Road to Serfdom or Path to Prosperity

The politics of demand destruction reduces to tax policy because paying taxes pays the economic rent.

Since the best way to have more of something is to tax it less (reduce the rent, which is what the kind did, and later the middle class who became rich like the king with the development of capitalism), if we want more millionaires, which indicates being on the path to prosperity, tax it less.

If we want to add supply, it is necessary to reduce the rent. No, this does not mean a broader and flatter distribution of income to demand the supply, which resists deflationary risk and rising rents. It means a broader and flatter tax burden against a zero-sum reduction of income for the lower classes, which regresses the tax burden, raises the rent (increases debt to demand the supply) and results in less productivity. It puts us on the road to serfdom described and explained as the path to prosperity.

According to efficient-markets theory, remember, we always encounter a detour along the path to prosperity. Debt increases to demand the supply. Margin compression occurs because a free market creates plenty of wealth but does not sustainably distribute it, which always puts us back on the road to serfdom.

Since capitalism considers redistribution of wealth to be a moral hazard because it reduces productive incentive, to cure recurrent crises of overproduction requires making the market more efficient.

(Keep in mind that the cure is a psychological trick utilizing the anchoring effect. Since the wealth does not trickle down enough to demand the supply, which results in oversupply at high prices, capitalists are quick to warn us that taxing the surplus will make it even less likely the wealth will trickle down. A more progressive tax rate is a hazard because it steals value and distributes it to people that did not earn it. Stealing is immoral, and this immoral act results in the hazard to be avoided--deflation. Thus, the moral hazard.

Avoiding the hazard is not a function of deconsolidation because consolidation is what makes the market more efficient, and raising the rent at the margin is as bad because it loots the value efficiently produced. Instead of adding the supply that cures the chronic shortages we had before capitalism, pillaging and plundering the wealth of nations like in days gone by deters the incentive to add supply. Financiers will not try and make markets more liquid and, hence, more expansive, but instead hord their cash like they are doing now, compressing the marginal product, causing shortages and rising prices.

Managing the risk with propriety requires the special understanding, the secret knowledge, needed to be a member of the ruling class, and its administrative bureaucracy ruled from the top down, both public and private. In order to not induce the risk being avoided, and make things worse, it is necessary to do the right thing and do the wrong thing no matter how immoral and hazardous it may be for the huddled masses in service--indebted--to their overlords, serving up the oversupply--the cure for shortages--on demand.)

Originally, during the Clinton administration, the market was made more efficient by progressing the tax code. The margin, instead of compressing into the hands of a few, wealthy plutocrats, was taxed so that it accumulated a budget surplus instead of debt on demand.

The Bush administration then returned the surplus to its "rightful owners" with tax cuts for the rich. The margin re-compressed in the private sector, but not to worry. A market that is deregulated--without deconsolidation because that reduces efficiency--self-corrects for abuses because a free market demands propriety, but without deconsolidation there is little or no incentive to correct without government intervention and the coercion that supposedly causes all our problems.

It is important to recognize that in both cases risk-value is kept consolidated for its "proper" management by elite, administrative authority both public and private, and consolidation of risk-value is exactly what a free market is not. The result of consolidation is, for example, being dependent on jobs "created" and compressed to expand the margin rather than demanded.

Without margin compression that occurs in small, disinflationary, non-catastrophic proportions on demand, we end up with one, big catastrophic, deflationary proportion that demands markets be commanded into efficiency. Instead of avoiding risk, we demand what we are supposedly trying to avoid--the need for big government.

It appears that free markets cannot, will not, work to sustainably distribute value. It appears that adding debt is the only way to demand the supply, and since adding debt is considered to be added risk, when it isn't, it appears that eliminating deficit spending with tax cuts will render free-market economics, when it won't.

Indications a free market doesn't exist doesn't mean it doesn't work. Just because the means for immediate accountability does not occupy political space with less and less need for government doesn't mean it can not. Quite the contrary. There is every indication that it works and so every attempt is made to avoid it.

By trying to avoid margin compression, which is unavoidable, we suffer free-market repression and a tax burden in regression to relieve our oppression.

