The rentier class always wins

Once again, taxpayers will end up paying the bill while rentiers escape unscathed

As the battle for our lives against the novel coronavirus pandemic rages, another battle is being ready to be fought: for the economy. It is not an exaggeration to say that that the second quarter of 2020 will see the most severe decline in global economic activity in the history of human civilization, and the question is whether we can come up with the right policies to ensure that the this does not deteriorate into another great recession or worse, another great depression.

For starters, let’s understand the scale of the carnage. Entire sectors of the economy like restaurants, hospitality, and travel have already collapsed. Entirely collapsed. The millions of workers that are now unemployed or which will be soon unemployed as a result of this will require a social safety net of epic proportions in order to survive the 3 or more months of lockdowns, with no guarantee that their jobs will still be there when the crisis is over. For countries that have pushed forward a comprehensive package of corporate lifelines and worker’s support (pay guarantees, moratorium on interest, utilities, mortgages, and rent, etc.), it is estimated that these may end up costing as much as 10% of GDP (maybe even more), putting further strains on national finances which in many cases have not yet recovered from the 2008-09 crisis. And for developing countries, with masses of informal workers and lack of social safety nets, the outlook could end up being as apocalyptic as the virus itself.

Tapping El Dorado

And yet there is one source of untapped resources that is seemingly going to yet again escape unscathed: wealth. In particularly, the wealth of the rentier class. What is the rentier class? It’s the class of individuals and institutions whose primary source of income is the rent derived from their assets, namely property. The rentier class is, by definition, unproductive, because property does not generate productive capital. There is no production of goods and no provision of services beyond managing the assets themselves. Whether by accident of history (the aristocracy and gentry of the UK owns 31% of all land) or by turning corporate profits into property-related investments (nowadays more lucrative in light of historically low interest rates), the rentier class exists for no other reason than to extract as much money from the productive sectors of the economy by providing a service (property) whose profitability rests on ensuring its scarcity.

Making matters worse is that the rentier class benefits most from the most vulnerable: non-homeowning individuals and small businesses who cannot afford to buy the premises where they operate. Anyone living in a large city like London or New York knows that rent is a huge expense; in London the average rent of a one-bedroom dwelling is equivalent to half the average income of the city’s residents. Adding to the cruelty is the fact that the harder it is to obtain home ownership, the more demand there is for renting which makes it more expensive still. For businesses overall, rent is a far smaller share of operational expenses and varies greatly by sector. However, it is still large enough to put a small business under water when sales dry out, especially since smaller businesses are unlikely to have massive cash piles to offset a major revenue shock.

It would therefore appear sensible to shift the burden of economic crisis financing to the rentier class since there is no other sector of the economy that has two of the most desirable features for such a thing: it’s non-productive and awash with assets. Which is why every economic crisis policy package should have measures such as cancellation of rent as a central component, along with more serious taxation and regulation of rentier activity in the longer run.

No pain, no gain

There’s another reason why the rentier class should bear a higher burden. The rentier class owns assets in order to manage income shocks. In fact, when it comes to welfare it is often assumed that owning assets means that one is undeserving of income support. For example,households with more than £16,000 in savings are not eligible for the UK’s new Universal Credit scheme, which is now the main source of welfare support. During an income shock, these financially prudent households (some of which, in the cruelest of ironies, may be saving up to by a home) are therefore being doubly punished, not only by the loss of income as a result of the crisis but also because their savings pot will be depleted to make up for these losses. With this logic it seems even more unfair that the rentier class, with all its assets, needs to be protected from an income shock while workers needing benefits are penalized; all the time they are labeled as lazy scroungers by the country’s vile right-wing tabloids and Tory politicians.

