Economism: Bad Economics and the Rise of Inequality by James Kwak (1 of 2)

book jacket for Economism red wth black XEconomism: Bad Economics and the Rise of Inequality by James Kwak (2017). Everyone would do well to read this book! Buy it if you like to read good material repeatedly to get the most out of it.

As is stated in the foreword, economics today has become an ideology.

Unfortunately, the ideology it pretends to objectively and neutrally assess ignores reality, supports the “dog eat dog” life experience as the only way the world can work, and basically asserts wealth as a sign of merit, God’s favor, and/or a deserved reward for hard work done ALL BY THEMSELVES with no help from anyone, least of all the government.

SQUANDERING THE BIG BUCKS while chasing the pennies

Ignore the fact that the corporate income tax is illusory, since some of the billion dollar profits are made in part due to a tax code biased in favor of business to an extreme degree. And they end up getting TAX REFUNDS, and billions of profits don’t eliminate multi-million dollar government subsidies.

And yet the Republicans and conservatives and neoliberals (aka current Democrats) all worry that a single mom in Kansas might use food stamps for “steak or seafood” instead of the cheapest hamburger available (which doesn’t include “lean” much less “extra lean” types).

Yes, it is that purchase of a round steak shared for an anniversary dinner after months of tuna noodle casserole that will break the government’s budget. Certainly not the military budget, blowing literally millions of dollars to bomb an empty airfield.

The foreword written by Simon Johnson, a professor at MIT and ” former chief economist and director of the research department at the International Monetary Fund” contains a few pithy paragraphs worth quoting at length here:

“{N]ot all property rights are created equal. Many people do not benefit from economic growth, because they start out with little or because they are expropriated as soon as their property (a small business or a claim on a piece of real estate) becomes valuable. As we get richer as a society, the barriers to individual success also rise: the real cost of completing college has increased dramatically at the same time that the rewards of a good education (or the penalty for lacking such an education) have jumped upward.

Putting this together leads to an uncomfortable thought for an economist or anyone else paying attention. Basic economics is today more than a tool kit or a structure upon which you can build deeper knowledge. It has also become, particularly in the United States, the raw material for a deliberately created ideology and a powerful belief system. (If you don’t believe me, you need to read chapter 3.)

Economists like to think they are scientists or, failing that, at least engineers who can build systems that work well. And there is real value to the logic of economics, including some of its mathematical tools. But simplistic economic stories are also used — day in and day out — to defend a particular SET OF POLICIES, which really amount to allowing tech and powerful people to do well while ensuring that everyone else gains less. Increasingly, the understanding that economics is used in this way has spread throughout society, reinforced by the global financial crisis of 2008 and the disappointing economic recovery.” (page XV of the foreword)


I shall have to read Candide by Voltaire. No one told me it was satire and “a manifesto of the French Enlightenment.” And even better, it refutes the religious orthodoxy even a “brilliant” man, Gottfried Wilhelm Leibniz (the investor of calculus) could not see his way out of the pervasive water to a fish as to religion of the time (1710).

If a better world were possible, God would have created that one instead; therefore, we live in the best of all possible worlds.

Anyone living in 1710 who believed that it was the best of all possible worlds could only have been a wealthy white man of property, ignorant of all that we know of the world today, and deliberately blind to the suffering of millions of people all around him.

So I had to look him up in Wikipedia. The son of a university professor goes a long way to explaining how he was able to become what he became. He was truly a brilliant man, a polymath as people who can master many disciplines are called. Of course, the critical feature of his development into such a polymath was possible because at the age of 7 he inherited a large library from his father and read it all. In Latin. Had he been born in a coal mining town, how likely is it he would have become a doctorate of law by age 20? A Bachelor degree was gained by 16 or so.

Anyone living today knows that to think this is the best of all possible worlds knows that for the lie it is. In fact, the condition of the world has been kept as bad as it is because of religious dogma that emphasize the rewards AFTER DEATH instead of making this world better.

This is why the Pope says NO CONDOMS OR BIRTH CONTROL to people in Africa who are being destroyed by AIDS, dying in childbirth or dying by forced birthing until death of women everywhere religion determines women’s lives.

And that doesn’t even consider ebola, other diseases, rape, mass murders, starving children, and so much more. Blaming the devil (an invention of the Catholic Church) remains unconvincing when a God is supposed to be all powerful!

“Voltaire was mocking not just Leibniz but also the use of religion to justify the social order of the time. Early modern Europe was a world of widespread material hardship in which a privileged few lived in relative comfort while the mass struggled to make ends meet — and archaic order that was upended by the French Revolution of 1789. If you were a landowning aristocrat in pre-revolutionary Europe — when the “1 percent” owned something like 60 percent of everything there was to own (f4) — how would you have explained the vast gulf in living standards between you and the common people? You might not have been a strict Leibnizian Optimist, but most likely you would have taken refuge in a religious understanding of the social order Depending on your denomination, you might have believed that the socioeconomic hierarchy was dictated by God or that the virtuous poor would earn their just deserts in a kingdom to come. According to the sociologist Max Weber, we owe the rise of capitalism to Calvinist Protestants who saw their material success as proof of their personal salvation (f5) One way or another, religion provided a ready justification for a vastly unequal society.” (p. 4)

Today, with the addition of literacy (not for all in all countries) people can read books and newspapers and learn that this is NOT the best of all possible words. Or watch television and SEE that this is definitely not the best of all possible worlds. Or the Internet and really find out how horrific life really is if you look just a little bit and survive without committing suicide in despair.

