Less Returns for Labor More for Capital

Executive Summary

• The Michael Hudson Interview
• What it Means

The Michael Hudson Interview

Michael Hudson makes some very important points in this video:

Here are a few of them:

• The financial industry is making itself tax-free. Examples include the write-offs that are received due to bank mergers
• Real estate already does not pay much in taxes. This is enabled through multiple accelerated depreciation, which can be re-depreciated every time the asset changes hands.
• Money is taken from income taxes and used to subsidize the financial industry

In addition to this, we already know that corporations now pay on average only 7% of their profits in taxes (which is much different from the official rate of 35% percent).

Less Return for Income and Labor

What this means is that the US is a deeply financialized economy. Most of the benefits or returns now come to financial and real estate speculation and manipulation. The real losers are the actual industry (which is viewed as secondary and to be outsourced to places like China). Most of the taxes in the US are now paid on income. Thus the fake economy (finance, insurance, real estate) now floats tax-free on the real economy, which pays taxes. Furthermore, the more you make, the less as a percentage you pay. As Leona Helmsley one said.

Taxes are for little people. – Leona Hemlsley

What this means is that people who work for their money (what the financial industry calls the “working class”) will receive fewer and fewer benefits. They will pay more taxes, and if they choose to invest this money in corporate controlled 401k programs (which route money again to the finance sector) it will be also taken, probably in one of the busts that occur every 6 to 7 years in our system. The top 2% of the country now owns 2/3rds of the countries wealth. This is not by accident, and it was not accumulated through the “free market.”

The end result of this is labor should stop working so hard. The idea of hard work makes sense if you actually benefit from this work. However, why work so hard if most the benefits are going to corrupt overlords. The ultra wealthy in this country have decided to financialize the economy so that benefits are received from stock flipping, creating mortgage backed securities or real estate speculation. However, working hard if you bake bread or perform aircraft maintenance does not make a lot of sense anymore. When anyone puts in an hour of work now, they should remind themselves, “Most of the output of my labor just went to the ultra wealthy.”

Standards of living are dropping for 95% of the population (and have already gone up for the top 5% of the population). They will continue to drop for most people. There are 12 trillion in bailouts to the financial sector that must be repaid by the general population, in addition to trillions that must still be paid for the Iraq war (another giveaway but to energy, defense, and construction firms.) If the rest of the country decides not to do something about it (which apparently is going to be the outcome) then the answer lies in reducing one’s overhead, not in working harder.