In my previous post, The Bubble Economy's Credit-Asset Death Spiral, I described the self-reinforcing feedback of expanding credit and soaring asset valuations and how the only possible result of this financial perpetual motion machine was a death spiral of collapsing debt service, collateral and credit impulse.
But this didn't exhaust the destructive dynamics of this self-reinforcing wealth-creation machine for the few who own the vast majority of the assets. As longtime correspondent T.D. explains, this concentration of the benefits of financialization in the hands of the few also concentrates political power and the wealth to distort every function of the economy to enrich the few at the expense of the many.
This concentration of wealth and corruption isn't cost-free. As I've discussed here many times, capital siphoned $50 trillion from labor via hyper-financialization and hyper-globalization:
The Bill for America's $50 Trillion Gluttony of Inequality Is Overdue (September 21, 2020)
Our Phantom Middle Class (December 23, 2020)
Monopolies and cartels focus on self-enrichment, not social or economic stability. Concentrating wealth and power in the hands of the most self-serving few and their entrenched interests has crushed the ladders of social mobility. Assets such as a family home are out of reach in many locales for all but the few. Inflation, high taxes and the corruption of student loans, etc. have stripped all but the top 10% of any hope of gaining middle-class security.
The only rational response to this reality is to opt out, lay flat and let it rot: stop the self-exploitation of working to make the already-rich even richer. Direct resistance is easily suppressed by force. But "letting it rot" by withdrawing one's labor and conformity cannot be reversed with force. Once a critical mass of the workforce opts out of self-exploitation and "lets it rot," the system of financialization / exploitation of labor can no longer sustain itself and it collapses in a putrid heap.
Here's T.D.'s explanation of these dynamics:
Don't forget the 'monopolization effect' promoted by the cycle you describe.
Large organizations in any industry use their inflated valuations as leverage to acquire whatever resources are needed to bully their smaller competitors out of the game.
They can buy off politicians, regulators, talent, and competitors to ensure their market dominance.
It's happened in every industry--including healthcare.
It's also left every industry dominated by a small number of colluding Potemkin organizations reliant on financialization to generate stakeholder value. They are formidable appearing but bereft of talent and mission. When challenges appear they simply do more of the same, becoming ever more reliant on their financialization to keep their systems churning.
In healthcare we are left with consolidating providers and payers who deliver just enough 'care' to create the simulacrum of a 'health system' but in reality they are completely unable to cope with their putative mission.
Need proof? Imagine what health care would look like if there were no Federal dollars of any kind.
There would be no more palaces of healing, no indecipherable bills, and no onerous pricing.
Just a service priced on value as judged by the purchaser.
Through inflation, speculative price swings, regulatory opacity, and preferential access to capital, the system described in your post is quite intentionally designed to use ever-inflating capital valuations to take the value of labor from the wage-earner and place it in the pocket of those who have the capital.
That's why it's so vulnerable to those who withdraw their labor. They work outside the system, they limit the excess value they create by 'laying flat.'
Without the labor, there's nothing to steal.
And all the IRS agents in the world won't change that.
We're seeing a huge labor shift in healthcare. Last year the big news was the mass migration of nurses to the Agency model where they could earn 2-3 x their hourly wage--you read that right, wages had been suppressed for so long, a freer market was able to treble them.
There was significant regulatory pushback, as health systems accused agencies and the nurses they represent of price gouging (heh).
That didn't last long though.
It quickly became clear that those nurses weren't going to return to their jobs at their previous pay, even if the agency option was regulated away.
So now, needing those nurses on the floor, the dominant model is a hospital staffed with agency nurses earning far more (and happier!) than they would have as full-time employees
Through using complexity to capture each industry and reducing the individual rewards of overcoming that complexity, the system you describe has sowed the seeds of the labor shortage which will result in its own destruction.
And all the anxiety, distraction, and division they sow only accelerates the very thing they seek to prevent.
And those of us who can see it simply need to prepare, sit back, and watch.
Well said, T.D. Thank you for the explanation.
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