IF NOT THE WILL OF GOD, then the poor must be poor because of EVOLUTION

In the nineteenth century, the author explains that the 1 percent (Carnegie, Mellon, Morgan, Rockefeller) once again owned “more than 40% of total wealth in the United States.”(f6)

Traditional religion was no longer enough to justify the rampant inequality. So the elites corrupted actual scientific theory into “societal evolution” (Herbert Spencer was the principle dark lord behind this cruel and demonstrably false notion widely accepted at the time). Social Darwinism, as this corrupted philosophy came be to known, denied systemic racism, misogyny, class exploitation, and all the real culprits behind wealth inequality. Instead, ” ‘survival of the fittest’: ‘the poverty of the incapable, the distresses that come upon the imprudent, the starvation of the idle, and those shouldering aside of the weak by the strong’ all ultimately serve the long-term progress of humanity.” (f7) (p. 5)

Charming. In a world without birth control, where women were denied the right to an education or work beyond prostitution and maybe as laundresses, Social Darwinism allowed men to justify patriarchy and not question the validity of it, backed up as it were, by millennia of religious distortions on women as little more than sex and household slaves.

From a class perspective, Social Darwinism was a wonderful basis to justify any exploitation the rich used to profit.

“William Graham Sumner translated this doctrine into a celebration of the wealthy. ‘[The millionaires] may fairly be regarded as the NATURALLY SELECTED AGENTS of society for certain work. They get high wages and live in luxury, but the brain is a good one for SOCIETY.’ Any attempt to tinker with this NATURAL ORDER OF THINGS would be doomed to failure.” (f8) For the businessmen who emerged victorious from the ‘evolutionary’ struggle, their worldview provided a convenient justification for their riches and social standing. In the words of the historian Richard Hofstader, Social Darwinism ‘was seized upon as a welcome addition, perhaps the most powerful of all to the store of ideas to which solid and conservative men appealed when they wished to RECONCILE THEIR FELLOWS to some of the HARDSHIPS OF LIFE.’ (f9)” (p. 5)

The author continues on page five to reinforce that what we have now is more of the same God ordained self-fulfilling prophecies that the rich are better than everyone else, more deserving, more “evolved” and the circular reasoning that allows them to believe this remains unquestioned.

Even by those who INHERITED wealth scammed and stolen off poor people in the first place. Thanks to politicians being the puppets to these masters of industry, the tax code principally serves to enable them to keep their wealth, virtually untaxed, and once again they are striving to repeal the estate tax because it is so “unfair” to tax their millions and billions on their death and reduce their children to mere millionaires.


The wealthy once again are busily justifying why they deserve more of everything once again in defense of their greed and hoarding of wealth to an extent that surely dwarfs relatively the disparity of the historical proportions. Surely there are more billionaires today and the sheer amount of the billions (Koch Brothers, 90 billion dollars worth) than anyone, even kings ever had in all their wealth back in the day?

“The total wealth of the world’s billionaires has quadrupled in the past two decades (even when the definition of “billionaire” is adjusted for inflation). (f10)”

“In the United States, the average family makes only 8 percent more money (after adjusting for inflation) than it did in the early 1970s, and even that meager increase is due to the fact that more people work today, whether by choice or by necessity; median income for men has actually fallen. (f12)”

He doesn’t go into detail here about the fact that in the 1970s a family probably relied on ONE adult bringing in the cash for the family. Possibly supplemented a bit by women working part-time (for pin-money grr). The income of today’s average family REQUIRES both adults in a family to work full time and even then, this is no loner a livable income. This is why families are having to spend more than 50 percent of their income on shelter, transportation, and child care.

The other fact of today’s working world is the hierarchy of inequality in corporations themselves. The author cites a 1950 CEO as taking home “as much money as twenty average employees; today HE makes as much as two hundred [200!!!] workers. The percentage of families in poverty has remained essentially unchanged for the past half century. (f13)  (p. 5-6)

The clincher to all this history is the punchline that (despite the best efforts of the zealots) Christian theology and the false (but persistent) belief in Social Darwinism don’t justify the massive inequality we are experiencing today.

Thankfully, the “Wall Street master of the universe or a billionaire hedge fund manager” has a SCIENTIFIC and academic discipline to justify their obscene wealth contrasted with the massive poverty or the working poor and the debt ridden “middle class” with student loans exceeding decades of work to pay off (with extortionate bankster interest in the middle).

Economics 101: “the absolute truth.”

My version of some economic pretend truths:

  • you are paid the value of your work (if you are a white man, no I take that back, some are overpaid)
  • inequality means you are lazy, unwilling to educate yourself to qualify for a “better” job, or “choose” to be in a poorly paid job (basically anything women do, especially care giving)
  • smart people get paid more (so NOT true) because the smart people go into finance, or start companies, or take on more responsibility (like CEOs who oversee hundreds of thousands of employees, and yet when things go bad, they get the golden parachute.)

In a paragraph mocking the financiers et al that suck up all the wealth, he explains how they justify “the vast economic chasm” between them and the “little” people:

“Tinkering with the NATURAL DISTRIBUTION OF INCOME — say, through taxes — would reduce the incentive to work, making everyone worse off. The law of SUPPLY and DEMAND ensures that all resources are put to their optimal use, maximizing social welfare. Attempts to interfere with the fundamental principles — regulations, for example, — only create ‘deadweight losses’ that reduce the total output of the economy. We live int he BEST OF ALL POSSIBLE WORLDS (or we would, if only we could get rid of those taxes and regulations0, not because God would otherwise have made a different one, but because any other world would make everyone worse off.” (p. 6 nice sarcasm)

Hence the “key to all things” becomes economics. This is itself a fake word in many senses. First economics as a word means next to nothing for most people, deliberately so. The terms serves to obscure what academic economics really means: “Acquiring wealth is the only goal and value in life and the sole measure of success” in America. This is NOT the only accepted value in other  developed countries, which is why they have universal healthcare, living wages, free education through university levels, MUCH MUCH more vacation time, paid parental leave, and dozens of other “perks” unimaginable in America.

The motto on our dollar bill should not be “in God we trust” for more than the McCarthyism that spawned it but because the actual motto of the controlling elites in this country is “wage work or die” and thus is particularly well-suited to be printed on the almighty dollar, the golden calf of Republicans and Neoliberals (who have pretended to be Democrats for decades).

