On a new homes sales interview in Amarillo, my prospective employer was driving us through his subdivision, when I spotted this white guy working on the roof of a home under construction. In Houston, in my four years and 100+ sales of new homes, I never, ever saw a white guy on a roof. My fellow sales counselors were white, black and a lonely Puerto Rican. The construction managers were white college graduates with a sprinkling of blacks. The people who built the homes from the ground up were Mexican illegals working for legal Salvadorian/Mexican owners. Immigration and Naturalization Service, the precursor to ICE would periodically raid a subdivision and scatter the entire workforce – I guess Amarillo was a sanctuary city for white construction workers.
I talked with a cement finisher who had been in Texas for over six years, still making only $5.00/hr. I bribed Abundio Laredo away from his 11 hours a day, six days and $500 a week meat cutter job at the Chinese restaurant, to milk our cows and goats for $15.00/hr. And yes, there is no way to make an illegal, legal in the USA – “There is no controlling legal authority ….” – Al Gore
FREE THE MINIMUM WAGE SLAVES
Walmart employs an astounding 2.1 million people. In the United States alone, the company employs 1.4 million people. This is a staggering 1% of the U.S.’s 140 million working population.
Walmart, in other words, matters. Its payrolls, and its pay, move the needle. And right now, many people argue, Walmart is very much part of the problem.
The average Walmart “associate,” Wake Up Walmart reports, makes $11.75 an hour. That’s $20,744 per year. Those wages are slightly below the national average for retail employees, which is $12.04 an hour. They also produce annual earnings that, in a one-earner household, are below the $22,000 poverty line.
On the other hand, these wages are far above minimum wage of $7.25 an hour. They also aren’t THAT FAR below the national retail average (only 2.5% below). In a two-earner household, moreover, these wages would produce a household income of $40,000+, which, in some areas of the country, is comfortably middle-class. Walmart offers benefits to some of its employees, as well as store discounts and profit-sharing plans.
Small businesses are Big business
Employees per establishment in the U.S. coffee and snack shops industry from 2002 to 2016 was 9.51. There are roughly 130 million U.S. workers employed by small businesses.
- Represent more than 99.7% of all employers
- Employ half of all private-sector workers and 39% of workers in high-tech jobs
- Provide 60% to 80% of the net new jobs annually
- Pay 44.3% of total U.S. private payroll
- Produce more than 50% of non-farm private gross domestic product, or a GDP of roughly $6 trillion
- 3% are franchises
Source: SBA, “Small Business by the Numbers,” June 2004
Prior to 1950 eighty percent of the population was self-employed – down on the farm. Today 98% live in urban areas that employ 90 million in the service sector and only 12 million in manufacturing. Adam Smith divided the employment world into Farmers-Merchants-Manufacturers. Farmers were the most important because they were the only ones who produced more than they consumed – it’s the one, two, three baby analogy. If a nation’s birthrate falls below 2.3, without immigration they’ll eventually go out of business.
Farmers, as long as they take care of the soil, can make 3 babies (grow more foodstuffs than they consume) every year to infinity. Merchants (Service Sector) don’t make any babies and Manufacturers make orphans that can’t reproduce. So, Houston what we have here is a big, big problem.
Small businesses (really family businesses, Sam Walton might have had 9.51 employees in his Dime Store) have always represented 99.7% of all employers, only by the end of WWII 80% of them still lived in the country. Worse yet, now the Merchants & Manufacturers have occupied rural America. In 1950 there were 12 million farmers, each raising an average of 200 pigs. Today there are 200 farmers each raising 2 million pigs.
THE CIVIL WAR WAS ABOUT SLAVE WAGES
Henry Ford gave everybody $5.00/day instead of the standard two-twenty-five, “so his employees could afford to buy a car.” WRONG! Ford didn’t raise wages so that his workers could afford his cars. What happened is that he hired and then lost some 52,000 workers a year in order to have a stable workforce of 14,000. This obviously had vast costs in trying to hire and then train all of these workers: as well as the costs when they walked off the assembly line disrupting production. The doubling of wages to $5 a day reduced those costs by more than the extra pay cost him. Which is why he did it. Ford had to hire 52,000 a year to keep 14,000 for a turnover of 370%. Retailers today range from 150-300% turnover. Each entry level new hire costs at least $2,000 to replace the dear departed. What really hurts is how much a May 25, 2014 five-dollar bill is worth today, $118.26 to be exact. Those poor turds were running in off the farm to get $14.72 an hour on the assembly line.
The biggest difference between workers in RTW and non-RTW states is the fact that workers in non-RTW states are more than twice as likely (2.4 times) to be in a union or protected by a union contract. Average hourly wages, the primary variable of interest, are 15.8 percent higher in non-RTW states ($23.93 in non-RTW states versus $20.66 in RTW states). Median wages are 16.6 percent higher in non-RTW states ($18.40 vs. $15.79).
