The “8888” Uprising refers to a series of protests that took place in Burma during 1988 that culminated on the date 8/8/1988, hence the name. The student protests that evolved into the nationwide uprising were sparked by (Dictator) General Ne Win’s decision that the Burmese government would no longer recognize the newly replaced currency notes, 100, 75, 35 and 25 kyats, leaving only 45 and 90 kyat notes. They were left, it is believed, because 45 and 90 are divisible by nine. General Ne Win was notoriously superstitious and he considered nine a lucky number. This wiped out people’s savings overnight and Burma, already poor and underdeveloped, was given Least Developed Country status by the UN.
Piketty Is Wrong: Rich Families Don't Generally Get Richer
Piketty is wrong that the rich get richer.

French economist Thomas Piketty made a huge splash last year with his Capital in the 21st Century in which he claimed that economic inequality increases as capital accumulates in the hands of the already rich. Piketty’s analysis as been comprehensively analyzed and dismissed by other economists. One of the moreinformative and entertaining takedowns of Piketty is by Northwestern University University of Illinois-Chicago economist Deirdre McCloskey.

Alerted to a new study, “The Rich Get Poorer: The Myth of Dynastic Wealth,” by TheEconomist’s Buttonwood column, I thought I would share some that study’s conclusions withReason readers.

From the study:

We believe Piketty’s core message is provably flawed on several levels, as a result of fundamental and avoidable errors in his basic assumptions. He begins with the sensible presumption that the return on invested capital, r, exceeds macroeconomic growth, g, as must be true in any healthy economy. But from this near-tautology, he moves on to presume that wealthy families will grow ever richer over future generations, leading to a society dominated by unearned, hereditary wealth. Alas, this logic holds true only if the wealthy never dissipate their wealth through spending, charitable giving, taxation, and splitting bequests among multiple heirs.

As individuals, and as families, the rich generally do not get richer; after a fortune is first built, the rich get relentlessly and inevitably poorer.

The “evidence” Piketty uses in support of his thesis is largely anecdotal, drawn from the novels of Austen and Balzac, and from the current fortunes of Bill Gates and Liliane Bettencourt. If Piketty is right, where are the current hyper-wealthy descendants of past entrepreneurial dynasties—the Astors, Vanderbilts, Carnegies, Rockefellers, Mellons, and Gettys? Almost to a man (or woman) they are absent from the realms of the super-affluent. Our evidence—used to refute Piketty’s argument—is empirical, drawn from the rapid rotation of the hyper-wealthy through the ranks of the Forbes 400, and suggests that, at any given time, roughly half of the collective worth of the hyper-wealthy is first-generation earned wealth, not inherited wealth.

The originators of great wealth are one-in-a-million geniuses; their innovation, invention, and single-minded entrepreneurial focus create myriad jobs and productivity enhancements for society at large. They create wealth for society, from which they draw wealth for themselves. In contrast, the descendants of the hyper-wealthy rarely have that same one-in-a-million genius. Bettencourt, cited by Piketty, is a clear exception. Typically, we find that descendants halve their inherited wealth—relative to the growth of per capita GDP—every 20 years or less, without any additional assistance from Piketty’s redistribution prescription.

Dynastic wealth accumulation is simply a myth. The reality is that each generation spawns its own entrepreneurs who create vast pools of entirely new wealth, and enjoy their share of it, displacing many of the preceding generations’ entrepreneurial wealth creators. Today, the massive fortunes of the 19th century are largely depleted and almost all of the fortunes generated just a half-century ago are also gone. Do we really want to stifle entrepreneurialism, invention, and innovation in an effort to accelerate the already-rapid process of wealth redistribution?

Buttonwood observes:

Indeed, the authors point out that the rapid turnover of the Forbes 400 suggests that inherited wealth is unstable. Three-quarters of the families in the original list no longer appear on it.

Of course, dropping out of the Forbes 400 hardly indicates a descent into penury. But family wealth tends to dissipate over time. The Astors, Vanderbilts and Carnegies were among the wealthiest families of the late 19th century; not one of their descendants makes it onto the modern list. Indeed a Vanderbilt family reunion held in 1973 failed to find a single millionaire among the 120 present.

