Kurt Vonnegut on The Money River, aka neo-liberalism

I’ve had this sitting around in a draft for a while since I saw it quoted in comments elsewhere, waiting for the right time to post it. From God Bless You, Mr. Rosewater (aka Pearls Before Swine), by Kurt Vonnegut Jr:

“The what?”

The Money River, where the wealth of the nation flows. We were born on the banks of it. We can slurp from that mighty river to our hearts’ content. And we even take slurping lessons, so we can slurp more efficiently.

“Slurping lessons?”

From lawyers! From tax consultants! We’re born close enough to the river to drown ourselves and the next ten generations in wealth, simply using dippers and buckets. But we still hire the experts to teach us the use of aqueducts, dams, reservoirs, siphons, bucket brigades, and the Archimedes’ screw. And our teachers in turn become rich, and their children become buyers of lessons in slurping.

“It’s still possible for an American to make a fortune on his own.”

Sure—provided somebody tells him when he’s young enough that there is a Money River, that there’s nothing fair about it, that he had damn well better forget about hard work and the merit system and honesty and all that crap, and get to where the river is. ‘Go where the rich and powerful are,’ I’d tell him, ‘and learn their ways. They can be flattered and they can be scared. Please them enormously or scare them enormously, and one moonless night they will put their fingers to their lips, warning you not to make a sound. And they will lead you through the dark to the widest, deepest river of wealth ever known to man. You’ll be shown your place on the riverbank, and handed a bucket all your own. Slurp as much as you want, but try to keep the racket of your slurping down. A poor man might hear.’

h/t to commentor CJO at Pharyngula

Serendipitously, I also posted this quote to my FB wall over the weekend, which speaks to the way that neo-liberal policies squeeze the middle classes and thus choke what is actually the major engine of economic activity:

“Since 1980, the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%,” Hanauer said. “If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs. …

“So here’s an idea worth spreading. In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class is the single smartest thing we can do for the middle class, the poor and the rich.”
David Horsey (LA Times) – Nick Hanauer explodes the myth of the capitalist ‘job creator’ (click through to see Horsey’s editorial cartoon)

Categories: economics, ethics & philosophy, history, social justice

Tags: , ,

11 replies

  1. There’s an interesting series starting up on The Conversation about class in Australia. Of course, all the usual neo-liberal suspects are out in force in the comments, saying that Australia is a classless society, and that people who aren’t middle class are just lazy, stupid, and uninterested in being part of society. Oh, and bogans are just letting the side down. But the actual article which starts the series is interesting – it starts with a quote from a student in an upper-middle class position in life, who’s insistent that class isn’t a factor in Australian life, because everyone has the same sorts of choices this eighteen-year-old girl had. It ends with a quote from a student from the other side of the tracks, who basically says yes, there is a class divide in Australia, and he knows because he lives in Frankston and works at Woolworths.
    And I want to dig out Marx and Engels and read them, and see how much of what they’re saying strikes echoes of my own experience…

  2. I read that thread on The Conversation carefully, and perhaps there is a different definition of ‘neo-liberal’, ‘egalitarian’, and ‘class’ that I’m not getting here.
    I don’t think that class exists, in its traditional British sense, in Australia – perhaps because Australian accents are exhibit much more of an urban-rural divide than by class. Australian (male) sporting interests also cut across class divides to a much greater extent (at least in Victoria; in NSW I made a fairly class-conscious decision to learn about rugby union rather than league), compared to the UK where cricket, for example, has definite class connotations.
    Before you accuse me of being like the first girl, privileged and unaware, consider that I grew up in the ghetto (Springvale) as a refugee enduring racist taunts and living in housing commission housing until I was well into high school. Being queer and deaf is just the icing on the intersectional cake.

    Speaking only for myself and not for Lauredhel, I don’t think anybody should be a neoliberal, since nearly every plank of the neoliberal platform simply enables robber barons to more effectively fleece the rest of us, especially when it comes to cutting tax rates, privatisation of essential infrastructure, the deregulation of financial markets, and “free trade agreements” that trample over regional sovereignty with respect to food security, local employment and environmental conservation (just for starters).

    An approach to economics and social studies in which control of economic factors is shifted from the public sector to the private sector. Drawing upon principles of neoclassical economics, neoliberalism suggests that governments reduce deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange rates, open up markets to trade by limiting protectionism, privatize state-run businesses, allow private property and back deregulation.