So, the rest of the wage story of America had the unions driving manufacturing from the rust belt to the sun belt. The three or four dollars an hour wage difference didn’t hold a candle to 15 cents an hour in Mexico and of course there was China. Which came first Wal-Mart or China. All recovering Yankees that weren’t nailed down moved to Atlanta, Houston & Dallas. After 2008 nobody but nobody could get a job for more than the $7.25/hr. MINIMUM and Wal-Mart became the employer of last resort.
DEFINITELY NOT COOL SLAVES
As a 14-month veteran of Richmond-Rosenberg’s Wal-Mart Tire, Lube, Express it takes a lot of humility and quasi-permanent damage to your self-esteem to work at Wal-Mart. I cannot list a single redeeming feature; on the contrary working at Wal-Mart is hazardous to your mental health.
There are 20 million plus, not 11 million, Abundio’s working for real slave wages because the slave labor supply to nationalized ratio is at least three times greater than when Lincoln ran the show. Build the Wall – issue federal photo ID cards – write the law
Eliminate All Subsidies and Tariffs
New Zealand did it 20 years ago and agriculture thrived. Absolutely no adverse consequences, only innovation and the benefits of a healthier food supply.
Reset World Reserve Currency to Gold Standard
US trade deficits were flat until Tricky Dick pulled the plug on Gold. Our 1998, 80 cents a pound goats are now worth $2.50/lb. According to the CPI calculator 80 centavos in ’98 is worth $1.25 in 2018, giving the self-employed goat farmer a $1.25/lb wage increase or shall we say, profit.
When I was at least 12, Marion and Esther, my G.I. generation parents took me to Coney Island. I was still too scared to ride the roller-coasters but the ‘Dogems’ appealed to my passive-aggressive nature. Once back home Marion asked me if I noticed the black kid I had banged into several times? “No, why?”
Well, for more than 65 years, Coney Island and its Sunlite Pool had been a riverside playground for most of the people of Cincinnati; it boasted cleanliness, thrilling rides, a place to swim and dance, a whisper of bygone days. But it was closed to blacks. The pool, even longer. That a place of public accommodation would remain a pocket of segregation as long as it did — especially in a Northern, industrial city — surprises many, astounds others. After all, the Supreme Court had ordered schools desegregated in 1954. The park finally opened its gates to blacks in 1955, and by the time the pool was integrated — May 29, 1961 — the civil-rights struggle was well under way, punctuated by sit-ins and demonstrations around the country.
I was a Baby Boomer enjoying my childhood during the 1st Turning Act I (1943-1964) of a four-generation live action, socio-political-psycho-economic histo-drama, I call, “Apocalypse Soon, Armageddon Later.” Starring fellow Boomers; George ‘W’ 1946, Hillary 1947, Bill Clinton 1946, Trump 1946, and Putin 1952.
On my street, Mooney Avenue, we had 70 kids in an approximate 60-40 split between Protestants and Catholics. As children of a fervent Christian Scientist mother, my sister and I tried to hide under the Protestant umbrella. The Catholic kids went to Saint Mary’s and the rest of us attended Hyde Park elementary. So, in my 1955 life experience, no black kids here, no black kids there and no black kids anywhere except for that kid on the ‘Dogems.’
Marion always bought ugly used cars like this ’53 Nash Ambassador – ‘Greg’ as Esther called him, drove us to Sunday school at the 1st Church of Christ Scientist Norwood then came back an hour later to pick us up. Norwood was a future Trump country neighborhood where everybody was white and wore blue collars to work at the GM Fischer Body plant. Two Sundays a month, after Marion got paid, we went to Frisch’s Big Boy and ate in the car. Regardless, every Sunday I’d come home with a headache from my hour-long lesson in Mind Over Matter and the evils of materia-medica. My meta-physical cure was holding a cold wash cloth to my left temporal.
RELIGION was my number one childhood complaint – “can’t we all just be normal kids like everybody else on the block” – number two was Marion shaming us with the only non-GM or Ford vehicle in Hyde Park, and used at that.
RACE RELIGION POLITICS SEX & MONEY
However, after Labor Day 1955, Marion drove me half way across town – to the east/west dividing line – to my first day at Walnut Hills High School. The school was smack dab in the middle of EVANSTON and from outward appearances an all-black community. I read recently that Cincinnati was the 8th most segregated city in the USA. Just looking out the window I couldn’t tell if they were Protestant or Catholic but they were the same color as the kid I bumped into at Coney Island.
But, oh Lordy, Lordy the halls of the 2,000 7-12th grade students at Walnut Hills High School were populated with black kids and white kids, but half of the white kids were Jews. Marion had warned me that, “if I didn’t learn anything from the Jews, I would never learn anything.” The first thing I noticed was that all the Jewish girls had breasts. Secondly, in naked swim class all the boys had more pubic hair, than I had hair on my head. Walnut Hills was an academic melting pot, my class of 305, had kids from every neighborhood in the city – places I had never heard of, let alone visited. What WHHS didn’t have was ‘greasers or hoods.’ Well, we did have Marty until he dropped out in the tenth grade. Marty wore ducktails and tried to act tough cool but the only status symbol at WHHS was your grade point average.
