Monday, January 27, 2014

The Perfect Ponzi Scheme

Last week, Thomas Perkins complained that governments were treating the very rich like Jews in Nazi Germany. Paul Krugman writes that such plutocratic paranoia is not an isolated instance:

There are a number of other plutocrats who manage to keep Hitler out of their remarks but who nonetheless hold, and loudly express, political and economic views that combine paranoia and megalomania in equal measure.

I know that sounds strong. But look at all the speeches and opinion pieces by Wall Streeters accusing President Obama — who has never done anything more than say the obvious, that some bankers behaved badly — of demonizing and persecuting the rich. And look at how many of those making these accusations also made the ludicrously self-centered claim that their hurt feelings (as opposed to things like household debt and premature fiscal austerity) were the main thing holding the economy back.

 What is even more disturbing is that the new plutocrats know they are parasites: 
I also suspect that today’s Masters of the Universe are insecure about the nature of their success. We’re not talking captains of industry here, men who make stuff. We are, instead, talking about wheeler-dealers, men who push money around and get rich by skimming some off the top as it sloshes by. They may boast that they are job creators, the people who make the economy work, but are they really adding value? Many of us doubt it — and so, I suspect, do some of the wealthy themselves, a form of self-doubt that causes them to lash out even more furiously at their critics.

And, completing the vicious circle, our political class have likewise become parasites. They rely on the plutocrats for nourishment. It's the perfect Ponzi scheme.


Rural said...

So what we have is Plutocrats supporting Oligarchs so long as said Oligarchs support said Plutocrats, ponzi scheme indeed......

Owen Gray said...

It's a gated community, Rural. And they're doing their best to keep the plebeians out.

Richard said...

Actually, the global economy meets the very definition of a Ponzi scheme:

It requires infinite growth and there is always more debt than currency to service it which requires even more loans with even more interest, and so on. The government's borrow from the banks and the banks make private profit off the interest from currency they produce out of thin air which is then paid back with the peasants' hard earned cash.

What you are identifying in this piece here are the relationships around the inherit Ponzi-conomy.

Owen Gray said...

And eventually -- as you pointed out the other day, Richard -- it ends in a liquidity trap.

The Mound of Sound said...

Although the plutocrats act in a degree of harmony that suggests collectivity, they see themselves as individuals.

When viewed from that solitary perspective it's easier to avoid recognizing what the plutocrats, as a class, are doing to their society or even to their own class. It is far easier to absolve oneself from responsibility for inequality or the social ills it spawns that it is when you weigh the forces of plutocracy across the class.

Owen Gray said...

Krugman writes that Roosevelt correctly called these folks "organized money," Mound.

And they have relied on organization to hijack democracy.