The productive class and the parasitic financiers

When economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny. - John Adams

I sincerely believe that ... the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale. - Thomas Jefferson

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. - James Madison

Communism is a hateful thing and a menace to peace and organized government; but the communism of combined wealth and capital, the outgrowth of overweening cupidity and selfishness, which insidiously undermines the justice and integrity of free institutions, is not less dangerous than the communism of oppressed poverty and toil, which, exasperated by injustice and discontent, attacks with wild disorder the citadel of rule. He mocks the people who proposes that the Government shall protect the rich and that they in turn will care for the laboring poor. - Grover Cleveland

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. – Franklin Delano Roosevelt

Great accumulations of wealth cannot be justified on the basis of personal and family security. In the last analysis such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals over the employment and welfare of many, many others . . . Such inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government. – Franklin Delano Roosevelt

Parasitic financiers are a fundamental threat to America. Our revolutionary founders predicted what would destroy the great experiment in democracy and freedom that they fought to create. It would not fall to foreign invaders. Instead, it would fall when the wealth of the nation became concentrated in a small class of financiers who had the power to make democratic elections basically irrelevant. They told us that when that time came, as it has today, we would have a choice. We could get off our couches and change the system to throw off that fatal corruption of our nation, or we could become serfs and pawns of that elite financial class.

Laborism is not about jealousy; we are not concerned with people who, through their labor, have made a lot of money and enjoy a luxurious lifestyle. It is about basic patriotism and the love of freedom. If we want to be worthy of our flag, if we want to feel pride when our national anthem is played, if we want to honor all the soldiers who have died in our wars because they had been told that they were defending freedom, if we want to respect the revolutionaries who gave their blood to give us a great democracy, then we must now work to make the change that Madison and Jefferson told us we would need to make. That change is laborism. It is permanently breaking the power of the parasitic financiers and allowing working people to harvest the benefit of the value they create. We don’t need to shed blood to make that happen. We just need to talk to each other and take the time to organize. But first we need to be clear about who the parasitic financiers are, and how to distingish them from working people.

Laborism favors everyone who gets (or got, or will get) most of their income from productive work. Everyone who works to produce some useful product or service is part of the productive class, even if they are well paid because their work is valuable. Taylor Swift has a whole lot of money, but she is a member of the productive class because she earned every penny of it by working. In 2023, the average income of a family¹ in the productive class was $85,091. The people who get most of their income from dividends, interest and capital gains - in other words from parasitically sucking away income from those of us who produce the goods and services - are part of the financier class, as are a group of their aides who spend their time not producing goods and services, but instead manipulating, investing, and siphoning off other people’s money.

The IRS statistics tell us who those people are. It has become common to talk about “the 1%”, but the 1% includes a large number of professional couples who make their income through productive work.² A favorite trick of the true financier class is to pretend that working professionals are the enemy, and to then propose high taxes and other penalties on their income³ so that politicians can look like they are taxing the wealthy without actually going after the financiers. In fact, if you carve the top 0.1% out from the top 1%, the rest of the 1% gets the majority of their income from wages and small-business income. The top 0.1%, in contrast, gets only 20% of its income from wages, and even there that’s really largely CEO stock compensation (income from stock speculation) that is classed as wage income for tax purposes⁴. They get most of their income from parasitic finance and speculation.

That group has income of at least $3,271,387 a year, averaging $10,909,151, and has average assets of $145,199,186. They, one family in 1,000, receive as much income as the bottom 50% of the population combined. If all of America was made up of 1,000 families and collectively received $100 in capital gains, that one family would receive $54.17 while the bottom 500 families taken together would receive $1.89 and the bottom 800 families taken together would receive $4.74. If America collectively earned $100 of interest income, that one family would receive receive $34.20 while the bottom 500 families collectively received only $8.26. If America collectively earned $100 of dividend income, that one family would receive receive $27.54 while the bottom 500 families collectively received only $5.31 and the bottom 800 families received $15.49.

They are not small business owners or wage earners. They receive 4% of small business income⁵ while the bottom 80% receive 47%. However, they receive over 28% of the benefit of the special business income deduction that was sold by the politicians and media as being for small business. Their relatively small share of small business income is similar to the split for wage income, where the top 0.1% earns 3% and the bottom 80% earns 44%. The financier class is very different from the productive class, the working people who actually produce all the goods and services. In a big corporation, almost all of the employees are members of the productive class. The CEO and a handful of other top executives, who earn the bulk of their income not from wages but from the price of the stock, have moved into the capital class.

The parasitic financiers and speculators get power from all that money. They own the politicians. They own the media. Through university contributions and funding of think-tanks and research grants and ownership of academic journals, they control what academics research and publish. They control what you see, what you hear, what you are taught in school, and who you get to vote for.

Laborism would take that power away. It would let them keep their assets and spend their time hosting lavish parties on their yachts and in their mansions, but it would stop their money from making infinitely more money. Laborism would put an end to speculation and gambling with our economy.

