3. Two
primary causes of
depressions
1. Concentration of Wealth
Exploitation
2. Blockages in the circulation of
money
“Rolling” of money
Spreads crisis
4. Political
capture
• Wealthy lobby for
Tax relief
Pro-globalization, anti-labor policies
Deregulation of financial industry
Stagnant
or declining average wages
• Borrowing to maintain consumption
Greater
risk preference for rich
12. Encourages
risk
• Perverse incentives
Distorts
consumption towards luxury goods
Predatory towards the poor
Robs resources from the rest of the
economy
• Talent goes to financial sector
13.
14.
15. 920
suicides
648 Homicides
20,240 fatal heart attacks or strokes
494 deaths from liver cirrhosis
4227 admissions to mental hospitals
3340 admissions to state prisons
*Brenner, 1976
18. Co-op-based economy inherently stable
• Locally-based, resistant to international contagion.
• Co-op workers reduce incomes rather than lay-off
in downturns
• Co-ops limit income inequality
Investment
is community-determined
Automation brings leisure, not
unemployment
Government policy of 100% employment
Notice how the share of the nation’s income going to the top 10% increases sharply just before the stock market crash preceding the Great Depression and in 2007, just before the financial crisis and the Great Recession.
U.S. housing policy: throw poor to loan sharks. Irony of rich rigging economy in their favor.
2003-2006 increase in MIT grads going into finance 13% to 25%. Harvard MBAs at 34%, down from 40% before recession. Concern from Nobel prize winning economists, Robert Solow and Robert Schiller
Explain, due to lost investment, long term unemployed lose skills, many drop out of the labor force, are no longer productive
Investment: no bubbles Less spending out of insecurity, keeping up with Joneses