Economism is not a made-up term by the author as I first thought. In a footnote he explains:

“Economism” is a somewhat obscure academic therm, generally used to criticize someone for OVERVALUING economics — by overestimating the importance of MATERIAL CONDITIONS, focusing exclusively on economic METRICS, applying economic methodologies when they are inappropriate, or accepting economic theory too readily. (f14) In this book, I use “economism” in a more specific sense, as the belief that a few isolated Economics 101 lessons accurately describe the real world. The economist Noah Smith calls this phenomenon “101ism.” (f15)”

The author perfectly and eloquently expresses my opposition to the relentlessness of American politicians and people in power (who always happen to be the wealthy) who use economics as the basis for evaluating all things in society. And by gosh, it turns out that “economism” is exactly the word that represents my belief that economics IS NOT the only value or the preeminent value with which the powers should be measuring worth.

“The invocation of basic economics lessons to explain all social phenomena is economism. It rests on the premise that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook, even though the assumptions behind those diagrams virtually never hold true in the real world. Economism is an interpretive lens through which people make sense of reality. Like any such framework, it also implies a certain set of value judgments and policy choices. For example, if a simple supply-and-demand model shows that taxes reduce employment, then it follows that high tax rates are bad and should be lowered. Because it claims the authority of “economics,” economism can be a powerful rhetorical tool. And while superficial economic arguments can serve multiple purposes, in today’s world they most often JUSTIFY THE EXISTING SOCIAL ORDER — and the INEQUALITY it generates — while explaining the [purported] FUTILITY of any attempt to change it.(p. 7)

Please go back and read this again, maybe twice more. It profoundly and succinctly identifies the falseness of economics itself but in particular, the adverse consequences: value judgements made on false assumptions and POLICY CHOICES based on keeping the wealthy wealthy and justifying it because, you know, “the poor will always be with us.”

SUPPLY AND DEMAND IS NOT A SCIENTIFIC LAW or  even valid many times applied

Supply and demand has been applied to everything and anything, generally to justify extortionate pricing. Yesterday I was in one of many meetings on the lack of affordable (much less accessible) housing in my town (and across the nation). The local cabal — if not outright RICO violating — real estate developers are refusing to build affordable housing. There are several irrational justifications given for this obscenity: They are “afraid” they can’t sell affordable units; they can’t make any profit on affordable units, or they can’t make “enough” profit without the city kicking in property tax incentives.

There is documented demand for as many as 20,000 units over the next few years to provide housing for the increasing workforce needed to fill the jobs expected as part of an economic (!) development project.

There is NO SUPPLY, no existing housing stock to speak of that isn’t already occupied, and people living here now cannot find affordable rentals and certainly no affordable houses. The people living in the houses cannot leave them, for example seniors wishing to downsize, because THERE IS NO HOUSING STOCK AVAILABLE TO MOVE TO. Speculators have been buying up everything that comes on the market and turning them into rentals so that removes significant housing stock from the affordable owner/occupied realm of possibility.

This mean there is MASSIVE demand for affordable (accessible too) housing. If the principle of “supply and demand” were valid for housing, the developers would be competing like crazy to build masses of tiny homes and condos and other affordable units. They aren’t and one thing I read by a developer was the comment: “If I can’t make $250 per square foot, it is not worth the bother.”

That is the true reason the developers aren’t building or choose to build only LUXURY RENTALS and also demand TIF (tax increment financing) to help them get a guaranteed profit of at least 22% or more. The opportunity cost for the city to forego that property tax money for the developers’ personal profit IS NOT TAKEN INTO CONSIDERATION AT ALL. The fact that money equivalences mean that deferred property tax of $100 today will need to be greater than $100 in future money due to the nature of money and inflation. That’s why you always see data that says things like they won a million dollars in 1935 and that would be like winning a billion dollars in today’s money. Future money is worth less than money in hand today. This economic fact is not taken into consideration at all in the current TIF policy.


Minimum wage increase will cause unemployment to increase.

Equal pay for equal work will force layoffs.

The country can’t support free university education but graduates can get “good jobs” and thrive with $100,000 of student debt?

Some of the routine “economic principles” are cited as a justification to not produce affordable housing, the claiming that providing affordable housing will actually make housing LESS AFFORDABLE. This is said with absolute certainty by the people who wish to only build $500,000 and higher luxury homes for maximum profit on every tiny fixture and more.

Similarly, as the author explains further on page 7:

“For every well-intentioned proposal to help ordinary working people, economism provides an answer. Raise the minimum wage so the working poor take home more money? That’s a nice idea, but that’s not how the world works. According to Jude Wanniski, one of the pillars of The Wall Street Journal’s editorial page in the 1970s, ‘Every increase in the minimum wage induces a decline in real output and a decline in employment.’ Wanniski was an adviser to Ronald Reagan, who echoed, ‘The minimum wage has caused more misery and unemployment than anything since the Great Depression.’ Raise taxes on the rich to pay for services for everyone else? Good try, but, Gregory Mankiw (author of one of the world’s most popular economics textbooks) explains, ‘as [high-income taxpayers] face higher tax rates, their services will be in shorter SUPPLY.’ Or, in the words of the 2012 vice presidential candidate Paul Ryan, ‘if you want faster economic growth, more upward mobility, and faster job creation lower tax rates across the board is key.’ (f16) “


The Republicans always say tax cuts “across the board” but they really mean for the wealthy. And they completely ignore basic mathematical reality. Cutting the taxes on the rich simply gives them even more money that they will put in offshore tax havens and play the tax codes even more to squeeze every nickel out of deductions, depreciation, and more to end up NEVER OWING ANY TAXES AT ALL. And multi-billion dollar profiting corporations can end up getting TAX REFUNDS worth millions and more. Some industries, despite making billions of dollars in profit, are still receiving TAXPAYER-FUNDED SUBSIDIES to global multi-national suck all economic value into their maw.

When you hear Republicans saying “The United States has one of the highest corporate tax rates in the world,” you need to translate that to reality: “Corporations in the United States pay next to nothing in taxes regardless of the purported tax rate because the tax code is written to provide them so many outs that they pay nothing.”

