The Wall Street financiers are not the best and the brightest [ix] said Kelley.
"How is this just?" he asked, his voice rising in incredulation, and echoing the sentiment of the crowd. We are told, Kelley said, quoting Margaret Thatcher that, "There Is No Alternative" (this has sometimes been called TINA by Thatcher, and then later, economists, usually more critically than her - http://en.wikipedia.org/wiki/There_is_no_alternative). Yet Germany, which was cited by Hudson earlier, has just 81.5 million people, and the 4th highest manufacturing base in the world. Turning to a solution, Kelley pointed to Kucinich's bill, HR2990, the N.E.E.D. Act, which would simply spend debt-free money [x] into the real economy, for infrastructure, education and even Social Security. (The benefits of Greenbacking, as this bill would do, are beyond the scope of this paper, but it is agreed by Hudson and Mazzone, both Georgist experts, and indisputable, that Henry George was a Greenbacker as well, coming right out and saying so at least once - http://www.monetary.org/henry-georges-concept-of-money-ful/2010/12).
Kelley used several depressing examples of oppositional smear-politics and lies from the ill-fated Kucinich campaign to demonstrate the sorry state of political dialog in America today. Clearly, this is not new -- Tammany Hall counted out Henry George in the 1886 Mayoral race too. But it is exactly the sort of thing that must be addressed if we are ever to have a society not rule by rentiers. The political answer says Kelley, is OWS, direct action, and embarrassing people with their lies.
Questions and Answers
Naturally, the audience had many questions for the panel, and moderator Dr. Cay Hehner handled them deftly and in order, until it was finally time to leave the room.
Q: Why don't industrialists criticize financial firms and their practices?
A: Hudson: There is nothing to criticize if you are doing the same thing. Hudson had the chance the elaborate on the financialization of industry, turning them effectively into banks. With Mazzone's prompting, he brought up the case of General Electric as an example -- a firm that many people still think of as the quintessential manufacturing industrial, but which, thanks to GE Capital, has now been turned in large part into a bank. GE Capital famously flamed and burned, while finding new ways to create credit and turning that into profit, for a while. For a while, said Hudson, GMAC provided most of the profits to GM. Even countries, Hudson said, have been financialized, forced to sell off parts of themselves to outside buyers -- an example being Greece, which is selling off some of its smaller islands. Greece may be going toward the Iceland model, Hudson says, as a monetarily sovereign nation again, out of the Euro. In this author's opinion, this would be a healthy development in the long run, and a good example to the world.
Q: How does the financial sector enable its own recovery by staging a global Land grab?
A: Hudson explained that post-WWII, the countries were divided up by the Allied powers, the earliest example of a "Land grab." He gave an example of how the financiers indebted Greece permanently. The debt crisis in Greece is being used to privatize everything, and turn the economy into a "toll booth economy." Greece has had a dictator imposed upon them, because a democratic election would have gone against the rentiers (and Germany). That's why Greece is going the way of Iceland.
Workers too, says Hudson, have been forced to become stockholders, actually put in the perverse position of wishing for the company's stock to rise and benefit their pensions, while tacitly supporting the downsizing of their own employment and wages as drags on profits. It is, as Hudson put it, "Making labor vote for its own downfall." Returning to the malfeasance of so-called "private equity" Hudson pointed out that one half of all pension funds have gone broke, and used as an example, Sam Zell's pension-raiding corporate takeover of the Tribune media empire that ultimately resulted in chapter 11 bankruptcy (http://en.wikipedia.org/wiki/Sam_Zell). He suggested that pensions should move towards a German-type system of pay-as-you-go instead of invested pensions that must make a certain return to be "solvent [xi] ". Occupy Wall Street, said Hudson, is on the right track in calling for restructuring the financial system, not simply fixing it. Nothing less will do.
Q: (Hudson) said 80% of all loans are mortgages, and banks are not making loans to businesses. Could you talk about that?
A: Kelley pointed out that banks do not loan to start businesses, or as venture capitalists, but only against collateral or against receivables, explaining why small businesses cannot get off the ground with new credit. "Banks no longer fund companies. They only loan to each other for casino games."
Q: If you eliminated the deductions and subsidies, what would happen to the FIRE sector?
A: Hudson, who is an adviser to the Chinese Government, also said that real estate is included in Chinese financial statements but not in American ones, an important point to Georgists who want to see Land get its proper accounting, but still falling short of the true solution of taxing land itself to prevent bubbles (China is having its own land bubble). Hudson also said that the real estate sector in America has not paid taxes since 1945, due to alleged, and repeated, depreciations, nor have mining companies, as taxes have been shifted onto labor instead.
I wish he'd had time to delve into this more, but we finally had to go.