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A Way Out

Starting here I have talked some about the state of the US economy in the summer of 2011.  One of the conclusions is that we are trapped in a self-reinforcing system designed to benefit speculators at the expense of a stable economy.  Another conclusion is that another crisis is not far off or, in any case, the current depression will not be ending any time soon.  It is quite likely that these greater economic pressures on society will force some type of drastic change.

The problem is that our society can change in many different ways.  I cannot tell what the changes will be and some of them are quite frightening.  It does provide an opportunity for positive progress to be made.  One must be careful in wanting too much change though; things only change a little bit at a time.  A problem is that changes in governments fallow changes elsewhere in society.  Changes are already happening out of the scope of news coverage that will dictate how society will change in response to the coming crisis.

As demonstrated, the economy for at-least 40 years has been focused on growing the economy for the benefit of the wealthy.  There has been some benefit for others as well but far less and that benefit is offset by increased demands placed on the working class.  This is overall bad for the economy as it is the working class that both operate and drive the economy forward.  If things remain as they are, economic growth for all will continue to slow.

There needs to be an economy that seeks to rebalance society in order to generate contentment amongst all.  There needs to be an economy that works for those who make the economy work.  Throughout modern history, when the working class didn’t advocate for itself, the benefits of the economy became fewer and fewer to them but when they did advocate for themselves (through government, unions, or other) the economy adjusted to benefit them.

If positive progress is going to be made in the economy, the working class needs to advocate for the whole working class.  Sings of this are seen when people work to the benefit of their community, when people are willing to work for the benefit of those less fortunate then they, when people are willing to advocate for what’s right even with no personal stake in the matter, and other such activities.  If these activities are prevalent today, the change in the near future will be for the better and the more one can do in advancing these activities the better that change will be.

Conversely, if people do the opposite and ignore problems in their communities as far as they’re not affected, work tirelessly for their own benefit without the thought of others not related or friends, only take a position on matters directly affecting themselves, and other such activities the change will be for the worse.  If these are the activities that are prevalent today, these ethics will be reinforced when the economic structures change and economic progress will reverse for most people.

The future lies in the strength of the community at all levels.  Strong communities make for strong economies while weak communities make for weak economies.  Strong communities can only form where there is a notion of shared responsibility for all in the community, but when responsibility mean looking out for one and one’s own, then weak communities are the result.  In any event, I do what little I can to see positive outcomes and the stakes are high enough that I have no choice but to continue no matter what the near future will hold.


What A Union Looks Like

Unions used to be popular in America, or at-least popular amongst a large portion of the working population.  The American Federation of Labor eventually succeeded in marginalizing unions.  What we call unions today are no unions at all.

The American Federation of Labor unions are a combination of a collective bargaining unit and a legal support structure for unionized labor.  Both of these structures are important but hardly unions.  Also these functions can adequately be served with cooperation between these units and large employers and the American Federation of Labor is in the business of cooperating with large employers.

The building block of a union, and something that the American Federation of Labor lacks in its entirety, is solidarity.  A union must be in the spirit that “an injury to one is an injury to all.”  If a union lacks this spirit individuals or separate groups are mistreated one by one with no collective action.

Our society is divided into individual parochial interests with little to no notion of collective well being.  In such a state those with economic and political power can operate in the divided environment to secure advantages over individuals and small groups.  Those in power often pit different interests against each other to deflect action against themselves.

In a society in which individuals are concerned for the wellbeing of his or her neighbor, a mass of people become harder to divide and exploit.  When one person needs better wellbeing, instead of being the only one to work towards advance, an entire community is working towards advance.  The benefits in the likelihood and expectation of advance should be clear in this organization as opposed to an every man for himself, beggar thy neighbor mentality.

A union needs to operate in the notion both within an individual working environment and across working people in general.  It is only then that the true strength of the union can be realized with an entire community or workers working towards the advance of all who need it.  The lack of this effort makes unions meaningless and why they have such a bad name today.