The Congress went after the tip income of servers with obscene tax law that bases the ASSUMPTION of tip income on various factors that bear no resemblance to reality. Meanwhile, no tax exists on financial transactions moving money around in the casino capitalism of Wall Street. And the “income” from capital gains (money made by selling stocks for more than you paid for example) receives a REDUCED TAX RATE because it is not “EARNED INCOME.” Truer words were never spoken! The bastards that make their $200 million income per years (like Mitt Romney) who are living off their “investments” (such as buying and destroying companies that otherwise would be providing good paying jobs for 10,000 people) pay less than a secretary making $30,000 a year. Capital gains is a preferential tax rate that keeps more money in the hands of the already wealthy. The ECONOMISM theory that supports this as “good for America” rests on the DEMONSTRABLY FALSE assertion that providing such massive wealth advantages to the people who need it the least will “cause” or “encourage” or otherwise enable the wealthy to (a) create more [good paying] jobs, (b) initiate creative and amazing new companies or inventions that will benefit the common good, (c) trickle down to the working class.

No one questions the belief that the working class ONLY DESERVES A TRICKLE! And why is that? because of ECONOMISM of course!

“This of financial markets, wealth care, education, and many other fields can all be reduced to economic first principles that dictate simple solutions.” (p. 8)

Saying something doesn’t make it true even if the person saying the bullshit sincerely believes it is true (like Ayn Rand acolyte Paul Ryan, who bases his economics on the words of a novelist, Ayn Rand).


Repetition of falsehoods does not make them more true either, although it becomes harder to make an argument against “commonly accepted” or mindless reiteration that “supply and demand” will cause the prices of anything to go down, including affordable housing.

I am reminded of my favorite meringue cookies from Trader Joe’s. The price of eggs had skyrocketed (probably some commodity market finagle). So the supplier couldn’t afford to make the cookies and still sell them for what became the retail price of $3.99 or so. Funny then how when eggs later became 99 cents for a while, and are hovering at $1.39, the cookies are back but the price has not and will never decrease. Of course, there are many legitimate factors that make it sensible to keep the price the same, but the point is the cheaper and increased supply of eggs did not cause of reduction of the price.

Yes, some things do sort of appear to decrease in price with increased supply (like computers), but I would argue that there are many other more significant factors to the price reductions unrelated to supply and demand for goods or services.


Of course the largest failure of the economism is in medical care. If you are really sick, you will pay anything [you have extra] to get well. This completely ignores the fact that (a) you do not have unlimited funds, (b) you cannot choose to ignore medical conditions and live, (c) it is a COMMON GOOD to have a society of people who can get needed medical care because, among other things, it is GOOD FOR THE ECONOMY to keep workers working, sheltered, and clothed and fed and so much more rather than simply being left to die in the street like the good old days.

The failure of the market pricing model (supply and demand, whatever) has become more glaringly a failure for medical care. Economism fails applied to medical care because WE DON’T HAVE A CHOICE about “consuming” medical care in any realistic sense. If you break a leg, and there is one hospital maybe only even available in a nearby town, you go to that hospital You do not shop around for the best price on casts. You don’t wait until there is a sale on fixing broken legs.

Or as the author more elegantly explains (p. 8):

“These claims are made so often in the media and by politicians that they appear to be a natural feature of the landscape. But they all come from somewhere. They are based on a lesson that economics students learn in their first semester: the model of the competitive* market driven by supply and demand. In this model, the supply and demand for any product determine its price; prices create incentives for individuals and businesses; and those incentives ensure that consumers get what they want, companies are as efficient as possible, and resources are allocated optimally across the economy.”

*The competitiveness of the competitive market is another lie. A market driven economy encourages big players to undercut little players to destroy them and then either buy them out for pennines on the dollar and keep them operating, or taking their intellectual property for exploitation, parking threatening patents, becoming less competitive and more monopolistic reaching cooperative agreements with equally large competitors not to complete for territory. Also known as racketeering, but the economic cost of competition for example, cable companies, is prohibitive. The company already selling cable service from cables in the ground cannot compete to offer services because the cable in the ground are considered proprietary by the current cable company. The cost to lay entirely new lines is prohibitive. So any supply and demand principle cannot exist despite a market demand for cheaper or a la carte cable services so you don’t have to pay for the 100 channels you never watch.

Cable TV represents the invalidity of supply and demand. I have to pay for channels I don’t want, and I have to pay 20% extra per month for ONE channel I do want even though that channel (BBC America) was included in the cable company offerings in another state by another monopoly.

“The definition of a competitive market requires that all suppliers off the same product — there are no differences in features, quality, or anything else– and that each company is so small that is behavior has no effect on overall supply. If this assumption does not hold — such as in the market for cell phone service, or are travel, or automobiles , or books, or almost anything — then supply and demand do not necessarily produce the optimal price and the allocation of resources may be distorted.(f19)”


Minimum wage is a battleground issue that conservative use economism to justify their ideology of NO MINIMUM WAGE is the best minimum wage. It might have been in this book (so I will come across the text later when I hit it again while writing this), but the fact is that in America, business fundamentally does not want to have to pay any wages at all. That is, they would rather spend millions on robots that simply pay workers a living wage plus benefits. It is bizarre but a true national characteristic.

I remember once negotiating a salary, and the rich woman who happened to do the negotiation claimed they were offering the maximum amount possible. She was trying to screw me out of something like $5 a day less for salary. They really wanted to hire me; I had lots of experience and a Master’s degree. I decided to take the job anyway because of the career opportunity with complete autonomy. Later I found out that they had in fact, budgeted more money for the position!

We need to have a non-adversarial relationship between employees and employers. Employers should WANT to pay the most for their employees — especially when they actually BUDGETED IT for pity’s sake. Why screw me over just because she could? She lied to my face! Then I learned that a clerical position made a similar salary with no Master’s degree, maybe not a bachelor’s either, no supervisory responsibility, etc. etc. and was the wife of a faculty member so it was one of those academic nepotism gigs.