Of course, the rentier class is likely to do everything in its power to ensure it emerges with its profits unscathed, and that the cancellation of rent would likely cause them to go bankrupt. I doubt it. For starters, property that has already been paid in full incurs no loss to the owner from a cancellation of rent. Secondly, mortgaged property that is being rented out benefits from moratoriums on mortgage payments, which most countries have enacted as part of their pandemic emergency packages. Whatever rent is not paid during the moratorium will be made up because presumably most of these properties will continue to be rented until the end of the mortgage and probably beyond that. Thirdly, some rentiers such as individual landlords may claim that rent is their only source of income. In this case, they should be extended the same income support measures that the rest of the population gets, no more, no less. For larger landlords and commercial property companies, the government could offer loans. With their properties as collateral, of course.

Is all of this too harsh? Well, if political elites claim that “we’re all in this together” and that a crisis like this demands unprecedented sacrifice, then the sacrifice should be proportional the means. And few groups have more means without any corresponding contribution to society than the rentier class, who are nothing more than the effluent of economic systems that permit profit from the deliberate creation of scarcity. Unfortunately it’s highly unlikely that they’ll pay any major price for the pandemic and the resulting economic crisis. Because while free market fascists and liberal centrist cronies continue running the world economy, workers will always be the sacrificial lambs in the altar of capitalism.

But a boy can dream than the rentier class won’t always win.

Why Bernie can win it (and Corbyn couldn’t)

He’s facing none of the personal or contextual adversities that led to Corbyn’s electoral wipeout

With less than two weeks left before Super Tuesday, the single most important day in the US’s highly convoluted and highly un-democratic primary elections, Bernie Sanders has consolidated himself as the candidate to beat, particularly following a very strong showing in Nevada and polls that show him gaining an ever greater share of national support. There are, of course, still obstacles to his nomination. Michael Bloomberg (the 9th richest man in the world) could still find ways of ad-blitzing his way to the nomination with his virtually unlimited cash. Or the Democratic establishment (namely the so-called Super Delegates) could end up voting for someone else in the event of a contested convention, even if Sanders gets the most delegates. Suffice to say that that the Democratic establishment is not keen on a Sanders candidacy and will continue doing everything it can to derail his chances at securing the nomination.

But even as the Sanders steamroller continues to get stronger, one of the most frequent criticism I hear about him is that he can’t beat Trump, and that if the Democrats are unwise enough to select a radical leftist, they will suffer a similar defeat like that which Corbyn faced in December 2019 in the UK. Trump, after all, continues to enjoy the support of a rabid, fired-up support base, Republicans are united behind him, and the prospect of the country that pretty much invented modern capitalism voting for a self-declared socialist seems almost preposterous. Well, for starters, the polls show otherwise. Even in 2016, polls showed Sanders having much wider leads in match-ups against Trump than Clinton did, because both represented anti-establishment figures willing to take on entrenched elites (only one of them, Sanders, clearly meant it). This time around, polls also show Sanders ahead of Trump and I suspect the difference will keep getting wider as his campaign continues to strengthen. Continue reading

Healthcare: a uniquely American tyranny

Economic liberals and libertarians should love universal healthare. This is why they don’t

One of the most shocking aspects of anyone who has spent any amount of time living in the US is its lack of public healthcare provision. It is the only industrialized economy not to offer either a universal healthcare service like Britain’s NHS, or a universal healthcare insurance scheme like that which is provided in countries like Germany and France. Even most of the richer developing countries offer services that the vastly wealthier US lacks: in my country, Mexico, you have access to the main public healthcare system with most formal jobs and even those in informal jobs have some limited coverage from a separate public scheme. Worse still is that the cost of private insurance in the US is horrifically expensive: the average monthly premium is estimated at over $300 a month for individuals and over $800 for families. Then there’s the copayments and the fact that insurers may decide not to cover you at all for a myriad of reasons.