The power of compound interest is so great that the financier class must constantly make the economy grow exponentially so that they have enough assets to buy with each year’s growing addition to their wealth. Just from September of 2023 to September of 2024, their assets grew by over $3 trillion dollars, or in other words by over 3,000 billion dollars. Adjusting for inflation and growth in population between 1992 and today, total assets grew by 86.22%, but assets of the top 0.1% grew by 242% while those of the bottom 50% grew by 55%. So, in 1992 the top 1 person in 1,000 had 8% of all assets while the bottom 500 people collectively had 7.9%, while in 2024 the top 1 person had 12.5% while the bottom 500’s share had shrunk to 5.5% (and the next 400 people’s share had shrunk from 37.4% down to 31.8%). If the top 0.1% keep the same 7.3% annual increase in assets they’ve had since 1992, in 2055 they will have $200 trillion, or 11% more assets than all Americans have today.

The international financial class runs our economy like a giant Ponzi scheme because they have to, or else their money will stop making money. They have learned to love giant federal deficits because they give them another couple of trillion dollars worth of investment assets each year, essentially allowing them to buy the future income of working taxpayers and their children and grandchildren. Deficits turn your and your children’s labor into an asset that the financiers can buy. Unless we make a change, your grandchildren will be forced, on penalty of prison, to spend most of their time working to pay interest to the grandchildren of the financiers.⁶

But like all Ponzi schemes this one must collapse. Even if you disregard limits to growth like climate change and the destruction of farmland, the rest of us can’t keep supporting the financiers’ desire for infinite growth in their income and wealth. The parasitic financiers can only suck so much life from the body of productive labor without killing the host. Within the lifetimes of today’s children, the capitalist system as we know it has to collapse. That is the ruthless logic of compound interest.

Laborism would keep us from heading further down this road to disaster. It would also stop the subtle forces that steal our souls, making us wage-slaves who check smart-phones and computers on our family vacations and who feel like we constantly have to buy more junk we don’t need.⁷ Because the financier class needs constant, accelerating growth in consumption, our society never asks what we need or really want as people, but instead drives us to consume more and more of what corporations can produce. Our inflation-adjusted Gross Domestic Product (GDP) has more than quadrupled since 1972, but those of us living in 1972 can tell you that that increase has not made our lives better. The financier-owned media shouts again and again that when members of the productive class remember the pre-1973 period as a better, more humane time it’s some sort of an evil illusion, but on average those were in fact better days for members of the productive class. Financier-centered policies and financier-driven mindless growth have had many destructive effects. Laborism would let us shrug off those dark forces and get back to using our time and labor to serve our real needs and desires. We, the productive class, would get our lives back. Laborism would do this mostly through the simple device of only allowing capital to earn the profit that capital deserves. The next posts will consider how this would work.

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To defeat the power of compound interest, we must use compound effort. Please subscribe as a supporter (it’s free) and pledge to recruit at least 5 other people who each pledge to recruit at least 5 others. Recruit family, friends, co-workers, church members, union members, lodge members, people in your organizations, strangers. We can do this, but we each need to put in the effort.

1. There are a lot of ways to define families and households, which makes the government statistics on median family income or median household income very hard to interpret. For example, if the economy takes a dive so that people lose their homes and move in with relatives, median household income will increase because of that. Here I am defining “family” as a unit that files an income tax return per the IRS statistics. That’s pretty close to the figure the census describes as “households”, and it is convenient to define family that way in using the IRS data. Note that the number I used here is “average”, i.e. adding up the total income of all productive-class families and dividing by the number of families, rather than “median”, which is the level of income where half of the families earn more than that and half earn less. The median is usually lower than the average.

2. In 2022, the 1% cut-off was family income of $663,000. While that is a lot of money, it is within the reach of two working professionals or even one well-compensated professional. The average for the top 1% excluding the top 0.1% is $1,178,829. The financiers probably cut in around the top 0.25%, but the public data does not have that level of detail.

3. History shows us that there is a universal pattern in the rise and fall of great nations. Madison and Jefferson predicted our fall based on that history. Over time, a wealthy elite develops. For a long time, that class is kept in check by what I call the pressing class, a layer of smart, productive people that the wealthy elite needs to produce their wealth and make society work. Eventually the wealthy class gets so greedy that they drain the pressing class, who lose interest in keeping the game going. Then the nation falls. The financiers are currently causing any attack on unacceptable concentration of wealth to be redirected to the pressing class, in order to discourage people in that class from complaining about over-concentration of wealth, thus neutralizing the people who are the greatest threat to the financiers.

4. The true financiers don’t even earn that much in wages. As noted above, a lot of what is classed as “wage income” is stock compensation for CEOs. Plus, the top 0.1% includes star athletes and some other people who produce things for a living and earn real wages; you can’t cleanly sort the parasitic financiers out from top-end productive people using IRS data.

5. IRS Schedules C and F.

6. Under the Congressional Budget Office forecast, which is conservative, by 2035 interest on the federal debt will amount to 15% of the inflation-adjusted current total income of the bottom 90% of the population, at $1.8 trillion. From there, it would grow at an accelerating rate, while interest rates would necessarily rise. The grandchildren of today’s college students will be serfs forced to turn their pay over to the financiers.

7. Paul Kingsnorth describes this soul-and-society destroying force as The Machine and ably describes its effects on us. It operates in ways we don’t notice, but we feel its effects on ourselves, our families, our relationships, and our spiritual natures. The discussion in this series will help to show how the nature of international parasitic finance and speculation drives the forces that fuel The Machine.