CH - I was earlier today at Husum meeting with a friend of yours.

In the long run, we're all dead. John Maynard Keynes

It is one thing to say that economic growth is not as high as it could be, and therefore the wealth, in absolute terms, that plutocrats have the potential to capture might not be going up to the same extent as it might have had a (relatively) more shared prosperity been enjoyed. Hard to argue with that.

On the other hand, and this is to my mind more important, relative to other classes within a society (and indeed, within this converging global community of which we increasingly are a part), the plutocrats are capturing an ever greater proportion of the overall total wealth creation (albeit the total being less than it could have been), as expressed in a number of ways. Among these ways are a globally rising gini, the casual addition of hundreds of billionaires annually to the ranks of the super rich at the expense of the poor, the peasants and the working classes of their respective home countries, and the increasing concentration of net worth at the top of the wealth strata in most of the liberal world.

That relative wealth, and not absolute wealth or prosperity, is what drives control over the levers of power, and allows the plutocrat class to buy off, in accruing measure, via control of the means of communication, the media, the means of production (via which the ability to decide which classes prosper and which are excluded) and increasingly the educational system, the democratic apparatus in each country over which they increasingly gain economic control. Stiffling shared growth for all is not a bug in the liberal economic system, but a feature.

Similar to the relative concentrations of wealth and power stiflfing growth for all, war tends to also depress, for a number of reasons, economic growth, but somehow, the plutocrats find a way to start them too.  And not only start them, but find a way not to pay their share (via regressive taxes, and yes, even in France this is largely the case) and find the blood and flesh of the lower classes to fight them. And it isn't just the US either...'39-'45 may have cooled the European plutocrats a bit to the use of war to consolidate power over, among other things, natural resources, but it seems this cooling is fading, and countries where aggressive military intervention abroad was seen as anethema to common values begin to pursue wars of aggression without compunction.

This too is not a bug in the system, but a feature.

The Hun is always either at your throat or at your feet. Winston Churchill

But when too much money finally stopped chasing too many assets, it started chasing too many goods.

He means "too few assets" and "too few goods" does he not?   Would that we were chasing "too many goods," especially of the black liquid sort, at least for the sake of India and China.

"It is not necessary to have hope in order to persevere."

Remember that the main failure of neoliberalism is, ultimately, that by denying the middle classes the income need to keep on buying, it kills off growth and makes things worse even for the rich. That was court-circuited in recent times by boosting debt, which allows the middle class to go on consuming without income growth.

No raises-> houses as ATM's
now we have a house crash-> no one has any money-> demand crisis.

It is all so clear and obvious that I worry we must have missed something fundamental.

I mean, no one* I talk to knows about these things, but when I argue for it everyone agrees at once.

* I asked my father who teaches business how much he thought real wages had risen in the US for the lower 90 % in 1976-2006. He guessed 30 %...

Peak oil is not an energy crisis. It is a liquid fuel crisis.

He has this new paper out:
http://www.j-bradford-delong.net/2008_pdf/20080521_capital.pdf

He focuses on capital, savings and the flow of capital around the world. What I find most interesting is that he can analyze the faults with "globalization" fairly well, but only in terms of how to improve growth by doing better in the future.

Apparently there are still no mainstream economists on any side of the spectrum who can contemplate a system not dependent on growth.

To summarize my 2 cents (again):

The rich countries have too much wealth and, especially in the US and UK, it is too unevenly distributed. In general these countries need to learn to do with less and substitute other activities for making "stuff".

The poor countries have too little wealth and it is also too unevenly distributed. They need to have more growth and better democratic institutions. Whether trade is necessary to meet these goals is an open question.

India, China and Brazil are developing into modern equivalents of 19th Century Britain. Industrialization is helping the few and pushing up macro measures of economic activity, but many are being left behind and/or exploited and the environmental damage is unacceptable. It is not clear that there are any political structures that could be devised or proposed that would make this situation better short of revolution or something similar.

However the pie gets sliced in the future the human race is already consuming at an unsustainable rate and population is still increasing. Neither of these fundamental constraints are included in economic models.

Without major change disaster looms.

Policies not Politics
---- Daily Landscape

Tax black hole | Comment is free

the stranglehold now exerted by the City over New Labour which has been persuaded that this financial enclave is central to the economic interests of the UK as a whole. Yet it is nothing of the kind. By bending over backwards to encourage hedge funds and private equity firms through the most egregious tax liberality (most recently the absurdly low 18% tax rate on their income from their "carry" or share of the gains on mammoth deals, less than half the income tax rate payable by top earners), the government has turned the UK, and specifically the City, into a gigantic tax haven for the internationally mobile business elite.

But by sucking talent and capital from other parts of the economy, it has been bought at a very high price. As the credit crunch is exposing, City profits on invisibles cannot compensate for the steady, continuing decline of Britain as a manufacturing nation. The volatility and excesses of the finance sector are outweighed by the million jobs lost in manufacturing in the last decade, the stagnant industrial output, the £7bn-a-month trade deficit, the weakness of manufacturing investment, and a so-called "knowledge economy"R&D restricted to a very few sectors.

The UK has even refused to allow the deduction of tax from interest payments within the EU which would hugely restrict the effectiveness of tax havens because a basic rate tax (probably 20%) would already have been deducted from that income before it reached the tax haven. There can be little doubt that this was stymied to preserve the UK as a tax haven with its City links to its overseas protectorates and crown dependencies. Equally, maintaining fiscal independence from Europe may be a populist move, but in reality it enables the international corporations to play off the EU and other countries against each other in constantly bargaining for the lowest tax rates.

The fact is, the UK can no longer afford either the prohibitive cost of the tax privileges of the City cuckoo-in-the-nest or the collateral manufacturing damage inflicted on Britain as an industrial nation.

(Not New) Labour MP Michael Meacher.

The CIF comment thread is unsurprising.

That was court-circuited in recent times by boosting debt, which allows the middle class to go on consuming without income growth.