Banks as collateral damage in a class war
annpettifor.substack.com
annpettifor.substack.com
Keeping nominal interest rates low will just continue the malinvestment and speculative ridiculousness of the last decade (or three) and risk serious inflation and political instability. Raising nominal interest rates hurts everyone and, as always, the primary burden will fall on the now heavily-indebted working and middle classes (capitalism, red in tooth and claw, for the masses, socialism for the rich).
The problem is too much debt, full stop. The fair way to address this is a modern debt jubilee: everyone gets the same nominal payout, debtors must use the payout to pay off debt, non-debtors may keep the money and do what they please with it.
https://think-beyondtheobvious.com/reducing-debt-via-a-moder...
Of course, Keen is completely ignored by modern economists becase "debt doesn't matter" and "we owe it to ourselves." Meanwhile, in the real world, the who are whomsting the whom, good and hard, and paying court economists a tidy speakers fee to not notice.
So it goes.
At the end of the day, we get what we deserve.
Doesn't this fuck over savers who have their money parked in fixed income securities, while giving a huge boon to anyone owning equity in indebted companies? On a comparative basis, it also hugely benefits people in their late twenties/thirties who were able to take out massive loans (ie. mortgage) while not doing much for everyone else.
It does dig younger people out of crushing debt, yes. That's the point: they can start a life without exponentially increasing debt grinding them to dust. This lets them participate in the wealth of the nation and incentivizes them to work and build families, thus producing more real wealth, rather than checking out and making just enough to pay the interest and monthly subscriptions.
There is no way out of this that doesn't involve helping young people throw off the yoke of crushing usury. A modern debt jubilee is the fairest way to do that: it rewards savers to an extent with free and clear money while paying off the debt of debtors.
The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear.
This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.
The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash.
Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically.
Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.
And is basically equivalent to “why don’t we just print more money and give it everyone?”.
And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…
I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.
Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation.
Rather, it is about:
- keeping it as simple and hard to game as possible
- reducing total debt in the economy to a sustainable level
If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.
You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.
If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%.
Now the poor who had debt no longer have debt but the price of life has gone way up for them.
The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money.
Thinking about this more, this like the poorer you are the worse off you'd now be in this situation.
Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.
But the net result was (AFAIK) a significant drop in indebtedness and poverty.
But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.
Also not practically possible at least in the real world. Which is possibly why it sounds so great…
Even if debtors pay off a chunk of their debt, companies will be lining up to offer them new debt, especially as the chance of default goes down with the new precedent.
The way a real debt jubilee has to work is that debt is repudiated, with the creditor left holding the bag - not made good on.
Still, it's not that hopeless. I've seen a lot of people get out of debt. You don't have to go into debt for things and you sure don't have to remain in debt.
People aren't as helpless as you think.
On the other hand, I recognize that the majority of people, and, importantly, young people have either been lured or forced into crushing debt for things like education, housing, medical care, trinkets and so forth. It is at the point now that, regardless of how you feel about the individual morality of a given debtor, it is threatening the whole economy.
We need to reduce total debt in the economy. A modern debt jubilee is the fairest way to do it.
Instead, we'll raise rates, crush the middle and working classes, and bail out the rich.
I'm sure there are more than enough people that carelessly got themselves into debt... They bought into the consumerist world we live in. It's hard to resist. But there are also many that are stuck in generational economic turmoil, that don't have the tools to dig themselves out.
If it's just that you currently don't have debt because you've paid off your student loans and your mortgage, then congrats I guess?
We are living in a silly debt fueled age where many people can't even afford to go into debt for a house these days. But banks are happy to give them credit for consumer shit like phones.
It wouldn't hurt you, it just wouldn't help. You wouldn't be hurting. I think that is a distinction. You don't get the help, because you don't need it. They do say "Fair isn't everyone gets the same thing, fair is where everyone gets what they need."
It is unsustainable.
I get the feeling you've never lived around Evangelicals or Mormons.
Joining the right church is a long-standing method of business/career networking.
I don't think you realize the business opportunities you're missing out on.