    Perhaps the problem is that the plutocracy is using ‘neoliberal’ as a defense of policies that suit them, and the left uses ‘neoliberal’ as a pejorative to attack policies and people they don’t like.
    My view of neoliberalism, and the reason I identify as one, is that the proper role of government is ensuring and supporting the freedom to make choices without picking winners. You cannot be free to make choices if you are too desperately poor, ill, or uneducated to make a decision from choice rather than duress – so these are rightfully within government’s remit.
    Once the circumstances exist to make those choices – ie adequate money, health care, and education – telling people that a certain choice is ‘better’ than another choice or that it is ‘essential’ is a degree of paternalism that feminists, of all people, should recognise as dangerous.
    The corollary of protecting freedom to make choices is that taxes should be invariant across social choice transforms. The most obvious way to do this is to have a flat tax rate and to replace income tax (a distorting tax[0]) with broad based consumption, Georgist and PIgovian taxes – the balance of which I don’t have a great feel for.
    Means testing of benefits, and granting of government concessions, is also distorting (in the same way as progressive taxation) – for example, concessional car registration for pensioners alters the tradeoff between car ownership and bicycle ownership. The non-distorting way, if access to transport is important, is to ensure that everyone has enough money to be able to register a car, and then if you want to spend that money on something non-car-related you should be free to do so.
    Privatisation prevents the government from using its monopoly power to foist corruption upon the people. What was to stop the NBN from rolling out in marginal electorates first?
    Secondly, government owned companies have political incentives to cross subsidise to fulfil political goals. Again, the NBN charges a single national wholesale access price, which I believe (without evidence) is a political diktat. The equivalent, Telstra Wholesale’s ADSL service (ULL/SS) used zoning to differentiate on price.
    Cross subsidies like this are an inefficient form of welfare, because they take from certain consumers who choose to purchase products and distribute to only those “disadvantaged” who are rich enough to purchase the same product.
    Furthermore, government notions of ‘equality’ sometimes mean banning private transactions to protect the second rate public product. Why does the NBN have anti-cherry-picking laws to protect it?
    [0] The imputed usage value of private property is not taxed as income. Consider two young people living at Bondi Beach. Alice is a nurse practitioner who earns 100k a year including overtime and shiftwork penalties. She rents an apartment overlooking the water for $1000 a week ($52k per year). She pays $22k in tax and $2800 in medicare levy plus surcharge because she believes that the hospital she works at is better than any private one. She has roughly $23k in disposable income. Bob has inherited an apartment in Bondi worth a million dollars, and half a million dollars in a capital guaranteed fund which returns 4%. He pays no tax and has $20k in disposable income.

    • Hildy 2014/02/26 at 9:00 pm: Perhaps the problem is that the plutocracy is using ‘neoliberal’ as a defense of policies that suit them, and the left uses ‘neoliberal’ as a pejorative to attack policies and people they don’t like.

      I’m not sure I understand why you see this as a problem or confusion about the labelling of certain policies as ‘neoliberal’? It seems a rational and predictable response to actual neoliberal policies suggested by people identifying themselves as neoliberals from both plutocrats and the left – the plutocracy likes the benefits that neoliberal policies would bring to them, and the left dislikes the expansion of inequities that neoliberal policies would bring to the rest of us.
      I’m also wondering why you single out the left as attacking “people they don’t like” as if the right and especially the plutocrats don’t do exactly the same thing (eta: and in both cases it’s not the most important thing going on in the criticism of policies).
      [Edited to add: I wrote this comment while I was still deciding what to do about Hildy’s preceding comment, which was in the moderation queue at the time. Now that Hildy has been banhammered, I don’t expect her to reply.]