My favorite WHHS grad was Miller Huggins, Class of 1897 pictured with Lou Gehrig and Babe Ruth. Miller’s father was a Methodist and prohibited his son from playing semi-pro ball on Sundays. Huggins graduated from law school and his professor, none other than William Howard Taft advised him that he’d make more money playing baseball.
Huggins set an MLB record on June 1, 1910 with six plate appearances but no at bats, with four walks and two sacrifice flies. Huggins, was short but WHHS smart and managed the Yankees from 1921-29. The Yankees swept the Pittsburgh Pirates in the 1927 World Series. This team became known as Murderers’ Row, and is considered the one of the greatest teams in baseball history.
My favorite famous WHHS grad was Jerry Rubin who went off to Berkley to found the ‘Yippies’ and protest the Vietnam War. I passed the reading/math test to gain admittance to WHHS but Latin, Trig, Physics and Chemistry left me intellectually challenged in a very competitive environment. That, plus suffering from a severe case of homework avoidance syndrome, left me at the back of the pack on graduation day in 1961. Of the 305 graduates, the top 100 went off to Harvard, Princeton, Yale and beyond. The middle third headed for Prairie League universities especially the hometown favorite the University of Cincinnati. My application to UC’s school of Architecture was rejected because I had not graduated in the top 10% of my high school class.
I was happy to just be a poly-sci guy at Miami or Antioch but Marion, the hard knocks engineer, wasn’t about to pay for any of that monkey business. So, Howard, Eddie and I entered UC’s Ding-Dong, two-year, associate’s degree program. I did so well relearning 7th grade Algebra, English and History that I was granted admission to the 1962 class of Architecture. Cincinnati was 85% German Catholic, home to Hebrew Union College and Rabbi Silver founder of Reformed Judaism. Thus, Cincinnati was blessed with a pragmatic German education culture. This meant that even though I missed out on Harvard I was going to be a University of Cincinnati Co-Op student and go to work for a living from my Freshman year on.
Herman Schneider (1872–1939), engineer, architect, and educator, concluded that the traditional learning space or classroom was insufficient for technical students. Schneider observed that several of the more successful Lehigh graduates had worked to earn money before graduation. Gathering data through interviews of employers and graduates, he devised the framework for cooperative education (1901). However, in 1903 the University of Cincinnati appointed Schneider to their faculty. In 1905 the UC Board of Trustees allowed Schneider to “try this cooperative idea of education for one year only, for the failure of which they would not be held responsible.” The cooperative education program was launched in 1906, and became an immediate success.
RACE RELIGION POLITICS MONEY & SEX
I spent Spring and Fall 1961-1967 working as an architectural co-op student in the offices of Outcalt, Guenther, Rode, Toguchi and Bonebrake on Shaker Square, Cleveland, Ohio’ thanks to my aunt, who got me the job and Herman Schneider, who started the first work/study program in the US at the University of Cincinnati.
Thinking Outside the Country
Where ever an American Expat or an expat from any country resides outside his home nation they instantly become street smart economists. I had never been west of Chicago until the US Marine Corps gave me a 12 month all expenses paid tour of Japan, the Philippines, Hong Kong and Taiwan. Teg, we’re not in Cincy anymore and why don’t you find a job overseas, when you get out?
Good idea, I followed my bliss, first to Brazil where I tried to live an American lifestyle on a beer budget. However, Buenos Aires, Machu Picchu, boat trip down the Amazon were worth the stay.
My second opportunity to think outside the country was a short 13 month stay in Egypt as a free-lancer (on-the-economy) begging for consultant crumbs from the US Agency for International Development. Got to visit all 45 agricultural research stations from Asawan to Alexandria, took sailing lessons on the Nile and the Aswan to Luxor Nile cruise. Got to see how the civilian side of the Federal government works or doesn’t.
After 2008 I found out that I couldn’t afford to live my ‘bliss’ lifestyle any place in the US on Social Security and my dinky pension. I exercised my one marketable job skill – speaking English with an American accent – seven years in Mainland China.
My good looking partner with her JD Law creds, became disenchanted with being a shill for Chinese ESL training schools so we began looking for greener, affordable pastures. India, Vietnam, the Philippines and Korea were ruled out in favor of Antalya, Turkey, San Diego weather at one third the US cost of living.
In China we lived on wages, now we live on my SSA monthly check and save 30% of that, if we avoid Euro-Dollar countries. When I bragged to a Bostonian lady that we paid $300 for a 3 bed 1.5 bath apartment one block from the Mediterranean, she was impressed. Due to the currency exchange rate of the USD/TRY we started off at $327 in March 2014. Today, the US/Turkey political relationship has knocked our rent back to $250.
What if the coming global financial Armageddon puts my pension on the Venezuela payment plan? That’s the problem in not only My Backyard but in 98% of the neighborhoods in the world. There are articles of living in Portugal or Ecuador for 30 years on $200,000, but what if your $200K turns into Zimbabwe bucks overnight?
My Backyard Strategy: Stay in Antalya, rent don’t own, bank accounts in TRY, EUR and USD, 5-10% savings in Gold.
I know, you know, We all know that this is not going to end well. I want to know how to survive the Apocalypse without buying gold or Bitcoin, investing in real estate or the stock market because those things require money. I know, you know and we all know that at least 80% of us don’t have any.