The study concludes:

When great wealth is achieved through entrepreneurialism, innovation, and invention, society benefits, jobs are created, and life becomes easier and better. For generations, this process has fueled American exceptionalism. When great income is achieved through entrepreneurialism, innovation, and invention, society again benefits for the same reasons. We find it puzzling that Piketty underplayed what even he recognizes as the major driver of growing American income inequality: the massive appropriation of the wealth of corporations by their executives. When it is objectively deserved, terrific; when it is not, it siphons resources out of the macroeconomy and hollows out the opportunity set for the populace at large.

As the researchers note, a significant driver of rising income inequality in the United States has been the increasingly outsized pay packages awarded to corporate CEOs. They do not see much evidence that 9-figure CEO compensation boosts shareholder wealth and argue for corporate governance reforms that more tightly align CEO pay with increased shareholder value.

In an case, they find that the proverb “shirt sleeves to shirt sleeves in three generations” has more than a bit of truth behind it.

People are very simply tired and exhausted and angry with austerity measures that have devastated Greek society.
—  Costas Panayotakis, author of “Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.” Watch his interview on Democracy Now! today.

The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals. … 

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists … The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights. … 

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?

“There is perhaps no writer better at articulating the economic way of thinking and exposing the myths that plague political debate than the Frenchman Frédéric Bastiat.”

Happy 214th birthday, Frédéric Bastiat!

For more:
White House: U.S. Not Contemplating A Federal Bailout Of Puerto Rico
NEW YORK, June 29 (Reuters) - Puerto Rico's governor on Monday called for the commonwealth to be allowed to restructure its debts under U.S. bankruptcy code, while a newly appointed adviser to the U.S

So the United States has billions to throw at nebulously defined proxy wars in the Middle East and Afghanistan… because reasons… but it can’t even get its shit together in order to see to the future fiscal and municipal needs of one of its own territories.  These priorities seem dubious.

It’s also interesting to think about why the U.S., Europe, the West, the World Bank and the IMF are so hardline and hellbent on forcing constituencies (like Greece) to repay debts that they cannot realistically repay without harming their quality of life or their possibilities for prosperity in the future.

When the global south was making headlines as a dependent, debtor ‘problem’, everyone assumed that racism was the driving force behind the exploitative, inflexible, anthropologically deterministic, environmentally destructive practices of global finance and development efforts.  Now we are starting to see that the only thing that really matters to power, in any nation, is ensuring the ongoing support of the non-laboring, wealthy global elite.

The world has relatively few real citizens.  They benevolently give their money to those they have forced into poverty, subservience, and economic disarray expecting a return on that investment.  They will wreck entire polities if they do not receive their expected returns and they will call it progress.  Unfortunately, any ‘restructuring’ plans, if they happen at all, will likely only perpetuate a malfunctioning global system of institutionalized exploitation and theft.

There’s a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can’t take part! You can’t even passively take part! And you’ve got to put your bodies upon the gears and upon the wheels… upon the levers, upon all the apparatus, and you’ve got to make it stop! And you’ve got to indicate to the people who run it, to the people who own it, that unless you’re free, the machine will be prevented from working at all!
—  Mario Savio, ‘Bodies on the Gears speech’, the steps of Sproul Hall, December 2, 1964.
The Daily Bell - F.A. Hayek and Why Government Can't Manage Society, Part II
It is seventy years, now, since near the end of the Second World War Austrian economist, and much later Nobel Prize winner, Friedrich A. Hayek published his most famous article, "The Use of Knowledge in Society," in September 1945, demonstrating why it is impossible for a system of socialist central planning to effectively manage a complex and ever-changing economy better than a functioning, competitive free market order.
By High Alert Investment Management Ltd.
Companies, Business Groups Blast Overtime Proposal
Companies and business groups warned a White House proposal to expand eligibility for overtime pay would curtail work hours and dent job growth as employers try to work around it to control costs.
By Melanie Trottman, Rachel Feintzeig and Lauren Weber

Conservatives – like the US Chamber of Commerce – respond to the new overtime threshold with their knee-jerk reaction to anything progressive: it’s going to kill jobs. But the economics say they are wrong:

Some economists don’t foresee any dire consequences from the proposed rule. When questions such as raising the minimum wage or expanding overtime eligibility come up, “the business community says the sky is falling and jobs will be lost,” said Paul Osterman, a labor economist and professor at the Sloan School of Management at the Massachusetts Institute of Technology. Data indicate such predictions don’t come true, he said. 

