and you will no longer have either a reputation or a college professorship. Economists do know which side of the bread the butter is on.)


September 8, 2018

Artificial Intelligence—The Promise

I am a big fan of digital technology and someone who is hopeful of the future. It is harder and harder for me to maintain that stance, however.

Currently there seems to be a widespread debate regarding the development of Artificial Intelligence (AI). Since we know so little the positions staked out are quite broad. At one end is a new future where machines take over dangerous and boring jobs and human beings have more leisure. At the other end, autonomous drones are the first step toward Skynet (the “bad guy” in the Terminator movies) and the extermination of human beings by intelligent killing machines.

There seems also to be many opinions in between the two extremes.

Something I do know is that it will not be the machines that determine the outcome. In every case of new technology impactful enough to change the course of history, the tech has been used to coerce and oppress the labor of the masses to serve the interests of the elites.

Consider the following photograph.

This is an Amazon warehouse. Amazon is a tech company. So, how do those who work in Amazon’s warehouses fare? Amazon uses personal monitoring algorithms to make sure that its employees do not waste time taking short breaks to catch their breath or go to the bathroom. They are to stay on task as long as Amazon wants them to … or else.

Jeff Bezos, creator of Amazon, makes huge profits by paying his warehouse employees wages that are so inadequate that many of them need public assistance just to get by. Thousands of Amazon workers are forced to rely on food stamps, Medicaid, and public housing because they can’t survive on the wages they receive. Meanwhile, Jeff Bezos is now worth $158 billion, and his wealth increases by leaps and bounds. (And who pays for the public assistance subsidizing Mr. Bezos’ wealth? You and I do, of course.)

If you think back to the first powered looms to make cloth, it was the workers who had to get along with the machinery, not the other way around. Same was true with the assembly line to make automobiles, etc.

I do not argue that there were no benefits from technology that actually accrue to ordinary people. Henry Ford, no friend of workers, paid more than anyone else as a daily wage to pursue his dominance of the auto market. But that was then and now, wage suppression is the favorite tool of the captains of industry. Much of the advanced tech of today is not available to us because, well it is very simple, we cannot afford to pay for it. We don’t make enough money.

As much as people will squander $1000 on a new iPhone, the really impactful tech, such as a liver transplant, is not available to you … unless you can afford to pay for health insurance and many, many people cannot.

So, AI in and of itself will not necessary oppress ordinary people, coercing our labor for the benefit of the elites, but if rich people have any say in the future, my bet is that a sizable amount of AI will be used for just that purpose. (Jeff Bezos has already begun the application.)

December 28, 2016

If You Think The System is Not Rigged … Read This

We will have Mr. Trump as our next president precisely because voters thought that the economic and political systems are rigged against them. That this “feeling” is based in fact should give pause to those currently excoriating Trump voters for voting against their own financial interests.

A Financial Times (London) report on a Lancaster University Management School study, said in part:






What is true in the UK is more than true in the U.S. as we are the leaders of this “the CEO is King/Emperor” movement. Like all of the other propaganda, black is white (and vice-versa). CEOs claim their compensation is “performance-based,” which it clearly is not as they have rigged the system by defining “performance” in a way that results in raises for themselves but no one else. When people hear that CEO salaries are “performance-based,” they assume the huge salaries and retirement programs CEOs “earn” are warranted because they don’t think to ask for the details. Well, the details are now out in the open and “the King/Emperor has no clothes” or any other kind of protective cover.

I am declaring that it is not open season on CEOs (no, not the Second amendment kind), but let’s see how many we can take down.

Since the CEO’s aren’t doing much for those gaudy salaries, one approach would be to fire them and ask the First Vice-CEO if he would like the job at half of the current CEO’s salary. I suggest no one will hear the word “no” to these offers. If the performance of that CEO is as abysmal as the one’s now, then fire that replacement and ask his second in command if he would like the job at half of his superior’s salary. If this doesn’t result in superior performance, it will certainly reduce overpayment of the CEO.

And, this is just a manifestation of the “disruption” all of the business experts say is so good for the growth of companies, just applied to top management … for once.

September 12, 2016

Essential Bill Moyers

In a cogent essay, Bill Moyers proves again why he is the Dean of American Journalists. He is able to frame our current situation better than anyone else. Please read “We, the Plutocrats vs. We, the People: Saving the Soul of Democracy.”

As you will see it has nothing to do with conservatives v. liberals, or Republicans v. Democrats, or any of the other things we focus on. It is simply the case of too much money in the hands of too few people who claim that “they earned it” when that is not really the case.


July 30, 2016

Why the Inequality?

Well, bubbie, it wasn’t by accident!

From How ‘Competitiveness’ Became One of the Great Unquestioned Virtues of Contemporary Culture by William Davies, a Senior Lecturer at Goldsmiths, University of London (Posted on July 30, 2016 by Yves Smith)






June 27, 2016

Giving the Lie to GOP Desires for “Original Intent” Constitution Interpretations

The GOP has a desire, embodied previously in the person of Supreme Court Justice Antonin Scalia, for the U.S. Constitution to be interpreted only on the basis of what the Framers intended when they drafted the document. This, of course, ignores the numerous times the Framers mentioned that they didn’t want to tie the hands of future generations, even providing the mechanism to amend the document and which they availed themselves of immediately with ten, count ‘em, ten amendments right off of the bat!

