A low volume, high quality source from the demand side perspective.The podcast is produced weekly. A transcript is posted on the day of.

Thursday, November 22, 2012

Transcript: Post Thanksgiving Day Reminder: The Power of Greed

Next week we will feature Alan Greenspan and Ben Bernanke in the Demand Side spot you all know. These are fruitcakes from the tree of Milton Friedman. Once a fringe kook, Friedman became front and center in the lurch to the right during the 1970s and 1980s. I have called him the P.T. Barnum of Economics, all show, now substance. The Godfather of Monetarism, his analysis of the Great Depression gained him fame and respect among the anti-New Deal Old Guard. What would be called to day the FoxNews crowd. Based on an elementary and long understood error – the quantity theory of money – it nonetheless became the operational paradigm for the Fed. Paul Volcker's much celebrated crashing of the economy to eliminate inflation in the late 70's and early 80's was based on the idea, not that crashing was a good thing, but that it would not happen because – as Friedman assured everybody – simply reducing the quantity of money would reduce prices painlessly. Didn't happen.
Listen to this episode
But here is an excerpt from an interview in 1972, to display


Not surprising Friedman was considered a kook during the golden age of economics and into the 1970s. This straw dogs debating style, as exemplified in this clip, in which he for example, sets the alternative to his view as the Soviet System and then attacks his opponent for suggesting such a thing – was and is basically dishonest. But effective. Still, he had to wait until the country forgot World War II, where millions of people sacrificed for the greater good in a common effort that was successful and made the fields fertile for the greedy.

Just as, I suppose, his explanation of the Depression had to wait until those who lived in and dealt with it faded from the scene. And the rise of big government had to be ignored, a somewhat difficult thing for anybody, since it was six times its size in 1950 as in 1930, and the postwar prosperity rose hand in glove with this evolution. The level of government Friedman advocated and the anti-government right advocates today is, to put it mildly, not historically consonant with prosperity.

But there is no doubt Friedman and the primacy of self-interest have carried the day in academic economics. Even now, after efficient markets theorists have recanted and the leading lights of Rational Expectations have dimmed in their ardor, the momentum of the Friedman, market fundamentalist, every person a Gordon Gecko, theory remain strong.

You can see it in surveys, which show that economics students are inculcated with self-interest, and display markedly more selfishness two years after they begin their studies than when they entered.

A newer study displays the attitudes of the wealthy,


“The upper class has a higher propensity for unethical behavior.”

From University of California Berkeley

The upper class has a higher propensity for unethical behavior, being more likely to believe – as did Gordon Gecko in the movie “Wall Street” – that “greed is good,” according to a new study from the University of California, Berkeley.

In seven separate studies conducted on the UC Berkeley campus, in the San Francisco Bay Area and nationwide, UC Berkeley researchers consistently found that upper-class participants were more likely to lie and cheat when gambling or negotiating; cut people off when driving, and endorse unethical behavior in the workplace.

“The increased unethical tendencies of upper-class individuals are driven, in part, by their more favorable attitudes toward greed,” said Paul Piff, a doctoral student in psychology at UC Berkeley and lead author of the paper published today (Monday, Feb. 27) in the journal Proceedings of the National Academy of Sciences.

Piff’s study is the latest in a series of UC Berkeley scholarly investigations into the relationship between socio-economic class and prosocial and antisocial emotions and behaviors, revealing new information about class differences during a time of rising economic tension.

“As these issues come to the fore, our research – and that by others – helps shed light on the role of inequality in shaping patterns of ethical conduct and selfish behavior, and points to certain ways in which these patterns might also be changed,” Piff said.

Ah, but they are worth it, those driving entrepreneurs making jobs for the rest of us.


Turns out

1. Only THREE PERCENT of the very rich are entrepreneurs.

According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate. Only 3.6 percent of taxpayers in the top .1% were classified as entrepreneurs based on 2004 tax returns. A 2009 Kauffman Foundation study found that the great majority of entrepreneurs come from middle-class backgrounds, with less than 1 percent of all entrepreneurs coming from very rich or very poor backgrounds.

2. Only FOUR OUT OF 150 countries have more wealth inequality than us.

In a world listing compiled by a reputable research team (which nevertheless prompted double-checking), the U.S. has greater wealth inequality than every measured country in the world except for

3. An amount equal to ONE-HALF the GDP is held untaxed overseas by rich Americans.
The Tax Justice Network estimated that between $21 and $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world's Ultra High Net Worth Individuals, that's $8 to $12 trillion in U.S. money stashed in far-off hiding places.

Based on a historical stock market return of 6%, up to $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.

Those numbers thanks to Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

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