Mr. Osterman added that while some companies say they will move toward part-time employment, that “isn’t realistic because there’s a substantial fixed cost associated with hiring new bodies. That’s why companies use overtime in the first place—it’s cheaper to pay time and a half than to hire new people.”
Naomi Klein Accepts Pope Francis’ Invitation to Debate Climate Change Action at the Vatican
The activist and “This Changes Everything” author said she was “surprised but delighted” to receive an invitation from the head of the Catholic Church to lead a conference this week, adding that while others may think his ideas on economics are wrong, she’s on his side. - 2015/06/29

Greece’s crisis has hit a new low, as fear of a total financial meltdown grew so widespread that Greeks emptied over a third of the country’s ATMs on Saturday in a desperate attempt to pull out as much money as possible before the banks collapse.

The crisis is at a pivotal moment now, but it has been brewing for years. Despite what you may have heard, it’s not happening because the Greek government spent beyond its means and now is suffering the consequences. It’s happening because Europe isn’t sure whether it wants to be one country or many, and has in the meantime adopted policies that have created a humanitarian catastrophe for the Greek people.

The Greek crisis: 9 questions you were too embarrassed to ask
This is not a typo: Only 3% of Americans are legally allowed to invest in start-ups
And they dictate the products and services that the rest of us consume.

More than 97% of Americans cannot invest in the latest startups, nor profit from their meteoric rises. For example, Kickstarter and other crowdfunding platforms like Indiegogo and Rockethub do not allow “supporters” to own part of the organizations featured on the site, even though their donations are financial investments in those advertising funds or projects. That’s why most crowd funding platforms reward their supporters with goodies (a first run of a manufactured product, say, or thank you cards.).

Under US law, only “accredited investors” are legally allowed to invest and own a stake in a start-up.

So who are accredited investors?

An investor is accredited if he or she has a net worth of at least $1 million. That doesn’t count the value of their primary residence. Another way to become accredited is to have income of at least $200,000 each year for the last two years (or $300,000 together with a spouse) and expect to make the same amount in the current year.

Tell me more about that free market I hear so much about.

There were strong economic reasons for the broad national reach of American slavery. Though Northerners gradually eliminated slavery in their states, Southern slave-grown cotton was the nation’s leading export. It powered textile-manufacturing revolutions in both New England and Europe, and paid for American imports of everything from steel to capital. In addition, the demand for slave labor in southwestern states like Mississippi, Louisiana and Texas drove up slave prices and land values throughout the South. In the 19th century, slave values more than tripled. By 1860, a young “prime field hand” in New Orleans would sell for the equivalent of an expensive car, say a Mercedes-Benz, today. American slaves represented more capital than any other asset in the nation, with the exception of land. In 1860, the value of Southern slaves was about three times the amount invested in manufacturing or railroads nationwide.

The whole “Life Hacks” meme annoys me on general principle, but there’s one subspecies of the type that particularly gets my goat: the ones that make theatre of financial responsibility. You know the ones - all those helpful “money-saving tips” that you’ll only ever have the opportunity to use if you’re already very well-off.

It wouldn’t be so bad if the amounts of money they dealt with were actually significant sums for their target audience, but it’s always stuff that’ll yield single-digit savings for people with six-figure incomes. It’s utterly meaningless - a way for upper-middle-class twits to feel smug about how clever and thrifty they are by playing games with the rounding error on their chequing account balance.

How to cadge free drinks at a four-star restaurant? I’ve got a better “Life Hack” for you: go fuck yourself.


The economy of you

A collaboration between myself and association-of-free-people (see the original post for contrast), this project has been languishing on my computer for some time, not seeing the light of day. I have been busy with my graphic design course, so all the projects I would like to be working on have been temporarily abandoned. Until now.

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