As the country spins farther and farther into division, truth becomes more and more of a punching bag.
One might reasonably believe that truth would unite us to some degree – even if we disagreed on what to do about it. Yet the fictional narratives in service of ideologies and scams are never ending. It does not matter if it is the government, politicians, Hollywood, the media or your neighbor – spinning fictional narratives in order to gain personal advantage has become the cultural norm. Americans attempt to hide their absurdity in numbers – “the more people I can get to believe my narrative the less absurd it becomes” is the general line of thinking. Check in on Bernie Sanders as the classic example of that line of thinking.
It does not matter how many people believe your narrative – it is still absurd if it contains only selective truth used to bolster the overall falsehood.
Camille Paglia recently remarked, ““What has happened is these young people now getting to college have no sense of history – of any kind! No sense of history. No world geography. No sense of the violence and the barbarities of history. So, they think that the whole world has always been like this, a kind of nice, comfortable world where you can go to the store and get orange juice and milk, and you can turn on the water and the hot water comes out. They have no sense whatever of the destruction, of the great civilizations that rose and fell, and so on – and how arrogant people get when they’re in a comfortable civilization. They now have been taught to look around them to see defects in America – which is the freest country in the history of the world – and to feel that somehow America is the source of all evil in the universe, and it’s because they’ve never been exposed to the actual evil of the history of humanity. They know nothing!”
How true – but in the absence of actual knowledge the false narratives abound. None of the false narratives are as damaging as the complete lack of knowledge as to how we arrived at our current economic dilemma, which I explained here.
Ray Dalio shared a very important post on his Linked-In page this weekend, “Our Biggest Economic, Social, and Political Issue The Two Economies: The Top 40% and the Bottom 60%.”
The post is worth your time.
Dalio remarked, “To understand what’s going on in “the economy,” it is a serious mistake to look at average statistics. This is because the wealth and income skews are so great that average statistics no longer reflect the conditions of the average man. For example, as shown in the chart below, the wealth of the top one-tenth of 1% of the population is about equal to that of the bottom 90% of the population, which is the same sort of wealth gap that existed during the 1935-40 period….
There has been no growth in earned income, and income and wealth gaps have grown and are enormous. Since 1980, median household real incomes have been about flat, and the average household in the top 40% earns four times more than the average household in the bottom 60%. While they’ve experienced some growth recently, real incomes have been flat to down slightly for the average household in the bottom 60% since 1980 (while they have been up for the top 40%). Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.”
I have often remarked that on the apples to apples comparison, i.e. white men, real-wages have been static since 1968. Note: the reason why white men are the apples to apples comparison is because other races and women were to varying degree shut out of portions of the economy at that time. Dalio remarks that “Since 1980, median household real incomes have been about flat” – which is including the absorption of all races and women into the economy. Household real-income gains from 1968 to 1980 are mostly attributable to the cultural shift from one- to two-earner households that took place in that time frame.
In short – the income and wealth disparity is primarily due to the financialization of the economy, and the financialization of the economy is primarily due to the tremendous amount of debt and more specifically the policies put in place in order that the debt may continue to be serviced with out government at all levels having to make hard decisions that might lead to guillotines. These policies have distorted the markets in such a manner that those who can create credit or invest in credit gain immense wealth for nothing more than moving that credit about in the digital world. What is driving the tremendous, historically unprecedented debt and historically unprecedented policies in regard to the debt are never ending political promises for more comfort.
The progressive argument that the solution to this is more taxes is absurd – if you are giving people free money in unlimited amounts they do not care if you tax them at 20% or 40% or 60% – you are giving them free money by the trillions! This is the very definition of hitting an empty paper bag.
Why are the progressives so wedded to trillions of dollars in wealth transfers to the 1%? Because all of the social spending promises that they have made and yearn for are dependent on the never-ending increase of that debt and the never-ending increase of that debt is dependent on the policies that transfer trillions of dollars in wealth to the 1%.
The fictional narrative the progressives have adopted is that this is a fiscal issue, not a monetary issue. The progressives have truly made a deal with the devil – never ending free money to the 1% in exchange for social spending. Everything the progressives claim they are against they actually enable – but the fictional narrative is that this is not so. The narrative is that it is anyone else’s fault but theirs.
The Trump people are not exempt from fictional narratives. They have created their own false narratives where monetary policy is not driving the overwhelming majority into poverty while enriching the top tier. One of the more interesting exclusions from the Dalio post is the effect of government debt and obligations on net wealth – so if you include your share of government debt then deduct another two million dollars or so from your net wealth. That the GOP congress and Trump appear perfectly willing to continue that game of selective statistics and expanding debt just feeds the false narrative.
Selective statistics in order to convince the public that things are going more swimmingly than they actually are is the one thing our government is genuinely good at. Take unemployment, where the current U3 number is 4.2%. The Clinton administration switched to the U3 measurement in order to exclude people who had historically been defined as ‘unemployed.’ During the Reagan administration for example, U6 was the measurement. If we still measured unemployment using U6 as we did during the Reagan years and a couple of decades before that the current unemployment rate would be 8.9%. Not exactly something to brag about – in fact U6 never dipped below 9% for the entire Obama administration. But wait – it gets worse! The Kennedy administration adopted U6 in order to exclude others from being counted as ‘unemployed’ for political gain – if we measured unemployment in the same manner as we did in the Eisenhower years the unemployment rate would be 22% at the moment – Great Depression level. No one gets re-elected with a 22% unemployment rate – so they repeatedly change how that number is measured in order that they may get re-elected and brag about how effective they are.
Still think the Obama years were great with an apples-to-apples unemployment rate of 22%? Well, to the point Dalio made – they were great years for those at the top.
This government data manipulation goes on and on and on – if we measured inflation today by the same method we measured it in 1990 the current inflation rate would be about 6%, not sub-2%. If we still measured GDP by the same method we measured it until 1993 then the United States has not had a single year of positive economic growth since 2004. No one gets re-elected on those numbers either – so the measurements have to be changed for the politicians to have a re-election narrative.
All of the data manipulation by the government is fodder for the endless false narratives – and at the end of the day the false narratives inevitably are simply story telling to explain why policy is not really reducing your net wealth and increasing your debt load while enriching the few. As a people we no longer have any comprehension of what happened, how we got here and how we get hoodwinked daily and is to Paglia’s point – “They have no sense whatever of the destruction, of the great civilizations that rose and fell, and so on – and how arrogant people get when they’re in a comfortable civilization.”
Even more to the point was Thomas Sowell – “When the people want the impossible, only liars can satisfy.”
Our comfortable civilization is predicated on debt and wealth transfers to the 1% – we continue to demand the impossible and willingly accept the lies because they allow us to maintain our arrogance and comfort.
“We’re willing participants in our own demise” – Eric Peters
Future historians will speculate on how we collectively went insane.