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The Vocabulary of Economic Deception

By Patrick follow Patrick   2019 Jan 7, 6:51pm 857 views   10 comments   watch   nsfw   quote   share

Just as history is written by the victors, you point out that economic vocabulary is defined by today ís victors, the rentier financial class. How is this deception accomplished?

MICHAEL HUDSON: It’s been accomplished in a number of ways. The first and most brutal way was simply to stop teaching the history of economic thought. When I went to school 60 years ago, every graduate economics student had to study the history of economic thought. You’d get Adam Smith, Ricardo and John Stuart Mill, Marx and Veblen. Their analysis had a common denominator: a focus on unearned income, which they called rent. Classical economics distinguished between productive and unproductive activity, and hence between wealth and overhead. The traditional landlord class inherited its wealth from ancestors who conquered the land by military force. These hereditary landlords extract rent, but don’t do anything to create a product. They don’t produce output. ...

An economic fight ensued and the parasites won. The first thing rentiers – the financial class and monopolists, a.k.a. the 1% – did was to say, ‘We’ve got to stop teaching the history of economic thought so that people don’t even have a memory that there is any such a thing as economic rent as unearned income or the various policies proposed to minimize it. We have to take the slogan of the socialist reformers – a free market – and redefine it as a free market is one free from government – that is, from ‘socialism’ – not free from landlords, bankers and monopolists.’ They turned the vocabulary upside down to mean the opposite. But in order to promote this deceptive vocabulary they had to erase all memory of the fact that these words originally meant the opposite. ...

Reform used to mean something social democratic. It meant getting rid of special privileges, getting rid of monopolies and protecting labor and consumers. It meant controlling the prices that monopolies could charge, and regulating the economy to prevent fraud or exploitation – and most of all, to prevent unearned income or tax it away. ...

The same logic applies to insurance. When President Obama passed the basically Republican Obamacare law advocated by the pharmaceutical and health management sectors, the cost of medical care went way up in the United States. It was organized so as to be a giveaway to the healthcare and pharmaceutical monopolies.

None of this increased payment for medical care increases its quality. In fact, the more that’s paid for medical care, the more the service declines, because it is paid to health insurance companies that try to legally fight against consumers. The effect is predatory, not productive.
1   PeopleUnited   ignore (1)   2019 Jan 8, 4:59am     ↓ dislike (0)   quote   flag      

Thanks for sharing Patrick. Economic and social illiteracy (in addition to spiritual depravity) is a defining characteristic of the times we live in. The lack of knowledge and understanding that people have for the world we live in is preventing them from pursuing let alone instituting meaningful change for the 99%.

The law of unintended consequences is a perfect example of how well meaning people pave the way to their own destruction.

How can we change anything without the support of academia? Now days academia is mired in gender/diversity/climate change issues and forgotten the most basic problems that individuals face in a modern world, which are economic problems.
2   Reality   ignore (7)   2019 Jan 8, 5:47am     ↓ dislike (0)   quote   flag      

Hudson however is engaging in the same vocabulary of economic deception: the rent collected by landlords in a competitive market place (not talking about a landlord owning half the town situation) is not economic rent but service for his maintenance of the building as well as planning (including paying for the previous caretakers' and developers' labor, including management and planning as labor). The town/city collecting property tax (essentially at gun point) to pay monopolistic public school, PD, FD and "urban planning" has far more monopolistic market power. The State and Federal governments have even more monopolistic power than the local governments. In fact, every real monopoly has to be licensed / endorsed by the government. Monopolies like the government-licensed medical industry don't even call the economic rent they collect as "rent" or even "unearned income" but "earned income." How exactly is a city planner's pay (after getting his job by "connection" because his dad was the head of the planning division) "earned income" whereas an investor's gain from risking his own capital buying dilapidated house and restoring it to habitable condition "unearned income"? Yet, that's how the tax codes say. Seems to me "earned income" should be defined as market place gains (paid in by others in voluntary exchanges), whereas "unearned income" should be defined as all income from government (which makes coerced transfers).

The Marxist antipathy towards inheritance (a "tradition" they took from the French Revolution) betrays their sociopathic mind. Michael Hudson is a self-avowed Marxist economist, and his father was a Marxist/Communist/Trotsyist activist, most likely bought and paid for. I'm sure they picked high quality women for wives; if they really want everyone to be born the same, they can offer their wives and daughters on the block, so that every man's sperm has the same chance and every new child can have the same opportunity inside the wombs. The very fact that W could be president and Hilary could be a viable candidate (and the Roosevelts, Adams, and even fools like Gore) proves that inheritance goes far beyond monetary inheritance. If anything, monetary/resource inheritance, just like private property ownership, is a counter-balance to inherited political power; fundamentally, the inequality at birth comes from everyone of us caring for our own children . . . and more importantly, men/women/sexual-reproduction and evolution exist because each one of us wants our own offspring to be better off. Significant wealth usually takes more than one generation to build. What checks the king's power is not a sea of penniless peasants who have to worry about their next meal, but a crowd of barons. The centralization of power always starts with reducing baronial power, and that is what the communists really want: centralization of power and imagining themselves holding that power, not realizing that centralization of power would inevitably create a killing field around that power.
3   FortWayneIndiana   ignore (2)   2019 Jan 8, 6:31am     ↓ dislike (1)   quote   flag      