The Southern Baptist Convention has supplied a recent form of this desire for original intent in the form of a resolution:

RESOLVED, That we strongly urge the President to nominate strict constructionist judges who seek to make decisions based on the original intent of the United States Constitution and, therefore, faithfully interpret rather than make law or impose their political views on the nation . . .

This desire is just a smokescreen or, worse, it indicates the ignorance of the speakers. Too often, people in politics are perfectly happy to let others do their thinking for them and this yearning for a country defined by the “original intent of the Framers” may be one of them.

Ironically, the actions of this age’s neoliberal conservatives is acting in direct opposition to the intent of the Framers of the Constitution. Note I said “neoliberal,” not liberal. Neoliberals are acolytes of the “Free Market” who favor privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy. This is clearly a philosophy in service to oligarchs and the already wealthy.

The game plan of the neoliberals is to diminish collective actions and thinking on the part of U.S. citizens by convincing us that we are the sole determinant of our future, that we are individual actors, not groups or a society as a whole. Margaret Thatcher, former Prime Minister of the U.K. and Robin to Ronald Reagan’s Batman (The roles might have been reversed in the U.K.), had the grace to state that idea in a straightforward manner when she said: “… there is no such thing as society. There are individual men and women, and there are families.”

Clear enough?

Does the phrase “divide and conquer” ring a bell?

Now, contrast this approach with that of the Framers of the Constitution. The Framers educated themselves on the life cycles of republics because it was clear to them from the beginning that we would be some form of self-governing republic. They were very focused on the death throes of those republics (“Half our learning is their epitaph.” Thomas Dawes, Jr.) All of the examples of republics available to them to study were, of course, failed republics (Greece, Rome, etc.). Most of the countries around the globe in the later 18th century were monarchies with kings and queens having some form of divine right to rule. There were no grand republics to model the U.S. on, all had failed at that point. So, they studied the source of the failures and tried to protect their creation from that. The lifeblood of a republic was, in their estimation, public virtue. By public virtue, they did not mean religious virtue (which may be the source of the Southern Baptist’s confusion) by public virtue they meant this:

“Public Virtue entailed firmness, courage, endurance, industry, frugal living, strength and above all, unremitting devotion to the weal of the public’s corporate self, the community of virtuous men.”
(Novus Ordo Seculorum, p. 70, my emphasis)

If I may quote John Adams (from a letter to Mercy Warren), “The must be a positive Passion for the public good, the public Interest, Honour, Power and Glory, established in the Minds of the people, or there can be no Republican Government, nor any real liberty.” The public passion, he wrote, “must be superior to all private Passions. Men must … be happy to sacrifice … their private Friendships and dearest Connections, when they stand in Competition with the Rights of Society.”

So, the GOP, whose policies are in direct contradiction to the intent of the Framers are claiming the direct opposite. The Framers wanted us to put the needs of society over individual desires, the GOP wants you to put your and your family’s needs at the top and fuck the rest, they are on their own.

It is a Brave New World indeed!


May 23, 2014

Cognitive Dissonance? Nope. Nothing to See Here, Move Along

The GOP insists upon a number of principles that are completely contradictory to reality for anyone to be a true believer. A the top, you must believe in the supremacy of free markets, that all government regulation of such is bad. This, of course, flies in the face of a steady stream of corporate bad/illegal/destructive/careless behavior. Think about Enron, the subprime mortgage disaster, the price of gasoline going up while demand was going down due to speculators, Monsanto, the Koch brothers trying to eliminate government support for alternative energy in Kansas, the Wall Street banks gambling with other people’s money and cheating their own customers, the fracking companies (What earthquakes? Water doesn’t burn. We don’t contaminate your water, no. All we want are laws that send people to prison for describing what we are doing.), railroad tank car fleet operators (What explosions? Our cars are perfectly safe.), General Motors (That’s not a defective ignition switch, you must have bumped the keys with your knee. Problems, there are no problems.), . . . , I forgot about the nuclear fuel company that buried its waste “out back” instead of processing it according to the law. (Okay I am done, wait, …)

So, if the free market would correct all of these things, why did they happen in the first place? Did government regulations cause all of these things? Was it too expensive to do things the right way, so they took forced shortcuts, knowing their parent corporation could “disincorporate” if things got really bad?

“The free market ideology is actually just an economic manifestation of human greed.”

Free markets are driven by greed, no matter their original attentions. Manipulation of “free” markets is the quickest path to wealth and so attracts greedy people. (Free markets are by nature based upon all parties having perfect information, free from anything manipulative, like advertising.) What aspect of free markets protects us from those greedy people? There is nothing.

Government taxes upon corporations are a way of charging those corporations for their externality costs (their use of the roads, communication networks, etc., their pollution of the air and water and land, and other things we share) but those same corporations have bribed government officials to eliminate or reduce their corporate taxes to a bare minimum, leaving their externalities to be paid for by others (us). They also make sure all of the laws benefit them and not the general citizenry. As just one example, college students cannot expunge college loan debts (to corporations) through bankruptcy, but corporations can avoid a massive toxic waste cleanup that way.