A Better Star Wars Prequel

A brief interlude from the economics (I just have a few more posts to finish up this arc) because I’ve gotten into an argument about Star Wars, here:  I’m trying to argue that the general story arch of the fall of Darth Vader could have been executed well with someone who claims that the story grantees a sucky feel good summer action blockbuster that appeals to both adults and children.  In furtherance of my argument I shall attempt and likely fail to sketch a plot outline for the prequel trilogy which would be better then what we got.

I should point out a few disclaimers though.  I like movies that break out of the framework reserved for big budget feel good summer action blockbusters put out by Hollywood.  There’s a place for that but I can appreciate a good through and through tragedy.  That said I’m going to try and write a script that would satisfy this type of summer blockbuster.

I need to credit No One of Consequence there for the main idea of my plot and part of my challenge is to tell the story of Anakin’s fall.  I also use some elements of this universe’s prequel.  There is lot of room for things to be filled in and for the story to be expanded upon.  I’m sure this can be improved greatly but on to the plot sketch:

Episode I:  A Disturbance in the Force

The opening scroll identifies the trade federation as being an occupying force on Naboo which produces a valuable commodity and that Jedi Qui-Gon Jinn is leading an investigation party for the Jedi Order.  The movie opens with a camera panning through city streets showing hardship and occupation.  The camera settles on an interaction where someone in rags is killed in cold blood by the occupying force for not having the right papers

The group of Jedi (5-11) lead by Qui-Gon Jinn and including Obi-Wan Kenobi  and his apprentice, a late teenaged Anakin Skywalker, arrive in orbit and are greeted warmly by trade federation representatives who indicate that the inspection shall begin shortly and that they have welcomed Naboo as a willing member of the Trade Federation.

The next scene shows a shuttle leading down to the planet fallowed by the group walking through a place that shows no signs of the oppression.  Qui-Gon and Obi-Wan discuss to the side that they sense more going on the meets the eye but it’s strangely clouded.  Qui-Gon has a special assignment for Obi-Wan that he’s going to tell him later.  They meet the monarch for Naboo and Qui-Gon exchanges pleasantries with him with the trade federation representative giving introductions.

The next scene shows Senator Palpatine discussing with other Senators in a posh Coruscant suite about the situation and his knowledge of the Jedi dealing, how the Republic must be prepared, and how the current Chancellor is unfit to meet the challenge.  Palpatine asks for support on a military bill and suggests that there may need to be a vote of no confidence in the Chancellor.

The next scene shows Obi-Wan, Anakin, and another Jedi sneaking their way around somewhere at night.  In whispered tones Obi-Wan explains how that’s not the rightful monarch and they must investigate it.  They come across a computer access port that tells them classified Trade Federation information that the king and queen have been killed but their teenaged daughter survives.  The make their way to the location of the princess.

The three rescue the princess from her holding cell and work their way to escape and hijacked transportation.  In route Darth Maul attacks the three and after a battle of three vs. one the accompanying Jedi is killed in a sacrifice move to save the other two Jedi and the Princess.  The three make it back to Couruscant with a layover in Tatooine in which they discuss Anakin’s history and look up his mother.  They also communicate back to the Jedi Temple where Yoda and Windu discuss the apparent discovery of a Sith.

Back on Coruscant, Qui-Gon and Yoda (with Obi-Wan, Anakin, and others standing politely in the background) brief Palpatine on the situation on Naboo.  At the end Palpatine thanks Obi-Wan and Anakin for saving the princess and offers to foster the girl.  He then uses the situation to get his military bill passed in the Senate and drops hints that the Chancellor might be unfit to rule in his speech.  Afterward, Yoda, Windu, Palpatine and an alien discuss a military mission to aid the Naboo people.

The alien race send their fleet to Naboo with a contingent of Jedi abroad the command ship’s bridge.  The fleet engages the Trade Federation’s fleet and Gui-Gon senses a dark presence on one of the ships.  He, Obi-Wan, and Anakin sneak aboard a shuttle piloted by the best pilot in the Galaxy, Anakin, and head over to the ship blasting their way inside.  The three make their way to where Darth Maul is and engage in a fight.  Darth Maul kills Gui-Gon but Anakin kills Darth Maul.  Obi-Wan and Anakin see that the alien fleet is retreating and make their way to a stolen two seater fighter and escape.   Denouement.

