"... The book was The Constitution of Liberty by Frederick Hayek . Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism . It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone. ..."
"... But by the time Hayek came to write The Constitution of Liberty, the network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set out to close the gap. ..."
"... He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour of the wealthy and powerful, intrude on the absolute freedom from coercion he demands. ..."
"... The general thrust is about the gradual hollowing out of the middle class (or more affluent working class, depending on the analytical terms being used), about insecurity, stress, casualisation, rising wage inequality. ..."
"... So Hayek, I feel, is like many theoreticians, in that he seems to want a pure world that will function according to a simple and universal law. The world never was, and never will be that simple, and current economics simply continues to have a blindspot for externalities that overwhelm the logic of an unfettered so-called free market. ..."
"... J.K. Galbraith viewed the rightwing mind as predominantly concerned with figuring out a way to justify the shift of wealth from the immense majority to an elite at the top. I for one regret acutely that he did not (as far as I know) write a volume on his belief in progressive taxation. ..."
"... The system that Clinton developed was an inheritance from George H.W. Bush, Reagan (to a large degree), Carter, with another large assist from Nixon and the Powell Memo. ..."
"... What's changed is the distribution of the gains in GDP growth -- that is in no small part a direct consequence of changes in policy since the 1970s. It isn't some "market place magic". We have made major changes to tax laws since that time. We have weakened collective bargaining, which obviously has a negative impact on wages. We have shifted the economy towards financial services, which has the tendency of increasing inequality. ..."
"... Wages aren't stagnating because people are working less. Wages have stagnated because of dumb policy choices that have tended to incentives looting by those at the top of the income distribution from workers in the lower parts of the economy. ..."
"... "Neoliberalism" is entirely compatible with "growth of the state". Reagan greatly enlarged the state. He privatized several functions and it actually had the effect of increasing spending. ..."
"... When it comes to social safety net programs, e.g. in health care and education -- those programs almost always tend to be more expensive and more complicated when privatized. If the goal was to actually save taxpayer money, in the U.S. at least, it would have made a lot more sense to have a universal Medicare system, rather than a massive patch-work like the ACA and our hybrid market. ..."
"... As for the rest, it's the usual practice of gathering every positive metric available and somehow attributing it to neoliberalism, no matter how tenuous the threads, and as always with zero rigour. Supposedly capitalism alone doubled life expectancy, supports billions of extra lives, invented the railways, and provides the drugs and equipment that keep us alive. As though public education, vaccines, antibiotics, and massive availability of energy has nothing to do with those things. ..."
"... I think the damage was done when the liberal left co-opted neo-liberalism. What happened under Bill Clinton was the development of crony capitalism where for example the US banks were told to lower their credit standards to lend to people who couldn't really afford to service the loans. ..."
The events that led to Donald Trump's election started in England in 1975. At a meeting a few months after Margaret Thatcher became
leader of the Conservative party, one of her colleagues, or so the story goes, was explaining what he saw as the core beliefs of
conservatism. She snapped open her handbag, pulled out a dog-eared book, and
slammed it on the table . "This is what we believe," she said. A political revolution that would sweep the world had begun.
The book was The Constitution
of Liberty by Frederick Hayek . Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an
outright racket.
The philosophy
was called neoliberalism . It saw competition as the defining characteristic of human relations. The market would discover a
natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design.
Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive.
Unrestricted entrepreneurs would create the wealth that would trickle down to everyone.
This, at any rate, is how it was originally conceived. But by the time Hayek came to write The Constitution of Liberty, the
network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of
defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set
out to close the gap.
He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions
as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour
of the wealthy and powerful, intrude on the absolute freedom from coercion he demands.
Democracy, by contrast, "is not an ultimate or absolute value". In fact, liberty depends on preventing the majority from exercising
choice over the direction that politics and society might take.
He justifies this position by creating a heroic narrative of extreme wealth. He conflates the economic elite, spending their money
in new ways, with philosophical and scientific pioneers. Just as the political philosopher should be free to think the unthinkable,
so the very rich should be free to do the undoable, without constraint by public interest or public opinion.
The ultra rich are "scouts", "experimenting with new styles of living", who blaze the trails that the rest of society will follow.
The progress of society depends on the liberty of these "independents" to gain as much money as they want and spend it how they wish.
All that is good and useful, therefore, arises from inequality. There should be no connection between merit and reward, no distinction
made between earned and unearned income, and no limit to the rents they can charge.
Inherited wealth is more socially useful than earned wealth: "the idle rich", who don't have to work for their money, can devote
themselves to influencing "fields of thought and opinion, of tastes and beliefs". Even when they seem to be spending money on nothing
but "aimless display", they are in fact acting as society's vanguard.
Hayek softened his opposition to monopolies and hardened his opposition to trade unions. He lambasted progressive taxation and
attempts by the state to raise the general welfare of citizens. He insisted that there is "an overwhelming case against a free health
service for all" and dismissed the conservation of natural resources. It should come as no surprise to those who follow such matters
that he was awarded
the Nobel prize for economics .
By the time Thatcher slammed his book on the table, a lively network of thinktanks, lobbyists and academics promoting Hayek's
doctrines had been established on both sides of the Atlantic,
abundantly financed by some of the world's richest people and
businesses , including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig,
the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people
sponsored found the words and arguments required to turn Hayek's anthem to the elite into a plausible political programme.
Thatcherism and Reaganism were not ideologies in their own right: they were just two faces of neoliberalism. Their massive tax
cuts for the rich, crushing of trade unions, reduction in public housing, deregulation, privatisation, outsourcing and competition
in public services were all proposed by Hayek and his disciples. But the real triumph of this network was not its capture of the
right, but its colonisation of parties that once stood for everything Hayek detested.
Bill Clinton and Tony Blair did not possess a narrative of their own. Rather than develop a new political story, they thought
it was sufficient to
triangulate
. In other words, they extracted a few elements of what their parties had once believed, mixed them with elements of what their
opponents believed, and developed from this unlikely combination a "third way".
It was inevitable that the blazing, insurrectionary confidence of neoliberalism would exert a stronger gravitational pull than
the dying star of social democracy. Hayek's triumph could be witnessed everywhere from Blair's expansion of the private finance initiative
to Clinton's
repeal of the Glass-Steagal Act , which had regulated the financial sector. For all his grace and touch, Barack Obama, who didn't
possess a narrative either (except "hope"), was slowly reeled in by those who owned the means of persuasion.
As I warned
in April, the result is first disempowerment then disenfranchisement. If the dominant ideology stops governments from changing
social outcomes, they can no longer respond to the needs of the electorate. Politics becomes irrelevant to people's lives; debate
is reduced to the jabber of a remote elite. The disenfranchised turn instead to a virulent anti-politics in which facts and arguments
are replaced by slogans, symbols and sensation. The man who sank Hillary Clinton's bid for the presidency was not Donald Trump. It
was her husband.
The paradoxical result is that the backlash against neoliberalism's crushing of political choice has elevated just the kind of
man that Hayek worshipped. Trump, who has no coherent politics, is not a classic neoliberal. But he is the perfect representation
of Hayek's "independent"; the beneficiary of inherited wealth, unconstrained by common morality, whose gross predilections strike
a new path that others may follow. The neoliberal thinktankers are now swarming round this hollow man, this empty vessel waiting
to be filled by those who know what they want. The likely result is the demolition of our remaining decencies,
beginning with the agreement to limit global warming .
Those who tell the stories run the world. Politics has failed through a lack of competing narratives. The key task now is to tell
a new story of what it is to be a human in the 21st century. It must be as appealing to some who have voted for Trump and Ukip as
it is to the supporters of Clinton, Bernie Sanders or Jeremy Corbyn.
A few of us have been working on this, and can discern what may be the beginning of a story. It's too early to say much yet, but
at its core is the recognition that – as modern psychology and neuroscience make abundantly clear – human beings, by comparison with
any other animals, are both
remarkably social and
remarkably
unselfish . The atomisation and self-interested behaviour neoliberalism promotes run counter to much of what comprises human
nature.
Hayek told us who we are, and he was wrong. Our first step is to reclaim our humanity.
justamug -> Skytree 16 Nov 2016 18:17
Thanks for the chuckle. On a more serious note - defining neoliberalism is not that easy since it is not a laid out philosophy
like liberalism, or socialism, or communism or facism. Since 2008 the use of the word neoliberalism has increased in frequency
and has come to mean different things to different people.
A common theme appears to be the negative effects of the market on the human condition.
Having read David Harvey's book, and Phillip Mirowski's book (both had a go at defining neoliberalism and tracing its history)
it is clear that neoliberalism is not really coherent set of ideas.
ianfraser3 16 Nov 2016 17:54
EF Schumacher quoted "seek first the kingdom of God" in his epilogue of "Small Is Beautiful: a study of economics as if people
mattered". This was written in the early 1970s before the neoliberal project bit in the USA and the UK. The book is laced with
warnings about the effects of the imposition of neoliberalism on society, people and the planet. The predictions have largely
come true. New politics and economics needed, by leaders who place at the heart of their approach the premise, and fact, that
humans are "by comparison with any other animals, are both remarkably social and remarkably unselfish". It is about reclaiming
our humanity from a project that treats people as just another commodity.
Filipio -> YouDidntBuildThat 16 Nov 2016 17:42
Whoa there, slow down.
Your last post was questioning the reality of neoliberalism as a general policy direction that had become hegemonic across
many governments (and most in the west) over recent decades. Now you seem to be agreeing that the notion does have salience, but
that neoliberalism delivered positive rather than negative consequences.
Well, its an ill wind that blows nobody any good, huh?
Doubtless there were some positive outcomes for particular groups. But recall that the context for this thread is not whether,
on balance, more people benefited from neoliberal policies than were harmed -- an argument that would be most powerful only in
very utilitarian style frameworks of thought (most good for the many, or most harm for only the few). The thread is about the
significance of the impacts of neoliberalism in the rise of Trump. And in specific relation to privatisation (just one dimension
of neoliberalism) one key impact was downsizing (or 'rightsizing'; restructuring). There is a plethora of material, including
sociological and psychological, on the harm caused by shrinking and restructured work-forces as a consequence of privatisation.
Books have been written, even in the business management sector, about how poorly such 'change' was handled and the multiple deleterious
outcomes experienced by employees.
And we're still only talking about one dimension of neoliberalism! Havn't even touched on deregulation yet (notably, labour
market and financial sector).
The general thrust is about the gradual hollowing out of the middle class (or more affluent working class, depending on
the analytical terms being used), about insecurity, stress, casualisation, rising wage inequality.
You want evidence? I'm not doing your research for you. The internet can be a great resource, or merely an echo chamber. The
problem with so many of the alt-right (and this applies on the extreme left as well) is that they only look to confirm their views,
not read widely. Open your eyes, and use your search engine of choice. There is plenty out there. Be open to having your preconceptions
challenged.
RichardErskine -> LECKJ3000 16 Nov 2016 15:38
LECKJ3000 - I am not an economist, but surely the theoretical idealised mechanisms of the market are never realised in practice.
US subsidizing their farmers, in EU too, etc. And for problems that are not only externalities but transnational ones, the idea
that some Hayek mechanism will protect thr ozone layer or limit carbon emissions, without some regulation or tax.
Lord Stern called global warming the greatest market failure in history, but no market, however sophisticated, can deal with
it without some price put on the effluent of product (the excessive CO2 we put into the atmosphere).
As with Montreal and subsequent agreements, there is a way to maintain a level playing field; to promote different substances
for use as refrigerants; and to address the hole in ozone layer; without abandoning the market altogether. Simple is good, because
it avoids over-engineering the interventions (and the unintended consequences you mention).
The same could/ should be true of global warming, but we have left it so late we cannot wait for the (inevitable) fall of fossil
fuels and supremacy of renewables. We need a price on carbon, which is a graduated and fast rising tax essentially on its production
and/or consumption, which has already started to happen ( http://www.worldbank.org/content/dam/Worldbank/document/SDN/background-note_carbon-tax.pdf
), albeit not deep / fast / extensive enough, or international in character, but that will come, if not before the impacts really
bite then soon after.
So Hayek, I feel, is like many theoreticians, in that he seems to want a pure world that will function according to a simple
and universal law. The world never was, and never will be that simple, and current economics simply continues to have a blindspot
for externalities that overwhelm the logic of an unfettered so-called free market.
LionelKent -> greven 16 Nov 2016 14:59
And persistent. J.K. Galbraith viewed the rightwing mind as predominantly concerned with figuring out a way to justify the
shift of wealth from the immense majority to an elite at the top. I for one regret acutely that he did not (as far as I know)
write a volume on his belief in progressive taxation.
RandomLibertarian -> JVRTRL 16 Nov 2016 09:19
Not bad points.
When it comes to social safety net programs, e.g. in health care and education -- those programs almost always tend to be more
expensive and more complicated when privatized. If the goal was to actually save taxpayer money, in the U.S. at least, it would
have made a lot more sense to have a universal Medicare system, rather than a massive patch-work like the ACA and our hybrid market.
Do not forget that the USG, in WW2, took the deliberate step of allowing employers to provide health insurance as a tax-free
benefit - which it still is, being free even from SS and Medicare taxes. In the post-war boom years this resulted in the development
of a system with private rooms, almost on-demand access to specialists, and competitive pay for all involved (while the NHS, by
contrast, increasingly drew on immigrant populations for nurses and below). Next, the large sums of money in the system and a
generous court system empowered a vast malpractice industry. So to call our system in any way a consequence of a free market is
a misnomer.
Entirely state controlled health care systems tend to be even more cost-effective.
Read Megan McArdle's work in this area. The US has had similar cost growth since the 1970s to the rest of the world. The problem
was that it started from a higher base.
Part of the issue is that privatization tends to create feedback mechanism that increase the size of spending in programs.
Even Eisenhower's noted "military industrial complex" is an illustration of what happens when privatization really takes hold.
When government becomes involved in business, business gets involved in government!
Todd Smekens 16 Nov 2016 08:40
Albert Einstein said, "capitalism is evil" in his famous dictum called, "Why Socialism" in 1949. He also called communism,
"evil", so don't jump to conclusions, comrades. ;)
His reasoning was it distorts a human beings longing for the social aspect. I believe George references this in his statement
about people being "unselfish". This is noted by both science and philosophy.
Einstein noted that historically, the conqueror would establish the new order, and since 1949, Western Imperialism has continued
on with the predatory phase of acquiring and implementing democracy/capitalism. This needs to end. As we've learned rapidly, capitalism
isn't sustainable. We are literally overheating the earth which sustains us. Very unwise.
Einstein wrote, "Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to
protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate
abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures,
to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting,
strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual
can achieve an inner equilibrium and can contribute to the well-being of society."
Personally, I'm glad George and others are working on a new economic and social construct for us "human beings". It's time
we leave the predatory phase of "us versus them", and construct a new society which works for the good of our now, global society.
zavaell -> LECKJ3000 16 Nov 2016 06:28
The problem is that both you and Monbiot fail to mention that your "the spontaneous order of the market" does not recognize
externalities and climate change is outside Hayek's thinking - he never wrote about sustainability or the limits on resources,
let alone the consequences of burning fossil fuels. There is no beauty in what he wrote - it was a cold, mechanical model that
assumed certain human behaviour but not others. Look at today's money-makers - they are nearly all climate change deniers and
we have to have government to reign them in.
aLERNO 16 Nov 2016 04:52
Good, short and concise article. But the FIRST NEOLIBERAL MILESTONE WAS THE 1973 COUP D'ETAT IN CHILE, which not surprisingly
also deposed the first democratically-elected socialist government.
accipiter15 16 Nov 2016 02:34
A great article and explanation of the influence of Hayek on Thatcher. Unfortunately this country is still suffering the consequences
of her tenure and Osborne was also a proponent of her policies and look where we are as a consequence. The referendum gave the
people the opportunity to vent their anger and if we had PR I suspect we would have a greater turn-out and nearly always have
some sort of coalition where nothing gets done that is too hurtful to the population. As for Trump, again his election is an expression
of anger and desperation. However, the American voting system is as unfair as our own - again this has probably been the cause
of the low turn-out. Why should people vote when they do not get fair representation - it is a waste of time and not democratic.
I doubt that Trump is Keynsian I suspect he doesn't have an economic theory at all. I just hope that the current economic thinking
prevailing currently in this country, which is still overshadowed by Thatcher and the free market, with no controls over the city
casino soon collapses and we can start from a fairer and more inclusive base!
JVRTRL -> Keypointist 16 Nov 2016 02:15
The system that Clinton developed was an inheritance from George H.W. Bush, Reagan (to a large degree), Carter, with another
large assist from Nixon and the Powell Memo.
Bill Clinton didn't do it by himself. The GOP did it with him hand-in-hand, with the only resistance coming from a minority
within the Democratic party.
Trump's victory was due to many factors. A large part of it was Hillary Clinton's campaign and the candidate. Part of it was
the effectiveness of the GOP massive resistance strategy during the Obama years, wherein they pursued a course of obstruction
in an effort to slow the rate of the economic recovery (e.g. as evidence of the bad faith, they are resurrecting a $1 trillion
infrastructure bill that Obama originally proposed in 2012, and now that they have full control, all the talk about "deficits"
goes out the window).
Obama and the Democratic party also bear responsibility for not recognizing the full scope of the financial collapse in 2008-2009,
passing a stimulus package that was about $1 trillion short of spending needed to accelerate the recovery by the 2010 mid-terms,
combined with a weak financial regulation law (which the GOP is going to destroy), an overly complicated health care law -- classic
technocratic, neoliberal incremental policy -- and the failure of the Obama administration to hold Wall Street accountable for
criminal misconduct relating to the financial crisis. Obama's decision to push unpopular trade agreements didn't help either.
As part of the post-mortem, the decision to continuing pushing the TPP may have cost Clinton in the rust belt states that went
for Trump. The agreement was unpopular, and her shift on the policy didn't come across as credible. People noticed as well that
Obama was trying to pass the measure through the lame-duck session of Congress post-election. With Trump's election, the TPP is
done too.
JVRTRL daltonknox67 16 Nov 2016 02:00
There is no iron law that says a country has to run large trade deficits. The existence of large trade deficits is usually
a result of policy choices.
Growth also hasn't gone into the tank. What's changed is the distribution of the gains in GDP growth -- that is in no small
part a direct consequence of changes in policy since the 1970s. It isn't some "market place magic". We have made major changes
to tax laws since that time. We have weakened collective bargaining, which obviously has a negative impact on wages. We have shifted
the economy towards financial services, which has the tendency of increasing inequality.
The idea too that people will be "poorer" than in the 1920s and 1930s is just plain ignorant. It has no basis in any of the
data. Wages in the bottom quartile have actually decreased slightly since the 1970s in real terms, but those wages in the 1970s
were still exponentially higher than wages in the 1920s in real terms.
Wages aren't stagnating because people are working less. Wages have stagnated because of dumb policy choices that have tended
to incentives looting by those at the top of the income distribution from workers in the lower parts of the economy. The 2008
bailouts were a clear illustration of this reality. People in industries rigged rules to benefit themselves. They misallocated
resources. Then they went to representatives and taxpayers and asked for a large no-strings attached handout that was effectively
worth trillions of dollars (e.g. hundreds of billions through TARP, trillions more through other programs). As these players become
wealthier, they have an easier time buying politicians to rig rules further to their advantage.
JVRTRL -> RandomLibertarian 16 Nov 2016 01:44
"The tyranny of the 51 per cent is the oldest and most solid argument against a pure democracy."
"Tyranny of the majority" is always a little bizarre, given that the dynamics of majority rule are unlike the governmental
structures of an actual tyranny. Even in the context of the U.S. we had minority rule due to voting restrictions for well over
a century that was effectively a tyranny for anyone who was denied the ability to participation in the elections process. Pure
majorities can go out of control, especially in a country with massive wealth disparities and with weak civic institutions.
On the other hand, this is part of the reason to construct a system of checks and balances. It's also part of the argument
for representative democracy.
"Neoliberalism" is entirely compatible with "growth of the state". Reagan greatly enlarged the state. He privatized several
functions and it actually had the effect of increasing spending.
When it comes to social safety net programs, e.g. in health care and education -- those programs almost always tend to be more
expensive and more complicated when privatized. If the goal was to actually save taxpayer money, in the U.S. at least, it would
have made a lot more sense to have a universal Medicare system, rather than a massive patch-work like the ACA and our hybrid market.
Entirely state controlled health care systems tend to be even more cost-effective. Part of the issue is that privatization
tends to create feedback mechanism that increase the size of spending in programs. Even Eisenhower's noted "military industrial
complex" is an illustration of what happens when privatization really takes hold.
daltonknox67 15 Nov 2016 21:46
After WWII most of the industrialised world had been bombed or fought over with destruction of infrastructure and manufacturing.
The US alone was undamaged. It enjoyed a manufacturing boom that lasted until the 70's when competition from Germany and Japan,
and later Taiwan, Korea and China finally brought it to an end.
As a result Americans born after 1950 will be poorer than the generation born in the 20's and 30's.
This is not a conspiracy or government malfunction. It is a quirk of history. Get over it and try working.
Arma Geddon 15 Nov 2016 21:11
Another nasty neoliberal policy of Reagan and Thatcher, was to close all the mental hospitals, and to sweeten the pill to sell
to the voters, they called it Care in the Community, except by the time those hospitals closed and the people who had to relay
on those institutions, they found out and are still finding out that there is very little care in the community left any more,
thanks to Thatcher's disintegration of the ethos community spirit.
In their neoliberal mantra of thinking, you are on your own now, tough, move on, because you are hopeless and non productive,
hence you are a burden to taxpayers.
Its been that way of thinking for over thirty years, and now the latest group targeted, are the sick and disabled, victims
of the neoliberal made banking crash and its neoliberal inspired austerity, imposed of those least able to fight back or defend
themselves i.e. vulnerable people again!
AlfredHerring GimmeHendrix 15 Nov 2016 20:23
It was in reference to Maggie slapping a copy of Hayek's Constitution of Liberty on the table and saying this is what we believe.
As soon as you introduce the concept of belief you're talking about religion hence completeness while Hayek was writing about
economics which demands consistency. i.e. St. Maggie was just as bad as any Stalinist: economics and religion must be kept separate
or you get a bunch of dead peasants for no reason other than your own vanity.
Ok, religion based on a sky god who made us all is problematic but at least there's always the possibility of supplication
and miracles. Base a religion on economic theory and you're just making sausage of your neighbors kids.
TanTan -> crystaltips2 15 Nov 2016 20:10
If you claim that the only benefit of private enterprise is its taxability, as you did, then why not cut out the middle man
and argue for full state-directed capitalism?
Because it is plainly obvious that private enterprise is not directed toward the public good (and by definition). As we have
both agreed, it needs to have the right regulations and framework to give it some direction in that regard. What "the radical
left" are pointing out is that the idea of private enterprise is now completely out of control, to the point where voters are
disenfranchised because private enterprise has more say over what the government does than the people. Which is clearly a problem.
As for the rest, it's the usual practice of gathering every positive metric available and somehow attributing it to neoliberalism,
no matter how tenuous the threads, and as always with zero rigour. Supposedly capitalism alone doubled life expectancy, supports
billions of extra lives, invented the railways, and provides the drugs and equipment that keep us alive. As though public education,
vaccines, antibiotics, and massive availability of energy has nothing to do with those things.
As for this computer being the invention of capitalism, who knows, but I suppose if one were to believe that everything was
invented and created by capitalism and monetary motives then one might believe that. Energy allotments referred to the limit of
our usage of readily available fossil fuels which you remain blissfully unaware of.
Children have already been educated to agree with you, in no small part due to a fear of the communist regimes at the time,
but at the expense of critical thinking. Questioning the system even when it has plainly been undermined to its core is quickly
labelled "radical" regardless of the normalcy of the query. I don't know what you could possibly think left-wing motives could
be, but your own motives are plain to see when you immediately lump people who care about the planet in with communist idealogues.
If rampant capitalism was going to solve our problems I'm all for it, but it will take a miracle to reverse the damage it has
already done, and only a fool would trust it any further.
YouDidntBuildThat -> Filipio 15 Nov 2016 20:06
Filipo
You argue that a great many government functions have been privatized. I agree. Yet strangely you present zero evidence of
any downsides of that happening. Most of the academic research shows a net benefit, not just on budgets but on employee and customer
satisfaction. See for example.
And despite these privitazation cost savings and alleged neoliberal "austerity" government keeps taking a larger share of our
money, like a malignant cancer. No worries....We're from the government, and we're here to help.
Keypointist 15 Nov 2016 20:04
I think the damage was done when the liberal left co-opted neo-liberalism. What happened under Bill Clinton was the development
of crony capitalism where for example the US banks were told to lower their credit standards to lend to people who couldn't really
afford to service the loans.
It was this that created too big to fail and the financial crisis of 2008. Conservative neo-liberals believe passionately in
competition and hate monopolies. The liberal left removed was was productive about neo-liberalism and replaced it with a kind
of soft state capitalism where big business was protected by the state and the tax payer was called on to bail out these businesses.
THIS more than anything else led to Trump's victory.
"... So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912, he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United States, 1867–1960" in 1963, when he was already completely crooked. ..."
"... Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology as alternative to communist ideology. He served as a President of this Society from 1970 to 1972. ..."
"... So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in economic modeling, the epitome of mathiness. ..."
Ironic isn't it? "Why didn't ... exhibit the same restraint in his role as a public intellectual?
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could
and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not
give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm
of his early career hardened into a rigid defense of what had become the new orthodoxy."
Krugman should have stuck to economics...
likbez -> JohnH...
Yes, this is pretty nasty verdict for Krugman too.
But, in reality, Milton Friedman was an intellectual prostitute of financial oligarchy most of his long life, starting from
his days in Mont Pelerin Society ( https://en.wikipedia.org/wiki/Mont_Pelerin_Society)
, where he was one of the founders.
So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912,
he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United
States, 1867–1960" in 1963, when he was already completely crooked.
Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology
as alternative to communist ideology. He served as a President of this Society from 1970 to 1972.
Capitalism and Freedom that many consider to be neoliberal manifesto similar to Marx and Engels "Manifesto of the Communist
Party" was published in 1962.
So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember
Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in
economic modeling, the epitome of mathiness.
Ironic isn't it? "Why didn't ... exhibit the same restraint in his role as a public intellectual?
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could
and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not
give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm
of his early career hardened into a rigid defense of what had become the new orthodoxy."
Krugman should have stuck to economics...
likbez -> JohnH...
Yes, this is pretty nasty verdict for Krugman too.
But, in reality, Milton Friedman was an intellectual prostitute of financial oligarchy most of his long life, starting from
his days in Mont Pelerin Society ( https://en.wikipedia.org/wiki/Mont_Pelerin_Society)
, where he was one of the founders.
So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912,
he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United
States, 1867–1960" in 1963, when he was already completely crooked.
Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology
as alternative to communist ideology. He served as a President of this Society from 1970 to 1972.
Capitalism and Freedom that many consider to be neoliberal manifesto similar to Marx and Engels "Manifesto of the Communist
Party" was published in 1962.
So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember
Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in
economic modeling, the epitome of mathiness.
"... My criticism of Krugman is far more fundamental. I do not believe the profit motive is superior to the mutual benefit motive
when it comes to organizing economies. ..."
1. His refusal to acknowledge the central role of consumption in our economy. As Keynes said, ""Consumption - to repeat
the obvious - is the sole end and object of all economic activity." The General Theory, p. 104.
And Adam Smith agreed: "Consumption is the sole end and purpose of all production." The Wealth of Nations, Book IV Chapter
VIII, v. ii, p. 660, para. 49.
2. Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB. That is not only anti-Keynesian, it plays
directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)
"Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB."
That is a strawman, and a bad one.
PS: My criticism of Krugman is far more fundamental. I do not believe the profit motive is superior to the mutual benefit
motive when it comes to organizing economies.
An Inquiry into the Nature and Causes of The Wealth of Nations
By Adam Smith
On Systems of Political Economy
Conclusion of the Mercantile System
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so
far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self evident that it would be absurd
to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the
producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
The General Theory of Employment, Interest and Money
By John Maynard Keynes
The Propensity to Consume: The Objective Factors
Consumption - to repeat the obvious - is the sole end and object of all economic activity. Opportunities for employment are
necessarily limited by the extent of aggregate demand. Aggregate demand can be derived only from present consumption or from present
provision for future consumption. The consumption for which we can profitably provide in advance cannot be pushed indefinitely
into the future. We cannot, as a community, provide for future consumption by financial expedients but only by current physical
output. In so far as our social and business organisation separates financial provision for the future from physical provision
for the future so that efforts to secure the former do not necessarily carry the latter with them, financial prudence will be
liable to diminish aggregate demand and thus impair well-being, as there are many examples to testify. The greater, moreover,
the consumption for which we have provided in advance, the more difficult it is to find something further to provide for in advance,
and the greater our dependence on present consumption as a source of demand. Yet the larger our incomes, the greater, unfortunately,
is the margin between our incomes and our consumption. So, failing some novel expedient, there is, as we shall see, no answer
to the riddle, except that there must be sufficient unemployment to keep us so poor that our consumption falls short of our income
by no more than the equivalent of the physical provision for future consumption which it pays to produce to-day.
anne -> Paul Mathis... , -1
Krugman's refusal to endorse fiscal stimulus unless the economy is at zero lower bound. That is not only anti-Keynesian, it plays
directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)
[ Only correct to a degree, economic weakness is recognized. ]
"What's odd about Friedman's absolutism on the virtues of markets and the vices of government is that in his work as an economist's
economist he was actually a model of restraint. As I pointed out earlier, he made great contributions to economic theory by emphasizing
the role of individual rationality-but unlike some of his colleagues, he knew where to stop. Why didn't he exhibit the same restraint
in his role as a public intellectual?
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could
and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not
give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm
of his early career hardened into a rigid defense of what had become the new orthodoxy.
In the long run, great men are remembered for their strengths, not their weaknesses, and Milton Friedman was a very great man
indeed-a man of intellectual courage who was one of the most important economic thinkers of all time, and possibly the most brilliant
communicator of economic ideas to the general public that ever lived. But there's a good case for arguing that Friedmanism, in
the end, went too far, both as a doctrine and in its practical applications. When Friedman was beginning his career as a public
intellectual, the times were ripe for a counterreformation against Keynesianism and all that went with it. But what the world
needs now, I'd argue, is a counter-counterreformation."
In an interview with Public Broadcasting System on Oct. 1, 2000, Dr. Milton Friedman said, "Let me emphasize [that] I think
Keynes was a great economist. I think his particular theory in The General Theory of Employment, Interest, and Money is a fascinating
theory. It's a right kind of a theory. It's one which says a lot by using only a little. So it's a theory that has great potentiality."
Brilliant economist? Not exactly. For monetarists who believe as Dr. Friedman did that "inflation is always and everywhere
a monetary phenomenon," the nearly $4 trillion added to the money supply by the Fed since 2008 should have produced raging hyper-inflation.
For Friedman, the answer was not debatable: "A steady rate of monetary growth at a moderate level can provide a framework under
which a country can have little inflation and much growth." The Counter-Revolution in Monetary Theory (1970).
this graph, which should have been labelled but was not, depicts the monetary base from October 2012 to December 2015 for reasons
that are a mystery to me.
So Friedman has vanished from the policy scene - so much so that I suspect that a few decades from now, historians of economic
thought will regard him as little more than an extended footnote.
Who Was Milton Friedman?
By Paul Krugman - New York Review of Books
1.
The history of economic thought in the twentieth century is a bit like the history of Christianity in the sixteenth century.
Until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936, economics-at least in the English-speaking
world-was completely dominated by free-market orthodoxy. Heresies would occasionally pop up, but they were always suppressed.
Classical economics, wrote Keynes in 1936, "conquered England as completely as the Holy Inquisition conquered Spain." And classical
economics said that the answer to almost all problems was to let the forces of supply and demand do their job.
But classical economics offered neither explanations nor solutions for the Great Depression. By the middle of the 1930s, the
challenges to orthodoxy could no longer be contained. Keynes played the role of Martin Luther, providing the intellectual rigor
needed to make heresy respectable. Although Keynes was by no means a leftist-he came to save capitalism, not to bury it-his theory
said that free markets could not be counted on to provide full employment, creating a new rationale for large-scale government
intervention in the economy.
Keynesianism was a great reformation of economic thought. It was followed, inevitably, by a counter-reformation. A number of
economists played important roles in the great revival of classical economics between 1950 and 2000, but none was as influential
as Milton Friedman. If Keynes was Luther, Friedman was Ignatius of Loyola, founder of the Jesuits. And like the Jesuits, Friedman's
followers have acted as a sort of disciplined army of the faithful, spearheading a broad, but incomplete, rollback of Keynesian
heresy. By the century's end, classical economics had regained much though by no means all of its former dominion, and Friedman
deserves much of the credit.
I don't want to push the religious analogy too far. Economic theory at least aspires to be science, not theology; it is concerned
with earth, not heaven. Keynesian theory initially prevailed because it did a far better job than classical orthodoxy of making
sense of the world around us, and Friedman's critique of Keynes became so influential largely because he correctly identified
Keynesianism's weak points. And just to be clear: although this essay argues that Friedman was wrong on some issues, and sometimes
seemed less than honest with his readers, I regard him as a great economist and a great man....
It's one of Ben Bernanke's most memorable quotes: at a conference honoring Milton Friedman on his 90th birthday, he said: *
"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say
to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do
it again."
He was referring to the Friedman-Schwartz argument that the Fed could have prevented the Great Depression if only it has been
more aggressive in countering the fall in the money supply. This argument later mutated into the claim that the Fed caused the
Depression, but its original version still packed a strong punch. Basically, it implied that no fundamental reforms of the economy
were necessary; all it takes to avoid depressions is for central banks to do their job.
But can we say that recent events appear to disprove that claim? (So did Japan's experience in the 1990s, but that lesson failed
to sink in.) What we have now is a Fed that is determined not to "do it again." It has been very aggressive about monetary expansion.
Here's one measure of that aggressiveness, banks' excess reserves:
[Bank excess reserves, 1990-2009]
And yet the world economy is still falling off a cliff.
Preventing depressions, it turns out, is a lot harder than we were taught.
This was written in 2011 but it summarizes Obama presidency pretty nicely, even today. Betrayer
in chief, the master of bait and switch. That is the essence of Obama legacy. On "Great Democratic betrayal"...
Obama always was a closet neoliberal and neocon. A stooge of neoliberal financial oligarchy, a puppet,
if you want politically incorrect term. He just masked it well during hist first election campaigning
as a progressive democrat... And he faced Romney in his second campaign, who was even worse, so after
betraying American people once, he was reelected and did it twice. Much like Bush II. He like
another former cocaine addict -- George W Bush has never any intention of helping American people, only
oligarchy.
Notable quotes:
"... IN contrast, when faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze. ..."
"... We (yes, we) recognise that capitalism is the most efficient way to maximise overall prosperity and quality of life. But we also recognise that unfettered, it will ravage the environment, abuse labor, and expand income disparity until violence or tragedy (or both) ensues. ..."
"... These are the lessons we've learned since the industrial revolution, and they're the ones that we should be drawing from the past decade. We recognise that we need a strong federal government to check these tendencies, and to strike a stable, sustainable balance between prosperity, community, opportunity, wealth, justice, freedom. We need a voice to fill the moral vacuum that has allowed the Koch/Tea/Fox Party to emerge and grab power. ..."
"... Americans know this---including, of course, President Obama (see his April 13 speech at GW University). But as this article by Dr. Westen so effectively shows, Obama is incompetent to lead us back ..."
"... he is not competent to lead us back to a state of American morality, where government is the protector of those who work hard, and the provider of opportunity to all Americans. ..."
"... I've heard him called a mediator, a conciliator, a compromiser, etc. Those terms indicate someone who is bringing divergent views together and moving us along. That's part of what a leader does, though not all. Yet I don't think he's even lived up to his reputation as a mediator. ..."
"... Almost three years after I voted for Obama, I still don't know what he's doing other than trying to help the financial industry: the wealthy who benefit most from it and the technocrats who run it for them. But average working people, people like myself and my daughter and my grandson, have not been helped. We are worse off than before. And millions of unemployed and underemployed are even worse off than my family is. ..."
"... So whatever else he is (and that still remains a mystery to me), President Obama is not the leader I thought I was voting for. ..."
"... I knew that Obama was a charade early on when giving a speech about the banking failures to the nation, instead of giving the narrative Mr. Westen accurately recommended on the origins of the orgy of greed that just crippled our economy and caused suffering for millions of Americans ..."
"... He should have been condemning the craven, wanton, greed of nihilistic financial gangsters who hijacked our economy. Instead he seemed to be calling for all Americans not to hate rich people. That was not the point. Americans don't hate rich people, but they should hate rich people who acquire their wealth at the expense of the well being of an entire nation through irresponsible, avaricious, and in some instances illegal practices, and legally bribe politicians to enact laws which allow them to run amok over our economy without supervision or regulation. ..."
"... I knew then that Obama was either a political lemon, in over his head, an extremely conflict averse neurotic individual with a compulsive need for some delusional ideal of neutrality in political and social relations, or a political phony beholden to the same forces that almost destroyed the country as Republicans are. ..."
When Barack Obama rose to the lectern on Inauguration Day, the nation was in tatters. Americans
were scared and angry. The economy was spinning in reverse. Three-quarters of a million people lost
their jobs that month. Many had lost their homes, and with them the only nest eggs they had. Even
the usually impervious upper middle class had seen a decade of stagnant or declining investment,
with the stock market dropping in value with no end in sight. Hope was as scarce as credit.
In that context, Americans needed their president to tell them a story that made sense of what
they had just been through, what caused it, and how it was going to end. They needed to hear that
he understood what they were feeling, that he would track down those responsible for their pain and
suffering, and that he would restore order and safety. What they were waiting for, in broad strokes,
was a story something like this:
"I know you're scared and angry. Many of you have lost your jobs, your homes, your hope. This
was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated
with your lives and futures. It was made by conservative extremists who told us that if we just eliminated
regulations and rewarded greed and recklessness, it would all work out. But it didn't work out. And
it didn't work out 80 years ago, when the same people sold our grandparents the same bill of goods,
with the same results. But we learned something from our grandparents about how to fix it, and we
will draw on their wisdom. We will restore business confidence the old-fashioned way: by putting
money back in the pockets of working Americans by putting them back to work, and by restoring integrity
to our financial markets and demanding it of those who want to run them. I can't promise that we
won't make mistakes along the way. But I can promise you that they will be honest mistakes, and that
your government has your back again." A story isn't a policy. But that simple narrative - and the
policies that would naturally have flowed from it - would have inoculated against much of what was
to come in the intervening two and a half years of failed government, idled factories and idled hands.
That story would have made clear that the president understood that the American people had given
Democrats the presidency and majorities in both houses of Congress to fix the mess the Republicans
and Wall Street had made of the country, and that this would not be a power-sharing arrangement.
It would have made clear that the problem wasn't tax-and-spend liberalism or the deficit - a deficit
that didn't exist until George W. Bush gave nearly $2 trillion in tax breaks largely to the wealthiest
Americans and squandered $1 trillion in two wars.
And perhaps most important, it would have offered a clear, compelling alternative to the dominant
narrative of the right, that our problem is not due to spending on things like the pensions of firefighters,
but to the fact that those who can afford to buy influence are rewriting the rules so they can cut
themselves progressively larger slices of the American pie while paying less of their fair share
for it.
But there was no story - and there has been none since.
In similar circumstances, Franklin D. Roosevelt offered Americans a promise to use the power of
his office to make their lives better and to keep trying until he got it right. Beginning in his
first inaugural address, and in the fireside chats that followed, he explained how the crash had
happened, and he minced no words about those who had caused it. He promised to do something no president
had done before: to use the resources of the United States to put Americans directly to work, building
the infrastructure we still rely on today. He swore to keep the people who had caused the crisis
out of the halls of power, and he made good on that promise. In a 1936 speech at Madison Square Garden,
he thundered, "Never before in all our history have these forces been so united against one candidate
as they stand today. They are unanimous in their hate for me - and I welcome their hatred."
When Barack Obama stepped into the Oval Office, he stepped into a cycle of American history, best
exemplified by F.D.R. and his distant cousin, Teddy. After a great technological revolution or a
major economic transition, as when America changed from a nation of farmers to an urban industrial
one, there is often a period of great concentration of wealth, and with it, a concentration of power
in the wealthy. That's what we saw in 1928, and that's what we see today. At some point that power
is exercised so injudiciously, and the lives of so many become so unbearable, that a period of reform
ensues - and a charismatic reformer emerges to lead that renewal. In that sense, Teddy Roosevelt
started the cycle of reform his cousin picked up 30 years later, as he began efforts to bust the
trusts and regulate the railroads, exercise federal power over the banks and the nation's food supply,
and protect America's land and wildlife, creating the modern environmental movement.
Those were the shoes - that was the historic role - that Americans elected Barack Obama to fill.
The president is fond of referring to "the arc of history," paraphrasing the Rev. Dr. Martin Luther
King Jr.'s famous statement that "the arc of the moral universe is long, but it bends toward justice."
But with his deep-seated aversion to conflict and his profound failure to understand bully dynamics
- in which conciliation is always the wrong course of action, because bullies perceive it as weakness
and just punch harder the next time - he has broken that arc and has likely bent it backward for
at least a generation.
When Dr. King spoke of the great arc bending toward justice, he did not mean that we should wait
for it to bend. He exhorted others to put their full weight behind it, and he gave his life speaking
with a voice that cut through the blistering force of water cannons and the gnashing teeth of police
dogs. He preached the gospel of nonviolence, but he knew that whether a bully hid behind a club or
a poll tax, the only effective response was to face the bully down, and to make the bully show his
true and repugnant face in public.
IN contrast, when faced with the greatest economic crisis, the greatest levels of economic
inequality, and the greatest levels of corporate influence on politics since the Depression, Barack
Obama stared into the eyes of history and chose to avert his gaze. Instead of indicting the
people whose recklessness wrecked the economy, he put them in charge of it. He never explained that
decision to the public - a failure in storytelling as extraordinary as the failure in judgment behind
it. Had the president chosen to bend the arc of history, he would have told the public the story
of the destruction wrought by the dismantling of the New Deal regulations that had protected them
for more than half a century. He would have offered them a counternarrative of how to fix the problem
other than the politics of appeasement, one that emphasized creating economic demand and consumer
confidence by putting consumers back to work. He would have had to stare down those who had wrecked
the economy, and he would have had to tolerate their hatred if not welcome it. But the arc of his
temperament just didn't bend that far.
Michael August 7, 2011
Eloquently expressed and horrifically accurate, this excellent analysis articulates the frustration
that so many of us have felt watching Mr...
Bill Levine August 7, 2011
Very well put. I know that I have been going through Kübler-Ross's stages of grief ever since
the foxes (a.k.a. Geithner and Summers) were...
AnAverageAmerican August 7, 2011
"In that context, Americans needed their president to tell them a story that made sense of
what they had just been through, what caused it,...
Unfortunately, the Democratic Congress of 2008-2010, did not have the will to make the economic
and social program decisions that would have improved the economic situation for the middle-class;
and it is becoming more obvious that President Obama does not have the temperament to publicly
push for programs and policies that he wants the congress to enact.
The American people have a problem: we reelect Obama and hope for the best; or we elect a Republican
and expect the worst. There is no question that the Health Care law that was just passed would
be reversed; Medicare and Medicare would be gutted; and who knows what would happen to Social
Security. You can be sure, though, that business taxes and regulation reforms would not be in
the cards and those regulations that have been enacted would be reversed. We have traveled this
road before and we should be wise enough not to travel it again!
Brilliant analysis - and I suspect that a very large number of those who voted for President
Obama will recognize in this the thoughts that they have been trying to ignore, or have been trying
not to say out loud. Later historians can complete this analysis and attempt to explain exactly
why Mr. Obama has turned out the way he has - but right now, it may be time to ask a more relevant
and urgent question.
If it is not too late, will a challenger emerge in time before the 2012 elections, or will
we be doomed to hold our noses and endure another four years of this?
Very eloquent and exactly to the point. Like many others, I was enthralled by the rhetoric
of his story, making the leap of faith (or hope) that because he could tell his story so well,
he could tell, as you put it, "the story the American people were waiting to hear."
Disappointment has darkened into disillusion, disillusion into a species of despair. Will I
vote for Barack Obama again? What are the options?
This is the most brilliant and tragic story I have read in a long time---in fact, precisely
since I read when Ill Fares the Land by Tony Judt. When will a leader emerge with a true moral
vision for the federal government and for our country? Someone who sees government as a balance
to capitalism, and a means to achieve the social and economic justice that we (yes, we) believe
in? Will that leadership arrive before parts of America come to look like the dystopia of Johannesburg?
We (yes, we) recognise that capitalism is the most efficient way to maximise overall prosperity
and quality of life. But we also recognise that unfettered, it will ravage the environment, abuse
labor, and expand income disparity until violence or tragedy (or both) ensues.
These are the lessons we've learned since the industrial revolution, and they're the ones
that we should be drawing from the past decade. We recognise that we need a strong federal government
to check these tendencies, and to strike a stable, sustainable balance between prosperity, community,
opportunity, wealth, justice, freedom. We need a voice to fill the moral vacuum that has allowed
the Koch/Tea/Fox Party to emerge and grab power.
Americans know this---including, of course, President Obama (see his April 13 speech at
GW University). But as this article by Dr. Westen so effectively shows, Obama is incompetent to
lead us back to America's traditional position on the global economic/political spectrum.
He's brilliant and eloquent. He's achieved personal success that is inspirational. He's done some
good things as president. But he is not competent to lead us back to a state of American morality,
where government is the protector of those who work hard, and the provider of opportunity to all
Americans.
Taxes, subsidies, entitlements, laws... these are the tools we have available to achieve our
national moral vision. But the vision has been muddled (hijacked?) and that is our biggest problem.
-->
I voted for Obama. I thought then, and still think, he's a decent person, a smart person, a
person who wants to do the best he can for others. When I voted for him, I was thinking he's a
centrist who will find a way to unite our increasingly polarized and ugly politics in the USA.
Or if not unite us, at least forge a way to get some important things done despite the ugly polarization.
And I must confess, I have been disappointed. Deeply so. He has not united us. He has not forged
a way to accomplish what needs to be done. He has not been a leader.
I've heard him called a mediator, a conciliator, a compromiser, etc. Those terms indicate
someone who is bringing divergent views together and moving us along. That's part of what a leader
does, though not all. Yet I don't think he's even lived up to his reputation as a mediator.
Almost three years after I voted for Obama, I still don't know what he's doing other than
trying to help the financial industry: the wealthy who benefit most from it and the technocrats
who run it for them. But average working people, people like myself and my daughter and my grandson,
have not been helped. We are worse off than before. And millions of unemployed and underemployed
are even worse off than my family is.
So whatever else he is (and that still remains a mystery to me), President Obama is not
the leader I thought I was voting for. Which leaves me feeling confused and close to apathetic
about what to do as a voter in 2012. More of the same isn't worth voting for. Yet I don't see
anyone out there who offers the possibility of doing better.
This was an extraordinarily well written, eloquent and comprehensive indictment of the failure
of the Obama presidency.
If a credible primary challenger to Obama ever could arise, the positions and analysis in this
column would be all he or she would need to justify the Democratic party's need to seek new leadership.
I knew that Obama was a charade early on when giving a speech about the banking failures
to the nation, instead of giving the narrative Mr. Westen accurately recommended on the origins
of the orgy of greed that just crippled our economy and caused suffering for millions of Americans,
he said "we don't disparage wealth in America." I was dumbfounded.
He should have been condemning the craven, wanton, greed of nihilistic financial gangsters
who hijacked our economy. Instead he seemed to be calling for all Americans not to hate rich people.
That was not the point. Americans don't hate rich people, but they should hate rich people who
acquire their wealth at the expense of the well being of an entire nation through irresponsible,
avaricious, and in some instances illegal practices, and legally bribe politicians to enact laws
which allow them to run amok over our economy without supervision or regulation.
I knew then that Obama was either a political lemon, in over his head, an extremely conflict
averse neurotic individual with a compulsive need for some delusional ideal of neutrality in political
and social relations, or a political phony beholden to the same forces that almost destroyed the
country as Republicans are.
"... You can't go all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates ... from
temptation. ... ..."
"... And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never
about the incentives; it was just another excuse to make the rich richer. ..."
"... "The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is, the search for a superior
moral justification for selfishness." ..."
"... choosing a cabinet of billionaires, because rich men are incorruptible"...kind of like showering ZIRP on the Wall Street banking
cartel and letting them how to ration credit to the rest of economy...mostly their wealthy clientele, who use it for stock buy-backs
and asset speculation. ..."
"... Of course, 'liberal' economists see nothing wrong with trickle down, supply side economics, as long as it's the Wall Street
banking cartel who's in charge of it... ..."
"... Stiglitz: "I've always said that current monetary policy is not going to work because quantitative easing is based on a variant
of trickle-down economics. The lower interest rates have led to a stock-market bubble – to increases in stock-market prices and huge
increases in wealth. But relatively little of that's been translated into increased and broad consumer spending." ..."
"... But pgl and many other '[neo[liberal' economists just can't get enough of the trickle down monetary policy...all the while
they vehemently condemn trickle down tax policy. ..."
"... You all think Trump can do worse than the sitting cabal adding $660B from Sep 2015 to the federal debt quietly keeping the
economy going for the incumbent party? ..."
"... The losers think the winners are as crooked as they! ..."
To belabor what should be obvious: either the wealthy care about having more money or they don't. If lower marginal tax rates
are an incentive to produce more, the prospect of personal gain is an incentive to engage in corrupt practices. You can't go
all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates ... from temptation. ...
And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never
about the incentives; it was just another excuse to make the rich richer.
In one sentence, you still can't beat John Kenneth Galbraith's assessment: "The modern conservative is engaged in one of man's
oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."
Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth. -- Nero
Wolfe
You need to know nothing else to understand the entirety of the conservative edifice.
JohnH :
"choosing a cabinet of billionaires, because rich men are incorruptible"...kind of like showering ZIRP on the Wall Street
banking cartel and letting them how to ration credit to the rest of economy...mostly their wealthy clientele, who use it for stock
buy-backs and asset speculation.
Of course, 'liberal' economists see nothing wrong with trickle down, supply side economics, as long as it's the Wall Street
banking cartel who's in charge of it...
But pgl and many other '[neo[liberal' economists just can't get enough of the trickle down monetary policy...all the while
they vehemently condemn trickle down tax policy.
yuan -> JohnH...
and few liberal economists have been more skeptical of QE's economic impact than Krugman.
You all think Trump can do worse than the sitting cabal adding $660B from Sep 2015 to the federal debt quietly keeping the
economy going for the incumbent party?
The losers think the winners are as crooked as they!
yuan -> ilsm...
when we can borrow over the long-term at 3% and have truly massive infrastructure and clean energy needs we should be borrowing
like military Keynesian republicans...
"... And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. ..."
"... That it is and always a sham is irrelevant. It is THE NARRATIVE that matters! They had a compelling story and they stuck to
it. That's how you sell politics in this country. ..."
And this is telling us something significant: namely, that supply-side economic theory is and always was a sham.
Urgh. That it is and always a sham is irrelevant. It is THE NARRATIVE that matters! They had a compelling story and they
stuck to it. That's how you sell politics in this country.
Trump told a significant fraction of the population that he understood their problems and that he would fix them. He told
enough people what they wanted to hear - and did so with a convincing tone - that he got himself elected. That's how you win.
You sell people on your vision. If you tell a good story most people aren't going to reality-check it. Sad but true.
Krugman was clearly a neoliberal propagandist on payroll. He
should not be even discussed in this context because his
columns were so clearly partisan.
As for "Centrist Democrats" (aka Clinton wing of the
party) their power is that you have nowhere to go: they rule
the Democratic Party and the two party system guarantees that
any third party will be either squashed or assimilated.
In no way they need that you believe them: being nowhere
to go is enough.
Remember what happened with Sanders supporters during the
convention? They were silenced. And then eliminated. That's
how this system works.
Cal -> likbez...
, -1
Krugman is a polarizing agent here in RiverCity...to our
collective loss IMHO...as you know I don't have the Nobel.
But you might be giving him some hope with that "was"?
Clearly he does not need $.
He is writing for our....yes, American, maybe even Global
citizenship, which he thinks is in peril.
It is. Otherwise I'd be out fishing.
And you?
What's in it for you? Are you familiar with the history of
political party systems that transition in and out of 2
parties?
Is this little forum an example of the 2 party system:
pro/con Krugman?
Americans believe crazy things, yet they are outdone by
economists
Comment on Catherine Rampell on 'Americans - especially but
not exclusively Trump voters - believe crazy, wrong things'#1
Americans are NOT special. Since more than 5000 years people
believe things JUST BECAUSE they are absurd - in accordance
with Tertullian's famous dictum "credo quia absurdum".#2
As a matter of principle, almost everybody has the right
to his own opinion no matter how stupid, crazy, wrong, or
absurd; the only exception are scientists. The ancient Greeks
started science with the distinction between doxa (= opinion)
and episteme (= knowledge). Scientific knowledge is
well-defined by material and formal consistency. Knowledge is
established by proof, belief or opinion counts for nothing.
Opinion is the currency in the political sphere, knowledge
is the currency is the scientific sphere. It is extremely
important to keep both spheres separate. Since the founding
fathers, though, economists have not emancipated themselves
from politics. They claim to do science but they have never
risen above the level of opinion, belief, wish-wash,
storytelling, soap box propaganda, and sitcom gossip.
The orthodox majority still believes in these Walrasian
hard core absurdities: "HC1 economic agents have preferences
over outcomes; HC2 agents individually optimize subject to
constraints; HC3 agent choice is manifest in interrelated
markets; HC4 agents have full relevant knowledge; HC5
observable outcomes are coordinated, and must be discussed
with reference to equilibrium states." (Weintraub)
To be clear: HC2, HC4, HC5 are NONENTITIES like angels,
Spiderman, or the Easter Bunny.
The heterodox minority still believes in these ill-defined
Keynesian relationships: "Income = value of output =
consumption + investment. Saving = income - consumption.
Therefore saving = investment."
Until this day, Walrasians, Keynesians, Marxians,
Austrians hold to their provable false beliefs and claim to
do science. This is absurdity on stilts but it is swallowed
hook, line and sinker by every new generation of economics
students. Compared to the representative economist the
average political sucker is a genius.
Did not William Casey (CIA
Director) say, "We'll know
our disinformation program is
complete when everything the
American public believes is
false."?
Notable quotes:
"... The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors. ..."
Americans are also led to believe a lot of crazy, wrong
things, such as Saddam had WMDs, or Iran had a nuclear
weapons program, to cite only the most outrageous lies
dutifully propagated by the mainstream media.
Before
Catherine Rampell criticizes ordinary Americans, she should
have the Washington Post engage in a little serious
introspection and self-criticism...
The media should certainly shoulder some blame for
parroting militarist propaganda but ordinary USAnians who
continue to reward these scoundrels with their votes. And
with Trump ordinary USAnians appear to have elected someone
even more willing to shamelessly lie and loot than his
predecessors.
It is time for ordinary USAnians to
engage in a lot of serious introspection and self-criticism.
I doubt this will happen until it's too late. (Very thankful
that I am not tied to this nation!)
>It is time for ordinary USAnians to engage in a lot of
serious introspection and self-criticism.
Don't hold your breath. Introspection and self-criticism
aren't our strong suits. They run counter to that whole
"American exceptionalism" thing.
> I doubt this will happen until it's too late.
I doubt that it will ever happen but, if it does, I have
no doubt that it will happen until after its too late to
salvage what currently passes for civilization in these
parts.
"There's a big difference between the task of trying to
sustain "civilisation" in its current form... and the task of
holding open a space for the things which make life worth
living. I'd suggest that it's this second task, in its many
forms, which remains, after we've given up on false hopes." (
http://dark-mountain.net/blog/what-do-you-do-after-you-stop-pretending/)
"... But there are other flavors too. For example Trump introduced another flavor which I called "bastard neoliberalism". Which is the neoliberalism without neoliberal globalization and without "Permanent revolution" mantra -- efforts for enlargement of the US led global neoliberal empire. Somewhat similar to Eduard Bernstein "revisionism" in Marxism. Or Putinism - which is also a flavor of neoliberalism with added "strong state" part and "resource nationalism" bent, which upset so much the US neoliberal establishment, as it complicates looting of the country by transnational corporations. ..."
"... Neoliberalism also can be viewed as a modern mutation of corporatism, favoring multinationals (under disguise of "free trade"), privatization of state assets, minimal government intervention in business (with financial oligarchy being like Soviet nomenklatura above the law), reduced public expenditures on social services, and decimation of New Deal, strong anti trade unionism stance and attempt to atomize work force (perma temps as preferred mode of employment giving employers "maximum flexibility") , neocolonialism and militarism in foreign relations (might makes right). ..."
"... The word "elite" in the context of neoliberalism has the same meaning as the Russian word nomenklatura. https://en.wikipedia.org/wiki/Nomenklatura, -- the political establishment holding or controlling both public and private power centers such as media, finance, academia, culture, trade, industry, state and international institutions. ..."
At this point, when I hear people use the words "neoliberal," "elites" and "the media" in unspecified
or highly generalized terms to make broad characterizations ... I know I'm dealing with an
unserious person.
It's a lot like when someone says "structural reform" without specification in an economic
discussion: An almost perfect indicator of vacuity.
likbez -> sanjait... , -1
Let's define the terms.
Neoliberals are those who adhere to the doctrine of Neoliberalism (the "prohibited" word
you should not ever see in the US MSM ;-)
In this sense the term is very similar to Marxists (with the replacement of the slogan of
"proletarians of all nations unite" with the "financial oligarchy of all countries unite").
Or more correctly they are the "latter day Trotskyites".
Neoliberalism consists of several eclectic parts such as neoclassic economics, mixture of
Nietzscheanism (often in the form of Ann Rand philosophy; with the replacement of concept of
Ubermench with "creative class" concept)) with corporatism. Like with Marxism there are different
flavors of neoliberalism and different factions like "soft neoliberalism" (Clinton third way)
which is the modern Democratic Party doctrine, and hard neoliberalism (Republican party version),
often hostile to each other.
But there are other flavors too. For example Trump introduced another flavor which I called
"bastard neoliberalism". Which is the neoliberalism without neoliberal globalization and without
"Permanent revolution" mantra -- efforts for enlargement of the US led global neoliberal empire.
Somewhat similar to Eduard Bernstein "revisionism" in Marxism. Or Putinism - which is also
a flavor of neoliberalism with added "strong state" part and "resource nationalism" bent, which
upset so much the US neoliberal establishment, as it complicates looting of the country by
transnational corporations.
Neoliberalism also can be viewed as a modern mutation of corporatism, favoring multinationals
(under disguise of "free trade"), privatization of state assets, minimal government intervention
in business (with financial oligarchy being like Soviet nomenklatura above the law), reduced
public expenditures on social services, and decimation of New Deal, strong anti trade unionism
stance and attempt to atomize work force (perma temps as preferred mode of employment giving
employers "maximum flexibility") , neocolonialism and militarism in foreign relations (might
makes right).
Like for any corporatist thinkers the real goals are often hidden under thick smoke screen
of propaganda.
The word "elite" in the context of neoliberalism has the same meaning as the Russian word
nomenklatura. https://en.wikipedia.org/wiki/Nomenklatura,
-- the political establishment holding or controlling both public and private power centers
such as media, finance, academia, culture, trade, industry, state and international institutions.
[As if] protectionist Japan is now backward and poverty stricken; free trade Africa is soaring
on the wings of giant trade deficits :
Economists lead the way in silly beliefs that defy empirical reality and common sense. The most glaring
example of this is the view that free trade is beneficial. All evidence points in the opposite direction,
but no matter - our fake economists are happy to say/believe whatever so long as their foreign government
paymasters and banks write the ten thousand dollar checks for "consulting" and "academic reports".
You are probably wrong. Free trade is a delicate instrument, much like tennis racket. If you hold
it too tightly you can't play well. If you hold it too loose you can't play well either.
Neoliberals promote "free trade" (note "free" not "fair") as the universal cure for all nations
problems in all circumstances. This is a typical neoliberal Three-card Monte.
The real effect in many cases is opening market for transnationals who dictate nations the
rules of the game and loot the country.
But isolationism has its own perils. So some middle ground should be fought against excessive
demands of neoliberal institutions like IMF and World Bank. For example, any country that take
loans from them (usually on pretty harsh conditions; with string attached), has a great danger
that money will be looted via local fifth column. And will return in no time back into Western Banks
leaving the country in the role of the debt slave.
The latter is the preferred role neoliberals want to see each and every third world country
(and not only third world countries -- see Greece and Cyprus). Essentially in their "secret" book
this is the role those counties should be driven into.
Recent looting of Ukraine is the textbook example of this process. The majority of population
now will live on less then $2 a day for many, many years.
At the same time, balancing free trade and isolationism is tricky process also. Because at some
point, the subversion starts and three letter agencies come into the play. You risk getting color
revolution as a free present for your refusal to play the game.
Neoliberals usually do not take NO for the answer.
That's when the word "neoliberal" becomes yet another dirty word.
Did William Casey (CIA
Director) really say, "We'll know
our disinformation program is
complete when everything the
American public believes is
false."?
Americans are also led to believe a lot of crazy, wrong
things, such as Saddam had WMDs, or Iran had a nuclear
weapons program, to cite only the most outrageous lies
dutifully propagated by the mainstream media.
Before
Catherine Rampell criticizes ordinary Americans, she should
have the Washington Post engage in a little serious
introspection and self-criticism...
The media should certainly shoulder some blame for parroting
militarist propaganda but ordinary USAnians who continue to
reward these scoundrels with their votes. And with Trump
ordinary USAnians appear to have elected someone even more
willing to shamelessly lie and loot than his predecessors.
It is time for ordinary USAnians to engage in a lot of
serious introspection and self-criticism. I doubt this will
happen until it's too late. (Very thankful that I am not tied
to this nation!)
Carnival Corp. told about 200 IT employees that the company was transferring their work to Capgemini,
a large IT outsourcing firm
Notable quotes:
"... Senior IT engineer Matthew Culver told CBS that the requested "knowledge transfer activities" just meant training their own replacements , and "he isn't buying any of it," writes Slashdot reader dcblogs . ..."
"... Foreign workers are willing to do a job at a lower salary in most if not all cases b/c the cost of living in their respective countries is a fraction of ours. ..."
Posted by EditorDavid on Sunday December 25, 2016 @05:05PM from the Bob-Cratchit-vs-Scrooge dept.
ComputerWorld reports:
In early December, Carnival Corp.
told about 200 IT employees that the company was transferring their work to Capgemini, a large
IT outsourcing firm. The employees had a choice: Either agree to take a job with the contractor or
leave without severance. The employees had until the week before Christmas to make a decision about
their future with the cruise line.
By agreeing to a job with Paris-based Capgemini, employees are guaranteed employment for six
months, said Roger Frizzell, a Carnival spokesman.
"Our expectation is that many will continue to work on our account or placed into other open
positions within Capgemini" that go well beyond the six-month period, he said in an email.
Senior IT engineer Matthew Culver told CBS that the requested "knowledge transfer activities"
just meant training their own replacements , and "he isn't buying any of it," writes Slashdot
reader dcblogs . "After receiving
his offer letter from Capgemini, he sent a counteroffer.
It asked for $500,000...and apology letters to all the affected families," signed by the company's
CEO. In addition, the letter also demanded a $100,000 donation to any charity that provides services
to unemployed American workers. "I appreciate your time and attention to this matter, and I sincerely
hope that you can fulfill these terms."
Foreign workers are willing to do a job at a lower salary in most if not all cases b/c
the cost of living in their respective countries is a fraction of ours.
I would be willing to do my job at a fraction of what I am paid currently should that (that
being how expensive it is to live here) change. It is equally infuriating to me when American
companies use loopholes in our ridiculously complicated tax code to shelter revenues in foreign
tax shelters to avoid paying taxes while at the same time benefiting from our infrastructure,
emergency services, military, etc..
Its assholes like you that always spout off about free market this or that, about some companies
fiduciary responsibilities to it's shareholders blah blah blah... as justification for shitty
behavior.
It is equally infuriating to me when American companies use loopholes in our ridiculously
complicated tax code to shelter revenues in foreign tax shelters to avoid paying taxes
So who are you infuriated at? The companies that take advantage of those loopholes, or the
politicians that put them there? Fury doesn't help unless it is properly directed. Does your fury
influence who you vote for?
... while at the same time benefiting from our infrastructure, emergency services, military,
etc.
No. Taxes are only sheltered on income generated overseas, using overseas infrastructure, emergency
services, etc. I am baffled why Americans believe they have a "right" to tax the sale of a product
made in China and sold in France.
I suppose it's related to the idea that intellectual property "rights" granted by a country
of origin should still have the same benefits and drawbacks when transferred to another country.
Or at the very least should be treated as an export at such time a base of operations moves out
of country.
Except that calling, say iOS sales 'generated overseas' when the software was written in the
US, using US infrastructure, etc . And the company is making the bogus claim that their
Irish subsidiary owns the rights to that software. It's a scam - not a loophole.
They are the same thing. The only way to ensure that there are no tax dodges out there is to
simplify the tax code, and eliminate the words: "except", "but", "excluding", "omitting", "minus",
"exempt", "without", and any other words to those same effects.
Americans are too stupid to ever vote for a poltiician that states they will raise taxes. This
means that either politicians lie, or they actively undermine the tax base. Both of those situations
are bad for the majority of americans, but they vote for the same scumbags over and over, and
will soundly reject any politician who openly advocates tax increases. The result is a race to
the bottom. Welcome to reaping what you sow, brought to you by Democracy(tm).
Except that calling, say iOS sales 'generated overseas' when the software was written
in the US, using US infrastructure, etc .
That makes no sense. Plenty of non-American companies develop software in America. Yet only
if they are incorporated in America do they pay income tax on their overseas earnings, and it
is irrelevant where their engineering and development was done.
It has nothing whatsoever to do with "using infrastructure". It is just an extraterritorial
money grab that is almost certainly counterproductive since it incentivizes American companies
to invest and create jobs overseas.
Yes, taxes are based on profits. So Google, for instance, makes a bunch of money in the US.
Their Irish branch then charges about that much for "consulting" leaving the American part with
little to no profits to tax.
"I am baffled why Americans believe they have a "right" to tax the sale of a product made in
China and sold in France."
Because the manufacturing and sales are controlled by a US based company, as is the profit
benefit which results. If a US entity, which receives the benefits of US law, makes a profit by
any means, why should it not be taxed by the US?
"... Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone's) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions. ..."
"... Of course another way to reduce inequality is to raise wages. Buried way down around paragraph 9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government should make the minimum wage "high enough so that no family with a full-time worker falls below the official poverty line." ..."
"... The current foundational rules embedded in tax law, intellectual property law, corporate construction law, and other elements of our legal and regulatory system result in distributions that favor those with capital or in a position to seek rents. This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the poor. It is more a question of how elites have rigged the system to work primarily for them. ..."
"... the problem is incomes and demand, and the first and best answer for creating demand for workers and higher wages to compete for those workers is full employment. ..."
"... if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. ..."
"... what we are looking at here is simple old fashioned greed just as stupid and ugly among the "non rich" as it is among the rich. ..."
"... you play into the hands of the Petersons who want to "cut taxes" and leave the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and fear-driven greed trying to provide against desperate poverty in old age absent any reliable security for their savings.) ..."
"... made by the ayn rand faithful. it is wearisome. ..."
"... The only cure for organized greed is organized labor. ..."
"... A typical voice of American politics is the avoidance of saying anything real on real issues" ..."
The content should be familiar to AngryBear
readers. A majority of Americans are alarmed by high and increasing inequality and support government
action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness
to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge
the question.
Rich individuals (who are willing to be interviewed) also express concern about inequality but
generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly
state his guess (and everyone's) that candidates are eager to please the rich, because they spend
much of their time begging the rich for contributions.
No suprise to anyone who has been paying attention except for the fact that it is on the front
page of www.nytimes.com and the article is printed in the business section not the opinion section.
Do click the link - it is brief, to the point, solid, alarming and a must read.
I clicked one of the links and found weaker evidence than I expected for Scheiber's view (which
of course I share
"By contrast, more than half of Americans and three-quarters of Democrats believe the "government
should redistribute wealth by heavy taxes on the rich," according to a
Gallup poll of about 1,000 adults in April 2013."
It is a small majority 52% favor and 47% oppose. This 52 % is noticeably smaller than the solid
majorities who have been telling Gallup that high income individuals pay less than their fair share
of taxes (click and search
for Gallup on the page).
I guess this isn't really surprising - the word "heavy" is heavy maaaan and "redistribute" evokes
the dreaded welfare (and conservatives have devoted gigantic effort to giving it pejorative connotations).
The 52% majority is remarkable given the phrasing of the question. But it isn't enough to win elections,
since it is 52% of adults which corresponds to well under 52% of actual voters.
My reading is that it is important for egalitarians to stress the tax cuts for the non rich and
that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the
non rich without huge budget deficits. This is exactly Obama's approach.
Comments (87)
Jerry Critter
March 29, 2015 10:40 pm
Get rid of tax breaks that only the wealthy can take advantage of and perhaps everyone will
pay their fair share. The same goes for corporations.
amateur socialist
March 30, 2015 11:42 am
Of course another way to reduce inequality is to raise wages. Buried way down around paragraph
9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government
should make the minimum wage "high enough so that no family with a full-time worker falls below
the official poverty line."
I'm fine with raising people's taxes by increasing their wages. A story I heard on NPR recently
indicated that a single person needs to make about $17-19 an hour to cover most basic necessities
nowadays (the story went on to say that most people in that situation are working 2 or more jobs
to get enough income, a "solution" that creates more problems with health/stress etc.). A full
time worker supporting kids needs more than $20.
You double the minimum wage and strengthen people's rights to organize union representation.
Tax revenues go up (including SS contributions btw) and we add significant growth to the economy
with the increased purchasing power of workers. People can go back to working 40-50 hours a week
and cut back on moonlighting which creates new job opportunities for the younger folks decimated
by this so called recovery.
Win Win Win Win. And the poor overburdened millionaires don't have to have their poor tax fee
fees hurt.
Mark Jamison, March 30, 2015 8:09 pm
How about if we get rid of the "re" and call it what it is "distribution". The current
foundational rules embedded in tax law, intellectual property law, corporate construction law,
and other elements of our legal and regulatory system result in distributions that favor those
with capital or in a position to seek rents.
This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the
poor. It is more a question of how elites have rigged the system to work primarily for them.
Democrats cede the rhetoric to the Right when they allow the discussion to be about redistribution.
Even talk of inequality without reference to the basic legal constructs that are rigged to create
slanted outcomes tend to accepted premises that are in and of themselves false.
The issue shouldn't be rejiggering things after the the initial distribution but creating a
system with basic rules that level the opportunity playing field.
coberly, March 30, 2015 11:03 pm
Thank You Mark Jamison!
An elegant, informed writer who says it better than I can.
But here is how I would say it:
Addressing "inequality" by "tax the rich" is the wrong answer and a political loser.
Address inequality by re-criminalizing the criminal practices of the criminal rich. Address
inequality by creating well paying jobs with government jobs if necessary (and there is necessary
work to be done by the government), with government protection for unions, with government policies
that make it less profitable to off shore
etc. the direction to take is to make the economy more fair . actually more "free" though you'll
never get the free enterprise fundamentalists to admit that's what it is. You WILL get the honest
rich on your side. They don't like being robbed any more than you do.
But you will not, in America, get even poor people to vote to "take from the rich to give to
the poor." It has something to do with the "story" Americans have been telling themselves since
1776. A story heard round the world.
That said, there is nothing wrong with raising taxes on the rich to pay for the government
THEY need as well as you. But don't raise taxes to give the money to the poor. They won't do it,
and even the poor don't want it except as a last resort, which we hope we are not at yet.
urban legend, March 31, 2015 2:07 am
Coberly, you are dead-on. Right now, taxation is the least issue. Listen to Jared Bernstein
and Dean Baker: the problem is incomes and demand, and the first and best answer for creating
demand for workers and higher wages to compete for those workers is full employment. Minimum
wage will help at the margins to push incomes up, and it's the easiest initial legislative sell,
but the public will support policies - mainly big-big infrastructure modernization in a country
that has neglected its infrastructure for a generation - that signal a firm commitment to full
employment.
It's laying right there for the Democrats to pick it up. Will they? Having policies that are
traditional Democratic policies will not do the job. For believability - for convincing voters
they actually have a handle on what has been wrong and how to fix it - they need to have a story
for why we have seem unable to generate enough jobs for over a decade. The neglect of infrastructure
- the unfilled millions of jobs that should have gone to keeping it up to date and up to major-country
standards - should be a big part of that story. Trade and manufacturing, to be sure, is the other
big element that will connect with voters. Many Democrats (including you know who) are severely
compromised on trade, but they need to find a way to come own on the right side with the voters.
coberly, March 31, 2015 10:52 am
Robert
i wish you'd give some thought to the other comments on this post.
if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non
rich you are simply proposing theft. if you were proposing raising taxes on the rich to provide
reasonable welfare to those who need it you would be asking the rich to contribute to the strength
of their own country and ultimately their own wealth.
i hope you can see the difference.
it is especially irritating to me because many of the "non rich" who want their taxes cut make
more than twice as much as i do. what we are looking at here is simple old fashioned greed
just as stupid and ugly among the "non rich" as it is among the rich.
"the poor" in this country do not pay a significant amount of taxes (Social Security and Medicare
are not "taxes," merely an efficient way for us to pay for our own direct needs . as long as you
call them taxes you play into the hands of the Petersons who want to "cut taxes" and leave
the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety
and fear-driven greed trying to provide against desperate poverty in old age absent any reliable
security for their savings.)
Kai-HK, April 4, 2015 12:23 am
coberly,
Thanks for your well-reasoned response.
You state, 'i personally am not much interested in the "poor capitalist will flee the country
if you tax him too much." in fact i'd say good riddance, and by the way watch out for that tarriff
when you try to sell your stuff here.'
(a) What happens after thy leave? Sure you can get one-time 'exit tax' but you lose all the
intellectual capital (think of Bill Gates, Warren Buffet, or Steve Jobs leaving and taking their
intellectual property and human capital with them). These guys are great jobs creators it will
not only be the 'bad capitalists' that leave but also many of the 'job creating' good ones.
(b) I am less worried about existing job creating capitalists in America; what about the future
ones? The ones that either flee overseas and make their wealth there or are already overseas and
then have a plethora of places they can invest but why bother investing in the US if all they
are going to do is call me a predator and then seize my assets and or penalise me for investing
there? Right? It is the future investment that gets impacted not current wealth per se.
You also make a great point, 'the poor are in the worst position with respect to shifting their
tax burden on to others. the rich do it as a matter of course. it would be simpler just to tax
the rich there are fewer of them, and they know what is at stake, and they can afford accountants.
the rest of us would pay our "taxes" in the form of higher prices for what we buy.'
Investment capital will go where it is best treated and to attract investment capital a market
must provide a competitive return (profit margin or return on investment). Those companies and
investment that stay will do so because they are able to maintain that margin .and they will do
so by either reducing wages or increasing prices. Where they can do neither, their will exit the
market.
That is why, according to research, a bulk of the corporate taxation falls on workers and consumers
as a pass-on effect. The optimum corporate tax is 0. This will be the case as taxation increases
on the owners of businesses and capital .workers, the middle class, and the poor pay it. The margins
stay competitive for the owners of capital since capital is highly mobile and fungible.Workers
and the poor less so.
But thanks again for the tone and content of your response. I often get attacked personally
for my views instead of people focusing on the issue. I appreciate the respite.
K
coberly, April 4, 2015 12:34 pm
kai
yes, but you missed the point.
i am sick of the whining about taxes. it takes so much money to run the country (including
the kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will
buy their products.
i can't do much about the poor whining about taxes. they are just people with limited understanding,
except for their own pressing needs. the rich know what the taxes are needed for, they are just
stupid about paying them. of course they would pass the taxes through to their customers. the
customers would still buy what they need/want at the new price. leaving everyone pretty much where
they are today financially. but the rich would be forced to be grownup about "paying" the taxes,
and maybe the politics of "don't tax me tax the other guy" would go away.
as for the sainted bill gates. there are plenty of other people in this country as smart as
he is and would be happy to sell us computer operating systems and pay the taxes on their billion
dollars a year profits.
nothing breaks my heart more than a whining millionaire.
Kai-HK
April 4, 2015 11:32 pm
Sure I got YOUR point, it just didn't address MY points as put forth in MY original post. And
it still doesn't.
More importantly, you have failed to defend YOUR point against even a rudimentary challenge.
K
coberly, April 5, 2015 12:45 pm
kai,
rudimentary is right.
i have read your "points" about sixteen hundred times in the last year alone. made by the
ayn rand faithful. it is wearisome.
and i have learned there is no point in trying to talk to true believers.
William Ryan, May 13, 2015 4:43 pm
Thanks again Coberly for your and K's very thoughtful insight. You guys really made me think
hard today and I do see your points about perverted capitalism being a big problem in US. I still
do like the progressive tax structure and balanced trade agenda better.
I realize as you say that we cannot compare US to Hong Kong just on size and scale alone. Without
all the obfuscation going Lean by building cultures that makes people want to take ownership and
sharing learning and growing together is a big part of the solution Ford once said "you cannot
learn in school what the world is going to do next".
Also never argue with an idiot. They will bring you down to their level then beat you with
experience. The only cure for organized greed is organized labor. It's because no matter
what they do nothing get done about it. With all this manure around there must be a pony somewhere!
"
A typical voice of American politics is the avoidance of saying anything real on real
issues". FDR.
Rich people pay rich people to tell middle class people to blame poor people
Earth doesn't matter, people don't matter, even economy doesn't matter . The only thing
that matters is R.W. nut bar total ownership of everything.
I'm sorry I put profits ahead of people, greed above need and the rule of gold above God's
golden rules.
I try to stay away from negative people who have a problem for every solution
We need capitalism that is based on justice and greater corporate responsibility. I do
not speak nor do I comprehend assholian.
"If you don't change direction , you may end up where you are headed". Lao-Tzu.
"The true strength of our nation comes not from our arm or wealth but from our ideas".
Obama..
Last one.
"If the soul is left to darkness, sins will be committed. The guilty one is not the one
who commits the sins, but the one who caused the darkness". Victor Hugo.
coberly , May 16, 2015 9:57 pm
kai
as a matter of fact i disagree with the current "equality" fad at least insofar as it implies
taking from the rich and giving to the poor directly.
i don't believe people are "equal" in terms of their economic potential. i do beleive they
are equal in terms of being due the respect of human beings.
i also believe your simple view of "equality" is a closet way of guarantee that the rich can
prey upon the poor without interruption.
humans made their first big step in evolution when they learned to cooperate with each other
against the big predators.
Jerry Critter, May 17, 2015 12:10 am
it is mildly progressive up to about $75,000 per year where the rate hits 30%. But from there
up to $1.542 million the rate only increases to 33.3%.
I call that very flat!
Jerry Critter, May 17, 2015 11:20 am
"i assume there are people in this country who are truly poor. as far as i know they
don't pay taxes."
Read my reference and you will see that the "poor" indeed pay taxes, just not much income tax
because they don't have much income. You are fixated on income when we should be considering all
forms of taxation.
Jerry Critter, May 17, 2015 9:25 pm
Oh Kai, cut the crap. Paying taxes Is nothing like slavery. My oh my, how did we ever survive
with a top tax rate of around 90%, nearly 3 times the current rate? Some people would even say
that the economy then was pretty great and the middle class was doing terrific. So stop the deflection
and redirection. I think you just like to see how many words you can write. Sorry, but history
is not on your side.
Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
Abstract
This paper combines tax, survey, and national accounts data to estimate the distribution of national
income in the United States since 1913. Our distributional national accounts capture 100% of national
income, allowing us to compute growth rates for each quantile of the income distribution consistent
with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making
it possible to provide a comprehensive view of how government redistribution affects inequality.
Average pre-tax national income per adult has increased 60% since 1980, but we find that it
has stagnated for the bottom 50% of the distribution at about $16,000 a year.
The pre-tax income of the middle class-adults between the median and the 90th percentile-has
grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise
of tax-exempt fringe benefits.
Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than
bottom 50% adults, while they earn 81 times more today.
The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital
income phenomenon since 2000.
The government has offset only a small fraction of the increase in inequality. The reduction of
the gender gap in earnings has mitigated the increase in inequality among adults. The share of women,
however, falls steeply as one moves up the labor income distribution, and is only 11% in the top
0.1% today.
Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
Introduction Income inequality has increased in many developed countries over the last
several decades. This trend has attracted considerable interest among academics, policy-makers,
and the general public. In recent years, following up on Kuznets' (1953) pioneering attempt,
a number of authors have used administrative tax records to construct long-run series of
top income shares (Alvaredo et al., 2011-2016). Yet despite this endeavor, we still face
three important limitations when measuring income inequality. First and most important,
there is a large gap between national accounts-which focus on macro totals and growth-and
inequality studies-which focus on distributions using survey and tax data, usually without
trying to be fully consistent with macro totals. This gap makes it hard to address questions
such as: What fraction of economic growth accrues to the bottom 50%, the middle 40%, and
the top 10% of the distribution? How much of the rise in income inequality owes to changes
in the share of labor and capital in national income, and how much to changes in the dispersion
of labor earnings, capital ownership, and returns to capital? Second, about a third of U.S.
national income is redistributed through taxes, transfers, and public good spending. Yet
we do not have a good measure of how the distribution of pre-tax income differs from the
distribution of post-tax income, making it hard to assess how government redistribution
affects inequality. Third, existing income inequality statistics use the tax unit or the
household as unit of observation, adding up the income of men and women. As a result, we
do not have a clear view of how long-run trends in income concentration are shaped by the
major changes in women labor force participation-and gender inequality generally-that have
occurred over the last century.
This paper attempts to compute inequality statistics for the United States that overcome
the limits of existing series by creating distributional national accounts. We combine tax,
survey, and national accounts data to build new series on the distribution of national income
since 1913. In contrast to previous attempts that capture less than 60% of US national income-
such as Census bureau estimates (US Census Bureau 2016) and top income shares (Piketty and
Saez, 2003)-our estimates capture 100% of the national income recorded in the national accounts.
This enables us to provide decompositions of growth by income groups consistent with macroeconomic
growth. We compute the distribution of both pre-tax and post-tax income. Post-tax series
deduct all taxes and add back all transfers and public spending, so that both pre-tax and
post-tax incomes add up to national income. This allows us to provide the first comprehensive
view of how government redistribution affects inequality. Our benchmark series uses the
adult individual as the unit of observation and splits income equally among spouses. We
also report series in which each spouse is assigned her or his own labor income, enabling
us to study how long-run changes in gender inequality shape the distribution of income.
Distributional national accounts provide information on the dynamic of income across
the entire spectrum-from the bottom decile to the top 0.001%-that, we believe, is more accurate
than existing inequality data. Our estimates capture employee fringe benefits, a growing
source of income for the middle-class that is overlooked by both Census bureau estimates
and tax data. They capture all capital income, which is large-about 30% of total national
income- and concentrated, yet is very imperfectly covered by surveys-due to small sample
and top coding issues-and by tax data-as a large fraction of capital income goes to pension
funds and is retained in corporations. They make it possible to produce long-run inequality
statistics that control for socio-demographic changes-such as the rise in the fraction of
retired individuals and the decline in household size-contrary to the currently available
tax-based series.
Methodologically, our contribution is to construct micro-files of pre-tax and post-tax
income consistent with macro aggregates. These micro-files contain all the variables of
the national accounts and synthetic individual observations that we obtain by statistically
matching tax and survey data and making explicit assumptions about the distribution of income
categories for which there is no directly available source of information. By construction,
the totals in these micro-files add up to the national accounts totals, while the distributions
are consistent with those seen in tax and survey data. These files can be used to compute
a wide array of distributional statistics-labor and capital income earned, taxes paid, transfers
received, wealth owned, etc.-by age groups, gender, and marital status. Our objective, in
the years ahead, is to construct similar micro-files in as many countries as possible in
order to better compare inequality across countries. Just like we use GDP or national income
to compare the macroeconomic performances of countries today, so could distributional national
accounts be used to compare inequality across countries tomorrow.
We stress at the outset that there are numerous data issues involved in distributing
national income, discussed in the text and the online appendix. First, we take the national
accounts as a given starting point, although we are well aware that the national accounts
themselves are imperfect (e.g., Zucman 2013). They are, however, the most reasonable starting
point, because they aggregate all the available information from surveys, tax data, corporate
income statements, and balance sheets, etc., in an standardized, internationally-agreed-upon
and regularly improved upon accounting framework. Second, imputing all national income,
taxes, transfers, and public goods spending requires making assumptions on a number of complex
issues, such as the economic incidence of taxes and who benefits from government spending.
Our goal is not to provide definitive answers to these questions, but rather to be comprehensive,
consistent, and explicit about what assumptions we are making and why. We view our paper
as attempting to construct prototype distributional national accounts, a prototype that
could be improved upon as more data become available, new knowledge emerges on who pays
taxes and benefits from government spending, and refined estimation techniques are developed-just
as today's national accounts are regularly improved....
Low oil prices and an increasingly
costly war in Yemen have torn a yawning hole in the Saudi budget and created a crisis that has led
to cuts in public spending, reductions in take-home pay and benefits for government workers and a
host of new fees and fines. Huge subsidies for fuel, water and electricity that encourage
overconsumption are being curtailed. ...
Market capitalism has certainly had a rough five years. Remember the
Washington Consensus
? That was the to-do list of 10 economic policies designed to Americanize emerging markets back
in the 1990s. The U.S. government and international financial institutions urged countries to impose
fiscal discipline and reduce or eliminate budget deficits, broaden the tax base and lower tax rates,
allow the market to set interest and exchange rates, and liberalize trade and capital flows. When
Asian economies were hit by the 1997-1998 financial crisis, American critics were quick to bemoan
the defects of "crony capitalism" in the region, and they appeared to have economic history on their
side.
Yet today, in the aftermath of the biggest U.S. financial crisis since the Great Depression, the
world looks very different. Not only did the 2008-2009 meltdown of financial markets seem to expose
the fundamental fragility of the capitalist system, but China's apparent ability to withstand the
reverberations of Wall Street's implosion also suggested the possibility of a new "Beijing Consensus"
based on central planning and state control of volatile market forces.
In his book
The End of the Free Market , the Eurasia Group's Ian Bremmer
argues that authoritarian governments all over the world have "invented something new: state
capitalism":
In this system, governments use various kinds of state-owned companies to manage the exploitation
of resources that they consider the state's crown jewels and to create and maintain large numbers
of jobs.
They use select privately owned companies to dominate certain economic sectors.
They use
so-called sovereign wealth funds to invest their extra cash in ways that maximize the state's profits.
In all three cases, the state is using markets to create wealth that can be directed as political
officials see fit.
And in all three cases, the ultimate motive is not economic (maximizing growth)
but political (maximizing the state's power and the leadership's chances of survival). This
is a form of capitalism but one in which the state acts as the dominant economic player and uses
markets primarily for political gain.
For Bremmer, state capitalism poses a grave "threat" not only to the free market model, but also
to democracy in the developing world.
Although applicable to states all over the globe, at root this is an argument about China. Bremmer
himself writes that "China holds the key." But is it in fact correct to ascribe China's success to
the state rather than the market? The answer depends on where you go in China. In Shanghai or Chongqing,
for example, the central government does indeed loom very large. In Wenzhou, by comparison, the economy
is as vigorously entrepreneurial and market-driven as anywhere I have ever been.
True, China's economy continues to be managed on the basis of a five-year plan, an authoritarian
tradition that goes all the way back to Josef Stalin. As I write, however, the Chinese authorities
are grappling with a problem that owes more to market forces than to the plan: the aftermath of an
urban real estate bubble caused by the massive 2009-2010 credit expansion. Among China experts, the
hot topic of the moment is the new shadow banking system in cities such as Wenzhou, which last year
enabled developers and investors to carry on building and selling apartment blocks even as the People's
Bank of China sought to restrict lending by raising rates and bank reserve requirements.
Talk to some eminent Chinese economists, and you could be forgiven for concluding that the ultimate
aim of policy is to get rid of state capitalism altogether. "We need to privatize all the state-owned
enterprises," one leading economist told me over dinner in Beijing a year ago. "We even need to privatize
the Great Hall of the People." He also claimed to have said this to President Hu Jintao. "Hu couldn't
tell if I was serious or if I was joking," he told me proudly.
Ultimately, it is an unhelpful oversimplification to divide the world into "market capitalist"
and "state capitalist" camps. The reality is that most countries are arranged along a spectrum where
both the intent and the extent of state intervention in the economy vary. Only extreme libertarians
argue that the state has no role whatsoever to play in the economy. As a devotee of Adam Smith, I
accept without qualification his argument in
The Wealth of Nations that the benefits of free trade and the division of labor will be
enjoyed only in countries with rational laws and institutions. I also agree with Silicon Valley visionary
Peter Thiel that, under the right circumstances (e.g., in time of war), governments are capable of
forcing the direction and pace of technological change: Think the Manhattan Project.
But the question today is not whether the state or the market should be in charge. The real question
is which countries' laws and institutions are best, not only at achieving rapid economic growth but
also, equally importantly, at distributing the fruits of growth in a way that citizens deem to be
just.
Let us begin by asking a simple question that can be answered with empirical data: Where in the
world is the role of the state greatest in economic life, and where is it smallest? The answer lies
in data the IMF publishes
on "general government total expenditure" as a percentage of GDP. At one extreme are countries like
East Timor and Iraq, where government expenditure exceeds GDP; at the other end are countries like
Bangladesh, Guatemala, and Myanmar, where it is an absurdly low share of total output.
Beyond these outliers we have China, whose spending represents 23 percent of GDP, down from around
28 percent three decades ago. By this measure, China ranks 147th out of 183 countries for which data
are available. Germany ranks 24th, with government spending accounting for 48 percent of GDP. The
United States, meanwhile, is 44th with 44 percent of GDP. By this measure, state capitalism is a
European, not an Asian, phenomenon: Austria, Belgium, Denmark, Finland, France, Greece, Hungary,
Italy, the Netherlands, Portugal, and Sweden all have higher government spending relative to GDP
than Germany. The Danish figure is 58 percent, more than twice that of the Chinese.
The results are similar if one focuses on government consumption - the share of GDP accounted
for by government purchases of goods and services, as opposed to transfers or investment. Again,
ignoring the outliers, it is Europe whose states play the biggest role in the economy as buyers:
Denmark (27 percent) is far ahead of Germany (18 percent), while the United States is at 17 percent.
China? 13 percent. For Hong Kong, the figure is 8 percent. For Macao, 7 percent.
Where China does lead the West is in the enormous share of gross fixed capital formation (jargon
for investment in hard assets) accounted for by the public sector. According to
World Bank data,
this amounted to 21 percent of China's GDP in 2008, among the highest figures in the world, reflecting
the still-leading role that government plays in infrastructure investment. The equivalent figures
for developed Western countries are vanishingly small; in the West the state is a spendthrift, not
an investor, borrowing money to pay for goods and services. On the other hand, the public sector's
share of Chinese investment has been falling steeply during the past 10 years. Here too the Chinese
trend is away from state capitalism.
Of course, none of these quantitative measures of the state's role tells us how well government
is actually working. For that we must turn to very different kinds of data. Every year the World
Economic Forum (WEF) publishes a
Global Competitiveness
Index , which assesses countries from all kinds of different angles, including the economic efficiency
of their public-sector institutions. Since the current methodology was adopted in 2004, the United
States' average competitiveness score has fallen from 5.82 to 5.43, one of the steepest declines
among developed economies. China's score, meanwhile, has leapt from 4.29 to 4.90.
Even more fascinating is the WEF's
Executive
Opinion Survey , which produces a significant amount of the data that goes into the Global Competitiveness
Index. The table below selects 15 measures of government efficacy, focusing on aspects of the rule
of law ranging from the protection of private property rights to the policing of corruption and the
control of organized crime. These are appropriate things to measure because, regardless of whether
a state is nominally a market economy or a state-led economy, the quality of its legal institutions
will, in practice, have an impact on the ease with which business can be done.
"... In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers. ..."
"... Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies. ..."
"... "We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available." ..."
"... Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records ..."
FALL RIVER - In this struggling industrial city, changes in trade policy are being measured
not only in jobs lost, but also in lives lost - to suicide.
The jobs went first, the result of trade deals that sent them overseas. Once-humming factories
that dressed office workers and soldiers, and made goods to furnish their homes, stand abandoned,
overtaken by weeds and graffiti.
And now there is research on how the US job exodus parallels an increase in suicides. A one percentage
point increase in unemployment correlated with an 11 percent increase in suicides, according to
Peter Schott, a Yale University economist who coauthored the report with Justin Pierce, a researcher
at the Federal Reserve Board.
The research doesn't prove a definitive link between lost jobs and suicide; it simply notes
that as jobs left, suicides rose. Workers who lost their jobs may have been pushed over the edge
and turned to suicide or drug addiction, lacking financial resources or community connections
to get help, the authors suggest.
The research contributes to a growing body of work that shows the dark side of global trade:
the dislocation, anger, and despair in some parts of the country that came with the United States'
easing of trade with China in 2000. The impact of job losses was greatest in places such as Fall
River and other cities in Bristol County, along with rural manufacturing counties in New Hampshire
and Maine, vast stretches of the South, and portions of the Rust Belt.
"There are winners and losers in trade," Schott said. "If you go to these communities, you can
see the disruptions."
The unemployment rate in Fall River remains persistently high and at 5.5 percent in September
was a good two points above the Massachusetts average. Nearly one in three households gets some
sort of public assistance.
Opposition to global trade policies became a rallying cry in Donald Trump's campaign, propelling
him into the White House with strategic wins in the industrial Midwest and the South. Trump has
threatened to impose tariffs on Chinese goods and has bashed recent US trade pacts. ...
... Previous trade deals, including the 1994 North American Free Trade Agreement with Canada and
Mexico, chipped away at US manufacturing towns. But economists say the decision to normalize relations
with China was far more disruptive. Some economists have estimated the United States may have
lost at least 1 million manufacturing jobs from 2000 to 2007 due to freer trade with China.
In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed
nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers.
Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said.
Automation has made manufacturing much more specialized, requiring more education and fewer workers,
leaving parts of the country struggling to figure out how to reinvent their economies.
"We will probably never have as many manufacturing jobs as we had in 1960," Dunn said.
"The question is how do we train workers and provide them opportunities to feel productive. What's
clear from the election is an increasing number of people don't have those opportunities or don't
feel that those opportunities will be available."
Officials in Fall River and Bristol County said they are trying to provide appropriate training,
including computer programming, a prerequisite for many manufacturing jobs.
They also point out there have been recent victories.
Amazon.com opened a distribution warehouse in Fall River and has been hiring in recent
months to fill 500 jobs.
Companies are eyeing Taunton for its cheaper land, access to highways, and state tax breaks.
Norwood-based Martignetti Cos., among the state's largest wine and spirits distributors,
last year agreed to move its headquarters to a Taunton industrial park.
Mayor Tom Hoye said Taunton has also been more active in recent years, holding community meetings
and expanding social services for residents facing distress and drug addiction.
Despite the hits the city and its residents have taken, there is reason to be optimistic about
the future, he said.
Jobs are returning, and the county's suicide rate dropped from 13 per 100,000 people in 2014
to 12 per 100,000 in 2015.
"We're reinventing ourselves," Hoye said on a recent morning as he sat in an old elementary
school classroom that has served as the temporary mayor's office for several years.
"It's tough to lift yourself out of the hole sometimes. But we're much better off than we were
10 years ago."
'The research doesn't prove a definitive
link between lost jobs and suicide; it
simply notes that as jobs left,
suicides rose.'
Pierce, Justin R., and Peter K. Schott (2016). "Trade Liberalization and Mortality:
Evidence from U.S. Counties," Finance and Economics Discussion Series
2016-094. Washington: Board of Governors of the Federal Reserve System
Characteristics of people dying by suicide after job loss, financial difficulties and other
economic stressors during a period of recession (2010–2011): A review of coroners׳ records
Caroline Coope, et al
Journal of Affective Disorders
Volume 183, 1 - September 2015
Economist was always adamantly anti-Russian and, especially, anti-Putin. The use of people like
Sergey Guriev (recent emigrant to Paris, who excape to avoid the danger of criminal procecution for skolkovao machinations) is just an icing on the cake.
Notable quotes:
"... During the 2015-16 recession, GDP. fell by more than 4 percent and real incomes declined by 10 percent. That is significant, but much less serious than, say, the 40 percent drop in GDP that Russia experienced during the first half of the 1990s. Despite a dramatic decline in oil prices and the burden of sanctions imposed by Western governments after the Crimea crisis, the Putin administration has managed to avert economic disaster by pursuing competent macroeconomic policies. ..."
"... As the sanctions cut off Russia's access to global financial markets, the government set out to cover the budget deficit by undertaking major austerity measures and tapping its substantial sovereign funds. In early 2014, the Reserve Fund (created to mitigate fiscal shocks caused by drops in oil prices) and the National Welfare Fund (set up to address shortfalls in the pension system) together held the equivalent of 8 percent of GDP. ..."
LONDON - The Russian economy is in trouble - "in tatters," President Obama has said - so why
aren't Russians more upset with their leaders? The country underwent a major recession recently.
The ruble lost half of its value. And yet, according to a leading independent pollster in Russia,
President Vladimir V. Putin's approval ratings have consistently exceeded 80 percent during the
past couple of years.
One reason is that while the Russian economy is struggling, it is not falling apart, and many
Russians remember times when it was in a much worse state. Another, perhaps more important, explanation
is that Mr. Putin has convinced them that it's not the economy, stupid, anymore.
Thanks largely to the government's extensive control over information, Mr. Putin has rewritten
the social contract in Russia. Long based on economic performance, it is now about geopolitical
status. If economic pain is the price Russians have to pay so that Russia can stand up to the
West, so be it.
It wasn't like this in the 1990s and 2000s. Back then the approval ratings of Russian leaders
were closely correlated with economic performance, as the political scientist Daniel Treisman
has demonstrated. When the economy began to recover from the 1998 financial crisis, Mr. Putin's
popularity increased. It dipped when growth stalled. It climbed again in 2005, after the global
price of oil - Russia' main export commodity - rose, foreign investment flowed in and domestic
consumption boomed. And it fell substantially after growth rates slowed in 2012-13.
Russia's intervention in Crimea in early 2014 changed everything. Within two months, Mr. Putin's
popularity jumped back to more than 80 percent, where it has stayed until now, despite the recession.
One might argue that these figures are misleading: Given the pressures faced by the Kremlin's
political opponents, aren't respondents in polls too afraid to answer questions honestly? Hardly,
according to a recent study co-written by the political scientist Tim Frye, based on an innovative
method known as "list experiments." It found that, even after adjusting for respondents' reluctance
to openly acknowledge any misgivings about specific leaders, Mr. Putin's popularity really is
very high: around 70 percent.
During the 2015-16 recession, GDP. fell by more than 4 percent and real incomes declined
by 10 percent. That is significant, but much less serious than, say, the 40 percent drop in GDP
that Russia experienced during the first half of the 1990s. Despite a dramatic decline in oil
prices and the burden of sanctions imposed by Western governments after the Crimea crisis, the
Putin administration has managed to avert economic disaster by pursuing competent macroeconomic
policies.
As the sanctions cut off Russia's access to global financial markets, the government set
out to cover the budget deficit by undertaking major austerity measures and tapping its substantial
sovereign funds. In early 2014, the Reserve Fund (created to mitigate fiscal shocks caused by
drops in oil prices) and the National Welfare Fund (set up to address shortfalls in the pension
system) together held the equivalent of 8 percent of GDP.
The government also adopted sound monetary policy, including the decision to fully float the
ruble in 2014. Because of the decline in oil prices and large net capital outflows - caused by
the need to repay external corporate debt and limited foreign investment in Russia - the currency
depreciated by 50 percent within a year. Although a weaker ruble hurt the living standards of
ordinary Russians, it boosted the competitiveness of Russia's companies. The Russian economy is
now beginning to grow again, if very modestly - at a projected 1 to 1.5 percent per year over
the next few years.
This performance comes nowhere near meeting Mr. Putin's election-campaign promises of 2012,
when he projected GDP. growth at 6 percent per year for 2011-18. But it isn't catastrophic either,
and the government has managed to explain it away.
Thanks partly to its near-complete control of the press, television and the internet, the government
has developed a grand narrative about Russia's role in the world - essentially promoting the view
that Russians may need to tighten their belts for the good of the nation. The story has several
subplots. Russian speakers in Ukraine need to be defended against neo-Nazis. Russia supports President
Bashar al-Assad of Syria because he is a rampart against the Islamic State, and it has helped
liberate Aleppo from terrorists. Why would the Kremlin hack the Democratic Party in the United
States? And who believes what the CIA says anyway?
The Russian people seem to accept much of this or not to care one way or the other. This should
come as no surprise. In a recent paper based on data for 128 countries over 10 years, Professor
Treisman and I developed an econometric model to assess which factors affect a government's approval
ratings and by how much. We concluded that fully removing internet controls in a country like
Russia today would cause the government's popularity ratings to drop by about 35 percentage points.
...
This Russian hacking thing is being discussed entirely out of realistic context.
Cyber security
is a serious risk management operation that firms and governments spend outrageous sums of money
on because hacking attempts, especially from sources in China and Russia, occur in vast numbers
against every remotely desirable target corporate or government each and every day. At my former
employer, the State of Virginia, the data center repelled over two million hacking attempts from
sources in China each day. Northrop Grumman, the infrastructure management outsourcer for the
State of Virginia's IT infrastructure, has had no known intrusions into any Commonwealth of Virginia
servers that had been migrated to their standard security infrastructure thus far since the inception
of their contract in July 2006. That is almost the one good thing that I have to say about NG.
Some state servers, notably the Virginia Department of Health Professions, not under protection
of the NG standard network security were hacked and had private information such as client SSNs
stolen. Retail store servers are hacked almost routinely, but large banks and similarly well protected
corporations are not. Security costs and it costs a lot.
Even working in a data center with an excellent intrusion protection program as part of that
program I had to take an annual "securing the human" computer based training class. Despite all
of the technical precautions we were retrained each year to among other things NEVER put anything
in an E-Mail that we did not want to be available for everyone to read; i.e., to never assume
privacy is protected in an E-Mail. Embarrassing E-Mails need a source. We should assume that there
will always be a hacker to take advantage of our mistakes.
The reality is that all the major world powers (and some minor ones), including us, do this routinely
and always have. While it is entirely appropriate to be outraged that it may have materially determined
the election (which I think is impossible to know, though it did have some impact), we should
not be shocked or surprised by this.
"...I would suggest attacks on Putin's personal business holdings all over the world..."
[My guess is that has been being done a long time ago considering the direction of US/Russian
foreign relations over NATO expansion, the Ukraine, and Syria.
Long before TCP/IP the best way to prevent dirty secrets from getting out was not to have dirty
secrets. It still works.
The jabbering heads will not have much effect on the political opinions of ordinary citizens
because 40 million or more US adults had their credit information compromised by the Target hackers
three years ago. Target had been saving credit card numbers instead of deleting them as soon as
they obtained authorizations for transfers, so that the 40 million were certainly exposed while
more than twice that were probably exposed. Establishment politicians having their embarrassing
E-mails hacked is more like good fun family entertainment than something to get all riled up about.]
Voting machines are public and for Federal elections then tampering with them is elevated to a
Federal crime. Political parties are private. The Federal government did not protect Target or
Northrop Grumman's managed infrastructure for the Commonwealth of Virginia although either one
can take forensic information to the FBI that will obtain warrants for prosecution. Foreign criminal
operations go beyond the immediate domestic reach of the FBI. Not even Interpol interdicts foreign
leaders unless they are guilty of genocide, crimes against humanity or war crimes.
The Federal government can do what it will as there are not hard guidelines for such clandestine
operations and responses. Moreover, there are none to realistically enforce against them, which
inevitably leads to war given sufficient cycles of escalation. Certainly our own government has
done worse (political assassinations and supporting coups with money and guns) with impunity merely
because of its size, reach, and power.
BTW, "the burglar that just ransacked your house" can be arrested and prosecuted by a established
regulated legal system with absolutely zero concerns of escalating into a nuclear war, trade war,
or any other global hostility. So, not the same thing at all. Odds are good though that the burglar
will get away without any of that because when he does finally get caught it will be an accident
and probably only after dozen if not hundreds of B&E's.
There is a line. The US has crossed that line, but always in less developed countries that
had no recourse against us. Putin knows where the line is with the US. He will dance around it
and lean over it, but not cross it. We have him outgunned and he knows it. Putin did not tamper
with an election, a government function. Putin tampered with private data exposing incriminating
information against a political party, which is a private entity rather than government entity.
Whatever we do should probably stay within the rule of law as it gets messy fast once outside
those boundaries.
As far as burglars go I live in a particular working class zip code that has very few burglaries.
It is a bad risk/reward deal unless you are just out to steal guns and then you better make sure
that no one is home. Most people with children still living at home also have a gun safe. Most
people have dogs.
There are plenty burglaries in a lower income zip code nearby and lots more in higher income
zip codes further away, the former being targets of opportunity with less security and possible
drug stashes, which has a faster turnover than fencing big screen TV's. High income neighborhoods
are natural targets with jewelry, cash, credit cards, and high end electronics, but far better
security systems. I don't know much about their actual crime stats because they are on the opposite
side of the City of Richmond VA from me, but I used to know a couple of burglars when I lived
in the inner city. They liked the upscale homes near the University of Richmond on River Road.
"They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined
the election"
And those two statement are not in conflict unless you are a brain dead Fox bot. Big nothing-burgers
like Bhengazi or trivial emails can easily be blown up and affect a few hundred thousand voters.
When the heck are you going to grow up and get past your 5 stages of Sanders grief?
I know - and there used to be some signs of a functional brain. Now it is all "they are all the
same" ism and Hillary derangement syndrome on steroids. Someone who cares need to do an intervention
before it becomes he get gobbled up by "ilsm" ism.
ABC video interview by Martha Raddatz of Donna Brazile 2:43
Adding the following FACTS, not opinion, to the Russian Hacking debate at the DNC
Russian hacks of the DNC began at least as early as April, the FBI informed the DNC in May
of the hacks, NO ONE in the FedGovt offered to HELP the DNC at anytime (allowed it to continue),
and Russia's Putin DID NOT stop after President Obama told Putin in September to "Cut it Out",
despite Obama's belief otherwise
"DNC Chair Says Russian Hackers Attacked The Committee Through Election Day"
'That goes against Obama's statement that the attacks ended after he spoke to Putin in September'
by Dave Jamieson Labor Reporter...The Huffington Post...12/18/2016...10:59 am ET
"The chair of the Democratic National Committee said Sunday that the DNC was under constant
cyber attack by Russian hackers right through the election in November. Her claim contradicts
President Barack Obama's statement Friday that the attacks ended in September after he issued
a personal warning to Russian President Vladimir Putin.
"No, they did not stop," Donna Brazile told Martha Raddatz on ABC's "This Week." "They came
after us absolutely every day until the end of the election. They tried to hack into our system
repeatedly. We put up the very best cyber security but they constantly [attacked]."
Brazile said the DNC was outgunned in its efforts to fend off the hacks, and suggested the
committee received insufficient protection from U.S. intelligence agencies. The CIA and FBI have
reportedly concluded that Russians carried out the attacks in an effort to help Donald Trump defeat
Hillary Clinton.
"I think the Obama administration ― the FBI, the various other federal agencies ― they informed
us, they told us what was happening. We knew as of May," Brazile said. "But in terms of helping
us to fight, we were fighting a foreign adversary in the cyberspace. The Democratic National Committee,
we were not a match. And yet we fought constantly."
In a surprising analogy, Brazile compared the FBI's help to the DNC to that of the Geek Squad,
the tech service provided at retailer Best Buy ― which is to say well-meaning, but limited.
"They reached out ― it's like going to Best Buy," Brazile said. "You get the Geek Squad, and
they're great people, by the way. They reached out to our IT vendors. But they reached us, meaning
senior Democratic officials, by then it was, you know, the Russians had been involved for a long
time."..."
This new perspective and set of facts is more than distressing it details a clear pattern of Executive
Branch incompetence, malfeasance, and ineptitude (perhaps worse if you are conspiratorially inclined)
im1dc -> im1dc... , -1
The information above puts in bold relief President Obama's denial of an Electoral College briefing
on the Russian Hacks
There is now no reason not to brief the Electors to the extent and degree of Putin's help for
demagogue Donald
Fred C. Dobbs -> Peter K....
December 26, 2016 at 07:15 AM neopopulism: A cultural and political movement, mainly in Latin
American countries, distinct from twentieth-century populism in radically combining classically opposed
left-wing and right-wing attitudes and using electronic media as a means of dissemination. (Wiktionary)
"... Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so. ..."
"... That's the effect of incessant Dem propaganda pitting races and sexes against each other. ..."
"... And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys. ..."
"... So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it. ..."
"... Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. ..."
"... Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation). ..."
"... If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats. ..."
"... The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work. ..."
"... The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt ..."
"... I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican. ..."
"... The Democratic Establishment and their acolytes are caught in a credibility trap. ..."
"... I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote. ..."
"... Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself. ..."
"... Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we? ..."
"... Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain. ..."
"... I have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for Duy ..."
"... The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class. ..."
"... Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons. ..."
"... All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics. ..."
"... Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa. ..."
"... The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it. ..."
Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they
live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity
politics for non-white, non-male, non-heterosexual is what the Democratic party is about today
and has been the last decade or so.
The only way Dems can make any headway by the midterms is if Trump really screws up,
which is a tall order even for him. He will pick the low-hanging fruit (e.g., tax reform, Obamacare
reform, etc), the economy will continue to recover (which will be attributed to Trump), and Dems
will lose even more seats in Congress. And why? Because they refuse to recognize that whites from
the middle-class and below are just as disadvantaged as minorities from the same social class.
If white privilege exists at all (its about as silly as the "Jews control the banks and media"
conspiracy theories), it exists for the upper classes. Poor whites need help too. And young men
in/out of college today are being displaced by women - not because the women have superior academic
qualification, but because they are women. I've seen it multiple times firsthand in some of the
country's largest companies and universities (as a lawyer, when an investigation or litigation
takes place, I get to see everyone's emails, all the way to CEO/board). There is a concerted effort
to hire only women and minorities, especially for executive/managerial positions. That's not equality.
That's the effect of incessant Dem propaganda pitting races and sexes against each other.
This election exposed the media's role, but its not over. Fortunately, Krugman et al. are
showing the Dems are too dumb to figure out why they lost. Hopefully they keep up their stupidity
so identity politics can fade into history and we can get back to pursuing equality.
"There is a concerted effort to hire only women and minorities, especially for executive/managerial
positions."
Goooooolllllllllllllly, gee. Now why would that be? I hope you're not saying there shouldn't
be such an effort. This is a good thing. It exactly and precisely IS equality. It may be a bit
harsh, but if certain folks continually find ways to crap of women and minorities, then public
policies would seem warranted.
Are you seriously telling us that pursuing public policies to curb racial and sexual discrimination
are a waste of time?
How, exactly, does your vision of "pursuit of equality" ameliorate the historical fact of discrimination?
You don't make up for past discrimination with discrimination. You make up for it by equal application
of the law. Today's young white men are not the cause of discrimination of the 20th century, or
of slavery. If you discriminate against them because of the harm caused by other people, you're
sowing the seeds of a REAL white nationalist movement. And Democrats' labeling of every Republican
president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger
created by discriminatory policies that punish [white] children and young adults, particularly
boys.
Displacement of white men by lesser-qualified women and minorities is NOT equality.
So, to make up for the alleged screw job that women and minorities have supposedly received,
the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing
this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes
for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes.
No experience, no certificate......but she has a management degree. But I guess you don't know
how to do the job to manage it.
God forbid somebody have to "pay some dues" before setting them loose as suit trash.
Back when cultural conservatives ruled the roost (not that long ago), they didn't pursue equality
either. Rather, they favored (hetero Christian) white men. So hoping for Dem stupidity isn't going
to lead to equality. Most likely it would go back to favoring hetero Christian white men.
"...should they find a new standard bearer that can win the Sunbelt states and bridge the divide
with the white working class? I tend to think the latter strategy has the higher likelihood of
success."
Easy to say. What would that standard bearer or that strategy look like?
Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats
(ie. Super Delegates) decided that they wanted to coronate Clinton. Big mistake that we are
now paying for...
Basic political math - Sanders would have been eaten alive with his tax proposals by the GOP anti-tax
propaganda machine on Trump steroids.
His call to raise the payroll tax to send more White working class hard-earn money to Washington
would have made election night completely different - Trump would have still won, it just wouldn't
have been a surprise but rather a known certainty weeks ahead.
Evolution of political parties happens organically, through evolution (punctuated equilibrium
- like species and technology - parties have periods of stability with some sudden jumps in differentiation).
Old politicians are defeated, new ones take over. The old guard, having been successful in
the past in their own niche rarely change.
If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans
since Lincoln. They will lose even more seats.
The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot
box to change the party. The same way the "Tea Party" revolution decimated the Republicans and
led to Trump. Natural selection at work.
In 1991, Republicans thought they would always win, Democrats thought the country was relegated
to Republican Presidents forever. Then along came a new genotype- Clinton. In 2012, Democrats
thought that they would always win, and Republicans were thought to be locked out of the electoral
college. Then along came a new genotype, Trump.
A new genotype of Democrat will have to emerge, but it will start with someone who can win
in flyover country and Texas. Hint: They will have to drop their hubris, disdain and lecturing,
some of their anti-growth energy policies, hate for the 2nd amendment, and become more fiscally
conservative. They have to realize that *no one* will vote for an increase in the labor supply
(aka immigration) when wages are stagnant and growth is anemic. And they also have to appreciate
people would rather be free to choose than have decisions made for them. Freedom means nothing
unless you are free to make mistakes.
But it won't happen until coastal elites like Krugman and Pelosi have retired.
My vote for the Democratic Tiktaalik is the extraordinarily Honorable John Bel Edwards, governor
of Louisiana. The central fact of the election is that Hillary has always been extraordinarily
unlikable, and it turned out that she was Nixonianly corrupt (i.e., deleted E-mails on her
illegal private server) as well - and she still only lost by 1% in the tipping point state (i.e.,
according to the current count, which could very well change).
You know what will win Texas? Demographic change. Economic growth. And it is looking pretty inevitable
on both counts.
I'm also pretty damned tired of being dismissed as "elitist", "smug" and condescending. I grew
up in a red state. I know their hate. I know their condescension (they're going to heaven, libruls
are not).
It cuts both ways. The Dems are going into a fetal crouch about this defeat. Did the GOP do
that after 2008? Nope. They dug in deeper.
Ahh yes, all Texas needs is demographic change, because all [Hispanics, Blacks, insert minority
here] will always and forever vote Democrat. Even though the Democrats take their votes for granted
and Chicago/Baltimore etc. are crappy places to live with no school choice, high taxes, fleeing
jobs, and crime. Even though Trump outperformed Romney among minorities.
Clinton was supposed to be swept up in the winds of demographics and the Democrats were supposed
to win the White House until 2083.
Funny things happen when you take votes for granted. Many urban areas are being crushed by
structural deficits and need some Detroit type relief. I predict that some time in the next 30
years, poles reverse, and urban areas are run by Republicans.
If you are tired of being dismissed as "elitist", "smug" and condescending, don't be those
things. Don't assume people will vote for your party because they have always voted that way,
or they are a certain color. Respect the voters and work to earn it.
The notion that hispanic=democrat that liberals like bob have is hopelessly ignorrant.
I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my
brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally
speaking, the longer hispanics are in the US, the more likely they tend to vote Republican.
The Democratic Party's plan to wait out the Republicans and let demographics take over is ignorant,
racist and shortsighted, cooked up by coastal liberals that haven't got a clue, and will ultimately
fail.
In addition to losing hispanics, Democrats will also start losing the African American vote
they've been taking for granted the last several decades. Good riddance to the Democratic party,
they are simply unwilling to listen to what the people want.
This is a really shoddy piece that repeats the medias pulling of Clintons quote out of context.
She also said "that other basket of people are people who feel that the government has let them
down, the economy has let them down, nobody cares about them, nobody worries about what happens
to their lives and their futures, and they're just desperate for change. It doesn't really even
matter where it comes from. They don't buy everything he says, but he seems to hold out some hope
that their lives will be different. They won't wake up and see their jobs disappear, lose a kid
to heroin, feel like they're in a dead-end. Those are people we have to understand and empathize
with as well."
Now maybe it is okay to make gnore this part of the quote because you think calling racism
"deplorable" is patently offensive. But when the ignored context makes the same points that Duy
says she should have been making, that is shoddy.
There are zero electoral college votes in the State of Denial. Hopefully you understand a)the
difference between calling people deplorable and calling *behavior* deplorable; b) Godwin's Law:
when you resort to comparing people to Hitler you've lost the argument. Trump supporters were
not racist, homophobic, xenophobic, or any other phobic. As a moderate, educated, female Trump
supporter counseled: He was an a-hole, but I liked his policies.
Even my uber liberal friends cannot tell me what Clinton's economic plan was. Only that they
are anti-Trump.
Trump flanked Clinton on the most popular policies (the left used to be the anti-trade party
of union Democrats): Lower regulation, lower taxes, pro-2nd amendment, trade deals more weighted
in favor of US workers, and lower foreign labor supply. Turn's out, those policies are sufficiently
popular that people will vote for them, even when packaged into an a-hole. Trump's anti-trade
platform was preached for decades by rust belt unions.
The coastal Democrats have become hostages to pro-big-government municipal unions crushing
cities under structural deficits, high taxes, poorly run schools, and overbearing regulations.
The best thing that can happen for the Democrats is for the Republicans to push for reforms of
public pensions, school choice, and break municipal unions. Many areas see the disaster in Chicago
and Baltimore, run by Democrats for decades, and say no thank you. Freed of the need to cater
to urban municipal unions, Democrats may be able to appeal to people elsewhere.
Tim, I believe you've missed the point: by straightforward measures, Democratic voters in USA
are substantially under-represented. The problem is likely to get much worse, as the party whose
policies abet minority rule now controls all three branches of the federal government and a substantial
majority of state governments.
This is an outstanding takedown on what has been a never-ending series of garbage from Krugman.
I used to hang on every post he'd made for years after the 2008 crisis hit. But once the Clinton
coronation arose this year, the arrogant, condescending screed hit 11 - and has not slowed down
since. Threads of circular and illogical arguments have woven together pathetic - and often non-liberal
- editorials that have driven me away permanently.
Since he's chosen to ride it all on political commentary, Krugman's credibility is right there
with luminaries such as Nial Ferguson and Greg Mankiw.
Seems that everyone who chooses to hitch their wagon to the Clintons ends up covered in bilge.....
funny thing about that persistent coincidence...
"And it is an especially difficult pill given that the decline was forced upon the white working
class.... The tsunami of globalization washed over them....in many ways it was inevitable, just
as was the march of technology that had been eating away at manufacturing jobs for decades. But
the damage was intensified by trade deals.... Then came the housing crash and the ensuing humiliation
of the foreclosure crisis."
All the more amazing then that Trump pulled out such a squeaker of an election beating Clinton
by less than 2% in swing states and losing the popular vote overall. In the shine of Duy's lights
above, I would have imagined a true landslide for Trump... Just amazing.
"I don't know that the white working class voted against their economic interest".
I think you're pushing too hard here. Democrats have been for, and Republicans against many
policies that benefit the white working class: expansionary monetary policy, Obamacare, housing
refinance, higher minimum wage, tighter worker safety regulation, stricter tax collection, and
a host of others.
I also think many Trump voters know they are voting against their own economic interest.
The New York Times interviewed a number who acknowledge that they rely on insurance subsidies
from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't
know what she will do if Obamacare is repealed but is quite happy with her vote.
There is zero evidence for this theory. It ignores the fact that Trump lied his way to the White
House with the help of a media unwilling to confront and expose his mendacity. And there was the
media's obsession with Clinton's Emails and the WikiLeaks daily release of stolen DNC documents.
And finally the Comey letter which came in the middle of early voting keeping the nation in suspense
for 11 days and which was probably a violation of the hatch act. Comey was advised against his
unjustified action by higher up DOJ officials but did it anyway. All of these factors loomed much
larger than the deplorables comment. Besides, the strong dollar fostered by the FOMC's obsession
with "normalization" helped Trump win because the strong dollar hurts exporters like farmers who
make up much of the rural vote as well as hurting US manufacturing located in the midwest states.
The FOMC was objectively pro Trump.
I was surrounded by Trump voters this past election. Trust me, an awful lot of them are deplorable.
My father is extremely anti semetic and once warned me not to go to Minneapolis because of there
being "too many Muslims." One of our neighbors thinks all Muslims are terrorists and want to do
horrible things to all Christians.
I know, its not a scientific study. But I've had enough one on one conversations with Trump
supporters (not just GOP voters, Trump supporters) to say that yes, as a group they have some
pretty horrible views.
Yep. I've got plenty of stories myself. From the fact that there are snooty liberals it does NOT
follow that the resentment fueling Trump's support is justified.
One should note that the "The racist, sexist, homophobic, xenophobic, Islamaphobic - you name
it ... " voted for Obama last time around.
When the blue collar voter (for lack of a better class) figures out that the Republicans (Trump)
are not going to help them anymore than the Dems did -- it will be time for them to understand
they can only rely on themselves, namely: through rebuilding labor union density, which can be
done AT THE STATE BY PROGRESSIVE STATE LEVEL.
To keep it simple states may add to federal protections like the minimum wage or safety regs
-- just not subtract. At present the NLRB has zero (no) enforcement power to prevent union busting
(see Trump in Vegas) -- so illegal labor market muscling, firing of organizers and union joiners
go completely undeterred and unrecoursed.
Recourse, once we get Congress back might include mandating certification elections on finding
of union busting. Nothing too alien: Wisconsin, for instance, mandates RE-certification of all
public employee unions annually.
Progressive states first step should be making union busting a felony -- taking the power playing
in our most important and politically impacting market as seriously as taking a movie in the movies
(get you a couple of winters). For a more expansive look (including a look at the First Amendment
and the fed cannot preempt something with nothing, click here):
http://ontodayspage.blogspot.com/2016/11/first-100-days-progressive-states-agenda.html
Labor unions -- returned to high density -- can act as the economic cop on every corner --
our everywhere advocates squelching such a variety of unhealthy practices as financialization,
big pharam gouging, for profit college fraud (Trump U. -- that's where we came into this movie).
6% private union density is like 20/10 bp; it starves every other healthy process (listening blue
collar?).
Don't panic if today's Repub Congress passes national right-to-work legislation. Germany, which
has the platinum standard labor institutions, does not have one majority union (mostly freeloaders!),
but is almost universally union or covered by union contracts (centralized bargaining -- look
it up) and that's what counts.
Trump took both sides of every issue. He wants high and low interest rates. He wants a depression
first, (Bannonomics) and inflation first, (Trumponomics), he wants people to make more and make
less. He is nasty and so he projected that his opponent was nasty.
Now he has to act instead of just talk out of both sides of his mouth. That should not be as
easy to do.
Hi Tim, nice post, and I particularly liked your last paragraph. The relevant question today if
you have accepted where we are is effectively: 'What would you prefer - a Trump victory now? Or
a Trump type election victory in a decade or so? (with todays corresponding social/economic/political
trends continuing).
I'm a Brit so I was just an observer to the US election but the same point is relevant here in
the UK - Would I rather leave the EU now with a (half sensible) Tory government? Or would I rather
leave later on with many more years of upheaval and a (probably by then quite nutty) UKIP government?
I know which one I prefer - recognise the protest vote sooner, rather than later.
Sure they're angry, and their plight makes that anger valid.
However, not so much their belief as to who and what caused their plight, and more importantly,
who can and how their plight would be successfully reversed.
Most people have had enough personal experiences to know that it is when we are most angry
that we do the stupidest of things.
Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he
spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream
thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words,
he is an over educated, political hack who has yet to learn to keep his overtly bias opinions
to himself.
Tim's narrative felt like a cold shower. I was apprehensive that I found it too agreeable on one
level but were the building blocks stable and accurate?
Somewhat like finding a meal that is satisfying, but wondering later about the ingredients.
But, like Tim's posts on the Fed, they prompt that I move forward to ponder the presentation
and offer it to others for their comment. At this time, five-stars on a 1-5 system for bringing
a fresh approach to the discussion. Thanks, Professor Duy. This to me is Piketty-level pushing
us onto new ground.
Funny how there's all this concern for the people whose jobs and security and money have vanished,
leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash
some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work
ethic, shall we?
Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct;
about half of them are various sorts of supremacists. The other half (she said this, too) made
common cause with the deplorables for economic reasons even though it was a devil's bargain.
Now, there's a problem with maternalism here; it's embarrassing to find out that the leader
of your political opponents knows you better than you know yourself, like your mother catching
you out in a lie. It was impolitic for Clinton to have said this But above all remember that when
push came to shove, the other basket made common cause with the Nazis, the Klan, and so on and
voted for a rapey fascist.
"Economic development" isn't (and can't) be the same thing as bringing back lost manufacturing
(or mining) jobs. We have had 30 years of shifting power between labor and capital. Restoring
labor market institutions (both unions and government regulation) and raising the floor through
higher minimum wages, single payer health care, fair wages for women and more support for child
and elder care, trade policies that care about working families, better safe retirement plans
and strengthened Social Security, etc. is key here, along with running a real full employment
economy, with a significant green component. See Bob Polllin's excellent program in
https://mitpress.mit.edu/books/back-full-employment
That program runs up against racism, sexism, division, and fear of government and taxation,
and those are powerful forces. But we don't need all Trump supporters. We do need a real, positive
economic program that can attract those who care about the economics more than the cultural stuff.
How about people of color drop the democrats and their hand wringing about white people when they
do nothing about voter suppression!! White fragility is nauseating and I'm planning to arm myself
and tell all the people of color I know to do the same. I expect nothing from the democrats going
forward.
I have never commented here but I will now because of the number of absurd statements. I happen
to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend
that trump and the Republican Party has their interest in mind is completely absurd. As for the
white working class, please tell me what programs either trump or the republican have put forward
to benefit them? I have lost a lot of respect for Duy
I think much of appeal of DJT was in his political incorrectness. PC marginalises. Very. Of white
working class specifically. it tells one, one cannot rely on one's ideas any more. In no uncertain
terms. My brother, who voted for Trump, lost his job to PC without offending on purpose, but the
woman in question felt free to accuse him of violating her, with no regard to his fate. He was
never close enough to do that. Is that not some kind of McCarthyism?
Just to be correct. Clinton was saying that half (and that was a terrible error-should have said
"some") were people that were unreachable, but that they had to communicate effectively with the
other part of his support. People who echo the media dumb-ing down of complex statements are part
of the problem.
Still, I believe that if enough younger people and african-americans had come out in the numbers
they did for Obama in some of those states, Clinton would have won. Certainly, the media managed
to paint her in more negative light than she objectively deserved-- even if she deserved some
negatives.
I am in no way a fan of HRC. Still, the nature of the choice was blurred to an egregious degree.
"The tough reality of economic development is that it will always be easier to move people to
jobs than the jobs to people."
This is indisputable, but I have never seen any discussion of the point that moving is not
cost-free. Back in the '90s I had a discussion with a very smart person, a systems analyst, who
insisted that poor people moved to wherever the welfare benefits were highest.
I tried to point out that moving from one town to another costs more than a bus ticket. You
have to pay to have your possessions transported. You have to have enough cash to pay at least
two months' rent and maybe an additional security deposit.
You have to have enough cash to pay for food for at least one month or however long it takes
for your first paycheck or welfare check to come in. There may be other costs like relocating
your kids to a new school system and maybe changing your health insurance provider.
There probably are other costs I'm not aware of, and the emotional cost of leaving your family
and your roots. The fact that some people succeed in moving is a great achievement. I'm amazed
it works at all in Europe where you also have the different languages to cope with.
I'm not sure the Hillary non-voters - which also include poor black neighborhoods - were voting
against their economic interests. Under Obama, they didn't do well. Many of them were foreclosed
on while Obama was giving the money to the banks. Jobs haven't improved, unless you want to work
at an Amazon warehouse or for Uber and still be broke. Obama tried to cut social security. He
made permanent Bush's tax cuts for the rich. Wars and more wars. Health premiums went up - right
before the election. The most Obama could say in campaigning for Hillary was "if you care about
my legacy, vote for Hillary." He's the only one that cares about his legacy. I don't know that
it's about resentment but about just having some hope for economic improvement - which Trump offered
(no matter how shallow and deceptive) and Hillary offered nothing but "Trump's an idiot and I'm
not."
I believe Bernie would have beat Trump's ass if 1) the DNC hadn't put their fingers on the
scale for Hillary and 2) same with the media for Hillary and Trump. The Dems need more than some
better campaign slogans. They really need a plan for serious economic equality. And the unions
need to get their shit together and stop thinking that supporting corrupt corporate Dems is working.
Or perhaps the rank and file need to get their shit together and get rid of union bosses.
The keys of the election were race, immigration and trade. Trump won on these points. What
dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead,
emphasize economic equality and security, for all working class.
Lincoln billed the civil war as a war to preserve the union, to gain wide support, instead
of war to free slaves. Of course, the slaves were freed when the union won the war. Dems can benefit
from a similar strategy
Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think
is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in
public opinion, for legitimate reasons.
Besides, a lot voters are tired of stale faces and stale ideas. They yearn something new, especially
the voters in deep economic trouble.
Maybe it's time to try some old fashioned mercantilism, protectionism? America first is an
appealing idea, in this age of mindless globalization.
All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and
mind, to what Thomas Frank has been saying, and they will know where they went wrong and most
likely what to do about it, if they can release themselves from their fatal embrace with Big Money
covered up by identity politics.
But they cannot bring themselves to admit their error, and to give up their very personally
profitable current arrangement. And so they are caught up in a credibility trap which is painfully
obvious to the objective observer.
Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa.
It seems quite clear that the vast majority of commenters live as much in the ivory tower/bubble
as is claimed for their ideological opponent.
It is also quite interesting that most of these same commenters don't seem to get that the
voting public gets what the majority of it wants - not what every single group within the overall
population wants.
The neoliberals with their multi-culti/love them all front men have had it good for a while,
now there's a reaction. Deal with it.
"... The author missed the fact that pillage and plunder and rentier capitalism as defined by Reaganomics
has failed just as badly as communism for the same reason. ..."
"... If you want to be paid well, you must pay everyone else well. ..."
"Do unto Others " -might be an important Economic principle
The author missed the fact that pillage and plunder and rentier capitalism as defined by
Reaganomics has failed just as badly as communism for the same reason.
When you call for cost cuts which can only be done by cutting labor costs which means fewer
workers getting paid less, you are calling for your wages and income, or of your children and
grandchildren to be slashed as well.
Tax cuts mean paying fewer workers to provide public services whether roads, education, knowledge,
health, which means you will suffer losses of services AND eventual loss of income to your family.
Fewer paid workers forces wages and incomes lower for all workers.
If you want to be paid well, you must pay everyone else well.
"... The matter with ATT was originally made public in 2014 and also involved two companies that actually applied the unauthorized charges, Tatto and Acquinity. ..."
"Through the FTC's refund program, nearly 2.5 million current ATT customers will receive
a credit on their bill within the next 75 days, and more than 300,000 former customers will receive
a check. The average refund amount is $31. [...] According to the FTC's complaint, ATT placed
unauthorized third-party charges on its customers' phone bills, usually in amounts of $9.99 per
month, for ringtones and text message subscriptions containing love tips, horoscopes, and 'fun
facts.' The FTC alleged that ATT kept at least 35 percent of the charges it imposed on its customers."
The matter with ATT was originally made public in 2014 and also involved two companies that
actually applied the unauthorized charges, Tatto and Acquinity.
"... The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal
play for all". This is a party of soft neoliberals and it adheres to Washington consensus no less then
Republicans. https://en.wikipedia.org/wiki/Washington_Consensus ..."
"... If you read the key postulates it is clear that that they essentially behaved like an occupier
in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation from
Wall Street occupation" movement. ..."
"... Bill Clinton realized that he can betray working class with impunity as "they have nowhere
to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right wing
nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have. ..."
You guys should wake up and smell what country you live in. Here is a good place to start.
"Campaigning for president in 1980, Ronald Reagan told stories of Cadillac-driving "welfare
queens" and "strapping young bucks" buying T-bone steaks with food stamps. In trumpeting these
tales of welfare run amok, Reagan never needed to mention race, because he was blowing a dog
whistle: sending a message about racial minorities inaudible on one level, but clearly heard
on another. In doing so, he tapped into a long political tradition that started with George
Wallace and Richard Nixon, and is more relevant than ever in the age of the Tea Party and the
first black president.
In Dog Whistle Politics, Ian Haney L?pez offers a sweeping account of how politicians and
plutocrats deploy veiled racial appeals to persuade white voters to support policies that favor
the extremely rich yet threaten their own interests. Dog whistle appeals generate middle-class
enthusiasm for political candidates who promise to crack down on crime, curb undocumented immigration,
and protect the heartland against Islamic infiltration, but ultimately vote to slash taxes
for the rich, give corporations regulatory control over industry and financial markets, and
aggressively curtail social services. White voters, convinced by powerful interests that minorities
are their true enemies, fail to see the connection between the political agendas they support
and the surging wealth inequality that takes an increasing toll on their lives. The tactic
continues at full force, with the Republican Party using racial provocations to drum up enthusiasm
for weakening unions and public pensions, defunding public schools, and opposing health care
reform.
Rejecting any simple story of malevolent and obvious racism, Haney L?pez links as never
before the two central themes that dominate American politics today: the decline of the middle
class and the Republican Party's increasing reliance on white voters. Dog Whistle Politics
will generate a lively and much-needed debate about how racial politics has destabilized the
American middle class -- white and nonwhite members alike."
Reading the above posts I am reminded that in November there was ONE Election with TWO Results:
Electoral Vote for Donald Trump by the margin of 3 formerly Democratic Voting states Michigan,
Ohio, and Pennsylvania
Popular Vote for Hillary Clinton by over 2.8 Million
The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States
that they lost in 2016, not change what they stand for, the principles of fair and equal play
for all.
And, in the 3 States that turned the Electoral Vote in Trump's favor and against Hillary, all
that is needed are 125,000 or more votes, probably fewer, and the DEMS win the Electoral vote
big too.
It is not any more complex than that.
So how does the Democratic Party get more votes in those States?
PANDER to their voters by delivering on KISS, not talking about it.
That is create living wage jobs and not taking them away as the Republican Party of 'Free Trade'
and the Clinton Democratic Party 'Free Trade' Elites did.
Understand this: It is not the responsibility of the USA, or in its best interests, to create
jobs in other nations (Mexico, Japan, China, Canada, Israel, etc.) that do not create jobs in
the USA equivalently, especially if the gain is offset by costly overseas confrontations and involvements
that would not otherwise exist.
"The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral
States that they lost in 2016, not change what they stand for, the principles of fair and equal
play for all. "
The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and
equal play for all". This is a party of soft neoliberals and it adheres to Washington consensus
no less then Republicans.
https://en.wikipedia.org/wiki/Washington_Consensus
If you read the key postulates it is clear that that they essentially behaved like an occupier
in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation
from Wall Street occupation" movement.
Bill Clinton realized that he can betray working class with impunity as "they have nowhere
to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right
wing nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have.
"You control the message, and the facts do not matter. "
Notable quotes:
"... That's funny. Neoliberals are closet Trotskyites and they will let you talk only is specially
designated reservations, which are irrelevant (or, more correctly, as long as they are irrelevant) for
swaying the public opinion. ..."
"... If you think they are for freedom of the press, you are simply delusional. They are for freedom
of the press for those who own it. ..."
"... Try to get dissenting views to MSM or academic magazines. Yes, they will not send you to GULAG,
but the problem is that ostracism works no less effectively. That the essence of "inverted totalitarism"
(another nickname for neoliberalism). You can substitute physical repression used in classic totalitarism
with indirect suppression of dissenting opinions with the same, or even better results. Note that even
the term "neoliberalism" is effectively censored and not used by MSM. ..."
"... And the resulting level of suppressing of opposition (which is the essence of censorship) is
on the level that would make the USSR censors blush. And if EconomistView gets too close to anti-neoliberal
platform it will instantly find itself in the lists like PropOrNot ..."
"Then of course, it is easy to attack the neoliberals, they'll actually let you talk."
That's funny. Neoliberals are closet Trotskyites and they will let you talk only is specially
designated reservations, which are irrelevant (or, more correctly, as long as they are irrelevant)
for swaying the public opinion.
They are all adamant neo-McCarthyists, if you wish and will label you Putin stooge in no time
[, if you try to escape the reservation].
If you think they are for freedom of the press, you are simply delusional. They are for
freedom of the press for those who own it.
Try to get dissenting views to MSM or academic magazines. Yes, they will not send you to
GULAG, but the problem is that ostracism works no less effectively. That the essence of "inverted
totalitarism" (another nickname for neoliberalism). You can substitute physical repression used
in classic totalitarism with indirect suppression of dissenting opinions with the same, or even
better results. Note that even the term "neoliberalism" is effectively censored and not used by
MSM.
See Sheldon Wolin writings about this.
And the resulting level of suppressing of opposition (which is the essence of censorship)
is on the level that would make the USSR censors blush. And if EconomistView gets too close to
anti-neoliberal platform it will instantly find itself in the lists like PropOrNot
"... Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the devastated post-industrial hell scape his policies helped create. ..."
"... Krugman should be temporarily barred from public discourse until he apologizes for pushing NAFTA and all the rest. Hundreds of millions of people were thrust into dire poverty because of the horrible free trade policies he and 99.9% of US economists pushed. ..."
"... Extremes meet: extreme protectionism is close to extreme neoliberal globalization in the level of devastation, that can occur. ..."
"... But please do not forget that Krugman is a neoliberal stooge and this is much worse then being protectionist. This is close to betrayal of the nation you live it, people you live with, if you ask me. ..."
"... To me academic neoliberals after 2008 are real "deplorables". And should be treated as such, despite his intellect. There not much honor in being an intellectual prostitute of financial oligarchy that rules the country. ..."
Economists are still oblivious to the devastation created by 40 years of free trade.
Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the
devastated post-industrial hell scape his policies helped create.
Krugman should be temporarily barred from public discourse until he apologizes for pushing
NAFTA and all the rest. Hundreds of millions of people were thrust into dire poverty because of
the horrible free trade policies he and 99.9% of US economists pushed.
They have learned nothing and they have forgotten much.
Oh yea - bring on the tariffs which will lead to a massive appreciation of the dollar. Which in
turn will lead to massive reductions in US exports. I guess our new troll is short selling Boeing.
likbez -> pgl, -1
I tend to agree with you. Extremes meet: extreme protectionism is close to extreme neoliberal
globalization in the level of devastation, that can occur.
But please do not forget that Krugman is a neoliberal stooge and this is much worse then
being protectionist. This is close to betrayal of the nation you live it, people you live with,
if you ask me.
To me academic neoliberals after 2008 are real "deplorables". And should be treated as
such, despite his intellect. There not much honor in being an intellectual prostitute of financial
oligarchy that rules the country.
(cnn.com)
255
Posted by EditorDavid
on Sunday December 18, 2016 @12:34PM
from the
eat-different
dept.
An anonymous reader writes:
Apple has been
ordered to cut a $2 million check
for denying some of its retail workers
meal breaks. The lawsuit was first filed in 2011 by four Apple employees in San
Diego. They alleged that the company failed to give them meal and rest breaks
[as required by California law], and didn't pay them in a timely manner, among
other complaints. In 2013, the case became a class action lawsuit that included
California employees who had worked at Apple between 2007 and 2012,
approximately 21,000 people...
The complaint says Apple's culture of secrecy keeps employees from talking
about the company's poor working conditions. "If [employees] so much as discuss
the various labor policies, they run the risk of being fired, sued or
disciplined."
Apple changed their break policy in 2012, according to CNN, which reports that
the second half of the case should conclude later this week. The employees that
had been affected by Apple's original break policy could get as much as $95
each from Friday's settlement, according to CNN, "but it's likely some of the
money will go toward attorney fees."
(washingtonpost.com)
497
Posted by
BeauHD
on Thursday December 08, 2016 @10:30PM
from the
live-long-and-prosper
dept.
An anonymous reader quotes a report from Washington Post:
For the first time
in more than two decades,
life expectancy for Americans declined last year
(Warning: may be paywalled;
alternate source
) -- a troubling development linked to a panoply of
worsening health problems in the United States.
In all, death rates
rose for eight of the top 10 leading causes of death. The new report raises the
possibility that major illnesses may be eroding prospects for an even wider
group of Americans. Its findings show increases in "virtually every cause of
death. It's all ages," said David Weir, director of the health and retirement
study at the Institute for Social Research at the University of Michigan. Over
the past five years, he noted, improvements in death rates were among the
smallest of the past four decades. "There's this just across-the-board
[phenomenon] of not doing very well in the United States." Overall, life
expectancy fell by one-tenth of a year, from 78.9 in 2014 to 78.8 in 2015,
according to the latest data. The last time U.S. life expectancy at birth
declined was in 1993, when it dropped from 75.6 to 75.4, according to World
Bank data. The overall death rate rose 1.2 percent in 2015, its first uptick
since 1999. More than 2.7 million people died, about 45 percent of them from
heart disease or cancer.
"At least three tents have been spotted in woodland beside the online retail
giant's base," reports a Scottish newspaper -- hidden behind trees, but within
sight of Amazon's warehouse, and right next to a busy highway.
An anonymous
reader writes:
Despite Scotland's "bitterly cold winter nights" -- with lows
in the 30s -- the tent "
was
easier and cheaper than commuting from his home
," one Amazon worker told
the
Courier
. (Though yesterday someone stole all of his camping
equipment.)
Amazon charges its employees for shuttle service to the fulfillment
center, which "swallows up a lot of the weekly wage," one political party
leader told the
Courier
, "forcing people to seek ever more desperate
ways of making work pay.
"Amazon should be ashamed that they pay their workers so little that they have
to camp out in the dead of winter to make ends meet..." he continued. "They pay
a small amount of tax and received millions of pounds from the Scottish
National Party Government, so the least they should do is pay the proper living
wage." Though the newspaper reports that holiday shopping has created 4,000
temporary jobs in the small town of Dunfermline,
The
Disney IT employees, said Sara Blackwell, a Florida labor attorney who is
representing this group, "lost their jobs when their jobs were outsourced to
contracting companies. And those companies brought in mostly, or virtually all,
non-American national origin workers," she said. The lawsuit alleges that
Disney terminated the employment of the plaintiffs "based solely on their
national origin and race, replacing them with Indian nationals." The people who
were laid off were multiple races, but the people who came in were mostly one
race, said Blackwell. The lawsuit alleges that Disney terminated the employment
of the plaintiffs "based solely on their national origin and race, replacing
them with Indian nationals."
"As companies tighten their purse strings, they're spreading out their hires --
this year, and for years to come," reports Backchannel, citing interviews with
executives and other workplace analysts.
mirandakatz
writes:
Once a
cost-cutting strategy,
remote offices are becoming the new normal
: from GitHub to Mozilla and
Wordpress, more and more companies are eschewing the physical office in favor
of systems that allow employees to live out their wanderlust. As workplaces
increasingly go remote, they're adopting tools to keep employees connected and
socially fulfilled -- as Mozilla Chief of Staff David Slater tells Backchannel,
"The wiki becomes the water cooler."
The article describes budget-conscious startups realizing they can cut their
overhead and choose from talent located anywhere in the world. And one group of
analysts calculated that the number of telecommuting workers
doubled
between 2005 and 2014
, reporting that now "75% of employees who work from
home earn over $65,000 per year, putting them in the upper 80th percentile of
all employees, home or office-based."
Are Slashdot's readers seeing a surge in
telecommuting? And does anybody have any good stories about the digital nomad
lifestyle?
Posted by msmash
on Tuesday November 29, 2016 @11:40AM
from the
fight-for-money
dept.
Uber drivers will join forces with fast food, home care and airport workers in
a nationwide protest on Tuesday.
Their demand: higher pay
.
From a report on CNET:
Calling it the "Day of
Disruption," drivers for the ride-hailing company in two dozen cities,
including Boston, Chicago, Los Angeles and San Francisco, will march at
airports and in shopping areas carrying signs that read, "Your Uber Driver is
Arriving Striking." The protest underscores the dilemma Uber faces as it
balances the needs of its drivers with its business. Valued at $68 billion,
Uber is the highest-valued venture-backed company worldwide. But as it has cut
the cost of rides to compete with traditional taxi services, Uber reportedly
has experienced trouble turning a profit.
Unlike many other workers involved in
Tuesday's protests, Uber drivers are not members of a union. In fact, Uber
doesn't even classify its drivers as employees. Instead the company considers
drivers independent contractors. This classification means the company isn't
responsible for many costs, including health insurance, paid sick days, gas,
car maintenance and much more.
However, Uber still sets drivers' rates and the
commission it pays itself, which ranges between 20 percent and 30 percent.
"I'd
like a fair day's pay for my hard work," Adam Shahim, a 40-year-old driver from
Pittsburgh, California, said in a statement.
"So I'm joining with the
fast-food, airport, home care, child care and higher education workers who are
leading the way and showing the country how to build an economy that works for
everyone, not just the few at the top."
"... Uber treats its drivers as Victorian-style "sweated labor", with some taking home less than the minimum wage, ..."
"... Drivers at the taxi-hailing app company reported feeling forced to work extremely long hours, sometimes more than 70 a week , just to make a basic living, said Frank Field, the Labor MP and chair of the work and pensions committee. ..."
"... Field received testimony from 83 drivers who said they often took home significantly less than the "national living wage" after paying their running costs. The report says they described conditions that matched the Victorian definition of sweated labor: "when earnings were barely sufficient to sustain existence, hours of labor were such as to make lives of workers periods of ceaseless toil; and conditions were injurious to the health of workers and dangerous to the public. ..."
"... Uber controls what the drivers charge, what they drive (minimum standards and all) and punishes them if they don't work when told to (by locking them out of the app for declining low paying rides). That's not a contract gig, that's employment. ..."
"... the math on the purchase of the car doesn't work out. ..."
"... That's the essence of modern American Slavery. Nobody's _ever_ forcing you. You're completely free to starve to death and die in the streets. It's why the South abandoned real slavery. Wage Slavery is ever so much more cost effective. ..."
"... The aristocrats of our age are as detached from reality as the French aristocrats were, and as unwilling to accept the responsibilities that come with vast accrual of wealth. ..."
"... The key is to run a business that is profitable enough to pay its workers a wage sufficient to cover food and medical and housing. Otherwise, my tax money does it and those dollars essentially make the business owner a welfare recipient by enabling him to be artificially enriched. ..."
Posted by msmash on Friday December 09, 2016 @05:40PM from the app-economy dept.
Uber treats its drivers as Victorian-style "sweated labor", with some taking home less than the minimum
wage, according to a report into its working conditions based on the testimony of dozens of drivers.
From a report on The Guardian:
Field received testimony from 83 drivers who said they often took home significantly less than
the "national living wage" after paying their running costs. The report says they described conditions
that matched the Victorian definition of sweated labor: "when earnings were barely sufficient to
sustain existence, hours of labor were such as to make lives of workers periods of ceaseless toil;
and conditions were injurious to the health of workers and dangerous to the public."
rsilvergun ( 571051 ) on Friday December 09, 2016 @06:13PM (#53456097)
Au contre mon cheri (Score:2)
they realized the exact opposite. Pity you didn't.
Uber controls what the drivers charge, what they drive (minimum standards and all) and
punishes them if they don't work when told to (by locking them out of the app for declining
low paying rides). That's not a contract gig, that's employment.
fluffernutter ( 1411889 ) on Friday December 09, 2016 @06:54PM (#53456365)
Re:Was never meant to be full time... (Score:2)
I think then the whole problem is that the math on the purchase of the car doesn't work
out. They have to work a lot of hours to make anything once the vehicle expenses are
taken care of.
MightyMartian ( 840721 ) on Friday December 09, 2016 @06:42PM (#53456283) Journal
Re:Tough shit (Score:3)
Even brilliant people can find themselves out of work, and become prey for pretty predatory
companies happy to take advantage of them. I've worked in the employment industry for many
years and see even some pretty highly skilled people stuck in shit-ass jobs because they can't
afford to move.
That is why most jurisdictions have it least some basic level of worker protection, and why no
one seriously contemplates turning the industrialized world into a Libertarian fantasy land.
Dorianny ( 1847922 ) on Friday December 09, 2016 @07:29PM (#53456597) Journal
Re:Mixed Metaphors (Score:2)
Antoinette's expression is in reference the tyranny of feudalism.
Pretty sure Uber drivers aren't indentured servants, much less serfs. Seeing as how, you
know, if you don't want to drive for Uber, you just don't load the app. The Gendarme isn't
going to break down your door and drag you to jail.
The expression "Let them eat cake" shows a complete lack of understanding that the absence
of basic food staples was due to poverty rather than a lack of supply. Serfdom was officially
abolished in France in 1789 by Antoinette's husband Louis XVI, although this was mostly a
formality as there were few if any actual Serfs left in France.
Most people were "free peasents" that were paid extremely low wages to work the lands of
the King and Nobility FYI: Even thou the expression "Let them eat cake" is commonly attributed
to Marie Antoinette there is no record of the phrase ever being said by her...
matbury ( 3458347 ) on Friday December 09, 2016 @06:55PM (#53456367) Homepage
Re:"Feel forced?" (Score:4, Insightful)
Taxi drivers also have regulated hours. Being tired is as impairing and dangerous as being
drunk. Would you hail a cab if you knew the driver was drunk? If he's been working double the
recommended hours a week, like an Uber driver, he's likely to be severely impaired and very
likely to have an accident.
rsilvergun ( 571051 ) on Friday December 09, 2016 @06:09PM (#53456055)
Says a man or woman (Score:4, Insightful)
who's never had a rent check bounce. Or never had to pay out of pocket to fix a kid's
broken arm. Or been born in a rust belt town when the last factory just left and/or automated.
That's the essence of modern American Slavery. Nobody's _ever_ forcing you. You're
completely free to starve to death and die in the streets. It's why the South abandoned real
slavery. Wage Slavery is ever so much more cost effective.
Solandri ( 704621 ) on Friday December 09, 2016 @07:31PM (#53456603)
Re:Says a man or woman (Score:4, Interesting)
Wage slavery is never cost effective except for the slave owner. That's what makes it an
unstable system which can only be perpetuated by government collusion, or lack of willpower by
the employees to break out of slavery. e.g. Detroit used to have slave-level wages.
Henry Ford decided to set up shop there and paid his factory workers much more than the
prevailing wage. He accidentally discovered that when he paid people a fair wage, not only did
their productivity increase, but they used those wages to buy the very product they were
helping build.
The resulting feedback loop multiplied his company's revenue and turned the Ford Motor
Company into the behemoth it is today. No longer were cars affordable only to the privileged
elite; the average middle class worker (by Ford factory standards) could afford to buy one.
If the only options you see are being a wage slave or starving to death, then you haven't
really tried. A location where the people are being paid slave wages or starving is ripe for a
new company to set up shop and hire willing employees for less than they'd have to pay at
well-established locations. As more of these people become employed and spend their wages on
local merchants, the economy picks up.
There are fewer unemployed, resulting in wages increasing. This is how the market equalizes
geographic wage inequality. If this isn't happening, then there are fundamental problems with
the region not caused by slave wages. Maybe the location is too far from markets, or the
highway/railroad access is poor, or people just don't want to live in that location. Unless
the government is intentionally keeping business out, low wages are a symptom not a cause.
And yes I've had a rent check bounce. A rent check a tenant gave me. I was stupid and
deposited it directly into our payroll bank account since it almost exactly topped off the
amount we needed to make payroll. Normally I transfer the payroll money from our primary
checking account, but I was lazy and decided to save a little work by depositing the checks
directly into payroll.
As a result I got charged a bounced check fee, but more importantly a bunch of my
employees' paychecks bounced, causing more bounced check fees for both them and myself. The
whole thing was a disaster. I called in each employee who was affected, apologized to them in
person, and told them to bring in their bank statement so I could reimburse their bounced
check fee (or fees if they then wrote checks which bounced).
The ones who needed the money immediately, I paid in cash out of my own pocket. All told it
was over $1300 in bank fees incurred because I was stupid/lazy, and because the person who
wrote the first check did so knowing he didn't have enough money to cover it but thought it
would be easier turning his problem into my problem.
It's cliche, but it's true. Your employees are your most valuable asset. A good business will
do everything it can to protect them and to retain them. A business which pays slave wages is
just ripe to be squeezed out by a business which will pay better (fair) wages. The only way a
slave wage business can stay in business is if the government is blocking competing
businesses, or if people like you have so discouraged others with your gloom and doom hopeless
corporate feudalism talk that they don't even bother trying to start up their own business to
compete.
serviscope_minor ( 664417 ) on Saturday December 10, 2016 @04:50AM (#53458279) Journal
Re:Says a man or woman (Score:5, Insightful)
or lack of willpower by the employees to break out of slavery
Ah, it's the slaves fault that they're slaves, then.
If the only options you see are being a wage slave or starving to death, then you haven't
really tried. A location where the people are being paid slave wages or starving is ripe for a
new company to set up shop and hire willing employees for less than they'd have to pay at
well-established locations.
Ah yes, it's so easy to set up a company when you're a wage slave and have no spare
resources with which to set up the company. If you don't you just lack the willpower to starve
to death for a few months or years before your company takes off.
Oh and if you don't have a head for business, you deserve to be a wage slave because fuck
you that's why.
A business which pays slave wages is just ripe to be squeezed out by a business which will
pay better (fair) wages.
Oh yes, that's precisely how things worked in Victorian England.
You know, or not. that they don't even bother trying to start up their own business to
compete.
Starting a business is the highest form of intellect and worth. If you can't, then die in
filth, scum. You deserve worse!
Jzanu ( 668651 ) on Friday December 09, 2016 @06:02PM (#53456007)
Re:"Feel forced?" (Score:4, Insightful)
Step 1: Create system where I make money doing nothing, we will call this being a
platform
Step 2: Force existing systems to work for me by under cutting prices and providing a
better way to interact
Step 3: Profit
Shit, Uber makes profit by undercutting cabs who already did not make much money... You can
tell people not to drive for them, but when you see the lease terms uber demands (weekly
payments, taken directly from your take, you dont pay we take the car) then you see that they
are required to drive, and drive long hours if riders are minimal.
This is a firm that has a master plan of shifting as much as it can on to other people so its
30% cut can be 90% profit. So far its working because people with no job will work any job in
a world where unskilled labor is not worth much (driving is definitely on the unskilled labor
side here) There are simply not many other jobs out there for a subset of people.
Uber's
real business [uber.com] (see bottom of page)
model [xchangeleasing.com] is incentivizing wage-slavery with poverty wages and binding
contract enforcement - it is just the vehicular version of the
company town [wikipedia.org].
MightyMartian ( 840721 ) on Friday December 09, 2016 @07:51PM (#53456707) Journal
Re:Don't worry (Score:5, Insightful)
It will certainly be screwed if it keeps allowing corporate interests to arguing away the
taxes they should be paying.
I'm genuinely concerned that events like Brexit and the Trump victory are the opening shots in
some sort of modern day French revolution. The aristocrats of our age are as detached from
reality as the French aristocrats were, and as unwilling to accept the responsibilities that
come with vast accrual of wealth.
They are creating a dangerously unstable situation, and when the Trumps of the world prove
as incapable or unwilling to rebalance economic and social issues, then we may be facing a far
less savory group of revolutionaries. And, as the French Revolution so ably demonstrated, even
wealth isn't an absolute shield.
jlowery ( 47102 ) on Friday December 09, 2016 @06:19PM (#53456129)
Re: Don't worry (Score:5, Insightful)
The key is to run a business that is profitable enough to pay its workers a wage
sufficient to cover food and medical and housing. Otherwise, my tax money does it and those
dollars essentially make the business owner a welfare recipient by enabling him to be
artificially enriched.
If your business doesn't sell a product people are willing to spend enough for you pay your
workers a living wage, then your business should go bankrupt. I'm not paying for your beach
house.
ghoul ( 157158 ) on Friday December 09, 2016 @06:20PM (#53456149)
Uber needs a recession (Score:5, Insightful)
The Uber business model only works for newly laid off workers who have a nice car with car
payments to make. Its not meant to be a fulltime job. The entire gig economy including iOS
apps only took off as in 2008 a lot of people lost their jobs but they still had cars,
computers and loads of time on their hand. As we closer to full employment people who have a
choice have moved away from gigs. Taxi companies are built upon the exploitation of illegal
immigrant drivers. Uber as a high visibility company cannot compete with Taxi companies as it
cant hire illegal immigrants and pay them sweat wages under the table. At the same time
driving a cab will not support a minimum wage so the best thing for Uber would be to go back
to being a gig company. Put a hard cap of 10 hours a week on driving for a driver - that will
remove the entire pool of drivers expecting to make a living from Uber, stop promoting Uber
driving as a full time job and stop giving leases to drivers to buy cars to drive for Uber.
Stop trying to grow for growth's sake. Stay at the size of a gig economy company like a temp
agency. They have some good software - license it to taxi companies and let them use it for
managing their own fleets in a mutli-tenant kind of model.
"... Popular pre-financial crisis versions of the model excluded banking and finance, taking as given that finance and asset prices were merely a by-product of the real economy. ..."
"... The centre-piece of Paul Romer's scathing attack on these models is on the 'pretence of knowledge' ..."
"... he is critical of the incredible identifying assumptions and 'pretence of knowledge' in both Bayesian estimation and the calibration of parameters in DSGE models. ..."
"... A further symptom of the 'pretence of knowledge' is the assumed 'knowledge' that these parameters are constant over time. A milder critique by Olivier Blanchard (2016) points to a number of failings of DSGE models and recommends greater openness to more eclectic approaches. ..."
"... The equation is based on the assumption of inter-temporal optimising by consumers and that every consumer faces the same linear period-to-period budget constraint, linking income, wealth, and consumption. ..."
"... In the basic form, consumption every period equals permanent non-property income plus permanent property income defined as the real interest rate times the stock of wealth held by consumers at the beginning of each period. Permanent non-property income converts the variable flow of labour and transfer incomes a consumer expects over a lifetime into an amount equally distributed over time. ..."
"... However, consumers actually face idiosyncratic (household-specific) and uninsurable income uncertainty, and uncertainty interacts with credit or liquidity constraints. ..."
"... The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout the US with priority ahead of claims by others (e.g. workers) in bankruptcy. ..."
"... 2004 SEC decision to ease capital requirements on investment banks increased gearing to what turned out to be dangerous levels ..."
"... Similar measures to lower required capital on investment grade PMBS increased leverage at commercial banks. These changes occurred in the political context of pressure to extend credit to poor. ..."
"... The importance of debt was highlighted in the debt-deflation theory of the Great Depression of Fisher (1933). 5 Briefly summarised, his story is that when credit availability expands, it raises spending, debt, and asset prices; irrational exuberance raises prices to vulnerable levels, given leverage; negative shocks can then cause falls in asset prices, increased bad debt, a credit crunch, and a rise in unemployment. ..."
"... In the financial accelerator feedback loops that operated in the US sub-prime crisis, falls in house prices increased bad loans and impaired the ability of banks to extend credit. As a result, household spending and residential investment fell, increasing unemployment and reducing incomes, feeding back further into lower asset prices and credit supply. ..."
"... The transmission mechanism that operated via consumption was poorly represented by the Federal Reserve's FRB-US model and similar models elsewhere. ..."
"... Reminds me of a young poseur at engineering school, who exclaimed during a group study session, "I've got it all jocked out. Now I just need the equations!" ..."
"... I have been aware of that for a few years now, but I doubt that one person in a hundred (or a thousand) knows when they listen to some economist on a news program or a business channel that the person speaking thinks that how much debt people have does not substantively affect their spending. ..."
"... If I used or invented an econ model that left out the "consumer", and modeled it with a "consumption agent object" having a single independent input variable being the Fed zero term, zero risk interest rate, I'd be too embarrassed to admit it. I would probably just very quietly make a career change into one of the softer sciences. Maybe writing fictional romance novels, or some such thing. ..."
"... The worst thing about these types of mea culpas from the mainstream is the cited criticisms from other mainstream economists only. It can only be a valid criticism if it was published in a mainstream journal ..."
"... That 'political pressure' turned out to be the bait and switch for a system that shifted power via debt creation. ..."
"... What we have not yet come to terms with are the implications of David Graeber's anthropological insights: how does debt affect social relationships, alter social norms, and affect relationships among individuals? ..."
"... Debt is a form of power, but by failing to factor this into their equations, the Central Bankers are missing the social, political, and cultural consequences of the profound shifts in 'credit market architecture'. In many respects, this is not about 'money'; it's about power. ..."
"... The Central Bankers' models can include all the parameters they can dream up, but until someone starts thinking more clearly about the role and function of money, and the way that 'different kinds of money' create 'different kinds of social relationships', we are all in a world of hurt. ..."
"... Now, maybe it is just a coincidence, but it is hard for me not to notice that the explosion in consumer credit matches up nicely with the rise in inequality. ..."
"... " .. debt does not make society as a whole poorer: one person's debt is another person's asset. So total wealth is unaffected by the amount of debt out there. This is, strictly speaking true only for the world economy as a whole .. " Paul Krugman "End this Depression Now". ..."
By John Muellbauer, Professor of Economics, Oxford University. Originally published at
VoxEU
The failure of the New Keynesian dynamic stochastic general equilibrium models to capture interactions
of finance and the real economy has been widely recognised since the Global Crisis. This column argues
that the flaws in these models stem from unrealistic micro-foundations for household behaviour and
from wrongly assuming that aggregate behaviour mimics a fully informed 'representative agent'. Rather
than 'one-size-fits-all' monetary and macroprudential policy, institutional differences between countries
imply major differences for monetary policy transmission and policy.
The New Keynesian DSGE models that dominated the macroeconomic profession and central bank thinking
for the last two decades were based on several principles.
The first was formal derivation from micro-foundations, assuming optimising behaviour of consumers
and firms with rational or 'model-consistent' expectations of future conditions. For such derivation
to result in a tractable model, it was assumed that the behaviour of firms and of consumers corresponded
to that of a 'representative' firm and a 'representative' consumer. In turn, this entailed the
absence of necessarily heterogeneous credit or liquidity constraints. Another important assumption
to obtain tractable solutions was that of a stable long-run equilibrium trend path for the economy.
If the economy was never far from such a path, the role of uncertainty would necessarily be limited.
Popular pre-financial crisis versions of the model excluded banking and finance, taking as
given that finance and asset prices were merely a by-product of the real economy.
Second, a competitive economy was assumed but with a number of distortions, including nominal
rigidities – sluggish price adjustment – and monopolistic competition. This is what distinguished
New Keynesian DSGE models from the general equilibrium real business cycle (RBC) models that preceded
them. It extended the range of stochastic shocks that could disturb the economy from the productivity
or taste shocks of the RBC model. Finally, while some models calibrated (assumed) values of the
parameters, where the parameters were estimated, Bayesian system-wide estimation was used, imposing
substantial amounts of prior constraints on parameter values deemed 'reasonable'.
The 'Pretence of Knowledge'
The centre-piece of Paul Romer's scathing attack on these models is on the 'pretence of knowledge'
(Romer 2016); echoing Caballero (2010), he is critical of the incredible identifying assumptions
and 'pretence of knowledge' in both Bayesian estimation and the calibration of parameters in DSGE
models. 1
A further symptom of the 'pretence of knowledge' is the assumed 'knowledge' that these parameters
are constant over time. A milder critique by Olivier Blanchard (2016) points to a number of failings
of DSGE models and recommends greater openness to more eclectic approaches.
Unrealistic Micro-Foundations
As explained in Muellbauer (2016), an even deeper problem, not seriously addressed by Romer or
Blanchard, lies in the unrealistic micro-foundations for the behaviour of households embodied in
the 'rational expectations permanent income' model of consumption, an integral component of these
DSGE models. Consumption is fundamental to macroeconomics both in DSGE models and in the consumption
functions of general equilibrium macro-econometric models such as the Federal Reserve's FRB-US. At
the core of representative agent DSGE models is the Euler equation for consumption, popularised in
the highly influential paper by Hall (1978). It connects the present with the future, and is essential
to the iterative forward solutions of these models. The equation is based on the assumption of
inter-temporal optimising by consumers and that every consumer faces the same linear period-to-period
budget constraint, linking income, wealth, and consumption. Maximising expected life-time utility
subject to the constraint results in the optimality condition that links expected marginal utility
in the different periods. Under approximate 'certainty equivalence', this translates into a simple
relationship between consumption at time t and planned consumption at t +1 and in periods
further into the future.
Under these simplifying assumptions, the rational expectations permanent income consumption function
can be derived. In the basic form, consumption every period equals permanent non-property income
plus permanent property income defined as the real interest rate times the stock of wealth held by
consumers at the beginning of each period. Permanent non-property income converts the variable flow
of labour and transfer incomes a consumer expects over a lifetime into an amount equally distributed
over time.
However, consumers actually face idiosyncratic (household-specific) and uninsurable income
uncertainty, and uncertainty interacts with credit or liquidity constraints. The asymmetric
information revolution in economics in the 1970s for which Akerlof, Spence and Stiglitz shared the
Nobel prize explains this economic environment. Research by Deaton (1991,1992), 2 several
papers by Carroll (1992, 2000, 2001, 2014), Ayigari (1994), and a new generation of heterogeneous
agent models (e.g. Kaplan et al. 2016) imply that household horizons then tend to be both heterogeneous
and shorter – with 'hand-to-mouth' behaviour even by quite wealthy households, contradicting the
textbook permanent income model, and hence DSGE models. A second reason for the failure of these
DSGE models is that aggregate behaviour does not follow that of a 'representative agent'. Kaplan
et al. (2016) show that, with these better micro-foundations, quite different implications follow
for monetary policy than in the New Keynesian DSGE models. A third reason is that structural breaks,
as shown by Hendry and Mizon (2014), and radical uncertainty further invalidate DSGE models, illustrated
by the failure of the Bank of England's DSGE model both during and after the 2008-9 crisis (Fawcett
et al. 2015). The failure of the representative agent Euler equation to fit aggregate data 3
is further empirical evidence against the assumptions underlying the DSGE models, while evidence
on financial illiteracy (Lusardi 2016) is a problem for the assumption that all consumers optimise.
The Evolving Credit Market Architecture
Of the structural changes, the evolution and revolution of credit market architecture was the
single most important. In the US, credit card ownership and instalment credit spread between the
1960s and the 2000s; the government-sponsored enterprises – Fannie Mae and Freddie Mac – were recast
in the 1970s to underwrite mortgages; interest rate ceilings were lifted in the early 1980s; and
falling IT costs transformed payment and credit screening systems in the 1980s and 1990s. More revolutionary
was the expansion of sub-prime mortgages in the 2000s, driven by rise of private label securitisation
backed by credit default obligations (CDOs) and swaps.
The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout
the US with priority ahead of claims by others (e.g. workers) in bankruptcy. This permitted
derivative enhancements for private label mortgage-backed securities (PMBS) so that they could be
sold on as highly rated investment grade securities. A second regulatory change was the deregulation
of banks and investment banks. In particular, the 2004 SEC decision to ease capital requirements
on investment banks increased gearing to what turned out to be dangerous levels and further
boosted PMBS, Duca et al (2016). Similar measures to lower required capital on investment grade
PMBS increased leverage at commercial banks. These changes occurred in the political context of pressure
to extend credit to poor.