However, there is another aspect of the US’s dysfunctional and inhumane healthcare system that is arguably the most troubling. That it exists solely for the purpose of private profit is problematic in itself but its nature as an instrument for labor’s subservience to capital is much worse. This is because for the grand majority of Americans, healthcare is obtained through their employers and is widely seen as an important “perk” of a good job. Although the Affordable Care Act (Obamacare) of 2010 made it much easier for  to obtain insurance while not employed, the fact that employers can generally negotiate a better deal with insurers as an institution than you as an individual means that job-based insurance schemes generally have better coverage and are cheaper than anything that you as an individual could obtain on your own. Consequently, the cost of losing a job is two-fold: not only your obvious loss of income but also the increased risk of suffering some health-related emergency or losing coverage for any condition that you or a loved one under your plan already had. Continue reading

Plucked Chicken Award 2019: Workington Man

You know capitalism won when the working class of Northern England identified with a racist plutocrat from London

When Plato described man as a featherless biped, Diogenes the Cynic came to his Academy with a plucked chicken proclaiming “this is Plato’s man!”. The Plucked Chicken Award will be awarded every year to the human being that best represents the folly of our idealization of our species.

Plucked Chicken Award 2019: Workington Man

It is the third installment of the Plucha (remember, every award needs its shorthand) and a memorable one, being the final year of a putrid decade. One in which fascism arrived on the shores of the Anglo-Saxon world that just seven decades earlier fought to save Europe from it. It is the decade that that brought us austerity and lost futures for a generation that will not have it nearly as good as the ones before it (and if you’re among the ones buying Steven Pinker’s whiggish optimism, read my upcoming book). And I haven’t even started talking about the music. At least in previous times of turmoil, we had a kick-ass, riff-laden soundtracks to bear through it. Now we have Ed Sheeran and Justin Bieber duos. It has come to this.

There is, of course, no shortage of candidates for an award like this, with people like Donald Trump having a standing invitation on the shortlist. Or Australia’s Scott Morrison who continues to deny climate change while his country burns as I write this. Or former WeWork CEO Adam Neumann who is this year’s living example of Silicon Valley’s pathological narcissism and hubris, blessed with an aura of messianic, new wave bullshit.  Elizabeth Holmes and Elon Musk, we hardly knew ye. But no, this year, I’m making it special. It’s not just one person. It’s thousands. Possibly millions. And yet it’s no one. I’m talking about Workington Man, the mythological British electoral beast that was mocked for being yet another offensive London stereotype of Northern working class men.

Until Workington Man won the 2019 election. For all the wrong reasons. Continue reading

The endorsement game: why Britain’s liberal centrist media must share the Brexit blame

How to endorse right-wing populism while pretending to be part of a reasonable center ground

It’s Endorsement Week and Britain’s liberal centrist establishment once again did what the liberal centrist establishment does: cower out of supporting a party (Labour) that is its only hope of averting the very Brexit that they allegedly stand against, as well as the horror show that would be five years of a Boris Johnson government. I am talking, of course, of the Economist and the Financial Times, the country’s two main liberal centrist publications, which for reasons that I find quite flabbergasting, have not received a smidgeon of the blame for the political mess that Britain finds itself in despite having significantly contributed to it.

It is conventional wisdom to blame Britain’s media for much of the current political malaise. On one hand there are the obnoxious right-wing tabloids like the Daily Mail and the Sun which have spent years promoting a toxic Euroscepticism that has contributed to the widespread support for Brexit. These have been tabloids that have consistently told their working class and conservative readerships that their problems are not caused by Whitehall but by Brussels; that the country has more to fear from immigrants than elites; and that somehow Brexit is going to usher in VE Day-like euphoria. “Believe in Britain!” they say, obliviating the mountains of evidence of how Brexit is going to deepen the immiseration that nine-years of Tory government has already inflicted on working people. Continue reading

Meet the man that terrifies the online right

How an irreverent left-wing Brooklyn radio host became the guy even Sam Harris fears debating

What does a famous atheist with degrees in philosophy and neuroscience, a mathematical physicist and investment fund director, a YouTube comedian-slash-right-wing troll with millions of followers, the host of the world’s biggest podcast, and the host of a somewhat less popular but lavishly funded (by libertarian pockets) podcast have in common?

