July 08, 2020 "Information
Clearing House" -
Now that the pandemic is over and
the economy is roaring again--so the stock
market says--we're heading straight back up into
the good old days of 2019. Nothing
to worry about, we've recovered the trajectory
of higher and higher, better every day in every
way.
Everything's great except the fatal
rot at the heart of the U.S. economy hasn't even
been acknowledged, much less addressed: every
sector of the economy is nothing but one form of neofeudal
extortion or another.
Let's spin the time machine back to
the late Middle Ages, at the height of feudalism,
and imagine we're trying to get a boatload of goods
to the nearest city to sell. As
we drift down the river, we're constantly being
stopped and charged a fee for transiting one small
fiefdom after another. When we finally reach the
city, there's an entry fee for bringing our goods to
market.
Note that none of these fees were
payments for improvements to transport or for
services rendered; they were simply extortion. This
was the economic
structure of feudalism: petty fiefdoms levied
extortionate fees that funded the lifestyles of
nobility.
This is why I have long called
America's economy neofeudal:
we pay ever higher fees for services that are
degrading, not improving. This
is the essence of extortion: we don't get any
improvement in goods and services for the extra
money we're forced to pay.
Consider higher education: costs are
soaring while the value of the "product"--a college
diploma--declines. What
extra value are students receiving for the doubling
of tuition and fees? The short answer is "none."
College diplomas are in over-supply, and studies
have found that a majority of students learn
remarkably little of value in college.
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As I
explain in my book Nearly Free University and the Emerging Economy,
the solution is to accredit
the student, not the institution.
If the student learned very little, he/she doesn't
get credentialed.
Were students to have access to the best classroom
lectures online (nearly free), and on-the-job
apprenticeships in the workplace, (nearly free or
perhaps even paid), learning would be significantly
improved and costs reduced by 80% to 90%.
In this structure, there's no need for costly
campuses or administration; the entire structure of
higher education could be largely automated with
software, except for the workplace apprenticeships
which focus on case studies and real-world projects
that are creating value in the here and now.
Consider healthcare: has the quality
of healthcare doubled along with costs? Are
Americans significantly healthier as the costs of
healthcare have tripled? The aggregate health of
Americans has arguably declined, while the stresses
placed on frontline care providers by the
ever-heavier burdens of compliance and paperwork
have increased.
What about the $200 hammers and $300
million F-35 aircraft of the defense industry? Once
again, as costs have soared, the quality and
effectiveness of the products being supplied has
arguable declined.
How about state and local government
services? Are they improving as taxes and junk fees
rise? Once again,
government services are often declining in quality
as taxes and fees increase by leaps and bounds.
In sector after sector, the quality
of the goods and services has declined while costs
have soared. This is the acme of neofeudalism: insiders
and the New Nobility are skimming fortunes as prices
skyrocket and the quality of the goods and services
provided plummet.
Look at the cost increases in higher
education, healthcare and childcare and
ask yourself if the quality of those services have
risen in lockstep with price increases.
This is nothing but neofeudal
extortion. The cartels
raise prices and we're forced to pay them, just as
feudal commoners were forced to pay.
But extortion isn't the only feature
of neofeudalism that is leading to collapse. Just
as important is the slow erosion of commoners'
self-rule and ownership of meaningful, productive
capital.
This gradual, almost imperceptible
erosion is the essence of neofeudalism, a
process of transferring political and economic power
from commoners to a new Financial
Aristocracy/Nobility.
If we examine the "wealth" of the middle
class/working class (however you define them, the
defining characteristic of both is the reliance on
labor for income, as opposed to living off the
income earned by capital), we find the primary
capital asset is the family home, which as I have
explained many times, is unproductive--in essence, a
form of consumption rather than a source of income.
In a globalized, financialized economy, the only
capital worth owning is mobile capital, capital that
can be shifted by a keystroke to avoid devaluation
or earn a a higher return.
Housing and pensions are "stranded capital," forms
of capital that are not mobile unless they are
liquidated before crises or expropriations occur.
I am also struck by the ever-rising barriers to
starting or even operating small businesses, a core
form of capital, as enterprises generate income and
(potentially) capital gains. (The pandemic has only
increased barriers that were already high.)
The capital and managerial expertise required to
launch and grow a legal enterprise is significant,
which is at least partly why a nation of
self-employed farmers, shopkeepers, artisans and
traders is now a nation of employees of government
and large corporations.
What sort of capital can be acquired
by the average commoner now? Enough
to match the wealth and political power of financial
Nobility?
As for political influence: a recent
study found that voters had very little power in the
U.S., which is effectively an oligarchy: Testing
Theories of American Politics: Elites, Interest
Groups, and Average Citizens.
Summary: "The U.S. government does not represent the
interests of the majority of the country's citizens,
but is instead ruled by those of the rich and
powerful, a new study from Princeton and
Northwestern universities has concluded."
Neofeudalism is not a re-run of
feudalism. It's a new and improved, state-corporate
version of indentured servitude. The
process of devolving to feudalism required the
erosion of peasants' rights to own productive
assets, which in an agrarian economy meant ownership
of land.
Ownership of land was replaced with various
obligations to the local feudal lord or monastery--
free labor for time periods ranging from a few days
to months; a share of one's grain harvest, and so
on.
The other key dynamic of feudalism was the removal
of the peasantry from the public sphere. In the
pre-feudal era (for example, the reign of
Charlemagne), peasants could still attend public
councils and make their voices heard, and there was
a rough system of justice in which peasants could
petition authorities for redress.
From the capitalist perspective, feudalism
restricted serfs' access to cash markets where they
could sell their labor or harvests. The
key feature of capitalism isn't just markets-- it's
unrestricted ownership of productive assets--land,
tools, workshops, and the social capital of skills,
networks, trading associations, guilds, etc.
Our system is Neofeudal because the non-elites have
no real voice in the public sphere, and ownership of
productive capital is indirectly suppressed by the
state-corporate duopoly.
Our society has a legal structure of
self-rule and ownership of capital, but in reality
it is a Neofeudal Oligarchy. The
decline is visible, and so is the trajectory to
collapse.
I discuss these dynamics in greater depth in my
books:
Pathfinding our Destiny: Preventing
the Final Fall of Our Democratic Republic
Inequality andthe Collapse of
Privilege
Why our Status Qup Failed and Is
Beyond Reform
We got your neofeudal wealth inequality right here:
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