Thursday, September 19, 2013

Fantasy League Rebound


It is once again time to talk about our friend, the pink unicorn, the emblem of free markets. In August, I mentioned the fantastical creature in connection with Spirit Level, an analysis of the deleterious effects of income concentration. That the rich get richer is bad enough; that many of them believe they are winning a game that is not rigged is just annoying. That many of them do know that the game is rigged is just wrong.

A couple of days later, my Return of the Pink Unicorn post described a temporary drop in stock markets that occurred when minutes of a Federal Reserve meeting suggested that the game might not be rigged quite as much in favor of investors. The impression was quickly reversed, and so were falling stock prices.

Which brings us to this morning. The Federal Reserve actually did meet yesterday, and it decided to keep stimulating growth, sending stock markets around the world up by more than one percent. The number at the top of this post is a very conservative estimate of the capital gains made JUST TODAY on the basis of that one announcement. I base the estimate on a report on world market capitalization from the American Enterprise Institute. The first word of its tagline is "freedom," but it is not really serious about that.

This news comes as Congress is debating whether to keep funding food subsidies for the poor, a program that has long had the support of conservative Senator Dole, who is aghast at his own party's selfishness these days. Cuts on the order of $4 billion per year are being contemplated by anti-tax fetishists in the House of Representatives who are both inhumane and bad at math. The result would be an unprovoked humanitarian injury that would also increase unemployment in the food sector and that would not balance the Federal budget.

Just as global capital "earned" more yesterday that Congress intends to save at the expense of poor people, middle-class families such as my own do also benefit. Those of use with typical retirement portfolios also "earned" as much yesterday as we can expect to spend in welfare-related taxes over the next several years. In this way, a game rigged for the top one percent earns the complicity of the next 10 percent or so.

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