They aren't exclusively hiring their own, but it's human nature to trust those closer to you. I've seen this heavily reflected in the evangelical and Mormon communities, but you'd never know unless you had insight via friends or family.
A lack of tribalism and a high-trust society, heavily influenced by the Church's ban on cousin marriage, is why the west was able to become so wealthy.
OK fine, it's a slightly different thesis but it's the correct one ;)
There's a theory that the faster things happen, the better - where we forgive outright fraud because it's theoretically driving commerce. In my experience, badly run (or intentionally fraudulent) businesses actually kill an entire area of commerce - by cheating and often going bankrupt on suppliers who then go out of business themselves rather than being able to provide their product to actually competitive companies who would remain in business.
Slower capital might mean more care and less fraud, but not implicitly. On the other hand, the velocity of capital through a system is at least one measure of its health and prosperity, and a system that deliberately tolerates a moderate amount of risk to min/max fraud/velocity is probably going to be healthier than one that errs too much on their side of either factor (at least in a very simplistic manner— of course there are many more factors and considerations as well)
The problem is that we seem to have entirely ignored the moral risk where some people (criminals in all but name) continually abuse the same issues. Companies intentionally go bankrupt with a ton of debt rather than trying to minimize debt when it implodes. I've seen companies buy big pieces of equipment just before bankruptcy which were then sold to pay general debts, only a small portion of which went to the seller. Management knew they were likely caput but they didn't act like it.
Mistakes can happen, but in this case it wasn't a mistake and it was incentivized - not just allowed - by our system. At this point it's not a tradeoff, it's a trap that we're stuck in while its being exploited.
If I borrowed your car and my garage burned down with it inside you wouldn't hold a grudge, but if I knowingly parked it in a burning garage you would.
From this I can gather that Sumerian kings on average didn't live very long. ;-)
> They also had serious difficulties in recovering money lent to Christians because either the repayment term was after August 10, the deadline for their departure, or many of the debtors claimed "usury fraud," knowing that the Jews would not have time for the courts to rule in their favor.
“Due to the precarious position of Jews, some nobles could ignore their debts. If the sponsoring noble died, his Jewish financier could face exile or execution.”
Thank you for adding this link.
Not really. It helps savers and punishes those who took undue amounts of risk.
Wouldn't this be very inflationary? It's approximately equivalent to "give everyone $X". I don't see any discussion at the link about how people would react to the dollar (and any dollar-denominated savings, wages, etc) suddenly being worth far less?
What's the difference between money suddenly being worth far less [1] and real income dropping so individuals have much less spending power - which is something that has been happening for most of the population since the late 70s?
[1] Assuming inflation would be the result, which is debatable.
This isn't true, though, even if you restrict to the US? Here's inflation-adjusted median individual income: https://fred.stlouisfed.org/series/MEPAINUSA672N It's up 40% since the late 70s.
This started happening as soon as the US dollar was completely unpegged from gold, allowing unlimited seigniorage to banks (the first spenders of newly printed money) via the Cantillon effect.
Yes?
I mean that’s sort of what happened during Covid (savings rates increased dramatically in the short term)…
In this case the currency would br hugely inflated, but it would only harm people who didn't get the payment. This might lead to everyone getting a million dollar. Now a carrot might cost $50 which doesn't matter, because you got a lot more dollars.
Inflation is a problem when the costs of different things, especially wages, don't increase at the same rate or you have a lot of savings in cash.
income net worth
-------- -----------
A: $20,000 $0
B: $30,000 $1,000
C: $50,000 -$80,000
D: $100,000 $300,000
E: $500,000 $10,000,000
income net worth
-------- -----------
A: $20,000 $100,000
B: $30,000 $101,000
C: $50,000 $20,000
D: $100,000 $400,000
E: $500,000 $10,100,000
This idea seems wildly inflationary to me, but I would love to hear why I am wrong. We have to remember that someone’s expense is someone else’s income. In other words, if all debt is paid off, then lendors will get a huge payday and have excess income to spend. In the end, this is exactly like injecting money directly into the economy like we did with covid stimulus.