The Importance of Debt
A fourth reason for the failure of the New Keynesian DSGE models, linking closely with the previous,
is the omission of debt and household balance sheets more generally, which are crucial for understanding
consumption and macroeconomic fluctuations. Some central banks did not abandon their large non-DSGE
econometric policy models, but these were also defective in that they too relied on the representative
agent permanent income hypothesis which ignored shifts in credit constraints and mistakenly lumped
all elements of household balance sheets, debt, liquid assets, illiquid financial assets (including
pension assets) and housing wealth into a single net worth measure of wealth. 4 Because
housing is a consumption good as well as an asset, consumption responds differently to a rise in
housing wealth than to an increase in financial wealth (see Aron et al. 2012). Second, different
assets have different degrees of 'spendability'. It is indisputable that cash is more spendable than
pension or stock market wealth, the latter being subject to asset price uncertainty and access restrictions
or trading costs. This suggests estimating separate marginal propensities to spend out of liquid
and illiquid financial assets. Third, the marginal effect of debt on spending is unlikely just to
be minus that of either illiquid financial or housing wealth. The reason is that debt is not subject
to price uncertainty and it has long-term servicing and default risk implications, with typically
highly adverse consequences.
The importance of debt was highlighted in the debt-deflation theory of the Great Depression
of Fisher (1933). 5 Briefly summarised, his story is that when credit availability expands,
it raises spending, debt, and asset prices; irrational exuberance raises prices to vulnerable levels,
given leverage; negative shocks can then cause falls in asset prices, increased bad debt, a credit
crunch, and a rise in unemployment.
In the 1980s and early 1990s, boom-busts in Norway, Finland, Sweden, and the UK followed this
pattern. In the financial accelerator feedback loops that operated in the US sub-prime crisis,
falls in house prices increased bad loans and impaired the ability of banks to extend credit. As
a result, household spending and residential investment fell, increasing unemployment and reducing
incomes, feeding back further into lower asset prices and credit supply.
The transmission mechanism that operated via consumption was poorly represented by the Federal
Reserve's FRB-US model and similar models elsewhere. A more relevant consumption function for
modelling the financial accelerator is needed, modifying the permanent income model with shorter
time horizons, 6 incorporating important shifts in credit lending conditions, and disaggregating
household balance sheets into liquid and illiquid elements, debt and housing wealth.
Implications for Macroeconomic Policy Models
To take into account all the feedbacks, a macroeconomic policy model needs to explain asset prices
and the main components of household balance sheets, including debt and liquid assets. This is best
done in a system of equations including consumption, in which shifts in credit conditions – which
have system-wide consequences, sometimes interacting with other variables such as housing wealth
– are extracted as a latent variable. 7 The availability of home equity loans, which varies
over time and between countries – hardly available in the US of the 1970s or in contemporary Germany,
France or Japan – and the also the variable size of down-payments needed to obtain a mortgage, determine
whether increases in house prices increase (US and UK) or reduce (Germany and Japan) aggregate consumer
spending. This is one of the findings of research I review in Muellbauer (2016). Another important
finding is that a rise in interest rates has different effects on aggregate consumer spending depending
on the nature of household balance sheets. Japan and Germany differ radically from the US and the
UK, with far higher bank and saving deposits and lower household debt levels so that lower interest
rates reduce consumer spending. A crucial implication of these two findings is that monetary policy
transmission via the household sector differs radically between countries – it is far more effective
in the US and UK, and even counterproductive in Japan (see Muellbauer and Murata 2011).
Such models, building in disaggregated balance sheets and the shifting, interactive role of credit
conditions, have many benefits: better interpretations of data on credit growth and asset prices
helpful for developing early warning indicators of financial crises; better understandings of long-run
trends in saving rates and asset prices; and insights into transmission for monetary and macro-prudential
policy. Approximate consistency with good theory following the information economics revolution of
the 1970s is better than the exact consistency of the New Keynesian DSGE model with bad theory that
makes incredible assumptions about agents' behaviour and the economy. Repairing central bank policy
models to make them more relevant and more consistent with the qualitative conclusions of the better
micro-foundations outlined above is now an urgent task.
Endnotes
[1] Part of the problem of identification is that the DSGE models throw away long-run information.
They do this by removing long-run trends with the Hodrick-Prescott filter, or linear time trends
specific to each variable. Identification, which rests on available information, then becomes more
difficult, and necessitates 'incredible assumptions'. Often, impulse response functions tracing out
the dynamic response of the modelled economy to shocks are highly sensitive to the way the data have
been pre-filtered.
[3] See Campbell and Mankiw (1989, 1990) and for even more powerful evidence from the UK, US and
Japan; Muellbauer (2010); and micro-evidence from Shea (1995).
[4] Net worth is defined as liquid assets minus mortgage and non-mortgage debt plus illiquid financial
assets plus housing assets, and this assumes that the coefficients are all the same.
[5] In recent years, several empirical contributions have recognised the importance of the mechanisms
described by Fisher (1933). Mian and Sufi (2014) have provided extensive micro-economic evidence
for the role of credit shifts in the US sub-prime crisis and the constraining effect of high household
debt levels. Focusing on macro-data, Turner (2015) has analysed the role of debt internationally
with more general mechanisms, as well as in explaining the poor recovery from the global financial
crisis. Jorda et al. (2016) have drawn attention to the increasing role of real estate collateral
in bank lending in most advanced countries and in financial crises.
[6] The FRB-US model does build in shorter average horizons than text-book permanent income. It
also has a commendable flexible treatment of expectations, Brayton et al (1997).
[7] The use of latent variables in macroeconomic modelling has a long vintage. Potential output,
and the "natural rate" of unemployment or of interest are often treated as latent variables, for
example in the FRB-US model and in Laubach and Williams (2003), and latent variables are often modelled
using state space methods. Flexible spline functions can achieve similar estimates. Interaction effects
of latent with other variables seem not to have been considered, however. We use the term 'latent
interactive variable equation system' (LIVES) to describe the resulting format.
'the omission of debt and household balance sheets more generally'
putting these eclownometric [sic] models at about the same level of technical sophistication
as the Newcomen steam engine of 1712, which achieved about one (1) percent thermodynamic efficiency.
'a macroeconomic policy model needs to explain asset prices and household balance sheets.
This is best done in a system of equations.'
Yes indeedy. Reminds me of a young poseur at engineering school, who exclaimed during a
group study session, "I've got it all jocked out. Now I just need the equations!"
' the omission of debt and household balance sheets more generally '
You beat me to it. I have been aware of that for a few years now, but I doubt that one
person in a hundred (or a thousand) knows when they listen to some economist on a news program
or a business channel that the person speaking thinks that how much debt people have does not
substantively affect their spending.
Really, 5 year olds describing how they get toys from Santa have a better grasp of economics
than most "economists"
If I used or invented an econ model that left out the "consumer", and modeled it with a
"consumption agent object" having a single independent input variable being the Fed zero term,
zero risk interest rate, I'd be too embarrassed to admit it. I would probably just very quietly
make a career change into one of the softer sciences. Maybe writing fictional romance novels,
or some such thing.
The worst thing about these types of mea culpas from the mainstream is the cited criticisms
from other mainstream economists only. It can only be a valid criticism if it was published in
a mainstream journal
Of the structural changes, the evolution and revolution of credit market architecture was
the single most important . In the US, credit card ownership and instalment credit spread between
the 1960s and the 2000s; the government-sponsored enterprises – Fannie Mae and Freddie Mac
– were recast in the 1970s to underwrite mortgages; interest rate ceilings were lifted in the
early 1980s; and falling IT costs transformed payment and credit screening systems in the 1980s
and 1990s. More revolutionary was the expansion of sub-prime mortgages in the 2000s, driven
by rise of private label securitisation backed by credit default obligations (CDOs) and swaps.
The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout
the US with priority ahead of claims by others (e.g. workers) in bankruptcy. This permitted
derivative enhancements for private label mortgage-backed securities (PMBS) so that they could
be sold on as highly rated investment grade securities. A second regulatory change was the
deregulation of banks and investment banks . Similar measures to lower required capital on
investment grade PMBS increased leverage at commercial banks. These changes occurred in the
political context of pressure to extend credit to poor.
That 'political pressure' turned out to be the bait and switch for a system that shifted
power via debt creation.
What we have not yet come to terms with are the implications of David Graeber's anthropological
insights: how does debt affect social relationships, alter social norms, and affect relationships
among individuals?
Debt is a form of power, but by failing to factor this into their equations, the Central
Bankers are missing the social, political, and cultural consequences of the profound shifts in
'credit market architecture'. In many respects, this is not about 'money'; it's about power.
After Brexit, Trump, and the emerging upheaval in the EU, it's no longer enough to just 'build
better economic models'.
The Central Bankers' models can include all the parameters they can dream up, but until
someone starts thinking more clearly about the role and function of money, and the way that 'different
kinds of money' create 'different kinds of social relationships', we are all in a world of hurt.
At this point, Central Bankers should also ask themselves what happens - socially, personally
- when 'debt' (i.e., financialization) shifts from productivity to predation. That shift accelerated
from the 1970s, through the 1990s, into the 2000s.
Allowing anyone to charge interest that is usurious is the modern equivalent of turning a blind
eye to slavery.
By enabling outrageous interest, any government hands their hard working taxpayers over to
what is essentially unending servitude.
This destroys the political power of any government that engages in such blind stupidity.
Frankly, I'm astonished that it has taken so long for taxpayers to show signs of outrage and
revolt.
I think you have come up with a good insight – I very much agree its about power and not money.
Now, maybe it is just a coincidence, but it is hard for me not to notice that the explosion
in consumer credit matches up nicely with the rise in inequality.
And one other thing I would point out – it doesn't take usurious interest rates. If squillionaires
have access to unlimited, essentially cost free money in which the distributors of money are guaranteed
a profit, NO MATTER HOW MUCH THEY HAVE LOST, while the debts on non-squillionaires are collected
with fees, penalties, and to the last dime, than it doesn't matter if interest rates are essentially
zero.
Who gets bailed out is not due to logic or accounting that says that the banks' losses have
to be made whole, but not home owners – that is an ideology called economics .
I wouldn't downplay how cool the money part is, however. It's no fun making questionable, dodgy
loans unless you can charge fees up front and then sell the risk off to a large crowd of suckers.
Hence the importance of securitization and other "insurance" type derivatives. Then, if you run
out of willing suckers, you need a place to stuff it all, say pension plans and maybe even privatized
social security.
But if they allow this to happen in the real world, shouldn't the models have a piece reflecting
this behavior as well? Full circle of course, where the "consumer balance sheet" contains his
bad debt investment and savings assets* offsetting his liabilities. Then everyone would be more
like a bank?
* we still need to model bubble assets – like real estate and stocks. This sounds like it's
starting to get tricky!
"Another important finding is that a rise in interest rates has different effects on aggregate
consumer spending depending on the nature of household balance sheets".
This is a point that Warren Mosler and other MMTers have been making since the 1990s: depending
on circumstances, lower interest rates may well have contractionary effects and higher interest
rates may stimulate the economy.
The tool of choice to fight recessions and control inflation should thus be fiscal instead
of monetary policy.
Again, MMT had the analysis right long before mainstream theory started to admit there might
be serious problems with its favorite approaches (without ever giving appropriate credit to MMT,
of course!).
I think the Samarians knew that 5000 years ago. The Templars certainly knew it 1300 years ago.
And most definitely, "modern" European banking knew it 300 years ago.
of note to me is just how simplistic Keynesian statistics were/are, based on almost fantasy-assumptions.
And that was followed by Stiglitz et al's theory of asymmetric information models. And this above
does give us a dose of all the different variables involved in accurately analyzing an economy
– an economy that exploded with financialization, but nobody could keep up. As was proven in 2008.
It shouldn't be this confusing. "Repairing CB policies to make them more relevant is now an urgent
task." I think it is urgent enough to nationalize the banks and start over using a sovereign money
model.
Let's take an infinitely complex system (the economy) that is widely affected by human emotion,
then we'll leave out the mechanism by which money itself is created and distributed and then let's
"model" it.
We'll have two fans of Stalin's communist "command and control" economy (Keynes and Harry Dexter
White) pretend they could create a stable system based on Ph.Ds divining future economic and trade
flows and then "managing" them by price fixing the price of money. We'll set policy based on the
national conditions of the country with the global reserve currency despite the fact that 2/3
of that currency is outside that country. And with a system where trade never settles so massive
imbalances can persist indefinitely. Then let's put self-interested private institutions in charge
of all money creation and distribution .and we'll be sure their system operates in secret and
is never audited. When the system blows up we'll have these central overlords step in as uneconomic
buyers of assets with no consideration for asset quality or price, with no economic need to ever
sell, and with "unlimited" funds with which to buy more such assets. At the end we'll continue
to call the system "capitalism" and we'll continue to call the scrip "money" and hope nobody notices.
The money supply is flat in the recession of the early 1990s.
Then it really starts to take off as the dot.com boom gets going which rapidly morphs into
the US housing boom, courtesy of Alan Greenspan's loose monetary policy.
When M3 gets closer to the vertical, the black swan is coming and you have a credit bubble
on your hands (money = debt).
The mainstream are all trained in neoclassical economics which is spectacularly dismal.
Steve Keen sits outside the mainstream and saw the credit bubble forming in 2005, you can see
it in the
US money supply (money = debt).
In 2007, Ben Bernanke could see no problems ahead (dismal).
Irving Fisher looked at the debt inflated asset bubble after the 1929 crash when ideas that
markets reached stable equilibriums were beyond a joke.
Fisher developed a theory of economic crises called debt-deflation, which attributed the crises
to the bursting of a credit bubble.
Hyman Minsky came up with "financial instability hypothesis" in 1974 and Steve Keen carries
on with this work today. The theory is there outside the mainstream.
To understand the theory you have to understand money:
" .. debt does not make society as a whole poorer: one person's debt is another person's
asset. So total wealth is unaffected by the amount of debt out there. This is, strictly speaking
true only for the world economy as a whole .. " Paul Krugman "End this Depression Now".
This is the neoclassical economic view of money and it's totally wrong and will always leave
you blind to events like 2008, e.g.
1929 – US (margin lending into US stocks)
1989 – Japan (real estate)
2008 – US (real estate bubble leveraged up with derivatives for global contagion)
2010 – Ireland (real estate)
2012 – Spain (real estate)
2015 – China (margin lending into Chinese stocks)
Norway, Sweden, Canada and Australia have been letting their real estate bubbles inflate because
their mainstream economists and Central Bankers don't know what's coming.
Money and debt are opposite sides of the same coin.
If there is no debt there is no money.
Money is created by loans and destroyed by repayments of those loans.
Advanced:
"Where does money come from" available from Amazon
You need to understand how money works to understand why austerity doesn't work in balance
sheet recessions, the cause of the dire prediction from the IMF that I started with.
You can look at the money supply/debt levels (the same thing) to see how well the economy is
doing.
The money supply is contracting – the economy will be doing badly and the risk of this turning
into debt deflation is high, there is positive feedback tending to make the situation worse. Debt
repayments are larger than the new debt being taken out, the overall level of debt is decreasing.
The money supply is stable – this is stagnation, in the ideal world the money supply should
be growing at a steady pace.
The money supply is growing steadily – the ideal.
The money supply is growing very rapidly – you've got a credit bubble on your hands and the
"black swan" is near. The FED didn't understand money and debt before 2008 so they missed it.
Mario is still doing austerity now, no wonder those Italian banks are full of NPLs.
It's too late for Norway, Sweden, Canada and Australia's mainstream economists and Central
Bankers, but we need to get this dismal neoclassical economics updated before the whole world
descends into debt deflation.
It's almost here, there isn't much time.
Chuck another trillion in to keep this sinking ship afloat Central Bankers, we need to get
our technocrat elite up to speed.
Just look at the rate of change of the money supply/debt.
When it's rising rapidly you're in trouble as a credit bubble is forming.
A negative gradient is also a bad sign as it means your money supply is contracting, your economy
is in trouble and debt deflation could be on its way.
I am shocked, shocked I tell you, that a model with 'Equilibrium' right in the name fails to
predict crises. They could probably do better just aggregating results from a big multi-player
version of The Sims.
Better models should start from scratch, assuming non-linearity. They could take the Limits-to-Growth
system of nonlinear pde's as a starting point, for example, to get a good handle on long range
dynamics. Then add detailed submodels for money and debt, for different countries, for trade,
for different economic sectors, etc. Use realistic agent based models where standard models are
inadequate.
To do all, start by sending all those economics Ph.D.s back to school in other fields where
they know how to do modern applied mathematics.
The biggest political surprise of
2016 was that everyone was so surprised. I certainly had no excuse to be caught
unawares: soon after the 2008 crisis, I wrote a book suggesting that a collapse of
confidence in political institutions would follow the economic collapse, with a lag of
five years or so.
We've seen this sequence before. The
first breakdown of globalization, described by Karl Marx and Friedrich Engels in their
1848
The Communist Manifesto,
was followed by reform laws creating unprecedented
rights for the working class. The breakdown of British imperialism after World War I was
followed by the New Deal and the welfare state. And the breakdown of Keynesian economics
after 1968 was followed by the Thatcher-Reagan revolution. In my book
Capitalism 4.0
, I argued that comparable political upheavals would follow the
fourth systemic breakdown of global capitalism heralded by the 2008 crisis.
When a particular model of capitalism
is working successfully, material progress relieves political pressures. But when the
economy fails – and the failure is not just a transient phase but a symptom of deep
contradictions – capitalism's disruptive social side effects can turn politically toxic.
That is what happened after 2008.
Once the failure of free trade, deregulation, and monetarism came to be seen as leading
to a "new normal" of permanent austerity and diminished expectations, rather than just
to a temporary banking crisis, the inequalities, job losses, and cultural dislocations
of the pre-crisis period could no longer be legitimized – just as the extortionate taxes
of the 1950s and 1960s lost their legitimacy in the stagflation of the 1970s.
If we are witnessing this kind of
transformation, then piecemeal reformers who try to address specific grievances about
immigration, trade, or income inequality will lose out to radical politicians who
challenge the entire system. And, in some ways, the radicals will be right.
The disappearance of "good"
manufacturing jobs cannot be blamed on immigration, trade, or technology. But whereas
these vectors of economic competition increase total national income, they do not
necessarily distribute income gains in a socially acceptable way. To do that requires
deliberate political intervention on at least two fronts.
First, macroeconomic management must
ensure that demand always grows as strongly as the supply potential created by
technology and globalization. This is the fundamental Keynesian insight that was
temporarily rejected in the heyday of monetarism during the early 1980s, successfully
reinstated in the 1990s (at least in the US and Britain), but then forgotten again in
the deficit panic after 2009.
A return to Keynesian demand
management could be the main economic benefit of Donald Trump's incoming US
administration, as expansionary fiscal policies replace much less efficient efforts at
monetary stimulus. The US may now be ready to abandon the monetarist dogmas of
central-bank independence and inflation targeting, and to restore full employment as the
top priority of demand management. For Europe, however, this revolution in macroeconomic
thinking is still years away.
At the same time, a second, more
momentous, intellectual revolution will be needed regarding government intervention in
social outcomes and economic structures. Market fundamentalism conceals a profound
contradiction. Free trade, technological progress, and other forces that promote
economic "efficiency" are presented as beneficial to society, even if they harm
individual workers or businesses, because growing national incomes allow winners to
compensate losers, ensuring that nobody is left worse off.
This principle of so-called Pareto
optimality underlies all moral claims for free-market economics. Liberalizing policies
are justified in theory only by the assumption that political decisions will
redistribute some of the gains from winners to losers in socially acceptable ways. But
what happens if politicians do the opposite in practice?
By deregulating finance and trade,
intensifying competition, and weakening unions, governments created the theoretical
conditions that demanded redistribution from winners to losers. But advocates of market
fundamentalism did not just forget redistribution; they forbade it.
The pretext was that taxes, welfare
payments, and other government interventions impair incentives and distort competition,
reducing economic growth for society as a whole. But, as Margaret Thatcher famously
said, "[ ] there's no such thing as society. There are individual men and women and
there are families." By focusing on the social benefits of competition while ignoring
the costs to specific people, the market fundamentalists disregarded the principle of
individualism at the heart of their own ideology.
After this year's political
upheavals, the fatal contradiction between social benefits and individual losses can no
longer be ignored. If trade, competition, and technological progress are to power the
next phase of capitalism, they will have to be paired with government interventions to
redistribute the gains from growth in ways that Thatcher and Reagan declared taboo.
Breaking these taboos need not mean
returning to the high tax rates, inflation, and dependency culture of the 1970s. Just as
fiscal and monetary policy can be calibrated to minimize both unemployment and
inflatio n, redistribution can be designed not merely to recycle taxes into welfare, but
to help more directly when workers and communities suffer from globalization and
technological change.
Instead of providing cash handouts
that push people from work into long-term unemployment or retirement, governments can
redistribute the benefits of growth by supporting employment and incomes with regional
and industrial subsidies and minimum-wage laws. Among the most effective interventions
of this type, demonstrated in Germany and Scandinavia, is to spend money on high-quality
vocational education and re-training for workers and students outside universities,
creating non-academic routes to a middle-class standard of living.
These may all sound like obvious
nostrums, but governments have mostly done the opposite. They have made tax systems less
progressive and slashed spending on education, industrial policies and regional
subsidies, pouring money instead into health care, pensions, and cash hand-outs that
encourage early retirement and disability. The redistribution has been away from
low-paid young workers, whose jobs and wages are genuinely threatened by trade and
immigration, and toward the managerial and financial elites, who have gained the most
from globalization, and elderly retirees, whose guaranteed pensions protect them from
economic disruptions.
Yet this year's political upheavals
have been driven by elderly voters, while young voters mostly supported the
status
quo
. This paradox shows the post-crisis confusion and disillusionment is not yet
over. But the search for new economic models that I called "Capitalism 4.1" has clearly
started – for better or worse
Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at
the Times of London, the International New York Times and the Financial Times, he is the author of
Capitalism 4.0, The Birth of a New Economy, which anticipated many of the post-crisis
transformations
"He stated, the culture in Silicon Valley is about social liberalism and environmentalism,
yet, the tech firms are full of the most ruthless free market capitalists he's ever seen."
Ha, Silicon Valley is full of the most anti-free market capitalists anywhere. They spend all
their time trying to figure out ways to eliminate competition through mergers and buyouts and
market domination.
The spend all their time suing each other to maintain their government enforced
anti-competitive patent monopolies. Silicon Valley hates free market competition. They spend inordinate
amounts of time and money to reduce free market competition.
"... Another thing: it will be clear how serious they take the allegations of Russian hacking, by how they address the problem of auditing electronic voting machines. ..."
"... If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing and auditing all close elections, we know the accusations of Russian hacking were blatant lies. ..."
Another thing: it will be clear how serious they take the allegations of Russian hacking,
by how they address the problem of auditing electronic voting machines.
If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing
and auditing all close elections, we know the accusations of Russian hacking were blatant lies.
"... Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals) and betrayed both organized labour and middle class in favour of financial oligarchy. ..."
"... The cynical calculation was that "they have nowhere to go" and will vote for Democrats anyway. And that was true up to and including election of "change we can believe in" guy. After this attempt of yet another Clinton-style "bait and switch" trick failed. ..."
"... Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the can down the road" stance made victory of Trump possible (although it surprised me; I expected that neoliberals were still strong enough to push their candidate down the US people throat) ..."
"... Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire. The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal interventionists" which is the same staff in a different bottle. This policy costs the US tremendous amount of money and it is probable that the US is going the way British empire went -- overextending itself. ..."
"... Regional currency blocks are now a reality and arrangements bypass the usage of US dollar if international trade are common. They are now in place between several large countries such as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized -- a kind of "conversion gauge" but without profits for real conversion national currency to dollars for major TBTF banks. ..."
This Washington Post article on Poland - where a right-wing, anti-intellectual, nativist party
now rules, and has garnered a lot of public support - is chilling for those of us who worry that
Trump_vs_deep_state may really be the end of the road for US democracy. The supporters of Law and Justice
clearly looked a lot like Trump's white working class enthusiasts; so are we headed down the same
path?
(In Poland, a window on what happens when
populists come to power http://wpo.st/aHJO2
Washington Post - Anthony Faiola - December 18)
Well, there's an important difference - a bit of American exceptionalism, if you like. Europe's
populist parties are actually populist; they pursue policies that really do help workers, as long
as those workers are the right color and ethnicity. As someone put it, they're selling a herrenvolk
welfare state. Law and Justice has raised minimum wages and reduced the retirement age; France's
National Front advocates the same things.
Trump, however, is different. He said lots of things on the campaign trail, but his personnel
choices indicate that in practice he's going to be a standard hard-line economic-right Republican.
His Congressional allies are revving up to dismantle Obamacare, privatize Medicare, and raise
the retirement age. His pick for Labor Secretary is a fast-food tycoon
who loathes minimum wage hikes. And his pick for top economic advisor is the king of trickle-down.
So in what sense is Trump a populist? Basically, he plays one on TV - he claims to stand for
the common man, disparages elites, trashes political correctness; but it's all for show. When
it comes to substance, he's pro-elite all the way.
It's infuriating and dismaying that he managed to get away with this in the election. But that
was all big talk. What happens when reality begins to hit? Repealing Obamacare will inflict huge
harm on precisely the people who were most enthusiastic Trump supporters - people who somehow
believed that their benefits would be left intact. What happens when they realize their mistake?
I wish I were confident in a coming moment of truth. I'm not. Given history, what we can count
on is a massive effort to spin the coming working-class devastation as somehow being the fault
of liberals, and for all I know it might work. (Think of how Britain's Tories managed to shift
blame for austerity onto Labour's mythical fiscal irresponsibility.) But there is certainly an
opportunity for Democrats coming.
And the indicated political strategy is clear: make Trump and company own all the hardship
they're about to inflict. No cooperation in devising an Obamacare replacement; no votes for Medicare
privatization and increasing the retirement age. No bipartisan cover for the end of the TV illusion
and the coming of plain old, ugly reality.
Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals)
and betrayed both organized labour and middle class in favour of financial oligarchy.
The cynical calculation was that "they have nowhere to go" and will vote for Democrats
anyway. And that was true up to and including election of "change we can believe in" guy. After
this attempt of yet another Clinton-style "bait and switch" trick failed.
Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton
is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the
can down the road" stance made victory of Trump possible (although it surprised me; I expected
that neoliberals were still strong enough to push their candidate down the US people throat)
Point 2:
Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire.
The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal
interventionists" which is the same staff in a different bottle. This policy costs the US tremendous
amount of money and it is probable that the US is going the way British empire went -- overextending
itself.
Regional currency blocks are now a reality and arrangements bypass the usage of US dollar
if international trade are common. They are now in place between several large countries such
as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized
-- a kind of "conversion gauge" but without profits for real conversion national currency to dollars
for major TBTF banks.
So if we think about Iraq war as the way to prevent to use euro as alternative to dollar in
oil sales that goal was not achieved and all blood and treasure were wasted.
In this sense it would be difficult to Trump to continue with "bastard neoliberalism" both
in foreign policy and domestically and betray his election promises because they reflected real
problems facing the USA and are the cornerstone of his political support.
Also in this case neocons establishment will simply get rid of him one way or the other. I
hope that he understand this danger and will avoid trimming Social Security.
Returning to Democratic Party betrayal of interests of labour, Krugman hissy fit signifies
that he does not understand the current political situation. Neoliberal wing of Democratic Party
is now bankrupt both morally and politically. Trump election was the last nail into Bill Clinton
political legacy coffin.
Now we returned to essentially the same political process that took place after the Great Depression,
with much weaker political leaders, this time. So this is the time for stronger, more interventionist
in internal policy state and the suppression of financial oligarchy. If Trump does not understand
this he is probably doomed and will not last long.
That's why I think Trump inspired far right renaissance will continue and the political role
of military might dramatically increase. And politically Trump is the hostage of this renaissance.
Flint appointment in this sense is just the first swallow of increased role of military leaders
in government.
"... If we go back to Bill Clinton, his "Putting People First" manifesto in '92 was quite left-of-center, but he didn't govern that way. If you look at things like NAFTA, Welfare reform, and cutting capital gains taxes - well, in many ways, Ronald Reagan would have been proud of him. ..."
"... Part of my view is that in the 1930s, we rejected the individuality of the '20s and before. After the crash and the Depression, we finally put the corporate class and bankers to the sidelines. Whether it was Keynesianism or the New Deal in the West, or state fascism or the advent of Stalinism, you saw more government control over the economy. This was good for workers and large governments. It was more nationalistic and led, obviously, to the next conflict. But the rise of government planning and government involvement was good for nominal GDPs. It was not good for the asset-holding classes - stocks and bonds did terribly over that period, right? You wanted to be a worker, you wanted to be labor, not capital. ..."
"... The period from the late 1970s to 1980 changed all that. You had Thatcher and the U.K. and Reagan in the U.S. Mao died in 1976, the Solidarity movement in Poland began in 1978, and the Soviet Union peaked in power in 1979. You saw that the pendulum had gone too far and now we're going to cut taxes on capital, we're going to be more globalistic, and trade was going to improve. Since then, capital has risen and assets have done better than labor. Taxes have been light on financial assets and heavy on labor. Everything was reversed on its head. ..."
"... If we look at the events of 2016 - Brexit, the Italian referendum, Trump, and the rise of nationalist China - are these the harbingers of something bigger? Or are they just a coincidence? The ground seems to be fertile for things to change globally. If so, does this give rise to a more nationalistic, protectionist, statist scenario? Are labor prices going to go up again? Are we going to tax capital and emphasize wages? ..."
You and I have
talked about how it has become a cost calculus for lots of corporations and financial
institutions to cheat. "If I get caught," they say, "I'm just going to pay a fine." How does this
change with new faces in Washington? You still have this very pro-corporate group on Capitol
Hill whose main bailiwick, in my opinion, is to protect the corporate class and the very wealthy.
You've got what ostensibly is a proto-populist in the White House with a cabinet that is a mélange
of different types, so who knows?
In my overall view, stuff happens to change people. If we go back to Bill Clinton, his "Putting
People First" manifesto in '92 was quite left-of-center, but he didn't govern that way. If you
look at things like NAFTA, Welfare reform, and cutting capital gains taxes - well, in many
ways, Ronald Reagan would have been proud of him.
Events conspire to derail our perceptions of presidents. When we look at their platforms, we
think we know where things are headed. But in modern times, the only two presidents that I can
think of who really got their ideas and platforms enacted wholesale were FDR and Reagan. Everybody
else has gotten compromised, or has had events overwhelm them.
... ... ...
JC:
Part of my view is that in the 1930s, we rejected the individuality of the '20s and before.
After the crash and the Depression, we finally put the corporate class and bankers to the sidelines.
Whether it was Keynesianism or the New Deal in the West, or state fascism or the advent of Stalinism,
you saw more government control over the economy. This was good for workers and large governments.
It was more nationalistic and led, obviously, to the next conflict. But the rise of government
planning and government involvement was good for nominal GDPs. It was not good for the asset-holding
classes - stocks and bonds did terribly over that period, right? You wanted to be a worker, you
wanted to be labor, not capital.
The period from the late 1970s to 1980 changed all that. You had Thatcher and the U.K. and Reagan
in the U.S. Mao died in 1976, the Solidarity movement in Poland began in 1978, and the Soviet
Union peaked in power in 1979. You saw that the pendulum had gone too far and now we're going
to cut taxes on capital, we're going to be more globalistic, and trade was going to improve. Since
then, capital has risen and assets have done better than labor. Taxes have been light on financial
assets and heavy on labor. Everything was reversed on its head.
If we look at the events of 2016 - Brexit, the Italian referendum, Trump, and the rise of nationalist
China - are these the harbingers of something bigger? Or are they just a coincidence? The ground
seems to be fertile for things to change globally. If so, does this give rise to a more nationalistic,
protectionist, statist scenario? Are labor prices going to go up again? Are we going to tax capital
and emphasize wages?
"... The fact remains, however, that every single developed country got there by using protectionist policies to nurture the develop local industries. Protectionism in developed countries does have strongly negative consequences, but it is beneficial for developing economies. ..."
"... You are exactly right about Japan and I lived through that period. Please name one advanced economy which did not rely on protectionist laws to support domestic industries. All of the European industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it and India has done it. ..."
"... Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted that the benefits to investors and 'strategic' considerations for free trade were more important that job losses. ..."
"... This extra demand for dollars as a commodity is what drives the price of the dollar higher, leading to the strategic benefits and economic hollowing out that I noted above. ..."
"... There really is no "post-industrialization era", no matter what fantasies the FIRE sector wants to sell. To the extent there is, the existing global trade agreements (including the WTO, World Bank, IMF, and related organization) accomplish that as well by privileging the position of first world capital. ..."
"... "Over the long haul, clearly automation's been much more important - it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways. ..."
"... Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T. ..."
"... People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers are basically supervisors of machines." ..."
"... Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners", won't help. What would help is structural changes that make things relatively easier for small enterprises and relatively harder for large ones. ..."
"... Making direct lobbying of state and federal politicians by industry groups and companies a crime punishable by 110% taxation of net income on all the participants would be a start. ..."
"... "Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers - particularly men without college degrees doing manual labor - have not recovered." ..."
"... So why have manufacturing jobs plummeted since 2000? One answer is that the current account deficit is the wrong figure, since it also includes our surplus in trade in services. If you just look at goods, the deficit is closer to 4.2% of GDP. ..."
"... trade interacts with automation. Not only do we lose jobs in manufacturing to automation, but trade leads us to re-orient our production toward goods that use relatively less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing, furniture and autos. ..."
"... There are industries that are closely connected with the sovereignty of the country. That's what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq and Libya ). ..."
"... Neoliberal commenters here demonstrate complete detachment from the fact that like war is an extension of politics, while politics is an extension of economics. For example, denying imports can and is often used for political pressure. ..."
"... Now Trump want to play this game selectively designating China as "evil empire" and providing a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know. ..."
"... The US propagandists usually call counties on which they impose sanction authoritarian dictatorships to make such actions more politically correct, but the fact remains: The USA as a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line. ..."
"... Neoliberalism as a social system is past it pinnacle and that creates some problems for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism over the globe ended almost a decade ago. ..."
The Case for Protecting Infant Industries : I must say, it's been almost breathtaking to see
how fast the acceptable terms of debate have shifted on the subject of trade. Thanks partly to
President-elect Donald Trump's populism and partly to academic
research
showing that the costs of free trade could be higher than anyone predicted, economics commentators
are now happy to lambast
the entire idea of trade. I don't want to do that -- I think a nuanced middle ground is best.
But I do think it's worth reevaluating one idea that the era of economic dogmatism had seemingly
consigned to the junk pile -- the notion of infant-industry protectionism. ...
DrDick -> pgl...
The fact remains, however, that every single developed country got there by using protectionist
policies to nurture the develop local industries. Protectionism in developed countries does have
strongly negative consequences, but it is beneficial for developing economies.
You are exactly right about Japan and I lived through that period. Please name one advanced
economy which did not rely on protectionist laws to support domestic industries. All of the European
industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it
and India has done it.
JohnH -> pgl... , -1
Japan and other developed countries took advantage of the strong dollar/reserve currency, which
provided their industries de facto protection from US exports along with a price umbrella that
allowed them export by undercutting prices on US domestic products. The strong dollar was viewed
as a strategic benefit to the US, since it allowed former rivals to develop their economies while
making them dependent on the US consumer market, the largest in the world. The strong dollar also
allowed the US to establish bases and fight foreign wars on the cheap, while allowing Wall Street
to buy foreign economies' crown jewels on the cheap.
Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted
that the benefits to investors and 'strategic' considerations for free trade were more important
that job losses.
Even pgl's guy, Milton Friedman, recognized that "overseas demand for dollars allows the United
States to maintain persistent trade deficits without causing the value of the currency to depreciate
or the flow of trade to re-adjust." https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar
This extra demand for dollars as a commodity is what drives the price of the dollar higher,
leading to the strategic benefits and economic hollowing out that I noted above.
John San Vant -> JohnH... , -1
That is because you get a persistent trade surplus in services, which offsets the "Goods" trade
deficit. The currency depreciated in the 2000's because said surplus in services began to decline
creating a real trade deficit.
There really is no "post-industrialization era", no matter what fantasies the FIRE sector
wants to sell. To the extent there is, the existing global trade agreements (including the WTO,
World Bank, IMF, and related organization) accomplish that as well by privileging the position
of first world capital.
anne -> DrDick... , -1
There really is no "post-industrialization era", no matter what fantasies the Finance, Insurance,
and Real Estate sectors want to sell....
[ Interesting assertion. Do develop this further. ]
The Long-Term Jobs Killer Is Not China. It's Automation.
By Claire Cain Miller
The first job that Sherry Johnson, 56, lost to automation was at the local newspaper in Marietta,
Ga., where she fed paper into the printing machines and laid out pages. Later, she watched machines
learn to do her jobs on a factory floor making breathing machines, and in inventory and filing.
"It actually kind of ticked me off because it's like, How are we supposed to make a living?"
she said. She took a computer class at Goodwill, but it was too little too late. "The 20- and
30-year-olds are more up to date on that stuff than we are because we didn't have that when we
were growing up," said Ms. Johnson, who is now on disability and lives in a housing project in
Jefferson City, Tenn.
Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping
down on trade, offshoring and immigration. But economists say the bigger threat to their jobs
has been something else: automation.
"Over the long haul, clearly automation's been much more important - it's not even close,"
said Lawrence Katz, an economics professor at Harvard who studies labor and technological change.
No candidate talked much about automation on the campaign trail. Technology is not as convenient
a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies
are in the United States and benefit the country in many ways.
Mr. Trump told a group of tech company leaders last Wednesday: "We want you to keep going with
the incredible innovation. Anything we can do to help this go along, we're going to be there for
you."
Andrew F. Puzder, Mr. Trump's pick for labor secretary and chief executive of CKE Restaurants,
extolled the virtues of robot employees over the human kind in an interview with Business Insider
in March. "They're always polite, they always upsell, they never take a vacation, they never show
up late, there's never a slip-and-fall, or an age, sex or race discrimination case," he said.
Globalization is clearly responsible for some of the job losses, particularly trade with
China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according
to research by economists including Daron Acemoglu and David Autor of M.I.T.
People who work in parts of the country most affected by imports generally have greater
unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published
in January. Still, over time, automation has had a far bigger effect than globalization, and would
have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization,
but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers
are basically supervisors of machines."
When Greg Hayes, the chief executive of United Technologies, agreed to invest $16 million in
one of its Carrier factories as part of a Trump deal to keep some jobs in Indiana instead of moving
them to Mexico, he said the money would go toward automation.
"What that ultimately means is there will be fewer jobs," he said on CNBC....
Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners",
won't help. What would help is structural changes that make things relatively easier for small
enterprises and relatively harder for large ones.
Making direct lobbying of state and federal politicians by industry groups and companies a
crime punishable by 110% taxation of net income on all the participants would be a start.
What's Different About Stagnating Wages for Workers Without College Degrees
There seems to be a great effort to convince people that the displacement due to the trade
deficit over the last fifteen years didn't really happen. The New York Times contributed to this
effort with a piece * telling readers that over the long-run job loss has been primarily due to
automation not trade.
While the impact of automation over a long enough period of time certainly swamps the impact
of trade, over the last 20 years there is little doubt that the impact of the exploding trade
deficit has had more of an impact on employment. To make this one as simple as possible, we currently
have a trade deficit of roughly $460 billion (@ 2.6 percent of GDP). Suppose we had balanced trade
instead, making up this gap with increased manufacturing output.
Does the NYT want to tell us that we could increase our output of manufactured goods by $460
billion, or just under 30 percent, without employing more workers in manufacturing? That would
be pretty impressive. We currently employ more than 12 million workers in manufacturing, if moving
to balanced trade increase employment by just 15 percent we would be talking about 1.8 million
jobs. That is not trivial.
But this is not the only part of the story that is strange. We are getting hyped up fears over
automation even at a time when productivity growth (i.e. automation) has slowed to a crawl, averaging
just 1.0 percent annually over the last decade. The NYT tells readers:
"Over time, automation has generally had a happy ending: As it has displaced jobs, it has
created new ones. But some experts are beginning to worry that this time could be different. Even
as the economy has improved, jobs and wages for a large segment of workers - particularly men
without college degrees doing manual labor - have not recovered."
Hmmm, this time could be different? How so? The average hourly wage of men with just a high
school degree was 13 percent less in 2000 than in 1973. ** For workers with some college it was
down by more than 2.0 percent. In fact, stagnating wages for men without college degrees is not
something new and different, it has been going on for more than forty years. Hasn't this news
gotten to the NYT yet?
Inequality, technology, globalization, and the false assumptions that sustain current inequities
by Jared Bernstein
December 22nd, 2016 at 3:24 pm
Here's a great interview* with inequality scholar Branko Milanovic wherein he brings a much-needed
historical and international perspective to the debate (h/t: C. Marr). Many of Branko's points
are familiar to my readers: yes, increased trade has upsides, for both advanced and emerging economies.
But it's not hard to find significant swaths hurt by globalization, particularly workers in rich
economies who've been placed into competition with those in poorer countries. The fact that little
has been done to help them is one reason for president-elect Trump.
As Milanovic puts it:
"The problems with globalization arise from the fact that gains from it are not (and can never
be) evenly distributed. There would be always those who gain less than some others, or those who
lose even in absolute terms. But to whom can they "appeal" for redress? Only to their national
governments because this is how the world is politically organized. Thus national governments
have to engage in "mop up" operations to fix the negative effects of globalization. And this they
have not done well, led as they were by the belief that the trickle-down economics will take care
of it. We know it did not."
But I'd like to focus on a related point from Branko's interview, one that gets less attention:
the question of whether it was really exposure to global trade or to labor-saving technology that
is most responsible for displacing workers. What's the real problem here: is it the trade deficit
or the robots?
Branko cogently argues that "both technological change and economic polices responded to globalization.
The nature of recent technological progress would have been different if you could not employ
labor 10,000 miles away from your home base." Their interaction makes their relative contributions
hard to pull apart.
I'd argue that the rise of trade with China, from the 1990s to the 2007 crash, played a significant
role in moving US manufacturing employment from its steady average of around 17 million factory
jobs from around 1970 to 2000, to an average today that's about 5 million less (see figure below;
of course, manufacturing employment was falling as a share of total jobs over this entire period).
Over at Econlog I have a post that suggests the answer is no, CA deficits do not cost jobs.
But suppose I'm wrong, and suppose they do cost jobs. In that case, trade has been a major
net contributor to American jobs during the 21st century, as our deficit was about 4% of GDP during
the 2000 tech boom, and as large as 6% of GDP during the 2006 housing boom. Today it is only 2.6%
of GDP. So if you really believe that rising trade deficits cost jobs, you'd be forced to believe
that the shrinking deficits since 2000 have created jobs.
So why have manufacturing jobs plummeted since 2000? One answer is that the current account
deficit is the wrong figure, since it also includes our surplus in trade in services. If you just
look at goods, the deficit is closer to 4.2% of GDP.
But even that doesn't really explain very much, because it's slightly lower than the 4.35%
of GDP trade deficit in goods back in 2000. So again, the big loss of manufacturing jobs is something
of a mystery. Yes, we import more goods than we used to, but exports of goods have risen at about
the same rate since 2000. So why does it seem like trade has devastated our manufacturing sector?
Perhaps because trade interacts with automation. Not only do we lose jobs in manufacturing
to automation, but trade leads us to re-orient our production toward goods that use relatively
less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing,
furniture and autos.
So trade and automation are both parts of a bigger trend, Schumpeterian creative destruction,
which is transforming big areas of our economy. It's especially painful as during the earlier
period of automation (say 1950-2000) the physical output of goods was still rising fast. So the
blow of automation was partly cushioned by a rise in output. (Although not in the coal and steel
industries!) Since 2000, however, we've seen slower growth in physical output for a number of
reasons, including slower workforce growth, a shift to a service economy, and a home building
recession (which normally absorbs manufactured goods like home appliances, carpet, etc.) We are
producing more goods than ever, but with dramatically fewer workers.
Update: Steve Cicala sent me a very interesting piece on coal that he had published in Forbes.
Ironically, environmental regulations actually helped West Virginia miners, by forcing utilities
to install scrubbers that cleaned up emissions from the dirtier West Virginia coal. (Wyoming coal
has less sulfur.) He also discusses the issue of competition from natural gas.
The historical record is totally unambiguous. Protectionism always leads to wealth and industrial
development. Free trade leads you to the third world. This was true four hundred years ago with
mercantilist England and the navigation acts; it was true with Lincoln's tariffs in the 1860's,
it was true of East Asia post 1945.
Economists better abandon silly free trade if they want to have any credibility and not be
seen as quacks.
Washington (CNN)President-elect Donald Trump's transition team is discussing a proposal to
impose tariffs as high as 10% on imports, according to multiple sources.
A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed
at spurring US manufacturing, which could be implemented via executive action or as part of a
sweeping tax reform package they would push through Congress.
Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings
with key Washington players last week, according to two sources who represent business interests
in Washington. But the senior transition official who spoke to CNN Thursday on the condition of
anonymity said the higher figure is now in play.
Such a move would deliver on Trump's "America First" campaign theme, but risks drawing the
US into a trade war with other countries and driving up the cost of consumer goods in the US.
And it's causing alarm among business interests and the pro-trade Republican establishment.
The senior transition official said the transition team is beginning to find "common ground"
with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular
to the border adjustment tax measure included in House Republicans' "Better Way" tax reform proposal,
which would disincentivize imports through tax policy.
Aides to Ryan and Brady declined to say they had "common ground" with Trump, but acknowledged
they are in deep discussions with transition staffers on the issue.
Curbing free trade was a central element of Trump's campaign. He promised to rip up the North
American Free Trade Agreement with Mexico and Canada. He also vowed to take a tougher line against
other international trading partners, almost always speaking harshly of China but often including
traditional US allies such as Japan in his complaint that American workers get the short end of
the stick under current trade practices.
Gulf with GOP establishment
It is an area where there is a huge gulf between Trump's stated positions and traditional GOP
orthodoxy. Business groups and GOP establishment figures -- including Ryan and Senate Majority
Leader Mitch McConnell -- have been hoping the transition from the campaign to governing would
bring a different approach.
Ryan did signal in a CNBC interview earlier this month that Trump's goals of spurring US manufacturing
could be accomplished through "comprehensive tax reform."
"I'll tell him what I've been saying all along, which is we can get at what he's trying to
get at better through comprehensive tax reform," Ryan said.
The pro-business GOP establishment says the new Trump administration could make clear it would
withdraw from NAFTA unless Canada and Mexico entered new talks to modernize the agreement to reflect
today's economy. That would allow Trump to say he kept a promise to make the agreement fairer
to American workers without starting a trade war and exacerbating tensions with America's neighbors
and vital economic partners.
But there remain establishment jitters that Trump, who views his tough trade message as critical
to his election victory, will look for ways to make an early statement that he is serious about
reshaping the trade playing field.
And when Priebus told key Washington players that the transition is mulling a 5% tariff on
imports, the reaction was one of fierce opposition, according to two sources who represent business
interests in Washington and spoke on condition of anonymity because the conversations with the
Trump team were confidential.
Priebus, the sources said, was warned such a move could start trade wars, anger allies, and
also hurt the new administration's effort to boost the rate of economic growth right out of the
gate.
Role of Wilbur Ross
One of the sources said he viewed the idea as a trial balloon when first raised, and considered
it dead on arrival given the strong reaction in the business community -- and the known opposition
to such protectionist ideas among the GOP congressional leadership.
But this source voiced new alarm Tuesday after being told by allies within the Trump transition
that defending new tariffs was part of the confirmation "murder board" practice of Wilbur Ross,
the President-elect's choice for commerce secretary.
At least one business community organization is worried enough about the prospect of the tariff
it already has prepared talking points, obtained by CNN Wednesday night.
"This $100 billion tax on American consumers and industry would impose heavy costs on the
US economy, particularly for the manufacturing sector and American workers, with highly negative
political repercussions," according to the talking points. "Rather than using a trade policy
sledgehammer that would inflict serious collateral damage, the Trump administration should
use the scalpel of US trade remedy law to achieve its goals."
The talking points also claim the tariffs would lead to American job loss and result in a tax
to consumers, both of which would harm the US economy.
Trump aides have signaled that Ross is likely to be a more influential player in trade negotiations
than recent Commerce secretaries. Given that, the aides know his confirmation hearings are likely
to include tough questioning -- from both Democrats and Republicans -- about Trump's trade-related
campaign promises.
"The way it was cast to me was that (Trump) and Ross are all over it," said one source. "It
is serious."
The second source was less certain about whether the tariff idea was serious or just part of
a vigorous debate about policy options. But this source said the unpredictability of Trump and
his team had the business interests nervous.
The business lobbying community is confident the GOP leadership would push back on any legislative
effort to impose tariffs, which organizations like the Chamber of Commerce, the Business Roundtable,
the National Association of Manufactures and others, including groups representing farmers, believe
would lead to retaliation against US industries heavily dependent on exports.
But the sources aligned with those interests told CNN the conversation within the Trump transition
includes using executive authority allowed under existing trade laws. Different trade laws enacted
over the course of the past century allow the president to impose tariffs if he issues a determination
the United States is being subjected to unfair trade practices or faces an economic or national
security threat because of trade practices.
There are industries that are closely connected with the sovereignty of the country. That's
what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all
countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty
and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal
fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq
and Libya ).
For example, if you depends of chips produced outside the country for your military or space
exploration, then sabotage is possible (or just pure fraud -- selling regular ships instead of
special tolerant to cosmic radiation or harsh conditions variant; actually can be done with the
support of internal neoliberal fifth column).
The same is probably true for cars and auto engines. If you do not produce domestically a variety
at least some domestic brans of cars and trucks, your military trucks and engines will be foreign
and that will cost you tremendous amount of money and you might depend for spare parts on you
future adversary. Also such goods are overprices to the heaven. KAS is a clear example of this
as they burn their money in the war with Yemen as there is no tomorrow making the US MIC really
happy.
So large countries with say over 100 million people probably need to think twice before jumping
into neoliberal globalization bandwagon and relying in imports for strategically important industries.
Neoliberal commenters here demonstrate complete detachment from the fact that like war
is an extension of politics, while politics is an extension of economics. For example, denying
imports can and is often used for political pressure.
That was one of factors that doomed the USSR. Not that the system has any chance -- it was
doomed after 1945 as did not provide for higher productivity then advanced capitalist economies.
But this just demonstrates the power of the US sanctions mechanism. Economic sanctions works
and works really well. The target country is essentially put against the ropes and if you unprepared
you can be knocked down.
For example now there are sanctions against Russia that deny them advanced oil exploration
equipment. And oil is an important source of Russia export revenue. So the effect of those narrow
prohibitions multiples by factor of ten by denying Russia export revenue.
That's how an alliance between Russia and China was forged by Obama administration. because
China does produce some of this equipment now. And Russia paid dearly for that signing huge multi-year
deals with China on favorable for China terms.
Now Trump want to play this game selectively designating China as "evil empire" and providing
a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know.
And look what countries are on the USA economic sanctions list: many entries are countries
that are somewhat less excited about the creation of the global neoliberal empire led by the USA.
KAS and Gulf monarchies are not on the list. So much about "spreading democracy".
The US propagandists usually call counties on which they impose sanction authoritarian
dictatorships to make such actions more politically correct, but the fact remains: The USA as
a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line.
The problem with tariffs on China is an interesting reversion of the trend: manufacturing is
already in China and to reverse this process now is an expensive proposition. So alienating Chinese
theoretically means that some of USA imports might became endangered, despite huge geopolitical
weight of the USA. They denied export of rare metals to Japan in the past. They can do this for
Apple and without batteries Apple can just fold.
Also it is very easy to prohibit Apple sales in China of national security grounds (any US
manufacturer by definition needs to cooperate with NSA and other agencies). I think some countries
already prohibit the use of the USA companies produced cell phones for government officials.
So if Trump administration does something really damaging, for Chinese there are multiple ways
to skin the cat. Neoliberalism as a social system is past it pinnacle and that creates some problems
for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism
over the globe ended almost a decade ago.
Krugman is a neoliberal stooge. Since when Social Security is an entitlement program. If you start
contributing at 25 and retire at 67 (40 years of monthly contributions), you actually get less then
you contribute, unless you live more then 80 years. It just protects you from "free market casino".
Notable quotes:
"... A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own. ..."
"... n a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in. ..."
"... If not about people, what is an economy about? ..."
"... I hadn't realized that Democrats now view Social Security and Medicare as "government handouts". ..."
"... Some Democrats like Krugman are Social Darwinists. ..."
"... PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk. ..."
"... What is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :) ..."
"... No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism. ..."
"... People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt." ..."
"... Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview. ..."
"... He is survived by the New York Times, also said to be in failing health. ..."
"... For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea? ..."
"... The GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. ..."
Brad DeLong has an interesting meditation * on markets and political demands - inspired by
a note from Noah Smith ** - that offers food for thought. I wonder, however, if Brad's discussion
is too abstract; and I also wonder whether it fully recognizes the disconnect between what Trump
voters think they want and reality. So, an entry of my own.
What Brad is getting at is the widespread belief by, well, almost everyone that they are entitled
to - have earned - whatever good hand they have been dealt by the market economy. This is reflected
in the more or less universal belief of the affluent that they deserve what they have; you could
see this in the rage of rentiers at low interest rates, because it's the Federal Reserve's job
to reward savers, right? In this terrible political year, the story was in part one of people
in Appalachia angrily demanding a return of the good jobs they used to have mining coal - even
though the world doesn't want more coal given fracking, and it can get the coal it still wants
from strip mines and mountaintop removal, which don't employ many people.
And what Brad is saying, I think, is that what those longing for the return to coal want is
those jobs they deserve, where they earn their money - not government handouts, no sir.
A fact-constrained candidate wouldn't have been able to promise such people what they want;
Trump, of course, had no problem.
But is that really all there is? Working-class Trump voters do, in fact, receive a lot of government
handouts - they're almost totally dependent on Social Security for retirement, Medicare for health
care when old, are quite dependent on food stamps, and many have recently received coverage from
Obamacare. Quite a few receive disability payments too. They don't want those benefits to go away.
But they managed to convince themselves (with a lot of help from Fox News etc) that they aren't
really beneficiaries of government programs, or that they're not getting the "good welfare", which
only goes to Those People.
And you can really see this in the regional patterns. California is an affluent state, a heavy
net contributor to the federal budget; it went 2-1 Clinton. West Virginia is poor and a huge net
recipient of federal aid; it went 2 1/2-1 Trump.
I don't think any kind of economic analysis can explain this. It has to be about culture and,
as always, race.
Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value
and Contribution of Knowledge- and Network-Based Increasing Returns
Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."
Perhaps in the end the problem is that people want to pretend that they are filling a valuable
role in the societal division of labor, and are receiving no more than they earn--than they contribute.
But that is not the case. The value--the societal dividend--is in the accumulated knowledge
of humanity and in the painfully constructed networks that make up our value chains.
A "contribution" theory of what a proper distribution of income might be can only be made
coherent if there are constant returns to scale in the scarce, priced, owned factors of production.
Only then can you divide the pile of resources by giving to each the marginal societal product
of their work and of the resources that they own.
That, however, is not the world we live in.
In a world--like the one we live in--of mammoth increasing returns to unowned knowledge
and to networks, no individual and no community is especially valuable. Those who receive good
livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near
Carrier's initial location. It's not that their contribution to society is large or that their
luck is replicable: if it were, they would not care (much) about the departure of Carrier because
there would be another productive network that they could fit into a slot in.
All of this "what you deserve" language is tied up with some vague idea that you deserve what
you contribute--that what your work adds to the pool of society's resources is what you deserve.
This illusion is punctured by any recognition that there is a large societal dividend to be
distributed, and that the government can distribute it by supplementing (inadequate) market wages
determined by your (low) societal marginal product, or by explicitly providing income support
or services unconnected with work via social insurance. Instead, the government is supposed to,
somehow, via clever redistribution, rearrange the pattern of market power in the economy so that
the increasing-returns knowledge- and network-based societal dividend is predistributed in a relatively
egalitarian way so that everybody can pretend that their income is just "to each according to
his work", and that they are not heirs and heiresses coupon clipping off of the societal capital
of our predecessors' accumulated knowledge and networks.
On top of this we add: Polanyian disruption of patterns of life--local communities, income
levels, industrial specialization--that you believed you had a right to obtain or maintain, and
a right to believe that you deserve. But in a market capitalist society, nobody has a right to
the preservation of their local communities, to their income levels, or to an occupation in their
industrial specialization. In a market capitalist society, those survive only if they pass a market
profitability test. And so the only rights that matter are those property rights that at the moment
carry with them market power--the combination of the (almost inevitably low) marginal societal
products of your skills and the resources you own, plus the (sometimes high) market power that
those resources grant to you.
This wish to believe that you are not a moocher is what keeps people from seeing issues of
distribution and allocation clearly--and generates hostility to social insurance and to wage supplement
policies, for they rip the veil off of the idea that you deserve to be highly paid because you
are worth it. You aren't.
And this ties itself up with regional issues: regional decline can come very quickly whenever
a region finds that its key industries have, for whatever reason, lost the market power that diverted
its previously substantial share of the knowledge- and network-based societal dividend into the
coffers of its firms. The resources cannot be simply redeployed in other industries unless those
two have market power to control the direction of a share of the knowledge- and network-based
societal dividend. And so communities decline and die. And the social contract--which was supposed
to have given you a right to a healthy community--is broken.
As I have said before, humans are, at a very deep and basic level, gift-exchange animals. We
create and reinforce our social bonds by establishing patterns of "owing" other people and by
"being owed". We want to enter into reciprocal gift-exchange relationships. We create and reinforce
social bonds by giving each other presents. We like to give. We like to receive. We like neither
to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual
reciprocal obligation. We don't like being too much on the downside of the gift exchange: to have
received much more than we have given in return makes us feel very small. We don't like being
too much on the upside of the gift exchange either: to give and give and give and never receive
makes us feel like suckers.
PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and
Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on
disability it is because they did honest hard work, something PK knows nothing about. What an
ignorant jerk.
Exactly the same could be said about many of those inner city minorities that the "dependent hillbillies"
look down on as "welfare queens". That may be one of the reasons they take special issues with
"food stamps", because in contrast to the hillbillies, inner city poor people cannot grow their
own food. What Krugman is pointing out is the hypocrisy of their tribalism - and also the idiocy,
because the dismantling of society would ultimately hurt the morons that voted GOP into power
this round.
"What Krugman is pointing out is the hypocrisy of their tribalism "
No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate
themselves or "skill up" so they deserve what they get. Social darwinism.
People like Bakho are probably anti-union as well. They're seen as relics of an earlier age
and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust
belt."
His tone is supercilious and offensive. But your argument is that they are not "dependent" because
they earned every benefit they get from the government. I think his point is that "dependent"
is not offensive -- the term jus reflects how we all depend on government services. DeLong makes
the point much better in the article quoted by anne above.
Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief
struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated
by cognitive dissonance from a severely challenged worldview.
He is survived by the New York Times, also said to be in failing health.
The New York Times is easily the finest newspaper in the world, is broadly recognized as such
and is of course flourishing. Such an institution will always have sections or editors and writers
of relative strength but these relative strengths change over time as the newspaper continually
changes.
NYT Co. to revamp HQ, vacate eight floors in consolidation
"In an SEC filing, New York Times Co. discloses a staff communication it provided today to
employees about a revamp of its headquarters -- including consolidating floors.
The company will vacate at least eight floors, consolidating workspaces and allowing for "significant"
rental income, the memo says."
The GOP has a long history of benefitting from the disconnect where a lot of their voters
are convinced that when government money goes to others (sometimes even within their own white
congregations), then it is not deserved. But if that same government money goes to themselves
(or their real close relatives), then it is a hard earned and well-deserved payback for their
sacrifices and tax payments. So the GOP leadership has always called it "saving social security"
and "cracking down on fraud" rather than admitting to their attempts to dismantle those programs.
The Dems better be on the ball and call it what it is. If you want to save those programs you
just have to prevent rich people from wiggling out of paying for them (don't repeal the Obamacare
medicare taxes on the rich).
On the Pk piece. I think it is really about human dignity, and the need for it. There were a lot
of factors in this horrific election, but just as urban blacks need to be spared police brutality,
rural whites need a dignified path in their lives. Everyone, united, deserves such a path.
This is a real challenge for economists; how do we rebuild the rust belt (which applies to
areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed.
I agree to a point, but what the piece is about is that in search of a solution to the problems
of the rustbelt (whatever the definition is),people voted for Trump who had absolutely no plan
to solve such a problem, other than going back to the future and redoing Nafta and getting rid
of regulations.
Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was
being placed in severe risk.
Those voters were fixed on his rhetoric and right arm extended while his left hand was grabbing
them by the (in deference to Anne I will not say the words, but Trump himself has said one of
them and the other is the male version).
Really? You didn't seem to before. You'd say what Duy or Noah Smith or DeLong were mulling about was
off-limits. You'd ban them from the comment section if you could. "This is a real challenge for economists; how do we rebuild the rust belt (which applies to
areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed." I don't see why this is such a controversial point for centrist like Krugman. How do we appeal to the white working class without contradicting our principles?
By promoting policies that raise living standards. By delivering, which mean left-wing policies
not centrist tinkering. It's the Clinton vs. Sanders primary. Hillary could have nominated Elizabeth Warren as her VP candidate but her corporate masters
wouldn't let her.
"Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being
placed in severe risk."
That safety net is an improvement over 1930. But it's been fraying so badly over the last 20-30
years that it's almost lost all meaning. It's something people turn to before total destitution,
but for rebuilding a life? A sick joke, filled with petty hassles and frustrations.
And the fraying has been a solidly bipartisan project. Who can forget welfare "reform"?
So maybe the yokels you're blaming for the 10,000-th time might not buy your logic or your
intentions.
... At the height of their influence in the 1950s, labor unions could claim to represent about
1 of every 3 American workers. Today, it's 1 in 9 - and falling.
Some have seen the shrinking size and waning influence of labor unions as a sign that the US
economy is growing more flexible and dynamic, but there's mounting evidence that it is also contributing
to slow wage growth and the rise in inequality. ...
(Union membership) NY 24.7%, MA 12.4%, SC 2.1%
... Are unions faring any better here in Massachusetts?
While Massachusetts's unions are stronger than average, it's not among the most heavily unionized
states. That honor goes to New York, where 1 in every 4 workers belongs to a union. After New
York, there are 11 other states with higher union membership rates then Massachusetts.
Here too, though, the decline in union membership over time has been steep.
... In 2015, 30 states and the District of Columbia had union membership rates below
that of the U.S. average, 11.1 percent, and 20 states had rates above it. All states
in the East South Central and West South Central divisions had union membership rates
below the national average, and all states in the Middle Atlantic and Pacific divisions
had rates above it. Union membership rates increased over the year in 24 states and
the District of Columbia, declined in 23 states, and were unchanged in 3 states.
(See table 5.)
Five states had union membership rates below 5.0 percent in 2015: South Carolina
(2.1 percent), North Carolina (3.0 percent), Utah (3.9 percent), Georgia (4.0 percent),
and Texas (4.5 percent).
Two states had union membership rates over 20.0 percent in
2015: New York (24.7 percent) and Hawaii (20.4 percent).
State union membership levels depend on both the employment level and the union
membership rate. The largest numbers of union members lived in California (2.5 million)
and New York (2.0 million).
Roughly half of the 14.8 million union members in the
U.S. lived in just seven states (California, 2.5 million; New York, 2.0 million;
Illinois, 0.8 million; Pennsylvania, 0.7 million; and Michigan, Ohio, and New Jersey,
0.6 million each), though these states accounted for only about one-third of wage and
salary employment nationally.
(It appears that New England union participation
lags in the northeast, and also in the rest of
the US not in the Red Zone.)
I have noted before that New England
is doing better 'than average' (IMO)
because of high-tech industry & education.
Not necessarily because of a lack of
unionization, which is prevalent here
in public education & among service
workers. Note that in higher ed,
much here is private.
Private industry here traditionally
is not heavily unionized, although
that is probably not the case
among defense corps.
As to causation, I think the
implication is that 'Dems dealing
with unions' has not been working
all that well, recovery-wise,
particularly in the rust belt.
That must have as much to do with
industrial management as it does
with labor, and the ubiquitous
on-going industrial revolution.
Everybody needs, and desperately crave, self-confidence and dignity. In white rural culture that
has always been connected to the old settler mentality and values of personal "freedom" and "independence".
It is unfortunate that this freedom/independence mythology has been what attracted all the immigrants
from Europe over here. So it is as strongly engrained (both in culture and individual values)
as it is outdated and counterproductive in the world of the future. I am not sure that society
can help a community where people find themselves humiliated by being helped (especially by bad
government). Maybe somehow try to get them to think of the government help as an earned benefit?
"... The essence of voting the lesser of two evils: "To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as they're better than the awful Republicans, then they're good enough and beyond criticism." ..."
"... These Wall Street Democrats can rest assured that Democrats will surely get their turn in power in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest in the economic welfare of the vast majority. ..."
"... In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010. ..."
"... Many Democratic candidates won't even endorse minimum wage increase in states where increases win via initiative. They preferred to lose elections to standing up for minimum wage increases. ..."
Peter K.... The essence of voting the lesser of two evils: "To comfortable centrists like pgl,
the Democrats should be graded on a curve. As long as they're better than the awful Republicans,
then they're good enough and beyond criticism."
These Wall Street Democrats can rest assured that Democrats will surely get their turn in power
in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw
things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest
in the economic welfare of the vast majority.
To pgl and his ilk, Obama was great as long as he said the right things...regardless of what
he actually did. Hillary didn't even have to say the right things...she only had to be a Wall
Street Democrat for pgl to be enthusiastic about her.
In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010.
At a minimum,
they could have taken their dominance then to enact increases for 2010-2016 or to index increases
to inflation. Instead, Pelosi, Reid and Obama preferred to do nothing.
Many Democratic candidates won't even endorse minimum wage increase in states where increases
win via initiative. They preferred to lose elections to standing up for minimum wage increases.
"... At some point the GOP has to decide how much of Trump's populist agenda they can stuff in the toilet without inducing an uncontrollable backlash. ..."
"... The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches. ..."
"... If the GOP just go ahead with a traditional "rule for the rich" policy (because they won) there could be serious fireworks ahead - provided the Dems can pull out a populist alternative policy by the the next election. ..."
"... I have no idea what's going to happen, but my guess is that Trump and the Republicans are going to completely sell out the "Trump voters." ..."
"... But they still tried to push through Social Security privatization even though everyone is against it. ..."
"... If recent history is any guide, incumbents get a second term regardless of how bad the economy is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in recent memory was Bush 41. ..."
"... Upper class tax cuts were central to his policies. Anybody who believed he was anything other than an standard issue Republican would buy shares in Arizona swampland. ..."
"... trump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius of trump's performance is that by never having a clear position his gullible followers were able to fill in the gaps using their own hopes and desires. ..."
"... That is correct, but also the weakness in his support. They will almost certainly be disappointed as the exact interpretations and choices between incompatible promises turns out to be different from the individuals hopes and desires. ..."
"... And consider how dysfunction from laissez faire healthcare policy readoption leads to rising prices/costs above current trend to limit disposable income even more, it will be amazing if we do not have stagnation and worse for the bulk of society. ..."
"... Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly don't want these do-gooder nonprofits competing against the doctor establishment. ..."
"... The question is first of all whether Trump can bully the Fed away from their current and traditional course (which would not allow much of a stimulus, before they cancelled it out with rate hikes). ..."
"... Second whether the Fed itself having been traditionally prone to support GOP presidents (see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies and allow higher inflation and wage growth than they have under any Dem president. ..."
"... The little people go to the credit channels to help finance the purchase of durables and higher education too. The Fed's actions themselves will see these credit prices ratchet, so nit good fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying gathered money to burn. ..."
At some point the GOP has to decide how much of Trump's populist agenda they can stuff in
the toilet without inducing an uncontrollable backlash.
The reason Trump won the GOP nomination was exactly because he claimed to reject traditional
GOP policies and approaches. It was the old tea-partiers insisting that their anti-rich/Anti-Wall
street sentiments be inserted into the GOP.
If the GOP just go ahead with a traditional "rule for the rich" policy (because they won)
there could be serious fireworks ahead - provided the Dems can pull out a populist alternative
policy by the the next election.
I have no idea what's going to happen, but my guess is that Trump and the Republicans are
going to completely sell out the "Trump voters."
George W. Bush wasn't completely horrible (besides Iraq, John Roberts, tax cuts for the rich,
the Patriot act and the surveillance state, Katrina, etc. etc. etc.). He was good on immigration,
world AIDS prevention, expensive Medicare drug expansion, etc.
But they still tried to push through Social Security privatization even though everyone
is against it.
To some extent Bush demoralized the Republican base and they didn't turn out in 2008.
If recent history is any guide, incumbents get a second term regardless of how bad the economy
is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in
recent memory was Bush 41.
About the only thing that can derail Trump is a big recession in 2019.
"The reason Trump won the GOP nomination was exactly because he claimed to reject traditional
GOP policies and approaches."
While generally enthusiastically embracing them. Upper class tax cuts were central to his
policies. Anybody who believed he was anything other than an standard issue Republican would buy
shares in Arizona swampland.
He never came out directly saying or tweeting that he would give bigger tax cuts to the rich than
anybody else - he said he would give bigger tax cuts. It is true that people with a college education
had an easy time figuring him out even before the election. But the populist messages he campaigned
on were anti-establishment including suggesting that the "hedge-fund guys" were making a killing
by being taxed at a lower rate.
trump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius
of trump's performance is that by never having a clear position his gullible followers were able
to fill in the gaps using their own hopes and desires.
"his gullible followers were able to fill in the gaps using their own hopes and desires"
That is correct, but also the weakness in his support. They will almost certainly be disappointed
as the exact interpretations and choices between incompatible promises turns out to be different
from the individuals hopes and desires. The reason Trump was able to beat even a Tea party
darling, was the backlash against big money having taken over the Tea party. The backlash against
Trump_vs_deep_state being "taken over by big money" interest will be interesting to observe, especially if
the Dems find the right way to play it.
Following up on Johnny Bakho's comment below, let's assume that average wage growth YoY for nonsupervisory
workers never reaches 3% before the next recession hits. Wage growth rates always decline in recessions,
usually by over 2%.
If in the next recession, we see actual slight nominal wage decreases, is a debt-deflationary
wage-price spiral inevitable? Or could there be a small decline of less than -1% without triggering
such a spiral.
"is a debt-deflationary wage-price spiral inevitable?"
Good question. It all depends on the response of policy makers. If we continue with the stupid
fiscal austerity that began in 2011, it may be inevitable. Which is why doing public infrastructure
investment is a very good idea.
And consider how dysfunction from laissez faire healthcare policy readoption leads to rising
prices/costs above current trend to limit disposable income even more, it will be amazing if we
do not have stagnation and worse for the bulk of society.
Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice
infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly
don't want these do-gooder nonprofits competing against the doctor establishment.
For Clinton dems, the ones the wiki revealed are con artists, doing for the peeps [like Bernie
stood for] is too far ideologically for the faux centrists.
They are neoliberals market monetarists who keep the bankers green and everyone else takes
the back seats.
At this point in time pretty much anything the policy makers do will be countered by the Fed.
The question is first of all whether Trump can bully the Fed away from their current and traditional
course (which would not allow much of a stimulus, before they cancelled it out with rate hikes).
Second whether the Fed itself having been traditionally prone to support GOP presidents
(see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies
and allow higher inflation and wage growth than they have under any Dem president.
As long as the FED thinks the natural rate of the employment to population ratio is only 60% -
you'd be right. But then the FED is not thinking clearly.
like many of my fellow socialists, i fulminated about bernanke's coddling of banks and asset holders.
i was somewhat wrong. bernanke was a evidently a strong voice for banking regulation and an end
to the moral hazard of TBTF. it is a pity that obama did not listen to him.
The little people go to the credit channels to help finance the purchase of durables and higher
education too. The Fed's actions themselves will see these credit prices ratchet, so nit good
fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying
gathered money to burn.
Will the Fed use rulemaking to control bubbling in the financial asset marketplaces as they
wont want to rause rates too much. I hope they are paying attention
"... I always laugh when Newt Gingrich says we need "rational regulation". His crew has as its prime agenda getting rid of any regulation that is actually rational. ..."
"... the greater the information asymmetry, the easier it is to loot. ..."
"... Gramm pushed the next round of stupid deregulation which led to the latest crisis. And it seems Team Trump is about to relive the same mistake. Studying overly simplified models that have historically failed us over and over is the height of stupidity. ..."
Jeb Hensarling and the Allure of Economism : The
Wall Street Journal has a profile up on Mike Crapo and Jeb Hensarling, the key committee
chairs (likely in Crapo's case) who will repeal or rewrite the Dodd-Frank Wall Street Reform and
Consumer Protection Act. It's clear that both are planning to roll back or dilute many of the
provisions of Dodd-Frank, particularly those that protect consumers from toxic financial products
and those that impose restrictions on banks (which, together, make up most of the act).
Hensarling is about as clear a proponent of
economism -the belief that the world operates exactly as described in Economics 101 models-as
you're likely to find. He majored in economics at Texas A&M, where one of his professors was none
other than Phil Gramm. Hensarling described his college exposure to economics
this way :
"Even though I had grown up as a Republican, I didn't know why I was a Republican until
I studied economics. I suddenly saw how free-market economics provided the maximum good to
the maximum number, and I became convinced that if I had an opportunity, I'd like to serve
in public office and further the cause of the free market."
This is not a unique story...
Introductory economics, and particularly the competitive market model, can be seductive that
way. The models are so simple, logical, and compelling that they seem to unlock a whole new way
of seeing the world. And, arguably, they do: there are real insights you can gain from a working
understanding of supply and demand curves.
The problem, however, is that the people ... forget that the power of a theory in the abstract
bears no relationship to its accuracy in practice. ...
Hensarling, who likes to quote market principles in the abstract, doesn't appear to have moved
on much from Economics 101. ... This ritual invocation of markets ignores the fact that there
is no way to design a contemporary financial system that even remotely resembles the textbook
competitive market: perfect information, no barriers to entry, a large number of suppliers such
that no supplier can affect the market price, etc. ...
Regulatory policy that presumes well-functioning markets that don't exist is unlikely to work
well in the real world. Actually, Bill Clinton and George W. Bush tried that already, and we got
the financial crisis. But to people who believe in economism, theory can never be disproved by
experience. Hensarling is "always willing to compromise policies to advance principles," he actually
said to the Journal . That's a useful trait in an ideologue. It's frightening in the man
who will write the rules for our financial system.
I always laugh when Newt Gingrich says we need "rational regulation". His crew has as its prime
agenda getting rid of any regulation that is actually rational.
That is required to cover all the common law complexities from civil suits on labor issues being
legislated from the Federal bench.
Businesses have resorted to getting judges to legislate their way once their lobbying failed
to get Congress to legalize slavery by other names.
Labor is a part of econ 101 that businesses do not understand.
Businesses see labor as black holes sucking all the money it can out of the economy. Consumers,
on the other hand, are infinite sources of spending as long as government does not require consumers
repay debts. But government does need to put more money in consumer pockets with more and bigger
tax cuts.
When I learned econ 1 in secondary school social studies, the money spent at businesses came
100% from wages businesses paid.
A more advanced concept was economic profits were bad because that meant monopoly power restricting
supply to consumers to take too much of their money and also pay them less than in an efficient
economy.
"Hensarling is about as clear a proponent of economism -- the belief that the world operates exactly
as described in Economics 101 models-as you're likely to find. He majored in economics at Texas
A&M, where one of his professors was none other than Phil Gramm."
Gramm never really got the economics of financial institutions. Milton Friedman did as he studies
their failures during the Great Depression. We sort of relived this during the 1980's S&L crisis
but on a smaller scale. That crisis was driven by ill advised financial deregulation.
Gramm pushed
the next round of stupid deregulation which led to the latest crisis. And it seems Team Trump
is about to relive the same mistake. Studying overly simplified models that have historically
failed us over and over is the height of stupidity.
"The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of
1999, (Pub.L. 106–102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United
States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933, removing barriers
in the market among banking companies, securities companies and insurance companies that prohibited
any one institution from acting as any combination of an investment bank, a commercial bank, and
an insurance company. With the bipartisan passage of the Gramm–Leach–Bliley Act, commercial banks,
investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore,
it failed to give to the SEC or any other financial regulatory agency the authority to regulate
large investment bank holding companies.[1] The legislation was signed into law by President Bill
Clinton.[2]"
a good read but i disagree with their suggested approach:
"Consideration needs to be given to approaches such as those suggested by Bulow and Klemperer
(2015) and
King (2016) that give more weight to market prices as indicators of asset values and that bring
automaticity to the restoration of bank capital when it starts to decline."
imo, small enough to fail institutions pose less system risk and are less likely to speculate.
I suspect over time we will disagree slightly here and there on specifics but it is a joy to have
someone here that gets down to real analysis.
In my view Sarin-Summers took too tiny a step into something fundamental but often overlooked.
The return to equity is a mix of the equity/asset ratio (which needs to go up) aka leverage risk
and the issue of operational risk which you are hinting at.
I bet Anne will demand more on what I'm saying here. Tiem to think about how best to present
this over at Econospeak as this is a really big deal. Even if it is something Trump's new CEA
(Lawrence Kudlow) does not get. Neither does PeterK so maybe he can work for Kudlow - the stupidest
man alive (almost).
Small enough to fail institutions like ... Bear and Lehman?
Theory aside, in the real life crisis we had risk built up across the entire system, not just
big banks, and when a few midsized firms went under it broke the buck and everything went to hell.
Perhaps more importantly though, it was *consumers'* overleveraging that caused the prolonged
depression. The big banks participated in that but didn't have central roles.
"Milton Friedman did as he studies their failures during the Great Depression."
So, how is it that he promised money market funds would ever be at risk of insolvency and need
Fed bailout of credit, and that money market funds would never face bank runs because no one would
ever question their safety and solvency?
How is it that he failed to predict Primary Reserve breaking the buck and triggering bank runs
on the shadow banks?
I remember the debate over Regulation Q and retail money market funds. I agreed with the big
government liberals that it was going to end badly. That it took 37 years is not a surprise to
me, but October 2008 was no surprise at all to me. It was forecast by my kind of economists in
1970 based on what happened multiple times before 1935 when sane bankers and economists developed
the bank regulation that produced half a century of no bank crisis.
Friedman, on the other hand, argued for deregulation that delivered bank crisis in the late
80s, the 90s multiple times deftly handled by bailouts by both government and by forcing Wall
Street banks to do Morgan bailouts, eg LTCM, and the IMF, and then yet again, the bank crisis
of the 00s.
Three decades of bank crisis in four decades is hardly evidence Friedman understood banking.
For Free Market Ideologues the Great Depression Never Happened
Simple question for Jeb H: Why was there a Great Depression when we had budget surpluses every
year during the 1920s?
How could the Free Market have failed so completely from 1929 to 1933? We had gold money and
regulations were minimal. It was the ideal context for the Free Market and yet the Dow lost 90%
of its value. Why has the Dow nearly tripled in value now with Dodd-Frank in force?
I'm with yuan on this one. But this is a long story. For today - let me applaud you and yuan for
bringing something new and needed here. Debates over actual economic analysis.
We got a lot more than the financial crisis from r lying on markets more than government. Yes,
regs are necessary (externalities, monopolies, etc) but "the more the merrrier" is not the underlying
principle. Read that D/F has > 20k "rules" with >300 "major" rules yet to be written after 6 years
of work. The world changes way faster than government can. Regulators need to find much simpler,
more general approaches ("less leverage") if they're going to continue to add value.
This is a problem of the teaching of contemporary economics, not of Jed Hensarling. Economists
tout simplified classical models as fundamentally correct, teach them in freshman Economics 101,
and only admit that they don't approximate reality in Econ 401, for seniors. But most students
never take another econ course after 101. The damage is done. Not surprisingly, most young Republicans
discover that economic reality is...Free Market and Republican!
Think maybe it's time to show them that the classical model doesn't really work when they are
freshmen, and not complain after they're already in Congress.
Agency's '04 Rule Let Banks Pile Up New Debt
It was unanimous. The decision, changing what was known as the net capital rule, was completed
and published in The Federal Register a few months later.
With that, the five big independent investment firms were unleashed.
In loosening the capital rules, which are supposed to provide a buffer in turbulent times,
the agency also decided to rely on the firms' own computer models for determining the riskiness
of investments, essentially outsourcing the job of monitoring risk to the banks themselves.
At Bear Stearns, the leverage ratio - a measurement of how much the firm was borrowing compared
to its total assets - rose sharply, to 33 to 1.
Ah, Texas the home of fundamentalism. Texas basically lives by sticking a big straw in the ground
and selling what comes out. That is great until it (as it will) stops working. Texas is a caricature
of all that is wrong with mankind.
Another way to look at Texas is as the Saudi Arabia of North America. All that is missing is a
King. The rest of the USA should get together and give it back to Mexico. Both countries would
be better off.
"... But "bastard neoliberalism" that Trump represents in his internal economic policy probably is not a solution for the nations problems. It is too early to say what will be the level of his deviation from election promises, but judging for his appointments it probably will be considerable -- up to a complete reverse on certain promises. ..."
"... So I view his election as the next logical step (after the first two by Bush II and Obama) toward military dictatorship. Previous forms of "Inverted totalitarism" -- a neoliberal version of Bolshevism (or, more correctly, Trotskyism -- many neocons were actually former Trotskyites ) seems to stop working. Neoliberal ideology was discredited in 2008. All three: Bolshevism, Trotskyism and neoliberalism might also be viewed as just different flavors of Corporatism. ..."
"... After 2008 crisis, neoliberalism in the USA continues to exist in zombie state: as a non-dead dead, so it will be inevitably replaced by something else. Much like Bolshevism after 1945. How soon it will happen and what will be the actual trigger (the next oil crisis which turns into another round of Great Recession?) and what will be the successor is anybody guess. Bolshevism in the USSR lasted till 1991 or 46 years. The victory on neoliberalism in the Cold War was in 1991 so if we add 50 years then 2041 might be the date. ..."
I think the shift from New Deal Capitalism to neoliberalism proved to be fatal for the form
of democracy that used to exist in the USA (never perfect, and never for the plebs).
Neoliberalism as a strange combination of socialism for the rich and feudalism for the poor
is anathema for democracy even for the narrow strata of the US society who used to have a say
in the political process. Like Bolshevism was dictatorship of nomenklatura under the slogan of
"Proletarians of all countries, unite!", neoliberalism is more like dictatorship of financial
oligarchy under the slogan "The financial elite of all countries, unite!")
In this sense Trump is just the logical end of the process that started in 1980 with Reagan,
or even earlier with Carter.
And at the same time [he is] the symptom of the crisis of the system, as large swats of population
this time voted against status quo and that created the revolutionary situation when the elite
was unable to govern in the old fashion. That's why, I think, Hillary lost and Trump won.
But "bastard neoliberalism" that Trump represents in his internal economic policy probably
is not a solution for the nations problems. It is too early to say what will be the level of his
deviation from election promises, but judging for his appointments it probably will be considerable
-- up to a complete reverse on certain promises.
So I view his election as the next logical step (after the first two by Bush II and Obama)
toward military dictatorship. Previous forms of "Inverted totalitarism" -- a neoliberal version
of Bolshevism (or, more correctly, Trotskyism -- many neocons were actually former Trotskyites
) seems to stop working. Neoliberal ideology was discredited in 2008. All three: Bolshevism, Trotskyism
and neoliberalism might also be viewed as just different flavors of Corporatism.
After 2008 crisis, neoliberalism in the USA continues to exist in zombie state: as a non-dead
dead, so it will be inevitably replaced by something else. Much like Bolshevism after 1945. How
soon it will happen and what will be the actual trigger (the next oil crisis which turns into
another round of Great Recession?) and what will be the successor is anybody guess. Bolshevism
in the USSR lasted till 1991 or 46 years. The victory on neoliberalism in the Cold War was in
1991 so if we add 50 years then 2041 might be the date.
And the slide toward military dictatorship does not necessary need to take a form of junta,
which takes power via coup d'état. The control of the government by three letter agencies ("national
security state") seems to be sufficient, can be accomplished by stealth, and might well be viewed
as a form of military dictatorship too. So it can be a gradual slide: phase I, II, III, etc.
The problem here as with Brezhnev socialism in the USSR is the growing level of degeneration
of elite and the growth of influence of deep state, which includes at its core three letter agencies.
As Michail Gorbachev famously said about neoliberal revolution in the USSR "the process already
started in full force". He just did not understand at this point that he already completely lost
control over neoliberal "Perestroika" of the USSR. https://en.wikipedia.org/wiki/Perestroika
In a way, the US Presidents are now more and more ceremonial figures that help to maintain
the illusion of the legitimacy of the system. Obama is probably the current pinnacle of this process
(which is reflected in one of his nicknames -- "teleprompter" http://www.huffingtonpost.com/2012/08/22/obama-photo-caption-contest-teleprompter_n_1821154.html)
.
You probably could elect a dog instead of Trump and the US foreign policy will stay exactly
the same. This hissy fits about Russians that deep state gave Trump before December 19, might
be viewed as a warning as for any potential changes in foreign policy.
As we saw with foreign policy none of recent presidents really fully control it. They still
are important players, but the question is whether they are still dominant players. My impression
is that it is already by-and-large defined and implemented by the deep state. Sometimes dragging
the President forcefully into the desirable course of actions.
"... One bankruptcy attorney told the Detroit Metro Times he had as many as 30 cases in 2015 tied to debt from the UIA; before the automated system was implemented, he said he would typically have at most one per year with such claims. The newspaper also found claimants who were charged with fraud despite never having received a single dollar in unemployment insurance benefits. ..."
"... A pair of lawsuits were filed in 2015 against the UIA over Midas. According to a pending federal case, in which the state revealed it had discontinued using Midas for fraud determinations, the system "resulted in countless unemployment insurance claimants being accused of fraud even though they did nothing wrong". ..."
"... Blanchard told the Guardian in February that many unemployment applicants may not have realized they were even eligible to appeal against the fraud charge, due to the setup of Midas. Attorneys representing claimants have said that many refuse to ever apply for unemployment benefits again. ..."
"... Levin, who represents part of metropolitan Detroit, said in his statement that Michigan officials had to fully account for the money that has flowed into the unemployment agency's contingent fund. ..."
Michigan government
agency wrongly accused individuals in at least 20,000 cases of fraudulently seeking unemployment
payments, according to a review by the state.
The review released this week found that an automated system had erroneously accused claimants
in 93% of cases – a rate that stunned even lawyers suing the state over the computer system and faulty
fraud claims.
"It's literally balancing the books on the backs of Michigan's poorest and jobless," attorney
David Blanchard, who is pursuing a class action in federal court on behalf of several claimants,
told the Guardian on Friday.
The
Michigan unemployment insurance agency (UIA) reviewed 22,427 cases in which an automated computer
system determined a claimant had committed insurance fraud, after federal officials, including the
Michigan congressman Sander Levin, raised concerns with the system.
The review found that the overwhelming majority of claims over a two-year period between October
2013 and August 2015 were in error. In 2015, the state revised its policy and required fraud determinations
to be reviewed and issued by employees. But the new data is the first indication of just how widespread
the improper accusations were during that period .
The people accused lost access to unemployment payments, and reported facing fines as high as
$100,000. Those who appealed against the fines fought the claims in lengthy administrative hearings.
And some had their federal and state taxes garnished. Kevin Grifka, an electrician who lives
in metro Detroit, had his entire federal income tax garnished by the UIA, after it accused him of
fraudulently collecting $12,000 in unemployment benefits.
The notice came just weeks before Christmas in 2014.
"To be honest with you, it was really hard to see your wife in tears around Christmas time, when
all of this went on for me," Grifka said.
The computer system claimed that he had failed to accurately represent his income over a 13-week
period. But the system was wrong: Grifka, 39, had not committed insurance fraud.
In a statement issued on Friday, Levin called on state officials to review the remaining fraud
cases that were generated by the system before the policy revision.
"While I'm pleased that a small subset of the cases has been reviewed, the state has a responsibility
to look at the additional 30,000 fraud determinations made during this same time period," he said.
Figures released by the state show 2,571 individuals have been repaid a total of $5.4m. It's unclear
if multiple cases were filed against the same claimants.
The findings come as Michigan's Republican-led legislature passed a bill this week to use
$10m from the unemployment agency's contingent fund – which is composed mostly of fines generated
by fraud claims – to balance the state's budget. Since 2011, the balance of the contingent fund has
jumped from $3.1m to $155m, according to
a report from a Michigan house agency.
The system, known as the Michigan Integrated Data Automated System (Midas), caused an immediate
spike in claims of fraud when it was implemented in October 2013 under the state's Republican governor,
Rick Snyder, at a cost of $47m.
In the run-up to a scathing report on the system issued last year by Michigan's auditor general,
the UIA began requiring employees to review the fraud determinations before they were issued.
The fraud accusations can carry an emotional burden for claimants.
"These accusations [have] a pretty big burden on people," Grifka said. While he said the new findings
were validating and his own case had been resolved, he called for state accountability.
"There's no recourse from the state on what they're doing to people's lives. That's my biggest
problem with all of this."
Steve Gray, director of the University of Michigan law school's unemployment insurance clinic,
told the Guardian earlier this year that he routinely came across claimants facing a significant
emotional toll. As a result, he said, the clinic added the number for a suicide hotline to a referral
resource page on the program's website.
"We had just a number of clients who were so desperate, saying that they were going to lose their
house they've never been unemployed before, they didn't know," said Gray, who filed a complaint
with the US labor department in 2015 about the Midas system.
The fines can be enormous. Residents interviewed by local news outlets have highlighted fraud
penalties from the UIA
upwards of $100,000 . Bankruptcy petitions filed as a result of unemployment insurance fraud
also increased during the timeframe when Midas was in use.
One bankruptcy attorney
told the Detroit Metro Times he had as many as 30 cases in 2015 tied to debt from the UIA; before
the automated system was implemented, he said he would typically have at most one per year with such
claims. The newspaper also found claimants who were charged with fraud despite never having received
a single dollar in unemployment insurance benefits.
A pair of lawsuits were filed in 2015 against the UIA over Midas. According to a pending federal
case, in which the state revealed it had discontinued using Midas for fraud determinations, the system
"resulted in countless unemployment insurance claimants being accused of fraud even though they did
nothing wrong".
Blanchard told the Guardian in February that many unemployment applicants may not have realized
they were even eligible to appeal against the fraud charge, due to the setup of Midas. Attorneys
representing claimants have said that many refuse to ever apply for unemployment benefits again.
A spokesman for the unemployment insurance agency, Dave Murray, said it appreciated Levin's work
on the issue and said it was continuing "to study fraud determinations".
The agency had already made changes to the fraud determination process, he said, and "we appreciate
that the state legislature this week approved a bill that codifies the reforms we've set in place".
Levin, who represents part of metropolitan Detroit, said in his statement that Michigan officials
had to fully account for the money that has flowed into the unemployment agency's contingent fund.
"While I am pleased that $5m has been repaid, it strikes me as small compared to the amount of
money that was collected at the time," he said. "Only a full audit will ensure the public that the
problem has been fully rectified."
ManuSHeloma 12 Feb 2016 9:02
Another failure of Gov Snyder's administration: first Flint water, now this. What can the people
of Michigan expect next? The recall of Snyder should be automated.
stuinmichigan pepspotbib 12 Feb 2016 10:02
It's not just Snyder and his lackies. You should see the radically gerrymanderd Michigan legislature,
run by rightist extremists, directed by the Koch Brothers, the DeVos family and others, via the
ALEC program that provides them with the radical right legislation they have passed and continue
to pass. Snyder ran saying that sort of stuff was not really on his agenda, but continues to sign
it. He's either a liar, an unprincipled idiot, or both. It's bad here. And it's getting worse.
DarthPutinbot 12 Feb 2016 9:09
What the f*ck is wrong in Michigan? Split it up among the surrounding states and call it good.
Michigan destroyed Detroit and cutoff their water. Michigan deliberately poisoned the residents
of Flint. Too many Michigan lawyers are crooks or basically inept. The court system screws over
parents in divorce cases. And now, Michigan is wrongly trying to collect money from people on
trumped up fraud charges. Stop it. The federal government needs to take over the state or bust
it up.
Non de Plume 12 Feb 2016 9:23
Hell, when the system *works* it's ridiculous. Watching my Dad - who had worked continuously since
14 years old save a few months in the early 90s - sitting on hold for hours... At least once a
week, to 'prove' he still deserved money from a system he paid into. Hours is not an exaggeration.
And now this. Goddammit Lansing! How many other ways can you try to save/take money from the
poor and end up costing us so much more?!?
Bailey Wilkins stuinmichigan 12 Feb 2016 21:56
Nothing against The Guardian's reporting, but if you follow the links, you'll see FOX 17 has been
covering the story locally since last May. It's their investigation that got the attention of
all the other publications (including Detroit Metro Times.) Local papers could have done a better
job though, agreed on that.
talenttruth 12 Feb 2016 12:48
Leering, Entitled Republican bastards like Governor Snyder simply HATE poor people. And THAT is
because all such bullies are cowards, through-and-through, always selecting as their "victims"
those who can't fight back. And, since such Puritan Cretins as Snyder "Believe" that they are
rich because of their superior merit, it stands to reason (doesn't it) that "poor people" (actually,
all us Little Folk) have NO merit, because we didn't inherit a Trust Fund, Daddy's Business or
other anciently stolen wealth. These people deserve stunningly BAD Karma. Unfortunately, Karma
has its own timeline and doesn't do what seems just, on a timely basis (usually).
Jim Uicker 12 Feb 2016 13:29
With today's sophisticated algorithms, computers are used to flag insurance claims all the time.
The hit rate is usually much better than 8%. But how can they even consider automating the adjudication
of fraud? Fraud is a crime; there should be a presumption of innocence and a right to due process.
Without telling people they had a right to appeal, didn't this system violate the constitutional
rights of Michigan's most vulnerable citizens: those with no job and therefore no money to defend
themselves?
And what about the employers who paid unemployment insurance premiums month after month, expecting
the system to protect their employees from business conditions that would necessitate layoffs?
Michigan has defrauded them as well, by collecting premiums and not paying claims.
Jim Uicker 12 Feb 2016 13:51
Even if the problem with Midas can be entirely blamed on the tech workers who built and tested
the software, there is no excuse for the behavior of the Snyder administration when they became
aware of the problem. Just like the cases of legionnaires disease, where the state failed to alert
the public about the outbreak and four more people died, the Snyder administration is again trying
to sweep its mistakes under the rug.
Before taking Midas offline, the UIA refused to comment on the Metro Times investigation, and
Snyder himself artfully avoided reporters' questions after being made aware of the result of an
investigation by a local television station. Now the state only revealed that it shut down Midas
to a pending lawsuit.
The state spent $47 million dollars on a computer system and then took it offline because it
didn't work. The flaws in the system are now costing the state many millions more. This level
of secrecy is evidence of bad government. The state is supposed to be accountable to taxpayers
for that money! Even if the Snyder administration isn't responsible for all of these tragedies,
it is definitely responsible for covering them up.
Jefferson78759 12 Feb 2016 13:55
This is the GOP "governing"; treat the average person like a criminal, "save" money on essential
infrastructure like water treatment, regardless of the consequences.
I get why the 1% votes GOP but if you're an average person you're putting your financial and
physical well being on the line if you do. Crazy.
MaryLee Sutton Henry 12 Feb 2016 22:30
I was forced to plead guilty by a public defender to the UIA fraud charge & thrown in jail for
4 days without my Diabetic meds or diet in Allegan county. As it stands right now the State of
Michigan keeps sending me bills that are almost $1000 more then what the county says I own. I
have done community service, and between witholding tax refunds and payments I have paid over
$1200 on a $4300 total bill. I have literally spend hours on the phone with UIA and faxing judgements
trying to straighten this out, yet still get bills for the higher amount from UIA. Its a nightmare,
I have a misdominer, until its paid and refuse to pay no more then $50 per month until they straighten
this out. Maybe joining the class action law suit would help. Does anyone have any better ideas??
Teri Roy 13 Feb 2016 13:27
My son and I both got hit, I was able to dispute mine but he has autism and they would not dismiss
his, so at 24 yrs old he's paying back 20 grand in pentailies and interest. Just not right
Outragously Flawless 14 Feb 2016 9:42
I also received a letter stating I owe and hadn't file taxes since 2007. I had to find all of
my taxes from 2007 to 2013 my question is why did they wait over 5yrs to contact me, or is that
the set up H&R block does my taxes and they didn't have records that far back.#sneakyass government
"... The New Keynesian agenda is the child of the neoclassical synthesis and, like the IS-LM model before it, New Keynesian economics inherits the mistakes of the bastard Keynesians. It misses two key Keynesian concepts: (1) there are multiple equilibrium unemployment rates and (2) beliefs are fundamental. My work brings these concepts back to center stage and integrates the Keynes of the General Theory with the microeconomics of general equilibrium theory in a new way. " ..."
" To complete the reconciliation of Keynesian economics
with general equilibrium theory, Paul Samuelson introduced
the neoclassical synthesis in 1955...
... In this view of the world, high unemployment is a
temporary phenomenon caused by the slow adjustment of money
wages and money prices. In Samuelson's vision, the economy is
Keynesian in the short run, when some wages and prices are
sticky. It is classical in the long run when all wages and
prices have had time to adjust....
... Although Samuelson's neoclassical synthesis was tidy,
it did not have much to do with the vision of the General
Theory...
... In Keynes' vision, there is no tendency for the
economy to self-correct. Left to itself, a market economy may
never recover from a depression and the unemployment rate may
remain too high forever. In contrast, in Samuelson's
neoclassical synthesis, unemployment causes money wages and
prices to fall. As the money wage and the money price fall,
aggregate demand rises and full employment is restored, even
if government takes no corrective action. By slipping wage
and price adjustment into his theory, Samuelson reintroduced
classical ideas by the back door-a sleight of hand that did
not go unnoticed by Keynes' contemporaries in Cambridge,
England. Famously, Joan Robinson referred to Samuelson's
approach as 'bastard Keynesianism.'
The New Keynesian agenda is the child of the
neoclassical synthesis and, like the IS-LM model before it,
New Keynesian economics inherits the mistakes of the bastard
Keynesians. It misses two key Keynesian concepts: (1) there
are multiple equilibrium unemployment rates and (2) beliefs
are fundamental. My work brings these concepts back to
center stage and integrates the Keynes of the General Theory
with the microeconomics of general equilibrium theory in a
new way. "
You could meanwhile contemplate Farmer's point that Samuelson
and his MIT colleagues "bastardized" Keynes' views when they
introduced them to the US.
" By slipping wage and price
adjustment into his theory, Samuelson reintroduced classical
ideas by the back door-a sleight of hand that did not go
unnoticed by Keynes' contemporaries in Cambridge, England.
Famously, Joan Robinson referred to Samuelson's approach as
'bastard Keynesianism."
And then you might contemplate Samuelson's (and MIT
colleagues) influence on Krugman, Blanchard, Summers and all
the well-publicized mainstream economists.
By slipping wage and price adjustment into his theory,
Samuelson reintroduced classical ideas by the back door-a
sleight of hand that did not go unnoticed by Keynes'
contemporaries in Cambridge, England. Famously, Joan Robinson
referred to Samuelson's approach as 'bastard Keynesianism'.
-- Roger Farmer
[ A fine place to start thinking. I knew this before and
read this again today, but did not think about the argument.
You might also wonder how it could happen that those "bastard
Keynesians", the ones who distorted Keynes' message, came to
be the ones who are well publicized, rather than more
accurate interpreters.
I think that is a good discussion. I also think the major
weakness of both Keynes and Marx is that they underestimated
the power and resilience of finance. They both thought logic
dictated the "euthanasia of the rentier", while we are seeing
the rentier growing ever stronger.
It's always with great diffidence that I write about
macroeconomics. Although I'm in good company in being
sceptical about much of macro (see this roundup from Bruegel
and this view from Noah Smith, for instance), I'm all too
well aware of the limits of my knowledge. So with that
warning, here's what I made of Roger Farmer's very
interesting new book, Prosperity for All: How To Prevent
Financial Crises....
"... Republican leaders in Congress are already sending Trump a subtle but clear warning: accept our business-as-usual Chamber of Commerce agenda or we will join Democrats to impeach you. ..."
"... Impeachment has been the goal of Democrats since the day after Trump won the election, and the Republican establishment will use the veiled threat as leverage to win concession after concession from the Trump White House. ..."
"... There are at least four Trump campaign promises which, if not dropped or severely compromised, could generate Republican support for impeachment: Trump's Supreme Court appointments, abandoning the Trans Pacific Partnership, radical rollback of Obama regulatory projects, and real enforcement of our nation's immigration laws. ..."
"... On regulatory rollback, Congress can legitimately insist on negotiating the details with Trump. But on the other three, immigration, the TPP, and Supreme Court nominees, Trump's campaign promises were so specific - and so popular - that he need not accept congressional foot-dragging. ..."
"... Senate Republican leader Mitch McConnell announced this week he will oppose Trump's tax reforms. Senator Lindsey Graham is joining Democrats in sponsoring new legislation to protect the "Dreamers" from deportation after their unlawfully granted legal status and work permits expire. Senator Susan Collins will oppose any restrictions on Muslim refugees, no matter how weak and inadequate the vetting to weed out jihadists. Senator Lamar Alexander aims to protect major parts of Obamacare, despite five years of voluminous Republican promises to "repeal and replace" it if they ever had the power to do so. ..."
"... on the House side, we have the naysayer-in-chief, Speaker Paul Ryan, who refused to campaign with Donald Trump in Wisconsin, and who has vowed to obstruct Trump's most important and most popular campaign promise - an end to open borders and vigorous immigration law enforcement. ..."
"... Donald Trump won a electoral mandate to change direction and put American interests first, beginning with border security. If the congressional Republican establishment chooses to block the implementation of that electoral mandate, it would destroy not only Trump's agenda, it would destroy the Republican Party. ..."
Several months ago I was asked what advice I would give to the Trump campaign.
I said, only half joking, that he had better pick a vice presidential candidate the establishment
hates more than it hates him. That would be his only insurance against impeachment. Those drums have
already begun to beat, be it ever so subtly.
Is anyone surprised how quickly the establishment that Donald Trump campaigned against has announced
opposition to much of his policy agenda? No. But few understand that the passionate opposition includes
a willingness to impeach and remove President Trump if he does not come to heel on his America First
goals.
Ferocious opposition to Trump from the left was expected and thus surprises nobody. From the comical
demands for vote recounts to street protests by roving bands of leftist hate-mongers and condescending
satire on late-night television, hysterical leftist opposition to Trump is now part of the cultural
landscape.
But those are amusing sideshows to the main event, the Republican establishment's intransigent
opposition to key pillars of the Republican president's agenda.
Republican leaders in Congress are already sending Trump a subtle but clear warning: accept our
business-as-usual Chamber of Commerce agenda or we will join Democrats to impeach you.
If you think talk of impeachment is insane when the man has not even been sworn into office yet,
you have not been paying attention. Impeachment has been the goal of Democrats since the day after
Trump won the election, and the Republican establishment will use the veiled threat as leverage to
win concession after concession from the Trump White House.
What are the key policy differences that motivate congressional opposition to the Trump agenda?
There are at least four Trump campaign promises which, if not dropped or severely compromised, could
generate Republican support for impeachment: Trump's Supreme Court appointments, abandoning the Trans
Pacific Partnership, radical rollback of Obama regulatory projects, and real enforcement of our nation's
immigration laws.
On regulatory rollback, Congress can legitimately insist on negotiating the details with Trump.
But on the other three, immigration, the TPP, and Supreme Court nominees, Trump's campaign promises
were so specific - and so popular - that he need not accept congressional foot-dragging.
Yet, while the President-elect 's transition teams at the EPA, State Department and Education
Department are busy mapping ambitious changes in direction, Congress's Republican leadership is busy
doubling down on dissonance and disloyalty.
Senate Republican leader Mitch McConnell announced this week he will oppose Trump's tax reforms.
Senator Lindsey Graham is joining Democrats in sponsoring new legislation to protect the "Dreamers"
from deportation after their unlawfully granted legal status and work permits expire. Senator Susan
Collins will oppose any restrictions on Muslim refugees, no matter how weak and inadequate the vetting
to weed out jihadists. Senator Lamar Alexander aims to protect major parts of Obamacare, despite
five years of voluminous Republican promises to "repeal and replace" it if they ever had the power
to do so.
And then, on the House side, we have the naysayer-in-chief, Speaker Paul Ryan, who refused to
campaign with Donald Trump in Wisconsin, and who has vowed to obstruct Trump's most important and
most popular campaign promise - an end to open borders and vigorous immigration law enforcement.
It is no exaggeration to say that Trump's success or failure in overcoming the opposition to immigration
enforcement will determine the success or failure of his presidency. If he cannot deliver on his
most prominent and most popular campaign promise, nothing else will matter very much.
So, the bad news for President Trump is this: If he keeps faith with his campaign promises on
immigration, for example to limit Muslim immigration from terrorism afflicted regions, which is within
his legitimate constitutional powers as President, he will risk impeachment. However, his congressional
critics will face one enormous hurdle in bringing impeachment charges related to immigration enforcement:
about 90 percent of what Trump plans to do is within current law and would require no new legislation
in Congress. Obama disregarded immigration laws he did not like, so all Trump has to do is enforce
those laws.
Now, if you think talk of impeachment is ridiculous because Republicans control Congress, you
are underestimating the depth of Establishment Republican support for open borders.
The first effort in the 21st century at a general amnesty for all 20 million illegal aliens came
in January 2005 from newly re-elected President George Bush. The "Gang of Eight" amnesty bill passed
by the US Senate in 2013 did not have the support of the majority of Republican senators, and now
they are faced with a Republican president pledged to the exact opposite agenda, immigration enforcement.
And yet, do not doubt the establishment will sacrifice a Republican president to protect the globalist,
open borders status quo.
The leader and spokesman for that establishment open borders agenda is not some obscure backbencher,
it is the Republican Speaker of the House. Because the Speaker controls the rules and the legislative
calendar, if he chooses to play hardball against Trump on immigration he can block any of Trump's
other policy initiatives until Trump abandons his immigration enforcement goals.
What all this points to is a bloody civil war within the Republican Party fought on the battlefield
of congressional committee votes.
Donald Trump won a electoral mandate to change direction and put American interests first, beginning
with border security. If the congressional Republican establishment chooses to block the implementation
of that electoral mandate, it would destroy not only Trump's agenda, it would destroy the Republican
Party.
"... "Earlier this week, I met separately with FBI [Director] James Comey and DNI Jim Clapper, and there is strong consensus among us on the scope, nature, and intent of Russian interference in our presidential election," the message said, according to officials who have seen it. ..."
"... Comment: The FBI now flip-flops from its previous assessment: FBI rejects CIA assessment that Russia influenced presidential election ..."
FBI and National Intelligence chiefs both agree with the CIA assessment that Russia interfered with
the 2016 US presidential elections partly in an effort to help Donald Trump win the White House,
US media report.
FBI Director James B. Comey and Director of National Intelligence James R. Clapper are both convinced
that Russia was behind cyberattacks that targeted Democratic presidential candidate Hillary Clinton
and her campaign chairman, John Podesta,
The Washington Post and reported Friday, citing a message sent by CIA Director John Brennan
to his employees.
"Earlier this week, I met separately with FBI [Director] James Comey and DNI Jim Clapper,
and there is strong consensus among us on the scope, nature, and intent of Russian interference in
our presidential election," the message said, according to officials who have seen it.
"The three of us also agree that our organizations, along with others, need to focus on completing
the thorough review of this issue that has been directed by President Obama and which is being led
by the DNI," it continued.
"... Brother Feltner is right. Corporations are moving offshore to cut their wage bills. But they are not using that money to reinvest in their companies to improve the product and train the workforce. Instead, they are offshoring to gain cash flow to finance their fix. They want more stock buybacks which in turn enrich top executives and Wall Street investors. Automation and technology have nothing to do with this perilous addiction. ..."
"... emissions ..."
"... "The Anti-Corn Law League was a successful political movement in Great Britain aimed at the abolition of the unpopular Corn Laws, which protected landowners' interests by levying taxes on imported wheat, thus raising the price of bread at a time when factory-owners were trying to cut wages to be internationally competitive." ..."
"... Our backwards free fall from stable middle class growth and access and attainment to higher education has been precipitated and pushed by a broadcasting system and cyber platforms that have excluded the VOICE OF WORKERS ever since the first newspaper carried a BUSINESS section with no ..."
"... from being forced to compete against cheaper off-shore or south-of-the-border slave labor that formed the same COMPETITIVE ADVANTAGE now taken for granted when a subsidized start-up like NIKE decides to pursue a business model that relentlessly exploits North American running shoe and sports wear market needs by cheaply manufacturing such products off-shore via contracting agents exploiting captive Indonesian (substitute other Latin American, African or Asian ENTERPRISE aka FREE TRADE ZONES) slave laborers. ..."
"... If we aren't worth hiring at a sustainable SOCIALLY CONTRACTED WAGE aimed at developing our national resources, we should reject buying from such nationally suicidal business models and corporate LLC fictions even if they can pay-2-play legislation that removes the PROTECTIONS. We vow to never sacrifice NATIONAL SECURITY, so why have we allowed the PRIVATIZATION of our NATIONAL SECURITY STATE by corporate legal fictions? A revealing if not all-encompassing historical answer to that question is another corporate-captured and regulatory-captured Mass Media Taboo discussed one time to my knowledge on the PEOPLE'S AIRWAVES. Search Bill Moyers panel discussing the LEWIS POWELL MEMO TO THE NATIONAL CHAMBER OF COMMERCE and the Nixon appointment of LEWIS POWELL to the Supreme Court, despite his total lack of judicial experience. ..."
"... {Creative Commons Copyright} Mitch Ritter Paradigm Shifters Lay-Low Studios, Ore-Wa Media Discussion List ..."
American manufacturers have chosen a different path. Their CEOs grow wealthy by financially strip-mining
their own companies, aided and abetted by elite financiers who have only one goal: extracting as
much wealth as possible from the company while putting back as little as possible into production
and workers.
The heroin driving their addiction is stock buybacks-a company using its own profits (or borrowed
money) to buy back the company's own shares. This directly adds more wealth to the super-rich because
stock buybacks inevitably increase the value of the shares owned by top executives and rich investors.
Since top executives receive the vast majority of their income (often up to 95%) through stock incentives,
stock buybacks are pure gold. The stock price goes up and the CEOs get richer. In this they are in
harmony with top Wall Street private equity/hedge fund investors who incessantly clamor for more
stock buybacks, impatient for their next fix.
For the few, this addiction is the path to vast riches. It also is the path to annihilating the
manufacturing sector. (For a definitive yet accessible account see "
Profits without Prosperity
" by William Lazonick in the Harvard Business Review .)
Wait, wait, isn't this stock manipulation? Well, before the Reagan administration deregulated
them in 1982, stock buybacks indeed were considered stock manipulation and one of the causes of the
1929 crash. Now they are so ubiquitous that upwards of 75% of all corporate profits go to stock buybacks.
Over the last year, 37 companies in the S&P 500 actually spent more on buybacks than they generated
in profits, according to
Buyback
Quarterly .
Little wonder that stock buybacks are a major driver of
runaway inequality . In 1980 before the
stock buyback era, the ratio of compensation between the top 100 CEOs and the average worker was
45 to 1. Today it is a whopping 844 to 1. (The German CEO gap is closer to 150 to 1.)
Germany holds down its wage gap, in part, by discouraging stock buybacks. Through its system of
co-determination, workers and their unions have seats on the boards of directors and make sure profits
are used to invest in productive employment. As a result, in Germany stock buybacks account for a
much smaller percentage of corporate profits.
Between 2000 and 2015, 419 U.S. companies (on the S&P 500 index) spent a total of $4.7 trillion
on stock buybacks (annual average of $701 million per firm). During the same period, only 33 German
firms in the S&P350 Europe index conducted buybacks for a total of $111 billion (annual average of
$211 million per firm). (Many thanks to Mustafa Erdem Sakinç from the
Academic-Industry Research Network for
providing this excellent data.)
Let's do the math: U.S. firms as a whole spent 42 times more on stock buybacks than German firms!
Little wonder that our manufacturing sector is a withering appendage of Wall Street, while German
manufacturing leads the global economy.
So why does the media consistently use automation/technology to explain the loss of well-paying
manufacturing jobs?
To be fair, Poppy is not alone. Virtually every elite broadcaster, journalist, pundit and columnist
claims that the loss of good-paying, blue-collar jobs is somehow connected to new technologies. How
can they ignore the fact that in Germany advanced technologies and good-paying jobs go hand in hand?
Part of the answer is that it is reassuring for elites to believe that job loss stems from complex
"forces of production" that are far removed from human control. The inevitability of broad economic
trends makes a pundit sound more sophisticated than the unschooled factory worker who thinks the
company is moving to Mexico just because labor costs one-tenth as much.
Technological inevitability also fits neatly into the idea that runaway inequality in our economy
is akin to an act of God, that globalization and technology move forward and no one can stop the
process from anointing winners and losers. The winners-the richest of the rich-are those who have
the skills needed to succeed in the international technological race. The losers-most of the rest
of us without the new skills-see our jobs vaporized by technology and automation.
Too bad. Nothing to be done about it. Stop whining. Move on.
In other words, rising inequality can't be fundamentally altered.
Sinclair's Law of Human Nature
Or maybe there's another explanation suggested by Upton Sinclair's famous adage: "It is difficult
to get a man to understand something, when his salary depends on his not understanding it."
The newscasters, the pundits, the top columnists and recidivist TV commentators-nearly all of
them are doing very well. They may not be billionaires, but they live in a rarefied world far removed
form the worries felt by Mr. Feltner and his brothers and sisters at Rexnord. From their elite vantage
point, the status quo may have problems, but it is treating them remarkably well. So quite naturally
they are drawn to narratives that justify their elite positions; that altering runaway inequality
and its privileges would be futile at best and even harmful to society as a whole. How convenient.
Then again, American media firms are no strangers to stock buybacks. Time Warner, which owns CNN,
Poppy's employer, instituted a $5 billion stock buyback in 2016. That's $5 billion that, for example,
didn't go to news investigations about the perils of stock buybacks. We don't know if Poppy Harlow
receives stock incentives, but her top bosses certainly do.
What about NBC/MSNBC? Comcast is the parent company which also instituted a $5 billion stock buyback
in 2016.
Brother Feltner is right. Corporations are moving offshore to cut their wage bills. But they
are not using that money to reinvest in their companies to improve the product and train the workforce.
Instead, they are offshoring to gain cash flow to finance their fix. They want more stock buybacks
which in turn enrich top executives and Wall Street investors. Automation and technology have nothing
to do with this perilous addiction.
So, I'll stop yelling at Poppy, once she starts covering stock buybacks.
Lambert Strether has been blogging, managing online communities, and doing system administration
24/7 since 2003, in Drupal and WordPress. Besides political economy and the political scene, he blogs
about rhetoric, software engineering, permaculture, history, literature, local politics, international
travel, food, and fixing stuff around the house. The nom de plume "Lambert Strether" comes from Henry
James's The Ambassadors: "Live all you can. It's a mistake not to." You can follow him on Twitter
at @lambertstrether. http://www.correntewire.com
View all posts by
Lambert Strether → John ,
December 18, 2016 at 6:33 am
Now I understand. Companies off-shore their manufacturing because Mexico, as an example, has
the latest in automation and the highest of high technology. Another example of the "Move alone.
Nothing to see here." mantra.
Yes, does moving to Mexico, or China, somehow enable more automation? If you are going to automate,
why not automate in place and forget unnecessary long supply chains.
There's an endless supply of Mexicans that can work cheap, can be trained and who cost far
less than complicated machinery. They also have another utilitarian value: driving down wages
in America.
I'm glad I'm not the only one yelling at the TV ..
;)
"HARLOW: But you agree it won't save all of them, because of automation, because of technology."
SO .does it occur to this reported to ask how many jobs are moving from the US to Mexico? If
so many jobs are lost to automation at this factory, why is it worthwhile to move to Mexico. HOW
MANY jobs lost in the US and HOW MANY jobs gained in Mexico from this plant??? I wouldn't be surprised
that there is a gain in Mexico beyond the number directly moved from Carrier .(extra maintenance,
etc.)
And its a bizarre thing – 99% of "news" is in fact "analysis" – and they are remarkably wrong
– yet NONE of them are ever fired
What Mexico offers for some segments of the steel industry is the ability to bypass emissions
controls. This, much more than labour, is a primary attraction for process industries like
steel/petrochemical, where the goods are all most never touched by human hand.
While it also offers proximity to market that building a similar, high emissions plant further
south into Central/South America (or further west into Asia) can't compete, even with labour cheaper
than Mexico's. Because NAFTA does not require economic impact equivalents, industries with high
costs of compliance will go where there is nothing to comply too.
Environmental regulations in general are lower in the off-shore areas. Those countries are
where we were 50 years ago with polluted air, water, and land. However, as the citizens have better
and more stable lives. they will insist on improved conditions. We are already seeing some of
that start in China and other countries. We had to invent many of the technologies in the 70s-90s,
so those countries will be able to improve their lot much faster if they want to because they
will be able to buy off the shelf technologies.
Countries like China are moving forward with renewable energy, as much because it means clean
air and water, as it does reduced reliance on the cantankerous Middle East and greenhouse gas
emissions. It will be interesting to see what happens when US voters figure out that the goal
of the current Republican party is to return the US environmental condition to a Third World country.
Keep in mind that nearly all of the major environmental laws were signed by Republican presidents.
Every buyback returns cash to the investor – who then has to re-invest in something else to
continue getting returns, so to some extent equity buybacks of one company result in new investment
in some other company. To the extent that a company's growth prospects are dim, there are many
many situations in which buybacks make complete sense – as that company simply needs less and
less capital for a shrinking industry. So why should they be heavily capitalized with low growth
prospects?
It is still stock manipulation, plain and simple. And the decision to do it is made by the
executives who benefit the most from it. And it was illegal for a good reason, and it was made
legal for another good reason.
If the executives have so much retained earnings that they do not know how to invest them properly
then they are incompetent in their jobs and should be replaced. They should not be allowed to
use corporate funds to manipulate the stock price up to their own benefit.
Even worse, in some cases the company borrows money, at today's low interest rates, to buy back
stock.
When this occurs pervasively, as it has been for some time now in the US, it is a sign of stagnation
of the corporate sector.
@ dwayne, In which class were you "accidentally" born into. Not hard to make a guess is it.
Don't bother with your already anticipated tesponse. Since I know fairwell the answer. The child
of a poor substistance farmer who was made to walk five miles in knee deep snow to learn all that
you now do.
Buy backs are not manipulation any more than increasing the dividend is. In both cases, the
corporation is saying it has more money than it needs, and that that money should be returned
to the company's stockholders, allowing them to choose how that money will be invested instead
of having corporate management do it for them.
The concern over stock buy backs is simply people focusing on part of a larger transaction
instead of seeing the whole thing. It is the difference between micro thinking and macro thinking,
otherwise known as failing to see the bigger picture.
Benedict – you are spot on. Sounds like a lot of the other responders are either bitter shorts
that have been burned by buybacks just generally shallow thinkers. They will be giving their same
economically baseless arguments for the rest of their lives unless they learn to open their minds.
Those who are arguing for a dividend instead of a buyback are making a foolish argument – as
if a significant dividend increase wouldn't see a significant rise in the stock and hence a similar
effect as a buyback. Of course a dividend increase would see a significant rise in the stock price
just like the buyback.
As to those whining about workers at-risk and executives with pay tied to the stock price –
they mention nothing about the fact that workers risked no capital and can head for the door whenever
they like, and that executives risked having part of their pay go to $0 in the event of an industry
or economic downturn, and locked them into staying at that company for a period of time (if they
leave, their options get taken away). The risk profile of a salaried worker and an executive are
far different – and hence their economic outcomes are rightfully different depending on the financial
performance of a company.
. . . Of course a dividend increase would see a significant rise in the stock price just
like the buyback.
Why is that almost never the option taken?
As to those whining about workers at-risk and executives with pay tied to the stock price
– they mention nothing about the fact that workers risked no capital and can head for the door
whenever they like, and that executives risked having part of their pay go to $0 in the event
of an industry or economic downturn . . .
In the event of an industry or economic downturn those workers risk all of their pay going
to $0
Your argument reminds me that a rich person has just as much right to sleep under the bridge
on a freezing night as the poor person.
Executives of publicly traded companies are not the owners, but act with impunity as if they
are, and they risked no capital either.
Do you guys live in the real world? The company hires (from among their friends) a CEO, COO,
whatever. These people are "granted stock options" ok, those stocks don't even exist so basically
they just dilute the holdings of everybody who was working there. After a few years they "cash
out" where money comes from basically the worker's pockets.
How's that for "shallow thinking"?
> that executives risked having part of their pay go to $0 in the event of an industry or economic
downturn, and locked them into staying at that company for a period of time (if they leave, their
options get taken away).
Sigh. How many links can NakCap readers come up with that shows that this is exactly what *doesn't*
happen. Lemme guess, Dwayne, economic major?
Why do share buy backs if growth prospects are dim?
Why not return the money as a special dividend or pay down debt?
I'd like to see share buyback proposal prefaced with a statement such as:
"We scoured the world looking for a suitable investment for our excess cash, there was no additional
business enhancing technology we could justify purchasing, no additional R&D into product development
we could justify, no additional investment in plant or equipment upgrades we could justify, no
additional training for our employees we could justify, no prepayment of debt we could justify,
no funding of university research we could justify."
"We don't see a way to use our excess cash to grow/improve our business".
"Surprisingly, from the global list of corporate securities we could find no financial security
that is at a more attractive price level than our own stock."
"So we are buying back our company's stock."
"Take our word for it, it will be a great investment for the future."
"Note: our senior executives will be exercising options but not holding onto their option purchased
stock."
"Personal financial diversification is important to them."
Excuse me, but isn't one of the main factors driving the buybacks contractual executive bonus
payouts?
As in, if the stock price increases by X%, the CEO gets a maximum bonus Y. The people in the
finance wing of these companies are simply solving for how many stocks they need to buyback in
order to achieve X. Because they can spend other people's money to meet that goal, there is no
technical or legal barrier to them doing this.
So, since we can't mandate more ethical and longer term thinking people become CEO's, can't
we put a rule into place that no one in the organization performing the buyback is allowed to
benefit from a buyback directly? That would make a buyback more like an option of last resort.
Which is what it should be, given how corrosive it is to future development of a company.
" Stock buybacks inevitably increase the value of the shares owned by top executives and
rich investors. "
While this is true as far as it goes, buybacks increase the value of ALL shares - including
the roughly one quarter of outstanding shares owned by pension plans.
Pension plans are an important asset of the middle class. Cut their investment returns, and
real people take a hit.
Jim's argument also applies to 401k and other defined-contribution plans, of course. You do
still have a point, though – a lot of people who are eligible for such plans can't contribute
to them because they don't have any surplus income to stash away – which is, of course, because
wages are too low .
It's called "talking one's book," and working whenever possible to keep the flow of discourse
going in the direction that supports one's wealth and interests
Goosing investment returns in the short term with buybacks to benefit stock-option insiders,
at the expense of underinvestment in productive measures like R&D and training, eventually leads
to corporate decline which does no favors for the few middle class people who still have pensions.
Buybacks increase the price of shares of stock, not the value. If a pension plan owns stock
which has been inflated by buy-backs, the dividends paid to the pension plan won't increase. The
only way that the pension plan can benefit is by selling the stock. Then the pension plan will
need to use the proceeds of the sale to buy something else. But if most companies are inflating
the price of their stocks with buy-backs, how does the pension plan find an appropriate stock
to buy? If they buy another inflated stock, the value of the pension plan is in the same place
as it was before it sold the previous stock.
It seems to me that buy-backs just cause a bubble. Short term "investors" such as executives
can benefit from the bubble, but long term investors such as pension plans aren't able to benefit
in that way.
It's a huge problem of principle agent. The other is that every dollar used to buy back for
the company is then one less available for capital costs, R&D, employee training, etc.
The overwhelming majority of the gains to investors will go to the wealthy as well. Workers
get nothing and often worse than nothing when their job security is under attack.
Things were a lot more straight forward in the 18th and 19th centuries and there was far less
complication to obscure the reality. In 18th and 19th century they had small state, raw capitalism
when there was little Government interference to cloud the issue.
The Corn Laws and Laissez-Faire, the requirements of free trade, a historical lesson:
"The Anti-Corn Law League was a successful political movement in Great Britain aimed at
the abolition of the unpopular Corn Laws, which protected landowners' interests by levying taxes
on imported wheat, thus raising the price of bread at a time when factory-owners were trying to
cut wages to be internationally competitive."
The landowners wanted to maintain their profit, charging a high price for corn, but this posed
a barrier to international free trade in making UK wage labour uncompetitive raising the cost
of living for workers and as a consequence, wages.
The anti-corn law league had to fight the vested interests of the landowners to get the UK
in a position where it could engage in free trade. They had to get the cost of living down to
a point where they could pay their workers internationally competitive wages.
Opposing national interests, productive industry and landowner rentiers.
It's always been that way, we just forgot.
Workers have been priced out of international markets by the high cost of living in the West
and now we try and tell them that is their fault. It is the elite who do not understand the first
thing about free trade unlike their 19th century predecessors.
The US has probably been the most successful in making its labour force internationally uncompetitive
with soaring costs of housing, healthcare and student loan repayments. These all have to be covered
by wages and US businesses are now squealing about the high minimum wage.
US investors and companies have little interest in investing in the US due to its high labour
costs caused by its own national rentier interests. There are opposing national interests within
the US just as there were in the UK in the 19th Century.
Most of the UK now dreams of giving up work and living off the "unearned" income from a BTL
portfolio, extracting the "earned" income of generation rent. The UK dream is to be like the idle
rich, rentier, living off "unearned" income and doing nothing productive.
The UK is itself atrocious and has encouraged rentier interests which oppose the interests
of those who want free trade. The UK is now ramping up student loans to make things worse. High
housing costs and student loan repayments will have to be covered by wages pricing UK labour out
of international markets.
Things were a lot more straight forward in the 18th and 19th centuries and there was far less
complication to obscure the reality. In 18th and 19th century they had small state, raw capitalism
when there was little Government interference to cloud the issue.
The Classical Economists observed the situation which was a lot more clear cut in those days.
The Classical Economists thought the cost of living must be kept low with free or subsidised housing,
education and healthcare funded through taxes on "unearned" income. "Earned" income shouldn't
be taxed as this raises the cost of doing business, real productive business that earns real wealth.
Imaginary wealth can be produced by inflating the value of a nations housing stock until the
bubble bursts and all the imaginary wealth disappears (e.g. US 2008, Japan 1989, Ireland, Spain,
etc ..).
Ditto all other financial assets.
The Classical Economists realised capitalism has two sides, the productive side where "earned"
income is generated the unproductive, parasitic side where "unearned" income is generated. The
vested interests of the two sides are opposed to each other.
If you forget you can made fundamental mistakes, like today's ideas on free trade.
Real wealth comes from the real economy where real products and services are traded. This involves
hard work which is something the financial sector is not interested in.
The financial sector is interested in imaginary wealth – the wealth effect.
They look for some existing asset they can inflate the price of, like the national housing
stock. They then pour money into this asset to create imaginary wealth, the bubble bursts and
all the imaginary wealth disappears.
1929 – US (margin lending into US stocks)
1989 – Japan (real estate)
2008 – US (real estate bubble leveraged up with derivatives for global contagion)
2010 – Ireland (real estate)
2012 – Spain (real estate)
2015 – China (margin lending into Chinese stocks)
Central Banks have now got in on the act with QE and have gone for an "inflate all financial
asset prices" strategy to generate a wealth effect (imaginary wealth). The bubble bursts and all
the imaginary wealth disappears.
The wealth effect – it's like real wealth but it's only temporary.
The markets are high but there is a lot of imaginary wealth there after all that QE. Get ready
for when the imaginary wealth starts to evaporate, its only temporary. Refer to the "fundamentals"
to gauge the imaginary wealth in the markets; it's what "fundamentals" are for.
Canadian, Australian, Swedish and Norwegian housing markets are full of imaginary wealth. Get
ready for when the imaginary wealth starts to evaporate, its only temporary. Refer to the "fundamentals"
to gauge the imaginary wealth in these housing markets; it's what "fundamentals" are for.
Remember when we were panicking about the Chinese stock markets falling last year?
Have a look at it on any web-site with the scale set to max. you can see the ridiculous bubble
as clear as day.
The Chinese stock markets were artificially inflated creating imaginary wealth in Chinese stocks,
it was only temporary and it evaporated.
Did the Chinese who used the "money" they got from inflation of stock prices to buy real estate
and other tangible assets, with that "money," continue to have legal ownership of said assets
after the market collapsed?
If they did, it's amazing how "wealth" gets created
I gave up TV 6 years ago and I am old. TV is awful for so many reasons. One of them is the
fact that it dictates lifestyle and values. I hate it for children.
Harlow is just using what I call the 3-legged stool approach which is to blunt any argument
by introducing rotating facets. You see it in arguments about the West Bank. If you mention Zionist,
they rebut with Israeli. If you say Israeli, they introduce Jewish. Round and round you go until
the point is lost.
Aside: I'd pay money to see Lambert yelling at a TV. The way he carves some people up on this
site makes my toes curl. No matter how much they deserve it, I feel really sorry for them.
Silver lining time. Without TV to emote to, my blood pressure is lower overall. This trade
off is very beneficial to me.
Also germane is that a hundred years ago, the cheap labour was pouring into America from offshore.
Now that population has stabilized, the labour is no longer as cheap, (it is still too cheap,
but,) in America. Companies are generally about the "bottom line." Socially conscious corporate
management is feted and lionized for a reason; it's rare.
Regulation and enforcement is the key. Buy local, shop local, govern local.
Yup. Unfortunately that can't be applied to the environment, where everybody is downstream
and downwind of everybody else. I don't believe in God, but if you do then you can claim that's
why he made planets spherical. :)
While I do have a tv I don't get CNN. Thank gawd. In fact the indignity of paying for CNN with
its inane announcers and endless commercial interruptions was a big motivator for "cutting the
cord."
Count me as another who doesn't have tv. The Jimmy Dore Show and various online videos make
up our viewing. In fact, it's difficult to read NC and other sites and then see the drivel that
passes for tv news. But just keep it up, guys (MSM); you're one of the main reasons we have a
huge alienated population of have-nots, and the unwashed masses are becoming restive.
The automation=job loss meme has been picked up in other places.
On the Saturday before the election, I visited the local Democratic headquarters in my Northern
California town to get a Clinton-Kaine bumper sticker for my collection.
As they wanted $1, I wanted to get some entertainment value from the purchase, so I asked one
of the elderly women "What has Hillary ever done?".
She responded with "Financial reform", apparently confusing HRC with Elizabeth Warren.
I mentioned that Hillary supported the TPP, until well into her campaign, and that trade bills
had cost jobs.
Her immediate response was "More jobs have been lost to automation than trade bills".
I was surprised she had this explanation at the ready, perhaps it was given to HRC campaign
workers as a talking point in case someone questioned HRC's commitment to stopping the TPP.
There is a meme being told from the people at the top, to the peasants.
Part of the answer is that it is reassuring for elites to believe that job loss stems from
complex "forces of production" that are far removed from human control. The inevitability of broad
economic trends makes a pundit sound more sophisticated than the unschooled factory worker who
thinks the company is moving to Mexico just because labor costs one-tenth as much.
The other day someone left a link to an article by an economist named Scott Sumner, where at
the end of his article the same meme is put forth, with a twist.
So what's all this really about? Perhaps the "feminization" of America. When farm work was
wiped out by automation, uneducated farmers generally found factory jobs in the city. Now factory
workers are being asked to transition to service sector jobs that have been traditionally seen
as "women's work". Even worse, the culture is pushing back against a lot of traditionally masculine
character traits (especially on campuses). The alt-right is overtly anti-feminist, and Trump ran
a consciously macho themed campaign. This all may seem to be about trade , but it's actually about
automation and low-skilled men who feel emasculated .
Unschooled and low skilled are code words for stupid, and the meme is, men that make stuff
are stupid.
Within his article is an interview of the CEO of United Technologies by Jim Cramer in Business
Insider that he quotes as confirming his reasoning that automation is solely responsible for all
the job loss and that offshoring and globalization caused zero manufacturing jobs to be lost in
the US.
The result of keeping the plant in Indiana open is a $16 million investment to drive down
the cost of production, so as to reduce the cost gap with operating in Mexico.
What does that mean? Automation. What does that mean? Fewer jobs, Hayes acknowledged.
From the transcript (emphasis added):
GREG HAYES: Right. Well, and again, if you think about what we talked about last week, we're
going to make a $16 million investment in that factory in Indianapolis to automate to drive the
cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with
lower cost of labor? No. But we will make that plant competitive just because we'll make the capital
investments there.
JIM CRAMER: Right.
GREG HAYES: But what that ultimately means is there will be fewer jobs .
The general theme here is something we've been writing about a lot at Business Insider. Yes,
low-skilled jobs are being lost to other countries, but they're also being lost to technology.
Everyone from liberal, Nobel-winning economist Paul Krugman to Republican Sen. Ben Sasse
has noted that technological developments are a bigger threat to American workers than trade.
Viktor Shvets, a strategist at Macquarie, has called it the "third industrial revolution."
Economists can't add. $16 million in investment, of real goods to improve productivity to the
point where air conditioner production in Indianapolis can compete with Mexican production cost
using existing technologies that are ripped off the shop floor and trucked to Mexico, itself creates
jobs, and the improved more highly automated plant still retains jobs here, along with the technology.
That $16 million investment happened only because Donald Trump either threatened or promised
something for United Technologies, but the number of jobs lost now are not solely due to moving
all production to Mexico, which would have been what happened had he not used his power of persuasion
to pry some money for investment out of the United Technologies bank account.
I wonder what Scott Sumner and the rest of the economists think of the women that work in manufacturing?
Are they stupid too?
In 1980 before the stock buyback era, the ratio of compensation between the top 100 CEOs
and the average worker was 45 to 1. Today it is a whopping 844 to 1. (The German CEO gap is
closer to 150 to 1.)
45 to 1, 150 to 1, 844 to 1 .it's all ridiculous. Just because you wear a suit and have your
own office to work in does not somehow entitle you to make as much in a year (or a month or a
week) as much as someone else does in a lifetime.
Stock buybacks are a problem of such proportions, that it is a subject all by itself. To connect
it to Germany's Industrial policy is a perfect example of ahistorical, faulty, unempirical analysis
at its worst leading to the politics of simpletons. The stock buybacks reference here are recent,
21st Century. The de-industrialization of the US goes back to the immediate post WWII policies
of corporate America as well as the US Government.
Germany's industrial policy has complex contributing factors which has a more important contributing
factor in its military expenditures. This of course is directly related to Germany's history.
It lost WWII and was an occupied territory, eventually split into an East And West Germany. For
many years, even as a NATO member, West Germany spent almost ZERO on military expenditures. This
comes with being an occupied nation that lost a war. Even today, the US Marine Corps alone has
a budget that exceeds all of the re-united Germany's military budget. Germany, for obvious historical
reasons has been deliberately suppressed as a military power, even in meager self defense, back
when a Soviet doppleganger was on its border. Of course, when the US Government stations on your
soil, almost 100,000 or more military personnel, armored tank divisions and US Air Force bases
for decades, you can avoid the cost of national defense.
----------
"German Chancellor Angela Merkel said on Saturday that Europe's largest economy would significantly
boost defense spending in the coming years to move towards the NATO target for member states to
spend 2 percent of their economic output on defense.
But Merkel, addressing a conference of the youth wing of her conservatives, did not specify
by how much defense spending would rise.
Merkel said U.S. President Barack Obama had told her it could no longer be the case that the
U.S. spends 3.4 percent of its gross domestic product (GDP) on security while Germany – its close
NATO ally – only spends 1.2 percent of GDP on that.
"To get from 1.2 percent to 2 percent, we need to increase it by a huge amount," Merkel said.
In 2016 Germany's budget for defense spending stands at 34.3 billion euros so it would need
to be increased by more than 20 billion euros to reach the 2 percent target."
And for decades, avoid the burden of military expenses it did, to the direct contribution to
its industrial manufacturing center. Chalmers Johnson reviews this critical aspect of America's
Hegemony since WWII in the course of several books. He was a CIA analyst as well academic economist
expert on Japan and China. The US economy suffered disinvestment in its tool and die and metal
working sector to the tune of over $7Trillion while building up the Pentagon into the Global Military
Hegemon that it is today. The platform of the manufacturing center dependent on tool and die to
make the parts of the machinery of factories and weapons of wars was in decline and overtaken
by the Japanese and the Germans. We outspent the Soviet Union and now the rest of the world by
staggering margins. But, to make and maintain the machinery of war, the Great American Killing
Machine, global bases and global industrial skills and equipment replaced the domestic. The US
Naval bases from Boston, Brooklyn, Philadelphia-founding locale of the US Navy and US Marine Corps,
Baltimore, and on and on, all gone. Replacing the base closures, Guam, Okinawa, Rota, Spain, Naples,
Italy Ramstein, Germany, and on and on. And Germany and Japan, played their roles to keep up American
military might in exchange for our nuclear umbrella and military protection. This to the detriment
of jobs in the US.
--------------------------
"After World War II, the US reduced defense spending to 7.2 percent of GDP by 1948, boosting it
to nearly 15 percent during the Korean War. During the height of the Cold War with the Soviet
Union US defense spending fluctuated at around 10 percent of GDP.
At the height of the Vietnam War in 1968 defense spending was 10 percent of GDP. But then it began
a rapid decline to 6 percent of GDP in the mid 1970s and hit a low of 5.5 percent of GDP in 1979
before beginning a large increase to 6.8 percent in 1986.
Starting in 1986 defense spending resumed its decline, bottoming out at 3.5 percent of GDP in
2001. After 2001, the US increased defense spending to a peak of 5.7 percent of GDP in 2010. It
is expected to reduce to 4.5 percent of GDP in 2015 and 3.8 percent by 2020."
For 20 years from the end of WWII, military expenses soaked up about 10% of the annual GNP.
Those amounts dwarf stock buy backs. As you can see from the excerpt above, the military bill
to the US is enormous and as a global military, much of this money is spent outside of the US,
employing people outside of the US, many who are not US citizens. As bad and as large as financialized
capitalism is, the jobs are lost more to wasteful military "Keynesianism". The 10s of $Trillions$
for most of the 2nd half of the 20th Century explains more than stock buybacks, which of course
are more than statistically significant, just not in the same league as Imperial America.
Automation, deindustrialization and run away factories together formed the basis for weakening
organized labor and reducing the amount of good paying working class jobs with their good benefits
and security. Job security comes in the form of unemployment benefits due to the boom/bust business
cycle that has factories operating on 2 or more shifts and then cut back due to saturation and
or slack demand. Mexicans thrown out of work are easier to deal with than unemployed Americans,
not only due to costs but also political fallout. Unemployed Americans can still vote congressmen
out of office every 24 months if they are that unhappy with the economy. You don't need a job
to vote. But alas, that is also another large scale problem, all by itself that deserves focused
analysis and comments.
Soooo it's back to blame the gub'ment and give Capital a pass, eh? I see what you did there
nice work. I particularly enjoyed your fantasy that unhappy workers can vote their congressperson
out every two years ' cause that's empirically true of the US political system.
All this stuff about 'automation' killing jobs is just a distraction. It's not happening, not
overall. That's why productivity figures are going down – they should be skyrocketing if automation
was to blame. The number of janitors and maids that have lost their jobs to a Roomba robotic vacuum
cleaner is zero. The number of truck drivers that have lost their jobs to robotic trucks is zero.
Shrimp are still flown to Malaysia, peeled by hand using slave labor, and then flown back, because
it's cheaper than developing and building and maintaining automated shrimp peeling machines. And
so on.
Why are the elites still so set on moving jobs to low wage countries? Why are they still so
set on an open-borders immigration policy? Because they know what they aren't telling us: right
now general robotics is still in its infancy, it's all about cheap labor.
So many otherwise rational and skeptical people have been distracted by the false 'robots are
now making human workers obsolete' meme. Congrats again on such a clearly reasoned piece.
The difference between German and US industrial manufacturing is social, not technological.
It only demonstrates that in the face of the displacement of labor with machines, social measures
are required to address the fact that a smaller percentage of total available labor is required
to produce the necessities of life. One way Germany has addressed this is by targeting high value-added
manufactures. In addition, historically manufacturing exports have always played a more important
part for Germany than for the US, never a big manufacturing exporter unlike (in the 19th C) Britain,
Germany, Japan and now China. US manufacturing was always primarily oriented towards the home
market, beginning with the Midwestern farmers and their McCormick reapers and Montgomery Wards
catalogs in the 19th C. The US has always been a primary products (oil, agri, timber, minerals)
exporter. Plus weapons. Kinda like Russia. Its two biggest trading partners are its continental
neighbors, Mexico and Canada.
The debate over whether job loss is due to automation or offshoring tends to be short on facts.
One almost never see a statistical breakdown that might tell us how much job losses are due to
one factor or another. That includes John Smith's "Imperialism in the Twenty-First Century: Globalization,
Super-exploitation and Capitalism's Final Crisis" (2016), quite big on off-shoring, but never
giving a concrete measure of the relative importance of one or the other.
However I put up a BLS-based chart that shows the decline in manufacturing jobs in the US in
a pretty diagonal straight line down beginning well before off-shoring became a thing, well before
NAFTA. Basically the manufacturing workforce peaked in the 50's. So there is always some pressure
through competition to displace labor with automation. Offshoring is merely a dependent alternative
to automation – reduce the labor bill with cheaper labor, not displacement. It's not "one or the
other".
Technological determinism aside, a fetish is made of automation in the media because they know
there is no answer that doesn't conclude with the elimination of capitalism, and that answer is
out of bounds. Hence it is deployed literally as a deus ex machina that ends social debate. But
clearly the question of a living income has become separated from that of productive labor.
One might say that manufacturing employment started declining, when we allowed non-reciprocal
"free-trade"; access to our markets, in order to enable some other geopolitical goal.
Going something like : "Sure, go ahead and let the Japanese and Germans export their cars to
our market. It will help their economies, and we'll never notice the difference. Besides, even
if they didn't have various ways of restricting our exports, the size of their markets aren't
worth exporting to "
Then in the 70-80s, it was "Sure, lets help all of our Allies develop an aerospace industry,
and build their own F-16s. "Offsets"? No problem. No sacrifice by US workers is too much in order
to fight the "Red Menace", and promote "Free Markets" "Democracy", and improve the standard of
living over there.."
Millions of jobs go to Mexico and millions of Mexicans come to usa and send their millions
in wages home to support their families. Meanwhile Politicians continue with Rectal Crainial Inversion
while drawing huge salaries. When will the revolution begin?
Class-hatred has been simmering in the U.S. throughout its entire history, and it manifests
itself today in the anti-Americanism of our greedy elites, who would prefer to profit from the
exploitation of foreign labor over living in a just and equitable society. Germany and Japan benefitted
from losing the War, from Cold War trade policies that allowed them to rebuild on exports to the
U.S. (subsidized in many cases, such as by container ships returning from Vietnam via Yokohama),
and the creation of a manufacturing culture that continued to value workers even as their wages
rose. Americans in the credentialed classes became obsessed with rock-star lifestyles, epitomized
by Slick Willie bragging that his first date with Hill in 1971 involved crossing a union picket
line to scab at the Yale Art Museum in order to gaze at a bunch of vacuous Rothkos. But watch
out - class-hatred is a two-way street
Chicken and egg, Lambert. Stock manipulation increases the power of the 1%. I also yell at
the TV "news" - probably because I didn't have one either between the critical developmental ages
of 18 and 23 - so "news" broadcasts are not allowed in my house.
It's not all roses and unicorns either in Germany. There is outsourcing going on as well –
for example both BMW and VW manufacture cars for the US market in the Southeastern US (IIRC both
in Spartanburg, SC).
Yes, Germany does have a better education system for apprentices etc plus it is still socially
acceptable to become an apprentice in a trade and not go to college. BMW is trying to establish
something similar around Spartanburg, but apparently with mixed success. Dan Rather did a segment
on this effort a few years back and interviewed a bunch of parents who said something along the
lines of "nice idea, but it's for other people's kids – ours have to go to college".
Another thing to keep in mind is that large German manufacturing companies still tend to have
pretty strong union representation, which of course is sorely missing in the US.
Two words missing from Union Reps and Wage Slaves ourselves as we flail away while falling
backwards, "SOCIAL CONTRACT." Our backwards free fall from stable middle class growth and
access and attainment to higher education has been precipitated and pushed by a broadcasting system
and cyber platforms that have excluded the VOICE OF WORKERS ever since the first newspaper carried
a BUSINESS section with no LABOR section.
Through the various historical attempts to insulate some small sliver of broadcast spectrum
from advertiser pressures and market forces. Those various historical attempts now the strictest
taboo on content, even stricter than sexual predation and violent aberration which comprise much
of the broadcast content. Yet when or where can we find a broadcaster in the U.S. addressing issues
of structural media reform to insulate some national resources from the POLITICAL E-CON-o-my that
grants them to the the highest bidder.
As media scholars Robert McChesney and John Nichols have pointed out in a number of their book-length
studies on this taboo U.S. history of mass media: One of the first national radio networks was
designated for LABOR, there were multiple EDUCATIONAL networks and this has nothing to do with
IDENTITY LABELS used to divide U.S. like Conservative or Liberal, however these shifty terms are
defined. A well-rounded human has both aspects and more within them depending on circumstance,
context and situation being addressed.
Another designated non-commercial broadcaster was the CATHOLIC CHURCH whose leaders were actively
concerned with the use of public airwaves by Advertising Agencies using sales tactics to habituate
dangerous past-times (like alcohol and tobacco) and were driven by seasonal fashions rather than
values and verities such as the bible and catechism's preponderant calls to address the needs
of society's most disadvantaged. Or to beat weapons into plowshares and sit under a fig tree and
reason together (Isaiah) rather than to use fear to keep subsidizing the worlds largest distributor
of weapons and its stealthy and steely profiteers.
Sad day when the few token representatives of U.S. Wage Slaves cannot even be counted on to
voice a DEMAND much less to insert the concept of SOCIAL CONTRACT that extended humane and practical
DEMAND-DRIVEN\SUPPLY LINE insights into our materialistic society's wealthiest distributors of
hate and divisiveness such as Henry Ford, who while stoking anti-Semitism and disparaging independently
organized labor for his MASS PRODUCTION facilities, eventually realized that if his impoverished
work-force was ever to constitute the potential internal markets that became the Post WW II envy
of the world, those workers would have to be paid more than slave wages, be granted access to
long-term capital to purchase big-ticket items and our growing internal markets within the lower
48 states would require careful regulation and controls like tariffs and capital-flight restrictions
that would protect our enviable internal markets. Nowadays whenever PROTECTIONISM is demonized
by both Fair & Balanced Journalists and their Golden Rolodex of E-CON and Bid-Net experts there
is nobody to note how our own late-developing working middle classes grew from the Age of the
Robber Barons in which the U.S. was as feudal a society as Europe's with simple substitution of
the Captains of Industry for the monopolistic and conservative royal Anglo and Euro monarchs whose
crown-chartered legal anti-trust fictions dba EAST INDIA TRADING COMPANY or HUDSON BAY TRADING
CORPORATION.
Our founders rebelled against these Conservative Royal Feudal Monarchs and their Royally Chartered
monopolistic Corporate Legal Fictions by dumping such product into every available cartel-controlled
mercantile harbor. PROTECTIONISM was what allowed our states to form that most enviable of internal
national markets and prevented our SOCIALLY CONTRACTED WORK FORCE from being forced to compete
against cheaper off-shore or south-of-the-border slave labor that formed the same COMPETITIVE
ADVANTAGE now taken for granted when a subsidized start-up like NIKE decides to pursue a business
model that relentlessly exploits North American running shoe and sports wear market needs by cheaply
manufacturing such products off-shore via contracting agents exploiting captive Indonesian (substitute
other Latin American, African or Asian ENTERPRISE aka FREE TRADE ZONES) slave laborers.
If we aren't worth hiring at a sustainable SOCIALLY CONTRACTED WAGE aimed at developing our
national resources, we should reject buying from such nationally suicidal business models and
corporate LLC fictions even if they can pay-2-play legislation that removes the PROTECTIONS. We
vow to never sacrifice NATIONAL SECURITY, so why have we allowed the PRIVATIZATION of our NATIONAL
SECURITY STATE by corporate legal fictions? A revealing if not all-encompassing historical answer
to that question is another corporate-captured and regulatory-captured Mass Media Taboo discussed
one time to my knowledge on the PEOPLE'S AIRWAVES. Search Bill Moyers panel discussing the LEWIS
POWELL MEMO TO THE NATIONAL CHAMBER OF COMMERCE and the Nixon appointment of LEWIS POWELL to the
Supreme Court, despite his total lack of judicial experience.
{Creative Commons Copyright}
Mitch Ritter Paradigm Shifters
Lay-Low Studios, Ore-Wa
Media Discussion List
FELTNER: These companies are leaving to exploit cheap labor. That's plain and simple. If
he can change those trade policies to keep those jobs here in America, that's what we need.
We need American jobs, not just union jobs.
And thus we circle back to finding a way to keep manufacturing jobs in the USA. The comment
by Feltner is correct, but the solution of keep jobs in the USA using more expensive labor simply
means more expensive products. That is fine if you are in the top 10% and can pay anything for
your purchases, but I am on a fixed income and cannot afford to pay more for anything without
a 1:1 drop in my living standards.
The real macroeconomic problem is all, I repeat – ALL – new income after inflation generated
by the macro economy since Bush II took office has gone to the top 10% of households by wealth.
Why does NOBODY else seem to understand that you cannot run an economy without money? And the
Main Street economy is strapped with 10's of millions having fallen out of the middle class even
as their paper assets like home equity were stolen by the financialization of the USA and the
stockholders that own the Wall Street economy.
The data coming out of the government/fed is a work of total fiction, inflation has been galloping
(at least here in Oregon) at double digits since Jan 2014, rents alone are up 75% since then.
Food at least 40%, both auto and healthcare insurance at least 40%, just to name three items,
even a sandwich at a fast food join is nearly 100% higher than start of 2014 here. Del Taco raised
it's menu prices in July by over 100%. Companies do not do that in disinflationary eras such as
we are assured have existed since 2010. My veteran's disability/SS had it's first COLA increase
in a while for 2017, social security disability went up $3, that is not a typo, my rent has gone
up from 725 in December 2013 to $1,250 in Jan 2017 while my benefit has risen for next year by
THREE dollars.
I considered myself middle class, just barely but above working class/poor, as recently as
2014. Now I am leaving for Australia on a one way ticket in 3 weeks, if I had not been invited
there by a friend I would have had to give notice at this place anyway in order to live in my
vehicle. Inflation is so wildly out of control that anyone taking home less than 40k a year here
now needs a roommate. Is this metro Portland? No, it is far southern semi rural Jackson county
hundreds of miles from the nearest major hub.
So any analysis of economic conditions in the USA have got to start with recognition that the
cost of living has risen OVERALL by as much as 40-50% just in the last very few years.
WHY DO YOU THINK POPULISM RAISED IT'S VIRULENT HEAD THIS ELECTION CYCLE?
People are angry, they are broke, living paycheck to paycheck, using payday loans to feed their
kids, and the entire media and government refuse to recognize price increases because those increases
do not fit the Feds or government's economic models that allowed for negative real interest rates
and the historic borrowing by the congress. Inflation is as bad as it ever was in the 1970's but
we are told there is no inflation and so if we are not making ends meet it simply has to be a
personal failing, bad habits, or profligate spending when I know for my part I have cut back on
absolutely every thing I can including heat. It is not a personal failing, it is being lied to
by the powers that be.
Seriously, until the contributors at Naked Capitalism finally recognize the house on fire inflation
for every item you must purchase (except gasoline and flat screens) there really is nothing here
worth reading.
The answer is that the very rich are waging class warfare and are looking for anything to absolve
them of responsibility.
If automation were responsible for unemployment, then productivity figures would be soaring.
Dean Baker notes that productivity has been rising at half the rate over the past decade at just
1.5% per year, compared to 3% between 1947 and 1973.
http://cepr.net/publications/op-eds-columns/the-job-killing-robot-myth
People need a restitution for the outright looting of society from the rich. That's about it.
You missed some. German companies, but also those of other European countries, generally have
a seat on the board for unions. The adversarial model of management versus unions is not so common.
China has stolen a great deal of technology from Germany because it has (had?) the most advanced
industrial technology in the world. Read the below articles from Der Spiegel and you will understand.
Essentially, Germany is what the U.S. was in the 1980s before the various presidents, both left
and right, starting with Nixon, sold us down the river.
– "Product Piracy Goes High-Tech: Nabbing Know-How in China"
– "Harmony and Ambition: China's Cut-Throat Railway Revolution"
– "Beijing's High-Tech Ambitions: The Dangers of Germany's Dependence on China"
And the following is from CNN/Money, "How to save U.S. manufacturing jobs": "High wages can't
be the culprit, because wages in U.S. manufacturing are not especially high by international standards.
As of 2009, 12 European countries plus Australia had higher average manufacturing wages than the
United States. Norway topped the list with an average manufacturing wage of $53.89 per hour, 60
percent above the U.S. average of $33.53 Moreover, the United States lost manufacturing jobs
at a faster rate since 2000 than several countries that paid manufacturing workers even more.
Among the 10 countries for which the Bureau of Labor Statistics tracks manufacturing employment,
Australia, France, Germany, Italy, the Netherlands and Sweden both had higher manufacturing wages
and lost smaller shares of their manufacturing employment than the United States between 2000
and 2010."
Not to mention Germany's apprentice system, which works really well.
"... Cahal Moran is a member of Rethinking Economics, the worldwide student movement to reform the teaching of economics. He is the co-author, with Joe Earle and Zach Ward-Perkins of the book ..."
"... The Econocracy: The Perils of Leaving Economics to the Experts ..."
"... the authors can be followed on their Twitter account ..."
"... @TheEconocracy ..."
"... . Interview conducted by Philip Pilkington, a macroeconomist working in asset management and author of the new book ..."
"... The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory ..."
"... . The views expressed in this interview are not those of his employer. ..."
"... In the book we give a formal definition of econocracy as "a society in which political goals are defined in terms of their effect on the economy, which is believed to be a distinct system with its own logic that requires experts to manage it. " ..."
"... Economists are wheeled out to comment on all sorts of public policy issues: in the news, on the TV, online and so forth. The deference to economic expertise is something that permeates our politics and, through the use of jargon, maths and statistics, serves to exclude non-expert citizens from conversations about issues that often have a direct impact on their lives. As you imply, it is something like an ancient priesthood. In fact, in an earlier draft of the book we made a comparison to ancient medical texts, which were only written in Latin and so created a huge asymmetry between experts and non-experts, which could have awful consequences for the latter. In some senses economics in modern times goes even further than this, because it affects policy on everything from incomes and jobs to healthcare and the environment. ..."
"... I suppose that leads us pretty tidily to the title of the second chapter of your book: 'Economics as Indoctrination'. Given that you have this view of economic language – one which I concur with in that I have concluded that maybe 60-80% of formal economic language is ideology – it pretty naturally follows that there will be some attempt to indoctrinate those who wish to speak the language. I guess the natural place to start is to ask you for a flavour of what this indoctrination looks like and then maybe we will move on to what its purposes are and what ends it serves. ..."
"... We call economics education indoctrination in the book not just because students are presented with only one set of ideas – neoclassical economics – but because they are taught to accept it in an uncritical manner, as if it is all there is to economics. ..."
"... Keynes said that the real challenge lies in escaping old ways of thinking, and this is something we've all noticed in ourselves after studying economics. ..."
"... This process is indeed the main way that the econocracy reproduces itself: as the economic experts of the present train the economic experts of the future, this shapes the way the latter approach economic problems when they go on to work at powerful institutions. Broadly speaking, this education shapes the perception of economic experts in two ways. Firstly, they tend to have mechanical view of the world, thinking of economic and social problems as clearly defined technical questions. This allows them to produce clear predictions when addressing even complex political issues. Secondly, they see economics as a separate, value-free sphere which does not require ethical and political debate. Their answers to policy questions have the air of objectivity about them. ..."
"... Economists predict disaster where none occurs. They deny the possibility of events that then happen. They oppose the most basic, decent, and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not re-examine their ideas. Instead, they simply change the subject. ..."
"... Making central banks independent from the political process, staffing them with economists and tasking them with using interest rates to manage inflation and growth, along with a fairly hands-off approach to the financial sector (which itself used economic models such as Black-Scholes) seemed to be working. That was, until the theoretical blind spots economists had in the housing market and financial sector was revealed by the near-collapse of both of them. ..."
"... I suppose this is a variant on the classic 'who governs the governors': who teaches the teachers. ..."
"... substantive ..."
"... If economics is to function as the medium of power than its students must be made to follow blindly. Critical thinking would allow them to undermine it or manipulate it to their own ends. ..."
"... The students must be made into strict adherents before being granted access to the highest levels of information. By erecting barriers at each level (be it specialized language that must be mastered or learning contigent on prior learning) we can separate the weak from the true adherents. ..."
"... Following Adler, economics is not a science, it's a philosophy. At least economics doesn't burn its heretics, it just ignores them. Science is neither immune. Gerald Pollack has written that he was advised to avoid water as a subject of inquiry, or it could kill his career. ..."
"... File under "the creative class" writers à la Toynbee ..."
"... When you think about it economics doesn't really exist. Society does. And when economics is talked about like society doesn't exist it gets pointless. Just like some stupid software language that does basically nothing. What we need is the courage of our human convictions. I think it was Blyth in an early clip who said more or less, "Just do it." Deficit spend as necessary and the solutions will appear. That's very Zen and I love it. I mean, here's the question, What is the worst that can happen? If there is sufficient money. Great interviewer and interviewee. Thanks NC for this post. ..."
"... "Economics doesn't really exist, society does": a super obvious statement that stands in starkest distinction to NeoLib ideology that insists we are all atomistic, isolated individuals. Math and language are epiphenomena to human being that have perverted our self perception nearly to oblivion. ..."
"... Interesting thing I heard the other day, Professor Richard Wolff says he studied economics at three elite universities (Yale, Harvard, and another notable I cannot remember) and never had a course in Karl Marx. Tunnel vision for sure in the field. ..."
"... Answer to question no 2: The jargon that is being used these days by presidents, economists, talk show hosts is beyond my understanding. I have a masters degree. ..."
"... An argot (English pronunciation: /ˈɑːrɡoʊ/; from French argot [aʁˈɡo] 'slang') is a secret language used by various groups-e.g., schoolmates, outlaws, colleagues, among many others-to prevent outsiders from understanding their conversations. The term argot is also used to refer to the informal specialized vocabulary from a particular field of study, occupation, or hobby, in which sense it overlaps with jargon. ..."
"... Is the economics profession simply following the "He who has the gold, makes the rules"? Many other professions service retail customers, such as attorneys and doctors. But how many ordinary citizens ever deal with an economist on any level? ..."
"... If paycheck dependent economists know that powerful politicians, wealthy corporate leaders and wealthy donors in academia are looking over their shoulders, one could expect economists' message to be justify what their "employers" want to do. ..."
"... "Keen was formerly an associate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university. ..."
"... You will eat, by and by, when you learn how to bake and how to fry. Chop some wood, It'll do ya good. And you'll eat in that sweet by and by. ..."
"... This interview articulates an extremely important insight when it states that the economy " is believed to be a distinct system with its own logic that requires experts to manage it." ..."
"... This seeming independence of the economic and political systems has largely deceived most of modern social science. This seeming independence is not real, and in fact these spheres are deeply intertwined. ..."
"... As people llike Karl Polyani and Philip Mirowski have maintained, markets are always organized through politics and institutions and one key to understanding this reality is to keep a focus on the promulgation of the rules and regulations of a powerful state that helps to create movements for both regulation and deregulation. ..."
"... It was notable that Cathal failed to mention Marx. I don't think he realizes yet quite how fully indoctrinated he's been – as that humdinger of an analogy (gay marriage – actually a redefinition to normalize surrogacy, a eugenics-by-stealth agenda, hence it's enormous funding by the plutocracy) indicates. The economic can never be separated from the socio-political. ..."
"... Mirowski describes how the "Neoliberal Economic thought collective" captured and now dominates economic doctrine by controlling what and who can publish in the major economic journals. As a result those aspects of Neoclassical Economics remaining are being re-shaped into a Neoliberal mold. I noticed the word "neoliberal" doesn't show up anywhere in this post yet Neoliberal economic policies and rationales dominate policy in the real world. ..."
"... Mirowski points out that Neoliberal economics designs policy to apply market models to every problem based on the doctrine that markets are the most powerful information processing system available to man - a strong form of the Efficient Markets Hypothesis. The Market is the ultimate epistemological device. If the market solution doesn't satisfy the needs of the common man then satisfying those needs is simply contrary to the wisdom of the market. For other problems like externalities they just need to be properly incorporated into the market model to obtain an optimal solution to whatever problem they present. ..."
"... . Putting fins and flashy hubcaps on Neoclassical economics as it morphs into Neoliberal economics is not the answer. ..."
"... The role of Economics is simple: it should inform people of the consequences of certain decisions we make about who gets what. ..."
"... You are right, that is what it should be, unfortunately neoclassical has failed horribly in that regard. It is based on assumptions that are demonstrably false and they are never revisited to see the effect of relaxing them. You might as well be counting angels on a pin. See Roamer's take down of it for starters. ..."
PP: Your book starts with a quote from Albert Camus that is, in some ways, rather pessimistic.
In it he says that most generations seek to reform the world but that his generation only sought
to ensure that the world does not destroy itself. You and I are both of the same generation broadly
speaking and I do not think it unfair that our generation is subject to some abuse and often portrayed
as narcissistic, video-game obsessed, layabouts. I have always felt that the 'problem generation'
are, in fact, the Baby Boomers who tag us with these clichés. It is this generation that rules the
world today and this generation that gave birth to The Econocracy. Before we get too much into what
The Econocracy is and how it operates, maybe you could briefly talk about this generational issue.
Is it something that you have given much thought to and do you identify more so with Camus' generation?
CM: We do not focus on the generational issue too much, but it is really at the heart of the book
and of the student movement more generally. Unlike the boomers, we have grown up in a world of economic
and political uncertainty, with the financial crisis being the most extreme example of this (yet).
The disconnect between this uncertainty and at times chaos and what we saw in the classroom really
sowed the seeds for societies like Post-Crash Economics. If the boom had simply continued, perhaps
we would have just shrugged our shoulders and got on with it. But we could not ignore what was going
on outside the lecture theatre. In this sense, Camus' feeling of a call of duty resonated with us
and that's why we chose that quote. However, we try to use this initial pessimism to build a positive
vision later on.
PP: Yeah, I know the feeling. It was very hard for me to not think that something was really,
really wrong with economics as I took undergraduate classes against the backdrop of the 2007-08 crisis.
For me there was a lot of cognitive dissonance. I found it really weird because it seemed to me pretty
obvious that economics was the language of power – the language through which our leaders communicated
their plans and goals to the rest of us. But what I was learning in class did not seem up to this
in any way, shape or form. I think that this is a theme in your book too. Could you explain what
you mean by 'The Econocracy' and how it functions?
CM: In the book we give a formal definition of econocracy as "a society in which political goals
are defined in terms of their effect on the economy, which is believed to be a distinct system with
its own logic that requires experts to manage it. " In other words, the idea of 'the
economy' as a separate sphere of life is dominant in politics, and this separate sphere has technical
properties which can only be understood through economic expertise. The results are twofold. First,
public debates about the economy are conducted in a language that most people simply do not speak
– we've tried to look at this this through undertaking polling with Yougov and one of the things
we found is that only 12% of respondents said they thought politicians and the media talk about economics
in an accessible language.
Second, many key areas of decision making – central banks, international institutions like the
IMF & World Bank, competition authorities – are delegated to people with economic expertise on the
grounds that they can find what is in some sense a technically 'right' answer to economic problems
in their respective domains. The rise of this idea of the economy is reflected in the increase in
mentions of 'the economy' in the winning UK political party's manifestos: it was only mentioned once,
for the first time, by the Conservatives in 1950, but 5 years later this rose to 10 and in the most
recent Conservative party manifesto 'the economy' was mentioned 59 times.
PP: I'm getting the sense that this goes beyond a simple criticism of technocracy and bureaucracy,
right? I mean a lot of aspects of society are run based on expertise of some sort or another. But
you seem to be getting at something else. Is this related to the fact that, like the Scholastics
of the Middle Ages, they have concocted an elite language?
CM: That's absolutely right. One could probably write a book critiquing the technocratic and bureaucratic
tendencies of say, lawyers or accountants, but where economics goes one step further is the place
it has in public debate. Economists are wheeled out to comment on all sorts of public policy issues:
in the news, on the TV, online and so forth. The deference to economic expertise is something that
permeates our politics and, through the use of jargon, maths and statistics, serves to exclude non-expert
citizens from conversations about issues that often have a direct impact on their lives. As you imply,
it is something like an ancient priesthood. In fact, in an earlier draft of the book we made a comparison
to ancient medical texts, which were only written in Latin and so created a huge asymmetry between
experts and non-experts, which could have awful consequences for the latter. In some senses economics
in modern times goes even further than this, because it affects policy on everything from incomes
and jobs to healthcare and the environment.
PP: Yes. I've also long thought this. My book is actually about trying to figure out what is pure
ideology and mysticism and what is not within the jargon. I suppose that leads us pretty tidily to
the title of the second chapter of your book: 'Economics as Indoctrination'. Given that you have
this view of economic language – one which I concur with in that I have concluded that maybe 60-80%
of formal economic language is ideology – it pretty naturally follows that there will be some attempt
to indoctrinate those who wish to speak the language. I guess the natural place to start is to ask
you for a flavour of what this indoctrination looks like and then maybe we will move on to what its
purposes are and what ends it serves.
CM: It sounds like there's some crossover between our books, and this is something I've noticed
with people across the movement. It's great that so many people are independently coming to similar
ideas and, I think, a sign that we may just have a point.
We call economics education indoctrination in the book not just because students are presented
with only one set of ideas – neoclassical economics – but because they are taught to accept it in
an uncritical manner, as if it is all there is to economics. The idea that there might be criticisms
of neoclassical economics, other schools of thought, and even the real world are evicted to such
an extent that after a while students may find it difficult to think any other way. Keynes
said that the real challenge lies in escaping old ways of thinking, and this is something we've all
noticed in ourselves after studying economics.
PP: I'd tend to agree. But what I found very interesting about the book was that you looked at
how economics education is structured. You paint the picture of a very odd discipline that does not
appear to be taught like other disciplines, whether natural or social science. Do you think that
there is something distinctly different in this regard and could you describe it briefly?
CM: Economics is definitely a law unto itself. In natural sciences, the culture is very much focused
on the empirics: theory has empirical motivations, and you always come back to falsifiable predictions
before too long. In other social sciences, the culture is instead focused on debate and the contested
nature of knowledge. You learn not to take any of your beliefs for granted. But entering an economics
degree feels a bit like being transported to another universe. Students are introduced to a fixed
body of knowledge that is presented as if – in the words of one student – it "fell from heaven in
an ever-true form". The focus is very much on learning this body of knowledge by rote, building up
the neoclassical world from abstract axioms and solving mathematical problems with at best vague
and stylised references to the real world they are supposed to represent. The commonly used phrase
'thinking like an economist' really captures the effort to indoctrinate students into this framework.
We did a curriculum review of the final exams and course outlines of 174 modules at 7 Russell
Group universities (considered the 'elite' of the UK) to look systematically into how economics students
are educated. Our main aim was to look for evidence of critical thinking, pluralism and real world
application, all of which we would consider vital to educating the experts of the future. The results
were deeply worrying: 76% of final exam questions showed no evidence of critical thinking – that
is, formulating an independent, reasoned argument. When only compulsory modules (namely micro and
macroeconomics) were included, this figure increased to a staggering 92%. Instead, the majority of
marks are given for what we call 'operate a model' questions: working through a model mathematically
without asking questions about its applicability. Of those questions which ask students to operate
a model, only 3% even attempted a link to the real world. The remainder of the marks were given for
simple description questions ('what is the Friedman k% rule?') or multiple choice questions, again
neither of which require any critical thinking. All of this is very worrying when you consider the
place economic expertise has in society.
