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2 years ago

Two Centuries of Parasitic Economics: The Struggle for Economic and Political Democracy on the

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"Two Centuries of Parasitic Economics " warns of impending rebellions across Western democracies, a delayed reaction to the Thatcher-Reagan counter-revolution and its associated parasitic economics. The Sanders and Trump phenomena in the US, the UK exiting the EU, and the brewing political upheavals across Europe confirm this.Christ advocated morality, but its economic efficiency has eluded economists for centuries. Al-Nakeeb explains morality as a positive economic externality and immorality as a negative one, making a compelling case for the economic efficiency of morality and balancing self-interest and societal-interest. He shows that Christ's ban on usury, for example, is the superior economic policy because usury's social cost far exceeds its nominal interest, causing market failure: it deepens recessions producing losses of millions of homes and jobs, increases risk, depresses growth, requires hugely costly bank bailouts, and undermines democracy itself by increasing bankers' power. Hence, usury is a negative externality that is best classified as a financial pollutant.Christ also called for the rich to look after the poor. This command was implicitly adopted in the aftermath of World War II, with spectacular results. Between 1946 and 1969, the economic dividend of better economic equality was the best US economic performance on record: brief recessions, low unemployment, strong unions, rapidly rising wages and corporate profits, brisk economic growth, greatly expanded welfare benefits, and mild inflation.The flaw in that otherwise excellent economic policy was that it was not driven by morality but by alarm at the spread of communism. Following World War II, communism engulfed numerous countries, from Eastern Europe to China and beyond. Moreover, it was gaining mass support in countries like Germany, Italy, France, Greece, Korea, and Japan. A return to the poverty stricken conditions of the 1930s and earlier risked giving communism the fuel to sweep the West and confiscate the wealth of the plutocracy (the ultra-rich holding the strings of power). Thus, the benevolent economic and political democracy that emerged in the West was plutocracy's insurance policy against revolution.Without appreciating morality's economic efficiency, moral economics was embraced reluctantly as a temporary measure. Hence, when communism waned in the 1980s and no longer threatened capitalism, the Thatcher-Reagan counter revolution relaunched parasitic economics to increase the share of the ultra-rich in the economic pie by rescinding the economic and democratic gains of the working class over the previous three decades, causing rising unemployment, falling real wages, and faltering growth.Other examples of the economic efficiency of morality and the inefficiency of immorality abound, but economists misinterpret them. Thus, Paul Volker, the Fed Chairman during the Carter and Reagan administrations, is mistakenly credited with curing a cost push inflation, using parasitic economics: punitive interest rates triggered two hugely costly and unnecessary recessions. Inflation ultimately fell due to surplus oil: gushing new oil supplies, improving fuel efficiency of the car pool, and better energy management, forced oil prices lower.The forgoing illustrates that the long-stagnant subject of macroeconomics is in bad need of an overhaul to incorporate the economics of morality (and immorality) and requires matching morally correct and economically efficient financial instruments, taxes, and public expenditure and monetary policies. Accordingly, this book has dedicated six chapters to spell out this alternative macroeconomic architecture. Moreover, now is a critical juncture because another major financial crisis is looming and the tired old economic counter measures of parasitic economics are mere sedatives that cure nothing. Hence, economic crises keep reappearing and more aggravated.