Episode II:  The Clone Wars

The opening scroll talks about it being the fourth of fifth year in a war between the Galactic Republic and the Trade Federation.  Both sides have found the need to resort to clones because of high casualty rates.  Military production facilities have multiplied and both sides field massive fleets in an apparent stalemate.

The action begins in a space battle with Obi-Wan and Anakin flying fighters.  The two have an adventure in which Anakin saves Obi-Wan.  Shortly thereafter the Republic retreats.  Back on Coruscant, the princess has come of age and is the leader of the Naboo in exile government.  Senator Palpatine, the Jedi lead by Windu, and the princess discuss the liberation of Naboo.  Palpatine suggests putting Obi-Wan and Anakin in charge of the liberation.  Palpatine laments that the current Chancellor (different one) isn’t acting strong enough and they will have to raise more forces.

Before leaving to raise forces, Palpatine talks to Anakin in private in a corridor asking about his Jedi training.  He talks about how important his “daughter” is to him and hope he takes care to make sure she’s safe.  He offers light criticism on how the Jedi do their job including accepting the appalling corruption of the Republic.

The three (Obi-Wan, Anakin, and the Princess) travel to a somewhat seedy natural planet to raise some forces.  Obi-Wan finds a contact who could help raise some muscle.  After the first meeting with all three present with the contact, Obi-Wan asks Anakin to escort the princess back to their ship.  On the way, Jango Fett kidnaps the Princess and Anakin fails to save her.  After informing Obi-Wan, Obi-Wan instructs Anakin to rescue her.

While Anakin takes the ship and chases after Fett, Obi-Wan continues negotiation with this contact.  The contact is also negotiating with a member of the Federation.  Obi-Wan initially tries to offer promises that the Republic will help him get established on this world once the war is over but the contact is interested in protection on Coruscant.  Meanwhile, Anakin tracks Fett to Tatooine where he delivers her to the Hutts.  Anakin surveills the transaction and infiltrates the Hutt compound where he finds his mother working as a sex slave.

Obi-Wan meets the contact for a three way negation with the Federation representative, Count Dooku.  The two negotiate promising essentially match for match but with styles different in subtle ways.  After the negation Obi-Wan warns the contact not to trust Dooku who, as it turns out, has said the same thing about Obi-Wan.  On Tatooine, Anakin rescues the princess and, while escaping, battles Fett.  Anakin accidently kills his mother and, in anger and blaming Fett, then kills Fett.  Boba Fett escapes in Slave One and Anakin heads back to the Seedy planet.  In route, the princess thanks and comforts Anakin a little too much for just friends.

The contact holocalls Obi-Wan and informs him that he’s ready to make the deal but needs to leave immediately with him on his ship and needs Obi-Wan to meet him there.  When Obi-Wan arrives, Dooku is there and captures him after a duel.  The contact apologizes to Obi-Wan claiming that Dooku has captured and is threatening his family.

Anakin arrives just in the nick of time and rescues Obi-Wan.  The two chase off Dooku and rescue the contacts family.  The leave on separate ships to Coruscant.  The Jedi Council criticizes Anakin for losing the princess but privately Palpatine reacts gratefully for saving his “daughter.”  Palpatine is also confides criticism of the Jedi for the deal Obi-Wan made with the seedy contact.

The combined forces of the Republic and of the Contact attack the forces occupying Naboo.  While the space battle rages a group of 5 Jedi including Obi-Wan and Anakin go down to the surface to confront Dooku who they’ve sensed on the planet.  Dooku kills the other three Jedi before escaping.  The Republic defeats the Federation and liberates Naboo.  Denouement.

Episode III: The Rise of the Sith

The crawl states that with the battle of Naboo the Galactic Republic has turned the tide in the war with the Trade Federation but the Trade Federation has developed a biological weapon and intends to use it against Naboo.  The movie opens with Obi-Wan and Anakin meeting with Palpatine and the queen on a diplomatic mission to Coruscant.  After pleasantries, Anakin has some alone time with the queen and it’s clear that they’re having an affair.