PP: It is really very concerning. Although I would imagine that anyone who has actually taken
an economics class – as many of the educated public have at some time or other – will not be surprised
at what you have found. If you are correct then it seems to logically follow that the experts of
the future are being trained to think in a highly abstract manner but that these abstractions need
no link to the real world as it exists. What is more, if they are only being given one perspective
and are told that this perspective is as true and infallible as the most rigorous of the sciences
you are going to get a very high level of confidence in these abstractions by these experts. Have
you thought about what this means when these people flow into the elite institutions that control
important aspects of our societies? How do you think that it informs and shapes their judgements
and what implications do you think this has for the rest of us?
CM: This process is indeed the main way that the econocracy reproduces itself: as the economic
experts of the present train the economic experts of the future, this shapes the way the latter approach
economic problems when they go on to work at powerful institutions. Broadly speaking, this education
shapes the perception of economic experts in two ways. Firstly, they tend to have mechanical view
of the world, thinking of economic and social problems as clearly defined technical questions. This
allows them to produce clear predictions when addressing even complex political issues. Secondly,
they see economics as a separate, value-free sphere which does not require ethical and political
debate. Their answers to policy questions have the air of objectivity about them.
To make things more concrete consider cost-benefit analysis, an idea with its roots in economics
that's used extensively by major institutions like the Government Economic Service in the UK. This
calculates the 'costs' and 'benefits' of different policies by assigning a monetary value to each
of them, then provides a clear decision rule: if the benefits outweigh the costs, the policy is a
good one. Cost-benefit analysis is used even when the effects of a policy are not obviously monetary,
such as the number of trees in an area, or mortality rates, transforming what was a multifaceted
problem into a simple, seemingly objective mathematical problem. The result of this is that decisions
which could concern a large range of stakeholders are made in a centralised manner behind closed
doors, often without the consultation of these stakeholders (except in order to retrieve money values
from them, which raises problems in itself).
PP: Right. I see what you mean. So this goes far beyond, say, the blindnesses in the theories
that led to, say, economists largely missing the crisis and thinking, to quote Blanchard, that
the "state of macro was good" even in the face of such problems. Have you given any consideration
to these facts in the book? James Galbraith has a great quote where he says that:
Economists predict disaster where none occurs. They deny the possibility of events that then
happen. They oppose the most basic, decent, and sensible reforms, while offering placebos instead.
They are always surprised when something untoward (like a recession) actually occurs. And when
finally they sense that some position cannot be sustained, they do not re-examine their ideas.
Instead, they simply change the subject.
That seems to be another angle by which you might criticise the profession: namely, that they're
not actually very good at what they claim to be specialists in. Do you and your co-authors have anything
to say about that?
CM: Exactly – economics permeates our political process, from seemingly small examples like cost-benefit
analysis to catastrophic events such as the financial crisis. We open the book with the former but
later on we move on to several case studies of the latter, including the financial crisis but also
broadening our argument to other areas where we think neoclassical economics falls short, like the
environment and inequality. The kind of hubris illustrated by economists like Blanchard – as well
as Robert Lucas when he claimed "the central problem of depression prevention had been solved" in
2003 – seems quite remarkable to us now, but economists really had convinced themselves that they'd
found a simple, technical solution to the business cycle. Making central banks independent from the
political process, staffing them with economists and tasking them with using interest rates to manage
inflation and growth, along with a fairly hands-off approach to the financial sector (which itself
used economic models such as Black-Scholes) seemed to be working. That was, until the theoretical
blind spots economists had in the housing market and financial sector was revealed by the near-collapse
of both of them.
Quite clearly, the profession has yet to find definitive answers to major economic questions like
'what causes financial crises?' This is completely understandable in itself, as these are difficult
questions. But the fact that the profession also has the capacity to convince not only itself but
policymakers and politicians that it has solved these problems, and therefore
that its ideas should guide public policy, is extremely worrying when it can have such terrible consequences
for so many people. And it is worth mentioning those non-neoclassical economists – like Hyman Minsky,
Wynne Godley, and Steve Keen – who put the financial sector front and centre of their analysis and
made sometimes prescient warnings about crises like the one we've just experienced. Given these examples,
it actually puzzles and saddens me that the profession is not willing to accept more intellectual
diversity. Galbraith's quote touches on this intellectual inertia, and one of the things we discuss
in the book is macroeconomists' attempts to reassert themselves since the financial crisis, some
of which have involved some impressive mental gymnastics. One example is Tom Sargent denying altogether
that macroeconomists failed to foresee the crisis, which is ironic because he wrote a paper just
before the crisis arguing that investors weren't taking enough risk due to their memories of the
Great Depression. This kind of retrospective rewriting of history has to be fought if economics is
not to slip back into old habits.
PP: The mental contortions are absolutely fascinating. I've noticed three key trends in the profession
since the crisis. The first is to talk more about a phenomenon that mainstream economists call 'rational
bubbles'. I mean RATIONAL bubbles. That is manifestly a doublethink word, not unlike Orwell's blackwhite.
The second is to add Bayesian agents into economics models and saying that this will ensure that
these models are robust in future (an absurd claim given the backward-looking nature of Bayesian
agents). Bayesian agents, of course, update their beliefs in line with past events - not a bad allegory
for the how the modellers see themselves! The final, and most pronounced, is to try to sweep under
the carpet the fact that the Efficient Markets Hypothesis makes falsifiable (and falsified!) claims
that markets integrate all relevant information and instead try to draw attention to the fact that
it also states that no one can beat the markets. The idea seems to be to maintain the theory by saying
that it doesn't say what it in fact says and drawing attention to a secondary prediction that it
makes. What do you make of this sorry, but I have to say it dishonesty? And do you think that the
next generation are by and large swallowing it?
CM: I think the issue is that many economists are stuck in their ways. It's clear these economists
have been doing economics a certain way, using a certain framework, for their entire lives, so it's
perhaps unsurprising that they can't think any other way. Max Planck said that science advances one
funeral at a time, but the especially worrying thing given the research we've done for the book is
that the next generation of economic experts are being trained to think in the exact same way. In
fact, evidence we present suggests that economics education has actually become more, not less narrow
over the past few decades, so if things don't change the situation could get even worse in the future.
And as I mentioned earlier, that's nothing against economics students themselves – they have exams
to pass, and aren't really given much opportunity to read around and question what they're taught.
The positive thing is that we are seeing these student groups spring up across the world who are
all recognising the limitations of their education: the lack of pluralism, critical thinking and
empiricism come up again and again in students' complaints. What's more is that we have support from
big institutions like the Bank of England, Trade Union Congress and Government Economic Service,
who have voiced similar concerns. If you look at things like the movement for gay marriage in the
United States, it's clear the politicians were the last to change – when every other sector of civil
society had been convinced and they had no choice. Perhaps if change comes to economics, academia
will be the last to change – when everyone else demands it.
PP: But surely this is somewhat different from a political issue like gay marriage. Political
issues have to do with changing peoples' opinions on some matter or other. That just means putting
forward a persuasive argument and then waiting for it to get accepted. What we are dealing with seems
like something rather different. Sure, you could convince many that some change needs to come about
in the way economics is taught. But that does not produce the means by which to teach it. I think
that we saw what happens there with Wendy Carlin's CORE program (an INET-funded attempt at curriculum
reform). This was the economists' response to demands for a more integrated and pluralistic course
but I saw it - and I think the student movement saw it - as more of the same. Yet I have no doubt
that Carlin really did her best to put together something that she thought would address the concerns
being raised. The problem is that Carlin et al cannot actually put together something that meets
the concerns. I suppose this is a variant on the classic 'who governs the governors': who teaches
the teachers.
CM: You are absolutely right about that and the example of CORE is a good one, as it demonstrates
perfectly the type of limited reform which can serve as a safety valve against more radical opposition.
Carlin and CORE's other proponents view the problem as one with economics education, but not economics
itself – she has previously stated that "economics explains our world, economics degrees don't".
Interestingly, this rhetoric is similar to the response to calls for reform in economics graduate
programs in the US in the 1980s, where the need for more real world application was accepted but
it was argued that programs should retain the "core [which] should be regarded as the basic unit
in which those things common to all economists should be taught". We repeatedly see this disconnect
between the critic's idea of reform and the mainstream's, cemented by the fact that many neoclassical
economists simply do not know enough about non-neoclassical ideas to teach them. It is a vicious
circle which is inevitably going to reproduce a fundamentally similar education, even if some internal
attempts at reform are made along the way.
Thus in CORE the calls for history, real world applications and interdisciplinarity are all, to
some degree accepted (even if they are not pursued adequately), while the calls for pluralism and
critical thinking are not. The resulting education is perhaps an improvement, but the outcome is
similar: instead of saying 'here is neoclassical economics, learn and then (maybe) apply it', the
message of CORE is 'here is the real world, here is how neoclassical economics applies to it'. Once
more, the idea that the theory and even the history itself might be contested is thrown out of the
window and the result is still a narrow education. In fact, we reviewed the University College London
exams for the CORE course and found that they showed a slight increase in critical thinking, but
were still primarily about regurgitating models and theories. The need for pluralism is made especially
apparent here, as learning about alternative ideas immediately makes students re-evaluate what they
have already been taught. Students need to know more than one set of ideas if they are to judge which
ideas are best suited to explaining a particular situation.
PP: My impression from the book – and please, correct me if I'm wrong – is that you want to bypass
this structural constraint by making economics more democratically accessible. Personally, I think
that there is a lot of merit to this idea. In my book, as I said, I try to present an ideology-neutral
economics – which I think can be done to some limited extent – and what you find with such an economics
is that many different worlds are possible. Economics in this regard can be a helpful guide but it
cannot tell you much about where you want to go. For this reason I would much prefer to see more
democratic input on economic decision-making and much less pontifications from an over-heavy technocracy.
That said, however, economics is still a relatively difficult subject. It cannot be picked up without
some commitment to study it. How do you square this circle – by which I mean, how do you try to increase
the accessibility of economics without watering it down so much that it becomes analytically dysfunctional?
And a cheeky, but related question: in the book you rightly draw attention to the fact that economics
jargon is over represented in political discourse – how do you ensure that you are not increasing
the volume and weight of this jargon through attempts at popularisation?
CM: We definitely view the democratisation of economics as a necessary part of the renewal of
the discipline and indeed of politics, but your conception of it as a strategic way to bypass the
inertia of the discipline is an interesting idea and something I hadn't thought of explicitly. I
suppose this goes back to what I was saying about bottom-up approaches to reform and the value of
demanding change from different angles. Unfortunately and as we've seen, one of the main response
to Brexit and Trump by elites has simply been to view those who vote for it as ignorant or bigoted.
The simple fact is that many peoples' lived experience of 'the economy' is completely different to
the top-down, statistical and theoretical views of economists and pundits. Many have experienced
huge shifts and declines in their circumstances for decades, neither of which are obvious if you
only look at GDP and inflation statistics, or (worse) if you are completely lost in theory.
In the book we introduce the idea of the public interest economist, who has socially aware research
topics, a commitment to public engagement and education, and who looks to hold powerful public and
private institutions to account. Reconnecting economic experts with the public in this way would
be a great way to temper the former's technocratic, top-down tendencies and encourage the experts
to understand that people may have different, valid views to them – and this is a gateway to appreciating
other approaches more generally. Of course, this doesn't eliminate the need for expertise altogether:
our intuition can only go so far, and some things can only be revealed by systematic and empirical
study. Economics is difficult, as you point out. But a world in which economic experts are in touch
with and can be questioned by the public is one where economic expertise will naturally be more responsive
to the needs of said public. We sum it up by saying that we want experts to inform our decisions,
but not necessarily to make them for us.
Illustrating the magnitude of the challenge you raise about teaching economics without jargon,
I'm going to have to introduce some jargon. In the book we distinguish between formal
literacy, where people are taught a fixed body of knowledge; and substantive
literacy, where people are encouraged to question the subject matter and form their own independent
views. This is the basis for the other pillar of our proposals: citizen economists, non-experts who
nevertheless have some baseline level of substantive literacy and are able to engage in economic
debates. The starting point for citizen economics is to make connections between peoples' own lives
and broader economic problems, encouraging their own input from the start. And an important part
of being a citizen economist is not to accept the seeming authority bestowed by the use of jargon
and to ask experts to say what they mean in plain language. As a student movement we have already
started to put this into practice with citizens' crash courses (evening classes for adults), schools
workshops, the public education website ecnmy.org and by supporting the RSA's
Citizens' Economic Council, which is seeking to establish more democratic input into economic policy.
PP: Yeah, I think I see what you're saying. Anyway, I suppose we should wrap this up as it's pretty
long already. Where do you see this whole thing going from here? Are you optimistic about the future,
both in terms of opening up the discipline and in terms of fixing the incredibly serious economic
problems that have emerged in the past 30 years?
CM: I am cautiously optimistic about the future, as I think in many ways the debate has been won
over whether economics should change – the question is now what form this change should take. On
top of changes we have already discussed such as CORE and the position of the Bank of England, we
have seen the ESRC put aside a large pot of money for research in new ideas in macroeconomics (the
question is whether this money will be used to support CORE type research or more diverse and radical
ideas); Manchester council involving citizens more in the decision-making process; the director of
the IFS, Paul Johnson, admitting economists' failure to communicate during Brexit; and many more
emerging examples that the message is getting across to various sections of civil society. More must
certainly be done and it is up to everyone to make sure that the changes are fundamental rather than
incremental, but in my eyes it is starting to look possible that economics will evolve from an insular
and esoteric discipline into a vibrant, pluralistic public dialogue – and we think that can only
be a good thing
"In other social sciences, the culture is instead focused on debate and the contested nature
of knowledge. You learn not to take any of your beliefs for granted. But entering an economics
degree feels a bit like being transported to another universe. Students are introduced to a
fixed body of knowledge that is presented as if – in the words of one student – it "fell from
heaven in an ever-true form"."
How on earth did this happen?? Was the teaching of economics always this way? Or did something
happen at some point along the way (say, the influence of a particular school of thought, etc.)
to create a static curriculum where critical thinking is so undervalued?
"The deference to economic expertise is something that permeates our politics and, through
the use of jargon, maths and statistics, serves to exclude non-expert citizens from conversations
about issues that often have a direct impact on their lives."
Doesn't this sound exactly like the Clinton campaign? Technocrats all, who say to people like
me, "Trust us. We're the EXPERTS. Don't even try to stretch your silly little brains. We know
what's best."
If economics is to function as the medium of power than its students must be made to follow
blindly. Critical thinking would allow them to undermine it or manipulate it to their own ends.
The students must be made into strict adherents before being granted access to the highest
levels of information. By erecting barriers at each level (be it specialized language that must
be mastered or learning contigent on prior learning) we can separate the weak from the true adherents.
Following Adler, economics is not a science, it's a philosophy. At least economics doesn't burn its heretics, it just ignores them. Science is neither immune.
Gerald Pollack has written that he was advised to avoid water as a subject of inquiry, or it could
kill his career.
This article highlights why I take what positions Naked Capitalism assert seriously. For instance
getting input from Clive about the difficulty of the mechanics of Greece leaving the Euro. Or
Yves, having knowledge from her father's work about solving problems in the real world. This problem
is not just limited to economics. To get a Phd one must basically agree to what you have been
taught. To get published one must undergo peer review by people who almost always believe the
current mainstream ideas in that field. Remember how the nutrition experts told you margarine
was good for you – butter and eggs were bad. Climate science is a good example. Reliance on models
that can never be complete. In almost every conversation I have had as a climate skeptic, the
strongest believers in the alarmist position rely not on their own understanding but that of experts.
And those experts who are alarmist rely almost entirely on computer modeling results to buttress
their position. In fact, as a skeptic I could almost rewrite the above article using climate science.
In your own mind, try that. As a generalist (non climate scientist) I can read and understand
most climate papers if I take the time to learn and understand the jargon as every subfield has
its own. it does take a good while with considerable effort. Climate science proclaims to know
with certainty what the climate future holds so they should be the experts on public policy that
will affect the lives of everyone in the world. "The totally convinced and the totally stupid
have too much in common for the resemblance to be accidental." Robert Anton Wilson
Economists writing about climate change purport to define the optimal reduction in greenhouse
gases by tallying up the avoided damage, or the benefit in the cost-benefit analysis, then saying
that costs of emission reduction should go no higher than this benefit. Not sure if they are still
doing this, but in the past they used the ethically questionable and benefit-lessening assumption
that lives in poor countries, where most people would die, should be valued much less than lives
in rich countries. Worse, the entire exercise is absurd because the result of the calculation
is an emissions reduction that could have no effect on the climate, because emissions don't have
a simple effect as with traditional air pollutants for which the analysis was initially developed.
As a generalist who works for and with a climate scientist who is at the forefront of his field
I am not able to understand essential details of most of his papers because he and his co-authors
are in fact physicists and their analyses involve substantially more than modest calculus. Furthermore
neither he nor any other of his colleagues whose work I am exposed to have proclaimed that they
"know" what the future holds.
At the UI and when I was at Michigan, they simply don't. Anything remotely like that would
be taught in the History department, and then mostly for History grad students.
At Cambridge University it was a compulsory course representing 25% of the first year curriculum
(this was 1991-92). No idea if it has been downsized since then but given the "new blood" I remember
entering the faculty I am pessimistic.
I have to agree that when I studied economics, it was theory and barely any practical exercises.
Lots of maximization and other But I never took this as gospel. I understood that all these economic models were a product
of their time. A framework that would be adapted by those in power to fit their needs.
When my son was born with a disability, I had to turn many 15 minute errands into 2 hour adventures.
It became even more evident that efficiency is relative What are we really maximizing anyway?
THAT is the key question.
I guess many graduate without any critical thinking. But I tend to think that many graduates
of economics like the way the world is set and feel no compulsion to change it.
yes, absolutely. If it is good public policy do it. When you think about it economics doesn't
really exist. Society does. And when economics is talked about like society doesn't exist it gets
pointless. Just like some stupid software language that does basically nothing. What we need is
the courage of our human convictions. I think it was Blyth in an early clip who said more or less,
"Just do it." Deficit spend as necessary and the solutions will appear. That's very Zen and I
love it. I mean, here's the question, What is the worst that can happen? If there is sufficient
money. Great interviewer and interviewee. Thanks NC for this post.
"Economics doesn't really exist, society does": a super obvious statement that stands in starkest
distinction to NeoLib ideology that insists we are all atomistic, isolated individuals. Math and
language are epiphenomena to human being that have perverted our self perception nearly to oblivion.
Bayes allows an entry to qualifying bias and uncertainty in conditional probabilities (tree
diagrams). It allows an indication that the source is b.s., which is currently relevant.
It's unnecessary in terms of fudging models, we've been quite capable of that without Bayesian
modifiers.
The most important bias his theorem clarifies concerns false positives, for example if a drug
test is 95% accurate it can still be wrong more than half the time on a positive response.
Economics wil never progress until it has a clearer grasp on the phenomenon of money. Until
they do it's the same old GIGO using Newtonian metaphors prettied up with math (or let us say
"arithmetic", since it's just basic calculus, linear algebra or probability/statistics).
Not to be demeaning toward Eigenvectors and matrix theory. It's amazing how recent that was
in the history of math - I mean all the way back to the Greeks, Pythagoras, Archimedes, etc. It's
like it's still brand new!
However, you could say a drawing by Rembrandt is just "basic pen and ink". Indeed on one level
it is. On another level it's an entire self-consistent and revelatory conceptualization of infinite
physical reality. That's the kind of holistic and syntheticistic ideation that economics sorely
lacks.
Not only does it lack this, but the economists don't even know it's there!
whoa you guys rock! that was faster than a New Yoarke minite. Whoa Yves would be proud. I hope
you get a bonus! maybe a few million dollars.
They're not this fast in Denver. That's for sure. All those TV people and all that money they
have and they fkk something up so bad they have to apologize. Wow. that really is screwing up.
Not only that, They're stilll pointing a camera straight at a scene and failing to use cinematic
story telling techniques invented , oh, 80 or 90 years ago!
There should be awards for excellence in fake news. The best fake news is news that's true
in the most profound and highest sense of reality. it's news that captures a truth reality only
approximates. It's hard to avoid Plato even when you try. I didn't mention him, OK? he's just
there. He's usually there, but if you mention him every time it gets boring.
The WaPo is an example of largely fake news written and published by individuals who don't
realize what's true and what's fake. You'd like to think they qualify for a fake news award, given
the fakeiness of what they write (except Redskins coverage which is very good, they have some
good spowtswriters for sure), but they don't because they think they're writing real news. That
should be embarrasing.
Well then, how would somebody advise them to better distinguish fake news from real news? Well,
how does a hawk know what to do to hunt rodents? There's no hawk scientist or hawk school or hawk
instruction manual. they can't even read! But they know exactly what to do. It's like that. Everybody
knows but they pretend to themselves they don't know. That's when the faking starts,
[T]he irony is that for many upper-middle-class white gay men, the argument became that
legal and economic (yes, economic) privileges of marriage were being denied. Fortunately, many
people were able to keep the focus on equality and equal protection of the law, which is political
argument.
On the one hand, yes, absolutely, and it remains a point of contention to this day in the gay
community that the one major victory in recent memory was perfectly amenable to a patriarchal,
capitalist order. People like David Brock and what have you, who saw gay liberation not as a means
to transform society, which is the purpose for which the GLF was created, but rather as a means
to help people like themselves become elites like anyone else.
On the other hand, and perhaps it's just the vulgar Marxist in me, but I recoil at the notion
of separating economics from politics. This is why the phrase political economy even exists, to
represent the notion that all decisions regarding distribution of resources are inherently political.
I find it symptomatic of how entirely defanged class rhetoric is in the US (though the interviewee
is British, I presume) that even the well meaning and critical thinking among us can get away
with pretending that "economics" can somehow be sequestered from political decisions.
I realize that's not the point you're making, but there are moments in the interview when the
subject moves in that direction. As for statistics, Mark Twain reminds us there are three kinds
of lies: lies, damned lies, and statistics–or, as my spouse is fond of saying, "70% of all statistics
are made up."
One place where social needs interfere with monetary policy, aka economics, is deficit spending
wherein the underlying economy is not keeping up (because of economic malpractice usually). So
that's a conflict against the oligarchy because they prevented the necessary jobs and so makes
their money worth less. So, depending which side you are on, politics should have a say (force
the government not to devalue the currency by inflation/deficit spending without a proper economy)
or politics should serve the chronically neglected needs of the general public regardless of preliminary
"inflation" – the inflation here is the most dreaded form of inflation for the rich, of course,
wage inflation. I think the term 'wage inflation' qualifies as an oxymoron, but that's just me.
probably an apocryphal story;
so a guy is playing regularly in a rigged poker game. a friend asked him, "why do you play, you
know they're cheating you"? the guy shrugs, and replies "i don't have a choice, it's the only
game in town".
Interesting thing I heard the other day, Professor Richard Wolff says he studied economics
at three elite universities (Yale, Harvard, and another notable I cannot remember) and never had
a course in Karl Marx. Tunnel vision for sure in the field.
Yikes. I remember being taught Marx in the early 90s . But that was Cambridge ;-) and it was
clearly a dying course as they were struggling to find faculty members.
As one who is well past university age, I am excited to hear that those in the Millenial generation
are organizing this movement. The (intentional?) failure of K-12 education to develop critical
thinking skills and focus solely on standardized testing of fact knowledge has been deeply upsetting
to me as a parent. To see that others have made it through our education system with a well developed
BS detector and are not afraid to use it is welcome news.
I look forward to reading your books!
Answer to question no 2: The jargon that is being used these days by presidents, economists,
talk show hosts is beyond my understanding. I have a masters degree.
I believe Trump gained some
supporters who were angry about the disconnect with the way they talk and the way they needed
to be talked to. Simple language has its own good. That is what Trump did. Trump is just not a
person. There is more to Trump that what it is. He proved so many of these experts wrong and bought
back the simple language and easy straight talk to the forefront. Saying wrong things is attractive
to me. More people relate to Trump in ways that he can say bad things. I relate to him because
we say bad things in our every day life. We go about having a conversation after to correct them.
Its that simple.
After all we are all human beings with little better instincts and rational than animals. Just
because few people can speak politically correct, few can dress like they are supposed to doesn't
mean that every one has to conform. I am excited to read this book.
An argot
(English pronunciation: /ˈɑːrɡoʊ/; from French argot [aʁˈɡo] 'slang') is a secret language used
by various groups-e.g., schoolmates, outlaws, colleagues, among many others-to prevent outsiders
from understanding their conversations. The term argot is also used to refer to the informal specialized
vocabulary from a particular field of study, occupation, or hobby, in which sense it overlaps
with jargon.
Is the economics profession simply following the "He who has the gold, makes the rules"?
Many other professions service retail customers, such as attorneys and doctors. But how many ordinary citizens ever deal with an economist on any level?
While there may be some economists attached to labor unions, for the most part economists are
employed by government, the financial industry, academia or the media.
If paycheck dependent economists know that powerful politicians, wealthy corporate leaders
and wealthy donors in academia are looking over their shoulders, one could expect economists'
message to be justify what their "employers" want to do.
"Keen was formerly an associate professor of economics at University of Western Sydney, until
he applied for voluntary redundancy in 2013, due to the closure of the economics program at the
university.
But he did find another job. "In autumn 2014 he became a professor and Head of the School of Economics, History and Politics
at Kingston University in London." Is there a large job market for skeptical economists?
Nothing's changed in 100 + years. American Yale Professor Irving Fisher "financial transactions
aren't random": Yale Professor Irving Fisher – 1920 2nd edition: "The Purchasing Power of Money"
"If the principles here advocated are correct, the purchasing power of money - or its reciprocal,
the level of prices - depends exclusively on five definite factors:
(1)the volume of money in circulation;
(2) its velocity of circulation;
(3) the volume of bank deposits subject to check;
(4) its velocity; and
(5) the volume of trade.
"Each of these five magnitudes is extremely definite, and their relation to the purchasing
power of money is definitely expressed by an "equation of exchange."
"In my opinion, the branch of economics which treats of these five regulators of purchasing
power ought to be recognized and ultimately will be recognized as an EXACT SCIENCE, capable of
precise formulation, demonstration, and statistical verification."
And the Fed already validated the Fisherian theory: In 1931 a commission was established on
member bank reserve requirements. The commission completed their recommendations after a 7 year
inquiry on Feb. 5, 1938. The study was entitled "Member Bank Reserve Requirements - Analysis of
Committee Proposal"
It's 2nd proposal: "Requirements against debits to deposits"
After a 45 year hiatus, this research paper was "declassified" on March 23, 1983. By the time
this paper was "declassified", required reserves had become a "tax" [sic].
Monetary flows, our means-of-payment money times its transactions velocity of circulation:
Here's my suggestion for educating economists about the fallacy of their assumption that it
is in any way acceptable or even meaningful to put a monetary price on a human life.
Step 1: we ask the economist to place a monetary value on his or her own life in the same way
that they feel so comfortable doing for people who are not them.
Step 2: crowdfund that amount of money.
Step 3: give said money to their next of kin and ask them to kindly follow us out to the woodshed
Ok, so let's call it a thought experiment .but I think that should make clear one
of the many, many things wrong with monetizing the value of everything in existence, as is the
common practice.
Step 1: we ask the economist to place a monetary value on his or her own life . . .
Priceless, or in economist's terms, infinity.
Step 2: crowdfund that amount of money.
Borrow from the Fed. It's fantasy money.
Step 3: give said money to their next of kin and ask them to kindly follow us out to the
woodshed
That would be cruel. They always claim they are the smartest guys in the room, while also claiming
men in manufacturing are low skill or put bluntly, stupid. Can we put them all on an uninhabited
island with a few shovels so they can live the civilized life and dig their own latrine, after
which they can bootstrap themselves to imagined wealth by inventing their own can opener? They
can get there by recycling the shovels, but they would need fire for that.
This interview articulates an extremely important insight when it states that the economy " is
believed to be a distinct system with its own logic that requires experts to manage it."
This seeming independence of the economic and political systems has largely deceived most of
modern social science. This seeming independence is not real, and in fact these spheres are deeply
intertwined.
As people llike Karl Polyani and Philip Mirowski have maintained, markets are always organized
through politics and institutions and one key to understanding this reality is to keep a focus
on the promulgation of the rules and regulations of a powerful state that helps to create movements
for both regulation and deregulation.
It is now imperative that an alternative political movement finally take the time to carefully
examine the nature and role of the State in political and economic life.
As a pre-med student of the mid 1970s, I never took an economics course. Professionally, I
tried to fight the same kind of jargon that baffles the lay public in medicine. And I watched
in horror how my profession became captured.
I struggle to read NC when reading jargon-filled posts. For example, I read about economic
cycles and wonder why that is an acceptable concept.
But I do so because I know that ignorance is not bliss. I know the economy is rigged. Orwellian
economics-speak allows the elite to configure human and social capital in their favor.
Is it time to throw this baby out with the bath water? If so, how do we conceive a baby that
doesn't eventually suckle at the wrong teat?
It was notable that Cathal failed to mention Marx. I don't think he realizes yet quite how fully indoctrinated he's been – as that humdinger of
an analogy (gay marriage – actually a redefinition to normalize surrogacy, a eugenics-by-stealth
agenda, hence it's enormous funding by the plutocracy) indicates. The economic can never be separated from the socio-political.
I think its more general than that. Those that have been airbrushed out of the history of economic
thought are those who never thought of economics as a separate, largely technocratic, discipline
but always as political economy. Marx was just one of these following the tradition of Smith,
Ricardo, Mill etc. Veblen and, to a large extent, Keynes were also following this tradition.
So sad that they lost and Walrasian physics envy ended up splitting economics from its political
context.
."how do you try to increase the accessibility of economics without watering it down so much
that it becomes analytically dysfunctional?"
This question makes no sense in the context of this discussion around the fact that modern
"economics" (theory, courses and practice) is an ideological construct. The suggestion being the
discipline as currently manifested would only become "analytically dysfunctional" if it were "watered
down" ??????
This simplistic, patently failed dogma has become an almost totalitarian "pensee unique" simply
because in coincided perfectly with the interests of the rich and powerful (and therefore those
of their lackeys)
It`s politics stupid!!!!!
Sorry, I realise the (exceptional!) core NC community knows all this as well as anyone
Another quibble. ?technocrats? At the height of the crisis, Italy, for example, had a govt
of "technocrats" foisted on the it. Monti, connections with Goldman?. Technocratic indeed!!!
The last couple of days I've been listening to a series of lectures by Philip Mirowski available
on youtube. When I place Mirowski's ideas in opposition to the ideas expressed in this interview
- the result is very different from the trend I see in the other comments here.
Mirowski describes how the "Neoliberal Economic thought collective" captured and now dominates
economic doctrine by controlling what and who can publish in the major economic journals. As a
result those aspects of Neoclassical Economics remaining are being re-shaped into a Neoliberal
mold. I noticed the word "neoliberal" doesn't show up anywhere in this post yet Neoliberal economic
policies and rationales dominate policy in the real world.
The discussion in the post makes several statements about how economics fails to make predictions
about the real world and fails in designing economic policies to help the common man. Mirowski
points out that Neoliberal economics designs policy to apply market models to every problem based
on the doctrine that markets are the most powerful information processing system available to
man - a strong form of the Efficient Markets Hypothesis. The Market is the ultimate epistemological
device. If the market solution doesn't satisfy the needs of the common man then satisfying those
needs is simply contrary to the wisdom of the market. For other problems like externalities they
just need to be properly incorporated into the market model to obtain an optimal solution to whatever
problem they present.
I don't see how "democratization" of economics teaching or eliminating jargon or deprecating
experts or more emphasis on critical thinking or pointing out the abject failure of economics
in solving economic problems will do much to counter the Neoliberal attack on the economics discipline.
Putting fins and flashy hubcaps on Neoclassical economics as it morphs into Neoliberal economics
is not the answer.
Its a hair ball that needs untangling and not a blowtorch thingy . If you are familiar with Philips past contributions to NC, his blog, social democracy blog
and other media portals you would have a better understanding of the perspective forwarded.
Disheveled . Mirowski does do service here wrt the fundamental methodology and how that frames
the topic, wrt base assumptions [human descriptors] and the extension of them.
The role of Economics is simple: it should inform people of the consequences of certain decisions
we make about who gets what. So if you have a problem with classical economics, you really have
a more fundamental problem. Economics provides many good answers; but don't expect it to also
provide the right questions. A comment above asked 'maximising what?'. Good question, but not
an economics question.
You are right, that is what it should be, unfortunately neoclassical has failed horribly in
that regard. It is based on assumptions that are demonstrably false and they are never revisited
to see the effect of relaxing them. You might as well be counting angels on a pin. See Roamer's
take down of it for starters. https://paulromer.net/wp-content/uploads/2016/09/WP-Trouble.pdf
First Bush II bankrupted the country by cutting taxes for rich and unleashing Iraq war. Then
Republicans want to cut Social Securty to pay for it
Notable quotes:
"... His nominee to run the Department of Health and Human Services, Tom Price, a Republican congressman from Georgia, has been a champion of cuts to all three of the nation's large social programs - Medicare, Medicaid and Social Security. When discussing reforms to Social Security, he has ignored ways to bring new revenue into the system while emphasizing possible benefit cuts through means-testing, private accounts and raising the retirement age. ..."
"... But Mr. Price, who currently heads the House Budget Committee, has found a way to cut Social Security deeply without Congress and the president ever having to enact specific benefit cuts, like raising the retirement age. ..."
"... Mr. Trump's hands-off approach to Social Security during the campaign was partly a strategic gesture to separate him from other Republican contenders who stuck to the party line on cutting Social Security. But he also noted the basic fairness of a system in which people who dutifully contribute while they are working receive promised benefits when they retire. Unfortunately, he has not surrounded himself with people who will help him follow those instincts. ..."
Donald Trump campaigned on a promise not to cut Social Security, which puts him at odds with the
Republican Party's historical antipathy to the program and the aims of today's Republican leadership.
So it should come as no surprise that congressional Republicans are already testing Mr. Trump's hands-off
pledge.
... ... ...
As Congress drew to a close this month, Sam Johnson, the chairman of the House Social Security
subcommittee, introduced a bill that would slash Social Security benefits for all but the very poorest
beneficiaries. To name just two of the bill's benefit cuts, it would raise the retirement age to
69 and reduce the annual cost-of-living adjustment, while asking nothing in the way of higher taxes
to bolster the program; on the contrary, it would cut taxes that high earners now pay on a portion
of their benefits. Last week, Mark Meadows, the Republican chairman of the conservative House Freedom
Caucus, said the group would push for an overhaul of Social Security and Medicare in the early days
of the next Congress.
... ... ...
Another sensible reform would be to bring more tax revenue into the system by raising the level
of wages subject to Social Security taxes, currently $118,500. In recent decades, the wage cap has
not kept pace with the income gains of high earners; if it had, it would be about $250,000 today.
The next move on Social Security is Mr. Trump's. He can remind Republicans in Congress that his
pledge would lead him to veto benefit cuts to Social Security if such legislation ever reached his
desk. When he nominates the next commissioner of Social Security, he can choose a competent manager,
rather than someone who has taken sides in political and ideological debates over the program.
What Mr. Trump actually will do is unknown, but his actions so far don't inspire confidence. By law,
the secretaries of labor, the Treasury and health and human services are trustees of Social Security.
Mr. Trump's nominees to head two of these departments, Labor and Treasury - Andrew Puzder, a fast-food
executive, and Steve Mnuchin, a Wall Street trader and hedge fund manager turned Hollywood producer
- have no government experience and no known expertise on Social Security.
His nominee to run the Department of Health and Human Services, Tom Price, a Republican congressman
from Georgia, has been a champion of cuts to all three of the nation's large social programs - Medicare,
Medicaid and Social Security. When discussing reforms to Social Security, he has ignored ways to
bring new revenue into the system while emphasizing possible benefit cuts through means-testing,
private accounts and raising the retirement age.
There is no way to mesh those ideas with Mr. Trump's pledge. But Mr. Price, who currently
heads the House Budget Committee, has found a way to cut Social Security deeply without Congress
and the president ever having to enact specific benefit cuts, like raising the retirement age.
Recently, he put forth a proposal to reform the budget process by imposing automatic spending
cuts on most federal programs if the national debt exceeds specified levels in a given year. If Congress
passed Mr. Trump's proposed tax cut, for example, the ensuing rise in debt would trigger automatic
spending cuts that would slash Social Security by $1.7 trillion over 10 years, according to an analysis
by the Center for American Progress, a liberal think tank. This works out to a cut of $168 a month
on the average monthly benefit of $1,240. If other Trump priorities were enacted, including tax credits
for private real estate development and increases in military spending, the program cuts would be
even deeper.
Mr. Trump's hands-off approach to Social Security during the campaign was partly a strategic
gesture to separate him from other Republican contenders who stuck to the party line on cutting Social
Security. But he also noted the basic fairness of a system in which people who dutifully contribute
while they are working receive promised benefits when they retire. Unfortunately, he has not surrounded
himself with people who will help him follow those instincts.
Susan Anderson is a trusted commenter Boston 1 hour ago
There is a simple solution to Social Security.
Remove the cap, so it is not a regressive tax. After all, Republicans appear to be all for
a "flat" tax. Then lower the rate for everyone.
There is no reason why it should only be charged on the part of income that is needed to pay
for necessary expenses should as housing, food, medical care, transportation, school, communications,
and such. Anyone making more than the current "cap" is actually able to afford all this.
There is no reason the costs should be born only by those at the bottom of the income pyramid.
As for Republican looting, that's just despicable, and we'll hope they are wise enough to realize
that they shouldn't let government mess with people's Social Security!
Thomas Zaslavsky is a trusted commenter Binghamton, N.Y. 1 hour ago
The idea hinted in the editorial that Trump has any principle or instinct that would lead him
to protect benefits for people who are not himself or his ultra-wealthy class is not worthy of
consideration. No, Trump has none such and he will act accordingly. (Test my prediction at the
end of 2017 or even sooner; it seems the Republicans are champing at the bit to loot the government
and the country fro their backers.)
Christine McM is a trusted commenter Massachusetts 2 hours ago
I wouldn't hold Trump to any of his campaign promises, given how often he changes positions, backtracks,
changes subjects, or whatever. His biggest promise of all was to "drain the swamp" and we know
how that turned out.
He might have a cabinet of outsiders, but they are still creatures from outside swamps. That
said, if there is even the barest of hints that this is on the agenda, I can pretty much bet that
in two years, Congress will completely change parties.
Imagine: cutting benefits for people who worked all their lives and depend on that money in
older age, all in order to give the wealthiest Americans another huge tax cut. For a fake populist
like Trump, that might sound like a great idea (he has no fixed beliefs or principles) but to
his most ardent supporters, that might be the moment they finally get it: they fell for one of
the biggest cons in the universe.
Rita is a trusted commenter California 2 hours ago
Given the Republican desire to shut down Medicare and Social Security, it is not hard to predict
that they will do so a little at a time so that people will not notice until its too late.
But since the Republicans have been very upfront with hostility towards the social safety net,
one can conclude that their supporters want to eliminate social safety net.
Mary Ann Donahue is a trusted commenter NYS 2 hours ago
RE: "To name just two of the bill's benefit cuts, it would raise the retirement age to 69 and
reduce the annual cost-of-living adjustment..."
The COLA for 2017 is .03% a paltry average increase of $5 per month. There was no increase in
2016.
The formula for how the COLA is calculated needs to be changed to allow for fair increases
not reductions.
Mary Scott is a trusted commenter NY 4 hours ago
Republicans have been promising to "fix" Social Security for years and now we are seeing exactly
what they mean. We can see how low they're willing to stoop by their plan to cut the taxes that
high earners now pay on a portion of their benefits and decimate the program for everybody else.
I wouldn't be surprised if they raised SS taxes on low and middle income earners.
There has been an easy fix for Social Security for years. Simply raise the tax on income to
$250,000 thousand and retirees both present and future would be on much firmer footing. Many future
retirees will be moving on to Social Security without the benefit of defined pension plans and
will need a more robust SS benefit in the future, not a weaker one.
Don't count on Donald Trump to come to the rescue. He seems to hate any tax more than even
the most fervent anti-tax freak like Paul Ryan. Mr. Trump admitted throughout the campaign that
he avoids paying any tax at all.
The Times seems to want to give Mr. Trump limitless chances to do the right thing. "Will Donald
Trump Cave on Social Security" it asks. Of course he will. One has only to look at his cabinet
choices and his embrace of the Ryan budget to know the answer to that question. Better to ask,
"How Long Will It Take Trump To Destroy Social Security?"
At least it would be an honest question and one that would put Mr. Trump in the center of a
question that will affect the economic security of millions of Americans.
serban is a trusted commenter Miller Place 4 hours ago
Cutting benefits for upper income solves nothing since by definition upper incomes are a small
percentage of the population. The obvious way to solve any problem with SS is to raise taxes on
upper incomes, the present cap is preposterous. People so wealthy that SS is a pittance can show
their concern by simply donating the money they get from SS to charities.
david is a trusted commenter ny 4 hours ago
We can get some perspective on what Social Security privatization schemes would mean to the
average SSS recipient from Roger Lowenstein' analysis of Bush's privatization scheme.
Roger Lowenstein's Times article discusses the CBO's analysis of how the Bush privatization
scheme for Social Security would reduce benefits.
"The C.B.O. assumes that the typical worker would invest half of his allocation in stocks
and the rest in bonds. The C.B.O. projects the average return, after inflation and expenses,
at 4.9 percent. This compares with the 6 percent rate (about 3.5 percent after inflation) that
the trust fund is earning now.
The second feature of the plan would link future benefit increases
to inflation rather than to wages. Because wages typically grow faster, this would mean a rather
substantial benefit cut. In other words, absent a sustained roaring bull market, the private
accounts would not fully make up for the benefit cuts. According to the C.B.O.'s analysis,
which, like all projections of this sort should be regarded as a best guess, a low-income retiree
in 2035 would receive annual benefits (including the annuity from his private account) of $9,100,
down from the $9,500 forecast under the present program. A median retiree would be cut severely,
from $17,700 to $13,600. "
"... Shorter Paul Krugman: nobody acted more irresponsibly in the last election than the New York Times. ..."
"... Looks like Putin recruited the NYT, the FBI and the DNC. ..."
"... Dr. Krugman is feeding this "shoot first, ask questions later" mentality. He comes across as increasingly shrill and even unhinged - it's a slide he's been taking for years IMO, which is a big shame. ..."
"... It is downright irresponsible and dangerous for a major public intellectual with so little information to cast the shadow of legitimacy on a president ("And it means not acting as if this was a normal election whose result gives the winner any kind of a mandate, or indeed any legitimacy beyond the bare legal requirements.") This kind of behavior is EXACTLY what TRUMP and other authoritarians exhibit - using pieces of information to discredit institutions and individuals. Since foreign governments have and will continue to try to influence U.S. policy through increasingly sophisticated means, this opens the door for anyone to declare our elections and policies as illegitimate in the future. ..."
"... Any influence Russian hacking had was entirely a consequence of U.S. media obsession with celebrity, gotcha and horse race trivia and two-party red state/blue state tribalism. ..."
"... Without the preceding, neither Trump nor Clinton would have been contenders in the first place. Putin didn't invent super delegates, Citizens United, Fox News, talk radio, Goldman-Sachs, etc. etc. etc. If Putin exploited vulnerabilities, it is because preserving those vulnerabilities was more important to the elites than fostering a democratic political culture. ..."
"... It's not a "coup". It's an election result that didn't go the way a lot of people want. That's it. It's probably not optimal, but I'm pretty sure that democracy isn't supposed to produce optimal results. ..."
"... All this talk about "coups" and "illegitimacy" is nuts, and -- true to Dem practice -- incredibly short-sighted. For many, voting for Trump was an available way to say to those people, "We don't believe you any more. At all." Seen in that light, it is a profoundly democratic (small 'd') response to elites that have most consistently served only themselves. ..."
"... Post Truth is Pre-Fascism. The party that thinks your loyalty is suspect unless you wear a flag pin fuels itself on Post Truth. Isnt't this absurdity the gist of Obama's Russia comments today!?! ..."
"... Unless the Russians or someone else hacked the ballot box machines, it is our own damn fault. ..."
"... The ship of neo-liberal trade sailed in the mid-2000's. That you don't get that is sad. You can only milk that so far the cow had been milked. ..."
"... The people of the United States did not have much to choose between: Either a servant of the Plutocrats or a member of the Plutocratic class. The Dems brought this on us when they refused to play fair with Bernie. (Hillary would almost certainly have won the nomination anyway.) ..."
"... The Repubs brought this on, by refusing to govern. The media brought this on: I seem to remember Hillary's misfeasances, once nominated, festering in the media, while Trump's were mentioned, and then disappeared. (Correct me if I'm wrong in this.) Also, the media downplayed Bernie until he had no real chance. ..."
"... The government brought this on, by failing to pursue justice against the bankers, and failing to represent the people, especially the majority who have been screwed by trade and the plutocratic elite and their apologists. ..."
"... The educational system brought this on, by failing to educate the people to critical thought. For instance: 1) The wealthy run the country. 2) The wealthy have been doing very well. 3) Everybody else has not. It seems most people cannot draw the obvious conclusion. ..."
"... Krugman is himself one of those most useful idiots. I do not recall his clarion call to Democrats last spring that "FBI investigation" and "party Presidential nominee" was bound to be an ugly combination. Some did; right here as I recall. Or his part in the official "don't vote for third party" week in the Clinton media machine....thanks, hundreds of thousands of Trump votes got the message. ..."
"... It's too rich to complain about Russia and Wikileaks as if those elements in anyway justified Clinton becoming President. Leaks mess with our democracy? Then for darn sure do not vote for a former Sec. of State willing to use a home server for her official business. Russia is menacing? Just who has been managing US-Russia relations the past 8 years? I voted for her anyway, but the heck if I think some tragic fate has befell the nation here. Republicans picked a better candidate to win this thing than we Democrats did. ..."
"... The truth of the matter is that Clinton was a very weak candidate with nothing to offer but narcissism ("I'm with her"). It's notable that Clinton has still not accepted responsibility for her campaign, preferring to throw the blame for the loss anywhere but herself. Sociopathy much? ..."
[ I find it terrifying, simply terrifying, to refer to people as "useful idiots" after all
the personal destruction that has followed when the expression was specifically used in the past.
To me, using such an expression is an honored economist intent on becoming Joseph McCarthy.
]
To demean a person as though the person were a communist or a fool of communists or the like,
with all the personal harm that has historically brought in this country, is cruel beyond my understanding
or imagining.
Well, not really. For example he referred to "the close relationship between Wikileaks and Russian
intelligence." But Wikileaks is a channel. They don't seek out material. They rely on people to
bring material to them. They supposedly make an effort to verify that the material is not a forgery,
but aside from that what they release is what people bring to them. Incidentally, like so many
people you seem to not care whether the material is accurate or not -- Podesta and the DNC have
not claimed that any of the emails are different from what they sent.
ZURICH - If Putin the Thug gets away with crushing Ukraine's new democratic experiment and
unilaterally redrawing the borders of Europe, every pro-Western country around Russia will be
in danger....
Yup, like the other elections, the bases stayed solvent and current events factored into the turnout
and voting patterns which spurred the independent vote.
When people were claiming Clinton was going to win big, I thought no Republican and Democratic
voters are going to pull the lever like a trained monkey as usual. Only difference in this election
was Hillary's huge negatives due entirely by her and Bill Clinton's support for moving manufacturing
jobs to Mexico and China in the 90s.
To Understand Trump, Learn Russian http://nyti.ms/2hLcrB1
NYT - Andrew Rosenthal - December 15
The Russian language has two words for truth - a linguistic quirk that seems relevant to our
current political climate, especially because of all the disturbing ties between the newly elected
president and the Kremlin.
The word for truth in Russian that most Americans know is "pravda" - the truth that seems evident
on the surface. It's subjective and infinitely malleable, which is why the Soviet Communists called
their party newspaper "Pravda." Despots, autocrats and other cynical politicians are adept at
manipulating pravda to their own ends.
But the real truth, the underlying, cosmic, unshakable truth of things is called "istina" in
Russian. You can fiddle with the pravda all you want, but you can't change the istina.
For the Trump team, the pravda of the 2016 election is that not all Trump voters are explicitly
racist. But the istina of the 2016 campaign is that Trump's base was heavily dependent on racists
and xenophobes, Trump basked in and stoked their anger and hatred, and all those who voted for
him cast a ballot for a man they knew to be a racist, sexist xenophobe. That was an act of racism.
Trump's team took to Twitter with lightning speed recently to sneer at the conclusion by all
17 intelligence agencies that the Kremlin hacked Democratic Party emails for the specific purpose
of helping Trump and hurting Hillary Clinton. Trump said the intelligence agencies got it wrong
about Iraq, and that someone else could have been responsible for the hack and that the Democrats
were just finding another excuse for losing.
The istina of this mess is that powerful evidence suggests that the Russians set out to interfere
in American politics, and that Trump, with his rejection of Western European alliances and embrace
of Russia's invasion of Ukraine, was their chosen candidate.
The pravda of Trump's selection of Rex Tillerson, head of Exxon Mobil, as secretary of state
is that by choosing an oil baron who has made billions for his company by collaborating with Russia,
Trump will make American foreign policy beholden to American corporate interests.
That's bad enough, but the istina is far worse. For one thing, American foreign policy has
been in thrall to American corporate interests since, well, since there were American corporations.
Just look at the mess this country created in Latin America, the Caribbean, Southeast Asia and
the Middle East to serve American companies.
Yes, Tillerson has ignored American interests repeatedly, including in Russia and Iraq, and
has been trying to remove sanctions imposed after Russia's seizure of Crimea because they interfered
with one of his many business deals. But take him out of the equation in the Trump cabinet and
nothing changes. Trump has made it plain, with every action he takes, that he is going to put
every facet of policy, domestic and foreign, at the service of corporate America. The istina here
is that Tillerson is just a symptom of a much bigger problem.
The pravda is that Trump was right in saying that the intelligence agencies got it wrong about
Saddam Hussein and weapons of mass destruction.
But the istina is that Trump's contempt for the intelligence services is profound and dangerous.
He's not getting daily intelligence briefings anymore, apparently because they are just too dull
to hold his attention.
And now we know that Condoleezza Rice was instrumental in bringing Tillerson to Trump's attention.
As national security adviser and then secretary of state for president George W. Bush, Rice was
not just wrong about Iraq, she helped fabricate the story that Hussein had nuclear weapons.
Trump and Tillerson clearly think they are a match for the wily and infinitely dangerous Putin,
but as they move foward with their plan to collaborate with Russia instead of opposing its imperialist
tendencies, they might keep in mind another Russian saying, this one from Lenin.
"There are no morals in politics; there is only expedience," he wrote. "A scoundrel may be
of use to us just because he is a scoundrel."
Putin has that philosophy hard-wired into his political soul. When it comes to using scoundrels
to get what he wants, he is a professional, and Trump is only an amateur. That is the istina of
the matter.
If nothing else, Russia - with a notably un-free press - has shrewdly used our own 'free press'
against US.
RUSSIA'S UNFREE PRESS
The Boston Globe - Marshall Goldman - January 29, 2001
AS THE BUSH ADMINISTRATION DEBATES ITS POLICY TOWARD RUSSIA, FREEDOM OF THE PRESS SHOULD BE
ONE OF ITS MAJOR CONCERNS. UNDER PRESIDENT VLADIMIR PUTIN THE PRESS IS FREE ONLY AS LONG AS IT
DOES NOT CRITICIZE PUTIN OR HIS POLICIES. WHEN NTV, THE TELEVISION NETWORK OF THE MEDIA GIANT
MEDIA MOST, REFUSED TO PULL ITS PUNCHES, MEDIA MOST'S OWNER, VLADIMIR GUSINSKY, FOUND HIMSELF
IN JAIL, AND GAZPROM, A COMPANY DOMINATED BY THE STATE, BEGAN TO CALL IN LOANS TO MEDIA MOST.
Unfortunately, Putin's actions are applauded by more than 70 percent of the Russian people. They
crave a strong and forceful leader; his KGB past and conditioned KGB responses are just what they
seem to want after what many regard as the social, political, and economic chaos of the last decade.
But what to the Russians is law and order (the "dictatorship of the law," as Putin has so accurately
put it) looks more and more like an old Soviet clampdown to many Western observers.
There is no complaint about Putin's promises. He tells everyone he wants freedom of the press.
But in the context of his KGB heritage, his notion of freedom of the press is something very different.
In an interview with the Toronto Globe and Mail, he said that that press freedom excludes the
"hooliganism" or "uncivilized" reporting he has to deal with in Moscow. By that he means criticism,
especially of his conduct of the war in Chechnya, his belated response to the sinking of the Kursk,
and the heavy-handed way in which he has pushed aside candidates for governor in regional elections
if they are not to Putin's liking.
He does not take well to criticism. When asked by the relatives of those lost in the Kursk
why he seemed so unresponsive, Putin tried to shift the blame for the disaster onto the media
barons, or at least those who had criticized him. They were the ones, he insisted, who had pressed
for reduced funding for the Navy while they were building villas in Spain and France. As for their
criticism of his behavior, They lie! They lie! They lie!
Our Western press has provided good coverage of the dogged way Putin and his aides have tried
to muscle Gusinsky out of the Media Most press conglomerate he created. But those on the Putin
enemies list now include even Boris Berezovsky, originally one of Putin's most enthusiastic promoters
who after the sinking of the Kursk also became a critic and thus an opponent.
Gusinsky would have a hard time winning a merit badge for trustworthiness (Berezovsky shouldn't
even apply), but in the late Yeltsin and Putin years, Gusinsky has earned enormous credit for
his consistently objective news coverage, including a spotlight on malfeasance at the very top.
More than that, he has supported his programmers when they have subjected Yeltsin and now Putin
to bitter satire on Kukly, his Sunday evening prime-time puppet show.
What we hear less of, though, is what is happening to individual reporters, especially those
engaged in investigative work. Almost monthly now there are cases of violence and intimidation.
Among those brutalized since Putin assumed power are a reporter for Radio Liberty who dared to
write negative reports about the Russian Army's role in Chechnia and four reporters for Novaya
Gazeta. Two of them were investigating misdeeds by the FSB (today's equivalent of the KGB), including
the possibility that it rather than Chechins had blown up a series of apartment buildings. Another
was pursuing reports of money-laundering by Yeltsin family members and senior staff in Switzerland.
Although these journalists were very much in the public eye, they were all physically assaulted.
Those working for provincial papers labor under even more pressure with less visibility. There
are numerous instances where regional bosses such as the governor of Vladivostok operate as little
dictators, and as a growing number of journalists have discovered, challenges are met with threats,
physical intimidation, and, if need be, murder.
True, freedom of the press in Russia is still less than 15 years old, and not all the country's
journalists or their bosses have always used that freedom responsibly. During the 1996 election
campaign, for example, the media owners, including Gusinsky conspired to denigrate or ignore every
viable candidate other than Yeltsin. But attempts to muffle if not silence criticism have multiplied
since Putin and his fellow KGB veterans have come to power. Criticism from any source, be it an
individual journalist or a corporate entity, invites retaliation.
When Media Most persisted in its criticism, Putin sat by approvingly as his subordinates sent
in masked and armed tax police and prosecutors. When that didn't work, they jailed Gusinsky on
charges that were later dropped, although they are seeking to extradite and jail him again. along
with his treasurer, on a new set of charges. Yesterday the prosecutor general summoned Tatyana
Mitkova, the anchor of NTV's evening news program, for questioning. Putin's aides are also doing
all they can to prevent Gusinsky from refinancing his debt-ridden operation with Ted Turner or
anyone else in or outside of the country.
According to one report, Putin told one official, You deal with the shares, debts, and management
and I will deal with the journalists. His goal simply is to end to independent TV coverage in
Russia. ...
"Unfortunately, Putin's actions are applauded by more than 70 percent of the Russian people"
Exactly; the majority of people are so stupid and/or lazy that they cannot be bothered understanding
what is going on; and how their hard won democracy is being subjugated. But thank God that is
in Russia not here in the US - right?
"Pravda" is etymologically derived from "prav-" which means "right" (as opposed to "left", other
connotations are "proper", "correct", "rightful", also legal right). It designates the social-construct
aspect of "righteousness/truthfulness/correctness" as opposed to "objective reality" (conceptually
independent of social standards, in reality anything but). In formal logic, "istina" is used to
designate truth. Logical falsity is designated a "lie".
It is a feature common to most European languages that rightfulness, righteousness, correctness,
and legal rights are identified with the designation for the right side. "Sinister" is Latin for
"left".
If you believe 911 was a Zionist conspiracy, so where the Paris attacks of November 2015, when
Trump was failing in the polls as the race was moving toward as you would expect, toward other
candidates. After the Paris attacks, his numbers reaccelerated.
If "ZOG" created the "false flag" of the Paris attacks to start a anti-Muslim fervor, they
succeeded, much like 911. Bastille day attacks were likewise, a false flag. This is not new, this
goes back to when the aristocracy merged with the merchant caste, creating the "bourgeois". They
have been running a parallel government in the shadows to effect what is seen.
There used to be something called Usenet News, where at the protocol level reader software could
fetch meta data (headers containing author, (stated) origin, title, etc.) independently from comment
bodies. This was largely owed to limited download bandwidth. Basically all readers had "kill files"
i.e. filters where one could configure that comments with certain header parameters should not
be downloaded, or even hidden.
The main application was that the reader would download comments in the background when headers
were already shown, or on demand when you open a comment.
Now you get the whole thing (or in units of 100) by the megabyte.
A major problem is signal extraction out of the massive amounts of noise generated by the media,
social media, parties, and pundits.
It's easy enough to highlight this thread of information here, but in real time people are
being bombarded by so many other stories.
In particular, the Clinton Foundation was also regularly being highlighted for its questionable
ties to foreign influence. And HRC's extravagant ties to Wall St. And so much more.
The media's job was to sell Trump and denounce Clinton. The mistake a lot of people make is thinking
the global elite are the "status quo". They are not. They are generally the ones that break the
status quo more often than not.
The bulk of them wanted Trump/Republican President and made damn sure it was President. Buffering
the campaign against criticism while overly focusing on Clinton's "crap". It took away from the
issues which of course would have low key'd the election.
Not much bullying has to be applied when there are "economic incentives". The media attention
economy and ratings system thrive on controversy and emotional engagement. This was known a century
ago as "only bad news is good news". As long as I have lived, the non-commercial media not subject
(or not as much) to these dynamics have always been perceived as dry and boring.
I heard from a number of people that they followed the campaign "coverage" (in particular Trump)
as gossip/entertainment, and those were people who had no sympathies for him. And even media coverage
by outlets generally critical of Trump's unbelievable scandals and outrageous performances catered
to this sentiment.
First, let me disclose that I detest TRUMP and that the Russian meddling has me deeply concerned.
Yet...
We only have assertions that the Russian hacking had some influence. We do not know whether
it likely had *material* influence that could have reasonably led to a swing state(s) going to
TRUMP that otherwise would have gone to HRC.
Dr. Krugman is feeding this "shoot first, ask questions later" mentality. He comes across
as increasingly shrill and even unhinged - it's a slide he's been taking for years IMO, which
is a big shame.
It is downright irresponsible and dangerous for a major public intellectual with so little
information to cast the shadow of legitimacy on a president ("And it means not acting as if this
was a normal election whose result gives the winner any kind of a mandate, or indeed any legitimacy
beyond the bare legal requirements.") This kind of behavior is EXACTLY what TRUMP and other authoritarians
exhibit - using pieces of information to discredit institutions and individuals. Since foreign
governments have and will continue to try to influence U.S. policy through increasingly sophisticated
means, this opens the door for anyone to declare our elections and policies as illegitimate in
the future.
It is quite clear that the Russians intervened on Trump's behalf and that this intervention had
an impact. The problem is that we cannot actually quantify that impact.
"We only have assertions that the Russian hacking had some influence."
Any influence Russian hacking had was entirely a consequence of U.S. media obsession with
celebrity, gotcha and horse race trivia and two-party red state/blue state tribalism.
Without the preceding, neither Trump nor Clinton would have been contenders in the first
place. Putin didn't invent super delegates, Citizens United, Fox News, talk radio, Goldman-Sachs,
etc. etc. etc. If Putin exploited vulnerabilities, it is because preserving those vulnerabilities
was more important to the elites than fostering a democratic political culture.
But this is how influence is exerted - by using the dynamics of the adversary's/targets organization
as an amplifier. Hierarchical organizations are approached through their management or oversight
bodies, social networks through key influencers, etc.
I see this so much and it's so right wing cheap: I hate Trump, but assertions that Russia intervened
are unproven.
First, Trump openly invited Russia to hack DNC emails. That is on its face treason and sedition.
It's freaking on video. If HRC did that there would be calls of the right for her execution.
Second, a NYT story showed that the FBI knew about the hacking but did not alert the DNC properly
- they didn't even show up, they sent a note to a help desk.
This was a serious national security breach that was not addressed properly. This is criminal
negligence.
This was a hacked election by collusion of the FBI and the Russian hackers and it totally discredits
the FBI as it throwed out chum and then denied at the last minute. Now the CIA comes in and says
PUTIN, Trump's bff, was directly involved in manipulating the timetable that the hacked emails
were released in drip drip form to cater to the media - creating story after story about emails.
It was a perfect storm for a coup. Putin played us. And he will play Trump. And God knows how
it ends. But it doesn't matter b/c we're all screwed with climate change anyway.
"It was a perfect storm for a coup. Putin played us. And he will play Trump. And God knows how
it ends. But it doesn't matter b/c we're all screwed with climate change anyway."
It's not a "coup". It's an election result that didn't go the way a lot of people want.
That's it. It's probably not optimal, but I'm pretty sure that democracy isn't supposed to produce
optimal results.
All this talk about "coups" and "illegitimacy" is nuts, and -- true to Dem practice --
incredibly short-sighted. For many, voting for Trump was an available way to say to those people,
"We don't believe you any more. At all." Seen in that light, it is a profoundly democratic (small
'd') response to elites that have most consistently served only themselves.
Trump and his gang will be deeply grateful if the left follows Krugman's "wisdom", and clings
to his ever-changing excuses. (I thought it was the evil Greens who deprived Clinton of her due?)
Post Truth is Pre-Fascism. The party that thinks your loyalty is suspect unless you wear a
flag pin fuels itself on Post Truth. Isnt't this absurdity the gist of Obama's Russia comments
today!?!
"On Wednesday an editorial in The Times described Donald Trump as a "useful idiot" serving Russian
interests." I think that is beyond the pale. Yes, I realize that Adolph Hitler was democratically
elected. I agree that Trump seems like a scary monster under the bed. That doesn't mean we have
too pee our pants, Paul. He's a bully, tough guy, maybe, the kind of kid that tortured you before
you kicked the shit out of them with your brilliance. That's not what is needed now.
What really is needed, is a watchdog, like Dean Baker, that alerts we dolts of pending bills and
their ramifications. The ship of neo-liberal trade bullshit has sailed. Hell, you don't believe
it yourself, you've said as much. Be gracious, and tell the truth. We can handle it.
The experience of voting for the Hill was painful, vs Donald Trump.
The Hill seemed like the least likely aristocrat, given two choices, to finish off all government
focus on the folks that actually built this society. Two Titans of Hubris, Hillary vs Donald,
each ridiculous in the concept of representing the interests of the common man.
At the end of the day. the American people decided that the struggle with the unknown monster
Donald was worth deposing the great deplorable, Clinton.
The real argument is whether the correct plan of action is the way of FDR, or the way of the industrialists,
the Waltons, the Kochs, the Trumps, the Bushes and the outright cowards like the Cheneys and the
Clintons, people that never spent a day defending this country in combat. What do they call it,
the Commander in Chief.
My father was awarded a silver and a bronze star for his efforts in battle during WW2. He was
shot in the face while driving a tank destroyer by a German sniper in a place called Schmitten
Germany.
He told me once, that he looked over at the guy next to him on the plane to the hospital in
England, and his intestines were splayed on his chest. It was awful.
What was he fighting for ? Freedom, America. Then the Republicans, Ronald Reagan, who spent the
war stateside began the real war, garnering the wealth of the nation to the entitled like him.
Ronald Reagan was a life guard.
Anthony Weiner
Podesta
Biden (for not running)
Tim Kaine (for accepting the nomination instead of deferring to a latino)
CNN and other TV news media (for giving trump so much coverage- even an empty podium)
Donna Brazile
etc.
The people of the United States did not have much to choose between: Either a servant of the
Plutocrats or a member of the Plutocratic class. The Dems brought this on us when they refused
to play fair with Bernie. (Hillary would almost certainly have won the nomination anyway.)
The Repubs brought this on, by refusing to govern. The media brought this on: I seem to
remember Hillary's misfeasances, once nominated, festering in the media, while Trump's were mentioned,
and then disappeared. (Correct me if I'm wrong in this.) Also, the media downplayed Bernie until
he had no real chance.
The government brought this on, by failing to pursue justice against the bankers, and failing
to represent the people, especially the majority who have been screwed by trade and the plutocratic
elite and their apologists.
The educational system brought this on, by failing to educate the people to critical thought.
For instance: 1) The wealthy run the country. 2) The wealthy have been doing very well. 3) Everybody
else has not. It seems most people cannot draw the obvious conclusion.
The wealthy brought this on. For 230 years they have, essentially run this country. They are
too stupid to be satisfied with enough, but always want more.
The economics profession brought this on, by excusing treasonous behavior as efficient, and
failing to understand the underlying principles of their profession, and the limits of their understanding.
(They don't even know what money is, or how a trade deficit destroys productive capacity, and
thus the very ability of a nation to pay back the debts it incurs.)
The people brought this on, by neglecting their duty to be informed, to be educated, and to
be thoughtful.
Anybody else care for their share of blame? I myself deserve some, but for reasons I cannot
say.
What amazes me now is, the bird having shown its feathers, there is no howl of outrage from
the people who voted for him. Do they imagine that the Plutocrats who will soon monopolize the
White House will take their interests to heart?
As far as I can tell, not one person of 'the people' has been appointed to his cabinet. Not
one. But the oppressed masses who turned to Mr Trump seem to be OK with this.
I can only wonder, how much crap will have to be rubbed in their faces, before they awaken to
the taste of what it is?
Eric377 : , -1
Krugman is himself one of those most useful idiots. I do not recall his clarion call to Democrats
last spring that "FBI investigation" and "party Presidential nominee" was bound to be an ugly
combination. Some did; right here as I recall. Or his part in the official "don't vote for third
party" week in the Clinton media machine....thanks, hundreds of thousands of Trump votes got the
message.
It's too rich to complain about Russia and Wikileaks as if those elements in anyway justified
Clinton becoming President. Leaks mess with our democracy? Then for darn sure do not vote for
a former Sec. of State willing to use a home server for her official business. Russia is menacing?
Just who has been managing US-Russia relations the past 8 years? I voted for her anyway, but the
heck if I think some tragic fate has befell the nation here. Republicans picked a better candidate
to win this thing than we Democrats did.
The truth of the matter is that Clinton was a very weak candidate with nothing to offer
but narcissism ("I'm with her"). It's notable that Clinton has still not accepted responsibility
for her campaign, preferring to throw the blame for the loss anywhere but herself. Sociopathy
much?
This has made me cynical. I used to think that at least *some* members of the US political
elite had the best interests of ordinary households in mind, but now I see that it's just ego
vs. ego, whatever the party.
As for democracy being on the edge: I believe Adam Smith over Krugman: "there is a lot of ruin
in a nation". It takes more than this to overturn an entrenched institution.
I think American democracy will survive a decade of authoritarianism, and if it does not, then
H. L. Mencken said it best: "The American people know what they want, and they deserve to get
it -- good and hard."
"... I had always thought Hayek made some good critical points about the illusions of socialists/utopians and then chose to ignore the fact that his criticism also applied to his ..."
"... So maybe Hayek didn't overlook the fact that his critique also applied to his utopia. Maybe he knew full well he was misrepresenting what he was selling, engaging in exactly the same propaganda techniques that he attributed to others. ..."
"... A Rovian strategy - conceal your weakness by attacking others on precisely that issue. ..."
"... The Road to Serfdom put out in the US after WWII, which was full of this inflammatory sort of thing that doing anything to ameliorate the harder edges of capitalism put one inexorably on the road to serfdom. ..."
"... In the actual RtS one finds Hayek himself supporting quite a few such amiliorations, most notably social insurance, especially national health insurance well beyond what we even have in the US now with ACA. ..."
"... The problem for lovers of Hayek, and arguably Hayek himself, is that he simply never repudiated this comic book version of his work, even as he and many of his followers got all worked up when people, such as Samuelson, would criticize Hayek for this comic book version of the RtS, pointing out his support for these ameliorations in the original non-comic book version. ..."
"... However, Samuelson in his last remarks on Hayek, which I published in JEBO some years ago, effectively said that Hayek had only himself to blame for this confusion. ..."
"... I have been thinking that maybe both "sides" in our mostly brainwashed America today could agree with the meme of "DRAIN-THE-SWAMP" and hope to see it carried proudly on protest signs by the non-zombies of both sides in the ongoing social upheaval. ..."
"... I agree that "accuse the other side of doing what you are doing" is a familiar ploy of the right. ..."
Sandwichman | December 10, 2016 12:51 am
In his neo-Confederate "Mein Kampf," Whither Solid South ,
Charles Wallace Collins quoted a full paragraph from Hayek's The Road to Serfdom
regarding the emptying out of the meaning of words. My instinct would be not to condemn Hayek
for the politics of those who quote him. Even the Devil quotes Shakespeare.
But after taking another look at the Look magazine
comic book edition of Hayek's tome, I realized that Collins's depiction of full employment
as a sinister Stalinist plot was, after all, remarkably faithful to the
comic-book version of Hayek's argument. With only a little digging, one can readily
infer that what the comic book refers to as "The Plan" is a policy also known as full employment
(or, if you want to get specific, William Beveridge's Full Employment in a Free Society
). "Planners" translates as cartoon Hayek's alias for Keynesian economists and their political
acolytes.
To be sure, Hayek's sole reference to full employment in the book is unobjectionable
- even estimable almost:
That no single purpose must be allowed in peace to have absolute preference over all others
applies even to the one aim which everybody now agrees comes in the front rank: the conquest of
unemployment. There can be no doubt that this must be the goal of our greatest endeavour; even
so, it does not mean that such an aim should be allowed to dominate us to the exclusion of everything
else, that, as the glib phrase runs, it must be accomplished "at any price". It is, in fact, in
this field that the fascination of vague but popular phrases like "full employment" may well lead
to extremely short-sighted measures, and where the categorical and irresponsible "it must be done
at all cost" of the single-minded idealist is likely to do the greatest harm.
Yes, single-minded pursuit at all costs of any
nebulous objective will no doubt be short-sighted and possibly harmful. But is that really
what "the planners" were advocating?
Hayek elaborated his views on full employment policy in a 1945 review of Beveridge's
Full Employment in a Free Society, in which he glibly characterized Keynes's theory of
employment as "all that was needed to maintain employment permanently at a maximum was to secure
an adequate volume of spending of some kind."
Beveridge, Hayek confided, was "an out-and-out planner" who proposed to deal with the difficulty
of fluctuating private investment "by abolishing private investment as we knew it." You see, single-minded
pursuit of any nebulous objective will likely be short-sighted and even harmful unless that
objective is the preservation of the accustomed liberties of the owners of private property, in
which case it must be done at all cost!
Further insight into Hayek's objection to Keynesian full-employment policy can be found in
The Constitution of Liberty . The problem with full employment is those damn unions. On this
matter, he quoted Jacob Viner with approval:
The sixty-four dollar question with respect to the relations between unemployment and full
employment policy is what to do if a policy to guarantee full employment leads to chronic upward
pressure on money wages through the operation of collective bargaining .
and
it is a matter of serious concern whether under modern conditions, even in a socialist country
if it adheres to democratic political procedures, employment can always be maintained at a high
level without recourse to inflation, overt or disguised, or if maintained whether it will not
itself induce an inflationary wage spiral through the operation of collective bargaining
Sharing Viner's anxiety about those damn unions inducing an inflationary wage spiral "through
the operation of collective bargaining" was Professor W, H, Hutt, author of the Theory of
Collective Bargaining, who "[s]hortly after the General Theory appeared
argued that it was a specific for inflation."
Hutt, whose earlier book on collective bargaining "analysed [and heralded] the position of the
Classical economists on the relation between unions and wage determination," had his own
plan for full employment . It appeared in The South African Journal
of Economics in September, 1945 under the title "Full Employment and the Future of Industry."
I am posting a large excerpt from Hutt's eccentric full employment "plan"
here because it makes explicit principles that are tacit in the neo-liberal pursuit of
"non-inflationary growth":
Full employment and a prosperous industry might yet be achieved if what I propose
to call the three "basic principles of employment" determine our planning .
The first basic principle is as follows. Productive resources of all kinds, including
labour, can be fully employed when the prices of the services they render are sufficiently
low to enable the people's existing purchasing power to absorb the full flow of the
product.
To this must be added the second basic principle of employment. When the prices of
productive service have been thus adjusted to permit full employment, the flow of purchasing power,
in the form of wages and the return to property is maximised .
The assertion that unemployment is "voluntary" and can be cured by reducing wages is the classical
assumption that Keynes challenged in the theory of unemployment. Hutt's second principle, that full
employment, achieved by wage cuts, will maximize the total of wages, profit and rent thus would be
not be likely to command "more or less universal assent," as Hutt claimed. But even if it did, Hutt's
stress on maximizing a total , regardless of distribution of that total between wages
and profits, is peculiar. Why would workers be eager to work more hours for
less pay just to generate higher profits? Hutt's principles could only gain "more or
less universal assent" if they were sufficiently opaque that no one could figure out what he was
getting at, which Hutt's subsequent exposition makes highly unlikely.
Hutt's proposed full employment plan consisted of extending the hours of work, postponing retirement
and encouraging married women to stay in the work force. He advertised his idea as a reverse lump-of-labor
strategy. Instead of insisting - as contemporary economists do - that immigrants (older workers,
automation or imports) don't take jobs, Hutt boasted they create jobs, specifically because they
keep wages sufficiently low and thus maximize total returns to property and wages
combined. He may have been wrong but he was consistent. Nor did he conceal his antagonism toward
trade unions and collective bargaining behind hollow platitudes about
inclusive growth .
The U.S. has been following Hutt-like policies for decades now and the
results are in :
For the 117 million U.S. adults in the bottom half of the income distribution, growth has been
non-existent for a generation while at the top of the ladder it has been extraordinarily strong.
Or perhaps Hutt was right and what has held back those at the bottom of the income distribution
is that wages have not been sufficiently low to insure full employment and thus
to maximize total returns to labor and capital. The incontestable thing about Hutt's theory is that
no matter how low wages go, it will always be possible to claim that they didn't go sufficiently
low enough to enable people's purchasing power to absorb the full flow of their services.
coberly , December 10, 2016 11:52 am
I can't claim to know all of what Hayek meant. but I did read one of his books and it was clear
he did not mean what the right has taken him to not only mean, but to have proved.
In any case it is dangerous (and a bit stupid) to base policy on what someone said or is alleged
to have said. Especially economists who claim to have "proved" some "law" of economics.
That said, i wonder if some of what is said here is the result of over-reading what someone
(else) as said: to be concerned with policies "to the exclusion of all else" is not the same as
rejecting the policies while keeping other things in mind. and to recognize the potential of labor
unions to force inflationary levels of wages is not the same as opposing labor unions.
neither the advocates in favor of or those opposed to the extreme understanding of these cautions
–including the authors of them if that is the case - are contributing much to the development
of sane and humane policy.
I had always thought Hayek made some good critical points about the illusions of socialists/utopians
and then chose to ignore the fact that his criticism also applied to his neo-liberal
utopia. But I followed up the passage quoted by Collins and it turns out that Hayek was discussing
a statement made by Karl Mannheim, which he quoted out of context and egregiously misrepresented
-- a classic right-wing propaganda slander technique. So here is Hayek talking about emptying out
the meaning from words and filling them with new content and he is doing just that to the words
of another author.
So maybe Hayek didn't overlook the fact that his critique also applied to his utopia. Maybe
he knew full well he was misrepresenting what he was selling, engaging in exactly the same propaganda
techniques that he attributed to others. By accusing others first of doing what he was doing,
it made it awkward for anyone to point out that he was doing it, too. A Rovian strategy - conceal
your weakness by attacking others on precisely that issue.
One of the problems with Hayek is that there was always this conflict between the "comic book
Hayek" and the more scholarly and careful Hayek. In fact, there really was a comic book version
of The Road to Serfdom put out in the US after WWII, which was full of this inflammatory sort
of thing that doing anything to ameliorate the harder edges of capitalism put one inexorably on
the road to serfdom.
In the actual RtS one finds Hayek himself supporting quite a few such amiliorations,
most notably social insurance, especially national health insurance well beyond what we even have
in the US now with ACA.
The problem for lovers of Hayek, and arguably Hayek himself, is that he simply never repudiated
this comic book version of his work, even as he and many of his followers got all worked up when
people, such as Samuelson, would criticize Hayek for this comic book version of the RtS, pointing
out his support for these ameliorations in the original non-comic book version.
However, Samuelson
in his last remarks on Hayek, which I published in JEBO some years ago, effectively said that
Hayek had only himself to blame for this confusion.
To me it comes down to whether government is structured to serve all or some obfuscated minority
of all. With that as the divider it is easy to decipher Hayek's work and others.
I have been thinking that maybe both "sides" in our mostly brainwashed America today could
agree with the meme of "DRAIN-THE-SWAMP" and hope to see it carried proudly on protest signs by
the non-zombies of both sides in the ongoing social upheaval.
coberly , December 10, 2016 6:41 pm
Sammich
I agree that "accuse the other side of doing what you are doing" is a familiar ploy of the
right.
I don't know what Hayek was really saying, or if he let the comic book version stand because
he was so flattered to have his child receive such adulation, or just because he was in his dotage
and didn't really understand how he was being misrepresented if he was.
but the fun thing to do with Hayek is to point out what he "really" said to those who have
only heard the comic book version
if anyone is still talking about him at all. seems there was a big rush of talk about Hyak
a few years ago and now it has faded.
Sandwichman
:
December 07, 2016 at 12:06 PM
Terence Hutchison concluded his appendix on "Some postulates
of economic liberalism" in Significance and Basic Postulates
of Economic Theory with the admonition, "It is high time to
put these theories [laissez faire and equilibrium doctrines]
firmly back in their place as Utopian constructions." He
cited S. Bauer's 1931 article, "Origine utopique et
métaphorique de la théorie du "laissez faire" et de
l'équilibre naturel."
Prominent in Bauer's discussion is
the role of Baltasar Gracian's Oráculo Manual, which was
translated into French by Amelot de la Houssaie in 1684, in
popularizing both the notion and the term, laissez faire.
Pierre le Pesant Boisguilbert is credited with introducing
the term into political economic thought in a book published
in 1707. It is conceivable that Keynes knew of the Gracian
maxim because he used the image Gracian had used of
tempestuous seas in his famous rejoinder about "the long run"
being "a misleading guide to current affairs."
In his book Hutchinson noted that "several writers have
argued that some such postulate as 'perfect expectations' is
necessary for equilibrium theory." This observation lends a
special note of irony to Gracian's coinage of laissez faire.
In his discussion of Gracian's Oráculo, Jeremy Robbins
highlighted the observation that:
"Gracián's prudence rests firmly on a belief that human
nature is constant... In Gracián's case, human nature is
viewed as a constant in so far as he believes it to act
consistently contrary to reason."
In fact, Robbin's chapter on Gracian is titled "The
Exploitation of Ignorance." Gracian's maxims establish "a
sharp distinction between the elite and the necios [that is,
fools]." Assuming that most people are fools who act contrary
to reason is obviously something quite different from
assuming perfect expectations. For that matter, the prudence
of a courtier seeking to gain power over others is something
quite distinct the foresight required of a policy
professional acting ostensively on behalf of the public
welfare.
That metaphorical and Utopian notions of laissez faire and
natural equilibrium have managed to persist and even prevail
in economics -- impervious to Hutchinson's warning (or
Keynes's) -- is testimony to the perceptiveness of Gracian's
estimate of human nature.
"Let's stop pretending unemployment is voluntary" is the
title for chapter four of Roger Farmer's book,"Prosperity for
All: How to Prevent Financial Crises."
That is not good
enough.
No. Let's stop pretending that the "pretending" is
innocent. Let's stop pretending that it isn't a deliberate
fraud that has been aided and abetted by most of the
economics profession.
If you want to access the dynamical systems literature you
should know the terminology that self-equilibrating systems
have at least one stable equilibrium point with a non-empty
domain of attraction (think downward pointing pendulum). Any
state (set of variables describing the system configuration)
that starts in this domain will end up at the stable
equilibrium point. Non-linear systems can have several
equilibria and some may be unstable as well, in that starting
any small distance from those equilibria results in movement
away from that equilibrium (e.g. an upside down pendulum). It
is not enough to determine if a point is an equilibrium
point, you must also check its stability.
The trouble with this approach is that economics is
describing a system that is not an equilibrium system in the
first place. Economics is describing a system that is
1. Evolutionary
2. Dynamic. (In fact all the measurements are not
measurements of a static state but of movements. Even
apparently static things like asset values or the discounting
sum of flow over time.)
Just in case you don't see the relevance, just think about
what happens if it is not the position that is moving but the
equilibrium point (and worse the equilibrium point is not
known, and perhaps unknowable).
" If the expectations of agents are incompatible or
inconsistent with the equilibrium of the model, then, since
the actions taken or plans made by agents are based on those
expectations, the model cannot have an equilibrium solution.
..."
There is clearly one very important word missing in
this sentence.
Let me try again:
"" If the expectations of ANY agents are incompatible or
inconsistent with the equilibrium of the model, then, since
the actions taken or plans made by agents are based on those
expectations, the model cannot have an equilibrium solution.
..."
Now what at first look seems merely far fetched, just
became laughable.
I'm sorry, but this is very, very important. General
equilibrium is the original sin of economics (especially
Macro-economics). It is where it all went wrong. They should
just drop it, and try to model the dynamic response of agents
and the system to disequilibrium, which inevitably arises
faster than equilibrating forces can possibly work. A more
fundamental way of thinking about this is to realize that
economics deals with transactions and all transactions are
the result of a disequilibrium (at equilibrium all the trades
are already made).
Where did the disequilibrium come from? When you
understand the answer to that, you can understand what drives
the economy. Not before.
"... "We propose the creation of a harmonious economic community stretching from Lisbon to Vladivostok," Putin writes. "In the future, we could even consider a free trade zone or even more advanced forms of economic integration. The result would be a unified continental market with a capacity worth trillions of euros." ..."
"... "The proposal comes as Putin travels to Germany on Thursday for a two-day visit, including a Friday meeting with German Chancellor Angela Merkel. On Wednesday, Russia and the EU reached an important agreement on the elimination of tariffs on raw materials such as wood. The deal was an important prerequisite for the EU dropping its opposition to Russian membership in the World Trade Organization. Moscow is hoping to become a member in 2011." http://www.spiegel.de/international/europe/from-lisbon-to-vladivostok-putin-envisions-a-russia-eu-free-trade-zone-a-731109.html ..."
Causes more polarization, between those who believe it & those who don't.
More importantly, it's in support of "fake news" (censorship) which is a serious move.
Also, the reason for such an unconvincing accusation is in Russia & Putin:
November of 2010, Putin wrote an editorial for Suddeutsche Zeitung. He urged No more tariffs.
No more visas. Vastly more economic cooperation between Russia and the European Union.
"We propose the creation of a harmonious economic community stretching from Lisbon to
Vladivostok," Putin writes. "In the future, we could even consider a free trade zone or even
more advanced forms of economic integration. The result would be a unified continental market
with a capacity worth trillions of euros."
"The proposal comes as Putin travels to Germany on Thursday for a two-day visit, including
a Friday meeting with German Chancellor Angela Merkel. On Wednesday, Russia and the EU reached
an important agreement on the elimination of tariffs on raw materials such as wood. The deal
was an important prerequisite for the EU dropping its opposition to Russian membership in the
World Trade Organization. Moscow is hoping to become a member in 2011."
http://www.spiegel.de/international/europe/from-lisbon-to-vladivostok-putin-envisions-a-russia-eu-free-trade-zone-a-731109.html
While we applaud the breakup of the EU, recognizing it as a force which eats the liberty and
economic prosperity of Europeans, Putin wants Russia to join it., and NATO as well.
Putin at Valdai in 2015
"I am certain that if there is a will, we can restore the effectiveness of the international
and regional institutions system. We do not even need to build anything anew, from the scratch;
this is not a "greenfield," especially since the institutions created after World War II are
quite universal and can be given modern substance, adequate to manage the current situation.
"We need a new global consensus of responsible forces. It's not about some local deals or
a division of spheres of influence in the spirit of classic diplomacy, or somebody's complete
global domination. I think that we need a new version of interdependence. We should not be
afraid of it. On the contrary, this is a good instrument for harmonising positions"
Putin supports the Rule of Law-- thru the Rockefeller-controlled UN. He's for national sovereignty
but never speaks of the desirability for nations to regain trade sovereignty, let alone economic,
immigration or currency sovereignty.
An opposition must have an opposing vision. Otherwise, what is it opposing? Is it enough that
it opposes US aggression as a means to bring about the shared vision of a regionally-administered
global oligarchy? Is it enough that Russia's 1% have to fight the West's 1% to keep 74% of the
wealth of Russia?
The hacking accusation is not meant to persuade us that it's true-- but only to reinforce our
feeling that there is opposition between Russia and the West: That Russia opposes the global tyranny
which is progressing to completion. That we need do nothing but have faith in our minds in Putin
and Russia.
I hope I'm wrong guys. Can anybody find any words of Putin's which speak of the desirability
of reversing any part of global governance?
"... What I'm against is the attempt to place a person's belief system onto the nation or the world generally. We object to the Soviet Union trying to dominate the world, to communize the world. The United States, I hope, is trying to democratize the world. But I certainly would be very much against trying to Christianize the world or to Islamize it or to Judaize it or anything of the sort. ..."
"... My objection to fundamentalism is not that they are fundamentalists but that essentially they want me to be a fundamentalist, too. ..."
"... Even in societies in which religion is very powerful, there's no shortage of crime and sin and misery and terrible things happening, despite heaven and hell. ..."
@ juliania who asked for clarification about my thoughts about religions in general and Xtians
i particular.
I was raised Catholic and went to Catholic school for 12 years, the last 4 with Jesuits. I
do give the Jesuits credit for teaching me to think.
As I thought more and educated myself further about history I wondered why religions were not
fully relegated to honorable myth after the Enlightenment period. It was clear to me that they
were pushing rules of social organization that were patriarchal and elitist....and still are.
Their enforcement of the rules is beyond hypocritical now and I see many who ascribe to one or
another but in name only. If Xtians leaders and their followers were true to their precepts we
would not have war and the money changers would not exist.....hence my Devils pact theory.
And then as I learned more about the Cosmos we live in I realized the hubris of a species that
creates Gods in their likeness. I explain it to folks this way:
1. Science, which I believe much of, has learned that the Cosmos consists of almost 5% matter,
which we are starting to know some things about but still clueless in many ways.
2. The remaining 95% of the Cosmos the science folk have some theories about but mostly we
are very clueless about that 95%
3. Does it make any sense that our species that is part of the 5% matter of the Cosmos can
discover/create/believe in any deity given our utter ignorance at this point in our existence?
4. I think it takes the utmost hubris to do so and view religions as crutches for those that
can't handle not knowing.
That said, I think that religions have come up with some useful thoughts to help guide society
but should not be thought of as having any more of a clue than the scientists. Religions, IMO,
should be relegated to the wonderful myth they represent in our history, certainly longer than
the 6K years the "serious" Xtians believe. True science, that is based rigorously on rules of
discovery has, IMO, ongoing relevance in our world.
Since I am on this topic and it is an open thread let me share some parts of an interview between
Bill Moyers and Isaac Asimov that speaks more to this subject:
MOYERS: The fundamentalists see you as the very incarnation of the enemy, the epitome of the
secular humanist who opposes God's plan for the universe. In 1984, the American Humanist Society
gave you their Humanist of the Year Award, and you're now president of that organization. Are
you an enemy of religion?
ASIMOV: No, I'm not. What I'm against is the attempt to place a person's belief system onto
the nation or the world generally. We object to the Soviet Union trying to dominate the world,
to communize the world. The United States, I hope, is trying to democratize the world. But I certainly
would be very much against trying to Christianize the world or to Islamize it or to Judaize it
or anything of the sort.
My objection to fundamentalism is not that they are fundamentalists but
that essentially they want me to be a fundamentalist, too. Now, they may say that I believe evolution
is true and I want everyone to believe that evolution is true. But I don't want everyone to believe
that evolution is true, I want them to study what we say about evolution and to decide for themselves.
Fundamentalists say they want to treat creationism on an equal basis. But they can't. It's not
a science. You can teach creationism in churches and in courses on religion.
They would be horrified
if I were to suggest that in the churches they teach secular humanism as an alternate way of looking
at the universe or evolution as an alternate way of considering how life may have started. In
the church they teach only what they believe, and rightly so, I suppose. But on the other hand,
in schools, in science courses, we've got to teach what scientists think is the way the universe
works.
MOYERS: But this is what frightens many believers. They see science as uncertain, always tentative,
always subject to revisionism. They see science as presenting a complex, chilling, and enormous
universe ruled by chance and impersonal laws. They see science as dangerous.
ASIMOV: That is really the glory of science - that science is tentative, that it is not certain,
that it is subject to change. What is really disgraceful is to have a set of beliefs that you
think is absolute and has been so from the start and can't change, where you simply won't listen
to evidence. You say, "If the evidence agrees with me, it's not necessary, and if it doesn't agree
with me, it's false." This is the legendary remark of Omar when they captured Alexandria and asked
him what to do with the library. He said, "If the books agree with the Koran, they are not necessary
and may be burned. If they disagree with the Koran, they are pernicious and must be burned." Well,
there are still these Omar-like thinkers who think all of knowledge will fit into one book called
the Bible, and who refuse to allow it is possible ever to conceive of an error there. To my way
of thinking, that is much more dangerous than a system of knowledge that is tentative and uncertain.
MOYERS: Do you see any room for reconciling the religious view in which the universe is God's
drama, constantly interrupted and rewritten by divine intervention, and the view of the universe
as scientists hold it?
ASIMOV: There is if people are reasonable. There are many scientists who are honestly religious.
Millikan was a truly religious man. Morley of the Michelson-Morley experiment was truly religious.
There were hundreds of others who did great scientific work, good scientific work, and at the
same time were religious. But they did not mix their religion and science. In other words, if
something they understand took place in science, they didn't dismiss it by saying, "Well, that's
what God wants," or "At this point a miracle took place." No, they knew that science is strictly
a construct of the human mind working according to the laws of nature, and that religion is something
that lies outside and may embrace science. You know, if there were suddenly to arise scientific,
confirmable evidence that God exists, then scientists would have no choice but to accept that
fact. On the other hand, the fundamentalists don't admit the possibility of evidence that would
show, for example, that evolution exists. Any evidence you present they will deny if it conflicts
with the word of God as they think it to be. So the chances of compromise are only on one side,
and, therefore, I doubt that it will take place.
MOYERS: What frightens them is something that Dostoevski once said - if God is dead, everything
is permitted.
ASIMOV: That assumes that human beings have no feeling about what is right and wrong. Is the
only reason you are virtuous because virtue is your ticket to heaven? Is the only reason you don't
beat your children to death because you don't want to go to hell? It's insulting to imply that
only a system of rewards and punishments can keep you a decent human being. Isn't it conceivable
a person wants to be a decent human being because that way he feels better?
I don't believe that I'm ever going to heaven or hell. I think that when I die, there will
be nothingness. That's what I firmly believe. That's not to mean that I have the impulse to go
out and rob and steal and rape and everything else because I don't fear punishment. For one thing,
I fear worldly punishment. And for a second thing, I fear the punishment of my own conscience.
I have a conscience. It doesn't depend on religion. And I think that's so with other people, too.
Even in societies in which religion is very powerful, there's no shortage of crime and sin
and misery and terrible things happening, despite heaven and hell. I imagine if you go down death
row, and ask a bunch of murderers who are waiting for execution if they believe in God, they'll
tell you yes. I wouldn't be surprised if the number of people in jail for fraud, for violent crimes,
for everything, includes a smaller percentage of acknowledged atheists than we have in the general
population. So I don't know why one should think that just because you don't want a ticket to
heaven, and you don't fear a ticket to hell, you should be a villain.
One more quote from that Bill Moyer/Isaac Asimov interview and then I will stop
MOYERS: Is it possible that you suffer from an excessive trust in rationality?
ASIMOV: Well, I can't answer that very easily. Perhaps I do, you know. But I can't think of
anything else to trust in. If you can't go by reason, what can you go by? One answer is faith.
But faith in what? I notice there's no general agreement in the world. These matters of faith,
they are not compelling. I have my faith, you have your faith, and there's no way in which I can
translate my faith to you or vice versa. At least, as far as reason is concerned, there's a system
of transfer, a system of rational argument following the laws of logic that a great many people
agree on, so that in reason, there are what we call compelling arguments. If I locate certain
kinds of evidence, even people who disagreed with me to begin with, find themselves compelled
by the evidence to agree. But whenever we go beyond reason into faith, there's no such thing as
compelling evidence. Even if you have a revelation, how can you transfer that revelation to others?
By what system?
"... existing official models do not sufficiently explain the Minsky period, the runup, how things got so fragile that they could collapse so badly. ..."
"... in effect Minsky provided a model and discussion of all three stages, although his model of the Keynes stage is not really all that distinctive and is really just Keynes. ..."
"... he probably did a better job of discussing the Bagehot stage than did Bagehot, and more detailed, if less formal, than Diamond and Dybvig. ..."
"... But the essentials of what go on in a panic and crash were well understood and discussed prior to 1873, with Minsky, and Kindlegerger drawing on Minsky in his 1978 Manias, Panics, and Crashes, quoting in particular a completely modern discussion from 1848 by John Stuart Mill ..."
"... Keep in mind, there are an infinite number of models that fit the data. Science requires more that a fit. It requires that the model correspond with reality in a way that it can fill in observable data before it is observed. ..."
"... Here's a theory (not a model): the true and revolutionary insights of Veblen, Keynes, and Minsky have all failed to significantly alter the trajectory of economic thought because the discipline expects "the truth" to do the impossible. ..."
Yes, we miss the late Hy Minsky, especially those of us who knew him, although I cannot claim
to be one who knew him very well. But I knew him well enough to have experienced his wry wit and
unique perspective. Quite aside from that, it would have been great to have had him around these
last few years to comment on what has gone on, with so many invoking his name, even as they have
in the end largely ended up studiously ignoring him and relegating him back into an intellectual
dustbin of history, or tried to.
So, Paul Krugman has a post entitled "The Case of the Missing Minsky," which in turn comments
on comments by Mark Thoma on comments by Gavyn Davis on discussions at a recent IMF conference on
macroeconomic policy in light of the events of recent years, with Mark link
http://economistsview.typepad.com/economistsview/2015/06/the-case-of-the-missing-minsky.htmling
to Krugman's post.
He notes that there seem to be three periods of note:
a Minsky period of increasing vulnerability of the financial system to crash before the crash,
a Bagehot period during the crash,
a Keynes period after the crash.
Krugman argues that, despite a lot of floundering by the IMF economists, we supposedly understand
the second two, with his preferred neo-ISLM approach properly explaining the final Keynes period
of insufficiently strong recovery due to insufficiently strong aggregate demand stimulus, especially
relying on fiscal policy (and while I do not fully buy his neo-ISLM approach, I think he is mostly
right about the policy bottom line on this, as would the missing Minsky, I think).
He also says that looking at 1960s Diamond-Dybvig models of bank panics sufficiently explain the
Bagehot period, and they probably do, given the application to the shadow banking system. However,
he grants that existing official models do not sufficiently explain the Minsky period, the runup,
how things got so fragile that they could collapse so badly.
Now I do not strongly disagree with most of this, but I shall make a few further points. The first
is that in effect Minsky provided a model and discussion of all three stages, although his model
of the Keynes stage is not really all that distinctive and is really just Keynes.
But he probably did a better job of discussing the Bagehot stage than did Bagehot, and more
detailed, if less formal, than Diamond and Dybvig. I suspect that Bagehot got dragged in by
the IMF people because he is so respectable and influential regarding central bank policymaking,
given his important 1873 Lombard Street, and I am certainly not going to dismiss the importance
of that work.
But the essentials of what go on in a panic and crash were well understood and discussed prior
to 1873, with Minsky, and Kindlegerger drawing on Minsky in his 1978 Manias, Panics, and Crashes,
quoting in particular a completely modern discussion from 1848 by John Stuart Mill (I am tempted
to produce the quotation here, but it is rather long; I do so on p. 59 of my 1991 From Catastrophe
to Chaos: A General Theory of Economic Discontinuities), which clearly delineates the mechanics
and patterns of the crash, using the colorful language of "panic" and "revulsion" along the way.
Others preceding Bagehot include the inimitable MacKay in 1852 in his Madness of Crowds book
and Marx in Vol. III of Capital, although admittedly that was not published until well after
Bagehot's book.
One can even find such discussions in Cantillon early in the 1700s discussing what went on in
the Mississippi and South Sea bubbles, from which he made a lot of money, and then, good old Adam
Smith in 1776 in WoN (pp. 703-704), who in regard to the South Sea bubble and the managers of the
South Sea company declared, "They had an immense capital dividend among an immense number of proprietors.
It was naturally to be expected, therefore, that folly, negligence, and profusion should prevail
in the whole management of their affairs. The knavery and extravagance of their stock-jobbing operations
are sufficiently known [as are] the negligence, profusion and malversation of the servants of the
company."
It must be admitted that this quote from Smith does not have the sort of detailed analysis of
the crash itself that one finds in Mill or Bagehot, much less Minsky or Diamond and Dybvig. But there
is another reason of interest now to note these inflammatory remarks by Smith. David Warsh in his
Economic Principals has posted in the last few days on "Just before the lights went up," also linked
to by the
inimitable
Mark Thoma. Warsh discusses recent work on Smith's role in the bailout of the Ayr Bank of Scotland,
whose crash in 1772 created macroeconomic instability and layoffs, with Smith apparently playing
a role in getting the British parliament to bail out the bank, with its main owners, Lord Buccleuch
and the Duke of Queensbury, paying Smith off with a job as Commissioner of Customs afterwards. I
had always thought that it was ironic that free trader Smith ended his career in this position, but
had not previously known how he got it. As it is, Warsh points out that the debate over bubbles and
what the role of government should be in dealing with them was a difference between Smith and his
fellow Scottish rival, Sir James Steuart, whose earlier book provided an alternative overview of
political economy, now largely forgotten by most (An Inquiry into the Principles of Political
Oeconomy, 1767).
I conclude this by noting that part of the problem for Krugman and also the IMF crowd with Minsky
is that it is indeed hard to fit his view into a nice formal model, with various folks (including
Mark Thoma) wishing it were to be done and noting that it probably involves invoking the dread behavioral
economics that does not provide nice neat models. I also suspect that some of these folks, including
Krugman, do not like some of the purveyors of formal models based on Minsky, notably Steve Keen,
who has been very noisy in his criticism of these folks, leading even such observers as Noah Smith,
who might be open to such things, to denounce Keen for his general naughtiness and to dismiss his
work while slapping his hands. But, aside from what Keen has done, I note that there are other ways
to model the missing Minsky more formally, including using agent-based models, if one really wants
to, these do not involve putting financial frictions into DSGE models, which indeed do not successfully
model the missing Minsky.
Barkley Rosser
Update: Correction from comments is that the Ayr Bank was not bailed out. It failed. However,
the two dukes who were its main owners were effectively bailed out, see comments or the original
Warsh piece for details. It remains the case that Adam Smith helped out with that and was rewarded
with the post of Commissioner of Customs in Scotland.
What, exactly, is the value added of formal (or even informal) "models" in all this? That is to
say, if a historian were to describe the events and responses outlined above, what would he leave
out that an economist would put in?
Keep in mind, there are an infinite number of models
that fit the data. Science requires more that a fit. It requires that the model correspond with
reality in a way that it can fill in observable data before it is observed.
Meanwhile, Simon Wren-Lewis dismisses the policy-maker who listens to the historian as using
mere "intelligent guess work", strongly suggesting that economists clearly do better. But if trying
to figure out whether the current moments is Minsky, Keynes or even Keen, isn't "guesswork" then
I don't know what is. Put "intelligent guess work" policy next to model guided policy in your
history above. Where's the value added from modeling? It has to be useful AND the policy maker
must have a scientific reason for knowing it will be useful IN REAL TIME.
Krugman frequently defends "textbook" modeling with a "nobody else has come up with anything
better" response. But that's a classic "when did you stop beating your wife".
What if the economy can't be modeled? Claiming to do the impossible is deluded, even if you
can correctly say: "no one has ever improved upon my method of doing the impossible."
"But we have learned so much!" People say that, but what, exactly, are they talking about?
Here's a theory (not a model): the true and revolutionary insights of Veblen, Keynes, and
Minsky have all failed to significantly alter the trajectory of economic thought because the discipline
expects "the truth" to do the impossible.
Newton faced this when his theory of universal
Gravity was criticized for failing to explain the distance of the planets from the sun. The Aristotelian
tradition said that a proper theory of the heavens would do this.
And so Keynes has his Aristotelian interpreter Hicks and Minsky has his Keen. Requiring the
revolution to succeed in doing the impossible means that the truth gets misinterpreted or ignored.
Either way, no revolution despite every generation producing a revolutionary that sees the truth.
What is the value of this theory? If true, it explains how economics can be filled with smart
people seeking the truth and yet make zero progress in more than a century.
I get the impression that mainstream economists are generally resistant to any kind of boom-and-bust
models (at least while getting a BA in econ I was never taught any). Is this the case? It's too
bad, because models like Lotka–Volterra are not that hard. Just from messing around with agent-based
models it seems like anything with a lag or learning generates cycles. Is it because economists
are fixated on optimization and equilibrium? Are they worried about models that are too sensitive
to initial conditions?
Maybe they should not be, but the discussion among IMF economists, Davis, Thoma, and
Krugman has involved models, and in particular, conventional models. So, Krugman declares that
there are conventional models as noted above to cover two of the stages, the latter two, but not
the first one identified with Minsky. I think there are better models for all this, but they are
not the conventional ones.
chrismealy,
The DSGE and other conventional models are able to model booms and busts, although they generally
do not use the Lotka-Volterra models that such people as the late Richard Goodwin (and even Paul
Samuelson) have used for modeling business cycle dynamics. The big difference is that the conventional
models involve exogenous shocks to set off their busts, with cyclical reverberations that decay
then following the exogenous shock, with some of the lag mechanisms operating for that.
It is not really surprising that this sort of thing does not model Minsky or the Minsky moment,
which involve endogenous dynamics, the very success of the boom as during the Great Moderation
itself undermining the stability and even resilience of the system as essentially endogenous psychological
(and hence behavioral) factors operate to loosen requirements for lending and to use Minksy language,
lending and borrowing increasingly involves highly leveraged Ponzi schemes (and I note that some
more conventional economists have emphasized leverage cycles, notably John Geanakoplis, although
avoiding Minsky per se in doing so).
This is a good post and discussion so far. So here's my $.02:
1. Maybe the behaviorists like
Thaler have already explored this, but it seems to me that economists still need to learn learning
theory from psychologists. Most importantly, "bservational learning," { http://psychology.about.com/od/oindex/fl/What-Is-Observational-Learning.htm
), or more simply "monkey see, monkey do." We constantly learn by observing behavior in others:
our parents, our older siblings, the cool kids at school, our favorite pop icons, our professors,
our business mentors, and so on. As to which,
2. Some people are better at learning than others (duh!). Some learn right away, some more
slowly, some never at all. And further,
3. Some people are more persceptive than others, recognizing the importance of something earlier
or later. If you recognized how important the trend change was when Volcker broke the back of
inflation in the early 1980s, and simply bought 30 year treasuries and held them to maturity,
you made a killing. If you discovered that in the early 1990s, you made less. And so on.
All we need, to pick up on chrismealy's comment, are time periods and learning. Incorporate
variations in skill and persceptiveness into the population, and you can get a nice boom and bust
model. As more and more people, with various levels of skill, learn an economic behavior (flipping
houses, using leverage), they will "push the edge of the envelope" more and more -- does 2x leverage
work? Yes, then how about 4x? Yes, then how about 20x? -- until the system is overwhelmed.
4. But if you don't want to incorporate imitative learning models from psychology, how about
just using appraisals of short term vs. long term risk and reward. Suppose it is the 1980s, and
I think treasury yields are on a securlar downtrend. But this book called "Bankruptcy 1995" just
came out, based on a blue ribbon panel Reagan created to look at budget deficits. That best selling
book forecasts a "hockey stick" of exploding interest rates by the mid-1990s due to ever increasing
US debt. So let's say I am 50% sure of my belief that treasury yields will continue to decline
for another 20 years, and I can make 10% a year if I am right. But if I am wrong .....
Meanwhile, I calculate that there is an 80% chance I can make 10% a year for the next few years
by investing in this new publicly traded company named "Microsoft."
Even leaving aside behavioral finance theories about loss aversion, it's pretty clear that
most investors will plump for Microsoft over treasuries, given their relative confidence in short
term outcomes.
Historically, once interest rates went close to zero at the outset of the Great Depression,
they stayed there for 20 years, and then gradually rose for another 30. How confident are investors
that the same scenario will play out this time?
Either or both of the learning theory or the short term-long term risk reward scenario are
good explanations for why backwards induction ad absurdum isn't an accurate description of behavior.
----
BTW, a nice example of a failed "backwards induction" is the "taper tantrum" of 2013. Since
investors knew that the Fed was going to be raising interest rates sooner or later, they piled
on and raised interest rates immediately -- and made a nice intermediate term top at 3%.
I think New Deal Democrat has it here. This surely, can be covered with a simple model
of asynchronous adaptive expectations with stochastic (Taleb type - big tail) risks. I wouldn't
think you would even need a sophisticated agent based model. There must be plenty of ratchet type
models out there to chose from.
"...the true and revolutionary insights of Veblen, Keynes, and Minsky have all failed to significantly
alter the trajectory of economic thought because the discipline..." sacrifices to the God, Equilibrium.
New Deal Democrat,
WRT "monkey see, monkey do" see Andred Orlean's The Empire of Value which articulates
his mimetic theory of value.
Sorry, I am not on board with this at all. Sure, I am all for incorporating
learning and lags. No problem. This is good old adaptive expectations, which I have no problem
with.
The problem is back to what I said earlier, that Minsky's apparatus operates endogenously without
any need for exogenous shocks, although it can certainly operate within those, as his quoting
of Mill shows, although I did not provide that quote, but Mill starts his story of how bubbles
happen with some exogenous initial supply/demand shock in a market.
Why is what you guys talk about an exogenous shock model? Look at the example: Volcker does
something and then different people figure it out at different rates. But Volcker is the exogenous
shocker. If he does nothing, nothing happens.
In Minsky world, there does not need to be an exogenous shock. The system may be in a total
anf full equilibrium,, but that equilibrium will disequilibrate itself as psychological attitudes
and expectations endogenously change due to it. This is what the standard modelers have sush a
problem with and do not like. They have no problem wiht adaptive expectations models. This is
all old hat stuff for them, with only the fact that one does not know for sure what all those
lags are being the problem, and what opened the door to the victory of ratex because it said there
are no lags and thus no problem. Agents now what will be on average.
Warsh's history of the Ayr Bank has errors. The Bank of England offered it a "bailout" in 1772
but required the personal guarantees of the two Dukes which were not forthcoming. The Ayr Bank
struggled on without lender of last resort support until August 1773, when it closed for good.
(This is all in Clapham's history of the Bank of England.)
What Warsh is calling a "bailout" was not a bailout of the bank, but of its proprietors who
had unlimited liability and were facing the possibility of putting their estates on the market
(which would have affected land prices in Scotland).
As I understand Warsh's description, Parliament granted the two Dukes a charter for a limited
liability company that would sell annuities. It is entirely possible that contemporary sources
would describe such an action as "indemnifying" the promoters of the company. But what is meant
by this use of the term is only that Parliament authorized the formation of corporation. The actual
indemnity is provided in the event the corporation fails by the members of the public who are
creditors of the corporation.
In short, it is an error to claim that there was a "bailout" of the Ayr Bank.
I still don't understand what information is added by "models". Krugman has a job he has created
for himself where everything he does is with an eye toward policy.
So I'm a policy maker. Explain why I need a model. in the 1930s austerity caused recessions
and WWII ended the Depression. A little history of Japan's lost decade and some thinking about
the implications of fiat currency, and, voilia, Krugman's policy suggestions, with no models and
therefore no need to listen to economists like Mankiw or the Germans currently destroying Europe
(third times a charm).
By the by, I have thought this thru. The head of Duke's Philosophy Department agrees: Krugman's
method for using models is empty hand-waving. However he comes to his conclusions, it is not logically
possible that ISLM, or any other model, has anything to do with it.
http://thorntonhalldesign.com/philosophy/2014/7/1/credentialed-person-repeats-my-critique-of-krugman
Since Adam Smith economists have told rather enthralling stories about speculations, manias,
follies, frauds, and breakdowns. The audience likes this kind of stuff. However, when it comes
to how all this fits into economic theory things become a bit awkward. Of course, we have some
modls -- Minsky, Diamond-Dybvig, Keynes come to mind -- but we could also think of other modls
-- more agent-based or equilibrium with friction perhaps. On closer inspection, though, economists
have no clue at all.
Keynes messed up the basics of macro with this faulty syllogism: "Income = value of output
= consumption + investment. Saving = income - consumption. Therefore saving = investment." (1973,
p. 63)
From I=S all variants of IS-LM models are derived including Krugman's neo-ISLM which allegedly
explains the post-crash Keynes period. Let there be no ambiguity, all these models have always
been conceptually and formally defective (2011).
Minsky built upon Keynes but not on I=S.
"The simple equation 'profit equals investment' is the fundamental relation for a macroeconomics
that aims to determine the behavior through time of a capitalist economy with a sophisticated,
complex financial structure." (Minsky, 2008, p. 161)
Here profit comes in but neither Minsky, nor Keynes, nor Krugmann, nor Keen, nor the rest of
the profession can tell the fundamental difference between income and profit (2014).
The fact of the matter is that the representative economist fails to capture the essence of
the market economy. This does not matter much as long as he has models and stories about crashing
Ponzi schemes and bank panics. Yes, eventually we will miss them all -- these inimitable proto-scientific
storytellers.
To have any number of incoherent models is not such a good thing as most economists tend to
think. What is needed is the true theory.
"In order to tell the politicians and practitioners something about causes and best means,
the economist needs the true theory or else he has not much more to offer than educated common
sense or his personal opinion." (Stigum, 1991, p. 30)
The true theory of financial crises presupposes the correct profit theory which is missing
since Adam Smith. After this disqualifying performance nobody should expect that some Walrasian
or Keynesian bearer of hope will come up with the correct modl any time soon.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper
Series, 1966438: 1–20. URL http://ssrn.com/abstract=1966438.
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected
Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.
Minsky, H. P. (2008). Stabilizing an Unstable Economy. New York, NY, Chicago, IL, San Francisco,
CA: McGraw Hill, 2nd edition.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics
and Econometrics. Cambridge, MA: MIT Press.
In addition to my hypo re Volcker and interest rates, I also mention flipping
houses and leverage.
Person A flips a house, makes $100k. Person B learns of it, figures s/he can do just as well,
and flips a house. Eventually enough people are doing it that news stories are written about it.
By now 1000s of people are figuring, "if they can do it, I can do it.":
So long as the trend continues, the person using financial leverage to flip houses makes even
more profit. Person B uses more leverage, and so on. And since 2x leverage worked, why not 4x
leverage. And if that works, why not 10x leverage?
Both the number of people engaging in the behavior, and the financial leveraging of the behavior,
are endogenous, unless you are going to hang your hat on existing trend (note, not necessarily
a shock - of rising house prices0.
All you need is more and more people of various skill sets at various entry points of time
engaging in the behavior, and testing increasing leverage the more the behavior works.
Secondly, as to stability breeding instability, stability itself is the existing trend. Increasingly
over time, more and more leverage will be used to profit off the existing trend. All it takes
is learning + risk-takers successfully testing the existing limits. The more stable the system,
the more risk-takers can apply leverage without rupturing it -- for a while.
Let me try to express my position as a series of axioms:
1. Assume that no system, no matter how stable, can withstand infinite leverage.
2. Assume that there is a certain non-zero percentage of risk-taking individuals.
3. Assume that risk-takers will use some amount of leverage to attempt to profit within a stable
system.
4. Assume that risk-takers will use increasing leverage once any given lesser percentage of leverage
succeeds in rendering a profit, in order to increase profits.
5. Assume that others will learn, over various time periods, at varying levels of skill, to imitate
the successful behavior of risk-takers.
Under those circumstances, it is certain that any system,
no matter how stable, will ultimately succumb to leverage. And the more stable, the more leverage
will have been applied to reach that breaking point. I.e., stability breeds instability.
Even using history as an analogy is implicitly introducing a model. You're saying, here's my model
of this history and I crank my little model to show the behavior of the model simulates the historical
record, then I adapt the model to present circumstances, and crank again arguing, again by analogy.
What I would object to is the reliance on "analytic models" as opposed to operational
models of the actual institutions. Economists love their analytic models, particularly axiomatic
deductive "nomological machines", DSGE being the current orthodox approach. Not that there is
anything wrong about analysis. My objection would be to basing policy advice on a study of analytic
models to the exclusion of all else -- Krugman's approach -- rather than an empirical study of
institutions in operation (which would still involve models, because that's how people think,
but they might be, for example, simulation models calibrated to observed operational mechanisms).
There are reasons why economists prefer analytic models, but few of those reasons are sound.
In the end, it is a matter of bad judgment fostered by a defective education and corruption or
weakmindedness. Among other things, reliance on analytic models give economics an esoteric quality
that privileges its elite practitioners. Ordinary people can barely understand what Krugman is
talking about in the referenced piece, and that's by design. He does his bit to protect the reputations
of folks like Bernanke and Blanchard, obscuring their viewpoints and the consequences of their
policies.
I am not sure what can be done about it. Economists like Krugman are as arrogant as they are
ignorant -- there's not enough intellectual integrity to even acknowledge fundamental errors,
and that lack of integrity keeps the "orthodoxy" going in the face of manifest failures. For the
conservatives on some payroll, the problem is even worse.
I am not confident that shooing economists from the policy room and encouraging politicians
to discuss these matters among themselves improves the situation. In doubt, people fall back on
a moral fundamentalism of the kind that gets us to "austerity" and "sacrifice" and blames the
victims -- pretty much what we have now.
Re-doing Minsky as an analytic model is an impossible task almost by definition. Minsky's approach
was fundamentally about abstracting from careful observation of what financial firms did, operationally.
It made him a hero with many financial sector denizens, who recognized themselves in his narratives,
even when he cast them in the role of bad guys. (No one is ever going to recognize himself as
a representative agent in a DSGE model.)
Perhaps the hardest thing to digest from Minsky is the insight that business cycles can not
be entirely mastered. The economy is fundamentally a set of disequilibrium phenomena, the instability
built-in (endogenous, as they say). The New Keynesian idea is that the economy is fundamentally
an equilibrium phenomenon, that occasionally needs a helping hand to recover from exogenous disturbance.
These are antagonistic world views, which cannot be reconciled with each other, and the New Keynesian
view can be reconciled only minimally with the observable facts of the world, by a lot of ad hoc
fuzzy thinking ("frictions").
Bruce, I disagree with your view of politicians. The current GOP crop are essentially following
the moral philosophy that, in the end, is the only content generated by economics. But it was
not always thus.
I once watched Senator Kit Bond of Missouri (very-R) try to round up a quorum in the Small
Business Committee. It was quite clear that the man enjoyed people. He liked the company of just
about everybody. Without the strong interference from economists, that's who ends up in politics.
People like that are pragmatic. They try things. They aren't there for the purpose (contra Ted
Cruz) of breaking things.
You're right, my problem really is with analytic "models" which aren't really models but rather
metaphors or analogies. But I don't think that's the only way reasoning from history can work.
There are lots of areas of policy, some of which continue to resist conversion to economic
religion. In education policy we try interventions and see what happens. It's inductive and mostly
correlation, but thru trial and error we do progress toward better policy (although schools of
education are only slowly moving away from their notoriously anti-scientific past).
Politicians don't have to think about the budget like a household and tighten belts. They know
that business borrow money all the time. It's actually the language of the academy that leads
to "tightening belts" instead of investing in the future. Economics is the science of claiming
that if you need something, and you can afford that something, you still must consider "multipliers"
or "the philosophers stone" or some other nonsense before you can decide to buy what you need.
What I mean to say about history: don't confuse theories with models. I have a theory about what
caused what in the Great Depression. But I don't model the economy.
I think I should clarify, I think endogenous and exogenous are a little bit besides the point
here. I think the exact trigger that starts a "state change" in the system has a stochastic component.
But the increasing vulnerability of the system is endogenous, in a very Minsky sense. What I am
saying is that increasing vulnerability could be modelled without using agent based modelling
(a bit like modelling landslides or earthquakes if you like). I'm not saying that the model is
just being driven by exogenous shocks.
Bruce,
I think there is a bit of tendency to mischaracterise what Paul Krugman is saying. He is the last
person you should be accusing of mistaking the map for the territory. He is saying that EVEN relatively
simple models can make sensible suggestions about policy in some circumstances.
Yes, though I tend to agree with you that general equilibrium is the original sin in macro-economic
modelling and that the system is in fact a disequilibrium system. But that doesn't imply to me
at all that you can't use analytical approaches.
""The trouble is not so much that macroeconomists say things that are inconsistent with the facts."
-- that's a clear sign of a cult.
Notable quotes:
"... "The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error." ..."
"... The obvious explanation is ideological. While Simon Wren Lewis cannot prove it was ideological, it is difficult to understand why one would choose to develop theories that ignore some of the existing evidence, in an area that lacks data. There is a reluctance among the majority of economists to admit that some among them may not be following the scientific method but may instead be making choices on ideological grounds. This is the essence of Romer's critique. ..."
"... ...it is all but indistinguishable from Milton Friedman's ideologically-driven description of the macroeconomy. In particular, Milton Friedman's prohibition of fiscal policy is retained with a caveat about the zero-lower bound in recent years. To argue otherwise is to deny Keynes' dictum that 'the ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood.' ..."
"... What I find most egregous in Neo-classicism, is it's failure to accept that people invented government to perform tasks they individually could not. ..."
"... Economics is a foul and pestilent ghetto, an intellectual dead-end akin to Ptolemaic astronomy. The priests will continue adding epicycles to epicycles until they are dragged screaming to the asylum. ..."
"... There is always some revered academic economist readily available to support virtually any political narrative imaginable, even if it's total rubbish. It is truly a "science" for all seasons fostered by reverend figures with authority earned by many years diligent practice in translating gibberish into runes of mathematical formulae. That's more dainty than poking about in sheep guts with a sharp stick, but of little more use in the real world which lies outside the ivied towers. ..."
"... Diligence blesses them with tenure followed by offers to serve private or public patrons perpetually engaged in rent-seeking. These made men (and women) are essentially set for life, regardless of whatever nonsense they may forever promote thereafter. A few are blessed by the good luck of a Nobel which guarantees a prosperous sinecure and unlimited opportunity to promote their own vacuous political narratives masqueraded as "science". ..."
"... This cult enjoys perpetual protection within public and private safe spaces created by their well-heeled paymasters. It is one of a number of deeply attached parasites which cannot be safely excised from the corrupt body of the host without killing it. ..."
"... I should add that neoclassical economics has damaged economics by excluding explicitly the government sector in their models. As a result, the impact of government on the macroeconomy has not been properly understood ..."
"... Do the economists he names really not understand the computer stat model they are using? Are they admitting to making up the fudge factors to make their 'data' fit their (wrong headed) totem pole, supply and demand? I mean, there it is in black and white, by the economists' own words, that their math is just flat out wrong. ..."
"... The economics I learned in the early 1960's seems to work as well now as it did back then. I was lucky enough to be so busy at work in the decades that followed, that I did not have a chance to keep up on the mis-education of the time. When I had the time to start paying more attention to the subject again, I couldn't understand what had happened to the knowledge that I had learned that seemed to explain all that was happening in the economy. ..."
"... The Neolib-Globalist Ministry Of Truth erased it. You must not have got the memo. ..."
"... It's 2016 and some Dismal Scientists are still debating whether "involuntary unemployment" exists. ..."
"... If anything, Philip Mirowski has persuasively argued that neoliberalism requires a powerful State. ..."
"... He has shown that the neoliberal thought collective theorized an elaborate political mobilization, and recognized early on that the creation of a new market is a political process requiring the intervention of organized power. The political will to impose a market required a strong state and elaborate regulation and also that the State would need to expand its economic and political power over time. ..."
"... The neoliberal market had to be imposed it did not just happen. A key issue for the future is defining the nature of the state–whether under neoliberalism or MMT or under Trump or Sanders, or left populist or right populist. ..."
"... Mankiw belongs in the non-ideological camp? I don't see how anybody with a brain could read any of his work past the first page and still hold that view. ..."
"... agreed, Mankiw is an intellectual clown and he has been mis-educating students for decades now. ..."
Romer
kicked off the debate in an essay, stating that for more than three decades, macroeconomics has
gone backwards. He finds that the treatment of identification now is no more credible than in the
early 1970s, but escapes challenge because it is so much more opaque. Macroeconomic theorists dismiss
mere facts by feigning an obtuse ignorance about such simple assertions as "tight monetary policy
can cause a recession." For Romer, the Nobel Prize-winning crop of macroeconomic theorists who transformed
the field in the late 1970s and 1980s - Robert Lucas, Edward Prescott and Thomas Sargent –
are the main people to be held responsible for this this development. Their models attribute fluctuations
in aggregate variables to imaginary causal forces that are not influenced by actions that any
person takes. Especially when it comes to monetary policy, the belief that it has no or little effect
on the economy is disturbing, or as Romer puts it:
"The trouble is not so much that macroeconomists say things that are inconsistent with the
facts. The real trouble is that other economists do not care that the macroeconomists do not care
about the facts. An indifferent tolerance of obvious error is even more corrosive to science than
committed advocacy of error."
... ... ...
Simon Wren-Lewis identifies yet another factor which lies at the heart of macroeconomic criticism:
ideology. As an example he quotes Real Business Cycle (RBC) research from a few decades ago. That
was only made possible because economists chose to ignore evidence about the nature of unemployment
in recessions. There is overwhelming evidence that employment declines in a recession because workers
are fired rather than choosing not to work, and that the resulting increase in unemployment is involuntary
(those fired would have rather retained their job at their previous wage). Both facts are incompatible
with the RBC model. Why would researchers try to build models of business cycles where these cycles
require no policy intervention, and ignore key evidence in doing so? The obvious explanation
is ideological. While Simon Wren Lewis cannot prove it was ideological, it is difficult to understand
why one would choose to develop theories that ignore some of the existing evidence, in an area that
lacks data. There is a reluctance among the majority of economists to admit that some among them
may not be following the scientific method but may instead be making choices on ideological grounds.
This is the essence of Romer's critique.
...it is all but indistinguishable from Milton Friedman's ideologically-driven description
of the macroeconomy. In particular, Milton Friedman's prohibition of fiscal policy is retained with
a caveat about the zero-lower bound in recent years. To argue otherwise is to deny Keynes' dictum
that 'the ideas of economists and political philosophers, both when they are right and when they
are wrong are more powerful than is commonly understood.'
PlutoniumKun, December 6, 2016 at 4:18 am
I can recall my very first lecture in Macroeconomics back in the mid 1980's when the Prof.
freely admitted that macro had very little real world validity as the models simply didn't match
the real world data. He advised us to focus on economic history if we wanted to understand how
the real world worked. That was the only useful thing I learned from three years studying the
subject.
Dr. George W. Oprisko, December 6, 2016 at 7:21 am
I cut y teeth on computer models of rainfall – streamflow relationships. We always started
with constants derived from experimental or theoretical bases
Recently I was asked to critique a paper written by a colleague which reported results of a
numeric model of plankton distribution in the Arabian Sea. In this paper his original constants
based on known relationships gave results which did not agree with reality, so instead of looking
for mistakes in his fundamentals, he massaged the constants until he got agreement. When I pointed
out that he neglected the Somali Current, he was livid. That is, instead of thanking me for pointing
out a glaring deficiency in his methodology, he chose to obfuscate.
I see the same thing prevalent in macro-economics, with the sole exception of Modern Monetary
Theory. I find MMT to be the only variant which concretely explains the real economy.
What I find most egregous in Neo-classicism, is it's failure to accept that people invented
government to perform tasks they individually could not.
iNDY
Jake, December 6, 2016 at 5:24 am
..and none of the economists were held responsible, refused tenure, tried in court or had
their nobel prizes taken away. They continued serving their pay masters or their ideologies and
nothing changed. Life went on, gradually becoming shittier, full of anxiety and ultimately meaningless.
But hey atleast the great information processor is satisfying your utility!
PlutoniumKun,
December 6, 2016 at 6:23 am
One Irish macro professor did quite well after the Irish economic crash (2008) informing everyone
about the correct policy approaches on various public media. His university department had one
of his peer reviewed papers online dating from 2005 which advocated the adoption of US style sub-prime
mortgages as a 'solution' to rising housing costs. Around 2010 the paper was quietly removed from
all servers. I regret not saving a copy so it could be linked to every time he popped up in public.
look for the doi and plug that in here (site does not work in Chrome) http://gen.lib.rus.ec/scimag/index.php
or here http://sci-hub.cc/
The 1st has an author search too, but it isn't as good, but it might work.
I Have Strange Dreams, December 6, 2016 at 5:43 am
Kill it with fire!
Economics is a foul and pestilent ghetto, an intellectual dead-end akin to Ptolemaic astronomy.
The priests will continue adding epicycles to epicycles until they are dragged screaming to the
asylum.
Burn the whole subject to the ground and sow the razed economics departments with salt. Require
economists to ring a bell when approaching the uninfected and cry "unclean! unclean!"
actually belly-laughed – 1st ever belly-laugh from an interweb comment – Bravisimmo!
H/e, can't agree with you re: economics. As a historical and social area of study, it is valid
in my book – even a necessity. Still, my eyes cross lately when I read the latest in economic
"theory" on any scale. Such a dreary and detached subject these days. Rootless and toothless.
Too bad.
Every time a bell rings, an angel gets his wings. That is a called a positive externality in
macroeconomics, and can therefore be defined in an equation. Which makes it thus so.
There is no chance of killing off this mystery cult as long as politicians rely on its ruminations
and incantations to help perpetuate them in office.
There is always some revered academic economist readily available to support virtually
any political narrative imaginable, even if it's total rubbish. It is truly a "science" for all
seasons fostered by reverend figures with authority earned by many years diligent practice in
translating gibberish into runes of mathematical formulae. That's more dainty than poking about
in sheep guts with a sharp stick, but of little more use in the real world which lies outside
the ivied towers.
Economists, like carny balloon sellers, are paid based on volume, not weight. Diligence
blesses them with tenure followed by offers to serve private or public patrons perpetually engaged
in rent-seeking. These made men (and women) are essentially set for life, regardless of whatever
nonsense they may forever promote thereafter. A few are blessed by the good luck of a Nobel which
guarantees a prosperous sinecure and unlimited opportunity to promote their own vacuous political
narratives masqueraded as "science".
This cult enjoys perpetual protection within public and private safe spaces created by
their well-heeled paymasters. It is one of a number of deeply attached parasites which cannot
be safely excised from the corrupt body of the host without killing it.
We live in a post-truth or post-fact world, where truth and fact do not matter.
But the fact is: Keynes has never gone away in the sense that governments have always been
trying to manage the economy with fiscal and monetary policies – which (to me) is the essence
of Keynes and macroeconomics. Most governments run budget deficits to stimulate demand. It is
merely cognitive dissonance of academics to think neoclassical economics only is mainstream and
solely responsible for the GFC, just because to them there is an apparent bias in research funding
at universities.
First, government is such a huge portion of the economy that its actions have huge influence
and therefore the impact has to be managed. Pretending you can have some type of neutral autopilot
is a false idea, but that is the bedrock of economic thinking, that economies have a natural propensity
to equilibrium and that equilibrium is full employment.
Second, it's not done much these days, but the best forms of intervention are ones that are
naturally countercyclical so you don't have politicians wrangling and have pork and election timing
and results and inertia get in the way.
I'm not defending neoclassical economics. In economics, the alternative to a wrong is another
wrong. Governments are politically compelled to intervene. But with the Keynesian economic fallacy,
their interventions make things worse in the long-run. Please visit my blog:
"The Battle of Bretton Woods" is very instructive. Start with two intellectuals (Keynes and
Harry Dexter White) who were big fans of Stalinist Russia's command economy ("I've seen the future and
it works!"). Last time I checked this kind of tomfoolery ("we will raise X number of cows because
we think we'll need leather for Y number of shoes") has been utterly discredited. Implement for
the global currency and trade systems. Fast forward to today where there are massive imbalances,
global currency wars, and a race to zero and beyond that has sucked all demand from the future
to the present and now the past. And the shining answer, the clarion rallying cry, is "we just
need more debt, and we need some new rugs to sweep all the bad debt under".
All while "macro-economists" propagate models that completely misunderstand how money is actually
created and distributed. All I can say is "Forward Soviet!".
Indeed. Gov't is the biggest business in town in every economy, everything else, even giant
corporations, are minuscule players in comparison. This is a large source of dynamical behavior,
the swings and re-balancing as the State throw its weight around in the marketplace.
I should add that neoclassical economics has damaged economics by excluding explicitly
the government sector in their models. As a result, the impact of government on the macroeconomy
has not been properly understood. The empirical facts, without theories or equilibrium assumptions
etc., show the failure of government policy of demand stimulation:
http://www.asepp.com/fiscal-stimulus-of-consumption/
It seems to me that for something to be called "keynesian", it should also mean that the aim
of those policies was to help create robust private demand (though I doubt Keynes was as emotionally
handicapped as today's mainstream bean-counting theorists are, if only because gdp figures didn't
yet dominate macro thinking in the manner they do today, thanks to everyone having received "economics
education" in school); if not, it wolud more fairly be called Marxist, because he was the one
from whom Keynes (indirectly, as he refused to read Marx personally) pilfered his insights. What
matters is whether we've got 'socialism for the rich / incumbents / industrial complexes', or
"socialism" (well, social-democrat, liberal new-dealerism) for the "masses".
Well, I have to say this article reminds me too much of the DNC sole searching over why Hillary
didn't win. Just another room full of wantonly clueless people.
Does start out on a high note where Romer states the problem is economists don't care if they
are winging and slinging BS from their arses same as chimpanzees.
I guess the article coulda ended there. But no.
Noah Smith laments a shortage of macro data – so the who knows how many gigs at FRED are found
wanting and I guess the BLS, etc aren't up to snuff either. Or maybe Noah means they are fabricating
phoney data? Then Noah doubles down on the efficacy of interest rate policy – after 9 years in
the liquidity trap.
[Caution: The following is allegory – we are speaking of the high priestess here.]
We then are treated to JYell and her discovery of the buggy whip. She states there is current
research being done on buggy whips, and more research is necessary. She is able to use big words
to speak of these buggy whips. Some of these words are borrowed from real science – making this
more scientific. Like hysteresis – and even an example for lay-off people. It's possible you may
never work again and add to the long term employment rate! Yikes. Worse yet, their definition
of "long term" is longer than 6 months. After that, 7 months or retire at 30 is all the same to
them. "Heterogeneity" is another good one. For use in polite company. Has an Evil Twin named inequality
and a macro version called crony capitalism. JYell can keep the hits coming!
I'm tired of typing someone else can take up the rest of it.
The complaint about not enough data struck me too; actually economist have vasts amounts of
data to gain insights from and test hypothesis against because economies are well recorded human
endeavours, recorded in actual painful detail thanks to the inexhaustible efforts of statemen
and statewomen to know everything about the populations they control and harvest. Probably more
data-oriented lines of research would lead to progress in macro-economy as a scholarly discipline?
@Ruben – They want more data because the data that exists cannot be explained by their eloquent
mathematical theories, which are based on assumptions that are ridiculous on their face e.g.,
rational expectations and utility maximization. The hope is that additional data will fit the
theories better allowing them to remain comfortably ensconced in their fantasy world of regressions
and p values.
Which is how we get adjustments to CPI based on the premise that CPI is overstating inflation.
Now the hip thing is that productivity is undermeasured because economists don't like what the
numbers are saying, so we can expect an upwards adjustment there as well.
Read Romer's article, twice. Will need a third try to fully get it, but as someone with a modest
background in engineering and engineering mathematics, I still can't quite believe what Romer
is saying. Do the economists he names really not understand the computer stat model they are
using? Are they admitting to making up the fudge factors to make their 'data' fit their (wrong
headed) totem pole, supply and demand? I mean, there it is in black and white, by the economists'
own words, that their math is just flat out wrong.
Now Romer is writing for the inside crowd, as an long time, connected insider himself, so don't
expect an easy read. But he writes quite clearly what is the problem with economics so the main
idea, that macro economics, in rejecting an early model of macro economics (Keynesian) because
said model was based on a few openly stated fudge factors, have spent the last 40 years building
models that are 1. full with even more fudge factors, 2. these fudge factors are never openly
stated, and 3. the new models have given truly disastrous results in the real world (also known
as the US economy, amoung others). Along the way, he names names and steps on some toes. Then
he finishes up with a full charge of how the 'dismal science' is a lying religion, nothing at
all like truth seeking science.
Okay, I'll quit here before I hurt myself. Let someone else slam the keys. (haha)
The economics I learned in the early 1960's seems to work as well now as it did back then.
I was lucky enough to be so busy at work in the decades that followed, that I did not have a chance
to keep up on the mis-education of the time. When I had the time to start paying more attention
to the subject again, I couldn't understand what had happened to the knowledge that I had learned
that seemed to explain all that was happening in the economy.
I was surprised to learn that Yellen had expressed any interest in the people permanently out
of the labor market. I thought all the discussions of interest rates focused almost exclusively
on what in my mind is the unemployment pseudo-rate, which completely ignores those people.
Regardless of which rate is considered, I have never been able to comprehend the mind that
can talk about acceptable levels of unemployment. Acceptable to whom? The people who lose their
homes, and sometimes their neighborhood networks when they have to move, and may with just a little
bad luck slide into still worse conditions? The communities that see more people becoming burglars,
muggers, bank robbers, drug dealers, and prostitutes because only the illegal economy has any
place for them? I have never seen a sustained or general effort to look at the economic consequences
of those events, much less an admission of the immorality of causing so much trouble. It seems
to me that a macroeconomics that divorces itself from those possibly micro concerns will be forever
irrelevant to good policy.
Way back prior to the great Permian-Triassic Extinction, I was fortunate enough to wander around
an Economics Department where I could encounter intellectual dead-ends like Keynes, Marx, Polanyi,
Kalecki, Veblen – all of whom prepared me to pump-gas at the local filling station oh wait!
Having somehow successfully survived the subsequent big-brain epoch, I settled comfortably into
making a modest annual donation to a scholarship fund for budding economists at the olde U. Then
it came to my attention that not only could one still obtain a BA in Economics, but the olde school
was also awarding two different Bachelor on Science degrees in Economics. Breathtaking! Economics,
an actual science! Like for example physics!
I am now in the reduced circumstance of donating only to my old high school in the doubtless vain
hope that the youngsters will study enough science to be able to shoot these aspiring BS cone-heads
to the moon.
It's 2016 and some Dismal Scientists are still debating whether "involuntary unemployment"
exists.
#FacePalm
Perhaps we should deploy them to that Carrier plant to investigate. So thankful for heterodox
voices:
Abba Lerner – Functional Finance
Hyman Minsky – Financial Instability
Wynne Godley – Sectoral Balances
Entire MMT School – Mosler, Wray, Kelton, Tcherneva et al
#ThereIsHope
Gee, why attack the one healthy sector of the economy, the Wealth Defence Industry?
(Why did so much of 'the social-democratic left' go along all this? I think John Rawls gave
them the excuse. He said inequality is great if the worse off are better off under this economic
system than they would be under a more equal one. The poor can therefore protest if they can show
that if we did things more equally they would be better off. The task of the economist today is
to ward this possibility off by ensuring that economic thought is utterly subservient to oligarchic
extraction. It does this by lying – Trickle Down! Rising Tide Lifts all Boats! This has worn out.
So next it does There Is No Alternative! – 'Those Jobs are Never Coming Back', 'Robots!' And finally,
to make really certain, it turns the whole discipline into toadying intellectual fantasy. Romer
homed in on the last.)
"Too much market and too little state invites a backlash."
If anything, Philip Mirowski has persuasively argued that neoliberalism requires a powerful
State.
He has shown that the neoliberal thought collective theorized an elaborate political mobilization,
and recognized early on that the creation of a new market is a political process requiring the
intervention of organized power. The political will to impose a market required a strong state
and elaborate regulation and also that the State would need to expand its economic and political
power over time.
The neoliberal market had to be imposed it did not just happen. A key issue for the future
is defining the nature of the state–whether under neoliberalism or MMT or under Trump or Sanders,
or left populist or right populist.
Mankiw belongs in the non-ideological camp? I don't see how anybody with a brain could
read any of his work past the first page and still hold that view.
I'm imagining them all as engineers on the deck of a half-submerged Titanic, debating about
whether the hull integrity model might perhaps not have been 100% accurate.
Ann Pettifor. give me ann pettifor always. she never puts the cart before the horse, only the
ideological neoliberals try to do that while keeping a straight face – they are quintessential
con artists if there ever were.
Excellent article, except it failed to point out that there are realistic and successful modeling
techniques, in addition to historical studies. These techniques are based on the nonlinear nature
of real world economies. Just use complexity and evolutionary techniques like agent based models
and nonlinear dynamical systems. Nothing new here – I still think that the limits-to-growth models
("system dynamics" = nonlinear dynamical systems) of the early 1970s represent the best mathematical
economics ever done. And the economists' agent based models are just a variation on cellular automata,
which have been used with notable success in other fields for many decades.
The problem is that economists either maintained a deliberate ignorance of such methods, or
have outright rejected them, like Nordhaus with system dynamics. In part this is because these
techniques involve a different mind set: they trade off simplistic models that are easy to understand,
but whose assumptions are demonstrably false, with complexity results that give much better real
world results but have more nuanced narratives.
Ann Pettifor is right about Brexit imo. The belief and the fact is that government is trying
a fast one on the people without being straightforward in its motives or intentions and a major
cause of the discontent and disillusionment seems to stem from the macro-economic error she highlights.
People don't want this mumbo-jumbo any more. The old professions – medicine, accountancy, law
– created jargons of specialist words and phrases (usually Latin) to make their speech and writings
incomprehensible to the hoi polloi. Then in recent decades all sorts of trades have adopted the
same jargon approach to mystifying their work. Enough already! Say what you mean, mean what you
say.
"Nick Bunker points out that in a recent speech, the Federal Reserve Chair Janet Yellen raised
important questions about macroeconomic research in the wake of the Great Recession."
Hint: Citing an ivory-tower twit like J-Yel as "raising important questions" is a huge bullshit
tell. While she was at it, did Janet raise any important questions as to why virtually every highly
credentialed macroeconomist on planet earth completely fail to foresee the global financial crisis
and the massive distortions, in very large part caused by the machinations of the high priests
of those "believers in the power of monetary policy", which portended its coming? But, on to the
bullshit:
"The first area of interest is the influence of aggregate demand on aggregate supply. Yellen
points to research that increasingly finds so-called hysteresis effects in the macroeconomy.
Hysteresis, a term borrowed from physics, is the idea that short-run shocks to the economy
can alter its long-term trend. One example of hysteresis is workers who lose jobs in recessions
and then are not drawn back into the labuor [sic] market but rather permanently locked out,
therefore increasing the long-term unemployment rate."
That's irreversibility, not hysteresis. The latter is a special case of the former, which the
chosen example does not illustrate. An example of hysteresis from my shower's temperature control:
I find the temp is a tad too high, and turn the control a bit toward the cold setting. But I overshoot
my target, and now it's too cold. Nudge back toward hot, but the somewhat-sticky mechanism again
overshoots and lands more or less on the starting "too hot" position. But the water is still too
cold, and I find I have to nudge even further toward hot to fix that. That's hysteresis. In the
context of the recession example, hysteresis would be e.g. if once the E/P ratio had recovered
to its pre-recession level but growth and its correlates remained weaker than expected, say due
to the "recovery jobs" being on average of poorer quality than those which were lost. Kinda like
the current 8-year-long "recovery", come to think of it! But I will admit that glossing over such
messy real-world details like "widespread worker immiseration" with hifalutin terminology-borrowed-form-actual-science
like "hysteresis:" is a great way to make oneself sound important, cloistered there in one's ivory
tower.
"Another open research question that Yellen raises is the influence of "heterogeneity" on aggregate
demand. Ignoring this heterogeneity in the housing market and its effects on economic inequality
seems like something modern macroeconomics needs to resolve."
Ah yes, "needs to resolve" - that implies lots of high-powered academic conferences and PhD
theses. And it's so wonderfully wishy-washy compared to "is something only a joke pretend-scientific
discipline would even need to consider stopping doing, because no self-respecting discipline would
have abandoned assumptions of homogeneity in roughly Year 2 of said discipline's evolutionary
history."
"Yellen raises other areas of inquiry in her speech, including better understanding how the
financial system is linked to the real economy and how the dynamics of inflation are determined.
Hey, when y'all finally "better understand" how this whole "financial system" thingy is linked
to the real economy, by all means do let us know, because it seems like such a linkage might have,
like, "important ramifications", or something. As to inflation, you mean actual inflation, or
the fake measures thereof the folks at the world's central banks make their stock in trade? You
know, for example, "in determining house price inflation we studiously ignore actual house prices
and instead use an artificial metric called Owner's Equivalent Rent, which itself studiously ignores
actual prices renters pay. Ain't it cool?"
Sorry if I sound grumpy, but this article is rather reminiscent of reading US Dem-party insiders
pretending to "soul search" in re. Election 2016. Let's see:
"Another open research question that Team HRC raises is the influence of "heterogeneity" on
voting preference. Ignoring this heterogeneity in the electoral trends and its effects on election
outcomes seems like something modern macroelectorodynamics needs to resolve."
This is a very weak article from a prominent paleoconservative, but it is instructive what a mess he has in his head as for the
nature of Trump phenomenon. We should probably consider the tern "New Class" that neocons invented as synonym for "neoliberals". If
so, why the author is afraid to use the term? Does he really so poorly educated not to understand the nature of this neoliberal revolution
and its implications? Looks like he never read "Quite coup"
That probably reflects the crisis of pealeoconservatism itself.
Notable quotes:
"... What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy. All have opposed large-scale free-trade agreements. ..."
"... the establishment in both parties almost uniformly favors one approach to war, trade, and immigration, while outsider candidates as dissimilar as Buchanan, Nader, Paul, and Trump, and to a lesser extent Sanders, depart from the consensus. ..."
"... The insurgents clearly do not represent a single class: they appeal to eclectic interests and groups. The foe they have all faced down, however-the bipartisan establishment-does resemble a class in its striking unity of outlook and interest. So what is this class, effectively the ruling class of the country? ..."
"... The archetypal model of class conflict, the one associated with Karl Marx, pits capitalists against workers-or, at an earlier stage, capitalists against the landed nobility. The capitalists' victory over the nobility was inevitable, and so too, Marx believed, was the coming triumph of the workers over the capitalists. ..."
"... The Soviet Union had never been a workers' state at all, they argued, but was run by a class of apparatchiks such as Marx had never imagined. ..."
"... Burnham recognized affinities between the Soviet mode of organization-in which much real power lay in the hands of the commissars who controlled industry and the bureaucratic organs of the state-and the corporatism that characterized fascist states. Even the U.S., under the New Deal and with ongoing changes to the balance between ownership and management in the private sector, seemed to be moving in the same direction. ..."
"... concept popularized by neoconservatives in the following decade: the "New Class." ..."
"... It consists of a goodly proportion of those college-educated people whose skills and vocations proliferate in a 'post-industrial society' (to use Daniel Bell's convenient term). We are talking about scientists, teachers, and educational administrators, journalists and others in the communication industries, psychologists, social workers, those lawyers and doctors who make their careers in the expanding public sector, city planners, the staffs of the larger foundations, the upper levels of the government bureaucracy, and so on. ..."
"... I have felt that this 'new class' is, so far, rather thin gruel. Intellectuals, verbalists, media types, etc. are conspicuous actors these days, certainly; they make a lot of noise, get a lot of attention, and some of them make a lot of money. But, after all, they are a harum-scarum crowd, and deflate even more quickly than they puff up. On TV they can out-talk any of the managers of ITT, GM, or IBM, or the administration-managers of the great government bureaus and agencies, but, honestly, you're not going to take that as a power test. Who hires and fires whom? ..."
"... Burnham had observed that the New Class did not have the means-either money or manpower-to wield power the way the managers or the capitalists of old did. It had to borrow power from other classes. Discovering where the New Class gets it is as easy as following the money, which leads straight to the finance sector-practically to the doorstep of Goldman Sachs. Jerry Rubin's journey from Yippie to yuppie was the paradigm of a generation. ..."
"... Yet the New Class as a whole is less like Carl Oglesby or Karl Hess than like Hillary Clinton, who arguably embodies it as perfectly as McNamara did the managerial class. ..."
"... Even the New Class's support for deregulation-to the advantage of its allies on Wall Street-was no sign of consistent commitment to free-market principles ..."
"... The individual-mandate feature of Obamacare and Romneycare is a prime example of New Class cronyism: government compels individuals to buy a supposedly private product or service. ..."
"... America's class war, like many others, is not in the end a contest between up and down. It's a fight between rival elites: in this case, between the declining managerial elite and the triumphant (for now) New Class and financial elites. ..."
"... Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan establishment, even if he goes down to defeat in November. ..."
"... The New Class, after all, lacks a popular base as well as money of its own, and just as it relies on Wall Street to underwrite its power, it depends on its competing brands of identity politics to co-opt popular support. ..."
"... Marx taught that you identify classes by their structural role in the system of production. I'm at a loss to see how either of the 'classes' you mention here relate to the system of production. ..."
"... [New] Class better describes the Never Trumpers. Mostly I have found them to be those involved in knowledge occupations (conservative think tanks, hedge fund managers, etc.) who have a pecuniary interest in maintaining the Global Economy as opposed to the Virtuous Intergenerational Economy that preceded. Many are dependent on funding sources for their livelihoods that are connected to the Globalized Economy and financial markets. ..."
"... "mobilize working-class voters against the establishment in both parties. " = workers of the world unite. ..."
"... Where the class conflict between the Working and Knowledge Classes begins is where the Knowledge Class almost unilaterally decided to shift to a global economy, at the expense of the Working Class, and to the self-benefit of the Knowledge Class. Those who designed the Global Economy like Larry Summers of Harvard did not invite private or public labor to help design the new Globalist Economy. The Working Class lost out big time in job losses and getting stuck with subprime home loans that busted their marriages and created bankruptcies and foreclosures. The Knowledge Class was mostly unscathed by this class-based economic divide. ..."
"... Trump's distinguishing ideology, which separates him from the current elite, is something he has summed up many times – nationalism vs. Globalism. ..."
"... The financial industry, the new tech giants, the health insurance industry are now almost indistinguishable from the government ruling elite. The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right in a sense. ..."
"... The hyperconcentration of power in Washington and a few tributary locations like Wall Street and Silicon Valley, elite academia and the media–call that the New Class if you like–means that most of America–Main Street, the flyover country has been left behind. Trump instinctively – brilliantly in some ways – tapped into the resentment that this hyperconcentration of wealth and government power has led to. That is why it cuts across right and left. The elites want to characterize this resentment as backwards and "racist," but there is also something very American from Jefferson to Jackson to Teddy Roosevelt that revolts against being lectured to and controlled by their would-be "betters." ..."
"... The alienation of those left out is real and based on real erosion of the middle class and American dream under both parties' elites. The potentially revolutionary capabilities of a political movement that could unite right and left in restoring some equilibrium and opportunities to those left out is tremendous, but yet to be realized by either major party. The party that can harness these folks – who are after all the majority of Americans – will have a ruling coalition for decades. If neither party can productively harness this budding movement, we are headed for disarray, civil unrest, and potentially the dissolution of the USA. ..."
"... . And blacks who cleave to the democrats despite being sold down the tubes on issues, well, for whatever reason, they just have thinner skin and the mistaken idea that the democrats deliver – thanks to Pres. Johnson. But what Pres. Johnson delivered democrats made a mockery of immediately as they stripped it of its intent and used for their own liberal ends. ..."
"... Let's see if I can help Dreher clear up some confusion in his article. James Burnham's "Managerial Class" and the "New Class" are overlapping and not exclusive. By the Managerial Class Burnham meant both the executive and managers in the private sector and the Bureaucrats and functionaries in the public sector. ..."
"... The rise of managers was a "revolution" because of the rise of modernization which meant the increasing mechanization, industrialization, formalization and rationalization (efficiency) of society. Burnham's concern about the rise of the managerial revolution was misplaced; what he should have focused on was modernization. ..."
"... The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America ..."
"... . Some 3 – 5% of the population facing no real opposition has decided that that their private lives needed public endorsement and have proceeded to upend the entire social order - the game has shifted in ways I am not sure most of the public fully grasps or desires ..."
"... There has always been and will always be class conflict, even if it falls short of a war. Simply examining recent past circumstances, the wealthy class has been whooping up on all other classes. This is not to suggest any sort of remedy, but simply to observe that income disparity over the past 30 years has substantially benefitted on sector of class and political power remains in their hands today. To think that there will never be class conflict is to side with a Marxian fantasy of egalitarianism, which will never come to pass. Winners and losers may change positions, but the underlying conflict will always remain. ..."
"... State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there. Back in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they would only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those. ..."
"... People don't really care for the actions of the elite but they care for the consequences of these actions. During the 1960's, per capita GDP growth was around 3.5%. Today it stands at 0,49%. If you take into account inflation, it's negative. Add to this the skewed repartition of said growth and it's intuitive that many people feel the pain; whom doesn't move forward, goes backwards. ..."
"... People couldn't care for mass immigration, nation building or the emergence of China if their personal situation was not impacted. But now, they begin to feel the results of these actions. ..."
"... I have a simple philosophy regarding American politics that shows who is made of what, and we don't have to go through all the philosophizing in this article: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli interests above America's is un-American. ..."
"... Re: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli interests above America's is un-American. ..."
"... The first has nothing whatsoever to do with American citizenship. It's just a political issue– on which, yes, reasonable people can differ. However no American citizen should put the interests of any other country ahead of our own, except in a situation where the US was itself up to no good and deserved its comeuppance. And then the interest is not that of any particular nation, but of justice being done period. ..."
"... A lot of this "New Class" stuff is just confusing mis-mash of this and that theory. Basically, America changed when the US dollar replace gold as the medium of exchange in the world economy. Remember when we called it the PETRO-DOLLAR. As long as the Saudis only accepted the US dollar as the medium of exchange for oil, then the American government could export it's inflation and deficit spending. Budget deficits and trade deficits are intrinsically related. It allowed America to become a nation of consumers instead of a nation of producers. ..."
"... It's really a form of classic IMPERIALISM. To maintain this system, we've got the US military and we prop up the corrupt dictatorships in Saudi Arabia, Iraq, Libya ..."
"... Yeah, you can talk about the "new class", the corruption of the banking system by the idiotic "libertarian" or "free market utopianism" of the Gingrich Congress, the transformation of American corporations to international corporations, and on and on. But it's the US dollar as reserve currency that has allowed it all to happen. God help us, if it ends, we'll be crippled. ..."
"... The Clinton Class mocks The Country Class: Bill Clinton, "We all know how her opponent's done real well down in West Virginia and eastern Kentucky. Because the coal people don't like any of us anymore." "They blame the president when the sun doesn't come up in the morning now," ..."
"... That doesn't mean they actually support Hillary's policies and position. What do they really know about either? These demographics simply vote overwhelmingly Democrat no matter who is on the ticket. If Alfred E. Newman were the candidate, this particular data point would look just the same. ..."
"... "On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the protectionism that would benefit hard industry and managerial interests." This doesn't ring true. Hard industry, and the managers that run it had no problem with moving jobs and factories overseas in pursuit of cheaper labor. Plus, it solved their Union issues. I feel like the divide is between large corporations, with dilute ownership and professional managers who nominally serve the interests of stock fund managers, while greatly enriching themselves versus a multitude of smaller, locally owned businesses whose owners were also concerned with the health of the local communities in which they lived. ..."
"... The financial elites are a consequence of consolidation in the banking and finance industry, where we now have 4 or 5 large institutions versus a multitude of local and regional banks that were locally focused. ..."
Since the Cold War ended, U.S. politics has seen a series of insurgent candidacies. Pat Buchanan prefigured Trump in the Republican
contests of 1992 and 1996. Ralph Nader challenged the Clinton wing of the Democratic Party from the outside in 2000. Ron Paul vexed
establishment Republicans John McCain and Mitt Romney in 2008 and 2012. And this year, Trump was not the only candidate to confound
his party's elite: Bernie Sanders harried Hillary Clinton right up to the Democratic convention.
What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy. All
have opposed large-scale free-trade agreements. (The libertarian Paul favors unilateral free trade: by his lights, treaties
like NAFTA and the Trans-Pacific Partnership are not free trade at all but international regulatory pacts.) And while no one would
mistake Ralph Nader's or Ron Paul's views on immigration for Pat Buchanan's or Donald Trump's, Nader and Paul have registered their
own dissents from the approach to immigration that prevails in Washington.
Sanders has been more in line with his party's orthodoxy on that issue. But that didn't save him from being attacked by Clinton
backers for having an insufficiently nonwhite base of support. Once again, what might have appeared to be a class conflict-in this
case between a democratic socialist and an elite liberal with ties to high finance-could be explained away as really about race.
Race, like religion, is a real factor in how people vote. Its relevance to elite politics, however, is less clear. Something else
has to account for why the establishment in both parties almost uniformly favors one approach to war, trade, and immigration,
while outsider candidates as dissimilar as Buchanan, Nader, Paul, and Trump, and to a lesser extent Sanders, depart from the consensus.
The insurgents clearly do not represent a single class: they appeal to eclectic interests and groups. The foe they have all
faced down, however-the bipartisan establishment-does resemble a class in its striking unity of outlook and interest. So what is
this class, effectively the ruling class of the country?
Some critics on the right have identified it with the "managerial" class described by James Burnham in his 1941 book The Managerial
Revolution . But it bears a stronger resemblance to what what others have called "the New Class." In fact, the interests of this
New Class of college-educated "verbalists" are antithetical to those of the industrial managers that Burnham described. Understanding
the relationship between these two often conflated concepts provides insight into politics today, which can be seen as a clash between
managerial and New Class elites.
♦♦♦
The archetypal model of class conflict, the one associated with Karl Marx, pits capitalists against workers-or, at an earlier
stage, capitalists against the landed nobility. The capitalists' victory over the nobility was inevitable, and so too, Marx believed,
was the coming triumph of the workers over the capitalists.
Over the next century, however, history did not follow the script. By 1992, the Soviet Union was gone, Communist China had embarked
on market reforms, and Western Europe was turning away from democratic socialism. There was no need to predict the future; mankind
had achieved its destiny, a universal order of [neo]liberal democracy. Marx had it backwards: capitalism was the end of history.
But was the truth as simple as that? Long before the collapse of the USSR, many former communists -- some of whom remained socialists,
while others joined the right-thought not. The Soviet Union had never been a workers' state at all, they argued, but was run
by a class of apparatchiks such as Marx had never imagined.
Among the first to advance this argument was James Burnham, a professor of philosophy at New York University who became a leading
Trotskyist thinker. As he broke with Trotsky and began moving toward the right, Burnham recognized affinities between the Soviet
mode of organization-in which much real power lay in the hands of the commissars who controlled industry and the bureaucratic organs
of the state-and the corporatism that characterized fascist states. Even the U.S., under the New Deal and with ongoing changes to
the balance between ownership and management in the private sector, seemed to be moving in the same direction.
Burnham called this the "managerial revolution." The managers of industry and technically trained government officials did not
own the means of production, like the capitalists of old. But they did control the means of production, thanks to their expertise
and administrative prowess.
The rise of this managerial class would have far-reaching consequences, he predicted. Burnham wrote in his 1943 book, The Machiavellians
: "that the managers may function, the economic and political structure must be modified, as it is now being modified, so as
to rest no longer on private ownership and small-scale nationalist sovereignty, but primarily upon state control of the economy,
and continental or vast regional world political organization." Burnham pointed to Nazi Germany, imperial Japan-which became a "continental"
power by annexing Korea and Manchuria-and the Soviet Union as examples.
The defeat of the Axis powers did not halt the progress of the managerial revolution. Far from it: not only did the Soviets retain
their form of managerialism, but the West increasingly adopted a managerial corporatism of its own, marked by cooperation between
big business and big government: high-tech industrial crony capitalism, of the sort that characterizes the military-industrial complex
to this day. (Not for nothing was Burnham a great advocate of America's developing a supersonic transport of its own to compete with
the French-British Concorde.)
America's managerial class was personified by Robert S. McNamara, the former Ford Motor Company executive who was secretary of
defense under John F. Kennedy and Lyndon Johnson. In a 1966 story for National Review , "Why Do They Hate Robert Strange McNamara?"
Burnham answered the question in class terms: "McNamara is attacked by the Left because the Left has a blanket hatred of the system
of business enterprise; he is criticized by the Right because the Right harks back, in nostalgia if not in practice, to outmoded
forms of business enterprise."
McNamara the managerial technocrat was too business-oriented for a left that still dreamed of bringing the workers to power. But
the modern form of industrial organization he represented was not traditionally capitalist enough for conservatives who were at heart
19th-century classical liberals.
National Review readers responded to Burnham's paean to McNamara with a mixture of incomprehension and indignation. It
was a sign that even readers familiar with Burnham-he appeared in every issue of the magazine-did not always follow what he was saying.
The popular right wanted concepts that were helpful in labeling enemies, and Burnham was confusing matters by talking about changes
in the organization of government and industry that did not line up with anyone's value judgements.
More polemically useful was a different concept popularized by neoconservatives in the following decade: the "New Class."
"This 'new class' is not easily defined but may be vaguely described," Irving Kristol wrote in a 1975 essay for the Wall
Street Journal :
It consists of a goodly proportion of those college-educated people whose skills and vocations proliferate in a 'post-industrial
society' (to use Daniel Bell's convenient term). We are talking about scientists, teachers, and educational administrators, journalists
and others in the communication industries, psychologists, social workers, those lawyers and doctors who make their careers in
the expanding public sector, city planners, the staffs of the larger foundations, the upper levels of the government bureaucracy,
and so on.
"Members of the new class do not 'control' the media," he continued, "they are the media-just as they are our educational
system, our public health and welfare system, and much else."
Burnham, writing in National Review in 1978, drew a sharp contrast between this concept and his own ideas:
I have felt that this 'new class' is, so far, rather thin gruel. Intellectuals, verbalists, media types, etc. are conspicuous
actors these days, certainly; they make a lot of noise, get a lot of attention, and some of them make a lot of money. But, after
all, they are a harum-scarum crowd, and deflate even more quickly than they puff up. On TV they can out-talk any of the managers
of ITT, GM, or IBM, or the administration-managers of the great government bureaus and agencies, but, honestly, you're not going
to take that as a power test. Who hires and fires whom?
Burnham suffered a stroke later that year. Although he lived until 1987, his career as a writer was over. His last years coincided
with another great transformation of business and government. It began in the Carter administration, with moves to deregulate transportation
and telecommunications. This partial unwinding of the managerial revolution accelerated under Ronald Reagan. Regulatory and welfare-state
reforms, even privatization of formerly nationalized industries, also took off in the UK and Western Europe. All this did not, however,
amount to a restoration of the old capitalism or anything resembling laissez-faire.
The "[neo]liberal democracy" that triumphed at "the end of history"-to use Francis Fukuyama's words-was not the managerial capitalism
of the mid-20th century, either. It was instead the New Class's form of capitalism, one that could be embraced by Bill Clinton and
Tony Blair as readily as by any Republican or Thatcherite.
Irving Kristol had already noted in the 1970s that "this new class is not merely liberal but truly 'libertarian' in its approach
to all areas of life-except economics. It celebrates individual liberty of speech and expression and action to an unprecedented degree,
so that at times it seems almost anarchistic in its conception of the good life."
He was right about the New Class's "anything goes" mentality, but he was only partly correct about its attitude toward economics.
The young elite tended to scorn the bourgeois character of the old capitalism, and to them managerial figures like McNamara were
evil incarnate. But they had to get by-and they aspired to rule.
Burnham had observed that the New Class did not have the means-either money or manpower-to wield power the way the managers
or the capitalists of old did. It had to borrow power from other classes. Discovering where the New Class gets it is as easy as following
the money, which leads straight to the finance sector-practically to the doorstep of Goldman Sachs. Jerry Rubin's journey from Yippie
to yuppie was the paradigm of a generation.
Part of the tale can be told in a favorable light. New Left activists like Carl Oglesby fought the spiritual aridity and murderous
militarism of what they called "corporate liberalism"-Burnham's managerialism-while sincere young libertarians attacked the regulatory
state and seeded technological entrepreneurship. Yet the New Class as a whole is less like Carl Oglesby or Karl Hess than like
Hillary Clinton, who arguably embodies it as perfectly as McNamara did the managerial class.
Even the New Class's support for deregulation-to the advantage of its allies on Wall Street-was no sign of consistent commitment
to free-market principles. On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the
protectionism that would benefit hard industry and managerial interests. The individual-mandate feature of Obamacare and Romneycare
is a prime example of New Class cronyism: government compels individuals to buy a supposedly private product or service.
The alliance between finance and the New Class accounts for the disposition of power in America today. The New Class has also
enlisted another invaluable ally: the managerial classes of East Asia. Trade with China-the modern managerial state par excellence-helps
keep American industry weak relative to finance and the service economy's verbalist-dominated sectors. America's class war, like
many others, is not in the end a contest between up and down. It's a fight between rival elites: in this case, between the declining
managerial elite and the triumphant (for now) New Class and financial elites.
The New Class plays a priestly role in its alliance with finance, absolving Wall Street for the sin of making money in exchange
for plenty of that money to keep the New Class in power. In command of foreign policy, the New Class gets to pursue humanitarian
ideological projects-to experiment on the world. It gets to evangelize by the sword. And with trade policy, it gets to suppress its
class rival, the managerial elite, at home. Through trade pacts and mass immigration the financial elite, meanwhile, gets to maximize
its returns without regard for borders or citizenship. The erosion of other nations' sovereignty that accompanies American hegemony
helps toward that end too-though our wars are more ideological than interest-driven.
♦♦♦
So we come to an historic moment. Instead of an election pitting another Bush against another Clinton, we have a race that poses
stark alternatives: a choice not only between candidates but between classes-not only between administrations but between regimes.
Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes,
"big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the
bipartisan establishment, even if he goes down to defeat in November.
The New Class, after all, lacks a popular base as well as money of its own, and just as it relies on Wall Street to underwrite
its power, it depends on its competing brands of identity politics to co-opt popular support. For the center-left establishment,
minority voters supply the electoral muscle. Religion and the culture war have served the same purpose for the establishment's center-right
faction. Trump showed that at least one of these sides could be beaten on its own turf-and it seems conceivable that if Bernie Sanders
had been black, he might have similarly beaten Clinton, without having to make concessions to New Class tastes.
The New Class establishment of both parties may be seriously misjudging what is happening here. Far from being the last gasp of
the demographically doomed-old, racially isolated white people, as Gallup's analysis says-Trump's insurgency may be the prototype
of an aggressive new politics, of either left or right, that could restore the managerial elite to power.
This is not something that conservatives-or libertarians who admire the old capitalism rather than New Class's simulacrum-might
welcome. But the only way that some entrenched policies may change is with a change of the class in power.
Daniel McCarthy is the editor of The American Conservative .
Excellent analysis. What is important about the Trump phenomenon is not every individual issue, it's the potentially revolutionary
nature of the phenomenon. The opposition gets this. That's why they are hysterical about Trump. The conservative box checkers
do not.
"Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big
government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan
establishment, even if he goes down to defeat in November."
My question is, if Trump is not himself of the managerial class, in fact, could be considered one of the original new class
members, how would he govern? What explains his conversion from the new class to the managerial class; is he merely taking advantage
of an opportunity or is there some other explanation?
I'm genuinely confused by the role you ascribe to the 'managerial class' here. Going back to Berle and Means ('The Modern Corporation
and Private Property') the managerial class emerged when management was split from ownership in mid C20th capitalism. Managers
focused on growth, not profits for shareholders. The Shareholder revolution of the 1980s destroyed the managerial class, and destroyed
their unwieldy corporations.
You seem to be identifying the managerial class with a kind of cultural opposition to the values of [neo]liberal capitalism. And
instead of identifying the 'new class' with the new owner-managers of shareholder-driven firms, you identify them by their superficial
cultural effects.
This raises a deeper problem in how you talk about class in this piece. Marx taught that you identify classes by their
structural role in the system of production. I'm at a loss to see how either of the 'classes' you mention here relate to the system
of production. Does the 'new class' of journalists, academics, etc. actually own anything? If not, what is the point of ascribing
to them immense economic power?
I would agree that there is a new class of capitalists in America. But they are well known people like Sheldon Adelson, the Kochs,
Linda McMahon, the Waltons, Rick Scott the pharmaceutical entrepreneur, Mitt Romney, Mark Zuckerberg, and many many hedge fund
gazillionaires. These people represent the resurgence of a family-based, dynastic capitalism that is utterly different from the
managerial variety that prevailed in mid-century.
If there is a current competitor to international corporate capitalism, it is old-fashioned dynastic family capitalism. Not
Managerialism.
There is no "new class". That's simply a derogatory trope of the Right. The [neo]liberal elite– educated, cosmopolitan and possessed
of sufficient wealth to be influential in political affairs and claims to power grounded in moral stances– have a long pedigree
in both Western and non-Western lands. They were the Scribal Class in the ancient world, the Mandarins of China, and the Clergy
in the Middle Ages. This class for a time was eclipsed in the early modern period as first royal authority became dominant, followed
by the power of the Capitalist class (the latter has never really faded of course). But their reemergence in the late 20th century
is not a new or unique phenomenon.
In a year in which "trash Trump" and "trash Trump's supporters" are tricks-to-be-turned for more than 90% of mainstream journalists
and other media hacks, it's good to see Daniel McCarthy buck the "trash trend" and write a serious, honest analysis of the class
forces that are colliding during this election cycle.
Two thumbs way up for McCarthy, although his fine effort cannot save the reputation of those establishment whores who call
themselves journalists. Nothing can save them. They have earned the universality with which Americans hold them in contempt.
In 1976 when Gallup began asking about "the honesty and ethical standards" of various professions only 33% of Americans rated
journalists "very high or high."
By last December that "high or very high" rating for journalists had fallen to just 27%.
It is certain that by Election Day 2016 the American public's opinion of journalists will have fallen even further.
Most of your argument is confusing. The change I see is from a production economy to a finance economy. Wall Street rules, really.
Basically the stock market used to be a place where working folk invested their money for retirement, mostly through pensions
from unions and corporations. Now it's become a gambling casino, with the "house"-or the big banks-putting it's finger on the
roulette wheel. They changed the compensation package of CEO's, so they can rake in huge executive compensation–mostly through
stock options-to basically close down everything from manufacturing to customer service, and ship it off to contract manufacturers
and outside services in oligarchical countries like mainland China and India.
I don't know what exactly you mean about the "new class", basically its the finance industry against everyone else.
One thing you right-wingers always get wrong, is on Karl Marx he was really attacking the money-changers, the finance speculators,
the banks. Back in the day, so-called "capitalists" like Henry Ford or George Eastman or Thomas Edison always complained about
the access to financing through the big money finance capitalists.
Don't overlook the economic value of intellectual property rights (patents, in particular) in the economic equation.
A big chunk of the 21st century economy is generated due to the intellectual property developed and owned by the New Class
and its business enterprises.
The economic value of ideas and intellectual property rights is somewhat implied in McCarthy's explanation of the New Class,
but I didn't see an explicit mention (perhaps I overlooked it).