Doug Casey’s 1980 interview on Phil Donahue foretold what Americans should’ve done, but that was way back then, when I was dreaming about getting rich. Then, I read that only 2% of the population achieved Financial Independence the remaining 98 per cent were dependent on government support totally or in part. I was still struggling to be Debt Free, let alone assemble an investment income.
The Race to the Bottom of the Pyramid
Now, the Boomers are just hoping they can make it to 62, the X’ers worry about the robots taking over all the jobs at Wal-Mart, the employer of last resort, while the Millennials are plotting the ‘American Spring’ on their smart phones. Doug Casey espouses 1) developing marketable job skills 2) leaving the country 3) opening a bank account in Switzerland or Singapore.
- developing marketable job skills: find your genius, your uniqueness, your Dharma and become an entrepreneur
- leaving the country: if you’re under 30 go to Africa, over 30 South America Argentina, maybe Chile or Columbia.
- opening a bank account in Switzerland or Singapore: the government knows where you keep the money.
Personal Experience: Brazil ’75-’78 I’d go to Argentina; Egypt ’85-’86 revisited in 2015 and Ethiopia 2013, if I was 30 I’d go to the interior nations e.g. Zambia, Malawi, Congo. China ’08-’14 if under 55 with an American accent teach ESL; Antalya, Turkey ’14-present, the bestest, cheapest place in the world for retirees. Casey doesn’t like Europe for its prospects of WWIII. No Euro country is affordable including Cyprus. USA ’43-’08 Cincinnati, Cleveland, Atlanta, Scottsdale, Houston, Eugene; I’d try to figure a way to live in Savannah, get involved in the real food farm to market movement and Sub Chapter S or LLC myself.
I have always been a Live to Eat kinda guy and want to avoid the Eat to Live crowd at the bottom of the pyramid.
At 8:45 the Pompous, Arrogant but not Stupid, Larry Summers explains why BitCoin is the next evolution in the payment system. Everyone will use it, why? Same as cash, “frictionless” no debit card fees of 1-3%, merchants can forego VISA MC fees, and I can wire funds w/o losing $75 every-time, whether it’s $500 or $5,000.
Adam Smith on money, the source and as a method of exchange.
Whoever derives his revenue from a fund which is his own, must draw it either from his labor, from his stock, or from his land. The revenue derived from labor is called wages. That derived from stock, by the person who manages or employs it, is called profit. That derived from it by the person who does not employ it himself, but lends it to another, is called the interest or the use of money. The revenue which proceeds altogether from land, is called rent, and belongs to the landlord. The revenue of the farmer is derived partly from his labor, and partly from his stock. To him, land is only the instrument which enables him to earn the wages of this labor, and to make the profits of this stock.
WHEN the division of labor has been once thoroughly established, it is but a very small part of a man’s wants which the produce of his own labor can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labor, which is over and above his own consumption, for such parts of the produce of other men’s labor as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.
But when the division of labor first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them.
The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconvenience of such situations, every prudent man in every period of society, after the first establishment of the division of labor, must naturally have endeavored to manage his affairs in such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.
Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armor of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen.
Ghandi Salt Tax March to the Sea
Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the alehouse.
In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce anything being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the ancient Spartans; copper among the ancient Romans; and gold and silver among all rich and commercial nations.
Those metals seem originally to have been made use of for this purpose in rude bars, without any stamp or coinage. Thus we are told by Pliny, upon the authority of Timaeus, an ancient historian, that, till the time of Servius Tullius, the Romans had no coined money, but made use of unstamped bars of copper, to purchase whatever they had occasion for. These bars, therefore, performed at this time the function of money.
Marx’s Theory of Money
In the same way as his theory of rent, Marx’s theory of money is a straightforward application of the labor theory of value. As value is but the embodiment of socially necessary labor, commodities exchange with each other in proportion to the labor quanta they contain. This is true for the exchange of iron against wheat, as it is true for the exchange of iron against gold or silver. Marx’s theory of money is therefore in the first place a commodity theory of money. A given commodity can play the role of universal medium of exchange, as well as fulfil all the other functions of money, precisely because it is a commodity, i.e. because it is itself the product of socially necessary labor. This applies to the precious metals in the same way it applies to all the various commodities which, throughout history, have played the role of money.
It follows that strong upheavals in the ‘intrinsic’ value of the money-commodity will cause strong upheavals in the general price level. In Marx’s theory of money, (market) prices are nothing but the expression of the value of commodities in the value of the money commodity chosen as a monetary standard. If £1 sterling = 1/10 ounce of gold, the formula ‘the price of 10 quarters of wheat is £1’ means that 10 quarters of wheat have been produced in the same socially necessary labor times as 1/10 ounce of gold. A strong decrease in the average productivity of labor in gold mining (as a result for example of a depletion of the richer gold veins) will lead to a general depression of the average price level, all other things remaining equal. Likewise, a sudden and radical increase in the average productivity of labor in gold mining, through the discovery of new rich gold fields (California after 1848; the Rand in South Africa in the 1890s) or through the application of new revolutionary technology, will lead to a general increase in the price level of all other commodities.
