What Poisoned America?

What Poisoned America? The list of suspects is long: systemic bias, special interests dominating politics, political polarization, globalization and the offshoring of productive capacity, over-regulation, the rise of rapacious cartels and monopolies, Big Tech's gulag of the mind, the permanent adolescence of consumerism, permanent global war, to name a few.

The question boils down to this: what problems cannot be addressed by the status quo? Most of the ills listed above can be addressed with existing mechanisms of governance and adaptation. For example, consider systemic bias. The U.S. Armed Forces have demonstrably led the way in dramatically reducing systemic bias via performance-based advancement. The rest of America would do well to copy these organizational improvements.

Many of the other ills could be addressed within current systems of governance--antitrust, etc.

The two that appear impervious to reform are 1) soaring wealth-income-power inequality and 2) the dominance of special interests. In both cases, the corporate foxes are guarding the hen house, so any reforms with real teeth are watered down to PR by those reaping the vast majority of the financial gains. Corporate profits are in the billions while you can buy elected officials' cooperation for mere millions. There is no way to get around that asymmetry.

I would propose an even deeper systemic poison: zero-interest yield on capital. For a variety of reasons, the yield on capital is either zero or less than zero if we factor in inflation. We now earn (heh) 0.1% on our cash while inflation is somewhere between the "official" rate of 3% and more real-world measures between 5% and 10%.

This is a significant change from the days when savings (in savings and loans institutions) earned 5.25% by regulation.

While ordinary capital earns nothing (or less than zero), the capital and income of the top 0.01% has rocketed to unprecedented levels. This vast asymmetry is poisoning America, and the financial system, from the Federal Reserve on down, is incapable of addressing it other than making it even more distorted and destructive by doing more of what's failed spectacularly.

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Disclosures: None.

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