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Neoclassical Pseudo Theories and Crooked and Bought Economists as Fifth Column of Financial Oligarchy

There is no economics, only political economy, stupid

News Casino Capitalism Recommended Links Neoliberalism as Trotskyism for the rich Number racket Efficient Market Hypothesis Economism and abuse of economic theory in American politics
Supply Side or Trickle down economics Invisible Hand Hypothesys Twelve apostles of deregulation Monetarism fiasco Financial Sector Induced Systemic Instability of Economy Samuelson's bastard Keynesianism Greenspan as the Chairman of Financial Politburo
Libertarian Philosophy Elite [Dominance] Theory And the Revolt of the Elite The Iron Law of Oligarchy Audacious Oligarchy and "Democracy for Winners" Ayn Rand and her Objectivism Cult Neoliberal Brainwashing -- Journalism in the Service of the Powerful Few The Deep State
Free Market Fundamentalism Friedman --founder of Chicago school of deification of market Lawrence Summers Corruption of Regulators Glass-Steagall repeal Rational expectations scam Free Markets Newspeak
In Goldman Sachs we trust: classic example of regulatory capture by financial system hackers Mathiness GDP as a false measure of a country economic output Introduction to Lysenkoism Republican Economic Policy Think Tanks Enablers  Small government smoke screen
Hyman Minsky John Kenneth Galbraith  Bookshelf History of Casino Capitalism Casino Capitalism Dictionary :-) Humor Etc
Is it really necessary for every economist to be brain-dead apologist for the rich and powerful and predatory, in every damn breath?

Bruce Wilder in comments to Clash of Autonomy and Interdependence

Smith briskly takes a sledgehammer to any number of plaster saints cluttering up the edifice of modern economics:

"assumptions that are patently ridiculous: that individuals are rational and utility-maximizing (which has become such a slippery notion as to be meaningless), that buyers and sellers have perfect information, that there are no transaction costs, that capital flows freely"

And then...papers with cooked figures, economists oblivious to speculative factors driving oil prices, travesty versions of Keynes's ideas that airbrush out its most characteristic features in the name of mathematical tractability.

And then...any number of grand-sounding theoretical constructs: the Arrow-Debreu theorem, the Dynamic Stochastic General Equilibrium model, the Black-Scholes option model, Value at Risk, CAPM, the Gaussian copula, that only work under blatantly unrealistic assumptions that go by high falutin' names - equilibrium, ergodicity, and so on.

The outcome of this pseudo-scientific botching is an imposing corpus of pretentious quackery that somehow elevates unregulated "free markets" into the sole mechanism for distribution of the spoils of economic activity. We are supposed to believe that by some alchemical process, maximum indulgence of human greed results in maximum prosperity for all. That's unfair to alchemy: compared with the threadbare scientific underpinnings of this economic dogma, alchemy is a model of rigor.

How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism

How many others are being paid for punditry? Or has the culture of corruption spread so far that the question is, Who isn't?

PAUL KRUGMAN, NYT, December 19, 2005

"MIT and Wharton and University of Chicago created the financial engineering instruments which, like Samson and Delilah, blinded every CEO. They didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one."

Paul Samuelson


Introduction

When you see this "neoclassical" gallery of expensive intellectual prostitutes (sorry, respectable priests of a dominant religion) that pretend to be professors of economics in various prominent universities, it is difficult not to say "It's political economy stupid". Those lackeys of ruling elite are just handing microphone bought by financial oligarchy.  Here is am Amazon.com review of  ECONned How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism eBook Yves Smith that  states this position well:

kievite:
Neoclassical economics as a universal door opener for financial oligarchy

There are many good reviews of the book published already and I don't want to repeat them. But I think there is one aspect of the book that was not well covered in the published reviews and which I think is tremendously important and makes the book a class of its own: the use of neoclassical economics as a universal door opener for financial oligarchy. I hope that the term "econned" will became a new word in English language.

Neoclassical economics has become the modern religion with its own priests, sacred texts and a scheme of salvation. It was a successful attempt to legitimize the unlimited rule of financial oligarchy by using quasi-mathematical, oversimplified and detached for reality models. The net result is a new brand of theology, which proved to be pretty powerful in influencing people and capturing governments("cognitive regulatory capture"). Like Marxism, neoclassical economics is a triumph of ideology over science. It was much more profitable though: those who were the most successful in driving this Trojan horse into the gates were remunerated on the level of Wall Street traders.

Economics is essentially a political science. And politics is about perception. Neo-classical economics is all about manipulating the perception in such a way as to untie hands of banking elite to plunder the country (and get some cramps from the table for themselves). Yves contributed to our understanding how "These F#@king Guys" as Jon Steward defined them, economics professors from Chicago, Harvard, Columbia, Princeton and some other places warmed by flow of money from banks for specific services provided managed to serve as a fifth column helping Wall Street to plunder the country. The rhetorical question that a special counsel to the U.S. Army, Joseph Welch, asked Senator McCarthy: "Have you no sense of decency?" applies.

The main effect of neoclassical economics is elevating unregulated ( "free" in neoclassic economics speak) markets into the key mechanism for distribution of the results of economic activity with banks as all-powerful middlemen and sedating any opposition with pseudo-mathematical mumbo-jumbo. Complexity was used as a powerful smoke screen to conceal greed and incompetence. As a result financial giants were able to loot almost all sectors of economics with impunity and without any remorse, not unlike the brutal conquerors in Middle Ages.

The key to the success of this nationwide looting is that people should be brainwashed/indoctrinated to believe that by some alchemical process, maximum level of greed results in maximum prosperity for all. Collapse of the USSR helped in this respect driving the message home: look how the alternative ended, when in reality the USSR was a neo-feudal society. But the exquisite irony here is that Bolsheviks-style ideological brainwashing was applied very successfully to the large part of the US population (especially student population) using neo-classical economics instead of Marxism (which by-and-large was also a pseudo-religious economic theory with slightly different priests and the plan of salvation ;-). The application of badly constructed mathematical models proved to be a powerful tool for distorting reality in a certain, desirable for financial elite direction. One of the many definitions of Ponzi Scheme is "transfer liabilities to unwilling others." The use of detached from reality mathematical models fits this definition pretty well.

The key idea here is that neoclassical economists are not and never have been scientists: much like Marxist economists they always were just high priests of a dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the benefit of the sect (and indirectly to their own benefit). All-in-all this is not unlike Lysenkoism: state support was and still is here, it is just working more subtly via ostracism, without open repressions. Look at Shiller story on p.9.

I think that one of lasting insights provided by Econned is the demonstration how the US society was taken hostage by the ideological views of the neoclassical economic school that has dominated the field at least for 30 or may be even 50 years. And that this ideological coup d'état was initiated and financed by banking establishment who was a puppeteer behind the curtain. This is not unlike the capture of Russia by Bolsheviks supported by German intelligence services (and Bolshevics rule lasted slightly longer -- 65 years). Bolsheviks were just adherents of similar wrapped in the mantle of economic theory religious cult, abeit more dangerous and destructive for the people of Russia then neoclassical economics is for the people of the USA. Quoting Marx we can say "History repeats itself, first as tragedy, second as farce".

That also means that there is no easy way out of the current situation. Ideologies are sticky and can lead to the collapse of society rather then peaceful evolution.

So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.

So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.

The cult which served as a Trojan horse for bankers to grab power and wealth by robbing fellow Americans. In a way this is a classic story of a parasite killing the host. The powers that be in academia put their imprimatur on economic ‘theory,’ select and indoctrinate its high priests to teach it, and with a host of media players grinding out arguments pro and con this and that, provide legitimacy sufficient for cover of bankers objectives. Which control the disposition and annuity streams of pension fund assets and related financial services. In his new documentary Inside Job, filmmaker Charles Ferguson provides strong evidence of a systematic mass corruption of economic profession (Yahoo! Finance):

Ferguson points to 20 years of deregulation, rampant greed (a la Gordon Gekko) and cronyism. This cronyism is in large part due to a revolving door between not only Wall Street and Washington, but also the incestuous relationship between Wall Street, Washington and academia.

The conflicts of interest that arise when academics take on roles outside of education are largely unspoken, but a very big problem. “The academic economics discipline has been very heavily penetrated by the financial services industry,” Ferguson tells Aaron in the accompanying clip. “Many prominent academics now actually make the majority of their money from the financial services industry, not from teaching or research. [This fact] has definitely compromised the research work and the policy advice that we get from academia.”

... ... ...

Feguson is astonished by the lack of regulation demanding financial disclosure of all academics and is now pushing for it. “At a minimum, federal law should require public disclosure of all outside income that is in any way related to professors’ publishing and policy advocacy,” he writes. “It may be desirable to go even further, and to limit the total size of outside income that potentially generates conflicts of interest.”

The dismantling of economic schools that favor financial oligarchy interests over real research (and prosecuting academic criminals -- many prominent professors in Chicago, Harvard, Columbia and other prominent members of neo-classical economic church) require a new funding model. As neoliberalism itself, the neoclassical economy is very sticky. Chances for success of any reform in the current environment are slim to non existent.

Here is one apt quote from Zero Hedge discussion of Gonzalo Lira article On The Identity Of The False Religion Behind The Mask Of Economic Science zero hedge

"They analyze data for Christ sakes"

Just like Mishkin analyzed Iceland for $120k? a huge proportion in US [are] on Fed payroll, or beneficiaries of corporate thinktank cash; they are coverup lipstick and makeup; hacks for hire.

Like truth-trashing mortgage pushers, credit raters, CDO CDS market manipulators and bribe-fueled fraud enablers of all stripes -- they do it for the dough -- and because everybody else is doing it.

It's now a common understanding that "These F#@king Guys" as Jon Steward defined them, professors  of neoclassical economics from Chicago, Harvard and some other places are warmed by flow of money from financial services industries for specific services provided managed to serve as a fifth column helping financial oligarchy to destroy the country. This role of neo-classical economists as the fifth column of financial oligarchy is an interesting research topic. Just don't expect any grants for it ;-).

As Reinhold Niebuhr aptly noted in his classic Moral Man and Immoral Society
Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold.

I would like to stress it again: they are not and never have been scientists: they are just high priests of dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the sect (and that means their own) benefits. Fifth column of financial oligarchy. All-in-all this is not unlike Lysenkoism: at some point state support became obvious as financial oligarchy gained significant share of government power (as Glass-Steagall repeal signified). It is just more subtle working via ostracism and flow of funding, without open repressions. See also Politicization of science and The Republican War on Science

Like Russia with Bolsheviks, the US society was taken hostage by the ideological views of the Chicago economic school that has dominated the field for approximately 50 years ( as minimum over 30 years). Actually the situation not unlike the situation with Lysenkoism is the USSR. It's pretty notable that the USA suffered 30 years of this farce, actually approximately the same amount of time the USSR scientific community suffered from Lysenkoism (1934-1965)

Rules of disclosure of sources of financing for economic research are non-existent


"Over the past 30 years, the economics profession—in economics departments, and in business, public policy, and law schools—has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy.

The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And it's due not just to ideology; it's also about straightforward, old-fashioned money."

Peter Dormat noticed amazing similarity between medical researchers taking money from drug companies and economists. In case of medical researchers widespread corruption can at least be partially kept in check by rules of disclosure. Universities are being called out for their failure to disclose to public agencies the other, private grants researchers are pulling in. This is not perfect policing as the universities themselves get a cut of the proceeds, so that the conflict of interest exists but at least this is theirs too.

But there is no corresponding policy for economics. So for them there are not even rules to be broken. And this is not a bug, this is  feature.  In a sense corruption is officially institualized and expected in economics. Being a paid shill is the typical career of many professional economists. Some foundations require an acknowledgment in the published research they support, but that's all about “thank you”, not disclaimer about the level of influence of those who pay for the music exert on the selection of the tune. Any disclosure of other, privately-interested funding sources by economists is strictly voluntary, and in practice seldom occurs. Trade researchers can be funded by foreign governments or business associations and so on and so forth.

In this atmosphere pseudo-theories have currency and are attractive to economists who want to enrich themselves. That situation is rarely reflected in mainstream press. For example, there some superficial critiques of neo-classical economics as a new form of Lysenkoism (it enjoyed the support of the state) but MSM usually frame the meltdown of neo-classical economic theory something like "To all you corrupt jerks out there: shake off the old camouflage as it became too visible and find a new way misleading the masses...". At the same time it's a real shocker, what a bunch of toxic theories and ideologies starting from Reagan have done to the US economy.

That suggests that neo-economics such as Milton Friedman (and lower level patsies like Eugene Fama ) were just paid propagandists of a superficial, uninformed, and simplistic view of the world that was convenient to the ruling elite. While this is somewhat simplistic explanation, it's by-and-large true and that was one of the factors led the USA very close to the cliff... Most of their theories is not only just nonsense for any trained Ph.D level mathematician or computer scientist, they look like nonsense to any person with a college degree, who looks at them with a fresh, unprejudiced mind. There are several economic myths, popularized by well paid propagandists over the last thirty years, that are falling hard in the recent series of financial crises: the efficient market hypothesis, the inherent benefits of globalization from the natural equilibrium of national competitive advantages, and the infallibility of unfettered greed as a ideal method of managing and organizing human social behavior and maximizing national production.

I would suggest that and economic theory has a strong political-economic dimension. The cult of markets, ideological subservience and manipulation, etc. certainly are part of neo-classical economics that was influenced by underling political agenda this pseudo-theory promotes. As pdavidsonutk wrote: July 16, 2009 16:14

Keynes noted that "classical theorists resemble Euclidean geometers in a non Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight --as the only remedy for the unfortunate collisions. Yet in truth there is no remedy except to throw over the axiom of parallels to work out a non-Euclidean geometry. SOMETHING SIMILAR IS REQUIRED IN ECONOMICS TODAY. " [Emphasis added]

As I pointed out in my 2007 book JOHN MAYNARD KEYNES (Mentioned in this ECONOMIST article as a biography "of the master") Keynes threw over three classical axioms: (1) the neutral money axiom (2) the gross substitution axiom, and (3) the ergodic axiom.

The latter is most important for understanding why modern macroeconomics is dwelling in an Euclidean economics world rather than the non-Euclidean economics Keynes set forth.

The Ergodic axiom asserts that the future is merely the statistical shadow of the past so that if one develops a probability distribution using historical data, the same probability distribution will govern all future events till the end of time!! Thus in this Euclidean economics there is no uncertainty about the future only probabilistic risk that can reduce the future to actuarial certainty! In such a world rational people and firms know (with actuarial certainty) their intertemporal budget constrains and optimize -- so that there can never be an loan defaults, insolvencies, or bankruptcies.

Keynes argued that important economic decisions involved nonergodic processes, so that the future could NOT be forecasted on the basis of past statistical probability results -- and therefore certain human institutions had to be develop0ed as part of the law of contracts to permit people to make crucial decisions regarding a future that they "knew" they could not know and still sleep at night. When the future seems very uncertain, then rational people in a nonergodic world would decide not to make any decisions to commit their real resources -- but instead save via liquid assets so they could make decisions another day when the future seemed to them less uncertain.

All this is developed and the policy implications derived in my JOHN MAYNARD KEYNES (2007) book. Furthermore this nonergodic model is applied to the current financial and economic crisis and its solution in my 2009 book THE KEYNES SOLUTION: THE PATH TO GLOBAL PROSPERITY (Palgrave/Macmillan) where I tell the reader what Keynes would have written regarding today's domestic crisis in each nation and its international aspects.

Paul Davidson ghaliban wrote:

July 16, 2009 15:34

I think you could have written a shorter article to make your point about the dismal state of economics theory and practice, and saved space to think more imaginatively about ways to reform.

A bit like biology, economics must become econology - a study of real economic systems. It must give up its physics-envy. This on its own will lead its practitioners closer to the truth.

Like biological systems, economic systems are complex, and often exhibit emergent properties that cannot be predicted from the analysis of component parts. The best way to deal with this is (as in biology) to start with the basic organizational unit of analysis - the individual, and then study how the individual makes economic decisions in larger and larger groups (family/community), and how groups take economic decisions within larger and larger forms of economic organization. From this, econologists should determine whether there are any enduring patterns in how aggregate economic decisions are taken. If there are no easily discernable patterns, and aggregate decisions cannot be predicted from a knowledge of individual decision-making preferences, then the theory must rely (as it does in biology) on computer simulations with the economy replicated in as much detail as possible to limit the scope for modeling error. This path will illuminate the "physiology" of different economies.

A second area of development must look into "anatomy" - the connections between actors within the financial system, the connections between economic actors within the real economy, and the connections between the real and financial economies. What are the precise links demand and supply links between these groups, and how does money really flow through the economic system? A finer knowledge of economic anatomy will make it easier to produce better computer simulations of the economy, which will make it a bit easier to study economic physiology.

"Markets uber alles" or more correctly "Financial oligarchy uber alles"

In her interview What Exactly Is Neoliberalism  Wendy Brown advanced some Professor Wolin ideas to a new level and provide explanation why "neoclassical crooks" like Professor  Frederic Mishkin (of Financial Stability in Iceland fame) still rule the economics departments of the USA. They are instrumental in giving legitimacy to the neoliberal rule favoured by the financial oligarchy:

"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."

"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."

"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."

"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."

"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination -- law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."

"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."

"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."

 


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I find an attempt to elevate academic finance and economics to sciences by using the word "scientism" to be bizarre. Finance models like CAPM, Black-Scholes and VAR all rest on assumptions that are demonstrably false, such as rational investors and continuous markets.

May 11, 2012 at 1-40 pm

[Feb 13, 2019] Mathiness and game thoery

Any good mathematical theory can be misapplied and perverted if there is social pressure and money to do so..
Feb 13, 2019 | www.alternet.org

Game Theory:

A glossary of exploitive economics 'Lean in' and 8 other bad business buzzwords that should be phased out – Alternet.org

The use of mathematics to model human reality; one of the more bizarre offshoots that followed the mathematization of economic thought in the 20th century.

Game theory focuses on strategies used by competing actors to make rational decisions. What should I do given my opponent may subsequently decide A, B, C, or D? It was pioneered by John von Neumann, John Nash, and Oskar Morgenstern. The assumption that social life is a game of logic between conniving actors is foundational to this view of economics. But do we really behave in such a "me versus you" manner?

Game Theory's rational individualism closely resonates with neoliberal capitalism because it reconceptualizes everyone as mini corporations who are totally selfish.

Individuals compete rather than share; seek to outsmart the next person rather than empathize. Proponents of the approach often use the "as if" defense. The model might not perfectly match reality, but we can approximate how someone behaves in the real world by assuming they act "as if" they're Nashian plotters.

It's the normative assumptions underlying this "as if" that are problematic that at bottom we're all greedy and impatient bankers. One could just as well argue that people act "as if" they're trusting and altruistic socialists, but Game Theory won't have any of that.

[Feb 13, 2019] The return of W>eimar Berlin - Lawlessness, Inequality, Extremism, Divisiveness and Crime

Notable quotes:
"... the financial corruption and private pilfering using public power, money laundering and the kind of soft corruption that is rampant amongst our new elite is all there ..."
Feb 13, 2019 | jessescrossroadscafe.blogspot.com

"He drew near and saw the city, and he wept for it saying, 'If you had only recognized the things that make for peace. But now you are blinded to them. Truly, the days will come when your enemies will set up barriers to surround you, and hem you in on every side. Then they will crush you into the earth, you and your children. And they will not leave one stone upon another, because you did not recognize the way to your salvation.'"

Luke 19:41-44

"You hypocrites! You build monuments for the prophets and decorate the graves of the righteous. And you say, 'If we had lived in the days of our ancestors, we would not have taken part with them in shedding the blood of His messengers.'"

Matthew 23:29-30

...the results of the Senate GOP finding no evidence of 'collusion' with Russia by the Trump Administration to influence the results of the presidential election..

This last item is not surprising, because this entire Russian collusion meme seems as though it is an hysterical reaction to the spin put out by the Clinton political faction and their neoliberal enablers after their shocking loss in the 2016 Presidential election.

Too bad though, because the financial corruption and private pilfering using public power, money laundering and the kind of soft corruption that is rampant amongst our new elite is all there. And by there we mean on both sides of the fence -- which is why it had to take a back seat to a manufactured boogeyman.

... ... ...

There is a long road ahead before we see anything like a resolution to this troubling period in American political history.

We look back at other troubled periods and places, and either see them as discrete and fictional, a very different world apart, or through some rosy lenses of good old times which were largely benign and peaceful. We fail to see the continuity, the similarity, and the commonality of a dangerous path with ourselves. As they did with their own times gone by. Madness blinds its acolytes, because they wish it so. They embrace it to hide their shame.

We are reassured and misled by the same kinds of voices that have always served the status quo and the monied interests, the think tanks, the so-called 'institutes,' and the web sites and former con men who offer a constant stream of thinly disguised propaganda and misstatements of principle and history. We are comforted by their lies.

People want to hear these reassuring words of comfort and embrace it like a 'religion,' because they do not wish to draw the conclusions that the genuine principles of faith suggest (dare we say command in this day and age) in their daily lives. They blind themselves by adopting a kind of a schizoid approach to life, where 'religion' occupies a discrete, rarefied space, and 'political or economic philosophy' dictates another set of everyday 'practical' observances and behaviors which are more pliable, and pleasing to our hardened and prideful hearts.

We wish to strike a deal with the Lord, and a deal with the Devil -- to serve both God and Mammon as it suits us. It really is that cliché. And it is so finely woven into the fabric of our day that we cannot see it; we cannot see that it is happening to us and around us.

And so we trot on into the abyss, one exception and excuse and rationalization for ourselves at a time. And we blind ourselves with false prophets and their profane theories and philosophies.

As for truth, the truth that brings life, we would interrupt the sermon on the mount itself, saying that this sentiment was all very well and good, but what stocks should we buy for our portfolio, and what horse is going to win the fifth at Belmont? Tell us something useful, practical! Oh, and can you please fix this twinge in my left shoulder? It is ruining my golf game.

"Those among the rich who are not, in the rigorous sense, damned, can understand poverty, because they are poor themselves, after a fashion; they cannot understand destitution. Capable of giving alms, perhaps, but incapable of stripping themselves bare, they will be moved, to the sound of beautiful music, at Jesus's sufferings, but His Cross, the reality of His Cross, will horrify them. They want it all out of gold, bathed in light, costly and of little weight; pleasant to see, hanging from a woman's beautiful throat."

Léon Bloy

No surprise in this. It has always been so, especially in times of such vanity and greed as are these. Then is now. There is nothing new under the sun. And certainly nothing exceptional about the likes of us in our indulgent self-destruction.

Are you not entertained?

[Feb 12, 2019] Social anger at neoliberalization as a material force in 2002 elections

Feb 12, 2019 | angrybearblog.com

likbez, February 12, 2019 8:11 pm

Daniel,

For decades we have heard about the loss of industrial production throughout what is called the "Rust Belt". It's presented, even as recent as the prior presidential election as a relative regional problem that only began post-Reagan.

With all due respect, it looks like you forgot that at some point quantity turns into quality, so making simple extrapolations might well result in an oversimplification of the current situation.

You essentially ignore the current reality of rising popular anger, and the fact of breaking of the social contract by neoliberal (and first of all financial) oligarchy, which is as detached from "deplorable" as French aristocracy ("let them eat cakes" mentality.)

In 2019 it is clear that the USA completely and irreversibly moved from an economy based on high wages and reliable benefits to a system of low wages and cheap consumer prices, to the detriment of workers, which means that social contract was broken ( https://www.theatlantic.com/business/archive/2013/12/the-past-and-future-of-americas-social-contract/282511/ ).

While less dangerous for the oligarchy then when the USSR used to exist, the level of social anger comes into play as never before. In 2016 became a material factor that decided the elections. I do not see that 2020 will be different.

The most detrimental effects from outsourcing and offshoring will come to the forefront probably in 10 years or so when the oil price might be well over $100 per barrel. But even now this huge social experiment on live people in redistribution of wealth up turn out to be detrimental for the unity of the country (and not only to the unity).

The current squabble between globalist, Clinton wing of Democratic Party allied with the corporatists with the Republican Party (with supporting intelligence agencies) and rag-tag forces of the opposition is a good indication of the power of this resentment.

Spearheaded by intelligence agencies (with material support from British government ) attack on Trump (aka Russiagate) is the attack on the idea of an alternative for neoliberal globalization, not so much on the personality or real or perceived Trump actions; the brutal, Soviet-style attack on the deviation from neoliberal status quo directed on the political elimination of the opposition by elimination of Trump from the political scene. Much like Show Trials were in the USSR (in this case people were charged to be British spies ;-)

There are two countries now co-existing within the USA borders. Which often speak different languages. One is the country of professionals, managers, and capital owners (let's say top 10%). The other is the country of common people (aka "deplorable", or those who are below median wage -- ~$30K in 2017; ratio of average and median wage is now around 65% ).

With the large part of the latter living as if they live in a third world country. That's definitely true for McDonald, Wall-mart (and all retail) employees (say, all less than $15 per hour employees, or around half of US workers).

I think the level of anger of "deplorable" will play the major role in 2020 elections and might propel Warren candidacy. That's why now some MSM are trying to derail her by exploiting the fact that she listed her heritage incorrectly on several applications.

But when the anger of "deplorable" is in play, then, as Donald Trump aptly quipped, one could stand in the middle of Fifth Avenue, shoot somebody and do not lose any voters. I think this is now true for Warren too.

Here are some old, but still interesting, facts circa Nov 2011 ( https://www.businessinsider.com/sad-facts-deindustrialization-america-2011-11 ):

-- The United States has lost approximately 42,400 factories since 2001
-- The United States has lost a total of about 5.5 million manufacturing jobs since October 2000
-- From 1999 to 2008, employment at the foreign affiliates of US parent companies increased an astounding 30 percent to 10.1 million
-- In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent
-- As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941. The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000
-- As of 2010 consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services
-- In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th
-- Asia produces 84% of printed circuit boards used worldwide.
-- In September 2011, the Census Bureau said 46.2 million Americans are now living in poverty, which is the highest number of poor Americans in the 52 years that records have been kept

NOTE: Programming jobs in the USA are expected to shrink in 2019 ( -21,300 ) so it is incorrect to look at IT industry as a potential compensating industry for manufacturing layoffs. ( https://money.usnews.com/careers/best-jobs/rankings/best-technology-jobs )

[Feb 12, 2019] Blain The Current Iteration Of 'Capitalism' Has Spawned Increased Global Poverty, Income Inequality, Urban Deprivation, Squal

Feb 12, 2019 | www.zerohedge.com

Blain's Morning Porridge, submitted by Bill Blain

What a fascinating world we live in.

Amazon boss Jeff Bezos exposing himself, and exposes the National Inquirer for attempted blackmail. A young senator, Alexandria Ocasio-Cortez, snaring the headlines and proposing a preposterous New Green Deal – while further splitting the Democrats. Europe plunging back into recession. The UK no closer to a Brexit Deal (hang-on, that's not a headline that's just normal..) Deutsche Bank paying up to demonstrate it can borrow in markets. Santander facing a Euro 50 bln breach of promise lawsuit from Andreas Orcel (proving the Spanish banking adage: At Santander – you are either a Botin or a.. servant..) So much out there

Are all these things linked? Yes – the world we live in determines the functionality of global markets. You might believe Washington Post owner Jeff Bezos was the victim of an Inquirer effort to "catch and kill" a story the paper has on Mr Trump's activities in Moscow, or you might believe Deutsche Bank's problems are part of a deeper malaise across European banking. Whatever the news changes our perceptions.

... ... ...

It's a difficult one: the current iteration of capitalism has spawned increased Global Poverty, Income Inequality, Urban Deprivation, Squalor and Filth. Yet, somehow, such iniquity isn't actually bad for markets? Should I therefore hurrah the continuation of low rates as good for markets and ignore the bad for people thing? What's to worry about when share-buybacks push up stock prices, and the Fed is keeping rates artificially low to i) placate the president, and ii) counter the president's trade policies.

Long term – even my most hardened sink or sink free-market capitalist critics admit we face a disruptive inequality crisis. We can address it sooner or later. The imbalances are growing and the rules of mean reversion apply as much to society and politics as they do to markets ! Long-term markets would probably function better if everyone is positively motivated. Adam Smith, the father of modern capitalism and economics got it. So do most people – but the sad reality is Change is Difficult – especially when the market leads opinion!

I've been thinking about the "hows" of making the world a better place all weekend, but I don't know enough 'ologys or medicine to cure drug abuse, chronic greed, urban mental illness, virtue-signaling philanthropy, or how to reform out education systems and society to improve everyone's opportunities.

What I do suspect is markets are building up great long-term underlying weaknesses, but in the short-terms low interest rates for longer is a distortion, but positive for financial asset prices That can't be a good thing?


silverwolf888 , 20 minutes ago link

Shallow people and trolls are fond of saying, of capitalism, "this is not capitalism." In 1964 Professor Quigley (Tragedy And Hope) identified 5 stages of capitalism, and we have come a long way since then, for the worse. But, like the current communist Chinese, it is all capitalism, stock markets, banks and all. I believe Marx was right when he said communism and capitalism are the same thing, at a different stage. We need some kind of free market. But as to this capitalism thing, it is still a new phenomenon in history, and it is not working.

jutah , 57 minutes ago link

for all you keyboard commando defenders of Adam Smith one thing you fail to comprehend is that life is about more than what you can just buy and sell, that is the point. Failing to recognize this fact will only hasten your demise. On top of that, if 'true capitalism' is not what we have now you say, which is a valid point, then how did we get here? That is how it started out and now look where it ended up. It was flawed from the start because of the power of greed in order to purchase influence and infiltrate your 'pure system'.

Caloot , 2 hours ago link

Where's Capitalism? This country is more fascist than Italy during Mussolini. So again. This itineration ? This what, version? There aren't flavors to freedom , fknut.

itstippy , 3 hours ago link

There's something amiss in our money system and it's killing us. Why, in a system of Fractional Reserve Banking, do the banks no longer need or want savers to deposit savings with them? What happened?

For decades the various commercial banks courted depositors like eager suiters. They offered competing interest rates on savings accounts, promoted their 5 and 10 year CDs, even offered free toasters for opening a new savings account. Something fundamental changed with the repeal of Glass-Steagal in November, 1999. Banks now promote their "services" - which cost money - and their loans. Mortgage loans, HELOCs, car loans, student loans, credit cards, all manner of loans. We're inundated with offers from banks to loan us money.

Prior to the repeal of Glass-Steagal the saying was, "The only way to get a loan is to prove you don't need one."

HaveDream , 3 hours ago link

Long term speaking, global 'capitalism' is really an alliance between global bankers and one strong country at a time, to use that country's government to blow a national money and asset bubble. ('Imperial' is probably better than 'national.')

First it was the Dutch Empire, then it was the British, and then it was America. When one top country's strength is spent by debt, corruption and easy living, the bankers move on to the next one.

Things look bad today because we're near the end of one global empire but the next one (India) is still some way off. The elites have to do whatever ad hoc trickery to keep the current charade going, absent real strength and growth from a new national bubble.

[Feb 12, 2019] Angry Bear Hey Rustbelt and beyond, Losing factories is not new

Feb 12, 2019 | angrybearblog.com

likbez , February 11, 2019 3:03 pm

Until neoliberal elite stops its brutal squeeze of workers, expect collapsing of the social contract. The country was already in a pre-revolutionary state in 2016 with the net result of election of Trump over Clinton (and, given a chance, people would have chosen Sanders over Trump).

The color revolution against Trump, which is underway, is, as s side effect, undermining of influence of neoliberal MSM (aka "fake news" ) and social unity of the nation. When the President calls WaPo "Bezos blog" that's delegitimization (and naked Bezos photos does not help either) When FBI is compared to STASI and Mueller investigation is called a witch hunt that points on the deeply divided country with the fractured neoliberal elite experiencing the crisis of legitimacy.

But the basic problem is that it costs a lot of money to cultivate a segment of the market now as it involves creation of a group of new consumers. And the more sophisticated the segment is, the more expensive it is. If workers are squashed (good jobs are displaced by McJob and/or permatemps) you face stagnation as top 10% can't replace bottom 80% as consumers.

That's probably why the US economy can't escape secular stagnation and reported growth is within the error margin of measurements and heavily depends on the inflation metric and "expansive" treatment of GDP (gambling, financial industries, military expenses, etc)

Paul Krugman said the US economy may be heading into a recession On the positive side that might end Trump run and give Warren a chance. On the negative it will amplify the current inequality problems and might provoke social unrest.

Bert Schlitz , February 11, 2019 3:13 pm

Sorry, Lilbez, Trump didn't win anything and was a neoliberal invention which coincides with evangelical voters. Why you keep on missing that point? Don't you want to admit that?

Another little fact, Sprague's growth peaked in 1959. It actually was bleeding jobs by the late 60's which triggered the real strikes. Maybe, just maybe that growth was a illusion of the war driven destruction.

spencer , February 11, 2019 4:20 pm

Bert -- the first death of manufacturing was the New England textile and shoe industries in the 1920's–1940s. Those industries finally became too small to have a significant negative impact in New England in the 1960s and 1970s. Boston and other New England areas started rebounding in the 1960s, largely on the back of aerospace and other technology intensive industries. But the 1970 recession was lead by the fall in those industries. So the Massachusetts Miracle appeared to start with the recovery from the 1970 recession. What made Mass different. One by the 1960s shoes and textiles has become so small that they were no longer a significant drag on the economy. Second, Massachusetts continued its very large investment in education, and it was not only MIT, but throughout the public secondary and college level schools. So it had the educated population to move into the very early stages of the emerging information technology industries that later came to be known as the Massachusetts Miracle. So Mass went through the death of its key manufacturing industries earlier than other regions, but continued to invest heavily in education, something I'm afraid I do not see in the Midwest. Moreover, in the Midwest the traditional industries are still large enough that weakness in them still has a significant negative impact on GDP. Moreover, the growth we do see in autos and other Midwestern industries is occurring in the South and does not help the Midwest much -- Alabama is now the second most important manufacturer of cars and light trucks.

There is a certain validity to your analysis, but it is off by enough to be misleading.

Kaleberg , February 11, 2019 7:53 pm

Spencer is right about manufacturing vanishing over a much longer time frame. Manufacturing jobs have been vanishing since the early 20th century. A lot of this is increased efficiency. It used to take over 100 work-hours to build a car. Now it's down to 20 and still falling. New England industrialized early, and by the 1970s the dead/dying shoe industry was a major item in the presidential debates. In 'Still the Iron Age', Smil points out that the steel industry has probably gained an order of magnitude in efficiency over the last 30 years, but this kind of thing never gets press coverage. Basic oxygen furnaces and direct reduction or iron don't make good news stories.

The places that have recovered first emphasized education and having a broad portfolio. Who would have imagined how important furniture design and manufacturing would be to Los Angeles recovery from the aerospace collapse after the Cold War? The big difference with our "Rust Belt" is the overall massive level of denial combined with vicious racism and antisemitism: "If we could just kill enough blacks and Jews, they'll start making washing machines here again."

[Feb 12, 2019] How Neoliberalism Is Normalising Hostility

Notable quotes:
"... By Couze Venn, Emeritus Professor of Cultural Theory in the Media & Communications Department at Goldsmiths, University of London, and Associate Research Fellow at Johannesburg University. His recent book is After Capital, Sage, 2018. Originally published at openDemocracy ..."
"... From working conditions to welfare policies, from immigration to the internet – this zero sum game of winners and losers benefits only the far right. ..."
"... Image: Homeless man with commuters walking past, Waterloo Station, London. Credit: Jessica Mulley/Flickr, CC 2.0. ..."
"... As Ha Joon Chang has shown, by the 1990s, financial capitalism had become the dominant power, prioritising the interest of shareholders, and incentivising managers through share ownership and bonuses schemes. ..."
"... Meanwhile, neoliberal political economy gradually became the new orthodoxy, increasing its impact through right wing thinktanks and government advisors and spreading its influence in academia and economic thought. Its initial success in terms of growth and prosperity in the 1990s and turn of the century consolidated its hold over the economy until the crash of 2008. ..."
"... political economy ..."
"... Neoliberalism has promoted a self-centeredness that pushes Adam Smith-style individualism to an extreme, turning selfishness into a virtue, as Ayn Rand has done. It is a closed ontology since it does not admit the other, the stranger, into the circle of those towards whom we have a duty of responsibility and care. It thus completes capitalism as a zero-sum game of winners and 'losers'. Apart from the alt-right in the USA, we find its exemplary advocates amongst leading Brexiteers in the UK, backed by dark money. It is not the social democratic compromise of capitalism with a human face that could support the welfare state. Seen in this context, there is an essential affinity between alt-right, neoliberal political economy and neo- fascisms, punctuated by aggressivity, intolerance, exclusion, expulsion and generalised hostility. ..."
Feb 12, 2019 | www.nakedcapitalism.com

How Neoliberalism Is Normalising Hostility Posted on February 12, 2019 by Yves Smith Yves here. Even though this post paints with very bright colors, I imagine most readers will agree with the argument it makes about the destructive social impact of neoliberalism.

Some additional points to consider:

Neoliberalism puts markets above all else. In this paradigm, you are supposed to uproot yourself if work dries up where you live or if there are better opportunities elsewhere. The needs of your family or extended family are treated as secondary. And your community? Fuggedaboudit. And this attitude has also led to what is arguably the most corrosive practice, of companies treating employees like tissue paper, to be trashed after use.

Companies have increasingly adopted a transactional posture towards customers. This shift happened on Wall Street as a result of deregulation in the 1980s (Rule 415; if anyone cares, I'll elaborate in comments). The reduced orientation towards treating customers well as a sound business practice, and merely going through the form is particularly pronounced at the retail level. I can't tell you how many times I have had to go through ridiculous hoops merely to get a vendor to live up to its agreement, and even though I am plenty tenacious, I don't always prevail. It didn't used to be anywhere near this bad. And this is corrosive. Not only are customers effectively treated as if they can be abused, the people in the support ops wind up being on the receiving end of well deserved anger even though they aren't the proper target. The phone reps are almost certainly not told that they are perpetrating an abuse (which then leads to the question of who in the organization has set up the scripts and training with lies in them) but for certain types of repeat cases, they have to know their employer is up to no good. I am sure this is the case at Cigna, where at least twice a year, I have a problem with a claim, the service rep says it should have been paid and puts it in to be reprocessed and I typically have to rinse and repeat and get stroopy about it, meaning the later reps can see the pattern of deliberate non-payment of a valid claim and continue to act as if they can do something about it.

By Couze Venn, Emeritus Professor of Cultural Theory in the Media & Communications Department at Goldsmiths, University of London, and Associate Research Fellow at Johannesburg University. His recent book is After Capital, Sage, 2018. Originally published at openDemocracy

From working conditions to welfare policies, from immigration to the internet – this zero sum game of winners and losers benefits only the far right.

Image: Homeless man with commuters walking past, Waterloo Station, London. Credit: Jessica Mulley/Flickr, CC 2.0.

The hostile environment is not just about the Windrush generation in the UK, or the harassment of migrants at the Mexican border in the USA, or the unwelcoming treatment of refugees trying to reach Europe. It has become ubiquitous and widespread. We encounter it in many aspects of daily life. In worsening conditions at work such as zero-hour 'contracts'. In obstacles to accessing social and health services due to cutbacks, making people's lives more precarious. Online threats and trolling are other signs of this normalisation of hostility.

The normalisation of hostile environments signals a worrying and global shift in values of tolerance, empathy, compassion, hospitality and responsibility for the vulnerable. It's a normalisation that was criticised recently in the UK by UN Poverty Rapporteur Philip Alston, who described how "punitive, mean-spirited, often callous" government welfare policies were contributing to an " increasingly hostile and unwelcoming society ".

There's a pattern to hostile environments that harks back to the 1930s and 40s. As we know, at the time, those targeted were considered as the enemy within, to be subject to expulsion, exclusion and indeed, genocide, as happened to Jews and other so-called 'inferior races'. In more recent time, the iterations of this discourse of the alien other who must be expelled or eliminated to save the 'pure' or 'good race' or ethnicity and reconstitute the broken community have found traction in Europe, the USA, Rwanda, India, parts of the Middle East. In its wake, refugees have become asylum seekers, migrants are labelled illegal or criminal, cultural differences become alien cultures, non-binary women and men are misgendered, and at the extreme, those targeted for violence become vermin. It marks a shift in political culture that inscribes elements of fascism.

Why has this atmosphere of hostility become the default position in politics? What have been the triggers and what are the stakes in this great moving rightwards shift? One may be tempted to identify the change in mood and attitudes with recent events like the election of Trump in the USA. But the far right has been on the rise in Europe, the UK and the US for some years, as seen in movements like the Tea Party, UKIP, or the National Front in France . They have been given a boost by the flood of refugees generated by wars in the Middle East, Afghanistan, parts of Africa, as well as by the spread of fundamentalist religious creeds that have an affinity with forms of fascism.

Why? Two related sets of developments that from the 1970s have gradually altered the political terrain. Economically, globalisation emerged as an integral part of a transnational corporate strategy aimed at securing advantageous conditions for the consolidation of global capital at a time of risky structural changes in the global economy. And politically, neoliberalism took hold when the crises of the 1970s started to undermine the postwar consensus in the Keynesian mixed economy and the role of the welfare state.

Globalisation saw the systematic deployment of outsourcing production in countries offering cheap labour, minimised corporate tax burdens and other incentives for transnational corporations, and the invention of the trade in derivatives (financial mechanisms intended to leverage the value of assets and repackaged debts). They contributed to the 2008 crash. The general public were made to bail out the banks through increased taxation and the establishment of policies across social services that produce hostile environments for claimants seeking state support.

As Ha Joon Chang has shown, by the 1990s, financial capitalism had become the dominant power, prioritising the interest of shareholders, and incentivising managers through share ownership and bonuses schemes. The disruptions due to this recomposition of capital have been a global squeeze on income, the creation of a new precariat, and the debt society. People who feel insecure, abandoned to forces outside their control become easy prey to demagogues and prophets of deceit who promise the return of good times, provided enemies and outsiders who wreck things are expelled.

Meanwhile, neoliberal political economy gradually became the new orthodoxy, increasing its impact through right wing thinktanks and government advisors and spreading its influence in academia and economic thought. Its initial success in terms of growth and prosperity in the 1990s and turn of the century consolidated its hold over the economy until the crash of 2008.

What is important here is the radical shift in values and attitudes that recall utilitarian values in the 19th Century. In particular, it is reflected in the neoliberal hostility towards the poor, the weak, the destitute, the ' losers', expressed in its denial or abnegation of responsibility for their plight or welfare, and its project of dismantling the welfare or providential state.

This pervasive atmosphere of hostility is the real triumph of neoliberal political economy . Not the economy – privatisation, monetisation, deregulation, generalised competition, and structural adjustments are immanent tendencies in globalised capitalism anyway. But neoliberal political economy reanimates attitudes and values that legitimate the consolidation of power over others, evidenced for example in the creation of an indebted population who must play by the dominant rules of the game in order to survive. It promotes new servitudes, operating on a planetary scale. What is rejected are ideas of common interest and a common humanity that support the principle of collective responsibility for fellow humans, and that radical liberal philosophers like John Stuart Mill defended. They were the values, along with the principles of fundamental human rights, that informed major reforms, and inspired socialism. The establishment of the welfare or providential state, and programmes of redistribution, enshrined in Beveridge or New Deals, draw from these same principles and values.

Neoliberalism has promoted a self-centeredness that pushes Adam Smith-style individualism to an extreme, turning selfishness into a virtue, as Ayn Rand has done. It is a closed ontology since it does not admit the other, the stranger, into the circle of those towards whom we have a duty of responsibility and care. It thus completes capitalism as a zero-sum game of winners and 'losers'. Apart from the alt-right in the USA, we find its exemplary advocates amongst leading Brexiteers in the UK, backed by dark money. It is not the social democratic compromise of capitalism with a human face that could support the welfare state. Seen in this context, there is an essential affinity between alt-right, neoliberal political economy and neo- fascisms, punctuated by aggressivity, intolerance, exclusion, expulsion and generalised hostility.

There are other important stakes at this point in the history of humanity and the planet. We tend to forget that support for fundamental human rights, like equality, liberty, freedom from oppressive power, has long been motivated by the same kind of concern to defend the vulnerable, the poor, the destitute, the oppressed from the injustices arising from unequal relations of power. We forget too that these rights have been hard won through generations of emancipatory struggles against many forms of oppressions.

Yet, it is sad to see many institutions and organisations tolerate intolerance out of confusion about the principles at stake and for fear of provoking hostile reactions from those who claim rights that in effect disadvantage some already vulnerable groups. Failure to defend the oppressed anywhere and assert our common humanity is the slippery slope towards a Hobbesian state and great suffering for the many.

[Feb 11, 2019] The so-called shale revolution, the fracking miracle, may have resulted in record oil and gas production in North America, but the real miracle -- in which shale companies make money fracking that oil and gas -- has yet to occur.

Feb 11, 2019 | www.nakedcapitalism.com

While U.S. politicians from both parties have given standing ovations for the U.S. oil and gas industry , investors appear to be losing their enthusiasm. The so-called shale revolution, the fracking miracle, may have resulted in record oil and gas production in North America, but the real miracle -- in which shale companies make money fracking that oil and gas -- has yet to occur.

[Feb 11, 2019] Blain The Current Iteration Of 'Capitalism' Has Spawned Increased Global Poverty, Income Inequality, Urban Deprivation, Squal

Feb 11, 2019 | www.zerohedge.com

Blain's Morning Porridge, submitted by Bill Blain

What a fascinating world we live in.

Amazon boss Jeff Bezos exposing himself, and exposes the National Inquirer for attempted blackmail. A young senator, Alexandria Ocasio-Cortez, snaring the headlines and proposing a preposterous New Green Deal – while further splitting the Democrats. Europe plunging back into recession. The UK no closer to a Brexit Deal (hang-on, that's not a headline that's just normal..) Deutsche Bank paying up to demonstrate it can borrow in markets. Santander facing a Euro 50 bln breach of promise lawsuit from Andreas Orcel (proving the Spanish banking adage: At Santander – you are either a Botin or a.. servant..) So much out there

Are all these things linked? Yes – the world we live in determines the functionality of global markets. You might believe Washington Post owner Jeff Bezos was the victim of an Inquirer effort to "catch and kill" a story the paper has on Mr Trump's activities in Moscow, or you might believe Deutsche Bank's problems are part of a deeper malaise across European banking. Whatever the news changes our perceptions.

The trick is too separate the chaos of new flow from the tau of markets . Markets are linear functions of buy/sell – they are not necessarily about common sense. To illustrate: last week I wrote about Italy, pointing out just how hopelessly its ensnared and entrapped within the straight-jacket of the Euro, with little prospect of growth, employment or upside.

Yet Italian bonds are one of the top performing assets – AND WILL REMAIN SO – because the ECB can't afford to let Italy go, and Europe sliding back into downturn pretty much ensures they'll continue to bailout Italy and likely resurrect QE in some form – watch out for something like long-term repos. An article in one weekend paper says the EU is now turning a blind eye to European governments spending their way out of austerity driven recession.

Therefore, smart investors might agree with my analysis of Italy as unsustainable, yet keep buying Italy, and will keep on buying right up to the moment the arbitrage cracks. (According the theory of flight bumble-bees can't fly – but they do.) That's why the smart hedge fund bosses are watching the succession for Draghi's job at the ECB so carefully, and weighting populism in Germany so carefully – as it requires a complicit German electorate to keep the Euro illusion going. I suspect they care considerably less about the current spat betwixt France and Italy – entertaining as it is.

On a purely common sense Macro perspective, you should probably ignore Europe completely. Who cares about counties with sub 1% growth, demographic time-bombs ticking away, and a hopeless mish-mash of unpredictable populist politics coming to the fore? Go invest in the fast growing economies of Africa and Asia instead.. Yet, it still makes sense to arb the European game.

Such things are just facets of the six-impossible things before breakfast approach to investment.

Using the same logic, you might see US stock and bond markets as a screaming buy!

US growth remains robust – despite the FED clearly indicating its dialing back rate hikes. Essentially rates will remain flat. Is that a problem? From the market's perspective – get out the party hats! There is no long term inflation threat because there is zero wage pressure. Despite "full employment" US companies pay as little as they can. Wages aren't rising.

Low rates will fuel yet more share buy-backs for Bernie Sanders to fulminate against. Share buybacks are great for the market and excellent for senior executives and owners of businesses – converting equity into massively underpriced debt and handing more capital back to them. More highly levered companies don't actually build anything more, or create new jobs but the rich get richer – and, heck, isn't that what capitalism is all about? In the short-run .

Last week I commented in the Morning Porridge about Squalor and Creeping Poverty in San Francisco. It was an eye-opener. It got about a quarter of a million views on Zerohedge , I got trolled and called a communist /socialist /democratic no-nothing stooge. (On the plus side, I got over 300 comments from porridge readers, and only one was nasty. The rest ranged from supportive to constructively critical.)

It's a difficult one: the current iteration of capitalism has spawned increased Global Poverty, Income Inequality, Urban Deprivation, Squalor and Filth. Yet, somehow, such iniquity isn't actually bad for markets? Should I therefore hurrah the continuation of low rates as good for markets and ignore the bad for people thing? What's to worry about when share-buybacks push up stock prices, and the Fed is keeping rates artificially low to i) placate the president, and ii) counter the president's trade policies.

Long term – even my most hardened sink or sink free-market capitalist critics admit we face a disruptive inequality crisis. We can address it sooner or later. The imbalances are growing and the rules of mean reversion apply as much to society and politics as they do to markets ! Long-term markets would probably function better if everyone is positively motivated. Adam Smith, the father of modern capitalism and economics got it. So do most people – but the sad reality is Change is Difficult – especially when the market leads opinion!

I've been thinking about the "hows" of making the world a better place all weekend, but I don't know enough 'ologys or medicine to cure drug abuse, chronic greed, urban mental illness, virtue-signaling philanthropy, or how to reform out education systems and society to improve everyone's opportunities.

What I do suspect is markets are building up great long-term underlying weaknesses, but in the short-terms low interest rates for longer is a distortion, but positive for financial asset prices That can't be a good thing?

[Feb 11, 2019] Many meaning of the word "free" are different from the "free from coercion" adopted by the Neoliberal Newspeak

Notable quotes:
"... The ruling class has successfully ruled out any concept of consent. Keep bringing consent up and their philosophies will be shown to be the same as gang rapists. ..."
"... They call themselves liberals, but they are intent upon abolishing liberty. ..."
"... They promise the blessings of the Garden of Eden ..."
Feb 11, 2019 | www.unz.com

sentido kumon , says: February 3, 2019 at 10:17 am GMT

'Liber' in Latin means:
1) free (man)
2) free from tribute
3) independent, outspoken/frank
4) unimpeded
5) void of

The author needs to recheck his definitions. Voluntary exchange, consent, free markets, free will, etc are just some of the concepts at the heart of the true libertarian thought. The ruling class has successfully ruled out any concept of consent. Keep bringing consent up and their philosophies will be shown to be the same as gang rapists.