Leaving aside short-term oscillations, the general price level will move in medium and long-term periods according to the relation between the fluctuations of the productivity of labor in agriculture and industry on the one hand, and the fluctuations of the productivity of labor in gold mining (if gold is the money-commodity), on the other.
Basing himself on that commodity theory of money, Marx therefore criticized as inconsistent Ricardo’s quantity theory. But for exactly the same reason of a consistent application of the labor theory of value, the quantity of money in circulation enters Marx’s economic analysis when he deals with the phenomenon of paper money.
As gold has an intrinsic value, like all other commodities, there can be no ‘gold inflation’, as little as there can be a ‘steel inflation’. An abstraction made of short-term price fluctuations caused by fluctuations between supply and demand, a persistent decline of the value of gold (exactly as for all other commodities) can only be the result of a persistent increase in the average productivity of labor in gold mining and not of an ‘excess’ of circulation in gold. If the demand for gold falls consistently, this can only indirectly trigger a decline in the value of gold through causing the closure of the least productive old mines. But in the case of the money-commodity, such overproduction can hardly occur, given the special function of gold of serving as a universal reserve fund, nationally and internationally. It will always therefore find a buyer, be it not, of course, always at the same ‘prices’ (in Marx’s economic theory, the concept of the ‘price of gold’ is meaningless. As the price of a commodity is precisely its expression in the value of gold, the ‘price of gold’ would be the expression of the value of gold in the value of gold).
Paper money, banks notes, are a money sign representing a given quantity of the money-commodity. Starting from the above-mentioned example, a banknote of £1 represents 1/10 ounce of gold. This is an objective ‘fact of life’, which no government or monetary authority can arbitrarily alter. It follows that any emission of paper money in excess of that given proportion will automatically lead to an increase in the general price level, always other things remaining equal. If £1 suddenly represents only 1/20 ounce of gold, because paper money circulation has doubled without a significant increase in the total labor time spent in the economy, then the price level will tend to double too. The value of 1/10 ounce of gold remains equal to the value of 10 quarters of wheat. But as 1/10 ounce of gold is now represented by £2 in paper banknotes instead of being represented by £1, the price of wheat will move from £1 to £2 for 10 quarters (from two shillings to four shillings a quarter before the introduction of the decimal system).
Keynes’s theory of surplus value
Over the last couple of weeks, we saw that Keynes denied that surplus value was produced by the unpaid labor of the working class. So how does surplus value—profit, interest and rent—arise, according to Keynes, if it is not produced by the working class?
“It is much preferable,” Keynes wrote in chapter 16 of the “General Theory,” “to speak of capital as having a yield over the course of its life in excess of its original cost, than as being productive. For the only reason why an asset offers a prospect of yielding during its life services having an aggregate value greater than its initial supply price is because it is scarce; and it is kept scarce because of the competition of the rate of interest on money. If capital becomes less scarce, the excess yield will diminish, without its having become less productive—at least in the physical sense.”
The difference between the “aggregate value,” to use Keynes’s terminology, and the “supply price”—the cost to the capitalist of that asset—is the surplus value that “asset” yields—not produces, according to Keynes—to its owner. But where does this surplus value that is “yielded” come from if it is not produced—that is, if it does not arise in the sphere of production? As we saw over the last several weeks, Keynes accepted the “classical” marginalist postulate, or unproved assumption, that the worker does not produce any surplus value but simply reproduces the value of the worker’s wage.
“I won’t go into a lot of detail but will list only some key concerns: the long-term fiscal and tax issues (driven mostly by healthcare and Social Security costs, as well as… “Jamie Dimon.
James “Jamie” Dimon is an American business executive, the good looking one in the picture. He is chairman, president and chief executive officer of JPMorgan Chase, largest of the Big Four American banks, and previously served on the Board … March 13, 1956 (age 60), NYC, NY.
March THIRTEENTH the Day of FATEFUL PREDICTION: Those born on March 13 lead fateful lives, which in retrospect could be said to have turned around a few chance happenings. Most individuals born on this day strongly believe in predetermined occurrences, moreover, and are prone to making predictions about the world and the lives of others. There is something of the oracular about much of what March 13 people say. They often utter their analyses of the world and its problems with a kind of knowing finality.
Jamie is the Big Man on Wall Street and when he says that there is a big problem with the unfunded liabilities of Social Security and Medicare/Medicaid you best believe him. Jamie’s total compensation for 2016 is $23 million with a base salary of $1.5 million. JPMorgan and Jamie pay Social Security tax only on the first $118,000 due to the earnings cap.
|Maximum Taxable Earnings:||2015||2016|
|Social Security (OASDI only): 15.3%||$118,500||$118,500*|
|Medicare (HI only) 2.9%||
N o L i m i t
What’s good for the goose is good for the gander Jamie and JP should pay 1.500,000 x 15.3% = $229,500 in payroll taxes just like us regular geese.
All that glisters is not gold;
Often have you heard that told:
Many a man his life hath sold
But my outside to behold:
Gilded tombs do worms enfold.