At the forefront of a more regressive tax burden are Ivy-League advocates who say the reason big businesses are hording (repressing) record amounts of cash (capitalizing the distribution of rents needed to demand the supply, which increases the demand for debt) is because there is too much uncertainty over tax policy (who pays the rent). However, consolidation of value (who collects the rent) is all but uncertain--it has a deflationary effect with high debt and rising unemployment...just exactly what benefits the want-to-be gods of wealth and power to the detriment of everybody else. If unemployment does abate because the gods command they pay no taxes in order to distribute the accumulated value, that will be when the debt is paid, which destroys the demand necessary to resist the detriment--deflation--and demand propriety. This is called "rigging the market."

Relying on the theory of efficient markets, the capacity to demand propriety is highly improbable.

Being determined by events that cannot be foreseen or prevented, with matters virtually popping in and out of existence, risk management at the level of the individual can be highly probabilistic. At the macro-economic level, however, with the utility of efficient-markets theory and the tools of quantum mechanics, the probable direction of the risk can be made to move by creating distortions in the free space called the market with massive accumulations of the capital like never before.

With the invention of the calculus and harnessing god-like forces of nature, you would think we had interchanged the road to serfdom for the path to prosperity. The path is paved, however, with the capacity for complete self-destruction, and while we should be wise enough to construct a risk ontology that reduces the probability of the risk without going MAD, the road to ruin is paved with good intentions. You would think that with so much productive capacity (referred to by the "job creators" as "creative-destruction" that infers a god-like potential for exacting unacceptable amounts of harm if we do not avoid the moral hazards) we could not only cure shortages, but cure want in the shadow of death, which is what it means to say, with propriety, "I shall not want."

A massive distortion of market space is created over time by organizing to avoid the strong force of proprietary (alpha) risk, which cannot be avoided on command (as the king found out, for example) because its value derives from the risk on demand. With accumulation of this risk value (supposedly to make the market more efficient), the probability the vast majority will be able to resist the gravitational field of the capital and determine the direction of the risk is highly improbable at the quantum level despite being the stronger force. At the same time, while the powers that be (the "job creators," for example) think they have cleverly commanded nature and de-ontologized the risk with value at the quantum level, the relative value of the risk is fully maintained in the macro dimension with an ontology that is all but uncertain.

Although the weaker force ("job creators" being fewer in number, for example) dominates and directs traffic with gravitas, eventually we learn how to read the signs. "We" discover the path to prosperity, without self-determination in the alpha dimension, is really the road to serfdom.

Following directions that take us back to gain the future, we gravitate down the road to serfdom with the false ambition of gaining strength in fewer numbers. Gaining what cannot be simultaneously had in large numbers is not at all probable within the fabric of the free market, however, and when we try, the risk of loss is fully assumed.

Demand Destruction

Capitalism claims to be synonymous with a free market but also claims it is inefficient. To make the marketplace more efficient it is necessary to consolidate it. This is called efficient-markets theory and dominates our current, political environment.

Repeal of Glass-Steagall is the product of efficient-markets theory. Subsequently, having produced the Great Recession, the market is to be made more efficient with thousands of pages of legislative initiatives to make the market more efficient.

It is not difficult to figure out that the theory is a technical failure, but as previously discussed, this depends on what the objective technically is. If you recall, when Mr. Obama campaigned for president, too-big-to-fail banks were the problem, not the solution. Having succumb to efficient-markets theory at the behest of his Ivy-League colleagues, demand continues to decline despite record budget deficits and low interest rates.

During the Reagan-Bush era, by contrast, when we had trickle-down tax cuts like we've had for the past 10 years, Fed chairman Volker moved interest rates up to record levels to cover the booming deficit. Spending was not cut because tax cuts for the rich, contrary to trickle-down theory, did not destroy demand for government spending but added it. The theory was an empirical failure but was replaced with efficient-markets theory, which during the Clinton era culminated in repeal of Glass-Steagall.

An unconsolidated, free market is supposed to be self-correcting, avoiding systemic risk. Instead, using efficient-markets theory as the working model, the marketplace yields the accumulation of risk to be avoided. Industry and markets are too consolidated as per the economy-of-scale efficiency the theory says cures shortages by adding supply. Objectively, it turns out, supply is added by destroying demand, which adds demand for government.

The Fed, by objective, is currently keeping rates low--manipulating rates to resist demand destruction. That is not a bad thing except that the marketplace is too consolidated--the added supply of money is being used to support the price of equities against declining demand. The capital that drives (empowers) demand is being horded to secure a regressive tax burden that will cause the demand destruction (the deflationary risk) supposedly being avoided by objectives both public and private.