"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!" – Ludwig Von Mises

[Feb 11, 2019] Has neoliberal mirage become apparent by Dr Khisa

Notable quotes:
"... Dr Khisa is assistant professor at North Carolina State University (USA). ..."
"... moses.khisa@gmail.com ..."
Feb 02, 2019 | monitor.co.ug
No country or region of the world has ever broke out of the chains of poverty through the magic of the market. And no country has developed because of the benevolence of foreign capital. None. The consistent historical record has entailed growth and development anchored in highly nationalist economic agendas with heavy involvement of public institutions.
In fact, for much of medieval and early modern Europe, with England leading the way, national economies were built around mercantilism. This was a system that directly employed state power for national economic accumulation. Merchants and rulers drunk from the same teacup.
This system of mercantilism is in fact still alive today: For example, American military power is intricately tied to business interests for national accumulation and when American politicians talk about 'our national interest,' they primarily mean economic.
With a terribly disappointing record of modest growth, at best, without transformation, the neoliberal creed has come under increasing doubt from the front-runner converts of the 1980s, including our own NRM regime in Uganda. There has been a striking turnaround in rhetoric though not practice.
It is instructive to hear the Ugandan ruler belatedly lamenting the dubious practices of multinational telecom companies that evade taxes and repatriate all their profits: That is precisely what we signed up for. Sorry Mr President. With rapidly growing and disproportionately young populations, African countries are increasingly seen as the main frontier for product innovation and experimentation. So, China's aggressive penetration of the continent, seductively using infrastructural projects, has to be viewed in that light – to capture markets and raw materials for the long-term.
The raw end to Africa's place in the global economy, and for which African governments show little concern, is the one-way traffic of an unlimited open policy in Africa, but not for African products out of Africa, not in China or India and not in the West.
Part of the problem, we are often told, is not having competitive products for the so-called global markets, but how on earth is this ever going to happen when local producers are overrun on the home turf by cheap Chines goods? Much the same way we hunger for foreign investors, there is a rather misleading obsession with exporting to foreign markets. But the immediate, domestic market provides the necessary testing ground for breaking into the distant consumer.
African governments, more so the one of Mr Museveni, will do well to fully concede to the neoliberal mirage. Markets can theoretically do many things, but they have never on their own, delivered robust and sustained growth or brought about economic transformation. There is now wide consensus in academic circles that fiscal coercion, to direct credit and investment to certain critical sectors of a poor economy, is crucial to propel and sustain high growth.
For Uganda, the greatest obstacle to a radical rethink and turnaround of national economic policy is the powerful cabal, comprising local comprador class and foreign speculators, who have profiteered enormously from the laissez faire system, including commandeering public property and using state power for economic predation.
In that regard, the struggle for political change is also, in fact, most importantly in concrete terms, a struggle for economic revolution, to embark on a wholly different approach to a long-term national economic strategy.
Without an internally coherent and clearly articulated long-term plan for economic transformation, away from the orthodoxy of the IMF and the World, Uganda will remain trapped in poverty 50 years down the road. Dr Khisa is assistant professor at North Carolina State University (USA).
moses.khisa@gmail.com

[Feb 10, 2019] Neoliberalism is dead. Now let's repair our democratic institutions by Richard Denniss

Highly recommended!
Notable quotes:
"... The opposite of a neoliberal economic agenda isn't a progressive economic agenda, but democratic re-engagement. Neoliberalism taught us that "there is no alternative" to cutting taxes, cutting services and letting the banks treat us as they see fit. But of course not even the Coalition believes that any more. These days they proudly subsidise their friends and regulate their enemies in order to reshape Australia in their preferred form. ..."
"... While the hypocrisy is staggering, at least voters can now see that politics, and elections, matter. Having been told for decades that it was "global markets" that shaped our society, it's now clear that it is actually the likes of Barnaby Joyce and Tony Abbott who decide whether we get new coal mines or power stations. Luckily, millions of voters now realise that if it's OK to subsidise new coal mines, there's no reason we can't subsidise renewables instead. ..."
"... So, what to nationalise? What new machinery of state should we build first? Should we create a national anti-corruption watchdog, replace the productivity commission with a national interest commission, or abolish the failed network of finance sector regulators and build a new one from scratch? ..."
"... The death of neoliberalism means we can finally have a national debate about the size and role of government, and the shape of the economy and society we want to build. ..."
"... class warfare (by the rich against the 99%, though I should not need to say that) is still very much alive. ..."
"... The rise of nationalism is indeed worrying situation.. but its clear that mass discontent is driving a 'shift' away from the status quo and that opportunists of every creed are all trying to get in on the action.. ..."
"... the elephant in the room that no one wants to discuss is population growth and lack of natural resources and meaningful 'employment' .. which self serving politicians are exploiting via playing the fear card and creating further division in society in order to embrace and increase their own power. Further more, no one, it seems, has any valid answers as regards resolving the division and creating a path forward.. thereby making more conflict an inevitability. ..."
"... Like Octopus, the globalists have every one of their eight legs in a different pot of gold. On their arms, suction cups maintain an iron grip. Trying to pull those suckers out, leaves us raw and bleeding. To release their grip, without hurting ourselves, we must aim for the brain. ..."
"... Murdoch's media empire has arms in every Democracy on earth. As his poisonous ink spread across our lands, we wallowed in the dark. ..."
"... The Oil and Coal Tycoons have arms in every black hole on earth. As their suckers pull black gold from the land beneath our feet, we choke on the air we breathe. ..."
"... The Financial Tyrants have arms in our buildings, factories, farms and homes. Their suckers stripped our pockets bare and we ran out of money. ..."
"... The False Prophets spread their arms into our private lives. Their suckers turned our modest, humble faiths into global empires filled with mega-churches, televangelists, jet-setting preachers and evangelical armies Hell bent on disruption and destruction. ..."
"... Neoliberalism may be dead but the former Trotskyites who invented it are still alive and they still have an agenda. ..."
"... Neo Liberalism was a project cooked up back in the late 1970s by the Capital owning classes & enacted by successive govts of "right" or "left" ever since. They feared the growing power of the working & middle classes which they felt threatened their own power & wealth. So they set out to destroy any ability of the working class to organise & to gut the middle class. ..."
"... Key to this was decoupling wages from productivity & forcing us all into debt peonage. Deregulation of the financial markets & the globalization of capital markets, disastorous multilateral trade deals & off shoring jobs, slashing state social programmes, Union busting laws all part of the plan. All covered with a lie that we live in meritocracies & the "best & brightest" are in charge. The result has been evermore riches funneled to the wealthiest few percent & a wealth gap bigger than that of the gilded age ..."
"... The majority press are so organised around the idea that neoliberalism in the sense captured economically and to some extent socially as construed in the article above; ..."
"... Rumours of neoliberalism's death have been somewhat exaggerated. Its been on life support provided by the LNP since John Howard and there are still a few market fundamentalists lurking in the ranks of the ALP, just waiting for their chance to do New Labor MkII in memory of Paul Keating. ..."
"... Neoliberalism's lasting legacy will not be the ludicrous economic programs, privatizations and deregulation, those can all be rolled back if some party would grow a spine. The real damage was caused by the aping of the US and UK's cult of individual responsibility, the atomizing effects of neoliberal anti-social policy and demonization of collective action including unionism. ..."
Oct 31, 2018 | www.theguardian.com

The opposite of a neoliberal economic agenda isn't a progressive economic agenda, but democratic re-engagement. Neoliberalism taught us that "there is no alternative" to cutting taxes, cutting services and letting the banks treat us as they see fit. But of course not even the Coalition believes that any more. These days they proudly subsidise their friends and regulate their enemies in order to reshape Australia in their preferred form.

While the hypocrisy is staggering, at least voters can now see that politics, and elections, matter. Having been told for decades that it was "global markets" that shaped our society, it's now clear that it is actually the likes of Barnaby Joyce and Tony Abbott who decide whether we get new coal mines or power stations. Luckily, millions of voters now realise that if it's OK to subsidise new coal mines, there's no reason we can't subsidise renewables instead.

Neoliberalism: the idea that swallowed the world Read more

The parliament is filling with people of all political persuasions who, if nothing else, decry the neoliberal agenda to shrink our government and our national vision. While there's obviously quite a distance between MPs who want to build the nation, one new coal mine at a time, and those who want to fill our cities with renewable energy, the whole purpose of democracy is to settle such disputes at the ballot box.

The Liberals want to nationalise coal-fired power stations and pour public money into Snowy 2.0 . The ALP want much bigger renewable energy targets and to collect more revenue by closing billions of dollars in tax-loopholes . The Greens want a publicly owned bank and some unions are pushing to nationalise aged care. It's never been a more exciting time to support a bigger role for government.

So, what to nationalise? What new machinery of state should we build first? Should we create a national anti-corruption watchdog, replace the productivity commission with a national interest commission, or abolish the failed network of finance sector regulators and build a new one from scratch?

... ... ...

The death of neoliberalism means we can finally have a national debate about the size and role of government, and the shape of the economy and society we want to build. But we need to do more than talk about tax and regulation. Australia is one of the oldest parliamentary democracies in the world, and we once helped lead the world in the design of democratic institutions and the creation of an open democratic culture. Let's not allow the legacy of neoliberalism to be a cynical belief that there is no point repairing and rebuilding the democratic institutions that ensure not just our economy thrives, but our society as well. A quick look around the world provides clear evidence that there really are a lot of alternatives.

Richard Denniss is chief economist for the Australia Institute


R_Ambrose_Raven , 1 Nov 2018 16:38

Mmmm, well, class warfare (by the rich against the 99%, though I should not need to say that) is still very much alive.

Globalisation-driven financial deregulation was commenced here by Hawke Labor from 1983 as a Laberal facade for the Australian chapter of the transnational ruling class policy of self-enrichment. It was sold to the aspirationals as the ever-popular This Will Make You Rich - as ever-rising house prices did, for home-owners then (paid for now through housing unaffordability for their descendants). Then, transnational capital was able to loot both aspirationals' productivity gains (easily 10% of GDP) plus usurious interest from the borrowings made by the said aspirationals (easily 6% of GDP) to keep up with the Joneses. Now, it loots 90% of all increases in GDP, leaving just 10% in crumbs from the filthy rich man's table for 15 million workers to share.

We don't notice as much as we should, because the mainstream (mainly but not only Murdoch) media is very good at persuading us - then and now - that there is nothing to see. It is a tool of that transnational class, its role being to manufacture our consent to our own exploitation. Thus they play the man because it is politically easier than open demands that the public be robbed. In the case of penalty rates, thus adopting the obvious hypocrisy of which "The Australian" accuses Shorten. Or they play the woman, in the case of the ferocious, relentless media vilification of Julia Gillard and Gillard Labor – five years after the demonization of Gillard Labor's Great Big New (Carbon) Tax, the need for one is now almost universally accepted. Or they play the players, hence a focus on Dutton's challenge that pretends that he has meaningful policies.

Labor's class traitors clearly intended to aggressively apply the standard neoliberal model – look at how it helps their careers after politics (ask Anna Blight)! Shorten is not working to promote some progressive agenda, he is doing as little as possible, and expects to simply be voted into The Lodge as a committed servant of transnational capitalism.

Colinn -> bushranga , 1 Nov 2018 16:14
Wait till the revolution comes and we get the bastards up against the wall.
Colinn , 1 Nov 2018 15:53
I stopped voting 40 years ago because the voting system is mathematically rigged to favor the duopoly. Until a large number of minor parties can share their preferences and beat the majors, which is now starting to happen. This is not just voting for a good representative, but voting against the corrupt parties. A minority government should lead to proper debate in parliament. More women will lead to lower levels of testosterone fuelled sledging and better communication. A "Coalition of Representative Independents" could form government in the future, leading by consensus and constantly listening to the community.
tjt77 -> BlueThird , 1 Nov 2018 11:35
The rise of nationalism is indeed worrying situation.. but its clear that mass discontent is driving a 'shift' away from the status quo and that opportunists of every creed are all trying to get in on the action..

The big nut to crack is HOW do we collectively find sane and honest leadership ? A huge part of the problem is the ongoing trend of disdain for government in favor of embracing private monopolies as the be all and end all for solving the ongoing societal rift. .. which has created a centralization of wealth and the power that that wealth yields.. allied to the fact that huge swaths of the population in EVERY nation were hiding when the brains were allocated.. and hence are very easy to dupe..

the elephant in the room that no one wants to discuss is population growth and lack of natural resources and meaningful 'employment' .. which self serving politicians are exploiting via playing the fear card and creating further division in society in order to embrace and increase their own power. Further more, no one, it seems, has any valid answers as regards resolving the division and creating a path forward.. thereby making more conflict an inevitability.

MeRaffey , 1 Nov 2018 08:05
Like Octopus, the globalists have every one of their eight legs in a different pot of gold. On their arms, suction cups maintain an iron grip. Trying to pull those suckers out, leaves us raw and bleeding. To release their grip, without hurting ourselves, we must aim for the brain.

Murdoch's media empire has arms in every Democracy on earth. As his poisonous ink spread across our lands, we wallowed in the dark.

The Oil and Coal Tycoons have arms in every black hole on earth. As their suckers pull black gold from the land beneath our feet, we choke on the air we breathe.

The Financial Tyrants have arms in our buildings, factories, farms and homes. Their suckers stripped our pockets bare and we ran out of money.

The False Prophets spread their arms into our private lives. Their suckers turned our modest, humble faiths into global empires filled with mega-churches, televangelists, jet-setting preachers and evangelical armies Hell bent on disruption and destruction.

Denniss offers us the cure! Start thinking fresh and new and starve the globalists to death. They fed us BS, we ate BS and now we are mal-nourished. We need good, healthy ideas.

Land. Infrastructure. Time.

Time - "WE" increased productivity and the globalists stole the rewards. Time to increase our FREE time. 32 hours is the NEW full time. Pay us full time wages, give us full time benefits, and reduce our work days by 20% and suddenly we have 20% more jobs. As the incomes of billionaires drop, the money in circulation will increase. We are the job creators - not globalists.

21st Century Infrastructure is about healthy human beings - not the effing economy. Think healthcare, education, senior care and child care. If we find out you have sent your money off-shore, your local taxes will increase by ten. So please, do, send your money off-shore - our cities and towns would love to increase taxes on your stores, offices and real estate by ten.

No more caps on taxes. If you are a citizen, you pay social taxes on every dime you get. In America you will be paying 15.3% of every dollar to social security. That's $153,000.00 a year for every million dollars you take out of our economy.

Land is not something you put in a museum, lock away in a vault, or wear on your neck. Think fresh and new. If you own land, you are responsible for meeting community rules.

No more empty, weed filled lots allowed. If you have empty land, you better put in a nice garden, pretty trees and walkways or we will do it for you and employ "eminent-domain" on your bank accounts to pay for it.

No more empty buildings. If you own an empty building you will put it to good use, or we will do it for you - and keep the profits to fund our local governments, schools, hospitals, and senior/child care centers.

No more slumlords allowed. We have basic standards, for everyone. If we catch you renting a slum to anyone, we will make repairs for you, and if you do not pay the bill, we will put a lien on your building and wait until you sell it to pay ourselves back.

We do not trust you big-box types anymore. If you want to build your mega-store in our cities, towns or communities, you must, first, deposit the entire cost of tearing it down, and landscaping a park, or playground when you leave. While you stay, we will invest your deposit in index funds and assure ourselves enough money down the road.

Sorry you BIG guys and gals, but you will find our countries are very expensive places for you to invest. We put our families, our neighborhoods and our lives first.

Proselytiser -> FarmerDave , 1 Nov 2018 07:30
That would be fantastic.

However - and it's a big however - there is a very real danger that at the next election the libs will again win by default due to the fact that many traditional labour voters are defecting to the greens instead. Sadly, LNP supporters are a lot less likely to vote green. Our best hope is to wipe the LNP out at the next election by voting labour, and then at the election after that establishing the greens in opposition. It is unfortunatly unlikely to happen at the next election....and I just hope that voters in certain seats understand that by voting for the greens they might be in fact unwittingly handing the reins back to the least green party of all: the LNP.

childofmine , 1 Nov 2018 04:04
Neoliberalism may be dead but the former Trotskyites who invented it are still alive and they still have an agenda.
Idiotgods , 1 Nov 2018 03:25
Neo Liberalism was a project cooked up back in the late 1970s by the Capital owning classes & enacted by successive govts of "right" or "left" ever since. They feared the growing power of the working & middle classes which they felt threatened their own power & wealth. So they set out to destroy any ability of the working class to organise & to gut the middle class.

Key to this was decoupling wages from productivity & forcing us all into debt peonage. Deregulation of the financial markets & the globalization of capital markets, disastorous multilateral trade deals & off shoring jobs, slashing state social programmes, Union busting laws all part of the plan. All covered with a lie that we live in meritocracies & the "best & brightest" are in charge. The result has been evermore riches funneled to the wealthiest few percent & a wealth gap bigger than that of the gilded age

Phalaris -> fabfreddy , 1 Nov 2018 03:18
The essential infrastructure to ensure a base level quality of life for all. Really it's not difficult. What are you afraid of?
Phalaris , 1 Nov 2018 03:15
The majority press are so organised around the idea that neoliberalism in the sense captured economically and to some extent socially as construed in the article above; as normal and natural that nothing can be done. As the system folds we see in its place Brexit, neoconservatism, Trump.

This is not new found freedom or Liberatarianism but a post liberal world where decency and open mindedness and open nuanced debate take a a back seat to populism and demagoguery.

Citizen0 , 1 Nov 2018 00:52
The whole purpose of Anglophone liberal democracy has been twofold: 1. to establish and protect private property rights and 2. TO guarantee some individual liberties. Guess who benefits from the enshrinement of private property rights as absolute? Big owners, and you know who they are. ... Individual tights are just not that sacred, summon the latest bogeyman, and they can be shrunken or tossed.
Alan Ritchie , 31 Oct 2018 22:24
Neoliberalism, the economic stablemate of big religion's Prosperity Evangelism cult. https://en.wikipedia.org/wiki/Prosperity_theology . Dual streams of bull shit to confuse the citizens while the Country's immense wealth is stolen.
PaulC_Fitzroy -> Bearmuchly , 31 Oct 2018 22:19
I certainly agree with you.

It seems there's been a turning point recently though in the ideas of neoliberalism, as pointed out by Denniss that suddenly it's okay for all and sundry to talk about nationalising industries and infrastructure. It will probably take a couple of decades to turn things around in practical ways. And there are surely plenty of powerful supporters of the ideas of neoliberalism still around.

HonestQuestion , 31 Oct 2018 19:00
Is neo-liberalism really dead or is it wishful thinking?
If neo-liberalism really is on the decline in Australia, all i can say is bravo to Australia, use this opportunity to build a stronger government and regain the terrain that was lost during the TINA (there is no alternative) years.
Here in Canada neo-liberalism is stronger than ever, maybe because of the proximity to the cancerous tumor at the south, so when i read this article, i did it with a bit of skepticism but also with a bit of envy and a bit of hope for the future.
MrTallangatta , 31 Oct 2018 18:58
Neoliberalism is *not* dead, and it is counter-productive to claim that it is. It is clearly the driver of what passes for policy by the LNP government. Just as trickle-down economics remains as the basis of the government's economic actions.
sangela -> mikedow , 31 Oct 2018 18:50
I love it!!
Nintiblue , 31 Oct 2018 18:48
It will look like it's dead when back bone services and infrastructure utilities are returned to public ownership.

Those things are not fit for market style private ownership for a few big reasons:

They are by their nature natural monopolies (so a market private ownership won't work and will rapidly creep up prices of reduced service precisely because they not in a natural market context.

These core services and utilities are mega scale operations beyond a natural market ROI value.

These core sovereign services and utilities, are nation critical to the national economy and political stability. The last thing we want to do is hand that sovereign power over to private control.

PaulMan , 31 Oct 2018 18:47
Australia is a very fortunate country. It enjoys national sovereignty, unshackled by crippling bonds to anything like the neoliberal EU. It is thus able to concentrate on solving its own issues.
StephenO -> ildfluer , 31 Oct 2018 18:47
When The Guardian's editorial staff goes down to Guatamala City, they can stand on a soap box in front of Subway sandwich or McDonalds or Radio Shack.

Europe doesn't do socialism. It's a capitalist system with a high rate of taxes to support a generous social welfare.

sangela -> Matt4720 , 31 Oct 2018 18:46
Jane is too radical and progressive for Warringah...maybe they don't know that?
sangela , 31 Oct 2018 18:45
Great article. Must say that we do have more than one vote per electorate. They're called preference votes. Kerryn Phelps get 23% of the primary PLUS a heap of preferences! But a proportional system would change a whole lot of results
ildfluer -> Matt4720 , 31 Oct 2018 18:41
Yes. But only if she relinquishes her British citizenship in time.
Fred1 -> Alpo88 , 31 Oct 2018 18:38
Firstly we are not in America. America is a basket case and has been since, well, forever.

Secondly the so called "housing crisis" is a simple consequence of a growing population. In the 1950s there were just 8m people in Australia, there 10m in the 1960s and 12m in the 1970s. And, no, neo-liebralism didn't cause the growing population. People having sex and living longer caused the growing population. It is therefore all the more remarkable that we have actually built enough houses to house a population which has doubled in size.

Thirdly, in the last 30 years 1 billion people have been lifted out of poverty. When you talk about huge, unprecedented, un-fucking-believable levels of poverty, super-massive inequality, dissatisfaction (Really? This is now a measure?), unemployment/sub-employment and casualization, collapse (collapse?) of public services, high(er) costs of living.....do you think you're being a little overly dramatic?

Do you really think it all comes to back to one silly economic theory?

Nothing to do with the reality of automation, globalisation, growing populations and the realities of living in 2018 rather than 1978?

Are voters around the world going hard against Neoliberalism? (I note it's now a capitalised term).

In the US they voted for a billionaire who blamed immigrants for people's problems while promising tax and spending cuts.....sounds like an even more extreme version of neo-liberlaism to me.

In Britain they voted for Brexit to....oh that's right....kick out immigrants and burn "red tape".

In Brazil, yep, more neo-liberalism on steroids.

In fact, looking around the world it's actually the far right which are seizing power.

And this is the issue with the obsessive preoccupation with community decline. It feeds directly into the hands of fascism and the far right.

I'm not saying things are perfect. I would prefer to see much more government investment. The only way we'll get that is to educate ourselves about how government finances work so that we're not frightened off by talk of deficits.

However, by laying this all on the door of one rather silly economic theory is to ignore that economics is nothing without human beings. It is human beings who are responsible for all of the good and bad in the world. No theory is going change that. If the world is the way it is it's because humans made it like this.

The "deterioration of the environment"? We did that not neo-liberalism .....

JustInterest , 31 Oct 2018 18:37
In answer to the headline article question, yes WE citizens should collectively strive to think radically, bigger and better than the existing status quo.

PAY CITIZENS TO VOTE!

We must bypass the vested interests and create a new system which encourages active, regular participation in democracy.... lest we wake up one day and realise too late that, by stealth and citizen apathy, the plutocrats and their corporate fascist servants have usurped our nation state, corrupted our law and weakened our institutions, to such a point that our individual rights are permanently crushed.

Change is coming, like it or not. This century - there is great risk to society that advanced technologies such as artificial intelligence, robotics and lifespan enhancing genetic engineering will be used by ultra-rich plutocrats to make the vast majority of humanity redundant (within a couple of generations).

Citizens should advocate for DIRECT DEMOCRACY in which citizens are PAID on a per vote per issue basis (subject to verification checks that support the rewarding of effort- citizens should be asked to first demonstrate that they have made effort to obtain sufficient knowledge on a particular topic, prior to being rewarded for their service of voting. Such a process can be opt-in, those who want to be paid, work to do so by learning about the governance issue which is to be voted upon. In this way, a minimum wage can be obtained by direct citizen participation in the governance of communities and our nation). We have the technologies TODAY to undertake open-ledger, smart-phone enabled, digital/postal voting on a per issue basis... which can be funded by EFFECTIVE taxation on large multinational corporations and ultra-wealthy (foreign) shareholders. Citizen will is needed to influence change - the major political parties did not want a Federal ICAC and they certainly will not support paid direct citizen democracy unless voters overwhelming demand it.

Citizens already accept that politicians are paid to vote (and frequently "rewarded" for their "service" to large corporations and wealthy (foreign) shareholders by unethical, corrupt means). Thus, in principle, why can society not collectively accept direct payment to citizens for their individual vote upon an issue? Why do citizens continue to accept archaic systems of democracy which have clearly FAILED to meet the needs of our population in the 21st century?

Citizens are not sufficiently politically engaged in democracy and their civic responsibilities BECAUSE they are not incentivised to do so and because they are economic slaves without the luxury of time to sort through deliberate overload of disinformation, distortion, distraction and deception. Citizens are struggling to obtain objective understanding and to think critically because these crucial functions of democracy are innately discouraged by our existing 20th century economy (that is, slaves are busy support the systems of plutocrats in order that they may live, ants to a queen).

We must advocate for change in the systems of democracy which are failing our communities, our nation, our planet. For too long, plutocrats and their servants have maintained control over economic slaves and the vast majority of the population because citizens have accepted the status quo of being governed by the powerful.

Technology has permanently changed our species. We must all collectively act before innate human greed, lust for power and fear of loss of control (by the wealthy few) lead the majority on an irrational path toward destruction - using the very technologies which helped set us free from the natural world!

JustInterest -> NoSoupforNanna , 31 Oct 2018 18:35
In answer to the headline article question, yes WE citizens should collectively strive to think radically, bigger and better than the existing status quo.
PAY CITIZENS TO VOTE!

We must bypass the vested interests and create a new system which encourages active, regular participation in democracy.... lest we wake up one day and realise too late that, by stealth and citizen apathy, the plutocrats and their corporate fascist servants have usurped our nation state, corrupted our law and weakened our institutions, to such a point that our individual rights are permanently crushed.

Change is coming, like it or not. This century - there is great risk to society that advanced technologies such as artificial intelligence, robotics and lifespan enhancing genetic engineering will be used by ultra-rich plutocrats to make the vast majority of humanity redundant (within a couple of generations).

Citizens should advocate for DIRECT DEMOCRACY in which citizens are PAID on a per vote per issue basis (subject to verification checks that support the rewarding of effort- citizens should be asked to first demonstrate that they have made effort to obtain sufficient knowledge on a particular topic, prior to being rewarded for their service of voting. Such a process can be opt-in, those who want to be paid, work to do so by learning about the governance issue which is to be voted upon. In this way, a minimum wage can be obtained by direct citizen participation in the governance of communities and our nation). We have the technologies TODAY to undertake open-ledger, smart-phone enabled, digital/postal voting on a per issue basis... which can be funded by EFFECTIVE taxation on large multinational corporations and ultra-wealthy (foreign) shareholders. Citizen will is needed to influence change - the major political parties did not want a Federal ICAC and they certainly will not support paid direct citizen democracy unless voters overwhelming demand it.

Citizens already accept that politicians are paid to vote (and frequently "rewarded" for their "service" to large corporations and wealthy (foreign) shareholders by unethical, corrupt means). Thus, in principle, why can society not collectively accept direct payment to citizens for their individual vote upon an issue? Why do citizens continue to accept archaic systems of democracy which have clearly FAILED to meet the needs of our population in the 21st century?

Citizens are not sufficiently politically engaged in democracy and their civic responsibilities BECAUSE they are not incentivised to do so and because they are economic slaves without the luxury of time to sort through deliberate overload of disinformation, distortion, distraction and deception. Citizens are struggling to obtain objective understanding and to think critically because these crucial functions of democracy are innately discouraged by our existing 20th century economy (that is, slaves are busy support the systems of plutocrats in order that they may live, ants to a queen).

We must advocate for change in the systems of democracy which are failing our communities, our nation, our planet. For too long, plutocrats and their servants have maintained control over economic slaves and the vast majority of the population because citizens have accepted the status quo of being governed by the powerful.

Technology has permanently changed our species. We must all collectively act before innate human greed, lust for power and fear of loss of control (by the wealthy few) lead the majority on an irrational path toward destruction - using the very technologies which helped set us free from the natural world!

exTen , 31 Oct 2018 17:13
Richard went off the rails in his opening sentence: "The opposite of a neoliberal economic agenda isn't a progressive economic agenda, but democratic re-engagement."

I say this because economically misinformed democratic engagement is a shackle around democracy, at best, if not fatal to democracy. And the biggest and most fundamental misinformation, spouted every bit as much by ALP and Greens as the Libs, is that we must strive for a "sustainable surplus".

As Richard rightly observes, "Neoliberalism taught us that "there is no alternative" to cutting taxes, cutting services and letting the banks treat us as they see fit. But of course not even the Coalition believes that any more." But that doesn't stop them, or Labor, or the Greens from guaranteeing the continuance of the neoliberal cut & privatise mania by insisting that they believe in "budget repair" and "return to surplus" - an insistence which their economically illiterate or misled supporters accept. If you believe in the obviously ridiculous necessity for a currency issuer to run balanced budgets, you are forced into invalid neoliberal thinking, into accepting a false "necessity" for cuts and privatisations, or economy-sedating taxation increases.

Thorlar1 , 31 Oct 2018 08:13
Rumours of neoliberalism's death have been somewhat exaggerated. Its been on life support provided by the LNP since John Howard and there are still a few market fundamentalists lurking in the ranks of the ALP, just waiting for their chance to do New Labor MkII in memory of Paul Keating.

Neoliberalism's lasting legacy will not be the ludicrous economic programs, privatizations and deregulation, those can all be rolled back if some party would grow a spine. The real damage was caused by the aping of the US and UK's cult of individual responsibility, the atomizing effects of neoliberal anti-social policy and demonization of collective action including unionism.

All of which have hastened the atrophy of our democracy.

First things first lets get rid of the neo-liberal national dinosaurs still wallowing in parliament unaware of the mass extinction awaiting them in March next year. At the same time vote in a minority Labor government with enough independent cross benchers, including a preponderance of Greens to keep the bastards honest.

Then just maybe we can start looking at the wider project of repairing Australian society and democracy while we try and reverse the near-decade of damage the LNP have done with their dangerous pro-fossil fuel stance, their insane climate change denial and hypocritical big business friendly economic policies.

Should be a snap!

exTen -> Loco Jack , 31 Oct 2018 08:05
The irony is that it's simple. It's the Heath Robinson contraptions that the economic priesthood for the plutocracy snow us with that are complicated, that turn us off economic thinking because they are impenetrable and make no sense. The simplicity comes from accepting the blinding obvious truth, once you think about it. The federal government is the monopoly issuer of the AUD. The rest of the world are users, not issuers. Its "budgets" are not our budgets. Nothing like them. Kind of the opposite. Its surpluses are the economy's deficits. Its deficits are the economy's surpluses.

[Feb 10, 2019] Neoliberalism's great strength is its ability to divide and rule effectively via its emphasis on individual responsibility and its insistence (as Thatcher cynically thundered) that there is no such thing as society.

Feb 10, 2019 | discussion.theguardian.com

KiwiInStraya , 16 Oct 2018 22:14

Neoliberalism is about maintaining success to the successful. As such, the policy has delivered as promised.
Runerunner -> Fred1 , 16 Oct 2018 22:08
No fred but I've seen a lot of places with the 9 billion and there isn't much there now, just ruined deserts.

Just seeing the chaos in Egypt in 2012 was enough and that huge population fighting over fuel, water and food is around 75% under the age of 25.

I don'r believe we do have bigger problems than the population explosion.

CaptainFlacid , 16 Oct 2018 22:06
Neoliberalism has been a spectacular failure that has seen the rich get richer and the poor more indebted to them.
20thcenturycoyote , 16 Oct 2018 21:55
Show me a neoliberal and I'll show you a self-serving prick with an over-inflated sense of self-entitlement.
Mikey70 , 16 Oct 2018 21:36
Former RBA governor says "Coalition pursues low-tax road to jobs and growth despite lack of evidence to support it"

The incumbent political cabal of grifters and leaners aren't interested in evidence, for the self righteous it has always been inconvenient & unnecessary.

Bearmuchly , 16 Oct 2018 21:34
Neo liberal capitalism is based on the premise that the Govt. sector
has a minimal role to play in the economy in a regulatory manner
, in the provision of goods/services and in redistributing wealth
........basically, the less Govt. the better.

As a starting point, it is best to consider what level of services
society expects from Govt. and to cost these, that then gives
you an amount of revenue required to fund these.......in Australia
our figure in 2017 was 28.2% of GDP (which also allowed for a
$6.2b. deficit and for some debt repayment)...the Federal share of this
was 21.6 % of GDP. In the world of wealthy countries (the OECD)
we sit at 27th of 35 ie: we are a low taxing country....the OECD average
is 34.3%.

The next part of any debate is what range and quality of services we expect
...in the US their social services/$'s provided by Govt. has plummeted by 50%
since neo liberalism was introduced (the Reagan era) whilst, for example Defence/
Security has risen by 5% of GDP and is by far the highest proportion in the world.
In Australia our proportions have changed far less......even with Medicare,
PBS, Child care subsidies, Education spending etc. our revenue rate has
dropped from an average of 33.5% of GDP to an average of 26.2% since the
1980's. (NDIS is too recent to be included but will up the ante).

The next step to consider is WHERE will the revenue come from and this
is where we have NOT followed the US in their lunacy.......since Reagan
their tax take from corporate profits and income taxes from the rich have
plummeted (and their deficits risen inexorably).

Putting it simply, Australia has indeed swallowed the neoliberal pill, but
has largely preserved its social amenity and the size of its Govt. sector.
It has privatised much but kept many aspects in public hands eg; much
of our healthcare. The pressures continue to privatise more, however
it still sees the Govt. being the funder but not the provider.....THAT has
been our massive change. Our reality has also been that household
incomes have been stagnant for years for at least 50% of our population
(it is worse in the US) as have been our income support payments ie:
Pensions and benefits (especially the latter that have gone backwards).
and our social mobility ie: the support/opportunity for people to move
from low to higher incomes (mostly via higher educational achievement)
have also stagnated in many cohorts.......in other words neoliberalism
has changed Australia, it has allowed the affluent and rich to improve
their situations but has seen stagnation for everyone else .......not
exactly a success after > 35 years, but at least not as bad as the US !

LovelyDaffodils , 16 Oct 2018 21:32
Neo-liberalism and it's form of capitalism is obviously not working; it's more of a Ponzi scheme, and causes societal division and inequality to an extreme. These intransigent politicians will keep taking us down the road of destruction unless we stop them.

Morrison and his cohort are dangerous, very dangerous, and will become even worse because what they do is transparent, and we let them get away with it. To them, they see their positions of power, and their actions, as being approved by the voting public to keep the unethical behaviour going.

Cosmo_Wilson , 16 Oct 2018 21:32
This comment was removed by a moderator because it didn't abide by our community standards . Replies may also be deleted. For more detail see our FAQs .
Bewareofnazihippies , 16 Oct 2018 21:32
Neo-liberalism = Failed Democracy/Corrupt government/Corporate feudalism.
Really no other way to describe it, and it's consequences.
And more and more people are waking up to this fact.
It's the 'what to do about it' that is the problem.
Overturn the government?
Revolution?
Bring back the tumbrils?
Personally, I'd think an aware, involved, and empowered citizenry would be the best solution.
Runerunner -> happylittledebunkera , 16 Oct 2018 21:30
Capitalism has brought lots of debt to the masses. $4 trillion of it in fact and that will lead to poverty and misery if it can't be paid back readily.
Capitalism is fine until it enters this debt binge stage and then it needs a great big correction to get it back on an even keel.
leon depope -> HellBrokeLuce , 16 Oct 2018 21:29
Since the 1980's and Thatcher and Reagan, the dominant political and economic rational has been neo-liberalism. Even under Blair and Brown (labour PM's in the UK) the thinking was neo-liberalism, as it largely was under Rudd and Gillard in Australia.
It is decades of right wing thinking which has been all pervasive in western societies and it will take decades to correct the faults that have been created in society; starting with changing the perceived accepted idea that govts do not exist to create jobs and that we exist, as individuals, to serve the economy (as is evidenced by the punishing of the unemployed and the drive to get women back into work as soon as possible after having children).
Thorlar1 , 16 Oct 2018 20:24
Its not so much polarisation as atomisation.

Neoliberalism's great strength is its ability to divide and rule effectively via its emphasis on individual responsibility and its insistence (as Thatcher cynically thundered) that there is no such thing as society.

In the absence of any kind of inspirational narrative or indeed hope, the morally bankrupt LNP have actually come to believe their own TINA propaganda. Their impoverished imaginations just can't imagine any other way of maintaining the status quo for their constituency than by keeping as much of the population as possible undereducated but surviving sufficiently to be jealous of what they have and fearful of the state taking it away.

An atomised population is one in which daily life, in the words of Thomas Hobbes, is a 'war of all against all'. How pathetic that conservative governments in 2018 remain intent on driving us back to a 'state of nature' Hobbes was condemning in 1651.

While our governments continue to be run by and for the benefit of big business and the wealthy at the expense of the rest of society, low-taxing neoliberal dogma will remain the order of the day.

Oneron , 16 Oct 2018 20:19
Dear Bernie, when have ideologues of any persuasion ever, ever relied on evidence...

The Neo-liberal project was conceived as an ideology- a way to hollow out the democratic legitimacy, and replace it with a Corporatocracy... This was based less on an economic rationale but more as a reaction to the democratization of voices and the challenges they posed to the 'old world' spheres of authority and power that emerged front he 60's and early 70's.
The Washington Consensus was the ideological product of this reaction- so vigorously championed by Reagan and Thatcher- who could forget her silly remark that there is no such thing as a society...
That's why the electorate in today's democratic countries seem to be only left with "rhetorical" Leaders- windbags, whose pronouncements signify nothing.

Fred1 , 16 Oct 2018 20:08
I'm not a conspiracy theorist but* if was I would say that the lizard people introduced the word "neo-liberalism" to distract people from the real issues......

But seriously, what the hell do people even mean by this term? darkbluedragon bless his/her/their/its cotton socks has done his/her/their/its best to explain what it is. In fact, if in 2019 we no longer identify along the lines of traditional gender roles why does anyone think we can agree on a over-arching economic theory which apparently is responsible for all of the woes in the world?

And actually the premise of all of this is of course how shit everything is today. People love talking about how the world was so much better 40 years ago or whenever. You know when women and minorities were discriminated against and so there were more jobs for white men. Good times I say.

The reality is that the world is the way it is because of people. If neo-liberalism is all about greed and meanness then frankly it's because people are greedy and mean. 100 years ago we were killing each other with bayonets. Bankers screwing vulnerable customers is an improvement compared to that shit.

Many people who talk about "neo-liebralism" in the political sense instead of the economic sense are also terrified of government deficits and think government finances are like a households. So what are you going to do?

If we're all going to become economists overnight (which I would strongly advise against) then we may as well go the whole hog and understand the other side of the coin i.e. the different monetary theories. But no side of the coin is going to be perfect because....because....people, people. People in the shit sense and a people in the glorious sense. People in all senses....

*Why does "I'm not.....but" always mean "I am"? I'm not racist but...I don't mean to be rude but........

JustAnotherPenguin , 16 Oct 2018 20:06
During their undergraduate years future politicians and business people learn about ideas that then form the foundations of their understanding of the world and how it works. Unfortunately, while the scholarship moves on, the politicians and business people don't, having dedicated their lives to their careers. So we end up with governments of people operating on principles some decades out of date, and often discredited. And when they want advice, who do they turn to? Not academia (and if they do they usually ignore it), but to business people, who are working off the same base.
It is often noticed that politicians in the twenty-first century seem to be applying nineteenth century solutions to twentieth century problems. What can be done?
Foxlike , 16 Oct 2018 19:55
Bring on the royal commission into privatisation!

In the absence of an RC, then at least a twenty-year comparative analysis of the economic and social 'benefits' (few) and costs (incalculable) of privatisation to the taxpayers of Australia, and the 'benefits' (massive) and costs (none) to the private sector. Surely someone has his data at their fingertips?

1908kangaroos , 16 Oct 2018 19:48
Neoliberalism is usually just a term to justify selfish arseholes making more money, usually by ripping off workers..
Bho Ghan-Pryde , 16 Oct 2018 19:33
At long freaking last some sanity is creeping back into the discussion of economics amongst those who have run the economy. Neo-liberal capitalism has run its course. It ended ten years ago in the GFC and probably before. Whatever good it has done is being undone in its extremes.


Even the capitalists at capitalist central do not believe in capitalism. When broke during the GFC they declared they were "too big to fail" and so market forces no longer applied to them. The people who own and run the capitalist system have long abandoned it but the Corporate State and its serfs - such as the liberal party - want to foist it on the peasants as a means of control.


The "too big to fail" capitalists park their business risk in the treasuries of the West and pocket the profits and then blame the poor for the lack of public money. It would be funny if it wasn't doing so much damage.

On climate change capitalism has failed. It has no way to deal with such an emergency. Capitalism has always taken such things as clean air, water and land from others without compensation and turned them into massive profit for the few. It can never tackle climate change as it means paying for environmental damage and other public resources and that contradict centuries of capitalist exploitation.
The answer for the right-wing neo-liberal capitalist is what it has always been when confronted with the contradictions of capitalism. Racism and division. Exactly what the IPA-liberal party has been about this last week big time. It is all normal for this system.

Isitruegoodoruseful , 16 Oct 2018 19:21
Because its based on Neo-Classical economics. A universally enforced scam economic dogma designed by and for the rich landowning classes to destroy any attempt at land value taxation.
https://www.prosper.org.au/2007/11/07/the-corruption-of-economics /

[Feb 10, 2019] The future of capitalism in emerging markets

Feb 10, 2019 | www.brookings.edu

Following the twin shocks of 2016 -- the U.K. Brexit vote and the election of Donald Trump in the U.S. -- right-leaning nationalism and populism appear to be gaining steam, buoyed by the public's dissatisfaction with globalization. At the same time, the political left is also growing more ambitious and confident; for instance, according to one recent poll, Americans aged 18-29 have a more positive view of socialism than of capitalism. Overall, the elite consensus surrounding the neoliberal economic model -- which advocated a relatively small role for government, deregulating markets to encourage competition, and liberalized international trade and financial policies -- is teetering.

In emerging markets, meanwhile, a related series of debates are unwinding, and have been for many years. Among these countries, the neoliberal economic model peaked in popularity sometime in the 1990s, in the aftermath of the collapse of the Soviet Union and amidst optimism in an accelerating globalization, epitomized in the creation of the World Trade Organization (WTO). Even at its peak, however, the neoliberal reform program was always implemented unevenly across countries and adapted to local contexts. Since then, a number of alternative models have been proposed in response to a series of economic and political shocks, from the Asian financial crisis to the "Pink Tide" in Latin America to the Arab Spring. These experiences provide a fertile ground for assessing the possible futures of capitalism, across both emerging and developed markets.

Neoclassical economics' focus on individual incentives and utility maximization misses much bigger questions about structural power relations, which play a central role in determining economic outcomes. Similarly, individuals' desires for status, happiness, and identity are first order concerns, and cannot be easily incorporated into neoclassical models based on assumptions of rationality. Alternative, heterodox approaches to economics -- which had flourished in earlier eras but lost ground to neoclassical approaches in recent decades -- are due for a revival. Such approaches could, for example, pay more attention to crises, tipping points, and transitions rather than equilibria outcomes; provide a richer treatment of power and politics; and study how governments create and shape markets, rather than simply respond to market failures.

[Feb 10, 2019] A stake through the heart of neoliberalism

So what's next? The return to New Deal capitalism? But coalition of workers a management that was at the core of the New Deal Capitalism does not exits. Look whom Democratic Party represents today: they represent Wall Street and intelligence agencies.
Notable quotes:
"... Private Wealth or Public Good ..."
Feb 10, 2019 | newsroom.co.nz

The problem is that almost every authority figure - in economics, politics and the media - tells us otherwise. You will hear plenty this week, as the global elite converge on the Swiss mountain resort of Davos to discuss the challenges facing our economies and our world. Yet, I can guarantee that despite all the talk, there will be no substantive questioning of the immoral foundation of our modern economies.

The current inequality crisis is the direct result of this moral failure. Our exclusive, highly unequal society based on extreme wealth for the few may seem sturdy and inevitable right now, but it will collapse. Before long, the pitchforks will come out and the ensuing chaos will benefit no one. Not wealthy people like me - and certainly not the poorest people who have already been left behind.

To avert this existential crisis, we must drive a stake through the heart of the neoliberal religion that instantly rewards greed at the expense of our future. We must replace it with a new economic framework that recognises that justice and inclusion are not the result of economic prosperity, but rather the cause of economic prosperity.

Only a society that seeks to include all its people in the economy can succeed in the long term: no company, and certainly no billionaire is an island. We owe our wealth to society - to the millions working each day for us at home and across the world, often for poverty wages. We owe our fortunes to governments, who provide the education, the infrastructure, and the research investment on which we build our empires. None of the companies I have invested in would have been able to function without this.

A fundamental prerequisite for a more just society is that the wealthiest should pay their fair share of tax. However, as Oxfam's inequality report, Private Wealth or Public Good , demonstrates, this is not happening. Here in the United States, the richest in society – people like me – have just benefited from one of the biggest tax cuts in decades. Meanwhile our public schools are crumbling, and our healthcare system continues to exclude millions, leading to huge pain and suffering. The top rates of tax on the wealthiest people and corporations are lower than they have been for decades. Unprecedented levels of tax avoidance and evasion ensure that the super-rich pay even less.

There can be no moral justification for this behaviour beyond a discredited neoliberal dogma that if everyone maximises their selfishness, the world will somehow be a better place: that ever-lower taxation on the richest will somehow benefit us all; that health and education left to the mercy of the free market, available only to those who have the money to pay for them, is somehow more efficient. It has no economic justification, either. As Henry Ford famously identified, you can't grow a business or an economy if people are impoverished.

I have absolutely no doubt in my mind that the richest in our society can and should pay a lot more tax to help build a more equal society and prosperous economy. As Oxfam shows, a fairer tax system could help ensure that every child gets an education, and that no one lives in fear of getting sick because they can't afford their medical bills.

Ultimately it is our humanity, not the absence of it, that is the true source of economic growth and a flourishing civilisation. This is not just an imperative for activists and academics but for all of us – including every billionaire. It is no longer a question of whether we can afford to do this but rather whether we can afford not to.

[Feb 10, 2019] The 2008 crisis failed to displace neoliberalism's core principles USAPP

Notable quotes:
"... IMF speeches do little to confirm hopes that the crisis would give rise to ..."
"... progressive capitalism, write ..."
Feb 10, 2019 | lse.ac.uk

IMF speeches do little to confirm hopes that the crisis would give rise to a more progressive capitalism, write Kevin Farnsworth and Zoë Irving .

It is now over ten years since the collapse of Lehman Brothers paved the way for the biggest, most global, and most significant financial crisis in living memory. It brought the global capitalist economy to its knees, it shook belief and faith in the capitalist system itself, and raised serious doubts about neoliberalism.

The hope that the crisis would give rise to a more progressive capitalism, however, proved to be premature. From the competing visions of recovery, the ascendance of austerity as both a political and an economic project paved the way for the construction of a new economically-elite-driven, capital-centric, shrunken welfare state model founded on a non-ideological, pragmatic, economic 'truth'.

Contemporary welfare states now exist within a world in which austerity as a broad set of ideas, encompasses the liberal (in a Hayekian sense) desire to shrink the (social welfare) state, deregulate labour and promote private markets as the driver of growth. This has forced a reconfiguration of the fortunes of the wealthy, the interests of capital, the position of middle-income and poorer citizens, and the state itself. And the biggest losers have been the poorest citizens. Nor is this new politics driven simply by economic austerity. An austere politics has sapped the political imagination and robbed people of hope that things might, one day, get better. At every level austerity restricts the terms of debate.

Whilst the Left rail against the cruelty of austerity, for many on the Right the crisis and the ascendance of austerity politics represents a 'dream come true'. Or does it? Whilst the critical voices are often quiet, there remains a powerful counter-narrative which suggests that in exposing the limitations of neoliberalism, the global crisis and subsequent austerity created a backlash against globalisation and brought the wider costs of unfettered capitalism into public focus. Nationalism, protectionism, and trade wars are widely reported and international organisations are taking a more obvious interest in inequality . More solid emerging evidence of a possible paradigmatic shift came most recently from none other than the IMF , perhaps the archetypal and unapologetic neoliberal institution , and one with the power to shape and frame the relationship between economies and welfare states.

For welfare state progressives, the possibility that austerity's social harms are gaining purchase in international and public discourse is heartening. However, as our research shows, there is little to feel optimistic about as far as the expansion of social policy is concerned. The post-crisis welfare terrain can be characterised as one of 'neo-austerity' – an emboldened set of claims for the residualisation of state welfare combined with spending to safeguard the power of economic elites. This contrasts with post-war 'socialised austerity' , the 'permanent austerity' of the 1990s and the simple austerity of public expenditure cuts.

Neo-austerity implies not less, but more reliance on the state to enforce, support and compensate for social, political and economic losses. But while a range of discretionary social provisions and services, from public spaces to social care, are erased from the social citizenship balance sheet, demand is increased for state support for private business and pressures for 'social' investment . This is the key policy problematic that governments and international organisations are currently grappling with – this rather than the morality of inequality is the major contradiction within neoliberalism. The rise of the nationalist Right is, in many ways a response to this counter-narrative. It has sought to capitalise on the discontent by promising a cure for the symptoms of austerity. But of course, nationalist politics do little or nothing to change the medicine!

The public statements of the IMF are an important discursive window through which to examine the strength of austerity in maintaining neoliberalism. Rather than coding the content of speeches ourselves, our approach let maths categorise the data. Our research utilised quantitative textual analysis (exploiting the capabilities of WordStat) to examine all public speeches by senior IMF representatives between 2004 and 2015.

The contradictions are clear but there is little to indicate that conviction in the economic fundamentals are on the wane. The IMF has at times appeared 'off-message' in its advice during the period of the Great Recession, but economic growth through private market development has remained its key priority. Unlike national governments, the IMF is an organisation playing the long and global game

... ... ...

Kevin Farnsworth – University of York -- is reader in international and comparative social policy at the University of York. His research interests include the political economy of welfare, welfare states and economic crisis and corporate welfare. He is author of Corporate Welfare versus social welfare (2012) and founder of corporate-welfare-watch. With Zoë Irving he is co-editor of the Journal of International and Comparative Social Policy. He tweets at @Dr_K_Farnsworth

Zoë Irving – University of York -- is senior lecturer in international and comparative social policy at the University of York. Her research interests include the international social politics of economic crisis and austerity with a special interest in Iceland. With Kevin Farnsworth she co-edited Social Policy in Challenging Times (2011) and Social Policy in Times of Austerity (2015)

[Feb 09, 2019] I understand that you do not like neoliberalism, fine. I understand you do not like nationalism of Trump and Salvini, of Le Pen and BNP, fine. But what do you like?

Notable quotes:
"... The elite thinkers who penned this manifesto need to wake up. Any chance of holding onto Western Civilization and "the legacy of Erasmus, Dante, Goethe and Comenius (Comenius?)" lies with the nationalist right. The academic left no longer gives a shit about the Western Canon, they're all just dead privileged white guys to them. Book burnings to follow. ..."
"... Did Cook and other so called Geniuses ever consider our nations are failing apart because we finance and fight wars for Israel. What would the trillions spent in Iraq, Afghanistan, and the Middle East have fixed in our own country. ..."
"... "The first is the status-quo cheerleaders like the European writers of liberalism's latest – last? – manifesto. With every utterance they prove how irrelevant they have become, how incapable they are of supplying answers to the question of where we must head next. They adamantly refuse both to look inwards to see where [neo]liberalism went wrong and to look outwards to consider how we might extricate ourselves." ..."
"... "Action makes propaganda's effect irreversible. He who acts in obedience to propaganda can never go back. He is now obliged to believe in that propaganda because of his past action. He is obliged to receive from it his justification and authority, without which his action will seem to him absurd or unjust, which would be intolerable. He is obliged to continue to advance in the direction indicated by propaganda, for action demands more action." ..."
"... Much the same could have been said about the last days of the USSR, or for that matter the last phase of the 30 Years War or the Napoleonic Wars. As back then, so now: The old elite and new authoritarians actively crushing the new group, well, they are are actively crushing _themselves_ at an even greater rate than they are crushing the new group. ..."
"... Example: Decay of Democratic leadership -- which is now, apparently, two old crazy people, one of which has active dementia. Waiting in the wings we see various groups that hate each other and propose what is pretty clearly a loot and burn approach to governing the US. They vary only in whom they will loot and what they will burn. ..."
"... Example: Decay of the media, which now knows it is as ineffective as Russian propaganda towards the USSR's end, and apparently either doesn't care or is unable to change. ..."
"... If resource scarcity prompts armed response, well, humanity has enough shiny new weapons _and untried weapons technologies_ to produce destruction as surprising in its extent as WW I and WW II were for their times [1] (or as the self supporting tercio was during the 30 Years War). ..."
"... However, that classical liberalism has absolutely nothing to do with what this author labels "liberalism'. The modern so-called "neoliberalism" he talks about is a complete reversal of the original ideals of the classical liberals. ..."
"... In medieval times, the "nobles" could throw peasants who revolted too much off their land, impoverishing them in the process. The monarchies of the time could exert much control on the nobles, and indirectly on the peasants, BUT they had to be careful themselves, as there were a lot more peasants than nobles or royalty. Pushing too hard could initiate revolts, almost all of which would not bode well for the nobles or royalty. ..."
"... They are responsible for the islamization of Europe as well as destruction of the European "social fabric", for the longest time, which was based on ethnicity and commonality of purpose. ..."
"... The EU switched to open external frontiers, Asian outsourcing and the free international flow of capital (i.e. the full Neo-Liberal agenda), and it was when the consequences (de-industrialization, unemployment, mass non-European immigration) became apparent, that the public turned against the EU. ..."
Feb 09, 2019 | www.unz.com

Giuseppe says: February 3, 2019 at 5:42 am GMT 100 Words

Unless the tide can be turned, elections across the European Union will be "the most calamitous that we have ever known: victory for the wreckers; disgrace for those who still believe in the legacy of Erasmus, Dante, Goethe, and Comenius; disdain for intelligence and culture; explosions of xenophobia and antisemitism; disaster".

The elite thinkers who penned this manifesto need to wake up. Any chance of holding onto Western Civilization and "the legacy of Erasmus, Dante, Goethe and Comenius (Comenius?)" lies with the nationalist right. The academic left no longer gives a shit about the Western Canon, they're all just dead privileged white guys to them. Book burnings to follow.

Replies: @anon

niteranger , says: February 3, 2019 at 6:15 am GMT

Thirty Elite ..really how about fucking Communists. Social media is a cancer on society run by Jews for the Deep State. Meanwhile in Israel they murder Palestinians, bulldoze their homes, build a wall and throw blacks out. Did Cook and other so called Geniuses ever consider our nations are failing apart because we finance and fight wars for Israel. What would the trillions spent in Iraq, Afghanistan, and the Middle East have fixed in our own country.

To put it bluntly: Does anyone have John Wick's phone number? We can take care of these problems very quickly.

Ilyana_Rozumova , says: February 3, 2019 at 6:29 am GMT
I would omit B.H. Levi and I would add Shakespeare, Virgilius, Cornelius, And most important Hugo for his work of Geniuses also Hegel and Kant.

Also: Carthage must be destroyed plus US system of sanctions must be destroyed.

Wally , says: February 3, 2019 at 7:00 am GMT
"The first is the status-quo cheerleaders like the European writers of liberalism's latest – last? – manifesto. With every utterance they prove how irrelevant they have become, how incapable they are of supplying answers to the question of where we must head next. They adamantly refuse both to look inwards to see where [neo]liberalism went wrong and to look outwards to consider how we might extricate ourselves."

Indeed, once they lie they must continue to lie, even they admit it:

"Action makes propaganda's effect irreversible. He who acts in obedience to propaganda can never go back. He is now obliged to believe in that propaganda because of his past action. He is obliged to receive from it his justification and authority, without which his action will seem to him absurd or unjust, which would be intolerable. He is obliged to continue to advance in the direction indicated by propaganda, for action demands more action."

– from ' Propaganda ', by French communist, Jacques Ellul

eah , says: February 3, 2019 at 9:37 am GMT
@apollonian and ethnic nationalism , which is the only workable nationalism.

A Nation of Widgets: The Wall Street Journal and Open Borders

Henryk Broder (also a Jew) recently spoke (on invitation) before the AfD faction of the Bundestag -- one theme of his talk was: Seit die Menschen nicht mehr an Gott glauben, glauben sie allen möglichen Unsinn -- since people stopped believing in God, they believe in all kinds of nonsense.

sentido kumon , says: February 3, 2019 at 10:17 am GMT
'Liber' in Latin means:
1) free (man)
2) free from tribute
3) independent, outspoken/frank
4) unimpeded
5) void of

The author needs to recheck his definitions. Voluntary exchange, consent, free markets, free will, etc are just some of the concepts at the heart of the true libertarian thought. The ruling class has successfully ruled out any concept of consent. Keep bringing consent up and their philosophies will be shown to be the same as gang rapists.

"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!" – Ludwig Von Mises

Stephen Paul Foster , says: Website February 3, 2019 at 11:08 am GMT
"What is needed to save us is radical change. Not tinkering, not reform, but an entirely new vision that removes the individual and his personal gratification from the centre of our social organisation."