Obviously, after finding this out, I pushed for salary increase and got some, but not enough to make me stay. The excuse of “well, policy won’t let us increase salary beyond x %” or some other excuse principally that meant that you start screwed and stay screwed. This adversely impacts bonuses, percentage increases, percentage of matched retirement or Social Security funds, and opportunity costs for me to do something better for my life that would have been possible if they had paid the full amount of salary they had budgeted — which was still a pay cut for me.

Which reminds me, the TRICK of paying you based on your previous job’s salary is a crock of shit. First of all, it serves to perpetuate pay discrimination. Secondly, the jobs aren’t the same, geographically or actually, plus you now have x numbers more experience under your belt that weren’t probably being compensated for at the previous position. I could go on and on. Then I found out that employers can’t legally force you to tell them what you made previously, so I stopped filling in that box. They always asked and always pushed hard for it, but fortunately because of my particular skills set (ha ha) I was in a position where I could walk away and get another job easily. So I guess I learned something from the being screwed job to not let it happen again.

NOTE: When I was in a hiring position and able to request salary change, I pushed to bring an employee in for $5,000 more a year than the bottom of the grids that HR departments are so fond of using. I fought for my employee to get what they deserved and got it for them.

“The argument that a minimum wage increases unemployment assumes that employees are currently being paid the entire value of their work; otherwise, employers would be willing to pay slightly higher wages in order to keep them. Again, this premise is unlikely to be true in the real world of fast-food restaurants or hotels, where workers have little bargaining power and companies are therefore able to claim most of the value that their employees create.” (p. 9)

The cold hard reality economists ignore remains the fact that employers view every penny they pay employees as actual money coming out of their pocket (or managerial bonuses depend on keeping wages down rather than just distributing that money to lower ranked employees). At a certain point, beyond the downsizing that makes workers do the work of three employees or get fired, a minimum number of people must be employed to get the work done. Business cannot simply let half their workers go (though they try) — increasing unemployment — if the law were to require a living wage. There are other discretionary places that businesses can cut, or hey, how about instead of paying a CEO 400 times as much as a secretary, you pay all the bottom 30% workers more?

Will the company fail if they “only” make 25% net profit? Especially when the profit range is multi-millions or billions of dollars profit. Will the owners decide that 999 million dollars is not “enough” to bother to keep the business going? I guess they could. After all, they have all the money and they don’t need to work for a living in any capacity. They are living off interest and dividend income from other investments.

We have reached the point of inequality, I think, that it is very likely that Paul Ryan’s wet dream of Atlas shrugging is possible. The super wealthy could simply refuse to even operate any business at all. They don’t need the money. They have enough for many lifetimes. Even if a lot of their wealth is in assets other than actual cash, there is actually no reason why the Koch brothers would have to keep operating their environment killing industries. In that case, obviously workers would suffer terribly, which people like the Koch’s kind of have as a goal anyway, so I am surprised they haven’t thought of that as a business strategy. After all, if they kept some oil in the ground, reducing the SUPPLY while the DEMAND remained the same, surely the price and therefore profit would rise?

The robber barons used their vast holdings to sell at a loss to undercut the competition without the deep pockets to carry an equal loss until they had to quit or sell out creating the ultimate logical end of market “competition” — monopoly. At which point, they raised the prices to an extortionate level and laughed all the way to their banks.


Capitalism under economism ideology assets that wealth inequality “is the NATURAL outcome of an economic system that provides the greatest good to the greatest number.” (p. 9) It boggles my mind that anyone can say such crap with a straight face. By any measure you could choose, data shows that the greatest number of people are NOT getting the greatest good. The majority, heck a supermajority, is not only not getting close to the greatest good, they are getting ALL the benefits from the existing implementation of the conservative conspiracy to make wage slaves of us all.

A government that acts FOR THE COMMON GOOD, that is for the greatest good to go to the greatest number cannot exist under Republican ideology including the dogma of economism, it would require REGULATIONS and constraints on the unmitigated greed and wealth hoarding of powerful and extremely wealthy people. The true NATURAL outcome of our economic system provides the rich get richer and there are no consequences to their bad behavior against the rest of society.


Secretly the wealthy may wish to believe that their wealth has been bestowed by a benevolent God to reward them for their ability to “succeed” at any cost to others as a fall back from the magic of the invisible hand of the market. Or the Paul Ryan / Ayn Rand worldview that he and others like him are simply BETTER and more deserving people than others who do not wish to be burdened or bear any responsibility for others less fortunate (aka not rich white males). This is Social Darwinism despite the fallen out of favor term used to identify the philosophy of entitlement.

“Good people don’t get sick.” I will never forget hearing this phrase although I have forgotten which asshole federal level Republican politician made this proclamation. I have MS and I do not think God is punishing me for behaving badly or that I somehow deserve to die because I am disabled and therefore a “burden” on society (that is, the rich). Social Darwinism essentially says that disabled people are not fit to survive and therefore it is okay to let us die — or in the case of the Republican government policies, deny us medical care so that we die. Actually they are working on many fronts to make sure we die or live short miserable lives.

Hate to bring up the Nazis, but it is inescapable that they first came for the disabled to kill. The Republicans don’t like the optics of herding us all into camps to die, so they are just going to keep us too sick, to stressed, to poor, too many things to fight back. We will end up being isolated, confined to nursing homes, bankrupt, and truly disabled from being a visible force against them.

We are told that the laws of economics are real, inviolate, and inevitable. No point in trying to change the system because “the market” will do what it will and it will always be for the best because the market is objective, neutral, just like the invisible  god so many believe in (despite the historical proof of many gods and non-monotheistic religions too). But the right believes in the RIGHT one.


The difficulty of rational arguments against a believer in economism (whether they know that is their belief or not) comes from a hard core believer “using the concepts of supply and demand, that universal coverage will bald to excess consumption. You either have to find a flaw in her economic argument, or you have to come up with a reason why economics is not the appropriate way to approach this issue.” (p. 11)

The problem comes when the hard core faithful like Republicans ONLY ACCEPT economism as the measure of all values. There is no value to them in social justice in particular.