Had you been as wise as bold,
Young in limbs, in judgement old
Your answer had not been inscroll’d
Fare you well, your suit is cold.
I boarded a KC-130 cargo plane on August 15, 1971 for a free ride to Rio de Janeiro, with an intermediate stop in Panama. The next morning I reported to Howard Air-force Base operations and got a “sorry Charlie” no flight to Brazil today – Nixon closed the Gold Window – nobody knows what to do.
I never liked ‘Tricky Dick’ after I stood on the curb to wave at his caravan from the Cincinnati airport when he was the 1960 Republican candidate running against JFK. My enigmatic mother had raised me to read body language at the attenuated level of today’s most sophisticated facial recognition software. I voted for George Wallace in 1968 as a protest vote in the Nixon-Humphrey presidential race. Although I was drafted twice in the Vietnam era, what really hurt was Nixon’s signature on my Honorable Discharge document.
I was serving my last six months of military service as a recruiter in the OSO (Officer Selection Office) in my hometown Cincinnati, Ohio, when an USAF sergeant touted space-available free air travel on MAC flights. All I had to do was drive to Charleston, SC. and get on a jet plane – the embassy-run – going on it’s weekly visit to the ten capitals of South America. All went well, the Howard AFB softball baseball team and I were the only passengers riding inside this empty 747 sized aircraft. Four hours later we arrived at the base and my only confusion was asking for directions to the BOQ which is called VOQ (Visiting Officers Quarters) in air force lingo.
It wasn’t until Brexit, QE (Quantitative Easing), Lehman Brothers and the 2008 crash, that I began to realize what Tricky Dick had done to the world economy 45 years ago. I got a ‘D’ in economics but after university I got an ‘A’ in new home sales because I knew enough about how-it-works to explain 100% financing, as no money down, to my first time home buyers.
However, the ‘invisible hand’ of Richard Nixon reaffirmed my lack of economic acumen when I took a liar loan (stated income) from Citi-mortgage in January 2008, using the naive thought that if the bank gives you the money it must be okay. When I should have gone with if you don’t need the money, it’s okay. Tricky Dick’s trick was to renege on the Bretton Woods Agreement.
All the king’s men and all the king’s horses met at the George Washington Hotel in Bretton Woods, New York to let the US dollar be the world’s reserve currency as long as it was linked to gold, $35/oz in 1971. Truman, Eisenhower, and JFK played by the rules of the agreement but LBJ couldn’t pay for his “guns and butter” agenda of Vietnam and the ‘Great Society.’ Therefore, in 1965 and 1968 Congress helped him out by removing the 25% dollar/gold cover – every Federal Reserve Note issued they were required to have 1/4th of the denomination in bank vault gold.
This action allowed the Fed to print money to its heart’s content and enabled the politicians to spend it to infinity and beyond. The ‘Nixon Shock’ followed me to Park Ridge, Illinois Hillary Clinton’s hometown. I was hired by The Austin Company in May 1974 to watch while inflation went to 12% and the interest rate hit 21%. My East European co-workers opened Swiss bank accounts and contemplated the firm’s $100 offer if we bought a GM car, under the, “What’s good for General Motors is good for the country,” banner.
Now I understand the ’73 Oil Embargo. The Saudi’s were paid in dollars and after Nixon debased the currency they raised the price from $2.50 a barrel to $25.00. Oil became liquid gold with an inverse relationship with the dollar. The more money the Fed prints the higher per barrel price of oil. That was true until 2015 when global GDP stopped growing and the demand for oil fell way below the supply.
My father made me a jitney, the forerunner of the go-kart. He put a lawnmower motor in my Red Flyer wagon and off I went cruising the neighbor at sub 20 mph speeds because he wisely installed a governor on the engine – no matter how much I put the pedal to the metal I couldn’t go above the twenty mark. So, you see what Tricky Dick did on August 15th, 1971 was remove the governor entirely – no more four to one ratio for gold backed Federal Reserve Bank Notes, just let her rip.
We Have Been Thrown Under the Money Bridge
The Emperor is always the last to learn that he is not wearing any clothes. America somehow thinks that September 11th, 2001 is Pearl Harbor II. America is worried that Lehman’s downfall on September 15th 2008 is the remake of the “Crash of ’29,” in 3D. Obama, the current emperor, thinks like FDR, that his government can save America with affordable health care, a free college education, and something called cap and trade. Unlike FDR, there are only merchants in Obama’s realm, all the farmers and manufacturers are living and working in China.
When Roosevelt said, “The nation that destroys its soil destroys itself,” in one of his famous “fireside chats” to share his solution for the 1937 dust bowl, he had a more balanced citizenry of farmers, merchants and manufacturers. The farmers had stopped making money after WWI (1914-1919), the merchant bankers had gone bust in 1929, the manufacturers had laid-off, 25% of their employees, and then in 1937 the topsoil of the Texas-Oklahoma Panhandle blew away, to once again reveal Coronado’s “Inland Desert.” FDR, like all the well intentioned emperors of America, tried to solve the problem but in the end only made it worse.
