"Whatever happened to Trump neckties?" asks Zane Anthony, Kathryn Sanders and David A. Fahrenthold at the Washington Post, "They’re over. So is most of Trump’s merchandising empire." Among the products that Trump lent his name to, for a fee, was a vitamin supplement, supposedly custom formulated based on the results of a urine test:
"Take a snapshot of the most critical metabolic markers in your body’s natural waste fluids," said the website for the Trump Network, a vitamin company that sent its customers urine-sample kits with the Trump logo on them. The tests would be used to determine what vitamins the customer needed, according to archived versions of the Trump Network website.As usual, the authors of this article miss the point of the enterprise, despite the Washington Post Wonkblog having covered it two years earlier. The overpriced vitamin supplements and quack urine tests were only window dressing. The real "product" the Trump Network sold was the "opportunity" to get rich quick by selling pseudo-scientific piss takes.
YouTube videos of Trump doing his urine test pitch have surprisingly few views, considering the man is "President of the United States" and his performance selling a get-rich-quick scam is, word-for-word and gesture-for-gesture, all he is and all he has ever been: pure flim-flam and puffery.
What bothers me, though, is not Don-the-con selling pie-in-the-sky schemes to suckers. What bothers me is what his kind of swindle reveals about the "legitimate" economy. The difference between a crude Ponzi scheme and conventional economic policy is a question of degree, not of kind.
Hyman Minsky argued that there are both "legitimate" and "fraudulent" forms of Ponzi finance. The distinction seems to hinge on matters of perceptions and intentions. Ponzi finance thus may be regarded as legitimate if dividends are paid on the basis of income that has been accrued but hasn't yet been received. Whether that income has actually been accrued and is going to be received is a matter of judgment about asset quality. A term deposit at the bank is one thing, a horde of Bitcoin is something else.
The quality of assets changes over time and is influenced by economic policy. "Everything that you do to encourage investment," Minsky claimed, "encourages debt financing. This increases instability." Here is the congressional testimony where he said that almost 40 years ago: June 20, 1978, from Special Study on Economic Change, Hearings before the Joint Economic Committee, Congress of the United States, Ninety-Fifth Congress, Second Session, page 858:
Representative BOLLING: I would like to begin by asking Mr. Minsky a question due to my own ignorance. This is my weakest area. I don't claim to be an economist, just a political economist. I need to know some things. In your statement, next to the last page -- the second sentence in the first full paragraph -- there are few words and a lot said. I want to be sure I understand it.
To decrease the emphasis on debt, the full employment rather than economic growth should become the proximate objective of policy;
Now, I would like you to explain that to me. I don't understand exactly what you mean.
Mr. MINSKY: I don't believe it is an accident that we have had increased instability and increased inflation since the emphasis shifted toward economic growth during the Kennedy-Johnson administration.
Everything that you do to encourage investment encourages debt financing. This increases instability. The simple example is that during the 10 years it takes to put a nuclear power plant on stream the workers producing that nuclear power plant are receiving income, spending that income on consumer goods, and not producing any consumer goods in exchange. So every time you increase the ratio of investment expenditures to consumer goods expenditures in the economy, prices rise.
Any time a higher proportion of a wage bill is used to pay for people who are earning investment income compared to the wage bill that is used in the production of consumer goods, consumer goods prices will increase. This, in turn, means that the wages of workers will go up. This is a very simple idea.
It takes 10 years before you get a kilowatt out of a nuclear power plant. People all the way back to the producers of input into that complicated thing meanwhile are spending. Every time you build a plant that does not quickly pay off you are producing inflation in the country.
Every time England goes out and builds a Concorde you produce inflation. Any banker and businessman knows that for every investment project worth doing there are thousands that are not. Everything you do to increase growth by way of increasing investment, offer incentives to undertake things that are not worth doing in a pure private account, you produce inflation.Perhaps Minsky's "very simple idea" was a bit too simple. What if economic policy was used to encourage investment and debt financing but suppress the wages of workers? Voila! Perpetual, non-inflationary growth! A non-accelerating inflation rate of unemployment! Instead of letting the instability and inflation infect the whole economy, why not target it on those dumb fucks who have no political traction anyway? If the rabble become restive, they can always be placated by chauvinist circuses and slick get-rich-quick scams.
So much winning! As John Kenneth Galbraith observed, "Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)"