Ponder what a clawback of the $50 trillion might require, and the immense advantages of returning to producing quality products and services by entirely relaxing financialization and globalization.
The happy story that’s been constantly promoted for 45 years is that financialization and globalization have actually been wunnerful for everyone, boosting wealth and saving a little fortune as the expense of products fell.
This is a remarkable distortion of reality. The truth is your home lost $500,000 in earnings and gained basically nothing in supposed “cost savings.” The facts are presented in a research study by the RAND Corporation: Patterns in Earnings From 1975 to 2018 $50 trillion in profits has actually been transferred to the Financial Upper class from the bottom 90% of American homes over the past 45 years..
B-b-but wait, didn’t we all save a fortune on low-cost jeans and Televisions? No, you lost on that, too, as every product was crapified by globalization. I talked about the uncounted losses of the U.S. economy being crapified in my post The “Crapification” of the U.S. Economy Is Now Complete.
Let’s begin by specifying financialization and globalization. Financialization is the enjoying of revenues not by creating worth by producing goods and services but by exploiting credit and leverage to enjoy unearned revenues.
Here are 2 examples. Borrow $1 billion and then utilize this to do a leveraged buyout (LBO) of a $10 billion business. Break the company’s divisions into separate business and sell them off or take them public through an IPO (initial public offering). Make $10 billion in pure make money from separating a business and offering its pieces, all from $1 billion in borrowed money. Note that this LBO didn’t generate any gains in performance or any brand-new products and services, nor did it develop any new tasks. All it did was considerably enhance a few financiers and Wall Street banks.
Here’s another example. Obtain $1 billion and use the cash to redeem the shares of the corporation. The market value of the company’s shares increase from $10 billion to $15 billion. The top management exercises its tremendous hoard of stock alternatives and skims billions of dollars in earnings. Keep in mind that this stock buyback didn’t create any gains in efficiency or any new items and services, nor did it develop any new tasks. All it did was greatly enrich a couple of at the top of the heap.
This is the financialization of the U.S. economy in a nutshell. Financial video games using other people’s money and leverage make the huge cash, producing items and services that develop tasks is for losers.
Globalization is the process of moving production of products and services overseas to gain the gains of low-cost labor, no ecological standards, corrupt politicians and the crapification of products and services. Globalization is the process of exposing much of America’s manpower to 1 billion new workers who will work for next to absolutely nothing since they have no other ways of earning cash.
Developing countries have restricted ways to implement ecological policies, so they are the practical and low-cost dumping grounds for international corporations making the most of earnings by dumping poisonous waste in garbage dumps, rivers, and so on. Ought to there be any area of bother, relatively affordable bribes and payoffs to corrupt leaders guarantee the labor and land will continue to be made use of without any problems with labor unions, ecological requirements, and so on.
Globalization also means making the product appearance good but strip out all quality as needless expenditure. Thin the paint so the steel rusts out in months, utilize the shoddiest materials so the veneer removes, the screws snap, the commodity chip stops working, taking the mother board and whole home appliance down with it, and so on, in an unlimited and oh-so-profitable parade of crapification.
Well-paid shills tally up all the “savings” created by crapification however they never take a look at the immense losses in utility and toughness. A home appliance that cost $500 and lasted twenty years with no repair is far more economical over the 20 year life expectancy than a $400 home appliance that stops working in 4 years and can’t be repaired, or the repair costs practically as much as a new device. The unlucky consumer of crapified items ends up paying $2,500 over the twenty years for poorly made scrap that breaks down in a couple of years or mysteriously fails as inexpensive electronic elements blink off.
In other words, I was being very charitable in giving $137.13 gains to each household in 45 years of globalization– in truth, each household lost countless dollars in energy and resilience. No wealthy investor funds research study into just how much each American household lost in utility and durability because the investors who money their philanthro-capitalist structures all made their fortunes by stripmining financialization and/ or crapifying goods and services and developing monopolies and cartels to exterminate any competition. (Cough, Gates Structure, cough.)
The well-paid shills tout the $100 cost savings however neglect the $2,000 in expenses added by the collapse of quality and resilience. Who constructs when consumers need to buy five appliances over twenty years instead of one? The shareholders of the financialized, globalized corporation, that’s who. And considering that the leading 10% of homes own roughly 90% of all corporate shares and bonds (and the top 0.1% own 40%), the gains are extremely focused in the top, as the graphics below show.
If the labor force had retained its 1975 share of the economy’s income, each family would have $500,000 more in earnings than they ended up with in the fully financialized, globalized, crapified economy we’re stuck with. Let’s do the mathematics: $50 trillion divided by 100 million homes (the bottom 90% of households) is $500,000. Divide $500,000 by 45 years which’s $11,110 a year for 45 years.
We can quibble about inflation and acquiring power and so on, but however you reckon it, $500,000 stripped from every home is a great deal of cash when we’re talking about 100 million homes.
Next time you’re on hold with a crapified Corporate America or federal government service, and the next time your globalized, crapified gadget fails, consider all the costs of financialization and globalization that have yet to be tallied. Contemplate what a clawback of the $50 trillion may entail, and the enormous advantages of returning to producing quality items and services by completely unwinding financialization and globalization.
We might totally loosen up financialization and globalization if we chose to. I discuss how in my new book Global Crisis, National Renewal: A (Revolutionary) Grand Technique for the United States.
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