Arctic heat is coming our way. And fast!

The Arctic Ocean heat map seems to show that it is the Barents Sea that has warmed the Arctic, which has melted too much in summer, which has given us the new dominant weather patterns in the northern countries. The El Nino is most likely the disturbance of the long term La Nina drought pattern, with the likely mechanism for this disturbance being the Honga Tonga volcano - which changed the Trade Winds that drive Pacific heating. 

The question is, how did the Barents Sea get so warm? Answer that question, and you have cracked global warming (rather than global flooding and drought). Two separate systems.

I don't see Barents as cooling anytime soon - meaning we have reached the tipping point Climate has changed. It is not theoretical - and unless we ban gasoline in urban areas and for highway use - as well as concrete - we are stuck here. The operative question is how many people in the 110 degree weather zone have to die or flea before we do something like this?  

The first thing that will happen is the end to agriculture wherever the 110 degree heat has become the new normal. The only solution to staying there is indoor food plant growth and cloned meat and dairy (although goats and sheep may do good indoors. Growing pigs and cows that way has been a disaster.

Are future humans really our problem?

Given breakthroughs in life extension or a very reasonable belief in reincarnation, these problems may be ours, and not just those of our children. The important question for both the present and the past is not as much the technology as the human systems. Will capitalism transform us or kill us? Will we transform it, or kill it? 

Will government, on its own, be able to ban urban and highway use of gas burning cars, replacing them with electric (preferably tethered, rather than battery)? We can tether cars the same way we tether electric trains - and computer control of both (as well as limited access in urban areas) will end automobile deaths. However, until workers are more involved in consumption (as well as production) and government decisions, the comity of capitalists will never escape the power of big oil.

Why Inequality Starts Becoming A Problem Now | Economics Explained

The issue is not just who holds the money, but the control it buys them over other people. The distribution of things is not as important. Social Democracy can fix that piece. Without social democracy, however, capitalism is as fragile as the business cycle - or rather -the fiscal policy driven cycle of speculation and bailout.  

Government spending is the yeast of any society. In social democracy, people getting benefits for education and retirement, as well as household spending by government employees and contractors spread the money out in fairly equal chunks. No business assets are ever acquired without the prospect of household or government consumption (or exports). 

Financing, however, is not the same as investment. When taxes are cut, there is a financial boom, but it may not be in any way linked to actual investment in plant and equipment. Indeed, it probably is not. Financial booms take money out of consumption and put it into speculation. Making a deal becomes more important than making a product. Until this is absolutely clear in our economic discussion, we will continue to make the same mistakes decade after decade.

Mexico Will Not Be The Next China | Economics Explained

Mexico has two huge issues: no linkage between the floor industrial centers and the oceans and/or U.S. internal waterway system. Absent political unity, there is no chance of expanding the Rio Grande to provide this (were it even possible hydrologically - no adequate headwaters) AND no major rail hub in the southern US that could integrate Mexican rail and transfer adequate tonnage to rival Chicago.

Development of Mexico and Chinese workforces and subsequent political development would require domination of the US market by firms with employee ownership and effective control, combined with cooperative consumption and finance and a willingness to expand such a system to overseas subsidiaries and supply chains with transfer pricing based on an equal standard if living for each class of labor.

What Everyone Gets Wrong About Global Debt | Economics Explained

The business cycle (like the problem of overconsumption) are myths. The issue is public finance. When taxes on the speculation sector are too low (for example, the cuts by Clinton and Bush to capital gains and dividends), it becomes more attractive to bid up asset prices and to create "innovative" financial instruments. This also hurts the consumption sector, as it sucks money out of lower performing investments - which leads to a need for the Federal Reserve to lower interest rates - which also allow for yet more garbage in speculation.

The only good thing in the 2017 tax cuts is that they did not decrease the 20% capital gains rate, nor did they do anything to repeal the 3.88 Affordable Care Act taxes on non-wage income. While the Trump rates did decrease growth by 1% by giving small increases to the capital sector (again, at the expense of the consumption sector), going further down the road to ruin due to speculation in crypto and rental single family homes was suspended due to liquidity caused by the pandemic recovery efforts. Essentially, the already failing housing bonds were propped up for a different reason.