I think the consideration of intellectual property rights and the value generated by IP might help to clarify the economic
power of the New Class for those who feel the analysis isn't quite complete or on target.
I'm not saying that IP only provides value to the New Class. We can find examples of IP throughout the economy, at all levels.
It's just that the tech and financial sectors seem to focus more on (and benefit from) IP ownership, licensing, and the information
captured through use of digital technology.
"What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy."
But today we have this: Trump pledges big US military
expansion . Trump doesn't appear to have any coherent policy, he just says whatever seems to be useful at that particular
moment.
[New] Class better describes the Never Trumpers. Mostly I have found them to be those involved in knowledge occupations (conservative
think tanks, hedge fund managers, etc.) who have a pecuniary interest in maintaining the Global Economy as opposed to the Virtuous
Intergenerational Economy that preceded. Many are dependent on funding sources for their livelihoods that are connected to the
Globalized Economy and financial markets.
Being white is not the defining characteristic of Trumpers because it if was then how come there are many white working class
voters for Hillary? The divide in the working class comes from being a member of a union or a member of the private non-unionized
working class.
Where the real class divide shows up is in those who are members of the Knowledge Class that made their living based on the
old Virtuous Economy where the elderly saved money in banks and the banks, in turn, lent that money out to young families to buy
houses, cars, and start businesses. The Virtuous Economy has been replaced by the Global Economy based on diverting money to the
stock market to fund global enterprises and prop up government pension funds.
The local bankers, realtors, private contractors, small savers and small business persons and others that depended on the Virtuous
Economy lost out to the global bankers, stock investors, pension fund managers, union contractors and intellectuals that propounded
rationales for the global economy as superior to the Virtuous Economy.
Where the class conflict between the Working and Knowledge Classes begins is where the Knowledge Class almost unilaterally
decided to shift to a global economy, at the expense of the Working Class, and to the self-benefit of the Knowledge Class. Those
who designed the Global Economy like Larry Summers of Harvard did not invite private or public labor to help design the new Globalist
Economy. The Working Class lost out big time in job losses and getting stuck with subprime home loans that busted their marriages
and created bankruptcies and foreclosures. The Knowledge Class was mostly unscathed by this class-based economic divide.
Beginning in the 50's and 60's, baby boomers were warned in school and cultural media that "a college diploma would become what
a high school diploma is today." An extraordinary cohort of Americans took this advice seriously, creating the smartest and most
successful generation in history. But millions did not heed that advice, cynically buoyed by Republicans who – knowing that college
educated people vote largely Democrat – launched a financial and cultural war on college education. The result is what you see
now: millions of people unprepared for modern employment; meanwhile we have to import millions of college-educated Asians and
Indians to do the work there aren't enough Americans to do.
Have to say, this seems like an attempt to put things into boxes that don't quite fit.
Trump's distinguishing ideology, which separates him from the current elite, is something he has summed up many times –
nationalism vs. Globalism.
The core of it is that the government no longer serves the people. In the United States, that is kind of a bad thing, you know?
Like the EU in the UK, the people, who fought very hard for self-government, are seeing it undermined by the erosion of the nation
state in favor of international beaurocracy run by elites and the well connected.
Both this article and many comments on it show considerable confusion, and ideological opinion all over the map. What is happening
I think is that the world is changing –due to globalism, technology, and the sheer huge numbers of people on the planet. As a
result some of the rigid trenches of thought as well as class alignments are breaking down.
In America we no longer have capitalism, of either the 19th century industrial or 20th century managerial varieties. Money
and big money is still important of course, but it is increasingly both aligned with and in turn controlled by the government.
The financial industry, the new tech giants, the health insurance industry are now almost indistinguishable from the government
ruling elite. The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives
are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both
are right in a sense.
The hyperconcentration of power in Washington and a few tributary locations like Wall Street and Silicon Valley, elite
academia and the media–call that the New Class if you like–means that most of America–Main Street, the flyover country has been
left behind. Trump instinctively – brilliantly in some ways – tapped into the resentment that this hyperconcentration of wealth
and government power has led to. That is why it cuts across right and left. The elites want to characterize this resentment as
backwards and "racist," but there is also something very American from Jefferson to Jackson to Teddy Roosevelt that revolts against
being lectured to and controlled by their would-be "betters."
The alienation of those left out is real and based on real erosion of the middle class and American dream under both parties'
elites. The potentially revolutionary capabilities of a political movement that could unite right and left in restoring some equilibrium
and opportunities to those left out is tremendous, but yet to be realized by either major party. The party that can harness these
folks – who are after all the majority of Americans – will have a ruling coalition for decades. If neither party can productively
harness this budding movement, we are headed for disarray, civil unrest, and potentially the dissolution of the USA.
I have one condition about which, Mr. Trump would lose my support - if he flinches on immigration, I will have to bow out.
I just don't buy the contentions about color here. He has made definitive moves to ensure that he intends to fight for US citizens
regardless of color. This nonsense about white racism, more bigotry in reality, doesn't pan out. The Republican party has been
comprised of mostly whites since forever and nearly all white sine the late 1960's. Anyone attempting to make hay out of what
has been the reality for than 40 years is really making the reverse pander. Of course most of those who have issues with blacks
and tend to be more expressive about it, are in the Republican party. But so what. Black Republicans would look at you askance,
should you attempt this FYI.
It's a so what. The reason you joining a party is not because the people in it like you, that is really beside the point. Both
Sec Rice and General Powell, are keenly aware of who's what it and that is the supposed educated elite. They are not members of
the party because it is composed of some pure untainted membership. But because they and many blacks align themselves with the
ideas of the party, or what the party used to believe, anyway.
It's the issues not their skin color that matters. And blacks who cleave to the democrats despite being sold down the tubes
on issues, well, for whatever reason, they just have thinner skin and the mistaken idea that the democrats deliver – thanks to
Pres. Johnson. But what Pres. Johnson delivered democrats made a mockery of immediately as they stripped it of its intent and
used for their own liberal ends.
I remain convinced that if blacks wanted progress all they need do is swamp the Republican party as constituents and confront
whatever they thought was nonsense as constituents as they move on policy issues. Goodness democrats have embraced the lighter
tones despite having most black support. That is why the democrats are importing so many from other state run countries. They
could ignore blacks altogether. Sen Barbara Jordan and her deep voiced rebuke would do them all some good.
Let's face it - we are not going to remove the deeply rooted impact of skin color, once part of the legal frame of the country
for a quarter of the nations populous. What Republicans should stop doing is pretending, that everything concerning skin color
is the figment of black imagination. I am not budging an inch on the Daughters of the American Revolution, a perfect example of
the kind of peculiar treatment of the majority, even to those who fought for Independence and their descendants.
________________
I think that there are thousands and thousands of educated (degreed)people who now realize what a mess the educational and
social services system has become because of our immigration policy. The impact on social services here in Ca is no joke. In the
face of mounting deficits, the laxity of Ca has now come back to haunt them. The pressure to increase taxes weighed against the
loss of manual or hard labor to immigrants legal and otherwise is unmistakable here. There's debate about rsstroom etiquette in
the midst of serious financial issues - that's a joke. So this idea of dismissing people with degrees as being opposed to Mr.
Trump is deeply overplayed and misunderstood. If there is a class war, it's not because of Mr. Trump, those decks were stacked
in his favor long before the election cycle.
--------
"But millions did not heed that advice, cynically buoyed by Republicans who–knowing that college educated people vote largely
Democrat–launched a financial and cultural war on college education. The result is what . . . employment; meanwhile we have to
import millions of college-educated Asians and Indians to do the work there aren't enough Americans to do."
Hmmmm,
Nope. Republicans are notorious for pushing education on everything and everybody. It's a signature of hard work, self reliance,
self motivation and responsibility. The shift that has been tragic is that conservatives and Republicans either by a shove or
by choice abandoned the fields by which we turn out most future generations - elementary, HS and college education. Especially
in HS, millions of students are fed a daily diet of liberal though unchecked by any opposing ideas. And that is become the staple
for college education - as it cannot be stated just how tragic this has become for the nation. There are lots of issues to moan
about concerning the Us, but there is far more to embrace or at the very least keep the moaning in its proper context. No, conservatives
and Republicans did engage in discouraging an education.
And there will always be a need for more people without degrees than with them. even people with degrees are now getting hit
even in the elite walls of WS finance. I think I posted an article by John Maulden about the growing tensions resulting fro the
shift in the way trading is conducting. I can build a computer from scratch, that's a technical skill, but the days of building
computers by hand went as fast it came. The accusation that the population should all be trained accountants, book keepers, managers,
data processors, programmers etc. Is nice, but hardly very realistic (despite my taking liberties with your exact phrasing). A
degree is not going to stop a company from selling and moving its production to China, Mexico or Vietnam - would that were true.
In fact, even high end degree positions are being outsourced, medicine, law, data processing, programming . . .
How about the changes in economy that have forced businesses to completely disappear. We will never know how many businesses
were lost in the 2007/2008 financial mess. Recovery doesn't exist until the country's growth is robust enough to put people back
to work full time in a manner that enables them to sustain themselves and family.
That income gap is real and its telling.
___________________
even if I bought the Karl Marx assessment. His solutions were anything but a limited assault on financial sector oligarchs
and wizards. And in practice it has been an unmitigated disaster with virtually not a single long term national benefit. It's
very nature has been destructive, not only to infrastructure, but literally the lifeblood of the people it was intended to rescue.
Let's see if I can help Dreher clear up some confusion in his article. James Burnham's "Managerial Class" and the "New Class"
are overlapping and not exclusive. By the Managerial Class Burnham meant both the executive and managers in the private sector
and the Bureaucrats and functionaries in the public sector.
There are two middle classes in the US: the old Business Class and the New Knowledge Class. A manager would be in the Business
Class and a Bureaucrat in the New Class.
The rise of managers was a "revolution" because of the rise of modernization which meant the increasing mechanization,
industrialization, formalization and rationalization (efficiency) of society. Burnham's concern about the rise of the managerial
revolution was misplaced; what he should have focused on was modernization.
The New Class were those in the mostly government and nonprofit sectors that depended on knowledge for their livelihood without
it being coupled to any physical labor: teachers, intellectuals, social workers and psychiatrists, lawyers, media types, hedge
fund managers, real estate appraisers, financial advisors, architects, engineers, etc. The New Knowledge Class has only risen
since the New Deal created a permanent white collar, non-business class.
The Working Class are those who are employed for wages in manual work in an industry producing something tangible (houses,
cars, computers, etc.). The Working Class can also have managers, sometimes called supervisors. And the Working Class is comprised
mainly of two groups: unionized workers and private sector non-unionized workers. When we talk about the Working Class we typically
are referring to the latter.
The Trumpsters should not be distinguished as being a racial group or class (white) because there are many white people who
support Clinton. About 95% of Blacks vote Democratic in the US. Nowhere near that ratio of Whites are supporting Trump. So Trumps'
support should not be stereotyped as White.
The number one concern to Trumpsters is that they reflect the previous intergenerational economy where the elderly lent money
to the young to buy homes, cars and start small businesses. The Global bankers have shifted money into the stock market because
0.25% per year interest rates in a bank isn't making any money at all when money inflation runs at 1% to 2% (theft). This has
been replaced by a Global Economy that depends on financial bubbles and arbitraging of funds.
"The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives are exasperated
by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right
in a sense."
Why other couching this. Ten years ago if some Hollywood exec had said, no same sex marriage, no production company in your
town, the town would have shrugged. Today before shrugging, the city clerk is checking the account balance. When the governors
of Michigan, and Arizona bent down in me culpa's on related issue, because business interests piped in, it was an indication that
the game had seriously changed. Some 3 – 5% of the population facing no real opposition has decided that that their private
lives needed public endorsement and have proceeded to upend the entire social order - the game has shifted in ways I am not sure
most of the public fully grasps or desires.
Same sex weddings in US military chapels - the concept still turns my stomach. Advocates control the megaphones, I don't think
they control the minds of the public, despite having convinced a good many people that those who have chosen this expression are
under some manner of assault – that demands a legal change - intelligent well educated, supposedly astute minded people actually
believe it. Even the Republican nominee believes it.
I love Barbara Streisand, but if the election means she moves to Canada, well, so be it. Take your "drag queens" impersonators
wit you. I enjoy Mr. and Mrs Pitt, I think have a social moral core but really? with millions of kids future at stake, endorsing
a terminal dynamic as if it will save society's ills - Hollywood doesn't even pretend to behave royally much less embody the sensitivities
of the same.
There is a lot to challenge about supporting Mr. Trump. He did support killing children in the womb and that is tragic. Unless
he has stood before his maker and made this right, he will have to answer for that. But no more than a trove of Republicans who
supported killing children in the womb and then came to their senses. I guess of there is one thing he and I agree on, it's not
drinking.
As for big budget military, it seems a waste, but if we are going to waste money, better it be for our own citizens. His Achilles
heel here is his intentions as to ISIS/ISIL. I think it's the big drain getting ready to suck him into the abyss of intervention
creep.
Missile defense just doesn't work. The tests are rigged and as Israel discovered, it's a hit and miss game with low probability
of success, but it makes for great propaganda.
I am supposed to be outraged by a football player stance on abusive government. While the democratic nominee is turning over
every deck chair she find, leaving hundreds of thousands of children homeless - let me guess, on the bright side, George Clooney
cheers the prospect of more democratic voters.
If Mr. Trumps only achievements are building a wall, over hauling immigration policy and expanding the size of the military.
He will be well on his way to getting ranked one of the US most successful presidents.
I never understood why an analysis needs to lard in every conceivable historical reference and simply assume its relevance, when
there are so many non constant facts and circumstances. There has always been and will always be class conflict, even if it
falls short of a war. Simply examining recent past circumstances, the wealthy class has been whooping up on all other classes.
This is not to suggest any sort of remedy, but simply to observe that income disparity over the past 30 years has substantially
benefitted on sector of class and political power remains in their hands today. To think that there will never be class conflict
is to side with a Marxian fantasy of egalitarianism, which will never come to pass. Winners and losers may change positions, but
the underlying conflict will always remain.
State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there.
Back in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they
would only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those.
The split on Trump is first by race (obviously), then be gender (also somewhat obviously), and then by education. Even among
self-declared conservatives it's the college educated who tend to oppose him. This is a lot broader than simply losing some "new"
Knowledge Class, unless all college educated people are put in that grouping. In fact he is on track to lose among college educated
whites, something no GOP candidate has suffered since the days of FDR and WWII.
People don't really care for the actions of the elite but they care for the consequences of these actions. During the 1960's,
per capita GDP growth was around 3.5%. Today it stands at 0,49%. If you take into account inflation, it's negative. Add to this
the skewed repartition of said growth and it's intuitive that many people feel the pain; whom doesn't move forward, goes backwards.
People couldn't care for mass immigration, nation building or the emergence of China if their personal situation was not
impacted. But now, they begin to feel the results of these actions.
I have a simple philosophy regarding American politics that shows who is made of what, and we don't have to go through all
the philosophizing in this article: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable.
Anyone who puts Israeli interests above America's is un-American.
EliteComic beat me to the punch. I was disappointed that Ross Perot, who won over 20% of the popular vote twice, and was briefly
in the lead in early 1992, wasn't mentioned in this article.
Re: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli
interests above America's is un-American.
The first has nothing whatsoever to do with American citizenship. It's just a political issue– on which, yes, reasonable
people can differ. However no American citizen should put the interests of any other country ahead of our own, except in a situation
where the US was itself up to no good and deserved its comeuppance. And then the interest is not that of any particular nation,
but of justice being done period.
A lot of this "New Class" stuff is just confusing mis-mash of this and that theory. Basically, America changed when the US
dollar replace gold as the medium of exchange in the world economy. Remember when we called it the PETRO-DOLLAR. As long as the
Saudis only accepted the US dollar as the medium of exchange for oil, then the American government could export it's inflation
and deficit spending. Budget deficits and trade deficits are intrinsically related. It allowed America to become a nation of consumers
instead of a nation of producers.
Who really cares about the federal debt. REally? We can print dollars, exchange these worthless dollars with China for hard
goods, and then China lends the dollars back to us, to pay for our government. Get it?
It's really a form of classic IMPERIALISM. To maintain this system, we've got the US military and we prop up the corrupt
dictatorships in Saudi Arabia, Iraq, Libya
Yeah, you can talk about the "new class", the corruption of the banking system by the idiotic "libertarian" or "free market
utopianism" of the Gingrich Congress, the transformation of American corporations to international corporations, and on and on.
But it's the US dollar as reserve currency that has allowed it all to happen. God help us, if it ends, we'll be crippled.
And damn the utopianism of you "libertarians" you're worse then Marxists when it comes to ideology over reality.
"State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there. Back
in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they would
only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those."
Ah, not it's policy on some measure able effect. The seatbelt law was debate across the country. The data indicated that it
did in fact save lives. And it's impact was universal applicable to every man women or child that got into a vehicle.
That was not a private bedroom issue. Of course businesses have advocated policy. K street is not a K-street minus that reality.
But GM did not demand having relations in parked cars be legalized or else.
You are taking my apples and and calling them seatbelts - false comparison on multiple levels, all to get me to acknowledge
that businesses have influence. It what they have chosen to have influence on -
I do not think the issue of class is relevant here – whether it be new classes or old classes. There are essentially two classes
– those who win given whatever the current economic arrangements are or those who lose given those same arrangements. People who
think they are losing support Trump versus people who think they are winning support Clinton. The polls demonstrates this – Trump
supporters feel a great deal more anxiety about the future and are more inclined to think everything is falling apart whereas
Clinton supporters tend to see things as being okay and are optimistic about the future. The Vox work also shows this pervasive
sense that life will not be good for their children and grandchildren as a characteristic of Trump supporters.
The real shift I think is in the actual coalitions that are political parties. Both the GOP and the Dems have been coalitions
– political parties usually are. Primary areas of agreement with secondary areas of disagreement. Those coalitions no longer work.
The Dems can be seen as a coalition of the liberal knowledge types – who are winners in this economy and the worker types who
are often losers now in this economy. The GOP also is a coalition of globalist corporatist business types (winners) with workers
(losers) who they attracted in part because of culture wars and the Dixiecrats becoming GOPers. The needs of these two groups
in both parties no longer overlap. The crisis is more apparent in the GOP because well – Trump. If Sanders had won the nomination
for the Dems (and he got close) then their same crisis would be more apparent. The Dems can hold their creaky coalition together
because Trump went into the fevered swamps of the alt. right.
I think this is even more obvious in the UK where you have a Labor Party that allegedly represents the interests of working
people but includes the cosmopolitan knowledge types. The cosmopolitans are big on the usual identity politics, unlimited immigration
and staying in the EU. They benefit from the current economic arrangement. But the workers in the Labor party have been hammered
by the current economic arrangements and voted in droves to get out of the EU and limit immigration. It seems pretty obvious that
there is no longer a coalition to sustain the Labor Party. Same with Tories – some in the party love the EU,immigration, globalization
while others voted out of the EU, want immigration restricted and support localism. The crisis is about the inability of either
party to sustain its coalitions. Those in the Tory party who are leavers should be in a political party with the old Labor working
class while the Tory cosmopolitans should be in a party with the Labor cosmopolitans. The current coalitions not being in synch
is the political problem – not new classes etc.
Here in the US the southern Dixiecrats who went to the GOP and are losers in this economy might find a better coalition with
the black, Latino and white workers who are still in the Dem party. But as in the UK ideological culture wars have become more
prominent and hence the coalitions are no longer economically based. If people recognized that politics can only address the economic
issues and they aligned themselves accordingly – the membership of the parties would radically change.
The Clinton Class mocks The Country Class: Bill Clinton, "We all know how her opponent's done real well down in West Virginia
and eastern Kentucky. Because the coal people don't like any of us anymore." "They blame the president when the sun doesn't come
up in the morning now,"
"Trump's voters were most strongly characterized by their "racial isolation": they live in places with little ethnic diversity.
"
During the primaries whites in more diverse areas voted Trump. The only real exception was West Virginia. Utah, Wyoming, Iowa?
All voted for Cruz and "muh values".
In white enclaves like Paul Ryans district, which is 91%, whites are able to signal against white identity without having to
face the consequences.
"All three major African, Hispanic, & Asian-American overwhelming support HRC in the election."
That doesn't mean they actually support Hillary's policies and position. What do they really know about either? These demographics
simply vote overwhelmingly Democrat no matter who is on the ticket. If Alfred E. Newman were the candidate, this particular data
point would look just the same.
"On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the protectionism that would
benefit hard industry and managerial interests."
This doesn't ring true. Hard industry, and the managers that run it had no problem with moving jobs and factories overseas
in pursuit of cheaper labor. Plus, it solved their Union issues. I feel like the divide is between large corporations, with dilute
ownership and professional managers who nominally serve the interests of stock fund managers, while greatly enriching themselves
versus a multitude of smaller, locally owned businesses whose owners were also concerned with the health of the local communities
in which they lived.
The financial elites are a consequence of consolidation in the banking and finance industry, where we now have 4 or 5 large
institutions versus a multitude of local and regional banks that were locally focused.
"... When societies take the restraints off competition and free markets, inequality follows in its wake. It happened in the Gilded Age and it happened in the Neoliberal Era. the picture of competition leading to leveling is a jejune textbook fantasy. ..."
"To some extent that's correct, but competitive capitalism is not divisive. In fact, it is just
the opposite. Competition is a great leveling force. For example, when a firm discovers something
new, other firms, if they can, will copy it and duplicate the innovation. If a firm finds a highly
profitable strategy, other firms will mimic it and take some of those profits for themselves.
A firm might temporarily separate itself from other firms in an industry, but competition will
bring them back together. Sometimes there are impediments to this leveling process such as patents,
monopoly power, and talent that is difficult to duplicate, but competition is always there, waiting
and watching."
Nice defense of the market place with the appropriate caveat about how monopoly
power can interfere with it to the benefit of the few. We should note there is monopsony power
which at times impedes wages from rising. In such cases, unions and minimum wages can help not
hurt. Which is a shout out to Seattle for letting Uber driving unionize.
That really gets to my critique of capitalism. While Mark is certainly correct about emerging
markets, mature capitalism inevitably trends toward monopoly/oligopoly where all the benefits
disappear and we get the mess we are in today.
When societies take the restraints off competition and free markets, inequality follows in
its wake. It happened in the Gilded Age and it happened in the Neoliberal Era. the picture of
competition leading to leveling is a jejune textbook fantasy.
Societies have sometimes
succeeded in building broad prosperity and a fairly level distribution of income. They have done
it by creating strong socializing institutions and laws that place restraints on individual economic
liberty and accept the necessity of some degree of intelligent planning.
pgl ->Dan Kervick...
Yawn! Do define the "Neoliberal Era"? Is that the one where we passed anti-trust legislation or
the one where it was gutted? No scratch that - we have had enough of your bloviating for one day.
Also see Wendy Brown interview What Exactly Is Neoliberalism to Dissent Magazine (Nov 03, 2015)
== some quotes ===
"... I treat neoliberalism as a governing rationality through which everything is "economized"
and in a very specific way: human beings become market actors and nothing but, every field
of activity is seen as a market, and every entity (whether public or private, whether person,
business, or state) is governed as a firm. Importantly, this is not simply a matter of extending
commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation
of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning,
dating, or exercising-in market terms, submits them to market metrics, and governs them with
market techniques and practices. Above all, it casts people as human capital who must constantly
tend to their own present and future value. ..."
"... The most common criticisms of neoliberalism, regarded solely as economic policy rather
than as the broader phenomenon of a governing rationality, are that it generates and legitimates
extreme inequalities of wealth and life conditions; that it leads to increasingly precarious
and disposable populations; that it produces an unprecedented intimacy between capital (especially
finance capital) and states, and thus permits domination of political life by capital; that
it generates crass and even unethical commercialization of things rightly protected from markets,
for example, babies, human organs, or endangered species or wilderness; that it privatizes
public goods and thus eliminates shared and egalitarian access to them; and that it subjects
states, societies, and individuals to the volatility and havoc of unregulated financial markets.
..."
"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental
feature of being human and of democracy. Democracy requires that citizens be modestly oriented
toward self-rule, not simply value enhancement, and that we understand our freedom as resting
in such self-rule, not simply in market conduct. When this dimension of being human is extinguished,
it takes with it the necessary energies, practices, and culture of democracy, as well as its
very intelligibility. ..."
"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling
rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside
the West; and the dilution of class power generated by unions, redistributive welfare states,
large and lazy corporations, and the expectations generated by educated democracies. From this
perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation
of class power aimed at releasing capital from regulatory and national constraints, and defanging
all forms of popular solidarities, especially labor. ..."
"... The grains of truth in this analysis don't get at the fundamental transformation of
social, cultural, and individual life brought about by neoliberal reason. They don't get at
the ways that public institutions and services have not merely been outsourced but thoroughly
recast as private goods for individual investment or consumption. And they don't get at the
wholesale remaking of workplaces, schools, social life, and individuals. For that story, one
has to track the dissemination of neoliberal economization through neoliberalism as a governing
form of reason, not just a power grab by capital. There are many vehicles of this dissemination
-- law, culture, and above all, the novel political-administrative form we have come to call
governance. It is through governance practices that business models and metrics come to irrigate
every crevice of society, circulating from investment banks to schools, from corporations to
universities, from public agencies to the individual. It is through the replacement of democratic
terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins
that governance dismantles democratic life while appearing only to instill it with "best practices."
..."
"... Progressives generally disparage Citizens United for having flooded the American electoral
process with corporate money on the basis of tortured First Amendment reasoning that treats
corporations as persons. However, a careful reading of the majority decision also reveals precisely
the thoroughgoing economization of the terms and practices of democracy we have been talking
about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just
as ideas are cast as freely circulating in a market where the only potential interference arises
from restrictions on producers and consumers of ideas-who may speak and who may listen or judge.
Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces
should be unregulated paves the way for overturning a century of campaign finance law aimed
at modestly restricting the power of money in politics. Moreover, in the decision, political
speech itself is rendered as a kind of capital right, functioning largely to advance the position
of its bearer, whether that bearer is human capital, corporate capital, or finance capital.
This understanding of political speech replaces the idea of democratic political speech as
a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion.
..."
"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations
today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization
. . . the world is governed by market forces," not elected representatives. ..."
Syaloch ->Dan Kervick...
I like where you're going, but your narrative here has a few problems:
"When societies take the restraints off competition and free markets, inequality follows
in its wake."
Free markets have restraints? Then they're not really "free", are they? And isn't that the
point?
"They have done it by creating strong socializing institutions and laws that place restraints
on individual economic liberty..."
I think Mark is defining economic liberty as the opposite of what you have in mind:
"The system works best when people have the freedom to enter a new business (if they have the
means and are willing to take the risk). It works best when people compete for jobs on equal footing,
have access to the same opportunities, when there are no artificial barriers in society that prevent
people from reaching their full potential."
Why not just say that strong socializing institutions and laws *increase* economic freedom?
DrDick ->Syaloch...
More to the point, "free markets" (largely unregulated) do not, have never, and cannot exist as
a viable system. Strong government regulation is essential to their viability.
Dan Kervick ->Syaloch...
Jeff Bezos had the freedom to create and enter a new business, and now he's a multi-gazillionaire
who uses his monopoly power to dictate terms. Mark Zuckerberg and the Koch brothers have used
their economic freedom to make themselves spectacularly wealthy and then move to buy control over
political processes.
The textbook picture of competition doesn't match reality. In that picture
the competitive economy is like an eternal game between equals. The players come and go, but no
one ever wins. The game goes on and on and on and on, and the conditions of the players is always
parity.
I don't know where economists came by this picture, but that's not what happens in most instances
in the real world. Generally, if you start out with a bunch of even competitors on a competitive
economic field, they will compete until one player defeats all of the others and rules the field.
Along the way, tacit coalitions will be built to gang up on the largest competitor and drive out
all of the small fry. The system tends with certainty toward oligopoly, if not always to monopoly.
The only way you can approximate enduring conditions of perfect competition is by rigging the
game with a bunch of highly restrictive rules designed to prevent human nature from taking its
course. For example, the ancient Greeks had a rule which allowed them to ostracize citizens who
had gotten too big.
I'm by no means arguing to get rid of private enterprise. But other countries have managed
to make intelligent use of restrained capitalist mechanisms within a more civilized and enlightened
social order. The United States has become an insane country: fanatically violent, aggressive,
uncivilized, nasty and anti-social. Conflict, competition and individual liberty are not effectively
balanced by moral, religious and political institutions that inhibit the vicious and narcissistic
tendencies of human beings. The popular image of the meaning of life perpetuated my the mass media
is crass and nihilistic.
Dan Kervick ->Syaloch...
"Why not just say that strong socializing institutions and laws *increase* economic freedom?"
I agree there are different kinds of freedom. Some restrictions on the economic freedom of capitalists
are enhancements of the workers' freedom not to live in fear of getting canned or impoverished.
But I really want to resist the doctrinal pressure in the US ideological system to cast everything
in the language of freedom. There are other important human valuesin addition to freedom. And
not every case in which people are given more choices makes them, or the people around them, happier.
likbez ->Syaloch...
The whole idea of "free markets" is an important neoliberal myth. Free for whom?
Only for multinationals.
The first for opening markets for multinationals under the banner of "free markets" is the cornerstone
of neoliberal ideology.
Free from what?
Free from regulation.
What about "fair markets" for a change?
ilsm ->DrDick...
US capitalism is not capitalism, it is exploitive greed and bankster plundering.
DrDick ->ilsm...
I agree with your characterization, but US capitalism is the only kind of actual capitalism that
has ever actually existed. Everywhere else has tempered its excesses with a healthy dose of socialism.
pgl ->DrDick...
19th century UK was far more laissez faire than our current set of rules. No socialism there.
Which was what Marx complained about.
DrDick ->pgl...
Which really makes my point, actually. You see the same basic patterns everywhere in the 19th
century that you do in the US today. We have only mildly reined it in compared to most of the
developed world.
"... Existing "trade" agreements like NAFTA allow corporations to sue governments for passing laws and regulations that limit their profits. They set up special " corporate courts " in which corporate attorneys decide the cases. These corporate "super courts" sit above governments and their own court systems, and countries and their citizens cannot even appeal the rulings. ..."
"... Now, corporations are pushing two new "trade" agreements - one covering Pacific-are countries and one covering Atlantic-area countries - that expand these corporate rights and move governments out of their way. The Pacific agreement is called the Trans-Pacific Partnership (TPP) and the Atlantic one is called the Trans-Atlantic Trade and Investment Partnership (TTIP). ..."
"... International corporations that want to intimidate countries have access to a private legal system designed just for them. And to unlock its power, sometimes all it takes is a threat. ..."
"... ISDS is so tilted and unpredictable, and the fines the arbitrators can impose are so catastrophically large, that bowing to a company's demands, however extreme they may be, can look like the prudent choice. ..."
BuzzFeed is running a very important investigative series called
"Secrets
of a Global Super Court." It describes what they call "a parallel legal
universe, open only to corporations and largely invisible to everyone else."
Existing "trade" agreements like NAFTA allow corporations to sue governments
for passing laws and regulations that limit their profits. They set up special
"corporate
courts" in which corporate attorneys decide the cases. These corporate "super
courts" sit above governments and their own court systems, and countries
and their citizens cannot even appeal the rulings.
Picture a poor "banana republic" country ruled by a dictator and his
cronies. A company might want to invest in a factory or railroad - things
that would help the people of that country as well as deliver a return to
the company. But the company worries that the dictator might decide to just
seize the factory and give it to his brother-in-law. Agreements to protect
investors, and allowing a tribunal not based in such countries (courts where
the judges are cronies of the dictator), make sense in such situations.
Here's the thing: Corporate investors see themselves as legitimate "makers"
and see citizens and voters and their governments - always demanding taxes and
fair pay and public safety - to be illegitimate "takers." Corporations are all
about "one-dollar-one-vote" top-down systems of governance. They consider "one-person-one-vote"
democracy to be an illegitimate, non-functional system that meddles with their
more-important profit interests. They consider any governmental legal or regulatory
system to be "burdensome." They consider taxes as "theft" of the money they
have "earned."
To them, any government anywhere is just another "banana republic"
from which they need special protection.
"Trade" Deals Bypass Borders
Investors and their corporations have set up a way to get around the borders
of these meddling governments, called "trade" deals. The trade deals elevate
global corporate interests above any national interest. When a country signs
a "trade" deal, that country is agreeing not to do things that protect the country's
own national interest - like impose tariffs to protect key industries or national
strategies, or pass laws and regulations - when those things interfere with
the larger, more important global corporate "trade" interests.
Now, corporations are pushing two new "trade" agreements - one covering
Pacific-are countries and one covering Atlantic-area countries - that expand
these corporate rights and move governments out of their way. The Pacific agreement
is called the Trans-Pacific Partnership (TPP) and the Atlantic one is called
the Trans-Atlantic Trade and Investment Partnership (TTIP).
Secrets of a Global Super Court
BuzzFeed's series on these corporate courts,
"Secrets
of a Global Super Court," explains the investor-state dispute settlement
(ISDS) provisions in the "trade" deals that have come to dominate the world
economy. These provisions set up "corporate
courts" that place corporate profits above the interests of governments
and set up a court system that sits above the court systems of the countries
in the "trade" deals.
In a little-noticed 2014 dissent, US Chief Justice John Roberts warned
that ISDS arbitration panels hold the alarming power to review a nation's
laws and "effectively annul the authoritative acts of its legislature, executive,
and judiciary." ISDS arbitrators, he continued, "can meet literally anywhere
in the world" and "sit in judgment" on a nation's "sovereign acts."
[. . .]
Reviewing publicly available information for about 300 claims filed during
the past five years, BuzzFeed News found more than 35 cases in which the
company or executive seeking protection in ISDS was accused of criminal
activity, including money laundering, embezzlement, stock manipulation,
bribery, war profiteering, and fraud.
Among them: a bank in Cyprus that the US government accused of
financing terrorism and organized crime, an oil company executive accused
of embezzling millions from the impoverished African nation of Burundi,
and the Russian oligarch known as "the
Kremlin's banker."
One lawyer who regularly represents governments said he's seen evidence
of corporate criminality that he "couldn't believe." Speaking on the condition
that he not be named because he's currently handling ISDS cases, he said,
"You have a lot of scuzzy sort-of thieves for whom this is a way to hit
the jackpot."
Part Two,
"The Billion-Dollar Ultimatum," looks at how "International corporations
that want to intimidate countries have access to a private legal system designed
just for them. And to unlock its power, sometimes all it takes is a threat."
Of all the ways in which ISDS is used, the most deeply hidden are the
threats, uttered in private meetings or ominous letters, that invoke those
courts. The threats are so powerful they often eliminate the need to actually
bring a lawsuit. Just the knowledge that it could happen is enough.
[. . .] ISDS is so tilted and unpredictable, and the fines the arbitrators
can impose are so catastrophically large, that bowing to a company's demands,
however extreme they may be, can look like the prudent choice. Especially
for nations struggling to emerge from corrupt dictatorships or to lift their
people from decades of poverty, the mere threat of an ISDS claim triggers
alarm. A single decision by a panel of three unaccountable, private lawyers,
meeting in a conference room on some other continent, could gut national
budgets and shake economies to the core.
Indeed, financiers and ISDS lawyers have created a whole new business:
prowling for ways to sue nations in ISDS and make their taxpayers fork over
huge sums, sometimes in retribution for enforcing basic laws or regulations.
The financial industry is pushing novel ISDS claims that countries
never could have anticipated - claims that, in some instances,
would be barred in US courts and those of other developed nations, or
that strike at emergency decisions nations make to cope with crises.
ISDS gives particular leverage to traders and speculators who chase
outsize profits in the developing world. They can buy into local disputes
that they have no connection to, then turn the disputes into costly international
showdowns. Standard Chartered, for example, bought the debt of a Tanzanian
company that was in dire financial straits and racked by scandal; now, the
bank has filed an ISDS claim demanding that the nation's taxpayers hand
over the full amount that the private company owed - more than $100 million.
Asked to comment, Standard Chartered said its claim is "valid."
But instead of helping companies resolve legitimate disputes over seized
assets, ISDS has increasingly become a way for rich investors to make money
by speculating on lawsuits, winning huge awards and forcing taxpayers to
foot the bill.
Here's how it works: Wealthy financiers with idle cash have purchased
companies that are well placed to bring an ISDS claim, seemingly for the
sole purpose of using that claim to make a buck. Sometimes, they set up
shell corporations to create the plaintiffs to bring ISDS cases.
And some hedge funds and private equity firms bankroll ISDS cases as third
parties - just like billionaire Peter Thiel bankrolled Hulk Hogan in his
lawsuit against Gawker Media.
The Progressive Change Campaign Committee (PCCC) released this statement
on the ISDS provisions in TPP:
"Under the Trans-Pacific Partnership, Wall Street would be allowed to
sue the government in extrajudicial, corporate-run tribunals over any regulation
and American taxpayers would be on the hook for damages. This is an outrage.
We need more accountability and fairness in our economy – not less. And
we need to preserve our ability to make our own rules.
"It's time for Obama to take notice of the widespread, bipartisan opposition
to the TPP and take this agreement off the table before he causes lasting
political harm to Democrats with voters."
CHRIS HEDGES: We're going to be discussing a great Ponzi scheme that not only defines not only
the U.S. but the global economy, how we got there and where we're going. And with me to discuss this
issue is the economist Michael Hudson, author of
Killing
the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics
who worked for many years on Wall Street, where you don't succeed if you don't grasp Marx's dictum
that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.
I want to open this discussion by reading a passage from your book, which I admire very much,
which I think gets to the core of what you discuss. You write,
"Adam Smith long ago remarked that profits often are highest in nations going fastest to
ruin. There are many ways to create economic suicide on a national level. The major way through
history has been through indebting the economy. Debt always expands to reach a point where it
cannot be paid by a large swathe of the economy. This is the point where austerity is imposed
and ownership of wealth polarizes between the One Percent and the 99 Percent. Today is not the
first time this has occurred in history. But it is the first time that running into debt has occurred
deliberately." Applauded. "As if most debtors can get rich by borrowing, not reduced to a condition
of debt peonage."
So let's start with the classical economists, who certainly understood this. They were reacting
of course to feudalism. And what happened to the study of economics so that it became gamed by ideologues?
HUDSON: The essence of classical economics was to reform industrial capitalism, to streamline
it, and to free the European economies from the legacy of feudalism. The legacy of feudalism was
landlords extracting land-rent, and living as a class that took income without producing anything.
Also, banks that were not funding industry. The leading industrialists from James Watt, with his
steam engine, to the railroads
HEDGES: From your book you make the point that banks almost never funded industry.
HUDSON: That's the point: They never have. By the time you got to Marx later in the 19th century,
you had a discussion, largely in Germany, over how to make banks do something they did not do under
feudalism. Right now we're having the economic surplus being drained not by the landlords
but also by banks and bondholders.
Adam Smith was very much against colonialism because that lead to wars, and wars led to public
debt. He said the solution to prevent this financial class of bondholders burdening the economy by
imposing more and more taxes on consumer goods every time they went to war was to finance wars on
a pay-as-you-go basis. Instead of borrowing, you'd tax the people. Then, he thought, if everybody
felt the burden of war in the form of paying taxes, they'd be against it. Well, it took all of the
19th century to fight for democracy and to extend the vote so that instead of landlords controlling
Parliament and its law-making and tax system through the House of Lords, you'd extend the vote to
labor, to women and everybody. The theory was that society as a whole would vote in its self-interest.
It would vote for the 99 Percent, not for the One Percent.
By the time Marx wrote in the 1870s, he could see what was happening in Germany. German banks
were trying to make money in conjunction with the government, by lending to heavy industry, largely
to the military-industrial complex.
HEDGES: This was Bismarck's kind of social – I don't know what we'd call it. It was a form
of capitalist socialism
HUDSON: They called it State Capitalism. There was a long discussion by Engels, saying, wait a
minute. We're for Socialism. State Capitalism isn't what we mean by socialism. There are two kinds
of state-oriented–.
HEDGES: I'm going to interject that there was a kind of brilliance behind Bismarck's policy
because he created state pensions, he provided health benefits, and he directed banking toward industry,
toward the industrialization of Germany which, as you point out, was very different in Britain and
the United States.
HUDSON: German banking was so successful that by the time World War I broke out, there were discussions
in English economic journals worrying that Germany and the Axis powers were going to win because
their banks were more suited to fund industry. Without industry you can't have really a military.
But British banks only lent for foreign trade and for speculation. Their stock market was a hit-and-run
operation. They wanted quick in-and-out profits, while German banks didn't insist that their clients
pay as much in dividends. German banks owned stocks as well as bonds, and there was much more of
a mutual partnership.
That's what most of the 19th century imagined was going to happen – that the world
was on the way to socializing banking. And toward moving capitalism beyond the feudal level, getting
rid of the landlord class, getting rid of the rent, getting rid of interest. It was going to be labor
and capital, profits and wages, with profits being reinvested in more capital. You'd have an expansion
of technology. By the early twentieth century most futurists imagined that we'd be living in a leisure
economy by now.
HEDGES: Including Karl Marx.
HUDSON: That's right. A ten-hour workweek. To Marx, socialism was to be an outgrowth of the reformed
state of capitalism, as seemed likely at the time – if labor organized in its self-interest.
HEDGES: Isn't what happened in large part because of the defeat of Germany in World War I?
But also, because we took the understanding of economists like Adam Smith and maybe Keynes. I don't
know who you would blame for this, whether Ricardo or others, but we created a fictitious economic
theory to praise a rentier or rent-derived, interest-derived capitalism that countered productive
forces within the economy. Perhaps you can address that.
HUDSON: Here's what happened. Marx traumatized classical economics by taking the concepts of Adam
Smith and John Stuart Mill and others, and pushing them to their logical conclusion.
Progressive
capitalist advocates – Ricardian socialists such as John Stuart Mill – wanted to tax away the land
or nationalize it. Marx wanted governments to take over heavy industry and build infrastructure to
provide low-cost and ultimately free basic services. This was traumatizing the landlord class and
the One Percent. And they fought back. They wanted to make everything part of "the market," which
functioned on credit supplied by them and paid rent to them.
None of the classical economists imagined how the feudal interests – these great vested interests
that had all the land and money – actually would fight back and succeed. They thought that the future
was going to belong to capital and labor. But by the late 19th century, certainly in America,
people like John Bates Clark came out with a completely different theory, rejecting the classical
economics of Adam Smith, the Physiocrats and John Stuart Mill.
HEDGES: Physiocrats are, you've tried to explain, the enlightened French economists.
HUDSON: The common denominator among all these classical economists was the distinction between
earned income and unearned income. Unearned income was rent and interest. Earned incomes were wages
and profits. But John Bates Clark came and said that there's no such thing as unearned income. He
said that the landlord actually earns his rent by taking the effort to provide a house and
land to renters, while banks provide credit to earn their interest. Every kind of income is thus
"earned," and everybody earns their income. So everybody who accumulates wealth, by definition, according
to his formulas, get rich by adding to what is now called Gross Domestic Product (GDP).
HEDGES: One of the points you make in
Killing
the Host which I liked was that in almost all cases, those who had the capacity to make money
parasitically off interest and rent had either – if you go back to the origins – looted and seized
the land by force, or inherited it.
HUDSON: That's correct. In other words, their income is unearned. The result of this anti-classical
revolution you had just before World War I was that today, almost all the economic growth in the
last decade has gone to the One Percent. It's gone to Wall Street, to real estate
HEDGES: But you blame this on what you call Junk Economics.
HUDSON: Junk Economics is the anti-classical reaction.
HEDGES: Explain a little bit how, in essence, it's a fictitious form of measuring the economy.
HUDSON: Well, some time ago I went to a bank, a block away from here – a Chase Manhattan bank
– and I took out money from the teller. As I turned around and took a few steps, there were two pickpockets.
One pushed me over and the other grabbed the money and ran out. The guard stood there and saw it.
So I asked for the money back. I said, look, I was robbed in your bank, right inside. And they said,
"Well, we don't arm our guards because if they shot someone, the thief could sue us and we don't
want that." They gave me an equivalent amount of money back.
Well, imagine if you count all this crime, all the money that's taken, as an addition to GDP.
Because now the crook has provided the service of not stabbing me. Or suppose somebody's held up
at an ATM machine and the robber says, "Your money or your life." You say, "Okay, here's my money."
The crook has given you the choice of your life. In a way that's how the Gross National Product accounts
are put up. It's not so different from how Wall Street extracts money from the economy. Then also
you have landlords extracting
HEDGES: Let's go back. They're extracting money from the economy by debt peonage. By raising
HUDSON: By not playing a productive role, basically.
HEDGES: Right. So it's credit card interest, mortgage interest, car loans, student loans. That's
how they make their funds.
HUDSON: That's right. Money is not a factor of production. But in order to have access to credit,
in order to get money, in order to get an education, you have to pay the banks. At New York University
here, for instance, they have Citibank. I think Citibank people were on the board of directors at
NYU. You get the students, when they come here, to start at the local bank. And once you are in a
bank and have monthly funds taken out of your account for electric utilities, or whatever, it's very
cumbersome to change.
So basically you have what the classical economists called the rentier class. The class
that lives on economic rents. Landlords, monopolists charging more, and the banks. If you have a
pharmaceutical company that raises the price of a drug from $12 a shot to $200 all of a sudden, their
profits go up. Their increased price for the drug is counted in the national income accounts as if
the economy is producing more. So all this presumed economic growth that has all been taken by the
One Percent in the last ten years, and people say the economy is growing. But the economy isn't growing
HEDGES: Because it's not reinvested.
HUDSON: That's right. It's not production, it's not consumption. The wealth of the One Percent
is obtained essentially by lending money to the 99 Percent and then charging interest on it, and
recycling this interest at an exponentially growing rate.
HEDGES: And why is it important, as I think you point out in your book, that economic theory
counts this rentier income as productive income? Explain why that's important.
HUDSON: If you're a rentier, you want to say that you earned your income by
HEDGES: We're talking about Goldman Sachs, by the way.
HUDSON: Yes, Goldman Sachs. The head of Goldman Sachs came out and said that Goldman Sachs workers
are the most productive in the world. That's why they're paid what they are. The concept of productivity
in America is income divided by labor. So if you're Goldman Sachs and you pay yourself $20 million
a year in salary and bonuses, you're considered to have added $20 million to GDP, and that's enormously
productive. So we're talking in a tautology. We're talking with circular reasoning here.
So the issue is whether Goldman Sachs, Wall Street and predatory pharmaceutical firms, actually
add "product" or whether they're just exploiting other people. That's why I used the word parasitism
in my book's title. People think of a parasite as simply taking money, taking blood out of a host
or taking money out of the economy. But in nature it's much more complicated. The parasite can't
simply come in and take something. First of all, it needs to numb the host. It has an enzyme so that
the host doesn't realize the parasite's there. And then the parasites have another enzyme that takes
over the host's brain. It makes the host imagine that the parasite is part of its own body, actually
part of itself and hence to be protected.
That's basically what Wall Street has done. It depicts itself as part of the economy. Not as a
wrapping around it, not as external to it, but actually the part that's helping the body grow, and
that actually is responsible for most of the growth. But in fact it's the parasite that is taking
over the growth.
The result is an inversion of classical economics. It turns Adam Smith upside down. It says what
the classical economists said was unproductive – parasitism – actually is the real economy. And that
the parasites are labor and industry that get in the way of what the parasite wants – which is to
reproduce itself, not help the host, that is, labor and capital.
HEDGES: And then the classical economists like Adam Smith were quite clear that unless that
rentier income, you know, the money made by things like hedge funds, was heavily taxed and put back
into the economy, the economy would ultimately go into a kind of tailspin. And I think the example
of that, which you point out in your book, is what's happened in terms of large corporations with
stock dividends and buybacks. And maybe you can explain that.
HUDSON: There's an idea in superficial textbooks and the public media that if companies make a
large profit, they make it by being productive. And with
HEDGES: Which is still in textbooks, isn't it?
HUDSON: Yes. And also that if a stock price goes up, you're just capitalizing the profits – and
the stock price reflects the productive role of the company. But that's not what's been happening
in the last ten years. Just in the last two years, 92 percent of corporate profits in America have
been spent either on buying back their own stock, or paid out as dividends to raise the price of
the stock.
HEDGES: Explain why they do this.
HUDSON: About 15 years ago at Harvard, Professor Jensen said that the way to ensure that corporations
are run most efficiently is to make the managers increase the price of the stock. So if you give
the managers stock options, and you pay them not according to how much they're producing or making
the company bigger, or expanding production, but the price of the stock, then you'll have the corporation
run efficiently, financial style.
So the corporate managers find there are two ways that they can increase the price of the stock.
The first thing is to cut back long-term investment, and use the money instead to buy back their
own stock. But when you buy your own stock, that means you're not putting the money into capital
formation. You're not building new factories. You're not hiring more labor. You can actually increase
the stock price by firing labor.
HEDGES: That strategy only works temporarily.
HUDSON: Temporarily. By using the income from past investments just to buy back stock, fire the
labor force if you can, and work it more intensively. Pay it out as dividends. That basically is
the corporate raider's model. You use the money to pay off the junk bond holders at high interest.
And of course, this gets the company in trouble after a while, because there is no new investment.
So markets shrink. You then go to the labor unions and say, gee, this company's near bankruptcy,
and we don't want to have to fire you. The way that you can keep your job is if we downgrade your
pensions. Instead of giving you what we promised, the defined benefit pension, we'll turn it into
a defined contribution plan. You know what you pay every month, but you don't know what's going to
come out. Or, you wipe out the pension fund, push it on to the government's Pension Benefit Guarantee
Corporation, and use the money that you were going to pay for pensions to pay stock dividends. By
then the whole economy is turning down. It's hollowed out. It shrinks and collapses. But by that
time the managers will have left the company. They will have taken their bonuses and salaries and
run.
HEDGES: I want to read this quote from your book, written by David Harvey, in
A Brief
History of Neoliberalism, and have you comment on it.
"The main substantive achievement of neoliberalism has been to redistribute rather than
to generate wealth and income. [By] 'accumulation by dispossession' I mean the commodification
and privatization of land, and the forceful expulsion of peasant populations; conversion of various
forms of property rights (common collective state, etc.) into exclusive private property rights;
suppression of rights to the commons; colonial, neocolonial, and the imperial processes of appropriation
of assets (including natural resources); and usury, the national debt and, most devastating
at all, the use of the credit system as a radical means of accumulation by dispossession. To
this list of mechanisms, we may now add a raft of techniques such as the extraction of rents from
patents, and intellectual property rights (such as the diminution or erasure of various forms
of common property rights, such as state pensions, paid vacations, and access to education, health
care) one through a generation or more of class struggle. The proposal to privatize all state
pension rights, pioneered in Chile under the dictatorship is, for example, one of the cherished
objectives of the Republicans in the US."
This explains the denouement. The final end result you speak about in your book is, in essence,
allowing what you call the rentier or the speculative class to cannibalize the entire society until
it collapses.
HUDSON: A property right is not a factor of production. Look at what happened in Chicago, the
city where I grew up. Chicago didn't want to raise taxes on real estate, especially on its expensive
commercial real estate. So its budget ran a deficit. They needed money to pay the bondholders, so
they sold off the parking rights to have meters – you know, along the curbs. The result is that they
sold to Goldman Sachs 75 years of the right to put up parking meters. So now the cost of living and
doing business in Chicago is raised by having to pay the parking meters. If Chicago is going to have
a parade and block off traffic, it has to pay Goldman Sachs what the firm would have made
if the streets wouldn't have been closed off for a parade. All of a sudden it's much more expensive
to live in Chicago because of this.
But this added expense of having to pay parking rights to Goldman Sachs – to pay out interest
to its bondholders – is counted as an increase in GDP, because you've created more product simply
by charging more. If you sell off a road, a government or local road, and you put up a toll booth
and make it into a toll road, all of a sudden GDP goes up.
If you go to war abroad, and you spend more money on the military-industrial complex, all this
is counted as increased production. None of this is really part of the production system of the capital
and labor building more factories and producing more things that people need to live and do business.
All of this is overhead. But there's no distinction between wealth and overhead.
Failing to draw that distinction means that the host doesn't realize that there is a parasite
there. The host economy, the industrial economy, doesn't realize what the industrialists realized
in the 19th century: If you want to be an efficient economy and be low-priced and under-sell
competitors, you have to cut your prices by having the public sector provide roads freely. Medical
care freely. Education freely.
If you charge for all of these, you get to the point that the U.S. economy is in today. What if
American factory workers were to get all of their consumer goods for nothing. All their food,
transportation, clothing, furniture, everything for nothing. They still couldn't compete with
Asians or other producers, because they have to pay up to 43% of their income for rent or mortgage
interest, 10% or more of their income for student loans, credit card debt. 15% of their paycheck
is automatic withholding to pay Social Security, to cut taxes on the rich or to pay for medical care.
So Americans built into the economy all this overhead. There's no distinction between growth and
overhead. It's all made America so high-priced that we're priced out of the market, regardless of
what trade policy we have.
HEDGES: We should add that under this predatory form of economics, you game the system. So
you privatize pension funds, you force them into the stock market, an overinflated stock market.
But because of the way companies go public, it's the hedge fund managers who profit. And it's those
citizens whose retirement savings are tied to the stock market who lose. Maybe we can just conclude
by talking about how the system is fixed, not only in terms of burdening the citizen with debt peonage,
but by forcing them into the market to fleece them again.
HUDSON: Well, we talk about an innovation economy as if that makes money. Suppose you have an
innovation and a company goes public. They go to Goldman Sachs and other Wall Street investment banks
to underwrite the stock to issue it at $40 a share. What's considered a successful float is when,
immediately, Goldman and the others will go to their insiders and tell them to buy this stock and
make a quick killing. A "successful" flotation doubles the price in one day, so that at the end of
the day the stock's selling for $80.
HEDGES: They have the option to buy it before anyone else, knowing that by the end of the day
it'll be inflated, and then they sell it off.
HUDSON: That's exactly right.
HEDGES: So the pension funds come in and buy it at an inflated price, and then it goes back
down.
HUDSON: It may go back down, or it may be that the company just was shortchanged from the very
beginning. The important thing is that the Wall Street underwriting firm, and the speculators it
rounds up, get more in a single day than all the years it took to put the company together. The company
gets $40. And the banks and their crony speculators also get $40.
So basically you have the financial sector ending up with much more of the gains. The name of
the game if you're on Wall Street isn't profits. It's capital gains. And that's something that wasn't
even part of classical economics. They didn't anticipate that the price of assets would go up for
any other reason than earning more money and capitalizing on income. But what you have had in the
last 50 years – really since World War II – has been asset-price inflation. Most middle-class families
have gotten the wealth that they've got since 1945 not really by saving what they've earned by working,
but by the price of their house going up. They've benefited by the price of the house. And they think
that that's made them rich and the whole economy rich.
The reason the price of housing has gone up is that a house is worth whatever a bank is going
to lend against it. If banks made easier and easier credit, lower down payments, then you're going
to have a financial bubble. And now, you have real estate having gone up as high as it can. I don't
think it can take more than 43% of somebody's income to buy it. But now, imagine if you're joining
the labor force. You're not going to be able to buy a house at today's prices, putting down a little
bit of your money, and then somehow end up getting rich just on the house investment. All of this
money you pay the bank is now going to be subtracted from the amount of money that you have available
to spend on goods and services.
So we've turned the post-war economy that made America prosperous and rich inside out. Somehow
most people believed they could get rich by going into debt to borrow assets that were going to rise
in price. But you can't get rich, ultimately, by going into debt. In the end the creditors always
win. That's why every society since Sumer and Babylonia have had to either cancel the debts, or you
come to a society like Rome that didn't cancel the debts, and then you have a dark age. Everything
collapses.
"... if neo-liberalism is partly defined by the free flow of goods, labor and capital - and that has been the Republican agenda since at least Reagan - how is Trump a continuation of the same tradition?" ..."
"... Trump is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal. ..."
"... Trump is too incoherent to really represent the populist view. He's consistent w/the trade and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc. ..."
"... But the next populists we see might be more full bore. When that happens, you'll see much more overlap w/Sanders economic plans for the middle class. ..."
"... There's always tension along the lead running between the politician and his constituents. The thing that seems most salient to me at the present moment is the sense of betrayal pervading our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan also speak to elite failure, as well as betrayal. ..."
"... Trump is a novelty act. He represents a chance for people who feel resentful without knowing much of anything about anything to cast a middle-finger vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing and distressing. ..."
"... There's also the fact Reagan tapped a fair number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running against him, and taking the party in a much more hard-right direction, sure. But he was repudiated largely because he got caught doing dirty tricks with his pants down. ..."
"... From what I can tell - the 1972 election gave the centrists in the democratic party power to discredit and marginalize the anti-war left, and with it, the left in general. ..."
"... Ready even now to whine that she's a victim and that the whole community is at fault and that people are picking on her because she's a woman, rather than because she has a habit of making accusations like this every time she comments. ..."
"... That is a perfect example of predatory "solidarity". Val is looking for dupes to support her ..."
"Once again, if neo-liberalism is partly defined by the free flow of goods, labor and capital
- and that has been the Republican agenda since at least Reagan - how is Trump a continuation
of the same tradition?"
You have to be willing to see neoliberalism as something different
from conservatism to have the answer make any sense. John Quiggin has written a good deal here
about a model of U.S. politics as being divided into left, neoliberal, and conservative. Trump
is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal.
... ... ...
T 08.12.16 at 5:52 pm
RP @683
That's a bit of my point. I think Corey has defined the Republican tradition solely
in response to the Southern Strategy that sees a line from Nixon (or Goldwater) to Trump. But
that gets the economics wrong and the foreign policy too - the repub foreign policy view has not
been consistent across administrations and Trump's economic pans (to the extent he has a plan)
are antithetical to the Nixon – W tradition. I have viewed post-80 Dem administrations as neoliberals
w/transfers and Repub as neoliberals w/o transfers.
Trump is too incoherent to really represent the populist view. He's consistent w/the trade
and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc.
But the next populists we see might be more full bore. When that happens, you'll see much
more overlap w/Sanders economic plans for the middle class. Populists have nothing against
gov't programs like SS and Medicare and were always for things like the TVA and infrastructure
spending. Policies aimed at the poor and minorities not so much.
T @ 685: Trump is too incoherent to really represent the populist view.
There's always tension along the lead running between the politician and his constituents.
The thing that seems most salient to me at the present moment is the sense of betrayal pervading
our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked
together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan
also speak to elite failure, as well as betrayal.
These are the two most unpopular candidates in living memory. That is different.
I am not a believer in "the fire next time". Trump is a novelty act. He represents a chance
for people who feel resentful without knowing much of anything about anything to cast a middle-finger
vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing
and distressing.
Nor will Sanders be back. His was a last New Deal coda. There may be second acts in American
life, but there aren't 7th acts.
If there's a populist politics in our future, it will have to have a much sharper edge. It
can talk about growth, but it has to mean smashing the rich and taking their stuff. There's very
rapidly going to come a point where there's no other option, other than just accepting cramdown
by the authoritarian surveillance state built by the neoliberals. that's a much taller order than
Sanders or Trump have been offering.<
Corey, you write: "It's not just that the Dems went after Nixon, it's also that Nixon had so few
allies. People on the right were furious with him because they felt after this huge ratification
that the country had moved to the right, Nixon was still governing as if the New Deal were the
consensus. So when the time came, he had very few defenders, except for loyalists like Leonard
Garment and G. Gordon Liddy. And Al Haig, God bless him."
You've studied this more than I have,
but this is at least somewhat at odds with my memory. I recall some prominent attackers of Nixon
from the Republican party that were moderates, at least one of whom was essentially kicked out
of the party for being too liberal in later years. There's also the fact Reagan tapped a fair
number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running
against him, and taking the party in a much more hard-right direction, sure. But he was repudiated
largely because he got caught doing dirty tricks with his pants down.
To think that something similar would happen to Clinton (watergate like scandal) that would
actually have a large portion of the left in support of impeachment, she would have to be as dirty
as Nixon was, *and* the evidence to really put the screws to her would have to be out, as it was
against Nixon during watergate.
OTOH, my actual *hope* would be that a similar left-liberal sea change comparable to 1980 from
the right would be plausible. I don't think a 1976-like interlude is plausible though, that would
require the existence of a moderate republican with enough support within their own party to win
the nomination. I suppose its possible that such a beast could come to exist if Trump loses a
landslide, but most of the plausible candidates have already left or been kicked out of the party.
From what I can tell - the 1972 election gave the centrists in the democratic party power
to discredit and marginalize the anti-war left, and with it, the left in general. A comparable
election from the other side would give republican centrists/moderates the ability to discredit
and marginalize the right wing base. But unlike Democrats in 1972, there aren't any moderates
left in the Republican party by my lights. I'm much more concerned that this will simply re-empower
the hard-core conservatives with plausbly-deniable dog-whistle racism who are now the "moderates",
and enable them to whitewash their history.
Unfortunately, unlike you, I'm not convinced that a landslide is possible without an appeal
to Reagan/Bush republicans. I don't think we're going to see a meaningful turn toward a real left
until Democrats can win a majority of statehouses and clean up the ridiculous gerrymandering.
Val: "Similarly with your comments on "identity politics" where you could almost be seen
by MRAs and white supremacists as an ally, from the tone of your rhetoric."
That is 100% perfect Val. Insinuates that BW is a sort-of-ally of white supremacists - an infuriating
insinuation. Does this insinuation based on a misreading of what he wrote. Completely resistant
to any sort of suggestion that what she dishes out so expansively to others had better be something
she should be willing to accept herself, or that she shouldn't do it. Ready even now to whine
that she's a victim and that the whole community is at fault and that people are picking on her
because she's a woman, rather than because she has a habit of making accusations like this every
time she comments.
That is a perfect example of predatory "solidarity". Val is looking for dupes to support
her - for people to jump in saying "Why are you being hostile to women?" in response to people's
response to her comment.
"... You can see what I mean when you visit Fall River, an old mill town 50 miles south of Boston. Median household income in that city is $33,000, among the lowest in the state; unemployment is among the highest, 15% in March 2014, nearly five years after the recession ended. Twenty-three percent of Fall River's inhabitants live in poverty. The city lost its many fabric-making concerns decades ago and with them it lost its reason for being. People have been deserting the place for decades. ..."
"... Many of the empty factories in which their ancestors worked are still standing, however. Solid nineteenth-century structures of granite or brick, these huge boxes dominate the city visually - there always seems to be one or two of them in the vista, contrasting painfully with whatever colorful plastic fast-food joint has been slapped up next door. ..."
"... The effect of all this is to remind you with every prospect that this is a place and a way of life from which the politicians have withdrawn their blessing. Like so many other American scenes, this one is the product of decades of deindustrialization, engineered by Republicans and rationalized by Democrats. This is a place where affluence never returns - not because affluence for Fall River is impossible or unimaginable, but because our country's leaders have blandly accepted a social order that constantly bids down the wages of people like these while bidding up the rewards for innovators, creatives, and professionals. ..."
"... Boston boasts a full-blown Innovation District, a disused industrial neighborhood that has actually been zoned creative - a projection of the post-industrial blue-state ideal onto the urban grid itself. ..."
"... Innovation liberalism is "a liberalism of the rich," to use the straightforward phrase of local labor leader Harris Gruman. This doctrine has no patience with the idea that everyone should share in society's wealth. What Massachusetts liberals pine for, by and large, is a more perfect meritocracy - a system where the essential thing is to ensure that the truly talented get into the right schools and then get to rise through the ranks of society. Unfortunately, however, as the blue-state model makes painfully clear, there is no solidarity in a meritocracy. The ideology of educational achievement conveniently negates any esteem we might feel for the poorly graduated. ..."
"... GE will move 800 jobs to Mass.with a tax incentive of $145,000,000. http://www.nytimes.com/2016/01/14/technology/ge-boston-headquarters.html?_r=0 This comes to over $181,000 per job. ..."
"... Attributed to Marx that capitalists will sell communists the ropes with which to hang them but probably should be updated that Dems will hang the poor to make the capitalists richer . ..."
"... Two parties (many of whose members genuinely hate each other). One system. ..."
"... The Clinton Bush Establishment Party is just about dividing the spoils. They don't need 320 million people – it will work with 30 million or less ..."
"... They hate each other because they compete for the same corporate money. ..."
"... As soon as you bring the social issues into that group, the group will start to fracture, losing strength until it no longer has that majority. This is how the elite's divide-and-conquer strategy works. ..."
"... This is Nader's two headed snake. The parties can differentiate on God, guns and gays as long as they both agree to corporate control of the economy. This is the Clinton Third Way legacy that left the Democrats kowtowing to the corporate elites. Hillary continues this tradition. ..."
"... Education and healthcare as rights are "unrealistic" in the richest nation the world has ever seen for Hillary. Even while every other advanced nation on the planet provides for it. Why is it unrealistic? Maybe because it will cut into corporate profits. ..."
"... I heard a self-identified "blue-collar conservative" express it this way: "the republicans always talking about Jesus, but they never try to help the people our Lord cared about. People who are sick, in jail, whatever." ..."
"... Deindustrialization has been occurring in all advanced OECD nations for the last 40 years, including before and after trade liberalization, before NAFTA, the WTO, Most-Favored Nation Status for China, in countries with strong interventionist industrial policy, and even in countries with strong labor unions. ..."
"... Robert Putnam, Our Kids: The American Dream in Crisis, writes that "Growing class segregation means that rich Americans and poor Americans are living, learning, and raising children in increasingly separate and unequal worlds, removing the stepping-stones to upward mobility." ..."
"... "Long ago it was said that "one half of the world does not know how the other half lives." That was true then. It did not know because it did not care. The half that was on top cared little for the struggles, and less for the fate of those who were underneath, so long as it was able to hold them there and keep its own seat. There came a time when the discomfort and consequent upheavals so violent, that it was no longer an easy thing to do, and then the upper half fell to inquiring what was the matter. Information on the subject has been accumulating rapidly since, and the whole world has had its hands full answering for its old ignorance." – Jacob A. Riis, How the Other Half Lives ..."
By Thomas Frank, author of the just-published
Listen,
Liberal, or What Ever Happened to the Party of the People? (Metropolitan Books) from which this
essay is adapted. He has also written Pity the Billionaire , The Wrecking Crew , and What's the Matter
With Kansas? among other works. He is the founding editor of The Baffler . Originally published at
TomDispatch
When you press Democrats on their uninspiring deeds - their lousy free trade deals, for example,
or their flaccid response to Wall Street misbehavior - when you press them on any of these things,
they automatically reply that this is the best anyone could have done. After all, they had to deal
with those awful Republicans, and those awful Republicans wouldn't let the really good stuff get
through. They filibustered in the Senate. They gerrymandered the congressional districts. And besides,
change takes a long time. Surely you don't think the tepid-to-lukewarm things Bill Clinton and Barack
Obama have done in Washington really represent the fiery Democratic soul.
So let's go to a place that does. Let's choose a locale where Democratic rule is virtually unopposed,
a place where Republican obstruction and sabotage can't taint the experiment.
Let's go to Boston, Massachusetts, the spiritual homeland of the professional class and a place
where the ideology of modern liberalism has been permitted to grow and flourish without challenge
or restraint. As the seat of American higher learning, it seems unsurprising that Boston should anchor
one of the most Democratic of states, a place where elected Republicans (like the new governor) are
highly unusual. This is the city that virtually invented the blue-state economic model, in which
prosperity arises from higher education and the knowledge-based industries that surround it.
The coming of post-industrial society has treated this most ancient of American cities extremely
well. Massachusetts routinely occupies the number one spot on the State New Economy Index, a measure
of how "knowledge-based, globalized, entrepreneurial, IT-driven, and innovation-based" a place happens
to be. Boston ranks high on many of Richard Florida's statistical indices of approbation - in 2003,
it was number one on the "creative class index," number three in innovation and in high tech - and
his many books marvel at the city's concentration of venture capital, its allure to young people,
or the time it enticed some firm away from some unenlightened locale in the hinterlands.
Boston's knowledge economy is the best, and it is the oldest. Boston's metro area encompasses
some 85 private colleges and universities, the greatest concentration of higher-ed institutions in
the country - probably in the world. The region has all the ancillary advantages to show for this:
a highly educated population, an unusually large number of patents, and more Nobel laureates than
any other city in the country.
The city's Route 128 corridor was the original model for a suburban tech district, lined ever
since it was built with defense contractors and computer manufacturers. The suburbs situated along
this golden thoroughfare are among the wealthiest municipalities in the nation, populated by engineers,
lawyers, and aerospace workers. Their public schools are excellent, their downtowns are cute, and
back in the seventies their socially enlightened residents were the prototype for the figure of the
"suburban liberal."
Another prototype: the Massachusetts Institute of Technology, situated in Cambridge, is where
our modern conception of the university as an incubator for business enterprises began. According
to a report on MIT's achievements in this category, the school's alumni have started nearly 26,000
companies over the years, including Intel, Hewlett Packard, and Qualcomm. If you were to take those
26,000 companies as a separate nation, the report tells us, its economy would be one of the most
productive in the world.
Then there are Boston's many biotech and pharmaceutical concerns, grouped together in what is
known as the "life sciences super cluster," which, properly understood, is part of an "ecosystem"
in which PhDs can "partner" with venture capitalists and in which big pharmaceutical firms can acquire
small ones. While other industries shrivel, the Boston super cluster grows, with the life-sciences
professionals of the world lighting out for the Athens of America and the massive new "innovation
centers" shoehorning themselves one after the other into the crowded academic suburb of Cambridge.
To think about it slightly more critically, Boston is the headquarters for two industries that
are steadily bankrupting middle America: big learning and big medicine, both of them imposing costs
that everyone else is basically required to pay and which increase at a far more rapid pace than
wages or inflation. A thousand dollars a pill, 30 grand a semester: the debts that are gradually
choking the life out of people where you live are what has made this city so very rich.
Perhaps it makes sense, then, that another category in which Massachusetts ranks highly
is inequality. Once the visitor leaves the brainy bustle of Boston, he discovers
that this state is filled with wreckage - with former manufacturing towns in which workers watch
their way of life draining away, and with cities that are little more than warehouses for people
on Medicare. According to one survey, Massachusetts has the eighth-worst rate of income inequality
among the states; by another metric it ranks fourth. However you choose to measure the diverging
fortunes of the country's top 10% and the rest, Massachusetts always seems to finish among the nation's
most unequal places.
Seething City on a Cliff
You can see what I mean when you visit Fall River, an old mill town 50 miles south of Boston.
Median household income in that city is $33,000, among the lowest in the state; unemployment is among
the highest, 15% in March 2014, nearly five years after the recession ended. Twenty-three percent
of Fall River's inhabitants live in poverty. The city lost its many fabric-making concerns decades
ago and with them it lost its reason for being. People have been deserting the place for decades.
Many of the empty factories in which their ancestors worked are still standing, however. Solid
nineteenth-century structures of granite or brick, these huge boxes dominate the city visually -
there always seems to be one or two of them in the vista, contrasting painfully with whatever colorful
plastic fast-food joint has been slapped up next door.
Most of the old factories are boarded up, unmistakable emblems of hopelessness right up to the
roof. But the ones that have been successfully repurposed are in some ways even worse, filled as
they often are with enterprises offering cheap suits or help with drug addiction. A clinic in the
hulk of one abandoned mill has a sign on the window reading simply "Cancer & Blood."
The effect of all this is to remind you with every prospect that this is a place and a way
of life from which the politicians have withdrawn their blessing. Like so many other American scenes,
this one is the product of decades of deindustrialization, engineered by Republicans and rationalized
by Democrats. This is a place where affluence never returns - not because affluence for Fall River
is impossible or unimaginable, but because our country's leaders have blandly accepted a social order
that constantly bids down the wages of people like these while bidding up the rewards for innovators,
creatives, and professionals.
Even the city's one real hope for new employment opportunities - an Amazon warehouse that
is now in the planning stages - will serve to lock in this relationship. If all goes according to
plan, and if Amazon sticks to the practices it has pioneered elsewhere, people from Fall River will
one day get to do exhausting work with few benefits while being electronically monitored for efficiency,
in order to save the affluent customers of nearby Boston a few pennies when they buy books or electronics.
But that is all in the future. These days, the local newspaper publishes an endless stream of
stories about drug arrests, shootings, drunk-driving crashes, the stupidity of local politicians,
and the lamentable surplus of "affordable housing." The town is up to its eyeballs in wrathful bitterness
against public workers. As in: Why do they deserve a decent life when the rest of us have no chance
at all? It's every man for himself here in a "competition for crumbs," as a Fall River friend puts
it.
The Great Entrepreneurial Awakening
If Fall River is pocked with empty mills, the streets of Boston are dotted with facilities intended
to make innovation and entrepreneurship easy and convenient. I was surprised to discover, during
the time I spent exploring the city's political landscape, that Boston boasts a full-blown Innovation
District, a disused industrial neighborhood that has actually been zoned creative - a projection
of the post-industrial blue-state ideal onto the urban grid itself. The heart of the neighborhood
is a building called "District Hall" - "Boston's New Home for Innovation" - which appeared to me
to be a glorified multipurpose room, enclosed in a sharply angular façade, and sharing a roof with
a restaurant that offers "inventive cuisine for innovative people." The Wi-Fi was free, the screens
on the walls displayed famous quotations about creativity, and the walls themselves were covered
with a high-gloss finish meant to be written on with dry-erase markers; but otherwise it was not
much different from an ordinary public library. Aside from not having anything to read, that is.
This was my introduction to the innovation infrastructure of the city, much of it built up by
entrepreneurs shrewdly angling to grab a piece of the entrepreneur craze. There are "co-working"
spaces, shared offices for startups that can't afford the real thing. There are startup "incubators"
and startup "accelerators," which aim to ease the innovator's eternal struggle with an uncaring public:
the Startup Institute, for example, and the famous MassChallenge, the "World's Largest Startup Accelerator,"
which runs an annual competition for new companies and hands out prizes at the end.
And then there are the innovation Democrats, led by former Governor Deval Patrick, who presided
over the Massachusetts government from 2007 to 2015. He is typical of liberal-class leaders; you
might even say he is their most successful exemplar. Everyone seems to like him, even his opponents.
He is a witty and affable public speaker as well as a man of competence, a highly educated technocrat
who is comfortable in corporate surroundings. Thanks to his upbringing in a Chicago housing project,
he also understands the plight of the poor, and (perhaps best of all) he is an honest politician
in a state accustomed to wide-open corruption. Patrick was also the first black governor of Massachusetts
and, in some ways, an ideal Democrat for the era of Barack Obama - who, as it happens, is one of
his closest political allies.
As governor, Patrick became a kind of missionary for the innovation cult. "The Massachusetts economy
is an innovation economy," he liked to declare, and he made similar comments countless times, slightly
varying the order of the optimistic keywords: "Innovation is a centerpiece of the Massachusetts economy,"
et cetera. The governor opened "innovation schools," a species of ramped-up charter school. He signed
the "Social Innovation Compact," which had something to do with meeting "the private sector's need
for skilled entry-level professional talent." In a 2009 speech called "The Innovation Economy," Patrick
elaborated the political theory of innovation in greater detail, telling an audience of corporate
types in Silicon Valley about Massachusetts's "high concentration of brainpower" and "world-class"
universities, and how "we in government are actively partnering with the private sector and the universities,
to strengthen our innovation industries."
What did all of this inno-talk mean? Much of the time, it was pure applesauce - standard-issue
platitudes to be rolled out every time some pharmaceutical company opened an office building somewhere
in the state.
On some occasions, Patrick's favorite buzzword came with a gigantic price tag, like the billion
dollars in subsidies and tax breaks that the governor authorized in 2008 to encourage pharmaceutical
and biotech companies to do business in Massachusetts. On still other occasions, favoring inno has
meant bulldozing the people in its path - for instance, the taxi drivers whose livelihoods are being
usurped by ridesharing apps like Uber. When these workers staged a variety of protests in the Boston
area, Patrick intervened decisively on the side of the distant software company. Apparently convenience
for the people who ride in taxis was more important than good pay for people who drive those taxis.
It probably didn't hurt that Uber had hired a former Patrick aide as a lobbyist, but the real point
was, of course, innovation: Uber was the future, the taxi drivers were the past, and the path for
Massachusetts was obvious.
A short while later, Patrick became something of an innovator himself. After his time as governor
came to an end last year, he won a job as a managing director of Bain Capital, the private equity
firm that was founded by his predecessor Mitt Romney - and that had been so powerfully denounced
by Democrats during the 2012 election. Patrick spoke about the job like it was just another startup:
"It was a happy and timely coincidence I was interested in building a business that Bain was also
interested in building," he told the Wall Street Journal . Romney reportedly phoned him with
congratulations.
Entrepreneurs First
At a 2014 celebration of Governor Patrick's innovation leadership, Google's Eric Schmidt announced
that "if you want to solve the economic problems of the U.S., create more entrepreneurs." That sort
of sums up the ideology in this corporate commonwealth: Entrepreneurs first. But how has such a doctrine
become holy writ in a party dedicated to the welfare of the common man? And how has all this come
to pass in the liberal state of Massachusetts?
The answer is that I've got the wrong liberalism. The kind of liberalism that has dominated Massachusetts
for the last few decades isn't the stuff of Franklin Roosevelt or the United Auto Workers; it's the
Route 128/suburban-professionals variety. (Senator Elizabeth Warren is the great exception to this
rule.) Professional-class liberals aren't really alarmed by oversized rewards for society's winners.
On the contrary, this seems natural to them - because they are society's winners. The liberalism
of professionals just does not extend to matters of inequality; this is the area where soft hearts
abruptly turn hard.
Innovation liberalism is "a liberalism of the rich," to use the straightforward phrase of
local labor leader Harris Gruman. This doctrine has no patience with the idea that everyone should
share in society's wealth. What Massachusetts liberals pine for, by and large, is a more perfect
meritocracy - a system where the essential thing is to ensure that the truly talented get into the
right schools and then get to rise through the ranks of society. Unfortunately, however, as the blue-state
model makes painfully clear, there is no solidarity in a meritocracy. The ideology of educational
achievement conveniently negates any esteem we might feel for the poorly graduated.
This is a curious phenomenon, is it not? A blue state where the Democrats maintain transparent
connections to high finance and big pharma; where they have deliberately chosen distant software
barons over working-class members of their own society; and where their chief economic proposals
have to do with promoting "innovation," a grand and promising idea that remains suspiciously vague.
Nor can these innovation Democrats claim that their hands were forced by Republicans. They came up
with this program all on their own.
When Massachusetts officials put on a luncheon feting General Electric CEO Jeffrey Immelt
last week, they were celebrating the company's decision to accept hundreds of millions of dollars
worth of taxpayer incentives and move to the state. At the same time, however, GE is not backing
off its refusal to fully remove the toxins it dumped in one of Massachusetts' largest waterways.
"What does GE's headquarters bring? There are the jobs, for sure. About 800 people work
at the Fairfield headquarters. Its new Boston office will include 200 corporate jobs and about
600 tech-oriented jobs: designers, programmers and the like."
"But GE is closing down a valve factory in Avon, eliminating roughly 300 local, largely
blue-collar jobs - and shifting the work that's done there to a new plant in Florida."
Sorry about multiple replies but decided to check out the valve plant move. GE got a $15,400,000
tax incentive from Florida and Jacksonville for making the move.
"I grew up in a family that struggled to get a job,"(Gov.)Scott said during his stop at
the JAX Chamber's office in downtown. "My parents struggled to get jobs. It's the most important
thing you can do for a family."
The race to the bottom is obvious. Middle class tax payers make up for tax losses due to these
incentives. Taking jobs away from middle class people in Massachusetts to give them to middle
class people in Florida just so a giant multinational can cut its tax load is nothing to be proud
of.
Thanks for the links Pookah, and of course, you bring up a great point – the lack of examination
of how much these jobs cost, and who the JOBS are FOR, and who is actually paying for them.
Attributed to Marx that capitalists will sell communists the ropes with which to hang them
but probably should be updated that Dems will hang the poor to make the capitalists richer .
I guess, the expression: "the D's are no better than the R's" can never be repeated enough.
And certainly the concrete evidence of Massachusetts, putting the lie to the nonsense of "the
Republicans made us do it" (sook-sook) is useful.
But, I feel sure, most NC readers are way beyond discussion of the character and differences
between the kabuki appearances of the one sorry, TWO institutional business parties.
I feel for people on the wrong side of our social issues, but the fact is that you're never
going to come up wit a governing majority unless you are talking about putting food on the dinner
table.
As soon as you bring the social issues into that group, the group will start to fracture,
losing strength until it no longer has that majority. This is how the elite's divide-and-conquer
strategy works.
This is Nader's two headed snake. The parties can differentiate on God, guns and gays as
long as they both agree to corporate control of the economy. This is the Clinton Third Way legacy
that left the Democrats kowtowing to the corporate elites. Hillary continues this tradition.
Education and healthcare as rights are "unrealistic" in the richest nation the world has
ever seen for Hillary. Even while every other advanced nation on the planet provides for it. Why
is it unrealistic? Maybe because it will cut into corporate profits.
"It shouldn't be an either/or proposition." Absolutely right! Yet I think many working class
people are beginning to realize how they have been played by identity politics.
I heard a self-identified "blue-collar conservative" express it this way: "the republicans
always talking about Jesus, but they never try to help the people our Lord cared about. People
who are sick, in jail, whatever."
Deindustrialization has been occurring in all advanced OECD nations for the last 40 years,
including before and after trade liberalization, before NAFTA, the WTO, Most-Favored Nation Status
for China, in countries with strong interventionist industrial policy, and even in countries with
strong labor unions.
De-industrialization, like De-agriculturalism that preceded it, in which 98% of the populace
moved from farming to factory jobs, seems to be a fundamental aspect of massive increases in productivity
, and advanced economies moving to services.
The forces that were responsible for this really can't be laid on the Democrats or Republicans,
since it's occurring everywhere at roughly the same rate. You can see a graph here:
http://s17.postimg.org/bha27d6xb/worldmfg.jpg
This can only get worse with the likes of self-driving cars and trucks, mobile e-commerce,
warehouse automation, AI based customer support, etc. Moving into the future, fewer people will
be needed to produce more with less, in addition to a demographic inversion from a low birth rate
producing countries where 30-40% of the population are 65 or older.
It's really time to stop playing with partisan politics and past models that imagine a return
to the Ozzie and Harriet days of large blue collar labor in manufacturing. Our populations are
getting older, and our technology is making work less relevant.
If anything, we should be looking at a move to universal living income model in which no one
needs to work to live, it becomes optional.
What you are describing is a non-authoritarian fulfillment of Marxist communism. Except unlike
Marx, you left out all the conflict that happens in a class society. Pray tell, you seem to be
expecting a classless society to appear out of the fulfillment of automation. Human beings aren't
classless creatures. We love division into classes, and the resulting conflict between them, if
we aren't loving ethnic, religious or national conflict.
What Disturbed Voter is trying to say, is that no major change ever goes unnopposed by those
who benefit from the existing system. Be prepared for the oligarchs and their quislings to fight
you tooth and nail. If you expect the Masters of the Universe who benefit from modern capitalism
to 'stop playing with partisan politics' then im afraid youre believing a fairy tale.
The assumption that increasing automation will continue in a world of diminishing natural and
energy resources is highly dubious. In societies which do not have privileged access to energy,
a lot of work is still performed with human muscle. If the energy resources the rich countries
rely upon become scarcer, the same is likely to be the case in what are now rich societies.
Agreed. That automation still requires energy – whether you want to account for the human (food,
shelter, etc.) or the machine (resources to produce the machine, resources to program the logic,
resources to power the computation, etc.) you can't escape the 2nd Law.
You are not correct that that US deindustrialization has been primarily a function of massive
increases in productivity. First of all, mfg productivity has decreased in the US since 2004.
(See recent Brookings paper). Second, the vast majority of the increase in overall mfg productivity
over recent decades is has been due to giant measured increases in one sector – computers – and
those giant measured increases (which are probably mismeasurements) have been accompanied by massive
offshoring of manufacturing jobs in this sector, not the elimination of work.
Also, deindustrialization is not like de-farming because farmers could move to higher productivity
work, where as laid off factory workers are having to move, when they can find work at all, from
high productivity work to low productivity work.
fewer people will be needed to produce more with less : this has been the case for the
last 100+ years at least yet has never led to the elimination of work. Indeed, average workdays
are longer now than they were 50 years ago and most families have more people working today than
families did 50 years ago.
Tony: Increasing automation will absolutely occur and increase, irrespective of current rates
of resource extraction from the ground. Here is why: as resource prices increase, capital will
begin to apply AI, etc. to the task of maximizing efficiency in recycling, etc – in order to continue
the march towards elimination of the variable price input they despise most (humans). As far as
energy goes, keep in mind that solar is rapidly increasing in efficiency too. Add to that, the
following: there are trillions of tons of scrap metal that, absent the need to pay humans to harvest
and handle them for recycling, can be reused to make more robots. If you are a 95% automated company,
you locate your factories in hellholes like Death Valley where solar is cheap. You make robots
whose task is to make more robots from scavenged metal, precious metals, rare-earths, etc.
The thing is, the holders of capital are now (or are all becoming) fundamentally sociopathic.
Ultimately, in order to stem the tide of automation (that, goshdarnit, they wish they wouldn't
have to resort to, but darn those pesky wages and benefits and so on), minimum wage laws will
be eliminated. I see this in comment sections all the time – if you allow people to compete on
price, the lowest will always win.
If, following a long period of rentier-extraction of all economic value (i.e. forced liquidiation
of any assets the workers hold, sales of personal belongings, you fill in the blanks), the final
answer is dystopian nightmare. Eventually, it will be accepted that people will be allowed to
indenture themselves again. Those agreements become currency – tradeable like bonds or other instruments.
Eventually, the rich, having used up everything else to buy/sell/crapify will resort to the outright
trading in human lives – it's easy to envision a world in which one obligates oneself at, say,
16, to 30 years of labor and your contract is then bought or sold by the rich depending on your
apparent worth.
All of this will be sanctioned and embraced by the collective sufferers of Stockholm Syndrome
that we are all becoming.
But why do those negotiating our trade deals do everything possible to protect agriculture
even though it employs few while telling us that manufacturing is gotta go because it's too productive?
Curious, other than things like Free Trade and voting rights for white men, what else does
it mean? Are there things Im forgetting? Because those are what come to mind.
What Thomas Frank writes is a measure of our civilization.
It is the best of times, it is the worst of times, it is the age of wisdom, it is the age of
foolishness, it is the epoch of belief, it is the epoch of incredulity, it is the season of light,
it is the season of darkness, it is the spring of hope, it is the winter of despair.
Everyone wants the American dream. But the dream isn't there anymore. Most fall more than they
climb.
Robert Putnam, Our Kids: The American Dream in Crisis, writes that "Growing class segregation
means that rich Americans and poor Americans are living, learning, and raising children in increasingly
separate and unequal worlds, removing the stepping-stones to upward mobility."
The politicians and the media tell us that we have to further tighten our belts and live on
hay, while the collapse of the middle class continues to accelerate, and promise us pie in the
sky. What a mockery!
The masses, having been deceived, are now agitated and in ferment.
"Long ago it was said that "one half of the world does not know how the other half lives."
That was true then. It did not know because it did not care. The half that was on top cared little
for the struggles, and less for the fate of those who were underneath, so long as it was able
to hold them there and keep its own seat. There came a time when the discomfort and consequent
upheavals so violent, that it was no longer an easy thing to do, and then the upper half fell
to inquiring what was the matter. Information on the subject has been accumulating rapidly since,
and the whole world has had its hands full answering for its old ignorance." – Jacob A. Riis,
How the Other Half Lives
Politicians ultimately serve their most important constituents, which across the country means
the wealthy. In traditional Democratic enclaves where getting out the vote meant giving out benefits
like housing and health care, the pressure from the masses is no longer there. Rather, whoever
raises the most money for campaign cash is able to win most elections. Scott Brown tapped into
the dissatisfied and down trodden of the state for his brief turn as our Republican representative
in the Senate, but he turned out to be nothing more than a barn jacket driving an F150. Moreover,
witness the massive rewards that are now possible for retired technocrats. Deval Patrick made
a fantastic wage as a lawyer prior to being governor and now waltzes into Bain Capital to continue
harvesting economic gains. Why would a politician do anything to bite the hand that feeds it?
Another fitting quote from "that" time:
"It is difficult to get a man to understand something when his salary depends upon his not understanding
it."
Upton Sinclair Jr.
The thing that gets lost in all of these discussions concerning inequality and the changing
nature of work and education is that all of these things are the result of policy changes.
Yes. We did it.
Willfully and purposefully.
And those who benefit the most and therefore are able to contribute the most to professional
associations and personal giving continue to demand that these policies not only continue on the
same track but that new wrinkles be added to aid the people giving the money to do even better
– whether it is regulatory, statute, or enforcement of existing laws; all of these can be enhanced
for the rich and successful.
At this point the working class person (whether by choice or necessity) has no champion. A
few years ago The Onion posted a faux news story detailing how the American People had hired lobbyists
to influence policy.
Like too much of the Onion's Stuff, the lampoon becomes the harpoon as it flies directly to
the heart of the matter.
Again what is missing is that these things are the result of policy not some organic sea-change
as the poster above delineates. (For the policies that are fomenting these changes are copied
around the world – "improved" – in come cases and sent back creating an endless loop of denigration
for working folks)
Who's this "we" you speak of, kemosabe? Those with the power to influence policy have designed
these outcomes. I have never been among them. Have you?
But you are correct in asserting that what we are seeing is the result purposeful action. The
policies are bad, but before we will be able to really change them, I think, we'll need to re-frame
the debate in such a way that every possible solution turns out to be a win for the elites. We
need to get back to basics. What is the economy for? Hint, not making money.
Are you an oligarch of some kind? If not, then saying that 'we did it' is wrong, because the
oligarchs bought all the politicians and had them enact these changes. To blame the electorate
when the majority of choices available to vote for were pre-selected to be answerable only to
the masters of capital seems to me to be disingenuous.
I'm glad Mr. Frank didn't mention "Boston Strong". There's a term that makes the hairs on the
back of my neck stand up. The Boston that was so strong that it was shut down and stilled for
a while by two brothers then one remaining brother, the teenager. A primer for how to apply Marshall
law to populous American cities during times of trouble. "Coming soon to a city near you", if
need be.
The attitudes were no different in Massachusetts fifty years ago, but you had to venture into
Southie or Roxbury or Fall River to see past the liberal rhetoric and observe the contempt the
gownies held for the townies. All that has changed is that now the manufacturing jobs are gone;
only the contempt remains.
Frank doesn't really mention though that de-industrialization in places like Fall River started
even before World War II. To be fair at this point it was textile mills and tanneries moving to
other places in the US with cheaper labor(i.e. the South). So Massachusetts historically was really
not hurt per say by free trade with other countries but free trade within the United States.
That's a reductionist argument, like saying that since you already had a cold the fact you've
now been diagnosed with cancer really isn't that big a deal. It's important to disaggregate different
trends and analyze their distinct contributions to changes in economic fortunes. Such an analysis
is likely to show that while the migration of some industries from the North to the South, largely
to exploit cheap labour, did have some non negligible regional impact the effect was completely
swamped by the subsequent shock of trade liberalization and globalization. The initial movement
involved labour intensive low skill light industries while the latter saw the decimation of the
heavy industries that were once the bedrock of the American economy. Moreover, fluctuations in
employment patterns within the US doesn't effect aggregate employment and output,
while the outsourcing of jobs overseas represents the dead loss of both, not to mention the negative
impact on the trade account of having to import all the things that were once produced domestically.
Thanks for your comparison article on MA, maybe you should look at Minnesota the only state
that has been mostly democrat for the longest period. Of course if you did you could not manage
your theme it just would not play-
The Nation has mostly the same excerpt of Frank's book and gives it a headline that is a
misdirect-"Why Have Democrats Failed in the State Where They're Most Likely to Succeed?" .The
Democrats didn't "fail", the leaders of the party were successful in their desired outcome.
In the UK we used to have three parties Labour, Conservative and Liberal. Now there is no room
between the slightly left and slightly right parties and the Liberals have been squeezed out of
existence.
Unfortunately the Neo-liberal ideology failed in 2008.
Everyone has now noticed the Neo-Liberal, Centrist main parties are not working in the interests
of the electorate.
Unconditional bailouts for bankers and austerity for the people.
How can there be any doubt?
New parties or leaders are required that aren't, Neo-Liberal centrists.
In Europe we have Podemos, Syriza and Five Star with a myriad of right wing parties including
Golden Dawn.
In the UK, UKIP and Corbyn.
In the US, Trump, Sanders and the Tea Party.
The elite haven't quite worked out how badly they have failed their electorate.
Get out of your ivory towers and discover the new reality.
It is important to establish the difference between Liberal and Labour/Socialist.
Where even the UK term Labour, and US term Socialist, are just versions of Capitalism that
lie on the Left, not true Socialism.
Liberals are left leaning elitists who are always using words like "populist" to show their
disdain for the masses.
They want those lower down to have reasonable lives but very much believe the elite should
run things, people like them.
New Labour were really Liberals, but the UK election system meant they had to hide under the
Labour banner to get into power. They lived in places like Hampstead where they never had to mix
with the hoi polloi and believed in private schools, so their children don't have to mix with
the great unwashed.
Labour/Socialists represent the people and identify with them.
With the technocrat elite messing things up globally it is time for real Labour and Socialists
to make their presence felt.
There is a world of difference between Liberals and the real Left and a three party system
makes sense.
The New Labour sympathisers need to get themselves under the correct banner, Liberal.
All those innovative new spin-off businesses will fail. Most of them. There are only so many
things an economy needs. A bubble of innovation isn't one of them. But it is good for the "consumer"
as Hillary tells us, because competition. Progress. So everyone can have more cheap crap. Who
says we have been deindustrialized? All this misbegotten innovation is going to bury us under
mountains of garbage. Just to keep the economy churning. We are not just wasting time and resources
for the sake of a bad idea, we are creating critical mass. It's almost as if policy makers think
that if we don't all run around in a frenzy of creativity the world will stop turning. Liberalism
is a silly, self indulgent thing.
I think you are largely right but let's give the devil his due: most of us would not like to
return to the world of 1760 before the first stuttering steps of industrial innovation. It was
a world even more unequal and authoritarian than our own. So when people talk about progress and
innovation, they have history and some powerful evidence from the past to call upon. The question
now is appropriateness, which I think is what you are driving at. We need to determine as a community
what is appropriate for our future well-being and how we want to use the technology we have, under
democratic control, to make a better future than the consumerist ecological disaster looming close
on our horizon.
"Innovation" is what limousine liberals propose to offer the masses in place of secure employment
and a decent standard of living. It's effectively old fashioned social Darwinism -innovate or
die- dressed up in fadish contemporary buisiness-speak that provides an ideological justification
for throwing the masses overboard while flattering their own prejudices about "meritocracy", "flexible
labour markets", and what have you.
As you said most of these businesses will fail, because the idea that innovation is an end
in itself is a conceit dreamed up by business school professors who have never spent a day running
the day to day operations (like meeting payroll) of an actual business. In reality innovation
is largely a serendipitous process that can't be taught in classrooms and is at best only slightly
responsive to external support ("incubation"). Very often it is largely dependent on dumb luck
– the proverbial being "in the right place at the right time". People like Deval Patrick are never
going to acknowledge that however because to do so would be to admit -first of all to themselves-
that having championed policies that stripped workers of security and a respectable livelihood
what they are offering them in its place amounts to a handful of beans.
For at least 30 years Democrats have run on a platform of 'Identity Politics' which pits gays
against straits, people of color against whites, skeptics against the religious, immigrants against
nativists, etc. In short, deviding the country against itself in almost every demographic category
except the one that really counts – labor against capital. The party once led by FDR who famously
welcomed the hatred and wrath of Wall Street is now led by the likes of Chuck Shumer and Steney
Hoyer who have their heads so far up the ass-end of Wall Street that it's amazing that either
one of them can still breathe.
$145M in tax breaks for 800 jobs that we stole from CT! Innovation!!!
I'm guessing employees aren't going to get paid the $181,250 a year that that comes out to?
Perhaps the state could have just hired 800 people and saved a bundle. But then we couldn't brag
about how we have so many world class businesses based right here!!!
"The city's education budget is $50 million short, despite a $13 million hike in school spending."
"Schools are facing the deficit due to rising costs and declining state and federal aid."
Oh right, that's where. Sometimes, it's like you can actually watch our wonderful leaders making
our society worse, more unequal right before your very eyes?!?!?!
I just got Thomas Frank's new book, and so far it seems to have gathered together in a coherent
narrative the journey of the leadership of the Democratic party to split off from the blue collar
workers who used to fill the factories. We no longer have the factories to occupy the time of
the least educated, and the dems have done precious little to confront this problem. I don't know
what else he has to say about his ideas towards the middle and end of his book, but I know the
real conclusion should be that the work week needs to continue to drop down another couple of
days. The level of automation and smart manufacturing design from the past 100 years has steady
improvements in productivity. The vast majority of our time is simply no longer required to sustain
the standard of living and increases in productivity. We may need to give over 3 Eight hour days
to work for the economy, the rest of the time should be left to own pursuit of happiness while
we live the short span allotted to us in the world.
The economic restructuring is a political decision making process that so far, no one party
as a whole has picked up as their primary unifying cause. While there are plenty of dems who have
a working class politics, they are in a minority within the dems.And while they understand the
value of supporting a tech based new economy, that doesn't mean we still don't needs tables and
chairs, refrigerators and stoves and other manufactured goods. It may mean we need fewer people
to make them, but the other alternatives for people without college or professional degrees needs
to be supported in numbers required to give everyone a decent paying job.
There is enough deferred maintenance of falling down buildings, homeless people that can be
housed in abandoned homes, potholes in roads, bad bridges, not to mention the enormous transition
to solar and wind power. The social order needs to change to allow people a quality standard of
living from our economic activity. And our economic activity can not just be based upon apps,
video games and 3-D printed birthday cakes. We still need to eat, so we did not abandon agriculture.
We still like to live in comfortable homes, so we do not have to abandon furniture making. And
we all benefit from being educated and healthy. All of our industrial base does not have to be
jettisoned for the sake of computers and the internet of everything. We still need something manufactured
if we are going to put the internet inside of it, whatever it maybe.
The best way to encourage innovation is to assure a strong safety net so that everyone can
innovate. The Scandinavian countries lead in measures of innovation (look it up). The US is also
a leader but only because of the large presence of government (read the book, "The Entrepreneurial
State).
Artisanal furniture, Artisanal coffee. Artisanal this and Artisanal that
but Artisanal Liberals, Artisanal Democrates, now that's where it's at!
~ a forgotten forklift driver who doesn't deserve a decent life because a decent life costs
more here than it does in Asia, with the difference going to those who don't need it for anything
more than cocktail party bragging rights
"... it seems fair to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might first step back and consider how we got to this point. ..."
"... An Inquiry into the Nature and Causes of the Wealth of Nations . ..."
"... Clinton will say anything then she'll sell you out. I hope we never get a chance to see how she will sell us out on TPP ..."
"... What we would be headed for under Hillary Clinton is fascism--Mussolini's shorthand definition of fascism was the marriage of industry and commerce with the power of the State. That is what the plutocrats who run the big banks (to whom she owes her soul) aim to do. President, Thomas Jefferson knew the dangers of large European-style central banks. ..."
On the surface, it appears that Hillary Clinton and Donald Trump, for all their mutual antipathy,
are united on one big issue: opposition to new trade deals. Here's a recent headline in
The Guardian: "Trump and Clinton's free trade retreat: a pivotal moment for the world's
economic future."
And the subhead continues in that vein:
Never before have both main presidential candidates broken so completely with Washington orthodoxy
on globalization, even as the White House refuses to give up. The problem, however, goes much
deeper than trade deals.
In the above quote, we can note the deliberate use of the loaded word, "problem." As in, it's
a problem that free trade is unpopular-a problem, perhaps, that the MSM can fix. Yet in the
meantime, the newspaper sighed, the two biggest trade deals on the horizon, the well-known
Trans Pacific Partnership (TPP), and the lesser-known
Trans Atlantic Trade Investment
Partnership (TTIP), aimed at further linking the U.S. and European Union (EU), are both in jeopardy.
So now we must ask broader questions: What does this mean for trade treaties overall? And what
are the implications for globalism?
More specifically, we can ask: Are we sure that the two main White House hopefuls, Clinton and
Trump, are truly sincere in their opposition to those deals? After all, as has been
widely reported, President Obama still has plans to push TPP through to enactment in the "lame
duck" session of Congress after the November elections. Of course, Obama wouldn't seek to do that
if the president-elect opposed it-or would he?
Yet on August 30, Politico reminded its Beltway readership, "How
Trump or Clinton could kill Pacific trade deal." In other words, even if Obama were to move TPP
forward in his last two months in office, the 45th president could still block its implementation
in 2017 and beyond. If, that is, she or he really wanted to.
Indeed, as we think about Clinton and Trump, we realize that there's "opposition" that's for show
and there's opposition that's for real.
Still, given what's been said on the presidential campaign trail this year, it seems fair
to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just
a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might
first step back and consider how we got to this point.
2. The Free Trade Orthodoxy
It's poignant that the headline, "Trump and Clinton's free trade retreat", lamenting the decay
of free trade, appeared in The Guardian. Until recently, the newspaper was known as The
Manchester Guardian, as in Manchester, England. And Manchester is not only a big city, population
2.5 million, it is also a city with a fabled past: You see, Manchester was the cradle of the Industrial
Revolution, which transformed England and the world. It was that city that helped create the free
trade orthodoxy that is now crumbling.
Yes, in the 18th and 19th centuries, Manchester was the leading manufacturing city in the world,
especially for textiles. It was known as "Cottonopolis."
Indeed, back then, Manchester was so much more efficient and effective at mass production that
it led the world in exports. That is, it could produce its goods at such low cost that it could send
them across vast oceans and still undercut local producers on price and quality.
Over time, this economic reality congealed into a school of thought: As Manchester grew rich from
exports, its business leaders easily found economists, journalists, and propagandists who would help
advance their cause in the press and among the intelligentsia.
The resulting school of thought became known, in the 19th century, as "Manchester
Liberalism." And so, to this day, long after Manchester has lost its economic preeminence to
rivals elsewhere in the world, the phrase "Manchester Liberalism" is a well-known in the history
of economics, bespeaking ardent support for free markets and free trade.
More recently, the hub for free-trade enthusiasm has been the United States. In particular, the
University of Chicago, home to the Nobel Prize-winning economist Milton Friedman, became free trade's
academic citadel; hence the "Chicago
School" has displaced Manchesterism.
And just as it made sense for Manchester Liberalism to exalt free trade and exports when Manchester
and England were on top, so, too, did the Chicago School exalt free trade when the U.S. was unquestionably
the top dog.
So back in the 40s and 50s, when the rest of the world was either bombed flat or still under the
yoke of colonialism, it made perfect sense that the U.S., as the only intact industrial power, would
celebrate industrial exports: We were Number One, and it was perfectly rational to make the most
of that first-place status. And if scribblers and scholars could help make the case for this new
status quo, well, bring 'em aboard. Thus the Chicago School gained ascendancy in the late 20th century.
And of course, the Chicagoans drew inspiration from a period even earlier than Manchesterism,
3. On the Origins of the Orthodoxy: Adam Smith and David Ricardo
One passage in that volume considers how individuals might optimize their own production and consumption:
It is the maxim of every prudent master of a family never to attempt to make at home what it
will cost him more to make than to buy.
Smith is right, of course; everyone should always be calculating, however informally, whether
or not it's cheaper to make it at home or buy it from someone else.
We can quickly see: If each family must make its own clothes and grow its own food, it's likely
to be worse off than if it can buy its necessities from a large-scale producer. Why? Because, to
be blunt about it, most of us don't really know how to make clothes and grow food, and it's expensive
and difficult-if not downright impossible-to learn how. So we can conclude that self-sufficiency,
however rustic and charming, is almost always a recipe for poverty.
Smith had a better idea: specialization. That is, people would specialize in one line of
work, gain skills, earn more money, and then use that money in the marketplace, buying what they
needed from other kinds of specialists.
Moreover, the even better news, in Smith's mind, was that this kind of specialization came naturally
to people-that is, if they were free to scheme out their own advancement. As Smith argued, the ideal
system would allow "every man to pursue his own interest his own way, upon the liberal plan of equality,
liberty and justice."
That is, men (and women) would do that which they did best, and then they would all come together
in the free marketplace-each person being inspired to do better, thanks to, as Smith so memorably
put it, the "invisible hand." Thus Smith articulated a key insight that undergirds the whole of modern
economics-and, of course, modern-day prosperity.
A few decades later, in the early 19th century, Smith's pioneering work was expanded upon by another
remarkable British economist, David Ricardo.
Ricardo's big idea built on Smithian specialization; Ricardo called it "comparative advantage."
That is, just as each individual should do what he or she does best, so should each country.
In Ricardo's well-known illustration, he explained that the warm and sunny climate of Portugal
made that country ideal for growing the grapes needed for wine, while the factories of England made
that country ideal for spinning the fibers needed for apparel and other finished fabrics.
Thus, in Ricardo's view, we could see the makings of a beautiful economic friendship: The Portuguese
would utilize their comparative advantage (climate) and export their surplus wine to England, while
the English would utilize their comparative advantage (manufacturing) and export apparel to Portugal.
Thus each would benefit from the exchange of efficiently-produced products, as each export paid for
the other.
Furthermore, in Ricardo's telling, if tariffs and other barriers were eliminated, then both countries,
Portugal and England, would enjoy the maximum free-trading win-win.
Actually, in point of fact-and Ricardo knew this-the relationship was much more of a win for England,
because manufacture is more lucrative than agriculture. That is, a factory in Manchester could crank
out garments a lot faster than a vineyard in Portugal could ferment wine.
And as we all know, the richer, stronger countries are industrial, not agricultural. Food is essential-and
alcohol is pleasurable-but the real money is made in making things. After all, crops can be grown
easily enough in many places, and so prices stay low. By contrast, manufacturing requires a lot of
know-how and a huge upfront investment. Yet with enough powerful manufacturing, a nation is always
guaranteed to be able to afford to import food. And also, it can make military weapons, and so, if
necessary, take foreign food and croplands by force.
We can also observe that Ricardo, smart fellow that he was, nevertheless was describing the economy
at a certain point in time-the era of horse-drawn carriages and sailing ships. Ricardo realized that
transportation was, in fact, a key business variable. He wrote that it was possible for a company
to seek economic advantage by moving a factory from one part of England to another. And yet in his
view, writing from the perspective of the year 1817, it was impossible to imagine
moving a factory from England to another country:
It would not follow that capital and population would necessarily move from England to Holland,
or Spain, or Russia.
Why this presumed immobility of capital and people? Because, from Ricardo's early 19th-century
perspective, transportation was inevitably slow and creaky; he didn't foresee steamships and airplanes.
In his day, relying on the technology of the time, it wasn't realistic to think that factories, and
their workers, could relocate from one country to another.
Moreover, in Ricardo's era, many countries were actively hostile to industrialization, because
change would upset the aristocratic rhythms of the old order. That is, industrialization could turn
docile or fatalistic peasants, spread out thinly across the countryside, into angry and self-aware
proletarians, concentrated in the big cities-and that was a formula for unrest, even revolution.
Indeed, it was not until the 20th century that every country-including China, a great civilization,
long asleep under decadent imperial misrule-figured out that it had no choice other than to industrialize.
So we can see that the ideas of Smith and Ricardo, enduringly powerful as they have been, were
nonetheless products of their time-that is, a time when England mostly had the advantages of industrialism
to itself. In particular, Ricardo's celebration of comparative advantage can be seen as an artifact
of his own era, when England enjoyed a massive first-mover advantage in the industrial-export game.
Smith died in 1790, and Ricardo died in 1823; a lot has changed since then. And yet the two economists
were so lucid in their writings that their work is studied and admired to this day.
Unfortunately, we can also observe that their ideas have been frozen in a kind of intellectual
amber; even in the 21st century, free trade and old-fashioned comparative advantage are unquestioningly
regarded as the keys to the wealth of nations-at least in the U.S.-even if they are so no longer.
4. Nationalist Alternatives to Free Trade Orthodoxy
As we have seen, Smith and Ricardo were pushing an idea, free trade, that was advantageous to
Britain.
So perhaps not surprisingly, rival countries-notably the United States and Germany-soon developed
different ideas. Leaders in Washington, D.C., and Berlin didn't want their respective nations to
be mere dependent receptacles for English goods; they wanted real independence. And so they wanted
factories of their own.
In the late 18th century, Alexander Hamilton, the visionary American patriot, could see that both
economic wealth and military power flowed from domestic industry. As the nation's first Treasury
Secretary, he persuaded President George Washington and the Congress to support a system of protective
tariffs and "internal improvements" (what today we would call infrastructure) to foster US manufacturing
and exporting.
And in the 19th century, Germany, under the much heavier-handed leadership of Otto von Bismarck,
had the same idea: Make a concerted effort to make the nation stronger.
In both countries, this industrial policymaking succeeded. So whereas at the beginning of the
19th century, England had led the world in steel production, by the beginning of the 20th century
century, the U.S. and Germany had moved well ahead. Yes, the "invisible hand" of individual self-interest
is always a powerful economic force, but sometimes, the "visible hand" of national purpose, animated
by patriotism, is even more powerful.
Thus by 1914, at the onset of World War One, we could see the results of the Smith/Ricardo model,
on the one hand, and the Hamilton/Bismarck model, on the other. All three countries-Britain, the
US, and Germany, were rich-but only the latter two had genuine industrial mojo. Indeed, during World
War One, English weakness became glaringly apparent in the 1915
shell crisis-as
in, artillery shells. It was only the massive importing of made-in-USA ammunition that saved Britain
from looming defeat.
Yet as always, times change, as do economic circumstances, as do prevailing ideas.
As we have seen, at the end of World War II, the U.S. was the only industrial power left standing.
And so it made sense for America to shift from a policy of Hamiltonian protection to a policy of
Smith-Ricardian export-minded free trade. Indeed, beginning in around 1945, both major political
parties, Democrats and Republicans, solidly embraced the new line: The U.S. would be the factory
for the world.
Yet if times, circumstances, and ideas change, they can always change again.
5. The Contemporary Crack-Up
As we have seen, in the 19th century, not every country wanted to be on the passive receiving
end of England's exports. And this was true, too, in the 20th century; Japan, notably, had its own
ideas.
If Japan had followed the Ricardian doctrine of comparative advantage, it would have focused on
exporting rice and tuna. Instead, by dint of hard work, ingenuity, and more than a little national
strategizing, Japan grew itself into a great and prosperous industrial power. Its exports, we might
note, were such high-value-adds as automobiles and electronics, not mere crops and fish.
Moreover, according to the same theory of comparative advantage, South Korea should have been
exporting parasols and kimchi, and China should have settled for exporting fortune cookies and pandas.
Yet as the South Korean economist
Ha-Joon Chang has chronicled,
these Asian nations resolved, in their no-nonsense neo-Confucian way, to launch state-guided private
industries-and the theory of comparative advantage be damned.
Yes, their efforts violated Western economic orthodoxy, but as the philosopher Kant once observed,
the actual proves the possible. Indeed, today, as we all know, the Asian tigers are among the richest
and fastest-growing economies in the world.
China is not only the world's largest economy in terms of purchasing power parity (PPP), but
also the world's largest manufacturing nation-producing 52 percent of color televisions, 75 percent
of mobile phones and 87 percent of the world's personal computers. The Chinese automobile industry
is the world's largest, twice the size of America's. China leads the world in foreign exchange
reserves. The United States is the main trading partner for seventy-six countries. China is the
main trading partner for 124.
In particular, we might pause over one item in that impressive litany: China makes 87 percent
of the world's personal computers.
Indeed, if it's true, as ZDNet reports, that
the Chinese have built "backdoors" into almost all the electronic equipment that they sell-that
is to say, the equipment that we buy-then we can assume that we face a serious military challenge,
as well as a serious economic challenge.
Yes, it's a safe bet that the People's Liberation Army has a good handle on our defense establishment,
especially now that the Pentagon has fully equipped itself with
Chinese-made iPhones and iPads.
Of course, we can safely predict that Defense Department bureaucrats will always say that there's
nothing to worry about, that they have the potential hacking/sabotage matter under control (although
just to be sure, the Pentagon might say, give us more money).
Yet we might note that this is the same defense establishment that couldn't keep track of lone
internal rogues such as Bradley Manning and Edward Snowden. Therefore, should we really believe that
this same DOD knows how to stop the determined efforts of a nation of 1.3 billion people, seeking
to hack machines-machines that they made in the first place?
Yes, the single strongest argument against the blind application of free- trade dogma is the doctrine
of self defense. That is, all the wealth in the world doesn't matter if you're conquered. Even Adam
Smith understood that; as he wrote, "Defense
. . . is of much more importance than opulence."
Yet today we can readily see: If we are grossly dependent on China for vital wares, then we can't
be truly independent of China. In fact, we should be downright fearful.
Still, despite these deep strategic threats, directly the result of careless importing, the Smith-Ricardo
orthodoxy remains powerful, even hegemonistic-at least in the English-speaking world.
Why is this so? Yes, economists are typically seen as cold and nerdy, even bloodless, and yet,
in fact, they are actual human beings. And as such, they are susceptible to the giddy-happy feeling
that comes from the hope of building a new utopia, the dream of ushering in an era of world harmony,
based on untrammeled international trade. Indeed, this woozy idealism among economists goes way back;
it was the British free trader Richard Cobden who declared in 1857,
Free trade is God's diplomacy. There is no other certain way of uniting people in the bonds
of peace.
And lo, so many wars later, many economists still believe that.
Indeed, economists today are still monolithically pro-fee trade; a
recent survey of economists found that 83 percent supported eliminating all tariffs and other
barriers; just 10 percent disagreed.
We might further note that others, too, in the financial and intellectual elite are fully on board
the free-trade train, including most corporate officers and their lobbyists, journalists, academics,
and, of course, the mostly for-hire think-tankers.
To be sure, there are always exceptions: As that Guardian article, the one lamenting the
sharp decrease in support for free trade as a "problem," noted, not all of corporate America is on
board, particularly those companies in the manufacturing sector:
Ford openly opposes TPP because it fears the deal does nothing to stop Japan manipulating its
currency at the expense of US rivals.
Indeed, we might note that the same Guardian story included an even more cautionary note,
asserting that support for free trade, overall, is remarkably rickety:
Some suggest a "bicycle theory" of trade deals: that the international bandwagon has to keep
rolling forward or else it all wobbles and falls down.
So what has happened? How could virtually the entire elite be united in enthusiasm for free trade,
and yet, even so, the free trade juggernaut is no steadier than a mere two-wheeled bike? Moreover,
free traders will ask: Why aren't the leaders leading? More to the point, why aren't the followers
following?
To answer those questions, we might start by noting the four-decade phenomenon of
wage stagnation-that's
taken a toll on support for free trade. But of course, it's in the heartland that wages have been
stagnating; by contrast,
incomes for
the bicoastal elites have been soaring.
We might also note that some expert predictions have been way off, thus undermining confidence
in their expertise. Remember, this spring, when all the experts were saying that the United Kingdom
would fall into recession, or worse, if it voted to leave the EU? Well, just the other day came this
New York Post headline: "Brexit
actually boosting the UK economy."
Thus from the Wall Street-ish perspective of the urban chattering classes, things are going well-so
what's the problem?
Yet the folks on Main Street have known a different story. They have seen, with their own eyes,
what has happened to them, and no fusillade of op-eds or think-tank monographs will persuade them
to change their mind.
However, because the two parties have been so united on the issues of trade and globalization-the
"Uniparty," it's sometimes called-the folks in the boonies have had no political alternative. And
as they say, the only power you have in this world is the power of an alternative. And so, lacking
an alternative, the working/middle class has just had to accept its fate.
Indeed, it has been a bitter fate, particularly bitter in the former industrial heartland. In
a 2013 paper, the
Economic Policy Institute (EPI) came to some startling conclusions:
Growing trade with less-developed countries lowered wages in 2011 by 5.5 percent-or by roughly
$1,800-for a full-time, full-year worker earning the average wage for workers without a four-year
college degree.
The paper added, "One-third of this total effect is due to growing trade with just China."
Continuing, EPI found that even as trade with low-wage countries caused a decrease in the incomes
for lower-end workers, it had caused an increase in the incomes of high-end workers-so no
wonder the high-end thinks globalism in great.
To be sure, some in the elite are bothered by what's been happening.
Peggy Noonan, writing earlier this year in The Wall Street Journal-a piece that must have
raised the hackles of her doctrinaire colleagues-put the matter succinctly: There's a wide, and widening,
gap between the "protected" and the "unprotected":
The protected make public policy. The unprotected live in it. The unprotected are starting
to push back, powerfully.
Of course, Noonan was alluding to the Trump candidacy-and also to the candidacy of Sen. Bernie
Sanders. Those two insurgents, in different parties, have been propelled by the pushing from all
the unprotected folks across America.
We might pause to note that free traders have arguments which undoubtedly deserve a fuller airing.
Okay. However, we can still see the limits. For example, the familiar gambit of outsourcing jobs
to China, or Mexico-or 50 other countries-and calling that "free trade" is now socially unacceptable,
and politically unsustainable.
Still, the broader vision of planetary freedom, including the free flow of peoples and their ideas,
is always enormously appealing. The United States, as well as the world, undoubtedly benefits from
competition, from social and economic mobility-and yes, from new blood.
As
Stuart Anderson, executive director of the National Foundation for American Policy, notes, "77
percent of the full-time graduate students in electrical engineering and 71 percent in computer science
at U.S. universities are international students." That's a statistic that should give every American
pause to ask: Why aren't we producing more engineers here at home?
We can say, with admiration, that Silicon Valley is the latest Manchester; as such, it's a powerful
magnet for the best and the brightest from overseas, and from a purely dollars-and-cents point of
view, there's a lot to be said for welcoming them.
So yes, it would be nice if we could retain this international mobility that benefits the U.S.-but
only if the economic benefits can be broadly shared, and patriotic assimilation of immigrants can
be truly achieved, such that all Americans can feel good about welcoming newcomers.
The further enrichment of Silicon Valley won't do much good for the country unless those riches
are somehow widely shared. In fact, amidst the ongoing outsourcing of mass-production jobs,
total employment in such boomtowns as San Francisco and San Jose has barely budged. That is,
new software billionaires are being minted every day, but their workforces tend to be tiny-or located
overseas. If that past pattern is the future pattern, well, something will have to give.
We can say: If America is to be
one nation-something Mitt "47 percent" Romney never worried about, although it cost him in the
end-then we will have to figure out a way to turn the genius of the few into good jobs for the many.
The goal isn't socialism, or anything like that; instead, the goal is the widespread distribution
of private property, facilitated, by conscious national economic development, as
I argued at the tail end of this piece.
If we can't, or won't, find a way to expand private ownership nationwide, then the populist upsurges
of the Trump and Sanders campaigns will be remembered as mere overtures to a starkly divergent future.
6. Clinton and Trump Say They Are Trade Hawks: But Are They Sincere?
So now we come to a mega-question for 2016: How should we judge the sincerity of the two major-party
candidates, Clinton or Trump, when they affirm their opposition to TPP? And how do we assess their
attitude toward globalization, including immigration, overall?
The future is, of course, unknown, but we can make a couple of points.
First, it is true that
many have questioned the sincerity of Hillary's new anti-TPP stance, especially given the presence
of such prominent free-traders as vice presidential nominee Tim Kaine and presidential transition-planning
chief Ken Salazar. Moreover, there's also Hillary's own decades-long association with open-borders
immigration policies, as well as past support for such trade bills as NAFTA, PNTR, and, of course,
TPP. And oh yes, there's the Clinton Foundation, that global laundromat for every overseas fortune;
most of those billionaires are globalists par excellence-would a President Hillary really
cross them?
Second, since there's still no way to see inside another person's mind, the best we can
do is look for external clues-by which we mean, external pressures. And so we might ask a basic question:
Would the 45th president, whoever she or he is, feel compelled by those external pressures to keep
their stated commitment to the voters? Or would they feel that they owe more to their elite friends,
allies, and benefactors?
As we have seen, Clinton has long chosen to surround herself with free traders and globalists.
Moreover, she has raised money from virtually every bicoastal billionaire in America.
So we must wonder: Will a new President Clinton really betray her own class-all those
Davos Men and Davos Women-for the sake of middle-class folks she has never met, except maybe
on a rope line? Would Clinton 45, who has spent her life courting the powerful, really stick her
neck out for unnamed strangers-who never gave a dime to the Clinton Foundation?
Okay, so what to make of Trump? He, too, is a fat-cat-even more of fat-cat, in fact, than Clinton.
And yet for more than a year now, he has based his campaign on opposition to globalism in all its
forms; it's been the basis of his campaign-indeed, the basis of his base. And his campaign policy
advisers are emphatic. According to Politico, as recently as August 30, Trump trade adviser
Peter Navarro reiterated Trump's opposition to TPP, declaring,
Any deal must increase the GDP growth rate, reduce the trade deficit, and strengthen the manufacturing
base.
So, were Trump to win the White House, he would come in with a much more solid anti-globalist
mandate.
Thus we can ask: Would a President Trump really cross his own populist-nationalist base by going
over to the other side-to the globalists who voted, and donated, against him? If he did-if he repudiated
his central platform plank-he would implode his presidency, the way that Bush 41 imploded his presidency
in 1990 when he went back on his "read my lips, no new taxes" pledge.
Surely Trump remembers that moment of political calamity well, and so surely, whatever mistakes
he might make, he won't make that one.
To be sure, the future is unknowable. However, as we have seen, the past, both recent and historical,
is rich with valuable clues.
Clinton will say anything then she'll sell you out. I hope we never get a chance to see
how she will sell us out on TPP
Ellen Bell -> HoosierMilitia
You really do not understand the primitive form of capitalism that the moneyed elites are trying
to impose on us. That system is mercantilism and two of its major tenets are to only give the
workers subsistence level wages (what they are doing to poor people abroad and attempting to do
here) and monopolistic control of everything that is possible to monopolize. The large multi-nationals
have already done that. What we would be headed for under Hillary Clinton is fascism--Mussolini's
shorthand definition of fascism was the marriage of industry and commerce with the power of the
State. That is what the plutocrats who run the big banks (to whom she owes her soul) aim to do.
President, Thomas Jefferson knew the dangers of large European-style central banks. He said:
"...The central bank is an institution of the most deadly hostility existing against the
Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes
for anything but Coin. If the American People allow private banks to control the issuance of
their currency, first by inflation and then by deflation, the banks and corporations that will
grow up around them will deprive the People of all their Property until their Children will
wake up homeless on the continent their Fathers conquered..."
The power to create money was given to the private banking system of the Federal Reserve in
1913. Nearly every bit of our enormous debt has been incurred since then. The American people
have become debt-slaves. In the Constitution, only Congress has the right to issue currency. That's
why the plutocrats want to do away with it--among other reasons.
...Neoliberalism is not a post-war version of capitalism. It's a post-war version of fascism.
Notable quotes:
"... drove CEO pay in large corporations up from 29 times that of the average worker in 1978 to 352 times as great in 2007. ..."
"... The unwillingness of our intellectual class generally, and academic economists in particular, to even describe, let alone confront, the totalitarian trajectory of public policy will be one of the most notable aspects historians describe when talking about our era. ..."
"... the most (in)famous members of the intellectual class – and that particularly includes academic economists – are really nothing more than employees of the creditor class paid to administer intellectual anesthetic to debt peasants who still have enough time to ask what's going wrong while they try to hold the Wolves of Wall Street at bay. ..."
"... The Neoliberal project has sought quite successfully to delegitimize republican federalist state power and legitimize corporate and wealth power in its place. ..."
"... Neoliberalism is not a post-war version of capitalism. It's a post-war version of fascism. ..."
"... What has been delegitimized are other groups or ideas to which state power has been subordinated in other times. ..."
"... This describes contemporary political economy in that the state's economic role tends to be largely confined to protection of private property and enforcement of contracts. Find a single bit of financial chicanery that isn't wrapped up in a shit contract or geared to protect the deeper pocketed side of a dispute, and I'll find a million that are. Hello protection of private property and enforcement of contracts. Enter Neoliberal State. ..."
"... Like the series chronicling the "Journey into a Libertarian Future," ..."
The most talked about economic development in the neoliberal era is rapidly rising inequality.
While Thomas Piketty's now-famous book, Capital in the 21st Century, documented the relentless rise
of the income share of the top 1%, he did not provide a convincing explanation of that development.
The neoliberal form of capitalism supplies a clear explanation. As neoliberal restructuring undermined
labor's bargaining power, the real wage stagnated while profits rose rapidly. Figure 1 shows the
big gap after 1979 between the growth rate of profit and of wages and salaries (which include managerial
salaries). That gap jumped sharply upward after 2000. Another feature of neoliberal capitalism, the
development of a market in corporate CEOs, drove CEO pay in large corporations up from 29 times
that of the average worker in 1978 to 352 times as great in 2007.
My new book The Rise and Fall of Neoliberal Capitalism explains in detail how the institutions
of neoliberal capitalism account for two other important economic developments since 1980. One was
the transformation of the financial sector from a stodgy provider of traditional loans to businesses
and households and the sale of conventional insurance into speculatively oriented companies that
developed a series of highly risky so-called "financial innovations" such as sub-prime mortgage backed
securities and credit default swaps. The most important cause of this change in the financial sector
was its deregulation, a key part of neoliberal restructuring, starting with the first bank deregulation
acts of 1980 and 1982 and culminating in the last such act in 2000. A contributing factor was the
intensifying competition of neoliberal capitalism, which drove financial institutions to more aggressively
seek the maximum possible profit, which for financial institutions always involves moving into speculative
and risky activities.
Second, a series of large asset bubbles emerged, one in each decade. The 1980s saw a bubble in
Southwestern commercial real estate, whose collapse sank a large part of the savings and loan industry.
In the second half of the 1990s a giant stock market bubble arose. And in the 2000s a still larger
bubble engulfed US real estate. The preceding period of regulated capitalism had no large asset bubbles.
The rapidly rising flow of income into corporate profit and rich households exceeded the available
productive investment opportunities, and some of that flow found its way into investment in assets,
tending to start the asset price rising. The eagerness of the deregulated financial institutions
to lend for speculative purposes enables incipient asset bubbles to grow larger and larger.
Neoliberalism and the Crisis of 2008
The three developments noted above – growing inequality, a speculative financial sector, and a
series of large asset bubbles – account for the long, if not very vigorous, economic expansions in
the US economy during 1982-90, 1991-2000, and 2001-07. The rising profits spurred economic expansion
while the risk-seeking financial institutions found ways to lend money to hard-pressed families whose
wages were stagnating or falling. The resulting debt-fueled consumer spending made long expansions
possible despite declining wages and slow growth of government spending. The big asset bubbles provided
the collateral enabling families to borrow to pay their bills.
However, this process brought trends that were unsustainable in the long-run. The debt of households
doubled relative to household income from 1980 to 2007. Financial institutions, finding limitless
profit opportunities in the wild financial markets of the period, borrowed heavily to pursue those
opportunities. As a result, financial sector debt increased from 21% of GDP in 1980 to 117% of GDP
in 2007. At the same time, financial institutions' holdings of the new high-risk securities grew
rapidly. In addition, excess productive capacity in the industrial sector gradually crept upward
over the period from 1979 to 2007, as consumer demand increasingly lagged behind the full-capacity
output level. All of these trends are documented in The Rise and Fall of Neoliberal Capitalism.
The above trends were sustainable only as long as a big asset bubble continued to inflate. However,
every asset bubble eventually must burst. When the biggest one – the real estate bubble – started
to deflate in 2007, the crash followed. As households lost the ability to borrow against their no
longer inflating home values, consumer spending dropped at the beginning 2008, driving the economy
into recession. Falling consumer demand meant more excess productive capacity, leading business to
reduce its investment in plant and equipment. The deflating housing bubble also worsened investor
expectations, further depressing investment. Finally, in the fall of 2008 the plummeting market value
of the new financial securities, which had been dependent on real estate prices, suddenly drove the
highly leveraged major commercial banks and investment banks into insolvency, bringing a financial
meltdown.
Thus, the big financial and broader economic crisis that began in 2008 can be explained based
on the way neoliberal capitalism has worked. The very same mechanisms produced by neoliberal capitalism
that brought 25 years of long expansions were bound to eventually give rise to a big bang crisis.
Triple Crisis welcomes your comments. Please share your thoughts below.
David Kotz is a professor of economics at the University of Massachusetts-Amherst and the
author of The Rise and Fall of Neoliberal Capitalism (Harvard University Press, 2015). This is the
first installment of a two-part series based on his book.
I highly recommend Kotz' "Russia's Path from Gorbachev to Putin." He shows how the collapse
of the Soviet economy resulted from the failure by Soviet elites to mobilize its considerable
industrial strengths within a "developmental state" model and instead to engage in looting, primarily
natural resource-based. (Yes, the familiar short-term vs. long-term mindsets.) Contrary to MSM
spew, the Soviet economy was still growing, albeit slowly, up to the point when central planning
institutions were dissolved in the late 80s. A political agenda geared to a "Never Again" destruction
of central planning capacities, a too rapid opening up of the Soviet economy to competition with
Western multinationals and simple venality has set up an lop-sided natural resource dependent
economy. His analysis is based on a collection of interviews with elite figures.
By what criteria does this describe our contemporary system of political economy? Neoliberalism
is the antithesis of capitalism. It does not believe in markets and rule of law and a limited
role for bureaucracy. It believes in limited markets and a predominant role for the bureaucracy
and a two-tiered justice system. I challenge the author to name an area of the American economy
where non-market institutions play a limited role.
The unwillingness of our intellectual class generally, and academic economists in particular,
to even describe, let alone confront, the totalitarian trajectory of public policy will be one
of the most notable aspects historians describe when talking about our era.
The "market" certainly no longer refers to competition as a dynamic in the production and distribution
goods and services. Instead, it means something more along the lines of international financial
monopolies protected by collusion between corporate captured local states, (including saturation
of executive, legislative, judicial, penal and enforcement branches of government), educational
institutions and media. I wonder if "trade deals" doesn't better describe the phenomenon that
has replaced "markets."
The unwillingness of our intellectual class generally, and academic economists in particular,
to even describe, let alone confront, the totalitarian trajectory of public policy will be
one of the most notable aspects historians describe when talking about our era.
Take a look at Michael Hudson's new book, "Killing the Host". This "unwillingness" becomes
understandable once you realize the most (in)famous members of the intellectual class – and
that particularly includes academic economists – are really nothing more than employees of the
creditor class paid to administer intellectual anesthetic to debt peasants who still have enough
time to ask what's going wrong while they try to hold the Wolves of Wall Street at bay.
The behavior of the intellectual class down through the ages is what – with notable exceptions
like Hudson, Veblen or Marx – gives intellectuals a bad reputation among the laboring cattle.
Their message is always the same – "Whatever is is right."
It's the difference between "we should use markets to efficiently allocate resources" and "Capitalists
should rule".
A nation's political system can be described by what types of power it legitimizes and delegitimizes,
and whose power it protects. No matter what we tell ourselves about our supposed political system
("constitutional federalism", "republican democracy") and economic system (Free Market Capitalism),
you can tell what we really have by looking at whose power the state protects. The Neoliberal
project has sought quite successfully to delegitimize republican federalist state power and legitimize
corporate and wealth power in its place.
If we really were in a capitalist system, the state would still actively intervene to make
sure that markets actually allocate resources efficiently. That is to say, the state would break
up monopolies and discourage rent extraction. If we really were in a representative democracy,
our elected officials' actions would hew more closely to the priorities that polls show the voters
to have.
delegitimize republican federalist state power and legitimize corporate and wealth power
in its place
I could see you going in a number of different directions, so I'm not sure whether I agree
or disagree.
From what I see, neoliberals love state power. They almost can't help themselves from
using government to interfere with citizens' lives. It is not a competition of wealth over the
state. It is a merger of state bureaucracy and private bureaucracy, a public-private partnership.
Neoliberalism is not a post-war version of capitalism. It's a post-war version of fascism.
Neoliberalism is not a post-war version of capitalism. It's a post-war version of fascism.
I think you really hit the nail on the head here. It's an important understanding to come to
before one can understand how the violence and criminality of it all play a part rather than are
some aberration.
Neoliberals do love state power, and have subordinated it to their purposes. What has been
delegitimized are other groups or ideas to which state power has been subordinated in other times.
Power does not reside in the hands of the people (thru the theoretical ability to drive out politicians
who fail to adequately safeguard our welfare). Regulatory agencies have power, but not to benefit
the interests of the people over the interests of the corporations they are supposed to regulate.
The state does not act to ensure the efficient allocation of resources, but it does act to protect
the interests of the Boardroom Class. It no longer acts to preserve checks and balances. Much
of this came through promoting the notion that the government is an illegitimate market actor
which is to blame for distorting markets (and that not distorting markets is more important than
mere values, ideals, or institutions).
The general term for the type of totalitarianism you are describing is fascism.
Until that last sentence, which does not follow from the rest. In what area of the economy
have neoliberals pushed to render government an illegitimate market actor?
It may be a leap for me to say the inroads neoliberals have made in securing state power is
built upon the premise (or propaganda) that the government is an illegitimate market actor. But
I feel the propaganda has been there for all to see for some time.
Since I was in college in the 80s, I've been bombarded with messages that when the government
seeks to help its citizens, it leads to worse results, because it distorts markets. (e.g. Reagan:
"The nine most terrifying words in the English language are: I'm from the Government, and I'm
here to help. "). The welfare state? Regulation? Environmental protection? Affirmative action?
I've heard or read every one of these blamed for causing or making worse the problems they are
intended to ameliorate; all because they interfere with the supposed effectiveness of untrammeled
free markets.
The net effect of all the changes to our nation while this rhetoric has been ascendant has
not been increased market efficiency, nor has it been smaller government. Instead, we have moved
to a system where protecting and promoting the interests of the Boardroom Class are the paramount
objectives of the state.
"Free markets" turns out to mean letting rich people do what they want, not promoting efficient
allocation of resources through competition and the price mechanism.
"Small government" turns out to means not allowing the government to help anyone the Boardroom
Class doesn't want helped.
"Free trade" turns out to mean subordinating government power to corporate power.
"Lower taxes" turns out to mean shifting the tax burden from corporations and the Boardroom
Class to the people the government is no longer allowed to help.
"Deregulation" means externalities are the law of the land, rather than a defect of capitalism
that could be ameliorated.
I don't disagree with the 'fascism' label. I just wanted to read out some of the ingredients.
"If we really were in a capitalist system, the state would still actively intervene " to deter
and punish financial fraud, not aid and abet it in the way that the legal and regulatory systems
do now. Campaign contributions from the biggest fraudsters, and cost-of-business fines and settlements,
have made the regulatory state the bought-off accessory after the fact and unindicted coconspirator
enabler of fraudulent financial schemes.
This describes contemporary political economy in that the state's economic role tends to
be largely confined to protection of private property and enforcement of contracts. Find a single
bit of financial chicanery that isn't wrapped up in a shit contract or geared to protect the deeper
pocketed side of a dispute, and I'll find a million that are. Hello protection of private property
and enforcement of contracts. Enter Neoliberal State.
It's all well and good to call bullshit on the bail-outs, robo-signings, illegitimate foreclosures,
HAMP runway foam, revolving doors and so on, but it's naive to suggest these practices are somehow
not really capitalist - that true Capitalism somehow doesn't do bureaucracy and that markets will
work fine if we can get the government off honest folks backs and on to policing fraud.
Today's markets aren't limited by the state so much as they are limited by monopoly power.
The state has recused itself from most everything outside of protecting those monopolies, which
makes it easy to see state intervention as bad in itself. So lift that protection - let the banks
fail; stop floating douche-bags like Elon Musk; stop foreclosures that lack a paper trail. Somehow
have a state that mostly just protects property and enforces contracts without corruption. Then
watch the rich get rich, the poor get poor, and the middle class disappear.
It takes money to make money. You can make money in a downturn. Buy low, sell high. Cash is
King. Free markets create, sustain, and grow inequality. Theory predicts it, and practice bears
it out.
it's naive to suggest these practices are somehow not really capitalist
What you're describing isn't what people who support market-based economics advocate. If we're
going to redefine capitalism so extremely, that's a perfectly fine semantics debate to have, but
then what's the point of talking about capitalism?
the state's economic role tends to be largely confined to protection of private property
and enforcement of contracts
But that's not at all descriptive of the state's role. First, the state does not protect private
property and enforcement of contracts. Rule of law has been almost completely replaced by rulers
of law. Some are more equal than others. We've been talking about a two-tiered justice system
for so long it is almost cliched at this point. Second, the state claims enormous powers beyond
the legal system. The role of government is so enormous that I am not sure you are thinking this
through. We have the largest prison system on the planet. We have the most aggressive national
security state on the planet. We have the most expensive healthcare system on the planet. We require
documents to go to work or cross the Canadian border or buy medicine. There are banking supports
and agribusiness and intellectual property and carried interest tax breaks and home mortgage interest
tax breaks and charitable contribution tax breaks and real estate development tax breaks and on
and on and on
Neoliberalism is not the antithesis of capitalism. It is yet another institutional setup that
has developed because relatively competitive capitalism is unworkable when it comes to large scale
industry. You're holding out for a form of market-based capitalism that has been completely superseded,
and not just by state-based mechanisms. There's a substantial literature – including work by Nomi
Prins, who's got a post here today, and Michael Perelman, also occasionally appearing here – on
how competition in late 19th century capitalism was regarded as too destructive by capitalists
themselves, leading to industry consolidations that were eventually bank-driven. Massive investment
commitments will not be undertaken if there's a chance they'll fail, and the logic of oligopoly
is not only straightforward but rational to some degree.
And, while we're at it, why not at least briefly consider the fate of communities of workers
who are supposed to cheerily migrate thither and yon to satisfy market-based criteria of efficiency
that equally cheerily ignore their externalized misery? Enter Polanyi and Marx.
I should add that Kotz also talks about the supersession of competitive capitalism in chapter
6 of the book Dayen extracted. Also recommended, a very succinct, useful history.
Did we read the same post? The author is talking about post-war developments, especially the
Reagan-Obama era. Government has become much more pervasive in all aspects of the economy, not
much less.
Today is 9/11. Are you aware that to this day we are still in a declared, official state of
emergency?
"the state's economic role tends to be largely confined to protection of private property and
enforcement of contracts"
if you interpret this broadly enough I suppose anything qualifies. But what we actually have
going on is not just something quaint like the "protection of private property", but of course
the massive expansion of private property (maybe it was ever thus, cue enclosure discussion).
But when they are attempting to patent things that have never been patented like medical procedures
as in the TPP, why use such unobjectionable (except to a serious socialist and even they don't
have much problem with personal property) terminology like "protection of private property" to
describe what is happening? I mean I could see people who support such things using such language
but that is all.
Ok only the essay wasn't about what is and is not "true capitalism" (which I'm not sure is
a productive line of thought, but who knows). The essay was making statements that it is very
hard to say are true in any sense like:
"Under neoliberalism, non-market institutions – such as the state, trade unions, and corporate
bureaucracies – play a limited role."
Would Katz support a radical decentralization and democratization of the modern state as well
a massive redistribution of property to private citizens giving everyone a chance to own the means
of production?
Or is he going to continue with the traditional lament of bankrupt socialist thinking that
since we are apparently unable politically to socialize the means of production we will continue
to wax nostalgic about the New Deal and be content with our serfdom–with Big Capital and Big State
running the show?
Do you think we will have massive redistribution of property short of revolution? Do you think
we need one? Sometimes a BIG does get it's foot in the door which would somewhat redistribute
money and power.
DOn't have time now, but the author mis-defines "neo-liberalism", making it out to be classical
liberalism, from which it is actually a stark depaarture. Neo-liberalism isn't about the state
withdrawing from market regulation and leaving it up to "market forces", but rather about using
the state to enforce and expand the dictates of Mr. Market, to the exclusion of any other function.
This can be seen in neo-liberalism's ignoring issues of monopoly and anti-trust, in contrast to
classical liberalism's concern with maintaining competition and suspicion of concentrated economic
power..
Things are not this complicated For example, the 2008 crisis did not happen in India because
the bank head (Rajan?) enforced a mandatory 20% cash down payment (among other things). No real
estate bubble in India.
Second, all of this starts with the ability of the banks and the state to create endless money,
so companies can make crazy investments. Solution is easy, make it expensive to make new money.
People should have a stake in the game involving real money when buying property (20% down).
The problem is wages may have stagnated so much compared to costs that it's hardly even possible
on the wages the vast majority are earning.
"Buying property" = Suburbia, "gentrification," "development?" These are all behaviors to be
credited and encouraged by "policy?" All involving assumption of large debt over long years, and
all kinds of externalities and consumptions? And "we" are to protect and foster such behaviors
as parts of the Rights of Man?
Always seemed strange to me that "growth in housing starts" is so happily cheered as a sign
of a Healthy Economy
"The most important cause of this change in the financial sector was its deregulation, a
key part of neoliberal restructuring, . A contributing factor was the intensifying competition
of neoliberal capitalism ."
Deregulation in a competitive endeavor. Yes. No one thinks taking the referees and umpires
off the playing field will result in teams self-regulating during play. Why do so many people
buy the nonsense that deregulating the financial competition field will be any different?
I think that if we consider the actual nature of capital, versus our perception of it and how
this relationship necessarily evolved over time, it would go a long way toward explaining the
economic dynamic of the last half century.
The reality is that capital functions as a glorified voucher system and as such, is a social
contract, but we think of and treat it as a commodity.
The divergence is that nothing is more detrimental to a voucher system than large numbers of
excess vouchers, but because we individually experience it as store of value, we think of it as
a form of commodity to be collected and saved.
Now there were sufficient means to maintain a fairly healthy circulation of capital, from savings
to productive investment, up to the 70's, but then this dynamic started to loosen and the excess
capital started seeping into the general economy and it caused inflation.
Presumably Volcker cured this by raising interest rates and thus reducing the flow of extra
capital into the economy, but that also further slowed the natural growth and so there was still
excess.
It wasn't until '82 that this process seemed to start working, but by that time Reaganomics
had ballooned the deficit to 200 billion and that was real money in those days. The concern voiced
publicly by economists at the time was this would crowd out private sector borrowing and further
slow the economy. Yet the reality was only Fed determined interest rates set the availability
of capital and the government was borrowing at high rates. So this served various purposes; For
one thing, it served to soak up excess capital. It created significant returns for investors and
the money was then spent on "Keynsian pump priming," which helped to get the economy going again.
The lesson apparently learned from this was not to let excess capital back into the larger
economy. For one, this required breaking up the labor movement and finding ways to store the surplus
within the investment community. Thus the explosion of the power and influence of the financial
community, as they were tasked with holding onto an ever growing percentage of the notational
wealth of the economy. Along with driving up asset prices and therefore the power of those holding
them. The momentum of this naturally knew no bounds and consequently the powers that be have run
amuck.
The lesson to learn from this is that wealth has to be stored in something other than notational
instruments and excess capital should be taxed back out of the economy, not borrowed back out.
This would definitely encourage people to develop all number of mediums of exchange and not rely
on banks to store their wealth.
For most people money is saved for very predictable reasons. Raising children, healthcare,
housing, retirement, vacations, entertainment, would be some of the most prominent reasons. So
rather than storing money in the banking system, communities could build up the infrastructure
to support these needs and consequently redevelop a public space. Which would amount to storing
wealth in a stronger community and a healthier environment.
So when this bubble does pop, it might prove to have set the stage for an advance in human
culture anyway.
"... The ideology, the fantasy of the market has penetrated so deeply into the culture that most people can imagine nothing else. ..."
"... The best insight of the change that started in 1980 that I've found is Emmanuel Todd's. "The United States itself, which was once a protector and is now a predator." Neo-liberalism is confusing. Predatory Capitalism is reality. ..."
By David Kotz, a professor of economics at the University of Massachusetts-Amherst and
the author of The Rise and Fall of Neoliberal Capitalism (Harvard University Press, 2015). This is
the second installment of a two-part series based on his book; see the first post
here. Originally published at
Triple
Crisis.
While it is widely agreed that capitalist economies underwent significant change after around
1980, there are different interpretations of the new form of capitalism that emerged. There is no
agreement about the best organizing concept for post-1980 capitalism. Some view it as financialized
capitalism, some as globalized capitalism, and some as neoliberal capitalism. These different conceptions
of contemporary capitalism have implications for our understanding of the problems it has produced,
including the financial and economic crisis that emerged from it in 2008. Focusing on the U.S. economy,
I presented a case in
part
1 that "neoliberal capitalism" is the best overall concept for understanding the form of capitalism
that arose around 1980. Here, I deal more specifically with the shortcomings of alternative interpretations
– focused on the concepts of "financialization" and "globalization," respectively.
Why Not "Financialization"?
Some economists view "financialization" as the best overall concept for understanding contemporary
capitalism. Financialization can best be understood, however, as an outgrowth of neoliberal capitalism.
The rise in financial profit, which gave the financial sector a place of growing importance in the
economy, came quite late in the neoliberal era. As figure 2 shows, only after 1989 did financial
profit begin a long and steep climb, interrupted by a fall in the mid 1990s, and then a sharp rise
to a remarkable 40% of total profit in the early 2000s. It was only in the 2000s that financialization
fully blossomed. At that time, commentators noted, Wall Street was beginning to draw a large percentage
of elite college graduates.
The "financialization" of the U.S. economy in recent decades, important though it is, was itself
driven by neoliberal restructuring. The neoliberal institutional structure, including financial deregulation,
enabled financial institutions to appropriate a growing share of profits. Furthermore, financialization
cannot account for many of the most important economic developments in contemporary capitalism. It
cannot explain the dramatic shift in capital-labor relations from acceptance of compromise by the
capitalists to a striving by capitalists to fully dominate labor.. It cannot explain the sharp rise
in inequality. And it cannot explain the deepening globalization of capitalism.
Why Not "Globalization"?
Like financialization, "globalization" has been presented by some analysts as the best framework
for understanding the contemporary form of capitalism. Capitalism has, indeed, become significantly
more integrated on a world scale in recent decades, including the emergence of global value chains
and a truly global production process in some sectors.
The degree of globalization of capitalism has gone through ups and downs in history. Capitalism
became increasingly globalized in the decades prior to World War I. Then the cataclysm of two world
wars and the Great Depression reversed the trend, and capitalism became less globally integrated
over that period. After World War II, the process of globalization resumed, gradually at first. Around
the late 1960s, globalization accelerated somewhat measured by world exports relative to world GDP,
as figure 3 shows. After 1986 the trend became more sharply upward. Thus, in contrast to financialization,
which emerged later than neoliberalism, the globalization process in this era began before neoliberalism
emerged, although globalization accelerated in the neoliberal era, particularly after 1990.
However, many of the most important features of capitalism since 1980 cannot be understood or
explained based on globalization any more than they can be on the basis of financialization. Globalization
cannot fully explain the rapidly rising inequality in the contemporary era, which has been quite
extreme in the United States yet milder even in some other countries, such as Germany, that are more
integrated into the global economy. Globalization cannot explain the financialization process and
the rise of a speculatively-oriented financial sector, nor can it explain the series of large asset
bubbles. Like financialization, globalization has been an important feature of neoliberal capitalism,
but it is not its defining feature.
Neoliberalism as the Key Concept
Both financialization and globalization are fundamental tendencies in capitalism. Financial institutions
have an ever-present tendency to move into speculative and risky activities to gain the high profits
of such pursuits. Even more so, globalization is a tendency present from the rise of capitalism,
since the capital accumulation drive always spurs expansion across national boundaries. Then why
do these phenomena characterize one era of capitalism more than another?
Both of these tendencies can be obstructed for long periods of time, or released, depending on
the prevailing institutional form of capitalism. Financialization was held in check from the mid
1930s to 1980 by financial regulation, and globalization was hindered from World War I until the
1960s by the world wars, the Great Depression, and then the state regulation of trade and international
investment allowed under the post-World War II Bretton Woods monetary system. The neoliberal restructuring
starting in the late 1970s can explain all of the key economic developments in contemporary capitalism,
with the processes of financialization and globalization-released by neoliberal capitalism-forming
a part of the account.
These differences in analysis are important, since they represent different views of the basic
characteristics of the current era of capitalism and different diagnoses of the origins of the current
crisis. Proposals to overcome the current crisis that focus only on reigning in financialization
or reconfiguring globalization would be insufficient unless part of a restructuring that replaces
neoliberalism with something new. craazyboy
September 17, 2015 at 10:28 am
I guess for people that don't have a concise idea of what "neoliberalism" is yet, I'll offer
the following formula:
Neoliberalism = Financialization + Globalization
Additionally, Neoliberals need Neocons to keep them safe in foreign lands.
must be why neoliberals focus on trade balances: capitalism = competition = consolidation =
monopoly = trade advantages = inequality or stg like that and financialism is just hastily put
together to grease the skids
I think that even more fundamental is "marketization" as discussed by Polyani. The idea that
all of human activity (and indeed nature) can be captured and cast in some sort of market paradigm.
Underlying all these discussions is the assumption that our current market system is ok. I
don't think it is, since markets are driving society not the other way around.
We even see the curious inversion of trying to apply something called competitive free markets
(whatever that may be) to nature and evolution. Then in a fabulous logical salto mortale, in a
circular argument based on our own projections we impute that since nature runs like a market
so does society,
The analysis needs to be much deeper, at least at the level of primary social organization,
its purpose and historical social anthropology. Elinor Ostrom and her analysis of organizations
and the commons is a good start.
I appreciate this post, Yves. To name something is to control it, to own it in some sense,
it is the Rumplestiltskin, If we don't have appropriate names, then we can't think of things as
they are.
Thure, I agree with you. The ideology, the fantasy of the market has penetrated so deeply
into the culture that most people can imagine nothing else.
I'm not sure how to phrase this elegantly, it's only when we can see clearly the ideology we're
embedded in that we'll be able to see how artificial it all is, and how easily we could end it
and build something better. We have to avoid the sort of false change with radical features of
contemporary Burschenschaften types.
I think of it as death cult capitalism. For it's dependence on war making, it's consumer insatiability
in a finite world, and its cannibalization of Institutions, public and private.
Very well put! The peace and prosperity model– that many of us grew up believing that some
capitalists actually believed in– has been entirely supplanted by disaster capitalism and the
shock doctrine. :(
re "death cult capitalism," the observation attributed to Fredric Jameson that it has become
easier to imagine an apocalypse than to imagine an end to capitalism seems very true. It becomes
even more sadly ironic, or maybe just terribly sad, if you consider the likelihood that for a
significant proportion of the population the fascination with end times in a distorted way represents
their hostility to this social order. Consider how willing Hollywood is to serve up techno-buffed
apocalypse instead of films depicting anything other than blatantly criminal antagonism to society.
But then you've got the Superheroes, acting on our behalf and making us feel all the more enfeebled
in the process.
More evidence that even many simpatico economists don't understand the construction and use
of ideal types. Also, he is scrambling his US and global perspectives. And reification of markets,
which are specific human-made institutions that don't all act the same.
There is a much more straightforward institutional analysis of US and global economic changes
over the last 40 years that doesn't require such squishy "global" concepts: Fear of a loss of
competitiveness among US business (which through the 1970s was not all that global) leaders and
politicians, and a desire to crush US labor (which despite all the post-WW2 "social contract"
mumbo-jumbo has never been far below the surface) drove a restructuring of the US economy beginning
in the mid-1970s in the interests and direction of the relative (to their competitors) strengths
of US firms – financial engineering, ease of corporate restructuring, etc. The same was true in
the UK, where the real economy was even more unbalanced than in the US.
It's OK to call this neoliberalism I guess, but the notion that neoliberalism is some kind
of unshackling of "the market" is dubious. Certain markets were unshackled, others weren't, and
some (drugs, patents, copyrights, etc.) become much more "shackled," all spelled out in various
laws and regulations blessed by the US (and UK) corporate and political class (and their economist
agents). During the 1970s-1990s at least, business leaders and politicians in other countries
(Germany, Japan, Korea, China to name the most obvious) pursued other strategies that differed
substantially from what American and British elites were up to. But it turned out that there was
a lot of easy money to be made through financial engineering (compared to the harder task of delivering
useful products and services at good value), and so elites all over the globe were drawn toward
what originally was a parochial American and British strategy. Also, having a large "advanced"
countries like the US and UK pursuing "labor immiseration" made it both easier and more necessary
for other "advanced" countries to reign in labor as well.
Patents and copyrights are state granted monopoly privileges absent the usual ( think Com Ed's
need to seek approval for rate hikes ) monopoly regulation.
The ( justly ) notorious Congressionally bestowed prohibition against Medicare's ability to bargain
for decreased drug costs is a perfect example of "reverse regulation".
What about just plain old capitalism? Capitalism seeks to accumulate profit, period. If it
can do this through accumulating financial income, by expanding globally, or crushing labor it
will do it. This is what I found refreshing about Piketty's book (and Arrighi's The Long Twentieth
Century too): he demonstrated that the 1930s-early 1970s was a historical anomaly.
These discussions can be useful, but only to a point. From someone working in academia, I see
word choices like these conforming not so much to what is the best overall term, but from what
you're focusing on. Some of us focus more on processes that are closer to "financialization,"
"globalization" etc. As someone else has said above, these are just good ideal types.
Hans and Franz wan to Pump You Up! so you're not a Girly Man economy. To get pumped up you
have to lose weight and sweat.
Neoperspiratory Capitalism for all you academics. You probably wouldn't want to get near sweat
if you can help it. hahahahahah. Layin around all day doing nothing. LOL
Possibly helpful here might be the late ecologist Garrett Hardin's concept of the Problem Of
The Commons- i.e. the degrading of a common resource by unregulated extractors. While it is in
the interest of the individual extractor that the common resource not be depleted, it is very
much in his interest to maximize his individual extraction. The collapse of ocean food fish populations
provide a good example.
Think of the U.S. economy as being like the Grand Banks of Newfoundland, rich source of fish (
profits to be made selling to an affluent consumer population ) , U.S. firms as being individually
owned fishing craft, and Globalization ( producing in very low wage, low safety, low environmental
protection areas while selling in the affluent USA ) and Financialization as rendering the "fishing
craft" much more efficient.
While the the individual fishing boat captains do not intend the destruction of the common resource,
they dare not slacken their extractive efforts. Depletion ( Deindustrialization, the collapse
of the Middle Class ) inevitably ensue.
Pace Adam Smith no Invisible Hand will save the Commons.
It is Deregulation, a key element of Neolibralism that is ultimately lethal- the Commons must
become everybody's property rather than no one's.
The Commons is an aspect that is being steadily wiped out by "enclosure" (restricting access
to what used to be shared resources).
David E. Martin has an interesting take on this as it relates to human creativity–something
that conventional capitalism encourages us to "enclose" for profit, with little understanding
of how this undervalues human creativity. There's a very good recent paper that mentions this
on the M-CAM website, called "Putting
It All Together".
Globalization is just the euphemism for Colonialism.
Low rate pseudo inflation regulation of Central Banks destroys interest rate relation to risk
so no lending that is meaningful in regime since Reagan.
Monopolies rule so no competition.
First World uses other world's slave labor and countries to avoid home base environmental regulations.
So what are you talking about calling any of this capitalism. Ridiculous and ignorant. A tool
of this evil
trade.
Great post. I have been baffled by the use of the term "neoliberalization."
What about the "neocon"? Is the neocon the neoliberal who takes advantage of the negative externalities
of perpetual war? (Are there Venn diagrams that can explain these neoeconomic terms?) Indeed,
how much of our economy is driven by negative externalities? Crises begets predatory behavior,
clothed by doublespeak like "opportunity" or "creative destruction."
Yet there's nothing stopping negative externalities because they are included in GDP metrics–the
measure of economic "wellness." After 9/11, Bush reminded that we must shop. Americans are valued
as consumers.
I hate how a patient has become a "consumer" of health care. In health care, "wellness" is
just another product to consume. With neoliberalism at the heart of American economics, I can't
imagine there will ever be any real attempt rein in health care costs. We depend on sickness (real
and imagined) to keep our economy humming. "Prevention" is the tail that wags the dog as doctors
chase more and more false positives and respond to lower thresholds for "abnormalities".
The globalization piece is the narrative of "free" trade. Import cheap goods that outsource
more jobs and keep prices down to artificially lower the cost of living. The plutocrats' narrative
is that when corporations move into poor countries with jobs this levels the playing field globally.
(Never mind their tendency to uproot when those pesky citizens demand better pay and work conditions!)
This, of course, takes a huge toll on the environment when we ship goods that could easily be
manufactured here.
It means we extract more resources to create more landfills. And "waterfills" and "airfills".
We use technology to engineer our way out of our big messes. More chemicals are dumped into our
land, water and air–with trade secrets obfuscating what these chemicals are and whether they are
harmful. Fracking, glyphosate for GMOs, etc.
Can neoliberalization die of natural causes?
Maybe we can we bring it to Oregon for death with indignity? (No capital punishment in Texas
for neoliberalization pun intended.)
You see, I'm getting really worried that we've passed the tipping point when economics collision
with natural ecosystems is irreversible And that makes this mama bear really mad!
That is the only thing that is going to kill this cancer. Extraction and exploitation, extend
and pretend (ecologically) will continue until it simply cannot. THAT will lead to a massive and
near-sudden collapse of the diseased, shambling zombie that is the modern neoliberal system, and
with it the entire setup that depends on it (and a LOT of humans). No, not enough will be done
to reign in climate change, no, there will be no techno fix (though some will be tried in ultimate
desperation to keep the band playing).
Welcome the coming collapse. The fisheries will return on their own after most humans are gone
and no longer sucking them dry. The forests will return after most humans are gone and no longer
mowing them down. As the late, great George Carlin prophetically and accurately stated, "The earth
isn't going anywhere. We are."
From where I sit, one of the most important developments of the last 35 years has been the
failure to prevent the increasing power of monopolies and cartels. The increasing share of income
taken in profits by said monopolies and cartels has of course strengthened the position of capital
relative to labour.
So my preferred term for current day arrangements is cartel capitalism. If you want to be more
pejorative there is of course crony capitalism and corrupt capitalism.
Glad you highlighted economic concentration. That used to be a deservedly emphasized part of
a critical analysis of capitalism but for some reason - did we just come to accept it? - fell
to second rank or backbench status. Perhaps it got folded into the idea of "multinational corporation,"
but that concept more immediately evokes globalization and the mobility of production rather than
concentration and the power that comes with it.
Monopolies that took decades to split away, over time gradually began to reemerge. I can't
place where I saw this, but there was an article about how "Ma Bell" was split into 10-12 regional
bells. Given enough time, we're somewhat nearly back where that started.
Plus in 1994, I think, the act passed to Congress eliminating / reducing restrictions on bank
consolidation over state lines. Just from my native state, that resulted in WachFirstOvia and
Bank of America. (Granted there have been smaller start up institutions using regional executives
and regional capital).
These posts are an interesting exercise which I find to be almost entirely lacking in critical
content. What difference does it make to quibble over the name of the current disaster (neoliberalism
it is) if no real attempt is made to explain what neoliberalism is and how it came to be? Professor
Kotz's book may be very good in this regard (I haven't yet had a chance to read it), but this
effort from my vantage point does not sufficiently explain neoliberalism to those not already
familiar with it; nor does it offer anything of particular interest to those who are.
The problem of dealing with neoliberalism is, in my opinion, coming to grips with the history
and philosophy behind it - and that is not simply accomplished. Neoliberalism is philosophy based
upon deceit and deliberate obfuscation of its goals and objectives. It is not simply capitalism.
It is an orchestrated effort to control the power and wealth of the world - and it is, by and
large succeeding. Without properly understanding the forces behind and within neoliberalism, I
don't believe that it is possible to formulate any real effort to stem the tide of its successes.
It is ultimately a self-destructive formulation, but the level of that destruction may well be
something none of us wish to experience.
Anyone truly interested in understanding neoliberalism should be reading the works of Philip
Mirowski, The Road From Mont Pelerin and Never Let A Serious Crisis Go To Waste. Professor Kotz's
book may well add to this, but this posting, I am sorry to day, does not. I in no way wish do
denigrate the work of those, including Professor Kotz, at the University of Massachusetts, Amherst
as they are among the best in the nation at standing up to neoliberalism and neoclassical economics.
I just wish this could have been a more useful post.
One of the interesting facets of globalization is its dependence on government subsidies. Some
are structural, such as social programs substituting for living wages, but many are direct transfers
of assets to corporations. Special currency exchange rates, forgivable loans, government gathering
of foreign intellectual property, free land, etc, all save the companies the expected business
expenses. This is on top of import barriers, local preference buying, and other help.
The justification is, of course, greater national economic activity/jobs. Americans call this
'smokestack chasing', but here its heyday's come and gone. Partly because states and cities have
figured out the math doesn't work. The government spends far more money than they could ever hope
for in taxes, even when the whole enterprise doesn't go bust. Today, any subsidy a corporation
wrings out of the locals is usually hedged with conditions that make it at least look like an
even deal. Before, it was a matter of faith.
Without government subsidies, would the foreign trade portion of globalization exist? Foreign
ownership, like any ownership, is protected by government. And that's a choice, too. But would
'cheap labor' or 'lack of environmental laws' really make up the difference? Seems global capitalism
depends on national boundaries.
I read Mirowski's "Never Let A Serious Crisis " two years ago, and as Paul Heideman's positive
review in "www.jacobinmag" concluded, it nonetheless left me wanting for an explanation of just
how a set of ideas enamating originally from the obscure Mont Pelerin Society (however influential)
could gain such worldwide traction, and seeking perhaps a social-anthropological or political
answer to that query. In "The Making of Global Capitalism" Panitch & Gindin point unequivocally
to the "pivitol role" of US state institutions (since WW2) in orchestrating (with other elites)
opportunities and overcoming difficulties in making the world free for – what Michael Hudson would
say – is primarily US "(fiat)-capital" (since the floating exchange rate regime with dollar as
key came into effect in 1971). Given the advantage to the US of the dollar as world reserve currency;
of the role US public & private institutions in maintaining that status and thwarting any challenges;
and the role of the US military in overall guardianship, (and the advantages Panitch & Gindin
point out that these factors have given real US industry in maintaining a lead in the more advanced
technologies & industries, (and how mutually supporting all these forces are of each other)) I
am inclined towards (the intemperate!-) Paul Craig Robert's assertion that NeoLiberalism is essentially
a US imperial project. Like many imperialisms of old, it relies on well rewarded local elites
playing their part in the outposts. But the loss of dollar and/or military hegemony would surely
lead to a significant retrenchment and a major realignment of world trade & development patterns,
not to mention financial flows? Hence the struggles we see today, to retain hegemonic status.
The amazing thing is, as playwright Harold Pinter said, how this "imperialism" is accepted as
representing "freedom", "democracy", "rule of law" – even just the very longterm natural evolution
of barter, in the form of modeern "markets"!
and the real dirty secret is, Americans love every second of it. they are consuming more than
ever.
Capitalism was global from the 19th century until the 1914 when WWI broke out. Before that
time, Europe was the modern America and America was modern BRIC. From a Babylon 5 pov, this was
the beginning of the transfer from the Brits to the US as the dominate global power. The Axis
were the "Shadows" while the Allies were the Vorlons. During this period of 1914-89, capitalism
receded back into nationalism and 'perceived' threats like communism. The first breakdown in this
was the global crisis in the mid-70's when the Soviet Union got hit by a crippling blow. Another
factor was the rising American living standards coupled with mass production still mostly inhabiting
the homeland. Capitalism does not do well with rising living standards. It can't make profit amid
dwindling supplies and high living standards. In Hitlerian talk, it needs breathing room. The
late 60's the results were coming in, inflation began to accelerate in the US, driving inflation
globally. The end result was the new global period and cheap sources of production to drive consumption
in the US via debt.
The best insight of the change that started in 1980 that I've found is Emmanuel Todd's.
"The United States itself, which was once a protector and is now a predator." Neo-liberalism is
confusing. Predatory Capitalism is reality.
"... The film compares the rise of the neoconservative movement in the United States and the radical Islamist movement, drawing comparisons between their origins, and remarking on similarities between the two groups. More controversially, it argues that radical Islamism as a massive, sinister organisation, specifically in the form of al-Qaeda, is a myth, or noble lie, perpetuated by leaders of many countries-and particularly neoconservatives in the U.S.-in a renewed attempt to unite and inspire their people after the ultimate failure of more utopian ideas. ..."
Here's a little something to rouse you from your post-Thanksgiving torpor; the first part of a
three-part 2004 series by Adam Curtis called "The Power of Nightmares." The title seems strangely
a propos, what?
Here's the WikiPedia
summary:
The film compares the rise of the neoconservative movement in the United States and the
radical Islamist movement, drawing comparisons between their origins, and remarking on similarities
between the two groups. More controversially, it argues that radical Islamism as a massive, sinister
organisation, specifically in the form of al-Qaeda, is a myth, or noble lie, perpetuated by leaders
of many countries-and particularly neoconservatives in the U.S.-in a renewed attempt to unite
and inspire their people after the ultimate failure of more utopian ideas.
I'm not going to attempt to tease out any systematic implications from listening to the series
right now, but well worth the listen it is. So many old friends from back in 2003, when those whackjobs
in the Bush administration were only starting to lose the wars in Iraq and Afghanistan! Random thoughts:
1)
Leo Strauss is a horrible human being, who has a lot to answer for.
3) The neocons make Henry Kissinger look like a Boy Scout.
4) Best quote: "The Soviets had developed systems that were so sophisticated that they were undetectable."
5) Sayyid Qutb, the Egyptian
Islamic theorist counterpoised by Curtis to Strauss, sees the United States "as obsessed with materialism,
violence, and sexual pleasures." What a nut job! To be fair, if the Egyptian government hadn't tortured
him, Qutb might never have come up with the
Jahiliyyah concept,
which, at least as I hear Curtis tell it, means that you're so corrupt that you can't even know you're
corrupt.
* * *
Nightmares is mostly archive footage plus a soundtrack, with Curtis narrating. So if
you want to listen to it with your morning coffee, the way one listened to NPR before it became evident
how horrid NPR is, that will work; you don't have to sit in front of the screen.
The Power of Nightmares 2: The Rise of the Politics of Fear (BBC-2004) Posted on
by
Yves Smith
"... In practice, however, neoliberalism has created a market state rather than a small state. Shrinking the state has proved politically impossible, so neoliberals have turned instead to using the state to reshape social institutions on the model of the market - a task that cannot be carried out by a small state. ..."
"... The Neoliberal State ..."
"... Neoliberals are not anarchists, who object to any kind of government, or libertarians, who want to limit the state to the provision of law and order and national defense. A neoliberal state can include a welfare state, but only of the most limited kind. Using the welfare state to realize an ideal of social justice is, for neoliberals, an abuse of power: social justice is a vague and contested idea, and when governments try to realize it they compromise the rule of law and undermine individual freedom. The role of the state should be limited to safeguarding the free market and providing a minimum level of security against poverty. ..."
"... Plant's central charge against neoliberalism is that, when stated clearly, it falls apart ..."
"... Neoliberalism and social democracy are not entirely separate political projects; they are dialectically related, the latter being a kind of synthesis of the contradictions of the former. ..."
"... But it is one thing to argue that the neoliberal state is conceptually unstable, another to suggest that social democracy is the only viable alternative. Neoconservatives have been among the sharpest critics of neoliberalism, arguing that the unfettered market is amoral and destroys social cohesion. ..."
"... Immanent criticism can show that the neoliberal theory of the state is internally contradictory. It cannot tell us how these contradictions are to be resolved - and in fact neoliberals who have become convinced that the minimal welfare state they favour is politically impossible do not usually become social democrats. Most opt for a conservative welfare state, which aims to prepare people for the labour market rather than promoting any idea of social justice. ..."
"... A more likely course of events is that social democracy will be eroded even further. ..."
"... The crisis is deep-rooted, and neoliberalism has no remedy for its own failure. ..."
"... Although the deregulated banking system may have imploded, capital remains highly mobile. Bailing out the banks has shifted the burden of toxic debt to the state, and there is a mounting risk of a sovereign debt crisis as a result. In these conditions, maintaining the high levels of public spending that social democracy requires will be next to impossible. ..."