Shortly after rejoining the others a garbled message comes in from Naboo of a hit and run attack by the Federation.  The message talks of a biological weapon being released into the atmosphere.  Obi-Wan suggests that he, Anakin, the queen, and other Jedi take a trip to Naboo to investigate the situation.  They take a Republic relief ship and in route, while Anakin is alone with the Queen, a medical droid informs them that the Queen is pregnant.  There is massive devastation on the planet due to the weapon and the Jedi return to Coruscant leaving the Queen on Naboo.

Upon their return, Palpatine meets up with Anakin and informs him that because of the attack at Naboo the Senate has chosen him as the new Chancellor with new powers.  Anakin remarks that this will give Palpatine the necessary tools to fix the Senate and Palpatine thanks Anakin for his loyal service and suggests he might have use of him in the future.  The Jed council discuss the problem of this new weapon and of the Sith, Dooku.  During the night Anakin has visions of the Queen’s death in childbirth.

The next day while giving Palpatine a briefing from the Jedi they discuss Anakin’s visions and Palpatine suggests he might be able to help without revealing too much.  Latter in council with the Jedi, Palpatine and the Jedi come to an agreement to send the contact on an effort to find the ship the weapon launched from.  The Jedi lament that they can’t spare many Jedi due to the war and Palpatine suggests sending Anakin alone.  The Jedi bulk at this saying that he’s not ready for a solo mission: Anakin and Obi-Wan will go together.

While preparing for the mission and giving Palpatine a private briefing, Palpatine tells Anakin that, reluctantly, he feels he must declare a Galactic Empire, temporally of course, in order to deal with the crisis and that he has the support of a majority of the Senate.  He asks for Anakin’s personal allegiance if he does such a thing suggesting that the Jedi council may be obstante and stubborn.  Anakin assents saying that it’s his duty as a Jedi.  As a first act, Palpatine criticizes the council for not having faith in Anakin as he has demonstrated that he can act alone when he saved his “daughter” and sends Anakan away without Obi-Wan.

Anakin and the contact have an initial dislike of each other on the hunt for the weapon ship.  They leave on a small but speedy and maneuverable ship with a light crew.  They find the weapon ship and manage to sneak Anakin and the contact aboard.  Anakin senses Dooku and the two split up with Anakin going after Dooku and the contact searching for a way to destroy the weapon.

Anakin catches up with Dooku and the two fight with Dooku trying to turn Anakin to the dark side and becoming his apprentice.  Anakin ends up using anger in defeating and killing Dooku.  Meanwhile the contact has an adventure in trying to find how to naturalize the weapon.  He finds out how and radios to Anakin (who just finished with Dooku) to meet up with him at a place.  The two meet up but destroying the weapon would end up destroying the rather large weapon ship.  Anakin makes the decision to do it and they do and high tail it back to their small vessel.  In the return the two have developed a respect for each other and the contact comforts Anakin for the death he caused.

Back on Coruscant the Queen (some time has passed because she is now, visibly pregnant and near birth) has arrived on a diplomatic mission to report on the situation and to garner more humanitarian aid while the Jedi Council is up and arms about this whole Empire business.  Obi-Wan has been sent away on a mission to help fight the Federation.  The Queen, Palpatine, and Anakin have dinner privately and Anakin and the Queen are free to show their affections.  Palpatine remarks on the disturbing visions and suggests that Anakin and he together can figure out a way to save the Queen’s life.  The Queen is shocked but hopeful.

Anakin has returned to his job of briefing the Emperor on Jedi business.  One day, Windu accompanies Anakin and discovers the Empire as a Sith Lord.  The two fight to a draw but Anakin helps out Palpatine and the Emperor ends up killing Windu.  The Emperor sends Anakin and the contact on a mission to destroy the command structure of the Federation.  But first Anakin must attack the Jedi temple.

The contact, leading a fleet, attacks the Federation stronghold.  While the fleet is engaged, Anakin sneaks to the surface to find and eliminate the leadership.  This he does but Obi-Wan finds him and the two battle with Obi-Wan trapping Anakin in a weapon chamber.  Emperor Palatine rescues Anakin and traps him in the suit as the Queen dies in giving birth.  Denouement.