For starters, all of these people are well-known personalities of the New Right, particularly the ecosystem known the “Intellectual Dark Web”. This is a group of loosely collected pundits and intellectuals that have pushed forward many of the same narratives pursued by the more notorious Alt-Right, albeit with a more intellectually reputable facade (and which I have described at length in a previous long post). I am, of course, talking about Sam Harris, Eric Weinstein, Steven Crowder, Joe Rogan, and Dave Rubin; names that should be familiar to anyone who has spent any respectable amount of time wading through the battlegrounds of the internet’s culture wars. And in the case of Harris (one of the original “four Horsemen” of New Atheism) and Rogan (former Fear Factor host and stand-up), are also very well known in more mainstream circles as well.

What may be less familiar is the other thing that they all have in common: all five of them are seemingly terrified of having a conversation with former comedian, small-time Hollywood actor, occasional TV pundit, and full-time radio host Sam Seder. This is the story of the greatest debate on the internet that never happened and most likely never will. Continue reading

Against hedonism

The modern obsession with self-indulgence is bad for the individual and even worse for society

It’s impossible to ignore the fact that we live in the Age of Hedonism. An age in which people’s lives, or at least the fictitious online manifestation of them, seems to be dedicated primarily to the obsessive pursuit of pleasure with no attempt at restraint. That the 2008-09 global financial crisis not only failed to contain this excess but perhaps even amplified it is all the more surprising and unprecedented. In 2009, the cultural critic Mark Fisher wrote about “capitalist realism”, the idea that capitalism had so permeated every aspect of our existence that we have been unable to imagine a future without it. One can easily argue that our cultural self-indulgence, so tied in with capitalism’s image of how we must look, think, and behave, is part of this phenomenon, producing the contradiction that the more individualistic we are made to be, the more we become like everyone else.

To me, one of the most visible manifestations of how the Age of Hedonism is upon us is the rise in popularity of music festivals. Granted, music festivals are hardly new, but it’s the “festival culture” that is now inescapably attached to it that is more notorious. It seems that festivals are less about the music nowadays and more about the “experience”, this being the pleasure in dressing in obnoxious boho chic, rave, or cybergoth outfits, behaving equally obnoxiously and taking as many pictures of oneself as possible. In a sense, festivals are now three-day long fancy dress or stag/hen parties, music be dammed. By far the most egregious offender is Burning Man, which nowadays resembles a hyper-sexualized Mad Max carnival filled not with marauding gangs but very affluent tech bros and Instagram influencers. If capitalism has ever had its greatest cultural victory, it is by perverting the original intention of this festival from an experience in communal self-reliance, to an orgy of Silicon Valley excess. Continue reading

The delusions of liberalism at the end of the end of history

Why liberals need to accept that the foundational ideology of the West is obsolete

No serious political scientist or pundit today would deny that liberalism, the foundational ideology of the Western world for the last few centuries, is under attack. Autocrats like Russia’s Vladimir Putin, Hungary’s Viktor Orbán, or Turkey’s Recip Erdogan have offered an illiberal challenge to liberal democracy that has gained strong appeal with its constituents. But in the very bastions of the liberal West, liberalism is also succumbing from the onslaught of far-right populism. That people like Donald Trump or Boris Johnson would become leaders of their respective countries would have seemed inconceivable just a few decades earlier. Now the question seems to be which country will be the next to fall into the cracks.

Despite these concerns, liberals from both the left and right of the political spectrum appear hopeful in their hubris. In the first two centuries after its inception, liberalism successfully dismantled the political absolutism of the ancien regime, and universalized the Western values of individual rights and liberties that almost every society on earth now takes for granted. In the 20th century it also fended off two great illiberal challenges in the form of fascism and communism. Although the term is annoyingly taken as a synonym of “left-winger” in the US, almost everyone in the Western world today believes him or herself to be a liberal from a political-philosophical perspective. Unfortunately, this label is usually self-applied without stopping to think what being a liberal actually means which is extremely problematic: a foundational political ideology that remains unchallenged eventually becomes a hindrance rather than a help to human progress when its adherents fail to realize it may be obsolete.

