Your Sunday morning economics snippets


Yves Smith’s Naked Capitalism remains one of the most important blogs I read. Last month’s article on why inequality is destroying democratic capitalism by Nobel economist Angus Deaton was particularly insightful:

I think that people getting rich is a good thing, especially when it brings prosperity to others. But the other kind of getting rich, “taking” rather than “making,” rent-seeking rather than creating, enriching the few at the expense of the many, taking the free out of free markets, is making a mockery of democracy. In that world, inequality and misery are intimate companions.

Jeremy Sear on Well May we Say #101, The Employer Lobby Strikes Back, featuring Cam Smith:

The entire justification the rich and wealthy have is that the poor are bad people who deserve it … because if the poor aren’t bad people who deserve their poverty, then why are they suffering so badly? It’s a huge incentive to think as badly as possible of the poor, and so they spend their lives taking in as many pieces of prejudice they can about the poor being undeserving and lazy and shit, and making poor decisions, and generally deserve every bad thing that happens to them. It’s also massively in the interest of their class and supporters for all the people who are out of work to be squabbling amongst themselves for the tiny amounts of work that are available.

We can’t discuss social security in Australia without someone mentioning dole bludgers or some other epithet. Even if half the people receiving government assistance didn’t deserve it in the eyes of these people, it’s still worth it to help those down on their luck. Frankly, I’m honoured my taxes go to helping people like this, it’s called living in a kind society.

It also helps entrepreneurs, because if things go belly up, they won’t starve. Safety nets and breaking up monopolies aren’t at the expense of the free market, they enable it, as Angus Deaton points out.

And while I’m posting snippets, Greg Jericho just posted another of his important economic articles for the Guardian Australia. We just reelected the same government who’s commitment to budget surplus sounds superficially responsible, but it’s absurd when you consider the weakness of the global economy right now, and that interest rates are below the rate of inflation:

This week the interest rate for Australian government 10-year bonds went below 1%. Show me a household that can take out a 10-year loan at a 0.96% rate, despite the fact that their level of debt has risen over the past six years from $257bn to $549bn, and I’ll start listening to you saying the government needs to budget like a household.

That’s enough of my soap box for this month. Or, is it?

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