John Gray Neoliberals
wanted to limit government, but the upshot of their policies has been a huge expansion in the power
of the state. Deregulating the financial system left banks free to speculate, and they did so with
reckless enthusiasm. The result was a build-up of toxic assets that threatened the entire banking
system. The government was forced to step in to save the system from self-destruction, but only at
the cost of becoming itself hugely indebted. As a result, the state has a greater stake in the financial
system than it did in the time of Clement Attlee. Yet the government is reluctant to use its power,
even to curb the gross bonuses that bankers are awarding themselves from public funds. The neoliberal
financial regime may have collapsed, but politicians continue to defer to the authority of the market.
Hardcore Thatcherites, and their fellow-travellers in New Labour, sometimes question whether there
was ever a time when neoliberal ideas shaped policy. Has public spending not continued to rise over
recent decades? Is the state not bigger than it has ever been? In practice, however, neoliberalism
has created a market state rather than a small state. Shrinking the state has proved politically
impossible, so neoliberals have turned instead to using the state to reshape social institutions
on the model of the market - a task that cannot be carried out by a small state.
An increase in state power has always been the inner logic of neoliberalism, because, in order
to inject markets into every corner of social life, a government needs to be highly invasive. Health,
education and the arts are now more controlled by the state than they were in the era of Labour collectivism.
Once-autonomous institutions are entangled in an apparatus of government targets and incentives.
The consequence of reshaping society on a market model has been to make the state omnipresent.
Raymond Plant is a rarity among academic political theorists, in that he has deep experience of
political life (before becoming a Labour peer he was a long-time adviser to Neil Kinnock). But he
remains a philosopher, and the central focus of The Neoliberal State is not on the ways
in which neoliberalism has self-destructed in practice. Instead, using a method of immanent criticism,
Plant aims to uncover contradictions in neoliberal ideology itself. Examining a wide variety of thinkers
- Michael Oakeshott, Friedrich Hayek, Robert Nozick, James Buchanan and others - he develops a rigorous
and compelling argument that neoliberal ideas are inherently unstable.
Neoliberals are not anarchists, who object to any kind of government, or libertarians, who
want to limit the state to the provision of law and order and national defense. A neoliberal state
can include a welfare state, but only of the most limited kind. Using the welfare state to realize
an ideal of social justice is, for neoliberals, an abuse of power: social justice is a vague and
contested idea, and when governments try to realize it they compromise the rule of law and undermine
individual freedom. The role of the state should be limited to safeguarding the free market and providing
a minimum level of security against poverty.
This is a reasonable summary of the neoliberal view of the state. Whether this view is underpinned
by any coherent theory is another matter. The thinkers who helped shape neoliberal ideas are a very
mixed bag, differing widely among themselves on many fundamental issues. Oakeshott's scepticism has
very little in common with Hayek's view of the market as the engine of human progress, for example,
or with Nozick's cult of individual rights.
It is a mistake to look for a systematic body of neoliberal theory, for none has ever existed.
In order to criticise neoliberal ideology, one must first reconstruct it, and this is exactly what
Plant does. The result is the most authoritative and comprehensive critique of neoliberal thinking
to date.
Plant's central charge against neoliberalism is that, when stated clearly, it falls apart
and is finally indistinguishable from a mild form of social democracy. Plant is a distinguished
scholar of Hegel, and his critique of neoliberalism has a strongly Hegelian flavour. The ethical
basis of the neoliberal state is a concern for negative freedom and the rule of law; but when these
ideals are examined closely, they prove either to be compatible with social democracy or actually
to require it. Neoliberalism and social democracy are not entirely separate political projects;
they are dialectically related, the latter being a kind of synthesis of the contradictions of the
former. Himself a social democrat, Plant believes that the neoliberal state is bound as a matter
of morality and logic to develop in a social-democratic direction.
But it is one thing to argue that the neoliberal state is conceptually unstable, another to
suggest that social democracy is the only viable alternative. Neoconservatives have been among the
sharpest critics of neoliberalism, arguing that the unfettered market is amoral and destroys social
cohesion. A similar view has recently surfaced in British politics in Phillip Blond's "Red Toryism".
Immanent criticism can show that the neoliberal theory of the state is internally contradictory.
It cannot tell us how these contradictions are to be resolved - and in fact neoliberals who have
become convinced that the minimal welfare state they favour is politically impossible do not usually
become social democrats. Most opt for a conservative welfare state, which aims to prepare people
for the labour market rather than promoting any idea of social justice.
If there is no reason in theory why the neoliberal state must develop in a social-democratic direction,
neither is there any reason in practice. A more likely course of events is that social democracy
will be eroded even further. The banking crisis rules out any prospect of a return to neoliberal
business-as-usual. As Plant writes towards the end of the book: "It has been argued that the central
cause of the banking crisis is a failure of regulation in relation to toxic assets . . . This, however,
completely neglects the systemic nature of the problems - a systemic structure that has itself been
developed as a result of liberalisation, that is, the creation of new assets without normal market
prices and their diffusion throughout the banking system." The crisis is deep-rooted, and neoliberalism
has no remedy for its own failure.
The upshot of the crisis is unlikely, however, to be a revival of social democracy. Although
the deregulated banking system may have imploded, capital remains highly mobile. Bailing out the
banks has shifted the burden of toxic debt to the state, and there is a mounting risk of a sovereign
debt crisis as a result. In these conditions, maintaining the high levels of public spending that
social democracy requires will be next to impossible. Neoliberalism and social democracy may
be dialectically related, but only in the sense that when the neoliberal state collapses it takes
down much of what remains of social democracy as well.
The Neoliberal State
Raymond Plant Oxford University Press, 304pp, £50
John Gray is the New Statesman's lead book reviewer. His book "False Dawn: the Delusions
of Global Capitalism", first published in 1998, has been reissued by Granta Books with a new introduction
(£8.99) His latest book is
The Soul of the Marionette: A Short Enquiry into Human Freedom .
"... "Business must learn the lesson . . . that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination-without embarrassment and without the reluctance which has been so characteristic of American business." ..."
"... "Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations." ..."
"... The number of corporate Political Action Committees soared from under 300 in 1976 to over 1,200 in 1980, and their spending on politics grew fivefold. In the early 1970s, businesses spent less on congressional races than did labor unions; by the mid-1970s, the two were at rough parity; by 1980, corporations accounted for three-quarters of PAC spending while unions accounted for less than a quarter. Then came Ronald Reagan's presidency, corporate control of the Republican Party, and a Republican-dominated Supreme Court and its "Citizens United" decision. ..."
Right-wing mega-donor Sheldon Adelson has just bought the biggest newspaper in Nevada, the Las Vegas
Review-Journal -- just in time for Nevada's becoming a key battleground for the presidency and for
the important Senate seat being vacated by Harry Reid. It's not quite like Rupert Murdoch's ownership
of Fox News and the Wall Street Journal, but Adelson's purchase marks another step toward oligarchic
control of America – and the relative decline of corporate power.
Future historians
will note that the era of corporate power extended for about 40 years, from 1980 to 2016 or 2020.
It began in the 1970s with a backlash against Lyndon Johnson's Great Society (Medicare, Medicaid,
the EPA and OSHA). In 1971, future Supreme Court justice Lewis Powell warned corporate leaders that
the "American economic system is under broad attack," and urging them to mobilize. "Business
must learn the lesson . . . that political power is necessary; that such power must be assiduously
cultivated; and that when necessary, it must be used aggressively and with determination-without
embarrassment and without the reluctance which has been so characteristic of American business."
He went on: "Strength lies in organization, in careful long-range planning
and implementation, in consistency of action over an indefinite period of years, in the scale of
financing available only through joint effort, and in the political power available only through
united action and national organizations."
Soon thereafter, corporations descended on Washington. In 1971, only 175 firms
had Washington lobbyists; by 1982, almost 2,500 did. Between 1974 and 1980 the U.S. Chamber of Commerce
doubled its membership and tripled its budget. In 1972, the National Association of Manufacturers
moved its office from New York to Washington, and the Business Roundtable was formed, whose membership
was restricted to top corporate CEOs.
The number of corporate Political Action Committees soared from under 300 in
1976 to over 1,200 in 1980, and their spending on politics grew fivefold. In the early 1970s, businesses
spent less on congressional races than did labor unions; by the mid-1970s, the two were at rough
parity; by 1980, corporations accounted for three-quarters of PAC spending while unions accounted
for less than a quarter. Then came Ronald Reagan's presidency, corporate control of the Republican
Party, and a Republican-dominated Supreme Court and its "Citizens United" decision.
"... Railroading Economics: The Creation of the Free Market Mythology ..."
"... The Wal-Mart Revolution ..."
"... Schnurr's speech was part of a yearlong campaign to oust Doty and thwart his efforts to implement rules that would increase auditors' accountability to investors and their independence from the companies they audit. ..."
"... Doty's efforts have floundered, in large part because Schnurr's office has used its oversight powers to block, weaken and delay them, according to a dozen current and former SEC and PCAOB officials. Schnurr's staff has also campaigned to have Doty removed from office, these people said. ..."
Continuing our series of
book reviews in time for the holiday gift-giving season, here's a quick look at Michael Perelman's
Railroading Economics, a title, and a subject, that intrigued me for two reasons. Trivially,
as readers know, I'm by way of being a
rail fan; more importantly, when I was a mere sprat, I read Matthew Josephson's Robber Barons.
Josephson's tales of
Jim Fisk watering
the stock of the Erie Railroad - "Gone where the woodbine twineth" was Fisk's answer to where the
money went - and his running buddy
Jay Gould - "I can hire one
half of the working class to kill the other half" (attributed) - trying to corner the gold market
would inoculate anyone from belief in the ideology of "perfect competition." They certainly did me.
Perelman begins (p.1):
The title of this book, Railroading Economics, has multiple meanings. The verb "railroading"
refers to the ideological straitjacket of modern economics, which teaches that the market is the
solution to all social and economic problems. The adjective "railroading" refers to the experience
of economists during the late nineteenth century when the largest industry in the country, railroading,
was experiencing terrible upheavals. Many of the leading eocnomists at the time came to grips
with the destructive nature of market forces. Competition, which according to conventional economics,
is supposed to guide business to make decisions that will benefit everybody, was driving business
into bankruptcy and common people into poverty.
That lesson was never allowed to take hold among economists. In fact, the same economists continue
to teach their students that markets work in perfect harmony, while they advised policy makers
to take quick action to put the brakes on competition. In effect, the railroad economists railroaded
economics into perpetuating a free market mythology.
This is a long and complicated story, and Perelman tells it well. Since Perelman is a radical
economist from a non-Ivy League School, reviews of his book are few and far between.
Here's one from an orthodox economist (latest book: The Wal-Mart Revolution) that to
my untutored eye seems to summarize Perelman's thesis fairly:
[Michael Perelman's new book] is a highly readable, lucidly written, and provocative account
of the evolving American economy. Moreover, readers of this site would be pleased that this is
a rare economist who draws very heavily on insights from economic history and even the history
of economic thought in reaching conclusions about the contemporary American economy. Also, the
book has lots of solid footnotes showing a serious appreciation of much of the relevant scholarly
literature of the past century or more .
According to Perelman, classical economics emerged out of an agrarian society where the presumption
of pure competition was fairly reasonable. Over time, however, massive capital-intensive businesses
evolved, notably the railroads, with very high fixed costs. The neoclassical notion that profit-maximizing
firms would produce where marginal costs equaled marginal revenue and price (in pure competition)
simply did not fit the reality of these new natural monopolies. Competition was destabilizing,
led to overinvestment, and paved the way for unscrupulous financiers like Jay Gould. In Perelman's
view, "the increasing relative importance of fixed costs means that competition would lead
to utter chaos" (p. 46). A group of "railroad economists" or corporatists understood all this,
but they were largely ignored by conventional economists who developed a "quasi-religious" and
"ideological" (p. 99) fervor towards their theoretical models, a fervor that persists today.
Perelman thinks that in pursuing competition, prices were forced so low that many railroads
were forced into bankruptcy, much as is happening in airlines today. This opens the door for the
"financial capitalists" who make money reducing competition (via mergers) and reorganizing bankrupt
companies, getting rich in the process and hurting workers of the involved companies. The Enron/WorldCom
problems of the early twenty-first century are not that different from those created by J.P. Morgan
organized mergers of a century earlier, best symbolized by the formation of U.S. Steel.
In Perelman's eyes, the instability arising from the lack of realization of the importance
of fixed costs, the machinations of financial interests, and so forth, have caused internal contradictions
in capitalism. He opines that "an economy built increasingly on finance is a disaster waiting
to happen" (p. 198), concluding "I look forward to the day when we no longer rely on competition
for monetary rewards when cooperation and social planning replace the haphazard world of the
market place" (p. 200).
Needless to say, the orthodox reviewer vehemently disagrees; readers can follow up at the link.
At this point, however, magpie-like, I want to pass on from assessing Perelman's thesis to display
a bright, shiny object I collected from the text. As the post title suggests, it's about accounting!
(Note the focus on fixed, long-lived capital; railroads have rather a lot of it.) From pp. 58-59:
What about accounting as an anchor for business rationality? Certainly, the widespread adoption
of seemingly solid accounting practices contributed to the illusion of a sound basis for business
action. Even as astute an observer as Max Weber associated accounting practices with rationality.
This attitude toward accounting is not surprising. Indeed, the erratic movements of markets disappear
in the accountant's ledgers, which exude a misleading image of straightforward calculations of
profit and loss.
First, accounts are necessarily backward-looking. Accountants must necessarily
base their calculations on historical costs, even though they can make allowances for changes
that have occurred since the original purchase. Since account books are based on historical
information, they will be better guides if the business is a relatively short-lived affair. After
all, tomorrow is more likely to resumble today than sometime in the far-off future will.
Second, the methods that accountants use to make these adjustments are necessarily based on
inexact conventions rather than precise measurements. Finally, as the dot com bubble proved [the
book was published in 2006] accountants can easily mislead even supposedly sophisticated investors.
Accounting firms even accommodated failing corporations by providing fraudulent information [of
which more below] rather than risk losing lucrative contracts.
So much for accounting. But wait! There's more!
The treatment of capital in conventional economic theory had its origins in the long-obsolete
accounting principles of early merchants. The economic environment of the early merchants' shops
conditioned later accounting practices, especially their treatment of fixed capital. Even as late
as the time of Adam Smith more than two centuries ago, fixed capital requirements were relatively
modest. Since accountants have never been able to discover a satisfactory method of handling
long-lived capital goods, accounting provides a frail foundation for business rationality in a
developed economy where long-lived fixed capital assumes great importance.
Ronald Coase once noted that an accountant would say that the cost of a machine is the depreciation
of the machine. The economist would say that "the cost of using the machine is the highest receipts
that could be obtained by the employment of the machine in some alternative use." If no alternative
exists, the cost of the machine is zero
Ideally, Coase is correct. Unfortunately, no economist can hope to calculate the highest receipts
that could be obtained. To do so would require knowledge of the future of all industries that
could possibly use the machine. As a result, economists generally either accept the accountant's
calculations in violation of their own principles or they assume away the problem of long-lived
capital goods.
Economists rarely consider this defect in economics because they avoid any serious consideration
of time in their models. Instead, in dealing with investment decisions, the models typically pretend
that investors are able to accurately foresee the future.
All that is solid melts into air. (Orthodox) economics assumes a soothsayer. And accounting provides
no basis for business rationality (at least if one is more than a shopkeeper). How does one even
begin to process that information? (Here let me welcome corrections and clarifications from readers
familiar with current accounting practice and theory.)
* * *
So what's accounting for, then? Perhaps the news flow will provide a clue. From
Reuters (but leaving out most of the detail on a sadly usual
flexian infestation):
Accounting industry and SEC hobble America's audit watchdog
The Public Company Accounting Oversight Board was set up [by Dodd-Frank] to oversee the auditing
profession after a rash of frauds. The industry got the upper hand, as the story of the board's
embattled chief shows.
James Schnurr, just two months into his job as chief accountant at the U.S. Securities and
Exchange Commission, stood before a packed ballroom in Washington last December and upbraided
a little-known regulator.
The Public Company Accounting Oversight Board, or PCAOB, oversees the big firms that sign off
on the books of America's listed companies. And the board was "moving too slowly," Schnurr said,
to address auditing failures that in recent years had shaken public confidence in those firms.
These were fighting words in the decorous auditing profession, and they hit their target. PCAOB
Chairman James Doty was among those attending the annual accounting-industry gala where Schnurr
spoke. And Schnurr was Doty's new supervisor.
"This is going to get ugly," Doty said to a colleague afterward.
In his new SEC job, Schnurr now had direct authority over the PCAOB – a regulator that just
a few years earlier had derailed his C-suite ambitions at Deloitte & Touche. As deputy managing
partner at the world's largest accounting firm, Schnurr had commanded an army of auditors – until
a string of damning PCAOB critiques of Deloitte's audits led to his demotion.
Then, in August 2014, SEC Chair Mary Jo White named Schnurr to his SEC post. It was a remarkable
instance of Washington's "revolving door" for professionals moving between government and industry
[sic] jobs.
Schnurr's speech was part of a yearlong campaign to oust Doty and thwart his efforts to
implement rules that would increase auditors' accountability to investors and their independence
from the companies they audit.
Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG audit companies that account for 98
percent of the value of U.S. stock markets. During the crisis, nine major financial institutions
collapsed or were rescued by the government within months of receiving clean bills of health from
one of the Big Four. While Schnurr was deputy managing partner at Deloitte, the firm signed off
on the books of Bear Stearns, Washington Mutual and Fannie Mae. Each went bust soon after, costing
investors over $115 billion in losses.
Doty's efforts have floundered, in large part because Schnurr's office has used its oversight
powers to block, weaken and delay them, according to a dozen current and former SEC and PCAOB
officials. Schnurr's staff has also campaigned to have Doty removed from office, these people
said.
Doty's term ended on Oct. 24. He continues to serve as PCAOB chairman day-to-day, waiting for
the SEC to decide whether or not to reappoint him.
The standoff is a test of who holds sway with regulators in Washington – investors large and
small who seek better disclosure of what really goes on inside companies, or the financial-services
establishment that's supposed to serve those investors.
Why, one might almost conclude that the accounting "industry" exists to enable
accounting control fraud, rather than to prevent it - especially given the limitations that Perelman
points out. Although, to be fair, perhaps fraud is what "business rationality" is all about these
days.
* * *
So, from Perelman, we learn that accounting has severe limitations that make it unsuitable as
a basis for business rationality. Moreover, it's not suitable (in its current form, at least) for
making decisions - any decision - about long-lived, fixed capital allocation - and isn't capitalism
supposed to be all about that? And finally, if we ask what accounting is good for, we find
that it's certainly useful for enabling fraud. It's very difficult to know how deep the rot goes.
Richard Parker coined the word "neglectorate" to describe the public's alienation from the current
dysfunctional political system. Now that economists have, for the most part relegated John Maynard
Keynes to the dustbin of history, the term Dickenysian seems to be appropriate for the present conditions,
which are becoming increasingly similar to Charles Dickens' portrayal of the world he lived in. The
power of the bond market in imposing its will on supposedly independent states, suggests that bondage
may be appropriate for expressing the power of capital.
Finally, we could describe the current economic system as Crapitalism, which treats ordinary people
as crap.
"... But if the Macri administration is a throwback to the neoliberal era of Menem, it is important to remember that the current historical context is very different. Back in the 1990s, the fall of the Berlin Wall and the collapse of the Soviet Union gave the neoliberal policies of the infamous Washington Consensus a status of unquestionable truth. Supposedly, ideology had vanished and history had come to an end. No alternative was politically possible. Since then, the 2008 global Great Recession has shown the world the perils of unfettered capitalism, and even if the "Keynesian moment" was brief and austerity policies have reasserted themselves, at least it is widely understood that the "free market" is no solution for the problems of development in a globalized economy. ..."
"... the phrase "Garbage in, Garbage out" sort of sums up the problem, I think. throughout the neoliberal world, similar events have transpired, supported importantly by a tame press. As well, if the objective of neoliberal policies is to roll back social safety nets and restore corporate or oligarchic control, then austerity like Mr. Dayan predicts has been a success. ..."
"... It is clearly not easy to dislodge the vultures, once their nests are well fortified, and the often bitter process can easily lead to the rise of an Argentine version of (God forbid) Donald Trump. ..."
"... If you're looking for an outright rejection of neoliberalism, you needn't look farther than Argentina in 2001. The people filled the streets shouting "Get Rid of Them All (leaders)" until the leading elite brought forth a leader (Néstor Kirchner) who finally got the message and reversed the Washington consensus. ..."
"... Kirchner, incidentally, had previously been a willing part of Menem's neoliberal policies in the 90s, so that just goes to show that it's not so important whom one elects, as it is the power of popular movements to get said person to do the right thing. ..."
"... Geopolitically too, the new administration seems quite happy to be a nice, well behaved member of the neoliberal club http://www.bbc.co.uk/news/uk-politics-34914413 and promises to not bump into the furniture or scoff too many of the hors d'oeuvres. If it is content to accept crumbs from the table, crumbs is what it - and the lucky people of Argentina - will get. ..."
"... Wikileaks reported that Macri went to the US embassy at least 5 times to seek support in winning the presidency. Now, scant days after the inauguration he has cancelled the Argentine memorandum of understanding with Iran in regards to Israel's allegations that Iran was behind two bombings against Israeli/Jewish targets in Argentina in the 90s. Very possibly quid pro quo. ..."
"... It seems to me that it is increasingly difficult for Leftist, i.e., non-neoliberal economies to survive, nevermind thrive, in the world today. As the neoliberal forces have coalesced globally they are now in position to punish any nation that refuses to follow the program. ..."
"... Until the U.S. reforms itself - or maybe Western Europe - it appears small Leftist nations will have to thread a needle just to survive. ..."
"... I would like to read the author's comments on the above in more detail. I cannot figure out why on earth the Roussef admin in brazil is doing what it is doing. They've destroyed their base who won't trust them again for a decade. Will lula ride to the rescue again? I'm not sure he can pull off the same act twice. ..."
"... What I'd always concede is that, for leftist political parties, this job will always be harder. No-one really expects neoliberal or corporatist state parties to be anything other than on the take, it simply goes with the territory. Voters are pretty cynical there, and rightly so, but the cynicism is realistic. The deal is, you put up with our pilfering in return for competent administration. It's more-or-less latter-day versions of "Say what you like about Mussolini, at least he made the trains run on time". ..."
"... The left, conversely, is expected to be both honest and competent. Rightly so, but harder. ..."
"... Oh great, another TBTF banker running a central bank. That should work to someone's advantage If they are telegraphing a devaluation, what does that mean for the FX market? Seems to me a move that large can make some fortunes if one had insider info. Here's a thought, wealthy right wing argentinians go to the us dollar in a similar way to us corps leaving money offshore, to create the impression of weakness, which justifies devaluation of the peso and deregulation, in swoop the buzzards (sorry, vulture is already taken in this case) to buy up pesos at 15 for a buck, plus no repatriations! ..."
"... The devaluation of the peso is a bit more tricky than this, since every political party pushed devaluation, just in different forms. The Kirchner's policy was a slow series of micro-devaluations that kept the peso steadily decreasing against the dollar to keep exports competitive. The bulwark against speculation was (sloppily applied) capital controls that did halt a lot of capital flight, but not all. ..."
"... The fact is very few people here save in pesos, they all save in dollars or property, mainly because there is no faith in the peso. A mega devaluation does not increase faith in the currency, but it does, as you say, work out dandy for speculators. ..."
"... Foreign "investment" (direct or via compradors) and foreign military occupation (direct or by proxy) are two sides of the same coin- of conquest, dominion, oppression and exploitation. Any semblance of, or aspiration to, autonomy, is limited by the perceived needs of imperial "manifest destiny", and thus must be "de"stabilized, then "re"stabilized as a heteronomy, that "better" serves the insatiable needs of the "masters of mankind" as far as "right" v. "left", from my pov comes down to the politics of "concentration" v. "distribution" and what defines "surplus" in the context of basic needs ..."
"... A crude parallel is the "shellacking" of Obama in 2010. Sure there were people that voted for the repubs, but it was by no means out of enthusiastic support for their policies. Likewise here, the enthusiasm was somewhat muted. ..."
By Matias Vernego, Associate Professor, Department of Economics, Bucknell University, and
author of the blog Naked Keynesianism.
Cross-posted from
Triple Crisis.
The election of businessman Mauricio Macri to the presidency in Argentina signals a rightward
turn in the country and, perhaps, in South America more generally. Macri, the candidate of the right-wing
Compromiso para el cambio (Commitment to Change) party, defeated Buenos Aires province governor
Daniel Scioli (the Peronist party candidate) in November's runoff election, by less than 3% of the
vote.
... ... ...
But if the Macri administration is a throwback to the neoliberal era of Menem, it is important
to remember that the current historical context is very different. Back in the 1990s, the fall of
the Berlin Wall and the collapse of the Soviet Union gave the neoliberal policies of the infamous
Washington Consensus a status of unquestionable truth. Supposedly, ideology had vanished and history
had come to an end. No alternative was politically possible. Since then, the 2008 global Great Recession
has shown the world the perils of unfettered capitalism, and even if the "Keynesian moment" was brief
and austerity policies have reasserted themselves, at least it is widely understood that the "free
market" is no solution for the problems of development in a globalized economy.
...The new government does not control congress, and the election was close, signaling
a divided country. In short, society is more organized and better prepared to face the onslaught
of neoliberal policies this time around.
First, a Succinct and well organized piece. A pleasure to read.
Thank you, David Dayan.
Sad but familiar pattern of political events. The key piece of the puzzle not yet known is
if the widespread failure of austerity policies to produce the claimed results will ever trigger
an effective rejection by the voters, and if so, how long will it take? It hasn't happened yet.
A stronger working class is fine, but what is the state of sources of information in Argentina?
in a democratic system, the phrase "Garbage in, Garbage out" sort of sums up the problem,
I think. throughout the neoliberal world, similar events have transpired, supported importantly
by a tame press. As well, if the objective of neoliberal policies is to roll back social safety
nets and restore corporate or oligarchic control, then austerity like Mr. Dayan predicts has been
a success.
It is clearly not easy to dislodge the vultures, once their nests are well fortified, and
the often bitter process can easily lead to the rise of an Argentine version of (God forbid) Donald
Trump. Been there, done that.
If you're looking for an outright rejection of neoliberalism, you needn't look farther
than Argentina in 2001. The people filled the streets shouting "Get Rid of Them All (leaders)"
until the leading elite brought forth a leader (Néstor Kirchner) who finally got the message and
reversed the Washington consensus.
Kirchner, incidentally, had previously been a willing part of Menem's neoliberal policies
in the 90s, so that just goes to show that it's not so important whom one elects, as it is the
power of popular movements to get said person to do the right thing.
Geopolitically too, the new administration seems quite happy to be a nice, well behaved
member of the neoliberal club
http://www.bbc.co.uk/news/uk-politics-34914413
and promises to not bump into the furniture or scoff too many of the hors d'oeuvres. If it is
content to accept crumbs from the table, crumbs is what it - and the lucky people of Argentina
- will get.
I don't suppose Jim Haygood will be mourning the political exit of the Black Widow, but I,
in my not so humble opinion, think this new lot of ex-financiers will be worse.
In addition to the Venezuela volte-face and a different tune on the Malvinas/Falklands issue,
there is a more substantive move in the works by the new regime.
Wikileaks reported that Macri went to the US embassy at least 5 times to seek support in
winning the presidency. Now, scant days after the inauguration he has cancelled the Argentine
memorandum of understanding with Iran in regards to Israel's allegations that Iran was behind
two bombings against Israeli/Jewish targets in Argentina in the 90s. Very possibly quid pro quo.
It seems to me that it is increasingly difficult for Leftist, i.e., non-neoliberal economies
to survive, nevermind thrive, in the world today. As the neoliberal forces have coalesced globally
they are now in position to punish any nation that refuses to follow the program.
Until the U.S. reforms itself - or maybe Western Europe - it appears small Leftist nations
will have to thread a needle just to survive. Maybe China will emerge, especially possible
as the failure of America's global leadership is underscored by political instability, global
warming, florid wealth disparities, and increasing radicalization.
Erm, I can't see The Middle Kingdom coming to anyone's rescue but their own. That will be good
only for those countries whose welfare coincides with China's. Which would be, ? Pro'ly not
Argentina?
The last government, in addition to selling huge quantities of grain to China, also conducted
2 currency swaps with Beijing– all to cries of "dealing with communists!" and "selling out our
patrimony to the enemies!" from the opposition. Now that the opposition is in power, they announced
a 3rd currency swap two days after coming into office.
In 2013, China South Railway(CSR) won a 1-billion U.S. dollar contract which provides 709
carriages to renew [Argentina's] commuter system.
By the end of July 2015, all the 709 carriages had been shipped to Argentina.
A large part of Argentina's national railway system has been in disrepair or underdeveloped.
Aging infrastructure has also led to a number of accidents in the country in recent years.
China of course is looking after its own mercantilist interests. But Argentina, after allowing
its British-built railroads to decay into shambles by a century of neglect and bizarro-world service
pricing, will benefit from upgraded rail infrastructure.
I got to ride the antiquated 99-year-old Belgian-built coaches, with manually-latched wooden
doors, on Line A of the Buenos Aires subte, before they were removed from service in 2013.
Photo:
The railroad system was built by the British, nationalised by Perón in his first term, and
then slowly privatised under successive dictatorships and their "democratic" front men. The coup
de grace was Menem in the 90s but the whole system was dead well before then, ditched in favour
of the more "advanced" US interstate system.
One of the last moves of the outgoing Kirchner government was to renationalise the system.
The new Chinese cars are a delight (and the old A line was indeed fun, but moved at a snail's
pace). Argentina does not yet have the native industry to produce trains, but that was definitely
a goal, that now looks farther away.
And just for comparison's sake, the top 2 Argentine presedencies in terms of infrastructure
built were Perón's 1&2 terms, and the Kirchners. Meanwhile, the record for least km of subway
built per year in Buenos Aires history belongs to Marucio Macri. All whilst going deeply into
debt.
Fiscal responsibility comrades: it's not a neoliberal priority.
"And if it is any consolation, at least the adjustment will be done by a right-wing party,
in contrast to Brazil, where the same program, essentially, is being pushed by the Workers' Party;
and yet the right-wing forces are also trying to bring the left of center government of Dilma
Rousseff down; more on that on another post]."
I would like to read the author's comments on the above in more detail. I cannot figure
out why on earth the Roussef admin in brazil is doing what it is doing. They've destroyed their
base who won't trust them again for a decade. Will lula ride to the rescue again? I'm not sure
he can pull off the same act twice.
Unfortunately nowhere is it written that the left is automatically able to walk (adopt and
implement progressive policies aiming to improve equality not just on social issues but also economic
and financial ones) and chew gum (govern competently and effectively) at the same time.
While Roussef's (and Christina Fernandez's) hearts may have been in the right place, for Roussef
not being whiter-than-white on campaign funding and employing accountants who would not only find
out any wrong-doing but tell the Workers' Party leadership something didn't smell right - and
also what seemed pretty blatant gerrymandering via the budget - were avoidable own-goals.
What I'd always concede is that, for leftist political parties, this job will always be
harder. No-one really expects neoliberal or corporatist state parties to be anything other than
on the take, it simply goes with the territory. Voters are pretty cynical there, and rightly so,
but the cynicism is realistic. The deal is, you put up with our pilfering in return for competent
administration. It's more-or-less latter-day versions of "Say what you like about Mussolini, at
least he made the trains run on time".
The left, conversely, is expected to be both honest and competent. Rightly so, but harder.
Agreeing with what Clive said, I would also add a couple points:
1. Syriza. 'Nuff said.
2. Here in LatAm (and elsewhere) the leftist leadership has a dismal record of not understanding
economics. In the example at hand, the Kirchners 'swooped in to rescue' Argentina from the clutches
of neoliberalism. But said neoliberalism had been imposed by their own ostensibly leftist, 'populist'
Justicialist (Peronist) party under Menem (and before under Perón himself). Néstor Kirchner and
Cristina Fernández were completely on board with this because they didnt really pay too much attention
to econ policy, and privatising everything seemed like a nice liberal thing to do. Only once the
street pushed back against the Washington Consensus in 2001 did they see the potential in riding
the wave, and did a reasonably good job at it, but it's not like socialism was in their DNA from
the get-go.
With Dilma, I'd say it's the same thing. She is leftist in that she is pro-human rights, pro-equal
marriage, etc. But she does not have a really leftist economic understanding, so to her austerity
seems to fit right in with her other leftist beliefs– just as it did with say Tony Blair or Bill
Clinton.
Oh great, another TBTF banker running a central bank. That should work to someone's advantage If
they are telegraphing a devaluation, what does that mean for the FX market? Seems to me a move
that large can make some fortunes if one had insider info. Here's a thought, wealthy right wing
argentinians go to the us dollar in a similar way to us corps leaving money offshore, to create
the impression of weakness, which justifies devaluation of the peso and deregulation, in swoop
the buzzards (sorry, vulture is already taken in this case) to buy up pesos at 15 for a buck,
plus no repatriations! It's just got win written all over it when you have a central banker
who's going to revalue the currency by selling off the commons in some form or another.
The devaluation of the peso is a bit more tricky than this, since every political party
pushed devaluation, just in different forms. The Kirchner's policy was a slow series of micro-devaluations
that kept the peso steadily decreasing against the dollar to keep exports competitive. The bulwark
against speculation was (sloppily applied) capital controls that did halt a lot of capital flight,
but not all.
In the election, both candidates campaigned on lifting the capital controls and 'floating'
the peso, with Macri's team saying it would lift all controls the day after the election. Didn't
happen. Incoming FinMin Prat Gay has now said they can't go 'free-market' just yet (i.e., release
ForEx restrictions and devalue the peso in one giant swoop), but the threat is hanging over the
economy like an executioner's knife. Last month after the election, prices shot up across the
board (up to 20% increases!) as merchants speculated on expectations. It was the highest inflation
recorded in over 20 years.
The fact is very few people here save in pesos, they all save in dollars or property, mainly
because there is no faith in the peso. A mega devaluation does not increase faith in the currency,
but it does, as you say, work out dandy for speculators.
Fifteen pesos for a buck is an 'informal' gray market that exists behind capital controls.
You can physically carry hundred-dollar bills into Argentina and exchange them at the ubiquitous
"compro oro" shops. But this trade can't be done from outside the country, in size.
Second issue is that a unified exchange rate might settle somewhere between 9 and 15 pesos,
since 15 pesos is an artificial 'dollar scarcity' value produced by capital controls. If the unified
exchange rate ends up at 13, speculators lose 13% in a hurry.
That's why speculators get paid to take risks. There is no obvious, guaranteed trade, equivalent
to picking up ten-dollar bills off the sidewalk.
The buzzards I refer to would actually be the insiders in the new gov who have info not available
to speculators as a whole, but I see your point that it's not as easy as it sounds in my pretty
tale
Foreign "investment" (direct or via compradors) and foreign military occupation (direct
or by proxy) are two sides of the same coin- of conquest, dominion, oppression and exploitation.
Any semblance of, or aspiration to, autonomy, is limited by the perceived needs of imperial "manifest
destiny", and thus must be "de"stabilized, then "re"stabilized as a heteronomy, that "better"
serves the insatiable needs of the "masters of mankind" as far as "right" v. "left", from my pov
comes down to the politics of "concentration" v. "distribution" and what defines "surplus" in
the context of basic needs
Excellent question, and one not answered in the article.
In the first round of voting Macri came in second place, but he had a close enough margin to
force a one-on-one runoff with the top voted candidate, Daniel Scioli, who was representing the
outgoing Kirchner government.
Macri and the far right have generally pulled about 20% of the population at most, but he made
an alliance with the two largest opposition parties (UCR and CC), who essentially sold their souls
just to ensure the Kirchner "successor" did not win. This put Macri over the top, giving him an
advantage of less than 2%– enough to win the runoff.
Furthermore, the Kirchnerist candidate was selected from the rightwing of the party, and ran
to the right. Macri meanwhile, well aware of the precariousness of his alliance, actually ran
to the left -– reversing his previous stances and saying he would not privatise anything or eliminate
social spending. By the time of the final election, the two candidates were practically indistinguishable.
A crude parallel is the "shellacking" of Obama in 2010. Sure there were people that voted
for the repubs, but it was by no means out of enthusiastic support for their policies. Likewise
here, the enthusiasm was somewhat muted.
"... Undoing the Demos: Neoliberalism's Stealth Revolution ..."
"... market values to all institutions and social actors ..."
"... Harperism: How Stephen Harper and his thank tank colleagues have transformed Canada ..."
"... Political Theory, ..."
"... Dr. Michael Welton is a professor at the University of Athabasca. He is the author of Designing the Just Learning Society: a Critical Inquiry. ..."
Deciphering the meaning of Neo-liberalism as a historical force and societal form requires the energies
and know-how of a sagacious sleuth like Hercule Poirot. Wendy Brown, a philosophy professor at UCLA
(Berkeley) and author of Undoing
the Demos: Neoliberalism's Stealth Revolution, has a Poirot intellectual sensibility and
acuity that sees what most of us cannot.
Those of us who have written on neo-conservative politics
and neo-liberalism as an economic form have illuminated many dimensions of "something new" that has
emerged out of the collapse of welfare state liberal democracy in the West over the last five decades.
But putting all the pieces of this intricate puzzle together and detecting not only particular
patterns but also the logic underlying neo-liberalism is a complex task.
What is the connection between the US Empire's contempt for law and truth-telling and neo-liberalism?
And how is it that citizens can be so passive in the face of evident government prevarication,
endless spinning of false narratives, the evisceration of democratic morality and countless corporate
and government scandals?
Most of us know that neo-liberalism as an economic form repudiates Keynesian welfare state economics
and was propounded by ideologues like Milton Friedman at the University of Chicago and in an earlier
day, by the dubious intellectual propagandist Friedrich von Hayek.
In popular usage, neo-liberalism conjures up a cluster of ideas adumbrated by Brown: a radically
free market, maximized competition and free trade achieved through economic de-regulation, elimination
of tariffs, a range of monetary and social policies favourable to business and indifferent toward
poverty, social deracination, cultural decimation and long-term resource depletion and environmental
destruction.
Something new and darker is at stake
But something new and darker seems to be at stake. The crux of Brown's sophisticated argument
is that the left fails to see the "political rationality that both organizes these policies
and reaches beyond the market" ("Neo-liberalism and the end of liberal democracy" [2003]). The left
analyses do not capture the "neo" of neo-liberalism because they "obscure the specifically political
register of neo-liberalism in the First World, that is, its powerful erosion of liberal democratic
institutions and practices in places like the US."
In other words, neo-liberalism agents systematically aim to radically de-democratize their societies.
The supreme triumph of corporate power in the world requires that liberal democracy be undermined.
This means that political autonomy is jettisoned. Formal rights, private property and voting are
retained, but civil liberties are re-cast as useful only for the enjoyment of private autonomy.
Social problems are de-politicized and converted into therapeutic, individualistic solutions (mostly
through consuming a special commodity). The political rationality of neo-liberalism interpellates
the governed self of the citizenry. Separated from the collectivity, this self is then absorbed into
a world of choice and need-satisfaction through consumption that is mistaken for freedom.
Aware that the mere restoration of some ragtag social welfare state spiced with a pinch of climate
change rhetoric is a dangerous delusion, Brown slices through the bramble bush of esoteric terminology
to enable us to see that "neo-liberalism carries a social analysis which, when deployed as a form
of governmentality, reaches from the soul of the citizen-subject to education policy to practices
of empire." Neo-liberal rationality "involves extending and disseminating market values to all
institutions and social actors, even as the market itself remains a distinctive player."
Neo-liberalism ruthlessly sets out to subvert democracy
Good god! This guy moved stealthily and incrementally according to a "master plan": to dismantle
Canadian democracy and free the society for total corporate domination without citizen recourse.
It was systematic! It was devilish! He did it behind closed doors and in the twilight under our noses!
Voter ignorance permits these bastards to blast the world back into the medieval era of serfdom and
anti-enlightenment beliefs and degrading practices.
This intention to subvert liberal democracy has not been fully grasped by those on the left. That's
Brown's wake-up call. And it is a salient one. It may provide us clues to understanding puzzling
elements of the contemporary world such as lying without consequences, total absence of moral principle
underpinning actions, abject inconsistency, utter hard-heartedness towards the vulnerable and contempt
for democratic deliberation and international diplomacy.
Specific characteristics of the neo-liberal political rationality
To help us sort these things out, Brown identifies the specific characteristics of this rationality.
Plunging in, Brown first points out that neo-liberal rationality configures human beings as homo
oeconomicus. All dimensions of human life are cast in terms of a market rationality. Actions
and policies are reduced to the bare question of profitability and the social production of "rational
entrepreneurial action." Our schools are re-figured to pump out little brown-shirted entrepreneurs
who know only calculation and competition.
Second, Brown states that neo-liberalism pedagogics intends to develop, disseminate, and institutionalize
such a rationality. "Far from flourishing when left alone," Brown asserts, "the economy must be directed,
buttressed, and protected by law and policy as well as by the dissemination of social norms designed
to facilitate competition, free trade, and rational economic action on the part of every member and
institution of society."
Neo-liberals only want to get the state out of providing for the security and well-being of its
citizens. They use the state apparatus to enable corporations to serve only their profit-making without
fear of legal regulation or moral demands. This means, then, that the market organizes and regulates
the state and society. Therefore:
(a) By openly responding to the needs of the market (through immigration policy or monetary and
fiscal policy), the state is released from the burden of a legitimation crisis (European critical
theorists like Claus Offe and Jurgen Habermas had raised this concern in the 1970s). The new form
of legitimation is simply economic success (it is also, I might add, the new, post-liberal democratic
morality). The old norms of crime and morality are expunged from the cultural ethos of neo-liberalism.
(b) Under neo-liberal conditions, the state itself must think and behave like a market actor.
The languages of cost-benefit analysis and calculation sweep in and consume public service and governmental
practices. Under the Harper dictatorship's thumb, gags were stuffed in the public service mouth.
(c) The health and growth of the economy is the "basis of state legitimacy both because the state
is forthrightly responsible for the health of the economy and because of the economic rationality
to which state practices have been submitted." The watchword of neo-liberalism is: "It's the economy,
stupid."
The third characteristic, then, of this depraved neo-liberal rationality (which wrenches itself
free of the constraints of the old liberal democratic paradigm) has to do with the "extension of
economic rationality to formerly non-economic domains and institutions extends to individual conduct,
or more precisely, prescribes citizen-subject conduct in a neo-liberal order." Famously, Habermas
termed this the "colonization of the lifeworld."
There is something disturbingly monstrous now before us. The classical liberal thinker Adam Smith
set out the necessity of tension between individual moral and economic actions. This crucial distinction
collapses, Brown maintains, because neo-liberalism has figured us as rational, calculating machines.
Thus, to be "morally autonomous" means that we take care of our own needs and fund our own self-projects.
Pedagogics (in schools and everyday life) orients its students to consider the costs, benefits,
and consequences of individual action. But this "responsibility for the self" gets carried to new
heights as support for the vulnerable and needy is withdrawn. They are on their own. Didn't Thatcher
say: "There is no such thing as society. There are individual men and women, and there are families"?
Grim news for the last defenders of deliberative democracy
For diehard defenders of active citizenship and liberal democracy, Brown's analysis is grim news.
Political citizenship is radically reduced within the neo-liberal frame to an "unprecedented degree
of passivity and political complacency."
In "American nightmare: neo-liberalism, neo-conservatism, and de-democratization," Political
Theory, 34 (6), December 2006)," Brown bemoans the "hollowing out of a democratic political
culture and the production of the undemocratic citizen. This is the citizen who loves and wants neither
freedom nor equality, even if of a liberal sort; the citizen who expects neither truth nor accountability
in governance and state action; the citizen who is not distressed by exorbitant concentrations of
political and economic power, routine abrogation of the rule of law, or distinctly undemocratic formulations
of national purpose at home and abroad." Bravo Ms. Brown!
Brown's most innovative analysis is the way she links neo-conservative religious thought and neo-liberal
economic and political rationality. She addresses the evident contradiction. "How does a project
that empties the world of meaning, that cheapens and deracinates life and openly exploits desire,
intersect with one centred on fixing and enforcing meanings, conserving certain ways of life, and
repressing and regulating desire?"
Neo-liberal political rationality and neo-conservative fundamentalist Christianity may diverge
on the level of ideas. But American Christianity (in its fundamentalist form) and neo-liberal rationality,
Brown contends, converge in the domain of political subjectivity. American fundamentalism contours
the spiritual sensibility of its adherents to submit to Divine Authority and a declarative form of
truth.
She states: "The combination of submissiveness toward a declared truth, legitimate inequality,
and fealty that seeps from religious and political rationality transforms the conditions of legitimacy
for political power; it produces subjects whose submission toward authority and loyalty are constitutive
of the theological configuration of state power sketched in Schmitt's juristic thought."
In post 9/11 America panicked and fearful citizens easily fall prey-so it sadly seems-to sacralising
the existing Neo-liberal regime. The founding myth of America as New Israel tips fundamentalists
(and others, too) toward fusing the US's malevolent actions in the world with America as instrument
of God's eternal purposes-"holy violence" to usher in the New Millennial Order.
Thus, apolitical preferences rule the day and citizens consume and idolize their families. Political
participation is not necessary; and political scientists write articles about "voter ignorance" and
weep. Critics of Habermas chide him for harbouring the illusion that voters know enough to deliberate
with each other. But this submission to the Natural Order (now God's order) of neo-liberal capitalism
is to bow down before the Golden Calf.
We appear to have entered Weber's "polar night of icy darkness" without morality, faith, heroism
and meaning. But for Brown both Weber and Marx's analyses are too teleological. Neither captures
the "discursive and practical integration" of formerly differentiated moral, economic and political
rationalities.
This perspective certainly is controversial and debateable stuff. But there is no denying that
neo-liberalism erodes "oppositional political, moral or subjective claims located outside capitalist
rationality but inside liberal democratic society, that is, the erosion of institutions, resources,
and values organized by non-market rationalities in democracies."
There is much at stake: the Left from Marx's day to ours assumed that liberal democratic societies
at least contained the formal principles of equality and freedom. This ethical gap between the norms
and social reality could elicit oppositional action to close the division and permit a form of "immanent
critique." Now Brown suggests provocatively, "Liberal democracy cannot be submitted to neo-liberal
political governmentality and survive." Indeed, "liberal democracy is going under in the present
moment, even as the flag of American 'democracy' is being placed everywhere it finds or creates soft
ground."
The Left humanist project for post-liberal democracy times
Thus, the Left Humanist movement world-wide confronts-if Brown's argument holds-a neo-liberal
rationality that in the post 9/11 period uses the idiom of liberal democracy while undermining it
in practice. The infamous cry from Paul Bremer in Iraq that it was "open for business" clearly signalled
that democratic institutions were secondary to "privatizing large portions of the economy and outsourcing
the business of policing a society in rubble, chaos, and terror occasioned by the combination of
organizing military skirmishes and armed local groups."
The only way we might fathom the post 9/11 American world of governmental deceit and a raw market
approach to political problem solving is to assume that moral principle has been banished because
the only criteria for action is whether the ends of success and profitability have been achieved.
That's all. That's it. And since morality is the foundation of legal systems, adhering to law is
abandoned as well.
There is, then, plenty of evidence for the argument of the assault on democracy. Civil liberties
have been undermined in the USA in the Homeland Security Act (and in Canada under the Harper regime),
aggressive imperial wars ventured into, the welfare state dismantled and progressive tax schemes
abolished and public education defunded.
Brown is reluctant to name this miserable concoction fascism (or neo-fascism). "Together these
phenomena suggest a transformation of American liberal democracy into a political and societal form
for which we do not yet have a name, a form organized by a combination of neo-liberal governmentality
and imperial world politics, contoured by the short run by conditions of global economics and global
security crisis."
Nonetheless, regardless of how we name this new world, the conditions we find ourselves inhabiting
at the moment must acknowledge that the "substance of many of the significant features of constitutional
and representative democracy have been gutted, jettisoned, or end-run, even as they continue to be
promulgated ideologically, serving as a foil and shield for their undoing and doing of death elsewhere."
Bitterly, Brown admits that this unprecedented nature of our time is that "basic principles and
institutions of democracy are becoming anything other than ideological shells for their opposite
as well as the extent to which these principles and institutions are being abandoned even as values
by large parts of the American people."
Thus, in order to avoid descent into acute melancholia on the part of the Left, Brown urges us
to reject the idea that we are in the "throes of a right-wing or conservative positioning with liberal
democracy but rather at the threshold of a different political formation, one that conducts and legitimizes
itself on different grounds from liberal democracy even as it does not immediately divest itself
of the name."
She maintains strongly that the Left must face the implications of losing democracy. We ought
not to run around in a frenzy raging into the polar night. We will have to dig in for the long haul
and offer an intelligent left counter-vision to the neo-liberal political and economic formation.
This will be an integral project of the reconstitution of the global left in post-liberal democracy
times.
The soft neoliberalism (or The Third Way) promoted by Clinton and Blair now is replaced with a splash
of far right nationalism. the level of anger in the bottom 99% and a refusal to accept the lies and
propaganda by the top 1% created a crisis of legitimacy for neoliberal elite. Moreover, right years
of king of "bait and switch" Obama with his typical for neoliberals unconditional love for financial
elites has revealed that change can be delivered only through radical means...
Notable quotes:
"... Of course in the age of inverted reality, spin and obfuscation, the true nature of [neo]iberals is quite the reverse. Just like the fabians they seek to divert attention from their real goals by describing themselves as mirror opposites. ..."
"... The [neo]liberal elite is nothing of the sort, they seek to control, manipulate and suppress everything which doesn't fit their hidden purpose, which is to promote the flat earth globalisation of the debt pyramid on behalf of the banking cartel and the likes of the Rothschild's. ..."
"... They are despicable creatures, full to the brim with breath-taking hypocrisy, happy to claim faux indignation over widening inequality and falling living standards while they promote the pyramid scheme of debts which causes it. They may dream of a world government with socialism for the masses and largesse for the elites, but as sure as the sun rises in the east, such concentration of power, wielded by those least suitable to hold it, would create an authoritarian tyranny like seen before. ..."
"... Essentially, Third Way liberalism as practised by Clinton and Blair, but even more so by those who followed them (Clinton and Blair were, let's not forget, populists of a sort), is predicated on the belief that you can fashion a winning mandate to govern by appealing to a consensus among middle class professionals, the liberal rich, and what they saw as a new, unideological class of 21st century workers - the socially liberal, politically apathetic, precariously situated masses who hover somewhere between traditional working class and educated middle. ..."
"... They did this by appealing to issues of social identity while reinforcing the economics of the right-wing neoliberal ushered in by Thatcher and Reagan. They were, at the same time, losing working class votes - but their analysis of the economics told them that the (in a Marxist sense) working class was an endangered species. ..."
"... 2008 exploded this fiction but its architects remain wedded to the cause. They personally enriched themselves by opening-up traditionally popular parties to the donations and interests of corporate capitalism. Look beyond Blair and the Clintons and you will see hundreds of centre-left politicians growing fat on an endless stream of corporate money: Cory Booker, Chuck Schumer, DWS, Howard Dean (in the US), Ben Bradshaw, Chris Byrne, Alastair Campbell, Jack Straw (in the UK) ..."
"... Deregulated capitalism tends to monopolies and the rise of a rentier class epitomised on Wall Street and property speculators like Donald Trump. ..."
"... Global capitalism pits workers against workers in an endless spiral of wage deflation and this fosters divisions between those whose class interests are, in fact, the same. The alienation that is an intimate part of capitalist production ..."
"... Marx also made a distinctive between productive and fictitious capital - share prices, derivatives and other financial instruments, arbitrage and all the other heinous arsenal of second-order exploitation. Neoliberalism has delivered productive capital into the arms of fictitious capital and ushered us into a world governed by nobody so much as orchestrated according to the graph-lines of the global stock markets. It has turned the spectacle from social relations mediates by images into the beating heart of how, where and why wealth moves the way that it does. The unreality has seeped into every aspect of lived experience. ..."
"... I am less despondent then I was under Obama and his smooth delivery of a hope and change always deferred. ..."
"... Or Hillary Clinton and her revolution of upper-class women with their own specific class interests. There is organising taking place right now and making demands that this system will not satisfy - because it is designed to do the exact opposite. ..."
"... I would rather speak with an alt-right troll than a liberal because one is searching for answers in the wrong place where the other glibly renders apologies for the system from which they seek to profit at the expense of those to whom they offer nothing but false sympathy. ..."
"... There is a mobilisation of anger and a refusal to accept the fictions spun by the ruling class that can potentially be harnessed for permanent change - and, moreover, 8 years of Obama and his pathological love for financial elites has revealed that radical change can be delivered only through radical means. ..."
"... But as others have said really we mean neoliberalism, not liberalism. Liberalism and capitalism are not the same thing and cant be used interchangeably, liberalism is a set of beliefs and capitalism is a set of practices which are sometimes at odds with one another. On the other hand, neoliberalism as a set of beliefs explicitly accepts the hegemony of capital and the expansion of the market economy into all areas of society and life. ..."
"... the reformist and incrementalist view of a progressive social democracy that balances state and market for the betterment of all is con. ..."
"... I don't think that Trump and Brexit mark an epochal shift; I think they are signs of disintegration. The more significant (though still not epochal!) moment was the 2008 financial crisis - and the complete failure of the political elites of Europe and America to address its fallout. This, by the way, was also far from the unforeseeable calamity that it was characterised as being in many sections of the media. Many economists and political analysts had discussed deregulation and unsustainable debt in terms of future crises; it wasn't prophesy, but a basic understanding of how unrestricted market capitalism (especially when reliant on the vicissitudes of shares/bonds/derivatives) operates. ..."
"... More broadly, I agree with you - history is not some untroubled march of the working class to freedom (alas!) It is contingent, messy and unexpected. We have agency - and we have to use it (another thing I believe has been reignited in the last 8 years). One of many ironies of the present situation is that neoliberal politicians believed that the educated precariat they were helping to create would be unideological, politically apathetic consumers - and yet it is the young who are returning the repressed in the form of unrest, economic demands, and the re-introduction of class into political discourse. ..."
"... Okay though, back to reality! That, I concede, is a very American and European perspective that does not take into account the global developments in Asia, Africa or Latin America. I actually lived in China for a while as a young man, and it struck me at the time that the society offered a possible, if bleak, template for the future - a technocratic, one-party state in which people trusted them to deliver the right decisions through a central bureaucracy but with consumer freedoms sufficient to forestall unrest. This is, perhaps, an alternative to the dissent and potentially unrest I have described - and what makes the latter imperative...? ..."
"... Oh, and what you wrote about waste is very interesting. I certainly agree that it, "efficiency" (usually code for cuts and/or transfer from public to private stewardship), are over-fetishised. In fact, ridiculously so. The waste of most governments is staggering and yet they attack only certain areas. What America squanders on its military is the most obvious of examples - or its increasingly repressive police. ..."
"... The point with Trump - and Brexit too - is not so much what it means to the man himself (or Brexit-profiteers like Boris Johnson) but how his victory gets brandished to confer legitimacy and political cover for a newly emboldened syndicate of zealously right-wing politicians and the corporate interests they represent (especially in America, where the majority of Congressional Republicans are little better than local union bosses who have been installed by the Mafia to carry their water and hold their places to exclude anyone else attaining any uncorrupted power or autonomous control). ..."
"... We are seeing this happen right now as Trump fashions his administration - there are a lot of lobbyists, reactionary financiers, neoconservative mavens, embittered figures from the intelligence community, and evangelical culture warriors suddenly footloose and demob happy after 8 years of Barack Obama and his patented brand of Fidel-loving, radical Chicago organising, spectacularly lukewarm but yet (according to Fox) apocalyptically awful, anti-American, Socialist Revolution. ..."
"... Much of the above will be familiar from Bush files - a man who was seldom happier than when sunk into his Lay-Z-Boy learning how to eat pretzels safely from Barney, his Scottish Terrier. His main role was to show up when required and gurn for the cameras, narrow his peepers and regurgitate what the teleprompter feeds him, before signing the executive orders dreamt up by his dream-team of vampyric, far-right champions of such American glories as the Vietnam War, Watergate, Iran/Contra, and more Latin American coup d'etats than even Henry Kissinger could shake his razor-studded cudgel at. ..."
"... The fact is that Trump cares about victory and basking in the light of his own self-proclaimed greatness – and now he's won. I doubt he cares nearly as much about mastering the levers of government or pursuing some overarching vision as he does about preening himself in his new role as the Winner of the World's Greatest Ever Reality TV Show. He may have thrown red meat to the crowds with the gun-toting, abortion-hating campaign rhetoric, but that is the base for every contemporary Republican's bill of fare. I don't believe he gives a tinker's cuss about those issues or any of the other poisons that constitute their arsenal of cultural pesticides. ..."
"... Like all rich people, he wants to pay as little tax as possible without breaking the law (or at least breaking it outrageously enough to attract the notice of the perennially over-worked, under-resourced IRS). ..."
"... And finally, like most rich people, he refuses to accept that governments can or should regulate transactions or industries in ways that may even slightly inhibit their unbound, irrepressible pursuit of their self-interests and unquenchable desire for more, more and yet again more. ..."
"... These basic right-wing tenets, of course, all easily translate into concrete policy - that's what the Republicans do best. ..."
"... But beyond that, there is the small matter of the world's most highly evolved and comprehensive system of state surveillance and repression - a confluence of agencies, technologies, paranoia and class war that was embraced and embellished by Obama from the moment he brought his glacial approach to change to the highest office in the land – indeed, he showed that he was quite comfortable signing off on historic erosions of constitutional freedoms provided it was endorsed by his ever-responsible friends in Langley and The Pentagon. ..."
"... So while Trump and his administration may in many ways resemble the familiar class warriors of Republican presidencies past, albeit with added evangelical vim, viciousness and vapidity courtesy of Mike Pence, let's not forget that his frequently displayed authoritarianism will have ample opportunity to be both stress-tested and to revenge itself on a plethora of opponents. ..."
"... The point, really, is to move beyond the office of the President, which is always absurdly fetishised in American politics to the detriment of scrutiny that should be directed elsewhere - at his team, his cabinet, his appointments, and his place in the web of Congressional Republicans, lobbyists and corporate money – the nexus of interests that really dictates policies and determined which political battles get fought aggressively, which cast aside. ..."
"... People will not see a new dawn, but the delirious rush to expand those chaotic, inhumane, amoral, and utterly unaccountable market forces that have already seeped far too deep into the already grotty political system. Trump is only a piece of this large and ugly tapestry – a figurehead for an army of cultural and social vandals serving alongside economic thieves and assassins. These are, moreover, the experts in how to instrumentalise economic inequality to serve the very politicians responsible for fostering the inequality in the first place and those most wedded to beliefs capable only of making matters worse for all but themselves and their donor-owners. ..."
"... But let's not be lulled by the familiarity of parts of this story. Familiar from Reagan and Bush Jnr, as well as Clinton and Obama (albeit with a more fulgent presentation and the skilled performance of sympathy to sugar the pill). ..."
"... [Neo]Liberalism is an ideology, it has many variations and even definitions for people. Arrogance, superiority, disdain, refusal to engage etc. A moral certainty more in line with doctrinal religion. ..."
"... The first question to ask is why these right wing commentators are attacking liberalism . Is it because they want a better society in which everyone gets a chance of a decent life ? Do they actually care about the people they claim to speak for - they people right at the bottom of the social scale ? ..."
"... The answer , of course, is no. They see attacking liberalism as a means of defending their own privileges which they believe liberalism and the gradual progress of recent years towards a more equal society have undermined. ..."
"... Since they are basically conning the underprivileged and cannot deliver what they promise the right will find itself driven to even more extremes of bigotry and deceit to maintain its position. The prospect is terrifying. ..."
Of course in the age of inverted reality, spin and obfuscation, the true nature of [neo]iberals
is quite the reverse. Just like the fabians they seek to divert attention from their real goals
by describing themselves as mirror opposites.
The [neo]liberal elite is nothing of the sort, they seek to control, manipulate and suppress
everything which doesn't fit their hidden purpose, which is to promote the flat earth globalisation
of the debt pyramid on behalf of the banking cartel and the likes of the Rothschild's.
They are despicable creatures, full to the brim with breath-taking hypocrisy, happy to
claim faux indignation over widening inequality and falling living standards while they promote
the pyramid scheme of debts which causes it. They may dream of a world government with socialism
for the masses and largesse for the elites, but as sure as the sun rises in the east, such concentration
of power, wielded by those least suitable to hold it, would create an authoritarian tyranny like
seen before. Power in all forms should be spread into as many hands as possible, monopolies
are always bad yet, once again, the illiberal's love a monopoly because they're not what they
seem.
tempestteacup 1d ago Guardian Pick
...You certainly have a point that the experiences in the UK and the US are different for lots
of reasons - historic alignments of the major parties, political corruption, and the different
points where class, race, gender and geographical location intersect - but the latter-day form
of liberalism tried - and failed - to do the same thing in both countries.
Essentially, Third Way liberalism as practised by Clinton and Blair, but even more so by
those who followed them (Clinton and Blair were, let's not forget, populists of a sort), is predicated
on the belief that you can fashion a winning mandate to govern by appealing to a consensus among
middle class professionals, the liberal rich, and what they saw as a new, unideological class
of 21st century workers - the socially liberal, politically apathetic, precariously situated masses
who hover somewhere between traditional working class and educated middle.
They did this by appealing to issues of social identity while reinforcing the economics
of the right-wing neoliberal ushered in by Thatcher and Reagan. They were, at the same time, losing
working class votes - but their analysis of the economics told them that the (in a Marxist sense)
working class was an endangered species. The Republicans in America willingly played into
this fantastical analysis by engaging in the culture wars - politically useful but also economically
necessary as a distraction from the growing cross-party consensus on how to enshrine, extend and
improve the means of capitalist exploitation through deregulation and debt.
2008 exploded this fiction but its architects remain wedded to the cause. They personally
enriched themselves by opening-up traditionally popular parties to the donations and interests
of corporate capitalism. Look beyond Blair and the Clintons and you will see hundreds of centre-left
politicians growing fat on an endless stream of corporate money: Cory Booker, Chuck Schumer, DWS,
Howard Dean (in the US), Ben Bradshaw, Chris Byrne, Alastair Campbell, Jack Straw (in the UK)
.
Evolutions and developments require always refreshed analysis but the basic principles by which
we subject those developments to our analysis remain fundamentally the same: capitalism is a system
by which wealth is transferred from the workers to those owning the means of production. Deregulated
capitalism tends to monopolies and the rise of a rentier class epitomised on Wall Street and property
speculators like Donald Trump.
Global capitalism pits workers against workers in an endless spiral of wage deflation and
this fosters divisions between those whose class interests are, in fact, the same. The alienation
that is an intimate part of capitalist production is carried over into the social relations
between workers and can only be short-circuited by acts of radical organising - revolution begins
with a question that the system cannot answer and ends with a demand that refuses to be denied.
Marx also made a distinctive between productive and fictitious capital - share prices,
derivatives and other financial instruments, arbitrage and all the other heinous arsenal of second-order
exploitation. Neoliberalism has delivered productive capital into the arms of fictitious capital
and ushered us into a world governed by nobody so much as orchestrated according to the graph-lines
of the global stock markets. It has turned the spectacle from social relations mediates by images
into the beating heart of how, where and why wealth moves the way that it does. The unreality
has seeped into every aspect of lived experience.
And yet, strangely, I am less despondent then I was under Obama and his smooth delivery
of a hope and change always deferred.
Or Hillary Clinton and her revolution of upper-class women with their own specific class
interests. There is organising taking place right now and making demands that this system will
not satisfy - because it is designed to do the exact opposite.
I would rather speak with an alt-right troll than a liberal because one is searching for
answers in the wrong place where the other glibly renders apologies for the system from which
they seek to profit at the expense of those to whom they offer nothing but false sympathy.
There is a mobilisation of anger and a refusal to accept the fictions spun by the ruling
class that can potentially be harnessed for permanent change - and, moreover, 8 years of Obama
and his pathological love for financial elites has revealed that radical change can be delivered
only through radical means.
joropofever -> tempestteacup 2d ago
I would agree about this idea of a vacuum being created by the political class but really I
think the political turmoil is a reflection of the economic inequality, economics shaping the
political. But as others have said really we mean neoliberalism, not liberalism. Liberalism
and capitalism are not the same thing and cant be used interchangeably, liberalism is a set of
beliefs and capitalism is a set of practices which are sometimes at odds with one another. On
the other hand, neoliberalism as a set of beliefs explicitly accepts the hegemony of capital and
the expansion of the market economy into all areas of society and life.
I think what you are saying (correct me if wrong) is that the reformist and incrementalist
view of a progressive social democracy that balances state and market for the betterment of all
is con. Marxists said this view would result in the state becoming a conduit for the accumulation
of power in the hands of capital and the gradual destruction of welfare and social institutions,
and they were right.
My question is then though is how do you achieve this transformation (though I don't know what
you would think best) without running the risk of a right-wing and nationalist hijack? History
is littered with cases where well intended left-wing revolutions and social movements helped sow
the seeds for later horrors. As you say, the prognosis and world view of the radical left and
the alt-right are not miles apart.
tempestteacup -> joropofever 2d ago
More excellent and pertinent questions!
I don't think that Trump and Brexit mark an epochal shift; I think they are signs of disintegration.
The more significant (though still not epochal!) moment was the 2008 financial crisis - and the
complete failure of the political elites of Europe and America to address its fallout. This, by
the way, was also far from the unforeseeable calamity that it was characterised as being in many
sections of the media. Many economists and political analysts had discussed deregulation and unsustainable
debt in terms of future crises; it wasn't prophesy, but a basic understanding of how unrestricted
market capitalism (especially when reliant on the vicissitudes of shares/bonds/derivatives) operates.
And I don't accept that this is an anglocentric point of view. There are crises across Europe,
although none have as yet had quite the before/after drama of the Brexit and presidential votes.
In France, the Front National are basically the second party. In Italy, the chaotic 5 Star Movement
are on the verge of toppling the prime minister and making gains elsewhere. In Hungary, Fidesz
and the borderline neo-fascist Jobbik dominate political discourse, as the Law and Justice party
have come to do in Poland. Even in Scandinavia, the Danish People's Party and True Finns have
made significant, even decisive, inroads on political discourse.
Commentators are fond of saying that the left-right divide has been scrambled. Doubtless they
would cite some of these as examples - many of the European nationalist parties I have mentioned
are in favour of strong welfare protections, and use race, country of origin, religion or ethnicity
as a dividing line. To me this does not signify the same thing - the Nazis were called National
Socialists for a reason, and while the purges of the 30s and the war brought the anti-semitic
mass murderers into the ascendancy, there were many founder-members like Strasser and Rohm who
were essentially socialists with a racial or nationalist element.
But look, you're right - the events of 2016 are, as we speak, being interpreted, exploited
and spun to the benefit of the prevailing conditions. One would expect no different - it's why
I was not surprised that the Tory bloodletting post-Brexit gave way to such a painless transition,
just as it appears to be doing in America under President-elect Trump. It's what the ruling class
do - protect their interests. What I believe has happened is that there is now a rupture within
the left (in its broadest sense) and that rupture is defined by those who believe economic change
will deliver social justice on the one hand and those who believe in cosmetic changes without
challenging the economic system.
More broadly, I agree with you - history is not some untroubled march of the working class
to freedom (alas!) It is contingent, messy and unexpected. We have agency - and we have to use
it (another thing I believe has been reignited in the last 8 years). One of many ironies of the
present situation is that neoliberal politicians believed that the educated precariat they were
helping to create would be unideological, politically apathetic consumers - and yet it is the
young who are returning the repressed in the form of unrest, economic demands, and the re-introduction
of class into political discourse.
If I may be allowed to spit-ball for a moment, this is, to my mind, a pivotal moment in history.
Those of us adults but under 40 are the last vestiges of the 20th century and its traditions of
dissent, revolt and counterculture. We are, so to speak, the children of the 1960s. And those
from the 1960s are still here - there is a living link, and in revolutionary terms, such things
matter. In a period where we could potentially prevent catastrophic, irreversible climate change,
there is no more time. It is imperative that we make our stand now, with those who lived through
the last revolutionary period in the west, to keep that flame of revolt alive - or, better yet,
to stoke it into a pyre. Because without those signal historical developments, those noble challenges,
the flame dies down and is covered in ashes....
Okay though, back to reality! That, I concede, is a very American and European perspective
that does not take into account the global developments in Asia, Africa or Latin America. I actually
lived in China for a while as a young man, and it struck me at the time that the society offered
a possible, if bleak, template for the future - a technocratic, one-party state in which people
trusted them to deliver the right decisions through a central bureaucracy but with consumer freedoms
sufficient to forestall unrest. This is, perhaps, an alternative to the dissent and potentially
unrest I have described - and what makes the latter imperative...?
tempestteacup -> joropofever 2d ago
Oh, and what you wrote about waste is very interesting. I certainly agree that it, "efficiency"
(usually code for cuts and/or transfer from public to private stewardship), are over-fetishised.
In fact, ridiculously so. The waste of most governments is staggering and yet they attack only
certain areas. What America squanders on its military is the most obvious of examples - or its
increasingly repressive police.
I was more concerned, though, with the general sustainability of a system where decisions are
made by criteria other than profit/loss, demand/supply. You're right about direct democracy (it's
been ages since I've read Raymond Williams so I'm glad you reminded me to do so again!) - but
how does that work when it comes to resources that have to be shared over large areas? Is it possible
to build, step by step, a democratic structure of shared ownership that is both responsive to
individual communities and responsible in its disposition of resources on the basis of needs rather
than profits?
tempestteacup -> ForgetThePolitics 1d ago
Sorry but I can't agree with that. Popular in terms of electoral success and populist in terms
of generating fervid support through direct, emotionally charged appeals to your audience's most
passionately held interests, fears or aspirations while adopting their language and mobilising
their energy, are two very different things. Obama was popular but not, it turned out, a populist
– despite the narrative of his early presidency, inflected as it still was with the delirious,
joyous cheers the followed his rhetorically rich but studiously vague Yes We Can barnburner (of
sorts).
The point with Trump - and Brexit too - is not so much what it means to the man himself
(or Brexit-profiteers like Boris Johnson) but how his victory gets brandished to confer legitimacy
and political cover for a newly emboldened syndicate of zealously right-wing politicians and the
corporate interests they represent (especially in America, where the majority of Congressional
Republicans are little better than local union bosses who have been installed by the Mafia to
carry their water and hold their places to exclude anyone else attaining any uncorrupted power
or autonomous control).
We are seeing this happen right now as Trump fashions his administration - there are a
lot of lobbyists, reactionary financiers, neoconservative mavens, embittered figures from the
intelligence community, and evangelical culture warriors suddenly footloose and demob happy after
8 years of Barack Obama and his patented brand of Fidel-loving, radical Chicago organising, spectacularly
lukewarm but yet (according to Fox) apocalyptically awful, anti-American, Socialist Revolution.
There are legions of pissed off, fired up kingpins from the fossil fuel industry already itching
to fire up the federal shredders fired up and set loose in the EPA. There are batallions of combat-ready,
obscenely wealthy people and dynasties for whom there is no such thing as too much, and who are
salivating just as they imagine the glorious bonfire of taxes that their Republican lackeys have
a chance to build and dance around in one of their pagan rituals of money worship and rapacity
as a fetish of a heavenly future. And they can build it on the floor of a Congress they also dominate,
before embarking on a mission to extend their current gains during the 2018 mid-terms, when several
precariously held Democratic Senate seats in otherwise Trump-friendly states will be up for re-election.
Much of the above will be familiar from Bush files - a man who was seldom happier than
when sunk into his Lay-Z-Boy learning how to eat pretzels safely from Barney, his Scottish Terrier.
His main role was to show up when required and gurn for the cameras, narrow his peepers and regurgitate
what the teleprompter feeds him, before signing the executive orders dreamt up by his dream-team
of vampyric, far-right champions of such American glories as the Vietnam War, Watergate, Iran/Contra,
and more Latin American coup d'etats than even Henry Kissinger could shake his razor-studded cudgel
at. It was their interests, energies, vendettas and connections that provided the real substance
for a presidency characterised above all by the elevation of anti-intellectualism to the level
of essential and authentic patriotic performance (preparing ground now bulldozed across by a Trump-shaped
figure reveling in the sheer winningness of it all).
The fact is that Trump cares about victory and basking in the light of his own self-proclaimed
greatness – and now he's won. I doubt he cares nearly as much about mastering the levers of government
or pursuing some overarching vision as he does about preening himself in his new role as the Winner
of the World's Greatest Ever Reality TV Show. He may have thrown red meat to the crowds with the
gun-toting, abortion-hating campaign rhetoric, but that is the base for every contemporary Republican's
bill of fare. I don't believe he gives a tinker's cuss about those issues or any of the other
poisons that constitute their arsenal of cultural pesticides.
Like all rich people, he wants to pay as little tax as possible without breaking the law
(or at least breaking it outrageously enough to attract the notice of the perennially over-worked,
under-resourced IRS). Like many rich people, he believes that his wealth is objective and
irrefutable proof of his personal excellence; that this proves how America is truly a land of
opportunity, where hard work, innovation and good old moxie can transform any Joe Schlubb on Main
Street into a millionaire princeling of the Upper West Side - thus demonstrating that social investment
in education or spending to address issues like systemic discrimination is just throwing money
at life's losers.
tempestteacup -> ForgetThePolitics 1d ago
And finally, like most rich people, he refuses to accept that governments can or should
regulate transactions or industries in ways that may even slightly inhibit their unbound, irrepressible
pursuit of their self-interests and unquenchable desire for more, more and yet again more.
These basic right-wing tenets, of course, all easily translate into concrete policy - that's
what the Republicans do best. It is what should be expected.
But beyond that, there is the small matter of the world's most highly evolved and comprehensive
system of state surveillance and repression - a confluence of agencies, technologies, paranoia
and class war that was embraced and embellished by Obama from the moment he brought his glacial
approach to change to the highest office in the land – indeed, he showed that he was quite comfortable
signing off on historic erosions of constitutional freedoms provided it was endorsed by his ever-responsible
friends in Langley and The Pentagon.
If, as would be unsurprising, public unrest spreads and civil disobedience intensifies while
Trump begin work on the familiar Republican transfer of wealth, with Black Lives Matter hardening
their resistance and resolve in the face of police brutalities now able to justify themselves
in terms of sympathetic views espoused by the incoming President himself; with white working class
voters realising that their interests have been, were always going to be, betrayed; with environmental
activists mobilised in deadly earnest and in a desperate effort to push back against potentially
catastrophic energy and industrial policies that imperil everyone's future; as young people schooled
in the Bernie campaign seek to organise and resist the excesses of a Trump presidency that few
accept as legitimately representative of them or their lives, and as the despair of the country
increases under a divisive, duplicitous and avaricious administration soaked in the very corruption
it was such a winning strategy to declaim - well, then Trump has at his fingers the shiniest forms
of repression that money and 21st century technology can provide: blanket surveillance online
and in the streets, habeas corpus perilously undermined by legislation like the NDAA, hyper-militarised
police forces trained in the use of obscenely excessive force, obscenely high sentences imposed
by one of the army of judges perversely satisfied by every extreme species of punitive justice
at their fingertips, along with prosecutors who consider the multi-year deprivation of freedom
in a brutalising prison system as a badge of professional honour, all the while dreaming up criminal
indictments that are so overzealous they look for felonies to charge the felonies with. Many warned
that the step-by-step construction of this multi-layered, barely controllable system (to complement
the steady erosion of civil liberties and constitutional rights) betrayed a potentially disastrous
lack of foresight. It would not always rest in the command of people unwilling to test its full
extent, and once you have created such possibilities in law, in storage rooms of equipment, in
training drills and operating manuals, it is only a matter of time before they will be invoked
in reality (and seldom in the exact ways they were originally intended or designed).
tempestteacup -> ForgetThePolitics 1d ago
So while Trump and his administration may in many ways resemble the familiar class warriors
of Republican presidencies past, albeit with added evangelical vim, viciousness and vapidity courtesy
of Mike Pence, let's not forget that his frequently displayed authoritarianism will have ample
opportunity to be both stress-tested and to revenge itself on a plethora of opponents. Add
in the fact that the Republicans have achieved an unexpected, clean sweep of Congress, as well
as holding an unprecedented number of governorships. They can act from a position of unparalleled
strength, and as a strength that came unexpectedly one should not be surprised if they start wielding
it recklessly. They can do so, also, after 8 years of stultification and political paralysis,
placed under restraints in order the more effectively to effectively perform their new definition
of Congressional work: obstruct everything the President attempts to do. They only receive the
occasional fun day-out to the Benghazi hearings or when they could play find the gavel during
the 2013 sequester.
So I would expect a lot of pent-up resentment, plenty of lunatic ideas and plenty of hubris
that sees no problem in airing them as if they were the wisdom of Solomon. Their opposition is
disastrously enfeebled after years of poor candidates being selected on the basis of their ability
to toe the corporate line rather than define and then achieve political goals. There is a chance
here, in other words and before demographic changes make future Republican presidential victories
more remote, to pursue their most cherished, most ideological, most shameless, lunatic, idiotic,
corrupt, destructive and irresponsible policies. Trump's bulbous slab of torso-meat, congenitally
bound to seek and fill every available limelight, can provide cover as they rip up every regulation
they see lying around or pretend to have read, slash taxes for themselves, their families, friends,
and all those fine citizens who fund their political cesspool, all the while having fun with whichever
civil liberty or egalitarian policy that catches their eye or makes them feel confused, perhaps
inadequate, with their nasty, un-American regard for systemic injustice and the imperative to
address historic wrongs.
Fresh from one of their favoured think-tanks, where charmed minds devote themselves to the
rigorous and sober analysis, the scholarly investigation of such pressing national issues as:
the best way to enjoy your money is to keep it, why the poor have only themselves to blame, and
freedom is whatever we say it is, vulpine Republican advisers can sink their teeth into racial
equality, voting rights, affirmative action, abortion rights, and whatever else Mike Pence and
friends have decided does not represent their crushingly reactionary, mind-numbingly mediocre
vision of an America without charm and sunk grotesquely in self-love, with anti-intellectualism
as a core principle and, in the end, frightened of anything that diverges from a template of respectability
designed by someone who seemingly loathes the entire human race.
None of this, however, justifies the orgy of visions competing to describe the most apocalyptic
America, commentators outdoing each other in op-ed after op-ed as they spin stories from the most
terrifying speculations or possible scenarios. I'm simply pointing out that it is not that difficult
to foresee the direction Trump's presidency will travel - or to point out where and how things
could become very nasty. The point, really, is to move beyond the office of the President,
which is always absurdly fetishised in American politics to the detriment of scrutiny that should
be directed elsewhere - at his team, his cabinet, his appointments, and his place in the web of
Congressional Republicans, lobbyists and corporate money – the nexus of interests that really
dictates policies and determined which political battles get fought aggressively, which cast aside.
The truth so far is about as desolate as one would expect – made that little bit worse by the
continued (maybe permanent?) state of delusion and the feeble platitudes dribbling out of the
by-now-almost-unsalvageable Congressional Democratic Wurlitzer of Wisdom, scarcely enough to drowned
the noise of meretricious minds whirring as they look for solutions to the only question that
really matters: how to continue mainlining the corporate donor money-dope while at the same time
presenting an appearance of interest in the left-wing changes championed by progressive Democrats
like Bernie sufficient to placate the latter along with their irritatingly rambunctious supporters.
tempestteacup -> ForgetThePolitics 1d ago
Ok, crazy - this is like a nightmare of my own making. So long! But must finished now I've
started........
Blimey, this got long - apologies. Let me offer the reader's digest, abbreviated version: Trump
and his court have thus far confirmed what was fairly obvious - that he and his new Congressional
play-mates are already pawing the ground in anticipation of the approaching adventure into their
favourite land: the magical kingdom of inexhaustible tax cuts, where every regulation can be tossed
on the fire, where protections come to you to be gutted and the public finances positively cry
out to be finagled in a giant cabaret that they can dedicate, as is their wont, to their feared
yet beloved corporate masters. They can demonstrate to their heart's content their enduring fealty
to the donor-class who bestride the nation like benevolent princes, they can lavish on them a
horn of plenty overflowing with gifts, endowments, contracts, pourboires, fortunes bilked from
the taxpayer and juggled into the pockets of these stalwart champions of American values, coy
little loopholes with diagrams for how to exploit them, and above all – first, last and always
– every asset they can think of stripping from public ownership they have been taught to believe
is merely a euphemism for Marxist-Leninism.
In the meantime, public resistance or acts of dissent, the faintest hint of mass organising
will be met with state forces of repression restrained now by little more than the frayed strands
of a mostly cut-through piece of rope. Divisions revealed, exploited and entrenched during the
election will, without serious and sustained will to extend solidarity beyond immediate interest-groups
and to learn from the experiences of others, become the permanent operative language of the entire
administration of American government. People will not see a new dawn, but the delirious rush
to expand those chaotic, inhumane, amoral, and utterly unaccountable market forces that have already
seeped far too deep into the already grotty political system. Trump is only a piece of this large
and ugly tapestry – a figurehead for an army of cultural and social vandals serving alongside
economic thieves and assassins. These are, moreover, the experts in how to instrumentalise economic
inequality to serve the very politicians responsible for fostering the inequality in the first
place and those most wedded to beliefs capable only of making matters worse for all but themselves
and their donor-owners.
But let's not be lulled by the familiarity of parts of this story. Familiar from Reagan
and Bush Jnr, as well as Clinton and Obama (albeit with a more fulgent presentation and the skilled
performance of sympathy to sugar the pill). Familiar from every interview with almost every
Republican and certainly the freshly minted, post Tea Party brand of prosperity Christian bullies
worthy of far greater anger and loathing than they often receive thanks to a perhaps deliberate
act involving a quasi-folksy clownishness – however many references, though, to the Republican
clown car cannot alter the fact that even the thickest among them is capable of being herded with
the others when it comes to voting for vicious legislation, insane tax cuts and budgets in which
each new one is more limited, more nihilistic than the one before in every respect but the military
and the ever-growing number of enormous flags that will soon follow Republican politicians around
the country to provide an immediately appropriate backdrop in case they feel the sudden need to
share their wisdom with the world or the nearest news anchor.
But while some parts are familiar, enough should be new or unknown to keep all of us looking
forward anxiously, preparing carefully, and planning intelligently for the potentially vicious
challenges ahead.
Danny Sheahan 3d ago
[Neo]Liberalism is an ideology, it has many variations and even definitions for people.
Arrogance, superiority, disdain, refusal to engage etc. A moral certainty more in line with doctrinal
religion.
These are big problems on the left/liberal platform.
Certainly not all but enough to damage it is a position.
Many, like me, who vote left are hoping that the penny will drop. It has to at some stage,
why not now?
It may not though, it would not surprise me.
tehanomander -> Danny Sheahan 3d ago
What Danny said
Supported Labour all my life probably will with reservations still ....but the disconnect is
palpable now (think Owen Smith to understand my meaning)
I voted Leave though .....so obviously now in here I'm a Trump supporter and racist xenophobe
(which always amuses my Jamaican wife when I tell her)
Keith Macdonald 3d ago \
The first question to ask is why these right wing commentators are attacking liberalism
. Is it because they want a better society in which everyone gets a chance of a decent life ?
Do they actually care about the people they claim to speak for - they people right at the bottom
of the social scale ?
Do they really want their own children to compete on equal terms with the rest of the population
for the inevitably limited number of top jobs ?
The answer , of course, is no. They see attacking liberalism as a means of defending their
own privileges which they believe liberalism and the gradual progress of recent years towards
a more equal society have undermined.
Since they are basically conning the underprivileged and cannot deliver what they promise
the right will find itself driven to even more extremes of bigotry and deceit to maintain its
position. The prospect is terrifying.
The next question is how liberals and progressives deal with this powerful onslaught. So far
we have done badly. For example Hillary Clinton clearly did not have a clue how Trump used the
constructed "reality" of shows like The Apprentice to mount a presidential campaign based on fiction
(although of course the underlying discontents are real). There is a massive amount of work to
do here.
Yes - there has been a failure to make globalisation work. I think Thomas Piketty began to
give some answers to this at
"... he changed American politics forever by demonstrating that style was more important than substance. In fact, he showed that style was everything and substance utterly unimportant. ..."
"... Conservatives used "bracket creep" to convince the middle class that reducing marginal rates on the top tax brackets along with their own would be a good idea, then with the assistance of Democrats replaced the revenue with a huge increase in FICA so that the Social Security Trust Fund could finance the deficit in the rest of the budget. The result was a huge boon to the richest, little difference for the middle class, and a far greater burden for the working poor. ..."
"... Any conversation about who the fantasy-projection "Reagan" was, misses an important reality: He was a hologram, fabricated by a kaleidoscope of various sorts of so-called "conservative" handlers and puppeteers. It was those "puppeteers" who ranged from heartlessly, stunningly "conservative" (destroya-tive), all the way further right to the kind of militaristic, macho, crackpots who have finally emerged from under their rocks at this year's "candidates." ..."
Do not contradict the memories of all the old teabaggers who desperately need the myth of Saint
Ronnie to justify their Greed is Good declining mentality and years.
When Reagan cut-and-ran on Lebanon he showed rare discretion. A lot of the puffery stuff was
B-Movie grade, but there was a lot of cross-the-aisle ventures, too.
He was a politician. The current GOP is just a bunch of white Fundie bullies, actually and
metaphorically (e.g., Carson).
Zepp -> thedono 19 Sep 2015 11:37
Well, compared to Cruz, or Santorum, or Huckabee, he's a moderate. Of course, compared to the
right people, you can describe Mussolini or Khruschev as moderates...
mastermisanthrope 19 Sep 2015 11:37
Lifelong shill
LostintheUS -> William J Rood 19 Sep 2015 11:36
Reagan underwent a political conversion when Nancy broke up his marriage with Jane Wyman and
married him.
The cold war ended while Reagan was president, but he did not win the cold war. His rhetoric
and strategy was wishful thinking - there's no way he could have had the definitive intelligence
about the entire military-political-economic that would have justified the confidence he projected.
He merely lucked out, significantly damaging the US economy by trying (and luckily succeeding)
to out-militarize the soviets.
pretzelattack -> kattw 19 Sep 2015 11:31
both clinton and obama have showed a willingness to "reform social security". try naked capitalism,
there are probably a number of articles in the archives.
LostintheUS -> piethein 19 Sep 2015 11:29
And that the emergency room federally funded program that saved his life was soon after defunded...by
him.
LostintheUS -> pretzelattack 19 Sep 2015 11:28
Many of us saw through him...I noted the senility during his speeches during his first campaign...as
did many people I knew.
Dementia masquerading as politics.
But you can't say anything negative about Saint Ronald!
Peter Davis -> Peter Davis 19 Sep 2015 11:22
I believe Reagan also is responsible for creating the Hollywood notion in American politics
and political thinking that life works just like a movie--with good guys and bad guys. And all
one needs is a gun and you can save the world. That sort of delusional thinking has been at the
heart of the modern GOP ever since.
loljahlol -> ID3732233 19 Sep 2015 11:21
Reagan did not end the Cold War. Brezhnev rule solidified the Soviet death. Their corrupt,
inefficient form of capitalism could not compete with the globalization of Western capitalism.
John78745 19 Sep 2015 11:21
There's not much nuance to Reagan. He was a coward, a bully and a loser. He got hundreds of
U.S. Marines killed then he ran from the terrorists in Beirut and on the Archille Lauro personally
creating the seeds of the morass of terrorists we now live with. He fostered the republican traditions
of sending U.S. jobs overseas at the expense of U.S. taxpayers and of invading helpless, hapless
nations, a tradition so adeptly followed by Bush I & II. He also promised that there would never
be a need for another amnesty.
I guess it's true that he talked mean to the Russians, broke unions, and helped make the military
industrial complex into the insatiable war machine that it is today. Remember murderous Iran-Contra
(a real) scandal where he and his minions worked in secret without congressional authorization
to overthrow a democratically elected government while conspiring to supply arms to the dastardly
Iranians!
We could also say that he bravely fought to save the U.S. from socialized medicine and to expunge
the tradition of free tuition for California students. Whatta hero!
thankgodimanatheist 19 Sep 2015 11:19
Reagan, the acting President, was the worst President since WWII until the Cheney/Bush debacle.
Most of the problems we face today can be directly traced to his voodoo economics, huge deficit
spending, deregulation, and in retrospect disastrous foreign policies.
LostintheUS 19 Sep 2015 11:17
"these days everyone seems to love Ronald."
Absolutely, not true. The farther along we go in time, the more Americans realize the damage
this man and his backers did to America and the world. The inversion of the tax tables, the undoing
of union laws, the polarization of Americans against each other so the plutocrats had no real
opposition and on and on. His camp stole the election in 1980 through making a back door deal
with the Iranian government to hold onto the American hostages until the election when Jimmy Carter
had negotiated an end to the hostage crisis, which was the undoing of Jimmy Carter's administration.
"Behind Carter's back, the Reagan campaign worked out a deal with the leader of Iran's radical
faction - Supreme Leader Ayatollah Khomeini - to keep the hostages in captivity until after the
1980 Presidential election." This is, unquestionably, treason. http://www.truth-out.org/opinion/item/20287-without-reagans-treason-iran-would-not-be-a-problem
No, Reagan marks the downward turn for our country and has resulted in the economic and social
mess we still have not clawed our way back out of. No, Reagan is no hero, he is an American nemesis
and a traitor. Reagan raised taxes three times while slashing the tax rate of the super rich...starting
the downward spiral of the middle-class and the funneling of money toward the 1%. Thus his reputation
as a "tax cutter", yeah, if you were a multi-millionaire.
Never thought of Reagan as the first Shrub but it fits. I wonder if future pundits will sing
the Dub's praises as well. I think I'm gonna be sick for a bit.
kattw -> namora 19 Sep 2015 11:10
Pretzel is maybe talking about the 'strengthen SS' bandwagon? Perhaps? Not entirely sure myself,
but yeah - one of the major democrat platform planks is that SS should NOT be privatized, and
that if people want to invest in stocks, they can do that on their own. The whole point of SS
is to be a mattress full of cash that is NOT vulnerable to the vagaries of the market, and will
always have some cash in it to be used as needed.
SS would be totally secure, too, if congress would stop robbing it for other projects, or pay
back all they've borrowed. As it is, I wish *I* was as broke as republicans claim SS is - I wouldn't
mind having a few billion in the bank.
William J Rood 19 Sep 2015 11:08
Reagan was former president of the Screen Actors' Guild. Obviously, he thought unions for highly
educated workers were great. Meatpackers? Not so much.
RealSoothsayer 19 Sep 2015 11:04
This article does not mention the fact that in his last couple of years as President at least,
his mental state had seriously deteriorated. He could not remember his own policies, names, etc.
CBS' Leslie Stahl should be prosecuted for not being honest with her everyone when she found out.
Peter Davis 19 Sep 2015 11:04
Reagan was a failed president who nonetheless managed to convince people that he was great.
He was a professional actor, after all. And he acted his way into the White House. Most importantly,
he changed American politics forever by demonstrating that style was more important than substance.
In fact, he showed that style was everything and substance utterly unimportant. He was the
figurehead while his handlers did the dirty work of Iran-Contra, ballooning deficits, and tanking
unemployment.
nishville 19 Sep 2015 11:03
For me, he was a pioneer. He was the first sock-puppet president, starting a noble tradition
that reached its climax with W.
mbidding -> hackerkat 19 Sep 2015 11:03
In addition to:
Treasonous traitor when, as a presidential candidate, he negotiated with Khomeini to hold the
hostages till after the election.
Subverter of the Constitution via the Iran-Contra scandal.
Destroyer of social cohesion by turning JFK's famous admonishment of "ask not what your country
can do for you, ask what you can do for your country" on its head with his meme that all evil
emanates from the government and taxation represents stealing rather than a social obligation
for any civilized society that wishes to continue to develop in a sound fashion that lifts all
boats.
Incarcerator in Chief through his tough on crime and war on drugs policies, not to mention
defunding mental health care.
Pisser in Chief through his successful efforts to imbed trickle down economics as the economic
thought du jour which even its original architects, notably Stockman, now confirm is a failed
theory that we nonetheless cling to to this day.
Ignoramus in Chief by gutting real federal financial aid for higher education leading to the
obscene amounts of student debt our college students now incur.
Terrorist creator extraordinaire not only with the creation of the Latin American death squads
you note, but the creation, support, trading, and funding of the mujahedin and Bin Laden himself,
now known as the Taliban, Al Qa'ida, and ISIS, only the most notable among others.
namora -> trholland1 19 Sep 2015 10:59
That is not taking into account his greatest role for which he was ignored for a much deserved
Oscar, Golden Globe or any of the other awards passed out by the entertainment industry, President
of The United States of America. He absolutely nailed that one.
William J Rood 19 Sep 2015 10:58
Conservatives used "bracket creep" to convince the middle class that reducing marginal
rates on the top tax brackets along with their own would be a good idea, then with the assistance
of Democrats replaced the revenue with a huge increase in FICA so that the Social Security Trust
Fund could finance the deficit in the rest of the budget. The result was a huge boon to the richest,
little difference for the middle class, and a far greater burden for the working poor.
Tax brackets could have been indexed to inflation, but that wouldn't have been so great for
Reagans real supporters.
Doueman 19 Sep 2015 10:55
What sad comments by these armchair experts.
They don't gel with my experiences in North America during this period at all. When Reagan
ran for the presidency he was generally ridiculed by much of the press in the US and just about
all of the press in the UK for being a right wing fanatic, a lightweight, too old, uninformed
and even worse an actor. I found this rather curious and watched him specifically on TV in unscripted
scenarios to form my own impression as to how such a person, with supposedly limited abilities,
could possibly run for President of the US. I get a bit suspicious when organisations and individuals
protest and ridicule too much.
My reaction was that he handled himself well and gradually concluded that the mainly Eastern
liberal press in the US couldn't really stomach a California actor since they themselves were
meant to know everything. He actually was pretty well read ( visitors were later astonished to
read his multiple annotations in heavy weight books in his library). He was a clever and astute
union negotiator dealing with some of the toughest Hollywood moguls who would eat most negotiators
for dinner. He had become Governor of California and had done a fine job. I thought it was unlikely
he was the simpleton many portrayed. He couldn't be easily categorised as he embraced many good
aspects of the Democrats and the Republicans. Life wasn't so polarised then.
The US had left leaning Republicans and right wing Democrats. A political party as Churchill
noted was simply a charger to ride into action.
In my view, his presidential record was pretty remarkable. A charming, fair minded charismatic
man without the advantage of a wealthy background or influential family. The world was lucky to
have him.
raffine -> particle 19 Sep 2015 10:50
Reagan's second term was a disaster. But as someone below mentioned, conservative pundits and
their financers engaged in a campaign to make Reagan into a right-wing FDR. The most effective,
albeit bogus, claim on Reagan's behalf was that he had ended the Cold War.
jpsartreny 19 Sep 2015 14:22
Reagan is the shadow governments greatest triumph. After the adolescent Kennedy, egomaniacs
Johnson and Nixon , they needed front guys who followed orders instead .
The experiment with the peanut farmer from Georgia provided disastrous to Zebrew Brzezinski
and the liberals. The conservatives had better luck with a B- movie actor with an great talent
to read of the teleprompter.
RealSoothsayer -> semper12 19 Sep 2015 14:19
How? By talking? Gobachev brought down the USSR with his 'Glasnost' and 'Perestroika' policies.
His vision was what communist China later on achieved: mixed economy that flies a red flag. Reagan
was just an observer, absolutely nothing more. Tito of Yugoslavia was even more instrumental.
Marc Herlands 19 Sep 2015 14:17
IMHO Reagan was the second most successful president, behind FDR and ahead of LBJ. Not that
I liked anything about him, but he moved this country to the right and set the play book. He lowered
taxes on the wealthy, the corporations, capital gains, and estate taxes. He reduced growth in
programs for the poor, and made it impossible to increase their funding after his presidency because
of he left huge federal deficits caused by lowering taxes and increasing outlays on the military.
This Republican playbook still is their way of making sure that the Democrats can't give the poor
more money after they lose power. Also, he enlarged the program for deregulating industries, doing
away with antitrust laws, hindering labor laws, encouraged anti-union behavior, and did nothing
for AIDS research. He was a scoundrel who did a deal with Iran to prevent Carter from being re-elected.
He directly disobeyed Congressional laws not to intervene in Nicaragua. He set the tone for US
interventions after him.
bloggod 19 Sep 2015 14:17
Obama, Clinton, and the Bushes all hope to be forgiven for their unpardonable crimes.
Popularity is created. It is not populism, or informed consent of the pubic as approval for
more of the same collusion.
It is a One Party hoe down.
bloggod -> SigmetSue 19 Sep 2015 14:12
"they"
the indicted Sec of Defense Weinberger; the indicted head of the CIA Casey who "died" as he
was due to testify: Mcfarlane, Abrams, Clair George, Oilyver North, Richard Secord, Albert Hakim
Reagan had no genius, he had Bush-CIA and the Jerry Falwell, Billy Graham, and the "immoral
majority" of anti-abortion war profiteers.
Marios Antoniou Lattimore 19 Sep 2015 13:52
I agree with everything you mentioned, and I intensely dislike Reagan YET the point of the
article wasn't that Reagan was good, it rather points to the fact that Republicans have shifted
so far to the right that Reagan would appear moderate compared to the current batch.
Rainer Jansohn pretzelattack 19 Sep 2015 13:52
Interesting had been his speeches during the Cold War.Scientists have subsumed it under "Social
Religion",a special form of political theology.Simple dialectical:UDSSR the incarnation of the
evil/hell on the other side USA :the country of God himself.A tradition in USA working until now.There
is no separation between government and church as in good old centuries sincetwo centuries resulting
from enlightening per Philosophie/Voltaire/Kant/Hume/Descartes and so on.Look at Obamas speeches/God
is always mixed in!
talenttruth 19 Sep 2015 13:49
Any conversation about who the fantasy-projection "Reagan" was, misses an important reality:
He was a hologram, fabricated by a kaleidoscope of various sorts of so-called "conservative" handlers
and puppeteers. It was those "puppeteers" who ranged from heartlessly, stunningly "conservative"
(destroya-tive), all the way further right to the kind of militaristic, macho, crackpots who have
finally emerged from under their rocks at this year's "candidates."
The fact that Reagan was going ga-ga – definitely in his second term, and likely for part of
the first – was entirely convenient for his Non-Human-Based-Crackpot-Right-Holographers, since
he had was not actually "driven" to vacuousness by a tragic mental condition (dementia) – THAT
change was merely a "short putt" – from his entire previous life.
Regarding his Great Achievement, the collapse of the Soviet Union? After decades of monstrous
over-spending by the USA's Military-Industrial-Complex, the bogus and equally insane USSR finally
bankrupted itself trying to "compete" and fell. Reagan (and his puppeteer handlers), always excellent
at Taking Credit for anything, showed up with exquisite cynical timing, and indeed Took Credit.
Lest anyone forget, Reagan got elected in 1980, via a totally illegal and stunningly immoral
"side deal" with the Iranians, in which they agreed to not release our hostages to make Carter
look like a feeble old man. Then we got Reagan who WAS a "feeble old man" (ESPECIALLY intellectually
and morally). Reagan "won," the hostages were "released" and he of course took credit for that
too.
So all these so-called "candidates" ARE the heirs of all the very worst of Ronald Reagan: they
are all simpleminded, they are totally beholden to Hidden Sociopathic Billionaires hiding behind
various curtains, and they all have NO CLUE what the word "ethics" means. Vacuous, anti-intellectual,
scheming, appealing only to morons, and puppets all. Perfect "Reaganites."
Bill Ehrhorn -> semper12 19 Sep 2015 13:32
It seems that the teabaggers and their ilk give only Reagan credit.
SigmetSue 19 Sep 2015 13:16
They called him the Teflon President because nothing ever stuck. It still doesn't. That was
his genius -- and I'm no fan.
Lattimore 19 Sep 2015 13:13
The article seems to present Reagan as an theatrical figure. I disagree. Reagan, President
of the United States, was a criminal; as such, he was among the most corrupt and anti democratic
person to hold the office POTUS. The fact that he tripled the national debt, raised taxes and
skewed the tax schedules to benifit the wealthy, are comparitively minor.
,,,
Reagan's crimes and anti democratic acts:
1. POTUS: CIA smuggling cocaine into the U.S., passing the drug to wholesalers, who then processed
the drug and distributed crack to Black communities. At the same time Reagan's "War on Crime"
insured that the Black youth who bought "Central Intelligenc Agencie's" cocaine were criminalized
and handed lengthy prison sentences.
2. POTUS supported SOUTH AMERICAN terrorist, and the genocidal atrocities commited by terrorist
in Chili, Guatamala, El Mazote, etc.
3. POTUS supported SOUTH AFRICAN apartheid, and the imprisonment of Nelson Mandela as well. Vetoing
a bill that would express condemnation of South Africa.
4. POTUS sold Arms to Iran.
5. POTUS used taxpayer dollars to influence election outcomes.
6. POTUS rigged government grants to enrich his cronies.
7. POTUS thew mental patients onto the streets.
8. POTUS supported McCarthyism, witch hunts, etc.
9. POTUS created and supported Islamic terrorist--fore runners of al Queada, ISIS, etc.
Niko2 LostintheUS 19 Sep 2015 13:12
I don't have much love for Nancy, but she did not break up this marriage, to be fair. And she
actually got rid off the extreme right wingers in Reagan's administration, like Haig and Regan,
whom she called "extra chromosome republicans". Surely she was a vain and greedy flotus with no
empathy whatsoever for people not in her Bel Air circles (I can easily imagine her, "Do I really
have to go and see these Aids-Babies, I'd rather shop at Rodeo Drive, lose the scheduler") but
she realized at an early stage that hubbies shtick-it-to-the-commies policies would do him no
favour. Maybe she's the unsung heroine of his presidency.
tommydog -> MtnClimber 19 Sep 2015 13:04
The principle subsidies to big oil are probably the strategic oil reserve and subsidies to
low income people for winter heating oil. You can choose which of those you'd like to cut. After
that you're arguing about whether exploration costs should be expensed in the year incurred or
capitalized and amortized over time.
WilliamK 19 Sep 2015 13:03
He was one of J Edgar Hoover's red baiting fascist admiring boys along with Richard Nixon and
Walt Disney used to destroy the labor unions, control the propaganda machine of Hollywood and
used to knuckle under the television networks and undermine as much as possible the New Deal polices
of Franklin Roosevelt. An actor groomed by the General Electric Corporation and their fellow travelers.
"Living better through electricity" was his mantra and he played the role of President to push
forward their right wing agenda. Now we are in new stage in our "political development" in America.
The era of the "reality television star" with Hollywood in bed with the military industrial complex,
selling guns, violence and sex to the fool hardy and their children and prime time television
ads push pharmaceutical drugs, children hear warnings of four hour erections, pop-stars flash
their tits and asses and a billionaire takes center stage as the media cashes in and goes along
for the ride. Yeah Ronnie was a second tier film star and with his little starlet Nancy by his
side become one of America's greatest salesman.
Backbutton 19 Sep 2015 12:57
LOL! Reagan was a walking script renderer, with lines written by others, and a phony because
he was just acting the part of POTUS. His speeches were all crafted, and he had good writers.
He was no Abraham Lincoln.
And now these morons running for office all want to rub off his "great communicator" fix.
Good help America!
Milwaukee Broad 19 Sep 2015 12:49
Ronald Reagan was an actor whom the depressingly overwhelming majority of American voters thought
was a messiah. They so believed in him that they re-elected him to a second term. Nothing positive
whatsoever became of his administration, yet he is still worshiped by millions of lost souls (conservatives).
Have a nice day.
Michael Williams 19 Sep 2015 12:48
The US was the world's leading creditor when Reagan took office. The US was the world's leading
debtor by the time Bush 1 was tossed out of office.
This is what Republicans cannot seem to remember.
All of the other scandals pale in comparison, even as we deal with the blowback from most of
these original, idiotic policies.
Reagan was an actor, mouthing words he barely understood, especially as his dementia progressed.
This is the exact reason the history is so poorly taught in the US.
People might make connections....
Jessica Roth 19 Sep 2015 12:46
Oh, he had holes in his brain long before the dementia. "Facts are stupid things", trees cause
pollution, and so on.
A pathetic turncoat who sold out his original party (the one that kept his dad in work throughout
the Great Depression via a series of WPA jobs) because Nancy allegedly "gave the best head in
Hollywood" and who believed that only 144,000 people were going to Heaven, presumably accounting
for his uncaring treatment of the less-well-off.
His administration was full of corruption, from Richard Allen's $1000 in an envelope (and three
wristwatches) that he claimed was an inappropriate gift for Mrs. Reagan he had "intercepted" and
then "forgotten" to report to William Casey trading over $3,000,000 worth of stocks while CIA
director. (Knowing about changes in the oil market ahead of time sure came in handy.) You had
an attorney general who took a $50,000 "severance payment" (never done before) from the board
of a corporation he resigned from to avoid conflict of interest charges and this was William French
Smith; his successor, Edwin Meese, was the one with real scandals (about the sale of his home).
Hell, Reagan himself put his ranch hand (Dennis LeBlanc) on the federal payroll as an "advisor"
to the Commerce Department. I didn't know the Commerce Dept needed "advice" on clearing wood from
St. Ronnie's ranch, but LeBlanc got a $58,500 salary out of the deal. (Roughly £98,000 at today's
prices.) Nice work if you can get it.
Meanwhile, RR "talked tough" at the Soviets (resulting in the world nearly ending in 1983 due
to a false alarm about a US nuclear attack) while propping up any rightwing dictator they could
find, from the South African racists to Ferdinand and Imelda Marcos (after they had Aquino assassinated
at the airport) to Roberto "Death Squad" D'Aubuisson in El Salvador (the man who masterminded
the assassination of Archbishop Romero while he was performing Mass).
Oh, and while Carter did a nice job of shooting himself in the foot, Reagan benefited in the
election not only from his treasonous dealings with the Iranian hostage-takers (shades of Nixon
making a deal with North Viet Nam to stall the peace talks until after the 1968 elections, promising
them better terms) but through more pedestrian means such as his campaign's stealing of Carter's
briefing book for the campaign's only debate, Reagan being coached for the debate by a supposedly
neutral journalist (George Will, of ABC and The Washington Post), who then went on television
afterwards (in the days when there were only three commercial channels) and "analysed" how successful
Reagan had been in executing his "game plan" and seeming "Presidential" without either Will or
ABC bothering to mention that Will had coached Reagan and designed the "game plan" in question.
The "liberal bias" in the media, no doubt.
Always a joke, only looking slightly better by the dross that has followed him. (Including
Bill "Third Way" Clinton and his over-£50,000,000 in post-Presidential "speaking fees" graft,
and Barack Obama, drone-murderer of children in over a dozen countries and serial-summary-executioner
of U.S. citizens. When Gordon-effing-Brown is the best that's held office on either side of the
Atlantic since 1979, you can see how this planet is in the state it's in.)
pretzelattack DukeofMelbourne 19 Sep 2015 12:45
his stand on russia was inconsistent, and he didn't cause it to collapse. his economic programs
were a failure. his foreign policy generally a disaster. he set the blueprint for the current
mess.
pretzelattack semper12 19 Sep 2015 12:38
a total crock. reagan let murdering thugs run rampant as long as they paid lip service to democracy,
the world over from africa to central america. the ussr watched this coward put 240 marines to
die in lebanon, and then cut and run, exactly the pattern he was so ready to condemn as treason
in others, and was so ready to portray as showing weakness, and you think the ussr was terrified
of him. he was a hollywood actor playing a role, and you bought it.
Tycho1961 19 Sep 2015 12:13
No President exists in a political vacuum. While he was in office, Reagan had a large Democrat
majority in the House of Representatives and a small Republican majority in the Senate. The Supreme
Court was firmly liberal. Whatever his political agenda Reagan knew he had to constructively engage
with people of both parties that were in opposition to him. If he didn't he would suffer the same
fate as Carter, marginalized by even his own party. His greatest strength was as a negotiator.
Reagan's greatest failures were when he tried to be clever and he and his advisors were found
to be rather ham handed about it.
RichardNYC 19 Sep 2015 11:57
The principal legacy of Ronald Reagan is the still prevalent view that corporate interests
supersede individual interests.
Harry Haff 19 Sep 2015 11:45
Reagan did many horrible things while in office, committed felonies and supported murderous
regimes in Central America that murdered tens of thousands of people with the blessing of the
US chief executive. he sold arms to Iran and despoiled the natural environment whenever possible.
But given those horrendous accomplishments, he could not now get a seat at the table with the
current GOP. He would be considered a RINO, that most stupid and inaccurate term, at best, and
a closet liberal somewhere down the line. The current GOP is more to the right than the politicians
in the South after the Civil War.
"... you will suffer metabolic injury so great that you will perish, as the cancer pumps out various toxins, like 'Free Market Fundamentalism', 'Western moral values' or 'Exceptionalism'. ..."
"... That is that the Rightwing Authoritarian Personality, or whatever other euphemism you care to use, suffer some or all of the well-known features of psychopathy ie the absence of human empathy and compassion, unbridled greed and narcissistic egomania, unscrupulousness and a preference for violence. ..."
"... From Obama down through Harper, Cameron, Abbott, Satanyahoo et al to the very dregs of politics and MSM propaganda, it is a vast field of human perfidy, differing only in the degree of their malevolence. ..."
Mulga Mumblebrain on September 17, 2015 · at 11:17 pm UTC
Erebus, that would be like trying to cage a cancer. If you do not then excise the cancer,
you will suffer metabolic injury so great that you will perish, as the cancer pumps out various
toxins, like 'Free Market Fundamentalism', 'Western moral values' or 'Exceptionalism'.
Cut the tumour out, plus the chemotherapy of somehow rescuing the non-malignant members of
the cancer societies from the inhuman habits inculcated in them from birth (ie gross materialism,
unbridled greed, cultural and racial superiority, addiction to crass 'tittietainment' etc) and
even a few escaping cancer cells can cause metastasis elsewhere.
What is really needed is a miracle, a 'spontaneous remission' where the individual cells in
the Western cancer suddenly transform themselves into non-malignant, human, organisms again. There
might be some good signs, such as the rise of Corbyn in the UK, the eclipse of Harper, the character
of Pope Francis, but there is a Hell of a way to go, and not much hope of success.
Mulga Mumblebrain on September 17, 2015 · at 11:07 pm UTC
David, I agree. The central problem facing humanity is that the planet has become dominated
by evil psychopaths. There is a mountain of literature that explains what one can see with one's
own eyes.
That is that the Rightwing Authoritarian Personality, or whatever other euphemism you care
to use, suffer some or all of the well-known features of psychopathy ie the absence of human empathy
and compassion, unbridled greed and narcissistic egomania, unscrupulousness and a preference for
violence.
The situation in the world today, geo-political, economic and ecological is a battle between
good and evil. Many people refuse to face that reality, because it is frightening, and presages
a dreadful global death struggle or the collapse of human civilization and probable species extinction.
But denying the hideous reality won't make it go away. What we have seen over recent decades in
Iraq, Libya, Syria, Congo etc is evil in action, and we had better acknowledge that reality.
From Obama down through Harper, Cameron, Abbott, Satanyahoo et al to the very dregs of
politics and MSM propaganda, it is a vast field of human perfidy, differing only in the degree
of their malevolence.
"... Nobody expected communism to fall apart in 1989, not a single person had any inkling what was coming, from within or without. For quite a long time previously it was wondered how it could keep on going, and it dutifully did until inertia had it's say. ..."
"... In many ways capitalism is the flipside of communism, and the latter kept us honest, but once we lost them as an arch-rival, what did we need honesty for anymore? ..."
"... The current diaspora ascending on Europe reminds me of when communism fell apart, the difference being that the bloc party then was thought of as a good thing. ..."
"... We've effectively taken over communism's role as being the dishonest player in terms of a rivalry, but there doesn't appear to be an honest rival anywhere, we're all the same now. ..."
Nobody expected communism to fall apart in 1989, not a single person had any inkling what
was coming, from within or without. For quite a long time previously it was wondered how it could
keep on going, and it dutifully did until inertia had it's say.
In many ways capitalism is the flipside of communism, and the latter kept us honest, but
once we lost them as an arch-rival, what did we need honesty for anymore?
lawyerliz wrote on Sat, 8/29/2015 - 5:45 am (in reply to...)
Yes we need an honorable enemy/rival. I don't think it will be China, but perhaps India could
make an honorable frenemy. I like Indians and we have Britain in common.
Jackdawracy wrote on Sat, 8/29/2015 - 5:47 am
The current diaspora ascending on Europe reminds me of when communism fell apart, the difference
being that the bloc party then was thought of as a good thing.
Jackdawracy wrote on Sat, 8/29/2015 - 5:49 am (in reply to...)
We've effectively taken over communism's role as being the dishonest player in terms of
a rivalry, but there doesn't appear to be an honest rival anywhere, we're all the same now.
Jackdawracy wrote on Sat, 8/29/2015 - 5:57 am (in reply to...)
Without a rivalry, the space race never gets off the ground. Liftoff would be a word with no
meaning whatsoever.
Folks in Florida right now would have an inkling of a hurricane coming from the Caribbean,
but have no idea the direction, speed, etc.
dilbert dogbert wrote on Sat, 8/29/2015 - 6:03 am (in reply to...)
Jackdawracy wrote:
In many ways capitalism is the flipside of communism, and the latter kept us honest,
but once we lost them as an arch-rival, what did we need honesty for anymore?
Been reading others making the same point. Unrestrained Capitalism, just like unrestrained
compound interest spirals out of control.
I for one welcome our new Unrestrained Capitalist Overlords!!! PS: Rents are still too damned
low!!! Impeach Now!!!
"... The buck is constantly and systematically passed to those least able to carry it – large-scale problems (e.g. national debts) are sent down the pipeline to smaller units; devolution without the resources to implement it, combined with competition for resources, choices without resources, responsibility without power, power without structure. ..."
"... "See-Judge-Act" ..."
"... resistance have happened over the last 5 years or so – views about how effective they have been vary. But as Christians, we are called to show solidarity with those who resist a dehumanising and very powerful status quo. ..."
"... And, above all, we should recognise that a very small space in which to act is not no space at all – challenging TINA – that neoliberalism is the only view on the block is itself action of a kind – sometimes opening up a space opens up new possibilities. What we shouldn‟t so, at least, is to close them down! ..."
Mar 07, 2015 | Diocese of Liverpool
Introduction: When is an economy not an economy? When it's a caravan park!
Sources – Chicago School of Economics (Friedman and Hayek) – also German „ordoliberalism‟.
First use of the word probably Freidman – 1951 essay Neoliberalism and its Prospects.
They DIFFERED but the development of their views has become the economic status quo since
the 1980s – „TINA‟ – „there is no alternative.‟
Ironic – from the 1930s to the 1950s, its theorists were dismissed by mainstream economic
thinking as cranks and mavericks
How did it get to be so influential? Interesting – one analysis - „rugby match‟ analysis –
„the think tanks passed to the journalists, who passed to the politicians, who with aid from the
think tanks run with it and score.‟
You won‟t see the term much – although the Guardian uses it! – you might see „free market,‟
or "competition" – but even if we don‟t know the term, neo-liberalism has become so much the norm
we don‟t even notice it – David Harvey: „Neo-liberalism has become incorporated into the common
sense way many of us live in, interpret and understand the world.‟ (A Brief History of Neo-Liberalism,
p 3)
But it isn‟t inevitable, natural or constructed – and many projects of practical compassion
in parishes are in response to its direct results.
So the first thing is to detach from it and NOTICE it – name the beast!
So What is It? Several key elements to what Neoliberalism is:
It affirms, above all else, the rule of the market1 - that means the unrestricted movement
of capital, goods and services.
The market is „self-regulating‟ in terms of the distribution of wealth– more wealth in the
system is supposed to equal more wealth for all – wealth distribution falls out of the system,
and in theory, there is a „trickle down‟ of wealth distribution.
The de-regulation of labour - e.g., de-unionization of labour forces, and end to wage controls.
The removal of any impediment to the moving of capital – such as regulations.
Reducing public expenditure – and in particular for utilities, common goods (water), and social
services, such as transport, health and education, by the government
Privatization of the above – of everything from water to the Internet
Increasing deregulation of the market, and allowing market forces to regulate themselves.
Changing perceptions of public and community good to individualism and individual responsibility.
Behind these features are a series of underlying assumed principles – an ideology of neo-liberalism:
2
Sustained economic growth is good in itself and the best way to human progress
Free markets would be the most efficient and socially optimal allocation of resources
Globalization is a good thing – beneficial to everyone
Privatization removes the inefficiencies of the public sector.
Governments‟ main functions should be to provide the infra structure to advance the rule of
law with respect to property rights and contracts and to ensure the market remains competitive.
So What's Wrong with it?
It is internally contradictory
There is no such thing as a free market
Even the original neoliberals recognise this – competition regulates the market – there
is no one view of what "competitive" is
The ordoliberals certainly recognise it – role of government to create the perfectly
competitive market
The view taken of competition based on price tends to monopolies, a "race to the bottom,"
and uniformity (Amazon, Sky, Apple )
Its effects are not as the theory predicted, and have often been damaging:
There has been no "trickle down" effect of wealth (in fact, wealth has redistributed upwards)
It has entailed much "creative destruction" of institutional frameworks and powers, divisions
of labour social relations, attachments to the land and habits of the heart.‟ (David Harvey,
Short History of Neo-Liberalism, p 3)
It has pushed, and is pushing, the reach of the market into ever more spheres of human
life, „the saturation of the state, political culture and the social with market rationality.‟
(Wendy Brown: American Nightmare: Neoliberalism, Neoconservatism and De-Democratization
(Political Theory 34 (2006), p 695)
It has a view of human beings as 'specks of human capital,' who can be 'plugged in'
to markets of various kinds, (or who plug themselves in)
the hero of neoliberalism is the entrepreneur – we are all becoming more and more required
to be „entrepreneurs of the self‟ – to invest in ourselves/make something of ourselves, „cultivate
and care for‟ ourselves and, increasingly – measure our performance.
The caravan park analogy –we are required to „plug ourselves in‟ – to pay the price of
doing so, and to accept the cost.
Our „belonging‟ becomes passive plugging in – rather than active participation.
Traditional forms of solidarity are wiped out.
Specks of human capital are eminently sacrificable, even if they have done all the „right
things‟ – there are no guarantees, and individuals are expected to bear the risk of their entrepreneurial
activity themselves (investing many hours in „training‟ and „upskilling,‟ often with no financial
or institutional support and with no guarantee of better employment practices – i.e. gain (more
skilled workforce) is privatized and risk is distributed downwards, labour is bound and capital
released.
Austerity politics is the natural outcome of this – people are told virtue is sacrifice
for the sake of a productive economy, but with no protection.
Despite opposition to „big government,‟ isolated and vulnerable individuals are eminently
governable, subject to new forms of power whilst having smaller and
smaller spaces in which to resist it. People are easily integrated into a project that
is quite prepared to sacrifice them.
So why is it bad for all of us?
It has redistributed wealth – upwards. Most extreme effects seen amongst the most vulnerable
– but many people are feeling the pinch in the middle. Cultural expression of neoliberalism encourages
those in the middle to „aspire‟ upwards – and demonises the most vulnerable. Not good for the
soul, even of those relatively comfortable!
An economy is not a caravan park that we plug into but a household (oeconomia) that we belong
to – with solidarities and mutuality built in – some of them unchosen. Neoliberalism cuts us off
from belonging in a way that allows us to flourish.
Its promotion of economic growth as the only good inevitably means economies built on debt
and austerity
To see people as sacrificeable specks of human capital means they are governable, isolated
and vulnerable – and the isolation and vulnerability is spreading upwards in society too (it takes
on average a year after graduation for a graduate from a "good" university to get a job)
The buck is constantly and systematically passed to those least able to carry it – large-scale
problems (e.g. national debts) are sent down the pipeline to smaller units; devolution without
the resources to implement it, combined with competition for resources, choices without resources,
responsibility without power, power without structure.
Dependency is denigrated and independence moralized – the most vulnerable are burdened morally
with failing to follow the correct processes of capital development
Lack of trust erodes community life and social relations
Physical and mental health are affected – and not just for those who are poorest, but for
those in the middle and even those at the top (see Richard Wilson and Kate Pickett:
The Spirit Level: Why Equality is Better for Everybody – London, Penguin 2009)
Education becomes narrow and instrumental
In some ways, those in the deepest peril are those who benefit from neoliberalism – „for what
will it profit them if they gain the whole world but forfeit their soul‟ (Matthew 16.26)
So what is to be done?
"See-Judge-Act"
SEE - We first need to SEE it – to name the beast - that the issues we confront daily
in parishes, in our everyday lives, and in the news do not arise by accident or as a result of
unfortunate circumstances, or the distorting lens of the media – but from the systematic application
of a particular, and very far-reaching economic theory.
JUDGE means unpicking the assumptions, watching how the ball curves; it means not just
coming up with concrete examples from our own circumstances, but relating them to the „macro‟
level – seeing how they result from larger structures and assumptions
JUDGE also means reflecting theologically on all this in the light of scripture and
tradition.
ACT – is harder – so what is to be done? It can seem impossible to do anything!
However – the very act of noticing is important. Neoliberalism‟s power derives partly from
its invisibility – we need to notice that it is happening. Various forms of
resistance have happened over the last 5 years or so – views about how effective they
have been vary. But as Christians, we are called to show solidarity with those who resist a dehumanising
and very powerful status quo.
We can – and should – continue to be involved in projects of practical compassion – and alongside
doing them, make connections with the bigger picture.
We can recognise our own complicity in neoliberalism – and disassociate from it, at least
with our heads.
We can ask critical questions whenever we have the opportunity to do so.
And, above all, we should recognise that a very small space in which to act is not no
space at all – challenging TINA – that neoliberalism is the only view on the block is itself action
of a kind – sometimes opening up a space opens up new possibilities. What we shouldn‟t so, at
least, is to close them down!
Justice will dwell in the wilderness, and righteousness abide in the fruitful field. The effect
of righteousness will be peace, and the result of righteousness quietness and trust forever. My people
will abide in a peaceful habitation, in secure dwellings, in quite resting places. (Isaiah 32.16-18)
Further Reading:
Zygmunt Bauman: Liquid Modernity (Cambridge, Polity Press 2000)
Ha-Joon Chang: 23 Things they don't tell you about capitalism (London, Penguin 2011)
"... Neoliberalism marches on in the centre-left critique of Brexit: Brexit's political motivation is a racist nationalism, there is no good or practical alternative to the EU and its four freedoms of unmanaged movements of capital, people, goods. ..."
"... The essence of left neoliberalism was the collaboration of the educated, credentialed managerial classes in the plutocratic project and the abandonment of the cause of defending what used to be called the working classes and the poor from predatory capital. ..."
"... the neoliberal trap in which what passes for left politics ..."
"... Brexit may never happen or its management may be taken over by other hands in a further reversal of political fortune on one side or the other of the Channel. A Eurozone collapse can scarcely be ruled out as Italy crumbles and France chooses between a proud neoliberal unaware of that collapse thingee and a right-wing of the old school. That would create opportunities I can scarcely imagine; there might be an alternative after all. ..."
"... [I]inequality is deadly for democracy, and for the equal political status of citizens. Because the power and influence high earners derive from their income threatens such status equality, there is a strong public interest in constraining it, even if doing so raises no money at all ..."
"... "Chauvinism" is a good thought, but you can see the problem. You read all manner of implications into "tribalism" that I don't see at all, but want to read fifty years or so of usage out of "chauvinism". ..."
"... Well neo-liberalism worked for some. Guess you had to be in early enough. I wonder if Paris or Frankfurt will allow its banking jobs to be outsourced to India? ..."
I think there's a real risk of confusing two things: on the one hand, ideology, on the other a
mechanism for mobilizing political and electoral support.
Neoliberalism may be a smoking ruin intellectually, but it remains the default ideology today
across most of the political spectrum, for lack of an articulated alternative. But it's not a
good way to mobilize electoral support ("vote for me and I'll outsource your job to India"). Historically,
that mobilizing role was played by divisions of wealth and power, but with the end of class politics,
the only obvious alternative is tribalism, or whatever we want to call it, with it's message "I
represent your group interests, vote for me." On the "right" this manifests itself through the
tribalism of tradition, language, culture etc; on the "left" through the tribalism of identity
politics. You can't really construct functioning political parties around purely abstract ideas
(tolerance, for example) – you need voters. This was perfectly well demonstrated by the Clinton
election campaign, where the ideology was neoliberal, but the mobilizing device was tribalism
("you are X therefore you should vote for me").
Much of the confusion in contemporary politics, therefore, results from competitive attempts
to foist tribal identities on people, and the resistance of potential voters to this tactic. Now,
traditional mobilizing factors did have the virtue of clarity; you were objectively poor, unemployed,
property-owning, share-owning or whatever, and it was fairly obvious what the consequences of
voting for this or that party would be. In the new dispensation, the "right" is doing better at
this game at the moment than the "left" because its tribal markers (language, history, nation
etc.), whilst not uncontested or unproblematic, mean more to people than the race and gender-based
markers of the "left". Someone with black skin may not feel that that defines the way they should
vote, in preference to say, their economic interests. This is why in France, for example, the
Socialists have effectively lost an increasingly prosperous and predominantly socially conservative
immigrant vote to the Right.
"Brexit is just a symptom of growing resistance to neoliberalism, and the loss of power
of neoliberal propaganda."
Broadly agree. After all, neoliberalism (and its child, globalization) was created and is enforced
by nations, and its destruction, if that happens, must begin at the national level. My own, totally
unrealistic, hope is that if Brexit looks like happening and similar things follow elsewhere,
the EU will be frightened enough that some of the neoliberal poison will seep out, and Europe
will go back to being what it was, and always should have been. Some hope.
"Apparently, the conservative government has now abandoned its plans for further austerity
and a balanced budget. It is expected to spend an additional $187 billion over the next five years
(roughly 1.0 percent of GDP) to boost the economy and create jobs. According to the NYT, this
spending is a direct response to concerns over the plight of working class people who voted for
Brexit in large numbers.
This outcome is worth noting, because the boost to the economy from additional spending is
likely to be larger than any drag on growth as a result of leaving the European Union. This would
mean that the net effect of Brexit on growth would be positive. Of course the UK government could
have abandoned its austerity path without Brexit, but probably would not have done so. Given the
political context, working class voters who wanted to see more jobs and a stronger welfare state
likely made the right vote by supporting Brexit. This doesn't excuse the racist sentiments that
motivated many Brexit supporters, but it is important to recognize the economic story here.
There is a deeper lesson in this story. The elites that derided Brexit were largely content
with austerity policies that needlessly kept workers from getting jobs and also weakened the welfare
state. Many were willing to push nonsense economic projections of recession in order to advance
their political agenda. In this context, it is not surprising that large numbers of working class
people would reject their argument that Brexit would be bad for the UK."
Rather than rehash
my objections to "tribalism" as far as the racialized and imperialist connotations of the
term itself, drawing off of likbez @ 6 and the recent sociobiology/evopsych thread, here's another
objection: to the extent that it relies on a vague idea of modern far-right nationalism as just
a modern manifestation of some deeper general human tendency toward ingroup/outgroup moral reasoning,
it goes much too far in naturalizing far-right nationalism, making it out to be a core
aspect of immutable human nature instead of the historically contingent political and economic
phenomenon it is. (Cf.
Kevin Drum's misapprehension of the term "white supremacy" , which doesn't refer to any abstract
idea that white people are or should be superior, but the historical reality of their tangible
efforts to create and maintain a superior material position.) On a certain level fascists are
fascists because they perceive the subjugation of other races and nationalities to be in their
interest based on their understanding of how global capitalist society works, and in some sense
their understanding of the subjugation and domination necessary for capitalism to function is
much clearer than the understanding of a proverbial "bleeding-heart liberal".
Accordingly, the ideological implication of "tribalism" that the guards at Auschwitz were doing
fundamentally the same thing as the chimpanzees in 2001: A Space Odyssey , resembles what
some old bearded leftist once described as an effort "to present production as encased in eternal
natural laws independent of history, at which opportunity bourgeois relations are then quietly
smuggled in as the inviolable natural laws on which society in the abstract is founded". No, fascism
isn't inevitable, or at least it's only inevitable as long as capitalism is too.
JQ: "I don't know how I could have been clearer that the current upsurge of tribalism is
a historically contingent political and economic phenomenon arising from the collapse of neoliberalism."
Saying "the current upsurge of tribalism" isn't the same thing as saying "tribalism". The implication
of the former is that tribalism has been here all along under the surface and our modern historical
moment isn't creating it so much as uncovering it, with the "it" in question implied
to be something premodern and primitive to which we're returning or even regressing. At best it's
a vague and partial metaphor that needs to be closely monitored to avoid implying any deeper comparison,
and if it's intended in any way as a pejorative, it works via our perception of something inherently
wrong or even evil about "primitive" modes of social existence, something that demands a unilateral
civilizing intervention by the enlightened imperialists of the mind. If you're really searching
for a proper response to "tribalism", the ideology embedded in the term "tribalism" seems to itself
imply the very same kind of paternalist liberal response you otherwise seem to rightly abhor.
Here's a thought: why not "chauvinism"? Just because in recent years it's widely become shorthand
for "male chauvinism", don't forget it was originally coined for excessive and potentially bigoted
nationalism, after a (likely apocryphal) Napoleonic-era French soldier named Nicolas Chauvin.
As far as historical allusions for a tendency claimed to encompass everyone from Hitler to George
Wallace to Donald Trump, using a word derived from the dictatorial personality-cultish nationalist
reaction to the first true modern universalist revolution seems to be on solid ground, especially
compared to a word that implies continuity between racist oppression in modern nation-states and
the alleged backward savagery of the very populations being oppressed.
John Quiggin 11.29.16 at 7:41 pm
"Chauvinism" is a good thought, but you can see the problem. You read all manner of implications
into "tribalism" that I don't see at all, but want to read fifty years or so of usage out of "chauvinism".
Trying Google, I find that just about all the top hits for "tribalism" are in the sense I use,
and nearly all of the top hits for "chauvinism" are associated with male chauvinism, even in some
dictionary definitions.
Brexit has not been defined in any detail, so calling for speculation is inviting any and all
kinds of counterfactual speculative projection. That may be interesting, to the extent it reveals
worldview or even more theoretical presupposition. But, what I get from the OP and many of the
comments is that neoliberalism has not collapsed at all.
Neoliberalism marches on in the centre-left critique of Brexit: Brexit's political motivation
is a racist nationalism, there is no good or practical alternative to the EU and its four freedoms
of unmanaged movements of capital, people, goods.
The great difficulty of renegotiating the Gordian knot of regulation tying the EU together
looms large, as it would for the socio-economic class of people tasked with creating and recreating
these sorts of systems, systems of finance, administrative process and supply chain that loom
so large in our globalised economy - pay no attention to the sclerosis, please! How will we get
visas?!?
The deep and persistent poverty that scars England and the struggles of local displacement
that shadow the fantastic globalised wealth imported into the core of the Great Metropolis are
mentioned by a few commenters as a dissent (my interpretation, alternative welcome). There is
in this leftish discussion little skepticism expressed about how healthy it is that the UK is
so invested in global and European finance. What is engaged is scorn for the idea of a Tory social
conscience. (I have never seen one myself.) But what goes unmentioned is the absence of a Left
economic conscience.
Which brings me back around to question the ostensible premise of the OP, the alleged collapse
of neoliberalism. What has collapsed politically - as any reader of news headlines must surely
know - is the social democratic left. (USA, France, Italy at any moment)
The essence of left neoliberalism was the collaboration of the educated, credentialed managerial
classes in the plutocratic project and the abandonment of the cause of defending what used to
be called the working classes and the poor from predatory capital. I do not yet see the left
critique of Brexit departing from either the collaboration or the abandonment. In British politics,
the continuing civil war in the Labour Party between the old leftists and the new membership on
the one hand and the Blairite careerists in the PLP and their supporters among the cosmopolitans
would seem to furnish a stark illustration of how disabled the left is at this juncture, mere
spectators as a weak Tory Party bungles its way forward unimpeded.
Mumbling about "tribalism" says more about the neoliberal trap in which what passes for
left politics appears fatally trapped than it does about right populism.
Sure, we want to shout "fascism" but if this is the second coming of that incoherent political
tendency, it is even more farce than it was the first time around.
This very weak tea populism that is Trump or May's one nation conservatism redux is only possible,
imho, because there is no left populism to compete credibly for those "working class" constituencies,
whose political worldviews and attitudes are - shall we say, unsophisticated? Rather than compete
for the loyalty of those authoritarian followers (to use a term from political psychology), the
left organizes its own form of "tribal" identity politics around scorning them as a morally alien
out-group. And, the new (alt?) right leverages the evidence of class contempt and so on for their
own populist mobilization.
This right is not very credible as populists, but it is a matter of out running a bear in the
woods – the bear is the loss of elite legitimacy – and it has only been necessary to outrun the
left, which so far will not even tie its shoes.
Brexit may never happen or its management may be taken over by other hands in a further
reversal of political fortune on one side or the other of the Channel. A Eurozone collapse can
scarcely be ruled out as Italy crumbles and France chooses between a proud neoliberal unaware
of that collapse thingee and a right-wing of the old school. That would create opportunities I
can scarcely imagine; there might be an alternative after all.
SamChevre 11.29.16 at 9:42 pm
Discussions of Brexit, and its economic effects, continues to remind me of this Chris Bertram
post from 2014.
[I]inequality is deadly for democracy, and for the equal political status of citizens.
Because the power and influence high earners derive from their income threatens such status equality,
there is a strong public interest in constraining it, even if doing so raises no money at all .[W]e
need to shift the balance of voice in favour of the unemployed teenager and against the City trader.
Maybe not just the social democratic left. Maybe the whole left. This whole capitalist experiment
is so new, historically speaking (in its industrialised form only going back a few centuries)
we simply have no idea how it will play out long-term. Maybe what we have known as 'the left'
was simply a 'reactive formation' to initial stages of capitalism, facilitated by wars and the
early,' factory' model of capitalism. Maybe in our 'post-modern' era of capitalism (which might,
after all, last for centuries), with low unionisation, high unemployment/underemployment, massive
income inequality, slow growth, and a 'bread and circuses' media, the left simply no longer has
any political role.
After all, the collapse of the social democratic left follows in the wake of the collapse of
the radical left in the 1980s and 1990s, which (despite occasional 'dead cat bounces' as we have
seen in Greece and Spain) shows no sign of returning. And the centre (e.g. the LibDems in the
UK) died a long time ago.
As Owen Jones has been amongst the few to point out perhaps the future of Europe lies in Poland
where the left and centre have simply ceased to exist, and all of political life consists of neo-Thatcherites
fighting ethno-nationalists for a slice of the political pie.
Helen 11.29.16 at 10:07 pm
"Chauvinism" is a good thought, but you can see the problem. You read all manner of implications
into "tribalism" that I don't see at all, but want to read fifty years or so of usage out of "chauvinism".
Trying Google, I find that just about all the top hits for "tribalism" are in the sense I use,
and nearly all of the top hits for "chauvinism" are associated with male chauvinism, even in some
dictionary definitions.
Well neo-liberalism worked for some. Guess you had to be in early enough. I wonder if Paris
or Frankfurt will allow its banking jobs to be outsourced to India?
In the US, the pres-elect has just nominated a health secretary who is for killing Obamacare
while Trump's party is talking about privatizing (thereby killing) Medicare. So much for the complete
death of neo-liberlism JQ. There's always time for one final looting.
WLGR 11.29.16 at 10:30 pm
Point taken, although if we're taking our intellectual cues from mainstream definitions now,
someone should notify the laypeople confused about non-mainstream scholarly definitions of words
like "liberalism" and "racism" that they were actually right all along. From my understanding,
the typical scholarly view of "tribe" as a concept ranges from vague and essentialist on one end
(cf. "feudalism") to a racism-tinged pejorative on the other end (cf. "savage"), and in neither
case is it considered particularly respectable to deliberately orient a theory of human society
around the distinction between what is or isn't "tribal".
But if you're not necessarily convinced that the term "tribalism" is offensive in itself, another
line of attack might resemble
this :
The instinct to explain the seemingly inexplicable rise of Trump by blaming a foreign influence–or
likening it to something from non-white or Slavic countries–is as lazy as it is subtly racist.
Trump is Trump. Trump is American. His bigotry, his xenophobia, his sexism, his contempt for
the media, his desire to round up undesirables, all have American origins and American explanations.
They don't need to be "like" anything else. They are like us. While acknowledging this may
be uncomfortable, doing so would go a lot further in combating Trump than treating him as anomalous
or comparable only to those poor, backwards foreigners.
In other words, even if we assume there's nothing inherently problematic about calling groups
like the Sioux or the Igbo "tribes" (although tellingly enough it's more common for such groups
to self-identify with the term "nation") the very act of casting fascists/ethnonationalists/whatevers
in terms of a foreign type of social organization acts as a means of disavowal, intentionally
or unintentionally letting ourselves off the hook for the extent to which the evil they express
is entirely that of our own society. Which, I might add, at least somewhat resembles the ideological
maneuver of the fascists/ethnonationalists/whatevers themselves: casting the antagonism and instability
inherent to any capitalist society as the result of a foreign intruder, whose removal will render
the nation peaceful and harmonious once again. Obviously the two aren't comparable in many other
ways, but the end result in either case is to avoid facing the immanent contradictions of one's
own national identity too directly.
There is no economics, only political economy. That means that financial oligarchy under liberalism
puts the political pressure and takes measures to have the final say as for who occupy top academic
positions.
Indirect negative selection under neoliberalism (much like in the USSR) occurs on multiple
fronts, but especially via academic schools and indoctrination of students. The proper term for
political pressure of science and creating an academic school that suppressed other is Lysenkoism.
So far this term was not mentioned even once here. But this what we have in the USA. Of course
there are some dissidents, some of them quite vocal, but in no way they can get to the level of
even a department chair.
In best traditions of Lysenkoism such people as Greg Mankiw, Krugman, DeLong and Summers after
getting to their lucrative positions can do tremendous, lasting decades damage. The same is true
for all other prominent neoliberal economists. It's not even about answers given, it is about
questions asked and framework and terminology used.
Fish rots from the head. It is important to understand that essentially the same game (with
minor variations, and far worse remuneration for sycophantism ) was played in the USSR -- the
Communist Party essentially dictated all top academic position assignments, so mostly despicable
sycophants had managed to raise to the top in this environment. Some people who can well mask
their views under the disguise of formal obedience also happened, but were extremely rare. Situation
in the past in the USA was better and such people as Hyman Minsky (who died in 1996) while not
promoted were not actively suppressed either. But He spend only the last decade of his career
under neoliberal regime.
What was really funny, is how quickly in late 80th prominent USSR economists switched to neoliberalism
when the wind (and money) start flowing in this direction.
I would suggest that there are non are trivial links between Soviet political and economic
science and neoclassical economics in the USA -- both are flavors of Lysenkoism.
"It's not unreasonable for people who paid into a system for decades to expect to get their
money's worth - that's not an "entitlement," that's honoring a deal. We as a society must also
make an ironclad commitment to providing a safety net for those who can't make one for themselves."
This view is also not compatible with classic neoliberalism.
I researched Dean's statements about austerity to try to understand why a man who opposed the
DLC would be so enthusiastic about inflicting austerity on the working class. I found part
of the answer. Dean was Vermont's governor. Dean explained to a conservative "
Squawk Box "
host why he supported austerity based on his experience as a governor.
There's a balance sheet that has to be met here and every Governor knows that, both Republicans
and Democrats. And you got to do that when you're the President.
The first sentence is correct. The second sentence is false. States do not have sovereign
currencies. The United States has a sovereign currency. A nation with a sovereign currency
is nothing like a state when it comes to fiscal policy – or a household. I cannot explain why
Dean does not understand the difference and has apparently never read an economic explanation of
the difference. But we can fill that gap. Again, I urge his supporters who have the ability
to bring serious policy matters to his attention to intervene. Dean is flat out wrong because
he does not understand sovereign currencies. The consequences of his error are terrible.
They would lock the Democratic Party into the continuing the long war on the working class through
austerity. That is a prescription for disaster for the Nation and the Democratic Party.
Progressive Democrats enlisted in the New Democrats' austerity wars because they seemed to be
politically attractive. The political narrative was as simple as it was false. The austerity
creation myth was told first by Bob Woodward in the course of writing his sycophantic ode to Greenspan
as the all-knowing "Maestro" of the economy. Bill Clinton, as President-Elect, was given an
economics lecture by Alan Greenspan. The economics lecture – from an Ayn Rand groupie – was
(shock) that austerity was good and New Deal stimulus was evil. Bill's genius was taking the
"Maestro's" words as revealed truth and turning his back on the New Deal. Bill embraced austerity.
The economy grew. Bill ran a budget surplus – the holy grail of austerity. Bill was followed
by Bush under whose administration economic growth slowed and the federal deficits reemerged.
There was a Great Recession.
The creation myth was clear. The newly virtuous New Democrats (after instruction in economics
by Saint Greenspan) embraced austerity and all was good. The vile Republicans, hypocrites all,
had renounced the true faith of austerity and they produced mountains of evil debt that caused poor
economic growth.
Dean pushed this narrative in his Squawk Talk appearance. When asked to explain the specific
Bush policies that he claimed were to blame for poor growth continuing under President Obama, Dean
went immediately and exclusively to Bush's increases in the federal "debt" to answer the question.
"The biggest ones are the deficits that were run up . The deficits were enormous."
The New Democrats' narrative, which Dean parroted, is false. One of the definitive refutations
of the Greenspan (and Robert Rubin) as Genius myth was by the economists
Michael
Meeropol and Carlos F. Liard-Muriente in 2007. Their refutation was inherently incomplete
because it was "too early" – the collapse of the housing bubble in 2007, the 2008 financial crisis
and the Great Recession were vital facts that helped reduce the myth to the level of farce.
These facts were unavailable to academic authors publishing in 2007. The authors discuss the
enormous role that the stock bubble played in the Clinton expansion, but they do not discuss the
housing bubble's contribution.
Any tale that begins with Alan Greenspan providing Bill Clinton with the secret to economic success
is justly laughable today. Clinton was our luckiest president when it came to economics.
His expansion was largely produced by the high tech stock bubble. When it collapsed, the housing
bubble, explicitly encouraged by Greenspan as a means of avoiding a severe recession, took up much
of the slack. Bush eventually inherited from Clinton a moderate recession that led inevitably
to moderately increased (not "enormous") federal deficits. The housing bubble then hyper-inflated,
bringing the economy rapidly out of the moderate recession. The hyper-inflation, of the housing
bubble, however, was driven by the three most destructive epidemics of financial fraud in history
and it caused a global financial crisis and the Great Recession. A great recession leads inevitably
to a very large increase in the federal budget deficit.
Greenspan, Bob Rubin, and Bill Clinton were lucky in their timing – for a time. The historical
record in the U.S. demonstrates that periods of material federal budget surpluses are followed with
only modest lags by depressions and, now, the Great Recession. Fortunately, such periods of
running material budget surpluses have been unusual in our history. As my colleagues have explained
in detail, the U.S., which is extremely likely to run balance of trade deficits, should typically
run budget deficits.
We all understand how attractive the myth of the virtuous and frugal Dems producing great economic
results under Clinton while the profligate Republicans produced federal deficits and poor economic
growth was to Democratic politicians. But the Dems should not spread myths no matter how politically
attractive they are. The catastrophic consequences of President Obama and Hillary Clinton coming
to believe such myths were shown when, as I have just described in several columns, they promised
to lead the long war against the working class that is austerity.
If people like Dean focused on the origins of the Clinton creation myth they would run from its
lies. The original actual creation myth is found in the book of Woodward. The brilliant
Greenspan converted the young Bill Clinton by exposing him to the one true faith (theoclassical economics)
and successfully calling on Clinton to renounce the devil (FDR) and all his work (the New Deal) and
to sit at the (far) right hand of Ayn Rand. The result was economic nirvana. Politically,
that's a terrible creation myth for Democrats to tell around the campfire – or to voters. Economically,
it's a lie, indeed, a farce.
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate
professor of economics and law at the University of Missouri-Kansas City. Jointly published at
New Economic Perspectives Soulipsis
November 28, 2016 at 6:30 am
This is one of the arguments, the making of which I've never understood. How could Dean not
know what he's doing by supporting austerity? How could the 0.001% not know? Of course they know!
Sometimes I think hyperacademics like who can be found trolling around this website are so involved
in the prestige of their discipline that they lose track of the world of wordless import that
makes up most of reality. This is why illiterate people are sometimes very wise, they have no
choice but to remain immersed in the wisdom of the Creation. I think Black and others are wasting
their breath on explanations and urgings such as this. And I think the brutality of Daesh and
the Saudis is the brutality of the 0.001%, and it's a delusion to think they don't have the social
model that is on display in Syria planned for the domestic U.S. market. What else is the 2012
NDAA for? NSPD 51, and the National Incident Management System. It's coming, and Dean is just
a little player. He probably got photographed doing something he shouldn't've and now he's stuck.
Whatever, how could he not know? He knows. Bill Clinton doesn't or didn't know? Please.
I am no economist, but it seems to me that this power of sovereign currency (to borrow increasing
amounts indefinitely) only works so long as people believe that they will be repaid. If one continues
to to rack up an exponentially growing debt, eventually that belief will be challenged. There
are numerous areas of expenses which could be trimmed, but they generally involve a relinquishing
of our empire.
One key to maintaining the appearance of sustainability for increasing debts is making sure
much of the deficit spending is going into productive infrastructure investments. In this case
the increasing debt will be accompanied by actual growth.
It puzzles me that private parties are allowed to buy sovereign debt. It changes the debt from
sovereign to private. Making it no longer an instrument of use but of exchange. Selling sovereign
debt destroys sovereignty. Much better to force the privateers to come up with their own investments
for which they bond and trade with each other and leave sovereign money out of it. The banksters
and their ilk like George Soros, King of the Vigilantes, should be detained until they pay back
everything they embezzled. and etc. It's just too easy for banksters to buy sovereign debt (with
a commodity they are legally allowed to create at the sovereign's expense) and then demand interest
on it. So clearly Howie Dean is a ditz.
I've read similar things in comments at NC and elsewhere about California Governor Jerry Brown,
whose left wing moonbeam reputation doesn't match his big business friendly actions.
Dean has his failings, but being the first Governor to sign a Civil Unions bill, implementing
a 99%+ child health care access law, and creating a systematic way for elementary school teachers
to get resources to families with kids that are in trouble is a pretty sound Progressive legacy.
It is not clear to me that Austerity is a long war against the working class. It might be that
Austerity turns out class neutral, or even pro-working class, depending on how gov't expenditures
shortages are applied across sectors? If Austerity is a war against the working class then the
opposite of Austerity, Stimulus, necessarily is pro-working class but we have seen that Stimulus
might be used to bail out non-working class sectors leaving working class wages and employment
opportunities depressed.
I suspect it is the way it is applied. The shocking hypocrisy of the current pro-austerity
people is what jars Black I guess. I mean these same austerity people were for tax cuts for the
rich, giving trillions to Wall Street, forgiving their (real) crimes, and spending trillions more
on wars whose result was to cause misery for millions of people and make the world an even less
safe place. And then they talk about keeping a tight budget? Hell needs to add a ninth circle
for these people.
Man, I love this site. I get more out of the comments than the articles sometimes. Your paragraph
does more to encapsulate reality than do ten long pages of learned professors.
Vatch, re "Moonbeam Brown", just google
"Something's not right about this California water deal, L.A. Times"
Austerity is primarily against the working class because it is deflationary. It benefits creditors
over debtors. And creditors are invariably the wealthy (i.e. the owners of capital). A moderately
inflationary fiscal/monetary policy with a focus on full employment puts power in the hand of
workers. An austerity policy (by which I mean one which puts an emphasis on balancing the books
over employment) gives power to the owners of capital.
> But the Dems should not spread myths no matter how politically attractive they are.
All myths are not created equal. I rue the day when "myth" became pejorative.
I dare say Prof. Black lives by one. If Jung was right, and I think he was, we all do, albeit
ignorantly, as in, we ignore their functioning (even my beloved science is mythological, but that
doesn't make it untrue). And his recasting of the myth of austerity in biblical terms is as potent
as it is funny. Our denigration of myths is complete enough that Prof. Black can say the above,
and yet do some very effective countermyth-making nonetheless.
Do the high priests of economics and politics really believe their public myth-making? Or is
their a private understanding that better fits the phenomena?
I know I must sound like a broken record, but due to its regrettable unfamiliarity, this bears
repeating.
1. The first function of mythology [is] to evoke in the individual a sense of grateful,
affirmative awe before the monstrous mystery that is existence
2. The second function of mythology is to present an image of the cosmos, an image of the
universe round about, that will maintain and elicit this experience of awe. [or] to present
an image of the cosmos that will maintain your sense of mystical awe and explain everything
that you come into contact with in the universe around you.
3. The third function of a mythological order is to validate and maintain a certain sociological
system: a shared set of rights and wrongs, proprieties or improprieties, on which your particular
social unit depends for its existence.
4. The fourth function of myth is psychological. That myth must carry the individual through
the stages of his life, from birth through maturity through senility to death. The mythology
must do so in accords with the social order of his group, the cosmos as understood by his group,
and the monstrous mystery.
As we all know so well. the myth of neoliberalism is as succinct as it is brutal. "Because
markets" and "Go die," though, don't fulfill all four functions. If I had the economic and financial
chops, I'd examine Saint Alan and the Church of Neoliberalism's mythology methodically and systematically
with the intent to creatively destroy it. But that wouldn't be enough. It'd be helpful to offer
an alternative, but I don't have that, either. Fat lot of good I am.
That's why I like Prof. Black's retelling so much. It puts the absurdity of the pseudo-mythology
of neoliberalism in terms familiar enough that that absurdity stands right out.
And I also dare say what we desperately need now is a fully functioning and genuine mythology
that leads us out of neoliberal hell and into a more perfect union of nature and society. First
party to do so wins the future.
Surprised that Black refers to Dean as a "progressive voice". That has never really been the
case and it's especially not true now. Also surprised that Black supports Ellison whose foreign
policy includes support for a no- fly zone in Libya- mirroring the position held by Clinton.
I sense a connection between this and the peak oil demand article. In the '80's and beyond,
financial services have sought and gained a control economy effect with student loans and more
recently the ACA, and feel that fracking, QE and the housing bubble all fit in there somewhere
as well. Basically it boils down to being easier to make money at the top when they choose where
the income stream comes from, i.e., in the New Deal citizens got money in some form of cash payment,
from SS to welfare, and could choose to spend the money on what they wanted to spend it on, which
in turn caused uncertainty in the finance arena, not so much that they couldn't survive, but the
financiers could envision a better world for themselves, enter student loans and now any kid without
wealthy parents has a lifetime of unpayable debt, a drag on their professional income, or no advanced
education with it's implicit restriction on income, or a combo of all three. This same dynamic
led us to the ACA which is, as opposed to a medicare style plan that could potentially curtail
costs, become little more than a payment stream, a class marker, and has nothing to do with healthcare
except in the sense that high costs make indebted heath industry workers able to pay their own
student loan, and a class warfare tool such that those wealthy healthcare industroids can separate
their offspring from the herd by being able to pay for their offspring's education, as it does
with the finance industry that manages the payment stream. I don't currently see this dynamic
changing, alas but maybe the newfound vigor of the purple dems could be mobilized in this direction
if they can ignore the payoffs for doing nothing.
As to the hyper inflation comment, I think any renter who has struggled with the disruptions caused
by increased rents would say yes, that's hyperinflation, and indeed feels a lot like needing a
wheelbarrow of cash to pay.
Let's talk about reality. For most folks, more austerity is going to kill us. We are so squeezed
now that we can barely pay our bills and save our homes. We have rampant price inflation, which
both the government and the media pretend does not exist. And the latest figures for Xmas shopping
show that although more people are buying stuff, they are spending less money. If the idiots running
the country think tax breaks for the rich will boost the economy, then they have learned nothing
from the last 30 years.
ISTR hearing that, if you want to grow your business, you need to get more people to buy more
of your goods or services more often. Having more people buying less? Doesn't sound like a recipe
for success.
I'm glad someone is saying that a correct understanding of the economy is where the Democrats
need to be. Imagine the impact if a candidate ran on payroll tax relief, expanded SS and a job
guranteee.
I like Keith Ellison as well, but I can't find anything about his economic policies. If Dean's
economics are disqualifying, and Ellison suggested as an alternative, shouldn't we know if he's
an improvement?
The Democrats are going to have to completely reinvent themselves if they ever want to get
a vote or a dollar from me again.
I went to a Democratic Party whine and cheese party the other day where the local "leadership"
tried to harness some kind of crowd energy against Trump based on the mere fact that they had
a D in front of their names.
The delicious moment came in the Q&A. I waited until after the usual regurgitations of racismphobiahatethreatsdisaster
about Trump to ask my question:
"You had a winner in Bernie and your party chose that corrupt disaster Hillary–now we're supposed
to trust you to lead us?" I thought the moderator was going to have a stroke. Her face turned
an appropriate shade of blue-purple.
An agreeing buzz of people around me. It was positively sadistic watching the scrambling of
the Democratic excusemakers shuffling their papers.
It is worse than you say for the Dems. Trump has once indicated that he understands the nature
of a sovereign currency. If he wasn't bullshitting, then the Dems are in for an economic shock,
at the very least.
Thanks for this post. Great final paragraph. The DLC neolib Dems' greatest achievement has
been in presenting this terrible destruction as virtuous. 'We have to destroy the 90%'s economy
in order to save it.'
1920s/2000s – high inequality, high banker pay, low regulation, low taxes for the wealthy,
robber barons (CEOs), reckless bankers, globalisation phase
1929/2008 – Wall Street crash
1930s/2010s – Global recession, currency wars, rising nationalism and extremism
Milton Freidman used the old 1920s economics, neoclassical economics, as his base but didn't
fix any of its problems.
Wall Street did exactly the same thing.
Jim Rickards ("Currency Wars" and "The Death of Money") has explained how the removal of Glass-Steagall
allowed Wall Street to repeat 1929.
In 1929, they carried out margin lending into the US stock market to artificially inflate its
value. They packaged up these loans in the investment side of the business to sell them on.
In 2008, they carried out mortgage lending into the US housing market to artificially inflate
its value. They packaged up these loans in the investment side of the business to sell them on.
The FED responded with monetary policy that didn't work again, the "New Deal" pulled the US
out in the end.
In 1929, the FED wasn't quite so quick with monetary policy and stocks were a much more liquid
asset and so the crash was so fast no one had a chance to deal with it as it was occurring.
Monetary policy did stop the initial crash in asset prices but didn't reflate the economy;
you need a "New Deal" for that.
The only real difference.
Why are multi-nationals hoarding cash and not investing?
Oh look it's Keynes's liquidity trap, its exactly the same.
Keynes studied the Great Depression and noted monetary stimulus lead to a "liquidity trap".
Businesses and investors will not invest without the demand there to ensure their investment
will be worthwhile.
The money gets horded by investors and on company balance sheets as they won't invest.
Cutting wages to increase profit just makes the demand side of the equation worse and leads
you into debt deflation.
Then there is the dutiful austerian Angela Merkel who stated that all members of the EU had
"shared sovereignty" – and so that was why they had to tighten their belts to the last notch
so the bond buyers could be paid back?
as Thomas Frank says:
"What our modernized liberal leaders offer is not confrontation [with corporate corruption] but
a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept
the inevitability of the situation."
I'm sure this is explained elsewhere but I still am perplexed; states have to pay their debts
but sovereign money-printing governments print money. So why not shift state expenses (schools,
police, garbage pickup, pensions ) to the sovereign government which can print the money to cover
the expense?
That is what that great socialist Richard Nixon did with revenue sharing. The Federal government
gave states block funding, with anti-fraud oversight. Nixon figured that lower levels of governments
had a better sense of their needs than the Feds did.
If the "best of the best" Stephanie Kelton couldn't even get Sanders to break the cycle of
mainstream economic "myths", who you gonna call ? If a simpleton like me can understand and believe
basic MMT principles, I can not imagine the "brainiacs" running the country ( or vying to run
the country) are innocent of the crime (assault with a deadly myth).
Who knows, with some luck, and he seems to be having a ton lately, the presumptive POTUS could
be that accidental MMT'er. But I'm sure he would deny that luck had anything to do with it.
"... The continuing reaction of the liberal elite to the repudiation of the Democratic establishment
by their traditional constituencies of the young and working people is a wonder to behold. They thrash
back and forth between a denial of their failure, and disgust at everyone else they can blame for it.
..."
"... It is frustrating because they do not know how to extract themselves from it, admit their errors
and reform the system, without undermining the very assumptions that entitle them, in their own minds
at least, to rule as the highly honored insiders, the elect of professional accomplishment. ..."
"Listening to the leading figures of the Democratic party establishment, however, you'd never
know it. Cool contentment is the governing emotion in these circles. What they have in mind for
2016 is what we might call a campaign of militant complacency. They are dissociated from the mood
of the nation, and they do not care...
What our modernized liberal leaders offer is not confrontation [with corporate corruption]
but a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept
the inevitability of the situation."
Thomas Frank
"Too many of America's elites-among the super-rich, the CEOs, and many of my colleagues in academia-have
abandoned a commitment to social responsibility. They chase wealth and power, the rest of society
be damned."
Jeffrey Sachs
"This elite-generated social control maintains the status quo because the status quo benefits
and validates those who created and sit atop it. People rise to prominence when they parrot the
orthodoxy rather than critically analyze it. Intellectual regurgitation is prized over independent
thought. Real change in politics or society cannot occur under the orthodoxy because if it did,
it would threaten the legitimacy of the professional class and all of the systems that helped
them achieve their status.
Kristine Mattis, The Cult of the Professional Class
The continuing reaction of the liberal elite to the repudiation of the Democratic establishment
by their traditional constituencies of the young and working people is a wonder to behold. They thrash
back and forth between a denial of their failure, and disgust at everyone else they can blame for
it.
It could not possibly be because of anything they might have done or failed to do. And so they
are caught in a credibility trap.
It is frustrating because they do not know how to extract themselves from it, admit their
errors and reform the system, without undermining the very assumptions that entitle them, in their
own minds at least, to rule as the highly honored insiders, the elect of professional accomplishment.
I am a Marxist economist (Professor of Economics, Mount Holyoke College) and I appreciate Branko
Milanovic's open-mindedness and his efforts in a recent post on his blog to educate economists who
often have a crude and superficial misunderstanding of Marx's labor theory of value.
For context for my comments on Milanovic, I will first say a few words about my interpretation
of Marx's labor theory of value (LTV). In my view, Marx's LTV is primarily a macro theory and
the main question addressed in Marx's macro LTV is the determination of the total profit (or surplus-value)
produced in the capitalist economy as a whole. Profit is the main goal of capitalist economies
and should be a key variable in any theory of capitalism. Marx's theory of the total profit
is that profit is the difference between the value produced by workers and the wages they are paid,
i.e. that profit is produced by the "surplus labor" of workers.
I argue that Marx's "surplus labor" theory of profit has very significant and wide-ranging explanatory
power. Marx's theory provides straight-forward and robust explanations of the following important
phenomena of capitalist economies: conflicts between capitalists and workers over wages, and
over the length of the working day, and over the intensity of labor (i.e. how hard workers work,
which determines in part how much value they produce); endogenous technological change (in order
to reduce necessary labor and increase surplus labor and surplus-value); increasing concentration
of capital and income(i.e. increasing inequality); the trend and fluctuations in the rate of profit
over time; and endogenous cycles due to fluctuations in the rate of profit rate of profit.
(A more complete discussion of the explanatory power of Marx's theory of profit is provided in my
" Marx's Economic Theory: True or False? A Marxian Response to Blaug's Appraisal, " in Moseley (ed.),
Heterodox Economic Theories: True or False?, Edward Elgar, 1995).
This wide-ranging explanatory power of Marx's surplus labor theory of profit is especially impressive
when compared to mainstream economics. In mainstream macroeconomics, there is no theory of
profit at all; profit (or the rate of profit) is not even a variable in the theory! I was shocked
when I realized in graduate school this absence of profit in mainstream macro, and am still shocked
that there is no effort to include profit. Indeed, DSGE models go in the opposite direction
and many models do not even have firms!
Mainsteam micro does have a theory of profit (or interest) – the marginal productivity theory
of distribution – but it is a weak and largely discredited theory. Marginal productivity theory
has been shown by the capital controversy and other criticisms to have insoluble logical problems
(the aggregation problem, reswitching, cannot integrate intermediate goods, etc.). And marginal
productivity theory has very meager explanatory power and explains none of the important phenomena
listed above that are explained by Marx's theory.
Milanovic agrees that Marx's LTV is primarily a macro theory, but he interprets it in this post
as only the assumption that "sum of values will be equal to sum of production prices". And
he continues: "The former is an unobservable quantity so Marx's contention is not falsifiable.
It is therefore an extra-scientific statement that we have to take on faith.
I argue, to the contrary, that Marx's macro LTV is primarily a theory of profit and my conclusion
that Marx's theory is the best theory of profit we have is not based on faith but is instead based
on the standard scientific criterion of empirical explanatory power. It is much more accurate
to say that marginal productivity theory is accepted by mainstream economists on faith, as Charles
Ferguson famously said in his conclusion to the capital controversy.
Now to my comments on Milanovic's three main points:
1. Milanovic's main point is that the LTV is often misinterpreted as a simple micro theory
that assumes that the prices of individual commodities are proportional to the labor-times required
to produce them. Milanovic argues that is not true in a capitalist economy because of the equalization
of the profit rate across industries with unequal ratios of capital to labor, so that according to
Marx's theory, long-run equilibrium prices are determined by the equation: w + d + rK, where
w is wages, d is depreciation and r is the economy-wide rate of profit (missing in this equation
is the cost of intermediate goods, but I will ignore this).
Milanovic emphasizes that Walras and Marshall had essentially the same equation for long-run equilibrium
prices. I agree that all three theories of long-run equilibrium prices have this same form,
but there is an important difference. Marx's theory provides a logically rigorous theory of
the rate of profit in this equation (based on his theory of the total profit discussed above) and
Walras and Marshall just take the rate of profit as given , disguised as an "opportunity cost", and
thus provides no theory of profit at all . Therefore, I think Marx's theory of long-run equilibrium
prices is superior to Walras' and Marshall's in this important sense.
2. Milanovic's second main point is that Marx's theory of long-run equilibrium prices are
"clearly very, very far from derisive statements that the labor theory of value means that people
are just paid for their labor input regardless of what is the 'socially necessary labor' required
to produce a good." I presume that this derisive statement means that workers produce more
value than they are paid and thus are exploited in capitalism. But Branko is mistaken about
this. Marx's theory of long-run equilibrium prices is based on his macro theory of profit according
to which the source of profit is the surplus labor of workers. This conclusion is indeed derisive
and that is the main (non-scientific) reason that Marx's theory of profit is rejected by mainstream
economists in spite of its superior explanatory power.
I know from previous correspondence that Milanovic understands well Marx's "exploitation" theory
of profit, but he seems to overlook the connection between Marx's micro theory of prices of production
and his macro theory of profit.
3. Milanovic's third point is that Marx's labor theory of value is most helpful in understanding
pre-capitalist economies and the relation between capitalism and non-capitalist economies today.
I argue, to the contrary, that Marx's labor theory of value and profit is the best theory we have
to understand the most important phenomena of capitalist economies, including 21 st century capitalism.
It would be one thing if mainstream economics had a robust theory of profit with significant explanation
power. But it has almost no theory of profit. Therefore it would seem to be appropriate
from a scientific point of view that Marx's surplus labor theory of profit should be given more serious
consideration.
Thanks again to Milanovic and I look forward to further discussion.
I used to respect Krugman during Bush II presidency. His columns at this time looked like on target
for me. No more.
Now I view him as yet another despicable neoliberal shill. I stopped reading his
columns long ago and kind of always suspect his views as insincere and unscientific.
In this particular
case the key question is about maintaining the standard of living which can be done only if manufacturing
even in robotic variant is onshored and profits from it re-distributed in New Deal fashion. Technology
is just a tool. There can be exception for it but generally attempts to produce everything outside
the US and then sell it in the USA lead to proliferation of McJobs and lower standard of living.
Creating robotic factories in the USA might not completely reverse the damage, but might be a step
in the right direction. The nations can't exist by just flipping hamburgers for each other.
Actually there is a term that explains well behavior of people like Krugman and it has certain
predictive value as for the set of behaviors we observe from them. It is called Lysenkoism and it
is about political control of science.
Yves in her book also touched this theme of political control of science. It might be a good time
to reread it. The key ideas of "ECONned: How Unenlightened Self Interest Undermined Democracy and
Corrupted Capitalism " are still current.
For them neocon/neoliberal propaganda 24/7 is OK, but anti-neoliberalism, anti-neoconservatism information, which sometimes is pro-Russian propaganda is not.
Viva to McCarthyism! The hint is that you do not have a choice -- Big Brother is watching you like
in the USSR. Anti-Russian propaganda money in action. It is interesting that Paul Craig Roberts who
served in Reagan administration is listed as "left-wing"... Tell me who is your ally (
Bellingcat) and I will tell who you are...
As Moon of Alabama noted "I wholeheartedly
recommend to use the list
that new anonymous censorship entity provides as your new or additional "Favorite Bookmarks" list. It
includes illustrious financial anti-fraud sites like Yves Smith's
Naked Capitalism ,
Wikileaks , well informed libertarian sites
like Ron Paul and
AntiWar.com and leftish old timers like
Counterpunch . Of general (non-mainstream)
news sites Consortiumnews , run by Robert
Parry who revealed the Iran-contra crimes, is included as well as
Truthdig and
Truth-out.org ."
Extended list is here
It a real horror to see how deep pro Russian propaganda penetrated the US society ;-) This newly minted
site lists as allies, and with such allies you can reliably tell who finance it
Look like some guys from Soviet Politburo propaganda department make it to the USA :-) The site
definitely smells with
McCarthyism -- the practice
of making accusations of subversion or treason without proper regard for evidence. Which
was the standard way of suppressing dissidents in the USSR. So this is really "Back in the
USSR" type of sites.
But the list definitely has value: the sites listed are mostly anti-establishment, anti status-quo, anti-neocon/neolib sites not so much pro-Russian.
After all Russia is just another neoliberal state, although they deviate from Washington consensus
and do not want to be a puppet of the USA, which is the key requirement for the full acceptable into
the club of "Good neoliberal states". Somehow this list can be called
the list of anti US Imperialism sites or anti--war sites. And this represents the value of the list as people may
not know about their existence.
The new derogatory label for the establishment for information they don't want you to see has become
"fake news." Conspiracy theories do nto work well anymore. That aqures some patina of respectability
with age :-). "Since the election's "surprise" outcome, the corporate media has railed against their
alternative competitors
labeling them as "fake" while their own frequently flawed, misleading, and false stories are touted
as "real" news. World leaders have now begun calling out "fake news" in a desperate attempt to lend
legitimacy to the corporate media, which continues to receive dismal approval ratings from the American
public. Out-going US president Barack Obama
was the first to speak out against the danger of "misinformation," though he failed to mention the
several instances where he himself
lied and spread misinformation to the American public."
The most crazy inclusion is probably Baltimore Gazette. Here how editors define its mission: "Baltimore Gazette is Baltimore's oldest
US news source and one of the longest running
daily newspapers published in the United States. With a focus on local content, the Gazette thrives
to maintain a non-partisan newsroom making their our content the most reliable source available in print and
across the web."
PropOrNot is an independent team of concerned American citizens (an
independent from whom? Concerned about what ? Looks like they are very dependent and so so
much concerned, Playing pro-establishment card is always safe game -- NNB) with a wide range of backgrounds
and expertise, including professional experience in computer science, statistics, public policy,
and national security affairs. We are currently volunteering time and skills to identify propaganda
- particularly Russian propaganda - targeting a U.S. audience. We collect public-record information
connecting propaganda outlets to each other and their coordinators abroad, analyze what we find,
act as a central repository and point of reference for related information, and organize efforts
to oppose it. 2 We formed PropOrNot as an effort to prevent propaganda from distorting U.S. political
and policy discussions (they want it to be distorted in their own
specific pro-neoliberal way --NNB).