Obama, the merchant CEO, and Xi Jinping, the manufacturer-plantation overseer, are co-captaining the world’s largest super-tanker in uncharted waters. The co-captains are joined daily in the officers’ mess, by industry lobbyists, political party leaders and government technocrats, while the farmer crew cannibalizes the sea and soil, to keep the ship afloat. The earth is the iceberg and two-thirds of the problem lies below its surface. This is not a redo of ‘Titanic’ it’s the ‘Mutiny on the Bounty’ and Denzel Washington is under contract to play Obama. The evidence of impending disaster is everywhere, climate change, world hunger, US addiction to a corn obesity diet, desertification, over population, and the gaping disparity in rural-urban income.
Obama, the merchant CEO, has chosen to ignore the ‘Terrestrial Carbon Sequestration’ counsel of soil management experts and stick with the same merchant bankers who created the Lehman dance, while believing that this time, it will be different. The new FDR, thinks Roosevelt was using the “Farmer’s Almanac,” as a teleprompter when he delivered his “The nation that destroys its soil destroys itself,” quote. The tagline of the Obama administration is, “Yes, we won’t have inflation, even though we printed twice as much money, as we have in the bank.”
Xi Jinping, after his yearlong honeymoon with Obama, aboard the US-Sino Love boat, now thinks that the U.S. married China only for the dowry. After all China had sustained itself for 5,000 years, suffering only occasional bouts of indigestion, brought on by the unintended consequences of governmental actions. China and President Xi wouldn’t even be talking to President Obama, if ‘Tricky Dick’ hadn’t made that cold call on Chairman Mao. Can you blame Xi and the Chinese government for their skepticism when the U.S. never gave China the time of the day, until Wall Street collapsed? Then again Xi had no choice but to accept the co-captainship, because those no good Yankee merchant bankers had already sold China a bunch of ‘too big to fail’ banknotes.
Marco Polo, the first Yankee peddler who visited China, went back to Venice, bearing the technological advancements of printing, gun powder, and paper money, along with silk, the rude produce of the land. However, 600 years later, the Chinese emperors started losing faith in welcoming foreigners, after the British, under the banner of Yankee Imperialism, waged their “War to Sell Drugs.” China holed-up in her ‘mansion’ until those pesky Yankee traders, dangled the baubles of the Asian Tigers in front of Deng Xiaoping. As Professor Jiang has noted, from that day forward the Chinese farmer stopped making a living.
I think the boys up top need some help from down below. Yes, they are our leaders, our only hope of saving the world from itself. Yes, they are well intentioned, well educated, well respected and well thought of, and they still need our help. They could have used some pre-marital counseling, but as in most shotgun marriages there was no time for that. How do we tell the boss what he should do? How do we, in the ‘new top down world order’ speak up? How do we tell the co-emperors that they aren’t wearing any clothes?
Ever since Lincoln was shot, America’s farmers, manufacturers and merchants have tried to curry favor with the emperor and his entourage, by organizing themselves in associations. Alexis de Tocqueville, in 1835, came to the then 25 States, interviewed 200 business and political leaders, went back home and wrote his seminal work, “Democracy in America.” Tocqueville attributed America’s success in creating a government of the people, by the people, and for the people, to 1) associations of like-minded individuals, 2) a fresh start in the new world and 3) no interference from a powerful church. The United States and Mexico both were start-up constitutional democracies The Catholic Church divided the power with their colonial governments, whether they were democracies or dictatorships. Karl Rove’s Christian coalition is an example of the damage that can be done when religion is used to win an election. However, the power behind the Yankees, was their need to form associations of individuals united in a common cause. These networks of local citizens were then able to speak with one voice, on issues that were important to their members.
One such association, known as the Grange, after the end of the Civil War in 1867, helped the farmer get his fresh start after the two centuries of unintended consequences, caused by the slavery form of agricultural subsidies. The Grange actually was one of several adult education movements after the War and had contemporaries like the Knights of Labor and the Farmers’ Alliance. The National Grange of the Patrons of Husbandry, as it is officially known, was conceived by Oliver Hudson Kelley and several of his colleagues at the – believe it or not – U S. Department of Agriculture. The term “Grange” comes from England and means an old estate where a variety of agricultural activities were carried on. The mission of the Grange was meant to:
1) advance agriculture through education; 2) make farmers more aware of new farming methods and legislation that was affecting them; 3) improve the living and working conditions of farming families; 4) organize cooperative economic power; and 5) overcome their isolation. (Stubblefield, 1994)
The Grange had a rocky beginning, taking on and promising too much at once. They had their greatest gain during the depression of 1873, when farmers turned to politics to cure their political problems. By 1874, almost nine thousand Granges with a membership of 643,125 had been organized in twenty-four states (Woods, 1991). It declined thereafter, but picked up again in the late 1880s (Buck, 1913).
One of the Grange’s contribution as a movement was creating social and educational opportunities at the local, state and national level. They had some outside lecturers, but relied heavily on their own membership to interchange views, prepare papers, debates, and talks about issues of interest. It was less about getting knowledge from the “experts” than gathering information and forming opinions themselves, from the ground up through group involvement.