This post will make the controversial point that liberalism has reached that point of obsolescence. More so, I will argue that it is a political ideology tarnished with blood, riddled with hypocrisy and contradictions, and which has become a rhetorical concept intended to justify the presumed superiority of Western civilization and thought as a justification for Western hegemony. And even if by the end of these lines you remain steadfast in your belief that liberalism is a sacred pillar of modernity and must be defended at any cost, hopefully it would make you uncomfortable enough that you will never look at liberalism the same way. Continue reading

Metroid: how to make an atmospheric masterpiece

Among the countless Alien rip-offs in gaming, this is one of the few that got it right

Metroid cover

Not everything in life is politics and economics. I will be be adding the occasional cultural content to this blog including music, movies, and retro gaming, the latter which I have been recently spending some of my spare time on. Enjoy this first post and there will be more to come!

Ok, I must confess that I never owned Metroid. It was already two years old when I first got an NES around 1988 and looked decidedly antiquated by the standards of later NES titles. Although I may have rented it a couple of times, this was not a game that was easy to get into and it quickly became a bit too daunting to invest more time into it. But in the age of emulators and online strategy guides, I recently decided to take a plunge into the depths of Planet Zebes and lead the intrepid intergalactic bounty hunter Samus Aran (one of videogame’s first female heroes, though you wouldn’t find out until she took her mask off during the end credits) into the adventure that launched one of Nintendo’s most famous franchises.

The birth of the action/adventure game

First some history: Metroid was Nintendo’s first true action/adventure game, intended to bridge the gap between the side-scrolling jump-fest of Super Mario Bros. and the adventure and RPG elements of The Legend of Zelda, all three of which were released the same year. Particularly unique about Metroid was its non-linearity: there are no levels in the traditional sense, the game is one giant interconnected whole. The seemingly endless corridors and shafts of Zebes were often dead ends, and most areas required you not just to reach a certain item but to backtrack your way to where you started. For example, the entrance to the game’s final section (Tourian) is found not too far from the starting point but you’ll first need to find and beat the two mini-bosses, Kraid and Ripley, to go through. Frustratingly, the game did not include any in-game mapping feature which means the unaided explorer was forced to map the game the old-fashioned way: with pencil and paper. Even then, there is a chronic same-ness to the different areas of Zebes, with the layout of many corridors being identical to each other giving you no sense of whether you had already explored that area or not. Many areas are also only accessible by shooting or bombing “false” floors or ceilings. And yet if you are to map the whole game, hours will have to be spent exploring every corner of the game’s five main sections, only the last one which is mercifully linear (and where you first encounter the game’s eponymous enemy, the Metroids). Continue reading

The exorbitant privilege of capital

Why we need to rethink capital’s relationship with labor

The robber barons

Capital has an exorbitant privilege. With capital we are able to undertake productive investments and reap a potentially infinite amount of rewards. However, capital is not the only factor of production: for those investments to succeed, we also need labor. Unfortunately the rewards received by labor are infinitesimal and declining. In the majority of the industrialized world, the share of national income received by labor has been dropping over the past decades as a result of a myriad of factors like globalization, deregulation of labor markets, and the neutering of the power and influence of unions. The root of this privilege goes back to the origins of capital and its historic process of accumulation.

Where does capital come from? One source is from capital itself. Any increase in the value of an asset provides the owner with additional income which can then be reinvested into other capital assets. Similarly, some assets like stocks and bonds provide a regular stream of income in the form of interest payments or dividends.  Additionally, physical capital like robots or other types of automated equipment can also produce additional capital without human input. However, the main source of capital is labor. Your work, as an employee of any firm, contributes to the profits of the firm through which the firm is then able to accumulate further capital. No amount of capital will make a firm thrive in the absence of labor which is why the two are not perfect substitutes. But capital’s exorbitant privilege comes from the fact that, unlike labor, it can generate infinite returns. Let’s see how this process takes place in practice. Continue reading