We hope to strengthen our cultural immune systems against hostile influence (there is another
name for that -- it is usually called brainwashing --NNB) and improve public
discourse generally. However, our immediate aim at this point is to empower the American voter and
decrease the ability of Russia to influence the ensuing American election.
paulcraigroberts.org --
this is the fierce anti-establishment site which was created by former highly placed
official in Reagan administration Paul Craig Roberts.
ronpaulinstitute.org --
major libertarian anti-war site of former presidential candidate Ron Paul, who in the past was
the only candidate with realistic and anti-neocon foreign policy platorm. Highly recommended.
"... Why would Obama normally have been thrilled to "start bringing down the deficit?" A budget deficit by a nation with a sovereign currency such as the U.S. is normal statistically and typically desirable when we have a negative balance of trade. No, it is not a "fact" that stimulus "added another $1 trillion to our national debt." Had we not adopted a stimulus program the debt would have grown even larger as our economy fell even more deeply into the Great Recession. ..."
"... Obama admits that stimulus was desirable. He knows that his economists believed that if the stimulus had been larger and lasted longer it would have substantially speeded the recovery. One of the most important reasons why dramatically increased government fiscal spending (stimulus) is essential in response to a Great Recession for a depression is that the logical and typical consumer response to such a downturn is for "families across the country" to "tighten their belts" by reducing spending. That reduces already inadequate demand, which leads to prolonged downturns. Economists have long recognized that it is essential for the government to do the opposite when consumers "tighten their belts" by greatly increasing spending. To claim that it is "common sense" to "do the same" – exacerbate the inadequate demand – because it is a "tough decision" makes a mockery of logic and economics. It is a statement of economic illiteracy leading to a set of policy decisions sure to harm the economy and the Democratic Party. In particular, it guaranteed a nightmare for the working class. ..."
"... No, no, no. I can feel the pain of my colleagues that are scholars in modern monetary theory (MMT). The U.S. has a sovereign currency. We can "pay" a trillion dollar debt by issuing a trillion dollars via keystrokes by the Fed. What Obama meant was that he would propose (over time) to increase taxes and reduce federal spending by one trillion dollars. Such an austerity plan would harm the recovery and reduce important government services. Again, the working class were sure to be the primary victims of Obama's self-inflicted austerity. ..."
"... First, the metaphor is economically illiterate and harmful. A government with a sovereign currency is not a "cash-strapped family." It is not, in any meaningful way, "like" a "cash-strapped family." Indeed, the metaphor logically implies the opposite – that it is essential that because the government is not like a "cash-strapped family" only it can spend in a counter-cyclical fashion (stimulus) to counter the perverse effect of "cash-strapped famil[ies]" cutting back their spending due to the Great Recession. ..."
"... Let's take this slow. In a recession, consumer demand is grossly inadequate so firms fire workers and unemployment increases. We need to increase effective demand. As a recession hits and workers see their friends fired or reduced to part-time work, a common reaction is for workers to reduce their debts, which requires them to reduce consumption. Consumer consumption is the most important factor driving demand, so this effect, which economists call the paradox of thrift, can deepen the recession. Workers are indeed cash-strapped. Governments with sovereign currencies are, by definition, not cash-strapped. They can and should engage in extremely large stimulus in order to raise effective demand and prevent the recession from deepening. Workers will tend to reduce their spending in a pro-cyclical fashion that makes the recession more severe. Only the government can spend in a counter-cyclical fashion that will make the recession less severe and lengthy. ..."
"... The Democrats have to stop attacking Republicans for running federal budget deficits. I know it's political fun and that the Republicans are hypocritical about budget deficits. Deficits are going to be "massive" when an economy the size of the U.S. suffers a Great Recession. We have had plenty of "massive" deficits during our history under multiple political parties. None of this has ever led to a U.S. crisis. We have had some of our strongest growth while running "massive" deficits. Conversely, whenever we have adopted server austerity we have soon suffered a recession. In 1937, when FDR listened to his inept economists and inflicted austerity, the strong recovery from the Great Depression was destroyed and the economy was thrust back into an intense Great Depression. ..."
"... As to the debt "commission" to solve our "debt crisis," it was inevitable that such a commission would be dominated by Pete Peterson protégés and that they would demand austerity and an assault on the federal safety net. That would be a terrible response to the Great Recession and the primary victims of the commission's policies would be the working class. ..."
"... For a nation with a sovereign currency, there is nothing good about the "record surpluses in the 1990s." Such substantial surpluses have occurred roughly nine times in U.S. history and each has been followed shortly by a depression or the Great Recession. This does not prove causality, but it certainly recommends caution. Similarly, "pay-as-you-go" has been the bane of Democratic Party efforts to help the American people. Only a New Democrat like Obama would call for the return of the anti-working class "pay-as-you-go" rules. ..."
"... No. It wouldn't have damaged our markets, increased interest rates or jeopardized our recovery. We had just run an empirical experiment in contrast to the Eurozone. Stimulus greatly enhanced our recovery, while interest rates were at historical lows, and led to surging financial markets. Austerity had done the opposite in the eurozone. ..."
"... Let's try actual common sense instead of metaphors that are economically illiterate. Let's try real economics. Let's stop talking about "mountains of debt" as if they represented a crisis for the U.S. and stop ignoring the tens of millions of working class Americans and Europeans whose lives and families were treated as austerity's collateral damage and were not even worth discussing in Obama's ode to the economic malpractice of austerity. Austerity is the old tired battle that we repeat endlessly to the recurrent cost of the working class. ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor
of economics and law at the University of Missouri-Kansas City. Jointly published at
New Economic Perspectives
I've come back recently from Kilkenny, Ireland where I participated in the seventh annual Kilkenomics
– a festival of economics and comedy. The festival is noted for people from a broad range of economic
perspectives presenting their economic views in plain, blunt English. Kilkenomics VII began two days
after the U.S. election, so we added some sessions on President-elect Trump's fiscal policy views.
Trump had no obvious supporters among this diverse group of economists, so the audience was surprised
to hear many economists from multiple nations take the view that his stated fiscal policies could
be desirable for the U.S. – and the global economy, particularly the EU. We all expressed the caution
that no one could know whether Trump would seek to implement the fiscal policies on which he campaigned.
Most of us, however, said that if he wished to implement those policies House Speaker Paul Ryan would
not be able to block him. I opined that congressional Republicans would rediscover their love of
pork and logrolling if Trump implemented his promised fiscal policies.
The audience was also surprised to hear two groups of economists explain that Hillary Clinton's
fiscal policies remained pure New Democrat (austerity forever) even as the economic illiteracy of
those policies became even clearer – and even as the political idiocy of her fiscal policies became
glaringly obvious. Austerity is one of the fundamental ways in which the system is rigged against
the working class. Austerity was the weapon of mass destruction unleashed in the New Democrats' and
Republicans' long war on the working class. The fact that she intensified and highlighted her intent
to inflict continuous austerity on the working class as the election neared represented an unforced
error of major proportions. As the polling data showed her losing the white working class by staggering
amounts, in the last month of the election, the big new idea that Hillary pushed
repeatedly was a promise that if she were elected she would inflict continuous austerity on the
economy. "I am not going to add a penny to the national debt."
The biggest losers of such continued austerity would as ever be the working class. She also famously
insulted the working class as "deplorables." It was a bizarre approach by a politician to the plight
of tens of millions of Americans who were victims of the New Democrats' and the Republicans' trade
and austerity policies. As we presented these facts to a European audience we realized that in attempting
to answer the question of what Trump's promised fiscal policies would mean if implemented we were
also explaining one of the most important reasons that Hillary Clinton lost the white working class
by such an enormous margin.
Readers of New Economic Perspectives understand why UMKC academics and non-academic supporters
have long shown that austerity is typically a self-destructive policy brought on by a failure to
understand how money works, particularly in a nation like the U.S. with a sovereign currency. We
have long argued that the working class is the primary victim of austerity and that austerity is
a leading cause of catastrophic levels of inequality. Understanding sovereign money is critical also
to understanding why the federal government can and should serve as a job guarantor of last resort.
People, particularly working class men, need jobs, not simply incomes to feel like successful adults.
The federal jobs guarantee program is not simply economically brilliant it is politically brilliant,
it would produce enormous political support from the working class for whatever political party implemented
it.
At Kilkenomics we also used Hillary's devotion to inflicting continuous austerity on the working
class to explain to a European audience how dysfunctional her enablers in the media and her campaign
became. The fact that Paul Krugman was so deeply in her pocket by the time she tripled down on austerity
that he did not call her out on why austerity was terrible economics and terrible policy shows us
the high cost of ceasing to speak truth to power. The fact that no Clinton economic adviser had the
clout and courage to take her aside and get her to abandon her threat to inflict further austerity
on the working class tells us how dysfunctional her campaign team became. I stress again that Tom
Frank has been warning the Democratic Party for over a decade that the policies and the anti-union
and anti-working class attitudes of the New Democrats were causing enormous harm to the working class
and enraging it. But anyone who listened to Tom Frank's warnings was persona non grata in
Hillary's campaign. In my second column in this series I explain that Krugman gave up trying to wean
Hillary Clinton from her embrace of austerity's war on the working class and show that he remains
infected by a failure to understand the nature of sovereign currencies.
What the economists were saying about Trump at Kilkenomics was that there were very few reliable
engines of global growth. China's statistics are a mess and its governing party's real views of the
state of the economy are opaque. Japan just had a good growth uptick, but it has been unable to sustain
strong growth for over two decades. Germany refuses, despite the obvious "win-win" option of spending
heavily on its infrastructure needs to do so. Instead, it persists in running trade and budget surpluses
that beggar its neighbors. England is too small and only Corbyn's branch of Labour and the SNP oppose
austerity. "New Labour" supporters, most of the leadership of the Labour party, like the U.S. "New
Democrats" that served as their ideological model, remain fierce austerity hawks.
That brings us to what would have happened if America's first family of "New Democrats" – the
Clintons – had won the election. The extent to which the New Democrats embraced the Republican doctrine
of austerity became painfully obvious under President Obama. Robert Rubin dominated economic policy
under President Clinton. The Clinton/Gore administration was absolutely dedicated toward austerity.
The administration was the lucky beneficiary of the two massive modern U.S. bubbles – tech stocks
and housing – that eventually produced high employment. Indeed, when the tech bubble popped the economy
was saved by the hyper-inflation of the housing bubble. The housing bubble collapsed on the next
administration's watch, allowing the Clintons and Rubinites to spread the false narrative that their
policies produced superb economic results.
When we think of the start of the Obama administration, we think of the stimulus package. In one
sense this is obvious. The only economically literate response to a Great Recession is massive fiscal
stimulus. When Republicans control the government and confront a recession they always respond with
fiscal stimulus in the modern era. Obama's stimulus plan was not massive, but it sounded like a large
number to the public. Two questions arise about the stimulus plan. Why was Obama willing to implement
it given his and Rubin's hostility to stimulus? Conversely, why, given the great success of the stimulus
plan, did Obama abandon stimulus within months?
Rubin and his protégés had a near monopoly on filling the role of President Obama's key economic
advisors. Larry Summers is a Rubinite, but he is infamous for his ego and he is a real economist
from an extended family of economists. Summers was certain in his (self-described) role as the President's
principal economic adviser to support a vigorous program of fiscal stimulus because the Obama administration
had inherited the Great Recession. Summers knew that any other policy constituted economics malpractice.
Christina Romer, as Chair of the President's Council of Economic Advisers and Jared Bernstein, Vice
President Biden's chief economist, were both real economists who strongly supported the need for
a powerful program of fiscal stimulus. Each of these economists warned President Obama that his stimulus
package was far too small relative to the massive depths of the Great Recession.
Rubin's training was as a lawyer, not as an economist, so Summers was not about to look to Rubin
for economic advice. In fairness to Rubin, he was rarely so stupid as to reject stimulus as the appropriate
initial response to a recession. He
supported President
Bush's 2001 stimulus package in response to a far milder recession and President Obama's 2009 stimulus
package. Rubin does not deserve much fairness. By early 2010, while Rubin admitted that stimulus
is typically the proper response to a recession and that the 2009 stimulus package was successful,
he opposed adding to the stimulus package in
2010 even though he knew that Obama's 2009 stimulus package was, for political reasons, far smaller
than the administration's economists knew was needed.
Here's ex-Treasury Secretary Robert Rubin–one of the chief architects of the global financial
crisis–articulating the position of his proteges at 1600 Pennsylvania Ave.
Robert Rubin: "Putting another major stimulus on top of already huge deficits and rising debt-to-GDP
ratios would have risks. And further expansion of the Federal Reserve Board's balance sheet could
create significant problems . Today's economic conditions would ordinarily be met with expansionary
policy, but our fiscal and monetary conditions are a serious constraint, and waiting too long
to address them could cause a new crisis .
In the spirit of Kilkenomics, we were blunt about the austerity assault that Rubin successfully
argued Obama should resume against America's working class beginning in early 2010. It was inevitable
that it would weaken and delay the recovery. Tens of millions of Americans would leave the labor
force or remain underemployed and even underemployed for a decade. The working class would bear the
great brunt of this loss. In modern America this kind of loss of working class jobs is associated
with mental depression, silent rage, meth, heroin, and the inability of working class males and females
to find a marriage partner, and marital problems. It is a prescription for inflicting agony – and
it is a toxic act of politics.
Prior to becoming a de facto surrogate for Hillary and ceasing to speak truth to her
and to America,
Paul Krugman captured the gap between the Obama administration's perspective and that of most
of the public.
According to the independent committee that officially determines such things, the so-called
Great Recession ended in June 2009, around the same time that the acute phase of the financial
crisis ended. Most Americans, however, disagree. In a March 2014 poll, for example, 57 percent
of respondents declared that the nation was still in recession.
The type of elite Democrats that the New Democrats idealized – the officers from big finance,
Hollywood, and high tech – recovered first and their recovery was a roaring success. Obama, and eventually
Hillary, adopted the mantra that America was already great. Our unemployment rates, relative to the
EU nations forced to inflict austerity on their economies, is much lower. But the Obama/Hillary mantra
was a lie for scores of millions of American workers, including virtually all of the working class
and much of the middle class. As Hillary repeated the mantra they concluded that she was clueless
about and indifferent to their suffering. As we emphasized in Kilkenny, Obama and Hillary were not
simply talking economic nonsense, they were committing political self-mutilation.
Krugman used to make this point forcefully.
[T]he American Recovery and Reinvestment Act, aka the Obama stimulus surely helped end the
economy's free fall. But the stimulus was too small and too short-lived given the depth of the
slump: stimulus spending peaked at 1.6 percent of GDP in early 2010 and dropped rapidly thereafter,
giving way to a regime of destructive fiscal austerity. And the administration's efforts to help
homeowners were so ineffectual as to be risible.
Timothy Geithner, a proponent of austerity, is famous for remarking that he only took only one
economics class – and did not understand it. In the same review of Geithner's book by Krugman that
I have been quoting, Krugman gives a concise summary of Geithner's repeated lies about his supposed
support for a larger stimulus. Jacob Lew, the Rubinite who Obama chose as Geithner's successor as
Treasury Secretary, was also trained as a lawyer and is equally fanatic in favoring austerity. In
2009, no one with any credibility in economics within the Obama administration could serve as an
effective spokesperson for austerity as the ideal response to the Great Recession.
But Romer, Summers, and Bernstein experienced the same frustration as 2009 proceeded. The problem
was not simply the Rubinites' fervor for the self-inflicted wound of austerity – the fundamental
problem was President Obama. Obama's administration was littered with Rubinites because Obama was
a New Democrat who believed that Rubin's love of austerity and trade deals was an excellent policy.
Of course, he had campaigned on the opposite policy positions, but that was simply political and
Obama promptly abandoned those campaign promises. Fiscal stimulus ceased to be an administration
priority as soon as the stimulus bill was enacted. Romer and Summers recognized the obvious and soon
made clear that they were leaving. Bernstein retained Biden's support, but he was frozen out of influence
on administration fiscal policies by the Rubinites.
By 2010, the fiscal stimulus package had begun to accelerate the U.S. recovery. Romer left the
administration in late summer 2010. Summers left at the end of 2010. Bill Daley (also trained as
a lawyer) became Obama's chief of staff in early 2011. Timothy Geithner, and finally Jacob Lew dominated
Obama administration fiscal policy from late 2010 to the end of the administration in alliance with
Daley and other Rubinite economists. It may be important to point out the obvious – Obama chose to
make each of these appointments and there is every reason to believe that he appointed them because
he generally shared their views on austerity. In the first 60 days of his presidency he went before
a Congressional group of New Democrats and told them "
I am a New Democrat ."
Obama began pushing for the fiscal "grand bargain" in 2010. The "grand bargain" would have pushed
towards austerity and begun unraveling the safety net. As such, it was actually the grand betrayal.
Obama's administration began telling the press that Obama viewed achieving such a deal with the Republicans
critical to his "legacy." There were two major ironies involving the grand bargain. Had it been adopted
it would have thrown the U.S. back into recession, made Obama a one-term president, and led to even
more severe losses for the Democratic Party in Congress and at the state level. The other irony was
that it was the Tea Party that saved Obama from Obama's grand betrayal by continually demanding that
Obama agree to inflict more severe assaults on the safety net.
Obama adopted Lew's famous, economically illiterate line and featured it is in his State of the
Union Address as early as January 2010. What follows is a lengthy quotation from that address. I
have put my critiques in italics after several paragraphs. Obama's switch from stimulus to austerity
was Obama's most important policy initiative in his January 2010
State of the Union Address .
The White House
Office of the Press Secretary
For Immediate Release
January 27, 2010
Remarks by the President in State of the Union Address
Now - just stating the facts. Now, if we had taken office in ordinary times, I would have liked
nothing more than to start bringing down the deficit. But we took office amid a crisis. And our
efforts to prevent a second depression have added another $1 trillion to our national debt. That,
too, is a fact.
Why would Obama normally have been thrilled to "start bringing down the deficit?" A budget
deficit by a nation with a sovereign currency such as the U.S. is normal statistically and typically
desirable when we have a negative balance of trade. No, it is not a "fact" that stimulus "added another
$1 trillion to our national debt." Had we not adopted a stimulus program the debt would have grown
even larger as our economy fell even more deeply into the Great Recession.
I'm absolutely convinced that was the right thing to do. But families across the country are
tightening their belts and making tough decisions. The federal government should do the same.
(Applause.) So tonight, I'm proposing specific steps to pay for the trillion dollars that it took
to rescue the economy last year.
Obama admits that stimulus was desirable. He knows that his economists believed that if the
stimulus had been larger and lasted longer it would have substantially speeded the recovery. One
of the most important reasons why dramatically increased government fiscal spending (stimulus) is
essential in response to a Great Recession for a depression is that the logical and typical consumer
response to such a downturn is for "families across the country" to "tighten their belts" by reducing
spending. That reduces already inadequate demand, which leads to prolonged downturns. Economists
have long recognized that it is essential for the government to do the opposite when consumers "tighten
their belts" by greatly increasing spending. To claim that it is "common sense" to "do the same"
– exacerbate the inadequate demand – because it is a "tough decision" makes a mockery of logic and
economics. It is a statement of economic illiteracy leading to a set of policy decisions sure to
harm the economy and the Democratic Party. In particular, it guaranteed a nightmare for the working
class.
No, no, no. I can feel the pain of my colleagues that are scholars in modern monetary theory
(MMT). The U.S. has a sovereign currency. We can "pay" a trillion dollar debt by issuing a trillion
dollars via keystrokes by the Fed. What Obama meant was that he would propose (over time) to increase
taxes and reduce federal spending by one trillion dollars. Such an austerity plan would harm the
recovery and reduce important government services. Again, the working class were sure to be the primary
victims of Obama's self-inflicted austerity.
Starting in 2011, we are prepared to freeze government spending for three years. (Applause.)
Spending related to our national security, Medicare, Medicaid, and Social Security will not be
affected. But all other discretionary government programs will. Like any cash-strapped family,
we will work within a budget to invest in what we need and sacrifice what we don't. And if I have
to enforce this discipline by veto, I will. (Applause.)
First, the metaphor is economically illiterate and harmful. A government with a sovereign
currency is not a "cash-strapped family." It is not, in any meaningful way, "like" a "cash-strapped
family." Indeed, the metaphor logically implies the opposite – that it is essential that because
the government is not like a "cash-strapped family" only it can spend in a counter-cyclical fashion
(stimulus) to counter the perverse effect of "cash-strapped famil[ies]" cutting back their spending
due to the Great Recession.
Let's take this slow. In a recession, consumer demand is grossly inadequate so firms fire
workers and unemployment increases. We need to increase effective demand. As a recession hits and
workers see their friends fired or reduced to part-time work, a common reaction is for workers to
reduce their debts, which requires them to reduce consumption. Consumer consumption is the most important
factor driving demand, so this effect, which economists call the paradox of thrift, can deepen the
recession. Workers are indeed cash-strapped. Governments with sovereign currencies are, by definition,
not cash-strapped. They can and should engage in extremely large stimulus in order to raise effective
demand and prevent the recession from deepening. Workers will tend to reduce their spending in a
pro-cyclical fashion that makes the recession more severe. Only the government can spend in a counter-cyclical
fashion that will make the recession less severe and lengthy.
We will continue to go through the budget, line by line, page by page, to eliminate programs
that we can't afford and don't work. We've already identified $20 billion in savings for next
year. To help working families, we'll extend our middle-class tax cuts. But at a time of record
deficits, we will not continue tax cuts for oil companies, for investment fund managers, and for
those making over $250,000 a year. We just can't afford it. (Applause.)
Now, even after paying for what we spent on my watch, we'll still face the massive deficit
we had when I took office. More importantly, the cost of Medicare, Medicaid, and Social Security
will continue to skyrocket. That's why I've called for a bipartisan fiscal commission, modeled
on a proposal by Republican Judd Gregg and Democrat Kent Conrad. (Applause.) This can't be one
of those Washington gimmicks that lets us pretend we solved a problem. The commission will have
to provide a specific set of solutions by a certain deadline.
The Democrats have to stop attacking Republicans for running federal budget deficits. I know
it's political fun and that the Republicans are hypocritical about budget deficits. Deficits are
going to be "massive" when an economy the size of the U.S. suffers a Great Recession. We have had
plenty of "massive" deficits during our history under multiple political parties. None of this has
ever led to a U.S. crisis. We have had some of our strongest growth while running "massive" deficits.
Conversely, whenever we have adopted server austerity we have soon suffered a recession. In 1937,
when FDR listened to his inept economists and inflicted austerity, the strong recovery from the Great
Depression was destroyed and the economy was thrust back into an intense Great Depression.
As to the debt "commission" to solve our "debt crisis," it was inevitable that such a commission
would be dominated by Pete Peterson protégés and that they would demand austerity and an assault
on the federal safety net. That would be a terrible response to the Great Recession and the primary
victims of the commission's policies would be the working class.
Now, yesterday, the Senate blocked a bill that would have created this commission. So I'll
issue an executive order that will allow us to go forward, because I refuse to pass this problem
on to another generation of Americans. (Applause.) And when the vote comes tomorrow, the Senate
should restore the pay-as-you-go law that was a big reason for why we had record surpluses in
the 1990s. (Applause.)
For a nation with a sovereign currency, there is nothing good about the "record surpluses
in the 1990s." Such substantial surpluses have occurred roughly nine times in U.S. history and each
has been followed shortly by a depression or the Great Recession. This does not prove causality,
but it certainly recommends caution. Similarly, "pay-as-you-go" has been the bane of Democratic Party
efforts to help the American people. Only a New Democrat like Obama would call for the return of
the anti-working class "pay-as-you-go" rules.
Now, I know that some in my own party will argue that we can't address the deficit or freeze
government spending when so many are still hurting. And I agree - which is why this freeze won't
take effect until next year - (laughter) - when the economy is stronger. That's how budgeting
works. (Laughter and applause.) But understand –- understand if we don't take meaningful steps
to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize
our recovery -– all of which would have an even worse effect on our job growth and family incomes.
No. It wouldn't have damaged our markets, increased interest rates or jeopardized our recovery.
We had just run an empirical experiment in contrast to the Eurozone. Stimulus greatly enhanced our
recovery, while interest rates were at historical lows, and led to surging financial markets. Austerity
had done the opposite in the eurozone.
From some on the right, I expect we'll hear a different argument -– that if we just make fewer
investments in our people, extend tax cuts including those for the wealthier Americans, eliminate
more regulations, maintain the status quo on health care, our deficits will go away. The problem
is that's what we did for eight years. (Applause.) That's what helped us into this crisis. It's
what helped lead to these deficits. We can't do it again.
Rather than fight the same tired battles that have dominated Washington for decades, it's time
to try something new. Let's invest in our people without leaving them a mountain of debt. Let's
meet our responsibility to the citizens who sent us here. Let's try common sense. (Laughter.)
A novel concept.
Let's try actual common sense instead of metaphors that are economically illiterate. Let's
try real economics. Let's stop talking about "mountains of debt" as if they represented a crisis
for the U.S. and stop ignoring the tens of millions of working class Americans and Europeans whose
lives and families were treated as austerity's collateral damage and were not even worth discussing
in Obama's ode to the economic malpractice of austerity. Austerity is the old tired battle that we
repeat endlessly to the recurrent cost of the working class.
Trump is Not Locked into Austerity
I note the same caution we gave in Ireland – we don't know whether President Trump will seek to
implement his economic proposals. Trump has proposed trillions of dollars in increased spending on
infrastructure and defense and large cuts in corporate taxation. In combination, this would produce
considerable fiscal stimulus for several years. The point we made in Ireland is that if he seeks
to implement his proposals (a) we believe he would succeed politically in enacting them and (b) they
would produce stimulus that would have a positive effect on the near and mid-term economy of the
U.S. Further, because the eurozone is locked into a political trap in which there seems no realistic
path to abandoning the self-inflicted wound of continuous austerity, Trump represents the eurozone's
most realistic hope for stimulus.
Final Cautions
Each of the economists speaking on these subjects in Kilkenny opposed Trumps election and believe
it will harm the public. Fiscal stimulus is critical, but it is only one element of macroeconomics
and no one was comfortable with Trump's long-term control of the economy. I opined, for example,
that Trump will create an exceptionally criminogenic environment that will produce epidemics of control
fraud. The challenge for progressive Democrats and independents is to break with the New Democrats'
dogmas. Neither America nor the Democratic Party can continue to bear the terrible cost of this unforced
error of economics, politics, and basic humanity. I fear that the professional Democrats assigned
the task of re-winning the support of the white working class do not even have ending the New Democrats'
addiction to austerity on their radar. They are probably still forbidden to read Tom Frank.
Seems to me that Ryan is not Trump's principal impediment, that Trump knows this, and that
the battle lines are already in the process of being drawn. Veiled threat?.. or, "Let's make a
deal"?
"In addition, with the debt-to-GDP ratio at around 77 percent there is not a lot of fiscal
space should a shock to the economy occur, an adverse shock that did require fiscal stimulus,"
she said.
Sovereign currency defense appears to be the primary job for the US both domestically and internationally.
There is a house of cards tenuous aspect to the US policies, with looming questions about
the ongoing stability of the domestic economy and society. Threats to that sovereign position
would seem to be present over the long term from China in particular. To what extent does currency
defense justify any manner of harmful policies, certainly given the perceived ends justify
the means tacit assumptions?
"... For more than three decades, macroeconomics has gone backwards," the paper began. Romer closed out his argument, some 20 pages later, by accusing a cohort of economists of drifting away from science, more interested in preserving reputations than testing their theories against reality, "more committed to friends than facts." In between, he offers a wicked parody of a modern macro argument: "Assume A, assume B, blah blah blah and so we have proven that P is true ..."
"... The idea that consumers and businesses always make rational choices pervades mainstream economics. Romer thinks that's not only wrong, but may lead to the misleading conclusion that government action can't fix big problems. ..."
"... There is no better place to be writing this than from (nearly) Minneapolis, for the University of Minnesota's economics department is the most devoted coven worshipping the most extreme form of "rational expectations." The most famous cultists have now relocated, but the U. Minnesota economics department remains fanatical in its devotion to rational expectations theory. ..."
"... All of this means that Romer's denunciations were sure to hit home far harder with mainstream and theoclassical economists than anything a heterodox economist could write. ..."
"... What this paragraph reveals is the classic tactic of theoclassical economists – they simply ignore real criticism. Lucas, Prescott, and Sargent all care desperately about Romer's criticism – but they all refuse to engage substantively with his critique. One has to love the arrogance of Sargent in "responding" – without reading – to Romer's critique. Sargent cannot, of course, respond to a critique he has never read so he instead makes a crude attempt to insult Romer, asserting that Romer has not done any scientific work in three decades. ..."
"... The rational expectations purists have been unable to come up with a response to their predictive failures and their false model of human behavior for thirty years. The Bloomberg article does not understand a subtle point about their non-defense defense, as shown in these key passages. ..."
"... What the rational expectations devotees are actually saying is their standard line, which is a radical departure from the scientific method. Their mantra is "it takes a model to beat a model." That mantra violates the scientific method. Their models are designed to embody their rational expectations theory. Those models' predictive ability is pathetic, which means that their theory and models are both falsified and should be rejected. The academic proponents of modern macro models, however, assert that their models are incapable of falsification by testing and predictive failure. This is not science, but theology. ..."
"... V.V. Chari's criticism of Romer is revealing. He complains that Romer does not want to "build on [rational expectation theory's] foundations." Why would Romer want to commit such a pointless act? Romer's point is that rational expectations is a failed theory that needs to be rejected so macroeconomics can move on to useful endeavors. ..."
"... Rational expectations theory has no such empirical foundations. ..."
"... Further, the dynamic stochastic general equilibrium (DSGE) models routinely fail the predictive test and, as Romer details, fail despite the use of dozens of ways in which the models are "gamed" with arbitrary inputs and restrictions that have no theoretical or empirical basis. Chari is right to describe the modern macro model as an "edifice." I would add that it is a baroque edifice top heavy with ornamental features designed to hide its lack of a foundation. Modern macro collapsed as soon as its devotees tried to build without an empirical foundation. ..."
"... The rational expectation devotees respond that predictive failures – no matter how extreme or frequent – cannot falsify their models or their theories. The proponents claim that only a better model, with superior predictive ability can beat their model. ..."
"... Kocherlakota's summary description is appropriately terse. He later explains the dogmatic gloss that devotees place on each of these five points. The "budget constraint," for example, means that nations with sovereign currencies such as the U.S. cannot run deficits, even to fight severe recessions or depressions. Why? Because theoclassical economists are enormous believers in austerity. As Kocherlakota archly phrased the matter, "freshwater" DSGE models were so attractive to theoclassical macro types because their model perfectly tracked their ideology. ..."
"... Specifying household preferences and firm objectives is equally erroneous, as Akerlof and Romer's 1993 article on "Looting" demonstrated. "Firms" do not have "objectives." Employees have "objectives," and the controlling officers' "objectives" are the most powerful drivers of employee behavior. ..."
"... Kocherlakota unintentionally highlighted modern macros' inability to incorporate even massive frauds driving national scandals and banking crises, despite the efforts of Akerlof (1970) (a market for "lemons") and Akerlof and Romer 1993: ("looting") in this passage. ..."
"... If macroeconomics, outside the cult of modern macro, were a car, it would not be "broken." It would be episodically broken when the rational expectations devotees got hold of monetary or fiscal policy. The rational expectations model fails the most fundamental test of a financial model – people trying to make money by anticipating the macroeconomics consequences of changes in monetary and fiscal policy overwhelmingly do not use their models because they are known to have pathetic predictive ability. The alternative models that embrace Keynesian analysis and are not dependent on the fiction of rational expectations function pretty well. The real world macro car, when driven by real world drivers, works OK. Essentially, the rational expectations devotees say that we can never drive the macro "car" because the public will defeat any effort to drive the economy in any direction. Instead, the economy will lurch about n response to random technological "shocks" that cannot be predicted because they occur without any relationship to any public policy choices. ..."
"... I am completely confused about the prediction of "rational choices". Do they include going bankrupt on purpose and letting your investors take the hit, burning your building down for the insurance money, hostile takeover behavior where businesses are run into the ground on purpose, tax strategies, people going on unemployment when they want a vacation from work, and on and on? These are decisions that have a rationale for the people who make them, and they have not been uncommon. Perhaps "economists" are best off observing not predicting "human behavior". ..."
"... I majored in economics. as you go up higher up into the dismal science, the more deranged it gets. The reason they are vague is because they don't know what they are talking about. They don't consider the real world, and as Bill Black's so brilliantly points out, they are in no hurry to out themselves as frauds. ..."
"... thanks, Simon. there must be something in those mental masturbation models for some people. justification for something the 99 % are all paying for most likely ..."
"... In some natural sciences, abandoning equilibrium models and replacing them with dynamic models have led to great progress, and looking at the actual time evolution of economies, there is a great deal of dynamics, such as growth, recessions, demography, natural catastrophes, immigration/emigration, resource discovery and depletion, technological progress. ..."
"... Since our economy has been gradually going casino for so many years, it makes sense that the folks who hold the reigns would make every effort to assure that all their key players adhere to their singular perspectives. ..."
"... The Nobel Memorial Prize in economics promotes the illusion that economics is a science. It is better conceptualized as a literary genre, and economists should be forced to compete with other writers for the prize in literature. ..."
"... Bill Black has a fascinating opinion on unnecessary complexity and I agree with him 200 percent. ..."
"... interesting about Kocherlakota formerly being a rational expectations devotee just the phrase 'rational expectations' is mind boggling as if there were no reaction to any action anywhere. Jack Bogle was on the news this morning laughing about stock picking and saying that every stock picker that makes money is balanced out by another one who loses money and so the only thing that makes money net-net is the long term progress of the market, (or society I would say – and that requires planning). ..."
"... Not one mention of Chaos or Catastrophe Theory, which are theories of systems with non linear feedback (aka: Fear and Greed), which appear to me to be fundamental aspects of Economics, especially the humans who are the Economy. ..."
"... Two slogans I read somewhere recently seem appropriate for theoclassical economics: Ideology is easy, thinking is hard. Belief is belonging. ..."
"... One doesn't have to have read any Reformation theology, but only to have observed more or less casually that human being are scarcely rational even about their own self-interest, and then only self-deceptively. Thomas Frank has commented effectively on that point in the political arena in What's the Matter with Kansas. To wit: Republicans have, he points out, diverted voters attention to social/cultural issues while picking their pockets. Perhaps one might sense an intersection of politics and economics on the latter point. ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor
of economics and law at the University of Missouri-Kansas City. Jointly published at
New Economic Perspectives
Bloomberg has written an article about the origins of Paul Romer's increasingly famous
critique of modern macroeconomics.
His intention actually had been to write a paper that would celebrate advances in the understanding
of what drives economic growth. But when he sat down to write it in the months before taking over
as the World Bank's chief economist, Romer quickly found his heart wasn't in it. The world economy
wasn't growing much anyway; and the math that many colleagues were using to model it seemed unrealistic.
He watched a documentary about the Church of Scientology, and was struck by how groupthink can
operate.
So, Romer said in an interview at the Bank's Washington headquarters, "I just thought, OK,
I'm going to say what I think. I don't know if I'm the right person, but no one else is going
to say it. So I said it."
The upshot was "The Trouble With Macroeconomics," a scathing critique that landed among Romer's
peers like a grenade.
A bit of background makes the first paragraph more understandable. Romer's specialty is developmental
economics.
There are many economists who have said for years that modern macroeconomics is an abject failure.
But all economists are not equal, and Romer is both an extremely distinguished economist and the
World Bank's chief economist. When he writes that macroeconomics is absurd his position gets vastly
more attention from the field.
The Bloomberg article humorously summarizes Romer's article.
"For more than three decades, macroeconomics has gone backwards," the paper began. Romer
closed out his argument, some 20 pages later, by accusing a cohort of economists of drifting away
from science, more interested in preserving reputations than testing their theories against reality,
"more committed to friends than facts." In between, he offers a wicked parody of a modern macro
argument: "Assume A, assume B, blah blah blah and so we have proven that P is true."
The idea that consumers and businesses always make rational choices pervades mainstream
economics. Romer thinks that's not only wrong, but may lead to the misleading conclusion that
government action can't fix big problems.
There is no better place to be writing this than from (nearly) Minneapolis, for the University
of Minnesota's economics department is the most devoted coven worshipping the most extreme form of
"rational expectations." The most famous cultists have now relocated, but the U. Minnesota economics
department remains fanatical in its devotion to rational expectations theory.
A belief that consumers and businesses always make rational choices does not "pervade mainstream
economics." Mainstream economics is increasingly influenced by reality, particularly in the form
of behavioral economics. Behavioral economics, which has led to multiple Nobel awards, has many currents,
but each of them agrees that consumers and business people typically do not make rational decisions
even in simpler tasks, much less demonstrate the ability to predict the future required by rational
expectations theory. Similarly, even the proponents of modern macroeconomics admit that its predictive
ability – and predictive ability is supposed to be their holy grail of legitimacy – is beyond pathetic.
What is true is that mainstream economics' most egregious errors have come from assuming contrary
to reality in a wide range of contexts that corporate officers, consumers, and investors make optimal
decisions that maximize the firm or the household's utility.
In any real scientific field modern macro would, decades ago, have been abandoned as an abject
failure. Romer, therefore, is not storming some impregnable bulwark of economics. He is calling an
obvious, abject failure an obvious, abject failure. Private sector finance participants typically
believe the academic proponents of rational expectations theory are delusional. Romer is calling
out elites in his profession who have ignored these failures and doubled and tripled-down on their
failed dogmas for decades. This makes the Bloomberg article's title deeply misleading: "The
Rebel Economist Who Blew Up Macroeconomics."
Romer is not a rebel. He did not blow up academic, mainstream macroeconomics – the academic proponents
of modern macroeconomics blew it up decades ago. Romer is mainstream, and he is sympathetic on personal
and ideological grounds to the theoclasscial economist most famous for developing rational expectations
theory. Romer has strongly libertarian views and did his doctoral work under Robert Lucas. Romer
has long been appreciative of Lucas. All of this means that Romer's denunciations were sure to
hit home far harder with mainstream and theoclassical economists than anything a heterodox economist
could write.
The same Bloomberg article made a key factual claim that is literally true but misleading.
What's at stake far exceeds hurt feelings in the ivory tower. Central banks and other policy
makers use the models that Romer says are flawed.
Central banks and private economic forecasters rarely use modern macro models, though they have
begun to use New Keynesian models that are hybrids. They do not do use "freshwater" models because
they are known to have terrible predictive ability and because alternative models not based on rational
expectations have far superior predictive ability. The private financial sector typically does not
rely on modern macro models, even the New Keynesian hybrids. Romer is not saying that the models
are "flawed" – he is explaining that they are inherently failed models. Worse, he is saying that
the designers of the models know they are failed and respond by gimmicking the models by littering
them with myriad assumptions that have no empirical or theoretical basis and are designed to try
to make the models produce less absurd results.
I explained that Romer was far from the first to call out modern academic macroeconomics as a
failure but that he is a prominent mainstream economist. The Bloomberg article's most interesting
reveal was the response by the troika of economists must associated with rational expectations theory
to Romer's article decrying their dogmas.
Lucas and Prescott didn't respond to requests for comments on Romer's paper. Sargent did. He
said he hadn't read it, but suggested that Romer may be out of touch with the ways that rational-expectations
economists have adapted their models to reflect how people and firms actually behave. Sargent
said in an e-mail that Romer himself drew heavily on the school's insights, back when he was "still
doing scientific work in economics 25 or 30 years ago."
What this paragraph reveals is the classic tactic of theoclassical economists – they simply
ignore real criticism. Lucas, Prescott, and Sargent all care desperately about Romer's criticism
– but they all refuse to engage substantively with his critique. One has to love the arrogance of
Sargent in "responding" – without reading – to Romer's critique. Sargent cannot, of course, respond
to a critique he has never read so he instead makes a crude attempt to insult Romer, asserting that
Romer has not done any scientific work in three decades.
The rational expectations purists have been unable to come up with a response to their predictive
failures and their false model of human behavior for thirty years. The Bloomberg article does
not understand a subtle point about their non-defense defense, as shown in these key passages.
Allies of the three Nobelists have been more outspoken, and many of them point out that Romer
- unlike Keynes in the 1930s - doesn't offer a new framework to replace the one he says has failed.
"Burning down the edifice, and saying we'll figure out what we'll build on its foundations
later, just does not seem like a constructive way to proceed," said V. V. Chari, an economics
professor at the University of Minnesota.
Romer's heard that line often, and bristles at it: "I'm saying, 'the car is broken.' And everyone's
saying, 'Romer's a terrible guy, because he couldn't fix the car'."
What the rational expectations devotees are actually saying is their standard line, which
is a radical departure from the scientific method. Their mantra is "it takes a model to beat a model."
That mantra violates the scientific method. Their models are designed to embody their rational expectations
theory. Those models' predictive ability is pathetic, which means that their theory and models are
both falsified and should be rejected. The academic proponents of modern macro models, however, assert
that their models are incapable of falsification by testing and predictive failure. This is not science,
but theology.
V.V. Chari's criticism of Romer is revealing. He complains that Romer does not want to "build
on [rational expectation theory's] foundations." Why would Romer want to commit such a pointless
act? Romer's point is that rational expectations is a failed theory that needs to be rejected so
macroeconomics can move on to useful endeavors.
A "foundation" in such a building metaphor is the deep, well-grounded stone or reinforced concrete
beneath the visible building that is attached to solid bedrock. Rational expectations theory
has no such empirical foundations. It was not based on testing that found that people behaved
in accordance with the theory. Behavioral economics and finance, by contrast, is based on a growing
empirical base – virtually all of which refutes the first three assumptions of the models. Similarly,
the work of Akerlof (1970), Akerlof & Romer (1993), and the work of white-collar criminologists has
falsified each of the first three assumptions of the models.
Further, the dynamic stochastic general equilibrium (DSGE) models routinely fail the predictive
test and, as Romer details, fail despite the use of dozens of ways in which the models are "gamed"
with arbitrary inputs and restrictions that have no theoretical or empirical basis. Chari is right
to describe the modern macro model as an "edifice." I would add that it is a baroque edifice top
heavy with ornamental features designed to hide its lack of a foundation. Modern macro collapsed
as soon as its devotees tried to build without an empirical foundation.
The rational expectation devotees respond that predictive failures – no matter how extreme
or frequent – cannot falsify their models or their theories. The proponents claim that only a better
model, with superior predictive ability can beat their model. That might sound acceptable to
some, but there is a critical unstated twist. The many rival models actually used by the private
sector and central banks that produce far superior predictive ability can never be treated as "better
models" to these devotees because the models with far superior predictive powers reject rational
expectations theory, rational decision-making, and the "budget constraint." To the devotees, only
DSGE models that accept this trio of market fictions are eligible to be acceptable "models." Dr.
Kocherlakota states that acceptable models "share five key features." These five characteristics
define DSGE models.
They specify budget constraints for households, technologies for firms, and resource constraints
for the overall economy. They specify household preferences and firm objectives. They assume forward-looking
behavior for firms and households. They include the shocks that firms and households face. They are
models of the entire macroeconomy.
Kocherlakota's summary description is appropriately terse. He later explains the dogmatic
gloss that devotees place on each of these five points. The "budget constraint," for example, means
that nations with sovereign currencies such as the U.S. cannot run deficits, even to fight severe
recessions or depressions. Why? Because theoclassical economists are enormous believers in austerity.
As Kocherlakota archly phrased the matter, "freshwater" DSGE models were so attractive to theoclassical
macro types because their model perfectly tracked their ideology.
[A]lmost coincidentally-in these models, all government interventions (including all forms
of stabilization policy) are undesirable.
Yes, "almost coincidentally."
Specifying household preferences and firm objectives is equally erroneous, as Akerlof and
Romer's 1993 article on "Looting" demonstrated. "Firms" do not have "objectives." Employees have
"objectives," and the controlling officers' "objectives" are the most powerful drivers of employee
behavior.
As Akerlof and Romer (and every modern crisis) demonstrated, this frequently leads to firm practices
that harm the firm, the consumer, and the shareholders. Such behavior, however, is impossible under
the second assumption, so any model (such as control fraud or "looting") that violates the assumption
is not eligible to be a rival model because it these superior models do not produce "general equilibrium."
The "GE" in a "DSGE" model is general equilibrium, so rival models from economics and criminology
that note that the economy is not a self-correcting apparatus that produces general equilibrium are
ruled out as superior models even though they are superior in that they have an empirical and theoretical
basis and demonstrate far superior predictive results.
Kocherlakota unintentionally highlighted modern macros' inability to incorporate even massive
frauds driving national scandals and banking crises, despite the efforts of Akerlof (1970) (a market
for "lemons") and Akerlof and Romer 1993: ("looting") in this passage.
In the macro models of the 1980s, all mutually beneficial trades occur without delay. This
assumption of frictionless exchange made solving these models easy. However, it also made
the models less compelling.
He then goes on to a delighted description of macro economists now sometimes building in (arbitrary)
lags ("frictions") in the time required to accomplish "all mutually beneficial trades." But what
of the three great fraud epidemics that produced the U.S. financial crisis and the Great Recession?
Sorry, that's not allowed into the "friction" canon. The market model is still one of perfection
(albeit slightly delayed). It does not matter how many massive financial scandals occur in which
the largest UK banks and Wells Fargo deliberately abuse their customers by encouraging them to engage
in transactions that will harm them and make the bankers rich. It doesn't not matter that over ten
million Americans were induced by bankers and their agents to pay excessive interest rates in return
for yield spread premiums (YSP) to the bankers and brokers. None of these things are allowed to happen
in these models. Your better model, which includes such frauds and abuses, is not allowed precisely
because it (a) is better and (b) falsifies the theoclassical ideology underlying "rational expectations"
theory.
The assumption of "forward looking behavior" produces "expectations," which are assumed to be
accurate and rational. Theoclassical proponents claim that we all have the ability to predict vast
aspects of the financial future. While we are not perfect, we are optimal in our forecasts given
the state of knowledge. If your rival model lacks rational expectations, it isn't a real model. Romer
rejects the rational expectations myth, so he is incapable of presenting a superior model to the
devotees of rational expectations.
If macroeconomics, outside the cult of modern macro, were a car, it would not be "broken."
It would be episodically broken when the rational expectations devotees got hold of monetary or fiscal
policy. The rational expectations model fails the most fundamental test of a financial model – people
trying to make money by anticipating the macroeconomics consequences of changes in monetary and fiscal
policy overwhelmingly do not use their models because they are known to have pathetic predictive
ability. The alternative models that embrace Keynesian analysis and are not dependent on the fiction
of rational expectations function pretty well. The real world macro car, when driven by real world
drivers, works OK. Essentially, the rational expectations devotees say that we can never drive the
macro "car" because the public will defeat any effort to drive the economy in any direction. Instead,
the economy will lurch about n response to random technological "shocks" that cannot be predicted
because they occur without any relationship to any public policy choices.
Romer takes particular delight in shredding the pretension to "science" in the model's abuse of
shocks. Again, however, the Bloomberg article seriously misleads in making it appear that
his critique of shocks is novel. Then Minneapolis Fed Chair Dr.
Kocherlakota (formerly chair of the U. Minnesota economics department, where he was a "rational
expectations" devotee) forcefully owned up to the egregious predictive failures of the models. He
acknowledged that "macro models are driven by patently unrealistic shocks."
It is unfortunate that Bloomberg article about Romer's article is weak. It is useful, however,
because its journalistic inquiry allows us to know how deep in their bunker Sargent, Lucas, and Prescott
remain. They still refuse to engage substantively with Romer's critique of not only their failures
but their intellectual dishonesty and cowardice. It is astonishing that multiple economists were
awarded Nobel prizes for creating the increasingly baroque failure of modern macro. In any other
field it would be a scandal that would shake the discipline to the core and cause it to reexamine
how it conducted research and trained faculty. In economics, however, a huge proportion of Nobel
awards have gone to theoclassical economists whose predictions have been routinely falsified and
whose policy recommendations have proven disastrous. Theoclassical economists, with only a handful
of exceptions, express no concern about these failures.
I am completely confused about the prediction of "rational choices". Do they include going
bankrupt on purpose and letting your investors take the hit, burning your building down for the
insurance money, hostile takeover behavior where businesses are run into the ground on purpose,
tax strategies, people going on unemployment when they want a vacation from work, and on and on?
These are decisions that have a rationale for the people who make them, and they have not been
uncommon. Perhaps "economists" are best off observing not predicting "human behavior".
I was fortunate enough to have an econ. prof. (mid 70's) who was also my student counselor
tell me that unless I intended to work for the gov't or teach the subject, a degree in econ. was
pointless. What's taught in class has very little to do with the real world.
Anyone who contends that econ is a "science" rather than philosophy is deluded or just trying
to protect their place in the hierarchy. Seems that "physics envy" is never going away.
I'll see your DSGE model & raise with with the IBGYBG* model; in theory, you should win that
hand but I'll be walking away with the actual money.
*(by the time this blows up) I'll Be Gone & You'll Be Gone
I majored in economics. as you go up higher up into the dismal science, the more deranged
it gets. The reason they are vague is because they don't know what they are talking about. They
don't consider the real world, and as Bill Black's so brilliantly points out, they are in no hurry
to out themselves as frauds.
thanks, Simon. there must be something in those mental masturbation models for some people.
justification for something the 99 % are all paying for most likely
I am not sure which is the greatest shortcoming of the macro-economy theory described by Black:
rational expectations or global equilibrium?
In some natural sciences, abandoning equilibrium models and replacing them with dynamic
models have led to great progress, and looking at the actual time evolution of economies, there
is a great deal of dynamics, such as growth, recessions, demography, natural catastrophes, immigration/emigration,
resource discovery and depletion, technological progress.
I sometimes like to use the analogy of the famous failure of the Tacoma Narrows bridge failure.
The engineers calculated the maximum force that the wind would have on the bridge, but didn't
calculate the dynamic aerodynamic effect as the bridge deck swayed in the wind. The result was
a spectacular failure.
Since our economy has been gradually going casino for so many years, it makes sense that
the folks who hold the reigns would make every effort to assure that all their key players adhere
to their singular perspectives.
The most important of these perspectives is that there is no higher human purpose than to make
a lot of money, in essence, that greed is good.
Thus the problem facing economists worshiping at the altar of "rational expectations" is that
the only rational expectation that is accepted as 'truly rational', is first and foremost, the
love of money.
This leads to problems for businesses, as truly selfish, and money-motivated people are actually
rare, as most people have a wide range of possible motivations working in their lives.
This is why business 'leaders' give prospective employees tests to find the people they can
'trust', which is to say find those who are motivated by money, which is the only motivating factor
our masters find useful.
Of course those who are motivated exclusively by the love of money are also those who believe
that austerity is the proper medicine for the rest of us.
There's one more thing about people who are motivated only by the need to accumulate money,
they also tend to steal anything that isn't tied down.
This doesn't bother FIRE sector employers since they are only concerned to ferret-out those
whose motivations might be polluted by inclinations other than greed.
Anyway, it seems to me that the importance of 'rational expectations' is in predicting the
behavior of FIRE sector employees, not the economy as a whole.
As far as the bulk of humanity goes, the only true 'rational expectation' is that people have
many and varied motivations that make it hard to predict their behavior.
Hey Econ. Prof. – I'll see your DSGE model & raise with my IBGYBG** model. In theory, you'll
win the hand but we'll see who actually walks away the money.
**(by the time this thing blows up) I'll Be Gone, You'll Be Gone
The Nobel Memorial Prize in economics promotes the illusion that economics is a science.
It is better conceptualized as a literary genre, and economists should be forced to compete with
other writers for the prize in literature.
We need to get back to basics, to the real economy of people and necessary supplies to support
people. Model a simple city, with a simple agricultural hinterland. You can know how many bushels
of grain equivalent are necessary for subsistence economy. You can know how many people you have
in the countryside and in the city. You can know how many bushels of grain equivalent are in storage.
You can estimate how much of the economy is barter and how much is cash purchase. You can know
how much money is in circulation, and from those determine what velocity the money needs to have,
to pay for all that bushels of grain equivalent. You don't need calculus, just arithmetic. End
the sophistry and obscurity thru unnecessary complexity.
interesting about Kocherlakota formerly being a rational expectations devotee just the
phrase 'rational expectations' is mind boggling as if there were no reaction to any action anywhere.
Jack Bogle was on the news this morning laughing about stock picking and saying that every stock
picker that makes money is balanced out by another one who loses money and so the only thing that
makes money net-net is the long term progress of the market, (or society I would say – and that
requires planning).
Not one mention of Chaos or Catastrophe Theory, which are theories of systems with non
linear feedback (aka: Fear and Greed), which appear to me to be fundamental aspects of Economics,
especially the humans who are the Economy.
Perhaps an approach to a solution for economists who are rightly disgusted with the continuing
failures of macroeconomics is to confess that economics is theology/philosophy and not science.
Economics lands on the "mammon" side of serving God or mammon.
One doesn't have to have read any Reformation theology, but only to have observed more
or less casually that human being are scarcely rational even about their own self-interest, and
then only self-deceptively. Thomas Frank has commented effectively on that point in the political
arena in What's the Matter with Kansas. To wit: Republicans have, he points out, diverted voters
attention to social/cultural issues while picking their pockets. Perhaps one might sense an intersection
of politics and economics on the latter point.
There is less need to moralize about "sin" than to see it as an heuristic. That is, one might
begin by assuming that businesses and individuals are not only guided by rationality, but to the
contrary are aided by economists, say, of the U of Minnesota ilk, to rely upon the myth of rationality
to cloak fundamental selfishness, which economists have neutered by casting it as "self-interest."
Selfishness is the root of continuing, destructive "irrationality," because it is part of what
defines a root of sin, i.e., missing the mark.
An economics of gratitude for shared abundance would be closer to the mark.
"... What we have been seeing worldwide, from India to the UK to the US, is the rebellion against the inner circle of no-skin-in-the-game policymaking "clerks" and journalists-insiders, that class of paternalistic semi-intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-driven education who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think and 5) who to vote for. ..."
"... Indeed one can see that these academic-bureaucrats wanting to run our lives aren't even rigorous, whether in medical statistics or policymaking. They cant tell science from scientism -- in fact in their eyes scientism looks more scientific than real science. (For instance it is trivial to show the following: much of what the Cass-Sunstein-Richard Thaler types -- those who want to "nudge" us into some behavior -- much of what they call "rational" or "irrational" comes from their misunderstanding of probability theory and cosmetic use of first-order models.) They are prone to mistake the ensemble for the linear aggregation of its components as we saw in the chapter extending the minority rule . ..."
"... The Intellectual Yet Idiot is a production of modernity hence has been accelerating since the mid twentieth century, to reach its local supremum today, along with the broad category of people without skin-in-the-game who have been invading many walks of life. Why? Simply, in many countries, the government's role is ten times what it was a century ago (expressed in percentage of GDP). The IYI seems ubiquitous in our lives but is still a small minority and rarely seen outside specialized outlets, social media, and universities -- most people have proper jobs and there are not many opening for the IYI. ..."
"... When Plebeians do something that makes sense to them, but not to him, the IYI uses the term "uneducated". What we generally call participation in the political process, he calls by two distinct designations: "democracy" when it fits the IYI, and "populism" when the plebeians dare voting in a way that contradicts his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote, with some equivalence for foreign elite schools, and PhDs as these are needed in the club. ..."
"... More socially, the IYI subscribes to The New Yorker. He never curses on twitter. He speaks of "equality of races" and "economic equality" but never went out drinking with a minority cab driver. Those in the U.K. have been taken for a ride by Tony Blair. The modern IYI has attended more than one TEDx talks in person or watched more than two TED talks on Youtube. Not only will he vote for Hillary Monsanto-Malmaison because she seems electable and some other such circular reasoning, but holds that anyone who doesn't do so is mentally ill. ..."
What we have been seeing worldwide, from India to the UK to the US, is the rebellion against the
inner circle of no-skin-in-the-game policymaking "clerks" and journalists-insiders, that class of
paternalistic semi-intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-driven
education who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to
think and 5) who to vote for.
But the problem is the one-eyed following the blind: these self-described members of the "intelligencia"
can't find a coconut in Coconut Island, meaning they aren't intelligent enough to define intelligence
and fall into circularities - but their main skills is capacity to pass exams written by people like
them .
With psychology papers replicating less than 40%, dietary advice reversing after 30 years of fatphobia,
macroeconomic analysis working worse than astrology, the appointment of Bernanke who was less than
clueless of the risks, and pharmaceutical trials replicating at best only 1/3th of the time, people
are perfectly entitled to rely on their own ancestral instinct and listen to their grandmothers (or
Montaigne and such filtered classical knowledge) with a better track record than these policymaking
goons.
Indeed one can see that these academic-bureaucrats wanting to run our lives aren't even rigorous,
whether in medical statistics or policymaking. They cant tell science from scientism -- in fact in
their eyes scientism looks more scientific than real science. (For instance it is trivial to show
the following: much of what the Cass-Sunstein-Richard Thaler types -- those who want to "nudge" us
into some behavior -- much of what they call "rational" or "irrational" comes from their misunderstanding
of probability theory and cosmetic use of first-order models.) They are prone to mistake the ensemble
for the linear aggregation of its components as we
saw in the chapter extending the minority rule .
The Intellectual Yet Idiot is a production of modernity hence has been accelerating since the
mid twentieth century, to reach its local supremum today, along with the broad category of people
without skin-in-the-game who have been invading many walks of life. Why? Simply, in many countries,
the government's role is ten times what it was a century ago (expressed in percentage of GDP). The
IYI seems ubiquitous in our lives but is still a small minority and rarely seen outside specialized
outlets, social media, and universities -- most people have proper jobs and there are not many opening
for the IYI.
Beware the semi-erudite who thinks he is an erudite.
The IYI pathologizes others for doing things he doesn't understand without ever realizing it is
his understanding that may be limited. He thinks people should act according to their best interests
and he knows their interests, particularly if they are "red necks" or English non-crisp-vowel class
who voted for Brexit.
When Plebeians do something that makes sense to them, but not to him, the IYI uses the term "uneducated".
What we generally call participation in the political process, he calls by two distinct designations:
"democracy" when it fits the IYI, and "populism" when the plebeians dare voting in a way that contradicts
his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one
man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote,
with some equivalence for foreign elite schools, and PhDs as these are needed in the club.
More socially, the IYI subscribes to The New Yorker. He never curses on twitter. He speaks of
"equality of races" and "economic equality" but never went out drinking with a minority cab driver.
Those in the U.K. have been taken for a ride by Tony Blair. The modern IYI has attended more than
one TEDx talks in person or watched more than two TED talks on Youtube. Not only will he vote for
Hillary Monsanto-Malmaison because she seems electable and some other such circular reasoning, but
holds that anyone who doesn't do so is mentally ill.
The IYI has a copy of the first hardback edition of The Black Swan on his shelves, but mistakes
absence of evidence for evidence of absence. He believes that GMOs are "science", that the "technology"
is not different from conventional breeding as a result of his readiness to confuse science with
scientism.
Typically, the IYI get the first order logic right, but not second-order (or higher) effects making
him totally incompetent in complex domains. In the comfort of his suburban home with 2-car garage,
he advocated the "removal" of Gadhafi because he was "a dictator", not realizing that removals have
consequences (recall that he has no skin in the game and doesn't pay for results).
The IYI is member of a club to get traveling privileges; if social scientist he uses statistics
without knowing how they are derived (like Steven Pinker and psycholophasters in general); when in
the UK, he goes to literary festivals; he drinks red wine with steak (never white); he used to believe
that fat was harmful and has now completely reversed; he takes statins because his doctor told him
so; he fails to understand ergodicity and when explained to him, he forgets about it soon later;
he doesn't use Yiddish words even when talking business; he studies grammar before speaking a language;
he has a cousin who worked with someone who knows the Queen; he has never read Frederic Dard, Libanius
Antiochus, Michael Oakeshot, John Gray, Amianus Marcellinus, Ibn Battuta, Saadiah Gaon, or Joseph
De Maistre; he has never gotten drunk with Russians; he never drank to the point when one starts
breaking glasses (or, preferably, chairs); he doesn't know the difference between Hecate and Hecuba;
he doesn't know that there is no difference between "pseudointellectual" and "intellectual" in the
absence of skin in the game; has mentioned quantum mechanics at least twice in the past 5 years in
conversations that had nothing to do with physics; he knows at any point in time what his words or
actions are doing to his reputation.
IYIs have the IYM and BOHICA to contend with and they are coming in Yuge numbers... There is no
escape. Their stats and not so magic algorithms and Faux sheepskins are useless..
"... The Demon In Democracy: Totalitarian Temptations In Free Societies . ..."
"... Brave New World ..."
"... The Demon In Democracy ..."
"... he explains how Poland cast off the bonds of communism only to find that liberal democracy imposed similar interdictions on free thought and debate: ..."
"... Very quickly the world became hidden under a new ideological shell and the people became hostage to another version of the Newspeak but with similar ideological mystifications. Obligatory rituals of loyalty and condemnations were revived, this time with a different object of worship and a different enemy. ..."
"... The new commissars of the language appeared and were given powerful prerogatives, and just as before, mediocrities assumed their self-proclaimed authority to track down ideological apostasy and condemn the unorthodox - all, of course, for the glory of the new system and the good of the new man. ..."
"... Media - more refined than under communism - performed a similar function: standing at the forefront of the great transformation leading to a better world and spreading the corruption of the language to the entire social organism and all its cells. ..."
"... Trump's victory seems logical as a continuation of a more general process that has been unveiling in the Western World: Hungary, Poland, Brexit, possible political reshufflings in Germany, France, Austria, etc. ..."
"... More and more people say No ..."
"... What seems to be common in the developments in Europe and the US is a growing mistrust towards the political establishment that has been in power for a long time. People have a feeling that in many cases this is the same establishment despite the change of the governments. ..."
"... This establishment is characterized by two things: first, both in the US and in Europe (and in Europe even more so) its representatives unabashedly declare that there is no alternative to their platform, that there is practically one set of ideas - their own - every decent person may subscribe to, and that they themselves are the sole distributors of political respectability; second, the leaders of this establishment are evidently of the mediocre quality, and have been such long enough for the voters to notice. ..."
"... Because the ruling political elites believe themselves to steer the society in the only correct political course it should take, and to be the best quality products of the Western political culture, they try to present the current conflict as a revolt of the unenlightened, confused and manipulated masses against the enlightened elites. ..."
"... The new aristocrats are full of contempt for the riffraff, do not mince words to bully them, use foul language, break the rules of decency - and doing all this does not make them feel any less aristocratic. ..."
"... When eight years ago America elected as their president a completely unknown and inexperienced politician, and not exactly an exemplar of political virtue to boot, this choice was universally acclaimed as the triumph of political enlightenment, and the president was awarded the Nobel Prize in advance, before he could do anything (not that he did anything of value afterwards). The continuation of this politics by Hillary Clinton for another eight years would have elevated this establishment and their ideas to an even stronger position with all deplorable consequences. ..."
"... Many Christians are understandably relieved that the state's ongoing assault on the churches and on religious liberty in the name of sex-and-gender ideology, will probably be halted under the new president. ..."
"... Q: Trump is a politician of the nationalist Right, but he is not a conservative in any philosophical or cultural sense. ..."
"... Had the vote gone only a bit differently in some states, today we would be talking about the political demise of American conservatism. Instead, the Republican Party is going to be stronger in government than it has been in a very long time - but the party has been shaken to its core by Trump's destruction of its establishment. Is it credible to say that Trump destroyed conservatism - or is it more accurate to say that the Republican Party, through its own follies, destroyed conservatism as we have known it, and opened the door for the nationalist Trump? ..."
"... The new generations of the neocons gave up on big ideas while the theocons, old or new, never managed to have a noticeable impact on the Republican mainstream. ..."
"... The Demon in Democracy ..."
"... Today the phrase "more Europe" does not mean "more classical education, more Latin and Greek, more knowledge about classical philosophy and scholasticism", but it means giving more power to the European Commission. No wonder an increasing number of people when they hear about Europe associate it with the EU, and not with Plato, Thomas Aquinas or Johann Sebastian Bach. ..."
"... Considering that in every Western country education has been, for quite a long time, in a deep crisis and that no government has succeeded in overcoming this crisis, a mere idea of bringing back classical education into schools in which young people can hardly read and write in their own native language sounds somewhat surrealist. ..."
"... The results of the elections must have shaken the EU elites, and from that point of view Trump's victory was beneficial for those Europeans like myself who fear the federalization of the European Union and its growing ideological monopoly. There is more to happen in Europe in the coming years so the hope is that the EU hubris will suffer further blows and that the EU itself will become more self-restrained and more responsive to the aspirations of European peoples. ..."
Legutko is a Polish philosopher and politician who was active in the anti-communist resistance.
He is most recently the author of
The Demon In Democracy: Totalitarian Temptations In Free Societies . In this post from September,
I said that reading the book - which is clearly and punchily written - was like
taking a red pill - meaning that it's hard to see our own political culture the same way after
reading Legutko. His provocative thesis is that liberal democracy, as a modern political philosophy,
has a lot more in common with that other great modern political philosophy, communism, than we care
to think. He speaks as a philosopher who grew up under communism, who fought it as a member of Solidarity,
and who took part in the reconstruction of Poland as a liberal democracy. It has been said that the
two famous inhuman dystopias of 20th century English literature - Orwell's 1984 and Huxley's
Brave New World - correspond, respectively, to Soviet communism and mass hedonistic technocracy.
Reading Legutko, you understand the point very well.
In
this post , I quote several passages from The Demon In Democracy . Among them, these
paragraphs in which he explains how Poland cast off the bonds of communism only to find that
liberal democracy imposed similar interdictions on free thought and debate:
Very quickly the world became hidden under a new ideological shell and the people became
hostage to another version of the Newspeak but with similar ideological mystifications. Obligatory
rituals of loyalty and condemnations were revived, this time with a different object of worship
and a different enemy.
The new commissars of the language appeared and were given powerful prerogatives, and just
as before, mediocrities assumed their self-proclaimed authority to track down ideological apostasy
and condemn the unorthodox - all, of course, for the glory of the new system and the good of the
new man.
Media - more refined than under communism - performed a similar function: standing at the
forefront of the great transformation leading to a better world and spreading the corruption of
the language to the entire social organism and all its cells.
And:
If the old communists lived long enough to see the world of today, they would be devastated
by the contrast between how little they themselves had managed to achieve in their antireligious
war and how successful the liberal democrats have been. All the objectives the communists set
for themselves, and which they pursued with savage brutality, were achieved by the liberal democrats
who, almost without any effort and simply by allowing people to drift along with the flow of modernity,
succeeded in converting churches into museums, restaurants, and public buildings, secularizing
entire societies, making secularism the militant ideology, pushing religions to the sidelines,
pressing the clergy into docility, and inspiring powerful mass culture with a strong antireligious
bias in which a priest must be either a liberal challenging the Church of a disgusting villain.
After the US election, Prof. Legutko agreed to answer a few questions from me via e-mail. Here
is our correspondence:
RD:What do you think of Donald Trump's victory, especially in context of Brexit
and the changing currents of Western politics?
RL: In hindsight, Trump's victory seems logical as a continuation of a more general
process that has been unveiling in the Western World: Hungary, Poland, Brexit, possible political
reshufflings in Germany, France, Austria, etc. What this process, having many currents and
facets, boils down to is difficult to say as it appears more negative than positive. More
and more people say No , whereas it is not clear what exactly they are in favor of.
What seems to be common in the developments in Europe and the US is a growing mistrust
towards the political establishment that has been in power for a long time. People have a feeling
that in many cases this is the same establishment despite the change of the governments.
This establishment is characterized by two things: first, both in the US and in Europe
(and in Europe even more so) its representatives unabashedly declare that there is no alternative
to their platform, that there is practically one set of ideas - their own - every decent person
may subscribe to, and that they themselves are the sole distributors of political respectability;
second, the leaders of this establishment are evidently of the mediocre quality, and have been
such long enough for the voters to notice.
Because the ruling political elites believe themselves to steer the society in the only
correct political course it should take, and to be the best quality products of the Western political
culture, they try to present the current conflict as a revolt of the unenlightened, confused and
manipulated masses against the enlightened elites. In Europe it sometimes looks like an attempt
to build a new form of an aristocratic order, since a place in the hierarchy is allotted to individuals
and groups not according to their actual education, or by the power of their minds, or by the
strength of their arguments, but by a membership in this or that class. The new aristocrats
are full of contempt for the riffraff, do not mince words to bully them, use foul language, break
the rules of decency - and doing all this does not make them feel any less aristocratic.
It is, I think, this contrast between, on the one hand, arrogance with which the new aristocrats
preach their orthodoxy, and on the other, a leaping-to-the-eye low quality of their leadership
that ultimately pushed a lot of people in Europe and the US to look for alternatives in the world
that for too long was presented to them as having no alternative.
When eight years ago America elected as their president a completely unknown and inexperienced
politician, and not exactly an exemplar of political virtue to boot, this choice was universally
acclaimed as the triumph of political enlightenment, and the president was awarded the Nobel Prize
in advance, before he could do anything (not that he did anything of value afterwards). The continuation
of this politics by Hillary Clinton for another eight years would have elevated this establishment
and their ideas to an even stronger position with all deplorable consequences.
For an outside observer like myself, America after the election appears to be divided
but in a peculiar way. On the one side there is the Obama-Clinton America claiming to represent
what is best in the modern politics, more or less united by a clear left-wing agenda whose aim
is to continue the restructuring of the American society, family, schools, communities, morals.
This America is in tune with what is considered to be a general tendency of the modern world,
including Europe and non-European Western countries. But there seems to exist another America,
deeply dissatisfied with the first one, angry and determined, but at the same time confused and
chaotic, longing for action and energy, but unsure of itself, proud of their country's lost greatness,
but having no great leaders, full of hope but short of ideas, a strange mixture of groups and
ideologies, with no clear identity or political agenda. This other America, if personified, would
resemble somebody not very different from Donald Trump.
Q: Trump won 52 percent of the Catholic vote, and over 80 percent of the white Evangelical
Christian vote - this, despite the fact that he is in no way a serious Christian, and, on evidence
of his words and deeds, is barely a Christian at all. Many Christians are understandably
relieved that the state's ongoing assault on the churches and on religious liberty in the name
of sex-and-gender ideology, will probably be halted under the new president. From your
perspective, should US Christians be hopeful about their prospects under a Trump presidency, or
instead wary of being tempted by a false prophet?
A: Christians have been the largest persecuted religious group in the non-Western world, but
sadly they have also been the largest victimized religious group in those Western countries that
have contracted a disease of political correctness (which in practice means almost all of them).
Some Western Christians, including the clergy, abandoned any thought of resistance and not only
capitulated but joined the forces of the enemy and started disciplining their own flock. No wonder
that many Christians pray for better times hoping that at last there will appear a party or a
leader that could loosen the straitjacket of political correctness and blunt its anti-Christian
edge. It was then to be expected that having a choice between Trump and Clinton, they would turn
to the former. But is Trump such a leader?
Anti-Christian prejudices have taken an institutional and legal form of such magnitude that
no president, no matter how much committed to the cause, can change it quickly. Today in America
it is difficult even to articulate one's opposition to political correctness because the public
and private discourse has been profoundly corrupted by the left-wing ideology, and the American
people have weaned themselves from any alternative language (and so have the Europeans). Any movement
away from this discourse requires more awareness of the problem and more courage than Trump and
his people seem to have. What Trump could and should do, and it will be a test of his intentions,
are three things.
First, he should refrain from involving his administration in the anti-Christian actions, whether
direct or indirect, thus breaking off with the practice of his predecessor. Second, he should
nominate the right persons for the vacancies in the Supreme Court. Third, he should resist the
temptation to cajole the politically correct establishment, as some Republicans have been doing,
because not only will it be a bad signal, but also display naïvete: this establishment is never
satisfied with anything but an unconditional surrender of its opponents.
Whether these decisions will be sufficient for American Christians to launch a counteroffensive
and to reclaim the lost areas, I do not know. A lot will depend on what the Christians will do
and how outspoken they will be in making their case public.
Q: Trump is a politician of the nationalist Right, but he is not a conservative in any
philosophical or cultural sense.Had the vote gone only a bit differently in some states,
today we would be talking about the political demise of American conservatism. Instead, the Republican
Party is going to be stronger in government than it has been in a very long time - but the party
has been shaken to its core by Trump's destruction of its establishment. Is it credible to say
that Trump destroyed conservatism - or is it more accurate to say that the Republican Party, through
its own follies, destroyed conservatism as we have known it, and opened the door for the nationalist
Trump?
A: Conservatism has always been problematic in America, where the word itself has acquired
more meanings, some of them quite bizarre, than in Europe. A quite common habit, to give an example,
of mentioning libertarianism and conservatism in one breath, thereby suggesting that they are
somehow essentially related, is proof enough that a conservative agenda is difficult for the Americans
to swallow. If I am not mistaken, the Republican Party has long relinquished, with very few exceptions,
any closer link with conservatism. If conservatism, whatever the precise definition, has something
to do with a continuity of culture, Christian and Classical roots of this culture, classical metaphysics
and anthropology, beauty and virtue, a sense of decorum, liberal education, family, republican
paideia, and other related notions, these are not the elements that constitute an integral part
of an ideal type of an Republican identity in today's America. Whether it has been different before,
I am not competent to judge, but certainly there was a time when the intellectual institutions
somehow linked to the Republican Party debated these issues. The new generations of the neocons
gave up on big ideas while the theocons, old or new, never managed to have a noticeable impact
on the Republican mainstream.
Given that there is this essential philosophical weakness within the modern Republican identity,
Donald Trump does not look like an obvious person to change it by inspiring a resurgence of conservative
thinking. I do not exclude however, unlikely as it seems today, that the new administration will
need – solely for instrumental reasons – some big ideas to mobilize its electorate and to give
them a sense of direction, and that a possible candidate to perform this function will be some
kind of conservatism. Liberalism, libertarianism and saying 'no' to everything will certainly
not serve the purpose. Nationalism looks good and played its role during two or three months of
the campaign, but might be insufficient for the four (eight?) years that will follow.
Q: Though the Republicans will soon have their hands firmly on the levers of political power,
cultural institutions - especially academia and the news and entertainment media - are still thoroughly
progressive. In The Demon in Democracy , you write that "it is hard to imagine freedom
without classical philosophy and the heritage of antiquity, without Christianity and scholasticism
[and] many other components of the entire Western civilization." How can we hope to return to
the roots of Western civilization when the culture-forming institutions are so hostile to it?
A: It is true that we live at a time of practically one orthodoxy which the majority of intellectuals
and artists piously accept, and this orthodoxy - being some kind of liberal progressivism - has
less and less connection with the foundations of Western civilization. This is perhaps more visible
in Europe than in the US. In Europe, the very term "Europe" has been consistently applied to the
European Union. Today the phrase "more Europe" does not mean "more classical education, more
Latin and Greek, more knowledge about classical philosophy and scholasticism", but it means giving
more power to the European Commission. No wonder an increasing number of people when they hear
about Europe associate it with the EU, and not with Plato, Thomas Aquinas or Johann Sebastian
Bach.
It seems thus obvious that those who want to strengthen or, as is more often the case, reintroduce
classical culture in the modern world will not find allies among the liberal elites. For a liberal
it is natural to distance himself from the classical philosophy, from Christianity and scholasticism
rather than to advocate their indispensability for the cultivation of the Western mind. After
all, these philosophies – they would say - were created in a pre-modern non-democratic and non-liberal
world by men who despised women, kept slaves and took seriously religious superstitions. But it
is not only the liberal prejudices that are in the way. A break-up with the classical tradition
is not a recent phenomenon, and we have been for too long exposed to the world from which this
tradition was absent.
There is little chance that a change may be implemented through a democratic process. Considering
that in every Western country education has been, for quite a long time, in a deep crisis and
that no government has succeeded in overcoming this crisis, a mere idea of bringing back classical
education into schools in which young people can hardly read and write in their own native language
sounds somewhat surrealist. A rule that bad education drives out good education seems to
prevail in democratic societies. And yet I cannot accept the conclusion that we are doomed to
live in societies in which neo-barbarism is becoming a norm.
How can we reverse this process then? In countries where education is primarily the responsibility
of the state, it is the governments that may - hypothetically at least - have some role to play
by using the economic and political instruments to stimulate the desired changes in education.
In the US – I suspect - the government's role is substantially more reduced. So far however the
European governments, including the conservative ones, have not made much progress in reversing
the destructive trend.
The problem is a more fundamental one because it touches upon the controversy about what constitutes
the Western civilization. The liberal progressives have managed to impose on our minds a notion
that Christianity, classical metaphysics, etc., are no longer what defines our Western identity.
A lot of conservatives – intellectuals and politicians – have readily acquiesced to this notion.
Unless and until this changes and our position of what constitutes the West becomes an integral
part of the conservative agenda and a subject of public debate, there is not much hope things
can change. The election of Donald Trump has obviously as little to do with Scholasticism or Greek
philosophy as it has with quantum mechanics, but nevertheless it may provide an occasion to reopen
an old question about what makes the American identity and to reject a silly but popular answer
that this identity is procedural rather than substantive. And this might be a first step to talk
about the importance of the roots of the Western civilization.
You have written that "liberalism is more about struggle with non-liberal adversaries than
deliberation with them." Now even some on the left admit that its embrace of political correctness,
multiculturalism, and so-called "diversity," is partly responsible for Trump's victory. How do
Brexit and Trump change the terms of the political conversation, especially now that it has been
shown that there is no such thing as "the right side of history"?
Liberalism, despite its boastful declarations to the contrary, is not and has never been about
diversity, multiplicity or pluralism. It is about homogeneity and unanimity. [Neo]Liberalism wants
everyone and everything to be [neo]liberal, and does not tolerate anyone or anything that is not
liberal. This is the reason why the [neo]liberals have such a strong sense of the enemy. Whoever
disagrees with them is not just an opponent who may hold different views but a potential or actual
fascist, a Hitlerite, a xenophobe, a nationalist, or – as they often say in the EU – a populist.
Such a miserable person deserves to be condemned, derided, humiliated and abused.
The Brexit vote could have been looked at as an exercise in diversity and, as such, dear to
every pluralist, or empirical evidence that the EU in its present form failed to accommodate diversity.
But the reaction of the European elites was different and predictable – threats and condemnations.
Before Brexit the EU reacted in a similar way to the non-[neo][neo]liberals winning elections
in Hungary and then in Poland, the winners being immediately classified as fascists and the elections
as not quite legitimate. The [neo]liberal mindset is such that accepts only those elections and
choices in which the correct party wins.
I am afraid there will be a similar reaction to Donald Trump and his administration. As long
as the [neo]liberals set the tone of the public debate, they will continue to bully both those
who, they say, were wrongly elected and those who wrongly voted. This will not stop until it becomes
clear beyond any doubt that the changes in Europe and in the US are not temporary and ephemeral
and that there is a viable alternative which will not disappear with the next swing of the democratic
pendulum. But this alternative, as I said before, is still in the process of formation and we
are not sure what will be the final result.
There will be elections in several key European nations next year - Germany and France, in
particular. What effect do you expect Trump's victory to have on European voters? How do you,
as a Pole, view Trump's fondness for Vladimir Putin?
From a European perspective, Clinton's victory would have meant a tremendous boost to the EU
bureaucracy, its ideology and its "more Europe" strategy. The forces of the self-proclaimed Enlightenment
would have gone ecstatic and, consequently, would have made the world even more unbearable not
only for conservatives. The results of the elections must have shaken the EU elites, and from
that point of view Trump's victory was beneficial for those Europeans like myself who fear the
federalization of the European Union and its growing ideological monopoly. There is more to happen
in Europe in the coming years so the hope is that the EU hubris will suffer further blows and
that the EU itself will become more self-restrained and more responsive to the aspirations of
European peoples.
"The fact that he made some warm remarks about Putin during the campaign does not make me happy."
You would think an advocate against the Western liberal establishment would view Putin favorably,
as Pat Buchanan does. I guess old nationalist rivalries trump sticking it to the snooty elitists
in this case.
[NFR: Are you serious? Legutko's country was occupied and tyrannized by the Soviets for
nearly 50 years. Poland has had to worry about Russian imperialism for much longer than that,
as a matter of national survival. Any Pole that doesn't worry about Putin's ambitions is nuts.
- RD]
"it may provide an occasion to reopen an old question about what makes the American identity and
to reject a silly but popular answer that this identity is procedural rather than substantive"
That's a good assessment, from an outside observer.
However, his anti-Russian views appear to be driven by his own Polish nationalism and past
Warsaw Pact Soviet imperialism, the latter ideologically and practically as dead as Josef Stalin,
and objectivity thus distorted, are much less clear. Imagine, welcoming a foreign imperial occupation
– one tied to the very liberal order he critiques so effectively.
I think that anti-interventionists, cheered by those Trump campaign statements questioning
the NATO mission post-communism, and defense cost bearing so that clients become real allies instead,
or not, are far more objectively considerate of Americans' interests through a drawdown from aggressive
globalist/militarist hegemony, than his understandable but very subjective Polish parochial prejudices.
re education: Andrew Pudewa for Secretary of Education! (Seriously, he said on FB he has some
idea what he'd do if he could get that post.)
re Russia: Hillary's rhetoric must not have translated very well over there At any rate, if
the Poles are so scared of Russian attack, they can train their own sons to defend them. Or maybe
they should just learn to get along with their neighbors.
"The liberal progressives have managed to impose on our minds a notion that Christianity, classical
metaphysics, etc., are no longer what defines our Western identity."
I'm sorry, but this is a lunatic idea. Too bad it is the lynchpin of all "new right" thought.
You want to return to some imaginary West in which nothing happened in intellectual life after
about 1650.
It would take a book to properly refute Legutko and I am not inclined to do the work of writing
one but to put it simply, he has no knowledge of how Americans think. Americans are, at heart,
pragmatists. We don't care about ideology and most of the time we don't bother much with religion
either except to give polite lip service to it. It has no claim on the American soul.
Americans are at heart easy going people who have no use for either the loons of Liberalism
or Conservatism. Right now it is the Liberals, with their particular brand of silliness that are
out of favor. A few years ago it was Conservatives that no one wanted for next door neighbors.
The things Legutko writes of Americans could not care less about.
The American embrace of Putin is simply the result of American disgust with Europe, a continent
populated by a peculiar species of coward and ungrateful wretch, a museum that produces nothing
of any value any more and is governed by self-righteous morons who have nothing better to do with
their time than to lecture the infinitely more intelligent Americans. The American attitude towards
Europe is, "To Hell with it." In such an environment, of course we are willing to let Putin have
the damned place and the Devil give him good office. Trump, with his expressed contempt for the
opinions of foreign leaders, especially the Europeans, fits this perfectly.
I think an acceptable deal could be reached with Russia.
You have to think about it from their perspective: They have lost all power and influence not
only in the territories that Stalin seized, but also in many that were in the traditional sphere
of the Russian Empire. They view extension of Western influence and NATO into these territories
as an act of aggression and American aggrandizement. The loss of Ukraine is the cruelest cut of
all, because Kiev is the cradle of Russian Orthodox civilization.
Russian nationalists loathe Gorbachev, in part because he could easily have negotiated a deal
enforcing neutrality in formally Soviet-dominated territories as Soviet troops were withdrawn.
Instead, from their point of view, he gave it all away for nothing and left the Motherland open
to encirclement.
There is plainly space for a deal that would include security guarantees for Russia's neighbors
but also mandatory neutrality. Russia would take that deal. So far at least, we wouldn't, because
US policymakers want encirclement and domination in the region.
Let's see if Trump rethinks this. Russia is very imperfect, but we face much bigger and more
important threats. We'd be better off forging an alliance with Russia if we can.
Mr. Legutko is a member of PiS, the party which currently rules Poland. Immediately after coming
to power they turned all public TV Stations into Government mouthpieces, and practically shut
down the supreme court.
Communism is not a "political philosophy"; it's an economic theory. If they guy actually called
it a political theory (he may not have; those may be Rod's words, written in haste) then he's
no more worth listening to than a astronomer who asserts that the sun and planet revolve around
the Earth.
"this establishment is never satisfied with anything but an unconditional surrender of its opponents."
The Right should have learned this lesson with the Regan Amnesty. "A Deal is never a Deal"
with the left. For the Left, any comprise is just an opportunity to move sidelines yard markers.
Rod, do yourself a huge favor and if you don't have it already, pick up a copy of C. Lasch's
posthumous book The Revolt of the Elites and the Betrayal of Democracy. For some reason
I'd missed this one along the way, but I bought a copy recently and started it over the weekend.
He wrote it in the early 90's, but it's so on-target you'd think it was written yesterday. The
introduction alone is worth the price of the book - obviously he did not have Trump, or even a
Trump-like character in mind, but his observations on conservatism, liberalism, populism, etc.,
are head-shakingly accurate. Not to be missed.
"he explains how Poland cast off the bonds of communism only to find that liberal democracy imposed
similar interdictions on free thought and debate."
I am sorry, but I have travelled throughout Eastern Europe before and after the fall of communism.
Anyone who tells me that liberal democracy there (where it exists) imposes "similar interdictions
on free thought and debate" is just not to be taken seriously.
This is an article I would have posted on Facebook if the tag line were not so inflammatory that
it would go unread and in fact do more harm than good.
This makes perfect sense . . . or it's utter nonsense. The problem is Donald Trump is a wild card.
No one knows exactly how Trump will play or be played. If Trump accepts the role of Head of State,
leaving the details of governing to others (Pense, Ryan, McConnell, whomever) there might be some
consistency. A conservative agenda (as Americans have come to know it) will be possible.
But if the Donald Trump who has displayed zero substantive knowledge about anything decides
to actually govern (or worse yet, sporadically and whimsically govern) then in the immortal words
of Bette Davis: "Fasten your seat belts! It's going to be a bumpy night."
Legutko is going to be disappointed but, I suspect, not surprised when Trump simply throws open
the door. And then asks Putin if he can get the base construction contracts.
I'm reminded of the lyrics in a song by The Who: "Meet the new boss, Same as the old boss." The
song title is "We won't get fooled again." Good luck with that.
Maybe there is just something in the nature of humans which compels us to want to impose our
biases, beliefs, and visions of society and the future upon those around us. Maybe it just boils
down to eventual fatigue from constantly arguing with people who will never end up agreeing to
your point of view: the simple solution has always been to make your opponents shut up. Failing
that, we resort to locking them up, or driving them out, or ultimately killing them.
With regard to this quote:
"Whether these decisions will be sufficient for American Christians to launch a counteroffensive
and to reclaim the lost areas, I do not know. A lot will depend on what the Christians will do
and how outspoken they will be in making their case public."
I'm not sure how to take this. Is he merely hoping to carve out some space for Christians to
co-exist with a larger secular majority. Or does he still harbor hope of restoring Christianity
as a central element of Western Culture, against the resistance of the secularists? If the latter
is his dream, I would point out that using institutional and political power to re-impose Christianity
upon the masses is no different that what the Left is doing now impose its preferred set of beliefs.
He would just be looking for a new Boss, if you will.
With regard to the European Project: It is worth remembering that European Nationalism resulted
many centuries of warfare between contending powers on the continent. It culminated in two world
wars, the second of which left most of that area of the world in ruins. The original motivation
for the European Union was to end that cycle of warfare, by more tightly linking together the
economies of these nations.
Now we see a resurgence of Russian Nationalism, with that country seeking to expand its sphere
of influence again, and gleefully egging on the Nationalists in Western Europe, with the hope
of finishing off the NATO military alliance. As emotionally satisfying as it might be to stop
the drive toward further unification and uniformity, a return to something worse is clearly possible.
Now Legutko clearly believes that the European Union and NATO were failing at the task of restraining
Russian imperialism anyway. From a Eastern European perspective, that is probably true. But if
you look around the conservative blogosphere, it isn't hard to find self described conservatives
who see that as a pragmatic necessity. They say it was a mistake to expand NATO, that those countries
were always naturally in the Russian sphere of influence, and coping with that reality it their
problem, and not our problem. The irony is that the more nationalistic and less global we become
in our perspective, the less likely we are to help protect Legutko's homeland from its larger,
aggressive neighbor to the East.
This guy derides the neocons, but on Russia, he is as bad or worse than them. How is Russia an
imperial nation when they have stood by and let NATO expand to their doorstep when the US promised
it would go no further east than Berlin? How is it imperialist that they secured their military
foothold in Crimea (killing no one I might add) against a US backed, fascist coup against the
democratically elected government of Ukraine?
[NFR: I think you should consider
the history of Poland
in the 19th and 20th centuries - especially from 1945 through 1989 - if you want to understand
why Poles worry about Russian imperialism. - RD]
I loathe the election of Trump and what it will do here (so much so, that our family will likely
move to Switzerland, where my wife is from and in which my 3 daughters all have citizenship),
but one of the quite reasonable things that Trump has said is that "If we got along with Russia,
it wouldn't be a bad thing."
I don't think that means letting Putin do whatever he wants, and I have zero or sub-zero faith
that Trump will implement anything like a sensible approach to whatever Putin does, but trying
to get along with Russia is not crazy.
At any rate, if the Poles are so scared of Russian attack, they can train their own sons to
defend them. Or maybe they should just learn to get along with their neighbors.
These beastly Poles. Always provoking their Russian and German neighbors.
Legato embraces his own set of traumatic, reactionary 'isms' which, like most 'isms', are covered
with a patina of light philosophy to make them seem like the wisdom of the ages. I'm not sure
he's entirely comfortable with the outcomes of the Enlightenment
[NFR: Of course he's not! Neither am I. Where you been? - RD]
The Republican brass degenerated into a bunch to neocon racketeers who want to impoverish regular Americans. That's why Trump won.
Notable quotes:
"... Indeed, in an October 1991 letter to Patrick J. Buchanan, Regnery claimed that Americans had been hornswoggled into supporting
the war by "the President and those who form public opinion." ..."
"... Everywhere he looked, the media-newspapers, network radio and television news, magazines, and journals-all seemed locked in
a [neo]liberal consensus. . . . If conservatives were going to claw their way back in from the outside, they were going to need to first
find a way to impair and offset liberals in the media. ..."
IN DECEMBER 1953, Henry Regnery convened a meeting in Room 2233 in New York City's Lincoln Building. Regnery, a former Democrat
and head of Regnery Publishing, had moved sharply to the Right after he became disillusioned with the New Deal. His guests included
William F. Buckley Jr.; Frank Hanighen, a cofounder of Human Events ; Raymond Moley, a former FDR adviser who wrote a book
called After Seven Years that denounced the New Deal; and John Chamberlain, a lapsed liberal and an editorial writer for the
Wall Street Journal . Regnery had not called these men together merely to discuss current events. He wanted to reshape them.
"The side we represent controls most of the wealth in this country," he said. "The ideas and traditions we believe in are those which
most Americans instinctively believe in also." So why was liberalism in the ascendant? Regnery explained that media bias was the
problem. Anywhere you looked, the Left controlled the commanding heights-television, newspapers and universities. It was imperative,
Regnery said, to establish a "counterintelligence unit" that could fight back.
In her superb Messengers of the Right , Nicole Hemmer examines the origins of conservative media. Hemmer, who is an assistant
professor at the University of Virginia, has performed extensive archival research to illuminate the furthest recesses of the Right,
complementing earlier works like Geoffrey Kabaservice's Rule and Ruin . She provides much new information and penetrating
observations about figures such as Clarence Manion, William Rusher and Henry Regnery. Above all, she shows that there has been a
remarkable consistency to the grievances and positions, which were often one and the same, of the conservative movement over the
decades.
According to Hemmer, the modern Right first took shape in the form of the America First Committee. A number of leading conservatives
saw little difference between Adolf Hitler and Franklin D. Roosevelt. Regnery recollected that "both Hitler and Roosevelt-each in
his own way -- were masters of the art of manipulating the masses."
Indeed, in an October 1991 letter to Patrick J. Buchanan, Regnery claimed that Americans had been hornswoggled into supporting
the war by "the President and those who form public opinion." Others such as the gifted orator Clarence Manion, a former FDR
acolyte, joined the America First Committee in 1941. After the war, Manion became the dean of the Notre Dame Law School and wrote
a book called The Key to Peace , which argued that limited government was the key to American greatness, not a quest to "take
off for the Mountains of the Moon in search of ways and means to pacify and unify mankind."
While serving in the Eisenhower administration, he also became a proponent of the Bricker Amendment, which would have subjected
treaties signed by the president to ratification by the states. Eisenhower demanded his resignation. An embittered Manion, Hemmer
writes, concluded that columnists such as James Reston, Marquis Childs, and Joseph and Stewart Alsop had effectively operated as
a united front to ruin him.
Everywhere he looked, the media-newspapers, network radio and television news, magazines, and journals-all seemed locked in
a [neo]liberal consensus. . . . If conservatives were going to claw their way back in from the outside, they were going to need to first
find a way to impair and offset liberals in the media.
In 1954, the Manion Forum of Opinion , which aired on several dozen radio stations, was born. It soon became a popular
venue that allowed Manion, who was cochair of a political party called For America, to inveigh against the depredations of liberalism
and preach the conservative gospel.
... ... ...
With the election of Ronald Reagan in 1980, the conservative media seemed to have arrived. But as Hemmer notes, a New Right generation
of activists that included figures such Terry Dolan of the National Conservative Political Action Committee and Jerry Falwell of
the Moral Majority had arrived that did not have much in common with the older conservative generation. She points out that leaders
of the New Right backed Republican congressman Phil Crane, then former Texas governor John Connally, only supporting Reagan during
the general election. Buckley and his cohort, Hemmer writes, saw the New Right paladins as "Johnnies-come-lately to the movement,
demanding rigorous fealty to social issues that had only recently become the drivers of politics." Hemmer might have noted that,
although Reagan has since become a conservative icon, George F. Will and Norman Podhoretz, among others, lamented what they viewed
as Reagan's concessive posture towards Mikhail Gorbachev.
Jacob Heilbrunn is editor of the National Interest.
"... The economic point is that globalisation has boosted trade and overall wealth, but it has also created a dog eat dog world where western workers compete with, and lose jobs to, people far away who will do the work for much less. ..."
"... But neither Trump nor Farage have shown any evidence of how realistically they can recreate those jobs in the west. And realistically god knows how you keep the wealth free trade and globalisation brings but avoid losing the good jobs? At least the current mess has focused attention on the question and has said that patience has run out. ..."
"... Compared to the real economic problems, the identity politics is minor, but it is still an irritant that explains why this revolution is coming from the right not from the left. ..."
"... And what "age" has that been Roy? The "age" of: climate change, gangster bankers, tax heavens, illegal wars, nuclear proliferation, grotesque inequality, the prison industrial complex to cite just a few. That "age"? ..."
"... the right wing press detest one kind of liberalism, social liberalism, they hate that, but they love economic liberalism, which has done much harm to the working class. ..."
"... Most of the right wing press support austerity measures, slashing of taxes and, smaller and smaller governments. Yet apparently, its being socially liberal that is the problem ..."
A crucial point "WWC men aren't interested in working at McDonald's for $15 per hour instead
of $9.50. What they want is... steady, stable, full-time jobs that deliver a solid middle-class
life."
The economic point is that globalisation has boosted trade and overall wealth, but it has
also created a dog eat dog world where western workers compete with, and lose jobs to, people
far away who will do the work for much less.
But neither Trump nor Farage have shown any evidence of how realistically they can recreate
those jobs in the west. And realistically god knows how you keep the wealth free trade and globalisation
brings but avoid losing the good jobs? At least the current mess has focused attention on the
question and has said that patience has run out.
Compared to the real economic problems, the identity politics is minor, but it is still
an irritant that explains why this revolution is coming from the right not from the left.
If you're white and male it's bad enough losing your hope of economic security, but then to
be repeatedly told by the left that you're misogynist, racist, sexist, Islamophobic, transgenderphobic
etc etc is just the icing on the cake. If the author wants to see just how crazy identity politics
has become go to the Suzanne Moore piece from yesterday accusing American women of being misogynist
for refusing to vote for Hillary. That kind of maniac 'agree with me on everything or you're a
racist, sexist, homophobe' identity politics has to be ditched.
Reply
Funny, I've been a white male my whole life and not once have I been accused of being a misogynist,
racist, sexist, Islamophobic, or transgenderphobic. I didn't think being a white male was so difficult
for some people...
Reply
"Are we turning our backs on the age of enlightenment?".
And what "age" has that been Roy? The "age" of: climate change, gangster bankers, tax heavens,
illegal wars, nuclear proliferation, grotesque inequality, the prison industrial complex to cite
just a few. That "age"?
I agree hardly an age of enlightenment. My opinion... the so called Liberal Elite are responsible
for many of the issues in the list. The poor and the old in this country are not being helped
by the benefits system. Yet the rich get richer beyond the dreams of the ordinary man.
I would
pay more tax if I thought it might be spent more wisely...but can you trust politicians who are
happy to spend 50 billion on a railway line that 98% of the population will never use.
No solutions from me ...an old hippy from the 60s "Love and peace man " ...didn't work did
it :)
I have come under the impression that the right wing press detest one kind of liberalism,
social liberalism, they hate that, but they love economic liberalism, which has done much harm
to the working class.
Most of the right wing press support austerity measures, slashing of taxes and, smaller
and smaller governments. Yet apparently, its being socially liberal that is the problem.
"... It is frustrating that Piketty sticks to the "if only we gave the right incentives to this system" approach for combating both hyper-globalization and global warming. THIS DOES NOT WORK. The reason we are in this mess today is not because there weren't enough well-intentioned people running the system – it is that the system deliberately selects against ..."
"... But then again, he titled his book "Capital" without ever having read Marx. ..."
"... This is not to say that the movement to raise awareness about TPP and its ilk was not useful – the point is that there is no useful feedback mechanism between the political elite and the electorate... The link between the state and civil society is fundamentally broken. ..."
"... Sometimes you just need the right incentive. I propose this one: the opportunity to stay out of prison! ..."
It is frustrating that Piketty sticks to the "if only we gave the right incentives to this
system" approach for combating both hyper-globalization and global warming. THIS DOES NOT WORK.
The reason we are in this mess today is not because there weren't enough well-intentioned people
running the system – it is that the system deliberately selects against such people.
He laments the inefficacy of the Paris Accord and CETA and suggests instead to create more
institutions? More bureaucratic positions and trade clauses?
And who exactly will undertake such
a thing, the corporate lobbyists and billionaires? Or the civil society movements that had such
an impact on elites that it required a Trump victory to finally dump the TPP?*
But then again, he titled his book "Capital" without ever having read Marx.
*This is not to say that the movement to raise awareness about TPP and its ilk was not
useful – the point is that there is no useful feedback mechanism between the political elite
and the electorate... The link between the state and civil society is fundamentally
broken.
I hate/have to say this but it is very typical in the French spirit of things to propose a
new administrative entity to address any perceived problem instead of the Anglo-Saxon approach
of looking at which entity caused the problem and needs to be removed. Call it the negative liberty/positive
liberty dialectic if you like.
It's a culture issue. You fix culture by removing the bad apples (prosecution) and making the
incentives survivable for decent people (because it is more fun, at the end of the day, to be
a good person).
"... For over a decade now, Chicago has been the epicenter of the fashionable trend of "privatization"-the transfer of the ownership or operation of resources that belong to all of us, like schools, roads and government services, to companies that use them to turn a profit. Chicago's privatization mania began during Mayor Richard M. Daley's administration, which ran from 1989 to 2011. Under his successor, Rahm Emanuel, the trend has continued apace. For Rahm's investment banker buddies, the trend has been a boon. For citizens? Not so much. ..."
"... the English word "privatization" derives from a coinage, Reprivatisierung, formulated in the 1930s to describe the Third Reich's policy of winning businessmen's loyalty by handing over state property to them. ..."
"... As president, Bill Clinton greatly expanded a privatization program begun under the first President Bush's Department of Housing and Urban Development. "Hope VI" aimed to replace public-housing high-rises with mixed-income houses, duplexes and row houses built and managed by private firms. ..."
"... The fan was Barack Obama, then a young state senator. Four years later, he cosponsored a bipartisan bill to increase subsidies for private developers and financiers to build or revamp low-income housing. ..."
"... However, the rush to outsource responsibility for housing the poor became a textbook example of one peril of privatization: Companies frequently get paid whether they deliver the goods or not (one of the reasons investors like privatization deals). For example, in 2004, city inspectors found more than 1,800 code violations at Lawndale Restoration, the largest privately owned, publicly subsidized apartment project in Chicago. Guaranteed a steady revenue stream whether they did right by the tenants or not-from 1997 to 2003, the project generated $4.4 million in management fees and $14.6 million in salaries and wages-the developers were apparently satisfied to just let the place rot. ..."
PGL on Chicago's parking meters. Yes Democratic Mayor Daley made a bad deal. If Trump does invest in infrastructure is this the kind of thing he'll be doing, selling off public
assets and leasing them back again, aka privatization?
Seems like two different things. Here's an In These Time article from January 2015 by the smart Rick Perlstein.
Welcome to Rahm Emanuel's Chicago, the privatized metropolis of the future.
BY RICK PERLSTEIN
In June of 2013, Chicago Mayor Rahm Emanuel made a new appointment to the city's seven-member
school board to replace billionaire heiress Penny Pritzker, who'd decamped to run President Barack
Obama's Department of Commerce. The appointee, Deborah H. Quazzo, is a founder of an investment firm
called GSV Advisors, a business whose goal-her cofounder has been paraphrased by Reuters as saying-is
to drum up venture capital for "an education revolution in which public schools outsource to private
vendors such critical tasks as teaching math, educating disabled students, even writing report cards."
GSV Advisors has a sister firm, GSV Capital, that holds ownership stakes in education technology
companies like "Knewton," which sells software that replaces the functions of flesh-and-blood teachers.
Since joining the school board, Quazzo has invested her own money in companies that sell curricular
materials to public schools in 11 states on a subscription basis.
In other words, a key decision-maker for Chicago's public schools makes money when school boards
decide to sell off the functions of public schools.
She's not alone. For over a decade now, Chicago has been the epicenter of the fashionable
trend of "privatization"-the transfer of the ownership or operation of resources that belong to all
of us, like schools, roads and government services, to companies that use them to turn a profit.
Chicago's privatization mania began during Mayor Richard M. Daley's administration, which ran from
1989 to 2011. Under his successor, Rahm Emanuel, the trend has continued apace. For Rahm's investment
banker buddies, the trend has been a boon. For citizens? Not so much.
They say that the first person in any political argument who stoops to invoking Nazi Germany automatically
loses. But you can look it up: According to a 2006 article in the Journal of Economic Perspectives,
the English word "privatization" derives from a coinage, Reprivatisierung, formulated in the
1930s to describe the Third Reich's policy of winning businessmen's loyalty by handing over state
property to them.
In the American context, the idea also began on the Right (to be fair, entirely independent of
the Nazis)-and promptly went nowhere for decades. In 1963, when Republican presidential candidate
Barry Goldwater mused "I think we ought to sell the TVA"-referring to the Tennessee Valley Authority,
the giant complex of New Deal dams that delivered electricity for the first time to vast swaths of
the rural Southeast-it helped seal his campaign's doom. Things only really took off after Prime Minister
Margaret Thatcher's sale of U.K. state assets like British Petroleum and Rolls Royce in the 1980s
made the idea fashionable among elites-including a rightward tending Democratic Party.
As president, Bill Clinton greatly expanded a privatization program begun under the first
President Bush's Department of Housing and Urban Development. "Hope VI" aimed to replace public-housing
high-rises with mixed-income houses, duplexes and row houses built and managed by private firms.
Chicago led the way. In 1999, Mayor Richard M. Daley, a Democrat, announced his intention to tear
down the public-housing high-rises his father, Mayor Richard J. Daley, had built in the 1950s and
1960s. For this "Plan for Transformation," Chicago received the largest Hope VI grant of any city
in the nation. There was a ration of idealism and intellectual energy behind it: Blighted neighborhoods
would be renewed and their "culture of poverty" would be broken, all vouchsafed by the honorable
desire of public-spirited entrepreneurs to make a profit. That is the promise of privatization in
a nutshell: that the profit motive can serve not just those making the profits, but society as a
whole, by bypassing inefficient government bureaucracies that thrive whether they deliver services
effectively or not, and empower grubby, corrupt politicians and their pals to dip their hands in
the pie of guaranteed government money.
As one of the movement's fans explained in 1997, his experience with nascent attempts to pay private
real estate developers to replace public housing was an "example of smart policy."
"The developers were thinking in market terms and operating under the rules of the marketplace,"
he said. "But at the same time, we had government supporting and subsidizing those efforts."
The fan was Barack Obama, then a young state senator. Four years later, he cosponsored a bipartisan
bill to increase subsidies for private developers and financiers to build or revamp low-income housing.
However, the rush to outsource responsibility for housing the poor became a textbook example
of one peril of privatization: Companies frequently get paid whether they deliver the goods or not
(one of the reasons investors like privatization deals). For example, in 2004, city inspectors found
more than 1,800 code violations at Lawndale Restoration, the largest privately owned, publicly subsidized
apartment project in Chicago. Guaranteed a steady revenue stream whether they did right by the tenants
or not-from 1997 to 2003, the project generated $4.4 million in management fees and $14.6 million
in salaries and wages-the developers were apparently satisfied to just let the place rot.
Meanwhile, the $1.6 billion Plan for Transformation drags on, six years past deadline and still
2,500 units from completion, while thousands of families languish on the Chicago Housing Authority's
waitlist.
Be that as it may, the Chicago experience looks like a laboratory for a new White House
pilot initiative, the Rental Assistance Demonstration Program (RAD), which is set to turn over some
60,000 units to private management next year. Lack of success never seems to be an impediment where
privatization is concerned.
"... The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and disable
their dominance. ..."
"... It seems to me that while neoliberalism on the right was much the same old same old, the neoliberal
turn on the left was marked by a measured abandonment of this struggle over the distribution of income
between the classes. In the U.S., the Democrats gradually abandoned their populist commitments. In Europe,
the labour and socialist parties gradually abandoned class struggle. ..."
"... When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features of
his economic team was the extent to which it conceded control of policy entirely to the leading money
center banks. Geithner and Bernanke continued in power with Geithner moving from the New York Federal
Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury in the Obama Administration,
but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan Chase and Citibank. The crisis served
to concentrate banking assets in the hands of the top five banks, but it seemed also to transfer political
power entirely into their hands as well. Simon Johnson called it a coup. ..."
"... Here's the thing: the globalization and financialization of the economy from roughly 1980 drove
both increasingly extreme distribution of income and de-industrialization. ..."
"... It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility for
economic performance and outcomes. Globalization and financialization were just "forces" that just happened,
in a meteorological economics. ..."
"... This was not your grandfather's Democratic Party and it was a Democratic Party that could aid
the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting constraints.
..."
"... No one in the Democratic Party had much institutional incentive to connect the dots, and draw
attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes the political
problem that much harder, because there are no resources for rhetorical and informational clarity or
coherence. ..."
"... If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of power,
Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular and gets Congressional
critters re-elected. So, again, if the stimulus is small and the Democratic Congress doesn't get re-elected,
Obama isn't really trying. ..."
"... Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because
it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference. ..."
At the center of Great Depression politics was a political struggle over the distribution of
income, a struggle that was only decisively resolved during the War, by the Great Compression.
It was at center of farm policy where policymakers struggled to find ways to support farm incomes.
It was at the center of industrial relations politics, where rapidly expanding unions were seeking
higher industrial wages. It was at the center of banking policy, where predatory financial practices
were under attack. It was at the center of efforts to regulate electric utility rates and establish
public power projects. And, everywhere, the clear subtext was a struggle between rich and poor,
the economic royalists as FDR once called them and everyone else.
FDR, an unmistakeable patrician in manner and pedigree, was leading a not-quite-revolutionary
politics, which was nevertheless hostile to and suspicious of business elites, as a source of
economic pathology. The New Deal did not seek to overthrow the plutocracy, but it did seek
to side-step and disable their dominance.
It seems to me that while neoliberalism on the right was much the same old same old, the
neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution
of income between the classes. In the U.S., the Democrats gradually abandoned their populist commitments.
In Europe, the labour and socialist parties gradually abandoned class struggle.
In retrospect, though the New Deal did use direct employment as a means of relief to good effect
economically and politically, it never undertook anything like a Keynesian stimulus on a Keynesian
scale - at least until the War.
Where the New Deal witnessed the institution of an elaborate system of financial repression,
accomplished in large part by imposing on the financial sector an explicitly mandated structure,
with types of firms and effective limits on firm size and scope, a series of regulatory reforms
and financial crises beginning with Carter and Reagan served to wipe this structure away.
When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features
of his economic team was the extent to which it conceded control of policy entirely to the leading
money center banks. Geithner and Bernanke continued in power with Geithner moving from the New
York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury
in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan
Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top five
banks, but it seemed also to transfer political power entirely into their hands as well. Simon
Johnson called it a coup.
I don't know what considerations guided Obama in choosing the size of the stimulus or its composition
(as spending and tax cuts). Larry Summers was identified at the time as a voice of caution, not
"gambling", but not much is known about his detailed reasoning in severely trimming Christina
Romer's entirely conventional calculations. (One consideration might well have been worldwide
resource shortages, which had made themselves felt in 2007-8 as an inflationary spike in commodity
prices.) I do not see a case for connecting stimulus size policy to the health care reform. At
the time the stimulus was proposed, the Administration had also been considering whether various
big banks and other financial institutions should be nationalized, forced to insolvency or otherwise
restructured as part of a regulatory reform.
Here's the thing: the globalization and financialization of the economy from roughly 1980
drove both increasingly extreme distribution of income and de-industrialization. Accelerating
the financialization of the economy from 1999 on made New York and Washington rich, but the same
economic policies and process were devastating the Rust Belt as de-industrialization. They were
two aspects of the same complex of economic trends and policies. The rise of China as a manufacturing
center was, in critical respects, a financial operation within the context of globalized trade
that made investment in new manufacturing plant in China, as part of globalized supply chains
and global brand management, (arguably artificially) low-risk and high-profit, while reinvestment
in manufacturing in the American mid-west became unattractive, except as a game of extracting
tax subsidies or ripping off workers.
It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility
for economic performance and outcomes. Globalization and financialization were just "forces" that
just happened, in a meteorological economics.
It is conceding too many good intentions to the Obama Administration to tie an inadequate stimulus
to a Rube Goldberg health care reform as the origin story for the final debacle of Democratic
neoliberal politics. There was a delicate balancing act going on, but they were not balancing
the recovery of the economy in general so much as they were balancing the recovery from insolvency
of a highly inefficient and arguably predatory financial sector, which was also not incidentally
financing the institutional core of the Democratic Party and staffing many key positions in the
Administration and in the regulatory apparatus.
This was not your grandfather's Democratic Party and it was a Democratic Party that could
aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting
constraints.
No one in the Democratic Party had much institutional incentive to connect the dots, and
draw attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes
the political problem that much harder, because there are no resources for rhetorical and informational
clarity or coherence.
The short version of my thinking on the Obama stimulus is this: Keynesian stimulus spending is
a free lunch; it doesn't really matter what you spend money on up to a very generous point, so
it seems ready-made for legislative log-rolling. If Obama could not get a very big stimulus
indeed thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen
spending on pork barrel projects is popular and gets Congressional critters re-elected. So, again,
if the stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really
trying.
Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism,
because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.
Great comment. Simply great. Hat tip to the author !
Notable quotes:
"… The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and
disable their dominance. …"
"… It seems to me that while neoliberalism on the right was much the same old same old, the
neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution
of income between the classes. In the U.S., the Democrats gradually abandoned their populist
commitments. In Europe, the labour and socialist parties gradually abandoned class struggle. …"
"… When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features
of his economic team was the extent to which it conceded control of policy entirely to the leading
money center banks. Geithner and Bernanke continued in power with Geithner moving from the
New York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury
in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan
Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top
five banks, but it seemed also to transfer political power entirely into their hands as well.
Simon Johnson called it a coup. … "
"… Here's the thing: the globalization and financialization of the economy from roughly 1980
drove both increasingly extreme distribution of income and de-industrialization. …"
"… It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility
for economic performance and outcomes. Globalization and financialization were just "forces"
that just happened, in a meteorological economics. …"
"… This was not your grandfather's Democratic Party and it was a Democratic Party that could
aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting
constraints. …"
"… No one in the Democratic Party had much institutional incentive to connect the dots, and
draw attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes
the political problem that much harder, because there are no resources for rhetorical and informational
clarity or coherence. …"
"… If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of
power, Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular
and gets Congressional critters re-elected. So, again, if the stimulus is small and the Democratic
Congress doesn't get re-elected, Obama isn't really trying. …"
"… Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism,
because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.
…"
"... I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. ..."
"... I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn't know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil ..."
"... Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll released Thursday, a signal that despite years after the Great Recession, Americans' finances remain precarious as ever. ..."
"... These difficulties span all incomes, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill. ..."
"... Even for the country's wealthiest 20 percent - households making more than $100,000 a year - 38 percent say they would have at least some difficulty coming up with $1,000 ..."
"... Chronicle for Higher Education: ..."
"... Meanwhile, 91% of all the profits generated by the U.S. economy from 2009 through 2012 went to the top 1%. As just one example, the annual bonuses (not salaries, just the bonuses) of all Wall Street financial traders last year amounted to 28 billion dollars while the total income of all minimum wage workers in America came to 14 billion dollars. ..."
"... "Between 2009 and 2012, according to updated data from Emmanuel Saez, overall income per family grew 6.9 percent. The gains weren't shared evenly, however. The top 1 percent saw their real income grow by 34.7 percent while the bottom 99 percent only saw a 0.8 percent gain, meaning that the 1 percent captured 91 percent of all real income. ..."
"... Adjusting for inflation and excluding anything made from capital gains investments like stocks, however, shows that even that small gains for all but the richest disappears. According to Justin Wolfers, adjusted average income for the 1 percent without capital gains rose from $871,100 to $968,000 in that time period. For everyone else, average income actually fell from $44,000 to $43,900. Calculated this way, the 1 percent has captured all of the income gains." ..."
"... There actually is a logic at work in the Rust Belt voters for voted for Trump. I don't think it's good logic, but it makes sense in its own warped way. The calculation the Trump voters seem to be making in the Rust Belt is that it's better to have a job and no health insurance and no medicare and no social security, than no job but the ACA (with $7,000 deductibles you can't afford to pay for anyway) plus medicare (since most of these voters are healthy, they figure they'll never get sick) plus social security (most of these voters are not 65 or older, and probably think they'll never age - or perhaps don't believe that social security will be solvent when they do need it). ..."
"... It's the same twisted logic that goes on with protectionism. Rust Belt workers figure that it's better to have a job and not be able to afford a Chinese-made laptop than not to have a job but plenty of cheap foreign-made widgets you could buy if you had any money (which you don't). That logic doesn't parse if you run through the economics (because protectionism will destroy the very jobs they think they're saving), but it can be sold as a tweet in a political campaign. ..."
"... The claim "Trump's coalition is composed of overt racists and people who are indifferent to overt racism" is incomplete. Trump's coalition actually consists of 3 parts and it's highly unstable: [1] racists, [2] plutocrats, [3] working class people slammed hard by globalization for whom Democrats have done little or nothing. ..."
"... The good news is that Trump's coalition is unstable. The plutocrats and Rust Belters are natural enemies. ..."
"... Listen to Steve Bannon, a classic stormfront type - he says he wants to blow up both the Democratic and the Republican party. He calls himself a "Leninist" in a recent interview and vows to wreck all elite U.S. institutions (universities, giant multinationals), not just the Democratic party. ..."
"... Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference. ..."
Eric places the blame for this loss squarely on economics, which, it seems to me, gets the analysis
exactly right. And the statistics back up his analysis, I believe.
It's disturbing and saddening to watch other left-wing websites ignore those statistics and
charge off the cliff into the abyss, screaming that this election was all about racism/misogyny/homophobia/[fill
in the blank with identity politics demonology of your choice]. First, the "it's all racism" analysis
conveniently lets the current Democratic leadership off the hook. They didn't do anything wrong,
it was those "deplorables" (half the country!) who are to blame. Second, the identity politics
blame-shifting completely overlooks and short-circuits any real action to fix the economy by Democratic
policymakers or Democratic politicians or the Democratic party leadership. That's particularly
convenient for the Democratic leadership because these top-four-percenter professionals "promise
anything and change nothing" while jetting between Davos and Martha's Vineyard, ignoring the peons
who don't make $100,000 or more a year because the peons all live in flyover country.
"Trump supporters were on average affluent, but they are always Republican and aren't numerous
enough to deliver the presidency (538 has changed their view in the wake of the election result).
Some point out that looking at support by income doesn't show much distinctive support for Trump
among the "poor", but that's beside the point too, as it submerges a regional phenomenon in a
national average, just as exit polls do. (..)
"When commentators like Michael Moore and Thomas Frank pointed out that there was possibility
for Trump in the Rust Belt they were mostly ignored or, even more improbably, accused of being
apologists for racism and misogyny. But that is what Trump did, and he won. Moreover, he won with
an amateurish campaign against a well-funded and politically sophisticated opponent simply because
he planted his flag where others wouldn't.
"Because of the obsession with exit polls, post-election analysis has not come to grips with
the regional nature of the Trump phenomenon. Exit polls divide the general electorate based on
individual attributes: race, gender, income, education, and so on, making regional distinctions
invisible. Moreover, America doesn't decide the presidential election that way. It decides it
based on the electoral college, which potentially makes the characteristics of individual states
decisive. We should be looking at maps, not exit polls for the explanation. Low black turnout
in California or high Latino turnout in Texas do not matter in the slightest in determining the
election, but exit polls don't help us see that. Exit polls deliver a bunch of non-explanatory
facts, in this election more than other recent ones." http://blogs.lse.ac.uk/usappblog/2016/11/11/23174/
"Donald Trump performed best on Tuesday in places where the economy is in worse shape, and
especially in places where jobs are most at risk in the future.
"Trump, who in his campaign pledged to be a voice for `forgotten Americans,' beat Hillary Clinton
in counties with slower job growth and lower wages. And he far outperformed her in counties where
more jobs are threatened by automation or offshoring, a sign that he found support not just among
workers who are struggling now but among those concerned for their economic future."
Meanwhile, the neoliberal Democrats made claims about the economy that at best wildly oversold
the non-recovery from the 2009 global financial meltdown, and at worst flat-out misrepresented
the state of the U.S. economy. For example, president Obama in his June 1 2016 speech in Elkhart
Indiana, said:
"Now, one of the reasons we're told this has been an unusual election year is because people
are anxious and uncertain about the economy. And our politics are a natural place to channel
that frustration. So I wanted to come to the heartland, to the Midwest, back to close to my
hometown to talk about that anxiety, that economic anxiety, and what I think it means. (..)
America's economy is not just better than it was eight years ago - it is the strongest, most
durable economy in the world. (..) Unemployment in Elkhart has fallen to around 4 percent.
(Applause.) At the peak of the crisis, nearly one in 10 homeowners in the state of Indiana
were either behind on their mortgages or in foreclosure; today, it's one in 30. Back then,
only 75 percent of your kids graduated from high school; tomorrow, 90 percent of them will.
(Applause.) The auto industry just had its best year ever. (..) So that's progress.(..) We
decided to invest in job training so that folks who lost their jobs could retool. We decided
to invest in things like high-tech manufacturing and clean energy and infrastructure, so that
entrepreneurs wouldn't just bring back the jobs that we had lost, but create new and better
jobs By almost every economic measure, America is better off than when I came here at the
beginning of my presidency. That's the truth. That's true. (Applause.) It's true. (Applause.)
Over the past six years, our businesses have created more than 14 million new jobs - that's
the longest stretch of consecutive private sector job growth in our history. We've seen the
first sustained manufacturing growth since the 1990s."
None of this is true. Not is a substantive sense, not in the sense of being accurate, not in
the sense of reflecting the facts on the ground for real working people who don't fly their private
jets to Davos.
The claim that "America's economy is the strongest and most durable economy in the world" is
just plain false. China has a much higher growth rate, at 6.9% nearly triple the U.S.'s - and
America's GDP growth is trending to historic long-term lows, and still falling. Take a look at
this chart of the Federal Reserve board's projections of U.S. GDP growth since 2009 compared with
the real GDP growth rate:
"[In the survey] [t]he Fed asked respondents how they would pay for a $400 emergency. The answer:
47 percent of respondents said that either they would cover the expense by borrowing or selling
something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who
knew?
"Well, I knew. I knew because I am in that 47 percent.
" I know what it is like to have to juggle creditors to make it through a week. I know
what it is like to have to swallow my pride and constantly dun people to pay me so that I can
pay others. I know what it is like to have liens slapped on me and to have my bank account
levied by creditors. I know what it is like to be down to my last $5-literally-while I wait for
a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs.
I know what it is like to dread going to the mailbox, because there will always be new
bills to pay but seldom a check with which to pay them. I know what it is like to have to tell
my daughter that I didn't know if I would be able to pay for her wedding; it all depended on whether
something good happened. And I know what it is like to have to borrow money from my adult daughters
because my wife and I ran out of heating oil ."
" Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000
emergency, according to an exclusive poll released Thursday, a signal that despite years after
the Great Recession, Americans' finances remain precarious as ever.
" These difficulties span all incomes, according to the poll conducted by The Associated
Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less
than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty
coming up with $1,000 to cover an unexpected bill.
" Even for the country's wealthiest 20 percent - households making more than $100,000 a
year - 38 percent say they would have at least some difficulty coming up with $1,000 .
"`The more we learn about the balance sheets of Americans, it becomes quite alarming,' said
Caroline Ratcliffe, a senior fellow at the Urban Institute focusing on poverty and emergency savings
issues."
The rest of Obama's statistics are deceptive to the point of being dissimulations - unemployment
has dropped to 4 percent because so many people have stopped looking for work and moved into their
parents' basements that the Bureau of Labor Statistics no longer counts them as unemployed. Meanwhile,
the fraction of working-age adults who are not in the workforce has skyrocketed to an all-time
high. Few homeowners are now being foreclosed in 2016 compared to 2009 because the people in 2009
who were in financial trouble all lost their homes. Only rich people and well-off professionals
were able to keep their homes through the 2009 financial collapse. Since 2009, businesses did
indeed create 14 million new jobs - mostly low-wage junk jobs, part-time minimum-wage jobs that
don't pay a living wage.
"The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment
growth during the sluggish recovery has been in low-wage work, at places like strip malls and
fast-food restaurants.
"In essence, the poor economy has replaced good jobs with bad ones."
And the jobs market isn't much better for highly-educated workers:
New research released Monday says nearly half of the nation's recent college graduates work
jobs that don't require a degree.
The report, from the Center for College Affordability and Productivity, concludes that while
college-educated Americans are less likely to collect unemployment, many of the jobs they do have
aren't worth the price of their diplomas.
The data calls into question a national education platform that says higher education is better
in an economy that favors college graduates.
Don't believe it? Then try this article, from the Chronicle for Higher Education:
Approximately 60 percent of the increase in the number of college graduates from 1992 to
2008 worked in jobs that the BLS considers relatively low skilled-occupations where many participants
have only high school diplomas and often even less. Only a minority of the increment in our
nation's stock of college graduates is filling jobs historically considered as requiring a
bachelor's degree or more.
As for manufacturing, U.S. manufacturing lost 35,000 jobs in 2016, and manufacturing employment
remains 2.2% below what it was when Obama took office.
Meanwhile, 91% of all the profits generated by the U.S. economy from 2009 through 2012
went to the top 1%. As just one example, the annual bonuses (not salaries, just the bonuses) of
all Wall Street financial traders last year amounted to 28 billion dollars while the total income
of all minimum wage workers in America came to 14 billion dollars.
"Between 2009 and 2012, according to updated data from Emmanuel Saez, overall income per
family grew 6.9 percent. The gains weren't shared evenly, however. The top 1 percent saw their
real income grow by 34.7 percent while the bottom 99 percent only saw a 0.8 percent gain, meaning
that the 1 percent captured 91 percent of all real income.
Adjusting for inflation and excluding anything made from capital gains investments like
stocks, however, shows that even that small gains for all but the richest disappears. According
to Justin Wolfers, adjusted average income for the 1 percent without capital gains rose from $871,100
to $968,000 in that time period. For everyone else, average income actually fell from $44,000
to $43,900. Calculated this way, the 1 percent has captured all of the income gains."
Does any of this sound like "the strongest, most durable economy in the world"? Does any of
this square with the claims by Hillary Clinton and Barack Obama that "By almost every economic
measure, America is better off "? The U.S. economy is only better off in 2016 by disingenuous
comparison with the stygian depths of the 2009 economic collapse.
Hillary Clinton tied herself to Barack Obama's economic legacy, and the brutal reality for
working class people remains that the economy today has barely improved for most workers to what
it was in 2009, and is in many ways worse. Since 2009, automation + outsourcing/offshoring has
destroyed whole classes of jobs, from taxi drivers (wiped out by Uber and Lyft) to warehoues stock
clerks (getting wiped out by robots) to paralegals and associates at law firms (replaced by databases
and legal search algorithms) to high-end programmers (wiped out by an ever-increasing flood of
H1B via workers from India and China).
Yet vox.com continues to run article after article proclaiming "the 2016 election was all about
racism." And we have a non-stop stream of this stuff from people like Anne Laurie over at balloon-juice.com:
"While the more-Leftist-than-thou "progressives" - including their latest high-profile figurehead
- are high-fiving each other in happy anticipation of potential public-outrage gigs over the next
four years, at least some people are beginning to push back on the BUT WHITE WORKING CLASS HAS
ALL THE SADS!!! meme so beloved of Very Serious Pundits."
That's the ticket, Democrats double down on the identity politics, keep telling the pulverized
middle class how great the economy is. Because that worked so well for you this election.
= = = mclaren@9:52 am: The rest of Obama's statistics are deceptive to the point of being
dissimulations -[ ] Only rich people and well-off professionals were able to keep their homes
through the 2009 financial collapse. = = =
Some food for thought in your post, but you don't help your argument with statements such as
this one. Rich people and well-off professionals make up at most 10% of the population. US homeownership
rate in 2005 was 68.8%, in 2015 is 63.7. That's a big drop and unquestionably represents a lot
of people losing their houses involuntarily. Still, even assuming no "well-off professionals"
lost their houses in the recession that still leaves the vast majority of the houses owned by
the middle class. Which is consistent with foreclosure and sales stats in middle class areas from
2008-2014. Remember that even with 20% unemployment 80% of the population still has a job.
Similarly, I agree that the recession and job situation was qualitatively worse than the quantitative
stats depicted. Once you start adding in hidden factors not captured by the official stats, though,
where do you stop? How do you know the underground economy isn't doing far better than it was
in the boom years of the oughts, thus reducing actual unemployment? Etc.
Finally, you need to address the fundamental question: assuming all you say is true (arguendo),
how does destroying the Affordable Care Act, Social Security, and Medicare help those in the economically
depressed areas? I got hit bad by the recession myself. Know what helped from 2010 forward? Knowing
that I could change jobs, keep my college-age children on my spouse's heath plan, not get hit
with pre-existing condition fraud, and that if worse came to worse in a couple years I would have
the plan exchange to fall back on. Kansas has tried the Ryan/Walker approach, seen it fail, doubled
down, and seen that fail 4x as badly. Now we're going to make it up on unit sales by trying the
Ryan plan nationally? How do you expect that to "work out for you"?
WLGR 11.16.16 at 4:11 pm
mclaren @ 7: "high-end programmers (wiped out by an ever-increasing flood of H1B via workers
from India and China)"
I'm on board with the general thrust of what you're saying, but this is way, way over
the line separating socialism from barbarism. The fact that
it's not even true is beside the point, as is the (quite frankly) fascist metaphor of "flood"
to describe human fucking beings traveling in search of economic security, at least as long as
you show some self-awareness and contrition about your language. Some awareness about the insidious
administrative structure of the H1-B program would also be nice - the way it works is, an individual's
visa status more or less completely depends on remaining in the good graces of their employer,
meaning that by design these employees have no conceivable leverage in any negotiation
over pay or working conditions, and a program of unconditional residency without USCIS as a de
facto strikebreaker would have much less downward pressure on wages - but anti-immigration rhetoric
remaining oblivious to actual immigration law is par for the course.
No, the real point of departure here from what deserves to be called "socialism" is in the
very act of blithely combining effects of automation (i.e. traditional capitalist competition
for productive efficiency at the expense of workers' economic security) and effects of offshoring/outsourcing/immigration
(i.e. racialized fragmentation of the global working class by accident of birth into those who
"deserve" greater economic security and those who don't) into one and the same depiction of developed-world
economic crisis. In so many words, you're walking right down neoliberal capitalism's ideological
garden path: the idea that it's not possible to be anticapitalist without being an economic nationalist,
and that every conceivable alternative to some form of Hillary Clinton is ultimately reducible
to some form of Donald Trump. On the contrary, those of us on the socialism side of "socialism
or barbarism" don't object to capitalism because it's exploiting American workers , we
object because it's exploiting workers , and insisting on this crucial point against all
chauvinist pressure ("workers of all lands , unite!") is what fundamentally separates our
anticapitalism from the pseudo-anticapitalism of fascists.
Maclaren: I'm with you. I well remember Obama and his "pivot to deficit reduction" and "green
shoots" while I was screaming at the TV 'No!! Not Now!"
And then he tried for a "grand bargain" with the Reps over chained CPI adjustment for SS, and
he became my active enemy. I was a Democrat. Where did my party go?
Just chiming in here: The implicit deal between the elites and the hoi polloi was that the economy
would be run with minimal competence. Throughout the west, those elites have broken faith with
the masses on that issue, and are being punished for it.
I'm less inclined to attach responsibility to Obama, Clinton or the Democratic Party than some.
If Democrats had their way, the economy would have been managed considerably more competently.
Always remember that the rejection of the elites wasn't just a rejection of Democrats. The
Republican elite also took it in the neck.
I'll also dissent from the view that race wasn't decisive in this election. Under different
circumstances, we might have had Bernie's revolution rather than Trump's, but Trump's coalition
is composed of overt racists and people who are indifferent to overt racism.
I find the discussions over identity politics so intensely frustrating. A lot of people
on the left have gone all-in on self-righteous anger
Identity politics (and to some extent probably the rhetorical style that goes with it) isn't
a 'left' thing, it's a liberal thing. It's a bête noire for many on the left-see eg. Nancy Fraser's
work.
The Anglo/online genus what you get when you subtract class, socialism and real-world organisation
from politics and add in a lot of bored students and professionals with internet connections in
the context of a political culture (America's) that already valorises individual aggression to
a unique degree.
As polticalfoorball @15 says. The Democrats just didn't have the political muscle to deliver on
those things. There really is a dynamic thats been playing out: Democrats don't get enough governing
capacity because they did poorly in the election, which means their projects to improve the economy
are neutered or allowed through only in a very weakened form. Then the next election cycle the
neuterers use that failure as a weapon to take even more governing capacity away. Its not a failure
of will, its a failure to get on top of the political feedback loop.
@15 politicalfootball 11.16.16 at 5:27 pm
"Throughout the west, those elites have broken faith with the masses on that issue, and are being
punished for it."
Could you specify some "elite" that has been punished?
'the economic theories and programs ascribed to John M. Keynes and his followers; specifically
: the advocacy of monetary and fiscal programs by government to increase employment and spending'
– and if it is done wisely – like in most European countries before 2000 it is one of the least
'braindead' things.
But with the introduction of the Euro – some governmental programs – lead (especially in Spain)
to horrendous self-destructive housing and building bubbles – which lead to the conclusion that
such programs – which allow 'gambling with houses' are pretty much 'braindead'.
Or shorter: The quality of Keynesianism depends on NOT doing it 'braindead'.
Cranky Observer in #11 makes some excellent points. Crucially, he asks: "Finally, you need to
address the fundamental question: assuming all you say is true (arguendo), how does destroying
the Affordable Care Act, Social Security, and Medicare help those in the economically depressed
areas?"
There actually is a logic at work in the Rust Belt voters for voted for Trump. I don't
think it's good logic, but it makes sense in its own warped way. The calculation the Trump voters
seem to be making in the Rust Belt is that it's better to have a job and no health insurance and
no medicare and no social security, than no job but the ACA (with $7,000 deductibles you can't
afford to pay for anyway) plus medicare (since most of these voters are healthy, they figure they'll
never get sick) plus social security (most of these voters are not 65 or older, and probably think
they'll never age - or perhaps don't believe that social security will be solvent when they do
need it).
It's the same twisted logic that goes on with protectionism. Rust Belt workers figure that
it's better to have a job and not be able to afford a Chinese-made laptop than not to have a job
but plenty of cheap foreign-made widgets you could buy if you had any money (which you don't).
That logic doesn't parse if you run through the economics (because protectionism will destroy
the very jobs they think they're saving), but it can be sold as a tweet in a political campaign.
As for 63.7% home ownership stats in 2016, vast numbers of those "owned" homes were snapped
up by giant banks and other financial entities like hedge funds which then rented those homes
out. So the home ownership stats in 2016 are extremely deceptive. Much of the home-buying since
the 2009 crash has been investment purchases. Foreclosure home purchases for rent is now a huge
thriving business, and it's fueling a second housing bubble. Particularly because in many ways
it repeats the financially frothy aspects of the early 2000s housing bubble - banks and investment
firms are issuing junks bonds based on rosy estimates of ever-escalating rents and housing prices,
they use those junk financial instruments (and others like CDOs) to buy houses which then get
rented out at inflated prices, the rental income gets used to fund more tranches of investment
which fuels more buy-to-rent home buying. Rents have already skyrocketed far beyond incomes on
the East and West Coast, so this can't continue. But home prices and rents keep rising. There
is no city in the United States today where a worker making minimum wage can afford to rent a
one-bedroom apartment and have money left over to eat and pay for a car, health insurance, etc.
If home ownership were really so robust, this couldn't possibly be the case. The fact that rents
keep skyrocketing even as undocumented hispanics return to Mexico in record numbers while post-9/11
ICE restrictions have hammered legal immigration numbers way, way down suggests that home ownership
is not nearly as robust as the deceptive numbers indicate.
Political football in #15 remarks: "I'll also dissent from the view that race wasn't decisive
in this election. Under different circumstances, we might have had Bernie's revolution rather
than Trump's, but Trump's coalition is composed of overt racists and people who are indifferent
to overt racism."
Race was important, but not the root cause of the Trump victory. How do we know this? Tump
himself is telling us. Look at Trump's first announced actions - deport 3 million undocumented
immigrants who have committed crimes, ram through vast tax cuts for the rich, and end the inheritance
tax.
If Trump's motivation (and his base's motivation) was pure racism, Trump's first announced
action would be something like passing laws that made it illegal to marry undocumented workers.
His first act would be to roll back the legalization of black/white marriage and re-instate segregation.
Trump isn't promising any of that.
Instead Trump's (bad) policies are based around enriching billionaires and shutting down immigration.
Bear in mind that 43% of all new jobs created since 2009 went to immigrants and you start to realize
that Trump's base is reacting to economic pressure by scapegoating immigrants, not racism by itself.
If it were pure racism we'd have Trump and Ryan proposing a bunch of new Nuremberg laws. Make
it illegal to have sex with muslims, federally fund segregated black schools and pass laws to
force black kids to get bussed to them, create apartheid-style zones where only blacks can live,
that sort of thing. Trump's first announced actions involve enriching the fantastically wealthy
and enacting dumb self-destructive protectionism via punitive immigration control. That's protectionism
+ class war of the rich against everyone else, not racism. The protectionist immigration-control
+ deportation part of Trump's program is sweet sweet music to the working class people in the
Rust Belt. They think the 43% of jobs taken by immigrants will come back. They don't realize that
those are mostly jobs no one wants to do anyway, and that most of those jobs are already in the
process of getting automated out of existence.
The claim "Trump's coalition is composed of overt racists and people who are indifferent
to overt racism" is incomplete. Trump's coalition actually consists of 3 parts and it's highly
unstable: [1] racists, [2] plutocrats, [3] working class people slammed hard by globalization
for whom Democrats have done little or nothing.
Here's an argument that may resonate: the first two groups in Trump's coalition are unreachable.
Liberal Democrats can't sweet-talk racists out of being racist and we certainly have nothing to
offer the plutocrats. So the only part of Trump's coalition that is really reachable by liberal
Democrats is the third group. Shouldn't we be concentrating on that third group, then?
The good news is that Trump's coalition is unstable. The plutocrats and Rust Belters are
natural enemies. Since the plutocrats are perceived as running giant corporations that import
large numbers of non-white immigrants to lower wages, the racists are not big fans of that group
either.
Listen to Steve Bannon, a classic stormfront type - he says he wants to blow up both the
Democratic and the Republican party. He calls himself a "Leninist" in a recent interview and vows
to wreck all elite U.S. institutions (universities, giant multinationals), not just the Democratic
party.
Why? Because the stormfront types consider elite U.S. institutions like CitiBank as equally
culpable with Democrats in supposedly destroying white people in the U.S. According to Bannon's
twisted skinhead logic, Democrats are allegedly race traitors for cultural reasons, but big U.S.
corporations and elite institutions are supposedly equally guilty of economic race treason by
importing vast numbers of non-white immigrants via H1B visas, by offshoring jobs from mostly caucasian-populated
red states to non-white countries like India, Africa, China, and by using elite U.S. universities
to trawl the world for the best (often non-white) students, etc. Bannon's "great day of the rope"
includes the plutocrats as well as people of color.
These natural fractures in the Trump coalition are real, and Democrats can exploit them to
weaken and destroy Republicans. But we have to get away from condemning all Republicans as racists
because if we go down that route, we won't realize how fractured and unstable the Trump coalition
really is.
The short version of my thinking on the Obama stimulus is this: Keynesian stimulus spending is
a free lunch; it doesn't really matter what you spend money on up to a very generous point, so
it seems ready-made for legislative log-rolling. If Obama could not get a very big stimulus indeed
thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen spending
on pork barrel projects is popular and gets Congressional critters re-elected. So, again, if the
stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really trying.
Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism,
because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.
Ps. Should prob add that identity politics isn't the same thing as feminism, anti-racism, LGBT
politics, etc. They're all needed now more than ever.
What we don't need more of imo is a particular liberal/middle-class form of those things with
particular assumptions (meritocratic and individualist), epistemology (strongly subjectivist)
and rhetorical style (which often aims humiliating opponents from a position of relative knowledge/status
rather than verbal engagement).
I don't know why I'm even having to say this, as it's so obvious. The "leftists" (for want of
a better word) and feminists who I know are also against neoliberalism. They are against the selloff
of public assets to enterprises for private profit. They want to see a solution to the rapidly
shrinking job market as technology replaces jobs (no, it's not enough for the Heroic Workers to
Seize the Means of Production – the means of production are different now and the solution is
going to have to be more complex than just "bring back manufacturing" or "introduce tariffs".)
They want to roll back the tax cuts for the rich which have whittled down our revenue base this
century. They want corporations and the top 10% to pay their fair share, and concomitantly they
want pensioners, the unemployed and people caring for children to have a proper living wage.
They support a universal "single payer" health care system, which we social democratic squishy
types managed to actually introduce in the 1970s, but now we have to fight against right wing
governments trying to roll it back They support a better system of public education. They support
a science-based approach to climate change where it is taken seriously for the threat it is and
given priority in Government policy. They support spending less on the Military and getting out
of international disputes which we (Western nations) only seem to exacerbate.
This is not an exhaustive list.
Yet just because the same people say that the dominant Western countries (and my own) still
suffer from institutionalised racism and sexism, which is not some kind of cake icing but actually
ruin lives and kill people, we are "all about identity politics" and cannot possibly have enough
brain cells to think about the issues I described in para 1.
The slow recovery was only one factor. Wages have been stagnant since Reagan. And honestly,
if a white Republican president had stabilized the economy, killed Osama Bin Laden and got rid
of pre-existing condition issue with healthcare, the GOP would be BRAGGING all over it. Let's
remember that we have ONE party that has been devoted to racist appeals, lying and putting party
over country for decades.
Obama entered office as the economy crashed over a cliff. Instead of reforming the banks and
punishing the bankers who engaged in fraudulent activities, he waded into healthcare reform. Banks
are bigger today than they were in 2008. And tell me again, which bankers were punished for the
fraud? Not a one All that Repo 105 maneuvering, stuffing the retirement funds with toxic assets
– etc. and so on – all of that was perfectly legal? And if legal, all of that was totally bonusable?
Yes! In America, such failure is gifted with huge bonuses, thanks to the American taxpayer.
Meanwhile, homeowners saw huge drops the value of their homes. Some are still underwater with
the mortgage. It's a shame that politicians and reporters in DC don't get out much.
Concurrently, right before the election, ACA premiums skyrocketed. If you are self-insured,
ACA is NOT affordable. It doesn't matter that prior to ACA, premiums increased astronomically.
Obama promised AFFORDABLE healthcare. In my state, we have essentially a monopoly on health insurance,
and the costs are absurd. But that's in part because the state Republicans refused to expand Medicaid.
Don't underestimate HRC's serious issues. HRC had one speech for the bankers and another for
everyone else. Why didn't she release the GS transcripts? When did the Democrats become the party
of Wall Street?
She also made the same idiotic mistake that Romney did – disparage a large swathe of American
voters (basket of deplorables is this year's 47%.)
And then we had a nation of voters intent on the outsider. Bernie Sanders had an improbable
run at it – the Wikileaks emails showed that the DNC did what they could to get rid of him as
a threat.
Well America has done and gone elected themselves an outsider. Lucky us.
"... Earning your living in finance or the related co-dependent fields such as economics, business management, certain areas of law and, most especially, information technology, you quickly pick up on the cult mentality that pervades it. ..."
"... When, like so many of us, you're desperate to try to cling onto some semblance of middle class status, you're an easy and, although I'd strongly qualify this statement, understandable, target for buying into the group-think. ..."
"... " Markets " do not " demand " anything. ..."
"... But a "market" can - at the very most, through the use of pricing signals - induce actors to consider entering into a transaction. ..."
"... They provided credit to low income customers because it was insanely profitable. The reason it was insanely profitable was that the loans to the low income customers could be securitised and the commissions the banks earned on the sale of those securities paid for massive bonus pools which directly benefitted bank employees. ..."
"... Yes, I'd always be the first to agree with the proverb "In Heaven you get justice, here on Earth we have the law". The law and our legal systems are not perfect. But they are not that shabby either. ..."
"... If it is regulatory interventions, rather than criminal indictments, that the Streetwise Professor is referring to, the banks can and do leave no political stone unturned in their efforts to water down, delay and neuter regulatory bodies. Look , if you can do so without wincing, at what has happened to the SEC. ..."
"... It wasn't a " pre-crisis political bargain " that caused the Global Financial Crisis. It was financial innovation that was supposed to "free" the financial services industry to allow it to soar to ever greater heights, heights that couldn't be reached with cumbersome "legacy" thinking. If that sounds a lot like Mike Hearn's Blockchain justifications, it's because it is exactly the same thing. ..."
"... Innovation must never be viewed only through separate, disconnected lenses of "technology", "politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation is subject to and either lives or dies by the interplay between these forces." ..."
"... I agree - however, "I don't mind people doing dangerous things" should require a little elucidation. What you likely meant to say was you don't mind people doing dangerous things, WITHIN REASON. ..."
"... Also, there is the rank unwillingness on the part of regulators to, you know, actually do their jobs. I can no longer count the number of times Yellen has sat in front of the Senate banking committee like a deer in headlights ..."
"... Excellent points, I thought that the Bush Wars were initiated to alleviate an oncoming recession as well as ensure W's reelection ..."
"... It did take them a while to get the pieces in place, the Banksters Real Estate Fraud Appraisals were identified as early as 2000, then the Banksters Fraudulent Loans peaked in 2006, and then we had the Banksters Fraudulent Reps and Warranties . ..."
"... Ah, the neo-liberals and the libertarians make their arguments by redefining terms and eliding facts. Once the audience agrees that up is down, why then their arguments are reasonable, dispassionate, and offered in dulcet tones of humble sincerity and objectivity. ..."
"... What a pleasure, then, to read your cold water smack-down of their confidence game. Perhaps they believed their own nonsense. Who knows. ..."
"... A third consequence of modern-day liberals' unquestioning, reflexive respect for expertise is their blindness to predatory behavior if it comes cloaked in the signifiers of professionalism. ..."
"... The difference in interpretation carries enormous consequences: Did Wall Street commit epic fraud, or are they highly advanced professionals who fell victim to epic misfortune? modern day liberals pretty much insist on the later view . Wall Street's veneer of professionalism is further buttressed by its technical jargon, which the financial industry uses to protect itself from the scrutiny of the public ..."
Earning your living in finance or the related co-dependent fields such as economics, business
management, certain areas of law and, most especially, information technology, you quickly pick up
on the cult mentality that pervades it.
When, like so many of us, you're desperate to try to cling onto some semblance of middle class
status, you're an easy and, although I'd strongly qualify this statement, understandable, target
for buying into the group-think. Or at least going along with it on the promise of continued
employment. While I'm letting myself off the hook in the process, I think that's forgivable. I and
others like me need the money. Besides, in our spare time, we might try to atone for our misdeeds
by using whatever means we have available, such as contributing to Naked Capitalism in whatever way
we can, to try to set the record straight.
Not quite so easily forgivable, though, are the members of an altogether different cadre who don't
give the impression of having to live paycheck to paycheck. What is it that motivates them? Why do
they willingly devise clever - and, I have to say it, some are exceptionally adept - ruses to defend
and further the causes of our élites?
... ... ...
As readers with not-so-long memories will recall, in the run-up to the Global Financial Crisis,
the TBTFs did indeed exercise the " FU Option ". As asset prices for the securities they held
fell precipitously, they held more and more of those assets on their balance sheets, refusing to
- or unable to - off-load them into a market that was shunning them. Eventually their capital cushions
were so depleted because of this, they became insolvent. Staring catastrophe in the face, governments
were put into a double-bind by the TBTFs: Rescue us through bail-outs or stand by and see our societies
suffer major collateral damage (bank runs, a collapse of world trade, ruining of perfectly good and
solvent businesses with the likelihood of mass unemployment and civil unrest).
In that situation, who was the " U " who was being " F "'ed? It was governments
and the public.
Faced with an asymmetry of power, in a reverse of the scenario painted by the Streetwise Professor
for OTC trading (where a notional seller tells a theoretical buyer they can go to Hell if they don't
want to pay the price the seller is asking), governments - and us - found themselves on the buy-side
of an " FU Option ". "F the-rest-of-us By Necessity" was a better description as we were
turned into forced buyers of what no other "market participant" would touch.
My dear Professor, allow me to give you , if I may risk the label of being impudent,
a lesson. If I am selling my prized Diana, Princess of Wales tea cups in a yard sale and you make
me a offer for them, that - I'm sure we'd agree on this point - is an OTC transaction. There's no
exchange (mercifully) for Diana, Princess of Wales tea cups. I put a price sticker on them. If you
want them, you pay the price I'm asking. Or else, you make me a different offer. If you don't pay
the price I want, or I don't accept the price you're offering, we do, indeed, have a genuine "
FU Option " scenario. But if instead my mother-in-law threatens to saw your face off with her
cheese grater if you don't buy my Diana, Princess of Wales tea cups at the price shown on the sticker,
then we no longer have an OTC transaction. We have extortion. See the difference?
That's not all. The piece discusses the differences between a proposed smart-contract based settlement
compared with a centralised counterparty which brings up some very valid points. But then it makes
a serious blunder which is introduced with some subtly but is all the more dangerous because of it.
I'll highlight the problem:
So the proposal does some of the same things as a CCP, but not all of them, and in fact omits
the most important bits that make central clearing central clearing. To the extent that these other
CCP services add value–or regulation compels market participants to utilize a CCP that offers these
services–market participants will choose to use a CCP, rather than this service. It is not a perfect
substitute for central clearing, and will not disintermediate central clearing in cases where the
services it does not offer and the functions it does not perform are demanded by market participants
, or by regulators.
Did you catch what is the most troubling thing in that paragraph? The technicalities of it are
fine, but the bigger framing is perilous. "Market participants" is given agency. And put on the same
level as actions taken by regulators. This is at best unintentionally misleading and at worse an
entirely deliberate falsehood.
The fallacious thinking which caused it is due to a traditional economist's mind-set. But this
mind-set is hopelessly wrong and every time we encounter it, we must challenge it. Regardless of
what other progressive goodies it is being bundled up with.
" Markets " do not " demand " anything.
A regulator or central bank can demand that a bank hold more capital and open its books
to check the underlying asset quality. The CFPB can demand that Wells Fargo stops opening fake accounts.
Even I can demand a pony. The power structures, laws, enforcement and levels of trust (to name the
main constraints) governing who is demanding what from whom determine how likely they will be to
have their demands met.
But a "market" can - at the very most, through the use of pricing signals - induce actors
to consider entering into a transaction. The pricing signal cannot make any potential
actor participate in that transaction. Not, probably, that it would have helped her much, but Hillary
Clinton could have created a market for left-wing bloggers to shill for Obamacare by offering Lambert
$1million to start churning out pro-ACA posts on his blog. But that market which Hillary could create
could not "demand" Lambert accept her offer. Lambert would not take that, or any other monetary amount,
and would never enter such a transaction. Markets have limits.
Whether unintentionally or by design, we have a nice example of bait and switch in the Streetwise
Professor's Blockchain article. If you run a critique of Blockchain, you'll likely attract an anti-libertarian
audience. It's a classic example of
nudge theory . If you can
lure readers in with the promise of taking a swipe at disruptive innovation nonsense but then lead
them to being suckered into a reinforcement of failed conventional free-market hogwash, that can
be a powerful propaganda tool.
But perhaps the Blockchain feature was an aberration, just a one-off? No.
Take, for example, this feature
on Deutsche Bank from earlier this month which I'll enter as Exhibit B - It's not the TBTFs Fault,
the Regulators / Governments / Some Guy / Made Us Do It
I'll leave the worst 'til last, but for now let's start with this little treasure:
the pre-crisis political bargain was that banks would facilitate income redistribution
policy by provide credit to low income individuals. This seeded the crisis (though like any complex
event, there were myriad other contributing causal factors), the political aftershocks of which
are being felt to this day. Banking became a pariah industry, as the very large legal settlements
extracted by governments indicate.
No, Streetwise Professor, banks did not provide credit to low income individuals as part of some
"political bargain". They provided credit to low income customers because it was insanely profitable.
The reason it was insanely profitable was that the loans to the low income customers could be securitised
and the commissions the banks earned on the sale of those securities paid for massive bonus pools
which directly benefitted bank employees.
Almost unimaginable wealth could be generated by individuals (the Naked Capitalism archive details
the full sordid story of the likes of Magnetar). The fact that this would all blow up eventually
was certainly predicable and even known by many actors in the prevailing milieu but they didn't care.
They knew they'd have already set themselves up for life financially even after just a few years
in that "game". Politics, for once, had nothing to do with it, save perhaps that regulators, which
are the politicians' responsibility, should have been better able to spot what was going on.
But the Streetwise Professor is only just getting started with the counterfactual misinformation:
It is definitely desirable to have mechanisms to hold financial malfeasors accountable,
but the Deutsche episode illustrates several difficulties. The first is that even the biggest
entities can be judgment proof, and imposing judgments on them can have disastrous economic externalities.
Another is that there is a considerable degree of arbitrariness in the process, and the results
of the process. There is little due process here, and the risks and costs of litigation mean that
the outcome of attempts to hold bankers accountable is the result of a negotiation between the
state and large financial institutions that is carried out in a highly politicized environment
in which emotions and narratives are likely to trump facts. There is room for serious doubt about
the quality of justice that results from this process.
A casual skim could leave the reader with the impression that the Streetwise Professor is lamenting,
rightly, the persistency of the TBTF model. But there's something really dastardly being concocted
here - the notion that in our societies, the rule of law is always and inevitably fallible and not
fit for the purpose of bringing errant TBTFs to justice. And that, if a case is brought against a
TBTF like Deutsche, then it can't help but become a political football.
Yes, I'd always be the first to agree with the proverb "In Heaven you get justice, here on
Earth we have the law". The law and our legal systems are not perfect. But they are not that shabby
either. Any quick parse through the judgments which the U.S. Supreme Court, the U.K. Supreme
Court or the European Court of Justice (to name only a few) hand down on complex cases - often running
to hundreds or even a thousand pages - demonstrates that courts can and do consider fairly and justly
the evidence that prosecutors present and make balanced rulings. And banks can utilize the same legal
safeguards that the law provides - they're not likely to be short of good legal advice options. Trying,
as the Steetwise Professor does, to claim that the TBTFs can't get justice is an insult to our judicial
systems and acceptance of this notion followed by any routine repetition serves to undermine faith
in the rule of law.
If it is regulatory interventions, rather than criminal indictments, that the Streetwise Professor
is referring to, the banks can and do leave no political stone unturned in their efforts to water
down, delay and neuter regulatory bodies.
Look , if you can do so without wincing, at
what has happened to the SEC.
It wasn't a " pre-crisis political bargain " that caused the Global Financial Crisis. It was
financial innovation that was supposed to "free" the financial services industry to allow it to soar
to ever greater heights, heights that couldn't be reached with cumbersome "legacy" thinking. If that
sounds a lot like Mike Hearn's Blockchain justifications, it's because it is exactly the same thing.
In summary, when you throw brickbats at a fellow blogger, it seems to me that you have a moral
obligation to put your cards on the table, to explain your motivations. I don't have to write for
a living ("just as well", I hear forbearing readers shout back). I don't take a penny from Naked
Capitalism's hard-wrung fundraisers, although Yves has generously offered a very modest stipend in
line with other contributors, I cannot conscientiously take anything for what I submit. I write in
the hope that I have some small insights that would help to undo some of the damage which big finance
has done to our cultures, our shared values and our aspirations for what we hope the future will
be for us and others.
That's what motivates me, anyway. After reading his output, I'm really still not at all sure what
is motivating the Streetwise Professor. Certainly there is nothing at all to suggest that he is interested
in rebuking or revising any of the traditional thought-forms which pass for the so-called science
of economics. Conventional economic theory is the ultimate in betrayal of the use of rational methodology
to provide air-cover for élite power grabs. It'll take more than a refutation of Blockchain spin
to convince me that the Streetwise Professor is ready to kick away the more odious ladders - like
being a professional economist - that have given him the leg-ups to the lofty perch he enjoys occupying.
About Clive
Survivor of nearly 30 years in a TBTF bank. Also had the privilege of working in Japan,
which was great, selling real estate, which was an experience bordering on the psychedelic.
View all posts by Clive →
I disagree on the first bit. Even at this blog, Yves mentiones not quite rarely the dangers
of tight coupling. The central exchanges create exactly that. Yes, the FU option of OTC is dangerous.
But then, everything is dangerous, and if I have to choose between tight coupling dangerous option
and loose coupling one, I'll chose the lose coupling one.
The problem is that the regulators refused to recognise that the institutions gamed the regulations
– moving stuff from trading to banking books. It is recognised now, under the new regulation,
although I still have some doubts about its effectivness.
To me all the para says is: markets demand services, and CCP don't offer them – and don't have
to. Regulators demand services (to be offered by CCP), and CCP deliver.
And sorry, I also disagree with your "markets participants demand". The text says "services
[ ] are demanded [by potential clients and by regulators]". I can't honestly see what's the problem
with that. Of course, regulatory demand, and a client demand are two different things – the former
you ignore at your peril, the second you can ignore to your heart's content.
But markets (or, I'd say agents that want to purchase – or sell) _always_ demand something,
and always offer something – otherwise there would not be any market or exchange of services (it
doesn't have to be there even with offer and demand, but in the absence of one it definitely won't
be there).
You could happily change the word to "require" "want" etc. and the meaning of the para would
remain unchanged.
The problem I had with the notion that OTC reduces tight coupling is that it gives the appearance
of reducing tight couple but doesn't actually do this. While "the market" is functioning within
its expected parameters, OTC is less tightly coupled than an Exchange. But as we saw first-hand
in the GFC, those markets function, right up until the point where they don't. By continuing to
function, or certainly giving the appearances of continuing to be functioning, they hide the stresses
which are building up within them but no-one can see. Unless you are deeply plumbed in to the
day-to-day operational activities of the OTC market and can spot signs - and that's all they are,
signs, you don't get to take a view of the whole edifice - you simply don't have a clue. There
were, at most, only a couple of dozen people in the organisation itself and outside it who knew
that my TBTF was a day away from being unable to open for business. That was entirely down to
information asymmetry and that asymmetry was 100% down to OTC prevalence.
And all the while TBTF isn't fixed, then as soon as the OTC market(s) fall off a cliff, the
public provision backstops can be forced to kick in. Yes, everything is dangerous. I don't mind
people doing dangerous things. But I do mind an awful lot being asked to pick up the pieces when
their dangerous things blow up in their faces and they expect me to sort the mess out. If that
is the dynamic, and to me, it most definitely is, then I want the actors who are engaged in the
dangerous things to be highly visible, I want them right where I can see them. Not hiding their
high-risk activities in an OTC venue that I'm not privy to.
And I stick by my objection to the - what I can't see how it isn't being deliberate - fuzziness
or obfuscation about who gets to "demand" and who is merely allowed "invite" parties to a transaction
to either perform or not perform of their own volition. This isn't an incidental semantic about
vocabulary. It goes to the heart of what's wrong with the Streetwise Professor's assessment of
innovation.
Innovation must never be viewed only through separate, disconnected lenses of "technology",
"politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation
is subject to and either lives or dies by the interplay between these forces. My biggest lambaste
of the Streetwise Professor's commentaries is that he examines them only in terms of "technology"
and "economics". In doing so, he reaches partial and inaccurate conclusions.
A 10 year old child might "demand", "require", "ask for", "insist", "claim a right to have"
(use whatever word or phrase you like there) a gun and live ammunition. But they are not, and
should not be, permitted to enter into a transaction to obtain the said gun and ammo based only
on the availability of the technology and the economics that would allow them to satisfy the seller's
market clearing sale price if they saved their pocket money for a sufficient amount of time. The
other forces I listed in my above paragraph are also involved, and just as well.
"Innovation must never be viewed only through separate, disconnected lenses of "technology",
"politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation
is subject to and either lives or dies by the interplay between these forces."
Very well said. I would argue further that "power relationships" structure how all the other
lenses actually operate. In the early sixteenth century the power relationship between the Church,
and Martin Luther, was such that the latter had an opening to redefine "morality"– in such a way
that the Pope's moral opinion was eventually no longer dispositive for Protestants.
In other words, the French invasion of Italy, late in the fifteenth century, weakened the papal
states enough to allow for defiance.
That last sentence, is of course a gross over-simplification! Anyone wishing to know the nitty-gritty
details of how foreign domination over the Italian peninsula was established by the middle of
the sixteenth century should read Machiavelli and Guicciardini.
The latter author's appeal to skepticism, when interpreting the actions and motivations of
powerful people, rings very true five centuries later:
" perché di accidenti tanto memorabili si intendino i consigli e i fondamenti; i quali spesso
sono occulti, e divulgati il più delle volte in modo molto lontano da quell che è vero."
"Yes, everything is dangerous. I don't mind people doing dangerous things. But I do mind an
awful lot being asked to pick up the pieces when their dangerous things blow up in their faces".
I agree - however, "I don't mind people doing dangerous things" should require a little
elucidation. What you likely meant to say was you don't mind people doing dangerous things, WITHIN
REASON.
And let's face it, much of the prior GFC behaviour was unreasonably dangerous. As it turned
out, not that dangerous to its perpetrators .
Danger, like risk, is a cost-benefit calculation. When that calculation ONLY includes benefits
for its originator & suppresses any (real & calculatable) cost for the community it's already
looking suspiciously like an unreasonable danger .
The problem is that the regulators refused to recognise that the institutions gamed the
regulations – moving stuff from trading to banking books. It is recognised now, under the new
regulation, although I still have some doubts about its effectivness.
Also, there is the rank unwillingness on the part of regulators to, you know, actually
do their jobs. I can no longer count the number of times Yellen has sat in front of the Senate
banking committee like a deer in headlights as Warren tries to get her to give anything like
a straight answer as to why, to this day, many if not most TBTFs have no rapid selloff/solvency
plan (which is required by the Dodd-Frank law) or why those banks that fail their stress tests
(again and again) suffer no consequences as a result.
How is any of this supposed to work when so many are clearly acting in bad faith?
Earning your living in finance or the related co-dependent fields such as economics, business
management, certain areas of law and, most especially, information technology, you quickly
pick up on the cult mentality that pervades it.
If you do not subscribe to the "cult mentality," although I'd prefer to call it a dogma, because
it is a unswerving belief in an unproven fact in the face of evidence the fact is not only unproven,
but wrong, one is "not a team player" and then penalized.
If these libertarian want "open markets" and innovation they have to shed the human response
to proof. In their behavior they are no better than the medieval pope, and his court, who did
not want to believe a the earth travels around the sun.
Medieval popes were probably more open to Pythagorean/Copernican cosmologies than early 17th
century Jesuits (i.e. Bellarmine); the opposition of the latter to Galileo had nothing to do with
science and everything to do with Protestantism and Protestant biblical interpretation. Bellarmine
was wrong and what happened to Galileo was shameful. But many of the best astronomers of the time
were in fact Jesuits, and the traditional way the story is told is inaccurate on almost every
level (and a product of late 19th century Italian nationalism).
this was very interesting stuff. Since a lot of things were coming together in the 90s and
2000s that were all connected in a mess too big to understand simply as immoral banking (freeing
up capital like that was crazy but there must have been a reason to try it besides windfall profiteering
and flat-out gambling), I imagine the following: Greenspan and the TBTFs knew returns were diminishing
and set out to do something about it. Because growth and expanding markets were the only thing
that could keep up with a demand by pension funds (and then little Bush's idiotic war) for a minimum
8% return. But growth was slowing down so the situation required clever manipulations and incomprehensible
things like financial derivatives. Makes sense to me. And if this is even partially true then
there was a political mandate all mixed up with the GFC. The banks really did crazy stuff, but
with the blessing of the Fed. Later when Bernanke said about QE and nirp: "now we are in uncharted
territory" he was fibbing – the Fed had been in uncharted territory, trying to make things work,
for almost 20 years. And failing.
Excellent points, I thought that the Bush Wars were initiated to alleviate an oncoming
recession as well as ensure W's reelection
It did take them a while to get the pieces in place, the Banksters Real Estate Fraud Appraisals
were identified as early as 2000, then the Banksters Fraudulent Loans peaked in 2006, and then
we had the Banksters Fraudulent Reps and Warranties .
WORSE then a bunch of Used Car Salesman, but what else would you expect from people who KEEP
the State Income taxes withheld from their employees checks
This bug can manifest itself for arrays whose length (in elements) is 230 or greater (roughly
a billion elements). This was inconceivable back in the '80s, when Programming Pearls was written,
but it is common these days at Google and other places. In Programming Pearls, Bentley says
"While the first binary search was published in 1946, the first binary search that works correctly
for all values of n did not appear until 1962." The truth is, very few correct versions have
ever been published, at least in mainstream programming languages.
Sorting is, or ought to be, basic blocking and tackling. Very smart, not corrupt people worked
on this. And yet, 2006 – 1946 = 60 years later, bugs are still being discovered.
The nice thing about putting your cash in a coffee can in the back yard is that it won't evaporate
because some hacker gets clever about big numbers.
Ah, the neo-liberals and the libertarians make their arguments by redefining terms and
eliding facts. Once the audience agrees that up is down, why then their arguments are reasonable,
dispassionate, and offered in dulcet tones of humble sincerity and objectivity.
What a pleasure, then, to read your cold water smack-down of their confidence game. Perhaps
they believed their own nonsense. Who knows.
What is the Streetwise Professor's (note the word "professor") real view? Has he thought much
about it or simply imbibed his "owners'" views, making him a useful tool. I don't know.
From the book "Listen, Liberal."
" A third consequence of modern-day liberals' unquestioning, reflexive respect for expertise
is their blindness to predatory behavior if it comes cloaked in the signifiers of professionalism.
Take the sort of complexity we saw in the financial instruments that drove the last financial
crisis. For old-school regulators, I am told, undue financial complexity was an indication of
likely fraud. But for the liberal class, it is the opposite: an indicator of sophistication. Complexity
is admirable in its own right. The difference in interpretation carries enormous consequences:
Did Wall Street commit epic fraud, or are they highly advanced professionals who fell victim to
epic misfortune? modern day liberals pretty much insist on the later view . Wall Street's veneer
of professionalism is further buttressed by its technical jargon, which the financial industry
uses to protect itself from the scrutiny of the public. "
-Thomas Frank
Liberal democracy has always depended on its relationships with an illiberal Other of one
sort or another, and all too often "liberal progressivism" merely means responding to such
relationships in one's own society, the capitalist exploitation of a domestic proletariat,
by "outsourcing" our illiberal tendencies to consist largely of the imperial domination
and subjugation of foreigners.
(Which can even happen inside one's own borders, as long as it remains suitably "illegal";
notice how much less ideologically problematic it is to document the presence and labor of
the most brutally exploited migrant workers in e.g. China or the Gulf Arab states than in more
liberal societies like the US or EU.)
It's the height of either hypocrisy or obliviousness for those who consider themselves
liberal progressives to then act surprised when the people charged with carrying out this domination
and subjugation on our behalf - our Colonel Jessups, if you will - demand that we stop hiding
our society's illiberal underbelly and acknowledge/celebrate it for what it is , a demand
that may be the single most authentic marker of the transition from liberalism to fascism.
In Pareto "elite rotation" terms, the election of Trump definitely means rotation of the US
neoliberal elite. "Status quo" faction of the elite was defeated due to backlash over globalization
and disappearance of meaningful well-paid jobs, with mass replacement of them by McJobs and temps/contractors.
Whether openness about domination and subjugation is an "authentic marker of the transition
from [neo]liberalism to fascism" remains to be seen, unless we assume that this transition (to
the National Security State) already happened long ego.
In a way illegal immigrants in the USA already represented stable and growing "new slaves"
class for decades. Their existence and contribution to the US economy was never denied or suppressed.
And even Greenspan acknowledged that Iraq war was about oil. So Trump put nothing new on the table
other then being slightly more blunt.
Neoliberalism and neo-imperialism show pretty much the contradictions of the older globalist
orders (late 19th c), they are just now distributed so as re-intensify the differences, the combined
etc, and concentrate the accumulation.
And elites are fighting over the spoils.
Yes, neoliberalism and neo-imperialism are much better and more precise terms, then fuzzy notions
like "liberal progressivism" . May be we should use Occam razor and discard the term "[neo]liberal
progressivism". The term "soft neoliberals" is IMHO good enough description of the same.
As for contradictions of the "older globalist orders (late 19th c)" the key difference is that
under neoliberalism armies play the role of "can opener" and after then the direct occupation were
by-and-large replaced with financial institutions and with indirect
"debt slavery". In many cases neoliberal subjugation is achieved via color revolution mechanism,
without direct military force involved.
Neo-colonialism creates higher level of concentration of risks due to the greed of financial
elite which was demonstrated in full glory in 2008. As such it looks less stable then old colonialism.
And it generates stronger backlash, which typically has elements of anti-Americanism, as we see in
Philippines now. Merkel days might also be numbered.
Also TBTF banks are now above the law as imposing judgments on them after the crisis can have
disastrous economic externalities. At the same time the corruption of regulators via revolving door
mechanisms blocks implementing meaningful preventive regulatory reforms.
In other words, like with Soviet nomenklatura, with the neoliberal elite we see the impossibility
of basic change, either toward taming the TBTF or toward modification of an aggressive
neocolonial foreign policy
with its rampant militarism.
Lost control of the Senate
Lost control of the House of Representatives
Lost control of dozens of state legislatures and Governorships.
The Republicans control 36 States of America - One more and they could in theory amend the Constitution.
In Wisconsin (notionally Democrat) the Legislature and Governor are both Republican controlled.
And Clinton didn't even campaign there when it was pretty obvious the State was not trending towards
her.
Do Economists Promote Ideology as
Science?
: Which is more important in
determining the policy positions of
economists, ideology or evidence? Is
economics, as some assert, little more
than a means of dressing up ideological
arguments in scientific clothing?
This certainly happens, especially among
economists connected to politically
driven think tanks – places like the
Heritage Foundation come to mind.