The Grange movement won several political battles for farmers. They strongly influenced the breakup of the power of railroads that set exorbitant prices for shipping crops and goods. This made it possible for farmers to actually make a living, instead of giving their earnings to the railroads to ship their produce. They conceived of and pushed for rural mail delivery, improved rural highways and greatly influenced the establishment and quality of rural schools. These are a few among many political accomplishments that the Grange was instrumental in bringing to the national, state and local debate.
Perhaps most unique as an organization of its time, the Grange was a forward-looking leader in the way that it handled membership and the participation of women. When the Grange was first in the minds of its creators, the men who were discussing it did not even consider membership of women to their organization. Caroline Hall, the niece of founder Oliver Hudson Kelley, told her uncle, “Your organization will never be permanent if you leave the women out!” (Gardner, 1949) The Grange went on to include women as full voting members, able to hold any of the sixteen offices in each local Grange hierarchy. Women became Grange masters, chaplains, secretaries, lecturers, gate keepers, etc. In fact, in order to begin a Grange, four of the necessary ten members had to be women. For many years’ women enjoyed many more rights and responsibilities within the Grange than in general American society.
Ask 10 people nowadays what the Grange is and they look puzzled. “Something to do with farms,” and “I’ve seen their halls,” is as close as they can come to defining the oldest agricultural organization in the country.
But in its heyday in the 1870s and in its strong community presence into the 1960s, the Grange was a force to be reckoned with. It was heralded for improving rural life even as some called it a cult. It was appreciated for providing halls and social gatherings that put the heart in some small communities.
The farmers, after WWI, started abandoning the countryside for jobs in the cities, and formed associations of merchants and manufacturers, like Rotary, Lions, Kiwanis, and Toastmasters. The first three organizations were formed to help the individual business man succeed through the contacts and social relationships formed while performing community service projects. Toastmasters started out as a self-improvement (public speaking) offering of the Anaheim, CA, YMCA.
At age fifty, following my mid-life crisis I joined Kiwanis, Lions, Toastmasters, and the late ‘30’s self-help group Alcoholics Anonymous. The Follett Lions Club was the Chamber of Commerce and the only non-denominational group in population 400, Follett, TX. ‘Vernie’ Schoenhals was the only farmer member and he was retired. We had the Texas A&M, PhD economist – I billed him as ‘the Alan Greenspan of the Prairie” – do an analysis on what the community could do to save itself from extinction. His well thought out answer was that we had a good transportation system – we could leave town by US 15 or hop a freight train. I could have called in a priest to give us ‘last rights’ but the Baptist majority wouldn’t have gone for it.
I joined Sugar Speaker Toastmasters when Shelby returned us back to Houston, to practice my, “why you should drive fifty miles out in the country for a $12 gallon of goat’s milk.” Maybe I should have joined the Optimist Club but as it turned out, talking out loud to your friends and fellow members has similar benefits to AA and group therapy that Kiwanis, Rotary, Lions and the Optimists can’t provide. Around midway in my stay at Sugar Speakers, Toastmasters International, began promoting itself as the world leader in both communications and leadership skills training.
I didn’t pay attention or immediately buy into that leadership stuff because after all I was a graduate (barely) from the nine month officers’ training course offered by U.S. Marine Corps, at Quantico, Virginia. However, eighteen months in Middle Kingdom Toastmasters Club, in Zhengzhou, Henan Province, China, had proven to me that I only learned the steps, the rules of leadership. Probably because my higher power and most assuredly the USMC didn’t want me to endanger the lives of others under my command, I never went to war. I was terrified of standing in front of the 127 enlisted in my artillery battery, and saying, “Men, follow me!” I’d rather try to tell 127 anybodies about my latest and greatest idea and cower at the first raised eyebrow of disbelief.
My Toastmasters experience in China is different, no raised eyebrows, just a “what did he say look,” no matter what topic I was pontificating on at the time. But real leadership training, I got because I was the only Yankee Toastmaster in the club. The Marine Corps only taught me the dance steps but Toastmasters China I got to practice dancing in front of a live audience.
In China, I was not self-conscious about my dancing, communication and leadership skills because nobody from my cultural group was watching. There are 300 million young adults (80 percent women, average age 24) who hunger and thirst for the Toastmasters oral English communications and leadership opportunity. Why? So they can get a good job, make money and see the world.
The Grange Society is dead, domestically Lions, Kiwanis and Rotary are, ‘on the ropes’ only AA (recovery of self) and Toastmasters (self realization) are growing at home and abroad. At Sugar Speakers, the membership is comprised of merchants of service (engineers, consultants, accountants, insurance, etc.), while the membership of Beijing Advanced, On The Way and Middle Kingdom is primarily merchants of educational services and manufacturers of technology hardware and software.
“All things considered,” my goal is to introduce Toastmasters to Henan and Zhenghou Universities as the most effective and efficient way to learn to speak English fluently and while learning the international language, develop their communication and leadership skills. The college crowd can then bring the farmer population on board with Mandarin Toastmaster clubs. Think of it as a Grange Society with Chinese characteristics.