Financial elites and their economic defenders continue to advocate for globalism, central bank sponsored inflation, and the financialization of the world. Apologists for elitism ignore the plight of working and middle class Americans. Waving false flags they rationalize the inequities and hazards of the exploitative systems they've helped devise. The allegedly ameliorative reforms they propose boil down to a continuation of disruptive woes: unsustainable economic growth, unceasing financial stimulus, and cost burdens for global environmental remediation transferred from corporations with historically high profits to hard pressed working class consumers.
Capitalism's economists focus excessively upon securing near-term economic growth and corporate profit maximization. In so doing they jeopardize quality of life prospects for regular Americans. In over-building the global economy in the context of a stressed natural resource environment, these princes of plunder bring the world nearer to global conflict. Still, they like to believe that a world knitted together through global commerce, financial interdependence, democratic institutions and open immigration is impervious to overwhelming disruptions. They forget that holders of concentrated wealth have always pushed the world toward war when their disproportionate stakes were threatened by resource constraints. The costs of the next world war in lives and other measures will demonstrate that wealth concentrated without true merit invites corruption, conflict and a debasement of the public good.
Why The Wealth Gap Grows
Defenders of the ascendent version of global capitalism refuse alternative economic systems due to their attachment to the market's highly disparate wealth distribution architecture. Elite economists, neoconservative and neoliberal alike, long ago abandoned a definition of financial merit that responsibly connects the size and nature of rewards with real world contributions to the sustainable public good. Elites expect to see a tight, logical connection between worker contributions and payroll compensation, but substitute an astronomically inflated merit metric when it comes to executive, investor and celebrity rewards. Yet, massively inflated remuneration is not an imperative for high performance: a fact validated by countless millions of workers in their workplace excellence. In this context the wealth gap in developed and developing nations should be growing narrower, not wider.
A critical problem in the existing system is that economic goals have substantially displaced other important values. Defenders of the existing system decry any retreat from profit maximization that could put at risk the valuation of tens of trillions of dollars of assets: bonds, stocks, real estate and passively held wealth that appreciates due to growth enabled expectations. Nonetheless, threats to security repeatedly emerge when economic systems are upheld up by the pillars of pervasive institutionalized debt and asset inflation.
Debt invites controlled inflation to make obligations more readily payable. Inflated prices invite new debt so that demand in an economy can be sustained. Wealth built upon the ownership of other people's securitized debts requires growth to reduce risks to debt repayment. Growth, in turn, invites a preoccupation with wealth acquisition because growth leverages the value of capital relative to labor and workplace ingenuity. Growth invites crises and calamities when growth plans inadequately account for the resource constraints of a finite planet.
Deconstructing the Growth Imperative
It is widely held that about one-third of humanity enjoys a satisfactory standard of living, materially speaking. Due to natural resource constraints and other dynamics, two-thirds of the world's population does not possess anything close to the median standard of living in Europe. Yet, Europe provides but a moderate standard of living in terms of energy consumption, housing amenities and transportation options. In short, there is no sustainable solution that could provide global social justice in material well-being. The world's human population is already far too large to support a global version of Europe's good life. Nevertheless, apologists for the world's existing economic architecture want more stimulus and more growth. What is the logic of such a growth imperative if not to serve privilege at the expense of fair opportunity? Indeed, with every passing year there are more people left behind than brought forward into middle class lifestyles.
World population is growing at a net rate of 80 million persons annually, the growth skewed toward the poorest countries. Does this trouble globalists? Not usually. Emigration from poor countries results in the acquisition of new workers for multinational corporations. Once placed behind modern machines, these workers' productivity soars as does their ability to demand goods and services. The result is greater economic output as well as demand, which translate into more growth and greater corporate profits.
The modern system is far more efficient than was institutionalized slavery in earlier centuries. Machines leverage worker skills while competition requires continuing performance. Freedom accentuates the consumerism that results from worker income. All that is left is to insure that workers in voluntary servitude are sufficiently trained, suitably fed, adequately housed, media entertained, and sufficiently intoxicated and medicated as needed. This is the prescription for the prosperity of global elites.
Globalists and their economic gurus want relatively open borders for money and people. Relatively open borders mean a constant flow of cheap labor into developed countries from developing countries, and on down the line. Wage pressures place a check on CPI inflation, thus allowing monetary policy to run hotter on behalf of asset appreciation. Meanwhile, wage pressures in the workplace enlarge profits for capital holders, thus allowing the winnings of executives and investors to climb.
The dramatic turn toward populism in Europe and the U.S. is sending a political signal to financial elites that they have pushed their share of national income as high as democratic electorates are willing to tolerate under current circumstances. Social media and internet blogging have provided alternative channels by which discontented voters can organize. Nevertheless, the complexity of global economics is likely to limit the effectiveness of voters' efforts to hold elites accountable for widening wealth gaps in the U.S. and Europe. The financialization of the economy is likely to persist, with excesses trimmed back only at unimportant margins.
Globalization has momentum: its inertia favors the ends sought by elites over the vision of populists. Key presidential appointments will continue to ensure that the financial sector's goals are subsidized, as the general mindset of U.S. Senators supports this outcome. Populism's dreams of a redistribution of opportunity and wealth in America will not be realized until populism develops a robust intellectual movement that understands morally measured merit, sustainable economics, and politically viable means of instrumenting sound goals.