The fiscal cliff is not a one-time political event; it is a generational process that ends in the collapse of the Status Quo.
To understand the fiscal cliff's inevitable endgame, we need to start with the financial and political basics of wealth and power in the U.S.
2. This preponderance of wealth in the hands of a few translates into an equivalent preponderance of political power, as there are no real limits on the purchase of political influence, favors and power.
The top 25% who pay most of the taxes, roughly 30 million people, are a political minority compared to the 127 million people drawing direct payments/benefits from the Federal government and the 65+ million who pay essentially no income taxes (though they do pay the 7.65% Social Security/Medicare payroll tax).
This preponderance of ownership of income-producing assets is reflected in the income stream flowing to the top 5%:
7. Those without meaningful unearned income have seen their real incomes drop substantially. Real household income has declined almost 10% since 2000:
Net worth has also declined as serial bubbles in stocks and housing popped: American Households Hit 43-Year Low In Net Worth
8. Federal spending has followed an exponential trajectory.
We in the Aristocracy will pay significant taxes as long as we control the levers of financial and political power. We in the top 24% will pay the rest of the income taxes as long as we and our children can continue to live well and accumulate wealth. We in the "middle class" will continue to work hard as long as we have hope of bettering our lifestyle and the lives of our children. We in the bottom 50% and retirees agree not to threaten the top 0.5%'s power as long as we continue to get our government transfers and benefits.
Gordon T. Long has assembled an excellent review of 2012 excerpted from the 20 video programs we taped in 2012 (also available as podcasts): the Recap is 23 minutes and includes 33 slides:
My new book Why Things Are Falling Apart and What We Can Do About It is now available in print and Kindle editions--10% to 20% discounts.
1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
5. Technological, financial and demographic changes in our economyComplex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.
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To receive a 20% discount on the print edition: $19.20 (retail $24), follow the link, open a Createspace account and enter discount code SJRGPLAB. (This is the only way I can offer a discount.)
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