I feel Cook's scorn for the hypocrisy of Levy and his self-infatuated band of scribblers and talkers, but when I hear someone proposing to "save us" with "radical change" my reaction is: I don't want anyone trying to "save" me, particularly someone who wants to do it in a "radical" way, which usually means a lot of coercion and often killing. He never gets to the specifics of what that salvation will look like, but if the past is any indication, being saved by radicals means, learning-to-love the radicals as they coerce you to do what they think is best for you and being happy to see your "personal gratification" eclipsed by theirs.

Alexandria Ocasio-Cortez, one of our "radicals" in Congress wants to put that "new vision" into place. I'll go with reactionaries instead.

http://fosterspeak.blogspot.com/2019/02/lone-ranger-hmm.html

Anon [424] Disclaimer , says: February 3, 2019 at 11:40 am GMT
Bernard Henry Levy is a Sephardic jew born in Algeria , https://en.wikipedia.org/wiki/Bernard-Henri_L%C3%A9vy , He lives in France and is always warmongering for Israel , demanding that the " west " intervenes and bombs all the countries that he orders Libia, Syria , Iraq , Ukraine , Russia , Venezuela , Afghanistan , Iran , Yemen , Cuba , you name it .

https://www.stalkerzone.org/vladimir-kornilov-bernard-henri-levy-and-the-correct-mutiny/

Bernard Henry Levi is a bloody prophet of death , he is an enemy of the "West " pretending to be a friend . Very sinister guy .

Counterinsurgency , says: February 3, 2019 at 12:18 pm GMT

The third trend is the only place where hope can reside. This trend – what I have previously ascribed to a group I call the "dissenters" – understands that radical new thinking is required. But given that this group is being actively crushed by the old liberal elite and the new authoritarians, it has little public and political space to explore its ideas, to experiment, to collaborate, as it urgently needs to.

Much the same could have been said about the last days of the USSR, or for that matter the last phase of the 30 Years War or the Napoleonic Wars. As back then, so now: The old elite and new authoritarians actively crushing the new group, well, they are are actively crushing _themselves_ at an even greater rate than they are crushing the new group.

Example: Decay of Democratic leadership -- which is now, apparently, two old crazy people, one of which has active dementia. Waiting in the wings we see various groups that hate each other and propose what is pretty clearly a loot and burn approach to governing the US. They vary only in whom they will loot and what they will burn.

Example: Decay of the media, which now knows it is as ineffective as Russian propaganda towards the USSR's end, and apparently either doesn't care or is unable to change.

Example: Reaction to yellow vests in France, which drew the reactions described in Cook's article (at the root of this comment thread). "Back to your kennels, curs!" isn't effective in situations like this, but it seems to be the only reply the EU has.

New groups take over when the old group has rotted away. At some point, Cook's third alternative will be all that is left. The real question is what will be happening world wide at that point. If resource scarcity prompts armed response, well, humanity has enough shiny new weapons _and untried weapons technologies_ to produce destruction as surprising in its extent as WW I and WW II were for their times [1] (or as the self supporting tercio was during the 30 Years War).

Counterinsurgency

1] To understand contemporary effect of WW I on survivors, think of a the survivors of a group playing paintball who accidentally got hold of grenade launchers but somehow didn't realize that until the game was over. WW II was actually worse -- people worldwide really expected another industrialized war within 20 years (by AD 1965), this one fought with nuclear weapons.

RVBlake , says: February 3, 2019 at 12:42 pm GMT
I fail to see where ethnonattionalists are disingenuous and are "new authoritarians."
onebornfree , says: Website February 3, 2019 at 12:52 pm GMT
"[neo]Liberalism, like most ideologies, has an upside. Its respect for the individual and his freedoms, "

Yes, that was an ideal of the original , 19th century classical liberalism. Other features of the classical liberal ideal were:

1] small governments tightly constrained to particular functions [ defense, courts only]

2]freedom of trade between individuals.

However, that classical liberalism has absolutely nothing to do with what this author labels "liberalism'. The modern so-called "neoliberalism" he talks about is a complete reversal of the original ideals of the classical liberals.

... ... ...

anarchyst , says: February 3, 2019 at 2:24 pm GMT
Many people have an erroneous concept of the relationships between "leaders" and their "subjects".

In medieval times, the "nobles" could throw peasants who revolted too much off their land, impoverishing them in the process. The monarchies of the time could exert much control on the nobles, and indirectly on the peasants, BUT they had to be careful themselves, as there were a lot more peasants than nobles or royalty. Pushing too hard could initiate revolts, almost all of which would not bode well for the nobles or royalty.

It is entirely possible that our "leaders" are fearful of losing control with the proliferation of the internet and social media, and the ability for every person with an internet connection to be a seeker of truth and a "true" journalist, free of the constraints of the "old systems, the "powers that be" are running scared. They no longer control the narrative, as much as they would like to the jewish "brainwashing" of the masses is starting to wear off.

They are responsible for the islamization of Europe as well as destruction of the European "social fabric", for the longest time, which was based on ethnicity and commonality of purpose. That has pretty much been lost, with the introduction of immigrants who don't even know how to read or use flush toilets. Add to that, the prohibition on criticism of many practices of these immigrants, as well as making excuses for their criminality. The debasement of European societies is deliberate. The elites want destruction, period they want their "new world order"

no nationalism before ours. Apparently, only Jewish Identity is real while all others are false identities no better than false idols.

wayfarer , says: February 3, 2019 at 4:26 pm GMT

Cultural Marxism : Its central idea is to soften up and prepare Western Civilization for economic Marxism after a gradual, relentless, sustained attack on every institution of Western culture, including schools, literature, art, film, the Christian religious tradition, the family, sexual mores, national sovereignty, etc. The attacks are usually framed in Marxist terms as a class struggle between oppressors and oppressed; the members of the latter class allegedly include women, minorities, homosexuals, and adherents of non-Western ideologies such as Islam. Cultural Marxism has been described as "the cultural branch of globalism."

source: https://www.conservapedia.com/Cultural_Marxism

Trotskyism : The political, economic, and social principles advocated by Trotsky especially the theory and practice of communism developed by or associated with Trotsky and usually including adherence to the concept of worldwide revolution as opposed to socialism in one country.

source: https://en.wikipedia.org/wiki/Trotskyism

Who Made the Useful Idiots of the Left?

Anon [424] Disclaimer , says: February 3, 2019 at 5:31 pm GMT
Bernard Henry Levy is like a vulture, he was in the Yugoslavian wars also , in the Georgian invasion of Russia wherever he goes there will be war , blood and misery , soon

The Guardian ( of the British Empire ) like other " prestigious " " liberal " journals has to be read the other way around . If they praise a lot someone , it means that this someone is a servant of the western System , and if they critizise sistematically someone , it means that he probably is a patriot ,that defends his country from western greed .

Colin Wright , says: Website February 3, 2019 at 5:43 pm GMT
'A Liberal Elite Still Luring Us Towards the Abyss'

That'd be the wrong metaphor. I don't feel lured at all. Fish are lured. I feel poked, prodded, and driven. Those'd be cattle.

Asagirian , says: February 3, 2019 at 6:07 pm GMT
If the attitude of the nation's Elites is "You the National Folk are NOT our people and, if anything, we globo-homo elites side with the foreign masses who shall replace you" , then the attitude of the National Folk should be "You the globo-homo pseudo-national elites are not OUR leaders, and if anything, we patriotic folks side with foreign elites who shall subvert you."
Sean , says: February 3, 2019 at 6:09 pm GMT

[neo]Liberalism, like most ideologies, has an upside. Its respect for the individual and his freedoms, its interest in nurturing human creativity, and its promotion of universal values and human rights over tribal attachment have had some positive consequences

Nazi Germany was beaten, so was the USSR. Liberalism wins actual and cold wars, it's stronger because it creates a larger more powerful economy. The only trouble is it sows the seeds of long term future dissolution.

More immediately pertinent, Liberalism, in its current self correcting theory of the free market mutation is not working against China because the entry of a billion Chinese into the globalized labour market is eroding the basis for indigenous labour in Western countries along with their productive capacity.

The problem is that the business class are strongly incentivized to like a hagfish eating up the economic and demographic core of Western countries from the inside.

Commentator Mike , says: February 3, 2019 at 6:43 pm GMT
If the EU were by the Europeans for the Europeans and not promoting anti-European policies like population replacement by non-Europeans then there would be no need to call for the various exits.
Anon [795] Disclaimer , says: February 3, 2019 at 7:03 pm GMT
Bernard-Henri Levy is (((liberal elite)))? Why the unnecessary occlusion? His position precisely reflects the Jewish Tanakh politics of foreign nation destruction. These politics are not vague in their book, nor do they differ in the slightest from his politics. See his simultaneous support of both Jewish nationalism and liberalism for non-Jews that is the marker of Jewish Supremacy.

Re: Dante

Although Guelph by ethnicity, Dante was a Ghibelline imperialist, that is a monarchist, who supported the Holy Roman Empire. The HRE was the nobility or land-owner faction. The Papacy was the supporter of the merchant class. Dante was the opposite of everything that Bernard Levy is espousing, and his most famous work, the Inferno, was an allegory that reflected those politics. Levy's invocation of Dante is strange in that it either reveals a curious lack of knowledge in regard to Dante or a disingenuous co-opting of his illustrious name for political purposes.

http://www.dantemass.org/html/guelphs-and-ghibellines.html

the White Guelphs became disaffected and eventually threw in their lot with the Ghibellines.

israel shamir , says: February 3, 2019 at 7:09 pm GMT
Excellent piece, as always, Jonathan! What is missing is your vision of the doctrine you approve of. I understood you do not like neoliberalism, fine. I understand you do not like nationalism of Trump and Salvini, of Le Pen and BNP, fine. But what do you like? Give us a hint. Is it Corbyn's Labour and Sanders' Dems? Or more radical Communism?
Sollipsist , says: February 3, 2019 at 7:39 pm GMT
I absolutely agree with the necessity of restoring value and focus to the family/tribe/community, but I'm deeply suspicious of any blanket indictment of individualism. Individualism is not inherently destructive selfishness, any more than using the resources of the state to benefit its people is inherently "socialist."

Any plan for moving forward that starts by bad-mouthing individualism is simply riding history's baby-with-the-bathwater pendulum to the opposite extreme – a sad and hollow caricature of communitarianism immediately made suspect by the coercive abuses baked into systems such as communism, theocracy, faceless bureaucracy, homogenizing consumerism, etc

geokat62 , says: February 3, 2019 at 8:06 pm GMT
@Asagirian

According to a book I read, How Sweden Became Multicultural , a man named (((David Schwarz))) almost singlehandedly spearheaded the changes that led to Sweden becoming a multicultural country, one in which they are destined to become a minority.

(((Emanuel Celler))) also made it his lifelong mission to get the restrictionist Immigration Act of 1924 repealed and replaced by the non-restrictionist Immigration Act of 1965.

Thanks to George Soros and the work of his Open Society Foundations, this story has been replicated in almost all Western nations.

As George W Bush once infamously claimed, Mission Accomplished !

buzzwar , says: February 3, 2019 at 8:08 pm GMT
The letter was penned by Bernard Henry Levy a French jew. this guy, an Israeli firster, is a warmonger of the worst kind. he was behind the destruction of Libya. Actively supports the aggression on Syria, Yemen; Calls for aggression on Iran. He opposes the planned US withdrawal from Syria and thinks that trump is a danger to the "Jewish people" . The fact that he is sponsoring the letter speaks volumes. He doesn´t like politicians who favor nationalist policies; he calls them populists. He doesn't like criticism of Israeli racist policies, he calls it anti-Semitism, etc. I wonder how he managed to secure so many signatures.
Colin Wright , says: Website February 3, 2019 at 9:13 pm GMT
@DaveLeeDee ' He's a f+++ing idiot.'

Yes, but he's attacked for other reasons entirely. As matters stand, if you join in the vilification of Jeremy Corbyn, you're helping to establish Zionism as unassailable.

It's a bit like if you were Labour, and this were 1940. You might not like Churchill, but the alternative is to accede to appeasing Hitler. That was in fact the choice Labour faced, and they had to swallow Churchill -- for the time being.

It's no longer a matter of liking Corbyn. It's a matter of who would rather have to put up with: Corbyn or Zionist domination?

Christopher Black , says: February 3, 2019 at 10:44 pm GMT
Excellent article. Here is my take on Brexit and that poseur BHL in support. https://journal-neo.org/2016/07/02/brexit-a-different-democracy-a-different-future/
Seraphim , says: February 4, 2019 at 3:40 am GMT
@Anon Because BHL is himself a multimillionare: "His father, André Lévy, was the founder and manager of a timber company, Becob, and became a multimillionaire from his business In 2004, his fortune amounts to 150 million euros. Owner of seven companies, his fortune comes essentially from the inheritance of his parents, then completed by stock exchange investments (he is in 2000 suspected of insider trading by the Commission des opérations de bourse) "
Miro23 , says: February 6, 2019 at 7:45 am GMT
@Christopher Black ts of European people. The EU switched to open external frontiers, Asian outsourcing and the free international flow of capital (i.e. the full Neo-Liberal agenda), and it was when the consequences (de-industrialization, unemployment, mass non-European immigration) became apparent, that the public turned against the EU.

The ideal solution would be a return to the original EEC (with its closed external frontier and removal of internal barriers to the internal movement of people and goods), but it's probably too late for that, as the whole Europe idea will probably be trashed in the counter reaction with a return to all the inter-European trade hassles of the 1950's and 60's.

[Feb 09, 2019] Tenth Circle Added To Rapidly Growing Hell

This 20 year old satire looks like it was written yesterday...
Notable quotes:
"... In the past, the underworld was ill-equipped to handle the new breed of sinners flooding our gates -- downsizing CEOs, focus-group coordinators, telemarketing sales representatives, and vast hordes of pony-tailed entertainment-industry executives ..."
"... Among the tortures the Corpadverticus Circle of Total Bastards boasts: the Never-Ending Drive-Thru Bank, the Bottomless Pit of Promotional Tie-In Keychains, and the dreaded Chamber of Emotionally Manipulative Home Shopping Network Products. ..."
"... condemned TV-exercise-show personalities, clad in skin-tight Spandex outfits soaked in flesh-dissolving acid, are forced to exercise for centuries on end ..."
"... In a nearby area, corporate raiders are forced to carry the golf clubs of uneducated Hispanic migrant workers from hole to hole for eternity, withering under a constant barrage of verbal abuse ..."
"... "In life, I was a Salomon Brothers investment banker," one flame-blackened shade told reporters. "When I arrived here, they didn't know what to do with me. They put me in with those condemned to walk backwards with their heads turned all the way around on their necks, for the crime of attempting to see the future. But then I sent a couple of fruit baskets to the right people, and in no time flat, I secured a cushy spot for myself in the first circle of the Virtuous Unbaptized. Now that was a sweet deal. But before long, they caught on to my game and transferred me here to the realm of Total Bastards. I've been shrieking for mercy like a goddamn woman ever since." ..."
Sep 23, 1998 | home.isi.org

CITY OF DIS, NETHER HELL

After nearly four years of construction at an estimated cost of 750 million souls, Corpadverticus, the new 10th circle of Hell, finally opened its doors Monday.

Tenth Circle Added To Rapidly Growing Hell

The Blockbuster Video-sponsored circle, located in Nether Hell between the former eighth and ninth levels of Malebolge and Cocytus, is expected to greatly alleviate the overcrowding problems that have plagued the infernal underworld in recent years. The circle is the first added to Hell in its countless-millennia history.

"A nightmarishly large glut of condemned spirits in recent years necessitated the expansion of Hell," inferno spokesperson Antedeus said. "The traditional nine-tiered system had grown insufficient to accommodate the exponentially rising numbers of Hellbound."

Adding to the need for expansion, Antedeus said, was the fact that a majority of the new arrivals possessed souls far more evil than the original nine circles were equipped to handle. "Demographers, advertising executives, tobacco lobbyists, monopoly-law experts retained by major corporations, and creators of office-based sitcoms–these new arrivals represent a wave of spiritual decay and horror the likes of which Hell has never before seen," Antedeus said.

Despite the need for expansion, the plan faced considerable resistance, largely due to the considerable costs of insuring construction projects within the Kingdom Of Lies. Opposition also came from Hell purists concerned about the detrimental effect a tenth level would have on the intricate numerology of Hell's meticulously arranged allegorical structure. In 1994, however, funding was finally secured in a deal brokered between Blockbuster CEO Wayne Huizenga and Satan himself.

Prior to the construction of the tenth circle, many among the new wave of sinners had been placed in such circles as Hoarders and Squanderers, Sowers of Discord, Flatterers and Seducers, Violent Against Art, and Hypocrites. Hell authorities, however, say that the new level, the Circle of Total Bastards, located at the site of the former Well of Giants just above the Frozen Lake at Hell's center, better suits their insidious brand of evil.

Frigax The Vile, a leading demonic presence, is one of the most vocal supporters of the new circle.

" In the past, the underworld was ill-equipped to handle the new breed of sinners flooding our gates -- downsizing CEOs, focus-group coordinators, telemarketing sales representatives, and vast hordes of pony-tailed entertainment-industry executives rollerblading and talking on miniaturized cell-phones at the same time. But now, we've finally got the sort of top-notch Pits of Doom necessary to give such repellent abominations the quality boilings they deserve."

Pausing to tear off the limbs of an Access Hollywood host, Frigax added, "We're all tremendously excited about the many brand-new forms of torture and eternal pain this new level's state-of-the-art facilities will make possible."

Among the tortures the Corpadverticus Circle of Total Bastards boasts: the Never-Ending Drive-Thru Bank, the Bottomless Pit of Promotional Tie-In Keychains, and the dreaded Chamber of Emotionally Manipulative Home Shopping Network Products.

The Circle also features a Hall of Aerobics, where condemned TV-exercise-show personalities, clad in skin-tight Spandex outfits soaked in flesh-dissolving acid, are forced to exercise for centuries on end , covered in vomit and prodded with the distended ribs of skeletal, anorexic demons, accompanied by an unending, ear-splittingly loud dance-remix version of the 1988 Rick Astley hit "Together Forever."

In a nearby area, corporate raiders are forced to carry the golf clubs of uneducated Hispanic migrant workers from hole to hole for eternity, withering under a constant barrage of verbal abuse from their former subservients as crows descend from trees to peck at their eyes. In one of the deepest and most profane portions of the circle, unspeakable acts are said to be committed with a mail-order Roly-Kit.

"In life, I was a Salomon Brothers investment banker," one flame-blackened shade told reporters. "When I arrived here, they didn't know what to do with me. They put me in with those condemned to walk backwards with their heads turned all the way around on their necks, for the crime of attempting to see the future. But then I sent a couple of fruit baskets to the right people, and in no time flat, I secured a cushy spot for myself in the first circle of the Virtuous Unbaptized. Now that was a sweet deal. But before long, they caught on to my game and transferred me here to the realm of Total Bastards. I've been shrieking for mercy like a goddamn woman ever since."

His face contorted in the Misery of the Damned, a Disney lawyer said: "It's hell here–there are no executive lounges, I can't get any decent risotto, and the suit I have to wear is a cheap Brooks Brothers knock-off. I'm beeped every 30 seconds, and there's no way to return the calls. Plus, I'm being boiled upside down in lard while jackals gnaw at the soles of my feet. If I could just reach the fax machine on that nearby rock, I could contact some well-placed associates and work something out, but it's just out of my grasp, and it's out of ink and constantly blinking the message, 'Replace Toner Cartridge, Replace Toner Cartridge, Replace Toner Cartridge.'"

He then resumed screaming in agony.

Grogar The Malefic, a Captain in Hell's elite Demon Corps and supervisor in charge of admissions for the new circle, said Hell's future looks bright, thanks to the new circle.

"Things are definitely looking up," Grogar said. "We're now far better equipped, and we're ready to take on the most Unholy Atrocities humanity has to offer."

"We're really on the grow down here," Grogar added. "This is an exciting time to be in Hell."

[Feb 09, 2019] The reality of neoliberal dominatin is not pretty: What we are experiencing today is the worst and most extreme form of predatory and parasitic financialised monopoly crony capitalism (crapitalism), allied with blatant aggressive jingoistic militarism and the crudest form of imperialist exploitation

Feb 09, 2019 | off-guardian.org

mark says Feb, 7, 2019

What we are experiencing today is the worst and most extreme form of predatory and parasitic financialised monopoly crony capitalism (crapitalism), allied with blatant aggressive jingoistic militarism and the crudest form of imperialist exploitation.

I'm not sure even Marx envisaged anything this corrupt and degraded. This must be the terminal stage of crapitalism's death throes. It can only end in war and complete collapse.

It comes as no surprise to see the Faux Left Blairite Backstabbers and the Oh-So-Right-On-Politically-Correct Trudeau Regime leading the charge for a bog standard Pinochet style US coup behind the likes of Trump, Bolton, Pompeo and recycled neocon war criminal and death squad queen Abrams.

They have taken off the mask and showed their true colours. The final outcome is uncertain but the fall out will extend way beyond Venezuela. It may well sound the death knell of our current system.

Archie1954 says Feb, 7, 2019
Isn't it amazing how the scum of the Earth arrange to get into high places? I am totally outraged that Canada had anything to do with fostering a coup in Venezuela! It disturbs my sense of national sovereignty and I rue the day that Trudeau made this apostosy a member of his cabinet. What a poor choice for a Minister of Foreign Affairs! Just consider Canada's recent problems with Saudi Arabia, the Meng problem with /China, the chastising of Russia because it protected its sole military base on the Black Sea and now this foolish interference in Venezuela's internal affairs brought on by US sanctions. Canada's stupidity in all these matters makes me bilious.
Michael says Feb, 7, 2019
Trudeau made Soros' protege Chrystia Freeland part of his cabinet because it was on that condition that Soros generously funded and otherwise caused Trudeau's election bid to be well supported. Billionaires make "democratic" politics so very easy. Canadians, naive, unquestioning, insouciant, swayed by very well rewarded PR & media and with the transacted aquiesence of the other two warmongering neoliberal parties (Conservative & NDP) voted their hopes and Justin Trudeau to PM. But positioning Chrystia Freeland on the global stage and creating a neoliberal path to imperious fascist globalization is the assigned purpose of the swish disposable Canadian Dauphin. Harper played his Soros assigned role, Trudeau will play his and Chrystia hers and they, as quislings all, will exit rewarded as pet functionaries of Soros and his overly entitled ilk. We authorize Soros by wishing & believing this coup is at worst simply a flawed democracy. Ukraine was a Soros coup, Canada is a Soros coup and Venezuela is a Soros coup. All very, very profitable. Don't look, this is how omelettes are made. Our political parties are always for rent by billionaires –that is the main function of political parties. Being corrupt is a design characteristic not a flaw. Buying political parties in supposed democracies is easier, less risky and much more profitable than stealing candy from babies. Canada is undefended against billionaires, invest here, concentrated public assets and resources are available and the quaint people are professionally deactivated. m\\

[Feb 09, 2019] Neoliberalism's collapse is probably inevitable but what will come next is completely unclear

Notable quotes:
"... Unfettered individual creativity may have fostered some great – if fetishised – art, as well as rapid mechanical and technological developments. But it has also encouraged unbridled competition in every sphere of life, whether beneficial to humankind or not, and however wasteful of resources. ..."
"... At its worst, it has unleashed quite literally an arms race, one that – because of a mix of our unconstrained creativity, our godlessness and the economic logic of the military-industrial complex – culminated in the development of nuclear weapons. We have now devised the most complete and horrific ways imaginable to kill each other. We can commit genocide on a global scale ..."
"... Those among the elites who understand that neoliberalism has had its day are exploiting the old ideology of grab-it-for-yourself capitalism while deflecting attention from their greed and the maintenance of their privilege by sowing discord and insinuating dark threats. ..."
"... The criticisms of the neoliberal elite made by the ethnic nationalists sound persuasive because they are rooted in truths about neoliberalism's failure. But as critics, they are disingenuous. They have no solutions apart from their own personal advancement in the existing, failed, self-sabotaging system. ..."
"... This trend – what I have previously ascribed to a group I call the "dissenters" – understands that radical new thinking is required. But given that this group is being actively crushed by the old neoliberal elite and the new authoritarians, it has little public and political space to explore its ideas, to experiment, to collaborate, as it urgently needs to. ..."
Feb 09, 2019 | www.unz.com

Ok neoliberalism is bad and is collapsing. We all understadn that. The different in opinions here is only in timeframe of the collapse and the main reason (end of cheap oil, WWIII, etc). But so far no plausible alternative exists. Canwe return to the New Deal, if top management betrayed the working class and allied with capital owners in a hope later to became such capital owners themselves (and many did).

The experience of the USSR tells as that each Nomenklatura (technocratic elite with the goal of "betterment" of people) degrade very quickly (two generations were enough for Bolshevik's elite for complete degradation) and often is ready switch sides for the place in neoliberal elite.

So while after 2008 neoliberalism exist in zombie states (which is more bloodthirsty then previous) they issue of successor to neoliberalism is widely open.

In one sense, their diagnosis is correct: Europe and the [neo]neoliberal tradition are coming apart at the seams. But not because, as they strongly imply, European politicians are pandering to the basest instincts of a mindless rabble – the ordinary people they have so little faith in.

Rather, it is because a long experiment in Neoliberalism has finally run its course. Neoliberalism has patently failed – and failed catastrophically.

... ... ...

Neoliberalism, like most ideologies, has an upside. Its respect for the individual and his freedoms, its interest in nurturing human creativity, and its promotion of "universal values" over tribal attachment have had some positive consequences.

But neoliberal ideology has been very effective at hiding its dark side – or more accurately, at persuading us that this dark side is the consequence of neoliberalism's abandonment rather than inherent to the neoliberal's political project.

The loss of traditional social bonds – tribal, sectarian, geographic – has left people today more lonely, more isolated than was true of any previous human society. We may pay lip service to universal values, but in our atomised communities, we feel adrift, abandoned and angry.

Humanitarian resource grabs

The neoliberal's professed concern for others' welfare and their rights has, in reality, provided cynical cover for a series of ever-more transparent resource grabs. The parading of neoliberalism's humanitarian credentials has entitled our elites to leave a trail of carnage and wreckage in their wake in Afghanistan, Iraq, Libya, Syria and soon, it seems, in Venezuela. We have killed with our kindness and then stolen our victims' inheritance.

Unfettered individual creativity may have fostered some great – if fetishised – art, as well as rapid mechanical and technological developments. But it has also encouraged unbridled competition in every sphere of life, whether beneficial to humankind or not, and however wasteful of resources.

At its worst, it has unleashed quite literally an arms race, one that – because of a mix of our unconstrained creativity, our godlessness and the economic logic of the military-industrial complex – culminated in the development of nuclear weapons. We have now devised the most complete and horrific ways imaginable to kill each other. We can commit genocide on a global scale .

Meanwhile, the absolute prioritising of the individual has sanctioned a pathological self-absorption, a selfishness that has provided fertile ground not only for capitalism, materialism and consumerism but for the fusing of all of them into a turbo-charged neoliberalism. That has entitled a tiny elite to amass and squirrel away most of the planet's wealth out of reach of the rest of humanity.

Worst of all, our rampant creativity, our self-regard and our competitiveness have blinded us to all things bigger and smaller than ourselves. We lack an emotional and spiritual connection to our planet, to other animals, to future generations, to the chaotic harmony of our universe. What we cannot understand or control, we ignore or mock.

And so the neoliberal impulse has driven us to the brink of extinguishing our species and possibly all life on our planet. Our drive to asset-strip, to hoard resources for personal gain, to plunder nature's riches without respect to the consequences is so overwhelming, so compulsive that the planet will have to find a way to rebalance itself. And if we carry on, that new balance – what we limply term "climate change" – will necessitate that we are stripped from the planet.

Nadir of a dangerous arrogance

One can plausibly argue that humans have been on this suicidal path for some time. Competition, creativity, selfishness predate neoliberalism, after all. But neoliberalism removed the last restraints, it crushed any opposing sentiment as irrational, as uncivilised, as primitive.

Neoliberalism isn't the cause of our predicament. It is the nadir of a dangerous arrogance we as a species have been indulging for too long, where the individual's good trumps any collective good, defined in the widest possible sense.

The neoliberal reveres his small, partial field of knowledge and expertise, eclipsing ancient and future wisdoms, those rooted in natural cycles, the seasons and a wonder at the ineffable and unknowable. The neoliberal's relentless and exclusive focus is on "progress", growth, accumulation.

What is needed to save us is radical change. Not tinkering, not reform, but an entirely new vision that removes the individual and his personal gratification from the centre of our social organisation.

This is impossible to contemplate for the elites who think more neoliberalism, not less, is the solution. Anyone departing from their prescriptions, anyone who aspires to be more than a technocrat correcting minor defects in the status quo, is presented as a menace. Despite the modesty of their proposals, Jeremy Corbyn in the UK and Bernie Sanders in the US have been reviled by a media, political and intellectual elite heavily invested in blindly pursuing the path to self-destruction.

Status-quo cheerleaders

As a result, we now have three clear political trends.

The first is the status-quo cheerleaders like the European writers of neoliberalism's latest – last? – manifesto . With every utterance they prove how irrelevant they have become, how incapable they are of supplying answers to the question of where we must head next. They adamantly refuse both to look inwards to see where neoliberalism went wrong and to look outwards to consider how we might extricate ourselves.

Irresponsibly, these guardians of the status quo lump together the second and third trends in the futile hope of preserving their grip on power. Both trends are derided indiscriminately as "populism", as the politics of envy, the politics of the mob. These two fundamentally opposed, alternative trends are treated as indistinguishable.

This will not save neoliberalism, but it will assist in promoting the much worse of the two alternatives.

Those among the elites who understand that neoliberalism has had its day are exploiting the old ideology of grab-it-for-yourself capitalism while deflecting attention from their greed and the maintenance of their privilege by sowing discord and insinuating dark threats.

The criticisms of the neoliberal elite made by the ethnic nationalists sound persuasive because they are rooted in truths about neoliberalism's failure. But as critics, they are disingenuous. They have no solutions apart from their own personal advancement in the existing, failed, self-sabotaging system.

The new authoritarians are reverting to old, trusted models of xenophobic nationalism, scapegoating others to shore up their own power. They are ditching the ostentatious, conscience-salving sensitivities of the neoliberal so that they can continue plundering with heady abandon. If the ship is going down, then they will be gorging on the buffet till the waters reach the dining-hall ceiling.

Where hope can reside

The third trend is the only place where hope can reside. This trend – what I have previously ascribed to a group I call the "dissenters" – understands that radical new thinking is required. But given that this group is being actively crushed by the old neoliberal elite and the new authoritarians, it has little public and political space to explore its ideas, to experiment, to collaborate, as it urgently needs to.

Social media provides a potentially vital platform to begin critiquing the old, failed system, to raise awareness of what has gone wrong, to contemplate and share radical new ideas, and to mobilise. But the neoliberals and authoritarians understand this as a threat to their own privilege. Under a confected hysteria about "fake news", they are rapidly working to snuff out even this small space.

We have so little time, but still the old guard wants to block any possible path to salvation – even as seas filled with plastic start to rise, as insect populations disappear across the globe, and as the planet prepares to cough us out like a lump of infected mucus.

We must not be hoodwinked by these posturing, manifesto-spouting liberals: the philosophers, historians and writers – the public relations wing – of our suicidal status quo. They did not warn us of the beast lying cradled in our midst. They failed to see the danger looming, and their narcissism blinds them still.

We should have no use for the guardians of the old, those who held our hands, who shone a light along a path that has led to the brink of our own extinction. We need to discard them, to close our ears to their siren song.

There are small voices struggling to be heard above the roar of the dying neoliberal elites and the trumpeting of the new authoritarians. They need to be listened to, to be helped to share and collaborate, to offer us their visions of a different world. One where the individual is no longer king. Where we learn some modesty and humility – and how to love in our infinitely small corner of the universe.

Jonathan Cook won the Martha Gellhorn Special Prize for Journalism. His books include "Israel and the Clash of Civilisations: Iraq, Iran and the Plan to Remake the Middle East" (Pluto Press) and "Disappearing Palestine: Israel's Experiments in Human Despair" (Zed Books). His website is www.jonathan-cook.net .


Rational , says: January 31, 2019 at 7:34 pm GMT

SAVAGES IN SUITS.

Democracy = populism = nationalism and patriotism are the pinnacles of a civilized society. We evolved towards these.

These people are just savages in suits, asking us to back into the gutter.

We refuse. They are refuse.

peter mcloughlin , says: February 1, 2019 at 4:02 pm GMT
'We can commit genocide on a global scale.'

With the growing movement towards nuclear war, we have indeed reached the nadir. It is important to see how humanity got here, for the signs are ominous.

The pattern of history is clear. Power (manifested as interest) has been present in every conflict of the past – no exception. It is the underlying motivation for war.

Other cultural factors might change, but not power. Interest cuts across all apparently unifying principles: family, kin, nation, religion, ideology, politics – everything. We unite with the enemies of our principles, because that is what serves our interest. It is power, not any of the above concepts, that is the cause of war.

https://www.ghostsofhistory.wordpress.com/

AWM , says: February 1, 2019 at 6:08 pm GMT
We are predators.
But Christ gave us an option.
Some people need to think about it.
MarkinLA , says: February 2, 2019 at 7:03 pm GMT
Maybe it is just me but I didn't see any actual solution or much of anything in his third group. You know, the one with all the "correct" answers. All I saw was that it was a glorious vision without all the failings of the other two while rejecting all the badthink.

Every major tragedy in human history starts out with people thinking they have a system better than all the previous that ever occurred. It too soon becomes a religion that needs to defend itself by executing all the blasphemers.

peterAUS , says: February 2, 2019 at 7:22 pm GMT

Maybe it is just me but I didn't see any actual solution or much of anything in his third group. You know, the one with all the "correct" answers. All I saw was that it was a glorious vision without all the failings of the other two while rejecting all the badthink.

Exactly.

I've been waiting for the author, or some from his "group", to post here at least a LINK to that solution, even a suggestion, of theirs. Hell, even the proper analysis of what's not right. A foundation of sort.

So far, as you said, nothing.

Anon[248], February 3, 2019 at 5:29 am GMT

Levy another Jewish "intellectual" shilling for globalization and open borders - for Western nations only, to hasten their demise. What else is new?

[Feb 09, 2019] Have you ever been to Kansas? Might as well move to Mexico, or Puerto Rico: Cost cutting means living costs are less because the standard of living is less.

Notable quotes:
"... Living standards are more than a house with indoor plumbing automatic heat, and lights at the flip of a switch. Its being able to talk with interested people about interesting topics. About being able to see interesting things when looking at the window, or walking, or riding. ..."
Feb 09, 2019 | economistsview.typepad.com

mulp -> Cudgel Carrot... February 08, 2019 at 03:38 AM

Have you ever been to Kansas? Might as well move to Mexico, or Puerto Rico. Kansas has gotten worse because of cost cutting. Cost cutting means living costs are less because the standard of living is less.

Living standards are more than a house with indoor plumbing automatic heat, and lights at the flip of a switch. Its being able to talk with interested people about interesting topics. About being able to see interesting things when looking at the window, or walking, or riding.

It tried to be connected to the world. If the politics were say 1870, they would want 600kph high speed train service so a day trip to a city like St Louis or Chicago was reasonable.

[Feb 07, 2019] The Global Con Hidden in Trump's Tax Reform Law, Revealed

Notable quotes:
"... Last night, President Trump reserved a few minutes of his State of the Union address to praise his tax reform law, which turned a year old last month. To promote its passage, Mr. Trump and his congressional allies promised Americans that drastically lowered corporate tax rates would bring home large sums of capital that had been stashed overseas and finance a surge of domestic investment. ..."
"... Why would any multinational corporation pay America's 21 percent tax rate when it could pay the new "global minimum" rate of 10.5 percent on profits shifted to tax havens, particularly when there are few restrictions on how money can be moved around a company and its foreign subsidiaries? ..."
"... For starters, the law's repatriation deal did prompt a brief surge in offshore profits returning to the United States. But the total sum returned so far is well below the trillions many proponents predicted, and a large chunk of the returned funds have been used for record-breaking stock buybacks, which don't help workers and generate little real economic activity. ..."
"... Bottom line: the Trump tax cut is a giveaway to corporations that doesn't promote investment here ..."
Feb 07, 2019 | economistsview.typepad.com

anne , February 06, 2019 at 04:05 PM

https://www.nytimes.com/2019/02/06/opinion/business-economics/trump-tax-reform-state-of-the-union-2019.html

February 6, 2019

The Global Con Hidden in Trump's Tax Reform Law, Revealed
Why would any multinational corporation pay the new 21 percent rate when it could use the new "global minimum" loophole to pay half of that?
By Brad Setser

Last night, President Trump reserved a few minutes of his State of the Union address to praise his tax reform law, which turned a year old last month. To promote its passage, Mr. Trump and his congressional allies promised Americans that drastically lowered corporate tax rates would bring home large sums of capital that had been stashed overseas and finance a surge of domestic investment.

"For too long, our tax code has incentivized companies to leave our country in search of lower tax rates," he said, pitching voters in the fall of 2017. "My administration rejects the offshoring model, and we have embraced a brand-new model. It's called the American model."

The White House argued they wanted a system that "encourages companies to stay in America, grow in America, spend in America, and hire in America." Yet the bill he signed into law includes a sweetheart deal that allows companies that shift their profits abroad to pay tax at a rate well below the already-reduced corporate income tax -- an incentive shift that completely contradicts his stated goal.

Why would any multinational corporation pay America's 21 percent tax rate when it could pay the new "global minimum" rate of 10.5 percent on profits shifted to tax havens, particularly when there are few restrictions on how money can be moved around a company and its foreign subsidiaries?

These wonky concerns were largely brushed aside amid the political brawl. But now that a full year has passed since the tax bill became law, we have hard numbers we can evaluate.

For starters, the law's repatriation deal did prompt a brief surge in offshore profits returning to the United States. But the total sum returned so far is well below the trillions many proponents predicted, and a large chunk of the returned funds have been used for record-breaking stock buybacks, which don't help workers and generate little real economic activity.

And despite Mr. Trump's proud rhetoric regarding tax reform during his State of the Union address, there is no wide pattern of companies bringing back jobs or profits from abroad. The global distribution of corporations' offshore profits -- our best measure of their tax avoidance gymnastics -- hasn't budged from the prevailing trend.

Well over half the profits that American companies report earning abroad are still booked in only a few low-tax nations -- places that, of course, are not actually home to the customers, workers and taxpayers facilitating most of their business. A multinational corporation can route its global sales through Ireland, pay royalties to its Dutch subsidiary and then funnel income to its Bermudian subsidiary -- taking advantage of Bermuda's corporate tax rate of zero.

Where American Profits Hide

[Graph]

No major technology company has jettisoned the finely tuned tax structures that allow a large share of its global profits to be booked offshore. Nor have major pharmaceutical companies stopped producing many of their most profitable drugs in Ireland. And Pepsi, to name just one major manufacturer, still makes the concentrate for its soda in Singapore, also a haven.

Eliminating the complex series of loopholes that encourage offshoring was a major talking point in the run-up to the 2017 tax bill, but most of them are still in place. The craftiest and largest corporations can still legally whittle down their effective tax rate into the single digits. (In fact, the new law encourages firms to move "tangible assets" -- like factories -- offshore).

Overall, the Tax Cuts and Jobs Act amounted to a technocratic sleight of hand -- a scheme set to shift an even greater share of the federal tax burden onto the shoulders of American families. According to the Treasury Department's tally for fiscal year 2018, corporate income tax receipts fell by 31 percent, an unprecedented year-over-year drop in a time of economic growth (presumably a time when profits and government revenue should rise in tandem).

These damning results, to be sure, don't make for a good defense of what came before the new law. In theory under the old system, American-based firms still owed the government a cut of their global profits. In practice, large firms could indefinitely defer paying this tax until the funds could be repatriated -- usually when granted a tax holiday by a friendly administration.

Over a generation, this political dance was paired with rules that made it relatively easy for firms to transfer their most prized intellectual property -- say, the rights to popular software or the particular mix of ingredients for a hot new drug -- to their offshore subsidiaries. Taken together, they created a tax nirvana of sorts for multinational corporations, particularly in intellectual-property-intensive industries like tech and pharmaceuticals. But it wasn't enough.

For their next trick, the companies worked with their political allies to favorably frame the 2017 tax debate. When he was the House speaker, Paul Ryan was fond of talking about $3 trillion in "trapped" profits abroad. But those profits weren't actually, physically, sitting in a few tax havens.

Dwarf Economies, Giant American Profits

[Graph]

They were largely invested in United States bank accounts, securities and bonds issued by the Treasury or other companies headquartered in the States. As Adam Looney -- a Brookings Institution fellow and former Treasury Department official -- has explained, companies that needed to finance a new domestic investment could simply issue a bond effectively backed by its offshore cash. (For instance, Apple could bring its "trapped" funds onshore by selling a bond to Pfizer's offshore account, or vice versa.)

Put plainly, they got the best of both worlds: Uncle Sam could tax only a small slice of their books while they traded with one another based on the size of the entire pie.

The scale of the tax shifting has become so immense that some economists believe curbing it could raise reported G.D.P. by well over a percentage point -- something Mr. Trump, who's been absorbed by opportunities to brag about the economy, should notionally welcome.

President Trump's economic advisers and the key architects of the bill on Capitol Hill must have known their reform wasn't going to end business incentives that hurt American workers. Honest reform would have meant closing corporate loopholes -- a move they originally promised to make.

Should the opportunity present itself, perhaps to the next president, there are a couple of viable options for a fundamental tax overhaul that wouldn't require reinstating the 35 percent corporate tax rate.

One of several possibilities is to return to a system of global taxation without the deferrals that enabled empty repatriations. That would mean profits sneakily booked tax-free in Bermuda would be taxed every year at 21 percent. Profits booked in Ireland -- or other low-tax nations -- would be taxed at the difference between Ireland's rate and America's rate.

It's an approach that would protect small and midsize American companies while cracking down on bad corporate actors with enough fancy accountants and lawyers to rig the game to their advantage. And it would be far better than the fake tax reform passed a year ago.

anne -> anne... , February 07, 2019 at 06:16 AM
https://twitter.com/paulkrugman/status/1093271623212457985

Paul Krugman‏ @paulkrugman

This is very good from the essential Brad Setser, our leading expert on international trade and money flows. Bottom line: the Trump tax cut is a giveaway to corporations that doesn't promote investment here 1/

https://www.nytimes.com/2019/02/06/opinion/business-economics/trump-tax-reform-state-of-the-union-2019.html

The Global Con Hidden in Trump's Tax Reform Law, Revealed

Why would any multinational corporation pay the new 21 percent rate when it could use the new "global minimum" loophole to pay half of that?

2:14 PM - 6 Feb 2019

@Brad_Setser also gets at something I've been trying to explain: corporate cash "overseas" isn't really a stash of money that can be brought home, it's an accounting fiction that lets them avoid taxes, with no real consequences for investment 2/

And this chart, showing the predominance of tax avoidance in overseas "investment", is a classic 3/

https://pbs.twimg.com/media/DywVXVvWsAAUvrh.jpg

[Feb 07, 2019] Bernie arrived on the scene like a time traveler from an era before the unbreakable stranglehold of neoliberalism

If Trump runs of the defense of neoliberalism platform he will lose. But Trump proved to be a bad, superficial politician, Republican Obama so to speak, so he may take this advice from his entourage. Trump proved to be a puppet of MIC and Israel, his tax cuts had shown that he is a regular "trickle down" neoliberal. So he attraction to voters is down substantially. Now
Polling is unambiguous here. If you define the "center" as a position somewhere between those of the two parties, when it comes to economic issues the public is overwhelmingly left of center; if anything, it's to the left of the Democrats. Tax cuts for the rich are the G.O.P.'s defining policy, but two-thirds of voters believe that taxes on the rich are actually too low, while only 7 percent believe that they're too high. Voters support Elizabeth Warren's proposed tax on large fortunes by a three-to-one majority. Only a small minority want to see cuts in Medicaid, even though such cuts have been central to every G.O.P. health care proposal in recent years.
Notable quotes:
"... Insiders have suggested that Trump plans to explicitly run against socialism in 2020. In fact, in playing up the dangers of socialism, he may be positioning himself to run against Bernie Sanders in 2020. ..."
"... Sanders's rebuttal to Trump's address gave us a preview of how he plans to respond to the mounting attacks on socialism from the Right. President Trump said tonight, quote, "We are born free, and we will stay free," end of quote. Well I say to President Trump, people are not truly free when they can't afford to go to the doctor when they are sick. People are not truly free when they cannot afford to buy the prescription drugs they desperately need. People are not truly free when they are unable to retire with dignity. People are not truly free when they are exhausted because they are working longer and longer hours for lower wages. People are not truly free when they cannot afford a decent place in which to live. People certainly are not free when they cannot afford to feed their families. ..."
"... As Dr Martin Luther King Jr said in 1968, and I quote, "This country has socialism for the rich, and rugged individualism for the poor." What Dr. King said then was true, and it is true today, and it remains absolutely unacceptable. ..."
"... In essence what we're seeing here is Bernie Sanders challenging the popular equation of capitalism with democracy and freedom. This is the same point Bernie has been making for decades. "People have been brainwashed into thinking socialism automatically means slave-labor camps, dictatorship and lack of freedom of speech," he said in 1976. This Cold War dogma swept the pervasive reality of capitalist unfreedom - from the bondage of poverty to the perversions of formal democracy under the pressure of a dominant economic class - under the rug. In a 1986 interview, Bernie elaborated: ..."
"... All that socialism means to me, to be very frank with you, is democracy with a small "d." I believe in democracy, and by democracy I mean that, to as great an extent as possible, human beings have the right to control their own lives. And that means that you cannot separate the political structure from the economic structure. One has to be an idiot to believe that the average working person who's making $10,000 or $12,000 a year is equal in political power to somebody who is the head of a large bank or corporation. So, if you believe in political democracy, if you believe in equality, you have to believe in economic democracy as well. ..."
"... The rise of neoliberalism and the fall of the Soviet Union relieved the capitalist state's elite of the need to keep shoring up the equation between capitalism and freedom. Capitalists and their ideology had triumphed, hegemony was theirs, and socialism was no real threat, a foggy memory of a distant era. But forty years of stagnating wages, rising living costs, and intermittent chaos caused by capitalist economic crisis remade the world - slowly, and then all at once. When Bernie Sanders finally took socialist class politics to the national stage three years ago, people were willing to listen. ..."
Feb 06, 2019 | economistsview.typepad.com

Christopher H. , February 06, 2019 at 01:36 PM

https://jacobinmag.com/2019/02/trump-state-of-union-socialism

02.06.2019

Trump Is Right to Be Afraid of Socialism
BY MEAGAN DAY

... I think he's scared," said Ocasio-Cortez of Trump's socialism remarks. "He sees that everything is closing in on him. And he knows he's losing the battle of public opinion when it comes to the actual substantive proposals that we're advancing to the public." Given the remarkable popularity of proposals like Bernie's Medicare for All and tuition-free college and Ocasio-Cortez's 70 percent top marginal tax rate, she's probably onto something.

Insiders have suggested that Trump plans to explicitly run against socialism in 2020. In fact, in playing up the dangers of socialism, he may be positioning himself to run against Bernie Sanders in 2020. That would be a smart move, since Bernie is the most popular politician in America and could very well be Trump's direct contender in the general election, if he can successfully dodge attacks from the establishment wing of the Democratic Party in the primary.

Sanders's rebuttal to Trump's address gave us a preview of how he plans to respond to the mounting attacks on socialism from the Right. President Trump said tonight, quote, "We are born free, and we will stay free," end of quote. Well I say to President Trump, people are not truly free when they can't afford to go to the doctor when they are sick. People are not truly free when they cannot afford to buy the prescription drugs they desperately need. People are not truly free when they are unable to retire with dignity. People are not truly free when they are exhausted because they are working longer and longer hours for lower wages. People are not truly free when they cannot afford a decent place in which to live. People certainly are not free when they cannot afford to feed their families.

As Dr Martin Luther King Jr said in 1968, and I quote, "This country has socialism for the rich, and rugged individualism for the poor." What Dr. King said then was true, and it is true today, and it remains absolutely unacceptable.

In essence what we're seeing here is Bernie Sanders challenging the popular equation of capitalism with democracy and freedom. This is the same point Bernie has been making for decades. "People have been brainwashed into thinking socialism automatically means slave-labor camps, dictatorship and lack of freedom of speech," he said in 1976. This Cold War dogma swept the pervasive reality of capitalist unfreedom - from the bondage of poverty to the perversions of formal democracy under the pressure of a dominant economic class - under the rug. In a 1986 interview, Bernie elaborated:

All that socialism means to me, to be very frank with you, is democracy with a small "d." I believe in democracy, and by democracy I mean that, to as great an extent as possible, human beings have the right to control their own lives. And that means that you cannot separate the political structure from the economic structure. One has to be an idiot to believe that the average working person who's making $10,000 or $12,000 a year is equal in political power to somebody who is the head of a large bank or corporation. So, if you believe in political democracy, if you believe in equality, you have to believe in economic democracy as well.

For more than four decades, Bernie made these points to relatively small audiences. In 2016, everything changed, and he now makes them to an audience of millions.

The rise of neoliberalism and the fall of the Soviet Union relieved the capitalist state's elite of the need to keep shoring up the equation between capitalism and freedom. Capitalists and their ideology had triumphed, hegemony was theirs, and socialism was no real threat, a foggy memory of a distant era. But forty years of stagnating wages, rising living costs, and intermittent chaos caused by capitalist economic crisis remade the world - slowly, and then all at once. When Bernie Sanders finally took socialist class politics to the national stage three years ago, people were willing to listen.

Bernie has been so successful at changing the conversation that the President now feels obligated to regurgitate Cold War nostrums about socialism and unfreedom to a new generation.

Good, let him. Each apocalyptic admonition is an opportunity for Bernie, and the rest of us socialists, to articulate a different perspective, one in which freedom and democracy are elusive at present but achievable through a society-wide commitment to economic and social equality. We will only escape "coercion, domination, and control" when we structure society to prioritize the well-being of the many over the desires of the greedy few.

Mr. Bill said in reply to anne... February 06, 2019 at 03:29 PM

A lot of the opinion part of what Paul Krugman says, in this article, maybe, doesn't ring quite true, although I don't dispute the facts.

Poll after poll show that 75% of us agree on 80% of the issues, regardless of which political tribe we identify with.

I tend to think that the real problem is that neither the GOP, which represents the top 1% of the economically comfortable, nor the Democrats who represent the top 10%, are representative of the majority of Americans.

Frantically trying to slice and dice the electorate into questionably accurate tranches, ignores the elephant in the room, Paul.

[Feb 07, 2019] Does the European Union generate external instability? by Branko Milanovic

As neocolonial empire of it s own (albeit the one that is vassal of the USA) yes it does, especially in xUSSR state where EU wants to capture the makets. Ukraine is a nice example here.
Feb 07, 2019 | economistsview.typepad.com

https://www.socialeurope.eu/external-instability

February 5, 2019

Does the European Union generate external instability?
The historic achievement of peace within a Europe of universal norms is belied by the external instability engendered by violent and incoherent interventions.
By Branko Milanovic

The European Union is justly admired for making war among its members impossible. This is no small achievement in a continent which was in a state of semi-permanent warfare for the past two millennia.

It is not only that we cannot even imagine the usual 19th and 20th century antagonists, such as France and Germany, going to war ever again. The same is true of other, lesser-known animosities which have led periodically to bloodlettings: between Poles and Germans, Hungarians and Romanians, Greeks and Bulgarians. Unthinkable is also the idea that the United Kingdom and Spain could end up, regarding Gibraltar, in a reprise of the Falklands/Malvinas war.

Destabilised

But creating geopolitical stability internally has not, during the last two decades, been followed by external geopolitical stability along the fringes of the union. Most of the big EU member states (UK, Poland, Italy, Spain) participated, often eagerly, in Operation Iraqi Freedom, which led to the deaths of some half a million people, destabilised the middle east even further and produced Islamic State.

Then, seemingly not having learned from this fiasco, France and Italy spearheaded another regime change, this time in Libya. It ended in anarchy, another civil war, two competing governments and a UN Security Council deadlocked for years to come -- since it is clear that China and Russia will not in the foreseeable future vote to allow another western military intervention.

The wars along the long arc from Libya to Afghanistan, in which EU powers participated, were the proximate cause of large refugee flows a few years ago, which continue even now. (As I have written elsewhere, the underlying cause of migration is the large gap in incomes between Europe, on the one hand, and Africa and the 'greater middle east', on the other, but the sudden outbursts were caused by wars.)

The next example of generating instability was Ukraine, where the then government of Viktor Yanukovych, having only postponed the signing of an EU agreement, was driven out of power in 2014 in a coup-like movement supported by the union. It is sure that a reasonable counterfactual, with the same EU-Ukraine agreements being signed and without a war in eastern Ukraine and with Crimea still part of Ukraine, would have been much preferable to the current situation, which threatens to precipitate a war of even much greater dimensions.

Finally, consider Turkey, in an association agreement with the European Economic Community since 1963, and thus in a membership-awaiting antechamber for more than half a century. The initial period in power of Recep Tayyip Erdoğan was marked by pro-European policies, a desire to create an 'Islamic democracy', in the mould of the Christian democracies of Italy and Germany, and civilian control over the army. But realisation that, because of its size and probably because of its dominant religion, Turkey would never be recognised as part of Europe led Erdoğan, gradually, to move in an altogether different direction -- with an almost zero chance that he would come back to his original pro-European stance.

The endless waiting period, with similarly protracted negotiations over what are now 35 chapters which need to be agreed between candidate countries and all 28 (or soon 27) members, is what lies behind the frustration with the EU in the Balkans. Long gone are the days when Greece could become a member after a couple of months (if that) of negotiations and an agreement between the French president, Valéry Giscard d'Estaing, and the German chancellor, Helmut Schmidt. The European bluff -- it neither has the stick nor the carrot -- albeit long hidden behind the veil of negotiations, was recently called by the Kosovo leadership, when it engaged in a trade war with Serbia. The EU could express its 'regrets' but it was squarely ignored. In the past, nether Kosovo nor any other Balkan state would have dared to defy Europe so openly.