Be sure not to confuse investment in plant and equipment with speculation (which is part of savings, not GDP). This is the most important thing to know about the relationship between public and private finance. The reason for the slow and steady growth in the late 50s, early to mid 60s was the willingness to have adequate taxation in place.

When Clinton kept taxes up (although his late in the administration capital gains cuts did fuel the tech finance boom - not tech itself), it put leverage needed to speculate in jeopardy. Without the leverage provided by public debt, you cannot expand the asset markets beyond the natural funding of assets such as home loans and plant and equipment finance (which respond to future consumption, not financial costs).

When debt finances asset price inflation, a crash is soon to occur. Don't make the debt by taxing adequately and keeping the economy going by adequate government salaries, contracts and transfers and long term growth will occur without boom-bust cycles. The fly in the ointment is the election of Republicans to Congress or the Presidency, who cut taxes that fuel the cycle.

The economic model laid out in the video left out the influence of speculation as the difference between available assets and those related to GDP. Trillions of dollars are junk. When that junk collapses, it destabilizes the financial markets. Stop making junk and begin the process of transferring productive assets to employees and households with minimal leverage and  the junk sector can be reduced even further.

When debt finances illusory assets and the overpricing of real property (it is almost always about housing), then there is too much of it.

The ability to finance debt is related to the ability to pay it back. For example, when housing prices (most specifically location value) are at reasonable levels compared to wage levels, then housing can be said to be correctly priced. When it becomes impossible to afford land without speculative loan products, the price has become too high.

Public debt is owed in proportion to how government is financed - and the only way to really have big debt is to tax incomes. Without the income tax, America could never have become the world's banker. Unless China and/or Europe develop adequate income taxation that is linked in with the debt that backs their currencies, the US has a blank check. 

If Europe united its debt (like Hamilton did for the states) adn a continent wide income tax was created, then the Euro would quickly compete with the United States as the global currency of choice. Until CCP, Inc. separates the party from wealth holding and then taxes high incomes adequately, it will remain a third world currency.

Even with a blank check, US debt is not sustainable (at least if lenders knew what to look for) because the ratio between income tax revenue and the national debt is too large. There is a tipping point somewhere, although we have not yet reached it. The tragic thing about tipping points is that, once reached, the economy is in ruin. 

President Biden's proposals to raise capital gains taxes by 5% will deflate the asset sector in an orderly fashion. Not doing so entails extreme risk, especially to the holders of speculative capital.

On the asset side, government held debt is in the form of trust funds - which are usually revolving - retirement of civil and military workers and Social Security/Medicare. The latter is held mainly be recipients or future recipients. When recipients get the money, they will be part of the bottom income quintile (or the bottom two - but mostly the bottom). The public debt is held by financial assets, from federal reserve and bank holdings which are ultimately owned by depositors, long term investors and mutual fund/debt investors. 

56% of long term and deposit assets are held by the top 10% of households. 77% of bond and mutual fund assets are held by the top 10%. Following the same percentage relationships (which match AGI relationships for income taxation), the top 1% holds 56% of the 56% long term and currency assets (a quarter), with remaining 9 percent holding the other quarter.

The mutual fund percentages follow the same rule. These are the funds which are used for speculative investment. They are mostly held by the top 1% - with a huge amount owned by the top 0.1%. Note that I am only describing national debt holding assets. The national debt is not held in speculative stocks. This is why speculative stocks are inherently worthless. In bankruptcy, they have no value. This is why mutual funds hold national debt instruments.

The top 1% of income mark is generally $500,000 per year.  Ultimately, if the economy crashes because they pay too little in income tax, they will bear most of the losses - although working people will still have it worse off, absent robust social safety net protections or the kind of cooperative financial systems that keep the speculators out of the ownership of the workplace and housing sectors, i.e., cooperative socialism.

Let's talk about lab grown chicken....

Sustainable Development for Inner Cities and the Developing World

This summer, I am taking a graduate class in Sustainable Development at the University of Maryland. We read Glynn Cochrane's book, Festival Elephants and the Myth of Global Poverty. It gave a good insight on how broken the current system is - and why most development money is wasted on spending for economists and grant writers and NGOs, not the poor. If such schemes were tried domestically, the operators would be arrested for fraud.

