Poetic Justice For The Aristocracy
Two points about today’s political economy – and then a prediction involving Illinois:
Point One: What’s coming is poetic justice for the aristocracy. The wave of populism/socialism/proto-fascism that’s sweeping the US and Europe is a direct result of the breathtaking hubris of a ruling class that didn’t know when to quit stealing.
While it is possible for societies dominated by a small group of rich/connected people to endure and even thrive, they can do so only if the 99% enjoys a rising standard of living and a certain amount of upward mobility. In other words, people will accept the existence of an entrenched elite as long as everyone else does a little better each year.
Today that’s not the case. The current crop of aristocrats (Google “Davos World Economic Forum images” for faces to go with the concept) are now simply harvesting the wealth of their subjects without much thought for their own vulnerability.
For an easy-to-grasp example of how this works, look at interest rates. Over the past couple of decades, the world’s central banks have been pushing rates lower in each cycle, impoverishing small savers and retirees who depend on income from bonds and bank accounts while enriching the already rich by raising the prices of stocks and real estate. The following two charts (from Charles Hugh Smith’s recent Who Killed The Middle Class?) illustrate the widening gap between the pay and assets of the haves and the used-to-haves. To put this in economist-speak, capital is gobbling up labor.
So the coming political tsunami is bit of French Revolution-style poetic justice, since most of the resulting policy changes will be aimed – either explicitly or accidentally – at the 1%.
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