Why the Current Structure is so Entrenched

Not only is the current structure of our economy and organization of our society designed to redistribute wealth from the poor to the rich, it is out of any direct human control.  There are systems in place to ensure that the right people are at the necessary places to ensure the self perpetuation of the system.  These controls are so pervasive that no person or small group of people can dismantle them.

The economic systems are the most straight forward.  Speculators and others in investment markets are interested in only one figure: how much return they can get.  In financial markets as fluid as those in the US there is no thought of long term investment.  What can yield the highest returns at the very moment gets funded.  A company making sacrifices at present for stability and growth down the road has a harder time getting access to capital.

The boards of directors of companies are under the direction of the owners who want results quickly less they sell their stakes.  These directors instruct their companies and hire executive officers to ensure that the company operates in such a short sighted manner.  If an executive officer or a majority of the board acts differently they are replaced, by the owners if necessary.  A speculator or investor with a different priority then the mainstream can operate but they are in such a minority that their efforts are drowned out.  Necessarily it is those with the short sighted mentality that make the biggest gains and thus develop the most weight in the decision making process.  This system self selects people to maintain the working order of the system and individuals who are different are marginalized.

The political system is controlled by the economic system.  Politicians are largely beholden to those who finance campaigns.  Even on a local level there is a lot of pressure to run a high money campaign as those have a greater chance of being successful.  Individuals and institutions with the most money are the ones with the deepest pockets and exert the most influence on the political process and on politicians.  Those who get the most money in the economic structures have the deepest pockets when buying politicians.  This with few exceptions here and there, political interests tend to align themselves with economic interests which are interested in massing concentrations of wealth in few individuals.

These control structures are so invasive that when someone in power wishes to change something, he or she is quickly found out of power and a more cooperative person in his or her place.  We live in a society whose goal is the perpetuation of these social structures.  In short, the people live to support the society as opposed to a situation where the society exists to support its people.

This is not only true in the decision making aspects of society but in all aspects as well.  Workers and others have their role to play.  There is no shortage of workers willing to work in jobs that damage their communities because of the price of being jobless and because of a positive unemployment rate.  Workers are often put in positions where they end up damaging themselves or damaging their families.

A family whose two adults work more than 60 hours a week to support itself cannot spend the time necessary to raise children in a healthy environment.  Families are living closer to their margin and have no room for safety and are failing at increasing rates (  In these situations, families and individuals who desire to act on principle are often damaged.  Those who are willing to compromise on anything survive and perpetuate a society in which we all are willing to turn on our neighbors if necessary.  Those who aren’t find themselves in dire situations.

These control structures are quite good and doing their job.  It may be better to say have a living wage and real unemployment protections but these cannot happen in our society the way it is structured and organized.  People often undercut their own long term benefit out of short term necessity.  Others who seek to change these structures find themselves defeated by those willing to benefit off of them.  These structures are so pervasive as to effect every area of society and to harm the vast majority of people in one way or another.

It’s a Matter of Organization

Working men and women for decades have improved the nation’s capacity to produce without seeing much benefit themselves.  We live in a nation of plenty but poverty is still quite problematic with a 14% poverty rate (  In addition with 15% of households having trouble putting food on the table ( 25% of all food designated for human consumption goes to waste (  Lastly with hundreds of thousands homeless ( there are millions of vacant housing units (

The workers of the United States already produce enough goods and services for everyone to live in comfort but that fails to happen.  Families are working longer hours ( to obtain slow material improvement.  Planed obsolescence is rampant and our society produces a large amount of waste.  Much productive time is spent in socially damaging industries such as marketing and defense.

Our society is organized to require people to work and the American people work yet there is constant want in the society.  This drives the production consumption cycle but also leads to a large amount of suffering.  American workers could satisfy the natural needs and a fair amount of the natural desires of the American population in less productive hours then is spent today.  It is way the economy is organized to drive production levels higher while at the same time levees consumers always unsatisfied with their status quo.

