Want Widespread Prosperity? Radically Lower Costs

It’s easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it’s actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.

As I have pointed out many times, history is unambiguous regarding the economic foundations of widespread prosperity: the core ingredients are:

1. Low inflation, a.k.a. stable, sound money

2. Social mobility (a meritocracy that enables achievers and entrepreneurs to climb out of impoverished beginnings)

3. Relatively free trade in products, currencies, ideas and innovations

4. A state (government) that competently manages tax collection, maintains roadways and harbors, secures borders and trade routes, etc.

Simply put, When costs are cheap and trade is abundant, prosperity is widely distributed. Once costs rise, trade declines and living standards stagnate. Poverty and unrest rise.

These foundations characterize stable economies with widely distributed prosperity across time and geography, from China’s Tang Dynasty to the Roman Republic to the Byzantine Empire to 19th century Great Britain.

The “Secret Sauce” of the Byzantine Empire: Stable Currency, Social Mobility(September 1, 2016)

The Lesson of Empires: Once Privilege Limits Social Mobility, Collapse Is Inevitable(April 18, 2016)

I have estimated the realistic cost of a conventional middle class lifestyle, and found that only the top 20% can afford a middle class lifestyle. Needless to say, this destroys the notion of being “middle.”

The squeeze on households comes from both the soaring cost of big-ticket items such as childcare and healthcare and from the stagnation of wages/income.

Why the Middle Class Is Doomed (April 17, 2012)

Priced Out of the Middle Class (June 28, 2012)

The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016)

Inflation Isn’t Evenly Distributed: The Protected Are Fine, the Unprotected Are Impoverished Debt-Serfs (May 25, 2017)

The Disaster of Inflation–For the Bottom 95% (October 28, 2016)

About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service (October 11, 2017)

So your new TV cost $100 less but your healthcare costs $10,000 more: the big expenses are soaring, costing households tens of thousands of dollars more while cheap TVs and clothing decline a few bucks.

Labor’s share of the economy keeps stairstepping down: every boom/bubble benefits the financier and technocrat class, but labor’s share of the economic “boom” flatlines for a few years and then tanks in the inevitable unwinding/recession.

The third dynamic is the dominance of anti-competitive cartels and state guilds which are no longer accountable or competent. (The two are related, of course; when accountability is lost, there’s no way to identify or weed out graft and incompetence.)

This report on the causes of the decline of New York’s subway system reads like a summary of the entire U.S. economy: the politicization of public services, corruption that evades the legal definition of corruption, self-enriching guilds, cartels and elites and gross incompetence enabled by zero accountability.

How Politics and Bad Decisions Starved New York’s Subway (New York Times)

As long as this is business as usual, it’s impossible to slash costs and boost widespread prosperity. 

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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  • Shiggity

    Cartel Economics 101

    • diogenes

      No, C.H. Smith has been ignoring that memo for years. He just can’t figure it out, where all the extra money goes, even while his other hand is writing about the booming stock market and publishing the Fed’s faked figures minimizing the concentration of wealth in the hands of one in a thousand. Mr. Smith is definitively clueless and ineducable, as he repeatedly proves. Maybe that’s his job description? A standard model American dunce?

  • Black Swan

    Foreclose on the Private Federal Reserve Credit and Money Issuance Monopoly and acknowledge and enforce ” ARTICLE I SECTION 8 OF OUR CONSTITUTION, CONGRESS IS SOLELY GIVEN THE AUTHORITY TO COIN MONEY, REGULATE THE VALUE THERE OF, AND OF FOREIGN COIN, AND FIX THE STANDARD OF WEIGHTS AND MEASURES.”

  • Sparticus

    You`re wrong. It is all very simple. The US government has nuclear weapons and the worlds most powerful army; which is why rates are LOW because everyone does what MAMMA Washingtons wants because they know what non-compliance will cost: their Lives.

    Seldom do any economists possess the well rounded knowledge to enable understanding of such simple matters. If China mouths off the US pulls all of its Industry and they go back to the stone-age. Russia is just happy to play third. America can do anything it wants, including printing and paying every adult citizen 1,000 mo in basic income and Universal Healthcare without rippling the water.

    Sure would be nice if the slaves would catch on. You`re only slaves because you want to be, Americans! There is no power on this earth that will ever question the US credit rating; translation, PARTY. Only Americans could miss the importance of this fact and the fact that their Currency Dominates the Globe. Only Americans could be Stiffed of what is Rightfully Due them.

  • Sparticus

    Oh, and if you`re really smart than you know Americans can hold wall street hostage, until they get what they deserve. What is Wall Street going to do about it? PAY UP, that`s what! However, they will only pay loins not sheep.

    Think about it, America, you are only POOR because you want to be POOR.

    • Mary


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    • sometime

      absolute hog wash, Sparticus
      your last sentence is bull shit….to the highest degree
      The world central bankers are responsible…..not individual citizens of any country…

      • diogenes

        we put up with it, most of us by burying our heads in the sand of ignorance, programed or willed. I think I’ll just have another drinky. How bout you?

        • sometime

          True. Not a damn thing you or I can do about it….never the less, needn’t deny the truth or honesty of a situation. Tis best to say in the affirmative…YES…when a yes is due or No when a No is due….
          then have another beer….
          Cause in the end
          we, you and I are the only ones who care of ourselves….and as Nam taught me…..Fuck um all but nine, six pall bearers two road guards and one to count cadence…..not a bad philosophy outside of war, either.

          • Sparticus

            Individuals cannot act alone. However, there are 6-million people living in abject poverty in NYC alone. Now,if you ( anyone) put those 6-million on Wall Street and Close the Exchanges on Protest they will get anything they want. Think about it. Wall Street is Checkmate for the Bankers, Governments and Corporations. Their own corruption can bring them DOWN!

      • Sparticus

        The individual Citizens Allow the Central Bankers to Enslave them. If you allow something then you are Responsible for it. Americans will not fight back, so, they love their slavery. The US government controls the worlds central banks. The US is the Chair of NATO. Anyone else ( outside NATO) goes along or gets JUNK status.

  • ICFubar

    Behind a voluminous smokescreen of created confusion the powers that have always controlled the human economy conduct business as usual and advance their agendas. The state of the human economy now has not happened by chance as this direction was chosen. Even if individual human variables and outcomes are entered into the equation the overall direction is overwhelmingly maintained.

    • Jennifer

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    • Jessica


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    • Susan


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    • Martha


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      !da207:
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