Affiliation: Economic Adviser to Dennis Kucinich
Bio: David I. Kelley is one of the country's leading authorities on pension present value issues. Mr. Kelley received his M.A. from the University of Connecticut. He is a registered representative and a registered principal with the National Assoc. of Security Dealers, as well as a Certified Financial Planner. He is a frequent lecturer on pensions and present values for family law bar associations, Judicial Colleges, and companies across the U.S.
The complete entry is here: http://www.leftforum.org/panel/monopoly-land-bubble-and-financial-crisis-tactics-fight-1The panelists and I met twice in the months leading up to the forum. These are busy and sought-after people, of course, so we not only had to make the most of our meetings, but of the emails and organizing in between. Michael Hudson, in particular, seems to be everywhere these days, and said he was treated like a rock star at a stadium he and his colleagues recently spoke at in Italy (http://michael-hudson.com/2012/03/mmt-as-the-austerity-alternative/). You can bet we had some interesting and lively pre-panel discussions about economics, the Henry George School (where we met), and Henry George! Hudson reminded me that George himself alienated many of the kinds of progressives we were likely to find at the Left Forum, though he agreed with me that George was, and is, still to the Left of the Right-wing leadership running the country today. Hudson has had a not always congenial relationship with the Henry George School, or with Georgism (http://www.cooperativeindividualism.org/hudson_selling_henry_george.html and http://michael-hudson.com/2008/01/henry-georges-political-critics/), having worked for it in the 1990s, but he likes the direction board member Andrew Mazzone are helping take the school in, now that the leadership has changed. [i] I think this kind of catching up and dialog between important economic scholars is one of the most important and under-appreciated benefits of this sort of effort. Disagreements will remain, and these should never be trivialized, but as Hudson has written: "I have heard the argument from many Georgists that there would be no overall economic problem because what the government collects in land-rent tax will be matched by a corresponding un-taxing of labor and capital"It is true that overall functions could un-tax labor and capital and make up the difference with a land tax. This is what George said, and it is what I believe and support" (http://www.cooperativeindividualism.org/hudson_selling_henry_george.html).
I've used italics in the following speakers' sections, to indicate my own thoughts and additional analysis.
Andrew Mazzone
How did we get here? Andy Mazzone began to answer that with a too-brief, but still essential recapping and analysis of post-WWII American economic history. He read a 2-page opening written by Michael Hudson, which identified the stages of the recent crisis, and the missed opportunities, including the chance to shut down megabanks like Citibank, when the Government was the major stockholder. Mazzone then proceeded to expand upon recent history further. Coming out of WWII, America was the world's leading manufacturer, Europe and Japan having -- conveniently for us -- blown themselves up in the war. The U.S. as Mazzone said, had a hegemony of power, with American workforces making over 50% of all manufactured goods in the world -- up to 80% in the 1970s (http://www.nytimes.com/2009/02/20/business/worldbusiness/20iht-wbmake.1.20332814.html). Contrast that to today, when America makes about 65% of manufactured goods (according to MAPI) used domestically, and dropping, together with the relative lowering of wages for the manufacturing sector, and this shows just how much America has shifted from thriving off the products of a vibrant labor and middle class, just gaining its power in George's day, to our own time, when the FIRE sector now accounts for some 80% of GDP, according to some calculations - often led by panelist Dr. Michael Hudson: en.wikipedia.org/wiki/Financialization. This is an unprecedented and unearned amount of wealth, placed in the hands of the hands of the "parasite" or "vampire squid" class, as Hudson and originally, Matt Tiabbi described the Financial industry in a now infamous article: http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405. It is hard to overestimate the deleterious effect of this siphoning off of wealth, but the panelists tried valiantly.
Mazzone described the American post-WWII plan: it would end autarchic rule such as that in Nazi Germany, keep our competitive edge, while farming out the dirty, drudge work to cheaper manufacturing outside the country. (Prior to this panel, Mazzone indicated that this is the time he came of age and he has said that the opportunities he had in the latter half of the 20th century do not exist for young people today in America). The plan then was: rebuild Europe and Japan, certainly (but not Russia, which was now the competing model of Communism), but America must keep its technological leadership.
Only, because of the increasing dominance of the financial class -- which, as Dave Kelley later pointed out, produces next to nothing nowadays -- this is not what happened.
In the 1960s, said Mazzone, cracks began to appear in this strategy, from the military "policing" of the system draining American resources, and from the "rise of the rest." This was not the rise of the proletariat, but simply the result of Capitalism's march towards ever-lower pricing at the expense of the workers, never the monopoly class, which absorbed, not so much created, wealth that even the vanquished European autocrats could not have imagined. But, as Kelley pointed out later, it has simply become impossible in our time, for the consumer class to continue to consume when middle class incomes had been slashed so severely. In a later analogy from Hudson, he said the parasite is rudely killing its host.
Mazzone talked about how free trade does not necessarily go along with imperialism. Imperialism might typically require protectionism, but in this case, he said, America had no choice because it was impossible to keep the protected countries from developing the technology that would eventually displace the workers of the American protector. By the 1970s, the outsource-based erosion was well underway. Both Mazzone and Hudson talked about the financialization of America and how this has led to a structural debt problem and the erosion of purchasing power now well known to everyone. He concluded that this was done because the financial elites really don't care what happens to America, but only about making money in a "virtual country." (In a separate discussion with Mazzone, well before this panel, he had remarked to me that the new strategy of the elite is basically to buy and sell to themselves - say, the top 15% - or less, over time, as wealth become increasingly concentrated, while the bulk of the population is given just enough to keep them from revolting. But, as I pointed out then, and as Kelley, Mazzone, and Hudson support, the newly powerful rentier class [ii] cannot survive without living off the productive class. The irony of meeting in a room, in a building, in a city, all built from labor, not financialization, should not be overlooked either. More pointedly, I said having a robust middle class might be impossible without a significant manufacturing base). Mazzone said the U.S. collected $3 trillion in taxes, 85% from income taxes.
He broke our economic assets further:
Land : $6 trillion. This, of course, is under-assessed and under-taxed. In NYC alone, Common Ground estimates $1 trillion in land values, about twice the official total from the NYC Dept of Finance.
Oil : $3 trillion. Ditto from above; this is probably too low, especially now, with fast-rising oil prices. It is my opinion that a Georgist ~100% resource tax on oil, as close to below the wellhead as possible, would end speculation and spur productivity and efficiency. It would also allow for consistent planning by the alternate energy industry.
Gold and surpluses from monopolies : $7 trillion. This amount, it seems to me, is both too low, and open to interpretation.
Total : $16 trillion
Therefore, says Mazzone, a tax of just 20% on unearned, in some cases, monopoly, income, would produce the amount of last year's Federal budget: $3 trillion. Taxing unearned income does not affect productivity or initiatives. The effect of untaxing labor and sales at the same time, while alone unable to stop the monopolization of Land [iii] by the elites, together with a Georgist tax on Land and monopolies, would add to the national wealth pie through greater opportunity and productivity gains. It would also eliminate the highly destructive effects of commodity speculation and would slow resource depletion and pollution . The taxing of monopolies is not strictly Georgist, though it may be complimentary. Yet, in this writer's opinion, the precise method of calculating the "surplus" Mazzone speaks of needs to be worked out more thoroughly, though he has told me elsewhere that a strict formula may not be possible. Life is not always neatly divisible by 2!
Michael Hudson
It was Hudson's turn next.
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