So, what is it about free markets that will “correct” for these corporate failings and manifestations of greed?

The answer is short—nothing. The free market ideology is actually just an economic manifestation of human greed. “Leave us alone to make as much money as we can and maybe you will benefit sometime down the road. Don’t interfere. Ignore that man behind the curtain.”

Is it just a coincidence that anytime we get close to their ideology that the rich getting richer and the poor getting poorer accelerate? I don’t think so.

Since these zealots claim that anything that smacks of regulation of free markets is socialism, well, then I am in favor of socialism, at least in so far as it is practiced in Scandinavia. There the reins on human greed, er, free markets, are held tightly by public interests.

May 20, 2014

Tail Trying to Wag Financial Dog . . . Again

The Anglo-Swedish drug company AstraZeneca has rejected the £69,ooo,ooo,ooo takeover bid of U.S. rival Pfizer. You would think that would be the end of things, but no. AstraZeneca shareholders are up in arms over the rejection of the deal.

Do the shareholders know the intricate details of the deal? No.

Do the shareholders know whether the deal will be good for AstraZeneca’s brand? No.

Do the shareholders know what the firm’s management’s full thinking was? No.

So, what did the shareholders know?

They knew that they would have made a major profit on the value of their shares.

So, as far as they are concerned, any deal that makes them money is a good deal? Or are they believers in the lie that the only reason for the existence of a corporation is to create value for its shareholders?

Whatever the case, it is extremely bad management on somebody’s part whenever the shareholders decide they want to run things. In this case it seems to be bad management on the part of the shareholders.

Ah, the stock market. Why do we still think this is a proper way for business to take place?

March 29, 2014

RIP—Political Parties

This weekend marks the beginning of the end of the political parties as we knew them. In the past, any potential political candidate had to solicit the help of one of the political parties to have any chance of success. The usual path for a candidate was to run for local office and make him- or herself known to the local political party officials. Then additional offices were attempted forming a ladder to higher office with closer and closer involvement with the party and more and more support from the party. Party officials introduced “up and coming,” promising new candidates to the various power brokers in the party. They arranged for fundraisers and provided funds from general accounts. They provided expertise that would have otherwise cost a candidate a great deal to purchase.

All of that is now on the edge of being gone.

Good riddance you say? Also going with the party is any influence the parties had over candidates to form their platforms or, really, anything else.

Replacing all of that will be the private “political conventions” put on by billionaires. This weekend in Las Vegas, most of the major Republican players in the 2016 presidential sweepstakes are meeting with billionaire casino magnate Sheldon Adelson. In the 2012 election cycle Mr. Adelson spend a pittance, a mere $90 million on presidential candidates (less than 0.5% of his wealth I am told). That kind of money will take a candidate as far as they want to go in any election. So, gone is the influence of the parties to get candidates to “toe the party line” only to be replaced by whatever it is the billionaires want as a “return on their investment.” And I do not believe the American Plutocrats will be publishing their “platform,” that is the list of the things they want of their candidate gets elected.

Candidates for sale! Candidates for sale! Git yer candidate!

February 3, 2014

Gamblers, Plain and Simple

I have written a couple of times about billionaire hedge fund managers and their ilk before. The only changes I can see is that there are more of them now, so my previous comments are not in need of amendment. (They revolve around the fact that to make a billion dollars in one fiscal year is to make $532,000 per hour. These assholes have also gotten their income declared “special” by sympathetic (read: bribed) Congressmen so that they pay a maximum of the lowest possible federal tax rate (15% on their earnings). They also contribute nothing substantial, being in essence insurance companies for investors (they insure against negative financial risks).)

What needs amending is my toss off statement that Wall Street magnates don’t create anything substantial. basically I didn’t go far enough. These folks are paper pushers, with the largest amount of paper being bank notes (I know it is all done electronically now and they rarely see a bank note or a stock certificate, but “electron pushers” just doesn’t have the same sting as “paper pushers,” no?)

I realize now that there is no difference between these Titans of Finance and ordinary gamblers, except for one big difference: ordinary gamblers do not own the casino, so when ordinary gamblers decide to change the rules, by cheating or by organizing information to their benefit, the casino owners ban them from not only their casinos but everybody else’s, too. On Wall Street, on the other hand, the “gamblers” get to: (a) gamble with other people’s money, and (b) create new games as they wish, and (c) get the rules changed when they decide there is an advantage to their own prospects. And no matter how poorly they perform (Jaime Dimon), their (Jaime Dimon) hand-picked Boards of Trustees give them (Jaime Dimon) big raises.

All of this is wrapped in mumbo-jumbo (including talking about the “market” as if it were an organism), elitisms (Data, and charts, and mathematics, oh, my!), and patriotism (We are a Capitalist Nation, under God!) but the “stock market” as described in my grade school classes barely exists as the gamblers have bought the casino: they bought off the owners, the regulators, the lawmakers, the judges, anybody who could tell them “no.” This country is now being run for their benefit, not ours.

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