Capitalism: A Magic Trick

IMG_4707

Capitalism is a magic trick. Through sleight of hand obfuscated by the charismatic voice and flourishes of the illusionist, the doubts as to the superiority of this economic system over any other possibility disappear. The illusionist reaches into his hat and pulls out the profit motive. The profit motive is the great and mysterious force that binds capitalism. An ethos of greed supposedly needed to incentivize people to work. The wage laborers work and work, but somehow the profits evade them. The illusionist opens the trap door and there are the workers’ profits.  But in modern globalized capitalism, the traditional exploitation of labor is just one of the many magic tricks that the illusionist can perform:

The nonfinancial corporate sector has deleveraged even less than households. Instead, companies have taken advantage of low interest rates and plentiful liquidity to take on more debt to buy back equity to support share prices, pay larger dividends, and hoard cash. In the United States, corporations have expanded their debt relative to GDP by 14 percent…As a result, corporate leverage (the ratio of net debt to GDP) is higher than at this point of business cycle than in recoveries from previous recessions. That does not bode well for a quick escape from the depression if interest rates on debt start to rise. Michael Roberts’s The Long Depression (pg. 109-110)

Continue reading

Unacceptable Outcomes: An Ode To Elizabeth Warren

lol red rosa stahp
Elizabeth Warren sending Habeas Quaestus’s author on  her first assignment. But seriously read Red Rosa.

People hate that I love Senator Elizabeth Warren. Which at first glance may seem surprising: after all, Warren is beloved by a large portion of the Left and even some people outside of it. But it isn’t her that’s the problem: it’s me. My liberal friends hate that I share her videos yet constantly chide and push them to be far more radical than the views she expresses. My radical friends hate that I defend her decision to not endorse Bernie Sanders, her decision to not run for president, and even her decision to be a Senator. Her sharp style of argumentation and rational, no-nonsense demeanor makes her an ideal populist candidate for a country fed up with big finance. But her and I both know that, at least at this point, she does more good as a Senator.

Continue reading