Michael Hudson has consistently been one of the best guides
through the labyrinth of lies that surround the monumental act of elite
thievery known as the “economic crisis.” Patiently and perceptively, he applies his economic expertise to the
realities behind the blather, laying out – in grim, heart-sinking detail – how
our great and good are using the crisis they created to move in remorselessly
for the final kill on any dreams of a decent life for the rabble – that is, the
99 percent of us who fall outside the golden circle of the rentier class.
So when Hudson speaks, we should pay serious heed. And his
latest piece in CounterPunch is heedful – and heart-sinking – indeed. We are,
he says, entering the end-game of a decades-long process of wealth transference
in which the entire burden of sustaining society – a degraded, hollowed-out,
inhumane society – and a bloated, belligerent militarist oligarchy falls
entirely on working people and the poor, while the elite reap all the profit.
Hudson sees yet another manufactured crisis hitting the
battered system next spring: the “debt” crisis, when Republican legislators and
Blue Dog Democrats refuse to raise the federal debt ceiling, “forcing” a most
willing (yea, eager) Barack Obama to effect an “historic compromise” to “save”
the government from closure and collapse: a flat tax.
You should read Hudson’s entire analysis, which is set up
carefully with very pertinent historical background, but here are some
The danger the United States faces today
is that the government debt crisis scheduled to hit Congress next spring (when
Republicans are threatening to vote against raising the federal debt limit as
the government deficit soars) will provide an opportunity for the wealthy to
give a coup de grace on what is left of
progressive taxation in this country. A flat tax on wage income and consumer
sales would “free” the rentiers from taxes on their property. …
The flat tax actually would tax wage
earners much more steeply than the wealthy, whose income it would largely
exempt! … The tax does not fall on “empty” pricing in excess of value – what
the classical economists termed “economic rent,” that element of price (and
income) that has no counterpart in actual cost of production (ultimately
reducible to labor) but is a pure free lunch: land rent, monopoly rent,
interest and other financial fees, and insurance premiums. This economic rent
is the major return to wealth. It is grounded in the finance, insurance and
real estate (FIRE) sector.
The effect of untaxing the FIRE sector
is twofold. First, it increases the power of wealth, privilege, monopoly rights
and property over living labor – including the power of hereditary wealth over
the living. Second, it helps “post-industrialize” the economy, creating a
“service” economy. A service economy is mainly a FIRE-sector economy.
And now for the end-game, the kabuki
theater in which the FIRE-breathing – or rather, FIRE-bought — politicians of
both parties finally give the One Percenters what they’ve always wanted: everything.
The wealthy want just what bankers want:
the entire economic surplus (followed by a foreclosure on property). They want
all the disposable income over and above basic subsistence – and then, when
this shrinks the economy, they want the government to sell off the public
domain in “privatization” giveaways, and they want people to turn over their
houses and any other property they have to the creditors. “Your money or your
life” is not only what bank robbers demand. It is what banks themselves demand,
and the wealthy 10 per cent of the population that owns most of the bank stock.
And of course, the wealthy classes want to free themselves
from the share of taxes that they have not already shed. The flat-tax ploy is
Here’s how I think the plan is intended
to work. Given the fact that voters have already rejected the flat tax in
principle, it can only be introduced by fiatunder crisis conditions. Alan
Simpson, President Obama’s designated co-chairman of the “Deficit Reduction
Commission” (the euphemistic title given to what is in reality a “Shift Taxes
Off Wealth Onto Labor” commission) already has suggested that Republicans close
down the government by refusing to increase the federal debt limit this spring.
This would create a fiscal crisis and threat of government shutdown. It would
be a fiscal 9/11, for the Republicans to trot out their “rescue plan” for the
emergency breakdown of government.
The result would cap the tax shift off finance and wealth onto
wage earners. Supported by Blue Dog Democrats, President Obama would shed
crocodile tears and sign off on the most right-wing, oligarchic, anti-labor,
anti-black and anti-minority, anti-industrial tax that anyone has yet been able
to think up. The notorious Flat Tax would fall only on wage income (paid by
employees and employers alike) and on consumer goods (the value-added tax,
VAT), while exempting returns that accrue to the wealthy in the form of
interest and dividend income, rent and capital gains.
Barack Obama is already one of the most right-wing
presidents we’ve ever had, building upon and expanding virtually every
pernicious policy of his oligarchic predecessor. But as Hudson warns us, we ain’t
seen nothin’ yet.