A parable is taught in first year economics course: why does the baker bake bread?  The answer is that the baker needs to be able to provide for his or her family and bakes to earn the income to support that and not because the baker wants to feed people.  Another interesting question is if the baker need not bake to satisfy his or her family, would the baker still bake?  I challenge that the answer to this question is yes.  People who have the opportunity often use it to volunteer their skills or goods to help others in need.

Constant want is unnecessary to sustain production but it is necessary to sustain socially damaging overproduction.  A society largely liberated from want would still produce at comfortable levels to sustain mutual well being with more time being afforded to leisurely and erudite pursuits.  This would require a change in how society is organized but a society can be organized to meet human needs as opposed to satisfy the perverse artificial need based motivation of the modern economy.  That’s not to say that the needs themselves are artificial but they need to be present.

The way society is structured is to maintain economic and political control of society in the hands of an elite few.  Poverty and the threat of poverty is essential to this means of control.   A society moving to truly try and satisfy human needs would mean broadening this social control over society in a truly democratic manner.  It is only matter of organization that poverty persists in a land of plenty.

Structure Matters

Structure Matters

The way an economy is structured is of great importance.  The drivers of wealth creation and those who ultimately control that wealth need not be the same.  To the extent that workers are necessitated by life needs to spend a portion of their income, they are not free while those benefiting most from an inequitable economy have considerably more economic freedom.

People influence market forces in proportion to their wealth and not in human proportionality: each person has equal influence.  If public institutions encourage wealth hording amongst the best off the decisions of an economy are made by those with the most wealth and an economy serves to benefit these individuals.  The benefit delivered to others in a society is merely incidental.

The question is: are public institutions in the US serving to amplify the market power of wealthy individuals?  I suggest that looking at who benefits from a growing economy is a way to answer this question.  I looked at real median household income (soruce: the US Census Bureau, Selected Measures of Household Income Dispersion: 1967 to 2009, their summery here: Income, Poverty, and Health Insurance Coverage in the United States: 2009 page 6, both found here: from 1967 until 2009 and compare it with real US GDP per capita (source from 1967 until 2009.  This comparison is apt as it is comparing a median against a mean.  When the median rises compared to a mean it means that the bulk of a distribution is shifting downward and vice versa.  The differences in the two measures makes an examination of an individual year meaningless but there is value in comparing temporal changes.  To simplify maters I took the situation in 1967 to be a baseline which is an arbitrary distinction.  I wish I had pre-1967 figures but I was limited by what the Census Bureau provides.  I divide the median income level against the GDP per capita level to get the final ratio.  Graph to fallow the table:

Year Real GDP Median Inc Ratio
1967 1.00 1.00 1.00
1968 1.04 1.04 1.00
1969 1.06 1.08 1.02
1970 1.05 1.07 1.02
1971 1.07 1.06 0.992
1972 1.12 1.11 0.993
1973 1.17 1.13 0.967
1974 1.15 1.10 0.950
1975 1.14 1.07 0.936
1976 1.19 1.08 0.912
1977 1.23 1.09 0.887
1978 1.29 1.13 0.881
1979 1.31 1.13 0.862
1980 1.29 1.09 0.847
1981 1.31 1.08 0.820
1982 1.27 1.07 0.842
1983 1.32 1.07 0.807
1984 1.40 1.10 0.783
1985 1.45 1.12 0.773
1986 1.48 1.16 0.781
1987 1.52 1.17 0.773
1988 1.57 1.18 0.755
1989 1.61 1.20 0.749
1990 1.62 1.19 0.734
1991 1.59 1.15 0.724
1992 1.63 1.14 0.704
1993 1.65 1.14 0.690
1994 1.70 1.15 0.678
1995 1.72 1.19 0.690
1996 1.76 1.20 0.683
1997 1.82 1.23 0.676
1998 1.88 1.27 0.679
1999 1.95 1.31 0.671
2000 2.00 1.30 0.651
2001 2.00 1.28 0.636
2002 2.02 1.26 0.624
2003 2.05 1.26 0.614
2004 2.11 1.26 0.596
2005 2.15 1.27 0.590
2006 2.19 1.28 0.584
2007 2.21 1.30 0.587
2008 2.19 1.25 0.571
2009 2.11 1.24 0.588

US GDP and Income Growth
Income to GDP Ratio
It is important to note that while real GDP more than doubled during this time period, median income failed to grow more than 30% (and I’ve heard arguments that the growth is solely due to more hours worked) during the same time period.  Such slow growth in a median compared with such high growth in a mean suggests that the distribution got longer at the upper end while the figures were static for a large portion on the lower end.  This suggests that many families were materially stagnant in an expanding economy.