Slow and hesitant

It all means that Europe needs a much better thought-out external policy with respect to its neighbours. There are already some signs that it is moving in that direction but it is doing so too slowly and hesitantly. A multilateral compact with Africa is needed to regulate migration from a continent with the fastest rising population and lowest incomes. Much more European investment -- in hard stuff, not conferences -- is needed. Rather than complaining about China's Belt and Road initiative, Europe should imitate it -- and, if it desires to counteract Chinese political influence, invest its own money to make more African friends. A similar set of much more proactive policies is required within the framework of the Mediterranean initiative, while military options in the region should be forsworn no less clearly than they are within the union.

When it comes to the potential members, as in the Balkans or the western republics of the former Soviet Union, interminable talks should be replaced by either special association with no expectation of EU membership or clearer, time-limited negotiations leading to membership. Both would manage expectations better and avoid the build-up of resentment and frustration.

The most important challenge is the relationship with Turkey. The EU does not have a blueprint for a Turkey after Erdoğan; nor can it offer anything to the Turkish secular opposition, as it is not clear within itself whether it wants Turkey in or out. It should be rather obvious that a European Turkey, with its vast economic potential and influence in the middle east, would be a huge economic and strategic asset. Such a Turkey would also behave differently in Syria and in Anatolia, because it would have an incentive to follow European rules.

This rethinking of the EU's neighbourhood policy thus calls, in short, for three things: greater economic aid to Africa, no support for wars or regime change, and much clearer rules and time-limits for membership talks.


Branko Milanovic is Visiting Presidential Professor at the Graduate Center of City University of New York (CUNY). Reply Wednesday, February 06, 2019 at 01:39 PM

Mr. Bill -> anne... , February 06, 2019 at 05:11 PM

Perhaps, you ascribe to the EU successes that it did not create.

The formation of the EU is not the vehicle that created, nor sustained, the uneasy peace. I suggest it was the resolution of WW2 that has determined the current state of tolerance.

I fear that the formation of the EU, in the end, will be the cause of a re-instigation of the age old skirmishes that have plagued the world, as you say, for two millennia.

The destruction of the Middle East by the West, not just the EU but the US, is a foolishness of biblical proportions.

The EU's disposition of Greece and Brexit are red flags that the EU is an unsustainable contrivance that will eventually, come undone. The mercantilist wars between France, England, Spain, Germany, Italy, etc, may rise again. Hopefully, I'm wrong.

[Feb 06, 2019] The best guess is that the next downturn will similarly involve a mix of troubles, rather than one big thing. And over the past few months we've started to see how it could happen. It's by no means certain that a recession is looming, but some of our fears are beginning to come true.

Feb 06, 2019 | economistsview.typepad.com
https://www.nytimes.com/2019/01/24/opinion/global-recession.html

January 24, 2019

The Sum of Some Global Fears
Setting the table for a smorgasbord recession.
By Paul Krugman

The last global economic crisis, for all its complex detail, had one big, simple cause: A huge housing and debt bubble had emerged in both the United States and Europe, and it took the world economy down when it deflated.

The previous, milder recession, in 2001, also had a single cause: the bursting of a bubble in technology stocks and investment (remember Pets.com?).

But the slump before that, in 1990-91, was a messier story. It was a smorgasbord recession -- a downturn with multiple causes, ranging from the troubles of savings and loan institutions, to a glut of office buildings, to falling military spending at the end of the Cold War.

The best guess is that the next downturn will similarly involve a mix of troubles, rather than one big thing. And over the past few months we've started to see how it could happen. It's by no means certain that a recession is looming, but some of our fears are beginning to come true.

Right now, I see four distinct threats to the world economy. (I may be missing others.)

China: Many people, myself included, have been predicting a Chinese crisis for a long time -- but it has kept not happening. China's economy is deeply unbalanced, with too much investment and too little consumer spending; but time and again the government has been able to steer away from the cliff by ramping up construction and ordering banks to make credit ultra-easy.

But has the day of reckoning finally arrived? Given China's past resilience, it's hard to feel confident. Still, recent data on Chinese manufacturing look grim.

And trouble in China would have worldwide repercussions. We tend to think of China only as an export juggernaut, but it's also a huge buyer of goods, especially commodities like soybeans and oil; U.S. farmers and energy producers will be very unhappy if the Chinese economy stalls.

Europe: For some years Europe's underlying economic weakness, due to an aging population and Germany's obsession with running budget surpluses, was masked by recovery from the euro crisis. But the run of good luck seems to be coming to an end, with the uncertainty surrounding Brexit and Italy's slow-motion crisis undermining confidence; as with China, recent data are ugly.

And like China, Europe is a big player in the world economy, so its stumbles will spill over to everyone, the U.S. very much included.

Trade war: Over the past few decades, businesses around the world invested vast sums based on the belief that old-fashioned protectionism was a thing of the past. But Donald Trump hasn't just imposed high tariffs, he's demonstrated a willingness to violate the spirit, if not the letter, of existing trade agreements. You don't have to be a doctrinaire free-trader to believe that this must have a depressing economic effect.

For now, corporate leaders reportedly believe that things won't get out of hand, that the U.S. and China in particular will reach a deal. But this sentiment could turn suddenly if and when business realizes that the hard-liners still seem to be calling the shots.

The shutdown: It's not just the federal workers not getting paid. It's also the contractors, who will never get reimbursed for their losses, the food stamp recipients who will be cut off if the stalemate goes on, and more. Conventional estimates of the cost of the shutdown are almost surely too low, because they don't take account of the disruption a nonfunctioning government will impose on every aspect of life.

As in the case of a trade war, business leaders reportedly believe that the shutdown will soon be resolved. But what will happen to investment and hiring if and when corporate America concludes that Trump has boxed himself in, and that this could go on for many months?

So there are multiple things going wrong, all of which threaten the economy. How bad will it be?

The good news is that even taking all these negatives together, they don't come close to the body blow the world economy took from the 2008 financial crisis. The bad news is that it's not clear what policymakers can or will do to respond when things go wrong.

Monetary policy ­ -- that is, interest rate cuts by the Federal Reserve and its counterparts abroad -- is normally the first line of defense against recession. But the Fed has very limited room to cut, because interest rates are already low, and in Europe, where rates are negative, there's no room at all.

Fiscal policy -- temporary hikes in government spending and aid to vulnerable workers -- is the usual backup to monetary easing. But would a president who's holding federal workers hostage in pursuit of a pointless wall be willing to enact a sensible stimulus? And in Europe, any proposal for fiscal action would probably encounter the usual German nein.

Finally, dealing effectively with any kind of global slump requires a lot of international cooperation. How plausible is that given who's currently in charge?

Again, I'm not saying that a global recession is necessarily about to happen. But the risks are clearly rising: The conditions for such a slump are now in place, in a way they weren't even a few months ago. Reply Tuesday, January 29, 2019 at 11:07 AM


RC AKA Darryl, Ron said in reply to anne... , January 29, 2019 at 11:34 AM

Besides that, "Trump Slump" has a kind of a tantalizing ring to it.
Mr. Bill -> RC AKA Darryl, Ron... , February 03, 2019 at 08:29 PM
Perhaps. More than that, the economy seems to be synthetic, rather than organic.

If the predilection of our world toward the adulation of wealth accumulation is a disequilibrium, then it cannot be sustained.

anne -> anne... , January 29, 2019 at 02:12 PM
https://www.bradford-delong.com/2019/01/eg-opinion-will-chinas-economy-hit-a-great-wall-the-new-york-times.html

January 26, 2019

As Karl Marx wrote in the middle of the nineteenth century: Imbalances in pre-capitalist economies do not produce aggregate demand crises and collapses. Why don't they? Because Pharaoh can always command that another pyramid be built, the king can always set out on another crusade, and the bishop can always build another cathedral. The expenditures that provide employment for those not producing the consumption-goods-in-demand only have to make profit-and-loss sense under the capitalist mode of production. Capitalist economies suffer Hayek-Minsky crises when deluded financial markets suddenly recognize that they have been over optimistic, have over invested, and need to shift investment-goods production back down not to normal but way below normal. And the collapse comes as near-universal bankruptcy and financial disruption prevents any such smooth expenditure-shifting. That Hayek-Minsky overinvestment crisis is what Paul Krugman, I, and other China-pessimists have been fearing for two decades now. But perhaps socialism with Chinese characteristics is insufficiently capitalist for that Hayek-Minsky logic to apply, and Paul and I and others should have been paying more attention to Uncle Karl. * **

* https://www.nytimes.com/2011/12/19/opinion/krugman-will-china-break.html

** https://www.nytimes.com/2019/01/15/opinion/will-chinas-economy-hit-a-great-wall.html

-- Brad DeLong

JF -> anne... , January 30, 2019 at 11:25 AM
Thanks for sharing Delong's commentary.

Let us get Delong to write about a public banking system, not-for-profit, that provides basic banking services to account holders and has the credit-creating privilege to fund mortgages, durable goods lending, educational support lending with the goal of supporting medium term basic consumption needs of the population while even offering to pay a good interest on the monies held in these personal accounts.

He needs to think more about why credit creation by the public's government cant supplement the private wielding of this privilege (held by banks now, which he ponts out is a source of instability of great risk) as done in the US type countries.

The Chinese have moved to a mixed view, coming from one pole; we can have a mix too?

I'd suspect we would do it better because of our form of government and freedoms. We need more people like him thinking about this mix. And more people like Bernie Sanders who mobilizes such discussions into public discourse.

Thanks.

anne -> JF... , January 30, 2019 at 08:30 PM
The Chinese have moved to a mixed view, coming from one pole; we can have a mix too?

[ I would hope so. ]

Plp -> anne... , January 31, 2019 at 07:53 AM
The re inyroduction of markets does not prempt the greater refinement of s comm9n social development plan

Go's plan plus NEP

The Soviet republics did this the corporate capitalist way

And we could move toward more plan
The corporate capitalist way too

Look at Germany

Pro corporate social markets

Or the present Russian system
The mix can .CAN....
be worse then either pole

Plp -> JF... , January 31, 2019 at 07:49 AM
Yes

The state must control the commanding heights of the credit system

And use that control for the common good

Btw

The citizenry needs a place to store money form
Wealth against devaluation
Nothing more nothing less

A rate of real interest equal to the rate of change in labor productivity should be.limited to stored income directly from labor earnings
Not earning on earnings

Plp -> Plp... , January 31, 2019 at 07:56 AM
The tip- c

Treasury inflation protected console

Mr. Bill -> JF... , February 03, 2019 at 08:35 PM
Or the Pharoah can increase military spending. Like Rome. A corruption of the human conscience that lasted for over one thousand years, compared to our puny 250 years.
Mr. Bill -> Mr. Bill... , February 03, 2019 at 08:53 PM
I am a critic of Dr. De Long, with a memory of his ambition exceeding his reasoning. In his former life, he was a China dove, selling the neoliberal nostrum of free trade at the pinnacle of power.

A Walmartian apologist without the requisite wisdom.

Julio -> anne... , January 30, 2019 at 01:35 PM
Part of their criticism of China was its alleged overinvestment in "pyramids" in the form of ghost cities, empty buildings, and fast trains without passengers.

Turns out that even if true, that was a pretty clever economic plan.

As I understand it, the Chinese government has kept a tight rein on their financial system and its allocation of investments. You can have considerable private property and enrichment under that "insufficiently capitalistic" umbrella.

anne -> Julio ... , January 30, 2019 at 03:39 PM
As I understand it, the Chinese government has kept a tight rein on their financial system and its allocation of investments. You can have considerable private property and enrichment under that "insufficiently capitalistic" umbrella.

[ Chinese monetary and fiscal policy are primarily directed rather than general. So that a region, urban or rural, or class of companies or class of households will be the focus. China is presently building entire cities...

As for building pyramids, building usually anticipates use so that a project may take time to be well "occupied" or "utilized" but as I track projects the use comes and comes. The Chinese are just now completing a global positioning system and while the system adds to that of the United States use is increasing dramatically in China and beyond. This year there will be between 2 and 3 satellite launches weekly on average, but the Chinese anticipate need. ]

Plp -> anne... , January 31, 2019 at 08:06 AM
Yes
Building for future use that will come in time

The discount in the delay only applies if superior sides of finds are passed over

Ie if there's slack the opportunity cost is
Not a real cost


Every development system faces an unknowable path of innovation and pattern development

Vieeeing development at the firm level is never optimal.

Yes full best use utilization earlier is
Improving outcomes and clearly a constant goal of development
But real cost is measured by alternative projects not actual built because the chosen project crowds it out

With slack this can be avoided by increasing use of existing but unde utlized productive factors

Notice the causal circle here

Better utilization all the way around

In a a system with unknown unknowns
And real time planning constraints
We just do the best we can 24/7/365

anne -> Plp... , January 31, 2019 at 08:13 AM
Viewing development at the firm level is never optimal...

[ Paul Krugman made precisely this point today:

https://twitter.com/paulkrugman/status/1090973283753824259

An important lesson, industrial policy is not company policy. ]

Mr. Bill -> anne... , February 03, 2019 at 08:59 PM
An important lesson for whom ? Correct me if I'm wrong but firm development is today's industrial policy and has been for the past 50 years.

Are you saying that was wrong ?

Mr. Bill -> Mr. Bill... , February 03, 2019 at 09:02 PM
Company policy is clearly the industrial policy of the US of A.
anne -> Plp... , January 31, 2019 at 08:26 AM
Were Chinese planners to work according to demonstrated present need alone, most of Chinese infrastructure would not be built. Planning means anticipation for the Chinese and I can assure any reader who has not been to, say, Shanghai that the supposed pyramids that have been built are repeatedly proven useful to essential.

I remember an especially fierce typhoon approaching the southern coast of China west of Hong Kong not long after new rail lines had been completed. The Chinese emergency authorities evacuated some 4 million people in 24 hours to avoid the storm and there was no difficulty. The return was also smooth and fast.

Mr. Bill -> anne... , February 03, 2019 at 08:39 PM
Make no mistake, China has discovered the magic of military spending as the primary vehicle for regime security. Just like America.

Whether or not their public face is coy.

anne -> Julio ... , January 30, 2019 at 04:01 PM
Article after article in the Western press about China will argue that projects are "pyramids," and far too expensive, in the building and in use, even for pyramids, and Chinese planners seldom respond, but later a high-speed rail system extending from Hong Kong to Beijing will come to be so well traveled that there will be complaints in the Hong Kong press about all those bustling "mainland" commuters (880,000 passengers in the opening 2 weeks).

The bridge-tunnel system extending across the bay from Hong Kong to Macao? Well, the Chinese want an urban area extending from Hong Kong to Macao...

JF -> anne... , January 31, 2019 at 05:46 AM
Keynes used the narrative about burying stuff and paying people to dig it up as a way to support demand and physical distributions of flow where needed.

I wonder what he might have said if he faced a population of this size. I think he would understand what the chinese officials have done.

anne -> JF... , January 31, 2019 at 06:43 AM
Keynes used the narrative about burying stuff and paying people to dig it up as a way to support demand and physical distributions of flow where needed.

I wonder what he might have said if he faced a population of this size. I think he would understand what the Chinese officials have done.

[ What the Chinese have done is create moderately prosperous lives for hundred of millions of people, so in a sense stuff has been buried and dug up but this was wildly productive stuff. Forty-two years of real GDP growth at 9.5% yearly and per capita GDP growth at 8.4% yearly with the "slow" GDP growth of 2018 at 6.6%.

Life expectancy increased by 11 years from 1977 through 2016, and was 7.7 years higher than that in India in 2016 and within 2.4 years of that in the United States. ]

Mr. Bill -> anne... , February 03, 2019 at 09:13 PM
I think what you meant to say that American capitalists made a deal with a communist dictatorship to undermine the labor movement in the Western economies, resulting in a transfer of wealth from the Western middle class to the Chinese peasantry and the capitalists. Labor arbitrage.

You always claim that the pittance to the peasants justifies the destruction of American labor. You are a neoliberal apologist of the worst kind. You must have tenure.

JF -> Mr. Bill... , February 04, 2019 at 06:00 AM
Yes, a thoughtful US might have instead used a treaty of convergence agreement with the chinese people instead of what you aptly described.
Plp -> JF... , January 31, 2019 at 08:10 AM
China has a billion souls racing to build their way to the global technical frontier

So for them
Build it and they will come
is a certainty
Frontier systems no longer have

But why has speed been reduced by a third

Prior to full arrival at the frontier

Plp -> Plp... , January 31, 2019 at 08:11 AM
Conjecture China should still be developing at 9 percent
anne -> Plp... , January 31, 2019 at 09:41 AM
Conjecture China should still be developing at 9 percent...

[ This must be explained. After all, what about India or Brazil or South Africa or Indonesia or Mexico or Nigeria...?

Chinese planners projected yearly growth at 6.5% through this current 5 year period. The gains that are being aimed for take more application of technology, more advanced technology, and specific programs for the poorer regions. ]

anne -> Plp... , January 31, 2019 at 08:29 AM
China has a billion souls racing to build their way to the global technical frontier

So for them
Build it and they will come
is a certainty
Frontier systems no longer have

But why has speed been reduced by a third

Prior to full arrival at the frontier ?

[ Interesting, interesting and important argument. ]

JF -> anne... , January 31, 2019 at 10:29 AM
And the chinese may have acknowleged the need to move a bit more slowly, urbanization brings environmental issues that ought to be balanced and rapid change threatens a much needed balance.

And perhaps they are getting more stable, so to speak, in anticipation of inroducing a retirement earning system, like our social security system. I assume they will do this as it is one way to boost consumerism and reconcile the ageing society pressures (fewer next generation people to take care of the elderly as they ply their urban lives means the old needs an income stream to buy services). So they need to take care more not to dissipate resources wastefully or public sentiments until they are ready - so going a but more slowly might help.

anne -> anne... , January 31, 2019 at 11:14 AM
Also, in thinking about the rate of Chinese growth slowing from a 42 year average of 9.5% to 6.5%, the emphasis that is being placed in China on clean or green growth might slow the rate at least in transition years. I think that Dean Baker wrote on this growth characteristic a few years ago and I will find the paper.

Make no mistake however, green growth is being emphasized through China.

Plp -> anne... , January 31, 2019 at 11:52 AM
Simply accelerate the green transition in as much as its about new and different machines
anne -> Plp... , January 31, 2019 at 12:25 PM
Simply accelerate the green transition in as much as its about new and different machines.

[ Agreed, which is just what China is now doing in regard to electric vehicles. This year will be a fine test of how fast China and grow as a greening economy, for President Xi is going to publish a paper this week focusing on just how necessary green growth is for China.

I have the paper from Dean Baker, but an unconvinced that a green transition for an economy means slower growth:

http://www.cepr.net/documents/publications/military_spending_2007_05.pdf

May, 2007

The Economic Impact of the Iraq War and Higher Military Spending
By Dean Baker

I think Baker is incorrect here on a green transition. ]

Julio -> anne... , January 31, 2019 at 12:56 PM
They way our economists measure the value of these "pyramids" is hopelessly inadequate. E.g. where is the accounting that measures the opportunities opened to young people from remote villages engaged in small-scale agriculture.

And to your other point, they measure each project at a firm level (would a private company be making a profit from this?) and miss the projects effect on the larger economy.

And to make them (our economists) look even worse, even by their own measures most of these projects are quite successful.

Maybe they should be looking at China and trying to learn something. Wait, hasn't someone been saying that?

anne -> Julio ... , January 31, 2019 at 01:37 PM
They way our economists measure the value of these "pyramids" is hopelessly inadequate. E.g. where is the accounting that measures the opportunities opened to young people from remote villages engaged in small-scale agriculture....

[ Really, really important. ]

Mr. Bill -> Julio ... , February 03, 2019 at 09:24 PM
Oh they are looking at China and learning plenty about how a dictatorship can control the population and repress opposition. I cannot believe the ignorant, glowing discussion of Chinese fascism on this site in defense of disproven economic principles, actually quoting Marx, the disprover.
anne -> Julio ... , January 30, 2019 at 04:07 PM
A sense of what green infrastructure development has meant in urban China comes from American company 3M recording a revenue decline because the sales of masks to protect against smog in Chinese cities has fallen so steeply. Turning coal use to natural gas, makes lots and lots of difference...
Plp -> anne... , January 31, 2019 at 11:53 AM
The stats should put a value on pollution reduction
anne -> Plp... , January 31, 2019 at 12:28 PM
The stats should put a value on pollution reduction

[ That has been a thought for years and years, but has gone nowhere. I am interested in what is counted in GDP, with a green emphasis being reflected by other data. Weighing turtles against shovels is of no consequence. ]

Mr. Bill -> anne... , February 03, 2019 at 09:28 PM
China has destroyed its environment. They have no choice. It is not altruism. Your little girl on a pony machinations are idiotic.
Mr. Bill -> Mr. Bill... , February 03, 2019 at 09:35 PM
An article by Steven Roach may cool off the China bot, Anne, a bit:

https://www.project-syndicate.org/commentary/world-economy-without-china-by-stephen-s--roach-2016-10?barrier=accesspaylog

anne -> Julio ... , January 30, 2019 at 05:29 PM
As I understand it, the Chinese government has kept a tight rein on their financial system and its allocation of investments....

[ Not company by company control, but control of investment direction coupled with monitoring of company performance. China has been increasingly emphasizing the importance of advanced technology investment (research and development).

The United States years ago blocked China from participation in the International Space Station program. China then began to develop a space station of its own and is already offering access internationally. China just sent a satellite and rocket and lander and rover to explore the far side of the moon. The intent late this year is to land again on the moon and this time to retrieve samples of the crust and return them to earth. ]

anne -> Julio ... , January 30, 2019 at 05:39 PM
Returning to earth, there is scarcely a day when the Chinese leadership does not call attention to the severe poverty ending programs that will hopefully have set an economic floor for Chinese through the entire country. That means infrastructure through the poorer regions of the country or those regions that are considered economically viable with assistance. As for pyramids, that means building houses and all that is necessary for housing to be viable from roads and power and communications to schools and health care facilities and investing in jobs.
Plp -> anne... , January 30, 2019 at 05:39 PM
Yes simply expanding payments to households will increase GDP
How much real how much just nominal is a good question

Tra Dr could go put of wack of course
But so what
China is a developing nation
Short run
Trade deficits are not a problem at full tilt domestic production

The increase in urban dwellers is too slow now

[Feb 05, 2019] Fed's Dudley Explains How I Learned To Stop Worrying Love The Fed's Balance Sheet

Feb 05, 2019 | www.zerohedge.com

"Stocks have reached a permanently high plateau", "subprime is contained", "there's no icebergs this far south" and now "The Fed's balance sheet is not the threat that people seem to think it is."

Man's ability to willfully ignore 'downside possibilities' and remain cognitively dissonant far longer than logic (or their pocketbook) should allow seems to know no bound and none other than The Federal Reserve's Bill Dudley just unleashed what could be the piece de resistance of "nothing to see here, move along" agitprop.

fersur , 19 minutes ago link

Great Picture' Cowboying a Nuke while discussing confidence in the FED, quite appropo' !

TRUTH @ 9:00; Plus this week, Friday will be Huge !

Should a seated President jail someone that attempted his Assassination, or a Former President that planned to Nuke the Yellowstone Super Volcano Caldera, or someone that sold email password to China and CC copied all 'to and from' messages including those highly Confidential, or blame a former President for planning 911 False Flag attack, or expose Planned Parenthoods first Amputating tongues for silently shipping in bulk, or expose Democrat history of Decades of Projecting blame while committing War Crimes, or end 19 Year War in Afghanistan ( Longest War ) then Syria against Last Night's Congressional Vote to keep status quo, or 'take a knee' and quit being President !

costa ludus , 42 minutes ago link

Is this from The Onion?

[Feb 05, 2019] The Real Reason Stock Buybacks Are a Problem

Notable quotes:
"... By Steve Roth, publisher of Evonomics. He is a Seattle-based serial entrepreneur, and a student of economics and evolution. He blogs at Asymptosis, Angry Bear, and Seeking Alpha. Twitter: @asymptosis. Originally published at Evonomics ..."
"... And they're dead wrong that there's no difference between the two. Buybacks steal money not so much from corporate wages, but much more obviously and explicitly: from taxes that contribute to our common public purse. ..."
"... noblesse oblige ..."
"... Given the legal ability of corporate managers to use corporate funds to actively manipulate stock prices for their private benefit, how many of those corporate managers use their 'omniscience' to goose their private benefits and just how closely has the SEC been watching for insider trading? Martha Stewart learned her lesson in a show trial for our entertainment, but are we really supposed to believe she is the only person making use of inside knowledge to do a little private stock dealing? ..."
"... Our Society gives a special place to business enterprise on the theory that it benefits us all through innovation in products, their production, and distribution, and that business provides a livelihood for our people. Corporations receive disproportionate benefits protecting them from risk in their ventures. Stock buybacks and financial manipulations undermine the creative impetus [such as there were] that once drove corporate management, or more accurately they redirect that 'creative impetus' toward schemes for most efficiently looting what past managers built. ..."
Feb 05, 2019 | www.nakedcapitalism.com

The Real Reason Stock Buybacks Are a Problem Posted on February 5, 2019 by Yves Smith Yves here. Even though this article on stock buybacks by Steve Roth, cross posted below after this lenghty introduction, makes an important central point, I believe it is missing the forest for the trees. Roth acts as if stock buybacks are merely an alternative to dividends (or investing or paying workers more). It's far worse than that. Since the crisis, many companies have been borrowing to buy back stock. And why is that? Duh, because executives have big time incentives to goose the stock price, and stock buybacks have become a socially acceptable way to manipulate share prices.

We have from time to time published the work of William Lazonick, who has made a much more comprehensive critique of stock buybacks, with considerable underlying data. It's great to see his ideas finally going mainstream with the publication of an op-ed in the New York Times by Chuck Schumer and Bernie Sanders (odd couples like that tell you the tectonic plates are moving), and more important, their plan to introduce legislation to curb buybacks. As they sketched out:

Our bill will prohibit a corporation from buying back its own stock unless it invests in workers and communities first, including things like paying all workers at least $15 an hour, providing seven days of paid sick leave, and offering decent pensions and more reliable health benefits.

In other words, our legislation would set minimum requirements for corporate investment in workers and the long-term strength of the company as a precondition for a corporation entering into a share buyback plan. The goal is to curtail the overreliance on buybacks while also incentivizing the productive investment of corporate capital.

As you'll see, this is actually a modest proposal, although forcing companies to take care of workers before they engage in share price manipulation is an important reordering of priorities.

By way of contrast, here is the key section of a 2018 post by Lazonick, who also gives credit to the Congresscritters who have been dogging this abuse for some time:

For the Republican corporate tax cut to result in job creation, Congress must follow it up with legislation to rein in these distributions to shareholders. There is a straightforward and practical way to accomplish this objective: Congress should ban corporations from doing stock buybacks, more formally known as open-market stock repurchases. As if more evidence were needed, here are three reasons to expect that corporations will use the Republican tax break to do stock buybacks.

First, the stock-based compensation of senior executives incentivizes them to do distributions to shareholders. Annual mean remuneration of CEOs of the same 475 companies listed on the S&P 500 from 2007 through 2016 ranged from $9.4 million in 2009, when the stock market was in the dumps, to $20.1 million in 2015, when the stock market was booming. The vast majority of this total remuneration, ranging from 53 percent in 2009 to 77 percent in 2015, was in the form of realized gains from stock-based options and awards.

Second, for more than three decades, executives of major U.S. corporations have preached, conveniently masking their self-interest, that the paramount responsibility of their companies is to " create value " for shareholders. Most recently, from 2007 through 2016, stock repurchases by 461 companies on listed on the S&P 500 totaled $4 trillion, equal to 54 percent of profits. In addition, these companies declared $2.9 trillion in dividends, which were 39 percent of profits. Indeed, top corporate executives are often willing to incur debt, lay off employees, cut wages, sell assets, and eat into cash reserves to "maximize shareholder value."

Third, in recent years hedge fund activists have ramped up the pressure on companies to do buybacks. With their immense war chests of billions of dollars of assets under management, these corporate predators have used the proxy voting system, " wolfpack " collaboration among hedge funds, and direct engagement with management, which was once illegal, to participate in the looting of the U.S. business corporation.

Repurchases done on the open market, which constitute the vast majority of all buybacks, are nothing but manipulation of the stock market. So why are companies allowed to do them? Because of the 1980 election of Ronald Reagan as president on a platform of market deregulation. In November 1982, after Reagan had appointed Wall Street banker John Shad as chairman of the Securities and Exchange Commission (SEC), the agency adopted Rule 10b-18 , which permits a company to do buybacks that can amount to hundreds of millions of dollars per day, trading day after trading day, without fear of being charged with stock-price manipulation. Rule 10b-18, which remains in force 35 years later, is a license to loot the U.S. business corporation.

The argument for rescinding Rule 10b-18 is overwhelming. As research I've done with the Institute for New Economic Thinking documents, buybacks wreak immense damage on households, companies, and the economy. The profits that major corporations reinvest in productive capabilities form the foundation for a prosperous middle class. Buybacks deprive companies of that investment capital, instead serving as a prime mode of making the richest households richer while eroding middle-class employment opportunities.

Moreover, the justification for buybacks rests on the faulty ideology that, for the sake of economic efficiency, companies should be run to "maximize shareholder value." Agency theory, the academic thinking that underpins this ideology, assumes that only shareholders take the risk of investing in the productive capabilities of companies. In fact, public shareholders do not as a rule provide financial capital to companies. They simply buy and sell outstanding shares. The true investors in productive capabilities are "households as workers," whose skills and efforts generate the company's innovative products, and "households as taxpayers," who devote a portion of their incomes to fund public investments in infrastructure and knowledge that companies need to be competitive.

Finally, the insidious Rule 10b-18 that for more than three decades has encouraged massive stock-market manipulation is just an ill-considered SEC regulation, adopted as part of Reagan "voodoo economics." The justification for Rule 10b-18 has never been debated, nor have its provisions been legislated, by Congress. That may, however, finally be changing. A number of U.S. senators, including Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawaii), and Cory Booker (D-N.J.), have voiced criticisms of buybacks, as has former Vice President Joseph Biden .

The most persistent challenge to this corrupt practice has come from Sen. Tammy Baldwin (D-Wis.), who in 2015 wrote two highly critical letters to former SEC Chairman Mary Jo White, and who has recently challenged the prescription drug lobby group PhRMA to reconcile its claim that the pharmaceutical companies need high drug prices to fund research and development with the fact that the major companies spend virtually all their profits on buybacks and dividends.

It has hit the point where the biggest buyers of US stocks in aggregate are the companies that once issued them. This is not how a well functioning economy operates.

By Steve Roth, publisher of Evonomics. He is a Seattle-based serial entrepreneur, and a student of economics and evolution. He blogs at Asymptosis, Angry Bear, and Seeking Alpha. Twitter: @asymptosis. Originally published at Evonomics

Bernie Sanders and Chuck Schumer's New York Times op-ed, " Limit Corporate Stock Buybacks ," has thrown internet gasoline on the buyback debate. The left is waving the flag, and the right is trying to tear it down.

The core Sanders/Schumer argument: buybacks extract money from firms, money that could be used to pay workers more, and fund productive investment (including worker training and upskilling).

The counterargument: how are buybacks any different from dividend distributions that way? Both transfer cash from firms to households. We don't hear people complaining about dividend distributions stealing money from workers and investment.

That counterargument is absolutely right, even while it's completely wrong. Because both sides miss the overwhelming effect of stock buybacks (vs dividends). Buybacks are a massive tax dodge for shareholders.

Imagine Megacorp wants to transfer a billion dollars to its shareholders (notably including the huge shareholders in its C suite and on its corporate board). Whether they distribute dividends or buy back shares, either way Megacorp has a billion dollars less on its balance sheet. Its book value drops by $1B.

But what happens on the household, shareholder side? With a dividend distribution it's simple; households get $1B in taxable dividend income. With a buyback, households that sell shares also receive $1B in cash, but they give up their shares, which obviously have value.

That's where the (perfectly legal) tax avoidance lies -- perhaps best explained by example:

Suppose the average shareholder's shares were purchased for $20 each. That's the shareholders' tax basis. If Megacorp pays $25 a share (for 40M shares), the shareholders who sell have cap gains of $5 a share -- $200M in taxable income -- versus $1B if the same cash is paid out via dividends.

Dividends and long-term cap gains in the U.S. are currently taxed using the same rates and brackets: 15% if your income is above $38K, 20% if it's above $425K. If Megacorp chooses a $1B stock buyback, our imagined shareholders pay $40M in taxes (at the 20% rate), versus $200M in taxes on a dividend distribution.

Neither of these has any effect on corporate taxes, by the way. C-corporation profits (as opposed to S corporations and other "pass-throughs") are taxed at the corporate level, whether they get distributed or not, and no matter which distribution method is used.

There are other important problems with buybacks, mainly having to do with boards' and C suites' greater discretion over the timing and amounts of buybacks, and the potential for self-dealing price manipulation. (Contra Schumer and Sanders' odd bank-shot approach to this problem, we could just repeal Rule 10B-18 .)

But the right is right: Buybacks are no more pernicious than dividends in "stealing money" from firms, that could otherwise be used for worker pay and productive investment.

And they're dead wrong that there's no difference between the two. Buybacks steal money not so much from corporate wages, but much more obviously and explicitly: from taxes that contribute to our common public purse.


Altandmain , February 5, 2019 at 2:38 am

There is another consideration – back when marginal taxes at the highest bracket were much higher, one of the limits of executive compensation was the fact that even if they engaged in such behvaiour, most of this would be taxed away.

https://www.theguardian.com/commentisfree/2013/oct/24/1percent-pay-tax-rate-80percent

It seems then that the solution is:

1. A straight up ban on stock buybacks, as they seem to be mainly an instrument for maximizing executive compensation by boosting EPS and share price, which are common metrics used to pay executives. They also result in debt from buybacks and less capital for actually meaningful investments.

2. The "Carried Interest" loophole should be immediately eliminated. This will also discourage "vulture private equity" as well, a social drain on society.

3. Taxes should be steeply progressive. This is to act as a deterrence against rent seeking. Perhaps the standard deduction could be increased even for ordinary working class citizens. Capital gains should be taxed at a comparable rate to labour or even higher (as the top 10% control 85% of stocks anyways).

4. A special high net worth enforcement unit should be set up in tax collection agencies around the world. This is to identify and catch high net worth individuals who engage in tax evasion and possibly aggressive tax planning as well.

5. Tax incentives should encourage corporations to invest in things that are actually productive, such as R&D, capital expenditures, and employee training. One key issue is that company executives know that share buybacks are the easiest way to maximize executive compensation and that they will often only be there for a few years. Competing through a superior product/service, developing R&D, good corporate culture, etc, is "hard" for executives and may not lead to a return. Plus it is often short term pain, long term gain.

6. Corporate governance clearly needs reform and I think that we may need something far more independent on boards than what is currently there. Often executives have a bias towards voting for high compensation knowing that they will someday face similar boards. They also tend to support management or be appointed to be "yes people" as opposed to be independent.

The biggest issue though is that our society's rich have no sense of noblesse oblige anymore. Their goal is to maximize their own compensation at society's expense. Tools like shareholder buybacks and private equity are just a cover for those objectives.

Jeremy Grimm , February 5, 2019 at 10:02 am

If we want to get fussed over taxes and tax evasion, domestic stock buybacks, capital gains taxes, and dividend taxes seem like small potatoes compared to the games international corporations play to realize their profits in countries that don't tax them.

Andrew Foland , February 5, 2019 at 3:03 am

I fail to see the monstrous tax dodge because the analysis fails to consider the integral of tax payments over the life of the stock.

Whomever sold the current shareholders their stock at $20 must have paid capital gains on that sale , unless it IPO'd at 20.

So there are effectively two cases. The first is that it IPO'd at 20. In this case, the shareholders put in the first 800M, and it doesn't seem unfair to tax them only on the additional 200M the company made.

The second is that it IPO'd at zero. Then the total amount of capital gains tax as it changed hands up to $20 (where current shareholders bought it) is on $800M. So again, taxing only $200M doesn't seem unfair.

For ipo prices between 0 and 20 you just have a combination of the two arguments.

One might conclude that the dividend tax double-taxes early share gains.

Why capital gains tax should be less than income tax makes no sense or obvious fairness. You might want to argue that dividend double-taxation isn't such a bad thing and effectively compensates for a low capital gains rate.

But the buyback isn't per se a tax dodge any more than the capital gains tax in the first place. And it would probably be conceptually cleaner just to raise the capital gains rate.

Yves Smith Post author , February 5, 2019 at 3:52 am

I didn't address this, and should have. He really is making a mountain out of a molehill.

Only about 1/4 of US stocks are held by taxable investors (the households he mentions). Retirement accounts including public and private pension funds, foundations, endowments, and foreign investors are all tax exempt. So any of them could have been the seller to the taxable household back in the day.

https://www.taxpolicycenter.org/taxvox/only-about-one-quarter-corporate-stock-owned-taxable-shareholders

PKMKII , February 5, 2019 at 9:51 am

You could argue that dividends get taxed at current rate, whereas capital gains from selling shares taxes at the rate at the time of the sale. Ergo, shareholders can wait for a decrease in capital gains taxes to sell and functionally dodge the taxes they would have paid if they received a dividend. However, it's still a weak argument as the capital gains rate could easily go up, and/or the value of the stock itself could fall for some other, unrelated reason. Yves' and Lazonick's critiques are much more relevant.

Mark , February 5, 2019 at 7:54 am

It's laudable and important to force companies to properly compensate workers before initiating stock buybacks. This won't solve he problem of using funds for buybacks instead of capital investments, R&D etc. To accomplish that we also need to un-Bork anti-trust law and actually have companies that are honestly competing with each other.

Colonel Smithers , February 5, 2019 at 7:54 am

Thank you, Yves.

It won't surprise you and the NC community that there's a debate on this side of the pond, too, as per https://www.theguardian.com/business/2015/aug/05/legal-and-general-boss-backs-andy-haldane-city-short-termism-shareholders , although the debate has gone quiet, perhaps due to the person sparking the debate going a bit quiet and not wanting to further diminish his chances of succeeding the matinee idol from the colonies.

Jeremy Grimm , February 5, 2019 at 9:56 am

To what extent have stock buybacks enabled corporate managers to leverage income streams in the corporations they 'manage' to increase corporate debt through bond issues? What happens to a corporation when it's revenue streams are impacted by ups-and-downs of the economy? Hasn't Professor Hudson gone on at length describing the instability such debt creates for a business? Dividends can move up-and-down with revenue streams, but bonds must be paid or there is a corporate cash flow problem. For a small business that means bankruptcy while for large corporate players I think that means takeover and merger further consolidating our monopoly and monopsony bloated Corporations. After all these years of stock buybacks and consolidation how much cash flow remains to leverage?

Given the legal ability of corporate managers to use corporate funds to actively manipulate stock prices for their private benefit, how many of those corporate managers use their 'omniscience' to goose their private benefits and just how closely has the SEC been watching for insider trading? Martha Stewart learned her lesson in a show trial for our entertainment, but are we really supposed to believe she is the only person making use of inside knowledge to do a little private stock dealing?

Worry about stock buybacks now? Too little and I fear much too late. How many of our great corporations are little more than Potemkin fronts for hollowed out shells of debt feeding a massive transfer of the wealth our country built over many generations into the hands of the obscenely wealthy?

Jeremy Grimm , February 5, 2019 at 10:20 am

Our Society gives a special place to business enterprise on the theory that it benefits us all through innovation in products, their production, and distribution, and that business provides a livelihood for our people. Corporations receive disproportionate benefits protecting them from risk in their ventures. Stock buybacks and financial manipulations undermine the creative impetus [such as there were] that once drove corporate management, or more accurately they redirect that 'creative impetus' toward schemes for most efficiently looting what past managers built.

[Feb 05, 2019] The bottom line is that this preoccupation with the 'headline number' for the current month as a single datapoint that is promoted by Wall Street and the Government for official economic data is a nasty neoliberal propaganda trick. You need to analise the whole time serioes to get an objective picture

Highly recommended!
Notable quotes:
"... And as for the median wage and income -- it is still too weak to sustain an economic recovery. ..."
Feb 05, 2019 | jessescrossroadscafe.blogspot.com

The bottom line is that this preoccupation with the 'headline number' for the current month as a single datapoint that is promoted by Wall Street and the Government for official economic data is misleading.

The effective method of considering a heavily adjusted and revised data series like this is with a trend analysis of at least seven to twelve observations, and more if you can get them.

But, that makes for a much less interesting and convenient narrative.

And as for the median wage and income -- it is still too weak to sustain an economic recovery.

Stocks were a bit weak today, despite all this fabulous economic data, having exhausted the sugar rush that was spoonfed to them by their friendly neighborhood Federal Reserve.

[Feb 05, 2019] Astrology plus Fedomania

Feb 05, 2019 | www.zerohedge.com

Follows the excerpt from his latest Gartman letter.

We remain positive of equities because of what we have said time and time again each morning for the past several weeks and which needs to be re-said here this morning yet again for nothing has changed: the Fed has indeed "changed" its monetary policies and this change was made clear by Mr. Powell's comments of now more than a month ago and made clearer midweek last week following the FOMC meeting .

[Feb 05, 2019] Italy Guns For Glass-Steagall-Type Law to Break Up Banks, Cut Bailout Costs for Taxpayers

Looks like pendulum moved in opposite direction and neoliberals (and first of all financial oligarchy) might be crashed by the return of the New Deal style regulations as well as higher taxes on incomes. the latter measure is popular even in the USA.
Notable quotes:
"... By Don Quijones of Spain, Mexico, and the UK, and an editor at Wolf Street. Originally published at Wolf Street ..."
"... The bill will face stiff opposition from the domestic banking sector as well as the European Commission, which in 2017, under pressure from Europe's banking lobbies, abandoned its own pledge to break-up too-big-to-fail lenders. ..."
"... Since the global financial crisis, big banks on both sides of the Atlantic have been fighting tooth and nail all regulatory attempts to split their deposit-taking commercial units from their riskier investment banking units. ..."
Feb 05, 2019 | www.nakedcapitalism.com
By Don Quijones of Spain, Mexico, and the UK, and an editor at Wolf Street. Originally published at Wolf Street

On Friday, Italy's coalition government unveiled new banking regulations that it hopes to pass in the coming months, including a rule that would separate banks' commercial and investment arms. It would be the Italian equivalent of the Glass-Steagall Act, the 1933 U.S. law that separated commercial banks that took deposits, made loans, and processed transaction, from riskier investment banking activities. The law was designed to protect deposits. Its repeal in 1999 led to the consolidation of the U.S. banking sector, unfettered risk-taking by deposit-taking banks, and arguably the Financial Crisis just eight years later.

... ... ...

The bill will face stiff opposition from the domestic banking sector as well as the European Commission, which in 2017, under pressure from Europe's banking lobbies, abandoned its own pledge to break-up too-big-to-fail lenders.

Since the global financial crisis, big banks on both sides of the Atlantic have been fighting tooth and nail all regulatory attempts to split their deposit-taking commercial units from their riskier investment banking units. Such legislation would would make each entity smaller. And that is not in the interests of the big banks, nor the ECB, which hopes to breathe life into a new generation of trans-European super-banks by serving as matchmaker to Europe's largest domestic lenders.

[Feb 05, 2019] Capitalists need their options regulated and their markets ripped from their control by the state. Profits must be subject to use it to a social purpose or heavily taxed. Dividends executive comp and interest payments included

Feb 05, 2019 | economistsview.typepad.com

Mr. Bill -> Mr. Bill... , January 31, 2019 at 08:22 PM

Is anyone else tired of the longest, least productive waste of war in American history ? What have we achieved, where are we going with this ? More war.
Mr. Bill -> Mr. Bill... , January 31, 2019 at 08:31 PM
We are being fed a fairy tale of war about what men, long dead, did. And the reason they did it. America is being strangled by the burden of belief that now is like then.
Mr. Bill -> Mr. Bill... , January 31, 2019 at 08:46 PM
By the patrician men and women administrators, posturing as soldiers like the WW2 army, lie for self profit. Why does anyone believe them ? Korea, Vietnam, Iraq, each an economic decision, rather than a security issue.
Mr. Bill -> Mr. Bill... , January 31, 2019 at 08:48 PM
America is dying on the same sword as Rome, for the same reason.
Plp -> JF... , January 31, 2019 at 07:28 AM
Capitalists need their options regulated and their markets ripped from their control by the state. Profits must be subject to use it to a social purpose or heavily taxed. Dividends executive comp and interest payments included
Julio -> mulp ... , January 31, 2019 at 08:58 AM
Well done! Much clearer than your usual. There are several distinct motivations for taxes. We have been far enough from fairness to workers, for so long, that we need to use the tax system to redistribute the accumulated wealth of the plutocrats.

So I would say high marginal rates are a priority, which matches both objectives. Wealth tax is needed until we reverse the massive inequality supported by the policies of the last 40 years.

Carbon tax and the like are a different thing, use of the tax code to promote a particular policy and reduce damage to the commons.

Gerald -> Julio ... , January 31, 2019 at 04:14 PM
"...we need to use the tax system to redistribute the accumulated wealth of the plutocrats. So I would say high marginal rates are a priority..."

Forgive me, but high marginal rates (which I hugely favor) don't "redistribute the accumulated wealth" of the plutocrats. If such high marginal rates are ever enacted, they'll apply only to the current income of such plutocrats.

Julio -> Gerald... , January 31, 2019 at 06:22 PM
You merged paragraphs, and elided the next one. The way I see it, high rates are a prerequisite to prevent the reaccumulation of obscene wealth, and its diversion into financial gambling.

But yes that would be a very slow way to redistribute what has already accumulated.

Gerald -> Julio ... , February 01, 2019 at 04:48 AM
Didn't mean to misinterpret what you were saying, sorry. High rates are not only "a prerequisite to prevent the reaccumulation of obscene wealth," they are also a reimposition of fair taxation on current income (if it ever happens, of course).
Global Groundhog -> Julio ... , February 02, 2019 at 01:39 PM
Wealth tax is needed until we reverse the massive inequality supported by the policies of the last 40 years. Carbon tax and the like are a different thing, use of the tax code to promote a particular policy and reduce damage to the commons.
"

more wisdom as usual!

Although wealth tax will be unlikely, it could be a stopgap; could also be a guideline to other taxes as well. for example, Elizabeth points out that billionaires pay about 3% of their net worth into their annual tax bill whereas workers pay about 7% of their net worth into their annual tax bill. Do you see how that works?

it doesn't? this Warren argument gives us a guideline. it shows us where other taxes should be adjusted to even out this percentage of net worth that people are taxed for. Ceu, during the last meltdown 10 years or so ago, We were collecting more tax from the payroll than we were from the income tax. this phenomenon was a heavy burden on those of low net worth. All this needs be resorted. we've got to sort this out.

and the carbon tax? may never be; but it indicates to us what needs to be done to make this country more efficient. for example some folks, are spending half a million dollars on the Maybach automobile, about the same amount on a Ferrari or a Alfa Romeo Julia quadrifoglio, but the roads are built for a mere 40 miles an hour, full of potholes.

What good is it to own a fast car like that when you can't drive but 40 -- 50 miles an hour? and full of traffic jams. something is wrong with taxation incentives. we need to get a better grid-work of roads that will get people there faster.

Meanwhile most of those sports cars just sitting in the garage. we need a comprehensive integrated grid-work of one way streets, roads, highways, and interstates with no traffic lights, no stop signs; merely freeflow ramp-off overpass interchanges.

thanks, Julio! thanks
again
.!

JF -> Global Groundhog... , February 04, 2019 at 05:42 AM
Wonderful to see the discussion about public finance shifting to use net worth proportions as the focus and metric.

Wonderful. Let us see if press/media stories and opinion pieces use this same way of talking about the financing of self-government.

Mr. Bill -> anne... , February 03, 2019 at 08:15 PM
Jesus Christ said, in so many words, that a man's worth will be judged by his generosity and his avarice.

" 24And the disciples were amazed at His words. But Jesus said to them again, "Children, how hard it is to enter the kingdom of God! 25It is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of God." 26They were even more astonished and said to one another, "Who then can be saved?"

[Feb 04, 2019] "I Have Never Experienced This Kind Of Immoral Behavior From A Bank In My Entire Life Goldman Slammed In Latest CDS Scandal

If you are dealing with Goldman Sachs that last thing is to expect moral behaviour from them. They are financial preduitors and generally dealing with them for smaller clients is a very dangerous undertaking, if you ask me.
Notable quotes:
"... Three months ago, when the loan market was freezing up, Goldman struck an unusual deal with a group of hedge funds to offload a buyout loan from its books, saving the bank and the funds from potential losses. What was odd, is that Goldman was also serving as the underwriter to the company issuing the loans...while at the same time arrenging a "kicker" to loan buyers by having them bet on the potential insolvency of its own client. ..."
"... Now, this bizarre arrangement is at the center of a lawsuit accusing the Wall Street giant of gorging on fees while also exposing the acquirer in the buyout, United Natural Foods, to hedge-fund sharks who stand to reap major profits if the company collapses as a result of the incremental debt: according to Bloomberg , United Natural had hired Goldman Sachs for the takeover and is now demanding at least $52 million - and potentially much more - from the bank. ..."
"... "I have never experienced this kind of egregious and immoral behavior from a bank in my entire life," United Natural Chief Executive Officer Steve Spinner told Bloomberg in an interview after his company filed the suit Wednesday in a state court in New York. Goldman, which until that moment had been retained by United Natural , vowed to vigorously fight the case, calling it "entirely without merit." ..."
"... Indeed, as Bloomberg notes, " again and again, the contracts have played strange roles in debt transactions, sometimes straining allies or encouraging unlikely alliances. " ..."
"... According to the lawsuit, Goldman adjusted the terms on a $2 billion financing deal in a way that allowed hedge funds to reap a windfall from their CDS bets, as first reported by Bloomberg in October . United Natural said it initially heeded Goldman's advice, agreeing to the changes so it could complete the takeover of grocery chain Supervalu. ..."
"... Where things got complicated, is that Goldman enlisted the help of hedge funds that had been betting on Supervalu's demise. Those funds now stand to benefit if United Natural struggles to repay. That was just the beginning: United Natural also alleges that the bank unfairly withheld fees, burdened it with additional interest expenses and relied on "scare tactics" by a senior banker to back it into a corner ..."
Feb 03, 2019 | www.zerohedge.com

"I Have Never Experienced This Kind Of Immoral Behavior From A Bank In My Entire Life": Goldman Slammed In Latest CDS Scandal

Not a month seems to pass any more without a major bank or hedge fund getting in hot water for using CDS in a way that was never intended, and now it's Goldman's turn, again.

Three months ago, when the loan market was freezing up, Goldman struck an unusual deal with a group of hedge funds to offload a buyout loan from its books, saving the bank and the funds from potential losses. What was odd, is that Goldman was also serving as the underwriter to the company issuing the loans...while at the same time arrenging a "kicker" to loan buyers by having them bet on the potential insolvency of its own client.

Now, this bizarre arrangement is at the center of a lawsuit accusing the Wall Street giant of gorging on fees while also exposing the acquirer in the buyout, United Natural Foods, to hedge-fund sharks who stand to reap major profits if the company collapses as a result of the incremental debt: according to Bloomberg , United Natural had hired Goldman Sachs for the takeover and is now demanding at least $52 million - and potentially much more - from the bank.

Worse, the distributor of natural and organic foods, specialty foods is absolutely furious at the bank that until recently was its strategic advisor:

"I have never experienced this kind of egregious and immoral behavior from a bank in my entire life," United Natural Chief Executive Officer Steve Spinner told Bloomberg in an interview after his company filed the suit Wednesday in a state court in New York. Goldman, which until that moment had been retained by United Natural , vowed to vigorously fight the case, calling it "entirely without merit."

As hinted above, Wall Street's latest drama once again revolves around the increasingly dysfunctional credit-default swaps market, where hedge funds and others wager on the ability of companies to keep up with their borrowings, only the traditional role of CDS as bankruptcy hedges has long ago given way to more "creative" applications. Indeed, as Bloomberg notes, " again and again, the contracts have played strange roles in debt transactions, sometimes straining allies or encouraging unlikely alliances. "

According to the lawsuit, Goldman adjusted the terms on a $2 billion financing deal in a way that allowed hedge funds to reap a windfall from their CDS bets, as first reported by Bloomberg in October . United Natural said it initially heeded Goldman's advice, agreeing to the changes so it could complete the takeover of grocery chain Supervalu.

Where things got complicated, is that Goldman enlisted the help of hedge funds that had been betting on Supervalu's demise. Those funds now stand to benefit if United Natural struggles to repay. That was just the beginning: United Natural also alleges that the bank unfairly withheld fees, burdened it with additional interest expenses and relied on "scare tactics" by a senior banker to back it into a corner.

In the beginning it was nothing but rainbows and roses: United Natural, which is a supplier to Whole Foods, announced the $2.9 billion Supervalu acquisition in July, and with the market soaring and credit and loan spreads near all time tights, not a cloud appeared on the horizon. And, as so often happens, the company announced that Goldman Sachs would act as lead underwriter to sell the billions in debt needed to fund the deal. But just a few months later, as equities first tumbled and shortly thereafter credit markets - especially in the leveraged loan market - froze up, the investment bank faced the prospect of being saddled with millions in losses unless it found a way to offload the loan from its books.

Meanwhile, hedge funds were facing major losses too after having bet against Supervalu's debt by loading up on CDS, but the company's sale threatened to create a situation known as an orphaned CDS contract, a situation similar to the infamous McClatchy fiasco (one which we profiled extensively in " Orphan CDS, Manufactured Credit Events, Insufficient Deliverables: What The Hell Is Going On In The CDS Market ?"). Because new debt being issued to purchase Supervalu would have paid down the grocer's obligations, it could have made swaps linked to Supervalu effectively worthless - referencing an entity with no significant borrowings - even as the default risk of the purchaser, United Natural, soared. However, due to the specific nature of the CDS contract, there was no continuity in tracking the referenced entity, as such those who were betting on a Supervalu default would end up with nothing, even if the successor company did eventually file for bankruptcy.

It is here that Goldman had an "epiphany", one which would kill two birds with one stone.