  3. Warning: multi-part response.
    Part 1:
    Okay, to start with, “class” is a term of art in socio-economics, rather than linguistics. So differences in accent don’t mean diddly (although differences in accent are class markers in the Australian system, trust me – have a look at our political class if you don’t believe me. The majority of them speak Standard Received ABC-newscaster Australian English[1], and the ones who DON’T tend to be stigmatised for it) when it comes to determining whether or not there is a class system in place in a society. Differences in accent in Australia aren’t as marked as elsewhere primarily due to technological factors more than anything else (we didn’t have enough centuries between the founding of the colonies and the coming of telecommunications and long-distance mass transit for the various local accents to steep and distil into something truly “regional”). Neither do choices in sporting following or similar – again, they can be used as class markers, but they aren’t indicators as to whether or not a class system exists.
    So let’s start with some definitions here. A class system can be defined as a socio-economic system whereby people’s economic status acts as a marker of social status as well. The simplest possible version of this is “the person who earns most money gets the most respect and social capital”. Class systems can be rigid or loose – the Australian one has been loose, but is rapidly gaining more and more rigidity as the years roll by – but they are marked by a clear set of boundaries which are behavioural and attitudinal as well as economic.
    Trust me, Hildy, Australia has a class system. I grew up “aspirational” working class (my parents had very middle class values) in a working class/lower middle class area. My brother’s ex-wife comes from a non-aspirational working class background. My partner, on the other hand, has parents who are middle to upper-middle class. The differences between our two sets of in-laws, and the differences between the attitudes of my parents to each set of in-laws make for an interesting contrast.
    If you don’t believe there is a class system in Australia, Hildy, kindly explain to me why “bogans” are scorned. Give good reasons, which DON’T rely on the presence of a socio-economic hierarchy which places some people at the top, and others at the bottom, and marks those at the bottom as people to be denigrated. Explain why the term “cashed-up bogan” is a term of abuse, and why things like “Kath & Kim” are funny. Again, explain all of this without reference to a social and economic hierarchy in which the notion of certain people being “born” into their rankings is possible and without reference to the term “social climber” (another class marker).
    (Given you defend your interest in rugby union as a class-based thing, I suspect you really don’t believe what you’re saying. Like me, you know a class system exists in Australia. Unlike me, you’re convinced you can get further by pretending – as per the upper echelons just about anywhere[2] – it doesn’t.)
    [1] This is, in itself, a marker of upper-middle-class values.
    [2] One of the best markers of the existence of a class system anywhere is a fervent belief in the upper sectors of society, particularly among otherwise well-meaning people, that there isn’t one.

  4. Part 2:
    On to neo-liberalism. Neo-liberalism is a political and economic position which started to condense in about the mid-eighties out of the arguments of the Friedmanite school of economic thinkers – the free market radicals. Basically, the position of the neo-liberals (and this has ALWAYS been the position of the neo-liberals, as far back as they go, which is approximately the mid nineteen-fifties, when Milton Friedman was first employed as a lobbyist on behalf of US corporate interests[3]) is one of fundamentalist belief in the “free market” – a market where no government regulation exists, and where no government regulation is tolerated. Where capital is free to do whatever the fuck it likes, without reference to anything other than the grand goal of making more money than anyone else. The neo-liberal position basically denies the existence of any external context other than economic factors, and they will typically deny the existence of “society”.
    Margaret Thatcher made the fundamental neo-liberal statement of position when she said there is no society, only individual men and women, and families[4].
    Denial of society and social forces essentially results in a denial of the legitimacy of democratic government (a democratic government only governs with the consent of the wider society, after all). As such, it’s a crucial step in the long-term goal of the free-market fundamentalists who want all that troublesome government regulation out of their business, because it stops them from owning All The Money. Never mind that government regulation is the thing which keeps their products safe to purchase, keeps the environment surrounding their factories safe for people to live in, and keeps their employees actually earning enough money to live on – as far as they’re concerned, government regulation is anathema, and should be scrapped altogether.
    Shall we have a look at what they’d consider to be an ideal market? A market which exists without government regulation, without any governmental constraints on trading? How about the market for illicit drugs, such as heroin and cocaine? This is actually a pretty good indicator of the risks inherent in an unregulated market for the average consumer – the lack of labelling laws and the non-existence of quality control mean the strength of the product varies immensely (to the point where death of a customer is an “acceptable risk” for the producers). The lack of control on competition and territory means gang warfare breaks out on a regular basis (leading to risk not only for the consumers of the product, but also for non-affiliated persons who happen to live in areas where the product is produced and/or sold). Even a cursory glance at the market for illegal drugs shows there’s not much in it to recommend it to consumers. But this is the sort of market the big corporate plutocrats and barons want to see introduced for everything.
    What you’re describing as “neo-liberalism” is actually a form of socialism, although you don’t appear to have understood either of these positions correctly. Socialism points out the inherent problems involved in a class structure (yup, back to class again) and posits the role of the government as a levelling agent. A neo-liberal, by contrast, sees government as inevitably interfering in the actions of business through denying choice, and denies the possibility of a socio-economic construct such as class. A socialist will see the role of society in wider structures. A neo-liberal denies the existence of society altogether. Neo-liberalism is a deliberately a-historical position, because it relies on the notion that all choices are equally possible to all people in a society, denying the notion of inherited social privilege or indeed of social privilege at all. Socialism tends to take the longer view, and looks to a history of gradual change over time to diminish, and eventually hopefully erase, social privilege.
    [3] http://www.alternet.org/visions/true-history-libertarianism-america-phony-ideology-promote-corporate-agenda?src=newsletter893563&paging=off
    [4] http://en.wikiquote.org/wiki/Margaret_Thatcher (scroll down to “Third Term as Prime Minister”, third quote down).