The conservatives have fought against all social progress forever.  They think that life is a pie and sharing any with anyone else will mean less for them. I can’t think of an argument that would persuade them to believe otherwise. And the people who keep trying to explain to the Republicans why they should support social justice, even from an economic point of view are stymied by a brute refusal to believe any other world view.

The ability of economism to pass as abstract science rather than rhetorical device is one source of its strength. (p. 11)

The Republicans are great at bumper sticker thinking. On page 15 one such example, “taxation kills incentives.” matches their ideology and makes for memorable catch phrases but aren’t true in any sense. Democrats’ messaging, apart from the corporatists and neoliberals defection of labor values, requires many sentences and paragraphs to cover all the nuances and conditions that support their assertions. Not good bumper sticker material. And we obviously live in a bumper sticker or 140-character world of political discourse between voters.


Wow. In rereading this book, some of the basics I thought I understood are becoming even more clear to me. I always thought the “law” of supply and demand was bullshit, maybe because as a woman, I could see that women and women’s work was in demand but much of it was (a) not valued, (b) not appropriately compensated, (c) not taken seriously.

But supply and demand “law” can be seen as an ideological basis for other false doctrines.

Page 17 the author notes how economism applies in criminal law, “where harsher sentencing policies were intended in part to increase the price‘ of committing a crime.’ “

In a previous paragraph above I mentioned copays. I just realized that same reasoning explains some of why our medical system has copays and deductibles: to INCREASE THE PRICE of medical costs so that we “consume” less.

One of the other pervasive threads of conservative ideology is the belief that we are all cheaters, liars, abusers, and guilty of something or other. Maybe that’s classic transference?

They would rather spend a million dollars urine testing single mothers before providing food stamps rather than risk giving a few bucks to an “undeserving” single mother; undeserving is usually code for  someone who takes drugs. The logic is economism: if the mother has the money to buy drugs she doesn’t deserve food assistance. Hard to argue with that even for a liberal. Marijuana use testing is especially aggravating — as if were as bad as heroin, or the cocaine so beloved by Wall Street traders. Even if you are prescribed medical marijuana (such as for spasticity with multiple sclerosis), I don’t think it would matter. You can certainly be fired for failing a drug test even if you are using marijuana medicinally.

Once again, Republican lawmakers choose the stick over the carrot by INCREASING THE PRICE of behavior they judge unacceptable. In this case, preventing a single mom from being able to feed her family regardless of other circumstances that might cause her to use drugs. Not the least of which is the miserable life the Republicans thrust upon so many and their refusal to accept that they are CAUSING some of the problems that leads to drug use.

Welfare Queens (though neoliberal Bill Clinton damaged welfare as bad as any Republican may have) as a trope proves the widely held belief that poor women are cheating and lazy and would rather live off the pathetic “safety net” government “handouts” than WAGE WORK or DIE (a clear Republican conservative value).

The persistent racist belief that government assistance takes money from white taxpayers to support (lazy) black and brown people when the white people are actually the majority of recipients will not die.

Women having babies just to get “more welfare” (also generally with a racial emphasis) is another common conservative trope. Then they deny birth control, sex education, abortion, and reproductive health care and surprise! Poor women are forced to have more babies than they can afford. So to punish them for their “overconsumption” of entitlements, we get an Arizona State legislator who declares that if women want to receive government support, then by God, they should be forced to have their tubes tied after the second child. And by after he meant, right there and then while she was delivering the second baby.

The current Republican health insurance dogma is to INCREASE THE COST of both not having children and having children by seeking to allow insurance companies to not have to offer basic — female — health services like covering birth control pills, abortion or  maternity care.

Some Republican fool even said that he didn’t think it was “fair” for men to pay into a pool that covered WOMEN’S healthcare: services they were never going to use. Missing the entire concept of a risk pool, but then no one covered that in Econ 101 I guess.

THE LIE OF “WHAT THE MARKET WILL BEAR” PRICING and the implied freedom to choose

In the chapter titled “The Magic of the Marketplace” (chapter 2, p. 18+), the author explains why INCREASING THE COST of anything impacts the DEMAND for it.

“Introductory economics beings with the basic model of a competitive market driven by supply and demand. The short summary goes like this: Both individuals and firms possess useful things of value, and they trade with each other in a “market” to get other useful things. Because nobody is EVER FORCED to make a trade (in theory, at least), a transaction occurs only if it makes both parties better off. Under these conditions, prices NATURALLY adjust until supply equals demand. The resulting set of prices makes everyone as well-off as possible. In other words, markets produce the best of all possible worlds.”

He uses the example of snow shovels. If they cost $1 then any one can buy them and some people might even buy more than one. If the price is INCREASED to $100 then people will not buy new ones, or extras, or will find another method to clear snow.

“In general, the higher the price of a thing, the less of that thing people want to buy.”

I don’t agree with this on several levels, though I am sure he is just trying to keep it simple, like the “theoretical” market principle that “nobody is ever forced to make a trade” remark.

First of all, there are MANY THINGS I WOULD BUY and may well need to buy but the price is prohibitive. Plenty of people want and need to buy hearing aids, for example, but they for some reason defy all of MARKET and economism theories by costing over $2,000-$3 000 and have cost that for decades whereas the price of computers has dropped — or even cell phones, more complex than any hearing aids, and yet they are and remain relatively cheap for the latest and greatest. The hearring aid programming is all done with software now, and the machines etc. used to make them — even customized — has been around a long time, so why haven’t the prices gone down? Because there is no such thing as a FREE MARKET.

Manufactures of goods that are both NEEDED and wanted may well fall outside the Econ 101 “demand curve” but the market model does not distinguish between want and need. Just like the fundamental flaw of the entire premise that no one is forced to do anything. If a company refuses to sell something for less than $1,700 declaring that to be “what the market will bear” but then they have to have a foundation to cover the costs (for a drug in this case) for people who cannot afford to buy it, that pretty much proves that it is more than the market can bear.


