One for You, Three for Me. Two for Me, One for You.

There's been more noise these days about a Right Wingnut takeover in Congress, and what that might mean.  Some have gone so far as to hope that they get both houses; the theory being that Obama will finally get the balls to put the blame where it belongs.  Good luck with that.

Then, there's the pleasant cognitive dissonance about unemployment, employment, and retirement; spurred on, no doubt, by the mess in France.  The bottom line (so to speak) is that, once again, it's the Distribution, Stupid.  On the one hand, the Right Wingnuts destroyed defined benefit retirement plans, forcing folks into becoming investment experts for their 401(k)s.  We can see how well that worked out.  It's the old divide and conquer ploy.  In this case, individuals are not only alone in solo lifeboats, they don't have the necessary information.  With professional investment directors managing the large funds, it's much easier to level out the ups and downs and still meet the needs of the plans.  Well, if the directors are not corrupt. 

Pressure to raise the retirement age is presented as the panacea to Social Security (and Medicare, although not spoken) difficulties.  But what happens when all those 60 somethings have to keep working?  Where will the jobs be?  Unless the Feds make it illegal to fire a 60 something, and give absolute preference to 60 somethings in hiring, we'll just see them (us) dying off at an earlier age, increasingly.  Which, of course, is the whole point.  No income, no healthcare; just die.

The problem with that, which the Right Wingnuts haven't the brains to figure out, is that the non-financial part of the US economy is increasingly healthcare.  It's kind of hard to outsource hospitals and nursing homes.  Not so easy to outsource doctoring, although it's been tried (diagnostics and the like shipped to India).  By punishing the general population, the short term profitability blooms, but the medium to long term contracts.

Which brings me around the main point, once again:  It's the Distribution of income which determines the health of an economy.  What follows is a model.  A model, in the scientific/engineering sense (not the luscious babe one), simply removes the extraneous noise from the real world situation, and asks "what happens next?".  Einstein's relativity was a model, which he referred to as a thought experiment.  Much the same.

In our model, we'll state that the population is 1,000 humans, that the only commodity produced and consumed is bread, and that there are some number of companies employing the 1,000 humans.  I'll call this place Little World.  At the outset, the humans produce 1,000 loaves a day, and earn enough to buy 1,000; one per human.  Equality reigns.  The companies earn enough in the process to remain in business, but each is small enough to be unable to affect the price of bread or the wages paid to workers.  Equality reigns.

Now, let's disturb the model by asserting that the companies collude and reduce wages to the 1,000 humans by 10%.  What's likely to happen?  We'll assume, for the moment, that a Police State exists such that conformance is mandatory (think, "Robo Cop").  Unless the companies reduce the price of bread, they'll only sell 900 loaves; there isn't sufficient money in the economy to buy the 1,000 loaves previously.  Who goes without?  We'll assert some random number of 100, and that once in the No Bread group, one remains there.  Let's assert that one can only survive a week in the No Bread group, so at the end of one week, we're down to 900 humans.

Can the 900 humans make 1,000 loaves?  Possibly, but there's no demand for the extra 100, since there's no extra cash; thus the companies have no incentive to make the extra 100.  They could then reduce the price, but there's no need for the extra 100, since there aren't any additional consumers (bread, in the model, has no bling factor, no conspicuous consumption vector).

The companies have now permanently reduced both the population and their business. 

Let's look at what happens in our Real World with respect to enforced wage reductions and tax giveaways to corporations, from the perspective of our Little World.  Well, we've already seen that enforced wage reductions merely lead to contraction of both population and profits for the companies; rather than selling 1,000 loaves, they now sell 900.  What happens if the Police State, after the time that population has reduced to 900, agrees to reduce the companies' taxes by 10% (taxes pay for roads to and from the bread factories and homes, and a squad of Robo Cops; you thought I'd forget, eh?)?  Is there any incentive for the companies to either reduce price of bread or hire more humans?  Well, no.  There are only 900 humans, and they're not totally stupid; they'll not breed until they're convinced that there will be enough bread for another 100 (just to pick a number at random).

So, what happens to the tax "incentive"?  It gets pocketed by the companies, of course.  They get more, the humans get less.

What happens if the Police State, realizing that its existence depends on a growing community of humans, instead grants bread to the humans?  Well, if the 900 humans believe that the increase in bread is real and sustained, they'll demand (in the economic sense of not just wanting, but have the cash to buy) this additional bread.  In our Little World, breeding is speedy, so presto-changeo, we now have 1,000 humans consuming 1,000 loaves. 

So, putting demand in the hands of humans leads to growth of Little World, while giveaways to companies in Little World leads to contraction.  And so it is in our Real World; where breeding is almost as speedy. 

The moral of the story:  taking from the many and giving to the few leads, inexorably, to destruction of the whole society.  Perhaps not in the week of Little World, and that's too bad.  Americans are sufficiently stupid that they don't even remember that their mess was caused by Right Wingnuts.  Hell, even that Christiane Amanpour, who was supposed to be smarter than Boy George, let McConnell lie about which folks implemented the bank bailouts.  For those readers who don't remember either:  it was the Right Wingnut Republicans.  If acts of stupidity brought retribution immediately, perhaps we could rid ourselves of so many stupid people.