Decline of the western society #2

Reader's comment wrote:- Stop wasting money on Ukraine

- Oh... a LORD... Who didn´t work physically a single full day during his whole life.

- Dam, I thought France was bad. 75?!?! WTF?!? Ahh yes, you old sir or mam will kindly get your deserved 3 days off retirement before we toss you in the ground.

- These "wanna be royals" are disgusting. The Brits (workers, etc) are the poorest in Europe. Why don't they just propose euthanasia by 74?

Michael Roberts wrote:Nobel (Riksbank) prize winner in economics (2015), Angus Deaton has a new book out, jointly written with his wife Ann Case, called Economics in America: An Immigrant Economist Explores the Land of Inequality,

https://www.theguardian.com/inequality/2023/oct/07/angus-deaton-interview-book-economics-in-america?fbclid=IwAR19HF6j9N6nD7MbkGpU2h7ftcNfm78zwvYf7Tv6ch-Fip27ic27M8nfPSI

In it, Deaton and Case attack the failure of neoclassical economics to address in any way the issues of poverty and inequality.  Mainstream economists in the US deliberately ignore rising levels of inequality and the horrendous impact of poverty, claiming that this is not the business of economics.  And yet "Real wages have stagnated since 1980 while productivity has more than doubled and the rich cream off the profits. The top 10% of US families now own 76% of wealth. The bottom 50% own just 1%."  A class system now operates and “the war on poverty has become a war on the poor”.

More equality will not be achieved by tax transfers and welfare payments - they will hardly make a dent.  The answer is state spending and investment in education and jobs for all.

BUT "We do not need to abolish capitalism or selectively nationalize the means of production. But we do need to put the power of competition back in the service of the middle and working classes. There are terrible risks ahead if we continue to run an economy that is organized to let a minority prey on the majority.”  But is that not a definition of capitalism?

For a critique of Deaton's ideas, see my posts: [he criticized Deaton's wish to preserve capitalism system which is the origin of social inequality, he did not criticize Deaton's progressive ideas and researches about poverty]

https://thenextrecession.wordpress.com/2020/01/06/assa-2020-part-one-inclusive-economics/?fbclid=IwAR3ECyqo2edtJa7OAqrNTQNJqxEw941hnDmrx989MJ7_GW6X4H1TslWDP7s

and

https://thenextrecession.wordpress.com/2015/10/13/weve-never-had-it-so-good/?fbclid=IwAR3wJH78Gp6uH30meTsMZpZOTMHjoivF4dDYSSr4ctCT1rzhsi5OI1koWFg

Michael Roberts wrote:It's a tiny country but another social-democratic government has been ousted - this time in New Zealand by 3.5m Kiwis in a general election.  The New Zealand Labour Party has lost to the centre-right National Party after six years in office.

Back in 2020, Labour swept to office under the media euphoria surrounding Jacinda Ardern - full of promises to transform New Zealand into a prosperous go-ahead country with great education, housing and equality.

None of this happened.  The pandemic lockdowns were severe and the ensuing inflationary spiral (fastest in 31 years) ate into average Kiwi living standards (inflation is still above 6% a year).  Education and housing have deteriorated and the economy is close to recession.  Young people have been leaving the country in droves.  Arden resigned earlier this year and has left the country.

None of the economic news is much different from the situation in many other advanced economies, including NZ's close neighbour, Australia.  Incumbent governments that have presided over the last few years of economic disaster have been paying the price in loss of office.

New Zealanders now have a National party government in coalition with an extreme free market libertarian junior partner.  Their policies are to cut taxes, reduce further public services, 'crack down on crime' and 'deregulate'.

Graph: economic activity contracts

David Coach-man
(writing from NZ) what was interesting was how the local ruling class almost totally drop funding Labour this election... after doing so at the last election. This time they at a record level funded the 3 right wing party's NZ Nats, ACT and NZFIrst.. Resulting in a vulgar amount of advertising.. Sadly, via the party list, some read dead meat is still to be found in Lab party...

Michael Roberts wrote:But then, as in the rest of advanced capitalist economies, the profitability of capital in Israel fell sharply from about the mid-1960s to the early 1980s.  This brought economic crises as part of the international slump of 1974-5 and 1980-2.  It also brought a new war with the Arab states in 1973. At this point in the story of the Israeli economy, it is very useful to look at the profitability of Israeli capital from the 1960s, as provided by the World Profitability Database.