The key was to restore the value of the roughly $470 million of net CDS wagers linked to Supervalu's debt. While the cost of the Supervalu derivatives had plunged through most of last year, by tweaking the loan docs to make Supervalu a co-borrower on the new financing, Goldman sparked a surge in the value of the swaps.

That, along with several other concessions, not only rescued hedge funds from getting wiped out on their SVU CDS, but more importantly, helped Goldman fill its order book for the loan and eliminate its exposure risk.

And while Goldman was the clear winner here, helping a couple of millionaire credit PMs avoid major losses for 2018 while avoiding taking a loss on its buyout loan exposure, United Natural claims that Goldman left it exposed to a group of lenders whose interests are at odds with its own and who are motivated to create roadblocks aimed at forcing a default so that they can notch further gains in the CDS market.

That may be difficult to prove, especially since Goldman can claim that without the contract fudge, the deal may never have been funded. Still, United Natural alleges that it never received a final list of funds participating in the loans and, had it known, would've raised concerns, even though without making the concessions to hedge funds, Goldman would have struggled to place the deal.

United Natural meanwhile claims that it went along with the changes after warnings from Stephan Feldgoise, who helps oversee Goldman's mergers business in the Americas. The bank allegedly warned that if the company didn't adjust the terms, it might "scare off" investors, trigger "blowback" from its own shareholders and "things would get ugly."

What Goldman apparently did not explain is that the one entity most on the hook - in terms of both P&L and reputation - was Goldman. Which is why Feldgoise and Bank of America, to co-lead arranger on the loan, are also named as defendants.

As Bloomberg concludes, it's another twist in Feldgoise's time at Goldman Sachs, which ironically, included a stint as chairman of the firm's global fairness committee. Curiously, in mid-2017, division chiefs announced he would be departing the bank, stepping down from his post in senior management to become an advisory director. Yet he's still at the bank, now in a heated battle with a client for whom he's handled various deals. That said, with the millions in fees from the United Natural-Supervalu deal, at least Feldgoise's tenure at Goldman is secure. Worst case, he can always get a job at one of the many hedge funds that made a killing on SVU CDS thanks to the Goldman fudge.

e_goldstein , 3 hours ago link

"I have never experienced this kind of egregious and immoral behavior from a bank in my entire life," United Natural Chief Executive Officer Steve Spinner

Well, Steve, perhaps you should have been paying more attention for the last 11 years.

[Feb 04, 2019] Absolute control over people and resources is the ultimate goal of financial oligarchy

Financial industry has inherent trend toward parasitism and gangsterism and as such should be as tightly regulated as gambling. Probably even more. But under neoliberalism where financial oligarchy a the ruling class this is a pipe dream. I do not see any significant countervailing force other the far right nationalism. Far right nationalism has power to brake bankers spine, but usually they allied with them (fascism)
Feb 04, 2019 | www.zerohedge.com
Authored by Tom Chatham via Project Chesapeake blog,

Those that have been following events for several years know they are under attack by an enemy that has no face and means to do them great harm. Nothing less than their sovereignty and freedom is at stake.

Absolute control over people and resources is the ultimate goal.

Davidduke2000 , 9 minutes ago link

On his deathbed, Andrew Jackson said " I beat the bank".

Davidduke2000 , 9 minutes ago link

On his deathbed, Andrew Jackson said " I beat the bank".

freedommusic , 2 hours ago link

...the bankers want to show up after the population has lost everything in a collapse, to be their savior and gain control of everyone by offering resources in exchange for compliance.

In the end these bankers are just people . They yield NO power other than a cheap magi c trick called money. They are simply losers pulling levers behind the curtain . They are terrified of real people. They are terrified of being exposed. They are worthless conjurers of useless paper. Their power is a cheap spell. They always have known that once people are aware of the trick, they are done. They are afraid of elevated souls. They are afraid of the awakened. They are terrified of the big red pill that is coming for the masses. Game over.

SickDollar , 2 hours ago link

Uncle Shmuel (the Neocon's version of Uncle Sam)

new term BITCHEZ

Uncle Sam is dead

[Feb 02, 2019] Pope Francis has some sensible things to say

Notable quotes:
"... Politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy. Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life. ..."
"... Production is not always rational, and is usually tied to economic variables which assign to products a value that does not necessarily correspond to their real worth. This frequently leads to an overproduction of some commodities, with unnecessary impact on the environment and with negative results on regional economies.[133] The financial bubble also tends to be a productive bubble. The problem of the real economy is not confronted with vigour, yet it is the real economy which makes diversification and improvement in production possible, helps companies to function well, and enables small and medium businesses to develop and create employment. ..."
"... Whenever these questions are raised, some react by accusing others of irrationally attempting to stand in the way of progress and human development. But we need to grow in the conviction that a decrease in the pace of production and consumption can at times give rise to another form of progress and development. ..."
"... The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved. Yet only when "the economic and social costs of using up shared environmental resources are recognized with transparency and fully borne by those who incur them, not by other peoples or future generations",[138] can those actions be considered ethical. An instrumental way of reasoning, which provides a purely static analysis of realities in the service of present needs, is at work whether resources are allocated by the market or by state central planning. ..."
Dec 16, 2016 | economistsview.typepad.com
December 16, 2016 at 07:48 AM
I'm an environmental scientist, not an economist, but it seems to me that Pope Francis has some sensible things to say, as in the following from Laudato si:

IV. POLITICS AND ECONOMY IN DIALOGUE FOR HUMAN FULFILMENT

189. Politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy. Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life. Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world. Production is not always rational, and is usually tied to economic variables which assign to products a value that does not necessarily correspond to their real worth. This frequently leads to an overproduction of some commodities, with unnecessary impact on the environment and with negative results on regional economies.[133] The financial bubble also tends to be a productive bubble. The problem of the real economy is not confronted with vigour, yet it is the real economy which makes diversification and improvement in production possible, helps companies to function well, and enables small and medium businesses to develop and create employment.

190. Here too, it should always be kept in mind that "environmental protection cannot be assured solely on the basis of financial calculations of costs and benefits. The environment is one of those goods that cannot be adequately safeguarded or promoted by market forces".[134] Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations? Where profits alone count, there can be no thinking about the rhythms of nature, its phases of decay and regeneration, or the complexity of ecosystems which may be gravely upset by human intervention. Moreover, biodiversity is considered at most a deposit of economic resources available for exploitation, with no serious thought for the real value of things, their significance for persons and cultures, or the concerns and needs of the poor.

191. Whenever these questions are raised, some react by accusing others of irrationally attempting to stand in the way of progress and human development. But we need to grow in the conviction that a decrease in the pace of production and consumption can at times give rise to another form of progress and development. Efforts to promote a sustainable use of natural resources are not a waste of money, but rather an investment capable of providing other economic benefits in the medium term. If we look at the larger picture, we can see that more diversified and innovative forms of production which impact less on the environment can prove very profitable. It is a matter of openness to different possibilities which do not involve stifling human creativity and its ideals of progress, but rather directing that energy along new channels.

192. For example, a path of productive development, which is more creative and better directed, could correct the present disparity between excessive technological investment in consumption and insufficient investment in resolving urgent problems facing the human family. It could generate intelligent and profitable ways of reusing, revamping and recycling, and it could also improve the energy efficiency of cities. Productive diversification offers the fullest possibilities to human ingenuity to create and innovate, while at the same time protecting the environment and creating more sources of employment. Such creativity would be a worthy expression of our most noble human qualities, for we would be striving intelligently, boldly and responsibly to promote a sustainable and equitable development within the context of a broader concept of quality of life. On the other hand, to find ever new ways of despoiling nature, purely for the sake of new consumer items and quick profit, would be, in human terms, less worthy and creative, and more superficial.

193. In any event, if in some cases sustainable development were to involve new forms of growth, then in other cases, given the insatiable and irresponsible growth produced over many decades, we need also to think of containing growth by setting some reasonable limits and even retracing our steps before it is too late. We know how unsustainable is the behaviour of those who constantly consume and destroy, while others are not yet able to live in a way worthy of their human dignity. That is why the time has come to accept decreased growth in some parts of the world, in order to provide resources for other places to experience healthy growth. Benedict XVI has said that "technologically advanced societies must be prepared to encourage more sober lifestyles, while reducing their energy consumption and improving its efficiency".[135]
194. For new models of progress to arise, there is a need to change "models of global development";[136] this will entail a responsible reflection on "the meaning of the economy and its goals with an eye to correcting its malfunctions and misapplications".[137] It is not enough to balance, in the medium term, the protection of nature with financial gain, or the preservation of the environment with progress. Halfway measures simply delay the inevitable disaster. Put simply, it is a matter of redefining our notion of progress. A technological and economic development which does not leave in its wake a better world and an integrally higher quality of life cannot be considered progress. Frequently, in fact, people's quality of life actually diminishes – by the deterioration of the environment, the low quality of food or the depletion of resources – in the midst of economic growth. In this context, talk of sustainable growth usually becomes a way of distracting attention and offering excuses. It absorbs the language and values of ecology into the categories of finance and technocracy, and the social and environmental responsibility of businesses often gets reduced to a series of marketing and image-enhancing measures.

195. The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved. Yet only when "the economic and social costs of using up shared environmental resources are recognized with transparency and fully borne by those who incur them, not by other peoples or future generations",[138] can those actions be considered ethical. An instrumental way of reasoning, which provides a purely static analysis of realities in the service of present needs, is at work whether resources are allocated by the market or by state central planning.

196. What happens with politics? Let us keep in mind the principle of subsidiarity, which grants freedom to develop the capabilities present at every level of society, while also demanding a greater sense of responsibility for the common good from those who wield greater power. Today, it is the case that some economic sectors exercise more power than states themselves. But economics without politics cannot be justified, since this would make it impossible to favour other ways of handling the various aspects of the present crisis. The mindset which leaves no room for sincere concern for the environment is the same mindset which lacks concern for the inclusion of the most vulnerable members of society. For "the current model, with its emphasis on success and self-reliance, does not appear to favour an investment in efforts to help the slow, the weak or the less talented to find opportunities in life".[139]

197. What is needed is a politics which is far-sighted and capable of a new, integral and interdisciplinary approach to handling the different aspects of the crisis. Often, politics itself is responsible for the disrepute in which it is held, on account of corruption and the failure to enact sound public policies. If in a given region the state does not carry out its responsibilities, some business groups can come forward in the guise of benefactors, wield real power, and consider themselves exempt from certain rules, to the point of tolerating different forms of organized crime, human trafficking, the drug trade and violence, all of which become very difficult to eradicate. If politics shows itself incapable of breaking such a perverse logic, and remains caught up in inconsequential discussions, we will continue to avoid facing the major problems of humanity. A strategy for real change calls for rethinking processes in their entirety, for it is not enough to include a few superficial ecological considerations while failing to question the logic which underlies present-day culture. A healthy politics needs to be able to take up this challenge.

198. Politics and the economy tend to blame each other when it comes to poverty and environmental degradation. It is to be hoped that they can acknowledge their own mistakes and find forms of interaction directed to the common good. While some are concerned only with financial gain, and others with holding on to or increasing their power, what we are left with are conflicts or spurious agreements where the last thing either party is concerned about is caring for the environment and protecting those who are most vulnerable. Here too, we see how true it is that "unity is greater than conflict".[140]

[Feb 02, 2019] The Immorality and Brutal Violence of Extreme Greed

Highly recommended!
Notable quotes:
"... By #SlayTheSmaugs, an elected Bernie delegate in Philly. ..."
"... #STS believes that the billionaire class are Smaugs (the greed incarnate dragon of The Hobbit), immorally hoarding wealth for no reason beyond ego gratification. To "Slay" the Smaugs, we need a confiscatory wealth tax, stronger democratic institutions to impose it, and a shared moral agreement that #GreedIsEvil to justify it. ..."
"... More; charitable foundations are not the same thing, in many cases, as true charity. Instead foundations often function as hoard preservers as well, and enrich their leadership too. ..."
"... After a certain level of accumulation money is simply ego gratifying points, it's not money any more. ..."
"... Wealth on this scale has nothing to do with financial security or luxurious living. For the trivial, it is (as per D. Trump) a game and money is how you keep score. For the serious, it has to do with power, with the ability to affect other people's lives without their consent. That is why the Smaugs' wealth is absolutely our business. It should be understood that we're talking about taking very large amounts of money and power away from very rich people, people for whom money and power are pretty much the only things they value. It will not be pretty. ..."
"... If we fail to prevent the imposition of this transnational regime there will only be three classes of humans left: kleptocrats, their favored minions, and slaves. ..."
"... A more modern similarity of the US is Rome. Vassals have been going full retard for several years now, traitors sell international competitors military secrets while the biggest merchants buy off the Senate. ..."
"... Isn't there an idiom about cutting off the head of the snake? Once you deal with the strongest opponents, it's easier to go after the others. Too big to fail is nothing short of feeding the beast. ..."
"... I disagree strongly with your premise that some sort of pure and natural meritocracy has ever existed, or could ever exist in human society. Corrupt and oppressive people will always define as "meritorious" those qualities that they themselves possess– whether wealth, "gentle birth," "technical skills," or whatever. We all possess the same merit of being human. ..."
"... Meritocracy is not the same as recognizing greater and lesser degrees of competence in various activities. It is absurd to deny that some are more skillful at some things than others. Assigning the relative "merit" to various competencies is what I find objectionable. ..."
"... Encouraging ethical behavior has nothing to do with ranking the "merit" levels of different occupations. While some occupations are inherently unethical, like that of an assassin, most can be performed in such a way as to do no harm to others, and some are nearly always beneficial to society at large. ..."
Jul 22, 2016 | Naked Capitalism

... ... ...

By #SlayTheSmaugs, an elected Bernie delegate in Philly.

#STS believes that the billionaire class are Smaugs (the greed incarnate dragon of The Hobbit), immorally hoarding wealth for no reason beyond ego gratification. To "Slay" the Smaugs, we need a confiscatory wealth tax, stronger democratic institutions to impose it, and a shared moral agreement that #GreedIsEvil to justify it.

Worshiping Wealth

When Gordon Gekko proclaimed that 'Greed is Good' in 1987, it was an obvious rejection of several millennia of teachings by traditional prophets and priests. Yet when Gekko preached greed, he was merely reinforcing the current cultural norm; greed had already been rebranded a virtue. (Still, the speech was to remind us Gekko was a bad guy). Consider that Madonna had proclaimed herself a Material Girl three years earlier, and "Living Large" was cool. Conspicuous consumption is walking the talk that greed is good.

Why had greed become good? I blame the creation of a credit-fueled culture of constant consumption that necessarily praises coveting stuff, plus the dismantling of the regulatory state that had kept Wall Street and wannabe oligarchs in check.

Our healthy cultural adoration of the self-made man, of respect for success, warped into worship of the rich. They are not the same. Wealth can be inherited, stolen through fraud and other illegal activities, or harvested from bubbles; none of these or myriad other paths to riches is due respect, much less worship. Paired with another 80's definition-government is the problem-worshiping wealth facilitates all the dysfunction in our government.

Remembering Greed is Evil

Thirty years later, the old social norm-the one that protected the many from the few, the one that demonized greed as a deadly sin-is resurgent. We have a Pope who preaches against greed, and who walks his talk . We had a Presidential candidate of a major party-Bernie Sanders-who railed against those living embodiments of greed, the Billionaire Class, and walked his talk by rejecting their money. At the convention, he has invited delegates to four workshops, one of which is "One Nation Now: Winning the Fight Against Racism and Greed". We have a late night comedian-John Oliver- ridiculing the prosperity gospel and taking on the debt industry . We have mass consciousness rising, reflected in Occupy, the label "the 99%", BLM and more.

But we need more voices insisting #GreedIsEvil. We need to teach that basic message at home, in school, and in houses of worship. We need to send the right signals in our social interactions. We need to stop coveting stuff, and start buying with a purpose: Shopping locally, buying American, buying green and clean, and buying less. We need to waste less, share more and build community. We need to re-norm-alize greed as evil, make it shameful again. Then we will have redefined ourselves as citizens, not consumers.

But make no mistake: America cannot become a just nation simply by the 99% becoming more virtuous. The cultural shift is necessary but not sufficient, for norms alone do not deliver social and economic justice. Shame will not slay the Smaugs; we need structural change in the political economy.

Extreme greed, the greed of Smaugs, is categorically different than the petit greed underlying the irrational, constant consumption and the worship of wealth. Extreme greed manifests as a hoard of wealth so great that "purchasing power" is an irrelevant concept; a hoard so great it lacks any utility other than to be sat upon as a throne, gratifying the Smaug's ego and symbolizing his power. That greed must be understood as an intolerable evil, something so base and malevolent that the full power of the state must be used against it.

This essay is my contribution to the cause of returning extreme greed to its rightful place in the pantheon of ultimate evils. Here is the thesis: extreme greed must be 'slain' by the state because extreme greed is brutally violent.

The Stealth Violence of False Scarcity and "Cutting Corners"

Greed's violence is quiet and deadly: The violence of false scarcity and of "corner cutting". Scarcity is not having enough because there just isn't enough to go round, like the nearly 50 million people who don't reliably have food during the year, including 15 million kids. False scarcity is when actually, there's plenty to go around, but people generally don't have enough because of hoarders.

It's a concentrated version of what happened to pennies in 1999. People keeping pennies in piggy banks created a shortage felt throughout New York City . If only people had broken open their piggy banks, and used their pennies, there would have been plenty of pennies in circulation, and shopkeepers wouldn't lose money by rounding purchases down. In this piece, I'm focusing on false scarcity of dollars, not pennies, and the maiming and premature death that results from false dollar scarcity. But the idea is essentially the same; there's just far fewer relevant piggy banks.

By the quiet violence of 'corner cutting', I'm referring to unsafe, even deadly, workplaces that could be safe if the employers invested in safety.

Sporadically, greed also drives overt, and sometimes profoundly bloody violence to protect the hoard. Think of employer violence against unions and union organizers, a la Henry Ford , or John D. Rockefeller . Nonetheless in this country now, the violence of greed tends to be more covert. It is that quiet violence, in both forms, I want you to hear now.

As Sanders often reminds us, in this, the richest nation in the world, nearly 50 million people are living in poverty; roughly one in seven Americans. And as Sanders explained, in a speech in West Virginia , 130,000 people die each and every year as a result of poverty. I have not read the study Sanders referred to, so I don't know how much it overlaps with the rise of suicide that accelerated after 2006 and which appears to be correlated with financial stress. Nor do I know how it overlaps with the documented increase in white mortality that also appears to correlate with financial stress. Regardless of overlap, however, each of these studies reflects the quiet violence of false scarcity. Naked Capitalism has featured many posts documenting the damage of greed; this is a recent one .

Chronic and acute financial stress from false scarcity maims, and kills. And Smaugs create false scarcity to feed money to their egos and maintain their oligarchic power.

As Lambert often says, they don't call it class warfare for nothing.

But wait, you might insist, how false is the scarcity, really? How much do a few billionaires matter? Ranting that greed is evil is all well and good, but really, can a relative handful of people be manufacturing scarcity where there is none, shortening and taking millions of lives in the process? Aren't you making your target too narrow in going after the Smaugs?

In order: Very false, a lot, yes and no.

The Falsity of Dollar Scarcity

In 2015 the Institute for Policy Studies determined that the richest 20 American billionaires had hoarded as much wealth as 152 million people had managed to scrape together combined. Think on that.

Twenty people had hoarded $732,000,000,000. America is a nation of about 300,000,000 people. That means 20 people could give a combined $2,370 to every American, and still hoard $1 billion each. I'm not suggesting that's how the redistribution should be done, but it's notable that in an era when some 200 million Americans haven't been able to save $1000 for an emergency, twenty people could give everyone over two grand while remaining fabulously wealthy.

Now, these 20 monstrous people, these full grown Smaugs, are not alone in their extreme greed. Adding in the assets of the next 380 richest Americans brings the total wealth hoarded to $2.34 trillion. That number is so large it's hard to process , so let's think this through.

First, imagine that we took all of that money with a confiscatory tax, except we again left each of the 400 people with $1 billion. They would still be obscenely rich, so don't pity them.* Our tax thus netted $1.94 trillion. Since that's still an unimaginable number, let's compare it to some recent government spending.

In December 2015, Congress funded five years' worth of infrastructure construction. Congress and President Obama were very self-congratulatory because our infrastructure is a mess, and building things involves good paying jobs. So, how much did five years of infrastructure building and job creation cost? $305 billion . That's less than the $400 billion we let the 400 Smaugs keep at the start of this thought experiment. With the $1.94 trillion we imagine confiscating, we could keep building at the 2015 pace for 32 years. Or we could spend it much faster, and create an economic boom the like of which this nation hasn't seen in generations.

Even Bernie Sanders, he of the supposedly overly ambitious, unable-to-be-paid for initiatives, only proposed spending $1 trillion on infrastructure over five years -a bit more than half what our tax would net. (Nor did this supposed radical call for a confiscatory wealth tax to fund his plan.) Sanders estimated his proposal would create 13 million good paying jobs. With nearly double the money, surely we get nearly double the jobs? Let's be conservative and say 22 million.

In sum, we could confiscate most of the wealth of 400 people-still leaving them obscenely rich with $1 billion each-and create 22 million good paying jobs over five years. But we don't; we let the Smaugs keep their hoards intact. Now consider this is only taxing 400 people; what if we taxed the richest 2,000 people more justly? What if we taxed corporations effectively? What if we stopped giving corporate welfare? A confiscatory wealth tax, however, simply isn't discussed in polite company, any more than a truly progressive income tax is, or even serious proposals to end corporate welfare. The best we can do is agree that really, someday soon, we should end the obscenity that is the carried interest loophole.

False scarcity isn't simply a failure of charity, a hoarding of wealth that should be alms for the poor. False scarcity is created through the billionaires' control of the state, of public policy. But the quiet violence of greed isn't visited on the 99% only through the failure to pay adequate taxes. Not even through the Smaugs' failure to have their corporations pay adequate wages, or benefits. Predatory lending, predatory servicing, fraudulent foreclosure, municipal bond rigging, and pension fund fleecing are just some of the many other ways immoral greed creates false scarcity.

While false scarcity has the broadest impact, it is not the only form of stealth violence used by the billionaires in their class war against the rest of us. The Ford and Rockefeller style violence of fists and guns may be rare in the U.S. these days, but a variant of it remains much too common: Unsafe workplaces, the quiet violence of "cutting corners". Whether it's the coal industry , the poultry industry , or the fracking and oil industries, or myriad other industries, unsafe workplaces kill, maim and sicken workers. Part of the political economy restructuring we must do includes transforming the workplace.

Feel the Greed

Let us remember why this stealth violence exists-why false scarcity and unsafe workplaces exist.

People who have more money than they hope to spend for the rest of their lives, no matter how many of their remaining days are "rainy"; people who have more money to pass on than their children need for a lifetime of financial security, college and retirement included; people who have more money to pass on than their grandchildren need for a similarly secure life–these people insist on extracting still more wealth from their workers, their clients, and taxpayers for no purpose beyond vaingloriously hoarding it.

Sure, some give away billions . But even so they retain billions. For what? More; charitable foundations are not the same thing, in many cases, as true charity. Instead foundations often function as hoard preservers as well, and enrich their leadership too.

In Conclusion

Greed is evil, but it comes in different intensities. Petit greed is a corrosive illness that decays societies, but can be effectively ameliorated through norms and social capital. Smaug greed is so toxic, so potent, that the state is the only entity powerful enough to put it in check. Greed, particularly Smaug greed, must be put in check because the false scarcity it manufactures, and the unsafe workplaces it creates, maim and kill people. The stealth violence of Smaug greed justifies a tax to confiscate the hoards.

#GreedIsEvil. It's time to #SlayTheSmaugs

*One of the arguments against redistribution is that is against the sacrosanct efficient market, which forbids making one person better off if the price is making someone else worse off. But money has diminishing returns as money after a certain point; the purchasing power between someone with one billion and ten billion dollars is negligible, though the difference between someone with ten thousand and a hundred thousand, or a hundred thousand and a million is huge. After a certain level of accumulation money is simply ego gratifying points, it's not money any more. Thus taking it and using it as money isn't making someone 'worse off' in an economic sense. Also, when considering whether someone is 'worse off', it's worth considering where their money comes from; how many people did they leave 'worse off' as they extracted the money? Brett , July 22, 2016 at 10:07 am

After a certain level of accumulation money is simply ego gratifying points, it's not money any more.

It quite literally isn't "money" as we regular folks know it beyond a certain point – it's tied up in share value and other assets. Which of course raises the question – when you decide to do your mass confiscation of wealth, who is going to be foolish enough to buy those assets so you actually have liquid currency to spend on infrastructure as opposed to illiquid assets? Or are you simply going to print money and spend it on them?

Thomas Hinds , July 22, 2016 at 10:33 am

Wealth on this scale has nothing to do with financial security or luxurious living. For the trivial, it is (as per D. Trump) a game and money is how you keep score. For the serious, it has to do with power, with the ability to affect other people's lives without their consent. That is why the Smaugs' wealth is absolutely our business. It should be understood that we're talking about taking very large amounts of money and power away from very rich people, people for whom money and power are pretty much the only things they value. It will not be pretty.

Ranger Rick , July 22, 2016 at 10:37 am

People become rich and stay that way because of a market failure that allows them to accumulate capital in the same way a constricted artery accumulates blood. What I'm wondering, continuing this metaphor, is what happens when all that money is released back into the market at once via a redistribution - toxic shock syndrome.

You can see what happens to markets in places where "virtual money" (capital) brushes up against the real economy: the dysfunctional housing situation in Vancouver, London, New York, and San Francisco.

It may be wiser to argue for wealth disintegration instead of redistribution.

a different chris , July 22, 2016 at 11:52 am

Yes I was thinking about that money is just something the government prints to make the system work smoothly. But that, and pretty much any view of money, obscures the problem with the insanely "wealthy".

If these people, instead of having huge bank accounts actually had huge armies the government would move to disarm them. It wouldn't re-distribute the tanks and rifles. It would be obviously removing a threat to everybody.

Now there would be the temptation to wave your hands and say you were "melting it into plowshares" but that causes an accounting problem - that is, the problem being the use of accounting itself. Destroying extreme wealth and paying for say roads is just two different things and making them sound connected is where we keep getting bogged down. Not a full-on MMT'er yet but it really has illuminated that fact.

And no, as usual l have no solutions.

John Merryman , July 22, 2016 at 12:55 pm

The western assumption is that money is a commodity, from salt to gold, to bitcoin, we assume it can be manufactured, but the underlaying reality is that it is a social contract and every asset is presumably backed by debt.
Here is an interesting link which does make the point about the contractual basis of money in a succinct fashion;
http://rs79.vrx.palo-alto.ca.us/opinions/ideas/economics/jubilee/

Since the modern commodity of money is backed by debt and largely public debt, there is enormous pressure to create as much debt as possible.
For instance, the government doesn't really budget, it just writes up these enormous bills, attaches enough goodies to get the votes and the president can only pass or veto it and with all the backing and no other method, a veto is a weak protection.

To budget is to prioritize and spend according to ability. What they could do would be to break these bills into all their various "line items," have every legislator assign a percentage value to each one, put them back together in order of preference and then the president would draw the line.
It would balance the power and reduce the tendency to overspend, but it would blow up our financial system, which if anyone notices, is based on the sanctity of government debt.

If instead of borrowing the excess money out of the system, to spend on whatever, if the government threatened to tax it out, people would quickly find other ways to store value than as money in the financial system.

Since most of us save for the same general reasons, from raising children to retirement, we could invest in these as public commons, not try to save for our exact needs. This would serve to strengthen communities and their environments, as everyone would be more dependent on those around them, not just having a private bank account as their personal umbilical cord.

We treat money as both medium of exchange and store of value. As Rick points out above, a medium is like blood in the body and it needs to be carefully regulated. Conversely, the store of value in the body is fat and while many of us do carry an excess, storing it in the circulation system is not wise. Clogged arteries, poor circulation and high blood pressure are analogous to a bloated financial system, poor circulation and QE.
Money is not a commodity, but a contract.

Julian , July 22, 2016 at 11:00 am

Do you realize that this supposed billionaire wealth does not consist of actual US dollars and that, if one were to liquidate such wealth (in order to redistribute it in "fair" equal-dollars) that number might drastically change?

The main thing these people (and indeed your pension funds) are actually hoarding are financial assets, and those, it turns out, are actually "scarce". Or, well, I don't know what else you would call trillions of bonds netting a negative interest rate and an elevated P/E stock market in a low-growth environment.

It's a bit of a pickle from a macro environment. You can't just force them to liquidate their assets, or else the whole system would collapse. It also kind of escapes the point that someone has to hold each asset. I would be excited to see what happens when you ask Bill Gates to liquidate his financial assets (in order to distribute the cash). An interesting thought, for sure. And one that would probably bring the market closer to reasonable valuations.

It is simply a wrong conclusion to say "Wealth is x, and if we distribute it, everyone would get x divided by amount of recipients in dollar terms". Now if you wanted to redistribute Bill Gates' stake in Microsoft in some "fair" way, you could certainly try but that's not really what you proposed.

Either way you can't approach wealth policy from a macro perspective like this, because as soon as you start designing macro-level policy to adjust (i.e. redistribute) this wealth, the value of it will fluctuate very wildly in dollar terms and may well leave everyone less well off in some weird feedback loop.

JTMcPhee , July 22, 2016 at 11:05 am

"The full power of the state must be used against" #extremegreed: Except, of course, "L'etat c'est moi "

Of course as a Bernie supporter, the writer knows that, knows that it is a long game to even start to move any of the hoard out of Smaug's cave, that there are dwarves with glittering eyes ready to take back and reduce to ownership and ornamentation the whole pile (maybe they might 'share" a little with the humans of Lake Town who suffered the Dragon's Fire but whose Hero drove a mystical iron arrow through the weak place in Smaug's armor, all while Sauron and Saruman are circling and plotting and growing hordes of genetically modified Orcs and Trolls and summoning the demons from below

The Elves seem to be OK with a "genteel sufficiency," their wealth being useful durable stuff like mithril armor and those lovely houses and palaces up in the trees. Humans? Grabbers and takers, in Tolkien's mythology. I would second that view - sure seems to me that almost any of us, given a 1000-Bagger like Zuckerman or Jobs or that Gates creature fell into, or Russian or Israeli or African or European oligarchs for that matter (pretty universal, and expected given Davos and Bilderberg and Koch summits) the old insatiable lambic system that drives for pleasure-to-the-max and helps our baser tribal drives and penchant for violence to manifest and "thrive" will have its due. Like 600 foot motor yachts and private-jet escape pods and pinnacles islands with Dr. No-style security provided by guns and accountants and lawyers and faux-legitimate political rulers for hire

Lots of analysis of "the problem." Not so much in the way of apparent remedies, other than maybe lots of bleeding, where the mopes will do most of it and if history is any guide, another Smaug will go on around taking all the gold and jewels and other concentrated wealth back to another pile, to sit on and not maybe even gloat over because the scales are just too large

Still hoping for the emergence of an organizing principle that is more attractive that "take whatever you can and cripple or kill anyone who objects "

Ulysses , July 22, 2016 at 11:38 am

"People who have more money than they hope to spend for the rest of their lives, no matter how many of their remaining days are "rainy"; people who have more money to pass on than their children need for a lifetime of financial security, college and retirement included; people who have more money to pass on than their grandchildren need for a similarly secure life–these people insist on extracting still more wealth from their workers, their clients, and taxpayers for no purpose beyond vaingloriously hoarding it."

These are people who are obscenely wealthy as opposed to merely wealthy. The fastest way to challenge their toxic power would be to help the latter group understand that their interests are not aligned with the former. Most millionaires (as opposed to billionaires) will eventually suffer when the last few drops of wealth remaining to the middle and working classes are extracted. Their future prosperity depends on the continued existence of a viable, mass consumer economy.

The billionaires imagine (in my view falsely) that they will thrive in a neo-feudal future– where they own everything and the vast majority of humanity exists only to serve their needs. This is the future they are attempting to build with the new TPP/TISA/TTIP regime. If we fail to prevent the imposition of this transnational regime there will only be three classes of humans left: kleptocrats, their favored minions, and slaves. Most neoliberal professionals, who imagine that they will be in that second group, are delusional. Did the pharaohs have any need for people like Paul Krugman or Maureen Dowd?

a different chris , July 22, 2016 at 11:59 am

Yeah unfortunately they did. It wasn't just the pharaoh and peasants, there was a whole priestly class just to keep the workers confused.

Now the individuals themselves weren't at all necessary, they have always been easily replaceable.

FluffytheObeseCat , July 22, 2016 at 12:36 pm

Pharaohs didn't need a middle/professional class as large as the ones in most western democracies today. But, we are going in the pharaonic direction.

The problem our polite, right wing professional classes face is that they are increasingly too numerous for society's needs. Hence the creeping gig-i-fication of professional employment. The wage stagnation in all but the most guild-ridden (medicine) professions.

It's so reminiscent of what happened to the industrial working class in the late 70s and 80s. I still remember the "well-reasoned", literate arguments in magazine op-eds proclaiming how line workers had become "excess" in the face of Asian competition and automation. How most just needed to retrain, move to where the jobs are, tighten their belts, etc. It's identical now for lawyers, radiologists, and many layers of the teaching professions. If I weren't part of that "professional" class I'd find the Schadenfreude almost too delicious.

HotFlash , July 22, 2016 at 1:54 pm
If we fail to prevent the imposition of this transnational regime there will only be three classes of humans left: kleptocrats, their favored minions, and slaves.

Sounds about right, but you are overlooking the fact that the largest class will be The Dead. They will not need nearly so many of Us, and we will be thinned, trimmed, pruned, marooned, or otherwise made to go away permanently (quietly, for preference, I assume, but any way will do).

Ergo, the violence of ineffectual health care, toxic environment, poisonous food, dangerous working conditions and violence (for instance, guns and toxic chemicals) in our homes, schools, streets, workplaces, cities and, well, everywhere are not only a feature, but a major part of the plan.

And I'm actually feeling rather optimistic today.

Tim , July 22, 2016 at 2:23 pm

It has been extensively documented that the merely wealthy are very upset at the obscenely wealthy.

If the author is truly focusing on a tax for obscene wealth I'd like to know a specific threshold. Is it 1 Billion and up? annual limit how many times the median income before it kicks in?

#SlayTheSmaugs Post author , July 22, 2016 at 3:30 pm

Well, I'm happy to have a discussion about at what threshold a confiscatory wealth tax should kick in; it's the kind of conversation we have with estate taxes.

I'm thinking a one off wealth tax, followed by a prevention of the resurrection of the problem with a sharply progressive income tax. Is $1 billion the right number for this initial reclamation? maybe. It is about the very top few, not the merely wealthy.

#SlayTheSmaugs

Vatch , July 22, 2016 at 5:32 pm

$1 billion is a reasonable amount of assets for determining whether to confiscate a portion of a person's wealth in taxes. Or perhaps we could base it on a percentage of GDP. The U.S. GDP in 2015 was approximately $17.9 trillion. Anyone with $1.79 billion or more in assets would have 1% of 1% of the U.S. GDP (0.01%). That's a lot of wealth, and surely justifies a heavy tax.

Quantum Future , July 22, 2016 at 4:15 pm

To your question Ulysses

'Professionals, who imagine that they will be in that second group, are delusional. Did the pharaohs have any need of Paul Krugman'

Sure they did. Those were called Priests who told the people what the gods were thinking. And since Pharoah's concluded themselves gods. The slaves revolt by working less. Anybody notice the dropping production levels the last couple of years? Whipping the slaves didn't turn out well for the Egyptians.

A more modern similarity of the US is Rome. Vassals have been going full retard for several years now, traitors sell international competitors military secrets while the biggest merchants buy off the Senate.

Ceasar becomes more a figurehead until one leads a coup which has not happened yet. Aquiring more slaves begins to cost more than what the return in general to the society brings but the Smaugs do not care about that until the barbarians begin to revolt (See Orlando for example, the shooter former employee of DHS. Probably pissed some of his comrades were deserted by US in some manner.

Ulysses , July 22, 2016 at 12:07 pm

My point was that the category of people in this priestly caste will likely be far, far smaller than the millions of credentialed neoliberal professionals currently living large in the top 10% of the developed world.

Interesting mental image– to see Paul Krugman chanting praises to the new Son of the Sun God the Donald!!

#SlayTheSmaugs , July 22, 2016 at 12:07 pm

Look, there's a simple way to #SlayTheSmaugs, and it's a confiscatory wealth tax coupled with a sharply progressive income tax, as part of an overall restructuring of the political economy.

Simple, is of course, not easy; indeed my proposal is currently impossible. But like Bernie I'm trying to change the terms of political debate, to normalize what would previously be dismissed as too radical to be countenanced.

I don't think the looting professional class needs to be slain, in the #SlayTheSmaugs sense. I think they can be brought to heel simply by enforcing laws and passing new ones that are already within acceptable political debate, such as one that defines corruption as using public office for private gain. I think norms matter to the looting professional class as well. Another re-norm-ilization that needs to happen is remembering what a "profession" used to be

Sylvia Demarest , July 22, 2016 at 12:17 pm

Friends and neighbors!! Most of this "wealth" is ephemeral, it is based on the "value of assets" like stocks, bonds, real estate, et al. If all of this "wealth" gets liquidated at the same time, values would collapse. These people are fabulously wealthy because of the incredible inflation we have seen in the "assets" they hold.

Remember, during the Great Depression the "wealth" wasn't confiscated and redistributed, it was destroyed because asset values collapsed and over 2000 banks failed wiping out customer accounts. This also collapsed the money supply causing debt defaults, businesses failures, and worker laid offs. No one had any money because there was none.

The US was on the gold standard limiting the creation of liquidity. President Roosevelt went off the gold standard so that he could work to increase the money supply. It took a long time. The result of the depression was decades of low debt, cheap housing, and hard working people who remembered the hard times. The social mood gradually changed as their children, born in more prosperous times, challenged the values of their parents.

Yves Smith , July 22, 2016 at 10:02 pm

Even though the bulk of what the super rich hold is in paper assets, they still hold tons of real economy assets. They've succeeded in buying enough prime and even merely good real estate (like multiple townhouses in Upper West Side blocks and then creating one monster home behind the facade) to create pricing pressure on ordinary renters and homeowners in the same cities, bidding art through the roof, owning mega-yachts and private airplanes, and most important of all, using the money directly to reshape society along their preferred lines, witness charter schools.

GlassHammer , July 22, 2016 at 12:21 pm

If you are going to fight against the "Greed is Good" mentality, you are going to have to address the habits of the average middle class household. Just take a look at the over accumulation of amenities and creature comforts. The desire to signal ones status/wealth through "stuff" is totally out of control and completely divorced from means/income.

#SlayTheSmaugs , July 22, 2016 at 12:58 pm

Fair, and I do propose that:

"But we need more voices insisting #GreedIsEvil. We need to teach that basic message at home, in school, and in houses of worship. We need to send the right signals in our social interactions. We need to stop coveting stuff, and start buying with a purpose: Shopping locally, buying American, buying green and clean, and buying less. We need to waste less, share more and build community. We need to re-norm-alize greed as evil, make it shameful again. Then we will have redefined ourselves as citizens, not consumers."

dots , July 22, 2016 at 2:09 pm

Isn't there an idiom about cutting off the head of the snake? Once you deal with the strongest opponents, it's easier to go after the others. Too big to fail is nothing short of feeding the beast.

Punxsutawney , July 22, 2016 at 12:45 pm

There was a time not that long ago that I would have opposed a "confiscatory wealth tax". After looking at what most of those in the .1% are doing with their wealth, and their contempt for the average person, those days are long gone. Plus it's good economics.

The only question is what is "obscene wealth". Well like pornography, I think we know it when we see it.

Alfred , July 22, 2016 at 1:48 pm

I am wondering about the distribution of all this concentrated wealth; how much of it is spread around in the equities and bond markets?

And if that amount was redistributed to the general public how much of it would return to the equities and bond market?

I'm thinking not very much which would have catastrophic effects on both markets, a complete reordering. This would undoubtedly crush the borrowing ability of our Federal government, upset the apple cart in other words. With less money invested in the equities market it would undoubtedly return to a lower more realistic valuation; fortunes would be lost with no redistribution.

Oh the unintended consequences.

#SlayTheSmaugs Post author , July 22, 2016 at 3:34 pm

Fair to ask: How do we achieve a confiscatory wealth tax without catastrophic unintended consequences? But that's a very different question than: should we confiscate the Smaug's wealth?

One mechanism might be to have a government entity created to receive the stocks, bonds and financial instruments, and then liquidate them over time. E.g. Buffett has been giving stock to foundations for them to sell for awhile now; same kind of thing could be done. But sure, let's have the "How" conversation

Quantum Future , July 22, 2016 at 4:34 pm

If lobbying were outlawed at the Federal level the billionaires and multi millionaires would need to invest in something else. That signal has a multiplier effect.so your right eboit enforcement of mostly what is on the books already. A 'wall' doesnt have to be built for illegal immigrants either. Fine a couple dozen up the wazoo and the signal gets passed the game is over.

But until a few people's daughters are kidnapped or killed like in other 3rd world countries, it wont change. That is sad but reality is most people do not do anything until it effects them. I started slightly ahead of the crowd in summer of 2007 but that is because a regional banker told me as we liked discussing history to look at debt levels of 1928 and what happened next. On top of that, we are the like the British empire circa 1933 so we get the downside of that as well.

Pain tends to be the catalyst of evolution that fully awakens prey to the predators.

juliania , July 22, 2016 at 1:53 pm

"As Sanders often reminds us. . ."

I am sorry, Sir Smaug slayer. The underlying theme of your lengthy disquisition is that Sanders is the legitimate voice of the 99%, and his future complicity within the Democratic Party is thereby ameliorated by his current proposals within it. This is the true meat of your discourse ranging so far and wide – even with the suggestion early on that we the 99% need tutoring on the evils of greed.

Not so. That ship has sailed. Our Brexit is not yet upon us, but that it is coming, I have no doubt. The only question is when. To paraphrase a Hannah Sell quote on such matters. . . for decades working class people have had no representation in the halls of Congress. All of the politicians . . . without exception, have stood in the interests of the 1% and the super-rich.

Bernie Sanders included. Hannah's remarks were more upbeat – she made an exception for Jeremy Corbyn. Unfortunately, I can't do that. Bernie has folded. We need to acknowledge that.

amousie , July 22, 2016 at 2:16 pm

One of the arguments against redistribution is that is against the sacrosanct efficient market, which forbids making one person better off if the price is making someone else worse off.

I think you mean downward redistribution here since upward redistribution seems to be rather sacrosanct and definitely makes one person better off at the price of making many someones worse off to make it happen.

Tim , July 22, 2016 at 2:18 pm

Confiscatory wealth tax is too blunt an instrument to rectify the root causes discussed in this article, and you do not want a blunt impact to the effect of disincentivizing pursuit of financial success.

Further Centralization the populous' money will incite more corruption which is what allows the have's to continue lording it over the have nots.

What are alternatives?
Instead Focus on minimizing corruption,
Then it will be possible to implement fair legislation that limits the options of the greed to make decisions that results in unfair impacts on the lower class.

Increase incentives to share the wealth, (tax deductible charitable giving is an example).

We do need to encourage meritocracy whenever possible, corruption and oppression is the antithesis to that.

We need to stop incentivizing utilization of debt, that puts the haves in control of the have nots.

JTMcPhee , July 22, 2016 at 6:25 pm

"Financial success. " As long as those words go together, and make an object of desire, the fundamental problem ain't going away.

Of course the underlying fundamental problem of human appetite for pleasure and power ain't going away either. Even if a lot of wealth was taken back (NOT "confiscated") from the current crop and hopeful horde of kleptocrats

JTMcPhee , July 22, 2016 at 6:27 pm

How long before the adage "A fool and his money are soon parted" kicked in?

Ulysses , July 22, 2016 at 2:51 pm

"We do need to encourage meritocracy whenever possible, corruption and oppression is the antithesis to that."

I disagree strongly with your premise that some sort of pure and natural meritocracy has ever existed, or could ever exist in human society. Corrupt and oppressive people will always define as "meritorious" those qualities that they themselves possess– whether wealth, "gentle birth," "technical skills," or whatever. We all possess the same merit of being human.

An Egyptologist, with an Oxbridge degree and extensive publications has no merit– in any meaningful sense– inside a frozen foods warehouse. Likewise, the world's best frozen foods warehouse worker has little to offer, when addressing a conference focused on religious practices during the reign of Ramses II. Meritocracy is a neoliberal myth, intended to obscure the existence of oligarchy.

NeqNeq , July 22, 2016 at 4:03 pm

An Egyptologist, with an Oxbridge degree and extensive publications has no merit– in any meaningful sense– inside a frozen foods warehouse. Likewise, the world's best frozen foods warehouse worker has little to offer, when addressing a conference focused on religious practices during the reign of Ramses II. Meritocracy is a neoliberal myth, intended to obscure the existence of oligarchy.

I am confused.

You claim meritocracy is "a neoliberal myth, intended to obscure the existence of oligarchy", but (seemingly) appeal to meritocratic principles to claim a warehouse worker doesnt offer much to an academic conference. Can you clear up my misunderstanding?

I agree, btw, that Idealized meritocracy has never existed (nor can). Follow up question: There has never been an ideal ethical human, does that mean we should stop encouraging ethical behavior?

Ulysses , July 22, 2016 at 6:44 pm

Meritocracy is not the same as recognizing greater and lesser degrees of competence in various activities. It is absurd to deny that some are more skillful at some things than others. Assigning the relative "merit" to various competencies is what I find objectionable.

Encouraging ethical behavior has nothing to do with ranking the "merit" levels of different occupations. While some occupations are inherently unethical, like that of an assassin, most can be performed in such a way as to do no harm to others, and some are nearly always beneficial to society at large.

Someone who did nothing but drink whiskey all day, and tell funny stories in a bar, is far more beneficial to society at large than a busy, diligent economist dreaming up ways to justify the looting of the kleptocrats.

Pierre Robespierre , July 22, 2016 at 4:37 pm

Wealth Redistribution occurs when the peasants build a scaffold and frog march the aristocracy up to a blade; when massive war wipes out a generation of aristocracy in gas filled trenches or in the upcoming event.

Roland , July 22, 2016 at 10:23 pm

"Fair to ask: How do we achieve a confiscatory wealth tax without catastrophic unintended consequences?"

Answer: Do it and find out. Some things can only be determined empirically. First, do what needs doing. We can take care of the Utility afterwards.≥

Barry , July 22, 2016 at 11:00 pm

I would like to see a financial settlements tax like Scott Smith presidential candidate recommends. http://www.scottsmith2016.com/

[Feb 01, 2019] THE NEOLIBERAL MARKETIZED ECONOMY AND POLITICS

Jan 07, 2019 | cup.columbia.edu

The Origins of Neoliberalism - Modeling the Economy from Jesus to Foucault - Columbia University Press

The process of the marketization of the economy from Mill to Becker described earlier is concluded in Becker's notions of "Human Capital" and "Economics of Crime and Punishment."

Becker reformulates the ethical modes by which one governs one's self by theorizing the economic self as human capital that generates labor in return for income. Such self-government is conducted by economizing one's earning power, the form of power that one commands over one's labor. Theorizing self-government as a form of command over one's own labor, Becker inserts the power relations of the market, which Smith identified as purchasing power over other people's labor, into the ethical sphere of the relationship between a person andherself.

Becker's theory of self-government also entails a transformation of the technologies of the self into an askesis of economizing the scarce means of the marketized self that have alternative uses for the purpose ofmaximizing the earning and purchasing power one commands in the mar- ketized economy.

The marketization of the self that turned zoon oikonomikon into a power-craving homo economicus also makes him governable by the political monarch, as demonstrated in the Economic analysis of Crime and Punishment. Economic man is governed through the legal framework of the mar- ket economy. Human action is controlled by tweaking a matrix of punishments and incentives that make the governed subject, as a prudent creature who craves to maximize his economic power, freely choose the desired course of action that will ensure economic growth. At the same time that Becker's technologies of the conduct of the marketized self establish a neoliberal self-mastery, they also enable the governmental technology of conducting one self conduct in the all-encompassing and ever growing marketized economy. Although Becker seems to reverse the ageold ethical question, that is, how can a human, as a governed subject, become free in the economy, into the technological one of how one can make a free human governable, the end result is pretty much the same, as the economy is reconstituted as a sphere in which the subject is seen as free and governed.

A neoliberal interpretation of Hobbes's economic power is found in Tullock and Buchanan's use of economic theory to "deal with traditional problems of political science," that is, to trace the works of Smithian economic power that have by now been transposed onto the political sphere: Incorporat(ing) political activity as a particular form of exchange; and, as in the market relation, mutual gains to all parties are ideally expected to result from the collective relation. In a very real sense, therefore, political action is viewed essentially as a means through which the "power" of all participants may be increased, if we define "power" as the ability to command things that are desired by men. To be justified by the criteria employed here, collective action must be advantageous to all parties. (Tullock and Buchanan 1962:23)

[Jan 30, 2019] The Natural Rate of Interest Is Anything But

Notable quotes:
"... By Enrico Sergio Levrero, Associate Professor of Economics, Roma Tre University. Originally published at the Institute for New Economic Thinking website ..."
Jan 30, 2019 | www.nakedcapitalism.com

By Enrico Sergio Levrero, Associate Professor of Economics, Roma Tre University. Originally published at the Institute for New Economic Thinking website

In contrast to Keynes's emphasis on the monetary nature of interest rates, the modern theory of central banking focuses on a benchmark rate for monetary policy that reflect "fundamental forces" supposedly unaffected by monetary factors. Its theoretical underpinning stems from Wicksell's analysis of the relationship between market and natural interest rates as restated in the so-called New Keynesian theory which combines real-business-cycle general equilibrium models with imperfect competition and nominal rigidities.

Here, at least in the short run, discrepancies between the actual and natural interest rate are deemed to lead to a rate of price inflation different from the desired and expected one. If some kind of price rigidity is present, the interest rate difference will also lead to a discrepancy between actual and potential output. The resulting rule for monetary policy is that authorities should credibly commit themselves to following the natural rate of interest (NRI). They must therefore forecast this "neutral" rate, namely, the real rate that, if maintained, would keep the economy at its production potential over time.

Despite the mainstream consensus on this approach, determining the "equilibrium interest rate" is a murky business . A first problem is that, while the "benchmark rate" ought to be based on sound theoretical foundations that allow a meaningful interpretation of its behaviour, all sorts of definitions of it appear in the literature when assuming real shocks away from balanced growth. They reflect the theory's reliance on notions of perfect or imperfect competition in commodities and factor markets as well as the possible influence of transitory or only permanent components of the natural rate.

The result is usually a view in which we have a "short-run" natural rate of interest that varies (usually pro-cyclically) during the cycle, resembling Dennis Robertson's old prescription that monetary policies should follow temporary shifts of the demand for and supply of loanable funds, along with a long run natural rate that corresponds to potential output for a given degree of market imperfections when both causal shocks and lags of adjustment are averaged out.

The two approaches lead to divergent monetary policies. If you try to conduct policy by reference to the long run notion of the natural rate determined by the steady state IS curve when all the lags and random shocks disappear, you will not favour sharp changes in the short-term interest rate during the cycle. By contrast, if you rely on a "short run" natural rate that could fall during a crisis, you would see a slow decrease in the policy rates as too little to stimulate economic activity.

Compounding these difficulties is the variability induced by the estimation methods of the natural rate of interest. The benchmark rate of the monetary policy should in fact be readily computable from observable economic data, but its counterfactual nature inevitably leads to a variety of estimation methods with results that recall the early criticism by Myrdal and Lindahl that Wicksell's natural rate is not an operational notion in the sense that it was incapable of practical application. With each the econometric method raising special problems of its own, the resulting variety and uncertainty of the value of the natural rate cannot but pose significant challenges for practical monetary policy.

The divergent estimates of the NRI advanced during the recent 2008 crisis are a case in point. The estimates vary hugely, with model-based and filtering methods producing higher volatility than semi-structural approaches or peak-to-peak averages. Some estimates of the NRI provided negative values on average and not only as a possible (short-lived) effect of temporary shocks, whereas others suggested that the NRI remained close to but higher than zero. These differences imply drastically different evaluations of the stance of monetary policy as policymakers weighed whether it made sense to drive the nominal policy rates towards their zero lower bound.

But the limits of the NRI as a benchmark for monetary policy are not only statistical or related to the difficulty of distinguishing among the kind and persistency of economic shocks. They pertain to the theory itself, specifically to model specification and the alleged independence of the average or normal interest rate from monetary policy.

Firstly, New-Classical and New-Keynesian models focus on the volatility of output, that is, its variance, on the assumption that the output gap will be closed by market forces. This hides the fact that potential output may fall during the crisis due to the destruction of productive capacity stemming from a fall in effective demand. This would break down the distinction between short-lived demand shocks on the one hand and supply shocks on the other, thus complicating any estimate of the NRI and raising questions about its theoretical relevance.

Secondly, in both the theoretical models and estimate procedures, an inverse relation between the interest rates and components of aggregate demand is postulated as well as between the former and the price level, although such relations are acknowledged as being weak and doubtful. In practice, output elasticity with respect to interest rates appears low and asymmetric, and investments in fixed capital are determined mainly by expected changes in aggregate demand. Moreover, the Gibson paradox and its modern restatement in the price puzzle suggest that a direct relation between prices and the interest rate may exist due to prices adjusting to the monetary costs of production which include the pure remuneration of capital, that is interest costs. All this implies that, if, after a fall in the interest rate, we observe a fall in prices (or una tantum a lower rate of inflation), this would not signal that the NRI should be lower. Nor should a low elasticity of output to the interest rate be interpreted as a reliable sign that the natural rate of interest has fallen.

But a more fundamental criticism can be advanced concerning the sheer existence of a natural rate of interest determined by "productivity and thrift" independent of the monetary policy. New-Keynesian models restate the loanable funds theory, viewing the market rate of interest as determined by the supply of and demand for credit, with the natural rate of interest set by the supply of and demand for savings when output is at its potential level. This theory was already criticised by Keynes, who questioned whether investments adjust to savings through changes in interest rates. On the grounds of the principle of effective demand, Keynes argued that savings equalise investments by means of income changes and considered the notion of the NRI as not useful. He instead viewed the rate of interest as a monetary phenomenon to which capital profitability would adjust. He also argued that credit is not an alternative to savings but the necessary preparation for them and that until potential output is achieved, investments are financed by the finance process and income changes rather than by any previous saving supply.

This criticism of Keynes and his idea that there is no mechanical tendency to full employment was strengthened later by the Cambridge capital controversy which showed that it was impossible to derive a decreasing demand curve for investments with regard to the interest rate -- a decreasing curve which is at the root of the neoclassical mechanism guaranteeing the tendency of actual output toward potential output. Unless a single commodity economy is assumed, a surrogate production function cannot in fact be derived due to the phenomena of re-switching and reverse capital deepening. Moreover, in the market for savings and investment, there may be multiple equilibria, the capital-labour ratio is not necessarily higher for a lower interest rate, and changes in the rate of interest out of equilibrium may be so strong that they question the validity of the theory.

If we put aside the loanable funds theory, due prominence can be given to Keynes's idea that the rate of interest is a highly conventional phenomenon. It opens the way for levels of rates of interest that are shaped by monetary authorities that affect income distribution, and this possibility casts a different light on the purposes and channels of transmission of the monetary policies. Of course, monetary policy is not advanced in a vacuum but takes into account the course of money wages and, more generally, the economic and financial conditions of the country involved. Yet, the benchmark rate to which monetary authorities anchor their decisions does not appear to reflect "fundamental forces" acting independently of monetary factors, and therefore those decisions cannot be conceived simply as a technical device used to find out the "true" natural interest rate.

Summing up, estimates of the NRI are misleading both on empirical and theoretical grounds and monetary policy is not neutral, primarily because it may influence the division of the surplus product among different classes and social groups. Quite paradoxically, however, the tricky nature of those estimates, with their consequent downward revision during the crisis due to their sensitivity to current economic conditions, has been used by Central Banks to pursue a regime of low interest rates that was required by the macroeconomic situation of industrialized countries after the 2008 crisis. The cost of doing this has been to hide the asymmetric effects and delay in the transmission of monetary policy, since the scant reactivity of output to the fall in interest rates has been explained precisely by appeals to an alleged fall in the natural rate of interest even to negative values due to reaching the zero-lower bound for policy nominal interest rates. This makes a murky business even more opaque.


Synoia , January 29, 2019 at 12:03 pm

I can provide an interest rate dartboard.

Bring you own darts.

Is the natural rate of interest that of Home loans, Student loans, or Credit Cards?

That's my world.

Susan the Other , January 29, 2019 at 12:04 pm

"production potential" = return on investment potential and/or debt service potential?

Ignacio , January 29, 2019 at 12:34 pm

All this econospeak naturally wakes up assasin instincts. Anyway, any recommendation?

ape , January 29, 2019 at 12:42 pm

"A first problem is that, while the "benchmark rate" ought to be based on sound theoretical foundations that allow a meaningful interpretation of its behaviour, all sorts of definitions of it appear in the literature when assuming real shocks away from balanced growth."

Has anyone ever shown that in fact the diff eqs being used actually are insensitive to small perturbations? That the solutions are actually numerically stable? If they're not -- and in general, this is something that has to be shown for the constrained parameters -- the rest is a waste.

If it's not a concave system, but the solutions are saddle points, for example given the number of parameters and the equations steady state solutions don't require "shocks" at all to be unstable but are inherently unstable. And most systems are unstable

Synoia , January 29, 2019 at 1:43 pm

And most systems are unstable

All systems with non-linear feedback (eg: Fear and Greed), are Chaotic, not Unstable. A system with Unstable but not Chaotic behavior falls to a predictable state.

It is arguable that Greed is feed-forward, possibly in all cases. Fear is both, feed forward and feedback. For example fear of the unknown is feed forward, fear of loss generally feedback.

A classic fear which is both, feed forward and feedback, is fear of unwanted pregnancy. It is well know that fears of unwanted pregnancy are always handled rationally. /s.

JEHR , January 29, 2019 at 2:51 pm

Exactly how I felt after reading a paragraph.

d , January 29, 2019 at 5:47 pm

dont really see the difference in chaotic and unstable. different words that describe the same thing

anon y'mouse , January 29, 2019 at 8:09 pm

Chaotic would mean no discernible pattern. Unstable would mean it has patterns that lurch from some state to some other state, but which are discernible.

Gavin , January 29, 2019 at 1:47 pm

I'm very rusty, but I do believe that money, or capital, is itself a good, so it follows that an interest rate is little more than the price of money. And which rate is the natural rate, the inter bank rate, mortgage rates, brokers call, maybe the whatever a payday lender charges? All those rates just reflect different markets, or am I really wrong?

Grebo , January 29, 2019 at 3:09 pm

This article is implying that there is no natural rate of interest.
That would imply that money is not subject to the laws of supply and demand so is not a good.

Accepting that would kick away one of the pillars of Liberalism and neoclassical economics. It would also reveal that money and capital are not equivalent, except to a banker.

hemeantwell , January 29, 2019 at 3:27 pm

He gets close to saying that the idea is sheer ideology, serving a normalizing function kind of like the "state of nature" in classical political theory, e.g. Rousseau or Locke, that would be used to justify a set of political institutions. But he won't allow himself a paragraph to step away from econospeak long enough for the point to become fully salient.

Grebo , January 29, 2019 at 3:53 pm

He's only an associate professor. Maybe when he gets tenure

Massinissa , January 29, 2019 at 2:01 pm

Guys, I think there might actually be a natural rate of interest.

I think its 0%.

coboarts , January 29, 2019 at 2:20 pm

I think it was something about money left alone fornicating in dark vaults to produce interest that was considered unnatural.

JEHR , January 29, 2019 at 2:52 pm

"Fornicating Money"–a nice picture I must say.

paulmeli , January 29, 2019 at 2:54 pm

I think its 0%

so does Warren Mosler among others:

http://www.cfeps.org/pubs/wp-pdf/WP37-MoslerForstater.pdf

Joey , January 29, 2019 at 10:41 pm

Amen. The fundamental flaw is the concept of perpetual growth. Lots of fancy words for a pseudo science. At least meteorological predictions get judged, not fudged.

d , January 29, 2019 at 5:48 pm

how can there be a natural state for some thing that is man made?

anon y'mouse , January 29, 2019 at 8:07 pm

You could write that question as the epitaph to the entire field of what we know as Standard Economics. Real question:does anyone care?

[Jan 29, 2019] A State of Neoliberalism by Kevin "Rashid" Johnson (New African Black Panther Party)

Highly recommended!
References omitted
Notable quotes:
"... "number of refugees and displaced persons increased dramatically over the decade, doubling from 2007 to 2015, to approximately 60 million people. There are nine countries with more than 10 per cent of their population classified as refugees or displaced persons with Somalia and South Sudan having more than 20 per cent of their population displaced and Syria with over 60 per cent displaced." ..."
"... In The Road to Serfdom ..."
"... The Road to Serfdom ..."
"... When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism -- the Mont Pelerin Society -- it was supported financially by millionaires and their foundations ..."
"... Masters of the Universe ..."
"... As an ideology, neoliberalism borrows heavily from Trotskyism. "One can view neoliberalism as Trotskyism refashioned for elite ..."
"... proletarians of all countries unite ..."
"... neoliberal elites of all countries unite. ..."
"... Today Trotskyism no more confines itself to "informing" the bourgeoisie. Today Trotskyism is the center and the rallying point for the enemies of the Soviet Union, of the proletarian revolution in capitalist countries, of the Communist International. Trotskyism is trying not only to disintegrate the dictatorship of the proletariat in the Soviet Union, but also to disintegrate the forces that make for the dictatorship of the proletariat the world over. ..."
"... The Origins and Doctrine of Fascism ..."
"... Donald Trump is a visible product of this culture, but clearly is not the choice of the elite ruling class to serve as their "front man" for President. Rather, his role seems to have been to polarize the electorate in such a way as to assure Hillary Clinton the election, just as Bernie Sanders played a role of mobilizing the left-neoliberal camp and then sheep-dogging it into Hillary's camp. ..."
"... Bernie Sanders is this election's Democratic sheepdog. The sheepdog is a card the Democratic party plays every presidential primary season when there's no White House Democrat running for re-election. ..."
"... "An extraordinary feature of the U.S. electoral process is that the two dominant parties collude to dictate – via their own bipartisan "commission" – who is allowed to participate in the officially recognized presidential debates. Needless to say, the two parties set impossible barriers to the participation of any candidates other than their own . Most potential voters are thereby prevented from acquainting themselves with alternatives to the dominant consensus. ..."
"... Citizens United ..."
"... as deep in the shadows as possible ..."
"... Former president Jimmy Carter said Tuesday on the nationally syndicated radio show the Thom Hartmann Program that the United States is now an "oligarchy" in which "unlimited political bribery" has created "a complete subversion of our political system as a payoff to major contributors ..."
Nov 16, 2016 | rashidmod.com

The fundamental difference between socialism and capitalism is not simply a question of private vs. state ownership of the means of production but of the nature of the state itself. This is because the state is an instrument of class dictatorship. In this epoch, the state will be either a dictatorship of the bourgeoisie or a dictatorship of the proletariat. The dictatorship of the proletariat has only one rationale for its existence which is to transform class society into classless society and the state into a non-state that will wither away as classless society is achieved. However, there is a great danger of the dictatorship of the proletariat transforming back into a dictatorship of the bourgeoisie and thereby restoring capitalism, so long as classes continue to exist under socialism.

Class struggle intensifies under socialism, and will until the basis of class divisions no longer continues to be present. Communism is necessarily a global system, stateless and classless and without national boundaries. At this stage in the evolution of capitalist-imperialism, independent national states have ceased to exist as the global capitalist system becomes ever more hegemonic. In this period the World Proletarian Socialist Revolution cannot simply liberate one country at a time and meanwhile peacefully co-exist with the global capitalist system. Rather we must wage revolution globally to defeat capitalist-imperialism and achieve a global dictatorship of the proletariat. A system of global revolutionary intercommunalism would be the logical form for this proletarian dictatorship.

The U.S. Military is deployed globally with bases in the majority of countries and "partnership" arrangements to train and advise most of the world's armed forces. The U.S. is the dominant force in NATO and of the United Nations' armed forces. A recent report by the Institute for Economics and Peace found a mere ten nations on the planet are not at war and completely free from conflict. The report cites an historic 10-year deterioration in world peace, with the "number of refugees and displaced persons increased dramatically over the decade, doubling from 2007 to 2015, to approximately 60 million people. There are nine countries with more than 10 per cent of their population classified as refugees or displaced persons with Somalia and South Sudan having more than 20 per cent of their population displaced and Syria with over 60 per cent displaced." [1] According to the report, the United States spends an outrageously high percentage of the globe's military expenditures -- 38 percent -- while the next largest military spender, China, accounted for considerably less, 10 percent of the global share. [2]

The principle contradiction in the world today is between the need of the monopoly capitalist ruling class to consolidate its global hegemony and the chaos and anarchy (including the threat of a Third World War) it is unleashing by attempting to do so. The so-called "War on Terrorism" is but a front for capitalist-imperialism's aggressive attempts to consolidate its global bourgeois dictatorship and subordinate every country to its hegemonic control. The essence of communism is community, and capitalist-imperialism is the antithesis of community, particularly under neo-liberalism, which is the final stage of imperialism. As George Monbiot explained:

"The term neoliberalism was coined at a meeting in Paris in 1938 . Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt's New Deal and the gradual development of Britain's welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

" In The Road to Serfdom , published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control . Like Mises's book Bureaucracy , The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism -- the Mont Pelerin Society -- it was supported financially by millionaires and their foundations .

"With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as "a kind of neoliberal International": a transatlantic network of academics, businessmen, journalists and activists. The movement's rich backers funded a series of think tanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

"As it evolved, neoliberalism became more strident. Hayek's view that governments should regulate competition to prevent monopolies from forming gave way, among American apostles such as Milton Friedman, to the belief that monopoly power could be seen as a reward for efficiency." [3]

As an ideology, neoliberalism borrows heavily from Trotskyism. "One can view neoliberalism as Trotskyism refashioned for elite . " [4] Instead of " proletarians of all countries unite " we have [the] slogan " neoliberal elites of all countries unite. " [5] Stalin purged Trotsky, but some of his disciples made the transition to become founding intellectuals of neoliberal ideology, and in particular its "neo-conservative" wing. "Neoliberalism is also an example of emergence of ideologies, not from their persuasive power or inner logic, but from the private interests of the ruling elite. Political pressure and money created the situation in which intellectually bankrupt ideas could prevail much like Catholicism prevailed during Dark Ages in Europe. In a way, this is return to Dark Ages on a new level." [6]

Trotsky's elitism and contempt for the masses led naturally to neoliberalism. As M.J. Olgin pointed out: Today Trotskyism no more confines itself to "informing" the bourgeoisie. Today Trotskyism is the center and the rallying point for the enemies of the Soviet Union, of the proletarian revolution in capitalist countries, of the Communist International. Trotskyism is trying not only to disintegrate the dictatorship of the proletariat in the Soviet Union, but also to disintegrate the forces that make for the dictatorship of the proletariat the world over. [7]

Neoliberalism also borrows from the ideology of fascism. As Giovanni Gentile, "The Philosopher of Fascism" expressed in a quote often attributed to Mussolini: "Fascism should more properly be called corporatism , since it is the merger of state and corporate power." Gentile also stated in The Origins and Doctrine of Fascism , that "mankind only progresses through division, and progress is achieved through the clash and victory of one side over another." [8]

Neoliberalism is a new form of corporatism based on the ideology of market fundamentalism, dominance of finance and cult of rich ("greed is good") instead of the ideology on racial or national superiority typical for classic corporatism. Actually, some elements of the idea of "national superiority" were preserved in a form superiority of "corporate management" and top speculators over other people. In a way, neoliberalism considers bankers and corporations top management to be a new Aryan race. As it relies on financial mechanisms and banks instead of brute force of subduing people the practice of neoliberalism outside of the G7 is also called neocolonialism. Neoliberal practice within G7 is called casino capitalism, an apt term that underscore [s] the role of finance and stock exchange in this new social order. Neoliberalism is an example of emergence of ideologies not from their persuasive power or inner logic, but from the private interests of ruling elite. Political pressure and money created the situation in which intellectually bankrupt ideas could prevail .

Neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a class strategy designed to redistribute wealth upward toward an increasingly narrow fraction of population (top 1%). It is the Marxist idea of "class struggle" turned on its head and converted into a perverted "revolt of the elite," unsatisfied with the peace of the pie it is getting from the society. While previously excessive greed was morally condemned, neoliberalism employed a slick trick of adopting "reverse," Nietzschean Ubermench morality in bastartized form propagated in the USA under the name of Randism. [9]

This neoliberal transformation of the society into a top 1% (or, more correctly, 0.01%) "have and have more" and "the rest" undermined and exploited by financial oligarchy with near complete indifference to what happens with the most unprotected lower quintile of the population. The neoliberal reformers don't care about failures and contradictions of the economic system which drive the majority of country population into abject poverty, as it happened in Russia. Nor do they care about their actions such as blowing financial bubbles, like in the USA in 2008 can move national economics toward disaster. They have a somewhat childish, simplistic "greed is good" mentality: they just want to have their (as large as possible) piece of economic pie fast and everything else be damned. In a way, they are criminals and neoliberalism is a highly criminogenic creed, but it tried to conceal the racket and plunder it inflicts of the societies under the dense smoke screen of "free market" newspeak.

That means that in most countries neoliberalism is an unstable social order as plunder can't continue indefinitely. It was partially reversed in Chile, Russia, and several other countries. It was never fully adopted in northern Europe.

One can see an example of this smoke screen in Thatcher's dictum of neoliberalism: "There is no such thing as society. There are only individuals and families." In foreign policy neoliberalism behaves like brutal imperialism which subdue countries either by debt slavery or direct military intervention. In a neoliberal view the world consist of four concentric cycles which in order of diminishing importance are .

Finance is accepted as the most important institution of the civilization which should govern all other spheres of life. It is clear that such a one-dimensional view is wrong, but neoliberals like communists before them have a keen sense of mission and made its "long march through the institutions" and changed the way Americans think (Using the four "M" strategy -- money, media, marketing, and management)

A well-oiled machine of foundations, lobbies, think-tanks, economic departments of major universities, publications, political cadres, lawyers and activist organizations slowly and strategically took over nation after nation. A broad alliance of neo-liberals, neo-conservatives and the religious right successfully manufactured a new common sense, assaulted Enlightenment values and formed a new elite, the top layer of society, where this "greed is good" culture is created and legitimized. [10]

Donald Trump is a visible product of this culture, but clearly is not the choice of the elite ruling class to serve as their "front man" for President. Rather, his role seems to have been to polarize the electorate in such a way as to assure Hillary Clinton the election, just as Bernie Sanders played a role of mobilizing the left-neoliberal camp and then sheep-dogging it into Hillary's camp. As Bruce A. Dixon explained:

" Bernie Sanders is this election's Democratic sheepdog. The sheepdog is a card the Democratic party plays every presidential primary season when there's no White House Democrat running for re-election. The sheepdog is a presidential candidate running ostensibly to the left of the establishment Democrat to whom the billionaires will award the nomination. Sheepdogs are herders, and the sheepdog candidate is charged with herding activists and voters back into the Democratic fold who might otherwise drift leftward and outside of the Democratic party, either staying home or trying to build something outside the two-party box." [11]

Once you realize what the principle contradiction in the world is, and how the game of bourgeois "democracy" is played, the current election become as predictable and blatantly scripted as professional wrestling. As Victor Wallace explained:

"An extraordinary feature of the U.S. electoral process is that the two dominant parties collude to dictate – via their own bipartisan "commission" – who is allowed to participate in the officially recognized presidential debates. Needless to say, the two parties set impossible barriers to the participation of any candidates other than their own . Most potential voters are thereby prevented from acquainting themselves with alternatives to the dominant consensus.

"This practice has taken on glaring proportions in the 2016 campaign, which has been marked by justified public distrust of both the dominant-party tickets. Preventing election-theft would initially require breaking up the bipartisan stranglehold over who can access the tens of millions of voters.

"Another distinctive U.S. trait is the absence of any constitutional guarantee of the right to vote. Instead, a multiplicity of state laws govern voter-eligibility, as well as ballot-access. A few states set ballot-access requirements so high as to effectively disqualify their residents from supporting otherwise viable national candidacies. As for voter-eligibility, it is deliberately narrowed through the time-honored practice of using "states' rights" to impose racist agendas. Most states deny voting rights to ex-convicts, a practice that currently disenfranchises some 6 million citizens, disproportionately from communities of color. More recently, targeting the same constituencies, many states have passed onerous and unnecessary voter-ID laws.

"The role of money in filtering out viable candidacies is well known. It was reinforced by the Supreme Court's Citizens United decision of 2010, which opened the gate to unlimited corporate contributions.

"The priorities of corporate media point in a similar direction. Even apart from their taste for campaign-advertising, their orientation toward celebrity and sensationalism prompts them to give far more air-time to well known figures – the more outrageous, the better – than to even the most viable candidates who present serious alternatives. Trump's candidacy was thus "made" by the media, even as they kept the Sanders challenge to Clinton as deep in the shadows as possible ." [12]

Moreover, the media, which in the U.S. is 90% owned by just six mega-corporations, [13] cooperates closely with the dominant establishment of the two parties in framing the questions that are posed in the debates. And they explicitly maintain the fiction that the "commission" running the debates is "non-partisan" when in fact it is bipartisan. [14]

"Turning finally to the voting process itself, the longest-running scandal is the holding of elections on a workday. In recent years, the resulting inconvenience has been partially offset by the institution of early voting, which however has the disadvantage of facilitating premature choices and of being subject to varied and volatile rules set by state legislatures.

"The actual casting of votes on Election Day is further subject to a number of possible abuses. These include: 1) insufficient polling places in poor neighborhoods, sometimes resulting in waiting periods so long that individuals no longer have the time to vote; 2) the sometimes aggressive challenging of voters' eligibility by interested parties; 3) the use of provisional ballots which may easily end up not being counted; and 4), perhaps most significantly, the increasingly complete reliance on computerized voting, which allows for manipulation of the results (via "proprietary" programs) in a manner that cannot be detected. (The probability of such manipulation – based on discrepancies between exit-polls and official tallies – was documented by Marc Crispin Miller in his book on the 2004 election.

"The corporate media add a final abuse in their rush – in presidential races – to announce results in some states before the voting process has been completed throughout the country." [15]

Despite multiple releases of hacked e-mails by WikiLeaks revealing the whole process in detail, it seems to have little effect on the masses or on the game. The most recent batch come from Obama's personal e-mail account and reveal that the Bush administration contacted the future president multiple times before the election in 2008, secretly organizing the transition of power. In one e-mail President Bush states:

" We are now at the point of deciding how to staff economic policy during the transition, who should be the point of contact with Treasury and how to blend the transition and campaign economic policy talent.

Normally these decisions could be made after the election, and ideally after the selection of a National Economic Advisor, but, of course, these are not normal times. " [16]

.... ... ...

The illusion of "democracy" is wearing thin:

Former president Jimmy Carter said Tuesday on the nationally syndicated radio show the Thom Hartmann Program that the United States is now an "oligarchy" in which "unlimited political bribery" has created "a complete subversion of our political system as a payoff to major contributors ." Both Democrats and Republicans, Carter said, "look upon this unlimited money as a great benefit to themselves."

Carter was responding to a question from Hartmann about recent Supreme Court decisions on campaign financing like Citizens United .

Transcript:

... ... ...

Kevin "Rashid" Johnson is the Minister of Defense, New African Black Panther Party (Prison chapter)

[Jan 29, 2019] Modern Monetary Theory A Cargo Cult

Jan 29, 2019 | www.zerohedge.com

Newly elected Representative Alexandria Ocasio-Cortez recently said that Modern Monetary Theory (MMT) absolutely needed to be "a larger part of our conversation." Her comment shines a spotlight on MMT. So what is it? According to Wikipedia , it is:

"a macroeconomic theory that describes the currency as a public monopoly and unemployment as the evidence that a currency monopolist is restricting the supply of the financial assets needed to pay taxes and satisfy savings desires."

It is uncontroversial to say that the Federal Reserve has a monopoly on the dollar. So let's look at the second proposition. Unemployment, MMT holds, is evidence that the supply of dollars is restricted.

In other words, more money causes more employment!

This does not sound very different from what the New Keynesians say. Keith analyzed former Fed Chair Janet Yellen's seminal paper on the economics of labor for Forbes :

"Here is their [Yellen and co-author Ackerloff] tenuous chain of logic:

  1. Disgruntled employees don't work hard, and may even sabotage machinery.
  2. So companies must overpay to keep them from slacking.
  3. Higher pay per worker means fewer workers, because companies have a finite budget.

Yellen concludes -- you guessed it:

  1. inflation provides corporations with more money to hire more people."

As a footnote, MMT is referred to as neo-Chartalism, and there is some evidence that Keynes was influenced by Chartalism (which goes back to at least 1905).

On Thursday, Marketplace published a piece on MMT . Things are heating up for this hot new (old) idea. Marketplace presented a "bathroom sink" model of the economy (yes, really!)

To wrap your brain around this concept, picture a bathroom sink. Think of the government and its ability to create more money whenever it needs to as the faucet and that bucket area of the sink where the water goes as the economy.

The government controls how much money, or water, is flowing into the economy. It spends money into the economy by building interstates or paying farm subsidies or funding programs.

"And so as those dollars reach the economy, they begin to fill up that bucket, and what you want to do is be very mindful about how full that bucket is getting or you're going to get an inflation problem," [Bernie Sanders economic advisor Stephanie] Kelton said.

Inflation is where the sink overflows. If that happens, Kelton said there are two ways to fix it: "You can slow the flow of dollars coming into that bucket. That means the government then has to start slowing it's [sic] rate of spending, or you can open up the drain and let some of those dollars out of the economy. And that's what we do when we collect taxes."

This sounds a lot like the Quantity Theory of Money (QTM). This view often paints a picture of pouring water into a container. The higher the water level, the higher the general price level.

QTM by itself does not promote the idea that more money causes more employment. Only that more money causes more rising prices. But Keynes did. And the New Keynesians like Yellen do.

So what makes MMT unique?

According to Stephanie Kelton, in the Marketplace article:

"If you control your own currency and you have bills that are coming due, it means you can always afford to pay the bills on time," Kelton said. "You can never go broke, you can never be forced into bankruptcy. You're nothing like a household."

Keynes taught us about government deficits to bolster employment and government deficits to respond to a crisis. MMT teaches us how to get to the next level. The voters want free goodies. Traditional economics says "there ain't no such thing as a free lunch."

MMT says "oh yes there is!"

At least until you get to too much inflation . The Monetarists would agree, don't print too much money or you get too much inflation . Much of the gold community also agrees. If you print too much money, then you get skyrocketing inflation .

Never mind that this prediction was proven wrong in the post-2008 policy response. We want to highlight that the Keyesians, the Monetarists, the MMTers, and even many Austrians largely agree. The problem with too much money printing is too much inflation . They quibble about what is too much, but they agree on the "bathroom sink" model of the economy.

In the words of early 20 th century physicist Wolfgang Pauli, QTM "is not even wrong ."

We define inflation as the counterfeiting of credit. That is, fraudulently taking money from a saver. It is called borrowing , but the borrower hasn't got the means or intent to repay. Additionally, when everyone thinks that the government's debt paper is money , the saver doesn't even know or consent to the borrowing.

There are lies, damnlies, and statistics. Then there are a few pugnacious, in your face, gaslighting make-you-believe-in-unreality cargo cults. We will explore this in full, below.

During World War II, the US military set up operations on certain Pacific islands. They built landing strips, where they landed planes bringing in supplies and men. They hired the local tribesmen as labor, and paid them stuff that was ordinary to Americans, but wondrous to the islanders. Like canned food. The islanders really looked forward to when a plane would land, and they would get some cargo.

After the war, the US military pulled up stakes and left. But the islanders still wanted the cargos. So they set up these elaborate charades, with tiki torches instead of flashlights, and coconut shell mockup headphones. They went through the motions that they thought the Americans did. To try to bring back the cargos.

Huh. What does that remind you of? An elaborate charade, with bogus props, going through the motions of a civilization they don't understand to try to produce desired results -- free goodies?

Modern Monetary Theory is a cargo cult.

It's ironic that the name includes the word modern . If we said that a pile of greasy rags sealed in a dark closet would spontaneously generate rats, would you call that a modern theory? If we said that sickness is caused by bad humors, and the cure is bloodletting by leaches, would you say this is modern ? How about the idea that the Sun and the planets orbit the Earth. Is this modern , too?

Not only are these not modern -- they are, in fact, old ideas that were tossed into the garbage heap -- they are not theories either. A theory is an explanation of reality, which integrates many observed facts and contradicts none. Modern Monetary Theory is neither modern nor a theory .

MMT is not an attempt to explain reality, but to deny it.

Even a child understands something. Even people in the ancient world understood it, too. If you lend a bushel of wheat to your neighbor, and he does not repay it, you suffer a loss. You are worse off, compared to before. And so is the borrower (who at the least ruins his credit).

MMT is based on denying this universal truth. Common sense says that if Peter lends to Paul, and Paul does not repay, then Peter is impoverished. Common sense says that Peter would not lend to Paul if he knew that Paul would renege on his obligation.

MMT says that a modern economy has a modern currency, which is just the state's paper. And in a modern economy, the modern state can print more with no concerns other than "overflowing the bathroom sink". Get that, the only concern is prices could rise too fast. And so long as this does not occur, then the state can get away with it. Only, there is nothing to get away with. It's perfectly fine.

In a cargo cult, the people did not recognize the difference between fake coconut shell headphones, and real headphones. Or flashlights and tiki torches. So they made crude copies as best they could. They went through the motions to summon the sky gods to come down to earth, with cargo.

Let's look at the mental gymnastics. They imbued magical -- that is outside the principle of cause and effect -- characteristics to their props. Failing to understand that airplanes are created by men, and that it takes a great deal of planning (not to mention wealth) to fly a plane full of cargo from America to the middle of the Pacific, they imagined that, somehow, the act of using the headphones and the flashlights caused the plane and its cargo to come. The headset is tokenized, viewed as a magical talisman.

What a cargo cult does to headphones, MMT does to money. First, the cargo cult substitutes coconut shells held together with twisted vine for headphones. What they wear when attempting to summon the sky gods is not a headset, but a surrogate. MMT (as does Keynesianism and Monetarism) substitutes government debt paper for money.

As an aside, even a gold-redeemable certificate is not money. Think about it. You can bring this piece of paper to the teller window. You push it across the counter. The teller pushes back the gold coin. If the word for the paper is money, then what is the word for the gold for which it redeems?

Anyways, modern monetary systems use irredeemable paper. It's not gold-redeemable, but even worse. And they treat this paper as if it were money .

And it goes even farther. Previous theories felt the need to at least pay lip service to repaying debt. They couldn't quite get to the point of openly admitting that the debt is never to be repaid. Keynes famously quipped that, "in the long run, we are all dead," creating ambiguity about the intention to repay. Monetarists generally promote the idea that if the economy grows fast enough, the debt will shrink as a proportion of GDP.

The Keynesians don't have the intention to repay. And the Monetarists don't look at Marginal Productivity of Debt , which would show them that their idea isn't working. But they don't go as far as the MMT'ers.

MMT says that the government is unlike deadbeat-debtor Paul. There is no need for the government to repay. It's the same as the cargo cult. The cargo cult has no concept for capital. The islanders do not produce in excess of what they consume, accumulating tools and technology to increase their productivity. They subsist, and assume that this is how the world works.

MMT has no concept for capital either. It puts blinders on, declaring that consumer prices are the only thing to measure. The only risk is if they rise too fast. And the MMT'ers refuse to see anything else.

In our discussion of Yield Purchasing Power , we introduced a farmer who sells off the back 40 (acres), chops down the apple orchard to sell the fruitwood, tears down the old barn to sell the planks, and even dismantles the tractor. And why does he do this? He gets cash in exchange. And the cash is far in excess of his crop yield. Why struggle and sweat to produce $20,000 a year by growing food, when you can sell off the piece of the farm for $20,000,000.

The monetary system incentivizes the farmer to trade productive capital for paper credit slips. The incentive is that this paper has a greater purchasing power than what he can earn by operating the farm. He can trade his farm for far more groceries, than the food he could grow on it.

This is the same old game. But MMT gives it a new name -- and asserts a bolder defense. MMT'ers don't want to see, and they want you not to see, that the lender gives up good capital but the borrower is just consuming it.

MMT justifies the naked consumption of capital.

Supply and Demand Fundamentals

The prices of the metals rose this week, especially on Friday. The exchange rate of gold went up twenty two US dollars, and that of silver 41 US cents.

As we will discuss below, we think that there is a rethinking of gold occurring in the market. And we don't just mean celebrities like Sam Zell buying gold for the first time.

There is a sense of déjà vu. Starting in mid-2004, the Fed went on one of its rate-hiking sprees. It did not manage to get as high as the previous peak of 6.5%, set prior to the previous crisis. In 2006, this rate topped out at 5.25%. In both the crisis of 2001, and the crisis of 2008, the Fed had begun cutting rates before the official indication of recession , and the cuts occurred more rapidly than the preceding hikes.

The cuts were too little and/or too late to avert disaster.

The problem is that during the period of low rates, firms are incentivized to borrow. They finance projects which generate a low rate of return. These projects would not be financed, but for the even-lower cost of borrowing. When rates rise, it does not increase the rate of return produced by marginal projects (likely the opposite). So borrowers are squeezed.

The Fed eventually comes along with its fix -- even lower rates. While this is too late to save firms that are teetering into default, it does enable the next wave of borrowing for even-poorer-projects.

And now, here we are. Since its first tepid hike in December 2005, the Fed has been hiking for just over three years so far. It has hit a rate well under half of the peak of 2006-2007. The president has publicly urged the Fed to reverse policy course. And the Fed said it is listening to the market, and may have paused hiking for now.

Meanwhile, the Fed Funds rate may be lower than the previous peak but it is much higher than it was from the end of 2008 through the end of 2015. For seven years, it was basically zero. Nobody knows how many dollars' worth of projects were financed that were only justified, only possible, due to this zero interest-rate policy. But it was surely a lot (we would guess at least trillions).

And now the rate is up to 2.25%. Many of those projects are no longer justified, and can no longer service the debt that finances them.

And none of this is a secret. It is well known to the borrowers, of course. And their creditors. And the Fed. And hedge funds and other sophisticated speculators. And not just in general theory, but lists of specific companies and the rollover dates of their bond issues.

Rollover is key to this. After decades of falling interest, everyone has learned the game of using short-term financing. But the risk is that it must be rolled over. And when it is rolled, the previous low-rate is replaced with the higher, current rate. And that's when we find out which businesses can still pay.

So what will the Fed do? The next programs will have a new name, but the Fed must lower the cost of capital if it wants to keep the game going.

Is this time going to be the total collapse of the dollar? We don't believe so, as there is still a lot of capital remaining and more is flooding in as people abandon the dollar-derivative currencies. So we think of it as déjà vu, the Fed is likely to do something similar to last time.

And that is an environment where even the non-goldbugs see clear and compelling arguments for owning gold.

It could be that the timing is not now. It could be that it will take months or years to arrive at this point. We make no predictions of timing. However, we note that the Monetary Metals Gold Fundamental Price has been in a rising trend since mid-October. Its low was on October 9 ($1,266).

Silver is similar, but a bit different. The low in its fundamental occurred in late November ($14.37). But it's up like a rocket since then, now about two bucks higher.

We are at an interesting point.

Let's take a look at the only true picture of the supply and demand fundamentals of gold and silver. But, first, here is the chart of the prices of gold and silver.

[Jan 26, 2019] Can the current US neoliberal/neoconservative elite be considered suicidal?

Highly recommended!
Can the elite be afflicted by some mass disease. Is Neoconservatism a deadly infection ?
Theoretically Democracy depends on information freely available and responsibility of the citizenry to make decisions based on that information. The political elites have made certain precious little of reliable, unclouded and relevant information ever gets broadcast even while popularizing, promoting and rewarding every form of misrepresentation, ignorance and irresponsibility. In other words they spearheaded a dangerous disease to stay in power. And eventually got infected themselves.
Notable quotes:
"... "But what if the elites get things wrong? What if the policies they promulgate produce grotesque inequality or lead to permanent war? Who then has the authority to disregard the guardians, if not the people themselves? How else will the elites come to recognize their folly and change course?" ..."
"... That is how they maintain control and manipulate government to facilitate their own interests to the detriment of the rest of society. Bretix and President Trump have upset their apple cart, which they felt certain was invulnerable and immune to challenge. ..."
"... The elites aren't interested in polls showing Americans want out of Syria and Afghanistan, are they? Can't have mere citizens having influencing decisions like that. ..."
"... An excellent piece. I would add only that the so-called elites mentioned by Mr Bacevich are largely the products of the uppermost stratum of colleges and universities, at least in the USA, and that for a generation or more now, those institutions have indoctrinated rather than educated. ..."
"... As their more recent alumni move into government, media and cultural production, the primitiveness of their views and their inability to think - to say nothing of their fundamental ignorance about our civilization other than that it is bad and evil - begin to have real effect. ..."
Jan 20, 2019 | www.theamericanconservative.com

Kent January 18, 2019 at 11:30 am

"But what if the elites get things wrong? What if the policies they promulgate produce grotesque inequality or lead to permanent war? Who then has the authority to disregard the guardians, if not the people themselves? How else will the elites come to recognize their folly and change course?"

What if, on election day, you only have a choice between 2 candidates. Both favoring all the wrong choices, but one tends to talk up Christianity and family and the other talks up diversity.

And both get their funding from the very wealthy and corporations. And any 3rd choices would be "throwing your vote away". How would you ever get to vote for someone who might change course?

Democracy has little to actually do with choice or power.

mlopez, January 18, 2019 at 6:22 pm

GB may not have been any utopia in 1914, but it was certainly geo-politically dominant. It's common people's social, economic and cultural living standards most assuredly was vastly improved over Russian, or European peasants. There can be no serious comparison with third world countries and regions.

As for the US, there can be absolutely no debate about its own dominance, or material standard of living after 1945 as compared to any where else in the world. More importantly, even uneducated and very contemporary observers were capable of recognizing how our elites had sold out their interests in favor of the furtherance of their own.

If we are on about democratic government, then it's been generations since either country and their peoples have had any real democracy. Democracy depends on information freely available and responsibility of the citizenry to make decisions based on that information. The political elites have made certain precious little of reliable, unclouded and relevant information ever gets broadcast even while popularizing, promoting and rewarding every form of misrepresentation, ignorance and irresponsibility.

That is how they maintain control and manipulate government to facilitate their own interests to the detriment of the rest of society. Bretix and President Trump have upset their apple cart, which they felt certain was invulnerable and immune to challenge.

Hello / Goodbye, January 19, 2019 at 11:40 am

The elites aren't interested in polls showing Americans want out of Syria and Afghanistan, are they? Can't have mere citizens having influencing decisions like that.

Patzinak, January 19, 2019 at 5:07 pm

What ineffable flummadiddle!

Prominent Brexiteers include Boris Johnson (dual UK/US citizenship, educated in Brussels and at Eton and Oxford, of mixed ancestry, including a link - by illegitimate descent - to the royal houses of Prussia and the UK); Jacob Rees-Mogg (son of a baron, educated at Eton and Oxford, amassed a solid fortune via hedge fund management); Arron Banks (millionaire, bankroller of UKIP, made to the Brexit campaign the largest ever political donation in UK politics).

So much for "the elite" being against Brexit!

But the main problem with Brexit is this. Having voted by a slim margin in favour of Brexit, the Great British Public then, in the general election, denied a majority to the government that had undertaken to implement it, and elected a Parliament of whom, by a rough estimate, two thirds oppose Brexit.

It ain't that "the elite" got "things wrong". It's that bloody Joe Public can't make his mind what to do - and go through with it.

Rossbach, January 20, 2019 at 2:14 pm

"Whether the imagined utopia of a dominant Great Britain prior to 1914 or a dominant America after 1945 ever actually existed is beside the point."

It wasn't to restore any defunct utopia that led people to vote for Brexit or Donald Trump; it was to check the descent of the Anglosphere into the totalitarian dystopia of forced multi-cultural globalism that caused voters to reject the EU in Britain and Hillary Clinton in the US. It is because they believed that only with the preservation of their national independence was there any chance or hope for a restoration of individual liberty that our people voted as they did.

Ratings System, January 17, 2019 at 1:27 pm

It's why they won't enjoy their privileges much longer. That stale charade can't and won't last.

We don't have a meritocracy. We have a pseudo-meritocracy with an unduly large contingent of aliens, liars, cheats, frauds, and incompetents. They give each other top marks, speak each other's PC language, and hire each other's kids. And they don't understand why things are falling apart, and why they are increasingly hated by real Americans.

A very nasty decade or two is coming our way, but after we've swept out the filth there will be a good chance that Americans will be Americans again.

Paul Reidinger, January 17, 2019 at 2:03 pm

An excellent piece. I would add only that the so-called elites mentioned by Mr Bacevich are largely the products of the uppermost stratum of colleges and universities, at least in the USA, and that for a generation or more now, those institutions have indoctrinated rather than educated.

As their more recent alumni move into government, media and cultural production, the primitiveness of their views and their inability to think - to say nothing of their fundamental ignorance about our civilization other than that it is bad and evil - begin to have real effect. The new dark age is no longer imminent. It is here, and it is them. I see no way to rectify the damage. When minds are ruined young, they remain ruined.

[Jan 25, 2019] Agathe Demarais on Twitter Supposedly official demands from #GiletsJaunes, include raising of minimum wage

Jan 25, 2019 | # GiletsJaunes , including rising minimum wage by 40%, defaulting on sovereign debt ("already repaid several times"), exiting the EU, suppressing speed cameras on roads, banning plastic, weakening pharmaceutical companies, and exiting NATO

Frederic Py ‏ @ Frel_ 7 Dec 2018

Replying to @ AgatheDemarais @ DaraghMcdowell

No such thing as "official" demandS on a grassroots movement which started on a single issue and has no real figurehead. This is just an attempt to politicize a headless movement

[Jan 24, 2019] The Trump Tax Cut Is Even Worse Than They Say by Dean Baker

Notable quotes:
"... To this point, there is essentially zero evidence of the promised investment boom. There was respectable growth in investment in the first two quarters of 2018, but growth slowed to just 1.1 percent in the third quarter. ..."
"... In any case, there is zero evidence that the tax cut is leading to the sort of investment boom that will qualitatively boost the rate of productivity and GDP growth and provide workers with substantially higher pay. ..."
"... (irrational) confidence level is an important economic factor. ..."
"... What has been destructive in major recessions has not been "misdirected investment", it has been the leveraged and/or fraudulent financial manipulations which maximize profit but which cause rapid collapse when conditions turn bad. Again, interest rates have in practice not been a main factor in this. ..."
"... Keynes was adamantly against high interest rates and he favored usury laws: "the rate of interest is not self-adjusting at a level best suited to the social advantage but constantly tends to rise too high, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanctions of the moral law." The General Theory, p. 351. ..."
"... "The evidence is not consistent with the idea that central banks can control economies with interest rates." ..."
"... A much larger threat to world economies (than interest rates) is the huge capital investments in petroleum assets. At some point, those investments will need to be unwound in an orderly fashion but it doesn't seem that anyone is considering how to do that. ..."
Jan 18, 2019 | cepr.net
Details
Published: 18 January 2019

(This piece was originally posted on my Patreon page .)

Jim Tankersley had a nice piece in the New York Times last week pointing out that the tax cut pushed through by the Republicans in 2017 is leading to a sharp drop in tax revenue. While this was widely predicted by most analysts, it goes against the Trump administration's claims that the tax cut would pay for itself.

Looking at full-year data for calendar year 2018, Tankersley points out that revenue was $183 billion (5.6 percent) below what the Congressional Budget Office (CBO) had projected for the year before the tax cut was passed into law. This is a substantial falloff in revenue by any standard, but there are two reasons the picture is even worse than this falloff implies.

The first is that we actually did see a jump in growth in 2018 pretty much in line with what the Trump administration predicted. The tax cut really did stimulate the economy. It put a lot of money in the economy (mostly going to those at the top) and people spent much of this money. The result was that the growth rate accelerated from around 2.0 percent the prior three years to over 3.0 percent in 2018. (We don't have 4 th quarter data yet, which may be delayed by the shutdown, but growth should be over 3.0 percent.)

The jump in growth in 2018 means that the drop in revenue was not due to the economy being weaker than expected, it was due to the fact that the tax rate had fallen by a larger amount than the boost to growth. In fairness to the Trump administration, they had also projected a falloff in revenue due to the tax cut in 2018, but not one that was as large as what we saw.

... ... ...

To this point, there is essentially zero evidence of the promised investment boom. There was respectable growth in investment in the first two quarters of 2018, but growth slowed to just 1.1 percent in the third quarter. It is likely to be even weaker in the fourth quarter due to the drop in world oil prices (less oil drilling), although we won't get these data until the shutdown is over. In any case, there is zero evidence that the tax cut is leading to the sort of investment boom that will qualitatively boost the rate of productivity and GDP growth and provide workers with substantially higher pay.

In this context, the deficits from the Trump tax cut are a problem. If the economy is bumping up against its limits and the labor market is close to full employment, it means a much larger share of output is going to the consumption of the wealthy. That both means less private consumption for everyone else, and it makes it more difficult to have major initiatives that involve substantial spending, such as a Green New Deal or Medicare for All.

The long and short is that the revenue data for 2018 looks pretty bad on its face. It looks even worse on a closer examination.

pieceofcake4 days ago ,

...and perhaps this funny (American?) idea - that economics only exist in order to have some ''Boom'' going -- forever -- and ever - (which everybody knows is NOT possible) - is the root of US problem??!

Paul6 days ago ,

Deficits are not a problem, period. They are a benefit because they keep the boom going, just as lower interest rates forestall a recession. Keynes pointed this out 80 years ago: "Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom." The General Theory of Employment, Interest and Money, p. 322.

Keeping us out of a recession/slump ought to be the focus of economic policy, not hypothetical questions about the economy "bumping up against its limits" which anti-Keynesians have been obsessed with for years.

skeptonomist Paul 6 days ago ,

Keeping out of bubbles is what keeps us out of slumps (in most cases). The usual pattern is that as conditions improve people put confidence where it does not belong and extend leverage, then financial collapse makes things look bad for everyone - the general (irrational) confidence level is an important economic factor.

Interest rates have an effect on speculation - when rates are low people have to turn to riskier things to make money, and leverage is cheap. Stock prices were very low in 1981 because interest rates were very high and they are very high now partly because interest rates have been very low. The effect on speculation may be a valid reason to raise rates - of course the imaginary threat of inflation is not.

But history indicates it is not a huge effect. The Fed did raise discount rate through 1928 and 1929 up to 6% and this did not seem to slow the development of the stock-market bubble. It is unlikely that the Fed can kill a bubble or boom now by raising at much lower levels. The housing bubble of 2006 was a matter of bad regulation. The Fed was involved in encouraging and then disregarding the bubble, but not by manipulating interest rates. Greenspan was always a cheerleader of deregulation.

Paul skeptonomist 5 days ago ,

"Bubblenomics" was discredited by Keynes:

"Moreover, even if over-investment in this sense was a normal characteristic of the boom, the remedy would not lie in clapping on a high rate of interest which would probably deter some useful investments and might further diminish the propensity to consume, but in taking drastic steps, by redistributing incomes or otherwise, to stimulate the propensity to consume.

"It may, of course, be the case -- indeed it is likely to be -- that the illusions of the boom cause particular types of capital-assets to be produced in such excessive abundance that some part of the output is, on any criterion, a waste of resources; -- which sometimes happens, we may add, even when there is no boom. It leads, that is to say, to misdirected investment." The General Theory p.321

"Thus an increase in the rate of interest, as a remedy for the state of affairs arising out of a prolonged period of abnormally heavy new investment, belongs to the species of remedy which cures the disease by killing the patient." The General Theory p.323.

Causing a recession in order to kill a bubble is madness.

skeptonomist Paul 5 days ago ,

I am not recommending killing a boom or bubble with interest rates. On the contrary I am always recommending against relying on manipulating interest rates to regulate the economy, whether it is to prevent inflation, real or imaginary, or to stimulate the economy in case of recession. While Keynes conjectured that interest rates could have effects, he certainly was very clear in not expecting that they would be sufficient to control the business cycle - see pp. 319-320, the end of Ch. 12 and ch. 24.

What has been destructive in major recessions has not been "misdirected investment", it has been the leveraged and/or fraudulent financial manipulations which maximize profit but which cause rapid collapse when conditions turn bad. Again, interest rates have in practice not been a main factor in this.

Paul skeptonomist 5 days ago ,

"While Keynes conjectured that interest rates could have effects, he certainly was very clear in not expecting that they would be sufficient to control the business cycle"

Really? Then why did he include "Interest" in the title of his magnum opus?

Keynes was adamantly against high interest rates and he favored usury laws: "the rate of interest is not self-adjusting at a level best suited to the social advantage but constantly tends to rise too high, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanctions of the moral law." The General Theory, p. 351.

Further, he railed against using high interest rates to limit the boom: "The austere view, which would employ a high rate of interest to check at once any tendency in the level of employment to rise appreciably above the average of, say, the previous decade, is, however, more usually supported by arguments which have no foundation at all apart from confusion of mind." The General Theory, p. 327-8.

The rate of interest is critical to economic growth which is why the Fed's role is so important.

skeptonomist Paul 5 days ago ,

The evidence is consistent with what Keynes said about high interest rates - the high rates in the 70's to 80's failed to prevent inflation but caused unemployment to go to 10.8%. The Fed failed utterly in both of its two objectives during that time. Since 2008 record low rates have not produced the claimed boost in investment and growth. This is especially obvious in Europe and Japan where conditions are worse than in the US despite negative interest rates. This is also consistent with Keynes' expectation that interest rates would not be sufficient to overcome variations in the perceived marginal efficiency of capital. The evidence is not consistent with the idea that central banks can control economies with interest rates, or even that their actions are always constructive. That idea was not Keynes'.

Paul skeptonomist 5 days ago ,

"The evidence is not consistent with the idea that central banks can control economies with interest rates."

That is a bridge too far, and Keynes disagrees:

"There is, indeed, force in the argument that a high rate of interest is much more effective against a boom than a low rate of interest against a slump." The General Theory, p. 320.

Slowing a boom with higher interest rates is indeed feasible and that has been Fed doctrine for decades. Obviously, higher interest rates reduce consumption and investment so growth must slow. The high inflation of the 1970s was due to the OPEC oil shocks, not excessively rapid growth of the economy. In fact, growth had been faster in the 1960s with much lower inflation.

RAP77 Paul a day ago ,

I understand why this economic discussion focuses only on interest rates but it leaves out a larger issue. That fact that, on CNBC and elsewhere, financial analysts obsess over interest rates, taxes, and the price of oil in relation to the market illustrates the cluelessness of the financial community. They all applaud "deregulation" without ever specifying which regulations. Do they mean all regulations?

Trump's deregulation of methane emissions, for example, will create future costs that are exponentially larger than any immediate savings to frackers and oil companies. That's just one example. Trump's environmental deregulatory agenda is stupidity writ large.

A much larger threat to world economies (than interest rates) is the huge capital investments in petroleum assets. At some point, those investments will need to be unwound in an orderly fashion but it doesn't seem that anyone is considering how to do that. Eventually, probably sooner than expected, a tipping point will be reached when mass realization of the threat climate change poses to our survival generates a mass panicked exit from petroleum assets which will create a financial crash that dwarfs what we saw in 2008.

Paul RAP77 a day ago ,

Do you remember "Limits to Growth"? Doomsday scenarios have been around for a long time especially in regard to the national debt which supposedly will cause the collapse of our economy sometime soon. I am skeptical about that.

[Jan 24, 2019] No One Said Rich People Were Very Sharp Davos Tries to Combat Populism by Dean Baker

Highly recommended!
Notable quotes:
"... the Davos crew is trying to combat populism, according to The Washington Post . It is kind of amazing that the rich people at Davos would not understand how absurd this is. ..."
"... The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world. ..."
"... It is important to remember, the World Economic Forum is not some sort of international organization like the United Nations, the OECD, or even the International Monetary Fund. It is a for-profit organization that makes money by entertaining extremely rich people. The real outrage of the story is that top political leaders, academics, and new outlets feel obligated to entertain them. ..."
"... Davos ought to be treated as a conspiracy against labor, representative government, environmental regulation and decent living standards, but of course our admiring national press corps doesn't see it that way -- their bosses attend, after all. ..."
"... It may be best to avoid the term "populist" because it tends to be applied indiscriminately to the likes of Trump and to leftist reformers. Or if it is used for Trump it should be "fake populist". Opposition to corporatist globalization can be populistic, but Trump's version so far has been mostly fake. ..."
"... Two kinds of populism: rightwing populism (which often looks like fascism) and leftwing populism. They are quite different critters and they don't have a lot to do with each other though they agree on a few things. ..."
"... People REALLY need to re-read 1984 & refresh their memories of Orwellian good-is-bad brainwashing ..."
"... Trump is a rightwing populist, but it is very confusing. In the US anyway and often in general, rightwing populists are NOT the enemies of the rich. Note Mussolini and Hitler. Fascism really is a type of rightwing populism. ..."
"... Rightwing populism pretends to be for the people and is to some extent (protectionism, isolationalism, nationalism) but in a lot of other ways, it's just fake and it's always a cover for class rule and rule by the rich. ..."
"... The rich will go to fascism or rightwing populism if they get a threat from the Left (read Trotsky), but they don't really like them very much, think they are classless brutes, barbarians, racists, bigots, etc. ..."
"... They're not worried about Donnie. He's no class traitor. They're worried about the populism of the Left and possibly about rightwing populism in Europe. Bolzonaro and Trump are hardly threats to capital. ..."
"... He pretends to be a populist because it helps him. For example, he doesn't care about illegal immigration. He's been happy to hire undocumented workers his whole life, even now in office. But it gets his base fired up so he rails about immigration. He has no ideology, he will use whatever helps him. ..."
"... Rightwing populism is NOT cool in my boat. Rightwing populism is Bolsonaro. It's Duterte too, but that's a bit different, he's a bit more pro-people. Erdogan is a rightwing populist too, but he's rather socialist. Marie Le Pen is out and out socialist and she gets called rightwing populist. Orban is 5X more socialist than Venezuela and he gets called rightwing populist. It's all very confusing. ..."
"... But in the US and Latin America, rightwing populism is ugly stuff all right, and it tends to be associated with fascism! ..."
Jan 22, 2019 | cepr.net
Let's see, cattle ranchers are against vegetarianism, coal companies are against restricting CO2 emissions, and the Davos crew is trying to combat populism, according to The Washington Post . It is kind of amazing that the rich people at Davos would not understand how absurd this is.

Yeah, we get that rich people don't like the idea of movements that would leave them much less rich, but is it helpful to their cause to tell us that they are devoting their rich people's conference to combating them? The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world.

It is important to remember, the World Economic Forum is not some sort of international organization like the United Nations, the OECD, or even the International Monetary Fund. It is a for-profit organization that makes money by entertaining extremely rich people. The real outrage of the story is that top political leaders, academics, and new outlets feel obligated to entertain them.


pieceofcake pieceofcake a day ago ,

And the fact that so many Americans -(and especially American workers) still mistake Von Clownstick as a so called ''Populist'' - and being on their side - is... unbearable!

Robert Lindsay pieceofcake 12 hours ago ,

He IS in fact a rigthwing populist of a sort. That's what rightwing populism in the US looks like, and what it's always looked like. Bunch of crap huh? Gimme Marie Le Pen any day.

Woodshedding a day ago ,

"The real incredible aspect of Davos is that so many political leaders and news organizations would go to a meeting that is quite explicitly about rich people trying to set an agenda for the world." \

Agreed - like how people almost worship British Royals.. or American celebrities... and yet, unfortunately, isn't it true that the greedmongers at Davos are not "trying," but rather "largely succeeding" at setting said world agenda?

Robert Lindsay pieceofcake 12 hours ago ,

Trump is a rightwing populist in fact. Nasty critters, aren't they?

pieceofcake Robert Lindsay 7 hours ago ,

''Nasty critters, aren't they''?

Yes!

Dwight Cramer 2 days ago ,

Nothing to see here, folks, move right along . . .

Davos and TED Talks. One entertains the rich, the other the smart. The skiing is better at Davos, the ideas are better at a TED Talk. Just remember, most of the rich aren't smart and most of the smart aren't rich. So it's all rather silly, 'though it's easier to get rich if you're smart than it is to get smart if you're rich. Don't ask me how I know that, but I'll tell you, if you have an ounce of human kindness in you, learning the second half of that lesson is more painful than the first.

None of this would be half as much fun outside the glare of publicity, or if not heavily spiced with the envy of the excluded.

Ishi Crew Dwight Cramer 19 hours ago ,

in my view half of ted talks are extremely stupid; the other half are basic 101 (eg j Hari).

Dwight Cramer Ishi Crew 17 hours ago ,

Ishi--I don't disagree with you. Just not as stupid as the Davos drivel. Perhaps I should have said 'less bad' ideas, but I liked the cadence of 'better' and 'better.' Gotta have cadence if you want to get the People Marching.

jake • 2 days ago ,

Davos ought to be treated as a conspiracy against labor, representative government, environmental regulation and decent living standards, but of course our admiring national press corps doesn't see it that way -- their bosses attend, after all.

pieceofcake jake 2 days ago ,

Firstly we have to treat the so called ''Populists'' as a conspiracy against labor - because they pretended in the utmost conspirational way to be on labors side.

While It always was as clear as mud that Davos was a Party of the Rich!

skeptonomist pieceofcake 2 days ago ,

It may be best to avoid the term "populist" because it tends to be applied indiscriminately to the likes of Trump and to leftist reformers. Or if it is used for Trump it should be "fake populist". Opposition to corporatist globalization can be populistic, but Trump's version so far has been mostly fake.

Robert Lindsay skeptonomist 12 hours ago ,

You guys need to read up. Two kinds of populism: rightwing populism (which often looks like fascism) and leftwing populism. They are quite different critters and they don't have a lot to do with each other though they agree on a few things.

Woodshedding skeptonomist a day ago ,

That's basically my take, too. The term is purposely misused by the propagandists to get normal people thinking "Populism" must be something they don't like. People REALLY need to re-read 1984 & refresh their memories of Orwellian good-is-bad brainwashing. [and even "brainwashing" is an orwellian term! Brain-NUMBING, maybe... but nothing's getting cleaned, that's for sure]

Robert Lindsay Woodshedding 12 hours ago ,

Nope US rightwing populism has often looked a lot like Trump's crap. I mean some of it was better. I have a soft spot for Huey Long. But in the US, rightwing populism just helps the rich mostly and it tends to be fascist.

pieceofcake Woodshedding a day ago ,

''The term is purposely misused by the propagandists to get normal people thinking "Populism" must be something they don't like'' You mean some con-artists have conned people who liked the term ''Populism'' into liking idiocy - racism and nationalism?.

Robert Lindsay pieceofcake 12 hours ago ,

Rightwing populism is indeed often nationalism + racism. That's how it works.

pieceofcake skeptonomist 2 days ago ,

- ''it tends to be applied indiscriminately to the likes of Trump and to leftist reformers''.

Only some very Confused (Americans?) confuse Idiotic (''Rightwing) ''Populists'' with Social (Leftwing) ''Socialists''.

Robert Lindsay pieceofcake 12 hours ago ,

Rightwing populists are indeed a thing. Wikipedia is your friend. Just because they suck ass doesn't mean they don't exist, comrade.

It's very common to get mixed up about the types of populism and jumble them all together though.

Robert Lindsay pieceofcake 3 hours ago ,

Trump is a rightwing populist, but it is very confusing. In the US anyway and often in general, rightwing populists are NOT the enemies of the rich. Note Mussolini and Hitler. Fascism really is a type of rightwing populism.

Rightwing populism pretends to be for the people and is to some extent (protectionism, isolationalism, nationalism) but in a lot of other ways, it's just fake and it's always a cover for class rule and rule by the rich.

The rich will go to fascism or rightwing populism if they get a threat from the Left (read Trotsky), but they don't really like them very much, think they are classless brutes, barbarians, racists, bigots, etc.

But the rich allow them because they think they can control them and not let them get out of hand. This is what happened in Germany. This is what often happens actually.

In a sense, rightwing populism IS fake populism because it pretends to be for the people while often fucking them over with rightwing class rule via fascism. It's still populism, it's just not for the people. It's fraudulent, iike most rightwing bullshit.

pieceofcake 2 days ago ,

- AND! -
to suggest - or imply? - that the type of ''Populism'' Trump -(and other so called ''Populists) represent - IS to ''leave the Davos Crowd much less rich'' -
could be the funniest thing ever written on this blog?

Robert Lindsay pieceofcake 12 hours ago ,

They're not worried about Donnie. He's no class traitor. They're worried about the populism of the Left and possibly about rightwing populism in Europe. Bolzonaro and Trump are hardly threats to capital.

Lord Koos pieceofcake 2 days ago ,

Trump is not a populist, even if he appeals to them. He's a very wealthy man who looks out for his rich friends.

DAS Lord Koos 8 hours ago ,

He pretends to be a populist because it helps him. For example, he doesn't care about illegal immigration. He's been happy to hire undocumented workers his whole life, even now in office. But it gets his base fired up so he rails about immigration. He has no ideology, he will use whatever helps him.

Robert Lindsay Lord Koos 12 hours ago ,

He actually has a lot of traits of a rightwing populist, US style, but then that's always been a suckhole anyway.

pieceofcake Lord Koos 2 days ago ,

''Trump is not a populist, even if he appeals to them. He's a very wealthy man who looks out for his rich friends''.

How true - but as most of the current so called ''Populists'' are just as ''non-populist'' as Trump - it might be time to find a new ''expression''.

Robert Lindsay pieceofcake 3 hours ago ,

Typical rightwing populism, which isn't really pro-people anyway, just another rightwing fraud.

pieceofcake pieceofcake 2 days ago ,

and to makes sure not to be misunderstood - I also think Davos is ''pathetic'' and ''hypocritical'' - and everything else one wants to throw at it -
BUT as one of my favorite American Philosophers said:

"Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity."

And I think he meant the current ''Populists'' of this planet! -(and lets include especially the Brazilian one too)

pieceofcake 2 days ago ,

But isn't it GREAT- that also ''the rich'' are starting to battle morons and a...holes like Baron von Clownsticks -(or the nationalistic idiots in the UK - or the Neo Nazis in Germany?) -

For I while I thought I was left ALL alone in order to battle the type of ''Populism''- which is nothing else than the sick racist phantasies of some nationalistic a...holes?

Robert Lindsay pieceofcake 12 hours ago ,

Rightwing populism is NOT cool in my boat. Rightwing populism is Bolsonaro. It's Duterte too, but that's a bit different, he's a bit more pro-people. Erdogan is a rightwing populist too, but he's rather socialist. Marie Le Pen is out and out socialist and she gets called rightwing populist. Orban is 5X more socialist than Venezuela and he gets called rightwing populist. It's all very confusing.

But in the US and Latin America, rightwing populism is ugly stuff all right, and it tends to be associated with fascism!

[Jan 23, 2019] Another sign of collapse of neoliberal ideology: discussion of 70% tax rate on income over 10 million is no longer viewed as anathema

Jan 23, 2019 | finance.yahoo.com

Billionaire Michael Dell, chief executive officer of the eponymous technology giant, rejected a suggestion by U.S. Representative Alexandria Ocasio-Cortez of a 70-percent marginal tax rate on the wealthiest Americans.

"No, I'm not supportive of that," Dell said at a Davos panel on making digital globalization inclusive. "And I don't think it will help the growth of the U.S. economy. Name a country where that's worked."

She may not be in Davos, but the New York representative's influence is being felt on the slopes of the Swiss Alps. Three weeks after Ocasio-Cortez floated the idea in an interview on "60 Minutes" to raise the top marginal tax rate on Americans' income of more than $10 million to 70 percent, it was a hot topic at the gathering of the global financial and political elite.

... ... ...

"My wife and I set up a foundation about 20 years ago and we would've contributed quite a bit more than a 70 percent tax rate on my annual income," Dell said. "I feel much more comfortable with our ability as a private foundation to allocate those funds than I do giving them to the government."

Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology who was on the panel with Dell, said such a rate worked in the U.S. after World War II. But other executives were opposed, including Salesforce.com Inc. Co-Chief Executive Officer Keith Block.

... ... ...

Billionaire investor Ray Dalio suggested that the idea may have legs in the run-up to the U.S. presidential election. Discussing the outlook for a slowing world economy Tuesday, Dalio said that next year will see "the beginning of thinking about politics and how that might affect economic policy beyond. Something like the talk of the 70 percent income tax, for example, will play a bigger role." He didn't mention Ocasio-Cortez by name.

Currently in the U.S., the top marginal tax rate is 37 percent, which takes effect on income of more than $510,300 for individuals and $612,350 for married couples, according to the Tax Foundation.

The fortunes of a dozen attendees at the World Economic Forum in 2009 have soared by a combined $175 billion, a Bloomberg analysis found. The same cannot be said for people on the other end of the social spectrum: A report from Oxfam on Monday revealed that the poorest half of the world saw their wealth fall by 11 percent last year.

[Jan 23, 2019] Under neoliberalism stock market is a casino that might well hurt ordinary people, not help them to create sizable funds for retirement

Under neoliberalism 301K investors are overinvested in stock market essentially feeding Wall Street sharks. The net result even in case of investing strictly in S&P500 are not that great. From 2000 to 2019 S&P rose from approximately 1400 to 2600 or 1200 points in 18 years. That's around 4.7% per year. Adding dividends that's around 6%. As you add money each year for this 18 years period you will realize only half of this return or 3% a year which is close to 30 years bond return (they are tax free, unlike S&P500) and barely beats inflation.
401K was an ingenious design to enrich Wall Street the staple on neoliberal attack on middle class
Notable quotes:
"... Samuelson was responding to my recent publications advocating expanded insurance, futures, and options markets to mitigate the financial risks – for example, those related to housing prices and occupational incomes – that ordinary people face. He said that these markets could, if pitched to the general population, turn into "casino markets," with people using them to gamble, rather than to protect themselves. ..."
Jan 23, 2019 | www.project-syndicate.org

Morality and Money Management by Robert J. Shiller - Project Syndicate

Advising people simply to hold the market is advising them to free-ride on the wisdom of others who do not follow such a strategy. If everyone followed Bogle's advice, market prices would turn into nonsense and would provide no direction to economic activity. 3

I remember exactly when I began to appreciate the complexity of the moral issues money management entails: October 8, 2009. I received a phone call from the eminent MIT economist Paul Samuelson, who had been my teacher when I was a graduate student in the early 1970s. He was 94 years old at the time, and two months later he died. I was so impressed by the call that I took notes on it in my diary.

Samuelson was responding to my recent publications advocating expanded insurance, futures, and options markets to mitigate the financial risks – for example, those related to housing prices and occupational incomes – that ordinary people face. He said that these markets could, if pitched to the general population, turn into "casino markets," with people using them to gamble, rather than to protect themselves.

He then brought up the example of Bogle, who "gave up a billion dollars for a concept," Samuelson said. "He could easily have cashed this in," but he didn't. "The miracle that was Vanguard came from Bogle's principles."

I thought he was right. In the long run, markets reward principled people. But there is still need for an expanded set of risk markets, because these markets can – and do – carry out useful functions, including risk management, incentivization, and orienting business.

The problem is that attention to these markets requires intelligent and hard-working people to help others in their investing. Theirs is not a zero-sum game, for they help direct resources to better uses. And these people must be paid. Even Vanguard, which now has a number of different index funds, hires investment managers and charges a management fee, albeit a low one.

Not every fund needs a low fee. We live in a world where constant and rapid change and innovation require more attention, and attention is costly. While many financial managers are at times unscrupulous, a higher management fee is not always a sign that something is wrong.

But Bogle is still a hero of mine, because he provided an honest product and was motivated by a sincere desire to help people. And he should be a hero to all, because he showed that markets eventually recognize integrity.

[Jan 23, 2019] When neoliberalism became the object of jokes, it is clear that its time has passed

Highly recommended!
Jan 23, 2019 | crookedtimber.org

Likbez, Jan 22, 2019

I would also say ideas like people age and gradually become irrelevant no matter how strongly they are propelled by the power of the state and MSM. When neoliberalism became the object of jokes, it is clear that its time has passed.

Neoliberal ideology experienced a severe crisis in 2007 and was by-and-large discredited.

But Neoliberalism as a social system is resilient and can continue to exist for some time even after ideology itself was discredited. Probably 30-50 years, if we think that neoliberalism is a perverted flavor of Trotskyism (Financial elite of all countries unite; Permanent neoliberal revolution until the global victory of neoliberalism) and Bolshevism lasted 50 years after the crisis of its ideology in early 60th.

So I think that neoliberalism entered its "zombie phase." It became more bloodthirsty, aggressive (look at Trump) and even managed to stage revenge in Argentina and Brasil deposing less neoliberal governments with hardcore neoliberal.

But ideas age and die like people and in 2019 the ideas of neoliberalism are essentially dead. So now it is clinging by the pure power of propaganda and coercion. That is the road to nowhere, and I expect this neoliberalism position in the USA will be further undermined by-elections of 2020. Maybe tax regime will start to change to byte top 1%, and maybe there is be local and quickly suppressed insurrections/strikes, like in France; I do not know. But with the level of inequality intact, the cracks might widen.

Degeneration of the neoliberal elite (Trump, Pelosi, Schumer, Pompeo, etc.) is another obvious problem. Filters work in such a way that capable (and this potentially dangerous to the system) people are eliminated at early stages of political selection. That might s danger for the USA is not so distant future as a viable, cohesive society and currently, the Congress really reminds Soviet Politburo. Bunch on Mayberry Machiavelli.

At least in Australia politicians started openly discuss alternatives. Here in the USA, there is dead silence. That means that the Congress is a part of the problem, not a part of the solution.

Another problem is with the level of militarism in the USA society. The size of MIC is a huge problem and like cancer is curable only by surgical means. The fact is that politicians are arguing about 5 billion wall which is something like one percent of F35 program cost ( https://www.bloomberg.com/news/articles/2017-07-10/f-35-program-costs-jump-to-406-billion-in-new-pentagon-estimate )

At this point, people stop to trust both politicians and MSM re-defining them as "fake news" which means the crisis of legitimacy of the neoliberal elite. And I think that the USA either reached this point or is very close.

That's why the US neoliberal elite decided to cement the cracks in the neoliberal ideological façade via Russophobia in best neo-McCarthyism fashion. The idea is to define the common enemy and mobilizing the society against it, leaving internal frictions on the "day after." But it looks like neoliberalism which Sheldon Wolin defined as "inverted totalities" is bad on mass mobilization. It no longer can produce slogans or politician who can ignite passion of common people. Obama was a fake. So is Trump.

And Russiagate gambit produced some unwanted to neoliberals externalities like the society attention to intelligence-driven machinations and their role as a political force under neoliberalism. Including the role of British intelligence services.

[Jan 22, 2019] The French Anti-Neoliberal Revolution. On the conditions for its success by Dimitris Konstantakopoulos

Highly recommended!
Notable quotes:
"... The French bourgeoisie is the politically most experienced ruling class in Europe. It has no illusions about the challenge it faces. Le Point put its file on the revolt of the vests under the self-telling title "What is waiting us". ..."
"... But it's not only the king who is naked. The whole system is naked. In the many pages devoted by the magazine to demonstrate that what the Vests want is unfeasible, not even a single serious word is written about what needs to be done to deal with the deep causes which led the French to revolt. Today's capitalism of Macron, Merkel and Trump does not produce a Roosevelt and New Deal or Popular Fronts – and we have to wait to see if it will produce a Hitler as some are trying to achieve. For the time being, it only produces Yellow Vests! ..."
"... In Oscar Wilde's masterpiece "The Picture of Dorian Gray", the main character looks every night at his horrible real self in the mirror. But he looks at it alone. ..."
"... This is where Macron made his most fatal mistake, being arrogant and markedly cut off from reality – with the confidence given to him by the mighty elite forces, which elected him and by his contempt of the common people which characterizes him. ..."
"... Observing Macron, the people understood what lied ahead for them. They felt their backs against the wall – they felt that they had only themselves to rely on, that they had to take themselves action to save themselves and their country. ..."
"... This was the decisive moment, the moment the historical mission of Macron was achieved . By establishing the most absolute control of Finance over Politics, he himself invited Revolution. His triumph and his tragedy came together. ..."
"... Many established "leftists" or "radical" intellectuals, who used to feverishly haul capitalism over the coals – although the last thing they really wanted was to experience a real revolution during their lifetime – they too, stand now frightened, looking at an angry Bucephalus running ahead of them. They prefer a stable capitalism, of which they can constitute its "consciousness", writing books, appearing on shows and giving lectures, analyzing its crises and explaining its tribulations. They idea that the People could at some point take seriously what they themselves said, never crossed their minds either! ..."
"... Today, four out of five French people disapprove of Macron's policies and one in two demands that he resigns immediately. We assume that this percentage is greater than the percentage of Russians who wanted the ousting of Tsar Nicholas II in February 1917. ..."
"... France is currently almost in a state of Power Vacuum . The president and the government cannot in essence govern and the people cannot tolerate them. It is not a situation of dual power, but a situation of dual legitimacy , in Mélenchon 's accurate description. ..."
"... This is a typical definition of a revolutionary situation . As history teaches us, the emergence of such a situation is necessary but not sufficient condition for a victorious Revolution. What is required in or order to turn a rebellion into a potentially victorious Revolution, is a capable and decided leadership and an adequate strategy, program and vision. These elements do not seem to exist, at last not for now, in today's France, as they did not exist in May 1968 or during the Russian Revolution of February 1917. Therefore, the present situation remains open to all possible eventualities; there must be no doubt however, that this is the beginning of a period of intense political and class conflicts in Europe, and that the Europe, as we know it, is already history. ..."
"... Or at least, for the people to be given the opportunity to develop an effective way of controlling state power. ..."
"... By reversing Marx's famous formula in German Ideology , the ideas of the dominant class do not dominate society. This is why the situation can be described as revolutionary. ..."
"... Although it is difficult to form an opinion from afar about how the situation may unfold, the formation of a such a United Front from grassroots could perhaps offer a way out with regards to the need for a political leadership for the movement, or even of the need to work out a transitional economic program for France, which must also serve as a transitional program for Europe . ..."
"... Contrary to how things were a century ago, certain factors such as the educational level of the lower social classes, the existence of a number of critical, radical thinkers with the necessary intellectual skills and the Internet, render such a possibility a much more realistic scenario today, than in the past. ..."
Jan 14, 2019 | www.defenddemocracy.press

The magazine Le Point is one of the main media outlets of the French conservative "centre-right". One of its December issues carries the cover title France Faces its History. 1648, 1789, 1830, 1848, 1871 four centuries of revolutions.

The cover features also a painting by Pierre-Jérôme Lordon, showing people clashing with the army at Rue de Babylone , in Paris, during the Revolution of 1830. Perhaps this is where Luc Ferry, Chirac's former minister, got his idea from, when, two days ago, he asked the Army to intervene and the police to start shooting and killing Yellow Vests.

Do not be surprised if you haven't heard this from your TV or if you don't know that the level of police repression and violence in France, measured in people dead, injured and arrested, has exceeded everything the country has experienced since 1968. Nor should you wonder why you don't know anything about some Yellow Vest's new campaign calling for a massive run on French banks. Or why you have been lead you to believe that the whole thing is to do with fuel taxes or increasing minimum wage.

The vast majority of European media didn't even bother to communicate to their readers or viewers the main political demands of the Yellow Vests ; and certainly, there hasn't been any meaningful attempt to offer an insightful interpretation of what's happening in France and there is just very little serious on-the-ground reporting, in the villages and motorways of France.

Totalitarianism

Following Napoleon's defeat in Waterloo, European Powers formed the Holy Alliance banning Revolutions.

Nowadays, Revolutions have just been declared inconceivable (Soros – though not just him – has been giving a relentless fight to take them out of history textbooks or, as a minimum, to erase their significance and meaning). Since they are unthinkable they cannot happen. Since they cannot happen they do not happen.

In the same vein, European media sent their journalists out to the streets in Paris on Christmas and New Year's days, counted the protesters and found that they weren't too many after all. Of course they didn't count the 150,000 police and soldiers lined up by Macron on New Year's Eve. Then they made sure that they remain "impartial" and by just comparing numbers of protesters, led viewers to think that we are almost done with it – it was just a storm, it will pass.

The other day I read a whole page article about Europe in one of the most "serious" Greek newspapers, on 30.12. The author devoted just one single meaningless phrase about the Vests. Instead, the paper still found the way to include in the article the utterly stupid statement of a European Right-Wing politician who attributed the European crisis to the existence of Russia Today and Sputnik! And when I finally found a somewhat more serious article online about the developments in France, I realized that its only purpose was to convince us that what is happening in France surely has nothing to do with 1789 or 1968!

It is only a pity that the people concerned, the French themselves, cannot read in Greek. If they could, they would have realized that it does not make any sense to have "Revolution" written on their vests or to sing the 1789 song in their demonstrations or to organize symbolic ceremonies of the public "decapitation" of Macron, like Louis XV. And the French bourgeois press would not waste time everyday comparing what happens in the country now with what happened in 1968 and 1789.

Totalitarianism is not just a threat. It's already here. Simply it has omitted to announce its arrival. We have to deduce its precence from its results.

A terrified ruling class

The French bourgeoisie is the politically most experienced ruling class in Europe. It has no illusions about the challenge it faces. Le Point put its file on the revolt of the vests under the self-telling title "What is waiting us".

A few months ago, all we had about Macron in the papers was praise, inside and outside of France – he was the "rising star" of European politics, the man who managed to pass the "reforms" one after the other, no resistance could stop him, he would be the one to save and rebuild Europe. Varoufakis admired and supported him, as early as of the first round of the 2017 elections.

Now, the "chosen one" became a burden for those who put him in office. Some of them probably want to get rid of him as fast as they can, to replace him with someone else, but it's not easy – and even more so, it is not easy given the monarchical powers conferred by the French constitution to the President. The constitution is tailored to the needs of a President who wants to safeguard power from the people. Those who drafted it could not probably imagine it would make difficult for the Oligarchy also to fire him!

Read also: Scandaleux : le fondateur du parti fasciste ukrainien Svoboda reçu à l'Assemblée et au Sénat !

And who would dare to hold a parliamentary or presidential election in such a situation, as in France today? No one knows what could come out of it. Moreover, Macron does not have a party in the sense of political power. He has a federation of friends who benefit as long as he stays in power and they are damaged when he collapses.

The King is naked

"The King is naked", points out Le Point's editorial, before, with almost sadistic callousness, posing the question: "What can a government do when a remarkable section of the people vomits it?"

But it's not only the king who is naked. The whole system is naked. In the many pages devoted by the magazine to demonstrate that what the Vests want is unfeasible, not even a single serious word is written about what needs to be done to deal with the deep causes which led the French to revolt. Today's capitalism of Macron, Merkel and Trump does not produce a Roosevelt and New Deal or Popular Fronts – and we have to wait to see if it will produce a Hitler as some are trying to achieve. For the time being, it only produces Yellow Vests!

They predicted it, they saw it coming, but they didn't believe it!

Yet they could have predicted all that. It would have sufficed, had they only taken seriously and studied a book published in France in late 2016, six months before the presidential election, highlighting the explosive nature of the social situation and warning of the danger of revolution and civil war.

The title of the book was "Revolution". Its author was none other than Emmanuel Macron himself. Six months later, he would become the President of France, to eventually verify, and indeed rather spectacularly, his predictions. But the truth is probably, that not even he himself gave much credit to what he wrote just to win the election.

By constantly lying, politicians, journalists and intellectuals reasonably came to believe that even their own words are of no importance. That they can say and do anything they want, without any consequence.

In Oscar Wilde's masterpiece "The Picture of Dorian Gray", the main character looks every night at his horrible real self in the mirror. But he looks at it alone.

This is where Macron made his most fatal mistake, being arrogant and markedly cut off from reality – with the confidence given to him by the mighty elite forces, which elected him and by his contempt of the common people which characterizes him.

Unwise and Arrogant, he made no effort to hide – this is how sure he felt of himself, this is how convinced his environment was that he could infinitely go on doing anything he wanted without any consequences (same as our Tsipras). Thus, acting foolishly and arrogantly, he left a few million eyes to see his real face. This was the last straw that made the French people realize in a definite way what they had already started figuring out during Sarkozy's and Hollande's, administration, or even earlier. Observing Macron, the people understood what lied ahead for them. They felt their backs against the wall – they felt that they had only themselves to rely on, that they had to take themselves action to save themselves and their country.

There was nobody else to make it in their place.

Macron as a Provocateur. Terror in Pompeii

This was the decisive moment, the moment the historical mission of Macron was achieved . By establishing the most absolute control of Finance over Politics, he himself invited Revolution. His triumph and his tragedy came together.

It was just then, that Bucephalus (*) sprang from the depths of historical Memory, galloping without a rider, ready to sweep away everything in his path.

Now those in power look at him with fear, but fearful too are both the "radical right" and the "radical left". Le Pen has already called on protesters to return to their homes and give her names to include in her list for the European election!

Mélenchon supports the Vests – 70% of their demands coincide with the program of his party, La France Insoumise – but so far he hasn't dared to join the people in demanding Macron's resignation, by adopting the immense, but orphan, cry of the people heard all over France: "Macron resign". Perhaps he feels that he hasn't got the steely strength and willpower required for attempting to lead such a movement.

The unions' leadership is doing everything it can to keep the working class away from the Vests, but this stand started causing increasing unrest at its base.

Read also: Macron Prepares a Social War

Many established "leftists" or "radical" intellectuals, who used to feverishly haul capitalism over the coals – although the last thing they really wanted was to experience a real revolution during their lifetime – they too, stand now frightened, looking at an angry Bucephalus running ahead of them. They prefer a stable capitalism, of which they can constitute its "consciousness", writing books, appearing on shows and giving lectures, analyzing its crises and explaining its tribulations. They idea that the People could at some point take seriously what they themselves said, never crossed their minds either!

In fact, this is also a further confirmation of the depth of the movement. Lenin , who, in any event knew something about revolutions, wrote in 1917: "In a revolutionary situation, the Party is a hundred times farther to the left than the Central Committee and the workers a hundred times farther to the left than the Party."

"Revolutionary Situation" and Power Vacuum

Today, four out of five French people disapprove of Macron's policies and one in two demands that he resigns immediately. We assume that this percentage is greater than the percentage of Russians who wanted the ousting of Tsar Nicholas II in February 1917.

France is currently almost in a state of Power Vacuum . The president and the government cannot in essence govern and the people cannot tolerate them. It is not a situation of dual power, but a situation of dual legitimacy , in Mélenchon 's accurate description.

This is a typical definition of a revolutionary situation . As history teaches us, the emergence of such a situation is necessary but not sufficient condition for a victorious Revolution. What is required in or order to turn a rebellion into a potentially victorious Revolution, is a capable and decided leadership and an adequate strategy, program and vision. These elements do not seem to exist, at last not for now, in today's France, as they did not exist in May 1968 or during the Russian Revolution of February 1917. Therefore, the present situation remains open to all possible eventualities; there must be no doubt however, that this is the beginning of a period of intense political and class conflicts in Europe, and that the Europe, as we know it, is already history.

People's Sovereignty at the center of demands

Starting from fuel tax the revolting French have now put at the centre of their demands, in addition to Macron's resignation, the following:

In other words, they demand a profound and radical " transformation " of the Western bourgeois-democratic regime, as we know it, towards a form of direct democracy in order to take back the state, which has gradually and in a totalitarian manner – but while keeping up democratic appearances – passed under direct and full control of the Financial Capital and its employees. Or at least, for the people to be given the opportunity to develop an effective way of controlling state power.

These are not the demands of a fun-club of Protagoras or of some left-wing or right-wing groupuscule propagating Self-Management or of some club of intellectuals. Nor are they the demands of only the lowest social strata of the French nation.

They are supported, according to the polls and put forward by at least three quarters of French citizens, including a sizeable portion of the less poor. In such circumstances, these demands constitute in effect the Will of the People, the Will of the Nation.

The Vests are nothing more than its fighting pioneers. And precisely because it is the absolute majority of people who align with these demands, even if numbers have somewhat gone down since the beginning of December, the Vests are still wanted out on the streets.

By reversing Marx's famous formula in German Ideology , the ideas of the dominant class do not dominate society. This is why the situation can be described as revolutionary.

And also because it is not only the President and the Government, who have been debunked or at least de-legitimized, but it's also the whole range of state and political institutions, the parties, the unions, the "information" media and the "ideologists" of the regime.

The questioning of the establishment is so profound that any arguments about violence and the protesters do not weaken society's support for them. Many, but not all, condemn violence, but there are not many who don't go on immediately to add a reminder of the regime's social violence against the people. When a famous ex-boxer lost his temper and reacted by punching a number of violent police officers, protesters set up a fundraising website for his legal fees. In just two hours they managed to raise around 120.000 euro, before removing the page over officials' complaints and threats about keeping a file on anyone who contributes money to support such causes.

Read also: Greece: Creditors out to crush any trace of Syriza disobedience

Until now, an overwhelming majority of the French people supports the demands while an absolute majority shows supports for the demonstrations; but of course, it is difficult to keep such a deadlock and power-void situation going for long. They will sooner or later demand a solution, and in situations such as these it is often the case that public opinion shifts rapidly from the one end of the political spectrum to the other and vice versa, depending on which force appears to be more decisive and capable of driving society out of the crisis.

The organization of the Movement

Because the protesters have no confidence in the parties, the trade unions, or anyone else for that matter, they are driven out of necessity into self-organization, as they already do with the Citizens' Assemblies that are now emerging in villages, cities and motorway camps. Indeed, by the end of the month, if everything goes well, they will hold the first " Assembly of Assemblies ".

Similar developments have also been observed in many revolutionary movements of this kind in various countries. A classic example is the spontaneous formation of the councils ( Soviets ) during the Russian revolutions of 1905 and 1917.

Although it is difficult to form an opinion from afar about how the situation may unfold, the formation of a such a United Front from grassroots could perhaps offer a way out with regards to the need for a political leadership for the movement, or even of the need to work out a transitional economic program for France, which must also serve as a transitional program for Europe .

Contrary to how things were a century ago, certain factors such as the educational level of the lower social classes, the existence of a number of critical, radical thinkers with the necessary intellectual skills and the Internet, render such a possibility a much more realistic scenario today, than in the past.

Because the movement's Achilles' Heel is that, while it is already in the process of forming a political proposition, it still, at least for now, does not offer any economic alternative or a politically structured, democratically controlled leadership.

Effective Democracy is an absolute requirement in such a front, because it is the only way to synthesize the inevitably different levels of consciousness within the People and to avoid a split of the movement between "left" and "right", between those who are ready to resort to violence to achieve their ends and those who have a preference for more peaceful, gradual processes.

Such a " front " could perhaps also serve as a platform for solidifying a program and vision, to which the various parties and political organizations could contribute.

In her Critique of the Russian Revolution Rosa Luxemburg , the leader of the German Social Democracy was overly critical of the Bolsheviks , even if, I think, a bit too severe in some points. But she closes her critique with the phrase: " They at least dared "

Driven by absolute Need, guided by the specific way its historical experience has formed its consciousness, possessing a Surplus of Consciousness, that is able to feel the unavoidable conclusions coming out of the synthesis of the information we all possess, about both the "quality" of the forces governing our world and the enormous dangers threatening our countries and mankind, the French People, the French Nation has already crossed the Rubicon.

By moving practically to achieve their goals at a massive scale, and regardless of what is to come next, the French people has already made a giant leap up and forward and, once more in its history, it became the world's forerunner in tackling the terrible economic, ecological, nuclear and technological threats against human civilization and its survival.

Without the conscious entry of large masses into the historical scene, with all the dangers and uncertainties that such a thing surely implies, one can hardly imagine how humanity will survive.

Note

(*) Bucephalus was the horse of Alexander the Great, https://en.wikipedia.org/wiki/Bucephalus

[Jan 21, 2019] Liberal Critics of neoliberalism by Gerald J. Russello

Notable quotes:
"... Identity politics are no help here either. Indeed, to Scialabba, they are part of the problem because they are too easily coopted by capital: "Identity politics are an essential component of neoliberalism, the extension of market relations across borders and into all spheres of life. When rewards are assigned efficiently in proportion to merit, then not only is total output maximized, but the winners feel no qualms about the plight of the losers." Corporate power sees no distinction between funding diversity efforts and pursuing profit, becoming "woke" through advertising. ..."
"... vigorous self-assertion of working classes and small proprietors, which I think as close to mass democracy as the world has come, was transformed, largely by the advent of mass production, into a mass society of passive, apathetic, ignorant, deskilled consumers ..."
Jan 21, 2019 | www.theamericanconservative.com

The Right can learn from George Scialabba's critiques of individual autonomy and markets.

Slouching Towards Utopia: Essays & Reviews, George Scialabba, Pressed Wafer Press, August 2018, 224 pages

George Scialabba continues to work in a political-literary vein almost forgotten in our partisan times. Along with Todd Gitlin, Thomas Frank perhaps, Jedediah Purdy (who introduces this volume), and a few others, Scialabba is a liberal without being progressive, in solidarity with workers against the capitalists rather than "woke" activists aligned with corporate interests, and respectful of tradition while also criticizing the past's faults.

The last two years have seen a drastic realignment of conservatives, where the stranglehold free-market and interventionist conservatives had has been loosened. Arguments from traditionalists such as Russell Kirk are being heard once again, and new voices are rising against Conservatism, Inc.

But the debate among liberals is just as interesting, if not more so, because of [neo]liberalism's own dominance over the media, academia, and entertainment. They are fighting in public, whereas conservatives mostly argue in the corners of the internet. A new generation of activists and progressives disdain the liberalism espoused by their once-radical elders. A world where Angela Davis gets awards rescinded for being insufficiently progressive and prominent liberals are protested at commencements is very different indeed from the heady 1960s and 1970s.

This new progressivism is sincere, but largely performative. It is too often in service to an individualistic view of the self and lacks the solidarity Scialabba sees as one of the strongest points of the Left. Resistance is a workers' collective, not a world in which choice -- mediated by corporations and advertising -- is king.

Identity politics are no help here either. Indeed, to Scialabba, they are part of the problem because they are too easily coopted by capital: "Identity politics are an essential component of neoliberalism, the extension of market relations across borders and into all spheres of life. When rewards are assigned efficiently in proportion to merit, then not only is total output maximized, but the winners feel no qualms about the plight of the losers." Corporate power sees no distinction between funding diversity efforts and pursuing profit, becoming "woke" through advertising.

This collection covers what may broadly be called questions of political culture. Like the best philosophical critics, Scialabba wants to know how we can live our common life with dignity and justice. He considers writers like Ronald Dworkin, Christopher Lasch, Yuval Levin, Michael Sandel, and others to probe how best to achieve public goods. The goods Scialabba advocates, it should be obvious, are not aligned with mainstream conservative goals. And one can argue with Scialabba's romance with a non-market economy in which redistributive justice has pride of place. The "utopia" toward which we are slouching is remote indeed.

But perhaps not that remote. In an interview republished here, "America Pro and Con," Scialabba praises the " vigorous self-assertion of working classes and small proprietors, which I think as close to mass democracy as the world has come, was transformed, largely by the advent of mass production, into a mass society of passive, apathetic, ignorant, deskilled consumers ." That vision would attract not a few Benedict Optioners, and not only them.

Scialabba has harsh words for Republicans -- the free market Paul Ryan types and the later MAGA incarnations. These comments are less interesting, and not just because they are unsurprising. It is more because Scialabba realizes the problem is more nuanced than just bad Republicans. Most of the elite Left and Right is in thrall to capital, and he can be as harsh on liberal autonomy as any conservative. In an essay titled "Ecology of Attention," which discusses Simon Head's Mindless: Why Smarter Machines are Making Dumber Humans and Matthew Crawford's The World Beyond Your Head , he writes: "Seeing past this liberal model of individual autonomy might also mean recognizing that consumerism can have civic consequences. Just as atmospheric fine particles can clog our lungs and impair our society's physical health, an unending stream of commercial messages can clog our minds, fragment our attention, and, in the long run, impair our society's mental and civic health."

The Critic as Radical The Radical Lasch

Drawing on a long left-wing tradition, he disputes the liberal capitalist view of people as those who simply seek to maximize their own individual gain (in wealth, pleasure, or status, for example). Rather, he says we are "situated beings" with our own pasts. In a perceptive, sympathetic piece on Leszek Kolakowski, the "Conservative-Liberal Socialist," Scialabba catalogs the failings of "existing socialism" that the Polish philosopher so ably described. However, Scialabba cannot find much in that critique today. Soviet socialism may have been rotten, but the liberal capitalism that has been triumphant since the 1980s in the West "has seen the rampant financialization of the economy, the pulverizing of organized labor, a drastic increase in economic inequality, the capture by business of the regulatory system, and the growth of the national security state." Scialabba instead reaches for the anti-capitalist and anti-Stalinist Left as a possible source of solutions for these ills. But the problem with this resort is the same as the neoconservatives' attachment to an abstract capitalism. The dominance or liberation of private life by the state is no longer the most pressing issue: media (especially social media) and the supremacy of the "self" against all forms of community are the new challenges.

As Shadi Hamid has written recently , "It is difficult to think of a time less suited to Marxist economism than the current one."

But back to Kolakowski. Scialabba nevertheless praises him for his willingness to be a debunker of the debunkers, rejoicing in his affliction of "the comfortable unbeliever." Although Scialabba cannot ultimately follow Kolakowski either in his political or religious beliefs, nonetheless he praises Kolakowski for two things: the skepticism that allowed him to break free -- and break others free -- of the illusions of totalitarianism, and a recognition of the limits of that skepticism. Scialabba concludes that "as he continually reminded rationalists, the skeptical impulse can't be sustained indefinitely or directed toward everything simultaneously. We need traditions too."

It is premises like these that make Scialabba interesting to conservatives. Because beginning from those premises Scialabba goes in directions conservatives typically do not follow. Because he opposes [neo]liberal capitalism, he is fond of unions. Because he believes we cannot completely extract ourselves from our cultural, ethnic, and religious inheritances, ingrained injustices must be recognized and remedied. Because he believes we are situated beings with traditions, we must construct an economic system that serves our nature rather than invent abstractions that we then serve. A defender of America's middle-class (described here, in reviewing a book by Alan Wolfe, as on the whole "generous, trusting, and optimistic"), nevertheless he faults them for being too gullible in responding to the call of capital and the military-industrial complex. But he also faults the Left for failing to understand that their fellow Americans are, in fact, decent, and, for the most part, tolerant people.

Scialabba might be surprised that he has sympathetic readers on the Right, or even that a form of nationalism might work with his premises. This possible compatibility isn't to ignore that American nationalism can and has been racist and inhospitable to minorities. But the conclusion that there is an "America" that has meaning beyond being simply a machine to generate GDP (on the backs of workers, perhaps, here or elsewhere) could fit, even if not fully comfortably, within Scialabba's generous intellectual world.

While not quite a utopia, it would be a start.

Gerald J. Russello is editor of The University Bookman .

[Jan 20, 2019] Has the USA become an elite club for financial bandits manipulating sheep under the name "American Nation".

Jan 20, 2019 | www.zerohedge.com

CatinThe Hat 3 hours ago

Taking Stock of Ukraine's Achievements Amidst Russia's Aggression

Five years ago, the Ukrainian people staged a peaceful "revolution of dignity" against a corrupt regime sponsored by the Kremlin. They stood firm even under gunfire and it was the discredited President Viktor Yanukovych who eventually retreated and took refuge in Russia. With Moscow engaging in renewed attacks against Ukraine in the Sea of Azov it is important to take stock of Ukraine's achievements since those fateful days in Kyiv's Independence Square."

Talk about Orwellian double speak. Only Russiagaters would eat that **** up in their stupidity .

pparalegal 10 hours ago (Edited)

Oligarchs, corporations and want to be psychopathic rulers East and West run the political/ think tank know-it-all class. All profit by it. Governments start wars, not people.

I am still waiting for an explanation of how the mythical beast New Russia will own the USA and what they will do with it after that. If we don't bomb the s**t out of some third country because we can. I am much more concerned about the in house mad cows we have elected to boss the American public and take the gold out of my teeth for the greater good..

Helg Saracen 10 hours ago (Edited)

I'm just curious. How many real estate over the past 15 years has been bought by the Chinese in New York, Chicago and California? How many brands, businesses were bought by the Chinese from the Americans? How many were "borrowed" technology? And how many Russians bought (rich Jews from Russia cannot be taken into account, they came to their relatives, well, they bought a little of everything)? :( 30 years ago, the USSR was communist, and the US was capitalist, now Russia has become capitalist, and the USA (I don't even know how to say) has become an elite club for financial bandits manipulating sheep under the name "American Nation".

Mantis964 6 hours ago

and the USA (I don't even know how to say) has become an elite club for financial bandits manipulating sheep under the name "American Nation".

Wouldn't you call that Fascism ?

[Jan 20, 2019] Explaining marginal taxes to a far-right former Governor

Jan 20, 2019 | economistsview.typepad.com

anne , January 17, 2019 at 05:12 AM

http://cepr.net/blogs/beat-the-press/washington-post-forgets-to-mention-scott-walker-misled-fifth-graders-about-taxes

January 16, 2019

Washington Post Forgets to Mention, Scott Walker Misled Fifth Graders About Taxes
By Dean Baker

The Washington Post had an article * about how Republicans and right-wingers have become obsessed with trying to attack Alexandria Ocasio-Cortez, the newly elected representative from Brooklyn. At one point it refers to former Wisconsin governor Scott Walker's attack on Ocasio-Cortez's position advocating a high marginal tax rate on high income individuals.

"Former Wisconsin governor Scott Walker, a Republican who was defeated in November, on Tuesday mocked Ocasio-Cortez for her tax proposal and suggested it was an elementary-school understanding of the issue. 'Even 5th graders get it,' he tweeted."

While the piece noted part of Ocasio-Cortez's response, that rich people are the one's with the money, it left out the more important part, Walker misled the fifth graders he refers to in his tweet. In his tweet, Walker confuses a marginal tax rate with an average tax rate

"Explaining tax rates before Reagan to 5th graders: 'Imagine if you did chores for your grandma and she gave you $10. When you got home, your parents took $7 from you.' The students said: 'That's not fair!' Even 5th graders get it."

Ocasio-Cortez correctly pointed out in her reply that the $10 the students earned for doing chores for their grandma would not be taxed because the 70 percent tax rate she proposes would only apply to incomes above $10 million.

"Explaining marginal taxes to a far-right former Governor:

"Imagine if you did chores for abuela & she gave you $10. When you got home, you got to keep it, because it's only $10.

"Then we taxed the billionaire in town because he's making tons of money underpaying the townspeople."

Ocasio-Cortez is right on this point and Walker is wrong. He either does not understand how our income tax system works or is deliberately lying to advance his agenda. Either way, the Post should have pointed out that Walker was wrong.

Many people are confused about the concept of a marginal tax rate (the higher tax rate only appears to the income above a cutoff). Opponents of high marginal taxes on the rich try to take advantage of this confusion in the way Scott Walker did with his class of fifth graders. It is the media's responsibility to try to inform people about how the tax system works and to expose politicians who misrepresent the issue.

* https://www.washingtonpost.com/powerpost/what-have-you-got-left-ocasio-cortez-taunts-gop-critics-obsessing-over-her/2019/01/15/a48b5832-1455-11e9-803c-4ef28312c8b9_story.html

RC AKA Darryl, Ron said in reply to anne... , January 17, 2019 at 05:49 AM
That's funny in a sad sort of way. Dean has his hands full. There is no explaining the stupidity of politicians, media, and ordinary people in the US these days.
Darrell in Phoenix said in reply to anne... , January 17, 2019 at 07:39 AM
The whole Laffer Curve is based on this lie.

100% tax, no economy, so no revenue.
0% tax, no revenue.

So, maximum revenue is somewhere between those.. and the 70% top rate is clearly above that.. so we have to lower the top rate.

Let's unwrap the lies.
1) At 100% top rate, there is no economy.
WRONG! Ignores brackets, marginal rates, deductions, effective rates... Even at 90% top rate, the rich were averaging 40% effective.

2) The goal of taxation is maximum revenue. NO!!! The tax code should be viewed as a tool to keep the right amount of money, actively circulating in the economy. As such, is not only about getting back out the money the government adds, but also about limiting how much the rich take out.

3) Even if we assumed there is some taxation rate that hurts the economy, there was no evidence presented to say we were above that point.


OF course, it is point #2 (limiting how much money the rich take from the economy) that the Laffer Curve was created to destroy. And destroy it did, which is why we've been going into debt at 3x the sustainable rate.

Julio -> Darrell in Phoenix... , January 18, 2019 at 10:21 AM
Very good take on this discussion.

I would add that there is plenty of historical evidence ("90% destroys all incentives!" "70% destroys all incentives!"..."39.5% destroys...") to conclude that the plutocrats believe that all taxation is theft.

Darrell in Phoenix said in reply to anne... , January 17, 2019 at 07:43 AM
People on the left need to realize that high top rates are NOT to take money from the rich. They will spend or invest in ways that lets them avoid taxes.

High top rates are needed to get the rich to spend and capital invest, to reverse the structural imbalances.

That spending and investing creates demand, jobs, wages, lifting the poor into the middle class.

The extra revenue comes from that growth in the middle class as the poor go from 0% effective rate to 10-15% effective rate.

kurt -> Darrell in Phoenix... , January 17, 2019 at 01:07 PM
Agree - but it also changes the incentives for corporations and CEOs. By taxing away huge windfalls for CEOs it allows corporations to set a max wage around 15-20M. This means instead of the 700M to 1B salaries of big corps going to one guy, they pay their mid managers more and their line staff more. It means they invest more in R&D. I agree with you - just an supporting argument.

[Jan 20, 2019] Cohan has been on a rant for years about how high risk corporate bonds are going to default in large numbers. Never happened

Jan 20, 2019 | economistsview.typepad.com

anne , January 17, 2019 at 09:35 AM

http://cepr.net/blogs/beat-the-press/does-william-cohan-s-nyt-tirade-against-low-interest-rates-make-any-sense

January 17, 2019

Does William Cohan's New York Times Tirade Against Low Interest Rates Make Any Sense?
By Dean Baker

It doesn't as far as I can tell. Cohan has been on a rant * for years about how high risk corporate bonds are going to default in large numbers and then ... something. It's not clear why most of us should care if some greedy investors get burned as a result of not properly evaluating the risk of corporate bonds. No, there is not a plausible story of a chain of defaults leading to a collapse of the financial system.

But even the basic proposition is largely incoherent. Cohan is upset that the Federal Reserve has maintained relatively low, by historical standards,interest rates through the recovery. He seems to want the Fed to raise interest rates. But then he tells readers:

"After the fifth straight quarterly rate increase, Mr. Trump, worried that the hikes might slow growth or even tip the economy into recession, complained that Mr. Powell would 'turn me into Hoover.' On January 3, the president of the Federal Reserve Bank of Dallas said the Fed should assess the economic outlook before raising short-term interest rates again, a signal that the Fed has hit pause on the rate hikes. Even Mr. Powell has signaled he may be turning more cautious."

It's not clear whether Cohan is disagreeing with the assessment of the impact of higher interest rates, not only by Donald Trump, but also the president of the Dallas Fed, Jerome Powell, and dozens of other economists.

Higher interest rates will slow growth and keep people from getting jobs. The people who would be excluded from jobs are disproportionately African American, Hispanic, and other disadvantaged groups in the labor market. Higher unemployment will also reduce the bargaining power of tens of millions of workers who are currently in a situation to secure real wage increases for the first time since the recession in 2001.

If Cohan had some story of how bad things would happen to the economy if the Fed doesn't raise rates then perhaps it would be worth the harm done by raising rates, but investors losing money on corporate bonds doesn't fit the bill.

* https://www.nytimes.com/2019/01/17/opinion/shutdown-recession.html

[Jan 19, 2019] Privateer capitalists like Mitt Romney are deadly parasites

Jan 19, 2019 | economistsview.typepad.com

anne , January 15, 2019 at 05:55 PM

http://cepr.net/blogs/beat-the-press/robert-samuelson-ignores-role-of-hedge-fund-magnate-eddie-lampert-in-sears-decline

January 14, 2019

Robert Samuelson Ignores Role of Hedge Fund Magnate Eddie Lampert in Sears Decline
By Eileen Appelbaum

In today's column, * Robert Samuelson attributes Sears bankruptcy and possible liquidation- the final chapter in a saga that has already cost 200,000 workers their jobs – to the department store chain's inability to adapt to competition with big box stores and the Internet. Apparently, he has never heard of Eddie Lampert and his ESL hedge fund, which took over Sears and Kmart in 2006 and ran the company, now known as Sears Holdings as an ATM for himself and his investors. Lampert may not have known anything about retailing, but as Sears' CEO he had no qualms about monetizing it assets for his own and his wealthy investors' benefit – including Treasury Secretary Steve Mnuchin who was an investor in his hedge fund and served on the Sears board for 12 years as the retailer spiraled downward.

In its most egregious act of financial engineering, Lampert's hedge fund setup a real estate company, Seritage Growth Properties, with Lampert as Chairman of Seritage's board. In 2015, Lampert as CEO of Sears sold 266 Sears and Kmart stores located on prime real estate to Seritage, where he was Chairman of the Board. Seritage shuttered stores and developed the real estate into high-priced new developments - offices for the burgeoning high tech sector in Santa Monica, a luxury shopping center in Aventura, Florida. Sears creditors are in court over this self-dealing by Lampert, claiming he cheated them out of $2.6 billion.

If Samuelson took the time to read his own newspaper, he could have learned about the business model of investment funds – private equity and hedge funds – that take over Main Street companies from Peter Whoriskey's investigative reporting on the bankruptcy of Marsh, a major mid-West grocery chain. Amazon, Walmart and the Internet certainly pose a challenge, but the inability of companies to respond can be laid squarely at the feet of investment funds that load the companies they own with unsustainable levels of debt and that take resources out of the company by selling off its real estate.

As I show ** in a comparison of the largest supermarket chain in America, the very successful publicly traded Kroger's, and the second largest, floundering private equity owned Albertsons, large, iconic retail companies can respond to competitive challenges when they control their own resources, own their own real estate, and keep their debt levels manageable.

Samuelson attributes the demise of Sears to changes in capitalism and competition without, apparently, having ever heard of hedge funds and private equity funds that take over the management of companies and run them in the interests of investors in their funds, with little regard for the companies' ability to compete or its workers.

Perhaps the Washington Post should set as a minimum requirement for its columnists that they actually read the newspaper.

* https://www.washingtonpost.com/opinions/capitalisms-tough-love-the-real-lessons-from-the-fall-of-sears-and-ge/2019/01/13/fef2d576-15df-11e9-803c-4ef28312c8b9_story.html

** https://prospect.org/article/private-equity-pillage-grocery-stores-and-workers-risk

Fred C. Dobbs said in reply to anne... , January 16, 2019 at 05:28 AM
Montgomery-Ward, the original mail-
order 'dry goods' store (1872-2001)

Wikipedia: Montgomery Ward was founded by Aaron Montgomery Ward in 1872. Ward had conceived of the idea of a dry goods mail-order business in Chicago, Illinois, after several years of working as a traveling salesman among rural customers. He observed that rural customers often wanted "city" goods, but their only access to them was through rural retailers who had little competition and did not offer any guarantee of quality. Ward also believed that by eliminating intermediaries, he could cut costs and make a wide variety of goods available to rural customers, who could purchase goods by mail and pick them up at the nearest train station. ...

Bankruptcy in 2000; Full liquidation in 2001

namesake retailer launched in 2004
after purchase of trademarks

https://www.wards.com/

[So, maybe there's still hope
for Sears-Roebuck. (1883-20??)]

Plp -> anne... , January 18, 2019 at 01:31 PM
Mitt Romney
More dangerous then Trump

We dodged a bullet in 2012

Plp -> Plp... , January 18, 2019 at 01:32 PM
Privateer capitalism

Lethal parasites

[Jan 19, 2019] Differences between the Chinese and the USA versions of neoliberalism

Jan 19, 2019 | economistsview.typepad.com

mulp -> anne... , January 1 6, 2019 at 02:27 PM

"Instead, the Chinese government has been piling on loans to businesses and state-owned enterprises, pushing the SOEs to spend more, and so on. Basically it has kept investment going despite low returns. Yet this process has to have some limits – and when it hits the (great) wall, it's hard to see how consumption can rise fast enough to take up the slack."

Proof Krugman has been corrupted by free lunch economics!

If interest on savings is very low, returns on capital investment should be very low.

The lower limit on returns to capital is the real interest rate on savings. In China, inflation makes interest on savings negative. So, returns on investment can be negative, just less negative than interest on savings.

The only way investment can be funded is by workers spending less on consumption than they earn working or from other sourcees. If workers are investing a lot, they have individually decided they should not consume more, because there is no shortage of goods andd services to buy in China.

This is a very different situation than in the US where 90% of the population has too little money to buy what they want or need, and thus they borrow money to pay for consumption. Wages are too low in the US to fund investment so a great deal of scarcity exists in the US of several consumption goods which result in rapid inflation in the prices of those goods, and thus very high returns to capotal even as interest on savings are kept artificially low in order to allow for high defaults on bad consumer debt, consumer debt needed to pay the high inflated price of selected scarce consumption goods due to under investment.

In China, workers earn so much more than they are accustomed to consume they have investing in housing so housing costs are very low, and housing exists in excess.

In the US, workers earn less than they need to consume, so hiusing is extremely scarce and consumption prices have inflated at high rates.

Now, while China uses Keynes and sees excess housing as a good thing, the US uses free lunch economics and sees scarce housing as a good thing because housing inflation "creates wealth".

China has embraced private capital in many ways much more than the US since the 80s, with returns to private capital falling to very low levels, while in the US, building capital is thwarted to generate capital scarcity and high rates of capital price inflation. To "create wealth" from capital scarcity.

anne -> mulp ... , January 1 6, 2019 at 02:27 PM
Really helpful and interesting argument, that I will consider point by point. I do appreciate the careful writing.
Chris Lowery -> mulp ... , January 18, 2019 at 06:48 AM
"[W]hile in the US, building capital is thwarted to generate capital scarcity and high rates of capital price inflation. To 'create wealth' from capital scarcity."

Alternatively, in the U.S. there is a combination of excess of capital and insufficient investment alternatives (due to growing income and wealth inequality and excessive market power, anti-competitive business practices and insufficient anti-trust enforcement) that causes investors to chase unproductive returns and unrealistically bid-up asset prices.

mulp -> Chris Lowery ... , January 18, 2019 at 03:07 PM
Name the excess capital from paying too much to workers to build capital assets.

The only thing that I can think of that might be true is too much paying of workers to create TV shows, movies, and computer games.

Except, in this media sector, big companies buying competitors along with buying back shares of their stocks with profits is spawning ever more competitors. As much as Comcast tries to eliminate competition, investors keep paying workers to build new streaming services with content only the new companies have by paying more workers to produce TV and movies.

But this is standard economic theory: technology cuts costs, which cuts prices which increases demand so the workers eliminated by technology get retasked producing more, but the more is so much more, more workers are needed. The equilibrium is reached when long term revenue just barely pays for all the workers long term.

You might object to everyone consuming more media content because you are like Miltion Friedman a classic Jew stereotype puritian who believes the mmasses must work more and suffer by consuming less, so you can be an elite preaching values you will not embrace for yourself.

Ie, you did not state: "I am paid too much which is a sign of too many workers being paid too much due to too much investment driving up wages".

Darrell in Phoenix said in reply to mulp ... , January 18, 2019 at 10:01 AM
"The only way investment can be funded is by workers spending less on consumption than they earn working or from other sourcees."

False. Investment can be funded by debt.

mulp -> Darrell in Phoenix... , January 18, 2019 at 03:16 PM
"False. Investment can be funded by debt. "

So, you consider debt to be a gift?

Please send me $1000 a month for the rest of my life as debt. Then collect your money, debt, after I'm dead. After all, your debt does not need to be repaid by my working for income and not consuming using all or more of my income!

Or you believe the Venezuela economic policy is fantastic and should be adopted in the US, because Trump and the GOP were not creating structural long term borrowing and spending fast enough 2017-2018?

Plp -> anne... , January 17, 2019 at 05:57 AM
PK can't escape his paradigm


Yes the management of the domestic market development might fail to take adequate measures
Indeed the macro managers may lose their way

But the techniques that got them this far
Are still solid
And with augmentation
Can continue high speed expansion of the production system and urbanization

Price regulation could and should be
CO ordinated with a mark up market

Land lots market value zeroed out
thru a 100 % George tax

And corporate debt placed in special investment vehicles and managed uniformly
Thru a universal default insurance system.
Run by a state default insurance agency

Plp -> Plp... , January 17, 2019 at 06:01 AM
The urban systems needs to expand
At break neck speed
There are still 400 million left behinds to urbanized

The social transfer payment system
can be expanded in tandem with output capacity raising the bottom households income at maximum speed

Boldness and audacity

Plp -> Plp... , January 18, 2019 at 01:14 PM
Btw
Why can't an economy sustain 40% GDP investment

When the capital ratio to population is so low
And so much has to be built

China is pulling a billion plus people into the 21st century

Plp -> Plp... , January 18, 2019 at 01:17 PM
Imagine north America pulling south America
Up to California standards

Think coastal v inland prc

mulp -> Plp... , January 18, 2019 at 04:14 PM
Imagine conservatives electing representatives to Congress who hiked the "gas tax" and then offered lots more money to States that had elected legislatures that hiked their gas tax to generate the matching funds to get Federal gas tax funds that were spent on transportation.

"Gas taxes" are not limited to fuel, but include fees on tires, which cost based on wear on roads, ie, a big rig uses big costly ties that last maybe 25,000 miles so the more use of the road the more tax paid. But increasingly cars have high cost performance tires. Then there are use taxes based on the size plus load of the vehicle. A very high tax rate on fossil fuels will eliminate their use requiring moving to a fee based on miles driven and capacity of the vehicle, maybe by open road tolling.

But as transportation is a living cost, living costs need to be increased in Trumpland to create the coastal economies Trump lives in and builds his resorts in. Economies with high living costs to pay the high wages of all the workers who moved from low living cost conservative places to high living cost liberal places.

mulp -> Plp... , January 18, 2019 at 03:59 PM
So, all capital assets must be consumed in an average of 3 years? A ten year old house would need to be burned down. Steeet torn up after five years returned to farm or forest land?

Average useful life of assets is probably 30 years, but at that point they still have a minimum of 10% of cost in residual value, and paying workers to invest in existing capital at 3-5% annually will maintaiin the asset value of over half of assets for centuries. Spending another 2% will replace all of the other half. So, spending 10% of GDP will increase capital assets by 3% easy every year, which 70/3 means doubling total assets every 25 years.

Your 40% would mean doubling assets every 70/35% or two years.

Assuming assets keep increasing GDP becyond the addition to GDP from building productive assets.

Note, cars are productive assets, ie, a car gets you to work. A house with utilities frees up probably 5 hours a day to be used working for others. Try being homeless or living in a tar paper shack with nothing but a pot belly stove and water from a pond half a mile away. The capital asset like a house includes roads, running water and sewage, and fuel to cook and heat with zero labor, which are paid for for with $100 in labor for a family unit up to 4, more or less. Paying $100 a week frees up at least 25 hours of unpaid household labor, collecting/cutting wood for energy, walking to the pond to fetch water, walking along a trail to work and shop.

anne -> Plp... , January 17, 2019 at 07:42 AM
PK can't escape his paradigm

Yes, the management of the domestic market development might fail to take adequate measures
Indeed the macro managers may lose their way

But, the techniques that got them this far
Are still solid
And with augmentation
Can continue high-speed expansion of the production system and urbanization

Price regulation could and should be
Coordinated with a markup market ...

[ Important criticism and agreed. Prominent Western economists have usually been unwilling to look to the structure of the Chinese economy and specific techniques that have been used to spur development. ]

anne -> Plp... , January 18, 2019 at 02:26 PM
Brad DeLong has been wrong about China since 1980, Jeffrey Sachs and Stanley Fischer since 1990, Paul Krugman since 2011... The problem is that they simply never look at the Chinese institutions that have driven 9.5% yearly growth in GDP and 8.5% yearly growth in per capita GDP these 42 years. Suddenly, then, Krugman decides that what has driven Chinese growth is of no consequence because China has (gasp) too few people.

Imagine a China of too few people, and I could care less about the age ratios, which I have and which are of no concern relative to productivity growth which is just what China is focusing on.

anne -> Plp... , January 18, 2019 at 02:26 PM
Land lots market value zeroed out
thru a 100 % George tax

[ This needs to be explained:

https://en.wikipedia.org/wiki/Henry_George

I never ever have read of an application in China. What am I missing? ]

Mr. Bill -> anne... , January 18, 2019 at 02:26 PM
"On one side, China's problems are real. On the other, the Chinese government – hindered neither by rigid ideology nor by anything resembling a democratic political process – has repeatedly shown its ability and willingness to do whatever it takes to prop up its economy. It's really anyone's guess whether this time will be different, or whether Xi-who-must-be-obeyed can pull out another recovery."

By God, Jeeves, I think he's got it.

Tonight's music recommendation is the Jefferson Airplane.

https://www.youtube.com/watch?v=xsHF-8xUFPA&index=8&list=RDzYZ_p63JAiQ

In life, the script is usually wrong, eventually. Can you you imagine being Gracie Slick or Jim Morrison's father ? Comrade Xi ?

[Jan 19, 2019] According to Wolin, domestic and foreign affairs goals are each important and on parallel tracks

Highly recommended!
Notable quotes:
"... The first, directed outward, finds its expression in the global War on Terror and in the Bush Doctrine that the United States has the right to launch preemptive wars. This amounts to the United States seeing as illegitimate the attempt by any state to resist its domination. ..."
"... The second dynamic, directed inward, involves the subjection of the mass of the populace to economic "rationalization", with continual "downsizing" and "outsourcing" of jobs abroad and dismantling of what remains of the welfare state created by President Franklin D. Roosevelt's New Deal and President Lyndon B. Johnson's Great Society. Neoliberalism is an integral component of inverted totalitarianism. The state of insecurity in which this places the public serves the useful function of making people feel helpless, therefore making it less likely they will become politically active and thus helping maintain the first dynamic. ..."
"... By using managerial methods and developing management of elections, the democracy of the United States has become sanitized of political participation, therefore managed democracy is "a political form in which governments are legitimated by elections that they have learned to control". ..."
"... Under managed democracy, the electorate is prevented from having a significant impact on policies adopted by the state because of the opinion construction and manipulation carried out by means of technology, social science, contracts and corporate subsidies. ..."
Jan 19, 2019 | www.moonofalabama.org

Jackrabbit , Jan 15, 2019 9:31:08 PM | lin k

karlof1

According to Wolin, domestic and foreign affairs goals are each important and on parallel tracks, as summarized at Wikipedia, the United States has two main totalizing dynamics:

The first, directed outward, finds its expression in the global War on Terror and in the Bush Doctrine that the United States has the right to launch preemptive wars. This amounts to the United States seeing as illegitimate the attempt by any state to resist its domination.

The second dynamic, directed inward, involves the subjection of the mass of the populace to economic "rationalization", with continual "downsizing" and "outsourcing" of jobs abroad and dismantling of what remains of the welfare state created by President Franklin D. Roosevelt's New Deal and President Lyndon B. Johnson's Great Society. Neoliberalism is an integral component of inverted totalitarianism. The state of insecurity in which this places the public serves the useful function of making people feel helpless, therefore making it less likely they will become politically active and thus helping maintain the first dynamic.

<> <> <> <> <> <> <> <> <> <>

Wolin's Inverted Totalitarianism provides the ground work for my suspicions regarding faux populists Obama and Trump:

By using managerial methods and developing management of elections, the democracy of the United States has become sanitized of political participation, therefore managed democracy is "a political form in which governments are legitimated by elections that they have learned to control".

Under managed democracy, the electorate is prevented from having a significant impact on policies adopted by the state because of the opinion construction and manipulation carried out by means of technology, social science, contracts and corporate subsidies.

[Jan 13, 2019] This is Main Street versus Wall Street. This is honest books versus dirty books by Greg Hunter

Notable quotes:
"... I watched Greg Hunter's show on this. Very disturbing because of it's currency. This backdoor off-the-books financing of whatever they want is as she says, the introduction of free fascism in the US. ..."
"... Deep State is REAL: https://www.youtube.com/watch?v=LLTzpDFGWjI ..."
Jan 13, 2019 | www.zerohedge.com

Via Greg Hunter's USAWatchdog.com,

originally from: Secret Money For Private Armies Austin Fitts Exposes America's Open Running Bailout

Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts says it looks like a "global recession is coming."

Is that going to cause the debt reset we've been hearing about for years? Fitts says, " Make no mistake about it, there is no reason for the federal government to default or monkey with any debt because they can literally print the currency..."

" The question is how do they make sure whatever they are printing really holds any kind of store of value. I think the reason you are seeing them reengineer the federal bureaucracy and financial transactions infrastructure is because they want much greater and tighter control to do whatever they do, and that includes to continue to debase the currency. They could do this (reset) entirely by debasing the currency...

What we are watching . . . is essentially a coup. We had a financial coup, and now we are watching a legal coup to consolidate that financial coup. I would keep my eye on the fundamental governance structure of the U.S. The important thing is not what they do. The important thing is who controls no matter what they do. Now, we have created a mechanism for them to control entirely in secret and create policies entirely in secret, including around the back of a U.S. President... It's pirating by the 'just do it' method. I said to someone the other day, what is it about secret money for secret private armies that you don 't understand? "

$21 trillion in "missing money" at the DOD and HUD that was discovered by Dr. Mark Skidmore and Catherine Austin Fitts in 2017 has now become a national security issue.

The federal government is not talking or answering questions, even though the DOD recently failed its first ever audit. Fitts says, "This is basically an open running bailout..."

"Under this structure, you can transfer assets out of the federal government into private ownership, and nobody will know and nobody can stop it. There is no oversight whatsoever. You can't even know who is doing it. I'm telling you they just took the United States government, they just changed the governance model by accounting policy to a fascist government. If you are an investor, you don't know who owns those assets, and there is no evidence that you do...

If the law says you have to produce audited financial statements and you refuse to do so for 20 years, and then when somebody calls you on it, you proceed to change the accounting laws that say you can now run secret books for all the agencies and over 100 related entities ."

In closing, Fitts says, "We cannot sit around and passively depend on a guy we elected President..."

"The President cannot fix this. We need to fix this...

This is Main Street versus Wall Street. This is honest books versus dirty books. If you want the United States in 10 years to resemble anything what it looked like 20 years ago, you are going to have to do it, and there is no one else who can do it. You have to first get the intelligence to know what is happening."

Join Greg Hunter as he goes One-on-One with Catherine Austin Fitts, Publisher of "The Solari Report."

https://www.youtube.com/embed/Mi6S4zrFjPg

To Donate to USAWatchdog.com


Withdrawn Sanction , 15 minutes ago link

"If the law says you have to produce audited financial statements and you refuse to do so for 20 years, and then when somebody calls you on it, you proceed to change the accounting laws that say you can now run secret books for all the agencies and over 100 related entities ."

She's referring to FASB standards, but those dont sound like a Constitutional Amendment to me.

Article i, Section 9, paragraph 7: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time."

Perhaps when $20+ trillion are involved, the Constitution be damned, I suppose. Or perhaps the govt boys will claim the $20T didn't come from an appropriation but instead from their own "industrious" activities...you know, like drug and gun running, and human trafficking perhaps?

DjangoCat , 21 minutes ago link

I watched Greg Hunter's show on this. Very disturbing because of it's currency. This backdoor off-the-books financing of whatever they want is as she says, the introduction of free fascism in the US.

Is the Donald on this case? Sure hope so.

JBlount123 , 22 minutes ago link

Deep State is REAL: https://www.youtube.com/watch?v=LLTzpDFGWjI

Duc888 , 24 minutes ago link

One of the smartest women out there. Huge fan here. She almost got snuffed for blowing the whistle at HUD (two sets of books and all). It's only recently that she's come out and said that there's no such thing as the "money being lost". It's digital and 100% traceable.

Arrowflinger , 15 minutes ago link

Fitts is correct and her approach is sound. Money flows are traceable. The problem is more complicated, though. As Enron proved and the Parmalat scandal cemented, the CRONY CUT is fatal. The Auditors gave up fiduciary duties for FIDOCIARIES riches. They rolled over and played dead.

Duc888 , 12 minutes ago link

They've already tried to off her. They broke her financially and she bounced back. She made a lot of enemies but luckily she has some good friends in high places too. Watch a few Vids about what they did to her after she blew the whistle at HUD. She's lucky to be above ground.

Her extensive studies and reports that follow crack cocaine being dumped into various areas the subsequent drug related violence and BS "WOD" response and then what happened to the real estate, as in, WHO WINDS UP BUYING block after block after block of blighted buildings is absolutely fascinating . She should have gotten more recognition for those exhaustive studies.

There's a VERY LARGE HAND at work there...for profit.

[Jan 13, 2019] It is impossible to separate the current backlash on globalization from the backlash on neoliberalism as an ideology.

Notable quotes:
"... Crumbling of neoliberal ideology now is an undisputable scientific fact. While neoliberal practice continues since 2008 unabated, and neoliberalism even managed (not without help from some three-letter agencies) staged counterrevolutions in several countries such as Ukraine, Argentina, and Brazil (the phenomena known as "Strange non-death of Neoliberalism"). ..."
"... The current level of degeneration of the neoliberal elite is another interesting factor. Essentially neoliberal oligarchy (and this is first of all financial oligarchy) and their political stooges lost the legitimacy in the minds of the majority of the electorate in the USA (Trump+Sanders supporters). ..."
"... Republican leaders will have to acknowledge that market capitalism is not a religion. Market capitalism is a tool, like a staple gun or a toaster. You'd have to be a fool to worship it. Our system was created by human beings for the benefit of human beings. We do not exist to serve markets. Just the opposite. Any economic system that weakens and destroys families is not worth having. A system like that is the enemy of a healthy society. ..."
"... Socialism is exactly what we're going to get, and very soon unless a group of responsible people in our political system reforms the American economy in a way that protects normal people ..."
Jan 13, 2019 | crookedtimber.org

likbez 01.13.19 at 6:05 pm 22

My impression is that it is impossible to separate the current backlash on globalization from the backlash on neoliberalism as an ideology.

Crumbling of neoliberal ideology now is an undisputable scientific fact. While neoliberal practice continues since 2008 unabated, and neoliberalism even managed (not without help from some three-letter agencies) staged counterrevolutions in several countries such as Ukraine, Argentina, and Brazil (the phenomena known as "Strange non-death of Neoliberalism").

One of the fundamental forces behind the last 25 years of neoliberal globalization is the availability of cheap oil. If this period is coming to an end in a decade or two (as in prolonging period of over $100 per barrel prices) the reversal of neoliberal globalization might acquire a completely different pace and scale.

The current level of degeneration of the neoliberal elite is another interesting factor. Essentially neoliberal oligarchy (and this is first of all financial oligarchy) and their political stooges lost the legitimacy in the minds of the majority of the electorate in the USA (Trump+Sanders supporters).

In this sense, I would like to emphasize an amazing and unexplainable (given Fox news owner) speech by Tucker Carlson on Jan 2, 2009.

He offered this blunt advice to Republicans:

Republican leaders will have to acknowledge that market capitalism is not a religion. Market capitalism is a tool, like a staple gun or a toaster. You'd have to be a fool to worship it. Our system was created by human beings for the benefit of human beings. We do not exist to serve markets. Just the opposite. Any economic system that weakens and destroys families is not worth having. A system like that is the enemy of a healthy society.

This is probably the first statement that neoliberalism is the enemy of healthy society on Fox.

This might not end well as financial oligarchy is entrenched and does not was to share power with anybody. Indeed, Carlson anticipated the resistance to his views in the way similar to FDR:

Socialism is exactly what we're going to get, and very soon unless a group of responsible people in our political system reforms the American economy in a way that protects normal people

This also shed additional light of Russiagate, as an attempt to cement cracks in the neoliberal society by uniting the nation against the common enemy. In no way Russiagate is only about Trump.

[Jan 13, 2019] There is no free market! It's all crooked by financial oligarchy!

Highly recommended!
Free market is possible only under strict government regulation. Without government regulation free market quickly deteriorates into the law of jungles. Such a paradox ;-)
And if financial oligarchy gets to power as they got via coup d'état in the USA in late 7th, it is only a matter of time before the society collapses. They are very destructive to the society at large. Probably more so then organized crime. But wait. They actually can be viewed as special type of organized prime as is "The best way to rob the bank is to own it".
Notable quotes:
"... Idiots on here are always going on about how we don't got capitalism, if we only had capitalism, we don't got free markets, if only we had free markets, then everything would be hunky-dory. Without any proof, of course, because there never was and never will be a "free" "market." The US has plenty capitalism. And everything sucks. And they want more. Confused, stupid, disingenuous liars. ..."
"... Free markets are crookedness factories. As a PhD from Chicago Business School told me, "Free markets?! What free markets?! There is no free market! It's all crooked!" ..."
Jan 13, 2019 | www.unz.com

obwandiyag , says: January 13, 2019 at 6:37 am GMT

Idiots on here are always going on about how we don't got capitalism, if we only had capitalism, we don't got free markets, if only we had free markets, then everything would be hunky-dory. Without any proof, of course, because there never was and never will be a "free" "market." The US has plenty capitalism. And everything sucks. And they want more. Confused, stupid, disingenuous liars.
obwandiyag , says: January 13, 2019 at 6:42 am GMT
Look, what you call "capitalism" and "free markets" just means scams to make rich people richer. You read some simple-minded description of some pie-in-the-sky theory of some perfect world where rational actors make the best possible decisions in their own interest without any outside interference, and you actually think you are reading a description of something real.

I'll tell you what's real. Crookedness. Free markets are crookedness factories. As a PhD from Chicago Business School told me, "Free markets?! What free markets?! There is no free market! It's all crooked!"

[Jan 13, 2019] Goldman Sachs has rolled back its call for much higher rates in U.S. government bonds in the U.S., though it still expects a gradual climb from the current muted levels in the Treasury market

Jan 13, 2019 | economistsview.typepad.com

im1dc , January 08, 2019 at 08:44 AM

Goldman's Bond Desk just called for a slower and lower US GDP in 2019

https://www.marketwatch.com/story/goldman-cuts-10-year-treasury-yield-target-for-2019-to-3-2019-01-08

"Goldman cuts 10-year Treasury yield target for 2019 to 3%"

By Sunny Oh...Jan 8, 2019...10:45 a.m. ET

"Goldman Sachs has rolled back its call for much higher rates in U.S. government bonds in the U.S., though it still expects a gradual climb from the current muted levels in the Treasury market.

In a Tuesday note, Goldman Sachs said they expect the 10-year yield TMUBMUSD10Y, +0.06% to hit 3% by year-end, a 50 basis point cut from their forecast of 3.5%. Since last week, the benchmark bond yield has steadily risen to 2.710% Tuesday, after hitting an 11-month low of 2.553% last Thursday, according to Tradeweb data.

Bond prices fall as yields climb."...

[Jan 13, 2019] If fiscal policy is not the main answer to the next recession, what is?

Jan 13, 2019 | economistsview.typepad.com

point , January 08, 2019 at 06:01 AM

Rogoff wants to reform central banks:

"If fiscal policy is not the main answer to the next recession, what is?"

https://www.project-syndicate.org/commentary/countercyclical-fiscal-policy-no-cure-in-next-recession-by-kenneth-rogoff-2019-01

having just ruled out what could very well be the only solution, all in the cause of independence.

"One can appreciate why central bankers don't want to get gamed into some of the nuttier monetary policies that have been proposed, for example "helicopter money" (or more targeted "drone money") whereby the central bank prints currency and hands it out to people. Such a policy is, of course, fiscal policy in disguise, and the day any central bank starts doing it heavily is the day it loses any semblance of independence. Others have argued for raising inflation targets, but this raises a raft of problems, not least that it undermines decades of efforts by central banks to establish the credibility of roughly 2% inflation."

I am reminded of Paul's advice to the day care coop, that they could not trade chits for hours simply because they didn't have enough chits to allow for savings, so make more and distribute them. At least, that's how I remember it.


JohnH -> point... , January 08, 2019 at 03:12 PM
The Fed failed to get growth going after the last recession...despite a long stream of rosy forecasts. So what do elites propose for the next recession? More Fed action...and why not? Low interest rates goose the markets, lining the pockets of the banksters who own the Fed.

Like Vietnam, Iraq, Afghanistan and the other pointless and futile military adventures, when the going gets tough, you can count on elites to double down with failed economic policies (that just happen to enrich them.)

Darrell in Phoenix said in reply to JohnH... , January 09, 2019 at 08:19 AM
At some point, policy simply becomes to "hold it together".

What do you think the goals of the policy in Iraq, Afghanistan are?

Oh sure, Bush Jr went in thinking we could set a pro-west democracy, ignoring the experts that said it would be impossible since the people don't want pro-west. If they have democracy, they are going to vote to disband the democracy and hand power to the theocracy.

Since then, the policy has simply been to prevent giving Iran and Russia free rein to set up anti-west theocracies as puppets of Russia and Iran.

As for the Fed not getting growth, same principal... at least they have prevented the house of cards that is the massive household and business debt from cascade defaulting into global depression.

Back in Bernanke's day, every Fed speech included comments on "structural imbalances that need to be addressed with fiscal policy", and every time he was dismissed as "the rich that fund the political campaigns will never allow it".

Going back to Point's OP. Once they have taken away the screw driver, the hammer becomes the only way to put in a screw.

JohnH -> Darrell in Phoenix... , January 09, 2019 at 11:31 AM
"What do you think the goals of the policy in Iraq, Afghanistan are?"

Answer: 1) Avoid admitting defeat. 2) Enrich the military/security oligopolies.

Kind of like the Fed's policy of pushing the wet noodle to reinvigorate the economy.

JohnH -> JohnH... , January 09, 2019 at 11:36 AM
BTW nobody knows the terms of the deal Big Oil negotiated with Iraqi leaders to get a lock on cheap oil in southern Iraq. It was so bad that the Iraqi parliament never approved it. I assume that Big Oil pays $5/barrel or less to Iraqi leaders' bank account in tax havens.

IOW...total corruption embraced by Republicans and Democrats alike.

Darrell in Phoenix said in reply to JohnH... , January 10, 2019 at 07:33 AM
"Answer: 1) Avoid admitting defeat. 2) Enrich the military/security oligopolies."

Nope.

To prevent Iran, with Russian aid, from advancing their goal of unifying the Islamic world.

The goal is to keep the middle east divided and fighting itself so that it can't unify against the west.

We can argue whether or not that is "good policy" or "moral policy", but that is the policy.

Our friends in the region, like Saudi Arabia and Turkey are the countries that are content to keep the middle east divided.

Iraq too, under Saddam Hussein... right up until he saw the collapse of the USSR and a weakened Iran as an opportunity to unite the middle east under his control. Once he decided to try to "unite the middle east" instead of being a tool for keeping it divided, he became just another part of the problem.

JohnH -> Darrell in Phoenix... , January 10, 2019 at 10:41 AM
Ridiculous. Total lack of understanding: Islamic world will never unite behind Iran. Iran is Shi'a.

Of course, the knuckleheads running American foreign policy didn't understand that in 2003...and probably still don't understand, so I'll cut Darrell in Phoenix a little slack, because his ignorance is shared by many elites.

ilsm -> Darrell in Phoenix... , January 10, 2019 at 01:49 PM
Are you a Wm Kristol devotee?

Just how will Iran, who was the safest Islamic country until US and Saudis got mad at them and stirred up Baluch and MEK terrorism, unify the Salafists who are Sunni supported by GCC emirs and royals?

Stop making up motives that make no sense at all:

"Since then, the policy has simply been to prevent giving Iran and Russia free rein to set up anti-west theocracies as puppets of Russia and Iran."

Note Russia has its own issues with Chechen and other Islamist terror!

Your excuses are almost as wild as the things Feith and Cheney made up about Iraq in 2002!

[Jan 13, 2019] Opinion The Case for a Mixed Economy by Paul Krugman

So this neoliberal stooge woke up and started advocating mixed economy. Very interesting.
Notable quotes:
"... What we see right away is that even now, with all the privatization etc. that has taken place, government at various levels employs about 15 percent of the work force – roughly half in education, another big chunk in health care, and then a combination of public services and administration. ..."
"... Follow The New York Times Opinion section on ..."
"... Twitter (@NYTopinion) ..."
"... , and sign up for the ..."
"... Opinion Today newsletter ..."
Dec 22, 2018 | www.nytimes.com

Maybe not everything should be privatized. There are private activities that could plausibly be made public, like utilities, which in some cases are publicly owned already.

There are private activities that could plausibly be made public, like utilities, which in some cases are publicly owned already. Credit Eric Thayer for The New York Times

A mind is a terrible thing to lose, especially if the mind in question is president of the United States. But I feel like taking a break from that subject. So let's talk about something completely different, and probably irrelevant.

I've had several interviews lately in which I was asked whether capitalism had reached a dead end, and needed to be replaced with something else. I'm never sure what the interviewers have in mind; neither, I suspect, do they. I don't think they're talking about central planning, which everyone considers discredited. And I haven't seen even an implausible proposal for a decentralized system that doesn't rely on price incentives and self-interest – i.e., a market economy with private property, which most people would consider capitalism.

So maybe I'm being dense or lacking in imagination, but it seems to be that the choice is still between markets and some kind of public ownership, maybe with some decentralization of control, but still more or less what we used to mean by socialism. And everyone either thinks of socialism as discredited, or pins the label on stuff – like social insurance programs – that isn't what we used to mean by the word.

But I've been wondering, exactly how discredited is socialism, really? True, nobody now imagines that what the world needs is the second coming of Gosplan. But have we really established that markets are the best way to do everything? Should everything be done by the private sector? I don't think so. In fact, there are some areas, like education, where the public sector clearly does better in most cases, and others, like health care, in which the case for private enterprise is very weak. Add such sectors up, and they're quite big.

In other words, while Communism failed, there's still a pretty good case for a mixed economy – and public ownership/control could be a significant, although not majority, component of that mix. My back of the envelope says that given what we know about economic performance, you could imagine running a fairly efficient economy that is only 2/3 capitalist, 1/3 publicly owned – i.e., sort-of-kind-of socialist.

I arrive at that number by looking at employment data . What we see right away is that even now, with all the privatization etc. that has taken place, government at various levels employs about 15 percent of the work force – roughly half in education, another big chunk in health care, and then a combination of public services and administration.

Looking at private sector employment, we find that another 15 percent of the work force is employed in education, health, and social assistance. Now, a large part of that employment is paid for by public money – think Medicare dollars spent at private hospitals. Much of the rest is paid for by private insurers, which exist in their current role only thanks to large tax subsidies and regulation.

And there's no reason to think the private sector does these things better than the public. Private insurers don't obviously provide a service that couldn't be provided, probably more cheaply, by national health insurance. Private hospitals aren't obviously either better or more efficient than public. For-profit education is actually a disaster area.

So you could imagine an economy in which the bulk of education, health, and social assistance currently in the private sector became public, with most people at least as well off as they are now.

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Then there are other private activities that could plausibly be public. Utilities are heavily regulated, and in some cases are publicly owned already. Private health insurance directly employs hundreds of thousands of people, with doubtful social purpose. And I'm sure I'm missing a few others.

By and large, other areas like retail trade or manufacturing don't seem suitable for public ownership – but even there you could see some cases. Elizabeth Warren is suggesting public manufacture of generic drugs , which isn't at all a stupid idea.

Put all of this together, and as I said, you could see an economy working well with something like 1/3 public ownership.

Now, this wouldn't satisfy people who hate capitalism. In fact, it wouldn't even live up to the old slogan about government controlling the economy's "commanding heights." This would be more like government running the boiler in the basement. Also, I see zero chance of any of this happening in my working lifetime.

But I do think it's worth trying to think a bit beyond our current paradigm, which says that anything you could call socialist has been an utter failure. Maybe not so much?

Follow The New York Times Opinion section on Facebook , Twitter (@NYTopinion) and Instagram , and sign up for the Opinion Today newsletter .

Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @ PaulKrugman


Avraam Jack Dectis Universe Du Jour Jan. 2

. Dr. Krugman missed the largest communist socialist organization in the USA - the military! The live on communes called bases. They have everything provided including clothes, housing, food and training. They get routine exercise as they prepare to defend the country in a world with no credible threat. It is like summer camp year round. The biggest irony? This communist orgsnization fought and trained for conflicts with communists. .

Reply 2 Recommend
Michael Dulin Cranbury NJ Jan. 1

To see what the government can do to support the economy we don't need to look farther than our own borders. The government has been crucial to the development and maintenance of many economic activities as they exist today. Much of our shiny technology owes its existence to government investment. Government investment was crucial to the development of flat screens and touch screens. GPS based products rely for their operation on continued government support. Mariana Mazzucato makes the point more completely in her book "the Entrepreneurial State." We should re-examine many areas of the economy to see where the government already has a positive impact. Where we find positive effects, we should try to extend those effects in the same and other enterprises - we should also look to see what is not working and eliminate or curtail the negative impacts of those activities. Outdoor recreation and tourism is another area of the economy that thrives on government support. Those activities contribute far more to the local economy of many rural areas than what they currently rely on in extractive activities like mining, oil and gas production and logging. Expanding outdoor activities and tourism will also require finding ways to reduce the risk of fires in many remote areas, which will also create jobs. (anyone for raking?) So thank you Professor Krugman for highlighting the possibilities of a mixed economy, but as you suggest, we need to broaden our imagination.

Reply Recommend
BoulderDad Colorado Dec. 30, 2018

Can the state be a better capitalist? I always hear how Norway has done an amazing job of creating a sovereign wealth fund, funded by their petroleum production taxes and fees. Last I checked, the US produces a lot of petroleum, but we don't have a sovereign wealth fund with $165,000 per person. Do we see our severance fees and royalties in other ways or do socialist economies do a better job in managing the funds?

Reply 2 Recommend
Excellency Oregon Dec. 28, 2018

Capitalism can be a bit of a boxing match. Not everything needs to be (should be?) a boxing match. A little Fri nite music for Krug - Alison Krause doing Simon & Garfunkel https://youtu.be/hci5q3G6-FA

Reply 1 Recommend
Ellen San Diego Dec. 28, 2018

Dr. Krugman - Please provide concrete examples of how other nations deal with such concepts as public/private in realistic ways that help the ordinary citizen. Bashing what we've got without profiling meaningful reforms only goes so far.

Reply 2 Recommend
DFWcom Canada Dec. 28, 2018

The roots of capitalism lie in how we create capital - on the basis of debt and, for the most part, by private sector banks. It's done using fractional reserve banking - taking money created by the state (promissory notes) and lending it over and over - by a factor of around eight times. The key - money is only created on the promise of a "profit", ie, economic growth. It's why GDP growth is always the measure of "progress". As this system becomes ever more dysfunctional and our thoughts turn to sustainability, it is logical we need to think about different systems of creating money. Why not by the state? 2008 is the answer to anyone who says it won't work - private sector banks created commercial paper out of fraudulent debt - not rational, efficient, or fair by any measure. China is an example of an economy where the state creates commercial money. It seems to be doing rather well, especially in building infrastructure that benefits peoples lives. Of course, we criticize China for not playing by the "rules" - our rules, of course, rules that are driving us over a cliff. I believe it's fundamental that we think of ways in which we can reduce the amount of commercial money created for profit by private sector banks in favour of money created for the common good. A nice side effect will be the increasing irrelevance of private-sector "wealth" - a way of scaling back inequality.

Reply 3 Recommend
Meredith New York Dec. 27, 2018

Krugman the liberal with a conscience, wouldn't go so far as to point out the many pros vs the cons of the EU social democracy systems. That would be going too far. The Democratic Party still need to raise plenty of corporate money to run in 2020. He'll continue with the anti Trump, anti GOP tirades. And write MAYBE not everything should be privatized as a profit center---in an operating democracy. Americans will still be left uninformed about what they should be demanding from the govt they stand in long lines to elect. Thus be left more vulnerable to GOP propaganda and maybe even future Trumps, now swimming up from the swamp.

Reply 4 Recommend
Meredith New York Dec. 26, 2018

So why doesn't our liberal with a conscience make concrete comparisons in real people terms with our PAST GENERATIONS when the middle class was expanding, and with other capitalist democracies now? American past examples are all there---upward mobility, unions, secure pensions, high tax rates on the wealthy, better regulations, infrastructure and highway building, low cost college tuition at state universities--etc etc . .... etc. The data is all there, as would befit an economist who won a special Nobel in economics. And who now works with an institute at City University of NY that studies income inequality. For more informative reading instead, read Leonhardt's column--When the Rich Said No to Getting Richer. And the recent Edsall column on big money influence in our politics. That's a topic most columnists and pundits avoid, except for 1 line occasionaly to show they're hip to it. Then they go on to something else to stay safe and centrist in line with our warped political spectrum. As our columnists stay careful in our FOX News/GOP/corporate political culure, we get more realistic, informative mini columns from many reader commenters instead of the columnists. It's the reader commenters, not the columnists who up the sales of the NYTimes.

Reply 3 Recommend
Meredith New York Dec. 26, 2018

I read that Canada avoided our 08 crash because it had earlier refused to merge with US banks. Maybe that's sensible 'conservativsm'--- to conserve their more balanced banking system and economy. Bernie Sanders once had a senate hearing on health care with witnessess from Canada and 4 other countries on how they pay for and use health care for all. Our media ignored it---I happened to catch it on cspan. Is Krugman even aware of this? Citizens of dozens of other countries wouldn't put up even with Obamacare, which is a vast improvement over the previous non system. But it keeps insurance profits subsidized by our taxes. Abroad, if not single payer, then their govts regulate premium prices for their citizens with insurance mandates. If they didn't the citizens would vote them out. This difference should rate a few columns by Krugman the economist, concerned about inequality. But he avoids these comparisons. It's how he and the NYT are positioning themselves in our politics---humanitarian, but not too much. At least we have reader comments to give some realistic data on other countries to Americans who are mostly kept in the dark by their media.

Reply Recommend
Citixen NYC Dec. 27, 2018

@Meredith I'm sorry Meredith, but your charge is unfair. I don't know how long you've been reading Krugman's column in the NYT, but he's literally published DOZENS of them comparing our healthcare 'system' with that of other countries, before, during, and after the implementation of Obamacare. And then there's his NYT blog, where wrote similarly but on a more advanced level. The last thing you could say about Krugman is that he's been 'captured' by the wealthy elite. Anything but.

Reply 2 Recommend
Meredith New York Dec. 27, 2018

@Citixen.....reading long time. Little about abroad. How about a link or 2?

Reply Recommend
morgan kansas Dec. 26, 2018

re: the case for a mixed economy The choice of markets or public ownership or any combination of the two is not the answer or even the question. By the way communism has never been given a fair shot. You mentioned the key to any discussion of economics... self-interest. Communisms downfall has always been self-interest (GREED). Greed comes in a number of guises. Military dictatorships or the NYSE. Capitalism's dead end is its ultimate goal... One conglomeration with one CEO.

Reply 1 Recommend
Citixen NYC Dec. 27, 2018

@morgan If Communism had a downfall, then it had a shot, and it failed. There's no reason to think that, as a system run by fallible human beings, the outcome would EVER be any different. Capitalism, on the other hand, has many flavors, almost all of which we ignore here in the USA, except the one that seeks to destroy our public institutions in the name of an extreme libertarianism masquerading as a Utopia of 'free markets'. Whether by committee or by the wealthy, redistribution of wealth by the few has always been a fool's game. Regulatory vigilance, constant reform, and transparent oversight, has proven itself the best partner of capitalism in every case. There IS a middle ground with capitalism that we ignore for the extremes of either wealth, or control.

Reply 2 Recommend
Meredith New York Dec. 26, 2018

Krugman says "But have we really established that markets are the best way to do everything? Should everything be done by the private sector? I don't think so." Gosh, don't THINK so? Krugman cautiously asks the question. He doesn't want to offend any centrist Democratic party leaders needing campaign money, and one of them may someday pick him as Treasury Secretary. CNN's Ali Velsh who is from Canada, stated flatly on TV that free market health care has never worked in any country. The incentives are not aligned to provide care that was deemed a right in most modern nations in 20th Century. But not deemed a right in USA. Krugman, as a winner of a special Nobel prize in economics, might actually compare the international GINI Score ranking of countries on their citizens' economic moblity. Americans ranks behind other democracies---that are also capitalist countries. Othe countries like profits too, but profits are not prioritized above all else like here. But to criticize this underlying causation is to look too left wing liberal socialist unAmerican, etc etc. Krugman shies away. That would seem the perfect topic for a Krugman-type columnist who titles himself a liberal with a conscience.

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Meredith New York Dec. 26, 2018

Hey, where's the usual easy Trump bashing that gives us all such emotional catharsis? Is Krugman realizing his anti Trump/Gop columns aren't enough, that we actually need more? Such as questioning the basic tenets of our political culture? That it's not only Trump that is weakening our democracy? This column is just a start---Krugman stays careful not to go too far to criticize our warped norms.

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Meredith New York Dec. 26, 2018

Omg! Warrens idea of public mfgr of generic drugs "isn't a stupid idea"? Is that all you can think up to say, PK? Tell us why it ISN'T stupid. PK wants to look like a humanitarian but still stick with the main Democratic party positions---but this party has to vie with GOP for campaign money. And PK is seen by the Times as its prestigious 'liberal' columnist. To not look too liberal by our warped standards, PK in effect helps to marginalize any ideas that are truly progressive and needed. They're not stupid, but are they smart? For whom? Policies that are called progressive in the US, are centrist in other capitalist democracies--- but keep that dark. Hey, 'liberal', where's your conscience you told us about? Talk not about those who hate capitalism, but those who want to keep it, if it is properly regulated by elected govt. Talk about how our politics are regulated by corporations --through donor money and norm setting, esp for the media. It's obvious--our columnists are careful to stay safe within the guidelines set up. There are many ways to influence 'free speech' without actual govt censorship. We see this daily in our news media, careful to stay within guidelines.

Reply 4 Recommend
John Mullen Gloucester, MA Dec. 26, 2018

Economies are human, social creations, they are not at all like solar systems, for example. As human creations, they should serve human interests. That will not happen independent of the political system of democracy. In the US, democracy is seriously corrupted by the power of oligarchs, so the failures of the US economy to do its job cannot be solved by purely economic re-arranging. Assuming that power is back in the hands of people, what should we expect from an economy? Three things: 1. sufficient production of goods and services (this is the free market's strong point), 2. fair (not necessarily equal) distribution of these (this a the free market's weak point), and 3. jobs that satisfy workers' needs for sociability and dignity. (This is a strong point of Marx's thought.) # 2 and 3 require an intelligent, well-functioning democracy. Framing this in old, worn out terms like capitalism and socialism, terms undermined by decades of rhetorical conflict, is not helpful...

Reply 4 Recommend
Miguel Madeira Portugal Dec. 26, 2018

A perhaps implausible proposal for a decentralized system that doesn't rely in a market economy with private property (which most people would consider capitalism): - The Firm in Illyria: Market Syndicalism, by Benjamin Ward, published in The American Economic Review , Vol. 48, No. 4 (Sep., 1958).

Reply 1 Recommend
tomster03 Concord Dec. 26, 2018

I remember seeing Dr Krugman in a Sunday TV panel discussion on US economic and tax policy. During his turn he spoke strictly in terms of the merits as policy. His fellow panelist George Will followed him and wisely avoided expressing any opinions about economic policy and instead made a sarcastic remark about the political chances of implementing the policy being discussed. I like to think we can discuss policy proposals whether or not they have a chance politically to become law. The alternative might not even appeal to George Will.

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NYT Reader Walnut Creek Dec. 26, 2018

Hey, I think you are talking about China....the proportions are not quite what you suggest (1/3 public) but by incorporating capitalism into a communist model, they are able to get the benefits of both.

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MS Norfolk, VA Dec. 26, 2018

Public manufacture of generic drugs... Where, without competition, would be the incentive for maintaining quality and/or efficiency? Where would be the incentive for improvement of the drugs themselves - increased effectiveness, less side effects, etc? Orwell's horse ("I must work harder!") was a figment of his imagination. Krugman forgets just what is the part of capitalism that brings the most to the table, competition.

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Sandy BC, Canada Dec. 26, 2018

@MS Competition for what? Wealth, of course. And we're back to those whose greed will never be satisfied. Why not "cooperation"? A competition for who can do the most good for humanity.

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MK Kentucky Dec. 27, 2018

@MS Is MS really think that competition among the drug lords of big pharma is truly competition ? Reminds me of the book on Adam Smith's Wealth of Nations with a photo of a huge factory belching smoke on his cover. When Adam Smith wrote his book in the late 18th century, a factory was ten people making pins.

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Robert Wood Little Rock, Arkansas Dec. 26, 2018

As I understand it, most, if not all, of the attempts at creating a "socialist" economy haven't really merited the name. They've tended to be autocratic regimes that falsely used the term "socialism" as a means of suggesting to their citizens that they would have a more participatory government. They were cynical charades. I would love to see a true socialist element in our economy, i.e., one that actually placed the needs of the citizens above the needs of plutocrats. Healthcare, in particular, seems to be an ideal candidate for public ownership. Too many companies today in the field are unnecessarily driving up the cost of care for all of us.

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Sandy BC, Canada Dec. 27, 2018

@Robert Wood A thousand recommends , if I could.

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gary e. davis Berkeley, CA Dec. 26, 2018

Krugman's thought experiment here seems to too readily accept that the questioner of "capitalism" knows what they're asking about, deflected by wanting speculation about whatever else -- supplements? ("mixed economy") Alternatives? I've spent many years with this issue, if I may say so. One aspect that ready critics of "capitalism" don't seem to appreciate is the difference between capital-intensive business and capitalISM. The latter is about profit at any cost and tends to be predatory. The former is normal business whose investors accept a reasonable margin and sustain concerns about employee quality of life, corporate citizenship, professional ethics, etc. as part of normal business. Normal business accepts a degree of regulatory constraint for the sake of a level playing field and reliable futures market (in an idiomatic sense), which is required for long-term investment. Libertarian Republicans apparently regard all regulation as "Socialist," but actually socialism is just a bad theory of democratic republicanism (small-d, small-r). If one examines the history of so-called "socialism," it's a history of desire for a democratic republic without much sophistication about making an economy innovative, resiliant, etc.; and a bad sense of government that enables prosperity. Questioning whether "capitalism" has run its course is an unwitting invitation to have one's sense of economics and good government enlightened.

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Ed F Tavares FL Dec. 26, 2018

"Everything For Sale" by Robert Kuttner, 1996. The same idea in specific areas of the economy. Recommended reading.

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John Brews ..✅✅ Reno NV Dec. 26, 2018

It's shocking that an economist finds a mixed economy has to "have a case made for it". It is very obvious that the private sector is not going to undertake any endeavor that helps everybody and not just its own competitive advantage. And it's obvious that regulating the private sector doesn't put them on the right road; just from running amok. Infrastructure, healthcare, education, environment, climate change -- the private sector -- you kidding?? And of course we have the great benefits of Citizens United to thank for assisting corporations to focus our politics upon what needs to be done. The GOP has succeeded beyond all expectations in ruining the country by doing favors for corporations.

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observer Ca Dec. 26, 2018

Socialized agriculture, socialized defense companies, socialized churches, socialized border security walls and socialized tax cuts are what america has. Republicans are hypocrites. Without the huge government subsidies that farmers get-many many billions, including but not limited to the 12 billion from trump after china imposed soyabean tariffs, the farmers would all be out of business by now. Defense companies are financed by ten and even hundreds of billions of pentagon spending. They can't survive on exports to saudi arabia alone. The pentagon gets hundreds of billions from government when there has been no war since world war 2, other than the ones it created in vietnam and iraq. Evangelical churches, GOP enterprises. are financed by tax charity, basically by government and they are socialist organizations. Trump wants to spend 5 billion of tax payer money for a border wall, after talking nonsense about making mexico paying for it-it would be a socialist border wall. The 2017 gop tax cut is socialist welfare for billionaires and corporations. It has added 1 trillion to the federal deficit. Trump and his party are the socialist party serving the top 0.1 percent of the wealthiest.

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observer Ca Dec. 26, 2018

A mixed economy is the best economic model. Capitalism is purely about profit. A purely private economy would create a society with a handful of ultrawealthy people, a small middle class and many tens or hundreds of millions of poor people with no basic health and education services- a system like the one that existed in the king, baron and serf era in england, and in many developing countries. We would have a trump tower with a corrupt and criminal politician and businessman sitting in it, and homeless people and slums surrounding the building for miles. Companies would pollute and destroy the air and water with impunity. The air in the cities would be hard to breathe, and the water would contain poisonous chemicals. Many millions would starve, be unable to go to school and get health services, and live in dirt and squalor. Global climate change would accelerate and the human species would soon be extinct. All relations with friends and allies alike would be purely business transactions and russia, china and hackers would be an much bigger threat than they are. saudi arabia can murder journalists-we will look the other way, just selling them arms and buying their oil.A purely public economy would give us job security for life, and cheap products and services, but they would all be poor in quality, and at the cost of higher taxes.When people want free electricity, and the local politician wants to give it to them,the utility company goes bankrupt.There will be no innovation

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Tdub Piedmont, CA Dec. 26, 2018

For me this is one of the long awaited topics that I have been hoping Krugman would engage; Now more than ever we need discussions of alternatives to the capitalism we have evolved to with its tacit assumption that it is the best of all possible models and that growth is essential. Paul do you really believe that growth can be endless without environmental consequences? I would like to see Krugman wade in on this and especially address newer discoveries of the de-growth movement embodied in stock flow consistent modeling done by Tim Jackson (Prosperity without Growth) and others that show that virtually zero growth can be sustainable and perhaps more stable than our current system.

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Michael Cohen Brookline Mass Dec. 25, 2018

There are 3 basic methods in a modern industrialized societies in which ownership of the means of production can be accomplished. 1. Ownership by a special group, called capitalists, or rentiers is apart from labor in enterprises which produce goods and services. 2. The government can own enterprise and employees like in the British Health Service can be state employees. The state can run the enterprise at a profit or run it paid for partially or completely by the taxpayer. 3. As in Germany in Part labor can have a voting share either complete as in a cooperative such as the Spanish Mondragon and ownership can be by the workers with a lead worker or even Union Official managing the company. Many mixes are possible and all posibilities need to be seriously considered. This has yet to be done in a serious or empirical fashion

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John Big City Dec. 25, 2018

What is the end game for right wingers? If everything is privatized and jobs are insecure, people will be afraid to spend. And we'll live in a feudalistic society. Think about that before you take away working class pensions to give tax cuts to the rich.

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observer Ca Dec. 25, 2018

One of the biggest socialist enterprises in america is the federal reserve board. They poured 4.5 trillion into banks and the economy to lower interest rates. It has turned out to be welfare for wall street and corporations. Trump and the wall street journal editors are complaining about this socialism for corporations when they attack and criticize the fed chief. The fed needs to go back to their main role-containing inflation. Let the stocks drop by 40 percent. The market will eventually adjust. With no place for their money, and low bond and cd rates, the investors will go back into stocks. After all the fed money sloshing around in the system has dried up banks and corporations will go back to paying mom and pop investors like you and me 5 percent. It will be great for financial stability as well. People have been forced to take too much risk in the stock market for years because of near zero interest savings and cd rates. Safe cds should pay interest rates well above inflation. Mortgage rates were low in 2008 even before the fed intervened. There was no need for the fed to pour in trillions. Fed intervention made sense till two years ago. No longer-it is just socialism for billionaires. They should have raised interest rates much faster than they have in the last two years and got out in a hurry. The interest rates are still too low. Mom and Pop investors are making a sacrifice to make hedge fund managers and CEOs even wealthier.

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Craig Hill Wintering in AZ Dec. 25, 2018

Actually Krugman sells socialism in America short, as practiced before our Founders formally engraved it in the Constitution with government operation of the mail. Before the term socialism was coined there were socialized sidewalks, public schools, socialized fire departments, socialized police departments ET CETERA! with no one back then dissenting from necessary partial socialist governance. It was only after the Civil War in the rightwing drift against socialism caused by the desires of massive private concentrated wealth that the socialist menace began to be a thing. It isn't, it never was, tho it, socialism in practice, will continue, the alternative being the alt-truth of for-profit governance, i.e. Medieval Feudalism sane peoples have long jettisoned as the ne plus ultra of concentrated wealth incarnate. That's how absolute monarchs appointed themselves as heads of state, rule by the wealthiest pirates (e.g. Donald Trump) of their time for which little-s socialism has always been the NECESSARY CORRECTIVE.

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Anon Brooklyn Dec. 25, 2018

The rich people want to privatize more and make more money for themselves. Privatizing puts them beyond public scrutiny and we wont really understand when they are failing us. We have to protect our democartic institutions and make income distribution more equal.

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asell1 scarsdlae ny Dec. 24, 2018

Technology is about to change society in a most drastic way. Unless the transformation is properly controlled the outcome could be disastrous. This enormous task cannot succeed without the government setting the strategy and providing the resources necessary to implement if The Chinese government has defined the goals and is engaged in working out a process of implementation. They have so far produced a successful version of a mixed economy. We may adopt perhaps a different mix but their example is worth to learn from

Reply 3 Recommend
Jerryg Massachusetts Dec. 24, 2018

It's an indication of how far we've fallen that an article like this has to make a case for a mixed economy. Even for Adam Smith it was self-evident that government had a key role to play. When Smith talked the value of free markets he was not talking about an uncontrolled private sector. He was talking about a new and better system that could be achieved if government would stop the private sector from perverting the markets--through monopoly behavior and influence over government policy. He was FIGHTING the kind of nonsense we have today. Krugman is actually arguing for the mainstream against the lunatic fringe. The idea that the liberated private sector is going to solve all problems has no basis in historical fact. The strength of capitalism is its efficiency in achieving its own ends. It will not miraculously assure the well-being of the population if government doesn't make it. It will not defend the environment or educate the population. It will not even provide the resources for its own success. The should be no question about the need for a mixed economy. It's the only way to get the job done.

Reply 16 Recommend
BWGIA Canberra Dec. 24, 2018

I work for a government agency. I have worked for private enterprise in the past. In a very simplistic way, I think the main difference between the two is that private enterprise takes in money, uses it to purchase goods and services and outputs something with the purpose to generate more money. Public 'enterprise' takes in money, uses it to purchase goods and services and outputs something with the purpose of improving (or if you like, maintaining) society. The issue is that money is easy to count, while literacy and good roads are much more difficult to quantify. Also, I'm always struck by how private enterprise can do whatever it likes because it has the freedom to completely fail. I think it's easy to use this metric to see where private enterprise is not really appropriate. National parks, national defense, public infrastructure and so on; we don't want more money from these things, and they can't fail like Nokia. What is really lacking is a public willing to have an extended and thoughtful discussion on what we want as public goods, and what we think they are worth.

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David Staszsk Saranac Lake NY Dec. 24, 2018

My real challange for Proff Krugman is to explain how an economy with zero or declining population would work it seems to me that our capitalistic system needs an ever increasing population.

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Citixen NYC Dec. 25, 2018

That is the big, unspoken, truth about the industrialized world that no one wants to talk about or acknowledge: material wealth tends to lower birth rates. Like climate change, the deniers would have you believe something different, that the world is overpopulated today and exploding tomorrow. The truth is, while global population is indeed increasing, the rate of increase is slowing down dramatically, as people exit systemic poverty and enter into relative wealth that is a consequence of industrialization.