Monday, August 24, 2009


"Consuming capital is perhaps the clearest sign that greed has come to dominate our economic life. That is the moral meaning of such phenomena as pollution and the transformation of farming into a mining operation through the depletion of the topsoil and the draining of the underground reservoirs. A decline in wealth ought to mean that consumption diminishes, but a moral failure prevents that from happening. Instead, a way is found to continue consumption at its former levels: living on capital. Thus the capital stock is raided. Roads, bridges, and buildings deteriorate, long-term borrowing finances current consumption, and the individual base falls into obsolescence. Paul McCracken of the University of Michigan calculates that the industrial capital stock is now falling instead of rising at its historic annual rate of 2.5 precent. We have hardly begun to pay for this in unemployment and reduced output. As more capital is destroyed by policies of taxation and inflation, people will remove it from uses that make it vulnerable. Saving will seem increasingly improvident, and more capital will either be consumed or placed into such unproductive forms as precious metals and collectibles. In any case, funds will not be available to build factories, schools, and barns. As the capital stock continues to be consumed, the pauperization process feeds upon itself. People persist in maintaining their standard of living through more capital consumption and currency depreciation. The system eventually collapses." Idols For Destruction pages 281-282

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