CEO's of big corporates, for example, operating with limited liability, insist that consolidation creates value, which in turn creates jobs. The opposite is true, however. Value is created with demand destruction--combination of unemployment and rising prices, which accumulates deflationary risk.

Big CEO's claim that by creating value (growth) they create demand (jobs), but growing a company (creating value) by consolidation (attaining economy-of-scale to make the market more efficient) is to the detriment of jobs. The capacity to demand jobs (and empower consumers with proprietary risk) is destroyed, not created, to add value (systemic risk) to the company. This is what is "twisted" about Fed policy. If big corporates, who we rely on to create jobs, destroy jobs to create them, the result is what we have now, stagflation--high prices and profits with high unemployment.

As long as unemployment remains high, the Fed tends to add new money to support demand (i.e., resist the declining rate of profit). Relying on the "job creators" to demand jobs from the top down turns them into gods to be supplicated. Growth requires sacrificing the capacity to demand it. The result is inorganic growth--merging and acquiring industries, markets, and proprietary risk to resist the declining rate of profit, financed by the Fed at low interest rates to support the demand for added supply.

With diminished capacity to demand the supply (demand destruction), supply is added and proprietary risk accumulates solely into the hands of the gods who falsely claim the result is the legitimate effect of the invisible hand. Supply-side advocates claim that collective action in the marketplace results in a beneficial detriment (naturally occurring risk in the aggregate referred to as "margin compression"), and since it results in detriment (stagflation), the marketplace needs to be made more efficient. Thus, the foundation of efficient-markets theory.

It is readily apparent that causing unemployment in order to effect job creation is irrational. (While it may be irrational to me, conservatives contend, it is only because I do not possess the secret knowledge of the elite. It is not so much that the knowledge is secret but that I am not capable of comprehending it. I am blinded by the light of empirical evidence that loses its truth value when elite status is achieved. Once I possess wealth and power I will understand, as Rand puts it, what objective reality is. I will be rational.) So, to rationally accommodate what is irrational, we have "Operation Twist" to de-compress the rate of interest (not deconsolidate it, mind you, because that would reduce the capacity to make the market more efficient...more rational). Technical inversion (decompressing the demand for yield that bids up supply instead of adding it) indicates consolidation of risk into the hands of a psychopathic elite drunk with god-like delusions of grandeur. These people, while operating with rhetoric that always suggests the benevolence of making the market more efficient, are interested in causing detriment. Not only does it create value for class consumption, but verifies status and creates a perverted, malevolent, sense of accomplishment referred to as "the American Dream" to which we all aspire--Dante's description of hell!

Understand that creating hell on earth is not irrational, it is a measure of creative competence scaled against probable destruction--the working concept of creative-destruction that Romney understands to be the strength of productive incentive, being dependent on the job creators rather than government. By always knowing evil we are always sure to measure with absolute certainty what is good, or rational.

When undocumented workers are locked into factories, working 80 hours a week to achieve Wal-Mart's price targets, factory owners are not being immoral, they are being rational. They do it because Wal-Mart will find somebody else that will, if they don't, on demand.

(Keep in mind that this problem is easily solved by ensuring the marketplace is deconsolidated in priority, with a bonus being less need for government and more freedom. The more deconsolidated, the more likely workers are able to secure propriety on demand. This deconsolidation of proprietary risk includes reversing the trend of falling incomes that creates the demand for ever-cheaper goods sold at Wal-Mart and feeds back into demand for impropriety. The less demand destruction there is, which forces consumers into Wal-Mart to consume a detriment that appears as an immediate benefit on demand, the harder it is to, in effect, demand slave labor in late order.)

Causing detriment is not the product of a psychopathic intellect. Instead, conservatives contend, it is intelligent management of nature's resources by design, pragmatically freed of moral conventions, maximizing efficiencies empirically measured with an expanding profit margin that clearly indicates the good life--the utility of adding value that would not otherwise exist. Turning natural resources into nature's bounty is not psycho--it is not selfish profiteering--it is utilitarian.

Look at the right-wing, reactionary description of "good" tax policy going forward, for example. It is a technical description that explains how supply-side economics works to maximize the utility of productive incentive, which is both indicated and achieved by driving up profits and driving down costs--the Bain Capital (corporate raider) and Wal-Mart (slave wage) models that, when combined, is more the road to serfdom than the path to prosperity.