This is not to say that we should not do development. Indeed, we must - especially as climate change displaces hundreds of millions of people on the rim of the Indian Ocean. The method I am advocating can also be done here. Those who follow my Center for Fiscal Equity site or our submissions to Ways and Means and Finance will find them familiar.

If we want real development, we need to build more apartment houses with classrooms and clinics on-site. There are ways to do passive air conditioning that are ancient involving the creation of air currents. We can recycle water. We can do energy from solar panels and wind. We can install dehumidifiers to make the tropics habitable. We can do hydroponics and greenhouses (and grow worms to turn black water waste to soil).

How do we build such things? The newest development in housing - which can be done in Africa, Indonesia or Philadelphia - is stackable prefabricated tiny homes. These can be built in country or imported. 

Unless we pay people to get educated, they will have opportunity costs that get in the way. This is true in South and Central America, Mexico, the US inner city, the Reservation, Africa, South Asia, Ukraine, Syria and anywhere that housing and education are subpar.

Where do we find the people (who would staff these apartment/schools). Train teachers, maintenance and nurse practitioners and have them pay back the education through paid service (pay them to go to school too). This can happen in the US or any other developing nation - and yes, given how empty it is and its inequality - the United States is a developing nation. 

For some jobs, like fixing dehumidifiers, an expert trains an apprentice while working, then the apprentice works as a journeyman then becomes a master to train new apprentices (and going from complex to complex).

How do we pay for this? We can both redirect aid from the World Bank/IMF/USAID/NGO complex - as well as from TANF and SNAP and pay people to get remedial education (including ESL) and pay the rent from these stipends. For the long term, we propose that in both the United States and the developing world, funds for education, family support (a child tax credit) and healthcare be raised using a subtraction value added tax. 

Any operation with employees would pay this tax, although for some employers, such as development projects above, the tax would be akin to a negative income tax. For this reason, in the developing world, this tax should actually raise money from all other employers, governmental and international governments and agencies. A local value added tax would also be levied - but with no tax exemption for government or development agency employees. For more information on these taxes, see the Center for Fiscal Equity web page backgrounder on Consumption Taxes.

One final thing, and this also goes for road building and water development, give GRANTS, not LOANS. Forgive the outstanding loans and turn any related bonds into US and other donor country debt - to be paid back by increases in progressive income taxes. In the US, EPA gives grants for water projects and the Army Corps of Engineers does not require repayment to build dams. Why is this not standard all over the world? We can do one of two things - make states take out federal loans for such facilities or quit giving loans to the developing world.

The Golden Rule works in development too. Indeed, it is the only way not to turn poor nations in Africa and Asia into Chinese client states.

A Future Beyond Capitalism? Socialism Explained. See my comments on ESOPs

The business cycle (and overproduction) is a myth. The problem is the tax cut cycle. When taxes are cut on capital gains and executive compensation, money is moved from consumption to speculation (which is savings, not investment in plant and equipment), leading to the creation of junk assets (such as mortgage backed securities and an overfunded oil futures market). When these financial products are sold to households and investment funds, they are revealed to be garbage (for example, single family rentals that are not well maintained or overpriced housing in the homebuyers market) and that is what crashes the economy. 

Also, when taxes are cut, increased debt is required (which again, provides leverage for creative investment products) to keep the economy afloat. When taxes are increased, speculation decreases and people like Greenspan calls a balanced budget dangerous to capitalism. It is, but capitalism is investment, NOT THE FREE MARKET.

The reason wages have not gone up are two-fold. One, the minimum wage does not go up with inflation. Two,  prices chase the median dollar, not the median household. The median dollar is at the 90th percentile. The reason for the spread, however, is bad math. Seriously. We give wages in the public and private sector on an equal percentage basis (high executive salaries come from speculation - because they are paid with capital gains or borrow against their shares - and borrowing is not income). If wages were increased on an equal dollar per hour basis, inequality would go away in a generation.

Taxes on incomes reward the rich for failure in their investments (capital loss), which offsets their salaries. If we had a nice value added tax on goods and services and another on assets,, it does not matter how they got their money, When they buy either stuff or stock, it would be taxed. No dodges. Also, if high incomes from salaries and dividends faced a residual graduated income tax - with no deductions for anything, then the combination of consumption VAT, asset VAT, a net business receipts tax to distribute social benefits with pay, rather than by government and that residual income tax would end high salaries (because the combination of taxes would result in marginal rates in the 80s) and, most importantly, cuts in worker salaries to get more profit.