  5. Part 3:
    When it comes to taxes, I really think you don’t know what you’re talking about. So again, some definitions for you.
    A regressive tax is one where the people at the bottom of the socio-economic ladder are hit the hardest by the tax, and wind up paying the greater proportion of their income in taxes. A progressive tax is where the people at the top of the ladder are hit hardest by the tax, and where they pay a greater proportion of their income in taxes.
    A flat tax is one where everyone pays the same dollar amount. These are hideously regressive, because they mean people who earn the least wind up paying the biggest proportion of their income in tax. For example, if we posit a flat tax of $5000 per annum, a person who is earning $10,000 per annum is paying 50% of their income in tax, while a person who is earning $100,000 is only paying 5%.
    A flat tax rate means everyone is paying the same percentage of their income, although the dollar amount varies. So with a 10% flat tax rate, our two sample income earners would be paying $1,000 and $10,000 respectively. This is still regressive (the person with the least is still most affected financially by the process of paying tax) but less so than a flat tax system.
    Consumption taxes are regressive taxes as well. They affect the poor more than the rich, because the more of your income you spend, the more you pay tax on. The more you save, the less you have to pay tax on. Part of the whole business of being poor is saving is difficult, if not impossible, because the cost of living is approximately equal to the income you receive, if not higher. So if we take our two example income earners again, and say that everyone has to spend approximately $5000 per year to survive, and then slap a 10% tax on consumption, the person who earns $10,000 is paying $500 out of their total income on top of the cost of living, which leaves them with $4,500, while the person who is earning $100,000 is paying the SAME $500, but is left with $94,500 to play with.
    So, let’s combine our two things here – flat tax rate of 10% per annum, and a consumption tax of 10% on per annum base expenses (food, rent, etc) of approximately $5000. Our person earning $10,000 pays a total of $1,000 income tax, plus $5000 expenses, plus another $500 in consumption tax, which leaves them, at the end of each financial year, with a total of $3,500 accumulated (or 35% of their earnings). Our person earning $100,000 pays $10,000 income tax, $5000 expenses, and $500 consumption tax on all of that, for a total of $84,500 per annum accumulated (or 84.5% of their earnings).
    How is this equitable? Or to phrase this more accurately: why should I (or anyone else) consider it right and proper for the person earning a higher income to retain the vast majority of their income, while a person on a lower income only retains a small percentage?
    (Please try to explain your answer to the above in short sentences, using small words, and a minimum of borrowed bafflegab. It may aid in clarifying your position).
    A progressive tax system aims to ensure the person on the high income and the person on the low income keep the same percentage of their earned income. I believe a progressive tax system would result in better social and economic outcomes for a greater proportion of people. We have more than enough examples from history and from other cultures and societies to demonstrate allowing the well-off to retain the greater proportion of their wealth without any counteracting measures at all does NOT benefit the majority of people.

