Asher Edelman is a former corporate raider. He was the inspiration for the fictional Gordon Gekko in Oliver Stone’s Wall Street. In other words, he’s a man closely tied to Wall Street. Recently he was asked who he wanted to see as the next president of the United States. His answer: “Bernie Sanders. No question.”
Bernie Sanders? Why would someone from Wall Street want Bernie Sanders rather than Donald Trump, Ted Cruz, or Hillary Clinton?
His words speak for themselves. “Well, I think it’s quite simple,” Edelman said. “If you look at something called ‘velocity of money’ — you guys know what that is, I presume — that means how much gets spent and turns around. When you have the top one percent getting money, they spend five, ten percent of what they earn. When you have the lower end of the economy getting money, they spend a hundred, or a hundred and ten percent of what they earn. As you’ve had a transfer of wealth to the top, and a transfer of income to the top, you have a shrinking consumer base, basically, and you have a shrinking velocity of money. Bernie is the only person out there who I think is talking at all about both fiscal stimulation and banking rules that will get the banks to begin to generate lending again as opposed to speculation. So from an economic point of view, it’s straightforward.”
Basically, he’s saying that when all the money flows to the top 1%, there’s not enough left to be spent by the bottom 99%. The top 1% might spend 5 or 10 percent of their income while the bottom 99% might spend 100% or more (by way of debt), or close to it (there’s some saving in the chain). If there’s not enough income for the bottom 99%, there’s shrinking demand and eventually an economic collapse because supply outstrips demand.
This sounds shockingly like what Karl Marx said. Here is a list of the five reasons Karl Marx gave as to why everything that isn’t Socialism will fail. The first one is:
- Employers will tend to maximize profits by reducing labor expenses, thus creating a situation where workers will not have enough income to buy the goods produced, creating the contradiction of causing profits to fall.
That’s what Edelman is saying, too.
Marx also thought these factors would figure into the equation:
- Inevitability of monopolies, which eliminate competition and gouge consumers and works.
- lack of centralized planning, which results in overproduction of some good and underproduction of others, encouraging economic crises such as inflation, slumps, depressions.
- Demands for labor-saving machinery, which force unemployment and a more hostile work force.
- Control of the state by the wealthy, the effect of which is passage of laws favoring themselves.
I’m not saying that Karl Marx was always right, because he certainly wasn’t. And Bernie Sanders doesn’t follow Karl Marx, either. But say what you like, does this sound like what’s happening in America? Most of us would agree that we wouldn’t necessarily want centralized planning of everything, although we certainly have it in some areas of our economy (the military, urban construction, and transportation come to mind). But the other three are definitely issues. It’s amazing that an economic philosopher from the 19th century can say things that really resonate today.
The trouble is that the only Presidential candidate really talking about these sort of economic problems (especially the first and last bullet points) is Bernie Sanders. While we think that we have a robust economy, he keeps pointing out that we don’t. We have to stop the flow of wealth to the top 1%, stop the control of politics by the wealthy, end the monopolies (bust up the big banks), and more. And now we have Asher Edelman pointing in the same direction.