Two Centuries of Parasitic Economics: The Struggle for Economic and Political Democracy on the Eve of the Financial Collapse of the West - Softcover

Al-Nakeeb, Basil

Softcover

ISBN 10: 1523827955 ISBN 13: 9781523827954

Publisher: CreateSpace Independent Publishing Platform, 2016

Synopsis

Two Centuries of Parasitic Economics is a radically original book, calling for revising macroeconomic theory and replacing the irrational finance, monetary, and tax regimes with robust systems to avert financial crises, depressions, and political turmoil and to restore democracy.

The introduction reviews the bailout of US banks in 2008, arguing that rescuing millions of delinquent homeowners to repay the banks was not just fairer but also faster for stabilizing the housing market and the economy.

Part I surveys macroeconomic theory. It faults classical economics for hailing self-interest as the sole economic driver and its ambivalence towards plutocracy (the reign of money), extreme poverty, and the periodic depressions plaguing 19th century Europe, thereby providing justification for Marxism. Marxism made the opposite mistake by assuming that only societal-interest mattered and denying self-interest, hence, its weakness. It credits expansionary Keynesian fiscal policies with alleviating contractions. A detailed examination of neoclassical macroeconomics concludes that, philosophically, its use of flawed logic and false premises makes it a collection of formal and informal fallacies, requiring its reclassification as a dogma.

Part II proposes a unified theory of macroeconomic failure to identify and resolve the subtle roots of economic problems, which invariably violate societal-interest through immoral policies, a negative externality (where the social cost exceeds the private cost). Treating immorality as a negative externality also permits its measurement and econometric modeling. It concludes that democratic erosion, poverty, misdirected public expenditure, irrational taxes, debt saturation, amplified cyclicality, and monopolies as part of an extended family of negative externalities that cause macroeconomic failure.

Part III examines negative externalities in depth. Banking, inherently unstable because it lends money it does not have, is liable to periodic crises, requiring exponential growth in government support, and a parallel growth in banking power. It reviews US business cycles (1787-2009) and why they became abruptly milder after 1942. It attributes the economic boom after World War II (rapid growth, rising living standards, the welfare state, unionization, and political reforms) to Western plutocracies’ fright of communist takeovers. Hence, the ebbing tide of communism in the 1980s saw the Thatcher-Reagan counter-revolution reverse those policies to increase the share of plutocracy in GDP with opposite results: enfeebling unions, increasing the market shares and rates of return of monopolies, rising inequality, and slowing growth. Hence, Professor Piketty’s conclusion that the rise in the rate of return above the growth rate (r>g) increased inequality is invalid, mistaking effect for cause. Part III concludes by examining democratic erosion, using a specifically constructed democracy index.

Part IV offers remedial solutions. To eliminate banking fiascos, it proposes replacing debt with equity, remodeling banking, and taxing interest, a negative externality, to curb its use. It warns that corporate income tax slows growth by falling on efficiency (profitability) and offers a revenue neutral corporate capital tax instead. It advocates replacing the present personal tax jigsaw with two simple taxes on earned income and personal capital. It also proposes a onetime democracy tax on extreme wealth to stop plutocracy’s hijacking of democracy.

Part V looks at the economic storms gathering over the West’s horizon and the likely tectonic shifts in political power to follow.

About this title

About the Author:

Basil Al-Nakeeb (b. 1949) is an independent scholar. He helped establish four investment banks and a consumer credit company. His investment career is diverse, spanning four decades and three continents, but mostly focused on stock investing. His last stock recommendation sent that stock limit up four days in a row. Although his career had a lesser focus on currencies, nevertheless, he successfully guided his research team to decompose the secret currency basket of the Kuwaiti Dinar, earning huge interest spreads for his employer. As part of his MSc. Dissertation in Financial Economics from University College of North Wales, he extended Leontief’s input-output matrix (for which Professor W. Leontief had received the Nobel Prize a year earlier) to optimize national investment plans. He also holds a Chartered Financial Analyst (CFA) designation. He has written articles and given talks on economics and finance. He lives in Dubai with his wife and son.

About this edition

• Publisher: CreateSpace Independent Publishing Platform
• Publication date: 2016
• ISBN 10: 1523827955
• ISBN 13: 9781523827954
• Binding: Paperback
• Edition number: 1
• Number of pages: 456