So Says Wolfgang Streeck

A friend referred me to this article in The New Left Review from the May/June 2014 edition.

In the article, Mr. Streeck has a lot to say about the state of capitalism.

I was reading along, keeping up as best I could – the man has a large vocabulary, uses correct and complex grammar and structures and deals in thoughts of more complexity than donnie’s latest tweet – and savoring and agreeing with everything that he was saying that I could understand.

Then I came upon this paragraph.

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I have used the word “endgame” occasionally in my posts; I use it when I feel I have described how “the system” is being managed to put most of us back to serfdom.

I read this paragraph and saw the mother of all descriptions of “endgame”.

I am offering it here.

I have taken the liberty of using my formatting method, but not a word is changed.

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“A central topic of current anti-democratic rhetoric is the fiscal crisis of the contemporary state, as reflected in the astonishing increase in public debt since the 1970s (Figure 4, below).

Growing public indebtedness is put down to electoral majorities living beyond their means by exploiting their societies’ ‘common pool’, and to opportunistic politicians buying the support of myopic voters with money they do not have.

[9] This is the Public Choice view of fiscal crisis, as powerfully put forward by James Buchanan and his school; see for example Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, Ann Arbor 1962.

However, that the fiscal crisis was unlikely to have been caused by an excess of redistributive democracy can be seen from the fact that the buildup of government debt coincided with a decline in electoral participation, especially at the lower end of the income scale, and marched in lockstep with shrinking unionization, the disappearance of strikes, welfare-state cutbacks and exploding income inequality.

What the deterioration of public finances was related to was declining overall levels of taxation (Figure 5) and the increasingly regressive character of tax systems, as a result of ‘reforms’ of top income and corporate tax rates (Figure 6).

Moreover, by replacing tax revenue with debt, governments contributed further to inequality, in that they offered secure investment opportunities to those whose money they would or could no longer confiscate and had to borrow instead.

Unlike taxpayers, buyers of government bonds continue to own what they pay to the state, and in fact collect interest on it, typically paid out of ever less progressive taxation; they can also pass it on to their children.

Moreover, rising public debt can be and is being utilized politically to argue for cutbacks in state spending and for privatization of public services, further constraining redistributive democratic intervention in the capitalist economy.”