A debt jubilee is an emergency surgery to deal with a critical situation. Convincing the patient to eat healthy is also important, but needs to happen afterwards.
"A nation of thirty millions of people, had been for ten years agitated by the most terrible convulsions... Conflagrations had laid the palaces of the wealthy in ruins, and the green lawns where their children had played, had been crimsoned with the blood of fathers and sons, mothers and daughters.
A gigantic system of robbery had seized upon houses and lands and every species of property and had turned thousands of the opulent out into destitution, beggary, and death. Pollution had been legalized by the voice of God-defying lust, and France, la belle France, had been converted into a disgusting warehouse of infamy. Law, with suicidal hand, had destroyed itself, and the decisions of the legislature swayed to and fro, in accordance with the hideous clamors of the mob. The guillotine, with gutters ever clotted with human gore, was the only argument which anarchy condescended to use. Effectually it silenced every remonstrating tongue.
Constitution after constitution had risen, like mushrooms, in a night, and like mushrooms had perished in a day. Civil war was raging with bloodhound fury in France, Monarchists and Jacobins grappling each other infuriate with despair. The allied kings of Europe, who by their alliance had fanned these flames of rage and ruin, were gazing with terror upon the portentous prodigy, and were surrounding France with their navies and their armies. The people had been enslaved for centuries by the king and the nobles. Their oppression had been execrable, and it had become absolutely unendurable. 'We, the millions,' they exclaimed in their rage, 'will no longer minister to your voluptuousness, and pride, and lust.'
'You shall, you insolent dogs,' exclaimed kings and nobles, 'we heed not your barking.'
'You shall,' reiterated the Pope, in the portentous thunderings of the Vatican. 'You shall', came echoed back from the palaces of Vienna, from the dome of the Kremlin, from the seraglio of the Turk, and, in tones deeper, stronger, more resolute, from constitutional, liberty-loving, happy England.
Then was France a volcano, and its lava-streams deluged Europe. The people were desperate. In the blind fury of their frenzied self-defense they lost all consideration. The castles of the nobles were but the monuments of past taxation and servitude. With yells of hatred the infuriated populace razed them to the ground. The palaces of the kings, where, for uncounted centuries, dissolute monarchs had reveled in enervating and heaven-forbidden pleasures, were but national badges of the bondage of the people... At one bound France had passed from despotism to anarchy. The kingly tyrant, with golden crown and iron sceptre, surrounded by wealthy nobles and dissolute beauties, had disappeared, and a many-headed monster, rapacious and blood-thirsty, vulgar and revolting, had emerged from mines and workshops and the cellars of vice and penury, like one of the spectres of fairy tales to fill his place. France had passed from Monarchy, not to healthy Republicanism, but to Jacobinism, to the reign of the mob. Napoleon utterly abhorred the tyranny of the king. He also utterly abhorred the despotism of vulgar, violent, sanguinary Jacobin misrule. The latter he regarded with even deeper repugnance than the former.
'I frankly confess,' said Napoleon, again and again, "that I must choose between Bourbon oppression, and mob violence, I infinitely prefer the former.'
... He had two foes to encounter, each formidable, the royalists of combined Europe and the mob of Paris. The quiet and undoubting self-confidence with which he entered upon this enterprise, is one of the most remarkable events in the whole of his extraordinary career. He took with him no armies to hew down opposition. He engaged in no deep-laid and wide-spread conspiracy. Relying upon the energies of his own mind, and upon the sympathies of the great mass of the people, he went alone, with but one or two companions, to whom he revealed not his thoughts, to gather into his hands the scattered reins of power. Never did he encounter more fearful peril. The cruisers of England, Russia, Turkey, of allied Europe in arms against France, thronged the Mediterranean. How could he hope to escape them? The guillotine was red with blood. Every one who had dared to oppose the mob had perished upon it. How could Napoleon venture, single-handed, to beard this terrible lion in his den?"
- John Stevens Cabot Abbott, "Napoleon Bonaparte" (1855)
For instance, housing inflation has to do with people who have long-running cheap mortgages who don't want to sell their asset just to pay a higher monthly premium while the market is in low supply. So shouldn't your calculation also take into account supply and demand?
Relatively, the wealth of the poor will increase more because, say, 100k, is life changing for a poor person but not as big a deal for a rich person.
The important part is reducing the total debt load and the exponent sitting on top of it.
Would it be perfect? Of course not, nothing is. But it's the fairest way I have heard of to broadly reduce the debt load in a manner that addresses the underlying issue of too much debt.
Additionally people would take on more debt, after freed from their current monthly payments, so you would predict consumption would rise even if the only effect were debt cancellation.
With rates approaching zero it was rational to load up on second mortgages, driving up the totality of the debt. If you managed to lock in a sub-3% loan few years back, it's irrational to accelerate repayment.
I'm generally supportive of these types of measures especially in a financial crisis, but keep in mind that economically, this isn't too different from a bank bailout. The primary net effect of giving people money to pay off their loans is making lenders whole.
Well no, that's the net effect if you give insolvent people money to pay their loans; but if you erase the debt of people who would keep on paying that money for decades, then this has the immediate impact of freeing up a big part of their next paycheck - which otherwise would go to that loan payment - to be spent or invested elsewhere, and this doesn't happen if you just make a bank bailout.
The rest of what you're talking about is fairly standard economic stimulus and it's not that controversial or unprecedented and has little to do with debt jubilee.
I'm not necessarily against any of this - the point is more that the mechanism proposed (giving money to everyone with the intent of helping people pay off their loans) does not match the rhetoric (GP decrying too much debt and socialism for the rich).
First of all, this isn't what your article says. It says that savers must buy newly issued corporate shares and the funds raised by these new shares must be used to pay corporate debt.
Second of all, this basically requires the government to perfectly micromanage billions of transactions, which is impossible. What's to prevent a debtor from immediately opening a new line of credit?
What is debt anyway? Let say I hold 100k in leveraged derivatives which are the equivalent of someone holding 400k worth of the underlying asset (they put down 100k and borrowed 300k).
What happens under this scheme if everyone gets 100k? I buy another 100k of derivatives and the other guy has to spend it paying down debt…
This is just a massive miss-allocated stimulus program (financed through.. you guessed it.. more debt) if that’s what Keen is suggesting maybe it’s one of the main reasons nobody takes him seriously?
> The answer may be down to the grip of an economic ideology espoused by tenured Harvard Professors like Larry Summers and Ken Rogoff. Both appear to believe that inflation exceeds in its power all other threats. And that inflation is largely caused by rising wages (even as real wages are falling) - or even the expectation that wages might rise. That to suppress wages and therefore inflation, central bankers are required to continue hiking aggressively even if this does depress demand, raise unemployment and slash wages further.
I don’t think that’s true though. The most mainline Keynesian would say that inflation has many more causes that just wage growth. And since one of the charter goals of the Fed is to reach maximum employment, I would imagine that rate hikes are trying to minimize impact on workers while still keeping inflation down (their real wages intact).
The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The rhetoric makes me think that they’re boiling the frog for a more commanded economy.
The very next paragraph after the one you quoted:
"today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation"
Insisting that something is a consequence and therefore not a cause smells like politics being placed over rigor.
https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamons...
> has tunnel vision for workers’ rights
Seems correct to me
That's a fair statement, but the timing is crucial, as you seem to note above, and the timing of the interest rate hikes is what the author is criticizing:
"But as importantly, through lack of analysis, regulation, oversight and foresight - central bankers have shown this last week they were prepared to use high rates to risk and even precipitate bank failures and global financial instability. They have done so, and continue to do so by deliberately tightening monetary policy into heavily indebted economies, with falling real incomes. Economies that have still not fully recovered from both the GFC and the pandemic."
"In other words, their effective preference is for class war over financial stability."
"The big question central bankers must address is this: why did speculators and venture capitalists notice these imbalances while they and financial regulators did not?"
> wage growth had already lagged behind inflation
Wage growth almost always lags behind inflation, because it's much easier and quicker to raise the price of goods than for workers in general to demand and receive wage increases.
Yeah, but I don't think Summers and Rogoff are mainline Keynesians. They're Chicago School neoliberals, IIRC, and their training and career experience really has been within the ideology that inflation is a function of the bargaining power of labor and you purchase low inflation by wage repression.
This can be true, while at the same time it can also be true that it's irresponsible to suddenly jack up interest rates in the post-pandemic economy. Indeed, it's a kind of consistent class warfare to keep the rates artificially low unless and until wages start to suddenly grow.
If you're rich, and you're doing class warfare (in the form of economically exploiting the less-well-off), and rates are low, you'll find a way to use that for class warfare. If rates go up, you'll find a way to use that for class warfare. All policies can lead to class warfare, but it isn't the fault of the policies.
Crazy to think they were still buying MBS into 2022 when easing was in no way necessary.
It should be noted that the author takes a very heterodox view of economics. Expert consensus does not agree with her perspective.
Of course. The author has been writing about economics for a long time, for example: https://www.amazon.com/Coming-First-World-Debt-Crisis/dp/023...
> Expert consensus does not agree with her perspective.
The author is an expert, but in any case, the consensus can't exactly take victory lap at this moment in time.
“Inflation” in specific sectors of the economy is just the overall market adjusting to new conditions. Discussing commodity inflation is useless.
For example, if real worker’s wages decline, that indicates that the diminished utility of individual workers has outstripped their productivity increases. In other words, automation is replacing the workers themselves, instead of just assisting them.
Nobody should be stuck paying 30% interest year over year. Those rates should be categorically illegal, and if anyone thinks they're truly necessary, then we need to re-examine our society as a whole. Debt repayment needs to be capped at the original sum plus an additional total value.
> After tightening Bank of England monetary policy and raising rates in February, 2022, the £575,000-a-year BoE governor, Andrew Bailey, was asked whether he wanted to inflict more pain on workers? His answer was direct:
>> "Broadly, yes - in the sense of saying: we do need to see a moderation of wage rises. That's painful - I don't want to in any sense sugar that message, it is painful."
Powell said more or less the same thing. This is misleading because:
1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
2) It leaves out the key point of the rate hikes, which is that this is a necessary pain to prevent inflation from rising out of control. What does the author propose: printing money forever? Let inflation keep rising? Apparently yes, since she brags about eliminating $100B of debt in her bio some 20 years ago.
3) It maliciously assigns the primary reason for the hike to "hurting workers", as if Andrew Bailey gets his rocks off at night based on how much pain he causes the working class, and not to crushing inflation back to normal levels.
Nothing after this is worth your time reading.
>1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
Yes.
source: https://www.usatoday.com/story/news/factcheck/2023/02/02/fac...
>Nothing after this is worth your time reading.
I found it to be an interesting viewpoint even if I don't agree.
Especially in the U.S., why doesn't a regulatory body like the FDIC not have a dashboard that would monitor items like the debt exposure SVB had so they could get involved before a takeover had to happen?
I'm not a finance expert by any stretch, but I thought inflation was lowering wages, and raising the rates is done to combat inflation, i.e. reduce devaluation of wages (and savings, and other stuff)?
Sounds like a good idea in theory, but completely ignores the real-world consequences of such shortsightedness: billionaires getting richer and richer without anyone caring is bad enough, but COVID and then the consequences of the Russian invasion forcibly exposed the worst issue that had been swept under the rug: low wages kill resiliency. When two thirds of the population barely keep up living paycheck to paycheck, even the tiniest disruption wipes them out financially and forces them into debt.
And for what it's worth, we're seeing it right now where all the inflation ends up: in the pockets of the rich. Corporate profits are at record levels, even though economies just got out of the devastation that was COVID and we're having a full blown war at the European borders - one might expect the opposite, massive economical problems after all this chaos. It is high time that minimum wage rises and employee direct action (i.e. strikes) end up redistributing these indecent profits to the pockets of the people.
The fed is a mechanical device designed to combat inflation by destroying productivity and growth and inducing economic contraction by spurring savings and making expansion more expensive and making businesses that operate on revolving credit lines impossible to run.
Not everything is inflating, and even if inflation eats away wage growth, at least people have jobs. Over time inflation drives investment - as there are more dollars the ability to capture them increases if you can increase your productivity and reduce the prices you charge. It’s perhaps counter intuitive but inflation induces a decrease in prices over time so long as you don’t make borrowing more expensive. the typical response to inflation is to raise borrowing which inhibits price competition.
Inflation is an excess of demand for supply. Supply increases to meet demand over time. It is true if you print money you see inflation. But when you stop printing money supply grows to meet demand. We stopped printing money already. If we left borrowing cheap, supply would meet demand and inflation would stop and we would probably see a growth based deflationary period.
On the other hand, debts are denominated on "the coin of the day", so inflation erodes the value of debts. Say, in the last year, I "paid" 10% of my mortgage because of inflation, even if my real income decreased 10%. I can go to my employer and threaten them with getting a new job if they don't increase my salary, or get a new job period. But the central bank doesn't want me to do that; instead they want those at the bottom to absorb the shock while those at the top adjust themselves for inflation freely.
Time will tell. In some parts of Europe, workers are highly unionized, and collective bargaining is a thing. Then it's a matter of ideological warfare: workers need to believe they are being affected and press the unions to press their employers and ultimately the government.
My understanding of economics is that median wage is everything- it's the basic unit of wealth. The wealth of rich people is measured as a multiple of this value. So if median wage goes up, the wealthy are less so. Thus upper classes care very much about this. What is wealth other than the power to control a bunch of workers?
That just creates shortages, and then you still have inflation, in fact you make it worse, because people still want the stuff, but then getting that stuff just involves off the book transactions, insider deals, and other nefarious and illicit actions to get the stuff.
I mean look at the USSR, being rich wasn't important, there were no rich. Yet there was still an exploitative parasitic upper class that dined on caviar and fine wine everyday while most of the population was waiting for hours in the cold to get bread. The only difference was, now it was based on who you knew and being connected instead of the amount of money you had.
A good example of this is my parent's internet fee. It is way less than mine since their gated community is buying it for everyone in the community.
Also, it doesn’t target the entire population fairly - surely there is a better way?
I found this a thought provoking starting place: https://podcasts.apple.com/ca/podcast/abc-news-daily/id13495...
(also, this process does not in and of itself transfer profit to banks! the bank's margin is generally a fixed number on top of the floating central bank rate)
The premise that central bankers who work modest public sector wages are obsessed with suppressing workers to serve their former classmates who got ultrarich doing similar work in the private sector is absurd and lacks a single thread of corroborating empirical evidence. 15 years of cheap money didn't spark a mass uplifting of the proletariat, and it won't anytime in the future either. Indeed, by the time Federal Reserve raised interest rates, inflation was already outpacing wage growth. The only people who want to keep low interest rates are stakeholders of failing institutions like SVB and far leftist politicians who want to ensure that they don't get the blame for the upcoming recession.
The class of people who clearly fall into the "labor" class, behaving as though they will one day be the "capital" class, is probably the majority of the posters on HN (this used to be me too).
How do you know if you're in the labor class? Here's a quick test:
- Do you have or represent the voting position of a controlling or influential number of shares in a for-profit stock organization?
- Could you choose at any point, not to be employed for a wage, and maintain your current consumption pattern or grow your consumption indefinitely?
If not, then you're firmly "labor" and unless you're on the trajectory to be one of these then you won't become it no matter how much money you put in your bank from your salary.
As "labor" you have basically zero control of your working destiny compared to oligarchs. Which of course is why so many people want to get out of this class! In the best case however, people will get to "wannabe capital" status - which is kind of the worst place to be, I know cause I've been there.
This class - also known as the petite-bougeoise - is typically just down the line management through SVP in most large corporations, and are the ground troops for Capital, with the promise of power just dangling out of reach.
People in this class in my experience fall into two categories: Think that someday they will rule the world with their genius and magnanimous ideas, or they just don't care and "fuck you got mine" to buy an island. They'll retire with up to - lets say $10 or $20M in the bank - put their kids through college, do some angel investing, donate to some charitable things and get your name on the wall at your kids school for donating a new basketball hoop. They might be a local micro-celebrity in their community - but otherwise don't really control or have any say over how major things in the world run.
Most importantly though, they ensure that people below them never get the power. They will do whatever it takes to ensure that they do not support anything that could possibly get in their way of future riches and power (which most will never even get close to). They will fight Unions and cooperatives and anything that might reduce their total overall earning capacity - you see these arguments CONSTANTLY on HN.
So until we end that striving and people trying to get into the capital class, then there will always have a forever group of psychopaths willing to step up and crush labor for the promise (that never comes) of riches and power.
Correct. The CEO is the core and primary tool for which capital applies pressure to labor
The Board appoints the CEO and determines their wage/compensation in 99% of cases. The larger the wage the more the CEO is "pwned" by investors. Go ask a Board of Directors who runs a company and see what they say.
There are two exceptions to this:
Founder/CEOs that successfully make the gap/transition to capital by having a large share of control of their own company (extremely rare). You can see the peacocking display of "$1 wage" to signal that they are not in the same game as labor anymore (it's taxed like paupers), their worth is determined by the stockholders whom they serve above all and it's kind of the ultimate "see ya suckers."
This is the wet dream of pretty much everyone who is in business or wants to be in business.
Or it's a mom and pop place not trying to be hyperscale/exascale and the "CEO" really just means, "guy who controls everything cause he started it"
1. Working class with no desire to be capital/power
2. Working class striving to be capital/power
3. Capital class
We could certainly argue about what percentage of the population falls into what bucket or why, but I think these are the real class distinctions we should be looking at.
You still spent 62 years tied to someone else's money, instincts, whims etc...making sure a labor class doesn't form by not supporting Unions, not forgoing bonuses or quitting companies that are unethical.
So it's in many way's worse than being Capital, cause it's enforcing the never ending push from capital to alienate, ripoff and deprive workers basic human rights.
My favorite rejoinder to this is "yeah that's real life" or some other cynical platitude that simply accepts wage slavery, and the wage slavemasters as an acceptable state of affairs.
"The Rich" aka "petit-bougeoise" aka the "wannabe capital class" aka the "fuck-you-money" is precisely what I'm describing as the problem
You're simply telling me that you want to be in that class
"The Rich" is not a fixed amount of wealth, it's simply the class striving to NOT BE LABOR
"have enough money to quit working" is the desire to be a landlord, making money with no work input. That's the class I am describing as the problem.
Real wages have been relatively stagnant for 40+ years while we've seen a massive concentration of wealth at the top. Trickle-down economics and deregulation have repeatedly shown themselves to be nothing more than tools for increasing income and wealth inequality.
Every aspect of your life is increasingly financialized. College, once free or cheap, now saddles you with lifelong debt. Mortgage debt and rent as a ratio to income have massively increased. Medical debt can wipe you out in the blink of an eye. All of this is by design. It's an inevitable consequence of hyper-capitalist neoliberalism.
All of this debt without a real increase in wages is designed to keep you a compliant worker. After all, with any kind of real freedom or financial independence, you're absolutely showing up for work tomorrow.
Additionally, inflation could be tackled way more effectively with a windfall profits tax without indiscriminately hitting all businesses as well as individual borrowers. Even if it did it would fill government coffers so the most in need could be helped.
You get the same sentiments as the Bank of England governor from Larry Summers [1]. All of this is built on the lie that wages are the real threat to inflation rather than boundles corporate greed and profiteering.
This is FUD. The only way to argue that this is the case is to lean heavily on a specious focus on "wages" while excluding other forms of compensation.[0] When looking at the whole picture, it's clear that real median personal income has been rising for past 50 years.[1]
[0]https://fee.org/articles/the-myth-of-the-pay-productivity-ga... [1]https://fred.stlouisfed.org/series/MEPAINUSA672N
Come on. Show some media literacy.
[1]: https://en.wikipedia.org/wiki/Foundation_for_Economic_Educat...
[2]: https://fee.org/media/41248/fees-2021-annual-report.pdf
Defending lies in bad faith and in a haughty tone? Yeesh.
Enjoy it while it lasts.