The irony of Fox News and Trump's opposition to socialism is that it had less to do with opposing equality and more to do with nuclear weapons. On Ukraine (not just the current war, but the first invasion and the sanctions from it), Trump was bought off by Putin - the guy from the KGB with the nuclear weapons - so Trump and certain Republicans in media and Congress who oppose aid to Ukraine are essentially backing Moscow. The irony is thick.

Again, the free market is not capitalism. Capitalism is the unfree market for wages (monopsony) and products (monopoly) where the capitalists pocket the economic rent. In a real free market, there would be no rent. The current use of stock options, grants and capital gains/dividend favored rates as executive compensation gives the CEO class all of the profits from wage theft and unfree consumer prices. Investors, especially institutional investors, only get a "normal profit." Normal profit is a decent dividend based on what the market for savings and dividends provides. Anything over that goes to the executives. Adequate taxes (as above) end the incentive to steal.

Because reactionaries always split workers by race, gender, immigrant status and sexuality, working class traditionalists vote one way and workers vote the other. Not a new thing, but it is why socialism is so hard to vote in. Pretty much impossible - especially because socialists always favor the hated minorities. Therefore, the path is employee ownership. to goose employee ownership, replace capital gains and inheritances taxes with the asset value tax at a high enough rate so that heirs and trust funds want a tax break. That tax break would be to expand the capital gains exemption for sales to an ESOP or COOP to sellers of public shares. Also, mark asset VAT to market at IPO, option exercise and the first sale after inheritance, gift or donation. If heirs (farmers, small businesses or shareholders) keep the operation going, no tax. When they bail out of these businesses - they pay on full value, not appreciation. Except if they sell to that ESOP or COOP.

The other challenge is to make ESOPs democratic, rather than capitalist lite. The answer to doing so is to give them better toys - such as housing and consumer finance from within and cooperative purchasing of housing and food - or housing with the ability to grow food, also clothing, education, healthcare and whatever the employee-owners wish to buy cooperatively. In other words, have workers control the means of consumption.

How to get this to happen. Make all asset capital gains taxable at one rate - including short term gains, through the use of asset VAT. Repeal death tax as above with zero rating for ESOP sales. No capital gains tax either - asset VAT would do that. Convert the deduction for sales taxes paid to a credit - essentially turning business taxes to a VAT. This is a tax cut and a way to end income taxes for most households - although the child tax credit would be distributed by employers as a deduction from their net business receipts taxes. State NBRT would also have deductions for education, from ESL to Community College/first two years of 4 year college and tech school, at the school of one's choice - including Catholic School.  Also health insurance. While there would be NBRT surtaxes for higher salary and dividend payouts, the recipients would not have to pay - just the employer. The credits would end small business, because big companies would get a tax break for rehiring such workers as staff rather than contractors. 

The GOP will not resist such tax reforms. Cut taxes - get communism.

From Lab to Table: I Tasted the World’s First Cultivated Meat!

At least a little bone and fat need to be grown to mix hamburger. Also, DARK MEAT chicken and turkey - duck is all dark meat. It just tastes better and does not dry out.

The important thing is to miniaturize and automate for a home and space flight version - use NASA money to develop it. In space, there may be sheep, but no cows. Maybe goats too - for the milk and cheese.

There should also be a version that can be done by cooperatives - including ESOPS - that have company stores that sell to employee-owners. Let these owners produce under license. There will be plenty of commercial business to go around.

Breakthrough Solar Panel Makes Hydrogen At Home!

Put the high pressure hydrolyzer in a car with electricity coming from an overhead line, embedded in a roof deck that powers the car while "in network" The network also provides central computer control. The hydrogen is used when outside of the network - which would exist in urban, and possibly suburban or exurban, areas as well as on interstate and major highways. It would also be fed from home electric (solar, wind, central power, whatever). This means getting rid of carbon in non-urban areas (like most of Iowa). Roof decks would have solar and grass and streams (to maximize solar), just because we can - or they can simply be grass covered. 

Home electricity and internet would also come through roof deck system (or walls of roadway). On daily commute, car would stay in system in urban areas and drive you to transit and drive itself home - to return to pick you up from transit later. Nuclear power (made from recycled waste) would mostly power the system.