Economists who work for businesses also
have a tendency to present evidence more
like a lawyer advocating a particular
position than a scientist trying to find
out how the economy really works. But
what about academic economists who are
supposed to be searching for the truth
no matter the political implications?
Can we detect the same degree of bias in
their research and policy positions? ...
rayward :
Thoma's assessment seems fair enough. I'd make the point that, for some
academic economists, no amount of evidence is sufficient to overcome their bias.
"Where's the proof" is the refrain one hears often. And then there's the
question: what is evidence? The availability of lots of data is often used to
"prove" this or that theory, even when the "proof" is contrary to the historical
evidence one can see with her own eyes. Data used as obfuscation rather than
clarification. I appreciate that one historical event following another
historical event does not prove causation, but what's better proof than history.
RogerFox :
, -1
"Shouldn't theory be a guide
when the empirical evidence
is unconvincing one way or
the other?"
No - we don't
allow MDs to prescribe or
treat on the basis of theory
alone. It's unethical for
any professional
practitioner to give advice
that is not supported by
compelling evidence
demonstrating that the
advise is both safe and
effective - 'First, do no
harm.'
To a man, professional
economists shill for the
view that they are morally
free to treat real economies
and real people as their
personal lab rats. As a
group, economists are an
ethically challenged bunch
in this respect, and
probably in other respects
too.
anne ->
RogerFox...
, -1
To a man, professional
economists shill...
[ This
phrase begins a
mean-spirited lie, no matter
how the sentence is
finished. The point of the
malicious post however is
only to be destructive. ]
Avraam Jack Dectis :
, -1
.
Economics is the most
interesting science because
it is not settled and has
great effect upon the
affairs of man.
One of the
things that make it
interesting is the number of
variables that exist in most
economic situations as well
as the strong psychological
and sociological component
to the science, due to its
attempts to predict the
actions of humans, a
hierarchical herd based
status insane animal.
Undoubtedly, the desire
to promote personally
attractive policies is
something everyone must
fight.
On a side note, having
seen this blog referenced
elsewhere and finally
starting to read it
regularly, truly a nice
thing, I notice that Dr.
Thoma and I are the same age
for about three months per
year. I suspect that is
about all we have in common
since I just spent the last
18+ years getting openly and
notoriously poisoned by a
stalker gang, have hit men
following me and am so
unpopular and poorly
connected that I seem
remarkably unable to engage
any law enforcement on the
issue.
Which leads into the next
point-> Is the dynamism of
an economy a function of
freedom of speech, riule of
law, security of the citizen
and so forth. For decades
the USA, as it fought two
opposing powerful systems,
made that case yet now that
no longer seems to be the
case in the USA and in fact
this is confirmed by the
fact that nobody makes that
case convincingly anymore.
Can this deterioration of
culture and embrace of
expediency have a stifling
economic effect?
DeDude :
, -1
Economics as a science is
mainly hurt by two things.
1. The rich plutocrats
have a major stake in
advocating very specific
narratives, so they will
throw large sums behind
those narratives (and the
fight against anything
conflicting with them).
2. Economics does not
have anything resembling the
double blind placebo
controlled trials that help
medicine fight off the
narratives of those with
money and power.
RGC :
, -1
What sort of opinions are
economists allowed to have
if they want tenure, want to
be published in the major
journals or want to make a
living?
Keynes concluded
that government direction
was necessary for a viable
economy. Keynes'
"interpreters" in the US
buried that idea, and thus
became very important
economists - guys like Paul
Samuelson. The first ( and
only) US book to faithfully
represent Keynes' ideas
faded away soon after
publication.
I did not know there was a
debate. Krugman summed it
all up in Peddling
Prosperity. Folks know who
pays the rent, and opine
accordingly.
Syaloch :
, -1
I think problems arise when
economists are called upon
by politicians or the media
to give expert advice.
Within the sciences, "We
don't know the answer to
that" is a perfectly
acceptable response, and in
scientific fields where the
stakes are low that response
is generally accepted by the
public as well. "What is
dark matter made of?" "We
don't know yet, but we're
working on it." But in
politics, where the stakes
are higher, not having a
definitive answer is viewed
as a sign of weakness. How
often do you hear a
politician responding to a
"gotcha" question admit that
they don't know the answer
rather than trying to BS
their way through?
Given the timeliness of
news coverage the media
prefer to consult experts
who offer definitive
answers, especially given
their preference for pro/con
type interviews which
require experts on both
sides of an issue.
Economists who are put on
the spot this way feel
pressured to ditch the error
bars and give unambiguous
answers, even answers based
purely on theory with little
to no empirical backing, and
the more often they do this
the more often they're
invited back.
It is impossible to talk
about economics without
making essentially
ideological distinctions.
Private property and wage
labor are not "natural"
categories. Their adequacy
as human practices therefore
needs to be either defended
or criticized. To simply
take them "as given" is an
ideological waffle that begs
THE question.
Economists thus SHOULD
have, acknowledge and fully
disclose their ideological
biases. When evaluating
evidence they should make
every effort to set aside
and overcome their biases.
And they need to stay humble
about how Sisyphean,
incongruous and incomplete
their attempts at
objectivity are.
Let's not forget that
"The End of Ideology" was a
polemical tract aimed at
designating the ideology of
the managers and symbol
manipulators "above" and
beyond ideology. Similarly,
Marx's brilliant critique of
ideology degenerated into
polemic as its practitioners
adopted the mantle of
"science."
The End of Ideology: On the
Exhaustion of Political
Ideas in the Fifties is a
collection of essays
published in 1960 by Daniel
Bell, who described himself
as a "socialist in
economics, a liberal in
politics, and a conservative
in culture". He suggests
that the older,
grand-humanistic ideologies
derived from the nineteenth
and early twentieth
centuries had been
exhausted, and that new,
more parochial ideologies
would soon arise. He argues
that political ideology has
become irrelevant among
"sensible" people, and that
the polity of the future
would be driven by piecemeal
technological adjustments of
the extant system.
A very big question! Like
"what is the meaning of
life?" At least a
semester-long upper division
seminar course. ;-)
In a
nutshell (to put it
crudely), Marx labelled as
ideologists a cohort of
German followers of Hegel's
philosophy who envisioned
historical progress as the
result of the progressive
refinement of intellectual
ideas. Marx argued instead
that historical change
resulted from struggle
between social classes over
the material conditions of
life, fundamental to which
was the transformation of
nature through human
intervention into means of
subsistence.
Marx labelled as ideologists
a cohort of German followers
of Hegel's philosophy who
envisioned historical
progress as the result of
the progressive refinement
of intellectual ideas. Marx
argued instead that
historical change resulted
from struggle between social
classes over the material
conditions of life,
fundamental to which was the
transformation of nature
through human intervention
into means of subsistence.
[ What a superb introductory
or summary explanation. I
could not be more impressed
or grateful. ]
"And so - though we proceed
slowly because of our
ideologies, we might not
proceed at all without
them."
- Joseph Schumpeter,
"Science and Ideology," The
American Economic Review
39:2 (March 1949), at 359
http://www.jstor.org/stable/1812737
Many guys are not driven by
ideology, rather than
evidence. The problem with
this article is that we
cannot compare with other
professions and say
"economists are more/less
prone to promote ideology
than the average".
All human endeavors are
shaped by "ideology" in many
different ways. What is
important is to be aware of
and explicit about their
influences on our thought
and action.
If there are two sides to an
argument that radically
disagree then it is possible
that both sides may be
ideology, but both sides
cannot be science. Only the
correct argument can be
science. Of course ideology
is a bit too kind of a word
since the incorrect argument
is actually just a con game
by people out to lay claim
on greater unearned wealth.
Economists seem content with
trying to figure out how to
make 'it' work. Far better,
I think, to try and figure
out how it should be.
It was philosophers such as
Hume, Locke, Marx, Smith,
Rawls, ... who asked the
right questions. Laws and
economics come down to us
according to how we think
about such things; they
change when we change the
way we think. Seems we're in
a bit of a philosophical dry
patch, here. Someday, we
will have to develop a
better economic system,
might be now. Likewise,
there are laws rooted in
antiquity that were wrong
then and are wrong still.
"Ideology certainly
influences which questions
academic researchers believe
are the most important, but
there is nothing wrong with
that."
No "experiment" in
economics comes with the
degree of control that
experiments in physical
sciences take for granted,
so there is tremendous room
for ideology to come into
the discussion of whether a
data set really represents
the conditions the model is
supposed to consider. Since
reviewing another
economist's study entails
asking questions those
questions...
DrDick ->
Arne...
, -1
Please describe the
"experimentation" which
takes place in astronomy and
geology. Ideologies also
play important roles in
experimental sciences, such
as biology (for which we
have a lot of evidence.
"... What America objects to in Russia is that Americans couldn't buy control of their oil, couldn't buy control of their natural resources, couldn't buy control of their public utilities and charge economic rents and continue to make Russia the largest stock market boom in the world as it was from 1994 through 1998 when there was the crisis. ..."
"... So the conflict is not one of economic systems. It's simply that America wants to control other countries and keep other countries within the dollar orbit. And what that means is that if the whole world saves in the form of dollars, that means saving by buying Treasury bonds. ..."
"... And other countries are trying to withdraw from this and America says, "Well, we can smash you." ..."
"... There really is no alternative, and that's the objective of control: to create a society in which there is no choice. That's what a free market [myth] is really all about: preventing any choice by the people except what the government gives them. ..."
"... has the illusion of choice in choosing either between which is the lesser evil. They get to vote for the lesser evil when it's all really the same process. ..."
> Ashcroft: What sort of president then will Hillary Clinton be?
> Hudson: A dictator. She… a vindictive dictator, punishing her enemies, appointing neocons in the secretary
of state, in the defense department, appointing Wall Street people in the Treasury and the Federal Reserve,
and the class war will really break out very explicitly. And she'll-as Warren Buffet said, there is
a class war and we're winning it.
> Ashcroft: As in the one percent are winning it.
> Hudson: The one percent are winning it. And she will try to use the rhetoric to tell people: "Nothing
to see here folks. Keep on moving," while the economy goes down and down and she cashes in as she's
been doing all along, richer and richer, and if she's president, there will not be an investigator of
the criminal conflict of interest of the Bill Clinton Foundation, of pay-to-play. You'll have a presidency
in which corporations who pay the Clintons will be able to set policy. Whoever has the money to buy
the politicians will buy control of policy because elections have been privatized and made part of the
market economy in the United States. That's what the Citizens United Supreme Court case was all about.
> Hudson: Well, after 1991 when the Soviet Union broke up, it really went neoliberal. And Putin is basically
a neoliberal. So there's not a clash of economic systems as there was between capitalism and communism.
What America objects to in Russia is that Americans couldn't buy control of their oil, couldn't buy
control of their natural resources, couldn't buy control of their public utilities and charge economic
rents and continue to make Russia the largest stock market boom in the world as it was from 1994 through
1998 when there was the crisis.
So the conflict is not one of economic systems. It's simply that America
wants to control other countries and keep other countries within the dollar orbit. And what that means
is that if the whole world saves in the form of dollars, that means saving by buying Treasury bonds.
And that means lending all of the balance-of-payments surplus that Russia or China or other countries
look at, by lending it to the U.S. Treasury, which will use that money to militarily encircle these
countries and threaten to do to any country that seeks to withdraw from the dollar system exactly what
they did to Iraq or Libya or Afghanistan, or now Syria.
And other countries are trying to withdraw from
this and America says, "Well, we can smash you." No country's going to invade any other country. There's
not going to be a military draft in any country 'cause the students; the population would rise up. Nobody's
going to invade, and you can't control or occupy a country if you don't have an army. So the only thing
that America can do-or any country can do militarily-is drop bombs.
And that's sort of the equivalent
of, just like the European Central Bank told Greece, "We'll close down your banks and the ATM machines
will be empty," America will say, "Well, we'll bomb you, make you look like Syria and Libya if you don't
turn over your oil, your pipelines, your utilities to American buyers so we can charge rents; we can
be the absentee landlords. We can conquer the world financially instead of militarily. We don't need
an army; we can use finance. And the threat of military warfare and bombing you to achieve things."
Other countries are trying to stay free of the mad bomber, and it's all about who's going to control
the world's natural resources: water, real estate, utilities-not a question of economic systems so much
anymore.
> Well, President Obama, even though he's a tool of Wall Street, at least he says, "It's not worth blowing
up the world to fight in the near east." Hillary says, "It is worth pushing the world back to the Stone
Age if they don't let us and me, Hillary, tell the world how to behave." That's a danger of the world
and that's why the Europeans should be terrified of a Hillary presidency and terrified of the direction
that America is doing, saying, "We want to control the world." It's not control the world through a
different economic philosophy. It's to control the world through ownership of their land, natural resources
and essentially, governments and monetary systems. That's really what it's all about. And the popular
press is not doing a good job of explaining that context, but I can assure you, that's what they're
talking about in Russia, China and South America.
> There really is no alternative, and that's the objective of control: to create a society in which
there is no choice. That's what a free market [myth] is really all about: preventing any choice by the people
except what the government gives them. That's what the Austrian school was all about in the 1920s, waging
war and assassination against the labor leaders and the socialists in Vienna, and that's what the free
marketers in Chile were all about in the mass assassinations of labor leaders, university professors,
intellectuals, and that's exactly the situation in America today without the machine guns, because the
population doesn't really feel that it has any alternative, but has the illusion of choice in choosing
either between which is the lesser evil. They get to vote for the lesser evil when it's all really the
same process.
"... fundamentally antiracism and other identitarian programs are not only the left wing of neoliberalism
but active agencies in its imposition of a notion of the boundaries of the politically thinkable " ..."
"... Feminism…? gender discrimination….? racial equality ? …. racism ? Yes, OK, looks good, let's
see what works best for us…. ..."
"... There is still the issue that some professions are more prestigious or lucrative than others
and attract many individuals with a skill set that would better serve other functions. ..."
"... Valuing people for who they are and integrating them into the social order implies that they
have something to contribute and that they have a responsibility for making things better for others,
not just making themselves more comfortable in public. ..."
"... The idea that we have progressed past prior barbarisms … we have forgotten that "the past is
prologue" among other things. ..."
"... This label of progressivism is just so coy and unconvincing in the face of neoliberalism's
full spectrum dominance of all facets of society and culture. ..."
"... I know Reagan was no conservative and Thatcher lost all moorings as an enlightened Tory as
the "project" became all consuming to the detriment of all else. The Tory today isn't conservative –
far from it – a real ideolgical zealot for the promotion of "me, myself and (at most) my class" in most
cases. ..."
"... Is Progressivism just a balm for those who want to feel good about themselves but don't want
to do think about anything in particular? In fact, it is just a cover for I'm ok, screw you pal when
the chips are down? ..."
"These responses [show] how fundamentally antiracism and other identitarian programs
are not only the left wing of neoliberalism but active agencies in its imposition of a notion
of the boundaries of the politically thinkable "
Yes: there we have it.
Neoliberalism (unlike conservatism, often mistaken for each other) has NO social/cultural
values…or, perhaps, more precisely, it has ANY social/cultural values which directly/indirectly
advance the 0.1%'s Will to wealth & power. (Likely, "wealth" is redundant, as it's a manifestation
of power). Neoliberalism is powerful, like all great "evils" because it is completely protean.
( It makes the Nazi's look child-like & naive: after all, the Nazi's actually "believed"
in certain things… [ evil nonsense, but that's not the point at the moment].
Feminism…? gender discrimination….? racial equality ? …. racism ? Yes, OK, looks good,
let's see what works best for us….
I often wonder if liberalism goes hand in hand with the availability of energy and resources…
shrink these and witness a surge in all types of discrimination.
You will notice that genocides are closely tied to the availability and distribution of
resources… we humans seem to be masters at inventing all kinds of reasons to explain why we deserve
the loot and not others.
There is still the issue that some professions are more prestigious or lucrative than others
and attract many individuals with a skill set that would better serve other functions. And
we do this under the guise that we can do whatever we want if we try hard enough.
There is a difference between PC and truly valuing every individual in society no matter their
job or profession.
There is a difference between PC and truly valuing every individual in society no matter
their job or profession.
This.
Mere inclusiveness, while not in itself a bad thing–being aware of other people's circumstances
is simply polite–it doesn't really get you much further past where you already are and in large
part can be satisfied with better rhetoric (or better PR, if you insist on being cynical about
such things), all the while capitalism goes on its merry way, because no real pressure to change
has been applied. Valuing people for who they are and integrating them into the social order
implies that they have something to contribute and that they have a responsibility for making
things better for others, not just making themselves more comfortable in public.
What so often gets lost in these conversations about safe spaces and what have you is that
we should have a sense of shared responsibility, responding TO others' circumstances while also
being responsible FOR the conditions that oppress us all to greater and lesser degrees.
In other words, it's about checking your privilege AND seizing the means of production, because
without the second one, the first just ends up being mere window dressing.
EATF – I really like these. I'll be sad when they conclude!
The idea that we have progressed past prior barbarisms … we have forgotten that "the past
is prologue" among other things. Progressives think that if we completely forget the past,
then the memes that created the sins of the past will become unthinkable, that like interrupted
family violence, a chain will be broken and we can heal. Such people don't believe in the existence
of Evil.
As a socialist, what I miss is the conservative (small c) conversation in our daily affairs.
This label of progressivism is just so coy and unconvincing in the face of neoliberalism's
full spectrum dominance of all facets of society and culture. The conservative gave voice
and depth to our internal doubts about how the future was all brite and new – at least the few
conservatives I knew.
I wonder would a conservative voice (seemingly non-existent any more) have argued for a more
instructive change from industrialisation into what we've now become – might they have mitigated
the course and provided pointers to alternatives?
Maybe they did and I wasn't listening.
I know Reagan was no conservative and Thatcher lost all moorings as an enlightened Tory
as the "project" became all consuming to the detriment of all else. The Tory today isn't conservative
– far from it – a real ideolgical zealot for the promotion of "me, myself and (at most) my class"
in most cases.
Is Progressivism just a balm for those who want to feel good about themselves but don't
want to do think about anything in particular? In fact, it is just a cover for I'm ok, screw you
pal when the chips are down?
I never really liked Disney films as a kid and I certainly don't like them now – but each to
their own.
I'm glad you're making these points. The arc of the story mirrors a number of conversations
I've been having lately with people from poor, white, rural backgrounds. The insistence by good
liberals of making a show of their concern for, and outrage over, both major and minor affronts
to people of color, women, LGBTQI people, etc., while at the same time making jokes about toothless,
inbred trailer-trash, is starting to really piss some people off. These are not conservative people.
These are people to the left of Chomsky.
For some reason, you can slander and shame poor white folks all you want…oh yeah, it's because
they're deplorable racist, fundamentalist Christians who vote for evil Republicans and probably
don't even have a GED, much less a college degree…so f- 'em. The good liberals, on the other hand,
are highly-educated, fundamentalist secular humanists, who've been to college and vote for evil
Democrats…which makes them God's chosen people, apparently. The rest are blasphemers, barely even
human, and deserve whatever they get.
Until we make a real commitment to both listening to everyone's suffering and then to doing
practical things, now, to remedy that suffering, we'll be doomed to Dollary Clump elections and
divide-and-conquer tactics forever after. Let's not go down that road, how about? How's about
let's try treating each other with respect and compassion for once, just to see how it goes? Every
other way lies damnation, imho.
Sorry: I'm not buying this episode: For instance, maybe the reason for the stress on smartness
is plain old class warfare.
The U.S. slavishly follows English fashions, and one of the fashions in England (with which
we have that Special Relationship) is that the upper classes made sure that their kids got into
Eton, Cambridge, Oxford–the whole self-perpetuating educational system of the Pythonesque English
"smart" twit.
So the U S of A has imitated its betters in producing a lot of Tony Blairs. Exhibit A: Chelsea
Clinton.
This has little to do with smartness. It is all about class privilege. (Which has little
to do with postmodernism and its supposed piercing insights.)
The title- Neoliberalisms Boarder Guard" – and this quote:
"Looking now at the other two principles – postmodernism and suffering – Wendy Brown
foretold that, as foci, they would be unable to coexist. Since the time of her prediction,
the balance between the two has shifted dramatically, and it has become clear that Brown was
rooting for the losing side. "
combine to make me wonder. Does liberalism simply accommodate itself to the prevailing ruling
power structure, regardless of that structure's philosophy? Is liberalism today a philosophy or
a social emollient? Desirable social traits do not challenge the ruling neoliberal philosophy,
although they make create a nice space within neoliberalism.
Not buying this episode: "High profile instances of genocide and torture don't appear every
day, and commitment flags without regular stimulation. And so we have taken seriously at least
one idea from postmodernism, the fascination with slight conceptual nuances, and the faith or
fear that these nuances can produce enormously consequential effects."
Oh really?
This sentence is on the order of, Who speaks of the Armenians?
Guantanamo is high profile. Homan Square is high profile. Yemen is genocide. What are the Dakota
Pipeline protests about? Genocide. Your bourgeois eyeglasses just don't allow you to look. It
has nothing to do with micro-aggressions.
Here's something you probably never saw or heard about in the west. This is Putin answering questions
regarding ISIS from a US journalist at the Valdai International Discussion Club in late 2014.
from the U.S.. much love for you Putin. you really opened the eyes of many, even in our country.
this man is the definition of president and the u.s hasnt had one for over 40 years... smh.
As an American I can say that all of this is very confusing. However, one thing I believe is
true, Obama and Hillary are the worst thing to ever happen to my country !!!! Average Americans
don't want war with Russia. Why would we ?? The common people of both countries don't deserve
this !!!!
+Emanuil Penev Obama is a human puppet who chose to be controlled, He is therefore culpable
for his action of supporting Islamic terrorists. Right now Islamic invasion of western countries
is the real problem. The USA is now under the control of Obama the Muslim Trojan horse who wants
the world to be under the rule of an Islamic empire. USA's military action in the Middle East
is the result of USA being under occupation by a Muslim Trojan horse that wants to create tidal
waves of Muslim refugees harboring Muslim radicals and terrorists for invading Europe and the
USA. Watch video (copy and paste for search) *From Europe to America The Caliphate Muslim Trojan
Horse The USA is a victim, not a culprit, in the Muslim invasion of western counties. Obama and
his cohorts are the culprits.
basically Russia wants to be friends with America again and America ain't having it. they have
the capabilities to set up shop all around the world. it's like putting guard towers in everyone's
lawn just in case somebody wants commit crime. but you never see inside the towers or know who
is in them but they have giant guns mounted on them ready to kill. that's how Putin feels. I mean
I get it but every other country has nukes. get rid of the nukes and the missile defense will
go away. if the situation were reversed it would be out president voicing this frustration. but
Putin said it, America is a good example of success that's what Russia needs to do is be more
like America. they have been doing it in the last year or so. I think America will come around
and we will have good relations with Russia again. so wait... did we support isis as being generally
isis or support all Qaeda / Saddam's regime which lead to isis??
The US supported multiple Rebel Groups that fought against Syria, they armed them, gave them
money, and members of those groups split up and formed more Rebel groups or joined different ones.
ISIS (at the time, not as large) was supported by the rebel groups the US armed and they got weapons
and equipment from said Rebel Groups, even manpower as well.. That is how ISIS came to be the
threat it is today.
putin doesnt view the us as a threat to russia..?? he has said countless times that he considers
the us as a threat.. and that russian actions are a result of us aggression
US people are a threat for all the world because they are not interested in politics, they
don't want to know truth, they believe to their one-sided media and allow their government and
other warmongers in the US military industry to do whatever they wish all over the world. US politics
are dangerous and lead to a new big war where US territory won't stay away this time. It''s time
for Americans to understand it. If you allow your son to become a criminal, don't be surprised
that your house will be burned some day.
Obama and Clinton are progressive evil cunts funded by Soros. Their decision making is calculated
and they want these horrendous results because it weakens the US and benefits globalism. Putin
kicked the globalists the fuck out, and when Trump wins he will do the same! They are scared shitless.
TRUMP/PENCE 2016
With a stupid and warmongering opponent such as the USA, Russia do not need to construct a
narrative or think out some elaborate propaganda. Russia simply needs to speak the truth. And
this is why the US and its puppets hates Russia and Putin so much.
"... In fact, I would posit that the Ivy League, especially Yale, Princeton, Harvard and MIT, are the principal crime factories in America today. ..."
"... Brownback is in Kansas; UMKC is in Missouri. There is a Kansas City in Kansas, and another Kansas City in Missouri. Missouri is not as red as KS, but it's still a red state. ..."
"... UMKC is part of the state system and most likely receives no funding from the city. It was home to New Letters, a respected literary magazine edited by poet John Ciardi. I hail from Kanasa City and always thought of UMKC as a decent commuter school, mostly catering to the educational needs of adult city dwellers. But the evolution of both the Econ and jazz studies departments lead me to suspect things have changed. Whether that's by design or through organic happenstance I don't know. ..."
"... Couldn't a Marxian analysis of capitalism as a whole also shed some light on this issue? I think Hudson is pretty much right but I think, like Sanders, he's offering a reformist option as opposed to a full on critique of the entire system. ..."
"... Not that a revolution is the option you necessarily want to go with, I just think that Marx's criticism of capitalism has useful information that could help with shaping the perspective here. ..."
Michael
Hudson spends a half hour with Meet the Renegades explaining his views on money, finance, economic
training, rentier capitalism, and how debt overhangs operate. Hudson fans will recognize his regular
themes. This is a good segment for introducing people you know to Hudson and to heterodox economic
ideas.
I've always found it interesting that both Hudson and Bill Black are on the faculty of UMKC,
which is a state university in a pretty conservative state. It's possible that some of the funding
for UMKC comes from the municipality of Kansas City, MO, but that town has never been known as
a hotbed of radical intellectuality either.
Joseph Campbell didn't teach at an Ivy League either. Conformity starts with the faculty in
your own department … and the Ivy League is as status quo and status conscious as it gets.
The Ivy League are not much different than privately held corporations when you consider who
their alma materi are, how much money the alma materi have, and where Ivy League endowments come
from.
In fact, I would posit that the Ivy League, especially Yale, Princeton, Harvard and MIT, are
the principal crime factories in America today.
Please recall that the dood who financed Liberty Lobby and other white supremacist nonsense
was Koch family patriarch, Fred Koch, who was a trustee at MIT. (Ever hear Noam Chomsky complain
about that????? Of course not!)
Ah but is it really an inherently conservative state fiscally, or just socially? That is, are
the people like Brownback appealing to one sort of conservatism and using that to do a "trust
me" on the other sort?
I would say it's not unreasonable for anybody to delegate something they are not so sure of
to somebody they trust for other reasons.
Brownback is in Kansas; UMKC is in Missouri. There is a Kansas City in Kansas, and another
Kansas City in Missouri. Missouri is not as red as KS, but it's still a red state.
UMKC is part of the state system and most likely receives no funding from the city. It was
home to New Letters, a respected literary magazine edited by poet John Ciardi. I hail from Kanasa
City and always thought of UMKC as a decent commuter school, mostly catering to the educational
needs of adult city dwellers. But the evolution of both the Econ and jazz studies departments
lead me to suspect things have changed. Whether that's by design or through organic happenstance
I don't know.
If you are not on the money makers' distribution list, it would make sense to find other ways
to get some of that loot if you can't the traditional way…
You can be conservative in your social values but want change, i.e. liberalism, in the way
the monetary system distributes the money.
The UMKC is also the home of the Kansas City School of Economics, more commonly known as the
MMT School. Neither Hudson nor Black are MMTers per se, but both have grown by their affiliation
with the school.
Thanks for sharing this excellent interview. Watching it I realized the people I actually admire
more than Hudson are his students. They must care more about learning the truth than securing
wealth and job prospects on wall street.
Couldn't a Marxian analysis of capitalism as a whole also shed some light on this issue? I
think Hudson is pretty much right but I think, like Sanders, he's offering a reformist option
as opposed to a full on critique of the entire system.
Not that a revolution is the option you necessarily want to go with, I just think that Marx's
criticism of capitalism has useful information that could help with shaping the perspective here.
I asked Yves Smith at the Dallas meetup last week (paraphrasing) "Do you meet with Michael
Hudson and Bill Black… is the independent media community, or any community, organizing around
Michael Hudson and Bill Black… to not only support and promote Hudson's and Black's perspectives
but to help develop their concepts and 'fine tune' their messaging?" I said to Yves "Hudson and
Black are clearly the leaders we desperately need to rally behind and push into Washington… they
clearly know what needs to be done… a PR machine needs to be developed… to get their messages
out to our families, friends, and acquaintances… unfortunately, the current messaging is not good
enough… I can't get my family, friends, and others to engage and echo the messaging to their family,
friends, etc."
Michael Hudson has been good at repeating his central message… 'by increasing land, monopoly,
and finance rent costs… the 1% are a highly organized mafia methodically looting our economy…
effectively raping, pillaging and consequently destroying every component of our social structures'.
Very unfortunately, Bill Blacks central message seems to have been lost for years now… he doesn't
repeat his central message… 'the crimes must be stopped… there is no alternative… looting criminals
MUST be publicly exposed, investigated, indicted, prosecuted, convicted, punished and their loot
returned to society… by letting cheaters prosper, organized white-collar crime, perpetrated by
the top-most leaders of our public and private institutions, has become an epidemic… the very
fabric of civil society is being destroyed… we have no choice… the criminals must be stopped…
and the only way to do that is to publicly expose, investigate, indict, prosecute, punish, and
take back what is ours'.
In 2008, when I tuned out of the mainstream media and tuned into the independent media, I thought
the messages from Michael Hudson ("they are organized criminals… this is what they're doing…")
and Bill Black ("the criminals must be stopped… here's how we stopped the Savings & Loan criminals…)
would resonate and become common knowledge. I quickly discovered that it didn't even resonate
with close family and friends. Why???
I will send out this video… Michael Hudson at his best, speaking-wise. I don't expect to get
any reaction… why?… very frustrated…
Amen. Once you start noticing, it becomes hard to stop. In looking hard for a silver lining
to the current election storm clouds, public awareness of the MSM seems to have nudged a few toward
slightly more objectivity, although I may just be wishing for that after media fatigue ;)
"... I'll be interested to see how much Hillary tries to "work with Republicans" when it comes to foreign or domestic policy, as she's promising on the campaign trail. ..."
"... In a recent interview Biden was talking about how his "friends" in the Senate like McCain, Lindsy Graham, etc. - the sane ones who hate Trump - have to come out in support of the Republican plan to block Clinton from nominating a Supreme Court judge, because of if they don't, the Koch brothers will primary them. ..."
"... While I agree that the Republican party has been interested in whatever argument will win elections and benefit their donor class, doesn't the Democratic Party also have a donor class? Haven't Bill Clinton, Barack Obama, and Hillary Clinton had a close relationship with some business interests? Did anyone go to jail after the asset bubble? Did welfare reform work or simply shift the problem out of view? How complicit are the Democrats in the great risk shift? ..."
"... I would think the scorched earth politics of the neoliberals required Democrats to shift to the right if they ever hoped to win an election, again. That is what it has looked like to me. The American equivalent of New Labor in Britain. So, we have a more moderate business-interest group of Democrats and a radical business-interest group of Republicans during the past 40 years. I think Kevin Phillips has made this argument. ..."
"... Our grand experimental shift back to classical theory involved supply side tax cuts, deregulation based on the magic of new finance theory, and monetarist pro-financial monetary policy. All of which gave us the masquerade of a great moderation that ended in the mother of all asset bubbles. While we shredded the safety net. ..."
"... Now the population is learning the arguments about free trade magically lifting all boats up into the capitalist paradise has blown up. We've shifted the risk onto the working population and they couldn't bear it. ..."
"... Economists lied to the American people about trade and continue to lie about the issue day in and day out. Brainwashing kids with a silly model called comparative advantage. ..."
This is all true but Krugman always fails to tell the other side of the story.
I'll be interested to see how much Hillary tries to "work with Republicans" when it comes
to foreign or domestic policy, as she's promising on the campaign trail.
The centrists always do this to push through centrist, neoliberal "solutions" which anger the
left.
In a recent interview Biden was talking about how his "friends" in the Senate like McCain,
Lindsy Graham, etc. - the sane ones who hate Trump - have to come out in support of the Republican
plan to block Clinton from nominating a Supreme Court judge, because of if they don't, the Koch
brothers will primary them.
Let's hope Hillary does something about campaign finance reform and Citizen United and takes
a harder line against obstructionist Republicans.
While I agree that the Republican party has been interested in whatever argument will win
elections and benefit their donor class, doesn't the Democratic Party also have a donor class?
Haven't Bill Clinton, Barack Obama, and Hillary Clinton had a close relationship with some business
interests? Did anyone go to jail after the asset bubble? Did welfare reform work or simply shift
the problem out of view? How complicit are the Democrats in the great risk shift?
I would think the scorched earth politics of the neoliberals required Democrats to shift
to the right if they ever hoped to win an election, again. That is what it has looked like to
me. The American equivalent of New Labor in Britain. So, we have a more moderate business-interest
group of Democrats and a radical business-interest group of Republicans during the past 40 years.
I think Kevin Phillips has made this argument.
Our grand experimental shift back to classical theory involved supply side tax cuts, deregulation
based on the magic of new finance theory, and monetarist pro-financial monetary policy. All of
which gave us the masquerade of a great moderation that ended in the mother of all asset bubbles.
While we shredded the safety net.
Now the population is learning the arguments about free trade magically lifting all boats
up into the capitalist paradise has blown up. We've shifted the risk onto the working population
and they couldn't bear it.
Perhaps the less partisan take-way would be - is it possible for any political candidate to
get elected in this environment without bowing to the proper interests? How close did Bernie get?
And, how do we fix it without first admitting that the policies of both political parties have
not really addressed the social adjustments necessary to capture the benefits of globalization?
We need an evolution of both political parties - not just the Republicans. If we don't get it,
we can expect the Trump argument to take even deeper root.
Economists lied to the American people about trade and continue to lie about the issue day
in and day out. Brainwashing kids with a silly model called comparative advantage. East Asian
economists including Ha Joon Chang among others debunked comparative advantage and Ricardianism
long ago.
Manufacturing is everything. It is all that matters. We needed tariffs yesterday. Without them
the country is lost.
"... In a sense Neoliberalism/Neoconservatism (neoconservatives are neoliberals with a gun) is recklessly revolutionary in old Marx's sense - it destroys the existing bonds that hold the society together. ..."
"the Left (or what passes for it in the US) is as much to blame as the Right
in that they haven't offered real substantive alternatives to the NeoLib/NeoCon
orthodoxy that seems to dominate US policymaking."
That's a very apt observation, especially in the part "the Left (or what
passes for it in the US) is as much to blame as the Right ".
The key question here" "Is neoliberalism a flavor of conservatism or not?".
Or it is some perversion of the left? I doubt that "Neolib/Neocon orthodoxy"
that is really completely dominant in the USA can be viewed as a flavor of
conservatism. IMHO it's actually more resembles Trotskyism with its idea of
"world revolution" and classic Marxist slogan "Working Men of All Countries,
Unite!"
The first slogan was replaced with "Permanent neoliberal revolution" and
"New American Militarism" that we saw in action in Iraq, Libya, Syria, Georgia,
Ukraine. They are eager to bring the neoliberal revolution into other countries
on the tips of bayonets.
The second was replaced by the slogan "Transnational corporate and financial
elites unite". Instead of Congresses of "Communist International" we have
similar congresses of financial oligarchy and neoliberal politicians like in
Davos.
In a sense Neoliberalism/Neoconservatism (neoconservatives are neoliberals
with a gun) is recklessly revolutionary in old Marx's sense - it destroys the
existing bonds that hold the society together.
Still in other sense it resembles " the ancien regime", especially in the
USA :
The opening chapters of Maistre's Considerations on France
are an unrelenting assault on the three pillars of the ancien regime:
the aristocracy, the church, and the monarchy. Maistre divides the
nobility into two categories: the treasonous and the clueless. The
clergy is corrupt, weakened by its wealth and lax morals. The monarchy is soft and lacks the will to punish. Maistre dismisses all three
with a line from Racine: "Now see the sad fruits your faults pro-duced, / Feel the blows you have yourselves induced."5
If we equate "ancien regime" with the neoliberalism, the quote suddenly
obtains quite modern significance. It does have a punch. Now we see Trump
supporters attacking neoliberalism with the same intensity. And we can
definitely divide the USA financial oligarchy into "the treasonous" and "the
clueless." While neoliberal MSM are as corrupt as "ancien regime" clergy, if
not more.
Like in the past there is a part of the USA conservatives that bitterly
oppose neoliberalism (paleoconservatives).
The key problem here is that as there is no real left (in European sense) in
the USA, the challenge to neoliberalism arose from the right. Trump with all
his warts is definitely anti-globalization candidate. That's why we see such a
hysteria in neoliberal MSM about his candidacy.
"... Well I'm sure there's many reasons but one has to be because religion was a good way of saying "I haven't got a fucking clue" without losing face. And we're obsessed with keeping face. ..."
"... That's all religion really is. It fills the gaps in human knowledge and as the gaps become fewer we become less religious. ..."
"... The issue of course is humans collectively know a lot of stuff but individually we only know a very specific amount of stuff. There's a lot of stuff on the internet these days which we can access and (skim) read but that's not to say we understand any of it or can critically assess it. ..."
Well I'm sure there's many reasons but one has to be because religion was a good way of saying
"I haven't got a fucking clue" without losing face. And we're obsessed with keeping face.
That's all religion really is. It fills the gaps in human knowledge and as the gaps become
fewer we become less religious.
Now we probably shouldn't get too far ahead of ourselves and say we've closed all of the gaps
(we've barely left our neck of the woods) but there is certainly the sense that humans know a
lot of stuff.
The issue of course is humans collectively know a lot of stuff but individually we only know
a very specific amount of stuff. There's a lot of stuff on the internet these days which we can
access and (skim) read but that's not to say we understand any of it or can critically assess
it.
Which brings me to Trump. Religion is not as popular these days because we've all got a bit
cocky and think we know everything because we can Google it. But we still have massive gaps in
our knowledge.
Trump panders to the same gaps in our knowledge that religion once did. Trump has the answers.
Clinton is the problem. We know this apparently. Just like we once knew there was a god.
As a general rule we should stick to what we know rather than what we perceive since perception
can be so misleading (good old common sense). We should also be deeply suspicious when someone
comes to us with answers especially when those answers are actually in the form of nothing in
particular and criticising everyone else.
Just for one second put aside what you think you know about the world and the "elite" and stick
to what you actually know about Trump. Sexual assault anyone?
Neoconservatism
The Autobiography of an Idea
By Irving Kristol
Irving Kristol has been a formidable presence in American intellectual life for over forty
years. After an early stint as an editor at Commentary, he helped to start three other influential
magazines -- Encounter, in 1953; The Public Interest, in 1965; and The National Interest, in 1985.
A Trotskyist in his student days, Kristol has moved in stages to the right, first becoming
a liberal anticommunist, then a conservative antiliberal. At one point in this evolution, in the
early 1970s, he embraced the label "neoconservative," which the socialist Michael Harrington had
introduced as a pejorative. Since then he has happily made himself so entirely synonymous with
neoconservatism that he now offers his latest collection of essays as its, not his, "autobiography."
But a label is not necessarily evidence of a coherent philosophy, or of a living one. As Kristol
himself acknowledges, neoconservatism has been swallowed by the larger conservative movement--[neoliberalism movement and ideology --NNB].
And his own views have evolved far beyond what he and others originally conceived as neoconservatism.
Several of his early collaborators at The Public Interest, notably Daniel Bell and Daniel Patrick
Moynihan, have long since parted ways. And well they might, considering the tone and substance
of Kristol's writing in recent years.
When neoconservatism first took shape in the late 1960s and '70s, it seemed to be different
from the older varieties of the American right. The Public Interest, and Kristol himself, accepted
the New Deal, but rejected the political and cultural currents of the '60s.
Yet even with
respect to the policies of that era, their stance was meliorism, not repudiation. They presented
themselves as defending the achievements of a capitalist civilization, often positively described
as liberal and secular, from the assaults of a radicalized liberalism. Nearly all were from New
York, most were Jewish, and they carried with them a sensibility that was urban and modern, even
when arguing on behalf of moral and cultural standards that were traditional or, to use Kristol's
preferred term, "bourgeois."
People who know neoconservatism only from that era might therefore be surprised to read
Kristol's recent fulminations against "secular humanism" and his praise of Christian fundamentalism.
Remembering the calm civility of his earlier essays, they might especially fasten on the following
passage from an article, written in 1993, with which Kristol concludes his new book: "So far from
having ended, my cold war has increased in intensity, as sector after sector of American life
has been ruthlessly corrupted by the liberal ethos.... Now that the other 'Cold War' is over,
the real cold war has begun." ...
The Myth of the Powell Memo
A secret note from a future Supreme Court justice did not give rise to today's conservative infrastructure.
Something more insidious did.
By Mark Schmitt
At one end of a block of Massachusetts Avenue in Washington, D.C., sometimes known as "Think
Tank Row"-the Carnegie Endowment for International Peace and the Brookings Institution are neighbors-a
monument to intellectual victory has been under reconstruction for a year. It will soon be the
home of the American Enterprise Institute, a 60,000-square-foot Beaux-Arts masterpiece where Andrew
Mellon lived when he was treasury secretary during the 1920s. AEI purchased the building with
a $20 million donation from one of the founders of the Carlyle Group, a private-equity firm.
Right Moves
The Conservative Think Tank in American Political Culture Since 1945
By Jason Stahl
In the story of the rise of the political right in America since the late 1970s, think tanks,
and sometimes the glorious edifices in which they are housed, have played an iconic role. The
Heritage Foundation, the American Enterprise Institute, and the libertarian Cato Institute, along
with their dozens of smaller but well-funded cousins, have seemed central to the "war of ideas"
that drove American policy in the 1980s, in the backlash of 1994, in the George W. Bush era, and
again after 2010.
For the center left, these institutions have become role models. While Brookings or the Urban
Institute once eschewed ideology in favor of mild policy analysis or dispassionate technical assessment
of social programs, AEI and Heritage seemed to build virtual war rooms for conservative ideas,
investing more in public relations than in scholarship or credibility, and nurturing young talent
(or, more often, the glib but not-very-talented). Their strategy seemed savvier. Conservative
think tanks nurtured supply-side economics, neoconservative foreign policy, and the entire agenda
of the Reagan administration, which took the form of a twenty-volume tome produced by Heritage
in 1980 called Mandate for Leadership.
In the last decade or so, much of the intellectual architecture of the conservative think tanks
has been credited to a single document known as the Powell Memo. This 1971 note from future Supreme
Court Justice Lewis Powell to a Virginia neighbor who worked at the U.S. Chamber of Commerce urged
business to do more to respond to the rising "New Left," countering forces such as Ralph Nader's
nascent consumer movement in the courts, in media, and in academia....
DeDude -> anne... , -1
The part where the neo-con-men get the scientific process wrong is where they begin with the conclusion,
before they even collect any facts. And then they whine that Universities are full of Liberals.
No they are full of scientists - and they are supposed to be.
"...That is, even central banks that follow some kind of Taylor rule in a flexible inflation-targeting
regime are susceptible to the knowledge problem...
The biggest information challenge comes from attempting to measure the output gap in real
time. The output gap is the difference between the economy's actual and potential level of output
and is subject to two big measurement problems.
First, real-time output data generally get revised and often on the same order of magnitude
as the estimated output gap itself.
Second, potential output estimates are based on trends that rely on ever-changing endpoints.
Orphanides finds the latter problem to be the biggest contributor to real-time misperceptions
of the output gap. This means that even if real-time data improved such that there were fewer
revisions, there would still be a sizable problem measuring the real-time output gap."
Conservative ideologues tell us government/central planners are inefficient because of the
"knowledge problem." Well so are private sector central planners. See the big banks and the housing
bubble/financial crisis. Or Samsung and its exploding Note 7. Or Volkswagon and its cheating on
benchmark tests.
This "output gap" is another rightwing diversion. It is useful to them precisely because it
is impossible to measure and therefore people can argue about it ad infinitum.
Meanwhile we have a lot of people who can't get a decent job at a living wage. That can
be easily measured and it could be easily remedied. And it is what average people actually care
about. So they want to make sure that isn't discussed. They want to discuss something with no
clear answer instead.
"Former Fed Vice Chairman Alan Blinder said he's skeptical that fiscal policy will be loosened
a great deal if Clinton wins the election, as seems likely based on recent voter surveys.
"She is promising not to make budget deficits bigger by her programs," said Blinder, who is
now a professor at Princeton University. "Whatever fiscal stimulus there is ought to be small
enough for the Fed practically to ignore it.""
Blinder is skeptical that Clinton will do enough to force the Fed to modulate their plans,
even though PGL and Sanjait tell us otherwise.
Clinton's infrastructure plans should be "substantially" larger as Krugman and Summers write.
This would help close the output gap. This would help with the job market and increasing incomes
and lowering personal debt loads.
But PGL can't admit this because he's a petulant child who thinks Germany still uses the Deutsche
Mark.
"The recent decision by the Fed to raise interest rates is the latest example of the rigged
economic system. Big bankers and their supporters in Congress have been telling us for years that
runaway inflation is just around the corner. They have been dead wrong each time. Raising interest
rates now is a disaster for small business owners who need loans to hire more workers and Americans
who need more jobs and higher wages. As a rule, the Fed should not raise interest rates until
unemployment is lower than 4 percent. Raising rates must be done only as a last resort - not to
fight phantom inflation."
What I do not get is how one can call himself/herself a democrat and be jingoistic monster.
That's the problem with Democratic Party and its supporters. Such people for me are DINO ("Democrats
only in name"). Closet neocons, if you wish. The level of militarism in the current US society
and MSM is really staggering. anti-war forces are completely destroyed (with the abandonment of
draft) and are limited for libertarians (such as Ron Paul) and paleoconservatives. There is almost
completely empty space on the left. Dennis Kucinich is one of the few exceptions
(see
http://libertyblitzkrieg.com/2016/10/27/must-read-of-the-day-dennis-kucinich-issues-extraordinary-warning-on-d-c-s-think-tank-warmongers/
)
I think that people like Robert Kagan, Victoria Nuland and Dick Cheney can now proudly join
Democratic Party and feel themselves quite at home.
BTW Hillary is actually very pleasant with people of the same level. It's only subordinates,
close relatives and Security Service agents, who are on the receiving end of her wrath. A typical
"kiss up, kick down personality".
The right word probably would not "nasty", but "duplicitous".
Or "treacherous" as this involves breaking of previous agreements (with a smile) as the USA
diplomacy essentially involves positioning the country above the international law. As in "I am
the law".
Obama is not that different. I think he even more sleazy then Hillary and as such is more difficult
to deal with. He also is at his prime, while she is definitely past hers:
== quote ==
Russian President Vladimir Putin said on Thursday it was hard for him to work with the current
U.S. administration because it did not stick to any agreements, including on Syria.
Putin said he was ready to engage with a new president however, whoever the American people
chose, and to discuss any problem.
== end of quote ==
Syria is an "Obama-approved" adventure, is not it ? The same is true for Libya. So formally
he is no less jingoistic then Hillary, Nobel Peace price notwithstanding.
Other things equal, it might be easier for Putin to deal with Hillary then Obama, as she
has so many skeletons in the closet and might soon be impeached by House.
CenturyLink Inc. is in advanced talks to merge with Level 3 Communications Inc., a deal
that would give the telecommunications companies greater heft in a brutally competitive industry.
Terms of the deal couldn't be learned. As of Thursday afternoon before the Journal's report
of the talks, Level 3, based in Broomfield, Colo., had a market value of $16.8 billion. CenturyLink,
based in Monroe, La., was worth $15.2 billion.
CenturyLink is a former rural telephone exchange operator which bought former Baby Bell, Qwest
(U S West) in 2011.
CenturyLink is a miserable, crappy telco - so spectacularly bad it makes the cable company
look like a paragon of customer friendliness by comparison. CTL's share price has declined
by about a third since its acquisition of Qwest, reflecting CTL's braindead managerial incompetence.
If this merger goes through, we'll have a Big Three of dinosaur telcos: AT&T, Verizon, and
CenturyLink.
My experience has been just the opposite. I have had excellent, reliable DSL service from CenturyLink
and good technical support. Perhaps it's because I live somewhere there is still some competition
– a duopoly with Comcast. I do have to call them every 6 or 12 months and talk to a retention
service rep to keep the charges down.
CenturyLink does seem slow in getting fiber to the end of the block everywhere in my city.
I know lots of people who have been stuck for years down at 5Mbps, which is not enough these days.
The routers they provide for customers (which most people call modems even though they're not)
are crap. I tried getting a router from CenturyLink that supports 802.11n so I could use 5GHz
(2.4GHz is very crowded in my neighborhood) – that's when I found out that 5GHz support is OPTIONAL
under the 802.11n standard. Of course CenturyLink went with the cheaper model. Returning the router
was no problem and the refund appeared promptly and correctly on my bill.
The return of monopolization is traced by Barry C. Lynn in his 2010 book, Cornered: The
New Monopoly Capitalism and the Economics of Destruction . It goes back to the decision of the
Reagan administration to reinterpret antitrust regulation to emphasize efficiency over competition.
No previous 20th century administration would have allowed the A&P chain to become a behemoth
like Walmart.
"... A few comparisons are in order. In their fine review of French history since 1870, Alice L. Conklin, Sarah Fishman, and Robert Zaretsky point out that French leaders at Vichy had several bargaining chips they could use against Hitler, but decided not to play them "because they had other priorities on their mind, including a 'National Revolution' to remake France, politically, socially, and economically." ..."
"... Petain was accompanied by legions of experts, administrators, and technocrats, who shared Petain's disdain for ordinary people and democratic processes, and by strident French fascists who even welcomed their country's defeat. Indeed, although fascists hated democracy, they also believed that Petain's measures did not go far enough to remake the country's institutions. The main thing this menagerie of "minorities" -- to use Stanley Hoffmann's phrase -- had in common was the loathing they shared of their own country. ..."
"... France was saved from its Vichy insanities by a country that was proclaimed, in the words of Abraham Lincoln, as the "last best hope on earth" -- that is, by the United States. The question is: Who will save America from its own Vichy regime? ..."
For the French, revisiting the time period when the Vichy Regime ruled what was left of the
country after its humiliating defeat by the Germans in 1940 involves trauma. But the lessons
imparted by those dark years of Nazi occupation transcend historical era and nationality,
touching upon equivalent circumstances in the United States for the past few years. Equivalent,
not identical: clearly, phalanxes of Nazi troops aren't goose-stepping down Pennsylvania
Avenue....
A few comparisons are in order. In their fine review of French history since 1870, Alice L. Conklin,
Sarah Fishman, and Robert Zaretsky point out that French leaders at Vichy had several bargaining
chips they could use against Hitler, but decided not to play them "because they had other priorities
on their mind, including a 'National Revolution' to remake France, politically, socially, and economically."
France's new leader, the 84-year-old Marshall Petain, was a deeply reactionary veteran who loathed
the Third Republic crushed by the Germans and vowed to take advantage of France's crisis to obliterate
the past and install a centralized, authoritarian government. His rejection of liberalism, egalitarianism,
and democracy prompted measures designed to return France to its pre-revolutionary roots: cities,
industrial plants, and factories were rejected in favor of a return to nature, to villages and small
shops. On top of this heap of nouveau-peasantry loomed the Marshall himself, whose grandfatherly
physiognomy was plastered on buildings in public arenas all over the country to remind French subjects
of who was in charge.
Petain was accompanied by legions of experts, administrators, and technocrats, who shared Petain's
disdain for ordinary people and democratic processes, and by strident French fascists who even welcomed
their country's defeat. Indeed, although fascists hated democracy, they also believed that Petain's
measures did not go far enough to remake the country's institutions. The main thing this menagerie
of "minorities" -- to use Stanley Hoffmann's phrase -- had in common was the loathing they shared
of their own country.
... .. ..
Further, like his aged counterpart before him, President Obama took advantage of a crisis to
"transform" American institutions instead of grappling with the country's main problems --
national debt, unemployment, recession, and burgeoning entitlement costs, to name a few. He made
matters worse by augmenting entitlements, exploding federal deficits, exacerbating unemployment,
and blaming others for the inevitable mess that ensued...
... ... ...
France was saved from its Vichy insanities by a country that was proclaimed, in the words of Abraham
Lincoln, as the "last best hope on earth" -- that is, by the United States. The question is: Who
will save America from its own Vichy regime?
Dr. Marvin Folkertsma is a professor of political science and Fellow for American Studies with
The Center for Vision & Values
at Grove City College. The author of several books, his latest release is a high-energy
novel titled "The Thirteenth Commandment."
"... An important essay indeed in that ideological influence is pervasive in writing by economists, which should be no problem as such, but economists should be aware of ideological influence in the work that they do. The problem is being unaware that work is ideological, so that the work is presented as simple truth allowing for no alternative presentation and argument. ..."
"... RBC economists are very well compensated for saying that no government intervention is needed in the economy, as are those saying that minimum wages harm employment. ..."
"... Actually a lot of academics are not exactly paid that well. This crowd does this sort as a religion. The problem is that those of us who never accepted perfect markets and instant market clearing were closed out of publications for 30 years. Now if RBC explained the real world - fine. But it had zero explanation for the last 9 years. ..."
"... Mankiw is paid well. ..."
"... Krugman is paid well. ..."
"... Speaking as an academic, in the university system with the lowest paid faculty in the nation, I am well aware of that. It is not the academic salaries, but the research grants and consulting contracts that matter here. ..."
"... Upton Sinclair is always right. ..."
"... "I suspect there is a reluctance among the majority of economists to admit that some among them may not be following the scientific method but may instead be making choices on ideological grounds." ..."
"... The RBC crowd is arrogant enough to argue that Keynes was practicing junk science. They knew his writings and just ignored it. ..."
"... That US economists are completely clueless is obvious to anyone who travels around the world. That free trade economies such as the US are complete basket cases is obvious to anyone who visits mercantilist economies such as Singapore, Japan, Israel etc. US trained economists only have prestige because the masses don't know how backward and poverty-stricken the US has become under the policies they relentlessly justify and apologize for. ..."
Being honest about ideological influence in economics : Noah Smith has an
article that talks about Paul Romer's recent
critique
of macroeconomics. ... He says the fundamental problem with macroeconomics is lack of data,
which is why disputes seem to take so long to resolve. That is not in my view the whole story.
If we look at the rise of Real Business Cycle (RBC) research a few decades ago, that was only
made possible because economists chose to ignore evidence about the nature of unemployment in
recessions. There is overwhelming evidence that in a recession employment declines because workers
are fired rather than choosing not to work, and that the resulting increase in unemployment is
involuntary (those fired would have rather retained their job at their previous wage). Both facts
are incompatible with the RBC model.
In the RBC model there is no problem with recessions, and no role for policy to attempt to
prevent them or bring them to an end. The business cycle fluctuations in employment they generate
are entirely voluntary. RBC researchers wanted to build models of business cycles that had nothing
to do with sticky prices. Yet here again the evidence was quite clear...
Why would researchers try to build models of business cycles where these cycles required no
policy intervention, and ignore key evidence in doing so? The obvious explanation is ideological.
I cannot prove it was ideological, but it is difficult to understand why - in an area which as
Noah says suffers from a lack of data - you would choose to develop theories that ignore some
of the evidence you have. The fact that, as I argue
here , this bias may have expressed itself in the insistence on following a particular methodology
at the expense of others does not negate the importance of that bias. ...
I suspect there is a reluctance among the majority of economists to admit that some among them
may not be following the scientific method but may instead be making choices on ideological grounds.
This is the essence of Romer's critique, first in his own area of growth economics and then for
business cycle analysis. Denying or marginalizing the problem simply invites critics to apply
to the whole profession a criticism that only applies to a minority.
An important essay indeed in that ideological influence is pervasive in writing by economists,
which should be no problem as such, but economists should be aware of ideological influence in
the work that they do. The problem is being unaware that work is ideological, so that the work
is presented as simple truth allowing for no alternative presentation and argument.
The point of Sophocles Oedipus cycle for Sophocles and for Freud was found in the Oracle at Delphi
with which the cycle begins. The inscription at Delphi read "Know Thyself."
Know your ideological bent or leaning. The tragedy of Oedipus was in not knowing himself.
Under Fidel Castro's rule Cuba bucked the historical trend--moving not toward but far away
from political democracy.
Under Fidel Castro it looks as though Cuba lost two generations of economic growth --
generations that other neighboring economies like Mexico, Costa Rica, and Puerto Rico made
very good use of. The only good thing you can say about Castro is that Cuba continued to have
the social indicators of a middle-income country even as it became a poor one.
It was always incomprehensible that an anti-Democratic dictator who managed to turn a
middle-income country into a poor one would have fans. Yet there are still people in the class
not of stooges looking for their Stalin, but fools who have found their Fidel.
-- Brad DeLong
[ Importantly, the economics here happen to be wildly wrong but is there any concern about
how Cuba actually fared in real per capita growth relative to Mexico, Costa Rica or Puerto
Rico since 1971 when record keeping begins?
Since 1971, real per capita GDP in Cuba has grown faster than real per capita GDP in Mexico, Guatemala,
El Salvador, Nicaragua, Costa Rica and Panama, faster than in Puerto Rico, Jamaica, Trinidad and
Bermuda, faster than in Colombia, Venezuela, Brazil and Argentina, faster than in Ecuador, Bolivia,
Uruguay and Paraguay, faster than in Spain and Portugal.
Real per capita growth in the Dominican Republic and Chile alone among Spanish or Portuguese
language countries has been faster than in Cuba.
Since 1971, real per capita GDP in Cuba has also grown faster than real per capita GDP in Peru...
Correcting:
Since 1971, real per capita GDP in Cuba has grown slightly slower than real per capita GDP
in Paraguay...
Completing:
Since 1971, real per capita GDP in Cuba has grown faster than real per capita GDP in Mexico,
Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama, faster than in Puerto Rico,
Jamaica, Trinidad and Bermuda, faster than in Colombia, Venezuela, Peru, Brazil and Argentina,
faster than in Ecuador, Bolivia and Uruguay, faster than in Spain and Portugal.
Real per capita growth in the Dominican Republic, Chile and Paraguay alone among Spanish or
Portuguese language countries has been faster than in Cuba.
RBC economists are very well compensated for saying that no government intervention is needed
in the economy, as are those saying that minimum wages harm employment.
Actually a lot of academics are not exactly paid that well. This crowd does this sort as a religion.
The problem is that those of us who never accepted perfect markets and instant market clearing
were closed out of publications for 30 years. Now if RBC explained the real world - fine. But
it had zero explanation for the last 9 years.
I write "a lot" and you read "all". More evidence that my internet stalker flunked pre-K. BTW
- Mankiw is not part of the RBC crowd but PeterK is too stupid to know that. Geesh.
Lord - what a stupid comment. Krugman does make his believes against evidence. I see this is another
post you did not bother to read before posting one of your patented pointless rants.
Speaking as an academic, in the university system with the lowest paid faculty in the nation,
I am well aware of that. It is not the academic salaries, but the research grants and consulting
contracts that matter here.
Speaking as an academic, in the university system with the lowest paid faculty in the nation,
I am well aware of that. It is not the academic salaries, but the research grants and consulting
contracts that matter here.
RBC economists are very well compensated for saying that no government intervention is needed
in the economy, as are those saying that minimum wages harm employment.
Real business-cycle theory (RBC theory) are a class of New Classical macroeconomics models
in which business-cycle fluctuations to a large extent can be accounted for by real (in contrast
to nominal) shocks. Unlike other leading theories of the business cycle, RBC theory sees business
cycle fluctuations as the efficient response to exogenous changes in the real economic environment.
That is, the level of national output necessarily maximizes expected utility, and governments
should therefore concentrate on long-run structural policy changes and not intervene through discretionary
fiscal or monetary policy designed to actively smooth out economic short-term fluctuations.
According to RBC theory, business cycles are therefore "real" in that they do not represent
a failure of markets to clear but rather reflect the most efficient possible operation of the
economy, given the structure of the economy.
"I suspect there is a reluctance among the majority of economists to admit that some among them
may not be following the scientific method but may instead be making choices on ideological grounds."
How is the ridiculous RBC theory different from saying, as many prominent economists do, that
presidents do not significantly influence economic growth and job creation?
Thus, I have heard repeatedly that FDR, Reagan, Clinton and Obama should not get credit for
the economic recoveries and job creation that occurred during their presidencies. Likewise, Hoover,
Carter and the Bushes should not be blamed for the economic debacles that occurred during their
presidencies. Apparently, these were all just real business cycles that no president has responsibility
for.
Of course voters do not agree at all, re-electing all of the "lucky" presidents while throwing
out all of the "unlucky" ones. For example, Carter, who is now regarded as a good president, was
buried in a massive landslide: 489-49 by a second rate actor who was regarded as a fool by many.
(Trump will outperform Carter!)
Either RBC is correct or presidents and their policies do matter a lot. Economists have to
decide where they stand.
The RBC crowd never really got that much into politics. Of course assuming markets always clear
and are perfect in every other way is a silly way to model a real world economy.
"you would choose to develop theories that ignore some of the evidence you have". It first this
New Classical/RBC crowd put forth all sorts of fancy new econometrics thinking if you looked at
the data the right way, their model would be confirmed. Only problem is their model says aggregate
demand can have only very transitional effects but the data show persistent effects. Shocks in
other words have sustained real effects.
So when their model was shown to be faulty by the evidence, they gave up on econometrics and
turned to calibration which is just fancy math designed to hide the failure of their models.
SWL continues noting David Card's research on the effects of increases in minimum wages:
'As Card points out in the interview his research involved no advocacy, but was simply about
examining empirical evidence. So the friends that he lost objected not to the policy position
he was taking, but to him uncovering and publishing evidence. Suppressing or distorting evidence
because it does not give the answer you want is almost a definition of an illegitimate science.'
Greg Mankiw searches high and low for anything that goes along with his view that higher wage
floors lead to less employment demand. Of course this kind of bias favors people like Donald Trump
who built that DC hotel under budget by ignoring the minimum wage laws.
Much of the economic models debates hinge on "sticky wages" which are irrefutable from all empirics.
What I haven't seen yet though is a sound testable hypothesis that supports the empirical observation.
In other words, we know by empirics it's true, but we really don't yet know why its true or true
in most, but certainly not all cases -- e.g. Greece recently for example. Many suppositions have
been described but none have to my knowledge been put into the form of testable hypothesis to
suppot the suppositions with "scientific" methods..
How does the relate to RBC models and ideology embedded in models?
RBC ignores the empirics for what can be said to be ideological reasons. But models which include
those observations have no hypothesis proven to support the observations either, so then those
models are equally using unscientific methods in their construction, which just so happens to
support a different ideological position.
I don't disagree at all that models must use observations in their construction but it doesn't
put those models at any greater scientific method advantage.
"It appears, therefore, that we have a sort of asymmetry on the two sides of the critical level
above which true inflation sets in. For a contraction of effective demand below the critical level
will reduce its amount measured in cost-units; whereas an expansion of effective demand beyond
this level will not, in general, have the effect of increasing its amount in terms of cost-units.
"This result follows from the assumption that the factors of production, and in particular
the workers, are disposed to resist a reduction in their money-rewards, and that there is no corresponding
motive to resist an increase. This assumption is, however, obviously well founded in the facts,
due to the circumstance that a change, which is not an all-round change, is beneficial to the
special factors affected when it is upward and harmful when it is downward.
"If, on the contrary, money-wages were to fall without limit whenever there was a tendency
for less than full employment, the asymmetry would, indeed, disappear. But in that case there
would be no resting-place below full employment until either the rate of interest was incapable
of falling further or wages were zero.
"In fact we must have some factor, the value of which in terms of money is, if not fixed, at
least sticky, to give us any stability of values in a monetary system.
"The view that any increase in the quantity of money is inflationary (unless we mean by inflationary
merely that prices are rising) is bound up with the underlying assumption of the classical theory
that we are always in a condition where a reduction in the real rewards of the factors of production
will lead to a curtailment in their supply." The General Theory, pp. 303-304.
yes, Keynes supposition, among other was precisely what I was referring to by knowing the observation
is true but not why it is.
Everybody knows it is true by observation that the sun rises in the east and settles in the
west 1x in roughly 24 hours give or take a winter/summer trend change. But it took an awfully
long time before Copernicus figured out why that was the case... and from his theory testable
hypothesis were developed to show that the hypothesis were confirmed.
With sticky wages we don't know why. E.G.
Wages will not go below [this level] because [insert testable hypothesis]. A testable hypothesis
takes the form
Lower Bound of Wage = [insert independent measurable variables and their relationships here]
As I said, lower bounds to wages are empirically observed. Now show why in repeatable results
with the equations using the independent variables that apply under the conditions imposed by
he hypothesis.
Until that is the observation is used in models because it suits ones interest to do so...
i.e. they like the results of the models better. It isn't a scientifically founded model... the
assumption is no better than rational expectations.
"If, on the contrary, money-wages were to fall without limit whenever there was a tendency
for less than full employment, . . . there would be no resting-place below full employment until
either the rate of interest was incapable of falling further or wages were zero."
Absent sticky wages, at ZLB interest, wages would fall to zero whenever there was a tendency
for less than full employment and nobody works for zero wages.
RBC also ignores anything that would explain why we have recessions at all. Its assumption that
markets instantly clear is key to their model but we know that markets are not so perfect.
A few years ago I would have suggested otherwise. But recent research notes you are right. Obama's
CEA is noting this but he will not be President for long. Our next President needs to take this
head on. Trump won't. Will Clinton? We will see.
"There is overwhelming evidence that in a recession employment declines because workers are fired
rather than choosing not to work, and that the resulting increase in unemployment is involuntary"
see Keynes called it involuntary unemployment NOT cyclical unemployment
as all the politicians are saying now a days, words mean something
Simon-Wren Lewis is making a common mistake as I see it. The limitations and assumptions of a
model should not be conflated with evidence against the model. Not considering certain types of
data is a limitation of a model; not evidence against that model. If an RBC model does not include
certain types of data, then the best approach is to try and understand that data and attempt to
show how it fits into the existing model. Another model should be considered only when certain
limitations appear intractable. Because there are almost always lots of ways to model the same
problem, at least in the social sciences, if you create a new model every time you come across
a limitation, you'll end up running around in circles.
This makes no sense to me. So how about explaining what you meant with real world examples? I
choose the examples of involuntary unemployment and wage stickiness, and the effects of raising
the minimum wage.
"The limitations and assumptions of a model should not be conflated with evidence against the
model."
I don't think this is what SWL is saying and am fairly certain it is not what Romer is saying:
The problem is not limitation or contradiction, it is central variables assumed to confer verisimilitude
that cannot and assumptions considered true that are not.
The assumptions of the model are false and therefore should be construed as evidence against
using the model. I'm saying that's faulty reasoning.
The "my model is better than your model" argument is not a good way to approach problems at
a theoretical level. It's sometimes okay at an applied level. One thing that's hard to wrap one's
head around is that a model can still be useful even when its assumptions are false. When data
is sparse, all useful theories will have to rely on false or incomplete assumptions. Usually a
better approach is to extend rather than start over to keep people from running in too many different
directions.
"Not considering certain types of data is a limitation of a model; not evidence against that
model. If an RBC model does not include certain types of data, then the best approach is to try
and understand that data and attempt to show how it fits into the existing model"
Henry Carey - a real American economist, sadly forgotten to history : , -1
That US economists are completely clueless is obvious to anyone who travels around the world.
That free trade economies such as the US are complete basket cases is obvious to anyone who visits
mercantilist economies such as Singapore, Japan, Israel etc. US trained economists only have prestige
because the masses don't know how backward and poverty-stricken the US has become under the policies
they relentlessly justify and apologize for.
Paul Krugman's recent posts have been most peculiar. Several have looked uncomfortably like special
pleading for political figures he likes, notably Hillary Clinton. He has, in my judgement, stooped
rather far down in attacking people well below him in the public relations food chain
Perhaps the most egregious and clearest cut case is his refusal to address the substance of a
completely legitimate, well-documented article by David Dayen outing Krugman, and to a lesser degree,
his fellow traveler Mike Konczal, in abjectly misrepresenting Sanders' financial reform proposals
The Krugman that was early to stand up to the Iraq War, who was incisive before and during the
crisis has been very much in absence since Obama took office. It's hard to understand the loss of
intellectual independence. That may not make Krugman any worse than other Democratic party apparatchiks,
but he continues to believe he is other than that, and the lashing out at Dayen looks like a wounded
denial of his current role. Krugman and Konczal need to be seen as what they are: part of the Vichy
Left brand cover for the Democratic party messaging apparatus. Krugman, sadly, has chosen to diminish
himself for a not very worthy cause.
"... I would agree that Trump is horrible candidate. The candidate who (like Hillary) suggests complete degeneration of the US neoliberal elite. ..."
"... But the problem is that Hillary is even worse. Much worse and more dangerous because in addition to being a closet Republican she is also a warmonger. In foreign policy area she is John McCain in pantsuit. And if you believe that after one hour in White House she does not abandon all her election promises and start behaving like a far-right republican in foreign policy and a moderate republican in domestic policy, it's you who drunk too much Cool Aid. ..."
"... In other words, the USA [workers and middle class] now is in the political position that in chess is called Zugzwang: we face a choice between the compulsive liar, unrepentant, extremely dangerous and unstable warmonger with failing health vs. a bombastic, completely unprepared to governance of such a huge country crook. ..."
The key problems with Democratic Party and Hillary is that they lost working class and middle
class voters, becoming another party of highly paid professionals and Wall Street speculators
(let's say top 10%, not just 1%), the party of neoliberal elite.
It will be interesting to see if yet another attempt to "bait and switch" working class and
lower middle class works this time. I think it will not. Even upper middle class is very resentful
of Democrats and Hillary. So many votes will be not "for" but "against". This is the scenario
Democratic strategists fear the most, but they can do nothing about it.
She overplayed "identity politics" card. Her "identity politics" and her fake feminism are
completely insincere. She is completely numb to human suffering and interests of females and minorities.
Looks like she has a total lack of empathy for other people.
"What scares me is my knowledge of her career-long investment in trying to convince the
generals and the admirals that she is a 'tough bitch', ala Margaret Thatcher, who will not
hesitate to pull the trigger. An illuminating article in the NY Times (
http://www.nytimes.com/2016/04/24/magazine/how-hillary-clinton-became-a-hawk.html ) revealed
that she always advocates the most muscular and reckless dispositions of U.S. military forces
whenever her opinion is solicited. "
Usually people are resentful about Party which betrayed them so many times. It would be interesting
to see how this will play this time.
Beverly Mann October 23, 2016 12:00 pm
It will be interesting to see if yet another attempt to "bait and switch" working class and
lower middle class works this time?
Yup. The Republicans definitely have the interests of the working class and lower middle class
at heart when they give, and propose, ever deeper tax cuts for the wealthy, the repeal of the
estate tax that by now applies only to estates of more than $5 million, complete deregulation
of the finance industry, industry capture of every federal regulatory agency and cabinet department
and commission or board, from the SEC, to the EPA, to the Interior Dept. (in order to hand over
to the oil, gas and timber industries vast parts of federal lands), the FDA, the FTC, the FCC,
the NLRB, the Consumer Product Safety Commission, and the Justice Dept. (including the Antitrust
Division)-to name only some.
And OF COURSE it's to serve the interests of the working class and lower middle class that
they concertedly appoint Supreme Court justices and lower federal court judges that are unabashed
proxies of big business.
And then there's the incessant push to privatize Social Security and Medicare. It ain't the
Dems that are pushing that.
You're drinking wayyy too much Kool Aid, likbez. Or maybe just reading too much Ayn Rand, at
Paul Ryan's recommendation.
beene October 23, 2016 10:31 am
I would suggest despite most of the elite in both parties supporting Hillary, and saying
she has the election in the bag is premature. In my opinion the fact that Trump rallies still
has large attendance; where Hillary's rallies would have trouble filling up a large room is a
better indication that Trump will win.
Even democrats are not voting democratic this time to be ignored till election again.
likbez October 23, 2016 12:56 pm
Beverly,
=== quote ===
Yup. The Republicans definitely have the interests of the working class and lower middle class
at heart when they give, and propose, ever deeper tax cuts for the wealthy, the repeal of the
estate tax that by now applies only to estates of more than $5 million, complete deregulation
of the finance industry, industry capture of every federal regulatory agency and cabinet department
and commission or board, from the SEC, to the EPA, to the Interior Dept. (in order to hand
over to the oil, gas and timber industries vast parts of federal lands), the FDA, the FTC,
the FCC, the NLRB, the Consumer Product Safety Commission, and the Justice Dept. (including
the Antitrust Division) -- to name only some.
And OF COURSE it's to serve the interests of the working class and lower middle class that
they concertedly appoint Supreme Court justices and lower federal court judges that are unabashed
proxies of big business.
=== end of quote ===
This is all true. But Trump essentially running not as a Republican but as an independent on
(mostly) populist platform (with elements of nativism). That's why a large part of Republican
brass explicitly abandoned him. That does not exclude that he easily will be co-opted after the
election, if he wins.
And I would not be surprised one bit if Dick Cheney, Victoria Nuland, Paul Wolfowitz and Perle
vote for Hillary. Robert Kagan and papa Bush already declared such an intention. She is a neocon.
A wolf in sheep clothing, if we are talking about real anti-war democrats, not the USA brand of
DemoRats. She is crazy warmonger, no question about it, trying to compensate a complete lack of
diplomatic skills with jingoism and saber rattling.
The problem here might be that you implicitly idealize Hillary and demonize Trump.
I would agree that Trump is horrible candidate. The candidate who (like Hillary) suggests
complete degeneration of the US neoliberal elite.
But the problem is that Hillary is even worse. Much worse and more dangerous because in
addition to being a closet Republican she is also a warmonger. In foreign policy area she is John
McCain in pantsuit. And if you believe that after one hour in White House she does not abandon
all her election promises and start behaving like a far-right republican in foreign policy and
a moderate republican in domestic policy, it's you who drunk too much Cool Aid.
That's what classic neoliberal DemoRats "bait and switch" maneuver (previously executed
by Obama two times) means. And that's why working class now abandoned Democratic Party. Even unions
members of unions which endorses Clinton are expected to vote 3:1 against her. Serial betrayal
of interests of working class (and lower middle class) after 25 years gets on nerve. Not that
their choice is wise, but they made a choice. This is "What's the matter with Kansas" all over
again.
It reminds me the situation when Stalin was asked whether right revisionism of Marxism (social
democrats) or left (Trotskyites with their dream of World revolution) is better. He answered "both
are worse" :-).
In other words, the USA [workers and middle class] now is in the political position that
in chess is called Zugzwang: we face a choice between the compulsive liar, unrepentant, extremely
dangerous and unstable warmonger with failing health vs. a bombastic, completely unprepared to
governance of such a huge country crook.
Of course, we need also remember about existence of "deep state" which make each of
them mostly a figurehead, but still the power of "deep state" is not absolute and this is a very
sad situation.
Beverly Mann, October 23, 2016 1:57 pm
Good grace.
Two points: First, you apparently are unaware of Trump's proposed tax plan, written by Heritage
Foundation economists and political-think-tank types. It's literally more regressively extreme
evn than Paul Ryan's. It gives tax cuts to the wealthy that are exponentially more generous percentage-wise
than G.W. Bush's two tax cuts together were, it eliminates the estate tax, and it gives massive
tax cuts to corporations, including yuge ones.
Two billionaire Hamptons-based hedge funders, Robert Mercer and his daughter Rebekah, have
been funding a super PAC for Trump and since late spring have met with Trump and handed him policy
proposals and suggestions for administrative agency heads and judicial appointments. Other yuge
funders are members of the Ricketts family, including Thomas Ricketts, CEO of TD Ameritrade and
a son of its founder.
Two other billionaires funding Trump: Forrest Lucas, founder of Lucas Oil and reportedly Trump's
choice for Interior Secretary if you and the working class and lower middle class folks whose
interests Trump has at heart get their way.
And then there's Texas oil billionaire Harold Hamm, Trump's very first billionaire mega-donor.
One of my recurring pet peeves about Clinton and her campaign is her failure to tell the public
that these billionaires are contributing mega-bucks to help fund Trump's campaign, and to tell
the public who exactly they are. As well as her failure to make a concerted effort to educate
the public about the the specifics of Trump's fiscal and deregulatory agenda as he has published
it.
As for your belief that I idealize Clinton, you obviously are very new to Angry Bear. I was
a virulent Sanders supporter throughout the primaries, to the very end. In 2008 I originally supported
John Edwards during the primaries and then, when it became clear that it was a two-candidate race,
supported Obama. My reason? I really, really, REALLY did not want to see another triangulation
Democratic administration. That's largely what we got during Obama's first term, though, and I
was not happy about it.
Bottom line: I'm not the gullible one here. You are.
likbez, October 23, 2016 2:37 pm
You demonstrate complete inability to weight the gravity of two dismal, but unequal in their
gravity options.
All your arguments about Supreme Court justices, taxes, inheritance and other similar things
make sense if and only if the country continues to exist.
Which is not given due to the craziness and the level of degeneration of neoliberal elite and
specifically Hillary ("no fly zone in Syria" is one example of her craziness). Playing chickens
with a nuclear power for the sake of proving imperial dominance in Middle East is a crazy policy.
Neocons rule the roost in both parties, which essentially became a single War Party with two
wings. Trump looks like the only chance somewhat to limit their influence and reach some détente
with Russia.
Looks like you organically unable to understand that your choice in this particular case is
between the decimation of the last remnants of the New Deal and a real chance of WWIII.
This is not "pick your poison" situation. Those are two events of completely difference magnitude:
one is reversible (and please note that Trump is bound by very controversial obligations to his
electorate and faces hostile Congress), the other is not.
We all should do our best to prevent the unleashing WWIII even if that means temporary decimation
of the remnants of New Deal.
Neoliberalism after 2008 entered zombie state, so while it is still strong, aggressive and
bloodthirsty it might not last for long. And in such case the defeat of democratic forces on domestic
front is temporary.
The Walloon mouse : ...Instead of decrying people's stupidity and ignorance in rejecting trade
deals, we should try to understand why such deals lost legitimacy in the first place. I'd put
a large part of the blame on mainstream elites and trade technocrats who pooh-poohed ordinary
people's concerns with earlier trade agreements.
The elites minimized distributional concerns, though they turned out to be significant for
the most directly affected communities. They oversold aggregate gains from trade deals, though
they have been smallish since at least NAFTA. They said sovereignty would not be diminished though
it clearly was in some instances. They claimed democratic principles would not be undermined,
though they are in places. They said there'd be no social dumping though there clearly is at times.
They advertised trade deals (and continue to do so) as "free trade" agreements, even though Adam
Smith and David Ricardo would turn over in their graves if they read, say, any of the TPP chapters.
And because they failed to provide those distinctions and caveats now trade gets tarred with
all kinds of ills even when it's not deserved. If the demagogues and nativists making nonsensical
claims about trade are getting a hearing, it is trade's cheerleaders that deserve some of the
blame.
One more thing. The opposition to trade deals is no longer solely about income losses. The
standard remedy of compensation won't be enough -- even if carried out. It's about fairness, loss
of control, and elites' loss of credibility. It hurts the cause of trade to pretend otherwise.
... ... ..
Trump would propose and/or enact, he listed the following six:
"A Constitutional Amendment to impose term limits on all members of Congress."
"A hiring freeze on all federal employees."
"A requirement that for every new federal regulation, 2 existing regulations must be eliminated."
"A 5-year ban on White House and Congressional officials becoming lobbyists after they leave government."
"A lifetime ban on White House officials lobbying on behalf of a foreign government."
"A complete ban on foreign lobbyists raising money for American elections."
"
~~WWW~
Lot of reform is needed but may be
The forgotten spirit of American protectionism : , -1
The free traders have human economic history precisely inverted. Countries that practice protectionism
almost uniformly become wealthy and technologically advanced. Countries that don't become or remain
terribly sad, poverty-stricken producers of worthless raw materials and desperate labor migrants.
This has been true at least going back to Byzantium and its economic conquest by Genoa and Venice.
That the US thrived pre-1970 free trade is no coincidence. There is no alternative to protectionism.
Free trade = no industry = no money = no future.
"... media largely went with the austerity narrative, can be partly explained by a neoliberal ethos.
Having spent years seeing the big banks lauded as wealth creating titans, it was difficult for many
to comprehend that their basic business model was fundamentally flawed and required a huge implicit
state subsidy. On the other hand they found it much easier to imagine that past minor indiscretions
by governments were the cause of a full blown debt crisis. ... ..."
"... Brexit is a major setback for neoliberalism ..."
"... Not only is it directly bad for business, it involves (for both trade and migration) a large
increase in bureaucratic interference in market processes. To the extent she wants to take us back to
the 1950s, Theresa May's brand of conservatism may be very different from Margaret Thatcher's neoliberal
philosophy. ..."
"... I think he misses the point here that much of the press coverage of these issues reflects the
economic interests of the media companies and the highly paid journamalists ..."
Neoliberalism and austerity : I
like
to treat neoliberalism not as some kind of coherent political philosophy, but more as a set
of interconnected ideas that have become commonplace in much of our discourse. That the private
sector entrepreneur is the wealth creator, and the state typically just gets in their way. That
what is good for business is good for the economy, even when it increases monopoly power or involves
rent seeking. Interference in business or the market, by governments or unions, is always bad.
And so on. ...
I do not think austerity could have happened on the scale that it did without this dominance
of this neoliberal ethos. Mark Blyth has
described
austerity as the biggest bait and switch in history. It took two forms. In one the financial crisis,
caused by an under regulated financial sector lending too much, led to bank bailouts that increased
public sector debt. This leads to an outcry about public debt, rather than the financial sector.
In the other the financial crisis causes a deep recession which - as it always does - creates
a large budget deficit. Spending like drunken sailors goes the cry, we must have austerity now.
In both cases the nature of what was going on was pretty obvious to anyone who bothered to
find out the facts. That so few did so, which meant that the media largely went with the austerity
narrative, can be partly explained by a neoliberal ethos. Having spent years seeing the big banks
lauded as wealth creating titans, it was difficult for many to comprehend that their basic business
model was fundamentally flawed and required a huge implicit state subsidy. On the other hand they
found it much easier to imagine that past minor indiscretions by governments were the cause of
a full blown debt crisis. ...
While in this sense austerity might have been a useful distraction from the problems with neoliberalism
made clear by the financial crisis, I think a more important political motive was that it appeared
to enable the more rapid accomplishment of a key neoliberal goal: shrinking the state. It is no
coincidence that austerity typically involved cuts in spending rather than higher taxes... In
that sense too austerity goes naturally with neoliberalism. ...
An interesting question is whether the same applies to right wing governments in the UK and
US that used immigration/race as a tactic for winning power. We now know for sure, with both Brexit
and Trump, how destructive and dangerous that tactic can be. As even the neoliberal fantasists
who voted Leave are finding out, Brexit is a major setback for neoliberalism.
Not only is it directly bad for business, it involves (for both trade and migration) a
large increase in bureaucratic interference in market processes. To the extent she wants to take
us
back to the 1950s, Theresa May's brand of conservatism may be very different from Margaret
Thatcher's neoliberal philosophy.
To the extent she wants to take us back * to the 1950s, Theresa May's brand of conservatism
may be very different from Margaret Thatcher's neoliberal philosophy.
[ When Teresa May became Prime Minister, I was puzzled for a time by the impression analysts
were leaving that May was moderate or even liberal in looking to a less class-structured or focused
Britain. The impression I had was that May would be comfortable with the British class structure
of a century back, and meant to turn Britain socially as far back as possible. Possibly my impression
was reasonable. ]
The Brexit vote takes us back not to the 1970s when we joined, but back to the 1950s. Britain
first tried to join the European Union in 1961, but was rebuffed by De Gaulle in 1963. Theresa
May's call for the return of Grammar schools * (selection into different schools at the age of
11) also takes us back to the 1950s. One of the major achievements of the Labour government of
the 1960s was to largely phase out selection at 11....
Good piece, but I think he misses the point here that much of the press coverage of these
issues reflects the economic interests of the media companies and the highly paid journamalists.
It also overlooks the concerted decades long attack of conservatives on the government.
Peter K. : , -1
Neoliberalism via Obama's Fed. Will Hillary's be any different?
Has Macroeconomic Policy Been Different Since the Crisis?
by David Beckworth
Brad DeLong wonders whether macroeconomic policy has been different in the post-2009 recovery.
If we assume the role of macroeconomic policy is to stabilize aggregate demand growth, then my
answer is an unequivocal yes. Macroeconomic policy was very different during the recovery than
in previous periods.
It was different in two key ways. First, aggregate demand growth was kept below its pre-crisis
trend growth rate. Since the recovery started in 2009Q3, NGDP growth has averaged 3.3 percent.
This is well below the 5.4 percent of 1990-2007 period (blue line in the figure below) or a 5.7
percent for the entire Great Moderation period of 1985-2007. Any way you slice it, macroeconomic
policy has dialed back the trend growth of nominal spending. This can be seen in the figure below.
[figure]
Second, aggregate demand growth was not allowed to bounce back at a higher growth rate during
the recovery like it has in past recessions. Put differently, macroeconomic policy in the past
allowed aggregate demand to run a bit hot after a recession before settling it back down to its
trend growth rate. This kept the growth path or level of NGDP stable. You can see this if the
figure above by noting how the growth rate (black line) would typically go above the trend (blue
line) temporarily after a recession.
Had macroeconomic policy allowed this NGDP growth to follow its typical bounce-back pattern
after a recession, we would have seen something like the red line in the figure. This line is
the dynamic forecast from a simple AR model based on the Great Moderation period. This naive forecast
shows one would have expected NGDP growth to have reached as much as 8 percent during the recovery
before settling back down. Instead we barely got over 3 percent growth.
So yes, macroeconomic policy has been different since the crisis. This policy choice, in my
view, is a key reason whey the recovery was so anemic.
P.S. Speaking of NGDP growth, Ambrose Evans-Pritchard NGDP has a sobering piece in the Telegraph
noting that nominal demand has been persistently falling since late 2014. This decline in nominal
economic activity, in my view, is tied to the Fed's implicit tightening of monetary policy via
the talking up of rate hikes since mid-2014.
As Europeans assess the fallout from the U.K.'s
Brexit referendum
, they face a series of elections that could equally shake the political establishment. In the
coming 12 months, four of Europe's five largest economies have votes that will almost certainly mean
serious gains for right-wing populists and nationalists. Once seen as fringe groups, France's National
Front, Italy's Five Star Movement, and the Freedom Party in the Netherlands have attracted legions
of followers by tapping discontent over immigration, terrorism, and feeble economic performance.
"The Netherlands should again become a country of and for the Dutch people," says Evert Davelaar,
a Freedom Party backer who says immigrants don't share "Western and Christian values."
... ... ....
The populists are deeply skeptical of European integration, and those in France and the Netherlands
want to follow Britain's lead and quit the European Union. "Political risk in Europe is now far more
significant than in the United States," says Ajay Rajadhyaksha, head of macro research at Barclays.
... ... ...
...the biggest risk of the nationalist groundswell: increasingly fragmented parliaments that will
be unable or unwilling to tackle the problems hobbling their economies. True, populist leaders might
not have enough clout to enact controversial measures such as the Dutch Freedom Party's call to close
mosques and deport Muslims. And while the Brexit vote in June helped energize Eurosceptics, it's
unlikely that any major European country will soon quit the EU, Morgan Stanley economists wrote in
a recent report. But they added that "the protest parties promise to turn back the clock" on free-market
reforms while leaving "sclerotic" labour and market regulations in place. France's National Front,
for example, wants to temporarily renationalise banks and increase tariffs while embracing cumbersome
labour rules widely blamed for chronic double-digit unemployment. Such policies could damp already
weak euro zone growth, forecast by the International Monetary Fund to drop from 2 percent in 2015
to 1.5 percent in 2017. "Politics introduces a downside skew to growth," the economists said.
"... As I have tirelessly explained, the U.S. economy is not just neoliberal (the code word for
maximizing private gain by any means available, including theft, fraud, embezzlement, political fixing,
price-fixing, and so on)--it is neofeudal , meaning that it is structurally an updated version of Medieval
feudalism in which a top layer of financial-political nobility owns the engines of wealth and governs
the marginalized debt-serfs who toil to pay student loans, auto loans, credit cards, mortgages and taxes--all
of which benefit the financiers and political grifters. ..."
"... The media is in a self-referential frenzy to convince us the decision of the century is between
unrivaled political grifter Hillary Clinton and financier-cowboy Donald Trump. Both belong to the privileged
ruling Elite: both have access to cheap credit, insider information ( information asymmetry ) and political
influence. ..."
"... If you exit the Pentagon, CIA, NSA, etc. at a cushy managerial rank with a fat pension and
lifetime benefits and are hired at a fat salary the next day by a private "defense" contractor--the
famous revolving door between a bloated state and a bloated defense industry--the system works great.
..."
Brimming with hubris and self-importance, the ruling Elite and mainstream media cannot believe
they have lost the consent of the governed.
Every ruling Elite needs the consent of the governed: even autocracies, dictatorships and corporatocracies
ultimately rule with the consent, however grudging, of the governed.
The American ruling Elite has lost the consent of the governed. This reality is being masked by
the mainstream media, mouthpiece of the ruling class, which is ceaselessly promoting two false narratives:
The "great divide" in American politics is between left and right, Democrat/Republican
The ruling Elite has delivered "prosperity" not just to the privileged few but to the unprivileged
many they govern.
Both of these assertions are false. The Great Divide in America is between the ruling Elite and
the governed that the Elite has stripmined. The ruling Elite is privileged and protected, the governed
are unprivileged and unprotected. That's the divide that counts and the divide that is finally becoming
visible to the marginalized, unprivileged class of debt-serfs.
The "prosperity" of the 21st century has flowed solely to the ruling Elite and its army of technocrat
toadies, factotums, flunkies, apparatchiks and apologists. The Elite's army of technocrats and its
media apologists have engineered and promoted an endless spew of ginned-up phony statistics (the
super-low unemployment rate, etc.) to create the illusion of "growth" and "prosperity" that benefit
everyone rather than just the top 5%. The media is 100% committed to promoting these two false narratives
because the jig is up once the bottom 95% wake up to the reality that the ruling Elite has been stripmining
them for decades.
As I have tirelessly explained, the U.S. economy is not just neoliberal (the code word
for maximizing private gain by any means available, including theft, fraud, embezzlement, political
fixing, price-fixing, and so on)--it is neofeudal , meaning that it is structurally an updated
version of Medieval feudalism in which a top layer of financial-political nobility owns the engines
of wealth and governs the marginalized debt-serfs who toil to pay student loans, auto loans, credit
cards, mortgages and taxes--all of which benefit the financiers and political grifters.
The media is in a self-referential frenzy to convince us the decision of the century is between
unrivaled political grifter Hillary Clinton and financier-cowboy Donald Trump. Both belong to the
privileged ruling Elite: both have access to cheap credit, insider information ( information asymmetry
) and political influence.
The cold truth is the ruling Elite has shredded the social contract by skimming the income/wealth
of the unprivileged. The fake-"progressive" pandering apologists of the ruling Elite--Robert Reich,
Paul Krugman and the rest of the Keynesian Cargo Cultists--turn a blind eye to the suppression of
dissent and the looting the bottom 95% because they have cushy, protected positions as tenured faculty
(or equivalent). They cheerlead for more state-funded bread and circuses for the marginalized
rather than demand an end to exploitive privileges of the sort they themselves enjoy.
Consider just three of the unsustainably costly broken systems that enrich the privileged Elite
by stripmining the unprivileged:
healthcare (a.k.a. sickcare because sickness is profitable, prevention is unprofitable),
higher education
Imperial over-reach (the National Security State and its partner the privately owned Military-Industrial
Complex).
While the unprivileged and unprotected watch their healthcare premiums and co-pays soar year after
year, the CEOs of various sickcare cartels skim off tens of millions of dollars annually in pay and
stock options. The system works great if you get a $20 million paycheck. If you get a 30% increase
in monthly premiums for fewer actual healthcare services--the system is broken.
If you're skimming $250,000 as under-assistant dean to the provost for student services (or equivalent)
plus gold-plated benefits, higher education is working great. If you're a student burdened with tens
of thousands of dollars in student loan debt who is receiving a low-quality, essentially worthless
"education" from poorly paid graduate students ("adjuncts") and a handful of online courses that
you could get for free or for a low cost outside the university cartel--the system is broken.
If you exit the Pentagon, CIA, NSA, etc. at a cushy managerial rank with a fat pension and
lifetime benefits and are hired at a fat salary the next day by a private "defense" contractor--the
famous revolving door between a bloated state and a bloated defense industry--the system works great.
If you joined the Armed Forces to escape rural poverty and served at the point of the spear somewhere
in the Imperial Project--your perspective may well be considerably different.
Unfortunately for the ruling Elite and their army of engorged enablers and apologists, they have
already lost the consent of the governed.
They have bamboozled, conned and misled the bottom 95% for decades, but their phony facade of
political legitimacy and "the rising tide raises all boats" has cracked wide open, and the machinery
of oppression, looting and propaganda is now visible to everyone who isn't being paid to cover their
eyes. Brimming with hubris and self-importance, the ruling Elite and mainstream media cannot believe
they have lost the consent of the governed. The disillusioned governed have not fully absorbed this
epochal shift of the tides yet, either. They are aware of their own disillusionment and their own
declining financial security, but they have yet to grasp that they have, beneath the surface of everyday
life, already withdrawn their consent from a self-serving, predatory, parasitic, greedy and ultimately
self-destructive ruling Elite.
"... At bottom, the success of despotic governments and Big Brother societies hinges upon a certain
number of political, financial, and cultural developments. The first of which is an unwillingness in
the general populace to secure and defend their own freedoms, making them completely reliant on corrupt
establishment leadership. For totalitarianism to take hold, the masses must not only neglect the plight
of their country, and the plight of others, but also be completely uninformed of the inherent indirect
threats to their personal safety. ..."
"... The prevalence of apathy and ignorance sets the stage for the slow and highly deliberate process
of centralization. ..."
"... People who are easily frightened are easily dominated. This is not just a law of political
will, but a law of nature. Many wrongly assume that a tyrant's power comes purely from the application
of force. In fact, despotic regimes that rely solely on extreme violence are often very unsuccessful,
and easily overthrown. ..."
"... They instill apprehension in the public; a fear of the unknown, or a fear of the possible consequences
for standing against the state. They let our imaginations run wild until we see death around every corner,
whether it's actually there or not. When the masses are so blinded by the fear of reprisal that they
forget their fear of slavery, and take no action whatsoever to undo it, then they have been sufficiently
culled. ..."
"... The bread and circus lifestyle of the average westerner alone is enough to distract us from
connecting with each other in any meaningful fashion, but people still sometimes find ways to seek out
organized forms of activism. ..."
"... In more advanced forms of despotism, even fake organizations are disbanded. Curfews are enforced.
Normal communications are diminished or monitored. Compulsory paperwork is required. Checkpoints are
instituted. Free speech is punished. Existing groups are influenced to distrust each other or to disintegrate
entirely out of dread of being discovered. All of these measures are taken by tyrants primarily to prevent
ANY citizens from gathering and finding mutual support. People who work together and organize of their
own volition are unpredictable, and therefore, a potential risk to the state. ..."
"... Destitution leads not just to hunger, but also to crime (private and government). Crime leads
to anger, hatred, and fear. Fear leads to desperation. Desperation leads to the acceptance of anything
resembling a solution, even despotism. ..."
"... Autocracies pretend to cut through the dilemmas of economic dysfunction (usually while demanding
liberties be relinquished), however, behind the scenes they actually seek to maintain a proscribed level
of indigence and deprivation. The constant peril of homelessness and starvation keeps the masses thoroughly
distracted from such things as protest or dissent, while simultaneously chaining them to the idea that
their only chance is to cling to the very government out to end them. ..."
"... When law enforcement officials are no longer servants of the people, but agents of a government
concerned only with its own supremacy, serious crises emerge. Checks and balances are removed. The guidelines
that once reigned in police disappear, and suddenly, a philosophy of superiority emerges; an arrogant
exclusivity that breeds separation between law enforcement and the rest of the public. Finally, police
no longer see themselves as protectors of citizens, but prison guards out to keep us subdued and docile.
..."
"... Tyrants are generally men who have squelched their own consciences. They have no reservations
in using any means at their disposal to wipe out opposition. But, in the early stages of their ascent
to power, they must give the populace a reason for their ruthlessness, or risk being exposed, and instigating
even more dissent. The propaganda machine thus goes into overdrive, and any person or group that dares
to question the authority or the validity of the state is demonized in the minds of the masses. ..."
"... Tyrannical power structures cannot function without scapegoats. There must always be an elusive
boogie man under the bed of every citizen, otherwise, those citizens may turn their attention, and their
anger, towards the real culprit behind their troubles. By scapegoating stewards of the truth, such governments
are able to kill two birds with one stone. ..."
"... Citizen spying is almost always branded as a civic duty; an act of heroism and bravery. Citizen
spies are offered accolades and awards, and showered with praise from the upper echelons of their communities.
..."
"... Tyrannies are less concerned with dominating how we live, so much as dominating how we think
..."
"... Lies become "necessary" in protecting the safety of the state. War becomes a tool for "peace".
Torture becomes an ugly but "useful" method for gleaning important information. Police brutality is
sold as a "natural reaction" to increased crime. Rendition becomes normal, but only for those labeled
as "terrorists". Assassination is justified as a means for "saving lives". Genocide is done discretely,
but most everyone knows it is taking place. They simply don't discuss it. ..."
As we look back on the horrors of the dictatorships and autocracies of the past, one particular
question consistently arises; how was it possible for the common men of these eras to NOT notice
what was happening around them? How could they have stood as statues unaware or uncaring as their
cultures were overrun by fascism, communism, collectivism, and elitism? Of course, we have the advantage
of hindsight, and are able to research and examine the misdeeds of the past at our leisure. Unfortunately,
such hindsight does not necessarily shield us from the long cast shadow of tyranny in our own day.
For that, the increasingly uncommon gift of foresight is required…
At bottom, the success of despotic governments and Big Brother societies hinges upon a certain
number of political, financial, and cultural developments. The first of which is an unwillingness
in the general populace to secure and defend their own freedoms, making them completely reliant on
corrupt establishment leadership. For totalitarianism to take hold, the masses must not only neglect
the plight of their country, and the plight of others, but also be completely uninformed of the inherent
indirect threats to their personal safety. They must abandon all responsibility for their destinies,
and lose all respect for their own humanity. They must, indeed, become domesticated and mindless
herd animals without regard for anything except their fleeting momentary desires for entertainment
and short term survival. For a lumbering bloodthirsty behemoth to actually sneak up on you, you have
to be pretty damnably oblivious.
The prevalence of apathy and ignorance sets the stage for the slow and highly deliberate process
of centralization. Once dishonest governments accomplish an atmosphere of inaction and condition
a sense of frailty within the citizenry, the sky is truly the limit. However, a murderous power-monger's
day is never quite done. In my recent article
'The
Essential Rules of Liberty' we explored the fundamentally unassailable actions and mental preparations
required to ensure the continuance of a free society. In this article, let's examine the frequently
wielded tools of tyrants in their invariably insane quests for total control…
People who are easily frightened are easily dominated. This is not just a law of political
will, but a law of nature. Many wrongly assume that a tyrant's power comes purely from the application
of force. In fact, despotic regimes that rely solely on extreme violence are often very unsuccessful,
and easily overthrown. Brute strength is calculable. It can be analyzed, and thus, eventually
confronted and defeated.
Thriving tyrants instead utilize not just harm, but the imminent THREAT of harm. They instill
apprehension in the public; a fear of the unknown, or a fear of the possible consequences for
standing against the state. They let our imaginations run wild until we see death around every
corner, whether it's actually there or not. When the masses are so blinded by the fear of reprisal
that they forget their fear of slavery, and take no action whatsoever to undo it, then they have
been sufficiently culled.
In other cases, our fear is evoked and directed towards engineered enemies. Another race, another
religion, another political ideology, a "hidden" and ominous villain created out of thin air.
Autocrats assert that we "need them" in order to remain safe and secure from these illusory monsters
bent on our destruction. As always, this development is followed by the claim that all steps taken,
even those that dissolve our freedoms, are "for the greater good". Frightened people tend to shirk
their sense of independence and run towards the comfort of the collective, even if that collective
is built on immoral and unconscionable foundations. Once a society takes on a hive-mind mentality
almost any evil can be rationalized, and any injustice against the individual is simply overlooked
for the sake of the group.
In the past, elitist governments would often legislate and enforce severe penalties for public
gatherings, because defusing the ability of the citizenry to organize or to communicate was paramount
to control. In our technological era, such isolation is still used, but in far more advanced forms.
The bread and circus lifestyle of the average westerner alone is enough to distract us from connecting
with each other in any meaningful fashion, but people still sometimes find ways to seek out organized
forms of activism.
Through co-option, modern day tyrant's can direct and manipulate opposition movements. By creating
and administrating groups which oppose each other, elites can then micromanage all aspects of
a nation on the verge of revolution. These "false paradigms" give us the illusion of proactive
organization, and the false hope of changing the system, while at the same time preventing us
from seeking understanding in one another. All our energies are then muted and dispersed into
meaningless battles over "left and right", or "Democrat versus Republican", for example. Only
movements that cast aside such empty labels and concern themselves with the ultimate truth of
their country, regardless of what that truth might reveal, are able to enact real solutions to
the disasters wrought by tyranny.
In more advanced forms of despotism, even fake organizations are disbanded. Curfews are
enforced. Normal communications are diminished or monitored. Compulsory paperwork is required.
Checkpoints are instituted. Free speech is punished. Existing groups are influenced to distrust
each other or to disintegrate entirely out of dread of being discovered. All of these measures
are taken by tyrants primarily to prevent ANY citizens from gathering and finding mutual support.
People who work together and organize of their own volition are unpredictable, and therefore,
a potential risk to the state.
You'll find in nearly every instance of cultural descent into autocracy, the offending government
gained favor after the onset of economic collapse. Make the necessities of root survival an uncertainty,
and people without knowledge of self sustainability and without solid core principles will gladly
hand over their freedom, even for mere scraps from the tables of the same men who unleashed famine
upon them. Financial calamities are not dangerous because of the poverty they leave in their wake;
they are dangerous because of the doors to malevolence that they leave open.
Destitution leads not just to hunger, but also to crime (private and government). Crime
leads to anger, hatred, and fear. Fear leads to desperation. Desperation leads to the acceptance
of anything resembling a solution, even despotism.
Autocracies pretend to cut through the dilemmas of economic dysfunction (usually while
demanding liberties be relinquished), however, behind the scenes they actually seek to maintain
a proscribed level of indigence and deprivation. The constant peril of homelessness and starvation
keeps the masses thoroughly distracted from such things as protest or dissent, while simultaneously
chaining them to the idea that their only chance is to cling to the very government out to end
them.
This is the main symptom often associated with totalitarianism. So much so that our preconceived
notions of what a fascist government looks like prevent us from seeing other forms of tyranny
right under our noses. Some Americans believe that if the jackbooted thugs are not knocking on
every door, then we MUST still live in a free country. Obviously, this is a rather naïve position.
Admittedly, though, goon squads and secret police do eventually become prominent in every failed
nation, usually while the public is mesmerized by visions of war, depression, hyperinflation,
terrorism, etc.
When law enforcement officials are no longer servants of the people, but agents of a government
concerned only with its own supremacy, serious crises emerge. Checks and balances are removed.
The guidelines that once reigned in police disappear, and suddenly, a philosophy of superiority
emerges; an arrogant exclusivity that breeds separation between law enforcement and the rest of
the public. Finally, police no longer see themselves as protectors of citizens, but prison guards
out to keep us subdued and docile.
As tyranny grows, this behavior is encouraged. Good men are filtered out of the system, and
small (minded and hearted) men are promoted.
At its pinnacle, a police state will hide the identities of most of its agents and officers,
behind masks or behind red tape, because their crimes in the name of the state become so numerous
and so sadistic that personal vengeance on the part of their victims will become a daily concern.
Tyrants are generally men who have squelched their own consciences. They have no reservations
in using any means at their disposal to wipe out opposition. But, in the early stages of their
ascent to power, they must give the populace a reason for their ruthlessness, or risk being exposed,
and instigating even more dissent. The propaganda machine thus goes into overdrive, and any person
or group that dares to question the authority or the validity of the state is demonized in the
minds of the masses.
All disasters, all violent crimes, all the ills of the world, are hoisted upon the shoulders
of activist groups and political rivals. They are falsely associated with fringe elements already
disliked by society (racists, terrorists, etc). A bogus consensus is created through puppet media
in an attempt to make the public believe that "everyone else" must have the same exact views,
and those who express contrary positions must be "crazy", or "extremist". Events are even engineered
by the corrupt system and pinned on those demanding transparency and liberty. The goal is to drive
anti-totalitarian organizations into self censorship. That is to say, instead of silencing them
directly, the state causes activists to silence themselves.
Tyrannical power structures cannot function without scapegoats. There must always be an
elusive boogie man under the bed of every citizen, otherwise, those citizens may turn their attention,
and their anger, towards the real culprit behind their troubles. By scapegoating stewards of the
truth, such governments are able to kill two birds with one stone.
Ultimately, the life of a totalitarian government is not prolonged by the government itself,
but by the very people it subjugates. Citizen spies are the glue of any police state, and our
propensity for sticking our noses into other peoples business is highly valued by Big Brother
bureaucracies around the globe.
There are a number of reasons why people participate in this repulsive activity. Some are addicted
to the feeling of being a part of the collective, and "service" to this collective, sadly, is
the only way they are able to give their pathetic lives meaning. Some are vindictive, cold, and
soulless, and actually get enjoyment from ruining others. And still, like elites, some long for
power, even petty power, and are willing to do anything to fulfill their vile need to dictate
the destinies of perfect strangers.
Citizen spying is almost always branded as a civic duty; an act of heroism and bravery.
Citizen spies are offered accolades and awards, and showered with praise from the upper echelons
of their communities. People who lean towards citizen spying are often outwardly and inwardly
unimpressive; physically and mentally inept. For the average moral and emotional weakling with
persistent feelings of inadequacy, the allure of finally being given fifteen minutes of fame and
a hero's status (even if that status is based on a lie) is simply too much to resist. They begin
to see "extremists" and "terrorists" everywhere. Soon, people afraid of open ears everywhere start
to watch what they say at the supermarket, in their own backyards, or even to family members.
Free speech is effectively neutralized.
In the end, it is not enough for a government fueled by the putrid sludge of iniquity to lord
over us. At some point, it must also influence us to forsake our most valued principles. Tyrannies
are less concerned with dominating how we live, so much as dominating how we think. If they
can mold our very morality, they can exist unopposed indefinitely. Of course, the elements of
conscience are inborn, and not subject to environmental duress as long as a man is self aware.
However, conscience can be manipulated if a person has no sense of identity, and has never put
in the effort to explore his own strengths and failings. There are many people like this in America
today.
Lies become "necessary" in protecting the safety of the state. War becomes a tool for "peace".
Torture becomes an ugly but "useful" method for gleaning important information. Police brutality
is sold as a "natural reaction" to increased crime. Rendition becomes normal, but only for those
labeled as "terrorists". Assassination is justified as a means for "saving lives". Genocide is
done discretely, but most everyone knows it is taking place. They simply don't discuss it.
All tyrannical systems depend on the apathy and moral relativism of the inhabitants within
their borders. Without the cooperation of the public, these systems cannot function. The real
question is, how many of the above steps will be taken before we finally refuse to conform? At
what point will each man and woman decide to break free from the dark path blazed before us and
take measures to ensure their independence? Who will have the courage to develop their own communities,
their own alternative economies, their own organizations for mutual defense outside of establishment
constructs, and who will break under the pressure to bow like cowards? How many will hold the
line, and how many will flee?
For every American, for every human being across the planet who chooses to stand immovable
in the face of the very worst in mankind, we come that much closer to breathing life once again
into the very best in us all.
"... Headed by Lenin, Marx's followers discussed finance capital mainly in reference to the drives of imperialism. ..."
"... It was left to Veblen to deal with the rentiers' increasingly dominant yet corrosive role, extracting their wealth by imposing overhead charges on the rest of society. ..."
"... Veblen described how the rentier classes were on the ascendant rather than being reformed, taxed out of existence or socialized. His Theory of Business Enterprise (1904) emphasized the divergence between productive capacity, the book value of business assets and their stock-market price (what today is called the Q ratio of market price to book value). He saw the rising financial overhead as leading toward corporate bankruptcy and liquidation. Industry was becoming financialized, putting financial gains ahead of production. Today's financial managers use profits not to invest but to buy up their company's stock (thus raising the value of their stock options) and pay out as dividends, and even borrow to pay themselves. Hedge funds have become notorious for stripping assets and loading companies down with debt, leaving bankrupt shells in their wake in what George Ackerlof and Paul Romer have characterized as looting. ..."
"... In emphasizing how financial "predation" was hijacking the economy's technological potential, Veblen's vision was as materialist and culturally broad as that of Marxists ..."
Edited excerpt from Michael Hudson and Ahmet Oncu, eds.,
Absentee Ownership and its Discontents: Critical Essays on the legacy of Thorstein Veblen ....................
From Marx to Veblen
Early (and most non-Marxist) socialism aimed to achieve greater equality mainly by taxing away
unearned rentier income and keeping natural resources and monopolies in the public domain. The Marxist
focus on class conflict between industrial employers and workers relegated criticism of rentiers
to a secondary position, leaving that fight to more bourgeois reformers. Financial savings were treated
as an accumulation of industrial profits, not as the autonomous phenomenon that Marx himself emphasized
in Volume 3 of Capital.
Headed by Lenin, Marx's followers discussed finance capital mainly in reference to the drives
of imperialism. The ruin of Persia and Egypt was notorious, and creditors installed collectors in
the customs houses in Europe's former Latin American colonies. The major problem anticipated was
war spurred by commercial rivalries as the world was being carved up. It was left to Veblen to deal
with the rentiers' increasingly dominant yet corrosive role, extracting their wealth by imposing
overhead charges on the rest of society. The campaign for land taxation and even financial reform
faded from popular discussion as socialists and other reformers became increasingly Marxist and focused
on the industrial exploitation of labor.
Veblen described how the rentier classes were on the ascendant rather than being reformed, taxed
out of existence or socialized. His Theory of Business Enterprise (1904) emphasized the divergence
between productive capacity, the book value of business assets and their stock-market price (what
today is called the Q ratio of market price to book value). He saw the rising financial overhead
as leading toward corporate bankruptcy and liquidation. Industry was becoming financialized, putting
financial gains ahead of production. Today's financial managers use profits not to invest but to
buy up their company's stock (thus raising the value of their stock options) and pay out as dividends,
and even borrow to pay themselves. Hedge funds have become notorious for stripping assets and loading
companies down with debt, leaving bankrupt shells in their wake in what George Ackerlof and Paul
Romer have characterized as looting.
In emphasizing how financial "predation" was hijacking the economy's technological potential,
Veblen's vision was as materialist and culturally broad as that of Marxists, and as rejecting of
the status quo. Technological innovation was reducing costs but breeding monopolies as the Finance,
Insurance and Real Estate (FIRE) sectors joined forces to create a financial symbiosis cemented by
political insider dealings – and a trivialization of economic theory as it seeks to avoid dealing
with society's failure to achieve its technological potential. The fruits of rising productivity
were used to finance robber barons who had no better use of their wealth than to reduce great artworks
to the status of ownership trophies and achieve leisure class status by funding business schools
and colleges to promote a self-congratulatory but deceptive portrayal of their wealth-grabbing behavior.
Absentee Ownership and its Discontents: Critical Essays on the legacy of Thorstein Veblen By
Michael Hudson and Ahmet Oncu
From Marx to Veblen
Early (and most non-Marxist) socialism aimed to achieve greater equality mainly by taxing away
unearned rentier income and keeping natural resources and monopolies in the public domain. The
Marxist focus on class conflict between industrial employers and workers relegated criticism of
rentiers to a secondary position, leaving that fight to more bourgeois reformers. Financial savings
were treated as an accumulation of industrial profits, not as the autonomous phenomenon that Marx
himself emphasized in Volume 3 of Capital.
Headed by Lenin, Marx's followers discussed finance capital mainly in reference to the
drives of imperialism. The ruin of Persia and Egypt was notorious, and creditors installed
collectors in the customs houses in Europe's former Latin American colonies. The major problem
anticipated was war spurred by commercial rivalries as the world was being carved up.
It was left to Veblen to deal with the rentiers' increasingly dominant yet corrosive role,
extracting their wealth by imposing overhead charges on the rest of society. The campaign
for land taxation and even financial reform faded from popular discussion as socialists and other
reformers became increasingly Marxist and focused on the industrial exploitation of labor.
Veblen described how the rentier classes were on the ascendant rather than being reformed,
taxed out of existence or socialized. His Theory of Business Enterprise (1904) emphasized the
divergence between productive capacity, the book value of business assets and their stock-market
price (what today is called the Q ratio of market price to book value). He saw the rising financial
overhead as leading toward corporate bankruptcy and liquidation. Industry was becoming financialized,
putting financial gains ahead of production. Today's financial managers use profits not to invest
but to buy up their company's stock (thus raising the value of their stock options) and pay out
as dividends, and even borrow to pay themselves. Hedge funds have become notorious for stripping
assets and loading companies down with debt, leaving bankrupt shells in their wake in what George
Ackerlof and Paul Romer have characterized as looting.
In emphasizing how financial "predation" was hijacking the economy's technological potential,
Veblen's vision was as materialist and culturally broad as that of Marxists , and as rejecting
of the status quo. Technological innovation was reducing costs but breeding monopolies as the
Finance, Insurance and Real Estate (FIRE) sectors joined forces to create a financial symbiosis
cemented by political insider dealings – and a trivialization of economic theory as it seeks to
avoid dealing with society's failure to achieve its technological potential.
The fruits of rising productivity were used to finance robber barons who had no better use
of their wealth than to reduce great artworks to the status of ownership trophies and achieve
leisure class status by funding business schools and colleges to promote a self-congratulatory
but deceptive portrayal of their wealth-grabbing behavior.
> If we don't get Trump's protectionism we will quickly become a country as poor as Armenia or
Moldova - stripped of industry and wealth, dependent on remittances from our migrant workers in Asia
and Europe.
While neoliberalism is clearly bad and Washington consensus needs to be reversed, that's a clear
exaggeration. The USA still the leader is some important areas of high technology as well as military
technology.
Moreover, while it is clear that neoliberalism is bad and tends to devour the society, what is
the most viable alternative to neoliberalism in very unclear.
The people who are afraid of the resurgence of national socialist sentiments are clearly wrong,
because combination of inverted totalitarism and national security state already (after 9/11)achieved
the same goals (for the US elite, not for the US people) as giving power to national socialists.
And with much less violence. I am not even sure that Trump is supported by military-industrial complex
is "sine qua non" for any national socialist leader. Looks like he is not.
Growth of nationalism (aka "American exceptionalism" as the USA flavor of the same) is given.
The uniqueness of the USA is that extreme nationalism is not persecuted and even is encouraged as
well as Russophobia, which by-and-large displaced anti-Semitism.
Barak Obama (aka Barry Soetoro) publicly claimed that he is big adherent of American exceptionalism;
and this it's official endorsement -- making him a sense a nationalistic leader. As strange as it
sounds for a "serial betrayer" and the king of "baiot and switch".
I suspect the USA might also see some resurgence of paleoconservatism as neoliberalism became more
and more moved into background as another failed ideology. But political forces behind it remains
very strong; so it can exists in zombie states for several years, if not decades. Much depends on
how acute will be "peak/plato oil" crisis that probably might hit the USA after 2020.
And the USA remains the center of the global neoliberal empire and global enforcer of neoliberal
consensus. As long as this is true the USA population might still be treated somewhat better then
population of other countries.
Althouth certain strata of the US population even now leave essentially in third world country
(those with McJobs and much of the retail (Walmart and friends) are two examples.
And this will continue because the elite now is scared of the strength of the wave of anti globalization
sentiment (that Trump supporters signifies) as hell.
Look what Summers and other prominent neoliberal shills (sorry, economists) have written recently.
They considerably shifted their positions away from "pure" neoliberalism. Especially "Rubin's
boy Larry".
"... "deep state" - the Washington-Wall-Street-Silicon-Valley Establishment - is a far greater threat to liberty than you think ..."
"... Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. ..."
"... Cultural assimilation is partly a matter of what psychologist Irving L. Janis called "groupthink," the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town's cool kids drop those ideas as if they were radioactive. As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said, "It is difficult to get a man to understand something when his salary depends upon his not understanding it." ..."
Steve Sailer links to this
unsettling
essay by former career Congressional staffer Mike Lofgren, who says the "deep state" - the
Washington-Wall-Street-Silicon-Valley Establishment - is a far greater threat to liberty than you
think. The partisan rancor and gridlock in Washington conceals a more fundamental and pervasive
agreement.
Excerpts:
These are not isolated instances of a contradiction; they have been so pervasive that they
tend to be disregarded as background noise. During the time in 2011 when political warfare over
the debt ceiling was beginning to paralyze the business of governance in Washington, the United
States government somehow summoned the resources to overthrow Muammar Ghaddafi's regime in Libya,
and, when the instability created by that coup spilled over into Mali, provide overt and covert
assistance to French intervention there. At a time when there was heated debate about continuing
meat inspections and civilian air traffic control because of the budget crisis, our government
was somehow able to commit $115 millionto keeping a civil war going in Syria and to pay
at least
£100m to the United Kingdom's Government Communications Headquarters to buy influence over
and access to that country's intelligence. Since 2007, two bridges carrying interstate highways
have collapsed due to inadequate maintenance of infrastructure, one killing 13 people. During
that same period of time, the government spent
$1.7 billion constructing a building in Utah that is the size of 17 football fields. This
mammoth structure is intended to allow the National Security Agency to store a
yottabyte of information, the largest numerical designator computer scientists have coined.
A yottabyte is equal to 500 quintillion pages of text. They need that much storage to archive
every single trace of your electronic life.
Yes, there is another government concealed behind the one that is visible at either end
of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country
according to consistent patterns in season and out, connected to, but only intermittently controlled
by, the visible state whose leaders we choose. My analysis of this phenomenon is not
an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain
sight, and its operators mainly act in the light of day. Nor can this other government be accurately
termed an "establishment." All complex societies have an establishment, a social network committed
to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global
reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither
omniscient nor invincible. The institution is not so much sinister (although it has highly sinister
aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such
as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State's protectiveness
towards its higher-ranking personnel that allows them to escape the consequences of their frequent
ineptitude.
More:
Washington is the most important node of the Deep State that has taken over America, but it
is not the only one. Invisible threads of money and ambition connect the town to other nodes.
One is Wall Street, which supplies the cash that keeps the political machine quiescent and operating
as a diversionary marionette theater. Should the politicians forget their lines and threaten the
status quo, Wall Street floods the town with cash and lawyers to help the hired hands remember
their own best interests. The executives of the financial giants even have de facto criminal immunity.
On March 6, 2013, testifying before the Senate Judiciary Committee,
Attorney General Eric Holder stated the following: "I am concerned that the size of some of
these institutions becomes so large that it does become difficult for us to prosecute them when
we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will
have a negative impact on the national economy, perhaps even the world economy." This, from the
chief law enforcement officer of a justice system that has practically
abolished the constitutional right to
trial for poorer defendants charged with certain crimes. It is not too much to say that Wall
Street may be the ultimate owner of the Deep State and its strategies, if for no other reason
than that it has the money to reward government operatives with a second career that is lucrative
beyond the dreams of avarice - certainly beyond the dreams of a salaried government employee.
[3]
The corridor between Manhattan and Washington is a well trodden highway for the personalities
we have all gotten to know in the period since the massive deregulation of Wall Street: Robert
Rubin, Lawrence Summers, Henry Paulson, Timothy Geithner and many others. Not all the traffic
involves persons connected with the purely financial operations of the government: In 2013, General
David Petraeus
joined KKR (formerly Kohlberg Kravis Roberts) of 9 West 57th Street, New York, a private equity
firm with $62.3 billion in assets. KKR specializes in management buyouts and leveraged finance.
General Petraeus' expertise in these areas is unclear. His ability to peddle influence, however,
is a known and valued commodity. Unlike Cincinnatus, the military commanders of the Deep State
do not take up the plow once they lay down the sword. Petraeus also obtained a sinecure as a non-resident
senior fellow at theBelfer
Center for Science and International Affairs at Harvard. The Ivy League is, of course, the
preferred bleaching tub and charm school of the American oligarchy.
Lofgren goes on to say that Silicon Valley is a node of the Deep State too, and that despite the
protestations of its chieftains against NSA spying, it's a vital part of the Deep State's apparatus.
More:
The Deep State is the big story of our time. It is the red thread that runs through the war
on terrorism, the financialization and deindustrialization of the American economy, the rise of
a plutocratic social structure and political dysfunction. Washington is the headquarters of the
Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited
by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to "live
upon its principal till ruin stared it in the face."
... I would love to see a study comparing the press coverage from 9/11 leading up to the Iraq War
with press coverage of the gay marriage issue from about 2006 till today. Specifically, I'd be curious
to know about how thoroughly the media covered the cases against the policies that the Deep State
and the Shallow State decided should prevail. I'm not suggesting a conspiracy here, not at all. I'm
only thinking back to how it seemed so obvious to me in 2002 that we should go to war with Iraq,
so perfectly clear that the only people who opposed it were fools or villains. The same consensus
has emerged around same-sex marriage. I know how overwhelmingly the news media have believed this
for some time, such that many American journalists simply cannot conceive that anyone against same-sex
marriage is anything other than a fool or a villain. Again, this isn't a conspiracy; it's in the
nature of the thing. Lofgren:
Cultural assimilation is partly a matter of what psychologist
Irving L. Janis called
"groupthink," the chameleon-like ability of people to adopt the views of their superiors and peers.
This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating
biennial budgeting, making grand bargains or invading countries. Then, after a while, all the
town's cool kids drop those ideas as if they were radioactive. As in the military, everybody has
to get on board with the mission, and questioning it is not a career-enhancing move. The universe
of people who will critically examine the goings-on at the institutions they work for is always
going to be a small one. As Upton Sinclair said, "It is difficult to get a man to understand something
when his salary depends upon his not understanding it."
A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness
of it all once you have planted yourself in your office chair for the 10,000th time. Government
life is typically not some vignette from an Allen Drury novel about intrigue under the
Capitol dome. Sitting and staring at the clock on the off-white office wall when it's 11:00 in
the evening and you are vowing never, ever to eat another piece of takeout pizza in your life
is not an experience that summons the higher literary instincts of a would-be memoirist. After
a while, a functionary of the state begins to hear things that, in another context, would be quite
remarkable, or at least noteworthy, and yet that simply bounce off one's consciousness like pebbles
off steel plate: "You mean the
number of terrorist groups we are fighting is classified?" No wonder so few people are whistle-blowers, quite apart from the vicious
retaliation whistle-blowing often provokes: Unless one is blessed with imagination and a fine
sense of irony, growing immune to the curiousness of one's surroundings is easy. To paraphrase
the inimitable Donald Rumsfeld, I didn't know all that I knew, at least until I had had a couple
of years away from the government to reflect upon it.
When all you know is the people who surround you in your professional class bubble and your social
circles, you can think the whole world agrees with you, or should. It's probably not a coincidence
that the American media elite live, work, and socialize in New York and Washington, the two cities
that were attacked on 9/11, and whose elites - political, military, financial - were so genuinely
traumatized by the events.
Anyway, that's just a small part of it, about how the elite media manufacture consent. Here's
a final quote, one from
the Moyers interview with Lofgren:
BILL MOYERS: If, as you write, the ideology of the Deep State is not democrat
or republican, not left or right, what is it?
MIKE LOFGREN: It's an ideology. I just don't think we've named it. It's a
kind of corporatism. Now, the actors in this drama tend to steer clear of social issues. They
pretend to be merrily neutral servants of the state, giving the best advice possible on national
security or financial matters. But they hold a very deep ideology of the Washington consensus
at home, which is deregulation, outsourcing, de-industrialization and financialization. And they
believe in American exceptionalism abroad, which is boots on the ground everywhere, it's our right
to meddle everywhere in the world. And the result of that is perpetual war.
This can't last. We'd better hope it can't last. And we'd better hope it unwinds peacefully.
"... The corridor between Manhattan and Washington is a well trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street: Robert Rubin, Lawrence Summers, Henry Paulson, Timothy Geithner and many others. ..."
"... General Petraeus' expertise in these areas is unclear. His ability to peddle influence, however, is a known and valued commodity. ..."
"... Petraeus also obtained a sinecure as a non-resident senior fellow at the Belfer Center for Science and International Affairs at Harvard. The Ivy League is, of course, the preferred bleaching tub and charm school of the American oligarchy. ..."
"... The Cathedral has no central administrator, but represents a consensus acting as a coherent group that condemns other ideologies as evil. ..."
"... "you believe that morality has been essentially solved, and all that's left is to work out the details." ..."
"... Cultural assimilation is partly a matter of what psychologist Irving L. Janis called "groupthink," the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town's cool kids drop those ideas as if they were radioactive. As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said, "It is difficult to get a man to understand something when his salary depends upon his not understanding it. ..."
"... A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness of it all once you have planted yourself in your office chair for the 10,000th time. ..."
"... No wonder so few people are whistle-blowers, quite apart from the vicious retaliation whistle-blowing often provokes: Unless one is blessed with imagination and a fine sense of irony, growing immune to the curiousness of one's surroundings is easy. To paraphrase the inimitable Donald Rumsfeld, I didn't know all that I knew, at least until I had had a couple of years away from the government to reflect upon it. ..."
"... It's probably not a coincidence that the American media elite live, work, and socialize in New York and Washington, ..."
"... It's a kind of corporatism. ..."
"... They pretend to be merrily neutral servants of the state, giving the best advice possible on national security or financial matters. But they hold a very deep ideology of the Washington consensus at home, which is deregulation, outsourcing, de-industrialization and financialization. ..."
"... And they believe in American exceptionalism abroad, which is boots on the ground everywhere, it's our right to meddle everywhere in the world. And the result of that is perpetual war. ..."
The corridor between Manhattan and Washington is a well trodden highway for the personalities
we have all gotten to know in the period since the massive deregulation of Wall Street: Robert
Rubin, Lawrence Summers, Henry Paulson, Timothy Geithner and many others.
Not all the traffic involves persons connected with the purely financial operations of the
government: In 2013, General David Petraeus
joined KKR (formerly Kohlberg Kravis Roberts) of 9 West 57th Street, New York, a private equity
firm with $62.3 billion in assets. KKR specializes in management buyouts and leveraged finance.
General Petraeus' expertise in these areas is unclear. His ability to peddle influence, however,
is a known and valued commodity. Unlike Cincinnatus, the military commanders of the Deep
State do not take up the plow once they lay down the sword. Petraeus also obtained a sinecure
as a non-resident senior fellow at the
Belfer Center for Science and International Affairs at Harvard. The Ivy League is, of course,
the preferred bleaching tub and charm school of the American oligarchy.
Lofgren goes on to say that Silicon Valley is a node of the Deep State too, and that despite the
protestations of its chieftains against NSA spying, it's a vital part of the Deep State's apparatus.
More:
The Deep State is the big story of our time. It is the red thread that runs through the war
on terrorism, the financialization and deindustrialization of the American economy, the rise of
a plutocratic social structure and political dysfunction. Washington is the headquarters of the
Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited
by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to "live
upon its principal till ruin stared it in the face."
The Cathedral - The self-organizing consensus of Progressives and Progressive ideology
represented by the universities, the media, and the civil service. A term
coined by blogger Mencius Moldbug. The Cathedral has no central administrator, but represents
a consensus acting as a coherent group that condemns other ideologies as evil. Community
writers have enumerated the
platform of Progressivism as women's suffrage, prohibition, abolition, federal income tax,
democratic election of senators, labor laws, desegregation, popularization of drugs, destruction
of traditional sexual norms, ethnic studies courses in colleges, decolonization, and gay marriage.
A defining feature of Progressivism is that "you believe that morality has been essentially
solved, and all that's left is to work out the details." Reactionaries see Republicans as
Progressives, just lagging 10-20 years behind Democrats in their adoption of Progressive norms.
You don't have to agree with the Neoreactionaries on what they condemn - women's suffrage? desegregation?
labor laws? really?? - to acknowledge that they're onto something about the sacred consensus that
all Right-Thinking People share. I would love to see a study comparing the press coverage from 9/11
leading up to the Iraq War with press coverage of the gay marriage issue from about 2006 till today.
Specifically, I'd be curious to know about how thoroughly the media covered the cases against the
policies that the Deep State and the Shallow State decided should prevail. I'm not suggesting a conspiracy
here, not at all. I'm only thinking back to how it seemed so obvious to me in 2002 that we should
go to war with Iraq, so perfectly clear that the only people who opposed it were fools or villains.
The same consensus has emerged around same-sex marriage. I know how overwhelmingly the news media
have believed this for some time, such that many American journalists simply cannot conceive that
anyone against same-sex marriage is anything other than a fool or a villain. Again, this isn't a
conspiracy; it's in the nature of the thing. Lofgren:
Cultural assimilation is partly a matter of what psychologist
Irving L. Janis called
"groupthink," the chameleon-like ability of people to adopt the views of their superiors and peers.
This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating
biennial budgeting, making grand bargains or invading countries. Then, after a while, all the
town's cool kids drop those ideas as if they were radioactive. As in the military, everybody has
to get on board with the mission, and questioning it is not a career-enhancing move. The universe
of people who will critically examine the goings-on at the institutions they work for is always
going to be a small one. As Upton Sinclair said, "It is difficult to get a man to understand something
when his salary depends upon his not understanding it."
A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness
of it all once you have planted yourself in your office chair for the 10,000th time. Government
life is typically not some vignette from an Allen Drury novel about intrigue under the
Capitol dome. Sitting and staring at the clock on the off-white office wall when it's 11:00 in
the evening and you are vowing never, ever to eat another piece of takeout pizza in your life
is not an experience that summons the higher literary instincts of a would-be memoirist.
After a while, a functionary of the state begins to hear things that, in another context, would
be quite remarkable, or at least noteworthy, and yet that simply bounce off one's consciousness
like pebbles off steel plate: "You mean the
number of terrorist groups we are fighting is classified?" No wonder so few people
are whistle-blowers, quite apart from the vicious retaliation whistle-blowing often provokes:
Unless one is blessed with imagination and a fine sense of irony, growing immune to the curiousness
of one's surroundings is easy. To paraphrase the inimitable Donald Rumsfeld, I didn't know all
that I knew, at least until I had had a couple of years away from the government to reflect upon
it.
When all you know is the people who surround you in your professional class bubble and your social
circles, you can think the whole world agrees with you, or should. It's probably not a coincidence
that the American media elite live, work, and socialize in New York and Washington, the two
cities that were attacked on 9/11, and whose elites - political, military, financial - were so genuinely
traumatized by the events.
Anyway, that's just a small part of it, about how the elite media manufacture consent. Here's
a final quote, one from
the Moyers interview with Lofgren:
BILL MOYERS: If, as you write, the ideology of the Deep State is not democrat or republican,
not left or right, what is it?
MIKE LOFGREN: It's an ideology. I just don't think we've named it. It's a kind of
corporatism. Now, the actors in this drama tend to steer clear of social issues. They
pretend to be merrily neutral servants of the state, giving the best advice possible on national
security or financial matters. But they hold a very deep ideology of the Washington consensus
at home, which is deregulation, outsourcing, de-industrialization and financialization.
And they believe in American exceptionalism abroad, which is boots on the ground everywhere,
it's our right to meddle everywhere in the world. And the result of that is perpetual war.
This can't last. We'd better hope it can't last. And we'd better hope it unwinds peacefully.
I, for one, remain glad that so many of us Americans are armed. When the Deep State collapses
- and it will one day - it's not going to be a happy time.
Questions to the room: Is a Gorbachev for the Deep State conceivable? That is, could you foresee
a political leader emerging who could unwind the ideology and apparatus of the Deep State, and not
only survive, but succeed? Or is it impossible for the Deep State to allow such a figure to thrive?
Or is the Deep State, like the Soviet system Gorbachev failed to reform, too entrenched and too far
gone to reform itself? If so, what then?
"... That the economic system is being cannibalized to generate the outsized economic claims on income for capital and their minions among the executive classes is worrying, as is the stagnation and the slow reaction to climate change and other similar issues. The 10% don't seem to be entirely ready to accept the parasitism in every detail. If you poison Flint's water or Well Fargo charges for fake accounts, there's some kind of reaction from at least some of the managerial / professional classes. We have Elizabeth Warren and she can be amazingly effective even if she seems like a lonely figure. ..."
"... But, mostly the parasitism of the financial sector affects the bottom 50%; the 10% get cash back on their credit cards. ..."
"... I personally know a guy who is an expert on the liver and therefore on the hazards posed by Tylenol (acetaminophen or paracetamol); it is quite revealing to hear about how he's attacked by interested corporations. ..."
"... The inverted totalitarianism that Bruce and Rich are referencing here is only apparently a successful marriage of the impulse to control complex processes and the technologies which promise the possibility of that control. ..."
"... Never mind how powerful their tools, managers who want to avoid catastrophic delusions will have to learn a little humility. My advice to them: feed that to your big data and your AI, right along with your fiat money, your global capital flows, and your commodified and devalued labor force. and see where you wind up. Where you're headed now is a dead end. ..."
"... it is not left neoliberalism versus right neoliberalism, but left neoliberalism versus something that is: a: worse b: a predictable consequence of neoliberalism. A being true makes B no less true, and vice versa. ..."
"... Trump is a dispicable human being but he has touched those who are desperate for a change. Unfortunately for them, Trump could never be the change they need – whilst Clinton is just more of the same sh*t as we've had for the last 40 years or more. Bernie was the best hope for change but the establishment made sure he could not win by the manipulation of the "super delegate vote"! ..."
But, isn't "boring" an argument too? A third way to
dissolve all the noisier contention, make it meaningless and then complain of
its meaninglessness?
I haven't quite recovered from merian challenging your argument from pattern
and precedent as decontextualized and ahistorical or then announcing that she
was not a supporter of Clinton after having previously justified her own
unqualified (though time-limited) support for Clinton.
I see the rhetorical power of Luttwak's "perfect non-sequitur", which Adam
Curtis explains as a basis for the propaganda of the inverted totalitarian
state in some detail. I've long argued that the dominating power of
neoliberalism - not just as the ideology of the managerial classes, but as the
one ideology to rule them all at the end of history - has to do with the way
(left) neoliberals argue almost exclusively with conservative libertarians
(right neoliberals). It is in that narrow, bounded dynamic of one completely
synthetic and artificial thesis with another closely related and also
completely synthetic and artificial antithesis that we got stuck in the
Groundhog Day, where history tails off after a few weeks and evidence consists
of counterfactuals projected a few weeks into the future.
It is not a highly contested election. It just looks like one and sounds
like one, but the noise (and it is all noise in the end) is drowning out
anyone's ability to figure out what is going on. And, really, nothing is going
on - or rather, nothing about which voters have a realistic choice to make.
That's the problem. (Left) neoliberalism was born* in the decision to abandon
the actual representation of a common interest (and most especially a working
class interest). Instead, it is all about combining an atomizing politics of
personal identity with Ezra Klein's wonkiness, where statistics are used to
filter out more information than revealed and esoteric jargon obscures the
rest. Paul Krugman, Reagan Administration veteran and Enron advisor, becomes
the authoritative voice of the moderate centre-Left.
*That's why the now ancient Charles Peters' Neoliberal Manifesto matters -
not because Peters was or is important, but because it was such a clear and
timely statement of the managerial / professional class Left abandoning
advocacy for the poor or labor interests against the interests of capital,
corporations and the wealthy. The basic antagonism of interests in politics was
to be abandoned and what was gained was financial support from capital and
business corporations. The Liberal Class, the institutional foundations of
which were eroding rapidly in the 1980s, with the decline of social
affiliation, mainline Protestant religions, public universities, organized
labor could no longer be relied upon to fund the chattering classes so the
chattering classes represented by Peters found a new gig and rationalized it,
and that is the (left) neoliberalism we know today as Vox speak.
The 10% gets free a completely artificial (because not rooted in class
interests or any interests) ideology bought and paid for by the 1/10th of 1%
and the executive class) ideology, but it gets it free and as long as the
system continues to lumber along, employing them (which makes them the 10%)
they remain complacent. They don't understand their world, but their world
seems to work anyway, so why worry? Any apparently alarming development can be
normalized by confusion and made boring.
More than 20 years after Luttwak / McMurtry, I would think inability of the
10% to understand how the world works might be the most worrying thing of all.
The 10% are the people who make the world work in a technical sense - that is
the responsibility of the professionals and professional managers, after all.
That the economic system is being cannibalized to generate the outsized
economic claims on income for capital and their minions among the executive
classes is worrying, as is the stagnation and the slow reaction to climate
change and other similar issues. The 10% don't seem to be entirely ready to
accept the parasitism in every detail. If you poison Flint's water or Well
Fargo charges for fake accounts, there's some kind of reaction from at least
some of the managerial / professional classes. We have Elizabeth Warren and she
can be amazingly effective even if she seems like a lonely figure.
But, mostly
the parasitism of the financial sector affects the bottom 50%; the 10% get cash
back on their credit cards.
I read with fascination articles about the travails
of that Virginia Tech guy who persisted in the Flint Water case; again, a
lonely figure.
I personally know a guy who is an expert on the liver and
therefore on the hazards posed by Tylenol (acetaminophen or paracetamol); it is
quite revealing to hear about how he's attacked by interested corporations.
And yet . In the more or less cobwebbed corners of the Internet, like CT, we
are in fact having this conversation, and others much like it - even when, as
inevitably happens, it leaves us vulnerable to accusations of leftist onanism
by self-appointed realists of the status quo. They may not be easy to ignore,
but knowing that their opinions can't possibly be as securely held as they
claim, and are in fact more vulnerable to events than they're capable of
imagining, we shouldn't feel obliged to pay their denunciations any more
attention than they deserve.
The inverted totalitarianism that Bruce and Rich
are referencing here is only apparently a successful marriage of the impulse to
control complex processes and the technologies which promise the possibility of
that control.
If we really want to foster a future in which institutions are
stable again, and can successfully design and implement effective protections
for the general welfare, we're going to have to get a lot more comfortable with
chaos, unintended consequences, the residual perversity, in short, of
large-scale human interactions.
Never mind how powerful their tools, managers
who want to avoid catastrophic delusions will have to learn a little humility.
My advice to them: feed
that
to your big data and your AI, right along
with your fiat money, your global capital flows, and your commodified and
devalued labor force. and see where you wind up. Where you're headed now is a
dead end.
> It is not a highly contested election. It just looks like one and sounds like
one, but the noise (and it is all noise in the end) is drowning out anyone's
ability to figure out what is going on.
Pretty sure it is. Precisely because
it is not left neoliberalism versus
right neoliberalism, but left neoliberalism versus something that is:
a: worse
b: a predictable consequence of neoliberalism.
A being true makes B no less true, and vice versa.
The 50-55 year old male, white, college-educated former exemplar of the
American Dream, still perhaps living in his lavishly-equipped suburban
house, with two or three cars in the driveway, one or two children in
$20,000 per annum higher education (tuition, board and lodging – all extras
are extra) and an ex-job 're-engineered' out of existence, who now exists on
savings, second and third mortgages and scant earnings as a self-described
'consultant', has become a familiar figure in the contemporary United
States.
It isn't liberal or conservative. It lives in a [neoliberal] fantasy
land where your station in life is merit based. If you are poor, it's a
personal failing. Rich, you earned every penny.
They incorrectly believe the American Dream is something more than a
fairytale rich people tell themselves to justify the misery they inflict
on the poor.
It's pro technocrat; "we have a perfect solution if it would just get
implemented . It won't rock the apple cart and will have minimum benefits
but it makes us look like we care."
boo321
, 14 Oct 2016 07:53
Neoliberalism has failed the poor, disadvantaged and disabled. Making
these people pay for the mistakes, corruption of our banks and major
institutions is indicative of the greedy rich and elite who don't give a
toss for their suffering.
Trump is a dispicable human being but he has touched those who are
desperate for a change. Unfortunately for them, Trump could never be the
change they need – whilst Clinton is just more of the same sh*t as we've
had for the last 40 years or more. Bernie was the best hope for
change but the establishment made sure he could not win by the
manipulation of the "super delegate vote"!
"... The email in question was even sent from Froman's Citibank email address (rookie!) and includes "A list of African American, Latino and Asian American candidates, broken down by Cabinet/Deputy and Under/Assistant/Deputy Assistant level, plus a list of Native American, Arab/Muslim American and Disabled American candidates. " ..."
"... It correctly identified Eric Holder for the Justice Department , Janet Napolitano for Homeland Security, Robert Gates for Defense, Rahm Emanuel for chief of staff , Peter Orszag for the Office of Management and Budget, Arne Duncan for Education, Eric Shinseki for Veterans Affairs, Kathleen Sebelius for Health and Human Services , Melody Barnes for the Domestic Policy Council, and more. For the Treasury, three possibilities were on the list: Robert Rubin, Larry Summers, and Timothy Geithner. ..."
"... This was October 6. The election was November 4. And yet Froman, an executive at Citigroup, which would ultimately become the recipient of the largest bailout from the federal government during the financial crisis, had mapped out virtually the entire Obama cabinet, a month before votes were counted. And according to the Froman/Podesta emails, lists were floating around even before that. ..."
"... Many already suspected that Froman, a longtime Obama consigliere, did the key economic policy hiring while part of the transition team. We didn't know he had so much influence that he could lock in key staff that early, without fanfare, while everyone was busy trying to get Obama elected. The WikiLeaks emails show even earlier planning; by September the transition was getting pre-clearance to assist nominees with financial disclosure forms. ..."
Perhaps the most startling discovery of the WikiLeaks dumps so far didn't come from the most recent
emails surrounding the various Hillary scandals, though there are many great ones, but from 2008
when John Podesta served as co-chair of President-elect Barack Obama's transition team. The email
came from Michael Froman, a former Citibank executive, who single-handedly built the entire cabinet
of what was supposed to be the "main street" President.
The email in question
was even sent from Froman's Citibank email address (rookie!) and includes "A list of African American,
Latino and Asian American candidates, broken down by Cabinet/Deputy and Under/Assistant/Deputy Assistant
level, plus a list of Native American, Arab/Muslim American and Disabled American candidates. "
Apparently Obama wasn't as worried about placing women in senior-level positions, but Froman decided
to offer up some suggestions anyway.
"While you did not ask for this, I prepared and attached a similar document on women."
Froman even went ahead and "scoped out" which people should be appointed to which cabinet positions.
"At the risk of being presumptuous, I also scoped out how the Cabinet-level appointments might
be put together, probability-weighting the likelihood of appointing a diverse candidate for each
position (given one view of the short list) and coming up with a straw man distribution."
As
New Republic points out, the Froman appointments ended up being almost entirely right.
The cabinet list ended up being almost entirely on the money . It correctly identified Eric
Holder for the Justice Department , Janet Napolitano for Homeland Security, Robert Gates for Defense, Rahm Emanuel for chief of staff , Peter Orszag for the Office of Management and Budget, Arne Duncan
for Education, Eric Shinseki for Veterans Affairs, Kathleen Sebelius for Health and Human Services
, Melody Barnes for the Domestic Policy Council, and more. For the Treasury, three possibilities
were on the list: Robert Rubin, Larry Summers, and Timothy Geithner.
This was October 6. The election was November 4. And yet Froman, an executive at Citigroup,
which would ultimately become the recipient of the largest bailout from the federal government
during the financial crisis, had mapped out virtually the entire Obama cabinet, a month before
votes were counted. And according to the Froman/Podesta emails, lists were floating around even
before that.
Many already suspected that Froman, a longtime Obama consigliere, did the key economic policy
hiring while part of the transition team. We didn't know he had so much influence that he could
lock in key staff that early, without fanfare, while everyone was busy trying to get Obama elected.
The WikiLeaks emails show even earlier planning; by September the transition was getting pre-clearance
to assist nominees with financial disclosure forms.
So if this history is any guide then the real power within a future Clinton administration is
being formed right now. In fact, another email from January 2015 reveals that Elizabeth Warren was
already "intently focused on personnel issues" almost two full years ago as evidenced by the
following recap of a
conversation that the Hillary campaign had with her Chief of Staff, Dan Geldon.
He was intently focused on personnel issues, laid out a detailed case against the Bob Rubin
school of Democratic policy makers, was very critical of the Obama administration's choices ,
and explained at length the opposition to Antonio Weiss. We then carefully went through a list
of people they do like, which EW sent over to HRC earlier.
We spent less time on specific policies, because he seemed less interested in that.
He spoke repeatedly about the need to have in place people with ambition and urgency who recognize
how much the middle class is hurting and are willing to challenge the financial industry.
To the extent there are any purists left, this should clear up any illusion of who controls the
political powers that be.
"... Unfortunately, Ip's position is reflective of the cognitive capture of an entire class of professionals. This is not rocket science and, as we have repeatedly seen, senior bank managers are far from rocket scientists. These financial intermediaries should be broken up and the FDIC-insured portions formally converted to public utilities. The Glass-Steagall Act should be reinstated and the primary role of banks in the nation's payments system and depository institutions restored. ..."
Now in fairness to Ip, he's relying on a study by Natasha Sarin and Larry Summers that relies on
the market value of banks as the basis for his conclusion.
The key paragraph :
They discovered that markets think banks are much more likely now to lose half their market
value than before the crisis. They interpret this as a "decline in the franchise value of major
financial institutions, caused at least in part by new regulations." The counterintuitive implication:
The bevy of rules designed to make banking safer may, by endangering their long-term viability,
ultimately achieve the opposite.
This is a perverse interpretation. Since when should the status of banks, right before they would
have destroyed the global economy absent extreme interventions by central banks and governments around
the world, be considered a sound benchmark?
Moreover, Sarin and Summers, thanks to the strong bias in executive compensation for share price
growth, have fallen for the canard that it is desirable or necessary for the health of a business.
Normally, the logic of issuing common stock is to fund expansion (remember, I helped companies do
this in a former life at Goldman). And common stock is not the preferred way to fund growth. Retained
earning is first, and borrowing is second. So if the banking industry for broader societal reasons,
needs to shrink or at least not grow, there's no reason to be particularly worried about lackluster
stock prices.
... ... ...
Banks enjoy such extensive subsidies that they should not be regarded as private institutions
. Even though most banks are public, as we wrote in 2013, they are in fact not profitable
in the absence of government subsidies. That means they should not be regarded as private institutions.
Any returns to shareholders are in fact a stealth transfer from taxpayers. That means they should
be regulated as utilities.
As we wrote :
The point is that the banking industry has been profitable (at times, seemingly very profitable)
only at the result of long standing government intervention to assure its profitability. It is
no exaggeration to say that the banking industry enjoys so much public support that it can in
no way be considered to be a private enterprise. But we've put in place the worst of all possible
worlds: we've allowed an industry that couldn't figure out how to operate profitably on its own
to extract undeservedly large subsidies, with the result that financial services industry has
become extractive. Its pay is wildly out of line with the social benefits it provides (indeed,
many of its most predatory activities are also its best remunerated) and it has also grown disproportionately
large, sucking resources away from better uses (we'd clearly be better off if math and physics
grads were tackling real world problems rather than devising better HFT algorithms. And when you
have bank branches displacing liquor stores, you know something is out of whack).
The cost of periodic financial crises is so great that the banking industry is value-destoying
to society . Again, that means that measures that reduce the odds of a crisis are entirely
justified. From a 2010 paper by the Bank of England's Andrew Haldane calculated the cost of financial
train wrecks:
….these losses are multiples of the static costs, lying anywhere between one and five times
annual GDP. Put in money terms, that is an output loss equivalent to between $60 trillion and
$200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK. As
Nobel-prize winning physicist Richard Feynman observed, to call these numbers "astronomical" would
be to do astronomy a disservice: there are only hundreds of billions of stars in the galaxy. "Economical"
might be a better description.
It is clear that banks would not have deep enough pockets to foot this bill. Assuming that
a crisis occurs every 20 years, the systemic levy needed to recoup these crisis costs would be
in excess of $1.5 trillion per year. The total market capitalisation of the largest global banks
is currently only around $1.2 trillion. Fully internalising the output costs of financial crises
would risk putting banks on the same trajectory as the dinosaurs, with the levy playing the role
of the meteorite.
Yves here. Haldane's working estimate of costs of one times global GDP was criticized as high
at the time; it now looks spot on.
So a banking industry that creates global crises is negative value added from a societal standpoint.
It is purely extractive . Even though we have described its activities
as looting (as in paying themselves so much that they bankrupt the business), the wider consequences
are vastly worse than in textbook looting.
Ip's defense of the role of banks is inaccurate . From Ip:
When central banks ease the supply of credit, they rely on banks to transmit the benefits to
the broader economy by making loans, handling trades and moving money between people, companies
and countries. Shrinking, unprofitable banks hobble that transmission channel.
This is the debunked "loanable funds" theory: that when money is on sale, businesses will go out
and invest more. That theory was partially debunked by Keynes and dispatched by Kaldor, but zombie-like,
still haunts the halls of central banks.
Businessmen see the cost of money as a possible constraint on growth, not a spur to it. They decide
to invest in expansion if they see an opportunity in their market. The big exception? Businesses
where the cost of funding is one of the biggest costs. What businesses are like that? Financial speculation.
And we've seen the failure of this tidy tale in the wake of the crisis. Providing super cheap
money has not induced businessmen to run out and ramp up their operations. Instead, one of the biggest
outcomes has been corporate financial speculation: issuing debt to buy back their own shares.
That isn't to say that banks aren't important. Payment systems are extremely important. But depicting
banks as needing to have robust profits to play their role is not well founded. Japanese banks had
razor thin profits in the years when Japan was going from strength to strength. And, what led them
to ruin was rapid deregulation forced on them by the US in the 1980s (remember that Japan is a military
protectorate of the US), not their profit levels.
Ip underplays the role of ZIRP, QE, and negative interest rates in the fall in bank profits
. The measures that helped goose asset prices and forestalled a day of reckoning are now
haunting banks and central bankers. In fact, the fact that QE and ZIRP have killed low-risk sources
of profits like income from float and easy yield-curve profits likely has much more to do with the
stock market's dour take on banks than regulations. Mr. Market is well aware of the fact that central
banks don't seem to have the foggiest idea how to get themselves out of the super low interest rate
corner they've painted themselves into.
Ip hates market discipline . One of the biggest problems with public companies
is that shareholders seldom act as activists and force managements to address problems they see.
It's easier to sell your holdings and move on.
Yet here, we see the uncharacteristic outcome that investors really are worried that banks will
do Bad Things and are avoiding banks that might do that, which in turn is leading banks to get out
of dodgy businesses.
Per Ip :
Indeed, investors must now discount the possibility that any bank could be one scandal away
from indictment and a crippling, multibillion-dollar fine. Banks have responded by exiting or
downsizing businesses that carry the most reputational risk, such as international money transfers
and issuing mortgages to less creditworthy borrowers.
What Ip fails to mention is that investors also love institutions that can tell a tale, whether
it is real or not, that they've are a better, smarter actor in a sector that others have pulled out
of. In other words, the process at work looks like perfectly normal creative destruction. But the
message is that banks are so special that they deserve a free pass.
The worst of this is that Ip, being full time on the banking beat, no doubt has seen the same
studies I have, and more, that stress how hypertrophied banking systems are an economic negative.
To see someone who should know better instead reveal that he is cognitively captured is, sadly, far
from surprising.
Unfortunately, Ip's position is reflective of the cognitive capture of an entire class of professionals.
This is not rocket science and, as we have repeatedly seen, senior bank managers are far from
rocket scientists. These financial intermediaries should be broken up and the FDIC-insured portions
formally converted to public utilities. The Glass-Steagall Act should be reinstated and the primary
role of banks in the nation's payments system and depository institutions restored.
Speculation in derivatives and markets by or booked in FDIC-insured banks should be disallowed,
legislation passed to stop the recidivist looting and control frauds, and criminal prosecution
of criminal behavior required. If individuals at these institutions want to continue to speculate,
they can do so with their own money and that of their bondholders and shareholders; rather than
that of government (taxpayers), the central bank, and bank depositors.
"... The banking and corporate elites certainly have a problem. The agenda for many decades has been to steal and rape enough from the 99% to maintain positive balance sheets and earnings per share. ..."
"... Fewer and fewer of the 99% can now afford to pay for the promoted goods and services. It has reached a tipping point. Name one major bank that could afford to mark-to-mark its balance sheet assets. Name one S&P corporation that has shown solid earnings growth absent stock buybacks. And from here on, it only gets worse. ..."
Global debt has now reached about a hundred and fifty-two trillion dollars
. This includes government debt, household debt, non-financial firms' debt. What does
all this debt mean for the global financial system and for everyday people here, Michael?
That works out to only USD $20,540 for every man, woman and child on the planet. I'm sure the
debt serfs can take double or triple that.
Yup, barely over 2 million dollars per 1 percenter. You can barely buy a passable vacation
mansion for that, let alone staff it with peons. C'mon, guys, work harder for (and borrow more
from) your betters!
The banking and corporate elites certainly have a problem. The agenda for many decades
has been to steal and rape enough from the 99% to maintain positive balance sheets and earnings
per share.
It has worked too well, but pure math has a way of biting the 1% in the ass.
Fewer and fewer of the 99% can now afford to pay for the promoted goods and services. It
has reached a tipping point. Name one major bank that could afford to mark-to-mark its balance
sheet assets. Name one S&P corporation that has shown solid earnings growth absent stock buybacks.
And from here on, it only gets worse.
"'Many people in Silicon Valley have become
obsessed with the simulation hypothesis, the argument that what we experience
as reality is in fact fabricated in a computer,' Tad Friend wrote in the New
Yorker piece. 'Two tech billionaires have gone so far as to secretly engage
scientists to work on breaking us out of the simulation'" [
Mic
].
In other words, ginormous capital investment decisions affecting the world's
economy are being made by lunatics with far too much time on their hands, and
much more money than sense.
flora
October 7, 2016 at 3:44 pm
re: Guillotine Watch (and "Watch" is very apt in this context).
The Silicon Valley simulation hypothesis is a modern version of the Clockwork
Universe theory.
Man creates a new technology that roughly models some aspect of the natural
world. Some men then insist the natural world in fact models the technology,
instead of the other way around. The more things change….
"'Many people in Silicon Valley have become obsessed with the simulation
hypothesis, the argument that what we experience as reality is in fact
fabricated in a computer,'
Tad Friend
Reminds me of a nightmare I had once. I was in Hell. It really wasn't so bad
– just about 120F or so and humid! But being a resourceful chap I started
trying to dig my way out. I got about 10 feet down when the bottom fell out and
I could see below me a lake of fire – stretching as far as I could see.
So if we are in a simulation, the goal should not be try to escape it –
impossible – but to pass whatever test we are being subjected to.
Shorter: Some people have more dollars than sense.
"... Krugman is such a deplorable hack. I know we are supposed to accept bribe-taking politicians and the economy run by looting robber barons. But can't we even have a goddamn fourth estate? ..."
"... The way Krugman murders journalism ethics by outright campaigning for one of the most corrupt politicians in American history is outrageous. Barfing up her disgusting campaign memes verbatim as if he's coordinating his columns with her war room. ..."
"... If you're a scientist you would know that economics does not remotely resemble a science. One familiar with the history of math and science will notice that their development (based on discovered facts) forms a tree-like structure. One discovery branches out to more discoveries. The growth is therefore exponential. ..."
Sure...Krugman will occasionally pay lip service to green energy.
The problem is that 'liberal' economists tend to keep separate silos for green energy and infrastructure.
Question is, why do they refuse to connect the dots between climate change mitigation, green
energy, fiscal stimulus, and lots of jobs? And why do they prioritize more road and bridges, which
will only make climate change worse?
Krugman is an abhorrent neoliberal hack (as well as Hillary stooge).
Who actually understand very little about climate change clearly being non-specialist without
any training of physics and geophysics. He is a second rate neoclassical economist with penchant
for mathiness (and a very talented writer).
The key question here is Clinton warmongering and the threat of nuclear war with Russia. Washington
neocon chichenhawks became recently realty crazy. Obama looks completely important and does not
control anything.
I think this is more immediate threat then climate change.
Oil depletion (which already started and will be in full force in a couple of decades) might
take care about climate change as period of "cheap oil" (aka "oil age") probably will last less
then 100 years and as such is just a blip in Earth history.
End of cheap oil also might lead to natural shrinking of human population -- another factor
in the global climate change and a threat to natural ecosystems.
Hillary is the fracking Queen. Claiming she's a champion of the environment is as ridiculous portraying
Donald Trump a feminist.
Obomba is another pretender on the environment. The Paris Agreement commits to absolutely nothing
but more talk at a future time. China signed on and is still keeping its commitment to do absolutely
nothing to reduce emissions until 2030. (By the time the West has exported the lion share of its
emissions to the country in a pointless GHG emissions shell game; emission per capita have skyrocketed
since 2002! a 25% increase!)
Krugman is such a deplorable hack. I know we are supposed to accept bribe-taking politicians
and the economy run by looting robber barons. But can't we even have a goddamn fourth estate?
The way Krugman murders journalism ethics by outright campaigning for one of the most corrupt
politicians in American history is outrageous. Barfing up her disgusting campaign memes verbatim
as if he's coordinating his columns with her war room.
So to all the pretend liberals out there who offer the people nothing more than more corruption,
lies, war-profiteering and public trust liquidation: you deserve Trump. And I pray that you get
him. (After him, a New Deal; and the 'me generation,' the Void.)
If you're a scientist you would know that economics does not remotely resemble a science.
One familiar with the history of math and science will notice that their development (based on
discovered facts) forms a tree-like structure. One discovery branches out to more discoveries.
The growth is therefore exponential.
Economic history does not follow this pattern.
With science there are paradigm shifts that occur with groundbreaking discoveries like the
theories of relativity and quantum mechanics. The Friedmanian paradigm shift was founded on jettisoning
all the enormously successful work Keynes accomplished and digging up failed 19th century ideology,
repeating disastrous history.
Even psychology follows the pattern. Although it began with a lot of unsubstantiated Aristotelian
philosophizing, it was a starting point from which a significant body of definite knowledge and
medical treatments developed. A real social science. (Not perfect. It was recently discovered
that about 50% of published psychological experiments were not reproducible.)
As an anthropologist you should know about cliques and group-think. Have an inkling of how
corruption could gradually develop and spread among upper-echelon cliques to the point where the
government, the economy, the courts and the news media become captured by the upper class. Understand
how cowards would rather look the other way than take a stand and deal with it: "see no evil,
hear no evil, speak no evil."
As an anthropologist, I can assert with confidence that you are babbling about things you do not
really understand at all. I have issues with a lot of economics, but you are completely incoherent.
Completely incoherent? Then it should be easy enough for you to tear apart what I wrote. It was
certainly easy enough for me to tear into Krugman's crass political pandering. But all you got
is lame generalizations. Stock insults that could be said about anything.
What issues do you have with "a lot of economics?" I bet you can't come up with anything. Come
on. Out with it! Say something intelligent about anything, if you are at all capable, Mr. Dick.
I have yet to read anything from you that indicates you have any knowledge about anything.
It is Dr. Dick, since I have a Ph.D. If you ever read the comments on this blog, you would know
full well what those issues are, since I have raised them here many times. For a start the assumption
of "rational actors" (only partially true), the assumption of economic maximization (people maximize
many different things which affect their economic choices), and the assumption of "rational markets"
(this ignores pervasive information assymetry and active deceit).
"... I got tired of lambasting macroeconomics a while ago, and the "macro wars" mostly died down in the blogosphere around when the recovery from the Great Recession kicked in. But recently, there have been a number of respected macroeconomists posting big, comprehensive criticisms of the way academic macro gets done. Some of these criticisms are more forceful than anything we bloggers blogged about back in the day! ..."
"... First, there's Paul Romer's latest, " The Trouble With Macroeconomics ". The title is an analogy to Lee Smolin's book " The Trouble With Physics ". Romer basically says that macro (meaning business-cycle theory) has become like the critics' harshest depictions of string theory - a community of believers, dogmatically following the ideas of revered elders and ignoring the data. The elders he singles out are Bob Lucas, Ed Prescott, and Tom Sargent. ..."
"... In response to the observation that the shocks [in DSGE models] are imaginary, a standard defense invokes Milton Friedman's (1953) methodological assertion from unnamed authority that "the more significant the theory, the more unrealistic the assumptions (p.14)." More recently, "all models are false" seems to have become the universal hand-wave for dismissing any fact that does not conform to the model that is the current favorite. ..."
"... We [macroeconomists] tend to view research as being the process of posing a question and delivering a pretty precise answer to that question...The research agenda that I believe we need is very different. It's hugely messy work. We need...to build a more evidence-based modeling of financial institutions. We need...to learn more about how people actually form expectations. We need [to use] firm-based information about residual demand functions to learn more about product market structure. At the same time, we need to be a lot more flexible in our thinking about models and theory, so that they can be firmly grounded in this improved empirical understanding. ..."
"... This is a somewhat misleading way of putting it, but it allows me to illustrate some important points about 'unrealistic' assumptions. In real world modelling in Physics 'unrealistic' assumptions are ubiquitous. What matters is not literal realism of assumptions but robustness.of conclusions. ..."
"... Simplifying assumptions are context specific, ie ad hoc, and never axiomatic.The ad hoc nature of simplifying assumptions is a feature, not a bug as the above example illustrates. ..."
"... Robustness is critical. As we move from our simplifying assumptions towards greater realism/precision, the conclusion should not change in any material way, and we use the simplifications because the gain in accuracy of the conclusions is not worth the added complexity and consequent loss of tractability in the model. ..."
"... This is indeed excellent. The three criteria for evaluating assumptions/simplifications, the precise definition of ad hoc, and the crystal-clear example of point mass for orbits vs rotation. ..."
"... So, we are witnessing a battle between a declining DSGE scam and ascending "Realistic assumptions" scam. ..."
"... Both approaches are worthless, but I guess it will give an excuse to macroeconomists why they are useless: we just used the wrong paradigm, now we are switching to the new one. Just many more years of research is needed and we will be ready. Science!, as they say. ..."
"... Science, IEHO, has three touchstones. Coherence - your model and its assumptions should not contradict each other or lead to contradictory conclusions. Consilience - a good theory has a broad reach for explaining reality. Consensus - a theory which is coherent and consilient should lead to a consensus among practicioners. It is only within a strong consensus that people can talk to each other and extend the field. ..."
"... It appears that macro misses out on a number of these. ..."
"... "Romer basically says that macro (meaning business-cycle theory)" ..."
"... In either case, I think this is another big problem with macro, its obsession with business cycles as opposed to long-term thriving and prosperity. eg, Gerald Friedman got tied in knots by this; he was trying to use "stimulus" thinking and arguments to talk about about multi-decadal possibilities. ..."
"... I'm fond of observing that in addition to "cargo cult science", macroeconomics has often been likened to a religion. What religions do when the mainstream becomes intolerable for one reason or another is schism. Then after a number of years what used to be the mainstream dies out and the former schismatics become the mainstream. ..."
"... Psychology went through this kind of crisis some years ago when the scientists split off from the clinicians, and created the Association for Psychological Science to contrast with the clinically-oriented American Psychological Association (the APA is the one that publishes the unscientific but influential Diagnostic and Statistical Manual). ..."
"... In order to be scientific, the standard method is to actually try predicting. Prediction is messy and provably fails to converge to any possible theory, but there are other authentic sciences that have this same theoretical limitation, like meteorology. This doesn't prevent meteorologists from constructing theories which make predictions that demonstrably get better and better year after year. ..."
"... For twenty years Romer has been implying (and recently saying) that economists who don't accept endogenous growth theory have abandoned the canons of science and are either blind or indifferent to the truth. Over the same twenty years he seems to have produced very little theoretical work, while his targets have remained working economists. (Why, after all, should anyone continue to do theory, since Romer has discovered the truth?) ..."
I got tired of lambasting macroeconomics a while ago, and the "macro wars" mostly died down in
the blogosphere around when the recovery from the Great Recession kicked in. But recently, there
have been a number of respected macroeconomists posting big, comprehensive criticisms of the way
academic macro gets done. Some of these criticisms are more forceful than anything we bloggers blogged
about back in the day! Anyway, I thought I'd link to a couple here.
First, there's Paul Romer's latest, "
The Trouble
With Macroeconomics ". The title is an analogy to Lee Smolin's book "
The Trouble With Physics ". Romer basically says that macro (meaning business-cycle theory) has
become like the critics' harshest depictions of string theory - a community of believers, dogmatically
following the ideas of revered elders and ignoring the data. The elders he singles out are Bob Lucas,
Ed Prescott, and Tom Sargent.
Romer says that it's obvious that monetary policy affects the real economy, because of the Volcker
recessions in the early 80s, but that macro theorists have largely ignored this fact and continued
to make models in which monetary policy is ineffectual. He says that modern DSGE models are no better
than old pre-Lucas Critique simultaneous-equation models, because they still take lots of assumptions
to identify the models, only now the assumptions are hidden instead of explicit. Romer points to
distributional assumptions, calibration, and tight Bayesian priors as ways of hiding assumptions
in modern DSGE models. He cites
an interesting
2009 paper by Canova and Sala that tries to take DSGE model estimation seriously and finds (unsurprisingly)
that identification is pretty difficult.
As a solution, Romer suggests chucking formal modeling entirely and going with more general, vague
but flexible ideas about policy and the macroeconomy, supported by simple natural experiments and
economic history.
Romer's harshest zinger (and we all love harsh zingers) is this:
In response to the observation that the shocks [in DSGE models] are imaginary, a standard
defense invokes Milton Friedman's (1953) methodological assertion from unnamed authority that
"the more significant the theory, the more unrealistic the assumptions (p.14)." More recently,
"all models are false" seems to have become the universal hand-wave for dismissing any fact that
does not conform to the model that is the current favorite.
The noncommittal relationship with the truth revealed by these methodological evasions...goes
so far beyond post-modern irony that it deserves its own label. I suggest "post-real."
Ouch. He also calls various typical DSGE model elements names like "phlogiston", "aether", and "caloric".
Fun stuff
. (Though I do think he's too harsh on string theory, which often is just a kind of math that
physicists do to keep themselves busy, and has no danger of hurting anyone, unlike macro theory.)
Meanwhile, a few weeks earlier, Narayana Kocherlakota wrote a post called "
On the Puzzling Prevalence of Puzzles ". The basic point was that since macro data is fairly
sparse, macroeconomists should have lots of competing models that all do an equally good job of matching
the data. But instead, macroeconomists pick a single model they like, and if data fails to fit the
model they call it a "puzzle". He writes:
To an outsider or newcomer, macroeconomics would seem like a field that is haunted by its lack
of data...In the absence of that data, it would seem like we would be hard put to distinguish
among a host of theories...[I]t would seem like macroeconomists should be plagued by underidentification...
But, in fact, expert macroeconomists know that the field is actually plagued by failures to fit
the data – that is, by overidentification.
Why is the novice so wrong? The answer is the role of a priori restrictions in macroeconomic theory...
The mistake that the novice made is to think that the macroeconomist would rely on data alone
to build up his/her theory or model. The expert knows how to build up theory from a priori restrictions
that are accepted by a large number of scholars...[I]t's a little disturbing how little empirical
work underlies some of those agreed-upon theory-driven restrictions – see p. 711 of Lucas (JMCB,
1980) for a highly influential example of what I mean.
In fact, Kocherlakota and Romer are complaining about much the same thing: the overuse of unrealistic
assumptions. Basically, they say that macroeconomists, as a group, have gotten into the habit of
assuming stuff that just isn't true. In fact, this is what the Canova and Sala
paper
says too, in a much more technical and polite way:
Observational equivalence, partial and weak identification problems are widespread and typically
produced by an ill-behaved mapping between the structural parameters and the coefficients of the
solution.
That just means that the model elements aren't actually real things.