  6. Part 4:
    Okay, now I’m going to get into some personal territory. (Mods, if you want to delete this, feel free).
    Firstly, your two boxed paragraphs up there – are you quoting, and if so, whom and from where?
    You aren’t quoting Tigtog in the original post which begins this article, or my own comment in the thread preceding yours, which are the ONLY two circumstances in which such un-attributed quotes are acceptable. So either you’re attempting to bring in quotes from elsewhere to muddy the waters (which is poor behaviour and generally indicative of bad faith) or you’ve messed up your HTML. Block quotes should be for quotations, and quotations, to be useful, need to be linked and referenced. Un-attributed quotations are only allowable where they quote 1) the original post, or 2) the comment immediately above yours in the thread. This is basic nettiquette, and it aids clarity and getting your point across.
    Secondly, did you actually have a point when you commented? Do you know what this point is? Because as far as I can tell, your only possible point is a generalised sense everyone else in the world is Extremely Wrong on the internet, and you must correct us all. How are the matters you raise in your comment (particularly those relating to taxation, social security benefits and the NBN) related to your overall point?
    You appear to be mentioning ill-understood talking points for the purpose of sounding erudite. This never works. It makes you sound a greater fool than you are.
    So, a few minor suggestions to aid in dealing with this second issue.
    1) Do some thinking. Decide what you want to say, then plan out how you’re going to say it. I find writing and editing my comments in a Notepad window is a great help for doing this. For one thing, it allows me to figure out whether or not I have anything to say on the topic in the first place. For a second, it helps me to clarify my position to myself, before I dump it out on the internet to (potentially) make a fool of myself.
    2) Do some research. Don’t just drop in talking points because they’re current. Figure out whether or not they’re related to the question at hand, and whether mentioning them will strengthen or weaken your position. There are several examples in your comment where you say one thing at the beginning of a paragraph, and then contradict yourself further down the page.
    3) Do decide whether the thread you’re commenting in is the correct place for your comment. Here’s a hint: if none of the topics you mention in your comment are related to the original post at the top of the thread, it may be the wrong place for your comment. If the main topic of the original post is tangential to the main topic of your comment, you’re commenting in the wrong place. If you keep getting modded down or out because your comments aren’t relevant to the thread, you’re commenting in the wrong place. If none of the other comments in an open thread are related to themes or topics in your comment, you’re commenting in the wrong place.
    If you really can’t find a place for your comment in the threads here, that’s not an indication you’re entitled to drop your comment in anywhere. It’s an indication you need to get your own blog and make those comments into blog posts there.

  7. Megpie71 Part 3: Or to phrase this more accurately: why should I (or anyone else) consider it right and proper for the person earning a higher income to retain the vast majority of their income, while a person on a lower income only retains a small percentage?

    It depends how low it is, and the percentages involved, which is where Occam comes in with a beard. How is it possible to manage this without all income being considered as disposable, and all necessary spending being priced at zero, such as the state providing everyone with housing, transport and food, or offering rebates? If there are rebates, how do we stop the the lawmakers who get paid from reducing those rebates to seven cans of dogfood a week and a cardboard box to live in? (Gratuitous Monty Python reference removed).
    One of the things I often say is that class will survive as long as people can inherit and send their kids to different schools and Universities, and that the question is not “how do we stop this?”, it is “how do we keep this at an acceptable level?”.

  8. Blockquoted the “previous comment”, part 3. An argument could be made that “previous comment” is strictly the previous entry, or that a multipart answer over four comments is a bit wibbly wobbly timet wimey, although no argument will be made by me that this is the thread to have that discussion. Would a mod please put “Part 3″ in the blockquote?

  9. Megpie@4:

    What you’re describing as “neo-liberalism” is actuall a form of socialism, although you don’t appear to understand either of these positions correctly.

    [Comment content has been disemvoweled]
    “Fmnsm s scl dlgy whch strtd n th 1960s whn ctvsts strtd rjctng htrnrmtv pprchs t fml sxlty nd xstnc. Wht y’r dscrbng s ctlly frm f htrsxl cnsrvtsm, bt y dn’t sm t hv lrnt bt thr pstn prprly.”
    Tllng thr ppl tht thr dntty s wrng, tht thy cn’t sy tht thy r fmnsm/qr/nlbrl/thst/Cthlc – tht ndd, thr ndrstndng f wht tht dntty mns s fctlly flwd – s wht th typcl thrtrn dlg ds.
    [Moderator Note: Hildy, nearly every comment you have made on HaT has been combative, and this one passes the threshold for unacceptably so. I’m sure you would be much happier arguing elsewhere. Farewell.]

%d bloggers like this: