Softpanorama
May the source be with you, but remember the KISS principle ;-)

Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Financial skeptic

Notes on "neoliberalism enforced" cruise to Frugality Island for 401K Lemmings

News Neoliberalism as a New Form of Corporatism Recommended Links Peak cheap Energy and Oil Price Slump Secular Stagnation under Neoliberalism Rational Fools vs. Efficient Crooks: The efficient m hypothesis Casino Capitalism
Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Neoliberal Attacks on Social Security Unemployment Inflation vs. Deflation Coming Bond Squeeze Notes on 401K plans Vanguard
401K Investing Webliography Retirement scams Stock Market as a Ponzy scheme Financial Sector Induced Systemic Instability Neoclassical Pseudo Theories The Great Stagnation Investing in Vanguard Mutual Funds and ETFs
OIL ETNs Peak Cheap Energy and Oil Price Slump Notes on 100-your age investment strategy behavior in rigged markets Chasing a trade The Possibility Of No Mean Reversion Junk Bonds For 401K Investors Tax policies
John Kenneth Galbraith The Roads We Take Economics Bookshelf Who Rules America Financial Quotes Financial Humor Etc

“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Still I hope it plays a small but important role: to warn about excessive risk taking by 401K investors in neoliberal economic system. It designed to serve as a warning sign and inject a skeptical note into MSM coverage. There are not many such sites, so a warning about danger of taking excessive risk in 401K accounts under neoliberalism has definite value. The following cartoon from 2008 illustrated this point nicely

As far as I know lot of 401K investors are 100% or almost 100% invested at stocks. Including many of my friends. I came across a very relevant to this situation joke which nicely illustrated the ideas of this page:

Seven habits that help produce the anything-but-efficient markets that rule the world by Paul Krugman in Fortune.

1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
5. Overgeneralize
6. Be trendy
7. Play with other people's money

I would like to stress again that it is very difficult to "guess" when the next wave of crisis stikes us: "A thing long expected takes the form of the unexpected when at last it comes".

But mispricing of risk in 401K accounts is systemic for "overbullish" 401 investors, who expect that they will be able to jusp of the train in time, before the crash. Usually such expectations are false. And to sell in the market that can lose 10% in one day is not easy psychologically. I remember my feelings in 2001-2002 and again 2008-2009. That's why many people who planned to "jump" stay put and can temporarily lose 30 to 50% of value of their 401k account in a very short period of time (and if you think that S&P500 can't return to 1000, think again; its all depends on FED). At this point some freak out and sell their holdings making paper losses permanent.

Even for those who weathered the storm and held to their stock holdings, it is important to understand that paper losses were eliminated mostly by Fed money printing. As such risks remains as at one point FED might find itself out of ammunition. The fact that S&P500 recovered very nicely it does not diminish the risk of such behavior. There is no guarantee that the third crisis will behave like previous two.

Next crash will have a new key determinant: the attitude toward the US government (and here I mean the current government of Barack Obama) and Wall Street after 2008 is the lack of trust. That means that you need to hope for the best but prepare for the worst. Injection on so much money into financial system was a novel experiment which is not ended yet. So how it will end is anybody's guess. We are now in uncharted waters. I think when Putin called Bernanke a hooligan, he meant exactly this. Since Bernanke was printing money out of thin air to buy financial paper, his action were tantamount to shoplifting. In some way this probably is more similar to running meth labs inside Fed building. The system was injected with narcotics. Everybody felt better, but the mechanism behind it was not healthy.

The complexity of modern financial system is tremendous and how all those new financial instruments will behave under a new stress is unknown. At the same time in the Internet age we, the great unwashed masses, can't be keep in complete obscurity like in good old time. Many now know ( or at least suspect ) that the neoliberal "show must goes on" after 2008 is actually going strongly at their expense. And while open rebellion is impossible, that results in lack of trust which represents a problem for financial oligarchy which rules the country. The poor working slobs are told be grateful for Walmart's low (poverty-subsidized) prices. Middle class is told that their declining standard of living is a natural result of their lack of competitiveness in the market place. Classic "bread and circuses" policy still works but for how long it will continue to work it is unclear.

But nothing is really new under the sun. To more and more people it is now clear that today the US is trying to stave off the inevitable decline by resorting to all kinds of financial manipulations like previous empires; yesterday, it was the British Empire and if you go further back, you get the USSR, Hapsburg empire, Imperial Russia, Spanish empire, Venetian empire, Byzantium and Roman empire. The current "Secretary of Imperial Wars" (aka Secretary of Defense) Ashton Baldwin Carter is pretty open about this:

“We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game.”

For the US elite it might be a time to rethink its neocon stance due to which the US is exposing ourselves to the enmity of the rising economic powers, and blowing serious cash to maintain it hegemony via maintaining huge military budget, financing wars and color revolutions in distant countries. In a way the US foreign policy became a financial racket, and racket can't last forever because it incite strong opposition from other countries.

Neoliberalism (aka casino capitalism) as a social system entered the state of decline after 2008. Like communism before it stopped to be attractive to people. But unlike communism it proved to have greater staying power, surviving in zombie state as finanfial institutions preserved political power and in some cases even enhanced it. It is unclear how long it will say in this state. Much depends on the availability of "cheap oil" on which neoliberal globalization is based.

But the plausible hypothesis is that this social system like socialism in xUSSR space before entered down slope and might well be on its way to the cliff. Attempts to neo-colonize other states by the West became less successful and more costly (Compare Ukraine, Libya and Iraq with previous instances of color revolutions). Some became close to XIX century colonial conquests with a lot of bloodshed (from half million to over a million of Iraqis, by different estimates, died ). As always this is mainly the blood of locals, which is cheap.

Libya and Ukraine are two recent examples. Both countries are now destroyed (which might be the plan). In Ukraine population is thrown in object poverty with income of less that $5 a day for the majority of population. And there is no other way to expand markets but to try to "neo-colonize" new countries by putting them into ominous level of debt while exporting goods to the population on credit. That is not a long term strategy as Greece, Bulgaria, and now Spain and Portugal had shown. With shrinking markets stability of capitalism in general and neoliberalism in particular might decrease.

Several researchers points to increased importance Central banks now play in maintaining of the stability of the banking system. That's already a reversal of neoliberal dogma about free (read "unregulated") markets. Actually the tale about "free markets", as far as the USA is concerned, actually was from the very beginning mainly the product designed for export (read about Washington consensus).

See also


Top updates

Softpanorama Switchboard
Softpanorama Search


NEWS CONTENTS

Old News ;-)

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

[May 24, 2017] Universities serve as finishing schools for the ruling class by Rob Montz

May 23, 2017

Originally from: Why Colleges Fold to Students' Anti-Intellectual Hysterics The American Conservative

Middlebury College just completed its final round of disciplinary hearings for students involved in March's violent disruption of a lecture by Charles Murray, the influential but controversial social scientist.

The punishments to date have been laughably lax. Guilty students have been presented with non-official "probation" letters that'll vanish upon graduation .

This toothless response reflects a deeper rot. Middlebury, like many prestigious colleges, has steadily gravitated away from its core educational mission and now serves primarily as a sort of finishing school for the ruling class. Professors and administrators alike are simply expected to shower students with affirmation-and then hand over a degree securing smooth entry into America's elite. College has become four years of expensive fun. This is what parents and students now demand.

This change-from institutions of learning to institutions of affirming-threatens the nation's future as colleges foster a vicious strain of anti-intellectualism.

At over $60,000 a year, Middlebury's tuition buys much more than books, lodging, and classes. Students also get a campus-wide square dance , dining halls that host culinary " world tours ," lavish fitness facilities, and an annual winter carnival complete with fireworks, a hot chocolate bar, and snow sculptures.

The student body is ultra-affluent. Middlebury is among a small handful of schools with more students from the top one percent of the income distribution than those from the bottom 60 percent . And on graduation, newly christened alums are typically funneled right back into their elite enclaves, taking jobs at places like Goldman Sachs, McKinsey, and Amazon .

... ... ...

Rob Montz is a fellow at the Moving Picture Institute. Find his work at: RobMontz.com. Check out his interview with TAC executive editor Pratik Chougule at Fearless Parent Radio: http://fearlessparent.org/free-speech-controversy-us-elite-universities-episode-104/

[May 24, 2017] Exxon Mobil has gone on a binge of share buy backs and dividend payments that combined with the shifting marketplace led to a credit rating downgrade last year:

May 24, 2017 | www.nakedcapitalism.com
Larry , May 23, 2017 at 7:10 am

Not to be lost in the shuffle is the amount of financial engineering that goes into creating unsustainable debt levels at fossil fuel companies. Exxon Mobil has gone on a binge of share buy backs and dividend payments that combined with the shifting marketplace led to a credit rating downgrade last year:

https://www.bloomberg.com/news/articles/2016-04-26/exxon-mobil-loses-top-credit-rating-it-held-since-depression

a different chris , May 23, 2017 at 8:47 am

..and share buybacks/dividends is what you do when there isn't anything else useful you can see to do with the money . or at least it was until predator capitalism became the thing. But for government-owing behemoths like Exxon-Mobile that is still true.

And actually it probably is predator capitalism because what I am talking about is a wind down of the assets existing in the firm, but as you point out they seem to be borrowing money to do this.

[May 24, 2017] Our collective response to global challenges such peak oil and global warming has been to bury our heads firmly in the sand and gamble our future on the comforting delusion

May 24, 2017 | www.nakedcapitalism.com
Temporarily Sane , May 23, 2017 at 4:00 am

Unless you are extremely wealthy or have connections to people who are, your wellbeing probably won't be on the list of "necessary purposes" if a doomsday scenario like the one the article discusses plays out.

After decades of bigging up consumer capitalism as the only "good life" worth living the reality of global warming now requires us to dismantle the system of gratuitous consumption if we are to avoid seriously compromising our species longevity (non-human life forms are even more threatened by extinction).

Our collective response has been to bury our heads firmly in the sand and gamble our future on the comforting delusion that consuming our way out of the crisis is possible until some awesome technology comes online at the 11th hour to save the day.

Part of the problem is climate change is framed as something that may happen in the future and that "innovation" and "creativity" will invent nifty new technologies that will save the day, no compromises required! (We won't think about the "issues" that will face the global south as the atmosphere heats up.)

Neoliberalism and its co-opting of the state, which prevents governments from passing legislation that does not benefit the capitalist class, is a massive stumbling block. The oligarchs and their enablers had no qualms throwing Greece under the bus and even less exploitng earthquake ravaged Haiti, as a well known former presidential candidate knows all about.

Neoliberal kleptocrats teaming up with neocon Blofeldian fantasists to save the world what could possibly go wrong?

HBE , May 23, 2017 at 8:01 am

gamble our future on the comforting delusion that consuming our way out of the crisis is possible until some awesome technology comes online at the 11th hour to save the day.

+10 agreed. Wunderenergie is one of the biggest collective delusions of our time.

justanotherprogressive , May 23, 2017 at 10:19 am

Lets be realistic here. You can interpret what I said any way you want, but as yet, there is no alternative to kerosene for airline travel ..so whether or not we stop using oil for other reasons, we are still going to need some for the airlines.

Sooo ..what are your ideas for fueling air flight? Because if you want to completely stop the use of oil, you'd better have some No, we are never going to nuclear power plants for airplanes.

Or maybe you think we will get rid of airplanes?

I would love it if we stopped using fossil fuels – I don't think we can do that entirely, but we can certainly cut back on their use with other actually CLEAN energy sources ..remember as with everything it is the dose to the environment that counts

[May 24, 2017] We turn away from nuclear at our peril. Right now, it's the only carbon-free technology that we actually know will work.

Notable quotes:
"... While many modeled scenarios have been published claiming to show that a 100% renewable electricity system is achievable, there is no empirical or historical evidence that demonstrates that such systems are in fact feasible On the basis of this review, efforts to date seem to have substantially underestimated the challenge and delayed the identification and implementation of effective and comprehensive decarbonization pathways. ..."
May 24, 2017 | www.nakedcapitalism.com
PlutoniumKun , May 23, 2017 at 5:30 am

I think the key thing to take from that article you link to is the demonstration that there has been massive investment in compact nuclear technology by the military (indeed, by several major miltaries) for nearly 70 years now. And its failed. The latest nuclear subs are still using pretty much the same basic reactor technology as the Nautilus 60 years ago, and almost all modern reactors are essentially scaled up versions of the same thing. The Soviets got closest in the 1960's with their lead bismuth reactors for the Alfa Class subs, but they couldn't make them reliable and cost effective.

So remember this next time someone starts arguing that the latest thing in smart, modular nuclear power is going to save the world – it doesn't matter whether its pebble bed reactors , thorium based fuel, sodium modulated cores, or whatever – countless billions of dollars, pounds, francs, yuen and roubles have been thrown into that technology by the military research establishments for many decades, with nothing to show for it.

In the meanwhile, wind and solar, with, in comparison, small change invested in research, has been advancing in cost and output terms in leaps and bounds and is proven practical in almost all environments.

Grumpy Engineer , May 23, 2017 at 9:38 am

Wind and solar are proven practical in almost all environments? Hardly. They're deeply impractical on any cold winter night with low wind. That's the real problem with wind and solar. How do you deal with the intermittency?

An all-renewable power grid can actually be accomplished when 70%+ of it is hydro. [Hydro actually has some controllability because you can let water pile up behind the dam for a later release.] But if hydro only provides 7% of your power needs (like it does in the US), the grid interconnection and ENERGY STORAGE requirements become deeply problematic.

Check out the following paper: Burden of proof: A comprehensive review of the feasibility of 100% renewable-electricity systems . To quote:

" While many modeled scenarios have been published claiming to show that a 100% renewable electricity system is achievable, there is no empirical or historical evidence that demonstrates that such systems are in fact feasible On the basis of this review, efforts to date seem to have substantially underestimated the challenge and delayed the identification and implementation of effective and comprehensive decarbonization pathways. "

When I read articles claiming that 100% renewables is feasible, the first thing I look for is a description of the energy storage requirements. Specifically, how many gigawatt-hours. If that information isn't described, their analysis is incomplete. Do you know how many GW-hr it would take for renewables to supply all of US electricity? Do you know how large the biggest battery energy storage system is in comparison? The answers are NOT pretty.

We turn away from nuclear at our peril. Right now, it's the only carbon-free technology that we actually know will work.

Knot Galt , May 23, 2017 at 11:45 am

The SCALE at which we currently live is wasteful and unnecessary for survival. Our current thinking of energy needs is based on our capitalistic consumer based life style and economy. Therefore, your assumption on energy needs is based on maintaining the current economic models which we all know to be falling apart at the seams.

It is obvious no matter how many of us dig in that this next level of change is unstoppable. What may be left will be the random outcomes that exist with survivability. Feasible will be what ever gets you to the next day?

Grumpy Engineer , May 23, 2017 at 12:30 pm

The "scale" at which we live is indeed wasteful and unnecessary for survival, but people LIKE it. People don't want to live in 250 square-foot "microhomes" and bicycle to work every day regardless of the weather. And how would we prevent people from doing otherwise? Seize and scrap their cars? Kick people out of their 3500 square-foot McMansions and tear them down? It would be the largest forced migration in human history.

Given that people LIKE the modern lifestyle, I see that we have three choices:

[1] Let people live their lives and watch carbon pour into the sky because we can't get enough renewables online to make a meaningful difference. Wait to see if it all crashes.

[2] FORCE people to embrace a leaner existence. At gunpoint if necessary.

[3] Let people live their lives and use low-footprint, carbon-free energy technology that actually works (like nuclear) to minimize the impact on the environment.

Population levels in developed countries are stabilizing. If we quit growing food for biofuels, we could actually let a lot of farmland revert to a natural state. I don't think we're doomed yet, but as of today we're heading down path #1.

This is why a number of environmental activists have embraced nuclear:
http://www.motherjones.com/environment/2013/01/pro-nuclear-power-environmental-movement

Vastydeep , May 23, 2017 at 2:03 pm

@Grumpy Engineer: " we have three choices:"

What do you mean "we" kemosabe?

I agree that we are currently heading down path #1. The problem is, long before things get mandatory-Jimmy-Carter-cardigan-sweater unpleasant, the climate will have changed enough that crops will start failing. Maybe not huge failures, but if you're subsisting now, you won't be then. When masses of people start starving, #1 turns into #2 pretty quickly. The 4 Horsemen travel together

"Some are born lean, some achieve leanness " We need to get serious about #2 before we have "leanness thrust upon us."

[May 23, 2017] I would argue that current stock market prices based on speculation, in the way that RE prices were during the RE bubble

May 23, 2017 | www.nakedcapitalism.com
"Class Struggle Still Gets the Goods" [ Jacobin ].

"Piketty's account of how wealth builds over time centers on savings. In his telling, the capitalist is prudent, dutifully investing large amounts of his income every year into capital goods. As these investments steadily accumulate, so too does the national wealth (which, according to this account, is the sum of all the previous years of savings minus depreciation). When the quantity of total past savings becomes very high in relation to the country's annual income, the seemingly permanent 5 percent rate of return on wealth drives up the capital share. The problem with Piketty's story, which Naidu and his peers get at in various ways, is that it doesn't match reality. Assets like real estate, equity, and debt are not assessed according to the quantity of savings that go into creating them. They are assessed according to the expectations of how much income those assets will deliver to their owners in the future. Put simply: asset values are forward-looking, not backward-looking. "

Jim A , May 23, 2017 at 2:37 pm

"They are assessed according to the expectations of how much income those assets will deliver to their owners in the future."-That is one of the three main ways of valuing assets. If you are a "buy and hold" investor, looking to bank your dividends or rents, that is what you use. Another is the "salvage value." If you cut up the asset and sell the parts what are they worth? That is what is often used when judging a business as collateral for a loan. A third is the speculative value. A price based on an anticipated higher future selling price for the asset, irrespective of future dividend/rents or the underlying salvage price of the asset.

I would argue that current stock market prices based on speculation, in the way that RE prices were during the RE bubble. I would further argue that this is in great part due to the increasing concentration of wealth. Basically, rich people are putting more money into Wall Street's hands because they have it, and this is raising asset prices DESPITE the fact that the companies involved aren't actually selling more product in aggregate. It's the classic case of inflation, more money chasing a fixed supply of "

[May 23, 2017] The fact that the US's status as reserve currency in large part due to oil, ensures the oil industry will not be phased out or collapse from internal pressure

Notable quotes:
"... Actually the US position of being able to control the world reserve currency is due to its having been able to maintain military dominance over the rest of the world.. And the primary role of the armies of the Empire has been to maintain access to the world oil supply by simply printing money and using it to keep the oil flowing into our SUV tanks. ..."
"... No amount of bloodshed can change the fact that a finite resource that is in high demand will eventually become scarce. In the case of an energy source the measure of impending scarcity is decreasing EROI. Cooking oil out of tar sands, drilling from floating platforms 10,000′ above the sea bed, squeezing oil out of shale rock, and trying to build platforms in icebound arctic seas-- could there be more graphic signs that the end is nigh? ..."
May 23, 2017 | www.nakedcapitalism.com
HBE , May 23, 2017 at 8:16 am

I believe the fact that the US's status as reserve currency in large part due to oil, ensures the oil industry will not be phased out or collapse from internal pressure.

It is too integral to the hegemon's status to be allowed to fail, ever.

The US is shortsighted enough that the geopolitical and economic benefits of an oil backed reserve currency, will likely outweigh the negative midterm effects of climate change and environmental instability.

The most likely scenario is, oil isn't going anywhere until climate change gets so bad the US (nor anyone else) can play hegemon.

craazyboy , May 23, 2017 at 8:31 am

Oh, dunno 'bout that. Has the perfect combination of re-flation and depressionary cost increase due to currency being whacked 50-75%. Neo dreamlike quality stuff. Cut 100% of the 99ers purchasing power combined with depressed economy and increased job dependence to pay off debt overhang.

Black donut hole economics – without any human intervention necessary. The Neolibcon World runs itself – hands off! Self driving global economy. WW3 as a jobs guarantee. But no one shows up because gas costs too much. Stagflation sets in. Everyone waits it out in Flyover Camp. Malls start doing well.

a different chris , May 23, 2017 at 8:59 am

>oil isn't going anywhere

I do agree that the US will be a big problem.. but it's less than 5% of the world's population. So when you say "oil isn't going anywhere".. that might just be exactly the problem.

It won't be going into the Chinese/Indian's/Europeans suddenly non-existent gas tanks. It may literally not go anywhere at all just sit in Oklahoma until our government finds a way to force feed it down our (again, 320million/7+billion) American throats.

Thor's Hammer , May 23, 2017 at 2:35 pm

"US's status as reserve currency in large part due to oil"

Actually the US position of being able to control the world reserve currency is due to its having been able to maintain military dominance over the rest of the world.. And the primary role of the armies of the Empire has been to maintain access to the world oil supply by simply printing money and using it to keep the oil flowing into our SUV tanks.

No amount of bloodshed can change the fact that a finite resource that is in high demand will eventually become scarce. In the case of an energy source the measure of impending scarcity is decreasing EROI. Cooking oil out of tar sands, drilling from floating platforms 10,000′ above the sea bed, squeezing oil out of shale rock, and trying to build platforms in icebound arctic seas-- could there be more graphic signs that the end is nigh?

Moneta , May 23, 2017 at 8:18 am

which can now generate more energy than oil for every unit of energy invested .
--
I doubt all energy inputs were included. Our entire economic system runs on oil and the development of new technology depends on the entire system. Huge sunk costs.

No big technological developments without transportation which is oil intensive something tells me they are not including the energy requirements of all global infrastructure that permits the development it these new technologies.

Also, I thought they were starting to see problems with the supply of silicon

Normal , May 23, 2017 at 8:54 am

problems with the supply of silicon

Sarcasm? I couldn't tell from the context.

Moneta , May 23, 2017 at 10:34 am

http://www.newyorker.com/magazine/2017/05/29/the-world-is-running-out-of-sand

http://www.economist.com/blogs/economist-explains/2017/04/economist-explains-8

[May 23, 2017] The recent news as for Rich Seth murder might take Trump probe in a somewhat different direction and put additional pressure of neoliberal, Pelosi-Clinton part of the party leadership

Notable quotes:
"... the recent news as for Rich Seth murder might take Trump probe in a somewhat different direction and put additional pressure of neoliberal, Pelosi-Clinton part of the party leadership. If half of what was recently reported is true, Clapper-Brennan "Intelligence assessment" looks more and more like Warren Commission report. ..."
"... ... Then, Newt Gingrich, on Fox News, says: " (Rich) was assassinated at 4 in the morning after having giving Wikileaks something like 53,000 emails and 17,000 attachments. Nobody's investigating that. And what does that tell you about what is going on?" ..."
May 23, 2017 | economistsview.typepad.com
RGC -> Fred C. Dobbs, May 23, 2017 at 08:27 AM
If Trump goes, Pence becomes president.

Pence is worse than Trump. And he is more likely to get two terms.

In the meantime, nothing gets fixed.

Anyone who wants single-payer, better jobs, etc. should focus on the 2018 elections and work for people who can oust people like Nancy Pelosi in the primaries and Republicans in the general.

libezkova, May 23, 2017 at 08:52 AM

"Pence is worse than Trump. And he is more likely to get two terms.In the meantime, nothing gets fixed."

True. Also the recent news as for Rich Seth murder might take Trump probe in a somewhat different direction and put additional pressure of neoliberal, Pelosi-Clinton part of the party leadership. If half of what was recently reported is true, Clapper-Brennan "Intelligence assessment" looks more and more like Warren Commission report.

http://dianawest.net/Home/tabid/36/EntryId/3559/A-Seth-Rich-Chronology-Part-1.aspx

Also at

http://www.unz.com/mwhitney/seth-rich-craig-murray-and-the-sinister-stewards-of-the-national-security-state/#comment-1880788

... Then, Newt Gingrich, on Fox News, says: " (Rich) was assassinated at 4 in the morning after having giving Wikileaks something like 53,000 emails and 17,000 attachments. Nobody's investigating that. And what does that tell you about what is going on?"

Well, we know that Kim's chances of attracting Congressional interest was just about nil, but then Sean Hannity invited Dotcom to discuss his evidence in the Seth Rich case on his shows.

Stay tuned. Public invitation Kim Dotcom to be a guest on radio and TV. #GameChanger Buckle up destroy Trump media. Sheep that u all are!!! https://t.co/3qLwXCGl6z

- Sean Hannity (@seanhannity) May 20, 2017

Most recently, he tweeted:

Complete panic has set in at the highest levels of the Democratic Party. Any bets when the kitchen sink is dumped on my head?? https://t.co/Zt2gIX4zyq
- Sean Hannity (@seanhannity) May 22, 2017

[May 22, 2017] Medical insurance coverage is measure of social security for nearly everyone amd as such is close to Four Freedoms that were articulated by FDR

Notable quotes:
"... Being able to access care is an important freedom as well ..."
"... Trump as candidate promised no cuts to Medicaid. But then he had to get the Paul Ryan seal of approval so it is a massive cut that will leave 10 million people uninsured: ..."
"... Republicans have been using free lunch economic theory to make increasingly bigger promises leading to Trump promising universal health care with no taxes or mandates that will give everyone many more choices on getting far more health care with it costing much less. Trump won by being more extreme and explicit in the free lunch promises the Republican started making with Reagan. ..."
"... It's just standard Reaganomics... the same propaganda (trickle-down & rising tides) & standard tax cuts for the rich based on supply side b.s. ..."
May 22, 2017 | economistsview.typepad.com

Sanjait, May 22, 2017 at 11:36 AM

This is an important concept that has been fought for but hasn't been well articulated by Dems since Four Freedoms.

ACA is an example. It provides insurance coverage for many and a measure of security for nearly everyone. It reduces the risk of living as an American, nominally limiting the "freedom" to benuninsurednor buy crappy insurance in exchange for giving everyone enhanced ability to access preventative and major medical care, even if low income or stricken with a pre-ex medical condition.

Being able to access care is an important freedom as well .

Dems really face planted politically trying to sell this notion, but now that it is under threat of being taken away, Americans suddenly realized they like it and think it is right that people should have this access.

pgl - , May 22, 2017 at 11:50 AM
Exactly. I wonder if the folks have this captured in their little freedom indices.
ilsm - , May 22, 2017 at 03:32 PM
my freedom index has nothing to do with hospital insurance, or NCA. DNC (as good as Cato's) freedom index very far right of Thoreau!
DrDick , May 22, 2017 at 03:32 PM
For conservatives, freedom means the freedom of the rich and corporations from taxes and restrictions on their actions and nothing else.
pgl , May 22, 2017 at 11:53 AM
Trump as candidate promised no cuts to Medicaid. But then he had to get the Paul Ryan seal of approval so it is a massive cut that will leave 10 million people uninsured:

https://www.washingtonpost.com/business/economy/trump-to-propose-big-cuts-to-safety-net-in-new-budget-this-week/2017/05/21/62c01f44-3e34-11e7-adba-394ee67a7582_story.html?utm_term=.01d130c2f913

More tax cuts for the rich! That is their entire agenda.

mulp - , May 22, 2017 at 12:44 PM
Progressives see conservatives as winning by hijacking the Republican Party and being more and more radical, making Congress totally incapable of doing anything and increasingly popular, and getting Trump elected with a minority of the vote to an environment where he can accomplish even less that very moderate Obama and a Democratic majority, and they want Democrats to become more like Republicans:

able to win power, but unable to deliver on anything.

Republicans have been using free lunch economic theory to make increasingly bigger promises leading to Trump promising universal health care with no taxes or mandates that will give everyone many more choices on getting far more health care with it costing much less. Trump won by being more extreme and explicit in the free lunch promises the Republican started making with Reagan.

Progressives want a Bernie elected making big free lunch promises.

It's not about delivering, but about winning.

TANSTAAFL

Longtooth , May 22, 2017 at 03:38 PM
It's just standard Reaganomics... the same propaganda (trickle-down & rising tides) & standard tax cuts for the rich based on supply side b.s.

[May 22, 2017] Making Russia a scapegoat for political tension connected with the crumbling of the neoliberal society due to austerity, inequality and impoverishment of the lower 80% of population

Notable quotes:
"... "Corporate media and the intelligence community are united in making the Russia Federation the scapegoat for the crumbling of the West that is due to austerity, inequality and impoverishment. If a world war breaks out, that is it." ..."
"... Donald Trump used alt-right messaging to get into the White House but he and his third-rate staff haven't the slightest clue of what gave rise to the deplorables in the first place and how to address the root [causes of] despair of the western working class. ..."
May 22, 2017 | economistsview.typepad.com

libezkova, May 22, 2017 at 03:58 PM

A comment from MoA contains an insightful observation

"Corporate media and the intelligence community are united in making the Russia Federation the scapegoat for the crumbling of the West that is due to austerity, inequality and impoverishment. If a world war breaks out, that is it."

http://www.moonofalabama.org/2017/05/the-special-council-investigation-will-be-bad-for-trump.html#c6a00d8341c640e53ef01b7c8f9d50c970b

VietnamVet | May 18, 2017 9:19:08 PM | 75

This is tragic. Corporate media and the intelligence community are united in making the Russia Federation the scapegoat for the crumbling of the West that is due to austerity, inequality and impoverishment.

If a world war breaks out, that is it. Donald Trump used alt-right messaging to get into the White House but he and his third-rate staff haven't the slightest clue of what gave rise to the deplorables in the first place and how to address the root [causes of] despair of the western working class.

They will blunder about in lost befuddlement until they vanish.

[May 21, 2017] The Connection Between Finance and Politics Has Been Under-Researched for Years by ProMarket writers

Notable quotes:
"... GR: Then in the beginning of the 2000s comes the beginning of your work with Professor Raghuram Rajan on "rules of the game." You looked at who's setting the rules of the game, who is influencing the rules ofthe game, and what we learn. ..."
"... GR: For decades, economists and other scholars dedicated a lot of intellectual energy to look at the relationship between companies, shareholders and executives, and between shareholders and boards. Maybe there's not enough intellectual energy going into the question of who sets the rules of the game that determine the outcomes and the dynamics in finance? ..."
"... GR: When it comes to politics, many times data aremuch more complicated and debatable, and ambiguous in many ways. When you deal with numbers and with asset prices, maybe it's easier to go with the data than when you go into the realms of politics. ..."
"... GR: Let's talk a little bit about the research that will be presented in this conference. I'll start with the most politically-sensitive paper that we have, a very interesting paper looking into the Obama administration and more than 2,000 meetings that President Obama and his chief aides had with businessmen over the last eight years. I don't know if you could call it crony capitalism, but whatever is happening out there didn't start in the Trump administration. ..."
"... GR: Another paper looks again at the United States and the way that decisions on bailouts of banks were decided after the financial crisis. Can you elaborate a bit on that? ..."
"... GR: When you're ignoring politics, the outcome many times would be to give more power in the market of ideas and in policies to vested interests, to the powerful? ..."
"... GR: Luigi Zingales, thank you very much. ..."
May 19, 2017 | promarket.org

Ahead of the Stigler Center'sconference on the political economy of finance, we interviewed Stigler Center Director Luigi Zingales about the motivation behind the first-of-its-kind conference.

On June 1-2, the Stigler Center will host a first-of-its-kind conference focusing on the role of politics in finance research. In the last twenty years, political considerations have played an increasingly important role in financial economics: from the design of the rules that make financial markets viable to politically-motivated changes in bankruptcy law, from political connections in firms to the effects of political uncertainty on investments. Yet up until now, no conference has been dedicated to it.

Ahead of this conference, we interviewed University of Chicago Booth School of Business Professor and Stigler Center Director Luigi Zingales [also, one of the editors of this blog] about the motivation behind it and the political economy of finance.

https://www.youtube.com/embed/jB1b2T0QtFk

The following is a transcript of the interview, slightly edited for clarity:

Guy Rolnik: I was surprised to understand that, actually, there are not many conferences on the politics of finance.

GR: Why is it that there aren't many conferences on the political economy of finance? You would think that politics has a lot to do with finance.

LZ: I think historically, people have not looked at that aspect a lot. I would like to divide the brief history of the academic field of finance into three periods: I would call the first one-that started in the late '50s-the Modigliani and Miller period. Modigliani and Miller, to simplify to the extreme, said that the way you slice a pizza does not change the size of the pizza. This is a period in which basically finance is irrelevant, and the only frictions that matter are probably only tax frictions.

Then, starting with the '70s, people realized: "Wait a second. If you start to divide a pizza before you produce the pizza, maybe this will have some impact on how the pizza is produced." This is what in jargon goes under "agency," or "asymmetric information." Essentially, the way you allocate the cash flows of the firm has some impact on the way the firm is run.

However, all this is in the context of, "The external rules are fixed. We're in a very predetermined society and the rules are fixed. That's what we do."

Starting with the '90s and then the 2000s, people realized that the rules are not fixed, that actually the changing nature of the rules is very important, and of course, political gain is what makes the rules change.

GR: So this is where the 2008 financial crisis comes in, and after the financial crisis people started to develop a lot of interest in the role of politics in financial crises and the role of politics in finance.

LZ: To be honest, I think things started before the financial crisis. I think probably the intellectual origin of all this is the theory of incomplete contracts developed by Grossman and Hart, where because the cash flow is bargain ex post, then the rules are more fluid. Then this call for renegotiation, or re-discussion, which is to a large degree about politics, comes into the game.

One of the early papers about this is a paper by Patrick Bolton and Howard Rosenthal-a finance guy and a political scientist-looking at how renegotiation of debt and the rules for bankruptcy change dramatically with the business cycle. Every major financial crisis in the United States had the bankruptcy rules restated to some extent, or reshaped.

Traditionally, finance people thought about bankruptcy as a given. Now [they] realize it is not a given, that the rules change. How do they change? They're politically determined. Of course, for the misbeliever, the financial crisis brought this to an attention that could not be ignored.

We've seen the work by Amir Sufi and Atif Mian and Francesco Trebbi looking at the political determinants of the intervention on TARP, and the work that Amit Seru and co-authors have done on the politics around regulation and how ineffective regulation is because of political constraints.

I think that by the beginning of the second decade of the 21st century, politics has become mainstream and was overdue to have a conference dedicated to it.

GR: Then in the beginning of the 2000s comes the beginning of your work with Professor Raghuram Rajan on "rules of the game." You looked at who's setting the rules of the game, who is influencing the rules ofthe game, and what we learn.

LZ: I think that in the late '90s and early 2000, there was a big interest inwhy countries are not more financially developed. Thanks to the work of Andrei Shleifer and Robert Vishny and others, there was this importance of the law as a major factor.

Raghuram and I asked the very simple question: if it is as simple as importing a code from another country, why don't more countries do it? It cannot be just a lack of technical expertise. Lawyers are expensive but can be imported. In fact, Russia did import the best lawyers from the United States. I'm not sure it was a big success.

The conclusion was, no, it's lack of political will. We started to open the debate for, say, "Look, finance does benefit most people, but hurts others." So there is a political economy even with [the] introduction of financial laws.

GR: For decades, economists and other scholars dedicated a lot of intellectual energy to look at the relationship between companies, shareholders and executives, and between shareholders and boards. Maybe there's not enough intellectual energy going into the question of who sets the rules of the game that determine the outcomes and the dynamics in finance?

LZ: I think that the role of conferences like the one here at the Stigler Center is to bring together scholars who work in a certain area, and also give confidence that this area is important, and attract more research.

You're absolutely right, people tend to research where the data are. The famous old joke about economists, that they look where the light is, not where they lost the key, has some element of truth. In finance, there are things that we can observe very well and compensation is one. You're going to have a lot of papers about managerial compensation.

But I think what is important is that even data are endogenous, in a sense. Compustat ExecuComp, which is the primary data source to study this stuff, was created in the early '90s as a result of academic interest in executive compensation.

Going back in history, CRSP, the Center for Research in Security Prices here at Chicago, which is the main data source for security prices research, was created by Jim Lorie, a faculty here, who saw people like Eugene Fama and others interested in this topic and said, "We have to create a data set to analyze."

The role of academia is, in a sense, to open new avenues and then have a data provider follow.

GR: When it comes to politics, many times data aremuch more complicated and debatable, and ambiguous in many ways. When you deal with numbers and with asset prices, maybe it's easier to go with the data than when you go into the realms of politics.

LZ: There are two aspects: one, there are fewer data coming from thepolitical world than from the asset pricing world, even from corporate finance. Even those data tend not to be disclosed and available as much as data on companies. Data on lobbying now start to be widely available. Data on campaign contributions start to be available. The data on corporate donations tend to be more difficult. They're not as established.

Then there is a more difficult problem to tackle: in a sense, politics is much more fluid. Whenever data are available, the deals move somewhere else. As researchers, we're always fighting the last war because we look at what happened in the past, but politics run ahead.

GR: Let's talk a little bit about the research that will be presented in this conference. I'll start with the most politically-sensitive paper that we have, a very interesting paper looking into the Obama administration and more than 2,000 meetings that President Obama and his chief aides had with businessmen over the last eight years. I don't know if you could call it crony capitalism, but whatever is happening out there didn't start in the Trump administration.

LZ: Certainly. I think it's actually very healthy, and one of the goals of this conference is to bring this research from analyzing foreign countries to analyzing the United States. It's much easier to point fingers toward other people. When Ray Fisman wrote the first paper on the political connections of Suharto, everybody clapped. Why? Because it's Indonesia and corruption in Indonesia is something that we think is granted.

Now, when people apply the same technique to the United States of America, a lot of people [are] up in arms and say, "Oh, it's impossible. This is not corruption." But if it worked as a technique for Suharto, why can't it work for Trump, or for Obama, or for people before?

I don't think that these results are specific to the Obama administration. I think that the data are better in recent years, and so, the paper analyzed that rather than analyzing George W. Bush, or Bill Clinton.

GR: Another paper looks again at the United States and the way that decisions on bailouts of banks were decided after the financial crisis. Can you elaborate a bit on that?

LZ: Again, I think that it's not surprising to international scholars that the allocation of aid, the allocation of credit, and particularly the allocation of bailout credit to banks is very politically-determined.

This research is showing that surprise, surprise, without a doubt, in the United States the same happens. I think it's a good example [that]what we've learned analyzing countries around the world can be applied to the United States.

GR: We do look internationally at this conference, and we have an interesting paper on Chile. Chile is a very interesting case for many reasons. One of them, of course, is that for many decades, Chile was the "poster child" of a successful market economy in South America. Recently, people have been looking into the details of what's happening in this economy, and they see some other perspectives on Chile that were not as salient as before.

LZ: I will distinguish two things: First of all, I think that Chile is a fantastic example of the difference between being pro-market and being pro-business. I think that Chile has been very much pro-business, but there is no doubt that it was a huge success in terms of growth. On the other hand, I think there is not enough antitrust policies, or attention to political connections. The result is that the income distribution is extremely unequal, and this really puts, in my view, bounds on future growth.

I think one needs to reconsider the limitations of looking only at micro-measures of market flexibility, and not at the political economy of the country.

In addition, like in many countries, [in Chile] we have a phenomenon where privatizations on the one hand improved efficiency-because the government is not very good at running things-but were probably done to the benefit of some people. One of the major mines was sold to the then son-in-law of Pinochet who now, ironically, was found to [have] actually [paid] money to the son of the current president, [Michelle] Bachelet. This shows that it's not right or left, it is basically crony capitalism.

GR: And China?

LZ: China is a phenomenal example. There is a very exciting paper looking at the way loans are made, and the political incentives, not only the economic incentives, that are present in China.

We tend to look at China with too much of a Western view, not realizing that in China, in every major company there is a representative of the Communist Party who basically oversees the company. These guys tend to have political incentives that are different than the standard market incentives. I think understanding better the interaction between the two is a fascinating topic.

GR: To sum up our discussion: politics is key when it comes to finance, and we should research the relationship between the political world and finance more. Are there any specific things that you think are under-researched today, or over-researched? From a societal point of view, what would be the right research agenda when it comes to finance today?

LZ: First of all, it's very difficult to ask an academic what is the right research agenda because most of the people will answer what they're doing this moment, so I don't want to fall into this trap. In general, the connection between finance and politics has been under-researched for years, and the goal of this conference is precisely to motivate more research. I think there is a need to apply more creative and different approaches.

I think that generally in academia, what tends to be overdone is research that's based on data that areeasily available, with techniques that are fairly well-established, because the cost of production is low, the value added is also low, but also, the risks tend to be low.

I think that what good researchers should do is to be more ambitious, take more risks-especially after you get tenure, there is no justification not to take more risks.

GR: Do economists need help from other disciplines when they're going into the realm of political economy of finance?

LZ: I think economists need help in other disciplines regardless. There was a long period in which economists were sort of colonialists, and they were moving to other fields, ignoring, or not really understanding the other fields, but just trying to grab some of those questions.

I think that those times, by and large, are gone. I think there is a lot of good research interacting psychology with economics. I think that is less so, for example, in sociology. I think that sociologists and economists tend to not interact a lot, and I think there are great opportunities there.

I think also with political scientists, there are more economists acting as political scientists-there is a bit less of an integration. I think that would be helpful, especially in areas like finance. I think if you are in the political economy section of an economics department, you naturally interact with political scientists.

When you come to business school, and you do finance, or you do IO, you tend to be less well-integrated.

GR: Some economists shy away from politics for many reasons, but correct me if I'm wrong: the deeper we go into the political economy of finance, we'll see that politics has a lot of influence on the outcomes of the financial markets, and it will force us to think much more about politics.

LZ: I would also say the opposite. I think that economists, and academics in general, have a huge impact on what happens in the political world. Not immediately, not individually, as they had in academia by themselves, but the academic thinking isa crucial part in shaping politics.

It's very hard to do lobbying without some ideas to support the lobbying. My fear is that academics are not sufficiently aware of their impact. Jean-Paul Sartre used to say you cannot not choose because not choosing is choosing not to choose. I would like to paraphrase and say you cannot ignore politics because ignoring politics is choosing a particular political perspective of ignoring it. You are announcing a particular view, you're not abstaining from it.

The attitude of many academics that say "I do science, I have nothing to do with politics"-they are doing politics in another way.

GR: When you're ignoring politics, the outcome many times would be to give more power in the market of ideas and in policies to vested interests, to the powerful?

LZ: I think that that could be an outcome. It's not necessarily an outcome, but that could be an outcome. I'm just saying that you should be aware of the consequences of your actions because not acting is an action.

GR: Luigi Zingales, thank you very much.

LZ: You're welcome.

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy .

[May 21, 2017] Neoliberal Democrats seek to create the same tribablist/identity voting block on the left that the republicans have on the right

Notable quotes:
"... Neoliberal Democrats seek to create the same tribablist/identity voting block on the left that the republicans have on the right. The is why people like sanjait get totally spastic when progressives criticize the party. ..."
"... Problem I have with the corporatist democrats is they're trading away the working class gains of the new deal in order to appease the centrist Republicans. Meanwhile the Centrist Republicans are breaking towards the fascist right wing of the party. ..."
"... Corporatism and financialization are the cornerstones of wealth consolidation and political capture on the one hand and reduced competition, wages, and innovation on the other hand. ..."
May 21, 2017 | economistsview.typepad.com

Gibbon1 - , May 19, 2017 at 04:59 PM

The current Democratic Party was handed two golden opportunities and blew both of them. Obama blew the 2008 financial crisis. And Hillary Clinton blew the 2016 election.

If you have a tool and the tool it broken you try to fix it. One doesn't pretend there is nothing wrong. The difference between neoliberal democrats and progressives is they differ on what's wrong.

Neoliberal Democrats seek to create the same tribablist/identity voting block on the left that the republicans have on the right. The is why people like sanjait get totally spastic when progressives criticize the party.

Progressives seek to create an aggressive party that represents the interests of working class and petite bourgeoisie. That is why you see progressives get spastic when the corporate democrats push appeasement policies.

Gibbon1 - , May 20, 2017 at 12:38 PM
Problem I have with the corporatist democrats is they're trading away the working class gains of the new deal in order to appease the centrist Republicans. Meanwhile the Centrist Republicans are breaking towards the fascist right wing of the party.

So not only are working class people losing their gains, but those gains are being traded away for nothing.

RC AKA Darryl, Ron - , May 20, 2017 at 02:27 PM
My problem is that and more. We should have been headed in the opposite direction these last fifty years.

Public daycare and universal pre-K would have been a good idea in the sixties.

Now they are so long overdue that it is pathetic.

Corporatism and financialization are the cornerstones of wealth consolidation and political capture on the one hand and reduced competition, wages, and innovation on the other hand.

[May 21, 2017] Now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart

Notable quotes:
"... Over the last thirty years the power of the Manufacturing and Infrastructure concerns has fallen dramatically. So now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart. ..."
"... According to former CIA director Richard Helms, when Allen Dulles was tasked in 1946 to "draft proposals for the shape and organization of what was to become the Central Intelligence Agency," he recruited an advisory group of six men made up almost exclusively of Wall Street investment bankers and lawyers. ..."
"... Dulles himself was an attorney at the prominent Wall Street law firm, Sullivan and Cromwell. Two years later, Dulles became the chairman of a three-man committee which reviewed the young agency's performance. ..."
"... So we see that from the beginning the CIA was an exclusive Wall Street club. Allen Dulles himself became the first civilian Director of Central Intelligence in early 1953. ..."
"... The current Democratic Party was handed two golden opportunities and blew both of them. Obama blew the 2008 financial crisis. And Hillary Clinton blew the 2016 election. ..."
"... Neoliberal Democrats seek to create the same tribablist/identity voting block on the left that the republicans have on the right. The is why people like sanjait get totally spastic when progressives criticize the party. ..."
May 21, 2017 | economistsview.typepad.com

Gibbon1 , May 19, 2017 at 04:24 PM

Among the rich I think there were three groups based on where their wealth and interests laid.

Banking/Insurance industry.
Distribution/logistics.
Manufacturing and Infrastructure.

Over the last thirty years the power of the Manufacturing and Infrastructure concerns has fallen dramatically. So now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart.

libezkova - , May 20, 2017 at 09:03 PM
"Over the last thirty years the power of the Manufacturing and Infrastructure concerns has fallen dramatically. So now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart."

This trend does not apply to Military-industrial complex (MIC). MIC probably should be listed separately. Formally it is a part of manufacturing and infrastructure, but in reality it is closely aligned with Banking and insurance.

CIA which is the cornerstone of the military industrial complex to a certain extent is an enforcement arm for financial corporations.

Allen Dulles came the law firm that secured interests of Wall Street in foreign countries, see http://www.informationclearinghouse.info/article30605.htm )

According to former CIA director Richard Helms, when Allen Dulles was tasked in 1946 to "draft proposals for the shape and organization of what was to become the Central Intelligence Agency," he recruited an advisory group of six men made up almost exclusively of Wall Street investment bankers and lawyers.

Dulles himself was an attorney at the prominent Wall Street law firm, Sullivan and Cromwell. Two years later, Dulles became the chairman of a three-man committee which reviewed the young agency's performance.

The other two members of the committee were also New York lawyers. For nearly a year, the committee met in the offices of J.H. Whitney, a Wall Street investment firm.

According to Peter Dale Scott, over the next twenty years, all seven deputy directors of the agency were drawn from the Wall Street financial aristocracy; and six were listed in the New York social register.

So we see that from the beginning the CIA was an exclusive Wall Street club. Allen Dulles himself became the first civilian Director of Central Intelligence in early 1953.

The prevalent myth that the CIA exists to provide intelligence information to the president was the promotional vehicle used to persuade President Harry Truman to sign the 1947 National Security Act, the legislation which created the CIA.iv

But the rationale about serving the president was never more than a partial and very imperfect truth...

Gibbon1 - , May 19, 2017 at 04:59 PM
The current Democratic Party was handed two golden opportunities and blew both of them. Obama blew the 2008 financial crisis. And Hillary Clinton blew the 2016 election.

If you have a tool and the tool it broken you try to fix it. One doesn't pretend there is nothing wrong.

The difference between neoliberal democrats and progressives is they differ on what's wrong.

Neoliberal Democrats seek to create the same tribablist/identity voting block on the left that the republicans have on the right. The is why people like sanjait get totally spastic when progressives criticize the party.

Progressives seek to create an aggressive party that represents the interests of working class and petite bourgeoisie. That is why you see progressives get spastic when the corporate democrats push appeasement policies.

[May 21, 2017] CIA is the cornerstone of the military industrial complex and, to a certain extent, an enforcement arm for financial corporations

May 21, 2017 | economistsview.typepad.com

DrDick, May 19, 2017 at 04:23 PM

The same as every other Republican since Eisenhower, lie to them.
Gibbon1, May 19, 2017 at 04:24 PM
Among the rich I think there were three groups based on where their wealth and interests laid.

Banking/Insurance industry.
Distribution/logistics.
Manufacturing and Infrastructure.

Over the last thirty years the power of the Manufacturing and Infrastructure concerns has fallen dramatically. So now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart.

libezkova, May 20, 2017 at 09:03 PM
"Over the last thirty years the power of the Manufacturing and Infrastructure concerns has fallen dramatically. So now we have a government dominated by Banking and Distribution, think Goldman Sacks and Walmart."

This trend does not apply to Military-industrial complex (MIC). MIC probably should be listed separately. Formally it is a part of manufacturing and infrastructure, but in reality it is closely aligned with Banking and insurance.

CIA which is the cornerstone of the military industrial complex to a certain extent is an enforcement arm for financial corporations.

Allen Dulles came the law firm that secured interests of Wall Street in foreign countries, see http://www.informationclearinghouse.info/article30605.htm )

According to former CIA director Richard Helms, when Allen Dulles was tasked in 1946 to "draft proposals for the shape and organization of what was to become the Central Intelligence Agency," he recruited an advisory group of six men made up almost exclusively of Wall Street investment bankers and lawyers.

Dulles himself was an attorney at the prominent Wall Street law firm, Sullivan and Cromwell. Two years later, Dulles became the chairman of a three-man committee which reviewed the young agency's performance.

The other two members of the committee were also New York lawyers.i For nearly a year, the committee met in the offices of J.H. Whitney, a Wall Street investment firm.ii

According to Peter Dale Scott, over the next twenty years, all seven deputy directors of the agency were drawn from the Wall Street financial aristocracy; and six were listed in the New York social register.iii

So we see that from the beginning the CIA was an exclusive Wall Street club. Allen Dulles himself became the first civilian Director of Central Intelligence in early 1953.

The prevalent myth that the CIA exists to provide intelligence information to the president was the promotional vehicle used to persuade President Harry Truman to sign the 1947 National Security Act, the legislation which created the CIA.iv

But the rationale about serving the president was never more than a partial and very imperfect truth...

[May 21, 2017] The Connection Between Finance and Politics Has Been Under-Researched for Years

May 21, 2017 | economistsview.typepad.com

likezkova, May 20, 2017 at 11:22 AM

A very interesting and important article: The Connection Between Finance and Politics Has Been Under-Researched for Years (https://promarket.org/connection-finance-politics2/ )

That was my point for a long time. Inability to challenge the underlying assumptions of the neoclassical economics and current neoliberal polices (such as Washington consensus) sooner of later backfire both in economics and politics, because politics and economics are intrinsically connected.

to the extent that "pure economics" is a pseudo-science (with bunch of complex mathematical masturbations, much like geocentric theory of movement of planets; which actually did predicted certain movements of plants accurately. using overcomplicated math stuff -- epicycles)

But political posturing often prevent such a reevaluation, even when people understand that something is wrong with the current state of economics.

Much like that fact that the USA pretentions of the world hegemony make deviations from pre-existing policies a sign of "weakness". But is a dialectical way, the obsessive desire to project strength is a serious weakness in itself ;-)

And it looks like this inability and lack of desire to challenge the fundamental assumptions is a very serious problem not only with the US elite, but with the American society as a whole.

http://www.imdb.com/title/tt0104257/quotes

Col. Jessep: [from the witness stand] *You want answers?*

Kaffee: *I want the truth!*

Col. Jessup: [from the witness stand] *You can't handle the truth!*

Emong other things it led to the economic policies that on "being disastrous" scale are probably close the policies that led to Iraq war (remember neocons boasting before this war that we will be greeted with flowers and the cost will be minimal and democracy will flourish in Iraq). The results of outsourcing of manufacturing is very similar to the real result obtains due to the Iraq war.

So there is an important question that the article missed. Can the American elite face the truth?

That answer is: "No". That's why neoclassical economics while discredited as a theory remain dominant as a civil religion of neoliberalism, indoctrination into which is a prerequisite to obtaining an academic degree, and students are indoctrinated into this this bunch of mathiness each year. Compare with Steve Keen "Debunking economics" ( https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926 ). Much like Marxism was obligatory in the USSR and can't graduate without passing exams on Marxist political economy.

But, truth be told, neoclassical economics has a strong political undercurrent because historically it emerged (like neoliberalism in late 30th early 40th) as an alternative to Marxism. And to certain extent it did has its value while Marxism and Marxist theory of value were not discredited (that means up to late 40th, early 60th).

Another point is that the US neoliberal elite demonstrated willingness and ability to engage in self-defeating behavior because they do not want to look weak or challenge the postulated of neoliberalism. That's the same behavior the Politburo was engaged in the USSR.

I would shy from using the term "decline od neoliberalism" because it has a flavor of "doom and gloom" (and haw we can speak about decline if a realistic alternative does not exist?), but neoliberalism really faces the crisis of confidence. Neoliberal myths such a "Greed is good", "Casino capitalism is virtuous", "Entrepreneurship is the ultimate value and the source of material reward", "free market", "free trade", "labor market", "poor are guilty of their own fate because they lack responsibility", "rising stock market tide lifts all boats", etc are dispelled.

Promises of "prosperity for all" are not delivered (at least to the lower 80% of population.)

Basically the same situation that existed with Brezhnev socialism in the USSR with the communist ideology stating with 70th.

Instead of the USSR alcoholism epidemic we have opioids and meth epidemic with the same or similar social roots.

Add to this several wars (or more correctly occupations of the countries) going on and resources wasted on those (mostly unwinnable) wars (with the recent myth that "counterinsurgency" tactics will bring the USA the success in Afghanistan -- David Petraeus' myth -- http://www.truth-out.org/news/item/12997-how-petraeus-created-the-myth-of-his-success, https://www.scribd.com/document/67519776/Puncturing-the-Counterinsurgency-Myth-Britain-and-Irregular-Warfare-in-the-Past-Present-and-Future ) which also nobody in the establishment has the courage of challenging and you get the picture. It's not pretty.

That worldview had derived from this conviction that American power implies commitment to global hegemony, and this commitment expressed the nation's enduring devotion to its founding ideals of freedom and democracy.

That also means that election of Trump will not result in proper actions that can change the course of "battleship America" and can rectify the current difficulties. Much like the election of Barack Obama before him.

[May 21, 2017] Note how quickly the price of oil fell, when the objective was to economically harm revenues of the gas station masquerading as a nation

Notable quotes:
"... Note how quickly the price of oil fell, when the objective was to economically harm revenues of the "gas station masquerading as a nation" (as McCain called his enemy), Russia. They wouldn't do that to benefit ordinary Americans, though they could have, long ago. ..."
"... And how quickly they were ready to export our own domestic oil surplus, and ordered laws be passed to do it, rather than have it accrue to the Americans to whom it really belongs. ..."
"... No, those "American Interests" are not the same as the interests of the millions of American people. ..."
"... Believe it or not, the CEOs of Exxon-Mobil, Shell or any other multinational hyper corporation don't consider what our opinions are, in the least, unless it creates a PR nightmare, in which case lawyers and liars are dispatched to distract ..."
May 21, 2017 | www.theamericanconservative.com

Fran Macadam, May 8, 2017 at 6:31 pm

"'Nor are these US interests that are of such geopolitical importance to politicians, congruent with the interests of hundreds of millions the actual American people.

"Unless those people want 'cheap' oil ?"

Note how quickly the price of oil fell, when the objective was to economically harm revenues of the "gas station masquerading as a nation" (as McCain called his enemy), Russia. They wouldn't do that to benefit ordinary Americans, though they could have, long ago.

And how quickly they were ready to export our own domestic oil surplus, and ordered laws be passed to do it, rather than have it accrue to the Americans to whom it really belongs.

No, those "American Interests" are not the same as the interests of the millions of American people.

Believe it or not, the CEOs of Exxon-Mobil, Shell or any other multinational hyper corporation don't consider what our opinions are, in the least, unless it creates a PR nightmare, in which case lawyers and liars are dispatched to distract.

[May 21, 2017] This week US bombed militia in Syria linked to Iran, Trump got a medal for providing air support for al Qaeda from their contributors.

Notable quotes:
"... In Riyadh, Mr. Trump is viewed as a refreshing change from President Barack Obama, who was viewed with disdain in the wake of the Iranian nuclear deal that Mr. Obama brokered in 2015. ... ..."
May 21, 2017 | economistsview.typepad.com

Fred C. Dobbs, May 20, 2017 at 09:46 AM

Trump Gets a Gold Medal as Welcome From Saudi King https://nyti.ms/2rCfpc5
NYT - MICHAEL D. SHEAR and PETER BAKER - MAY 20, 2017

... .. ...

Flanked by Saudi military personnel standing at attention and alternating Saudi and American flags, Mr. Trump and the king exchanged a brief handshake and a few pleasantries as trumpets blared, cannons boomed and seven Saudi jets streaked through the sky, streaming red, white and blue smoke.

"Very happy to see you," the king said. "It's a great honor," Mr. Trump replied, before he was offered a bouquet of flowers from Saudi girls.

The two leaders posed for photos while seated in the Royal Hall at the airport's terminal before getting into a motorcade to head to a series of meetings. Aides said Mr. Trump had spent most of the flight from Washington, which took 12 hours and 20 minutes, meeting with staff, reading newspapers and working on his speech. He got very little sleep, they said.

In Riyadh, Mr. Trump is viewed as a refreshing change from President Barack Obama, who was viewed with disdain in the wake of the Iranian nuclear deal that Mr. Obama brokered in 2015. ...

Related:

With Harleys and Hamburgers, Saudis Salute US on Trump's Visit https://nyti.ms/2qF569M
NYT - BEN HUBBARD - MAY 20, 2017

(cycle parade video at link)

RIYADH, Saudi Arabia - There was neither beer, nor tattoos nor women at the biker rally in Saudi Arabia's capital on Friday night. But among the hundreds of men riding on roaring Harley Davidsons and sporting leather vests, there was overwhelming excitement about the incoming visitor: President Trump. ...

Saudi Arabia prepared an enormous reception for Mr. Trump, who landed in the capital, Riyadh, on Saturday morning on the first foreign trip of his presidency. Billboards with his face next to that of King Salman, the Saudi monarch, adorned highways around the capital, miles of which were lined with Saudi and American flags.

The Saudis planned such an opulent greeting for Mr. Trump to emphasize the depth of their commitment to the United States and to persuade him to deepen the partnership to fight terrorism, confront Iran and enhance economic ties. ...

ilsm, May 20, 2017 at 12:46 PM
This week US bombed militia in Syria linked to Iran, Trump got a "medal" for providing air support for al Qaeda from their contributors.

[May 21, 2017] Taibbi on Hillary

Notable quotes:
"... Hillary not only voted for the Iraq War, but offered a succession of ridiculous excuses for her vote. Remember, this was one of the easiest calls ever. A child could see that the Bush administration's fairy tales about WMDs and Iraqi drones spraying poison over the capital (where were they going to launch from, Martha's Vineyard?) were just that, fairy tales. ..."
"... Yet Hillary voted for the invasion for the same reason many other mainstream Democrats did: They didn't want to be tagged as McGovernite peaceniks. The new Democratic Party refused to be seen as being too antiwar, even at the cost of supporting a wrong one. ..."
"... But that's faulty thinking. My worry is that Democrats like Hillary have been saying, "The Republicans are worse!" for so long that they've begun to believe it excuses everything. It makes me nervous to see Hillary supporters like law professor Stephen Vladeck arguing in the New York Times that the real problem wasn't anything Hillary did, but that the Espionage Act isn't "practical." ..."
"... Young people don't see the Sanders-Clinton race as a choice between idealism and incremental progress. The choice they see is between an honest politician, and one who is so profoundly a part of the problem that she can't even see it anymore. ..."
"... "new Democratic Party" is lined up with the neocons. ..."
"... Bill put Strobe Talbot and Mrs Kagan in senior positions in 1993! Hillary voted comfortably with Paul Wolfowitz ands her internal neocon. While Obama used his peace prize speech to tell the world he would decide who should run sovereign nations. 26000 bombs in 7 diverse countries in one year when the US is not in any declared war. ..."
"... "new Democratic Party" is neocon foreign policy and $500B for the pentagon each year not counting the bombing costs. "new Democratic Party" also armed ISIS until they "went off the ranch" and broke the promise they made to the US' spooks 'not to shoot at people US liked.' ..."
May 20, 2017 | economistsview.typepad.com

Christopher H. , May 20, 2017 at 10:39 AM

You linked to Matt Taibbi's on Roger Ailes.

Here's Taibbi on Hillary. Make sure you read all of it.

http://www.rollingstone.com/politics/news/why-young-people-are-right-about-hillary-clinton-20160325

Why Young People Are Right About Hillary Clinton
Listening to the youth vote doesn't always lead to disaster

By Matt Taibbi
March 25, 2016

... ... ...

.. the millions of young voters that are rejecting Hillary's campaign this year are making a carefully reasoned, even reluctant calculation about the limits of the insider politics both she and her husband have represented.

For young voters, the foundational issues of our age have been the Iraq invasion, the financial crisis, free trade, mass incarceration, domestic surveillance, police brutality, debt and income inequality, among others.

And to one degree or another, the modern Democratic Party, often including Hillary Clinton personally, has been on the wrong side of virtually all of these issues.

Hillary not only voted for the Iraq War, but offered a succession of ridiculous excuses for her vote. Remember, this was one of the easiest calls ever. A child could see that the Bush administration's fairy tales about WMDs and Iraqi drones spraying poison over the capital (where were they going to launch from, Martha's Vineyard?) were just that, fairy tales.

Yet Hillary voted for the invasion for the same reason many other mainstream Democrats did: They didn't want to be tagged as McGovernite peaceniks. The new Democratic Party refused to be seen as being too antiwar, even at the cost of supporting a wrong one.

It was a classic "we can't be too pure" moment. Hillary gambled that Democrats would understand that she'd outraged conscience and common sense for the sake of the Democrats' electoral viability going forward. As a mock-Hillary in a 2007 Saturday Night Live episode put it, "Democrats know me . They know my support for the Iraq War has always been insincere."

This pattern, of modern Democrats bending so far back to preserve what they believe is their claim on the middle that they end up plainly in the wrong, has continually repeated itself.

Take the mass incarceration phenomenon. This was pioneered in Mario Cuomo's New York and furthered under Bill Clinton's presidency, which authorized more than $16 billion for new prisons and more police in a crime bill.

As The New Jim Crow author Michelle Alexander noted, America when Bill Clinton left office had the world's highest incarceration rate, with a prison admission rate for black drug inmates that was 23 times 1983 levels. Hillary stumped for that crime bill, adding the Reaganesque observation that inner-city criminals were "super-predators" who needed to be "brought to heel."

You can go on down the line of all these issues. Trade? From NAFTA to the TPP, Hillary and her party cohorts have consistently supported these anti-union free trade agreements, until it became politically inexpedient. Debt? Hillary infamously voted for regressive bankruptcy reform just a few years after privately meeting with Elizabeth Warren and agreeing that such industry-driven efforts to choke off debt relief needed to be stopped.

Then of course there is the matter of the great gobs of money Hillary has taken to give speeches to Goldman Sachs and God knows whom else. Her answer about that - "That's what they offered" - gets right to the heart of what young people find so repugnant about this brand of politics.

One can talk about having the strength to get things done, given the political reality of the times. But one also can become too easily convinced of certain political realities, particularly when they're paying you hundreds of thousands of dollars an hour.

Is Hillary really doing the most good that she can do, fighting for the best deal that's there to get for ordinary people?

Or is she just doing something that satisfies her own definition of that, while taking tens of millions of dollars from some of the world's biggest jerks?

I doubt even Hillary Clinton could answer that question. She has been playing the inside game for so long, she seems to have become lost in it. She behaves like a person who often doesn't know what the truth is, but instead merely reaches for what is the best answer in that moment, not realizing the difference.

This is why her shifting explanations and flippant attitude about the email scandal are almost more unnerving than the ostensible offense. She seems confident that just because her detractors are politically motivated, as they always have been, that they must be wrong, as they often were.

But that's faulty thinking. My worry is that Democrats like Hillary have been saying, "The Republicans are worse!" for so long that they've begun to believe it excuses everything. It makes me nervous to see Hillary supporters like law professor Stephen Vladeck arguing in the New York Times that the real problem wasn't anything Hillary did, but that the Espionage Act isn't "practical."

If you're willing to extend the "purity" argument to the Espionage Act, it's only a matter of time before you get in real trouble. And even if it doesn't happen this summer, Democrats may soon wish they'd picked the frumpy senator from Vermont who probably checks his restaurant bills to make sure he hasn't been undercharged.

But in the age of Trump, winning is the only thing that matters, right? In that case, there's plenty of evidence suggesting Sanders would perform better against a reality TV free-coverage machine like Trump than would Hillary Clinton. This would largely be due to the passion and energy of young voters.

Young people don't see the Sanders-Clinton race as a choice between idealism and incremental progress. The choice they see is between an honest politician, and one who is so profoundly a part of the problem that she can't even see it anymore.

They've seen in the last decades that politicians who promise they can deliver change while also taking the money, mostly just end up taking the money.

And they're voting for Sanders because his idea of an entirely voter-funded electoral "revolution" that bars corporate money is, no matter what its objective chances of success, the only practical road left to break what they perceive to be an inexorable pattern of corruption.

Young people aren't dreaming. They're thinking. And we should listen to them.

ilsm - , May 20, 2017 at 12:42 PM
"new Democratic Party" is lined up with the neocons.

Bill put Strobe Talbot and Mrs Kagan in senior positions in 1993! Hillary voted comfortably with Paul Wolfowitz ands her internal neocon. While Obama used his peace prize speech to tell the world he would decide who should run sovereign nations. 26000 bombs in 7 diverse countries in one year when the US is not in any declared war.

"new Democratic Party" is neocon foreign policy and $500B for the pentagon each year not counting the bombing costs. "new Democratic Party" also armed ISIS until they "went off the ranch" and broke the promise they made to the US' spooks 'not to shoot at people US liked.'

Sadly, Bernie would be no George McGovern!

[May 20, 2017] Outsourcing higher wage work is more profitable than outsourcing lower wage work

Notable quotes:
"... Baker correctly diagnoses the impact of boomers aging, but there is another effect - "knowledge work" and "high skill manufacturing" is more easily outsourced/offshored than work requiring a physical presence. ..."
"... That's what happened with American IT. ..."
May 20, 2017 | economistsview.typepad.com
cm, May 20, 2017 at 04:51 PM
Baker correctly diagnoses the impact of boomers aging, but there is another effect - "knowledge work" and "high skill manufacturing" is more easily outsourced/offshored than work requiring a physical presence.

Also outsourcing "higher wage" work is more profitable than outsourcing "lower wage" work - with lower wages also labor cost as a proportion of total cost tends to be lower (not always).

And outsourcing and geographically relocating work creates other overhead costs that are not much related to the wages of the local work replaced - and those overheads are larger in relation to lower wages than in relation to higher wages.

libezkova -> cm... May 20, 2017 at 08:34 PM

"Also outsourcing "higher wage" work is more profitable than outsourcing "lower wage" work"

That's what happened with American IT.

[May 20, 2017] Demand, Secular Stagnation and the Vanishing Middle-Class

Notable quotes:
"... The anger and despair crystalized into a 'groundswell of discontent' among those left behind, which likely helped to propel Donald Trump into the White House on the promise of 'making America great again'. ..."
"... That's my feeling too about one of the key factor that propelled Trump -- "the anger and despair". For some, voting for Trump was a showing middle finger to Washington establishment. ..."
"... Thus, the battle lines between neoliberal and a "social contract" approach to employment are clearly cut. So far Wall Street, the City, and other worldwide "epicenters for free-market discipline," are winning the battle. According to "free market discipline" dogma, if you are hired at below living wave (as in Wall Mart or other retail chain) it's your own fault. Very convenient theory. The fact that it produce strong desire to shoot or hang all neoliberal economists notwithstanding ;-) ..."
May 20, 2017 | economistsview.typepad.com
Christopher H., May 20, 2017 at 10:36 AM
From INET in today's links.

https://www.ineteconomics.org/perspectives/blog/the-new-normal

The New Normal

By Servaas Storm

MAY 19, 2017

Demand, Secular Stagnation and the Vanishing Middle-Class

The Great Financial Crisis of 2008 deeply scarred the U.S. economy, bringing nine dire years of economic stagnation, high and rising inequalities in income and wealth, steep levels of indebtedness, and mounting uncertainty about jobs and incomes

. Big parts of the U.S. were hit by elevated rates of depression, drug addiction and 'deaths of despair' (Case and Deaton 2017), as 'good jobs' (often in factories and including pension benefits and health care coverage) leading to careers, were destroyed and replaced by insecure, freelance, or precarious 'gigs'. All this is evidence that the U.S. is becoming a dual economy-two countries, each with vastly different resources, expectations and potentials, as America's middle class vanishes (Temin 2015, 2017).

The anger and despair crystalized into a 'groundswell of discontent' among those left behind, which likely helped to propel Donald Trump into the White House on the promise of 'making America great again'.

likezkova, May 20, 2017 at 12:35 PM

"The anger and despair crystalized into a 'groundswell of discontent' among those left behind, which likely helped to propel Donald Trump into the White House on the promise of 'making America great again'."

That's my feeling too about one of the key factor that propelled Trump -- "the anger and despair". For some, voting for Trump was a showing middle finger to Washington establishment. When jobs are gone, people are essentially put against the wall. Neoliberal politicians, be it "DemoRats", or "Repugs" do not care, as under neoliberalism this is a domain of "individual responsibility". The neoliberal stance is that you need to increase your value in the "job market" so that you will be eventually hired on better conditions. Very convenient theory for capital owners.

Thus, the battle lines between neoliberal and a "social contract" approach to employment are clearly cut. So far Wall Street, the City, and other worldwide "epicenters for free-market discipline," are winning the battle. According to "free market discipline" dogma, if you are hired at below living wave (as in Wall Mart or other retail chain) it's your own fault. Very convenient theory. The fact that it produce strong desire to shoot or hang all neoliberal economists notwithstanding ;-)

Academic prostitution is not that different and probably less noble that a regular one.

[May 19, 2017] What the author inadvertently points out is that capitalism, particularly the so called consumer capitalism that we have is like a board game; only at the beginning anything is possible

Notable quotes:
"... What the author inadvertently points out is that capitalism, particularly the so called consumer capitalism that we have is like a board game; It has a beginning when anything is possible. A middle when a broad spectrum of players prosper and there is extra money for infrastructure and public amenities. Then an end where wealth is increasingly concentrated in fewer and fewer hands and the waste stream has taken its toll. ..."
"... Tell me, when where these good old days, of "true" capitalism? Back when we were enslaving Africans? ..."
"... workers fail to ..."
"... Yeah, it's really a pity that author of such a well-written piece confuses GDP with living standards. If that was the case people wouldn't vote for nationalist and populists. ..."
"... serving their own interests; ..."
"... In our imperial system, it does not matter to the people whether they vote, or how; it matters, occasionally, to the contestants' position in the power structure, but nothing more than that. ..."
"... there are rumors that the Federal Liberal Party in Canada is exploring this. ..."
"... 8) Nothing in this section shall be construed to impose a duty upon: (a) A provider of an electronic store, gateway, marketplace or other means of purchasing or downloading software or applications to review or enforce compliance with this section by those applications or software; or (b) A provider of an interactive computer service to review or enforce compliance with this section by third-party content providers. As used in this paragraph, "interactive computer service" means any information service, system or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such services or systems operated or offered by libraries or educational institutions. (9) This section does not apply to general audience Internet websites, general audience online services, general audience online applications or general audience mobile applications, even if login credentials created for an operator's site, service or application may be used to access those general audience sites, services or applications. ..."
May 19, 2017 | www.nakedcapitalism.com
DJG , May 19, 2017 at 10:20 am

Definitely worth reading and reading again. What popped on first reading is the description of the rise of income in Poland and the stagnation of income in the U S of A. What pops for me on seccond reading is these paragraphs about tax evasion and income inequality: >>

One reason nothing happens is a culture of tax evasion. There's a folk belief in American business that if you pay full taxes, you're not doing your fiduciary duty, and your board will fire you.

Apple now has a quarter trillion dollars offshore that it refuses to put into direct productive use in the United States. Apple boasts that its products are designed in California-they will sell you a $300 book called Designed By Apple In California. But they do their damndest to make sure that California never sees a penny of their overseas profits.

You in the EU are all too familiar with this brand of tax evasion. Google, Amazon, Apple, Microsoft have all been under investigation or in court on charges of evading European taxes.

Another reason good intentions don't translate is that capitalism, especially venture capital, doesn't work very well when there is vast wealth inequality.

[Tax evasion isn't just a folk belief: It is taught in U.S. law schools and in business schools, along with union busting.]

Jef , May 19, 2017 at 10:52 am

What the author inadvertently points out is that capitalism, particularly the so called consumer capitalism that we have is like a board game; It has a beginning when anything is possible. A middle when a broad spectrum of players prosper and there is extra money for infrastructure and public amenities. Then an end where wealth is increasingly concentrated in fewer and fewer hands and the waste stream has taken its toll.

diptherio , May 19, 2017 at 11:49 am

Another reason good intentions don't translate is that capitalism, especially venture capital, doesn't work very well when there is vast wealth inequality.

The author does not understand that capitalism creates vast wealth inequality: that's the whole point. Inequality is a feature, not a bug, and so trying to save capitalism while eliminating vast wealth inequalities is working at cross-purposes, and only one of those aims can be successful and guess which one it always is?

justanotherprogressive , May 19, 2017 at 11:56 am

+100

Wisdom Seeker , May 19, 2017 at 12:39 pm

"capitalism creates vast wealth inequality: that's the whole point."

Not in Adam Smith's world, nor Henry Ford's. True capitalists prosper by creating wealth which improves the lives of everyone around them. Crony capitalists, the ones we have now, strip wealth from others. Witness today's bubble-and-bust cycles rather than the prior widespread economic growth.

The capitalism you see today is an abomination of the original concept, just as Mnuchin's claim to support "Glass Steagall" is an abomination. And don't get me started on the "Affordable" Care Act, or the "Patriot" act which gutted the Constitution

P.S. The original author's article is riddled with glaring factual errors, but he has the big picture right: it's time to restore Antitrust Law and apply it to the internet monopolists. And restore privacy rights and and it's a long list. Start fighting now, if you want anything to happen in your lifetime!

Carla , May 19, 2017 at 2:05 pm

The author's central thesis strikes me as correct: that Europe provides the only hope for applying any brakes whatsoever to the American tech sector. I hope someone over there is listening, as prospects here seem utterly hopeless.

MyLessThanPrimeBeef , May 19, 2017 at 2:21 pm

Freedom means people should have reasonable alternatives, choices on any product, service or ideology. Today's internet experience lacks that freedom aspect quite a bit.

diptherio , May 19, 2017 at 2:42 pm

Hokum. The "theory" is that it benefits everyone, but the reality is quite different. Tell me, when where these good old days, of "true" capitalism? Back when we were enslaving Africans? Back when we were hanging Wobblies? Back when we had to put nets around our factories to keep the workers from committing suicide? Please the dictatorship of the proletariat worked out just fine in Marx's theory, too.

clinical wasteman , May 19, 2017 at 3:00 pm

Another one for the gallery of glaring factual errors: "capitalists prosper by creating wealth". Unless that was an epic typo for something like: " workers fail to prosper while creating wealth".

As for "the original concept" of "capitalism", in which district of the astral plane did you find that? Apart from his anthropological sci-fi about the origins of money in "barter", Adam Smith generally tried to write about the real world. Just like Marx, except that Smith was speaking for a different class interest, whose "moral philosopher" imagined himself to be. For that reason, "capital" and "capitalist"(n.) were important concepts for Smith and Marx alike, but "capitalism" - a sort of hybrid implying the social reality and the ideology cheerleading for it at once without ever really distinguishing between the two - is an abstraction that neither had much time for, and one that only really caught on once both were dead.

Wisdom Seeker , May 19, 2017 at 4:01 pm

Wasteman – for a start, unlike todays Cronyists, Adam Smith understood that capitalism would not function for the benefit of all unless monopolies were restrained by government:

"The interest of the dealers [referring to stock owners, manufacturers, and merchants], however, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, and absurd tax upon the rest of their fellow-citizens. (Adam Smith, Wealth of Nations (Amherst, New York: Prometheus Books, 1991), pages 219-220)"

See here for more details:
https://machineryofpolitics.wordpress.com/2012/01/04/adam-smith-on-the-crisis-of-capitalism-2/

Another interesting perspective is from J. K. Galbraith (sorry I lost the source) who pointed out that in an economy with healthy competition, profit margins are lower, but employment and wage income are necessarily higher.

diptherio , May 19, 2017 at 5:14 pm

And pray tell, who is it who will restrain the monopolists? Our elected officials, who just so happen to be under the control of those same capitalists? Which is possible due to the vast wealth inequalities that capitalism generates .

Capitalists, almost without exception, do everything in their power to avoid competition. The idea is to make a profit and competition is antithetical to that.

Lots of things are good in theory, like three-way relationships. Reality, on the other hand, feels no obligation to correspond with theory.

Vatch , May 19, 2017 at 3:27 pm

capitalism creates vast wealth inequality

Not exactly. Capitalism extends or expands existing inequality. It was the development of agriculture several thousand years ago that broke the approximate egalitarianism of the hunter gatherer lifestyle. Even that had some inequality, but not much. For more information, see the early chapters of The Great Leveler , by Walter Scheidel.

diptherio , May 19, 2017 at 5:23 pm

Hence the "vast" part. I'm not so silly as to think that before capitalism there was not wealth inequality. But not the type where a few hundred people control more wealth than a few billion. It would seem to me, on just a gut level based on a little reading, that whereas systems like feudalism were unequal but relatively stable*, i.e. the level of inequality stayed the same generation to generation, capitalism's dynamics have caused inequality to skyrocket, both nationally and globally.

*Or at least cyclically stable, as with regular debt jubilees in Sumer.

HBE , May 19, 2017 at 3:11 pm

"Living standards in Poland in 2010 had more than doubled from 1990." This sentence annoyed me to no end. Yes, the reason that is true is because every capitalist country in the world worked to smash and destroy communism without pause for its entire life and then internal and external oligarchs snatched up everything.

Living standards increased over that period in Poland but so did inequality and poverty. So the country got some shiny new consumer goods (which the author seems enamored by) while the populations poverty rate continues to climb. Thank god for privatization ("Suddenly people had cars, phones, appliances" and suddenly poverty surged as well), and the end of those no good dirty commies, right?

vlado , May 19, 2017 at 4:02 pm

Yeah, it's really a pity that author of such a well-written piece confuses GDP with living standards. If that was the case people wouldn't vote for nationalist and populists.

In any case, despite very good performance of Polish economy, its convergence to West Europe at least in terms of GDP (PPP) is questionable as the cases of Czech Republic and Slovenia show. See the article The convergence dream 25 years on in Bruegel

visitor , May 19, 2017 at 6:04 pm

There is a reason why people voted for the populist PiS and ousted the liberals who had made such a great job at bringing Poland into the EU and its "market society".

justanotherprogressive , May 19, 2017 at 10:23 am

A long but brilliant article that everyone should take the time to read! I want all the techies in my family to read it because it points out some of the uneasiness even techies feel about the their industry.

My favorite paragraph (although there were many close seconds):

"But real problems are messy. Tech culture prefers to solve harder, more abstract problems that haven't been sullied by contact with reality. So they worry about how to give Mars an earth-like climate, rather than how to give Earth an earth-like climate. They debate how to make a morally benevolent God-like AI, rather than figuring out how to put ethical guard rails around the more pedestrian AI they are introducing into every area of people's lives."
Yep .

MyLessThanPrimeBeef , May 19, 2017 at 2:28 pm

That popular vote comment is misleading as well.

A previous example was given about a hypothetical House vote, where, in yes-districts, voters are split 51-49 yes (assuming that is so lots of times, congress persons vote 'their conscience') and voters in no-districts are 90-10 for no. Yes votes win by one.

In that case, the popular vote actually is for No.

And that has nothing to do with slavery.

It's how the math works in a representative voting system.

PhilM , May 19, 2017 at 3:32 pm

Before responding to MLTPB, I'd like to voice my opinion that the OP article is thoughtful and reflects a decent level of awareness of the reality of the world, along with positive solutions that would be achievable in a polity that had the public good as its aim.

As for MLTPB's opinion on the vote, I beg to differ: it has everything to do with slavery. That's how the numbers work in our system, which is imperial, not representative. It's a bitch when instead of Augustus you get Caligula, but it doesn't change the basic reality of how the system works, and has worked since Ike. In our imperial system, it does not matter to the people whether they vote, or how; it matters, occasionally, to the contestants' position in the power structure, but nothing more than that.

Here is the reality: the people in any office in our federal government-basically everyone who lives in or around Washington DC-have the same relationship to American people as they have to Russian, Chinese, or Indian people: that of serving their own interests; predation, if you will; animal husbandry, if you prefer. They will act so as to extract the maximum value consistent with not-killing-the-goose-that-lays-the-golden-eggs from every person, wherever they are located, whatever their religion, whatever their nationality, as long as they are powerless, which means everyone who is a private citizen, however rich, or a small business; everyone who is not a Forbes 500 corporation.

The notion that the federal government is somehow tied to "Americans," or even to the geographical entity now known as the USA, much less to the values expressed in the so-called "founding documents," is a child's bedtime story.

It's amusing that it took the election of Trump to bring this realization about; but really, that is why some of us actually voted for Trump: to rub the idiots' noses in the reality of their political environment. (Not me, mind you; because I do not bother to vote: when I want something done, I write a check, like any experienced consumer of government services.)

There is a cure, but it is not changing the election mechanism so the choice of president results from the popular vote totals in a population of 300 million. No, it means changing it so there are 1000 presidents and 100,000 representatives and 1000 supreme courts, and 1000 republics. Those are the numbers that would achieve representative government the way it was designed to function by people who knew. Alternatively, you could reduce federal taxation to 1/10th of its current level, and assign all other taxation to the township, with a population limit of 20,000. Now you would have something that is no longer imperial.

But since most people since the dawn of history have lived under organizations that are imperial with perfect happiness, the appropriate course of action is not to struggle in futility for change, which would almost certainly do more harm than good, and result in an outcome that would just use up the world's resources more swiftly in the chaos of consumption and war. The optimum course is to watch reruns of amusing sitcoms and eat good food; to gratify the animal pleasures and such pleasures of the mind as remain to aging bodies mistreated by pharmaceuticals; and to die as quickly and painlessly as the authorities permit.

MyLessThanPrimeBeef , May 19, 2017 at 5:37 pm

In our imperial system, it does not matter to the people whether they vote, or how; it matters, occasionally, to the contestants' position in the power structure, but nothing more than that.

In that case, the popular vote question is not a question anymore (with the current 1 president, instead of 1,000 setup), as you point out here:

There is a cure, but it is not changing the election mechanism so the choice of president results from the popular vote totals in a population of 300 million.

I have mentioned before that Rome had, at one time, 2 or 4 co-emperors. You suggest 1,000 presidents, as a solution. That's nothing to do with slavery, except in the sense that we're all serfs or slaves. It about making one's voice heard within a smaller group, having someone representing you along with fewer constituents.

The inherent problem of having representatives vote, versus direct voting, is still here, as in the example given above. The math scales up and down.

Thomas Williams , May 19, 2017 at 11:04 am

Nice piece: Two things to note
– The Clintons, Bush & Obama presided over this mess and aided in it's creation but the albatross of abuse is being hung on Trump.
– He shares an enormous egotistical blind spot common to tech workers. He wants unionization and strength for tech workers but seems to advocate for a globalized work force. More than anything else, foreign workers are responsible for wage suppression in the US. Is he saying 'Tech workers are special and should be pampered but others should work for $1.85 per day"?
– The above points are not germaine to his central theme, which is important and well written. But it does raise questions about his values.

Knot Galt , May 19, 2017 at 2:13 pm

Agreed. Trump = Chucklehead and the shadow in T.S. Eliot's poem

Jacobite_In_Training , May 19, 2017 at 11:11 am

" Boycotts won't work, since opting out of a site like Google means opting out of much of modern life ."

Good .Opt out of modern life. Now. Get as far away from it as you possibly can. You'll be the better person for it. There was a time I felt 'modern life' was the place to be .Now the older me realizes 'modern life' is a sham, an illusion, and a trap.

A very cleverly designed trap, and one in which the cattle to be slaughtered all believe they are choosing their own destiny even as they are herded inexorably closer to the slaughterhouse.

Amusingly, although my younger naive and idealistic self had a significant part to play in the great tech revolutions and evolutions through the 90's and early 2000's (for which I will be eternally regretful and ashamed, given how the creations we labored on have been whored out by the pimps in the oligarchy and government) I was also incredibly lucky to have grown up on a farm and learned how to use a hoe, a hand powered washing machine, how to gather eggs and grow things.

Real things, things that can feed people. But more importantly .how to grow things like spirit and independence that do not rely on any flow of electrons to come to glorious fruition.

I also so much better understand what that prophet Edward Abbey was trying to warn us about all those decades ago .

" Growth for the sake of growth is the ideology of the cancer cell "

Tom , May 19, 2017 at 11:27 am

Indeed. The promise of technology has devolved into Clickbait Nation - where millions mindlessly click on endless deceptive headlines like rats pushing levers in a giant Skinner box.

justanotherprogressive , May 19, 2017 at 11:55 am

Is "opting out" really an option? Are we willing to opt out out of modern medicine too?
Whether we like it or not, we aren't opting out of using the internet, so we aren't opting out of anything this author talked about .

Sooooo ..wouldn't a better idea be to learn as much as we can about this technology and get involved in its decision making, so that we can control it and make it work for rather than against us?

Jacobite_In_Training , May 19, 2017 at 12:13 pm

I've had that debate before, people typically starting with the 'well, you are posting using the Internet so you aren't really opting out of anything', but thats a simplistic approach, and the process of opting out is a matter of degrees – it is never a binary on/off.

One can continue 'opting out' of aspects of society, and technology, to as extreme a position as you wish .even back to the stone age, should you choose. (sort of the ultimate boycott)

Tradeoffs are inherent to the process, no argument there .just be aware that the experience of opting out is itself liberating. You realize all these shiny objects, and expensive things, and
complicated processes that you have been raised to think of as critical necessities that cannot ever EVER be parted with .may not be so critical as you think.

Sometimes the tradeoffs will be negative, more often – in my experience – (once you have solved the problems presented by improvising/adapting/overcoming) you will find the 'tradeoffs' are a net positive.

You are, of course, a creature with free will and free to do what you choose . opt in, opt out .as you will. :)

Thuto , May 19, 2017 at 12:59 pm

Agreed, there are several gradations to this whole opting out thing. I for one am completely absent from any social media platform and feel no loss whatsoever because of this. It takes a committed group of independent thinkers to deconstruct and debunk this whole narrative that you're either "all-in" with these internet platforms or you opt out and life passes you by as you're consigned to an existence of irrelevance and ignorance about the world around you.

MoiAussie , May 19, 2017 at 1:05 pm

Perhaps it would be more accurate to say that you are very selective about the social media in which you participate.

Thuto , May 19, 2017 at 1:50 pm

If by social media we are talking facebook, instagram et al, then I have never participated in any of those. To be sure, this is not meant to sound like I take a dim view on those who do, the point is the narrative is typically framed, at least in my part of the world, as an all-in/opt-out binary in which participation in social media platforms is a prime determinant in who "remains relevant" and who doesn't

Vatch , May 19, 2017 at 3:29 pm

I don't have a MyFace account.

I love saying that!

justanotherprogressive , May 19, 2017 at 1:21 pm

I'm not sure what you think you are opting out of. If you are on the internet, then you have to have a carrier – Verizon, Comcast, etc. Do you think their data collection systems are different than what Google, Facebook, or any other social media does?

jrs , May 19, 2017 at 1:54 pm

and least they aren't funding trips to mars? :)

jrs , May 19, 2017 at 1:51 pm

Yea I think the truly open minded probably try many of the internet platforms just to see what they are like and then delete their accounts (this does not need to entail posting one's entire private life there needless to say). Not a lot of open mindedness out there really though, it's all extremes: rigid abstinence from it all, or hopeless addiction to it.

I mean I understand a priori rejection of the majority of what capitalism produces (except if it's necessary to life then well), but it is a pretty uninformed position from which to criticize (as is being addicted to it really).

PKMKII , May 19, 2017 at 2:46 pm

Even if you opt out personally, you're still going to be interacting with a lot of people, businesses, governments, etc., that are dependent on the Five Horsemen. Pay cash at the local business, but travel down the supply chain that brought the goods there and you'll run into someone using cloud storage, social media, consumer surveillance data, etc.

Wisdom Seeker , May 19, 2017 at 1:01 pm

Regarding "get involved in its decision making" –

Ordinary folks have really only two ways to do this. One is in their consumer choices. Avoid or boycott companies that abuse their customers – hit them in their wallets. The other is in their voting and political participation push privacy rights, antitrust enforcement, etc. higher on the political agenda.

It's entirely possible to be comfortably social without "social media". Personally, I boycott Facebook, Twitter, and (as much as possible) Google and Ebay. Google is tough because they have infiltrated the schools with Google Classroom (which has value, but do we really want an internet advertising company to be gathering data on our children?). Microsoft is tough because of the Office monopoly, but just because I have to use it at work doesn't mean I need to pay them any money anywhere else in my life There are also ways to buy online without using Amazon.

lyman alpha blob , May 19, 2017 at 1:58 pm

There are other search engines, browsers, email services, etc. besides those operated by the giants. DuckDuckGo, protonmail, and the Opera browser (with free built-in VPN!) work well for me.

The problem is, if these other services ever do get popular enough, the tech giants will either block them by getting their stooges appointed to Federal agencies and regulating them out of existence, or buy them.

I've been running from ISP acquisitions for years, as the little guys get bought out I have to find an even littler one. Luckily I've found a local ISP, GWI, that I've used for years now. They actually came out against the new regulations that would allow them to gather and sell their customers' data. Such anathema will probably wind up with their CEO publicly flayed for going against all that is good and holy according to the Five Horsemen.

Mel , May 19, 2017 at 1:26 pm

There are two sides to opting out.
When net neutrality is gone, then capital and market concentration will transform the internet into what cable TV is now, and nobody will need it much.
Contrariwise the big tech companies are taking over the implementation of major social functions:
– if you can't vote without the internet
– if you can't spend your money without the internet
– if you can't contact your friends without the internet
– if you can't get news without the internet - this has already happened - just look at us all here.
– if you can't join a political party without liking it on your Facebook page and following it on Twitter - there are rumors that the Federal Liberal Party in Canada is exploring this.
As I said somewhere else, all this would amount to an uncontracted and unspecified public/private partnership (various ones, actually) and all entered into unexamined. Time to examine them while they're still easy to change.

HotFlash , May 19, 2017 at 5:58 pm

there are rumors that the Federal Liberal Party in Canada is exploring this.

Interesting. Are they going to get us all free internet? If not, I think they will find a big surprise.

jrs , May 19, 2017 at 1:45 pm

To assume that workers in ANY Industry (including tech where we know the big players have rigged the labor market against tech workers) have more power than consumers seems pretty unrealistic to me. Of course consumer power is one dollar one vote and hardly democratic but at least consumers do have options and some power. The employee role is a powerless one in the U.S..

Kris Alman , May 19, 2017 at 11:40 am

We can either continue on the knowledge economy road, where our personal data is commodified. Or we could fight for a knowledge society, where we collectively access knowledge while protecting our identity and privacy. I vote for the latter.

Google would plant a chip in every child if they could. Short of that, they have insinuated themselves in public schools, hoping that every kid in America will consummate their relationship with this giant after they graduate from k-12. See this NY Times article from last weekend: How Google Took Over the Classroom

It's hard to mitigate their reach. In a landmark student privacy law passed in California (with an even weaker version passed in my state of Oregon), they built in what I call a Google exemption clause.

( 8) Nothing in this section shall be construed to impose a duty upon:
(a) A provider of an electronic store, gateway, marketplace or other means of purchasing or downloading software or applications to review or enforce compliance with this section by those applications or software; or
(b) A provider of an interactive computer service to review or enforce compliance with this section by third-party content providers. As used in this paragraph, "interactive computer service" means any information service, system or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such services or systems operated or offered by libraries or educational institutions.
(9) This section does not apply to general audience Internet websites, general audience online services, general audience online applications or general audience mobile applications, even if login credentials created for an operator's site, service or application may be used to access those general audience sites, services or applications.

The Campaign for a Commercial-Free Child and the Parent Coalition for Student Privacy (a group with which I have worked) just put out a Parent Toolkit for Student Privacy .

Patient Privacy Rights has an upcoming international summit that is free. Stream it! See: https://patientprivacyrights.org/health-privacy-summit/

MyLessThanPrimeBeef , May 19, 2017 at 2:07 pm

We can either continue on the knowledge economy road, where our personal data is commodified. Or we could fight for a knowledge society, where we collectively access knowledge while protecting our identity and privacy. I vote for the latter.

When I am not accessing knowledge, I would still prefer to remain private.

For example, what videos I access for entertainment should private. It's not knowledge I access, just something to pass time.

That those activities should b protected as well.

Privacy-protected-society is probably a broader term than knowledge society.

MyLessThanPrimeBeef , May 19, 2017 at 2:09 pm

And the Google exemption clause reads like a Facebook exemption clause as well (or Amazon or Warner Cable exemption clause).

[May 19, 2017] The Great Realignment and the New class

May 19, 2017 | economistsview.typepad.com

point , May 19, 2017 at 04:12 PM

Paul says: May 19, 2017 at 04:12 PM

"...Republicans ... went all in behind Trump..."

Well, maybe for those with selective memories. There was plenty of consternation among Repubs about lining up behind the guy.

libezkova , May 19, 2017 at 04:41 PM
Here is part of an insightful comment by William Meyer in which he made an important point about "great realignment" of the "New Class" (aka "the USA nomenklatura") with capital owners which happened in 70th.

http://crookedtimber.org/2016/11/13/on-the-alleged-failure-of-liberal-progressivism/#comment-698333

William Meyer 11.13.16 at 9:40 pm 4

My observation is that the New Class (professionals, lobbyists, financiers, teachers, engineers, etc.) have ruled the country in recent decades. For much of the twentieth century this class was in some tension with corporations, and used their skills at influencing government policy to help develop and protect the welfare state, since they needed the working class as a counterweight to the natural influence of corporate money and power. However, somewhere around 1970 I think this tension collapsed, since corporate managers and professionals realized that they shared the same education, background and interests.

Vive la meritocracy. This "peace treaty" between former rivals allowed the whole newly enlarged New Class to swing to the right, since they really didn't particularly need the working class politically anymore. And since it is the hallmark of this class to seek prestige, power and money while transferring risk away from themselves, the middle class and blue collar community has been the natural recipient. Free trade (well, for non-professionals, anyway), neoliberalism, ruthless private equity job cutting, etc., etc. all followed very naturally. The re-alignment of the Democratic Party towards the right was a natural part of this evolution.

I think the 90% or so of the community who are not included in this class are confused and bewildered and of course rather angry about it. They also sense that organized politics in this country – being chiefly the province of the New Class – has left them with little leverage to change any of this. Watching the bailouts and lack of prosecutions during the GFC made them dimly realize that the New Class has very strong internal solidarity – and since somebody has to pay for these little mistakes, everyone outside that class is "fair game."

So in that sense–to the extent that you define liberal as the ideology of the New Class (neoliberal, financial-capitalistic, big corporate-friendly but opposed to non-meritocratic biases like racism, sexism, etc.) is "liberalism", I think it is reasonable to say that it has bred resistance and anger among the "losers." As far as having "failed", well, we'll see: the New Class still controls almost all the levers of power. It has many strategies for channeling lower-class anger and I think under Trump we'll see those rolled out.

Let me be clear, I'm not saying Donald Trump is leading an insurgency against the New Class – but I think he tapped into something like one and is riding it for all he can, while not really having the slightest idea what he's doing.
Perhaps some evolution in "the means of production" or in how governments are influenced will ultimately develop to divide or downgrade the New Class, and break its lock on the corridors of power, but I don't see it on the horizon just yet. If anyone else does, I'd love to hear more about it.

[May 19, 2017] Trump is just a one acute symptom of the underling crisis of the neoliberal social system, that we experience. So his removal will not solve the crisis.

Notable quotes:
"... When Trump becomes president by running against the nation's neoliberal elite of both parties, it was a strong, undeniable signal that the neoliberal elite has a problem -- it lost the trust of the majority American people and is viewed now, especially Wall Street financial sharks, as an "occupying force". ..."
"... That means that we have the crisis of the elite governance or, as Marxists used to call it "a revolutionary situation" -- the situation in which the elite can't govern "as usual" and common people (let's say the bottom 80% of the USA population) do not want to live "as usual". Political Zugzwang. The anger is boiling and has became a material force in the most recent elections. ..."
"... The elites also ran American foreign policy, as they have throughout U.S. history. Over the past 25 years they got their country bogged down in persistent wars with hardly any stated purpose and in many instances no end in sight-Iraq, Afghanistan, Syria, Yemen, Libya. Many elites want further U.S. military action in Ukraine, against Iran, and to thwart China's rise in Asia. Aside from the risk of growing geopolitical blowback against America, the price tag is immense, contributing to the country's ongoing economic woes. ..."
"... Thus did this economic turn of events reflect the financialization of the U.S. economy-more and more rewards for moving money around and taking a cut and fewer and fewer rewards for building a business and creating jobs. ..."
"... ...Now comes the counterrevolution. The elites figure that if they can just get rid of Trump, the country can return to what they consider normalcy -- the status quo ante, before the Trumpian challenge to their status as rulers of America. That's why there is so much talk about impeachment even in the absence of any evidence thus far of "high crimes and misdemeanors." That's why the firing of James Comey as FBI director raises the analogy of Nixon's "Saturday Night Massacre." ..."
"... That's why the demonization of Russia has reached a fevered pitch, in hopes that even minor infractions on the part of the president can be raised to levels of menace and threat. ..."
"... There is no way out for America at this point. Steady as she goes could prove highly problematic. A push to remove him could prove worse. Perhaps a solution will present itself. But, even if it does, it will rectify, with great societal disquiet and animosity, merely the Trump crisis. The crisis of the elites will continue, all the more intractable and ominous. ..."
May 19, 2017 | economistsview.typepad.com

libezkova, May 19, 2017 at 10:44 AM

Trump is just a one acute symptom of the underling crisis of the neoliberal social system, that we experience. So his removal will not solve the crisis.

And unless some kind of New Deal Capitalism is restored there is no alternative to the neoliberalism on the horizon.

But the question is: Can the New Deal Capitalism with its "worker aristocracy" strata and the role of organized labor as a weak but still countervailing force to corporate power be restored ? I think not.

With the level of financialization achieved, the water is under the bridge. The financial toothpaste can't be squeezed back into the tube. That's what makes the current crisis more acute: none of the parties has any viable solution to the crisis, not the will to attempt to implement some radical changes.

When Trump becomes president by running against the nation's neoliberal elite of both parties, it was a strong, undeniable signal that the neoliberal elite has a problem -- it lost the trust of the majority American people and is viewed now, especially Wall Street financial sharks, as an "occupying force".

That means that we have the crisis of the elite governance or, as Marxists used to call it "a revolutionary situation" -- the situation in which the elite can't govern "as usual" and common people (let's say the bottom 80% of the USA population) do not want to live "as usual". Political Zugzwang. The anger is boiling and has became a material force in the most recent elections.

I think Robert W. Merry analysis of the situation is pretty insightful. In his article in the American Conservative ( http://www.theamericanconservative.com/articles/removing-trump-wont-solve-americas-crisis/) he made the following observations:

At least Republican elites resisted the emergence of Trump for as long as they could. Some even attacked him vociferously. But, unlike in the Democratic Party, the Republican candidate who most effectively captured the underlying sentiment of GOP voters ended up with the nomination. The Republican elites had to give way. Why? Because Republican voters fundamentally favor vulgar, ill-mannered, tawdry politicians? No, because the elite-generated society of America had become so bad in their view that they turned to the man who most clamorously rebelled against it.

... ... ...

The elites also ran American foreign policy, as they have throughout U.S. history. Over the past 25 years they got their country bogged down in persistent wars with hardly any stated purpose and in many instances no end in sight-Iraq, Afghanistan, Syria, Yemen, Libya. Many elites want further U.S. military action in Ukraine, against Iran, and to thwart China's rise in Asia. Aside from the risk of growing geopolitical blowback against America, the price tag is immense, contributing to the country's ongoing economic woes.

... ... ...

Then there is the spectacle of the country's financial elites goosing liquidity massively after the Great Recession to benefit themselves while slamming ordinary Americans with a resulting decline in Main Street capitalism. The unprecedented low interest rates over many years, accompanied by massive bond buying called "quantitative easing," proved a boon for Wall Street banks and corporate America while working families lost income from their money market funds and savings accounts. The result, says economic consultant David M. Smick, author of The Great Equalizer , was "the greatest transfer of middle-class and elderly wealth to elite financial interests in the history of mankind." Notice that these post-recession transactions were mostly financial transactions, divorced from the traditional American passion for building things, innovating, and taking risks-the kinds of activities that spur entrepreneurial zest, generate new enterprises, and create jobs. Thus did this economic turn of events reflect the financialization of the U.S. economy-more and more rewards for moving money around and taking a cut and fewer and fewer rewards for building a business and creating jobs.

...Now comes the counterrevolution. The elites figure that if they can just get rid of Trump, the country can return to what they consider normalcy -- the status quo ante, before the Trumpian challenge to their status as rulers of America. That's why there is so much talk about impeachment even in the absence of any evidence thus far of "high crimes and misdemeanors." That's why the firing of James Comey as FBI director raises the analogy of Nixon's "Saturday Night Massacre."

That's why the demonization of Russia has reached a fevered pitch, in hopes that even minor infractions on the part of the president can be raised to levels of menace and threat.

... ... ...

There is no way out for America at this point. Steady as she goes could prove highly problematic. A push to remove him could prove worse. Perhaps a solution will present itself. But, even if it does, it will rectify, with great societal disquiet and animosity, merely the Trump crisis. The crisis of the elites will continue, all the more intractable and ominous.

IMHO Trump betrayal of his voters under the pressure from DemoRats ("the dominant neoliberal wing of Democratic Party", aka "Clinton's wing") makes the situation even worse. a real Gordian knot. Or, in chess terminology, a Zugzwang.

[May 19, 2017] Demorats and boiling anger of lower 80 percent of the US population

economistsview.typepad.com

libezkova - , May 17, 2017 at 07:10 PM

May 19, 2017 | economistsview.typepad.com
"Democrats have spent the last generation opposing cuts to the tax rates on the rich "

Did Bill Clinton opposed tax cut for the rich? While being in the pocket of Wall Street.

Pretty brave assertion that has no connection to reality...

EMichael - , May 17, 2017 at 08:42 PM
He raised taxes on them you Russian troll.
libezkova - , May 18, 2017 at 07:25 PM
He raised income taxes for the top 1.5% and dramatically lowered capital gain tax. As rich get bulk of their income from capital gains and bonds he lowered taxes for rich. Is this so difficult to understand ?

As for "Russian troll" label, that only demonstrates your level brainwashing and detachment from reality. Clinical case of a politically correct neocon. People like you, as well as "Washington swamp", underestimate how angry people outside, let's say, top 20% are -- angry enough to elect Trump.

This boiling anger is now an important factor in the USA politics. That's why the US neocons feels do insecure and resort to dirty tricks to depose Trump. They want the full, 100% political power back.

Even the fact that Trump conceded the most important of his election promises is not enough for them. Carthago delenda est -- Trump must go -- is the mentality. But if it comes to the impeachment, "demorats" (aka neoliberal democrats) might see really interesting things, when it happens. It might well be that this time neocons/neolibs might really feel people wrath. I might be wrong as psychopaths are unable to experience emotions, only to fake them.

We are definitely living in interesting times.

[May 19, 2017] The instrumental and transformation view of the benefits of imperialism is reflected in comments I once read by Charles deGaulle who, as I recall saw the massacre of the Gauls by Julius Caesar, and the integration of the Gauls into the Roman polity as an essential step towards the emergence of a modern Europe

Notable quotes:
"... An alternative and modern view is that imperialism and colonialism are unreservedly adverse for the "natives' in that it deprives them of the freedom to shape their own futures. So many of us from the old colonies would not agree that imperialism the best thing that happened to us. But this debate continues. ..."
"... He who pays the piper calls the tune. ..."
"... What you are saying, sociologically, is that the Roman military conquests spread enabling technology. Well, it certainly is hard to suggest a counter-intuitive, except Jesus Christ. ..."
May 19, 2017 | economistsview.typepad.com

JA, May 18, 2017 at 08:02 PM

The instrumental and transformation view of the benefits of imperialism is reflected in comments I once read by Charles deGaulle who, as I recall saw the massacre of the Gauls by Julius Caesar, and the integration of the Gauls into the Roman polity as an essential step towards the emergence of a modern Europe. [I wish I could find the reference].

An alternative and modern view is that imperialism and colonialism are unreservedly adverse for the "natives' in that it deprives them of the freedom to shape their own futures. So many of us from the old colonies would not agree that imperialism the best thing that happened to us. But this debate continues.

XXX, May 18, 2017 at 08:29 PM

He who pays the piper calls the tune.

I suspect that your citation is reasonably accurate, historically. What you are saying, sociologically, is that the Roman military conquests spread enabling technology. Well, it certainly is hard to suggest a counter-intuitive, except Jesus Christ.

[May 19, 2017] Is neo-imprealism about which Branko Milanovic talks just neoliberal neocolonialism?

Notable quotes:
"... Installing compliant regime using the forces of internal "fifth column" of neoliberalism (which, is some cases, consists predominantly of former communists like happened in the USSR and China ;-). Actually, a step from communism to neoliberalism for Communist elite ("nomenklatura") was easy as neoliberalism is "Trotskyism for the rich." If necessary/possible it removes democratically elected governments from the power by claiming that election are falsified and the government is authoritarian (unlike the puppets they want to install). ..."
"... After puppets came to power they mandate austerity, burden the country with debt most of which is stolen and repatriated to the West. The only new idea that neoliberals introduced in the old scenario of colonization is that the crisis for financial and political takeover can be manufactured and instead of psychical occupation of the colony you can use "comprador" regime and rule the country indirectly via financial mechanisms. This is the essence of Washington consensus. ..."
May 18, 2017 | economistsview.typepad.com

Is "neo-imperialism" the only path to development? [ in the current circumstances]

libezkova, May 18, 2017 at 08:55 PM

Yes, in a sense, "the rise of Asia" was a side effect of global neoliberal revolution. So the key here not imperialism per ce, but neoliberalism. Unfortunately it is missing from "questions to be asked" list and that diminished the value of the article.

"(whence the origins of this transformation? the role of the nation-state and imperialism? the role of the bourgeois-led independence movements?)"

Neo-imperialism (or, more correctly, neocolonialism) is intrinsically connected with neoliberalism and, by extension, with "casino capitalism" -- oversized role of financial sector under neoliberalism as the rent extraction mechanism (via "debt slavery"). It uses instead of old-fashion occupation of the country, political and financial takeover the countries in crisis.

Installing compliant regime using the forces of internal "fifth column" of neoliberalism (which, is some cases, consists predominantly of former communists like happened in the USSR and China ;-). Actually, a step from communism to neoliberalism for Communist elite ("nomenklatura") was easy as neoliberalism is "Trotskyism for the rich." If necessary/possible it removes democratically elected governments from the power by claiming that election are falsified and the government is authoritarian (unlike the puppets they want to install).

After puppets came to power they mandate austerity, burden the country with debt most of which is stolen and repatriated to the West. The only new idea that neoliberals introduced in the old scenario of colonization is that the crisis for financial and political takeover can be manufactured and instead of psychical occupation of the colony you can use "comprador" regime and rule the country indirectly via financial mechanisms. This is the essence of Washington consensus.

That make neocolonialism more sustainable as the illusion of sovereignty is preserved. For example for all practical purposes Greece is now a colony. But armed struggle against occupation forces will not happen as there is no physical occupation forces in the country. They are all virtual ;-)

"Regime change" favorable to neoliberal globalization is what the idea of "color revolution" is about. It can occur even in the country that already has a brutal neocolonial neoliberal administration. Like was the case with Yanukovich regime in Ukraine. That means that we can't separate neocolonialism and neoliberal globalization. They are two sides of the same coin.

Also the development is not equivalent to the growth of GDP, even if we use purchase parity method of calculation of GDP. Standard of living of population and the growth of GDP can be detached under neoliberalism. Thay are not the same thing.

Simultaneously, like under classic imperialism, the population of the "host" county (the imperial power) suffers too, because it carries the increasing burden of maintaining and expanding of the empire. The current situation in the USA is clear example of this trend.

We also clearly see the attempts to lower the level of income to subsistence level in the USA (Wal-Mart), so this part of Marxism still have some validity. It looks like neoliberalism is not that interested in maintaining "worker aristocracy" in the "host" country. It might be replaced by upper strata of "guard labor" and "national security parasites".

Industrialization of China was an interesting historical event -- the result to three very improbable events.

1. Voluntarily conversion of China leadership of Communist Party to neoliberalism ( Deng Xiaoping theory "It doesn't matter whether a cat is white or black, as long as it catches mice." )

2. The USA successful attempt to play China against the USSR and Warsaw block.

3. The neoliberal revolution in the USA itself, which removed the idea of sharing profits with working class (New Deal Capitalism), and opened the path to outsourcing first manufacturing and then services to the low wage countries, making China a very lucrative target for the transfer of manufacturing and wage arbitrage. Timewise it corresponded with retirement of the managerial class which fought in WWII and replacement of this generation with more technocratic and more "neoliberally brainwashed" boomers.

Another interesting nuance is that out of "Asian tigers", only China can be viewed as nominally sovereign nation.

Other countries are to various degrees vassals of the USA. And that puts strict limits to their growth. Actually Trump election might be a signal to those nations: "know you place".

The idea that "Thus the seeds of the idea that imperialism may undermine class struggle in developed countries were sown and that had far reaching consequences." presuppose the working class, in classic Marxist tradition, has "revolutionary potential", the energy and the desire to overthrow the existing order.

This part of Marxism proved to be false. It was the social-democratic parties which were key to mobilizing workers.

This idea of the tremendous importance of the party for the modern society and that one party rule can stimulate economic development was actually inherited from Marxism by national socialism. Mussolini was a former prominent Italian social-democrat.

The "iron rule of oligarchy" also severely undermined the Marxist idea of "socialist state" and the possibility of the rule of working class (and democracy as a political system -- Göring: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy).

It is rumored that close to his death and seeing the emergence of "nomenklatura" as a new ruling class in the Soviet Russia Lenin exclaimed "My God, what we have done !".

[May 19, 2017] The suppliers of the intelligence that Trump told the Ruskies, want to control the US Intelligence Community.

Mr. Bill - , May 18, 2017 at 06:56 PM

May 19, 2017 | economistsview.typepad.com
Joe Lieberman surfacing from the lowest portal of the swamp, is not good news. The suppliers of the intelligence that Trump told the Ruskies, want to control the US Intelligence Community.

How many nuclear weapons do they have and where are they pointed ? Anyone allowed to ask ?

[May 18, 2017] Toward a Jobs Guarantee at the Center for American Progress by Lambert Strether

Notable quotes:
"... By Lambert Strether of Corrente ..."
"... The Financial Times ..."
"... customer ..."
May 17, 2017 | www.nakedcapitalism.com
Posted on May 17, 2017 By Lambert Strether of Corrente

I had another topic lined up today, but this ( hat tip alert reader ChrisAtRU ) is so remarkable - and so necessary to frame contextualize immediately - I thought I should bring it your attention, dear readers. The headline is "Toward a Marshall Plan for America ," the authors are a gaggle of CAP luminaries with Neera Tanden leading and Rey Teixeira trailing, and the "Marshall Plan" indeed includes something called a "Jobs Guarantee." Of course, I trust Clinton operatives like Tanden, and Third Way types like Teixeira, about as far as I can throw a concert grand piano. Nevertheless, one sign of an idea whose time has come is that sleazy opportunists and has-beens try to get out in front of it to seize credit[1] and stay relevant. So, modified rapture.

In this brief post, I'm going to look at the political context that drove CAP - taking Tanden, Teixeira, and the gaggle as a proxy for CAP - to consider a Jobs Guarantee (JG), briefly describe the nature and purpose of a JG, and conclude with some thoughts on how Tanden, Teixeira would screw the JG up, like the good liberals they are.

Political Context for CAP's JG

Let's begin with the photo of Prairie du Chien, WI at the top of CAP's JG article. Here it is:

I went to Google Maps Street View, found Stark's Sports Shop (and Liquor Store), and took a quick look round town. Things don't look too bad, which is to say things look pretty much like they do in my own home town, in the fly-over state of Maine; many local businesses. The street lamps make my back teeth itch a little, because along with bike paths to attract professionals, they're one of those panaceas to "bring back downtown," but as it turns out Prairie du Chien has marketed itself to summer tourists quite successfully as " the oldest Euro-American settlement established on the Upper Mississippi River," so those lamps are legit! (Of course, Prairie du Chien, like so much of flyover country, is fighting an opioid problem , but that doesn't show up in Street View, or affect the tourists in any way.)

More to the point, Crawford County WI, in which Prairie du Chien is located, was one of the counties that went for Obama, twice, and then flipped to Trump ( 50.1% Trump, 44.6% Clinton ), handing Trump the election, although the CAP authors don't mention this. AP has a good round-up of interviews with Prairie du Chien residents , from which I'll extract the salient points. On "flipping," both from Obama (since he didn't deliver) and away from Trump (if he doesn't deliver):

In 2012, [Lydia Holt] voted for Barack Obama because he promised her change, but she feels that change hasn't reached her here. So last year she chose a presidential candidate unlike any she'd ever seen, the billionaire businessman who promised to help America, and people like her, win again. Many of her neighbors did, too .

In this corner of middle America, in this one, small slice of the nation that sent Trump to Washington, they are watching and they are waiting, their hopes pinned on his promised economic renaissance. And if four years from now the change he pledged hasn't found them here, the people of Crawford County said they might change again to someone else.

"[T]hings aren't going the way we want them here," she said, "so we needed to go in another direction."

And the issues:

[Holt] tugged 13 envelopes from a cabinet above the stove, each one labeled with a different debt: the house payment, the student loans, the vacuum cleaner she bought on credit.

Lydia Holt and her husband tuck money into these envelopes with each paycheck to whittle away at what they owe. They both earn about $10 an hour and, with two kids, there are usually some they can't fill. She did the math; at this rate, they'll be paying these same bills for 87 years.

Kramer said she's glad the Affordable Care Act has helped millions get insurance, but it hasn't helped her he and her husband were stunned to find premiums over $1,000 a month. Her daughter recently moved into their house with her five children, so there's no money to spare. They opted to pay the penalty of $2,000, and pray they don't get sick until Trump, she hopes, keeps his promise to replace the law with something better.

Among them is a woman who works for $10.50 an hour in a sewing factory, who still admires Obama, bristles at Trump's bluster, but can't afford health insurance. And the dairy farmer who thinks Trump is a jerk - "somebody needs to get some Gorilla Glue and glue his lips shut" - but has watched his profits plummet and was willing to take the risk.

And of course jobs (as seen in this video, "Inside the Minds and Homes of Voters in Prairie du Chien, WI," made by students at the University of Wisconsin-Milwaukee).

So that's Prairie du Chien, Wisconsin. CAP frames the electoral context this way:

While the election was decided by a small number of votes overall, there was a significant shift of votes in counties in critical Electoral College states, including Iowa, Michigan, Ohio, Pennsylvania, and Wisconsin.

(I could have told them that. In fact, I did! ) And the reasons for the shift:

What was going on in these heavily white working-class counties that might explain support for Trump? Without diminishing the importance of cultural and racial influences, it is clear to us that lingering [sic] economic pressures among important voting blocs helped to create a larger opening for Trump's victory.

We do not yet know the exact reasons for the drop in turnout among young people and black voters. But with President Obama not on the ticket to drive voter enthusiasm, it is quite possible that lingering job and wage pressures in more urban areas with lots of young people, and in areas with large populations of African-Americans, yielded similar, if distinct, economic anxiety in ways that may have depressed voter turnout among base progressives. The combined effect of economic anxiety may have been to drive white noncollege voters toward Trump and to drive down voter engagement and participation among base progressives.

Either way, issues related to lost jobs, low wages, high costs, and diminished mobility played a critical role in setting the stage for a narrow populist victory for Trump.

(I could have told them that, too. In fact, I did! ) Note the lingering "Obama Coalition" / identity politics brain damage that casually assumes "base progressives" equate to African-Americans and youth. Nevertheless, mild kudos to CAP for fighting through to the concept that "economic pressures among important voting blocs helped to create a larger opening for Trump's victory." The CAP paper then goes on to recommend a JG as an answer to such "economic pressures."[2]

Nature and Purpose of a JG

Here's the how and why of a JG (though I wrote it up, I had the help of practioners):

How would the JG work from the perspective of a working person (not an owner?) Or from the perspective of the millions of permanently disemployed? The MMT Primer :

If you are involuntarily unemployed today (or are stuck with a part-time job when you really want to work full time) you only have three choices:

Employ yourself (create your own business-something that usually goes up in recessions although most of these businesses fail) Convince an employer to hire you, adding to the firm's workforce Convince an employer to replace an existing worker, hiring you

The second option requires that the firm's employment is below optimum-it must not currently have the number of workers desired to produce the amount of output the firm thinks it can sell. …

If the firm is in equilibrium, then, producing what it believes it can sell, it will hire you only on the conditions stated in the third case-to replace an existing worker. Perhaps you promise to work harder, or better, or at a lower wage. But, obviously, that just shifts the unemployment to someone else.

It is the "dogs and bones" problem: if you bury 9 bones and send 10 dogs out to go bone-hunting you know at least one dog will come back "empty mouthed". You can take that dog and teach her lots of new tricks in bone-finding, but if you bury only 9 bones, again, some unlucky dog comes back without a bone.

The only solution is to provide a 10 th bone. That is what the JG does: it ensures a bone for every dog that wants to hunt.

It expands the options to include:

    There is a "residual" employer who will always provide a job to anyone who shows up ready and willing to work.

It expands choice. If you want to work and exhaust the first 3 alternatives listed above, there is a 4 th : the JG.

It expands choice without reducing other choices. You can still try the first 3 alternatives. You can take advantage of all the safety net alternatives provided. Or you can choose to do nothing. It is up to you.

If I were one of the millions of people permanently disemployed, I would welcome that additional choice. It's certainly far more humane than any policy on offer by either party. And the JG is in the great tradition of programs the New Deal sponsored, like the CCC, the WPA, Federal Writers' Project , and the Federal Art Project