Israel’s so-called democratic socialist state had to go if Israel’s capitalists were to prosper. And so, as in many other capitalist economies, Israelis now elected governments that aimed to end ‘socialism’ and open up the economy to capital without restrictions, while at the same time reducing Israel’s ‘welfare’ state and support for collectives like the kibbutz. Israel entered the neo-liberal era which lasted globally for the next two to three decades with a vengeance. In a carbon copy policy of Reagan in the US and Thatcher in the UK, between 1986-2000, 83 government owned companies were sold for a total of $8.7 billion US dollars.  The national airline ELAL, the telecommunications network Bezeq, all the major banks and the other big five conglomerates were all sold off to buyers selected by the government.

For a while these measures did help to get the profitability of Israeli capital up – in our profitability graph, there was a doubling of the rate of profit from 1982 to 2000.  But the rise in profitability was mainly driven by a new influx of immigrants after the collapse of the Soviet Union and from North Africa. Immigration cheapened labour costs, while a period of seeming ‘truce’ with the Arabs ensued after the Oslo accords enabling even greater inflows of foreign investment.

But this did not last.  In the 21st century, Israel’s capitalist economy increasingly struggled like many other ‘emerging economies’. In the past ten years the collective Kibbutzim have rapidly disappeared to be replaced by high-end suburban housing. Land values have skyrocketed with real estate speculation. There has been continual erosion in funding for health and other public services which has led to a rise in the private cost of health and adds to growing gaps in the access to services between those who have money and those who don’t.

The gap between the lowest and highest earners in Israel is the second highest in the industrialized world, and the child poverty rate is second only to Mexico among developed countries.  An average of one in three Israeli children are living in poverty, with one in five families subsisting well below the poverty line. Israel is one of the most unequal high-income countries. The bottom 50% of the population earn on average NIS 57,900, while the top 10% earn 19 times more. Thus, inequality levels are similar to those in the US, with the bottom 50% of the population earning 13% of total national income, while the top 10% share is 49%. Of course, poverty and the inequality gap is much greater for the Arab citizens of Israel who represent around 20% of Israel’s population.  But poverty rates are also high in orthodox Jewish communities, which represent one-tenth of the population. As for Gaza and the West bank, poverty levels are horrendous.

In stark contrast, the concentration of wealth in Israel is the second highest in the western world. The notorious family fiefdoms include: Arison, Borovich, Danker, Ofer, Bino, Hamburger, Wiessman, Wertheim, Zisapel, Leviev, Federman, Saban, Fishman, Shachar, Kass, Strauss, Shmeltzer, and Tshuva. These families collectively control a fifth of the revenue generated from Israel’s leading companies and these top 500 companies account for 40% of the business sector and 59% of national revenue.

The big difference, of course, is that in its perpetual war with its neighbouring Arab states, Israel has been backed to the hilt by the US and Western capital.  So even facing permanent conflict with its Arab neighbours and uprisings by the displaced Palestinians, it has been able to survive economically and also develop a formidable military force.

But the impact of neoliberal policies and economic slowdown has not led to a shift to the left.  The fear of Arab attacks and the failure of any effective alternative socialist opposition have instead led to the rise of religious and ethnic political parties. The race and religious cards have been played by Israeli capital to avoid any confrontation over its economic and social failures.

ucanbpolitical wrote:I would like to touch on the Kibbutz movement. Essentially this was an example of barrack socialism. Communism requires internationalism, the opposite of any attempt to implant it in a settler state. Communism requires appropriating the resources of the most advanced capitalist countries not being sited on a farm in an impoverished part of the world as it was then. Communism requires the flourishing of the individual as Marx pointed out in the Critique of the Gotha Program not the levelling down as occurred on the Kibbutzim and which made them so unattractive to following generations which saw the cities providing more freedoms. Communism depends of conquering the commanding heights of the economy not being subject to the banks and merchants which the Kibbutz movement was, and which bankrupted it.

Its greatest achievement was providing the Israeli army with some of its most hardy commanders and soldiers. In short the Kibbutz movement was a travesty, a stain on the name socialist.

GarryB wrote:A privately run company is different from a government run company... a privately run company can pick and choose... a private airline will only fly the main centres and any places that are profitable. A national airline has to fly to everywhere even places they lose money on, so obviously the private airlines are more profitable.

Which is why privately owned police forces or hospitals or schools or electricity suppliers are a bad thing... they work when they are properly funded by everyone... when everyone funds it it becomes affordable.