Good read, thanks for sharing. Didn’t even realize this until right now.
4   HeadSet   ignore (3)   2019 Jan 8, 6:48am     ↓ dislike (0)   quote   flag      

an investor's gain from risking his own capital buying dilapidated house and restoring it to habitable condition

Yep, That is what I did. No inheritance, I have to use savings from being an employee along with money I had to beg from a bank loan officer. At that I time I could only afford a dilapidated home to buy as an investment. I spent 4 months doing the work myself including tearing out all drywall, putting up insulation plus redoing the electric and plumbing. Then I had to dig into my own pocket to pay an HVAC guy to put in heat/AC. This first house was not very profitable, but I did learn enough to make money on 5 others that I bought, repaired, and rented out for a few years before selling. Contrast this with the FHA 230k program where the FHA financed the purchase of dilapidated owns, and allowed the borrower to finance everything, including profit. The idea was to increase the supply of affordable homes. But what happened is that some firms bought up a collection of need-work homes, did a quick skim coat repair, and let the homes go into foreclosure with the FHA picking up the tab. The FHA 203k program was ended for that reason.
5   Patrick   ignore (1)   2019 Jan 8, 7:59am     ↓ dislike (0)   quote   flag      

Reality says
the rent collected by landlords in a competitive market place (not talking about a landlord owning half the town situation) is not economic rent but service for his maintenance of the building

The rent on the land is economic (non-productive) rent, for which the landlord did nothing productive for anyone. Pure parasitism.

The rent on the building is definitely justified compensation for building or maintaining it. The building is the result of productive work.
6   Reality   ignore (7)   2019 Jan 8, 9:26am     ↓ dislike (0)   quote   flag      

Georgist "land" may have been significant a century and half ago at the time of Henry George, when people mostly farmed on family plots without massive nitrogen enrichment.

Nowadays, "land" that are valuable, i.e. building plots in cities, are largely result of land-forming (part of development), plot development (connecting utility lines and road to it) and survey / title management. There have been 100+ years of tax-paying and title management/insurance that the value of those "land" are largely the result of those long chains of title management/defense and tax-payment (i.e. paying for local roads and utility lines, as well as maintenance of neighborhood). This point is illustrated by the fact that building plots with ambiguous titles are worth much much less than normal building plots with valid chain of title (many plots with ambiguous titles are not worth anything), and land in a shitty neighborhood is not worth much of anything.

Farm land in active tilling has also been largely the result of improvement, management and active nitrogenation in the past half century or longer. Otherwise, the land itself would have turned into dust bowl (unplantable) in the 1930's (after a few decades of intensive planting without proper land enrichment and reconditioning like what was started in the 1950's).

There might still be some "virgin land" somewhere, but they are largely not worth much of anything per acre. Land as close as 1hr drive of San Fran, NYC, DC or Boston (the 4 most expensive metros) is as cheap as $1000 - $10,000 per acre. That's negligible value compared to a house costing into millions.
7   HeadSet   ignore (3)   2019 Jan 8, 10:46am     ↓ dislike (0)   quote   flag      

The rent on the land is economic (non-productive) rent, for which the landlord did nothing productive for anyone. Pure parasitism.

The amount of yard work I had to do belies this statement. On one property, I had to remove 17 trees. On the last rental house I sold off, I had to revive a dead lawn. Lots of seeding and watering. The house I had build for my primary resident had to be excavated down 50 feet or so, and then filled in with 14 dump trucks of 50 stone before the basement could be poured on top of it. Land does not come ready made for either the farmer or home builder. Also consider a man who buys 100 acres of rural acreage. That land is not worth much as it came, but becomes valuable only after the builder lays in roads and utilities. It takes labor and expense to make raw land suitable for a building.
8   HEYYOU   ignore (50)   2019 Jan 8, 11:10am     ↓ dislike (0)   quote   flag      

Economic deception- Fiat currency that has no support except delusions & debt that can't be repaid.
What's the saying about a forest & trees ?
9   APOCALYPSEFUCKisShostakovitch   ignore (52)   2019 Jan 8, 11:29am     ↓ dislike (0)   quote   flag      

If we don't pay off the medical-death-management complex, doctors will simply climb up on the roofs of their mansions and start shooting.
10   PeopleUnited   ignore (1)   2019 Jan 8, 6:40pm     ↓ dislike (0)   quote   flag      

Rather than promoting the interests of the common man, (who would prefer to keep the cost of land ownership and land taxation down) wouldn't Georgism actually make it more expensive to buy and own land and thereby increase the likelihood that the 99% could ill afford to own land?

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