More to the point there is just about a constant decrease in the ratio during this time.  I take this to be an indication that there has been a constant relative accumulation of wealth amongst those already wealthy.  The economy of the past forty years has been one of stagnation for a large portion of people who need an economy to work for them the most while at the same time working quite well for those already well off.

I also looked at the rate for growth of the per capita GDP for a larger period.  I used the same source for the figures and I measured the year to year growth rate and the average annual growth rate over ten and thirty years leading up to a year.  I took the geometric mean, of course.
GDP growth

The graph seems to indicate a relatively constant rate of growth in GDP per capita at 2% per year from 1950 until 2010 with it being slightly higher in the 1960’s and slightly lower in the 2000’s.  It seems that income equality seams not to have had an impact on the overall growth in GDP in the situation looked at.  If anything a more equal distribution helped the GDP grow faster and a less equal helped it to grow slower.

The overall point remains, that the way an economy is structured determines who benefits and who does not.  A debate about how to structure an economy usually is talked about how the economy will grow the most but what the past forty years have had more to do with improving things for the most wealthy without regard to growing things for those less wealthy.  Structures both public and private are set up to this end yet an economy structured to help those in need of it most would likely be just as effective at that end as the current economy is at it’s end.

A Place for Debt

Debt and investment provides liquidity for producers to be able to anticipate consumer demand.  One of the ways this happens is by the use of fractional reserve banking.  In fractional reserve banking, a bank is required to keep part of someone’s savings deposits in reserve.  If this amount is 15% and one deposits $100 in a bank, the bank keeps $15 and loans out $85.  This $85 dollars is able to be loaned to a producer to generate wealth.  The bank then passes on the maturation of the loan as interest on the savings.


Debt is an essential part of the modern US economy being used to allow producers to keep up with consumer demand.  It allows for flexibility and foresight.  It can also be used to aid speculation feeding a speculative bubble.  It can also be used to artificially inflate the indicators of wealth in a society.  In the fractional reserve situation above there is an indication of $185 dollars in an economy (a $100 deposit and an $85 loan) despite there actually only being $100 in circulation.  A precipitous increase in the amount of debt in a society can cause an inflated measure of the wealth in society.


In a situation where debt is being abused to keep consumer appetites artificially inflated and to keep up the ability of producers to meet this inflated demand, a culmination of this unsustainable situation causes a crash in demand and a crash in producer ability along with an apparent large loss of wealth.  In such crashes there is no wealth being destroyed (nothing is physically being destroyed) but the accounting is showing a drop in wealth in society.  This is merely a correction to reflect the reality of a situation by a destruction of imagined wealth.  It is necessary although painful but attempts to avoid the pain by maintaining the unsustainable situation only causes more pain in the long run.


What I desire to emphasize is that there is no change in actual wealth in this situation.  Debt in any case and in a holistic perspective is only an accounting tool.  When used well it allows for the present creation of wealth based on its use in the future.  When abused it allows for a production of goods that is unjustified by future distributions of wealth.  Someone who purchases something with a $100 of debt that cannot repay it still influences consumer demand and is either generating $100 of wealth for him or herself and taking it from another or must lose $100+ of wealth him or herself in the future to make up for it.


The presence of debt as an accounting tool is caused by the fact that money itself is an accounting tool.  Money is a measure through which wealth is measured.  Distributions and flows of money is what allow for information to be transmitted for the functioning of the production consumption cycle.  The money is an abstract quantity designed for this information exchanged but the actual wealth is produced by producers and consumed by consumers.


How money is used in modern economies necessitates the use of dept so that producers can meet the demand of consumers.  If poorly regulated debt can hide the presence of economic stagnation and make it harder to deal with such a situation.