Wage labor gets caught in the falsity of the “at will” employment lie that is the basis of all our labor laws since the U.S.A. has existed (maybe forever).  “At will” employment is so observably unjust that I have been sporadically researching its origination for some time. I finally found a clue and I know someday I will find the screen shot or reference to back this up. At a Supreme Court labor case hearing back in the 1850s or so, a note was made in the margin of a transcription for the oral arguments.

In essence, a Justice mused aloud that since employees could quit a job they didn’t like or didn’t like the conditions of the work place, and the employer could fire employees “at will” for what ever reason or no reason at all, then that was FAIR because both parties were EQUALLY able to act “at will.”

In reality CORPORATIONS ARE NOT PEOPLE. No business must buy food to exist, but actual people do. Workers cannot just quit a job at will. There may be no other work to be had of any kind. They could get blackballed even if there were. They have to pay rent, buy food, pay for utilities, and these days, pay for credit card debt that allows people to live on unlivable wages (root canal $1,000 monthly income $2,000 or worse).


Women cannot refuse sexual advances without risking their jobs and future employment opportunities (employees need references) and furthermore, for decades the reality of women’s experience with constant sexual harassment in the workplace was dismissed, derided, and women were blamed, judged “too sensitive”  or incapable of “taking a joke” even if they were actually raped. How many times have MANagers held back a bonus unless they got a blow job? We will never know. But one quote that always stood out in my mind was said by Marilyn Monroe when she was asked what the benefits were of her fame. She replied something along the lines of, “I don’t have to give blow jobs to get a part any more.”

So in light of recent news events, well ongoing news, since the “grab them by the pussy” of 2016 and more, when I read that economism principles are based on NO ONE BEING FORCED to make a trade, I think of all the experiences of all the women everywhere and everyday who are forced to trade something small or large. “Give us a smile!” (or we will follow you and rape you).”

The job I took was priced lower than budgeted and yes, in a manner of speaking, I was not technically forced to accept it, but I believed my future employer when they said “we can’t pay any more.” I guess I could have passed up the chance to do cool stuff and they could have suffered the loss of what I had to offer, but I don’t think that failure to make the trade would have left both of us better off. My skills and education were worth more money than they WANTED to pay.  They valued their DEPARTMENTAL BUDGET more than my ability to afford food or a nicer apartment or any other NEED or WANT. This attitude is sick.  It was not their personal money. They would not be penalized or rewarded for either choice. But pay negotiations are designed to get someone to spend their precious minutes of their lives to do work for the least amount possible as a general principle.

So the fundamental belief that only GOOD TRADES ever happen, whether because a trade is not “forced” (like me and the job), or because of the belief that NO ONE WOULD EVER MAKE A BAD TRADE — like giving someone a smile or a blow job to not be raped or get or keep a job. I suppose in a man’s world, getting a blow job and allowing the “slut” who complied to keep her job is a good trade.


The Atlas shrugging scenario roughly has the “best” people basically taking the ball and going home rather than play with others. I haven’t read it  for decades (and won’t read again) so am not going to try to do a rebuttal beyond saying I don’t want to live in a dog eat dog world where cheaters and the real takers prosper.

Another fallacy I see in the supply and demand argument economists make, described in chapter 2, is the ASSUMPTION THAT COMPANIES WILL WANT TO MAKE MORE of something if they can charge more for it.

First of all, I don’t get why, if the supply and demand relationship were true, anyone would increase supply since according to the market theory that would cause a lower price. Secondly, there is an assumption unremarked that if making things that were only worth high prices motivated business, no one would make toothpicks, much less multiple kinds and colors and wood or plastic. Sure you are going to go with QUANTITY over quality to make it worth doing at all, but doesn’t that also argue against the entire supply and demand model?

This principle of supply and demand seemingly doesn’t apply to developers in my town who state that they will not risk building affordable housing because they are “afraid” it won’t sell despite the fact that we have a massive affordable housing crisis like many cities everywhere. There is proof of demand. So why won’t they build? One comment was that they can’t make “enough” profit to make it worthwhile. So if the city wants affordable housing for the workforce, the developers expect we taxpayers to  provide the funding of their private profits to  incentivize building by deferring property taxes.

In the case of housing then, developers control the supply and ignore demand until they get the INCREASED PROFIT despite being asked to build lower priced units

Then there are the monopolies, the racketeers, the collusion and the price fixing among the purported competitors. You can’t even boycott a company anymore because they diversify and hide the parent company under multiple brand names. So if you don’t want to feed the Koch brothers profits and choose to NOT buy Angel Soft toilet paper, it might be difficult to know that the other brand you select is ALSO a brand owned by the Koch brothers.

The big competitors drive out the little guys. That’s why we have Wal-Marts and virtually no locally owned (not franchises) stores any more. Wal-Mart can set the prices wherever they want because they can negotiate (screw) manufacturers down on wholes prices and then pretend they are selling the merchandise at the lowest possible price point while in fact, they are making a higher net profit off manufacturers’ discounts that are not passed on to the consumers and partly on the backs of their low wage workers who get no benefits and don’t even get a fixed schedule much less full-time work.

The other thing about the snow shovel example that bothers me is the fact that reality is that manufacturers will charge the absolute most they can get away with. They collude with others to fix prices. Sure you can buy different brands of appliances but they are all going to be within $50 or each other with tweaks for different extras. Heck they are probably made at the same factory and just have a different logos slapped on them. Sure you can  go from one big box store to another (or online) and the principle difference will end up being shipping or delivery costs. Which are contracted out to gig workers.

How anyone, even this author, can say the market has any merit at all as corrupted as it is on every level? He actually calls the competitive market model “deeply seductive” on page 28. To be fair, in the opening material he did say that this book was not going to completely trash economics, but at least in the case of the chapter 2 material where he explores the basics, he fails to critique some of the assumptions and indeed, fails to acknowledge many flaws in the entire construct of the market.That said, I expect that is an editorial decision to keep the text clean and unencumbered.