Basic Human Need? Or Investment Asset? Housing Affordability in the US i...

The ultimate form of smart growth urbanism is employee-owned companies which also provide housing and transportation, as well finance and consumer products - either including food or through employees working a shorter workday while growing their own food in ways developed for space missions (lab grown meat (blood, fat and bone), recycled water, aquaculture, chicken coops, lambs and hydroponic and green house veggies and potatoes. If you work, in the early part of your career, you get an apartment and a meal plan. Later, you can get a home if you want to grow your own food (and kids).

Mass ownership of rental property should be illegal: a rant.

This system was about to crash and started to do so until the pandemic bailout, where Pelosi and Mnuchin (a huge private equity slumlord) kept people in homes, while the Fed stabilized the bonds.

Eventually, supply and demand will kill AirBNB that cannot adapt. The question is whether we can force bailouts to include sales to tenants at the bottom-basement prices.

The ultimate answer is employee-owned firms that also provide apartments to younger workers (and student interns - summer associates even) and will finance homes for worker-owners later in their careers. If you own the company store and bank, it's not usury. Homes, transit and workplaces would be better designed (smart growth models) in walkable communities.

The key is to have such systems ready when, not if, the current system crashes for the last time.

The Big Economic Problem of Shrinking Cities | Economics Explained

Shrinking cities need to "de-annex" and give unsustainable pieces at boundaries to counties or organize them as their own municipal areas. 

Tax support needs to change at the same time. Split property tax into land and buildings with buildings going to city for services and land going to state to extract location value. 

Education and social welfare should be funded with employer paid subtraction value added tax.

Limit income tax to top 20% of income. Brackets set to 80th percentile to 96th, 96th to 99th, 99th to 99.9th and top 0.1%. 3% for each bracket.

Overrated Cities: 10 U.S. Metro Areas That Give You the Least City for Y...

How This Building Powers the Internet

Let's talk about currency & companies and peas & carrots....

American capitalism is backed by mutual, insurance, pension, retirement savings and deposits in Federal Reserve Banks and their loan portfolios containing Treasury Notes and Bonds. China and Japan also hold bonds so they can trade with the US. Other overseas bonds are held by capitalists in tax havens - lots of whom are American billionaires. The top 1% hold half the mutual and bond holdings and 25% of longer term assets. families making less than $150K per year (this includes retirees, not so much for most workers) hold about a quarter of the bonds and mutual funds and less than half of the long term investments. Those with incomes between $150K and $500K hold the remainder - roughly a quarter of the debt held in any account. Those are the people who will later hold all of the assets retirees hold. 

People who labor have nothing. Not even cash. They are owned by capitalists. They do not own capital. The only thing they do own is their share of the debt held by the Social Security and Medicare Trust funds. These are the funds the GOP wants to force more money into from workers. 

What is my source for this analysis. The Survey of Consumer Finance held every three years by the Federal Reserve. Last reported survey is 2019 (pre pandemic). There was a survey gathered last year that will be reported about a year from now.

The GOP members and staff who are playing with debt default are essentially putting their donor base at extreme risk. They are either bluffing or stupid. My guess is the latter.

This Old Building Material is New Again

Cooperative employee-owned firms could order this - and even have a division that builds homes for members and clients using this material.

Capitalism Doesn't Need Consumers | Economics Explained

The economic model for the future will be employee-ownership, where the owners democratically elect their leaders, provide a financial system based on standard labor hour debt and control of the means of consumption. There will be economics outside these cooperatives, but the will use standard labor hour exchange rather than cash. Another aspect of this, one that will provide for more children and continued labor, is habitats where people produce their own food with AI assist and artificial meat which would be 3-D printed and use lab grown meat protein, bone, blood and fat.

People will balance their labor hours and out for habitat production and maintenance, as well as for healthcare - which would go beyond modern medicine. As long as doctors and nurses must work, everyone must work. Areas for work will include space exploration and education provided on a global basis.

How is the transition to occur? Shift capital gains taxes to an asset value added tax, with zero rates for sales to employee-owned and cooperative enterprises. No mass confiscation is necessary - just heirs deciding to cash out fortunes to the workers to avoid paying taxes on asset sales.

Do We Really Live Under Capitalism?

Why Social Democracy Isn't Good Enough