USA - A DOWNTON ABBEY ECONOMY

Downton Abbey

Lawrence Summers, a former US Treasury secretary, thinks that America risks becoming a Downton Abbey economy.

He worries about inequality.

 http://www.ft.com/


Streets of Liverpool.

According to Summers, the USA needs tax reform.

This is because the rich currently have too many loopholes available to allow them to shield their wealth.

 Readers of the Financial Times have made a number of comments:

 http://www.ft.com/

Don Williams points out that

1. Larry Summers, as Clinton's Secretary of the Treasury, bailed out the rich who had been hit by George H Bush's Savings and Loan scandal.

2. In 1978 the Richest 1% had 9% of the national income.

When Clinton came to power, the Richest 1% had 14% of the national income.

When Clinton left office, the Richest 1% had 22% of the national income.

3. Larry Summers, as Obama's National Economic Adviser, bailed out the rich who had been hit by the subprime mortgage scandal

95% of the income gains in 2009-2012 went to the Richest 1%.



Aware refers to the conversation reported to have taken place between Walter Reuther and a Ford executive while touring a newly automated automobile plant:

"The executive proudly pointed to some new automatically controlled machines and asked Reuther: “How are you going to collect union dues from these guys?”

Reuther replied: “How are you going to get them to buy Fords?”

Helveticus comments that in Switzerland, Norway and Iceland about 82% of the 16 to 64 year olds are in work.

In the US it is 63%.

D Maynard  comments that weakening government granted monopolies would certainly benefit consumers.

Every dollar spent buying a legal copy of MS Office enriches Gates but does virtually nothing to improve consumers lives.



Hedda Bird wants us to recognise that there is no such thing as a free market.

Every single market is regulated in some way by bully boys, mafiosi or government.

The idea that the wealthy are wealthy because the market is free is ludicrous.

Graham Lovell comments that Lawrence Summers has not identified the cause of the problem, which is unrestrained free trade.

Unrestrained free trade drives down wages by creating unemployment in the developed world.



Horizon comments that Lawrence Summers and his cohort "must be worried about the political backlash that is inevitable...

"We live in neo-feudal system... but it seems no one important enough cares about economic freedom any more. The era is still about financialisation. Nothing has changed.

"Reducing inequality will not happen. The damage was done when all those working class jobs were exported..."

ReportFalmer writes that a capitalist economy's natural rate of growth slows with increasing inequality due to lack of demand, as the marginal propensity to consume of the wealthy is low, and the fruits of economic growth are siphoned into rising asset prices (Hyde Park real estate, Lucian Freud paintings, professional sports teams).

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