“Similarly, economists matters today not because the competitive market model taught in first-year economics classes is intrinsically correct. It matters because it is one important vehicle that interest groups have used to pursue their objectives during the past half century.” (p. 31)

There is a list on Wikipedia of course (yay) of the history of economic thought. I looked because in chapter 3 he talks about some of the history and people who contributed to economic principles. Most people would recognize the name of Adam Smith or maybe the title of his book, The Wealth of Nations, “the founding text of modern economics.” A fascinating bit of trivia about the book was that it was published in 1776 so that makes it easy to place it in a historical context for those of us here in the States.

Tee hee, he quotes an economist on the mechanism of pricing: “naturally aims at bringing always that precise quantity thither which may be sufficient to supply and no more than supply, that demand. “ (p. 31)

Without going into excruciating detail to assess Smith’s pricing mechanism theory, I have to wonder if he was so naive as to not grasp the basic venal nature and greed of people? For pity’s sake, people legally owned SLAVES to make a profit. People, especially when ensconced in the corporate personhood status, do not act the part of the good neighbor. They act the part of the anonymous untouchable entitled self-righteous power mad despot. Prices are not based on some rational “we need to make 25% net profit to meet payroll, direct costs and overhead.” They set prices based on maximum return on investment. There is no room for social justice values in the market, only profit or maybe that should be only profiteering.

The author cites a subsequent economist, Alfred Marshall, whose textbook [1890] “showed how supply and demand interact to produce a stable equilibrium price that MAXIMIZES SOCIAL WELFARE. . .” Though the author goes on to quote Marshall for his clarification of the “limited sense” of the merit of equilibrium, I was pleased to see that Marshall “rejected the idea that the resulting equilibrium was necessarily optimal for society. Even better, Marshall went so far as to say that, ‘Because people differ in wealth, ‘the aggregate satisfaction can prima facie be increased by the distribution, whether VOLUNTARILY or COMPULSORILY, of some of the property of the RICH among the POOR.’ (p 32)

Alas the wealthy will never voluntarily share the wealth and they are doing their best to make sure they contribute nothing compulsorily either:

“Although the competitive market model was fully developed by the late nineteenth century, the historical and intellectual conditions for economism did not yet exist. At the time, UNCHECKED MARKET FORCES SEEMED TO BE PRODUCING SOCIAL INSTABILITY, NOT UNIVERSAL PROSPERITY.”


It would have been stupid for the American response to this worker unrest, and in light of the socialist and communist movements, to hang on to the obvious failure of free market capitalism when government intervention could have worked to SAVE capitalism (reminds me of Robert Reich’s book, Saving Capitalism).

Of course the United States doubled down on the belief that the “free market” was ideal and failed to follow the lead of of Prussia (1880s) and other European countries that did the right thing and did it well by implementing “social insurance programs such as pensions and workers compensation insurance.” And as we poor miserable citizens here now suffer by contrast, still waiting for universal healthcare.

The idea that unregulated markets could maximize prosperity for all seemed discredited once and for all. (p. 33)

Then 19t30s happened.

Alas, the inviolable belief in “free” markets is still not dead; in fact it has become remarkably entrenched in the face of all facts to the contrary. Hmm, or maybe because the ruling elite does not care to achieve maximum prosperity for all.

Franklin Delano Roosevelt might be said to have saved capitalism in the United States by the implement of his New Deal after his 1932 election victory as president as well as the election of many other Democrats to Congress. He “launched an unprecedented program of government intervention in the economy.” :

“These policies, collectively know as the New Deal, included financial regulations, public works programs, controls on wages and prices, a safety net centered on Social Security, and union-friendly labor laws.” (p. 33) 

From another book I read on FDR one telling problem to all this progressive change was that the Republicans actively worked to repeal these successful programs and succeeded in doing so. Part of the rationale was that World War II caused the uptick in the economy and employment so programs were no longer “necessary.” The only major program that survived FDR’s untimely death was Social Security. And as you all no doubt are aware, the Republicans have been ruthlessly pursuing New Deal destruction with mindless obsessive intent for the decades since. Especially now in 2017 with the most nihilist government to grace the planet since Caligula.

Since the working class was no longer threatening to revolt, the “old economic elite . . . saw itself as powerless, beset by labor unions, government bureaucracies, social insurance programs, and high taxes. Some corporations and their executives publicly endorse the expanded role of government, but many stood to gain from a reversal of the New Deal. A smaller government would also benefit the wealthy, who would no longer have to pay taxes for programs they did not need, such as Social Security.” (p. 35)

BTW, the 1930s also gave us John Maynard Keynes. His book, The General Theory of Employment, Interest, and Money, proposed that government management of the economy “was necessary to preserve the capitalist system against the threats of fascism and communism.” (p. 34)

Oh the good old days, postwar America “when the tax rates  as high as 91 percent funded federal government programs aimed at helping the poor, protecting ordinary families from economic risks, and regulating the private sector.”

“But corporate executives and the wealthy couldn’t just demand a better deal for themselves. Instead, they needed a conceptual framework that showed why their preferred policies were good FOR eOCIETY as a whole (and only incidentally good for them).” (p. 35)

Nowadays the wealthy elite just lie outright and do what they want through their puppets in Congress.

The interest groups were powerful and while the workers “adopted socialism and communism to contest an unequal political and economic order in the mid-twentieth century, the rich and powerful created and adopted economism to combat what they saw as oppressive government sustained by a coalition of Democrats and Eisenhower Republicans.”

The rest of chapter 3 is a succinct and astute description of the various people and theories that have led us to the incorporation of economism as the measure of all things. If you are interested in taking names and rebutting  the “if a = b then c” flawed logic of sequential economists than this chapter is one that you will want to research line by line.

Wow, his got really long and I am only through 3 chapters. Plus the book is a week overdue. So I am just going to publish to save what I have so far and will continue in a part 2 where we get past the flawed history and onto how to bring reality and human values back into policy and political decisions.




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