(This critique resonates with me. From day 1, the thing that always annoyed me about macro was how
people made excuses for assumptions that were either unverifiable or just flatly contradictory to
micro data. The usual excuse was the "
pool player analogy " - the idea that the pieces of a model don't have to match micro data as
long as the resulting model matches macro data. I'm not sure that's how Milton Friedman wanted his
metaphor to be used, but that seems to be the way it does get used. And when the models didn't
match macro data either, the excuse was "all models are wrong," which really just seems to be a way
of saying "the modeler gets to choose which macro facts are used to validate his theory". It seemed
that to a large extent, macro modelers were just allowed to do whatever they wanted, as long as their
papers won some kind of behind-the-scenes popularity contest. But I digress.)
So what seems to unite the new heavyweight macro critics is an emphasis on realism . Basically,
these people are challenging the idea, very common in econ theory, that models shouldn't worry about
being realistic. (Paul Pfleiderer is another economist who has recently made
a similar complaint , though not in the context of macro.) They're not saying that economists
need 100% perfect realism - that's the kind of thing you only get in physics, if anywhere. As
Paul
Krugman and
Dani Rodrik have emphasized, even the people advocating for more realism acknowledge that there's
some ideal middle ground. But if Romer, Kocherlakota, etc. are to be believed, macroeconomists aren't
currently close to that optimal interior solution.
Updates
Olivier Blanchard is a bet less forceful, but he's definitely also
one of the new heavyweight
critics . Among his problems with DSGE models, at least as they're currently done, are 1. "unappealing"
assumptions that are "at odds with what we know about consumers and firms", and 2. "unconvincing"
estimation methods, including calibration and tight Bayesian priors. Sounds pretty similar to Romer.
Meanwhile,
Kocherlakota
responds to Romer . He agrees with Romer's criticism of unrealistic macro assumptions, but he
dismisses the idea that Lucas, Prescott, and Sargent are personally responsible for the problems.
Instead, he says it's about the incentives in the research community. He writes:
We [macroeconomists] tend to view research as being the process of posing a question and delivering
a pretty precise answer to that question...The research agenda that I believe we need is very
different. It's hugely messy work. We need...to build a more evidence-based modeling of financial
institutions. We need...to learn more about how people actually form expectations. We need [to
use] firm-based information about residual demand functions to learn more about product market
structure. At the same time, we need to be a lot more flexible in our thinking about models and
theory, so that they can be firmly grounded in this improved empirical understanding.
Kocherlakota says that this isn't a "sociological" issue, but I think most people would call it that.
Since journals and top researchers get to decide what constitutes "good" research, it seems to me
that to get the changes in focus Kocherlakota wants, a sociological change is exactly what would
be required.
Kocherlakota now has another post describing
how
he thinks macro ought to be done . Basically, he thinks researchers - as a whole, not just on
their own! - should start with toy models to facilitate thinking, then gather data based on what
the toy models say is important, then build formal "serious" models from the ground up to match that
data. He contrasts this with the current approach of tweaking existing models.
My question
is: Who is going to enforce this change? If a few established researchers start doing things
the way Kocherlakota wants, they'll certainly still get published (because they're famous old people),
but will the young folks follow? How likely is it that established researchers en masse are going
to switch to doing things this way, and demanding that young researchers do the same, and using their
leverage as reviewers, editors, and PhD advisers to make that happen? This doesn't seem like the
kind of change that can be brought about by a few young smart rebels forcing everyone else to recognize
the value of their approach - the existing approach, which Kocherlakota dislikes, already succeeds
in getting publication and prestige, so the rebels would simply coexist alongside the old approach,
rather than overthrowing it. How could this cultural change be put into effect?
Also: Romer
now has a follow-up
to his original post, defending his original post against the critics. This part stood out to
me as particularly persuasive:
The whine I hear regularly from the post-real crowd is that "it is really, really hard to do research
on macro so you shouldn't criticize any of our models unless you can produce one that is better."
This is just post-real Calvinball used as a shield from criticism. Imagine someone saying to a
mathematician who finds an error in a theorem that is false, "you can't criticize the proof until
you come up with valid proof." Or try this one on and see how it feels: "You can't criticize the
claim that vaccines cause autism unless you can come up with a better explanation for autism."
Sounds right to me. The old like that "it takes a theory to kill a theory" just seems wrong to me.
Sometimes all it takes is evidence.
I've already commented at lenght on Romer at
Mark Thoma's. So I'll just use something you wrote on physics to make a tangential comment
on unrealistic assumptions.
"They're not saying that economists need 100% perfect realism - that's the kind of thing
you only get in physics, if anywhere"
This is a somewhat misleading way of putting it, but it allows me to illustrate some important
points about 'unrealistic' assumptions. In real world modelling in Physics 'unrealistic' assumptions are ubiquitous. What matters is
not literal realism of assumptions but robustness.of conclusions.
Consider a point-mass. There is no such thing. Yet it is a perfectly legitimate simplifying
assumption about a planet if you are interested in studying its orbit around its sun. It is not
a legitimate assumption if you are interested in studying a planet's rotation about its axis
The most important points underlying such simplifying assumptions are:
1. Simplifying assumptions are context specific, ie ad hoc, and never axiomatic.The ad hoc
nature of simplifying assumptions is a feature, not a bug as the above example illustrates.
2. Robustness is critical. As we move from our simplifying assumptions towards greater realism/precision,
the conclusion should not change in any material way, and we use the simplifications because the
gain in accuracy of the conclusions is not worth the added complexity and consequent loss of tractability
in the model.
3. Out of sample performance of the model.
* Richard Feynman:
"...in order to understand physical laws you must understand that they are all some kind of
approximation.
The trick is the idealizations. To an excellent approximation of perhaps one part in 10^10,
the number of atoms in the chair does not change in a minute, and if we are not too precise we
may idealize the chair as a definite thing; in the same way we shall learn about the characteristics
of force, in an ideal fashion, if we are not too precise. One may be dissatisfied with the approximate
view of nature that physics tries to obtain (the attempt is always to increase the accuracy of
the approximation), and may prefer a mathematical definition; but mathematical definitions can
never work in the real world. A mathematical definition will be good for mathematics, in which
all the logic can be followed out completely, but the physical world is complex, as we have indicated
in a number of examples, such as those of the ocean waves and a glass of wine. When we try to
isolate pieces of it, to talk about one mass, the wine and the glass, how can we know which is
which, when one dissolves in the other? The forces on a single thing already involve approximation,
and if we have a system of discourse about the real world, then that system, at least for the
present day, must involve approximations of some kind.
This system is quite unlike the case of mathematics, in which everything can be defined, and
then we do not know what we are talking about. In fact, the glory of mathematics is that we do
not have to say what we are talking about. The glory is that the laws, the arguments, and the
logic are independent of what "it" is.
Indeed. That was part of the reason for redundantly using the phrase :) . The other reason
was that the usage is strictly accurate. ad hoc = for this particular purpose (Shorter OED)
It is difficult to see how simplifying assumptions underlying real world models can be anything
but ad hoc (context-specific)
For a mathematician to object to ad hoc statements would be understandable, but for someone
concerned with real world modelling to do so is mind-boggling.
It is worth pointing out that the economists who do so object have never in their life built
a model that works, for any definition of 'works' acceptable anywhere outside economics.
This is indeed excellent. The three criteria for evaluating assumptions/simplifications, the
precise definition of ad hoc, and the crystal-clear example of point mass for orbits vs rotation.
I'd like to bring in my pet bailiwick, accounting. Our (national) accounting systems are rife
with assumptions and simplifications - they are economic models. (Or in Feynman's excellent
term, "idealizations.") And those assumptions are effectively invisible to almost everyone. If
I had a nickel for every time I've heard "it's an accounting identity" as if that was somehow
synonymous with "truth"...
Just one example, relating to a rather important economic measure - income:
The national-accounting sages know that the appropriateness of this basic conceptual construct
is a very open question. But that fact is invisible to almost everyone. National accounts could
be depicted quite differently (yes, with everything still balancing).
Economists' thinking is completely owned by the conceptual constructs, the idealizations, embodied
in our national-accounting structures. And they frequently display zero understanding of the constructs
that they are (we are) using to think with.
I've been critical of you in the past, but that is a really good comment, 100% on the ball.
But I will add that the simplifying assumption you used to illustrate your point, may not be true,
but it is nearly true (without the scales being considered). And many simplifying assumptions
used in economics are not nearly true.
Informally we might - and sometimes do - say that the assumption (point-mass) is 'nearly true',
but it is not quite correct. It is an idealization that satisfies criterion (2): robustness, and
the resulting model satisfies criterion (3); out-of-sample performance.
Of course this is very different from the sort of assumptions common in economics which are
often patently false - and this is the critical point - making them more realistic materially
changes the conclusions ie the assumptions in the models fail to satisfy the robustness criterion.
And, at least in DSGE/RBC macro to talk of in-sample fit or out-of-sample performance of the resulting
model would imply a libelous misuse of the terms.
Actually, as Romer notes, the situation in economics is often even worse.with assumptions being
not merely false ( with non-robust conclusions) but entirely meaningless in terms of real world
observables. Assumptions of the sort that are deservedly derisively dismissed as not even wrong
in every scientific or engineering discipline.
It's not just an argument about having models with realistic assumptions. It is also an argument
about the extent to which mathematics and models can usefully provide the answers we need to know.
Basically we are going back to Keynes's (1937) arguments about the limitations of "pretty and
polite techniques". Edgeworth was also very much aware of the limitations of mathematics in economics.
And so have many others, for a long time.
I have been critical of Romer in the past. His growth theory for me does not answer the critical
questions that I think are the most important into understanding why certain countries get on
to a growth curve and others do not. But I now really have to admire his honesty.
It is not true that we do not have a lot of macro data. The National Accounts contain scores
of (largely stock-flow consistent) data. The point is: one of the big failures of DSGE economists
is their failureto establish a measurement system which produces data consistent with the DSGE
models. Keynes, who even established his own government statistical office, the present day ONS,
and, in a more indirect sense, Smith, Marshall as well and Veblen did establish systems of measurement
to measure data consistent with their models and ideas. Read Mitra Kahn http://openaccess.city.ac.uk/1276/
or my efforts
DSGE economists never bothered to do this. Weird (well, not that weird - taking account of
real life data would have meant taking unemployment and the government serious... Or the fact
that the National Accounts identities only hold for nominal variables, not for deflated real variables).
Anyway - as there is no system of DSGE consistent measurement of the macro-economy it can't be
called a valid science.There are however systems consistent with the ideas of Keynes and Veblen...
So, we are witnessing a battle between a declining DSGE scam and ascending "Realistic assumptions"
scam.
Both approaches are worthless, but I guess it will give an excuse to macroeconomists why
they are useless: we just used the wrong paradigm, now we are switching to the new one. Just many
more years of research is needed and we will be ready. Science!, as they say.
I'm curious how many economists are simply too blind to understand that this will lead nowhere
and how many are simply cynical beyond belief.
I just don't understand the mentality. Wouldn't you like to do something productive? Like produce
actual knowledge? Can you guys be satisfied with infinite curve fitting?
Science, IEHO, has three touchstones. Coherence - your model and its assumptions should not contradict each other or lead to contradictory
conclusions. Consilience - a good theory has a broad reach for explaining reality. Consensus - a theory which is coherent and consilient should lead to a consensus among practicioners.
It is only within a strong consensus that people can talk to each other and extend the field.
It appears that macro misses out on a number of these.
"Romer basically says that macro (meaning business-cycle theory)"
Are you equating macro with business-cycle theory, or are you saying that Romer does?
In either case, I think this is another big problem with macro, its obsession with business
cycles as opposed to long-term thriving and prosperity. eg, Gerald Friedman got tied in knots
by this; he was trying to use "stimulus" thinking and arguments to talk about about multi-decadal
possibilities.
" (Though I do think he's too harsh on string theory, which often is just a kind of math that
physicists do to keep themselves busy, and has no danger of hurting anyone, unlike macro theory.)"
I find it hard to believe Noah understands string theory well enough to justify such a strong
opinion of it only existing to keep theorists employed. As much as I like "The Trouble With Physics"
those reading should keep in mind that Lee Smolin acknowledges that maybe there is something to
string theory.
And again, the focus of string theory in theoretical physics is harmful to the expansion of
knowledge and economic growth if too many brains not only barked up the wrong tree - nothing wrong
with that - but *continued* to bark up the wrong tree for years, ignoring other paths of understanding
physics, which is Smolin's main point.
I'm fond of observing that in addition to "cargo cult science", macroeconomics has often
been likened to a religion. What religions do when the mainstream becomes intolerable for one
reason or another is schism. Then after a number of years what used to be the mainstream dies
out and the former schismatics become the mainstream.
Psychology went through this kind of crisis some years ago when the scientists split off
from the clinicians, and created the Association for Psychological Science to contrast with the
clinically-oriented American Psychological Association (the APA is the one that publishes the
unscientific but influential Diagnostic and Statistical Manual).
All that heterodox economists need to do is gain some self-confidence and stop calling themselves
derogatory names. That won't make them scientific, but it'll be a step in the right direction.
In order to be scientific, the standard method is to actually try predicting. Prediction is
messy and provably fails to converge to any possible theory, but there are other authentic sciences
that have this same theoretical limitation, like meteorology. This doesn't prevent meteorologists
from constructing theories which make predictions that demonstrably get better and better year
after year.
Why don't all these macro critics stop publishing in "unscientific" mainstream journals and
setup their own J.Econ.Sci. that has rigorous scientific standards? Many of them have tenure or
non-academic jobs (e.g. Roemer) and don't need to kowtow to committees who care only about established
impact factors. It's been done elsewhere. It wasn't so long ago that one of the most prestigious
biology journals Cell, was just an upstart new face on the block. All it takes is a strong editor
and a pool of like-minded peer reviewers.
I think Paul Romer's self-serving ad hominem attacks should be identified as just that. One
would hardly blame the older generation of Nobel laureates of conspiring to deny economic pre-eminence
to Romer - look at how he behaves! - but I think they probably have better things to do.
I admit I haven't completely digested Romer's latest thunderbolt - I'm basing my comments more
on Romer's "mathiness" series of a year ago. In that case, I went back and read the "mathy" papers
that Romer was attacking. Mathy they were, but the Lucas and Moll paper at least was very clear
about why it didn't see increasing returns-to-scale in growth models convincing: the intellectual
property-driven economic sector just isn't, in their view, big enough. (BTW, that's almost exactly
the same argument made by William Nordhaus against the AI "singularity" folks: it could happen,
but none of today's macroeconomic data suggest that it is happening.)
To come back to the current discussion, I have no particular sympathy with the Lucas-Prescott-Sargent
rational expectations / microfoundations / real business cycle approach - but the needed discussion
of the defects of RBC has been underway for some time. And note that Romer's opening distillation
of RBC makes its problems all about a supposed "exogenous" component, for which the subtext is
that RBC's authors don't accept Romer's "endogenous" growth theory.
For twenty years Romer has been implying (and recently saying) that economists who don't accept
endogenous growth theory have abandoned the canons of science and are either blind or indifferent
to the truth. Over the same twenty years he seems to have produced very little theoretical work,
while his targets have remained working economists. (Why, after all, should anyone continue to
do theory, since Romer has discovered the truth?)
I wish Romer well at the World Bank. There is no doubt that his ideas around urbanization,
for example, will bring an important and updated perspective to a development bank. But the very
move suggest to me that the World Bank has not failed to note Romer's ability to propagandize
an economic agenda - and that it values his political skills as much as his reputation as an economic
theorist.
It's easy to poke holes in existing methodology, but it's much more difficult to come up with
viable alternatives and solutions. Do those who knock DSGE models really think we should go back
to 1970's macro and reuse old-school Keynesian models? The empirical evidence against Keynesian
multipliers is overwhelming (See Ramey for an overview). Methodologically, Keynesian models make
just as many implausible, ad hoc assumptions as DSGE models, if not more. Their forecast accuracy
is no better; private forecasters are mostly selling stories and scenarios, not forecasts that
in any way will prove ex post to be accurate.
I think you are repeating - and it is a good reminder - the classic Mark Blaug argument that
economists should not abandon the "best available" theory (even if its deficiencies are manifest)
if there is no better replacement. I have no problem with that.
However, I think the discussion right now is about those manifest defects. And there are stirrings
about what comes next. Noah has blogged several times on the new "empirical turn". And the Keynesians,
who have never gone away, may yet stand up a rehabilitated theory. For a usable business cycle
theory, there are really three tests to satisfy:
1) Normal forecasting capability (as you mention);
2) Convincing comparative statics on the effects of monetary or fiscal intervention. (RBC omitted
this almost by definition.)
3) Some ability to detect pressures that are building toward a major shock. (I call this 'the
Cassandra feature', since the predictions are unlikely to be believed or heeded.) Whether any
model could really offer this is open to question, but it's a real question. The Fed always talks
about "risks to the economy", but is the perception of those risks coming from the model? How
did Warren Buffet know that the pile of financial derivatives would collapse, but bankers and
regulators and economists not know it? One answer, at least for economists, is that rational expectations
theory forces prediction of any kind of discontinuity completely out of the model. That part of
Paul Romer's complaint seems to me to be valid.
"... There is indeed a wing of heterodox economics that is anti-mathematical. Known as "Critical Realism" and centred on the work of Tony Lawson at Cambridge UK, it attributes the failings of economics to the use of mathematics itself... ..."
"... Steve also offers some useful criticism of Milton Friedman's ideas about how to evaluate a model's empirical success ( I agree ). ..."
"... The problem with 'heterodox economics' is that it is self-definition in terms of the other. It says 'we are not them' - but says nothing about what we are. This is because it includes everything outside of the mainstream, from reasonably well-defined and coherent schools of thought such as Post Keynesians, Marxists and Austrians, to much more nebulous and ill-defined discontents of all hues. To put it bluntly, a broad definition of 'people who disagree with mainstream economics' is going to include a lot of cranks. People will place the boundary between serious non-mainstream economists and cranks differently, depending on their perspective. ..."
"... Aside from rejecting standard neoclassical economics, the Marxists and the Austrians don't have a great deal in common. ..."
"... Noah seems to define heterodox economics as 'non-mathematical' economics. This is inaccurate. There is much formal modelling outside of the mainstream. ..."
"... Noah's post unfortunately seems to have elicited some rather defensive responses from the heterodox community, along the lines of " But we DO like mathematics! " or even, " Actually our mathematics is better than yours ". But this is to buy into Noah's core proposition. The heterodox economics community should - and, to be fair, in most cases does - reject it outright. Economics is not, and cannot be , exclusively mathematical...There is no need for the heterodox economic community to be defensive about vagueness. ..."
The other day I wrote
a Bloomberg View post arguing that heterodox macroeconomics is not in any better shape than mainstream
macroeconomics. As you might expect, this drew some lively responses.
One or two of the responses seemed to be arguing against the title of my post, rather than
the contents. That's understandable, since titles are important. In this case, though, it probably
detracted from the debate a great deal. The Bloomberg title people are good, and they usually get
things right, but once in a while the title they choose doesn't quite capture the point I'm trying
to make. This was one of those cases. The title they gave my post was "Economics Without Math Is
Trendy, But It Doesn't Add Up." But actually, this wasn't what I was arguing. My point about non-mathy
models wasn't that these are bad, useless, or inferior. It was that they're different from
mathy models, and so comparing non-mathy models with mathy ones is an apples-to-oranges comparison.
Both types of models have their uses, but you can't really compare one to the other. I make that
pretty clear in the text of
my post , but most of the people who responded tended to focus more on the title. Oh well. These
things happen.
Anyway, on to some of the responses. The numbering here is arbitrary, corresponding to the order
in which the tabs were open on my browser. (Note: The ordering has changed; see #4.)
Response 1: Steve Keen
First, we have
a
response by Steve Keen . Steve, unlike others, did get the point I was making about mathy vs.
non-mathy models (Thanks, Steve!), and had some good commentary on the subject:
There is indeed a wing of heterodox economics that is anti-mathematical. Known as "Critical
Realism" and centred on the work of Tony Lawson at Cambridge UK, it attributes the failings of
economics to the use of mathematics itself...
What Noah might not know is that many heterodox economists are critical of this approach as well.
In response to
a paper by Lawson that effectively defined "Neoclassical" economics as any economics that
made use of mathematics (which would define me as a Neoclassical!), Jamie Morgan edited a book
of replies to Lawson entitled
What is Neoclassical Economics? (including a chapter by me). While the authors agreed with
Lawson's primary point that economics has suffered from favouring apparent mathematical elegance
above realism, several of us asserted that mathematical analysis is needed in economics, if only
for the reason that Noah gave in his article[.]
Steve also offers some useful criticism of Milton Friedman's ideas about how to evaluate a model's
empirical success (
I agree ).
Steve also makes the useful point that linearization critically hampers many mainstream models
(
I agree ).
Steve points out that non-mathy models can make qualitative forecasts. That's true. However, my
point was that these are often a lot less actionable than quantitative forecasts. A non-mathy model
might tell you that private-sector debt is dangerous, but it might not tell you how much of
it is dangerous, or how dangerous. For that, you'd need some kind of mathy model. Steve definitely
seems to get this point too, though, so I'm not disagreeing.
Steve then discusses overfitting of data, and points out that many mainstream models do this too.
That's certainly true, although I think DSGE models tend to be a lot more parsimonious than SFC models
or stuff like FRB/US. Actually, overfitting is one of the big criticisms of the most popular DSGE
models in use at central banks.
Steve then addresses the idea that heterodox models are similar to mainstream ones. I never said
they were, although I said there are some similarities between the FRB/US model and Wynne Godley-type
SFC models. In fact, there are some similarities, though there are also differences. But in general,
most heterodox models are very different from most mainstream models.
Steve also discusses my (admittedly too brief) mention of agent-based models, and has some good
comments:
Largely speaking, this is true - if you want to use these models for macroeconomic forecasting.
But they are useful for illustrating an issue that the mainstream avoids: "emergent properties".
A population, even of very similar entities, can generate results that can't be extrapolated from
the properties of any one entity taken in isolation...Neoclassical economists unintentionally
proved this about isolated consumers as well, in what is known as the Sonnenschein-Mantel-Debreu
theorem. But they have sidestepped its results ever since...Multi-agent modelling may not lead
to a new policy-oriented theory of macroeconomics. But it acquaints those who do it with the phenomenon
of emergent properties - that an aggregate does not function as a scaled-up version of the entities
that comprise it. That's a lesson that Neoclassical economists still haven't absorbed.
I think this is right. Agent-based models have so far served as a demonstration of the fragility
of representative agent models. In the future, they might be much more than that.
So anyway, I'd say I pretty much agree with Steve's response. Good stuff. (Though
this person on Reddit had some problems with it.)
Response 2: Ari Andricopolous
Ari
has a response as well . His response comes in the form of a list of things that he thinks macro
models should not include. The list is:
Microfoundations
Neoliberal_rationality/
Loanable funds
Interest rate effects
The financial sector
It's pretty clear that the last item on this list is misplaced, since Ari thinks one should
include the financial sector in models.
Whether macro models should be microfounded is a big open question, but I'd like to note that
by saying they shouldn't be, Ari is saying that agent-based models are bad. Agent-based models are
as microfounded as they come.
As for rationality, I kind of disagree...humans observe and learn and adapt (OK, some more than
others, I'll grant). Even though perfect rationality is probably pretty unrealistic, to insist that
models totally ignore human observation, learning, and adaptation seems very dangerous for the realism
of any model.
As for the loanable funds thing...yeah, OK, sure.
Response 3: Jo Michell
Jo Michell's response might have been the first to go up, but it's later on this list because...the
numbering is arbitrary!
Jo, which I believe is short for "Jörmungandr", has a helpful diagram of the "schools" of macroeconomic
thought. He also pushes back on the notion that "heterodox" is a useful classification at all:
The problem with 'heterodox economics' is that it is self-definition in terms of the other.
It says 'we are not them' - but says nothing about what we are. This is because it includes everything
outside of the mainstream, from reasonably well-defined and coherent schools of thought such as
Post Keynesians, Marxists and Austrians, to much more nebulous and ill-defined discontents of
all hues. To put it bluntly, a broad definition of 'people who disagree with mainstream economics'
is going to include a lot of cranks. People will place the boundary between serious non-mainstream
economists and cranks differently, depending on their perspective.
Another problem is that these schools of thought have fundamental differences. Aside from
rejecting standard neoclassical economics, the Marxists and the Austrians don't have a great deal
in common.
This is a good and useful point. My Bloomberg post really did bite off more than it could chew. My
point was that there wasn't something better and more successful out there that by rights ought to
already have displaced the (unsuccessful) mainstream approach. But in making that point, I touched
on a number of different types of alternatives that aren't really closely connected. And I left out
others (for example, Steve Keen's own work, and the Austrians).
Jo, unfortunately, appears to have gotten tripped up by the title:
Noah seems to define heterodox economics as 'non-mathematical' economics. This is inaccurate.
There is much formal modelling outside of the mainstream.
Well, no, I don't define it that way, otherwise I wouldn't have discussed SFC models and agent-based
models in my post.
Jo goes on to make some good points about mainstream models, and some of the problems they encounter.
Response 4: Frances Coppola
Frances Coppola, whom I cited in my Bloomberg post,
also has
a response . I responded to this post earlier, but Frances changed it, so I moved my response
down to #4.
Frances still seems to misunderstand my post somewhat, and to have been tripped up by the title:
Noah's core proposition is that economics has no validity unless it is expressed in mathematical
terms. He says that economics without mathematics doesn't add up.
Actually, I didn't make such a claim. Nor do I believe it.
What I wrote was:
Broad idea-sketching is certainly a valuable activity. If theorists get lost in the specifics
of their models, they can blind themselves to truly new hypotheses and mechanisms that would let
them make big, radical changes. I do think this has happened to some degree in mainstream macro...But
that doesn't mean that broad idea-sketching is a replacement for formal models. It's not an apples-to-apples
comparison.
My point is that although non-mathematical econ is often valuable, it's not comparable to mathematical
econ. Both have their place. But to say that a non-quantitative theory was successful at predicting
the Great Recession, while a quantitative theory failed, is to hold the two theories to very different
standards, since "predict" means different things for quantitative theories than it does for non-quantitative
theories.
Frances goes on to discuss some of the limitations of purely quantitative models. She's broadly
right. She then criticizes some heterodox theorists who, in her opinion, focus too much on math:
Noah's post unfortunately seems to have elicited some rather defensive responses from the
heterodox community, along the lines of "
But we DO like mathematics! " or even, "
Actually our mathematics is better than yours ". But this is to buy into Noah's core proposition.
The heterodox economics community should - and, to be fair, in most cases does - reject it outright.
Economics is not,
and cannot be , exclusively mathematical...There is no need for the heterodox economic community
to be defensive about vagueness.
Again, Frances demonstrates a deep misunderstanding of my thesis. I never said that econ theory should
be exclusively mathematical, nor do I believe it. This confusion is partly the result of the title,
and partly the result of me just not explaining my thesis well enough.
Anyway, those are the responses I've seen. Thanks to everyone who took the time to respond!
"... While much ignorance is really the absence of knowledge, ignorance can also be produced by warriors in ongoing economic, political and cultural battles. ..."
I have been wanting to share this book review I did in 2009 and I guess now is as good a time
as any....
AGNOTOLOGY Book Review
What is Agnotology? What does the Agnotology book say about it? What does Agnotology have to
do with capitalism?
Agnotology [The Making & Unmaking of Ignorance] is a book (collection of essays) edited by Robert
N Proctor and Londa Schiebinger
What is Agnotology? It is defined as a term to describe the cultural production of ignorance
(and its study)
This term is being forwarded by Robert N. Proctor and others interested in the timely study
of ignorance with focus on the manufactured sort. The book begins with a preface by Robert N Proctor
who is a professor of History of Science at Stanford University. The subsequent essays are grouped
into three Parts:
I ) Secrecy, Selection, and Suppression
II ) Lost Knowledge, Lost Worlds
III ) Theorizing Ignorance
Professor Proctor's prime example of agnotology centers on the tobacco industry. He touts a
quote from an internal 1969 Brown & Williamson Tobacco Company memo saying, "Doubt is our product."
when showing how this industry had the audacity to spend profits from its customers to brainwash
them into believing that there was doubt that smoking causes cancer.
The 4 essayists in part I of the book provide similar manufacturing of ignorance insights in
areas of censorship, environmental science, public health and women's orgasms.
The 3 essayists in Part II of the book focus on showing how western society has suppressed
medicinal plant knowledge for abortions because they were against them, how the American white
man trivialized and ignored the indigenous fossil knowledge of the American Indians and lastly
about ignorance in Archeology.
The 4 essayists in Part III of the book expand on the theories of ignorance in ways that are
daunting to understand completely let alone summarize. Suffice to say that terms like bounded
rationality, confirmation bias, patriarchy, ethnocentrism, social memory, and the evolution of
the Precautionary Principle in relation to Risk Management are discussed, analyzed and postulated
about.
While much ignorance is really the absence of knowledge, ignorance can also be produced
by warriors in ongoing economic, political and cultural battles.
Other examples of agnotology are "intelligent design" or faith based political economies, resistance
to global warming, the car centered transportation culture...and of course whether unregulated
investment banking is toxic or not.
Pride of ignorance is the biggest impediment for critical thinking individuals to overcome
with efforts that appeal to simplistic economic euphemisms like free markets good/ govt regulation
bad. The biggest lies are that totally unrestrained corporatism and "free" markets are best and
bigger is better. Having faith that the economic fundamentals are supportive of the American dream
is akin to so many individuals seemingly unable to evolve beyond Enlightenment understanding of
the various religion myths.
One of the concepts that is missing in discussions is that the maximization of self-interest
is rarely consistent with the maximization of social interest. A forum is need to reconcile the
conflicts between self and social economic interests.
The unstated paradox of Agnotology is that it is the basis of more study of an obvious problem
that rational people would consider antisocial behavior, which is what the big complaint is of
agnotology claimants. The further frustration is that these studies do not include any proscriptions
about making the efforts to propagate disinformation criminal.
psychohistorian@26 - Fascinating. Ponerology. Agnotology. So many books, so much evil, so little
time. Proctor's book is now at the top of my wish list. Thanks for posting that.
Agnotology--"... term to describe the cultural production of ignorance (and its study)"
Indeed, that includes the compulsion to lie. The USG in 1972/3 sent out the Pioneer 10 and
11 space probes with picture-drawings of male and female humans. The female genitals were erased
because certain humans were ashamed of nudity. Have a look:
The idea of Pioneer 10 and 11 was demonstrate, should any intelligent beings in interstellar
space discover the probes, what a lying civilization Earth had spawned?
Creating ignorance is often the result of fixed-ideas being implanted into infants by the age
of 3. The child henceforth is blocked from rational thinking in many areas. Indeed, the child
is unaware that notions and mental movies are doing his "thinking".
"... Some combination of improved public infrastructure, better education, more encouragement for private investment, and more-effective regulation is likely to promote faster growth, which would increase the natural rate of interest and, thus, reduce the probability that we may find ourselves again struggling to avoid Keynes's infamous liquidity trap. If the natural rate can be lifted by appropriate policies, the economic near-stagnation that many countries have experienced in recent years may well turn out not to be that secular after all. ..."
"... A truly orthodox monetarist believes that monetary policy IS a panacea, that counter-cyclical fiscal policy is inflationary and debt expanding such that it should never be used. ..."
[If Vice Chairman Stanley Fischer is not a strictly orthodox monetarist then I cannot see any
reason for anyone else to be one. ]
...But, second, the virtues of sound monetary policy notwithstanding, we must not forget, as former
Fed Chairman Ben Bernanke reminded us on numerous occasions, that "monetary policy is not a panacea."17
For instance, as I mentioned recently elsewhere, policies to boost productivity growth and the
longer-run potential of the economy are more likely to be found in effective fiscal and regulatory
measures than in central bank actions.18
Some combination of improved public infrastructure, better
education, more encouragement for private investment, and more-effective regulation is likely
to promote faster growth, which would increase the natural rate of interest and, thus, reduce
the probability that we may find ourselves again struggling to avoid Keynes's infamous liquidity
trap. If the natural rate can be lifted by appropriate policies, the economic near-stagnation
that many countries have experienced in recent years may well turn out not to be that secular
after all.
[A truly orthodox monetarist believes that monetary policy IS a panacea, that counter-cyclical
fiscal policy is inflationary and debt expanding such that it should never be used.]
Notice that Fishers remedies do not include policy actions to support increased consumption/demand
apparently believing that Investment is done for what purpose? Could he not have said that people
might increase Investment in productive purposes if they felt they could sell their produced offerings
profitably. Then I would like him to say that the creation of credit is not productive as it comes
almost costlessly (a corporate bond, even a mortgage contract cost little to produce), the same
with a govt bond or govt currency, or the electronic registration of a stock, or the creation
of derived financial instruments defined by ink on paper.
Inputs like labor, equipment and supplies of materials produce offerings, but financial assets
need almost none of these inputs. We need much more flow going to getting real offerings marketed.
But why does investing-wherewithal take such risks in hoping to organize all these inputs and
marketing efforts when the huge volumes of high trading frequency lead to returns of added wherewithal
coming to comfortable offices anywhere, to be churned again in the trading of non-production based
financial things.
Have central banks (and others in the financial asset trading club) become so distanced from
the production economics of Wicksall and Keynes that they can no longer even talk about basic
demand for goods and services as a reason to Invest?
How about a set of remarks focused on aggregate demand for real offerings.
How about a set of remarks focused on how to redirect the economic wherewithal churning about
in the financial asset trading marketplaces and convert more and more of this wherewithal into
taking risks on real production and marketing businesses (more than ample supply of wherewithal
now). The central bank leaders could talk more about how they can serve in making this conversion
happen well, in coordination with other public policies such as those that help support more basic
demand and happier more dynamic animal spirits in society, so to speak.
Can we replace Fisher with a deputy who sees everything first via the lens of demand side thinking
followed by labor market considerations, long before they see solutions coming from "encouraging
private investment" in financial assets?
Vice Chairman Stanley Fischer is a very conventional orthodox establishment economist, just not
a strictly orthodox monetarist. I was in no way lauding Fischer other than by just spelling his
last name correctly. However he can serve as a benchmark that distinguishes orthodox establishment
economics from the even more narrow and rigid orthodox monetarism.
My misspelling was not intended as a passive aggressive disrespect. But of course I called for
his replacement, and I did this to bring attention to matters important to me, not just as an
ad hominem attack on Mr. Fischer.
I do not want more policies to encourage capital formation and husbandry, nor do I want managers
of capital to use public means or subsidues so they can get better educated workforces and eak
more out of them so their capital is further favored (of course there are public good reasons
for public effirts here, but its purposes are not just to encourage more investment because it
is further subsidized), and the same with public efforts to build better infrastructure if the
idea of 'better' is because it subsidizes investors (not perhaps because it makes society safer
to have a more reilient and efficient energy delivery system that also helps with climate change
concerns too), or better regulation of the financial system so its risks are spread better and
investors are encouraged to trade even more in them. So here I've taken each of Fischers recommendations
and addressed them, pointing out how these statements can be seen as supporting the investing
class nit the real economy of demand side considerations about economics.
Perhaps the Deputy Director didn't intend for these remarks to be read that way. After all
he talked about Wicksell, and I'm pretty sure his views were tied to the world of real production,
anf Fischer even talked about production. So maybe I'm too willing to read with suspicion, or
he is not cautious enough in his writing, or he needs to be replaced (because I read this the
way he meant it).
Conventional orthodox establishment economists worry about inflation even after they deliver 1.6
percent growth for 2016.
And they insist monetary policy doesn't work well which is somewhat of a contradiction as they're
worrying about inflation and monetary policy working too well.
If you read the Sept. 2008 minutes of the FOMC they are worrying about inflation 48 hours after
Lehman failed and the implosion of the financial system. Just 8 years ago and they don't seem
to have learned.
Noah Smith from yesterday: "Most of the profession does
believe in the power of monetary policy. The dominant form of
macroeconomic model for at least a decade has been so-called
New Keynesian models, which say that interest rates play a
very large role in stabilizing the economy. These are also
the dominant form of modern macro model in use at central
banks...
Now, the big question is whether faith in monetary policy
might have been misplaced. The seemingly small effects of
quantitative easing, and the difficulty of dealing with very
low interest rates, are causing some macroeconomists to cast
about for alternatives to the New Keynesian paradigm.
It sure seems like the economics profession is confused,
very confused. Sadly, that will not keep them from
demagoguing their favorite policy and insulting those who
dare to point out the obvious problems and mistakes.
"... Most junior-level academics are on two-year contracts. The pay is not that great, there are usually no relocation programs since junior-level academics having a family is considered a dire waste of resources and if one wants to procure something one has to go to meetings with 20++ people who all also want theirs if someone else is getting some. All of these meetings are about managing a flock of spoiled children were a few are being given sweets. Most lower level academics (in the career sense) eventually "fail out" to private business and settle down once they realize that they will never make tenure, not even at a lower ranking university. This usually happens at the age of 30 or so. ..."
"... Very few get full tenure. For those few finally becoming a tenured professor there is *still* the everlasting scrabbling for external funding, perpetual fights with other colleges over internal funding (now at a much higher level and against people truly skilled in the art, said skills acquired through years of dedicated effort in "undoing the competition"), and of course for space, resources and the good students. ..."
"... A few tenured professors can do like Tolkien did: "Fuck this bullshit business, I'll just be writing books which totally tangentially involves my specialty and teach, so they can't sack me". ..."
You can dress up what is happening in all sorts of ways. When democracy has been stolen, when
the political class has been bought and paid for by a small controlling elite, you have a decline
into third world economics. The incentives to start businesses in the US have gone because of
the worship of the large corporations who are able to pay for the necessary lobbying so that laws
are skewed in their favour.
I guess when you sit in the safety of an academic institution, facing up to nothing more challenging
than dreaming up ways to either provide intellectual cover for the plunder, or find ways to increase
your take of the available government grants, then what you get is the nonsense above.
There is a very obvious paradigm shift going on which the article goes nowhere near. To do
of course means that you would cease to be one of the 'insiders' or useful idiots.
Obviously, you have never been employed in an academic institution: Unless one is a tenured
professor there is no such thing as "safety" in academics.
Most junior-level academics are on two-year contracts. The pay is not that great, there
are usually no relocation programs since junior-level academics having a family is considered
a dire waste of resources and if one wants to procure something one has to go to meetings with
20++ people who all also want theirs if someone else is getting some. All of these meetings are
about managing a flock of spoiled children were a few are being given sweets. Most lower level
academics (in the career sense) eventually "fail out" to private business and settle down once
they realize that they will never make tenure, not even at a lower ranking university. This usually
happens at the age of 30 or so.
Very few get full tenure. For those few finally becoming a tenured professor there is *still*
the everlasting scrabbling for external funding, perpetual fights with other colleges over internal
funding (now at a much higher level and against people truly skilled in the art, said skills acquired
through years of dedicated effort in "undoing the competition"), and of course for space, resources
and the good students.
A few tenured professors can do like Tolkien did: "Fuck this bullshit business, I'll just
be writing books which totally tangentially involves my specialty and teach, so they can't sack
me".
Others will whore themselves out to whoever pays for specific results and maybe end up in a
think-tank at 10x or even 50x the academic salary.
Most will just find a way to muddle through and enjoy what they are getting.
Olens defended Georgia's gay marriage ban and sued the federal government over the transgender
bathroom directive. That's why students organized Monday afternoon's protest and drafted a petition
that has more than 5,000 signatures.
In the petition, students ask the Georgia Board of Regents to not appoint Olens as KSU's next
president.One student, who wouldn't give 11Alive his name, said he's disappointed.
"The support groups would probably be disbanded and not to mention the scholarships that are
offered for people active in LGBT rights," he said
After the rally ended, he stayed around to continue the protest.
"I feel it's my duty. I'm a student here and I have to make sure the school is safe for me
and students. If this place becomes unsafe, I'd have to leave," he said.
Oh for pity's sake, this snowflake thinks hiring the Georgia AG as the school's president would
lead to anti-gay pogroms? I hate the way this Orwellian "safe space" concept has become the cudgel
with which campus progressives use to club the expression of opinions with which they disagree. Anyway,
the reader comments:
Okay, a couple things. First, KSU gives scholarships for "people active in LGBT rights"? I'd
love to know details on that. Second, note the alleged disqualification here: Olens defended the
laws of his state - laws that were created by a democratically elected legislature. In other words,
he did the job he is elected to do. But as you and I know, this now constitutes Thoughtcrime.
Leonard Witt, a KSU professor, wrote
a column
criticizing the choice in which he concludes: "Let's, this time, show the world that
Cobb County carries the torch for all its diverse communities." Yes, diverse communities - as
long as one of those communities isn't Christians or people fulfilling the duties of their elected
office.
Now, I should note that as a college professor myself I happen to agree with Witt's other point:
that a college president should be an academic, not someone plucked from business or politics.
If I taught at KSU, I would oppose Olens for that reason. But this is something different: opposition
to him because of something he believes, and because he did his job according to the constitution
of the state of Georgia.
Eventually we're going to have to call explanations like Witt's the "Eich Maneuver," as an
homage to Mozilla's preposterous explanation that they had to fire Eich because of how much they
value diversity of viewpoint.
The reader says to be sure to note this reasoning from KSU's Prof. Witt (what follows is a quote
from Witt's column):
Already the KSU LGBTQ community members are signing petitions. A headline in Project Q, a popular
Atlanta blog, screams out "Gay marriage bigot Sam Olens to become KSU president." Unfair? Perhaps,
but how do we know,since the selection process is coming from the darkest corners of state government.
As attorney general, Olens ardently opposed both gay marriage and now gender neutral bathrooms.
Hence, the headline.
Given Cobb County's history, try as the chancellor may argue otherwise, important national
constituencies are going to be outraged about the secret meetings aimed at appointing a candidate
who they know will infuriate the LGBTQ community and their allies at Kennesaw State, in Cobb County
and throughout the state and nation.
The nation's largest foundations that support higher education demand respecting diversity
in all its forms. An active foe of gay marriage or transgender neutral bathrooms for KSU president?
Cobb County again? We have better places to put our money. Google, Microsoft, Apple, Nike and
just about every other major corporation may well openly or silently boycott Kennesaw State University.
Plus, the tainted brand name will not exactly be a student resume builder.
Says the reader:
Echoes of Indiana and RFRA.
If we don't keep up with the LGBT agenda, no corporations will
want to do business with us!
And note the fear that we could "infuriate the LGBTQ community
and their allies." If I even mentioned to my academic colleagues that something could upset we
Christians and our allies, I'd probably hear laughter.
We should be hearing Republican politicians, churches, and civic leaders calling this stuff out
for what it is: diversity McCarthyism. Olens may or may not be qualified to run the university, but
what these SJWs are attempting is frightening - or should be. Where does it stop?
Bobby M. Wilson
(bio)
In the era of neoliberalism, human beings are made accountable for their
predicaments or circumstances according to the workings of the market as
opposed to finding faults in larger structural and institutional forces like
racism and economic inequality. The market exchange is an ethic in itself,
capable of acting as a guide for all of human action (
Harvey
2005
). In many ways, the discourse of neoliberalism represents a radical
inversion of the notion of "human agency," as conceived through the
prophetic politics of Martin Luther King. As originally conceived, human
agency focused on people's capability of doing things that can make a
difference, that is, to exercise some sort of power and self-reliance. As a
central concern among many in the social sciences, this concept sought to
expose the power of human beings. Reverend Martin Luther King's prophetic
politics were determinedly "this worldly" and social in their focus. He
encouraged people to direct their attention to matters of social justice
rather than concern for personal well-being or salvation. He believed in the
power of people to make a difference.
But the concept of "justice" has
been reconstructed to fit neoliberal political and economic objectives. This
reconstruction is part of a larger discourse to reconstitute liberalism to
include human conduct. The invisible hand of the market not only allocates
resources but also the conduct of citizens. Economie agency is no longer
just about the market allocation of resources, but the allocation of people
into cultural worlds. This represents a radical inversion of the economic
agent as conceived by the liberalism of Adam Smith. As agents, humans are
implicated as players and partners in the market game. The context in which
individuals define themselves is privatized rather than publicized; the
focus of concerns is on the self rather than the collective. Power operates
internally, not externally, by inducing people to aim for
"self-improvement." The effect has been to negate the "social" in issues of
"justice" or "injustice." Individual subjects are rendered responsible,
shifting the responsibility for social risk (unemployment, poverty, etc.) to
the individual.
Black inner city spaces compete freely within a deregulated global
market. Central cities of large metropolitan areas have become the epicenter
of segregation. In 1988, approximately 55% of black students in the South
attended schools that were 50% to 100% minorities. By 2000, almost 70%
attended such schools. Only 15% of intensely segregated white schools are
schools of concentrated poverty, whereas 88% of the intensely segregated
racial minority schools are schools of concentrated poverty. Fifty years
after the
Brown
decision, we continue to heap more disadvantages on
children in poor communities. The community where a student resides
[End Page 97]
and goes to school is now the best predictor of
whether that student will go to college and succeed after graduation. High
school graduation rates in the South were lowest in the most isolated
black-majority districts-those separated by both race and poverty. Across
the South, we have created public and private systems that encourage the
accumulation of wealth and privilege in mostly white and socially isolated
communities separated by ever greater distances from the increasingly
invisible working poor (
Orfield
and Mei 2004
).
The most fundamental difference between today's segregated black
communities and those of the past is the much higher level of joblessness (
Wilson
1997
). Black unemployment and poverty level consistently remains at
twice the level of the total population. Access to jobs, already
disproportionately tenuous for black workers, has become even more
constricted in the current era of global capital. Without meaningful work,
the impact of racially segregated communities is much more pervasive and
devastating. The vast majority of intensely racial and ethnic segregated
minority places face a growing surplus labor determined to survive by any
means necessary. Two-thirds of the people in prison are now racial and
ethnic minorities. The proportion of young black males who are incarcerated,
on parole, or on probation nationwide continues to reach record levels.
Blacks represent 12.3% of the total population but make up 43.7% of the
incarcerated population. The number of black men in prisons increased from
508,800 in...
"... the point that there's no ethical consumption under capitalism is a good one, repeated often but not often enough, even if in your case it comes in the stale clichéd context of "therefore First-World leftists need to shut up". ..."
"... in still-existing Communist Party regimes like the People's Republic of China, the party cadres are the neoliberal capitalist elites, no political transition required at all. ..."
"... It's George Orwell's final ironic revenge on those who would conscript his Animal Farm into service as a procapitalist propaganda tract: they forget that the final lines aren't just an indictment of the pigs (Communist nomenklatura) for being no better than the men (capitalists) but also of the men for being no better than the pigs. ..."
A side note: there was some conversation above about the interests of an aristocracy, which
of course prompted the idea that the aristocracy is long gone. But meritocracy is a kind of
aristocracy.
This is an interesting observation. BTW other aspect of the same is related to the "Iron law
of oligarchy". Also both aristocracy and meritocracy are just variants of oligarchy. The actual
literal translation from the Greek is the "rule of the few".
At the same time traditional aristocracy is not fixed either and always provided some "meritocratic"
mechanisms for entering its ranks. Look, for example, at British system where prominent scientists
always were awarded lordship. Similar mechanism was used in in many countries where low rank military
officers, who displayed bravery and talent in battles were promoted to nobility and allowed to
hold top military positions. Napoleonic France probably is one good example here.
Neoliberal elite like traditional aristocracy also enjoys the privilege of being above the
law. And like in case of traditional aristocracy the democratic governance is limited to members
of this particular strata. Only they can be viewed as political actors.
USSR nomenklatura is yet another example of the same. It was so close in spirit to neoliberal
elite, that the transition in 1991 was almost seamless.
In other words, vertical mobility can't be completely suppressed without system losing the
social stability and that's was true for classic aristocracy as well as modern neoliberal elite
(actually vertical mobility is somewhat higher in European countries then in the USA; IMHO it
is even higher in the former Eastern block).
Re Will G-R: Your constant references to "liberals" as if they are all hideous, foul, disgusting,
and evil, dripping in blood of the victims of global capitalism's exploitative ways (do you
have a smartphone by the way? [I don't]; do you know who mined its ingredients?) is getting
perhaps a bit, um, repetitive.
If by liberals we would understand neoliberals, this might not be an overstatement. Neoliberals
destroy the notion of social justice and pervert the notion of the "rule of the law". See, for
example, The Neo-Liberal State by Raymond Plant
social justice is incompatible with the rule of law because its demands cannot be embodied
in general and impartial rules; and rights have to be the rights to non-interference rather
than understood in terms of claims to resources because rules against interference can be understood
in general terms whereas rights to resources cannot. There is no such thing as a substantive
common good for the state to pursue and for the law to embody and thus the political pursuit
of something like social justice or a greater sense of solidarity and community lies outside
the rule of law.
But surely, it might be argued, a nomocratic state and its laws have to
acknowledge some set of goals. It cannot be impartial or indifferent to all goals.
Law cannot be pointless. It cannot be totally non-instrumental. It has to facilitate
the achievement of some goals. If this is recognized, it might be argued, it will
modify the sharpness of the distinction between a nomocratic and telocratic state,
between a civil association and an enterprise association.
IMHO for neoliberals social justice and the rule of law is applicable only to Untermensch.
For Ubermensch (aka "creative class") it undermines their individual freedom and thus they need
to be above the law.
To ensure their freedom and cut "unnecessary and undesirable interference" of the society in
their creative activities the role of the state should be limited to safeguarding the free market
as the playground for their "creativity" (note "free" as in "free ride", not "fair")
LFC, the point that there's no ethical consumption under capitalism is a good one, repeated
often but not often enough, even if in your case it comes in the stale clichéd context of "therefore
First-World leftists need to shut up". The point about repetition is particularly ironic,
though, coming in the midst of yet another repetitive liberal circlejerk about Donald Trump blowing
the Gabriel's trumpet of a civilization-destroying neo-Nazi apocalypse.
likbez: "USSR nomenklatura is yet another example of the same. It was so close in spirit to
neoliberal elite, that the transition in 1991 was almost seamless."
One doesn't even have to compare different types of government to grasp this point, when
in still-existing Communist Party regimes like the People's Republic of China, the party cadres
are the neoliberal capitalist elites, no political transition required at all.
It's George Orwell's final ironic revenge on those who would conscript his Animal Farm
into service as a procapitalist propaganda tract: they forget that the final lines aren't
just an indictment of the pigs (Communist nomenklatura) for being no better than the men (capitalists)
but also of the men for being no better than the pigs.
"It's George Orwell's final ironic revenge on those who would conscript his Animal Farm
into service as a procapitalist propaganda tract: they forget that the final lines aren't just
an indictment of the pigs (Communist nomenklatura) for being no better than the men (capitalists)
but also of the men for being no better than the pigs."
"... The moment Science and Innovation became the mistreated handmaidens of the monopolistic cartels which dominate today's economy they were effectively neutered and drugged under the influence of money and petty privilege. ..."
"... Big capital is not fond of innovation nor does it tolerate discovery. Science and Innovation are anathema to the the doctrine of maximizing profits on capital already invested. While we enjoy the benefits of neoliberal "Free Markets" we should expect that no more than a trickle of discovery and innovation might ooze between the cracks. ..."
"... The ability of capital to buy academic researchers and use them as tools is really amazing. On the level, which Academician Lysenko did not even dreamed off. ..."
"... I think this can be considered as a modern flavor of Lysenkoism. ..."
Have discoveries and developments in science and innovation reached a point of diminishing returns?
I don't think so - at least not of necessity. The moment Science and Innovation became the mistreated
handmaidens of the monopolistic cartels which dominate today's economy they were effectively neutered
and drugged under the influence of money and petty privilege.
Big capital is not fond of innovation
nor does it tolerate discovery. Science and Innovation are anathema to the the doctrine of maximizing
profits on capital already invested. While we enjoy the benefits of neoliberal "Free Markets" we should
expect that no more than a trickle of discovery and innovation might ooze between the cracks.
"The moment Science and Innovation became the mistreated
handmaidens of the monopolistic cartels which dominate today's economy
they were effectively neutered and drugged under the influence of
money and petty privilege."
This is a great observation -- Thank you.
The ability of capital to buy academic researchers and use them as
tools is really amazing. On the level, which Academician Lysenko did not
even dreamed off.
I think this can be considered as a modern flavor of Lysenkoism.
Olens defended Georgia's gay marriage ban and sued the federal government over the transgender
bathroom directive. That's why students organized Monday afternoon's protest and drafted a petition
that has more than 5,000 signatures.
In the petition, students ask the Georgia Board of Regents to not appoint Olens as KSU's next
president.One student, who wouldn't give 11Alive his name, said he's disappointed.
"The support groups would probably be disbanded and not to mention the scholarships that are
offered for people active in LGBT rights," he said
After the rally ended, he stayed around to continue the protest.
"I feel it's my duty. I'm a student here and I have to make sure the school is safe for me
and students. If this place becomes unsafe, I'd have to leave," he said.
Oh for pity's sake, this snowflake thinks hiring the Georgia AG as the school's president would
lead to anti-gay pogroms? I hate the way this Orwellian "safe space" concept has become the cudgel
with which campus progressives use to club the expression of opinions with which they disagree. Anyway,
the reader comments:
Okay, a couple things. First, KSU gives scholarships for "people active in LGBT rights"? I'd
love to know details on that. Second, note the alleged disqualification here: Olens defended the
laws of his state - laws that were created by a democratically elected legislature. In other words,
he did the job he is elected to do. But as you and I know, this now constitutes Thoughtcrime.
Leonard Witt, a KSU professor, wrote
a column
criticizing the choice in which he concludes: "Let's, this time, show the world that
Cobb County carries the torch for all its diverse communities." Yes, diverse communities - as
long as one of those communities isn't Christians or people fulfilling the duties of their elected
office.
Now, I should note that as a college professor myself I happen to agree with Witt's other point:
that a college president should be an academic, not someone plucked from business or politics.
If I taught at KSU, I would oppose Olens for that reason. But this is something different: opposition
to him because of something he believes, and because he did his job according to the constitution
of the state of Georgia.
Eventually we're going to have to call explanations like Witt's the "Eich Maneuver," as an
homage to Mozilla's preposterous explanation that they had to fire Eich because of how much they
value diversity of viewpoint.
The reader says to be sure to note this reasoning from KSU's Prof. Witt (what follows is a quote
from Witt's column):
Already the KSU LGBTQ community members are signing petitions. A headline in Project Q, a popular
Atlanta blog, screams out "Gay marriage bigot Sam Olens to become KSU president." Unfair? Perhaps,
but how do we know,since the selection process is coming from the darkest corners of state government.
As attorney general, Olens ardently opposed both gay marriage and now gender neutral bathrooms.
Hence, the headline.
Given Cobb County's history, try as the chancellor may argue otherwise, important national
constituencies are going to be outraged about the secret meetings aimed at appointing a candidate
who they know will infuriate the LGBTQ community and their allies at Kennesaw State, in Cobb County
and throughout the state and nation.
The nation's largest foundations that support higher education demand respecting diversity
in all its forms. An active foe of gay marriage or transgender neutral bathrooms for KSU president?
Cobb County again? We have better places to put our money. Google, Microsoft, Apple, Nike and
just about every other major corporation may well openly or silently boycott Kennesaw State University.
Plus, the tainted brand name will not exactly be a student resume builder.
Says the reader:
Echoes of Indiana and RFRA.
If we don't keep up with the LGBT agenda, no corporations will
want to do business with us!
And note the fear that we could "infuriate the LGBTQ community
and their allies." If I even mentioned to my academic colleagues that something could upset we
Christians and our allies, I'd probably hear laughter.
We should be hearing Republican politicians, churches, and civic leaders calling this stuff out
for what it is: diversity McCarthyism. Olens may or may not be qualified to run the university, but
what these SJWs are attempting is frightening - or should be. Where does it stop?
Bobby M. Wilson
(bio)
In the era of neoliberalism, human beings are made accountable for their
predicaments or circumstances according to the workings of the market as
opposed to finding faults in larger structural and institutional forces like
racism and economic inequality. The market exchange is an ethic in itself,
capable of acting as a guide for all of human action (
Harvey
2005
). In many ways, the discourse of neoliberalism represents a radical
inversion of the notion of "human agency," as conceived through the
prophetic politics of Martin Luther King. As originally conceived, human
agency focused on people's capability of doing things that can make a
difference, that is, to exercise some sort of power and self-reliance. As a
central concern among many in the social sciences, this concept sought to
expose the power of human beings. Reverend Martin Luther King's prophetic
politics were determinedly "this worldly" and social in their focus. He
encouraged people to direct their attention to matters of social justice
rather than concern for personal well-being or salvation. He believed in the
power of people to make a difference.
But the concept of "justice" has
been reconstructed to fit neoliberal political and economic objectives. This
reconstruction is part of a larger discourse to reconstitute liberalism to
include human conduct. The invisible hand of the market not only allocates
resources but also the conduct of citizens. Economie agency is no longer
just about the market allocation of resources, but the allocation of people
into cultural worlds. This represents a radical inversion of the economic
agent as conceived by the liberalism of Adam Smith. As agents, humans are
implicated as players and partners in the market game. The context in which
individuals define themselves is privatized rather than publicized; the
focus of concerns is on the self rather than the collective. Power operates
internally, not externally, by inducing people to aim for
"self-improvement." The effect has been to negate the "social" in issues of
"justice" or "injustice." Individual subjects are rendered responsible,
shifting the responsibility for social risk (unemployment, poverty, etc.) to
the individual.
Black inner city spaces compete freely within a deregulated global
market. Central cities of large metropolitan areas have become the epicenter
of segregation. In 1988, approximately 55% of black students in the South
attended schools that were 50% to 100% minorities. By 2000, almost 70%
attended such schools. Only 15% of intensely segregated white schools are
schools of concentrated poverty, whereas 88% of the intensely segregated
racial minority schools are schools of concentrated poverty. Fifty years
after the
Brown
decision, we continue to heap more disadvantages on
children in poor communities. The community where a student resides
[End Page 97]
and goes to school is now the best predictor of
whether that student will go to college and succeed after graduation. High
school graduation rates in the South were lowest in the most isolated
black-majority districts-those separated by both race and poverty. Across
the South, we have created public and private systems that encourage the
accumulation of wealth and privilege in mostly white and socially isolated
communities separated by ever greater distances from the increasingly
invisible working poor (
Orfield
and Mei 2004
).
The most fundamental difference between today's segregated black
communities and those of the past is the much higher level of joblessness (
Wilson
1997
). Black unemployment and poverty level consistently remains at
twice the level of the total population. Access to jobs, already
disproportionately tenuous for black workers, has become even more
constricted in the current era of global capital. Without meaningful work,
the impact of racially segregated communities is much more pervasive and
devastating. The vast majority of intensely racial and ethnic segregated
minority places face a growing surplus labor determined to survive by any
means necessary. Two-thirds of the people in prison are now racial and
ethnic minorities. The proportion of young black males who are incarcerated,
on parole, or on probation nationwide continues to reach record levels.
Blacks represent 12.3% of the total population but make up 43.7% of the
incarcerated population. The number of black men in prisons increased from
508,800 in...
"... Trump isn't attempting to appeal to neocons or neoliberals. (New Classical or New Keynesian.) That's Hillary's job. So losing this guy (neocon Bush economist) means nothing. ..."
"... Accusations of corruption against Hillary are ridiculous! Have you ever listened to Hillary's voice? Her speeches are like music to the ears! The only reason why corporations across various industrial complexes - financial, healthcare, private prison, military, Big Oil, etc. - pay Hillary $250k a speech is because they can afford to. The rest of society - the moochers - can only dream of being wealthy enough to enjoy a Hillary speech! ..."
"... I'm so tired of people hating on the rich and disparaging the Clintons' 'democratic innovation' techniques. They are clearly nothing more than envious ingrates and ignoramuses! ..."
"... All of the neoclassical tax cutting over the past 35 years has only provided a net benefit to the upper class. Only 30% of the US economy is related to international trade. So very little of the debt created with tax cuts has trickled down into trade deficits. ..."
"... But trade-liberalization/outsourcing policies, on the other hand, explain how a trade deficit has an accompanying budget deficit (according to the Twin Deficits hypothesis.) If a country is spending more on imports than it is earning in exports it will have to borrow the money to pay for them. ..."
"... Trump's absurd tax cuts would only benefit the top 20%. They would not increase demand for imports or increase the trade deficit. All of this money would be in the form of whopping budget deficits and growing government debt. It would be a spectacular failure. A better one than what Hillary would bring: because the Republicans would be on the hook for it. (If Hillary wins, the Democrats are on the hook for a 12 year Great Recession by 2020. That kicks the New Deal can down the road to 2024.) ..."
"... Sanders supporters dislike Republicans more than Hillary supporters do according to polls. They're not going to go for trickle-down economics. Sanders's message was that the problem with the economy and political system are people like Trump. That's why he proposed a significant financial transaction tax. Sanders supporters agree with Sanders, Dean Baker and Jared Bernstein that corporate trade deals could be made more fair. ..."
"... "Corporate" trade deals aren't the issue. It is capital markets. Republicans wants a total abolition of regulations on capital markets. Not only will Trumps deficits need more foreign finance, he will gut the economy to bring that foreign finance in or gut the economy if it doesn't come in if he trade saber rattles. The only other option is much such large government spending cuts, that creates a recession as well creating capital flight. ..."
"... Mankiw reveals like Krugman he's never been to East Asia, nor is he the least bit curious about why the US developed in the first place. If he had studied economic development or East Asia he would know that blistering high interest rates (+50%) were common in the East Asian countries during their periods of stunning growth. Rising interest rates from the reduced flow of capital would also be associated with - for the first time in 40 years -- positive incentives to invest in US tradable goods production. ..."
"... Watch Charles Ferguson's Inside Job for information on how morally and financially compromised US economists are. ..."
"... And Mankiw does this specifically in the context of offering support to idiotic Republican policies, to pander to the Republican mandarins who hire him every 4 years as economic adviser to their Presidential candidate (and to sell more textbooks at Red-state schools). ..."
"... Why does Mankiw think he deserves to sell his own ass like a two-bit prison whore, while Navarro and Ross can't? ..."
Trump isn't attempting to appeal to neocons or neoliberals. (New Classical or New Keynesian.)
That's Hillary's job. So losing this guy (neocon Bush economist) means nothing.
This argument against Trump's economic plan would appear to be nonsensical. Interest rates
are not marked to international markets. They are set by the central bank to manage demand and
inflation. (According to 'orthodox' economics, protectionism would negatively affect GDP and put
a downward pressure on demand, inflation and interest rates. So this argument is doubly senseless.)
I can't imagine that many economists understand international trade or they wouldn't be in
favor of the highly mercantlist global economy that free-trade globalization has produced.
The 35 years of trade deficits the US has run with undeveloped mercantilist countries is a
triple whammy: 1) jobs, production and investment flow out of the country reducing GDP, real incomes
and demand; 2) the trade deficit has an accompanying budget deficit (according to the Twin Deficits
hypothesis); this creates rising government debt; spending cuts further depress demand; 3) for
every dollar that flows out of the country from imported goods, a dollar must flow back into the
country in the form of foreign investment (i.e. debt owed to foreign countries.)
This process is certainly no Carnot engine. Simply a linear process of wealth being transferred
from one source to another (much of it in debt.) A process that is quickly running out of steam.
My impression is that only a return to the progressive Keynesian New Deal era (that began with
FDR and ended with Reagan) can prevent the global economy from collapsing into fascist revolutions
and world war. (Repeating the history of the 1930s; Trump would make a better Herbert Hoover than
Hillary, that's for sure.)
Accusations of corruption against Hillary are ridiculous! Have you ever listened to Hillary's
voice? Her speeches are like music to the ears! The only reason why corporations across various
industrial complexes - financial, healthcare, private prison, military, Big Oil, etc. - pay Hillary
$250k a speech is because they can afford to. The rest of society - the moochers - can only dream
of being wealthy enough to enjoy a Hillary speech!
I'm so tired of people hating on the rich and disparaging the Clintons' 'democratic innovation'
techniques. They are clearly nothing more than envious ingrates and ignoramuses!
All of the neoclassical tax cutting over the past 35 years has only provided a net benefit
to the upper class. Only 30% of the US economy is related to international trade. So very little
of the debt created with tax cuts has trickled down into trade deficits.
But trade-liberalization/outsourcing policies, on the other hand, explain how a trade deficit
has an accompanying budget deficit (according to the Twin Deficits hypothesis.) If a country is
spending more on imports than it is earning in exports it will have to borrow the money to pay
for them.
Clearly any form of non-regulated stimulus (tax cuts or income redistribution) that primes
anemic demand by putting more money in the hands of the bottom 80% will produce a bigger trade
deficit. The only way to eliminate a trade deficit with a mercantilist country is with tariffs.
If Trump's plan is to raise GDP by eliminating the trade deficit with some form of regulatory
measures, then clearly this could not raise the trade deficit.
Trump's absurd tax cuts would only benefit the top 20%. They would not increase demand
for imports or increase the trade deficit. All of this money would be in the form of whopping
budget deficits and growing government debt. It would be a spectacular failure. A better one than
what Hillary would bring: because the Republicans would be on the hook for it. (If Hillary wins,
the Democrats are on the hook for a 12 year Great Recession by 2020. That kicks the New Deal can
down the road to 2024.)
Sanders supporters dislike Republicans more than Hillary supporters do according to polls.
They're not going to go for trickle-down economics. Sanders's message was that the problem with
the economy and political system are people like Trump. That's why he proposed a significant financial
transaction tax. Sanders supporters agree with Sanders, Dean Baker and Jared Bernstein that corporate
trade deals could be made more fair.
Ben Groves -> Peter K.... , -1
"Corporate" trade deals aren't the issue. It is capital markets. Republicans wants a total
abolition of regulations on capital markets. Not only will Trumps deficits need more foreign finance,
he will gut the economy to bring that foreign finance in or gut the economy if it doesn't come
in if he trade saber rattles. The only other option is much such large government spending cuts,
that creates a recession as well creating capital flight.
Sanders doesn't support deregulated capital markets, he can swagger about 'trade'.
Saigo Takamori : , -1
Mankiw reveals like Krugman he's never been to East Asia, nor is he the least bit curious
about why the US developed in the first place. If he had studied economic development or East
Asia he would know that blistering high interest rates (+50%) were common in the East Asian countries
during their periods of stunning growth. Rising interest rates from the reduced flow of capital
would also be associated with - for the first time in 40 years -- positive incentives to invest
in US tradable goods production.
US economists are paid to confuse people and be confused. Watch Charles Ferguson's Inside
Job for information on how morally and financially compromised US economists are.
No wonder the US is an economic basket case on the cusp of becoming a third world country.
Thanks economists! You guys have the best advice! Free trade and comparative advantage are real
winners! Just ask Haiti, the second most open economy in the Americas after the US.
I've watched Mankiw, on video, on several occasions, make patently false claims about economic
policy based on first-year macro that's completely and utterly disproven at even a third-year
level.
And Mankiw does this specifically in the context of offering support to idiotic Republican
policies, to pander to the Republican mandarins who hire him every 4 years as economic adviser
to their Presidential candidate (and to sell more textbooks at Red-state schools).
Why does Mankiw think he deserves to sell his own ass like a two-bit prison whore, while
Navarro and Ross can't?
Tommy Breen, the low profile boss of support services group
DCC who earned
a relatively modest €737,000 in the year to March 2016, offered the best value for money, according
to rankings by consultants Mercer Kepler.
Alison Cooper, chief executive of consumer goods group Imperial Brands, who was paid £3.58m in
2015, and George Weston, boss of international food group
ABF, who
earned £3.05m in 2015, were in second and third place.
The total pay of all three is below the average pay of £5.5m for a FTSE 100 chief executive in
2015, according to the High Pay Centre.
In contrast, only two of the top 10 best paid FTSE 100 CEOs in 2015 made the top 30 in the value
for money rankings. This was
Shire chief
executive Flemming Ornskov, who earned £14.6m last year, and RELX boss Erik Engstrom, who was awarded
£10.9m.
None of the other top 10 best paid bosses last year, which included Sir Martin Sorrell, who earned
£70.4m at WPP
, Rakesh Kapoor, awarded £23.2m at
Reckitt Benckiser
, Jeremy Darroch, on £16.9m at Sky, or Bob Dudley, on £13.3m at
BP , made
the top 30 value for money list. The index only lists the top 30.
Full details of Mrs May's plans will not be laid out until later in the autumn when BIS, the business
department, launches a consultation. Some of the policies are already known: disclosure of pay ratios,
annual binding shareholder votes on pay and having worker and consumer representatives on boards.
Other investors and business groups have been critical of the planned government reforms, warning
that they may force up pay levels. An annual binding vote, they warn, could create uncertainty, which
in turn might prompt demands for extra compensation.
The Mercer survey looks at the relationship between value created and money earned by a chief
executive. The value is calculated by taking the company's total shareholder return relative to the
FTSE and its sector.
Money earned is the chief executive's three-year average realised pay figure, which is adjusted
for the size of the company. Chief executive pay correlates strongly with company size as well as
performance.
Gordon Clark, partner at Mercer Kepler, said: "Our research puts all companies on a level playing
field when comparing whether their executives offer value for money. It does this by controlling
for differences in sector, size and complexity.
"Executives who create the most value for shareholders relative to their peers, and relative to
their pay, offer the best value for money."
"... ...Second, it should acknowledge at least to itself that it has damaged its credibility by repeatedly holding out the prospects of much more tightening than the market anticipated, being ignored by the market, and then having the market turn out to be right. It should recognize output and inflation and unemployment would all be closer to their target levels today and in their forecasts if rates had not been increased last December... ..."
[It is wonderful to see Larry Summers has redeeming social value. As far as monetary policy
goes then Larry has nailed it here.]
...First, it should acknowledge that the neutral rate is now close to zero and it may well remain
under 2 percent for the foreseeable future...
...Second, it should acknowledge at least to itself that it has damaged its credibility by
repeatedly holding out the prospects of much more tightening than the market anticipated, being
ignored by the market, and then having the market turn out to be right. It should recognize output
and inflation and unemployment would all be closer to their target levels today and in their forecasts
if rates had not been increased last December...
...Third, the Fed should make real the idea that its inflation target is symmetric by being clear
that in the late stage of prolonged expansion with low unemployment it is comfortable with inflation
rising a little bit above 2 percent with the confidence that it will decline when the next recession
comes...
... Fourth, the Fed should make clear that it sees risk as asymmetric right now...
[I can agree with all that without changing my view of last December's 25 basis point FFR hike.
That hike did very little to change the economic conditions compared to how much it did to change
the conversation. How could the hawks be capitulating to the doves now had they not gotten their
chance to be proven wrong? That goes double for the neo-Fisherites.]
"... Isn't the title of his article backward? Shouldn't it be "The economic damage wrought by those in power (including me) is causing the decline of the middle class". Poor Larry doesn't appear to understand cause and effect. ..."
"... You better believe the man is not stupid and understands this very well. Cue Upton Sinclair's "it is difficulty to convince a man to understand something" quote. ..."
"... It is very common for former officials to come forward with critical accounts of current goings-on *including their own term in office* after they have retired from their post. While in office they can simply not let on this kind of thing. It is not polite, or inconsistent with what they are hired and paid to do. (Which is the second and here unstated part of the Sinclair quote.) ..."
"... Let me see. The rich run the country, and the government. and they have figured out how to suck $400 Billion per year out of the real economy and into their financial pockets. And Larry proposes that the government, controlled by these same rich, remember, adopt policies which will put an end to the feeding frenzy. ..."
"... Even that "reduction" is debate-able. Summers ignores the credit boom and the 98-06 spending orgy. Credit markets drive spending more than base income. Ig spending starts rising "above potential" in 2017-19, then his thesis will collapse along with another correction/recession in the early 20's. ..."
"... America ran a "soft" national socialist economy during and after WWII. ..."
"... Trump supports a complete deregulation of capital markets while the Clinton's a modest firming of them. This is what people don't understand. It isn't trade that determines national production and consumption. ..."
"... You simply can't bring back the Nazi/Soviet bubble back that created the late 20th century middle class. The Capitalists won't allow it. The system is going back to where it was in March of 1929. It always was. ..."
"... Yeah okay, except you might be able to explain it to the kleptocrats better if you use simple economics to show that there'll be more interest income for them if they just lift their jackboot off the throat of the working class, instead of trying to stripmine the West for dirt and dumping their trillions in tax haven accounts earning negative rates. ..."
"... The median household income is approximately $56,000, therefore the IMF study places the breakpoint between "middle" and "high" income at $84,000 (150% of median income). It strikes me that this is unrealistically low. The really meaningful divergence in lifestyles and consumption behavior certainly occurs at a significantly higher level than this. ..."
"... The other question this study raises is, what is the quantifiable extent to which economic growth in the mid-90's to the mid-aughts (prior to the meltdown) was the result of the debt bubble (more broadly than just housing bubble). It would be very interesting to see an estimate of the aggregate impact on the economy has been from the suppression of workers' wages over the past several decades. ..."
"... I don't follow the argument to be honest. The US has a chronic trade deficit. It doesn't actually suffer from inadequate domestic demand, but from an overvalued dollar. His argument might hold for other countries though. ..."
"... That doesn't mean that a "hollowed-out" middle class doesn't have a negative impact on the economy, but it means that you won't see the problem looking at the macro-data (apart from productivity growth statistics perhaps) but in the structure of the economy. It is very hard to find a new high value added niche in mass markets today, because of the lack of disposable income of the masses. ..."
"... Such an article can be viewed as a sign of the collapse of neoliberal model. ..."
This level of reduction in spending is huge. For example, it exceeds by a significant margin
the
impact in any year of the Obama stimulus program. Alone it would be enough to account for
a significant reduction in
neutral real
interest rates . If consumers were spending 3 percent more, there would be scope to maintain
full employment at interest rates much closer to normal. And there would be much less of a problem
of monetary policy's
inability to respond to the next recession.
What is the policy implication? Principally, it is the macroeconomic importance of supporting
middle class incomes. This can be done in a range of ways from promoting workers right to
collectively bargain to raising spending on infrastructure to making the tax system more progressive.
...
Isn't the title of his article backward? Shouldn't it be "The economic damage wrought by those
in power (including me) is causing the decline of the middle class". Poor Larry doesn't appear
to understand cause and effect.
cm -> David...
You better believe the man is not stupid and understands this very well. Cue Upton
Sinclair's "it is difficulty to convince a man to understand something" quote.
It is very common for former officials to come forward with critical accounts of current
goings-on *including their own term in office* after they have retired from their post. While
in office they can simply not let on this kind of thing. It is not polite, or inconsistent
with what they are hired and paid to do. (Which is the second and here unstated part of the
Sinclair quote.)
Let me see. The rich run the country, and the government. and they have figured out how
to suck $400 Billion per year out of the real economy and into their financial pockets. And Larry
proposes that the government, controlled by these same rich, remember, adopt policies which will
put an end to the feeding frenzy.
Ha, Ha, Ha. No. I think not. Any policy our- *their* government would adopt would be purely
cosmetic. If, after 40 years of depredations, they finally feel the need to put lipstick on this
particular pig.
To be sure, 3 % per year will probably be lethal to society, and sooner rather than later.
But, sustainability has never been a feature of capitalism.
Polarization has reduced "consumer spending" by more than 3 percent or about $400 billion annually.
Consumer spending. Not spending (investment). I'm not disagreeing with Summers, just pointing
out the qualification.
Even that "reduction" is debate-able. Summers ignores the credit boom and the 98-06 spending
orgy. Credit markets drive spending more than base income. Ig spending starts rising "above potential"
in 2017-19, then his thesis will collapse along with another correction/recession in the early
20's.
Most of the myth of the American middle class was a Nazi/Soviet driven illusion. America
ran a "soft" national socialist economy during and after WWII. It was about organic
cohesiveness between government, business and labor. It is part of the reason Hillary is getting
her own white nationalist support, even though they don't like her.
Most of Trumps are ex-neocons, other various "old" white nationalist like conman, gambler David
Duke (aka, I took my non-white mistress to France for a abortion) and other useless tools like
Stormfront, which only represent 25% of the total "white nationalist" vote, yet because of jewish
pact money, get the most noise in the media.
Trump supports a complete deregulation of capital markets while the Clinton's a modest
firming of them. This is what people don't understand. It isn't trade that determines national
production and consumption.
You simply can't bring back the Nazi/Soviet bubble back that created the late 20th century
middle class. The Capitalists won't allow it. The system is going back to where it was in March
of 1929. It always was.
ken melvin :
Well known, the housing prices in the Bay Area are insane. Along with goes the 'house poor'
syndrome. The 'middle class' spends all it's money on housing, leaving little or nothing for such
as dining out, skiing trips, triops o the beach, ...
As consequence, those restaurants that used to cater to the dining out of these folks are all
closed. So, the little resort town stops, motels, ... on the way to ski resorts, the beach, etc.
Dan Kervick said...
The decline of the middle class IS economic damage, not just a cause of economic damage. You
don't have to demonstrate that the decline of the middle class has had some negative impact on
some further economic aggregate, such as the aggregate purchased output of consumables, in order
to see it as a form of damage in itself.
pgl -> Dan Kervick...
I absolutely agree. So well said as this is a very important point. Regardless of all the other
issues that may be attributable to income inequality - we need to address income inequality period.
vic twente -> pgl...
Yeah okay, except you might be able to explain it to the kleptocrats better if you use
simple economics to show that there'll be more interest income for them if they just lift their
jackboot off the throat of the working class, instead of trying to stripmine the West for dirt
and dumping their trillions in tax haven accounts earning negative rates.
vic twente -> vic twente...
Point being it's the kleptocrat class who has to decide to let the working class gain some
income improvement and increased ability to consume. Unless of course you're all for just killing
the lot of them, in which case I merely find your position intriguing and may subscribe to your
newsletter.
Dan Kervick -> vic twente...
I agree that's probably part of what Summers is up to in this piece. His audience is the big
wheels, and he's probably aiming at convincing them that the problems of the middle class are
ultimately their problem as well.
reason -> Dan Kervick...
Yes, let me third that. A very good point. Another case of treating the "economy" as that it
is something that has a value independent of the people that it is supposed to be serving.
Who Ma Weeny said...
decline of the middle class is causing even more economic damage than we realized: I have just
come across an International Monetary Fund working paper on income polarization in the United
States that makes an important contribution to the secular stagnation
.....
policy implication? Principally, it is the macroeconomic importance of supporting middle class
incomes. This can be done in a range of ways from promoting workers right
"
By definition, income polarization is the divide between upper vs lower caste, not middle caste.
Forget middletons! We need less contrast between upper and lower caste. Even Keynesian-s admit
that it is the transfer of buying power from upper to lower caste that "stimulates", lower propensity
to upper propensity to consume. Hell! LS, don't stop off in the middle!
A Boy Named Sue said...
Lets remember, Larry Summers was one of the persons who drove Brooksley Born out of town for
sending up the red flag on toxic derivatives.
Summers was one of the free market crowd under Clinton, Rubin, and Greenspan who ignored the warnings
of toxic derivative tradings.
While Summers is able to have a change of heart, unlike many conservatives, he was a part of the
neo-liberal elite who helped crashed the economy.
Would I ever expect an apology out of him? No.
Tom aka Rusty -> A Boy Named Sue...
If I remember correctly Summers was a big advocate of "too big to prosecute" and had at least
one ugly conversation with Elizabeth Warren at the White House.
Tom aka Rusty -> Tom aka Rusty ...
More correctly he did not want to prosecute foreclosure fraud because it might slow market
clearing in the housing sector.
Chris Lowery said...
The median household income is approximately $56,000, therefore the IMF study places the
breakpoint between "middle" and "high" income at $84,000 (150% of median income). It strikes me
that this is unrealistically low. The really meaningful divergence in lifestyles and consumption
behavior certainly occurs at a significantly higher level than this.
And if the authors had performed their analyses using a higher breakpoint, they probably would
have seen much greater income stagnation and a greater divergence in the propensity to consume.
I haven't delved into the math, but I'd guess they might have seen an even greater impact -- as
if 3% weren't enough! -- on the economy from lower consumption.
The other question this study raises is, what is the quantifiable extent to which economic
growth in the mid-90's to the mid-aughts (prior to the meltdown) was the result of the debt bubble
(more broadly than just housing bubble). It would be very interesting to see an estimate of the
aggregate impact on the economy has been from the suppression of workers' wages over the past
several decades.
kaleberg said...
I don't have a lot of hope, but at least they are realizing that square wheels don't seem to
rotate all that well. All of this was rather obvious back in 1930. That's why the New Deal created
a US middle class, to get a sustainable economy. This is only non-obvious now thanks to a well
funded disinformation campaign that succeeded in the 1980s.
David said...
I totally argree that middle class income stagnation and income inequality decrease aggregate
demand and probably hurts consumer confidence. But it also creates political instability. For
40 years the Republican Party has resentment, tribalism, and increasingly less subtle racist tropes
to push for policies that increase inequality and Trump is doing that on steroids.
The Republican Party needs be called out on this bait and switch.
reason said...
I don't follow the argument to be honest. The US has a chronic trade deficit. It doesn't
actually suffer from inadequate domestic demand, but from an overvalued dollar. His argument might
hold for other countries though.
That doesn't mean that a "hollowed-out" middle class doesn't have a negative impact on
the economy, but it means that you won't see the problem looking at the macro-data (apart from
productivity growth statistics perhaps) but in the structure of the economy. It is very hard to
find a new high value added niche in mass markets today, because of the lack of disposable income
of the masses.
Again, I appeal, please let us concentrate on more on the dynamics of the economy (for instance
the life cycle of new products and new processes) and less on comparative static (equilibrium)
perspective. Far too much talk about "growth" or "productivity" sees these processes as governed
by magic, rather than by observable dynamics. I sincerely believe that this is the direction economics
needs to go.
likbez said...
Such an article can be viewed as a sign of the collapse of neoliberal model.
Summers was/is a staunch supporter of deregulation of financial sector. He also played a role
of a hired gun in killing Glass-Steagall.
Later with his fees for speaking (for example, $135K for a single speech from Goldman Sachs)
he became a walking illustration of the corruption of the academy by special interests. Essentially
he became an academic lobbyist for financial industry.
During his stint in the Clinton administration, Summers was successful in pushing for capital
gains tax cuts.
The crisis exposed some serious flaws in our economic thinking. It has highlighted the need to
look at economic policy with more critical, fresh approaches. It has also revealed the limitations
of existing tools for structural analysis in factoring in key linkages, feedbacks and trade-offs
– for example between growth, inequality and the environment.
We should seize the opportunity to develop a new understanding of the economy as a highly complex
system that, like any complex system, is constantly reconfiguring itself in response to multiple
inputs and influences, often with unforeseen or undesirable consequences. This has many implications.
It suggests policymakers should be constantly vigilant and more humble about their policy prescriptions,
act more like navigators than mechanics, and be open to systemic risks, spillovers, strengths, weaknesses,
and human sensitivities. This demands a change in our mind-sets, and in our textbooks. As John Kenneth
Galbraith once said, "the conventional view serves to protect us from the painful job of thinking."
This is why at the OECD we launched an initiative called New Approaches to Economic Challenges
(NAEC). With this initiative we want to understand better how the economy works, in all its complexity,
and design policies that reflect this understanding. Our aim is to consider and address the unintended
consequences of policies, while developing new approaches that foster more sustainable and inclusive
growth.
Complexity is a common feature of a growing number of policy issues in an increasingly globalised
world employing sophisticated technologies and running against resource constraints.
The report of the OECD Global Science Forum (2009) on Applications of Complexity Science for Public
Policy reminds us of the distinction between complicated and complex systems. Traditional science
(and technology) excels at the complicated, but is still at an early stage in its understanding of
complex phenomena like the climate.
For example, the complicated car can be well understood using normal engineering analyses. An
ensemble of cars travelling down a highway, by contrast, is a complex system. Drivers interact and
mutually adjust their behaviours based on diverse factors such as perceptions, expectations, habits,
even emotions. To understand traffic, and to build better highways, set speed limits, install automatic
radar systems, etc., it is helpful to have tools that can accommodate non-linear and collective patterns
of behaviour, and varieties of driver types or rules that might be imposed. The tools of complexity
science are needed in this case. And we need better rules of the road in a number of areas.
This is not an academic debate. The importance of complexity is not limited to the realm of academia.
It has some powerful advocates in the world of policy. Andy Haldane at the Bank of England has thought
of the global financial system as a complex system and focused on applying the lessons from other
network disciplines – such as ecology, epidemiology, and engineering – to the financial sphere. More
generally, it is clear that the language of complexity theory – tipping points, feedback, discontinuities,
fat tails – has entered the financial and regulatory lexicon. Haldane has shown the value of adopting
a complexity lens, providing insights on structural vulnerabilities that built up in the financial
system. This has led to policy suggestions for improving the robustness of the financial system.
Closer to home, Bill White, Chairman of our Economic and Development Review Committee (EDRC) has
been an ardent advocate of thinking about the economy as a complex system. He has spoken in numerous
OECD meetings – in part as an explanation and in part as a warning – that systems build up as a result
of cumulative processes, can have highly unpredictable dynamics and can demonstrate significant non-linearity.
As a result Bill has urged policymakers to accept more uncertainty and be more prudent. He also urged
economists to learn some exceedingly simple but important lessons from those that have studied or
work with complex systems such as biologists, botanists, anthropologists, traffic controllers, and
military strategists.
Perhaps the most important insight of complexity is that policymakers should stop pretending that
an economy can be controlled. Systems are prone to surprising, large-scale, seemingly uncontrollable,
behaviours. Rather, a greater emphasis should be placed on building resilience, strengthening policy
buffers and promoting adaptability by fostering a culture of policy experimentation.
At the OECD, we are starting to embrace complexity. For several years we have been mapping the
trade "genome" with our Trade in Value Added (TiVA) database to explain the commercial interconnections
between countries.
We have examined the possibilities for coupling economic and other systems models, for example
environmental (climate) and societal (inequalities). Our work on the Costs of Inaction and Resource
Constraints: Implications for Long-term Growth (CIRCLE) is a key example of linking bio-physical
models and economic models to gauge the impact of environmental degradation and climate change on
the economy.
We are also looking at governing complex systems in areas as diverse as education and international
trade policy. And we are looking at the potential for tapping big data – an indispensable element
of complexity modelling approaches. But there remains much to do to fully enrich our work with the
perspectives of complexity.
The OECD is delighted to work with strong partners – the Institute for New Economic Thinking (INET)
Oxford, and the European Commission to help policy-makers advance the use of complex systems thinking
to address some of the most difficult challenges.
An important question remains. How can the insights and methods of complexity science be applied
to assist policymakers as they tackle difficult problems in areas such as environmental protection,
financial regulation, sustainability or urban development?
At the Workshop on Complexity and Policy on 29-30 September at the OECD, we will help find the
answer – stimulate new thinking, new policy approaches and ultimately better policies for better
lives.
[Sometimes when it seems like you are just howling at the moon there really is a new day coming.]
I think it is both correct,
and entirely wrong-headed.
Firstly, we have not believed that the economy can be controlled (we were just trying
to steer it) - the guiding principle was that it didn't need to be controlled which is something
completely different. It also falls into the trap of talking about "the economy" as though
the economy was an organism that had its own purposes, rather than as a set of institutions
that ultimately exist to serve human beings (a job which it achieves with quite varying
degrees of success). I won't say this approach is necessarily bound to fail, I just doubt
that it will be alone sufficient.
The OECD is one of those institutions.
Yep, they have plenty of their own assumptions. Complexity has been mentioned here before.
Exactly what they mean is indeterminable from the general principles mentioned, but examples
are worthwhile. You might read them to mean be cautious about leaps of faith such as financial
deregulation because bad stuff CAN happen.
"...Perhaps the most important
insight of complexity is that policymakers should stop pretending that an economy can be
controlled. Systems are prone to surprising, large-scale, seemingly uncontrollable, behaviours.
Rather, a greater emphasis should be placed on building resilience, strengthening policy
buffers and promoting adaptability by fostering a culture of policy experimentation..."
[In context I took this more to mean that economic models are probabilistic at best rather
than deterministic rather than that it said policy makers in the OECD were performing central
planning of the economy, which everyone knows is not true.]
Firstly, we have not believed
that the economy can be controlled (we were just trying to steer it) - the guiding principle
was that it didn't need to be controlled which is something completely different. It also
falls into the trap of talking about "the economy" as though the economy was an organism
that had its own purposes, rather than as a set of institutions that ultimately exist to
serve human beings (a job which it achieves with quite varying degrees of success)....
Re: Stop pretending that an economy can be controlled -
OECD Insights
"The crisis exposed some serious flaws in
our economic thinking. It has highlighted the need to look
at economic policy with more critical, fresh approaches.
It has also revealed the limitations of existing tools for
structural analysis in factoring in key linkages,
feedbacks and trade-offs – for example between growth,
inequality and the environment.
We should seize the opportunity to develop a new
understanding of the economy as a highly complex system
that, like any complex system, is constantly reconfiguring
itself in response to multiple inputs and influences,
often with unforeseen or undesirable consequences. This
has many implications. It suggests policymakers should be
constantly vigilant and more humble about their policy
prescriptions, act more like navigators than mechanics,
and be open to systemic risks, spillovers, strengths,
weaknesses, and human sensitivities. This demands a change
in our mind-sets, and in our textbooks. As John Kenneth
Galbraith once said, "the conventional view serves to
protect us from the painful job of thinking."
..................................
Complex systems such as chemical processes are managed by
feedback control systems that specify a desired output and
then measure deviation from that control point (the error
signal) to adjust the inputs and thus return to the
desired setpoint.
I have promoted the use of control theory concepts in
economics before. From a previous post:
Auto-control:
Did you ever think about how you keep the temperature
in your house at a comfortable level even though the
weather is unpredictable and can change a lot?
Well, maybe the level of the economy could be controlled
on similar principles. Maybe economists could borrow from
the control theory that is employed in air conditioning
thermostats.
For example, if we wanted to maintain full employment we
could adjust inputs in a similar manner to the way heat
and cooling is adjusted in your house. Just as heat is
added when the temperature gets too low, government jobs
could be added when private employment falls short. When
the temperature starts to get too high ( full employment
is achieved), heat could be sucked out ( no more jobs
would be added and/or higher taxes could be imposed) to
cool things off.
This is an appealing analogy because, like the weather,
the economy is inherently unpredictable and, like the air
conditioning in your house, you could keep things
comfortable without the need of forecasting the
unknowable.
So maybe economists should forsake their DSGE models and
instead study control theory.
...................
In my view such approaches are not promoted because they
require central control by the state and our elite
establishment quashes such threats to their dominance.
That is why Keynes' conclusions were subverted:
"The context is as follows: in an interview with the
leftist British journalist Kingsley Martin (1897–1969) in
the New Statesman of January 1939, Keynes – commenting on
the need for a new interventionist economic system and at
the same time the need to avoid the authoritarianism of
the Fascist and communist states – said this:
"The question is whether we are prepared to move out of
the nineteenth-century laissez faire state into an era of
liberal socialism, by which I mean a system where we can
act as an organized community for common purposes and to
promote social and economic justice, whilst respecting and
protecting the individual-his freedom of choice, his
faith, his mind and its expression, his enterprise and his
property." (Moggridge 1982: 500 = Keynes and Martin 1939:
123).
............
Many people now accept that we have traveled the wrong
path since the 1950's. I would submit that economists
would do well to go back to the ideas of Keynes, Kalecki,
Lerner and perfect those concepts within a framework of
automatic stabilization. This would be greatly facilitated
if some prominent economists would have the guts to say
again what Keynes was saying in the 30's.
What would a recommended reading of or about Abba Lerner
be? Though Lerner is frequently mentioned, I still have no
idea where to begin reading. Would this do?
The Lerner symmetry theorem is a result used in
international trade theory, which states that, based on an
assumption of a zero balance of trade (that is, the value
of exported goods equals the value of imported goods for a
given country), an ad valorem import tariff (a percentage
of value or an amount per unit) will have the same effects
as an export tax. The theorem is based on the observation
that the effect on relative prices is the same regardless
of which policy (ad valorem tariffs or export taxes) is
applied.
The theorem was developed by economist Abba P. Lerner
in 1936.
Functional Finance and Full Employment: Lessons from
Lerner for Today?
By Mathew Forstater
The Asian Crisis, with the fallout in Latin America and
the transition economies; the Russian default; continuing
troubles in Japan; weaknesses in the structure of the new
European EMU; volatility on Wall Street; deflationary
pressures in the global economy: recent economic
developments invite a reconsideration of some of our most
deeply held beliefs concerning economic theory and public
policy. Even within the hallowed halls of mainstream
economics, voices of dissent can be heard. Paul Krugman,
Joseph Stiglitz, and Jeffrey Sachs are among those whose
recent proclamations indicate that we have entered a
period in which orthodox views are being openly
questioned, creating an atmosphere characterized by a
crisis of confidence.
Such periods of impending crisis and open expressions
of self-doubt, questioning our most deeply held beliefs
about the way the world works, creates a climate in which
the ideas of the great unorthodox thinkers of the past may
be revisited. The work of those who in the past dedicated
their lives to formulating solutions to the challenges of
modern capitalist economies may contain lessons applicable
to the contemporary situation. It is in this spirit that
this paper revisits the early works of Abba Lerner,
outlining fifteen such lessons regarding macroeconomic
theory and policy, as fresh in the context of the current
scene as they were some five decades ago when they were
first formulated.
Lesson #1: Full employment, price stability, and a
decent standard of living for all are fundamental
macroeconomic goals, and it is the responsibility of the
state to promote their attainment.
Lesson #2: Policies should be judged on their ability
to achieve the goals for which they are designed and not
on any notion of whether they are "sound" or otherwise
comply with the dogmas of traditional economics.
Lesson #3: "Money Is a Creature of the State"
Lesson #4: Taxing is not a funding operation.
Lesson #5: Government Borrowing is not a funding
operation.
Lesson #6: The primary purpose of taxation is to
influence the behavior of the public.
Lesson #7: The primary purpose of government bond sales
is to regulate the overnight interest rate.
Lesson #8: Bond sales logically follow from, rather
than precede, government spending....
Functional Finance: Monetary and Fiscal Policy for
Sovereign Currencies
By L. Randall Wray
Today we will lay out Abba Lerner's approach to policy.
In the 1940s he came up with what he called the functional
finance approach to policy.
Lerner's Functional Finance Approach. Lerner posed two
principles:
First Principle: if domestic income is too low,
government needs to spend more. Unemployment is sufficient
evidence of this condition, so if there is unemployment it
means government spending is too low.
Second Principle: if the domestic interest rate is too
high, it means government needs to provide more "money",
mostly in the form of bank reserves.
The idea is pretty simple. A government that issues its
own currency has the fiscal and monetary policy space to
spend enough to get the economy to full employment and to
set its interest rate target where it wants. (We will
address exchange rate regimes later; a fixed exchange rate
system requires a modification to this claim.) For a
sovereign nation, "affordability" is not an issue-it
spends by crediting bank accounts with its own IOUs,
something it can never run out of.If there is unemployed
labor, government can always afford to hire it-and by
definition, unemployed labor is willing to work for money.
Lerner realized that this does not mean government
should spend as if the "sky is the limit"-runaway spending
would be inflationary (and, as discussed many times, it
does not presume that government spending won't affect the
exchange rate). When Lerner first formulated the
functional finance approach (in the early 1940s),
inflation was not a major concern-the US had recently
lived through deflation in the Great Depression. However,
over time, inflation became a serious concern, and Lerner
proposed a form of wage and price controls to constrain
inflation that he believed would result as the economy
nears full employment. Whether or not that would be an
effective and desired way of attenuating inflation
pressures is not our concern here. The point is that
Lerner was only arguing that government should use its
spending power with a view to moving the economy toward
fullemployment-while recognizing that it might have to
adopt measures to fight inflation.
Lerner rejected the notion of "sound finance"-that is
the belief that government ought to run its finances as if
it were like a household or a firm. He could see no reason
for the government to try to balance its budget annually,
over the course of a business cycle, or ever. For Lerner,
"sound" finance (budget balancing) was not "functional"-it
did not help to achieve the public purpose (including, for
example, full employment). If the budget were occasionally
balanced, so be it; but if it never balanced, that would
be fine too. He also rejected any attempt to keep a budget
deficit below any specific ratio to GDP, as well as any
arbitrary debt to GDP ratio. The "correct" deficit would
be the one that achieves full employment.
Similarly the "correct" debt ratio would be the one
consistent with achieving the desired interest rate
target. This follows from his second principle: if
government issues too much debt, it has by the same token
issued too few bank reserves and cash. The solution is for
the treasury and central bank to stop selling bonds,and,
indeed, for the central bank to engage in open market
purchases (buying treasuries by crediting the selling
banks with reserves). That will allow the overnight rate
to fall as banks obtain more reserves and the public gets
more cash.
Essentially, the second principle just says that
government ought to let the banks,households, and firms
achieve the portfolio balance between "money" (reserves
and cash) and bonds desired. It follows that government
bond sales are not really a "borrowing" operation required
to let the government deficit spend. Rather, bond sales
are really part of monetary policy, designed to help the
central bank to hit its interest rate target. All of that
is consistent with the modern money view advanced
previously....
"... Why all the bullshit jobs? And why are the most necessary and useful jobs, almost inevitably the lowest prestige and lowest paid? Capitalism. It's a nasty, nasty, nasty tangle of perverse incentives and evil. ..."
Why all the bullshit jobs? And why are the most necessary and useful jobs, almost inevitably
the lowest prestige and lowest paid? Capitalism. It's a nasty, nasty, nasty tangle of perverse
incentives and evil.
The answer clearly isn't economic: it's moral and political. The ruling class has figured
out that a happy and productive population with free time on their hands is a mortal danger (think
of what started to happen when this even began to be approximated in the '60s). And, on the other
hand, the feeling that work is a moral value in itself, and that anyone not willing to submit
themselves to some kind of intense work discipline for most of their waking hours deserves nothing,
is extraordinarily convenient for them. David Graeber from
http://evonomics.com/why-capitalism-creates-pointless-jobs-david-graeber/
Also, as several here have noted, one can work without a job if they have such resources as
land or a workshop and, dare I say it, an income.
"... Ridiculing the anachronism of Marxism is a pastime, but what are to do with neoclassical economics? Even if I believed that world leaders ceremonially signing agreements were willing to act in (corrupt) principle, there is still the small matter of technocratic palsy among the economists. I mean, did you read the 5th IPCC summary? Responding will cost growth. ..."
"... What I do get explicitly from Marxism which is mostly only implicit in neoclassical economics is that increasing inequality is bad news for managing resource limits and externalities. ..."
"... The demands of the masses can be crammed down, but at a cost to social discipline as well as poverty. The power of the rich to marshal resources to mitigate the effects and externalize and socialise costs will exacerbate the main drivers. ..."
Throwing around a Marxist accented capitalism label as all purpose explanator does not seem to
me to providing much insight independent of what is projected onto it, and calling for Monty Python
revolution proves as much, imho. That said, neoclassical economics is even less helpful.
Quite apart from the impulses of sociopathic or philanthropic financiers - are they the same
or different people? - the official doctrine of economic analysis, in which framework public policy
must be drawn, has been remarkably unhelpful in developing a common understanding of what needs
to be done, imho.
Ridiculing the anachronism of Marxism is a pastime, but what are to do with neoclassical
economics? Even if I believed that world leaders ceremonially signing agreements were willing
to act in (corrupt) principle, there is still the small matter of technocratic palsy among the
economists. I mean, did you read the 5th IPCC summary? Responding will cost growth.
But, not to worry, we will be able to extract carbon at scale real soon and reverse overshoot.
The optimistic reply seems to reject the need for an overarching framework of ideas to give
context and orientation: apparently, solar electricity will keep getting cheaper - here is a price
per kWh - problem solved. Which problem? . . .?
What I do get explicitly from Marxism which is mostly only implicit in neoclassical economics
is that increasing inequality is bad news for managing resource limits and externalities.
The demands of the masses can be crammed down, but at a cost to social discipline as well
as poverty. The power of the rich to marshal resources to mitigate the effects and externalize
and socialise costs will exacerbate the main drivers.
"... By Alejandro Reuss, a historian, economist, and co-editor of Triple Crisis blog and ..."
"... magazine. Originally published at Triple Crisis ..."
"... This is the first part of a three-part series on the historical trajectory of European social democracy towards the so-called "Third Way"-a turn away from class-struggle politics and a compromise with neoliberal capitalism-and its role in the shaping of the Economic and Monetary Union of the EU. It is a continuation of his earlier series "The Eurozone Crisis: Monetary Union and Fiscal Disunion" ( Part 1 and Part 2 ). His related article "An Historical Perspective on Brexit: Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism" is available here . ..."
"... legitimation crisis of capital from the standpoint of capitalists themselves, ..."
"... "This, of course, has always been a fundamental contradiction when left-social democratic parties have swept to power: the political consciousness of its working class base demands a direct attack on the inequities and injustices of capitalism but not to the extent of overthrowing capitalism itself. Social democracy is thus philosophically idealist about fundamentally altering the dynamics of capitalism while ignoring that those reforms will never change capitalism's core dynamic of class rule and exploitation, but it will cloak this under the rubric of pragmatism and the endless possibility of voting in a bourgeois electoral system. In an era of expanding worldwide demand and growth of industry in the core, the social democratic system of working class empowerment could be tolerated as it tamed the wilder impulses of the working class while creating the consumers now lauded as the "middle class" of 20th century capitalism's 30-year golden age in the post-WWII era. Social democracy never won the working class political control, but the power wielded by socialist parties allowed segments of the working class access an increasing share of capital's immense accumulation in the post-war era. ..."
Posted on
September 30, 2016
by
Yves Smith
By Alejandro Reuss, a historian, economist, and co-editor of Triple
Crisis blog and
Dollars & Sense
magazine. Originally published at
Triple Crisis
This is the first part of a three-part
series on the historical trajectory of European social democracy towards the
so-called "Third Way"-a turn away from class-struggle politics and a compromise
with neoliberal capitalism-and its role in the shaping of the Economic and
Monetary Union of the EU. It is a continuation of his earlier series "The
Eurozone Crisis: Monetary Union and Fiscal Disunion" (
Part
1
and
Part 2
). His related article "An Historical Perspective on Brexit:
Capitalist Internationalism, Reactionary Nationalism, and Socialist
Internationalism" is available
here
.
The idea of a united Europe was not unique to neoliberal politicians or
financial capitalists, even if their vision was the one that ended up winning
out. Rather, this idea cut across the entire political spectrum, from forces
clearly associated with giant capitalist corporations and high finance to those
associated with the working-class movement. Just as there have been
"anti-Europe" or "euroskeptic" forces on the political left and right, there
were also diverse forces in favor of European unification, each with its own
vision of what a united Europe could be.
Going back to the mid-20th century, leaders of the social democratic,
reformist left envisioned a future "Social Europe." The European Social
Charter, adopted by the Council of Europe in 1961, promulgated a broad vision
of "social and economic rights," including objectives like full employment,
reduction of work hours, protection of workers' rights to organize and bargain
collectively, rights to social security and medical assistance, protection of
the rights of migrants, and so on.
Figures on the revolutionary left, like the Belgian Marxist economist and
Trotskyist leader Ernest Mandel, advocated a "United Socialist States of
Europe." This was an expression not only of revolutionary internationalism, but
also of Mandel's view that the working class could no longer confront
increasingly internationalized capital through political action confined to the
national level.
In other words, the question was not just whether Europe would become
united, but (if it did) what form such unification would take.
Triumph of the "Modernizers"
The vision of social democracy on a grand scale did not come to pass, nor
even was there significant movement in that direction when social democratic
parties led the governments of the largest and most powerful countries in the
EU. During overlapping periods in the late 1990s, the Labour Party's Tony Blair
was prime minister in the U.K., the Socialist Lionel Jospin was prime minister
in France (though in "cohabitation" with Conservative president Jacques
Chriac), the L'Ulivo (Olive Tree) coalition's Romano Prodi led the government
in Italy, and the Social Democrat Gerhard Schroeder (leading the so-called
"Red-Green" coalition, with the Green Party as junior partner) was the
chancellor of Germany.
All of these governments were led by figures who had turned away from the
traditional social-democratic politics of class struggle (in even the moderated
form prevalent in the postwar period), while still promising to temper
neoliberal capitalism. This approach became known as the "Third Way," a term
especially associated with the "New Labour" program of Blair in the U.K., but
also used to describe similar shifts in other countries. As Swedish political
scientist Peo Hansen puts it, Blair expressed "unconditional espousal of
capitalist globalization and … further liberalization of labour markets."
Jospin, who campaigned as a critic of neoliberalism, quickly shifted to
"multiple privatization schemes and policy reshufflings favourable to
business." Prodi was "firmly in the camp of the 'modernisers'."
The case of Germany is especially instructive: The finance minister in the
Social Democratic-Green coalition government, Oskar Lafontaine, was notable for
swimming against the neoliberal tide-criticizing the EU's fiscal constraints
and inflation-targeting monetary policy, and proposing the adoption of common
tax and social welfare policies. That is, he was arguing for EU-wide social
democratic reforms to end "race to the bottom" dynamics (on wages, taxes, etc.)
emerging in the EU. "Wage dumping, tax dumping and welfare dumping," Lafontaine
declared, "are not our [social democrats'] response to the globalization of
markets!" That was too much for Schroeder and other social democratic leaders
in Europe, and Lafontaine resigned under pressure in 1999.
Lafontaine would later become a founder and leader of Die Linke (The Left),
which is certainly to the left of the Social Democrats. He was not, however, a
revolutionary who threatened to upset the reformist apple cart. Rather, argues
Hansen, Lafontaine was a "political liability among his own for merely sticking
with a set of very traditional social democratic policies and values."
The Third way movements, so called, used the language of reform, the
language of toned-down class struggle to gain power but have never worked
toward any of the goals implicit in that language. The opposite is true.
Politicians like The Clintons, and Obama in the US, and Blair in the UK, have
worked steadily to erode the gains made by workers struggles in the 20th
century, and have done far more to that end than any right wing ideologue could
have. . There have a been a few bitter lesson for the working class in it 1.
Like it or not, there is a class struggle 2. class struggle doesn't end when
you gain a few concessions 3. You cant hire opportunistic politicians to carry
on that struggle for you by voting for them once every few years.
I'll once again jump in, hands waving, to recommend Wolfgang Streeck's
"Buying Time" and Peter Mair's "Ruling the Void" to anyone who wants a more
developed take on this subject. Streeck is particularly good on how Marxist
theorists missed the boat on the possibility of a
legitimation crisis of
capital from the standpoint of capitalists themselves,
as opposed to the
standpoint of the working and - I'll cautiously add - professional-managerial
classes. There's also a useful periodization of the changes in sources of state
funding, accompanied by consideration of the politics accompanying those
changes. Mair is great on how "catch-all" parties developed out of the more
class struggle-oriented parties the article refers to. (It's a real shame Mair
died relatively young.).
"This, of course, has always been a fundamental contradiction when
left-social democratic parties have swept to power: the political
consciousness of its working class base demands a direct attack on the
inequities and injustices of capitalism but not to the extent of
overthrowing capitalism itself. Social democracy is thus philosophically
idealist about fundamentally altering the dynamics of capitalism while
ignoring that those reforms will never change capitalism's core dynamic of
class rule and exploitation, but it will cloak this under the rubric of
pragmatism and the endless possibility of voting in a bourgeois electoral
system. In an era of expanding worldwide demand and growth of industry in
the core, the social democratic system of working class empowerment could be
tolerated as it tamed the wilder impulses of the working class while
creating the consumers now lauded as the "middle class" of 20th century
capitalism's 30-year golden age in the post-WWII era. Social democracy never
won the working class political control, but the power wielded by socialist
parties allowed segments of the working class access an increasing share of
capital's immense accumulation in the post-war era.
Syriza has arrived on the scene decades after the last meaningful acts of
social-democracy could occur. Capitalism in the core has long since ceased
to need to make deals with socialist parties as representatives of an
industrial proletariat; those jobs have been replaced by shifting industrial
work to the periphery as the capitalist world-system tends to do
specifically as acounter to the success of mid-century social-democracy, or
by increasing mechanization in the core – again, a tendency within
capitalism well described by Marx. Straitjacketed by a capitalism that no
longer needs to tame a restless proletariat into a large consumer class,
Syriza faces immense pressure from "the institutions" to allow continued
profiteering from privatization and bond repayment – the very things that
constitute super-profit in the financial era of this end of capitalism's
long-cycle. Add to this the European Union's structure itself, which was
built to constrain any national attempts at left-reformism, and Syriza's
determination not to even bluff about a Grexit – which might provide a
modicum of control over at least the nation's currency and deficit spending
– and there is little room for a party like Syriza to deliver on its
promises."
This level of reduction in spending is huge. For example, it exceeds
by a significant margin the
impact in any year
of the Obama stimulus program. Alone it would
be enough to account for a significant reduction in
neutral real interest rates
. If consumers were spending 3 percent
more, there would be scope to maintain full employment at interest
rates much closer to normal. And there would be much less of a problem
of monetary policy's
inability to respond
to the next recession.
What is the policy implication? Principally, it is the macroeconomic
importance of supporting middle class incomes. This can be done in a
range of ways from promoting workers right to
collectively bargain
to raising spending on infrastructure to
making the tax system more progressive. ...
Paying CEOs so much in stocks puts their focus on the share price instead of building for the
long run.
By
Joe Biden
Sept. 27, 2016 7:14 p.m. ET
135 COMMENTS
Short-termism-the notion that companies forgo long-run investment to boost near-term stock
price-is one of the greatest threats to America's enduring prosperity. Over the past eight years,
the U.S. economy has emerged from crisis and maintained an unprecedented recovery. We are now
on the cusp of a remarkable resurgence. But the country can't unlock its true potential without
encouraging businesses to build for the long-run.
Private investment-from new factories, to research, to worker training-is perhaps the greatest
driver of economic growth, paving the way for future prosperity for businesses, their supply chains
and the economy as a whole. Without it robust growth is nearly impossible. Yet all too often,
executives face pressure to prioritize today's share price over adding long-term value.
The origins of short-termism are rooted in policies and practices that have eroded the incentive
to create value: the dramatic growth in executive compensation tied to short-term share price;
inadequate regulations that allow share buybacks without limit; tax laws that designate an investment
as "long-term" after only one year; a subset of activist investors determined to steer companies
away from further investment; and a financial culture focused on quarterly earnings and short-run
metrics.
Consider the evolution in the structure of CEO compensation. In the 1980s, roughly three-fourths
of executive pay at S&P 500 companies was in the form of cash salary and bonuses, and the rest
in investment options and stock, according to an article in the Annual Review of Financial Economics.
The Omnibus Budget Reconciliation Act of 1993 included a provision to link executive pay to the
performance of the company. But it didn't work as intended. By the time I became vice president,
only 40% of executive pay was in cash, with the bulk being tied to investment options and stock.
Now more than ever, there is a direct link between share price and CEO pay.
Performance-based pay encourages executives to think in the short-term. Ever since the Securities
and Exchange Commission changed the buyback rules in 1982, there has been a proliferation in share
repurchases. Today buybacks are the norm. According to economist William Lazonick , from 2003-12,
companies on the S&P 500 spent 37% of their earnings on dividends and a full 54% on buybacks-leaving
less than 10% for reinvestment.
This emphasis on returning profits to shareholders has led to a significant decline in business
investment. Total investment as a share of the economy has fallen to about 11% today, down from
a high of about 15% in the early 1980s, according to the Bureau of Economic Analysis. With interest
rates at historically low levels, and business confidence in the U.S. far ahead of its economic
competitors, there should be more investment, not less.
I am not blaming CEOs. The business leaders I've met over the course of my career want to build
their firms and contribute to the economy, not simply send checks to investors or buy back their
own stock. Sometimes they succeed. Other times the pressures to lift the short-run share price
are simply too great.
As these short-term pressures mount, most of the harm is borne by workers. As any economist
will tell you, productivity is typically the most important driver of increasing wages. But productivity
will never flourish without businesses investing in endeavors like on-the-job training, new equipment,
and research and development. In short, business investment boosts productivity, which lifts wages.
A continued economic resurgence requires solving the short-termism puzzle. The federal government
can help foster private enterprise by providing worker training, building world-class infrastructure,
and supporting research and innovation. But government should also take a look at regulations
that promote share buybacks, tax laws that discourage long-term investment and corporate reporting
standards that fail to account for long-run growth. The future of the economy depends on it.
[You go, Joe! He even references William Lazonick.
Lazonick wrote about the new economy business model (NEBM) versus the old, but never really
pinned down what changed in the taxation on returns to capital that caused it. Also, Lazonick
seemed to believe that the rapid capital formation used in the NEBM justified the low taxation
on capital gains. That was a big mistake. Scarce capital has never been a obstacle in the US since
early in the 20th century except when a financial shock locked up capital allocation.
Dividends payouts are sometimes seen as short term payouts to shareholders, but if not for
the capital gains tax preference that would not be true. Paying dividends reduces a firms capital,
but increases the desirability of its shares both as a source of income and as a performer which
boost share price more than the underlying reduction of equity due to capital payout. So, dividends
versus capital gains is not an either or in the short term. Over the longer term accumulated dividends
from a firm that invests in itself are a better incentive for reinvestment than a capital gains
windfall at some point in that longer term. The capital gains preference makes selling shares
more desirable than holding shares and M&A more desirable than internal investment.
In 1954 the dividends tax credit was rescinded in that year's tax act. It had been in effect
since 1913 except for 1936-1939. I know that I should provide references, but since I started
writing about this five years ago most of the evidence has been taking off the WWW.
The dividends tax credit returned to the individual taxpayer the amount of their tax liability
on their dividends income that had been paid in corporate taxes by the issuing firms. This served
as an incentive to shareholders to prefer higher corporate tax rates with fewer loopholes. Higher
effective corporate tax rates encourage firms to increase their expenses in wages and exempt reinvestments
that lowers their taxable profits.
If we wanted even less short termism then we should have higher capital gains tax rates with
reductions per year of holding term along with the dividends tax credit. Rescinding the dividends
tax credit might be considered desirable because it was a tax increase on the wealthy, but in
1954 both Congress and POTUS were Republican which is worth considering. Democrats had done it
before in 1936, but reversed it in 1939. Joe Biden's article on short termism is probably a lot
more significant than it will ever been given credit for which goes a long ways to explain how
corporatism and globalization have had such devastating effects on jobs and wages. We not only
do not know what we are doing, but we don't know what we have done either.]
Sure huge executive stock options have a perverse effect on corporate financial decisions, but
"higher capital gains tax rates with reductions per year of holding term along with the dividends
tax credit" would go a long ways to changing the incentives created by stock options as well.
By higher capital gains tax rates I mean much higher, at least before holding term exclusions.
Also, an inflation adjustment to the basis for capital gains calculation for each year of holding
term equal to each year's SSA COLA would eliminate the pressure against SSA COLA that is exerted
by agents of the wealthy against the interest of retired wage class seniors.
The only way to limit executive pay is to tax it at very high levels. Reagan blew up the top tax
rate and set the stage for executive pay to skyrocket.
From that WaPo story: "According to a new paper from Temple University's Steven Balsam published
by the Economic Policy Institute, the big flaw in 162(m) was its broad exemption of "performance-based"
pay. The $1 million cap only applied to traditional salaries, bonuses and grants of company stock."
Sort of a silly way of measuring compensation it seems. I agree that a higher tax rate on income
would help but be careful to define income as total compensation.
Of course the other thing one might consider is to have a Board of Directors that answers to
shareholders and not upper management.
The tax incentives on dividends relative to capital gains work for executive pay, monopoly, investment,
and wage worker channels. Dividends can be used for just taking profits but they produce more
over the longer term from investment returns. Capital gains are never more than a one time windfall
although stable share price is useful for equities as collateral.
RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , -1
Since CEOs are usually the shareholders with the most power then affecting their incentives as
shareholders can be very effective. Getting CEOs to not raise their own pay is futile. Changing
the game for everyone to favor internal investment over M&A as a use for retained earnings is
necessary. The downside of my recommendation is that IPOs will no longer make angel investors
insanely rich over night. Boohoo!
It seems to me this line from Wren-Lewis is the biggie as far
as the Great Recession/Longer Depression is concerned:
"A
recession initiated by a financial crisis is also likely to
see consumers reducing their own borrowing, and so
(erroneous) analogies between governments and households
resonate."
In 2008/9 the public was (rightly) convinced that the
collapse was due to deflation of a financial bubble blown up
by many years of excessive private borrowing and debt-fueled
over-consumption: too much credit card debt; too much
borrowing against (inflated) home values; two much
speculative gambling with, and ponzi profiting from, cutesy
and overvalued financial instruments. That correct,
instinctive evaluation of the situation was backed up by
numbers showing that the total private debt to GDP ratio had
reached a level unseen since 1928, and by the sudden
discovery of the many analyses of many experienced, sober,
but neglected financial observers who had been predicting
some kind of collapse for years.
Since the public was thus primed to believe that, going
forward, the private economy had to reduce its overall debt
load, it was very easy to convince them that governments,
being just another part of the overall economy, had to do the
same thing.
But what Wren-Lewis doesn't seem to mention is that the
public had already been primed by decades of Norquistian,
Petersonian and Rubinite deficit-hectors, debt-despairers and
entitlement-exterminators to believe that our deficits were a
very bad thing, that government was too big, and that we were
headed for a "fiscal train wreck" because of our
undisciplined budgets and government spending. They were thus
easily convinced that the financial crisis also had something
to to with the problems alleged by this bipartisan team of
budget Casandras all finally coming a-cropper.
We had endless cadres of Republican politicians promoting
hysteria over the public debt and also decrying the very size
of government, whether deficit-financed or not.
We had Bill Clinton running around bragging about his
"reinvention" (shrinking) of government and his dot-com
boom-assisted surprise surplus.
We had Joe Biden telling everyone that the financial
collapse was caused by "putting two wars on a credit card".
We had the Concord Coalition and the Peterson Institute
gearing up their zombies for the Fix the Debt onslaught that
eventually saddled us with an economic discourse driven by a
stupid budget-reduction commission in the middle a deep
recession!
Hatred of governments and their spending habits had
already given us years of gradually building stagnation due
to declining public investment and a consequent secular shift
from capital formation to consumption. But the voters saw
only that all of the Serious People in both parties were
strongly in favor of this "disciplined" decimation of
government. So why in the world wouldn't they end up
supporting its continuation?
"... Most workers suffer serious consequences when they mess up on their jobs. Custodians get fired
if the toilet is not clean. Dishwashers lose their job when they break too many dishes, but not all
workers are held accountable for the quality of their work. ..."
"... At the top of the list of people who need not be competent to keep their job are economists.
Unlike workers in most occupations, when large groups of economists mess up they can count on the media
covering up their mistakes and insisting it was just impossible to understand what was going on. ..."
Economists Keep Getting It Wrong Because the Media Coverup Their Mistakes
Most workers suffer serious consequences when they mess up on their jobs. Custodians get
fired if the toilet is not clean. Dishwashers lose their job when they break too many dishes,
but not all workers are held accountable for the quality of their work.
At the top of the list of people who need not be competent to keep their job are economists.
Unlike workers in most occupations, when large groups of economists mess up they can count on
the media covering up their mistakes and insisting it was just impossible to understand what was
going on.
This is first and foremost the story of the housing bubble. While it was easy * to recognize
that the United States and many other countries were seeing massive bubbles that were driving
their economies, which meant that their collapse would lead to major recessions, the vast majority
of economists insisted there was nothing to worry about.
The bubbles did burst, leading to a financial crisis, double-digit unemployment in many countries,
and costing the world tens of trillions of dollars of lost output. The media excused this extraordinary
failure by insisting that no one saw the bubble and that it was impossible to prevent this sort
of economic and human disaster. Almost no economists suffered any consequences to their career
as a result of this failure. The "experts" who determined policy in the years after the crash
were the same people who completely missed seeing the crash coming.
We are now seeing the same story with trade. The New York Times has a major magazine article
** on the impact of trade on the living standards of workers in the United States and other wealthy
countries. The subhead tells readers:
"Trade is under attack in much of the world, because economists failed to anticipate the accompanying
joblessness, and governments failed to help."
Of course many economists did not anticipate the negative impact of trade, but of course many
of us did. The negative impact was entirely predictable and predicted. (Here are a few from Center
for Economic and Policy Research, *** **** ***** there are many more books and papers from my
friends at the Economic Policy Institute.) The argument is straightforward: trade policy has been
designed to put manufacturing workers in direct competition with low paid workers in the developing
world. This costs jobs and puts downward pressure on the wages of these workers. It also puts
downward pressure on the wages of less-educated workers more generally, as displaced manufacturing
workers seek jobs in retail and other sectors. Stagnating wages and increasing inequality are
the predicted result of this pattern of trade, not a surprising outcome.
If economists were like custodians and dishwashers, the failure to recognize this obvious outcome
of trade policy would have put them out on the street. Instead, we get major news outlets like
the New York Times, telling us this is all a remarkable surprise. No one could have seen that
trade would have bad outcomes for large segments of the workforce. Rather than lose their jobs,
economists can still draw comfortable six figure salaries as they tell reporters how it was impossible
for them to understand the economy.
Economic theory tells us that if economists don't face consequences for completely messing
up on the job then they have no incentive to get things right. If the custodian never pays any
price for not cleaning the toilet, then they won't clean the toilet. In the same way, if the media
and the country always grant a "who could have known" amnesty to large chunks of the economics
profession when it gets things completely wrong, then there is no reason to expect that economists
will ever get things right. All they have to do is say the same things as other elite economists
say, and if it turns out to be wrong, the NYT will just run major news articles explaining that
no one could have known better.
There is one other important point that needs emphasis here. There was nothing inherent to
trade that required growing inequality, it was the structure of trade policy that gave us this
result. There are millions of very bright ambitious people in the developing world who would be
very happy to study to meet U.S. standards and work as doctors, dentists, lawyers and other professionals
in the United States. We could have designed trade agreements to facilitate this process.
The result would be massive economic gains in the form of lower cost health care, dental care,
legal services and other professionals services. In the case of physicians alone, if the increased
supply brought the pay of our doctors down to the levels of Western Europe and Canada, we would
save close to $100 billion a year. This comes to roughly $700 a year in savings for every family
in the United States. And, this would lead to a reduction in inequality.
Our elite economists have chosen not to discuss this sort of trade opening. (They also rarely
discuss reducing rather than increasing protectionist barriers like patents and copyrights.) These
issues are discussed in more depth in my forthcoming book, "Rigged: How Globalization and the
Rules of the Modern Economy Were Structured to Make the Rich Richer" (coming to a website near
year in October). But the key point here is that economists should know better, and if they were
doing their job, they did.
"The argument is straightforward: trade policy has been designed to put manufacturing workers
in direct competition with low paid workers in the developing world. This costs jobs and puts
downward pressure on the wages of these workers. It also puts downward pressure on the wages of
less-educated workers more generally, as displaced manufacturing workers seek jobs in retail and
other sectors. Stagnating wages and increasing inequality are the predicted result of this pattern
of trade, not a surprising outcome."
This is surprising to PGL and Krugman who argue the Fed will just adjust to keep full employment
or at least that's what the models tell them.
Dean is talking about protectionism for drug companies, doctors etc. and free trade for the rest
of us. On this score he is exactly right and I have said so many times. This is a very different
issue from the macroeconomic ones. I would accuse you of once again misrepresenting what I have
said. But to be fair - you are too stupid to get these distinctions so maybe you are not lying.
I do wish I had a smarter internet stalker.
Tom aka Rusty -> anne... , -1
Baker get the diagnosis correct.
Baker's standard solutions do very little for blue collar workers. Having a cheaper doctor
and lawyer don't help much for the unemployed and underemployed.
Simon Wren-Lewis has an excellent new paper * trying to
explain the widespread resort to austerity in the face of a
liquidity trap, which is exactly the moment when such
policies do the most harm. His bottom line is that
"austerity was the result of right-wing opportunism,
exploiting instinctive popular concern about rising
government debt in order to reduce the size of the state."
I think this is right; but I would emphasize more than he
does the extent to which both the general public and Very
Serious People always assume that reducing deficits is the
responsible thing to do. We have some polling from the 1930s,
showing a strong balanced-budget bias even then:
[Chart]
I think Simon would say that this is consistent with his
view that large deficits grease the rails for deficit phobia,
since Franklin Roosevelt's administration did run up deficits
and debt that were unprecedented for peacetime. But has there
ever been a time when the public favored bigger deficits?
Meanwhile, as someone who was in the trenches during the
US austerity fights, I was struck by how readily mainstream
figures who weren't especially right-wing in general got
sucked into the notion that debt reduction was THE central
issue. Ezra Klein documented this phenomenon ** with respect
to Bowles-Simpson: ***
"For reasons I've never quite understood, the rules of
reportorial neutrality don't apply when it comes to the
deficit. On this one issue, reporters are permitted to openly
cheer a particular set of highly controversial policy
solutions. At Tuesday's Playbook breakfast, for instance,
Mike Allen, as a straightforward and fair a reporter as
you'll find, asked Simpson and Bowles whether they believed
Obama would do 'the right thing' on entitlements - with 'the
right thing' clearly meaning 'cut entitlements.' "
Meanwhile, as Brad Setser points out, the International
Monetary Fund - whose research department has done heroic
work puncturing austerity theories and supporting a broadly
Keynesian view of macroeconomics - is, in practice, pushing
for fiscal contraction **** almost everywhere.
Again, this doesn't exactly contradict Simon's argument,
but maybe suggests that there is a bit more to it.
Austerity is defined as a fiscal contraction that causes a
significant increase in aggregate unemployment. For the
global economy, or an economy with a flexible exchange rate,
or a monetary union as a whole, an increase in unemployment
following a fiscal consolidation can and should be avoided
because monetary policy can normally offset the demand impact
of the consolidation. The tragedy of global austerity after
2010 was that fiscal consolidation was not delayed until
monetary policy was able to do this.
An individual member of a currency union that requires a
greater fiscal contraction than the union as a whole cannot
use its own monetary policy to offset the impact of fiscal
consolidation. Even in this case, however, a sharp and deep
fiscal contraction is unlikely to be optimal. Providing this
economy is in a union where the central bank acts as a
sovereign lender of last resort, a more gradual fiscal
adjustment is likely to minimise the unemployment cost.
As the theory behind these propositions is simple and
widely accepted, the interesting question is why global
austerity happened. Was austerity an unfortunate accident, or
is there a more general political economy explanation for why
it occurred? Answering this question is vital to avoid the
next global recession being followed by yet more austerity.
The answer is that politicians and pundits have a flawed
understanding of inflation and its relationship to
hyperinflation.
Some economists promoted a seriously flawed interpretation of
the 1970s stagflation that solidified myths about inflation.
As Max Planck said, "Science advances one funeral at a time."
We need the current generation of economists and their failed
models to be replaced by a new generation that does not
suffer from the same mythology.
Peter K. -> anne...
, -1
If one just read Krugman or Kevin Drum you wouldn't
understand how Bill Clinton declared "the era of Big
Government is over" or how after he was first elected he
listened to his top two economic advisers Robert Rubin and
Alan Greenspan and dropped his middle class spending campaign
promise in favor of deficit reduction.
Greenspan promised Clinton lower rates in exchange for
reducing government. Clinton ended "welfare as we knew it."
But Greenspan didn't regulate this increase in private
investment. It led to the tech-stock bubble and a shadow
banking system which was susceptible to a banking panic.
According to Hillary, Bush's tax cuts caused the housing
bubble and Great Recession. It's a little more complicated.
But this cuts against Krugman and Drum's narrative that the
Clinton years were nothing but awesome.
Summers told Brooksley Born that derivatives shouldn't be
regulated b/c the market is magic.
Obama reinforced the narrative that government should
tighten its belt during hard times like households do. This
is exactly wrong.
Maybe it's understandable for politicians to pander for
short-term political expediency but it's hurts the long-term
ideological conflict.
There's the right and there's the left and Obama and
Clinton tried to straddle the two ideologies which just
waters down the left's appeal and pull.
That's why the millennials and more progressive workers
aren't as excited for Hillary's candidacy. That's why Sanders
energized them.
Now I agree with Sanders that a Trump Presidency would be
a disaster, but this doesn't preclude me from correcting
Krugman's outlook as some center-leftists would insist in
their binary thinking.
It seems to me this line from Wren-Lewis is the biggie as far
as the Great Recession/Longer Depression is concerned:
"A
recession initiated by a financial crisis is also likely to
see consumers reducing their own borrowing, and so
(erroneous) analogies between governments and households
resonate."
In 2008/9 the public was (rightly) convinced that the
collapse was due to deflation of a financial bubble blown up
by many years of excessive private borrowing and debt-fueled
over-consumption: too much credit card debt; too much
borrowing against (inflated) home values; two much
speculative gambling with, and ponzi profiting from, cutesy
and overvalued financial instruments. That correct,
instinctive evaluation of the situation was backed up by
numbers showing that the total private debt to GDP ratio had
reached a level unseen since 1928, and by the sudden
discovery of the many analyses of many experienced, sober,
but neglected financial observers who had been predicting
some kind of collapse for years.
Since the public was thus primed to believe that, going
forward, the private economy had to reduce its overall debt
load, it was very easy to convince them that governments,
being just another part of the overall economy, had to do the
same thing.
But what Wren-Lewis doesn't seem to mention is that the
public had already been primed by decades of Norquistian,
Petersonian and Rubinite deficit-hectors, debt-despairers and
entitlement-exterminators to believe that our deficits were a
very bad thing, that government was too big, and that we were
headed for a "fiscal train wreck" because of our
undisciplined budgets and government spending. They were thus
easily convinced that the financial crisis also had something
to to with the problems alleged by this bipartisan team of
budget Casandras all finally coming a-cropper.
We had endless cadres of Republican politicians promoting
hysteria over the public debt and also decrying the very size
of government, whether deficit-financed or not.
We had Bill Clinton running around bragging about his
"reinvention" (shrinking) of government and his dot-com
boom-assisted surprise surplus.
We had Joe Biden telling everyone that the financial
collapse was caused by "putting two wars on a credit card".
We had the Concord Coalition and the Peterson Institute
gearing up their zombies for the Fix the Debt onslaught that
eventually saddled us with an economic discourse driven by a
stupid budget-reduction commission in the middle a deep
recession!
Hatred of governments and their spending habits had
already given us years of gradually building stagnation due
to declining public investment and a consequent secular shift
from capital formation to consumption. But the voters saw
only that all of the Serious People in both parties were
strongly in favor of this "disciplined" decimation of
government. So why in the world wouldn't they end up
supporting its continuation?
Exactly. This all having started with the 70s arrival of
monetarism, essentially a gold standard with no gold. While
no one really paid attention to gold standard (depressionary)
budgeting until Clinton I, the rhetoric was being put into
place such that, even today, the Democrats still hail
Clinton's "balanced budget" disaster as if it were God's
gift, when in reality it was the kickoff to consumers
cannibalizing the home equity just to keep pace, and the
ultimate reason the 2008 crash was so severe on household
spending. Hillary Clinton; be forewarned.
If governmental fat cats and billionaire lobbyists would
spend more time at fixing the obvious, they would have less
time for looting the public treasure. Do you see how they
could have prevented the HD, Hoboken disaster?
They could have removed the overpowered transformers that
oversupplied coulombs to the Catenary wire that supplied
current to the Pantograph of the Hoboken train that just now
crashed into the station full of passengers. All the
transformers at the end of the line should be scaled down to
prevent this sort of disaster, plus all the transformers near
a curves in the roadbed should be scaled back to prevent
excess power from speeding train up enough to jump the track.
No!
You can't always depend on the engineer's judgment to
prevent these disasters. Can't always depend on
high-tech-safety devices to prevent! Hell! High-tech can be
hacked by the North Koreans. You need to change the deep
infrastructure of power available.
Most people have a flawed understanding of inflation.
Sustainable inflation means BOTH wages and prices go up.
Most people think of inflation only in terms of price
increases so we get: Prices go up, wages stay the same: BAD.
A minimum level of inflation is necessary to allow relative
prices and wages to reset smoothly.
Prices and wages are sticky downward.
It is unsustainable for a business to deflate prices below
fixed costs.
A price can be reset downward by inflation (if inflation is
high enough) erosion and thus is less likely to be below
fixed costs.
Businesses don't cut wages of employees, they layoff
employees.
Businesses don't only cut prices, they cut production.
Workers with leverage and fixed payments cannot afford to
work for less.
Inflation allows relative wages to deflate without causing
issues with fixed payments.
Everyone agrees that deflation is bad because it is
associated with lower output and higher unemployment.
Inflation and deflation are a continuum. Inflation that is
too low is only marginally better than deflation.
Inflation must be high enough to absorb relative price resets
demanded by the majority of economic shocks or the process of
resetting wages and prices will be extended and be a
continued drag on an economy.
The evidence clearly suggests that US inflation in the 21st
Century has been much too low. A higher inflation target is
clearly necessary.
People misunderstand hyperinflation.
Hyperinflation is associated with an increased money supply.
The increased money supply is an effect of hyperinflation not
its cause.
Under hyperinflation, an economy needs increasingly larger
amounts of currency for transactions, so governments print
more money to meet demand.
Hyperinflation is caused by loss of confidence in a
currency.
Under hyperinflation, the risk of complete loss of buying
power of a currency factors into the price that vendors are
willing to accept for goods and services.
Example: In the 1865 US, Confederate currency hyper inflated,
not because too much was printed, but because the Confederate
government was facing elimination and the currency no longer
being honored. 90 percent of the currency could have been
eliminated and prices still would have hyperinflated.
Major Myths:
Printing money does not cause hyperinflation, loss of
confidence does.
A higher rate of inflation does not make hyperinflation more
likely.
A lower rate of inflation is NOT always better for an economy
than a higher rate.
Politicians and pundits need to unlearn these inflation
myths.
DrDick -> pgl...
, -1
Krugman makes some good points, adding to Wren Lewis's
excellent observations. I would point out, however, that
neither of them acknowledges that most of our media are
economic and policy illiterates and incapable of
understanding the issues, while the general public has been
sold on the idiocy that national budgets are just like
household budgets (mostly by that same illiterate media).
Perusing
Palgrave's Dictionary of Political Economy from 1894 alerted me to the odd interaction
of a pair of distinctions. The first distinction was between the study of "what is" and "what ought
to be." The second distinction was between "economic science" (or "economics") and "political economy."
Economic science presumably distinguished itself from political economy by its strict focus on describing
"what is" rather than on prescribing "what ought to be."
Palgrave's explains the latter distinction to have been at least partly motivated by the confusion
that arose over just what kind of laws -- legal or natural -- so-called "laws of political economy"
were. Even after the attempt at rebranding, however:
"...even well-educated persons still occasionally speak of "laws of political economy" as being
"violated" by the practice of statesmen, trades-unions and other individuals and bodies.
You can't "break" scientific laws. They are simply generalized descriptions of fact. A flying airplane
doesn't break the law of gravity. It conforms to a more comprehensive complex of physical laws. The
law of gravity isn't the only law.
Palgrave's Dictionary further noted that the "great complexity and variety of circumstance
which surround every economic problem are such as to render the enunciation of general laws, on a
large scale, barely possible and if possible barely useful."
So the whole "positive" economics rigamarole wasn't just about methodological rigor. It was a
purification ritual to rid the political economist of the stigma of dogma. Economists
who invoke the violation of so-called laws aren't only forfeiting any legitimate claim to
economic science. They are contaminating their profession with atavistic hokum.
Speaking of atavistic hokum, I have been trying to track down ANY accessible published
record of a trade unionist or advocate of the reduction of the hours of labor EVER overtly
expressing the belief that there is a fixed amount of work to be done or a certain quantity of labor
to be performed or whatever synonymous equivalent. There is none.
There is a reasonable explanation for this absence of evidence. The alleged false belief is expressed
in abstract language that was not vernacular to the people accused of harbouring it. It's the wrong
answer to a question workers never asked themselves.
False belief requires two conditions to be fulfilled: 1. the idea is false and 2. it is believed
by someone to be true. The matrix below shows the possible states of belief and falsehood. An idea
does not have to be true to be "not false" and it doesn't have to be believed to be false to be "not
believed to be true." The fallacy claim asserts a simplistic (and false!) polarization in which the
beliefs of the "unenlightened" are "the opposite" of economic orthodoxy.
In an 1861 letter to the Times of London "A Master Builder" alleged that George Potter,
secretary of the carpenters' union, and his associates had "absurdly argued that there was only a
certain amount of work to be done" during a 1859 strike and lock-out of the London building trades.
There is a detailed report on the 1859 strike in an 1860 report on
Trades' Societies and Strikes published by the National Association for the Promotion of
Social Science. The 23-page account presents several items of correspondence from Potter outlining
the union's position with not a hint of a lump in the load. The "certain amount of work to be done"
was what Mr. Master Builder thought he heard when he mentally translated Potter's argument
into his own capitalistic patois .
There was something else interesting in the 685-page document -- an overarching controversy about
whether or not labor was a commodity just like any other and therefore whether or not unions violated the laws of political economy by trying to regulate wages and hours
of work. The employers who maintained this were pretty dogmatic about it. "Rates of wages cannot
be settled by mediation, but must be left to the free operation of supply and demand." It's the law!
This was not simply political economy It was vulgar political economy of the most self-serving
and disingenuous kind. One has no difficulty whatsoever finding multiple evocations by employers
of the so-called laws of political economy but the elusive lump remains "one of the most tenaciously
held and generally least articulated of trade union beliefs."
Least articulated? Least articulated is an understatement. Try NEVER articulated. There
is no there there. The alleged false belief is a pure projection by the laws-of-political-economy
crowd onto the unbeliever. The
eighth annual report of the New York Bureau of Labor Statistics for the year 1890 contains the
responses of over 600 labor union locals to the question of whether and why they support an eight-hour
day. Not one claims there is only a certain quantity of work to be done.
Below is an example of what an overt statement of the theory of the lump of labor looks like.
It is not from a trade union manifesto or a pamphlet of the eight-hour day movement. It is from a
propaganda tract put out by Nassau Senior's crew of Whig-Benthamites in defense of their New Poor
Laws, which abolished outdoor relief and established the workhouse test:
The fact is, there is a certain quantity of work to be done, and the question is who ought to
do it -- those who live by their labour, and their labour only, or those who have thrown themselves
on public charity.
Can anyone find such an unequivocal articulation of the false belief by a trade unionist? Of course
not. It's not the way that workers talk about their work. Work is not an abstract, disembodied
quantity to those who do it. It is part of a lived experience. "A certain quantity of work to
be done" is political economy speak, plain and simple. It's ceteris paribus and "all else
being equal."
Paradoxically, for old school vulgarians there both is and is not a certain quantity
of work to be done. There is a certain quantity of work to be done when it comes to disparaging
the idea that workers might increase wages their through collective action:
There is a certain quantity of work to be done, and a certain number of hands to do it; if there
be much work and comparatively few hands, wages will rise; if little work and an excess of hands,
wages will fall. It is self-evident that combinations and strikes cannot alter this law. They
can neither increase capital, nor diminish population; and, therefore, it is utterly impossible,
in the very nature of things, that they ever can procure a permanent rise of wages.
But there isn't a certain amount of work when it comes to explaining why such foolish action
isn't even necessary:
There is, say they, a certain quantity of labour to be performed. This used to be performed by
hands, without machines, or with very little help from them... The principle itself is false.
There is not a precise limited quantity of labour, beyond which there is no demand. Trade is not
hemmed in by great walls, beyond which it cannot go. By bringing our goods cheaper and better
to market, we open new markets, we get new customers, we encrease the quantity of labour necessary
to supply these, and thus we are encouraged to push on, in hope of still new advantages. A cheap
market will always be full of customers.
Five years ago I compiled a database of over 500 instances of the claim in books and journal articles
between 1890 and 2010 (
Excel file ). That's 500 claims without a single overt statement of the false belief from an
alleged believer. Six claimants (about one percent) named culprits whose argument "arguably depends
upon..." "makes an error equivalent to..." "indicates a belief..." "seems hopelessly involved in..."
"is an example of the strange conclusions to which one may be carried by clinging clinging firmly
to..." and "are driven by implicit assumptions." Each of those turns out to be a false alarm -- an
uncharitable, speculative inference. Five hundred boys crying "wolf" and not a single wolf to be
seen?
This is an astonishing performance. This compulsion to repeat is not "careless" or "dogmatic."
It's neurotic.
The patient cannot remember the whole of what is repressed in him, and what he cannot remember
may be precisely the essential part of it.. He is obliged to repeat the repressed material as
a contemporary experience instead of remembering it as something in the past.
The atavistic return of the repressed "laws of political economy" conforms faithfully to a description
toward the end of chapter 3 of Beyond the Pleasure Principle where Freud talks about the experiences
of "people with whom every human relationship ends in the same way" and gives as a "singularly affecting"
final example the events in a romantic epic, in which the hero, Tancred, repeatedly slays his beloved,
Clorinda, each time she reappears in a different guise. In this example, as Gavriel Reisner notes,
Freud reverses the compulsion to repeat, showing how we will sometimes injure others in order
to avoid injuring ourselves. Freud concludes that we often project the internal, masochistic drive
as the external, sadistic drive, victimizing others to redirect an intent toward self-victimization.
The utilitarian political economists styled themselves advocates for "the greatest good for the greatest
number" and viewed opponents as apologists for narrow special interests. The supposed laws they discovered,
which operated through isolated exchanges between individuals in the market, vindicated a system
of natural liberty and consequently freedom entailed obedience to those laws. Collective action and
collective bargaining violated the laws of individual exchange, resulting in sub-optimal outcomes.
Such perversity could only be motivated by false beliefs. The false beliefs of the adversary were
presumably the opposite of the true beliefs of the faithful: trade unions operated through tyranny
and their bizzaro-world political economy assumed that less output meant more income.
Reality discredited that polemic of political economy and calmer heads sought to rebrand the enterprise
as economics. The ersatz laws were scaled back to tendencies, which operated within the admittedly
abstract ceteris paribus pound of the economist's static model. Real life and the evolution
of economic relations operated outside the ceteris paribus pound but maybe the static model
could shed light on dynamic economic activity.
It was no longer fashionable to denounce "The Evils of Collective Bargaining in Trades' Unions"
(Thomas Cree, 1898) because it was increasingly understood that the so-called laws of supply and
demand operated quite differently with regard to the peculiar commodity of labor power (Richard Ely,
1886):
While those who sell other commodities are able to influence the price by a suitable regulation
of production, so as to bring about a satisfactory relation between supply and demand, the purchaser
of labor has it in his own power to determine the price of this commodity and the other conditions
of sale.
But even as old-guard political economy was being gradually displaced by rebranded economics in the
universities, employers' associations and business journalism emerged to propound and propagate the
old-time religion. The break with quasi-scientific, quasi-legalistic, quasi-religious pseudo-laws
was ambivalent, the reconciliation surreptitious. Employers' associations told the college teachers
what to teach. Textbooks served up a smorgasbord of the obsolescent and the innovative.
In this twilight of science and superstition, the fallacy claim offered uncertain economists a
distinctive advantage. It enabled them to continue to denounce violations of the laws of political
economy without actually having to specify which laws were being violated. That left them
exempt from any obligation to justify the validity of defunct laws. The burden of proof deftly shifted
and the providence of economic science affirmed, albeit by default.
Economic science thus gets to have its "what is" humility... and eat its "what ought to be" hubris
too! Evidence be damned.
That there was one particular offense singled out for condemnation by the self-appointed economic
police is suggested by the example given in Palgrave's Dictionary for the common confusion
between the legislative and scientific senses of law: "Thus it is often said that to regulate the
hours of labour, or to introduce differential import duties, is to break economic law." The anachronism
of such a view should require no explanation. The hours of labor are regulated.
Any proposal to repeal the Fair Labor Standards Act of 1938 on the grounds that it "breaks economic
law" would no doubt be laughed at by Paul Krugman, David Autor, Jonathan Portes or Alan Manning.
But, inadvertently, that is precisely the historical grammar of their lump-of-labor fallacy taunt.
Although there is no logical imperative that links the law-breaking claim to the fallacy claim, they
have been inseparably paired in usage from their inception. To invoke the latter is either to imply
the former or it is a non sequitur.
At long last, economists, have you no scientific self-respect ? On this labor day, 2016,
would you still insist that regulating of the hours of work breaks the laws of economics? Posted
by
Sandwichman at
12:00 AM
"Everybody except Joan Robinson agrees about capital theory." -- Robert Solow (as paraphrased
by Robinson)
An essential text in my researches on mercantilism, usury and bills of exchange is Raymond de Roover's
Gresham on Foreign Exchange, which just happens to be stored in part of SFU's library that
is under construction and thus inaccessible. The immediate unavailability of that book, however,
led to a fortuitous discovery.
I browsed in the call number section of the library's general collection where de Roover's book
would have been and Robert Leeson's Ideology and the International Economy caught my eye.
I flipped through the book and noticed on page 19 the delicious quote from Joan Robinson that, "the
free-trade doctrine is just a more subtle form of mercantilism."
The quote is from a 1966 lecture, "The New Mercantilism" that is included in a collection of essays,
Contributions to Modern Economics, which also contains "Capital Theory Up-to-Date," a 1970
review of C. E. Ferguson's The Neoclassical Theory of Production and Distribution, in which
Robinson reprises her parody of neo-Walrasian, neo-neoclassical capital "
leets. " Leets is steel spelled backward and
makes its debut in "Equilibrium Growth Models," Robinson's 1961 review of James Meade's Neo-Classical
Theory of Economic Growth. This allegedly ectoplasmic representation of capital is, in a nutshell, the crux of the "Cambridge
capital controversy," which Robinson launched with her 1952 challenge, "I leave it to those who draw
production functions to say what marginal productivity and the elasticity of substitution mean when
labour and capital are the factors of production." Looking back, in 1978, on her 1952 essays and
the "long struggle to escape... habitual modes of thought and expression," Robinson stressed that
"it was precisely from the concept of equilibrium that Keynes was struggling to escape..." Contrarily,
though:
"...textbook teaching in the department of so-called macro theory was an attempt to push Keynes
into short-term equilibrium. ... The grand neoclassical synthesis (now known as bastard Keynesianism)
was a more ambitious attempt to reduce the General Theory to a system of equilibrium."
In responding to Robinson's leets critique, Robert Solow began by acknowledging "much truth" to the
objection that "the usual production functions, allowing for more or less substitutability between
capital and labor, attribute to 'capital' a degree of malleability which contradicts common observation."
He then distinguished between the "econometrically-minded person" who would view the overly malleable
capital as a "specification error" and others -- presumably including Robinson -- who judge it to
be "a doctrinal error; and its consequence is a kind of Fall from Grace." Seven years later, Robinson
had this to say about "doctrinal disputes":
Many economists, nowadays, who are interested in practical questions are impatient of doctrinal
disputes. What does it matter, they are inclined to say, let him have his leets, what harm does
it do? But the harm that the neo-neoclassicals have done is, precisely, to block off economic
theory from any discussion of practical questions.
If one is concerned about actual unemployment in an actual economy, Robinson later
explained, one "has to discuss it in terms of processes taking place in actual history. The concept
of equilibrium is incompatible with history. It is a metaphor based on movements in space applied
to processes taking place in time." In other words, it is not just some kind of ethereal affectation
to object to the concept of equilibrium -- it is an argument with irrevocable real-world consequences.
The failure of what Robinson dismissed as "bastard Keynesianism" also had real-world doctrinal
consequences. "In the era of stagflation, this notion [that equilibrium growth can be achieved through
fiscal and monetary 'fine tuning'] has been discredited and the quantity theory of money is blossoming
afresh amongst its ruins." This 'blossoming,' incidentally, was not something Robinson welcomed.
Well, my interlibrary loan of de Roover's Gresham on Foreign Exchange has arrived, so I'm
off up the hill to pick it up.
To be continued...
"... Originally published at Tax Justice Network ..."
"... Corporations used to contribute $1 out of every $3 in federal revenue. Today, despite very high corporate profitability, it is $1 out of every $9. ..."
"... As of 2015, U.S. corporations had $2.4 trillion in untaxed profits offshore. Another study, looking at S&P 500 companies, found they held $2.1 trillion as of 2014. This roughly five-fold increase from $434 billion in 2005 stems largely from anticipation of a tax holiday. ..."
Yves here. This short post extracts key findings from a new study by Americans for Tax Fairness and
the Economic Policy Institute. We liked the summary and include it immediately below. One thing to
keep in mind: taxes are a big element of economic policy by default, as in that they provide incentives
and disincentives. The fact that Big Pharma and tech companies lower their tax rates through the
use of clever structuring and tax havens and report higher profits is an economic privilege relative
to other industries.
While the statutory tax rate on corporate income is 35 percent, estimates of the rate corporations
actually pay put the effective rate at about half the statutory rate. Driving this divergence
between what corporations are supposed to pay and what they actually pay is a combination of offshore
profit shifting and tax avoidance. Multinational corporations pay taxes on between just 3.0 and
6.6 percent of the profits they book in tax havens.
And corporations have become increasingly adept at making their profits appear to be earned
in these tax havens; the share of offshore profits booked in tax havens rose to 55 percent in
2013. Almost half of offshore profits are held by health care companies (mostly pharmaceutical
companies) and information technology firms. Because of the inherent difficulty in assigning a
precise price to intellectual property rights, it is relatively easy for these companies to manipulate
the rules so that U.S. profits show up in tax havens.
The use of offshore profit-shifting hinges on a single corporate tax loophole: deferral. Multinational
companies are allowed to defer paying taxes on profits from an offshore subsidiary until they
pay them back to the U.S. parent as a dividend. Proponents of cutting the corporate tax rate refer
to profits held offshore as "trapped." This characterization is patently false. Nothing prevents
corporations from returning these profits to the United States except a desire to pay lower taxes.
In fact, corporations overall return about two-thirds of the profits they make offshore, and pay
the taxes they owe on them.
Further, there are numerous U.S. investments that these companies can undertake without triggering
the tax. In short, deferral provides a mammoth incentive for multinational corporations to disguise
their U.S. profits as profits earned in tax havens. And they have responded to this incentive:
82 percent of the U.S. tax revenue loss from income shifting is due to profit shifting to just
seven tax-haven countries.
Firms have also become increasingly adept at manipulating the rules here in the United States
to avoid taxation. Lower tax rates on "pass-through" business entities and poor regulatory responses
have given firms the chance to reorganize as "S-corporations" or opaque partnerships in order
to avoid paying any corporate income tax at all.
This intentional erosion of the U.S. corporate income tax base has real consequences. Rich
multinational corporations avoiding their fair share of U.S. taxes means that domestic firms and
American workers have to foot the bill. It also means that corporations are not paying their fair
share for our infrastructure, schools, public safety, and legal systems, despite depending on
all of these services for their profitability.
Corporate profits are way up, and corporate taxes are way down. In 1952, corporate
profits were 5.5 percent of the economy, and corporate taxes were 5.9 percent. Today, corporate
profits are 8.5 percent of the economy, and corporate taxes are just 1.9 percent of GDP.
And there are plenty more striking facts. Just for example:
Corporations used to contribute $1 out of every $3 in federal revenue. Today, despite very
high corporate profitability, it is $1 out of every $9.
As of 2015, U.S. corporations had $2.4 trillion in untaxed profits offshore. Another study,
looking at S&P 500 companies, found they held $2.1 trillion as of 2014. This roughly five-fold
increase from $434 billion in 2005 stems largely from anticipation of a tax holiday.
Just two industries-high-tech and pharmaceutical/health care-hold half the untaxed offshore profits.
And here's a picture pointing to the "big six" corporate tax havens, which we've noted before:
What about mergers. Do they not only facilitate monopolies but tax evasion?
The IP stuff, the inverted balance sheets of those companies and their opaque allocation of
revenues is the "dark matter" economists talk about euphemistically?
I presume these offshore profits are not held in cash but are moved into U.S. Treasury bonds
and other investments. What happens to the profits and losses from those? Are they eventually
returned to the U.S. and taxed?
Yves: Thanks for this. Still another area of bipartisan connivance and neglect. And there is
a real irony about the Netherlands, which has been doing a lot of virtual signaling with regard
to Greece (especially) and Italy, being a major tax haven. I guess that it is easy to balance
the budget with all of that funny money floating around.
Luxembourg? My solution is just to give it to France as a new département.
Robert Hahl: Don't count on profits not being held in cash. There are some indications, and
Yves has published posts about them, that companies indeed are hoarding cash.
You do not have to leave your backyard to find the same tax avoidance built into the capitalist
system. Here in Philadelphia, during a 2nd wave of large scale real estate investment in the 10s
of $Billions$, property is sold off for development parcels or after the development is completed,
fully rented and a juicy source of rental for years and years to come. You would think the city
government would reap some kind of windfall, that the school district funded by annual real estate
taxes based on market value, but of course, the crony capitalism assures that tax avoidance strategies,
all perfectly legal due to the laws written by the 1%, the self dealing loopholes will prevail.
Now, a very successful real estate developer got himself elected to city council, along with
a long suffering republican chamber of commerce guy. And THEY want to close some of the long standing
loopholes that may have cost the city as much as $24Mil last year alone. Plus the ongoing depressed
valuation used for the annual real estate tax bill.
Immanuel Wallerstein in his lectures has pointed the 3 main obstacles to profits that the Global
Capitalist System must control in order to sustain growth.
1. The cost of inputs
2. The costs of wages and ancillary benefits such as social insurances for health, unemployment,
and eventual retirement.
3. Taxes
This article speaks directly to #3, as does my local example. The ongoing war on tax avoidance
as a necessary standing policy by capitalists is on the local, national and international levels.
The universal rule of law begs the questions, who writes these laws, who interprets these laws,
who benefits from these laws and why do they never change in a way that gives meaning to the authority
of government as having authority to rule. The pretense that tax loopholes are perfectly legal
is critical to maintain the social order and belief in the rule of law. When tax laws are rendered
useless by legal mumbo jumbo, the authority of the state to govern must be called into question
as well!
When people out in the street riot, loot and vandalize to show political dissatisfaction, that
is criminal behavior, not legal, and has no loophole to excuse them. There is no question that
the state must step in with its full power and authority and enforce the law, which is crystal
clear in the case of rioting. There is no question that even local government must seek reinforcement
from the military. Imagine a lawyer saying: "Well, the rioters are adopting a perfectly legal
strategy of prosecution and jail avoidance by massing in numbers so large that they all can not
be arrested, tried and convicted.
This constitutes not a crime against society, but the legitimate right to self determination
in the face of a corrupt and meaningless system of democracy where the majority of the people
are permanently relegated into menial economic toil to sustain the oversized wealth and power
of the 1%. Clearly, this must considered protected political activity and freedom of speech, NOT
violence in the pedestrian sense of a lone gun man holding up a liquor store. The socially redeeming
value of large scale social change due to mob activity protects this crowd as political activists,
not mere petty criminals. They are making the world a better place, not just stealing to benefit
themselves as individuals. Just as people vote with their dollars, vote with their feet by moving
to where jobs are, people are voting by rioting to correct the abuse of power not regulated by
the meaningless ballot box which has been rendered useless and beyond reach."
On the one hand, Tax Justice Network is often fuzzy (as in wrong) on technical tax details.
Tax is fiendishly complex. But on the other hand, the general idea that there may be ways to structure
around this isn't crazy. As I recall, for instance, if I recall correctly, the publicly-traded
PE firms are legal entities that own (or own the cash flows) of general partnerships.
So the government is subsidizing corporate profits through tax breaks, loopholes, and non-enforcement.
This has the overall effect of re-distributing the wealth towards the upper end of the income
spectrum and sponsors the creation of millionaires and billionaires. Who would have a problem
with that?
That's not class warfare at all says this temporarily embarrassed trillionaire.
i bet if you had a "birds-eye" view of all the money in all the accounts, both her and overseas,
and ownership of shell companies stock, and on and on, you would find that that person exists
already.
Don't the mega-corporations write the thousands of pages of our corporate tax code? Congress
just rubber stamps it, right?
Can't remember where I read it, but it has been suggested that the supposedly high corporate
tax rate is there by design. The biggest players write in all the loopholes they need and more,
burdening the small fry with the nominal rate and thus squelching any competition that the big
guys might face from lesser competitors.
"... It's good to see articles criticizing financialization now and then. It would be great if our politicians would take this issue up, but alas, it would be suicide (certainly politically, and possibly literally). ..."
"... On the surface, the reasons behind Bridgeport's poverty and Greenwich's wealth do not seem related. Bridgeport is struggling because it is a one-time manufacturing hub whose jobs went overseas as factories moved away in the late 20th century. Greenwich became a home for New York City financiers who wanted to live somewhere a little more bucolic than New York, and later hedge-fund managers decided they could work closer to home and set up their companies there, too. ..."
"... Michael Parenti gets it: "The reason we have poor people is rich people." ..."
"... And because we have poor people who are told they should not envy the rich their advantages because they just might be one of them someday. So we lionize this era's robber barons from Bezos to Cook to Brin instead of roasting them over a slow fire until they agree to pay taxes in this country. Too bad we don't have a trust-busting politician of any stripe around, Teddy Roosevelt where are you when we need you. ..."
The Atlantic article (
Finance Is Ruining America Atlantic (Phil U)) would have been more effective if it had described
a typical hedge fund deal, like, say, Guitar Center, or one of Mitt Romney's "successes" (you
know, debt fueled special dividends). It's good to see articles criticizing financialization now
and then. It would be great if our politicians would take this issue up, but alas, it would be
suicide (certainly politically, and possibly literally).
On the surface, the reasons behind Bridgeport's poverty and Greenwich's wealth do not seem
related. Bridgeport is struggling because it is a one-time manufacturing hub whose jobs went overseas
as factories moved away in the late 20th century. Greenwich became a home for New York City financiers
who wanted to live somewhere a little more bucolic than New York, and later hedge-fund managers
decided they could work closer to home and set up their companies there, too.
These two towns have different fates in part because of two distinct dynamics in the American
economy. Yet there are economists who believe that there is a link between the improving prosperity
of the wealthy and the eroding bank accounts of everyone else. The reason? It's two-fold: First,
there is the rise of the financial industry, which has fueled extraordinary wealth for a very
few without creating good jobs down the line, and, second, a tax policy that not only fails to
mitigate these effects, but actually incentivizes them in the first place. It's probably not surprising,
then, that the 10 states with the biggest jumps in the top 1 percent share from 1979 to 2007 were
the states with the largest financial service sectors, according to the Economic Policy Institute
analysis.
=============================================
It is astounding that people still believe low interest rates mean some industrialist can get
a loan and start a factory and hire employees….where it seems pretty apparent that it means a
financier can move a company overseas….
As well as the fact it seems harder and harder to be able to say that the 1%'s getting richer
is NOT due to everybody else getting poorer.
It's the neoliberal Rube Goldberg machine. Why just give money where needed when you can give
it to someone on the assumption they'll give a portion to someone else, who will give it to someone
else, so that they can maybe pass some of it along to whoever needs it?
'Greenwich became a home for New York City financiers who wanted to live somewhere a little
more bucolic than New York'
Until 1991, Connecticut had no income tax. New Jersey had walked that plank in 1976, leaving
CT as the only quasi-tax haven within commuting distance of NYC.
But then former Gov. Lowell Weicker (who had run on a "no income tax" platform - he lied
) introduced one. Result : a stagnant, moribund Connecticut economy, with flat population.
General Electric saw the light and bailed for Boston with its HQ.
Jaren Dilliian, who grew up there, wrote of throwing a party in CT with a deejay. The DJ had
to be licensed, plus they needed a permit, plus union electricians had to set up and take down
the equipment. Hassle, cost, bureaucracy.
What value added does contemporary CT provide for its tax take, vs pre-1991 CT? Zero.
Maybe less than zero.
"But then former Gov. Lowell Weicker (who had run on a "no income tax" platform - he lied)
introduced one. Result: a stagnant, moribund Connecticut economy, with flat population."
Sequel, perhaps. Result, not proved, and I suspect questionable. The data here appear to undermine
your claim:
They show corporate income tax at <1% and personal income tax <5% for all but the top 5% of
incomes. I find it very hard to believe those rates are responsible for Connecticut's allegedly
moribund economy.
As for not providing value, consider another point of view:
And because we have poor people who are told they should not envy the rich their advantages
because they just might be one of them someday. So we lionize this era's robber barons from Bezos
to Cook to Brin instead of roasting them over a slow fire until they agree to pay taxes in this
country. Too bad we don't have a trust-busting politician of any stripe around, Teddy Roosevelt
where are you when we need you.
Get Rich or Die Tryin is the last gasp in the American Hunger Games. It's the same story as ever,
told down through the ages, the rich squeeze the poor, then they can't help but squeeze juuust
that little bit more, and we get Charlotte
It is astounding that people still believe low interest rates mean some industrialist can
get a loan and start a factory and hire employees….where it seems pretty apparent that it means
a financier can move a company overseas….
fresno dan [bold added]
Or automate jobs away with what is, in essence, the public's credit due to extensive government
privileges for depository institutions.
The implicit social contract whereby capitalists shall provide good jobs in exchange for the
public's credit is broken – if it ever existed – without hope of fixing due to automation alone.
good point and I agree.
And there are probably all sorts of examples. For instance, how long did low interest rates help
by stimulating home building, home buying, until shadow banking was able to super charge profits
by taking a rather straight forward, dull, simple to understand thing like home loans and turning
it into a giant scam? How was it that something that worked so well for so long got so totally
f*cked up?
Doesn't it feel nowadays that in every protection, advancement, or progress is advocated by a
Hillary talking clone, and that the only point of it is to weasel more money out of you???
and that the word "protection" defacto means "screw"
How was it that something that worked so well for so long got so totally f*cked up?
fresno dan
Well, point of fact, it did not work so well if one was red-lined. And philosophically, how
does one justify government privileges for depository institutions in the first place? Because
they work? Work for who? Not those who were redlined, for sure.
America is like an aging, punch drunk prize fighter, so much blood streaming into his eyes
he can't even see what he's doing any more. So we flail around with Iraq-style nation-building
wars despite being smashed squarely in the face with all our previous ones. Just put your hands
behind your back and stick your jaw way out. The Fed sprays free money around like its Skittles
despite the fact that the only takers for new debt are CEOs buying back their stocks and heading
for the islands. And precisely one candidate has the stones to mention it, and no I don't mean
the falling down, sickly grandmother who sold the business of our government for immense personal
gain through her Foundation.
Swapping standing in line at the check-out for the line at the exit. And when there is an issue
then the greeter calls in the check-out police thereby pissing off the customer. Brilliant.
While Apple fanboys are willing to work for their iPhone's company for free by doing their
own check-out I doubt that is likely for people going to Sam's Club. As well many customers, even
if they have a smartphone, will not enjoy using up their data plan as they try to check and process
the details online.
All these smartphone apps have one major goal, besides collecting credit fees. Reduce store
overhead by getting customers to do more of the work while eliminating employees. The winners
are not the customers or people looking for a way to make ends meet.
Another goal of course is to track even further every single purchase - what, and where, and
when. And then sell the consumption data to the insurers perhaps… a packet of cigs per day? Or
too many bottles of booze?
Of course they are already doing that with the store "fidelity cards", but the mobile apps
will be more precise and less optional.
Re the Oilprice link, here's an article that contradicts the notion that US policy in Syria
was about the Qatari pipeline as that claim–put forth in a Politico article by Robert Kennedy
Jr–was little more than a poorly sourced rumor.
That claim has no credibility for a very simple reason: there was no Qatari proposal for
Syria to reject in 2009. It was not until October 2009 that Qatar and Turkey even agreed to
form a working group to develop such a gas pipeline project.
Gareth Porter says that instead
The US decision to support Turkey, Qatar and Saudi Arabia in their ill-conceived plan to
overthrow the Assad regime was primarily a function of the primordial interest of the US permanent
war state in its regional alliances. The three Sunni allies control US access to the key US
military bases in the region, and the Pentagon, the CIA, the State Department and the Obama
White House were all concerned, above all, with protecting the existing arrangements for the
US military posture in the region[….]
The massive, direct and immediate power interests of the US war state – not the determination
to ensure that a pipeline would carry Qatar's natural gas to Europe – drove the US policy of
participation in the war against the Syrian regime. Only if activists focus on that reality
will they be able to unite effectively to oppose not only the Syrian adventure but the war
system itself.
In other words the MIC strikes again and seems to be directly challenging Obama policies with
"accidents" like the recent bombing of the Syrian army. Time for movie fans to dust off old copies
of Seven Days in May?
Porter may well be right about the pipeline. However, a piece that purports to account for
our Syria operations and the obsession with the removal of Assad that does not mention Israel
and the Israel Lobby cannot be the complete story. Breaking the 'Shia Crescent' is a major strategic
aim of the friends of Israel.
Without a doubt the Lobby keeps the liberals–the "progressives except for Palestine"–supporting
the fever dreams of the generals, but arguably it's this internal, and traditionally rather Waspy
pressure group that is the real menace. As the following quite accurately points out, we have
a WW2 military with nothing to do with itself unless they can invent a suitable enemy.
We live in a military world fundamentally different from that of the last century. All-out
wars between major powers, which is to say nuclear powers, are unlikely since they would last
about an hour after they became all-out, and everyone knows it. In WWII Germany could convince
itself, reasonably and almost correctly, that Russia would fall in a summer, or the Japanese
that a Depression-ridden, unarmed America might decide not to fight. Now, no. Threaten something
that a nuclear power regards as vital and you risk frying. So nobody does.
Or, to sum up
What is the relevance of the Pentagon? How do you bomb a trade agreement?
The generals and admirals need a Russian foe to justify their absurd budgets and their very
existence. It's ironic that our great victory in WW2–triumph of industrial America–may end up
doing us more long term harm than those European and Asian nations that were bombed into ashes.
You can rebuild cities but dismantling imperial hubris turns out to be harder.
Occam would probably just say that the Cold War never ended for our geniuses-in-chief, despite
dissolving away in 1989 our enemy is and always was and will be Russia uber alles. The simple
fact that they back Assad is all it took, yes add in a sprinkle of Tehran and Tel Aviv and goose
with a little juice from Riyadh but the overnight disappearance of our existential enemy was something
up with which we could not put.
Peter K. :
September 25, 2016 at 07:01 AM
This is a large problem for the left. (and I see the prospect
of enacting "maximum wage laws" as pretty slim. Maybe I'm
wrong.)
You read progressive commenters like David and
EMichael here pondering the returns on their investments. Not
that there's anything fundamentally wrong with it. It's just
a problem needed to be solved by public policy so everyone is
facing the same rules.
You Voted to Pay Wells Fargo CEO John Stumpf $19.5 Million
by Dean Baker
Published: 24 September 2016
You don't remember casting that vote? Well, you didn't
actually cast it, but if you have a 401(k) someone like
Blackrock CEO Larry Fink cast the vote for you.
Most middle income people have 401(k)s for their
retirement and most of this money is in mutual funds. These
mutual funds have control over the proxy votes for the shares
they hold. This means that funds like Blackrock, which has
more than $5 trillion in assets, have enormous say over the
distribution of income in this country. And, as Gretchen
Morgenson points out in her NYT column this morning, these
folks almost always endorse outlandish pay packages for CEOs.
As they say in Wall Street circles, what's a few million
dollars between friends.
Folks need to keep their $$$$ out of mutual funds, keep their
$$$$ out of 401(k). Plus you will avoid the load. When stocks
fall your t-bonds will rise by virtue of their negative beta.
Is that why investment bankers are contributing more to
Clinton Dynasty Foundation? To Clinton election slush fund?
Than to Trump University? Because the strongly suspect that
stocks will collapse when the Donald moves into White House?
Do you know where your assets are? When was the last
I hate to remark on so obvious a matter. A TBTF bank CEO
bonus of $19.5million is a low bonus by industry standards.
Back in the 90s and oughties a $2million bonus for a managing
director was an insult or an indication that you were on your
way out. $10million was a good bonus, $5 million was OK. A
$20 million bonus was really good for an MD. CEOs and leaders
of successful business units could see 9 figure bonuses, like
Mr Blankfein's $130million 2010 bonus, and he was not the
highest paid GS exec that year. A bonus below $20million for
a current day CEO could be read as bad news and is probably
read as such by his friends. He is probably on his way out.
Bonuses today are not as sumptuous as they were in 2010
when the Obama bailout money was considered income and
bonuses were paid out in proportion to the income of the
business unit.
It seems Wells Fargo may have avoided the disasterous decline
in stock valuations that BofA and Citigroup experienced but
this is not exactly a large increase either:
Sad part, is that now pgl will tell us about the woes of one
or two of his favorite banks and try to project that to the
industry...or he'll put in a link showing declines in net
interest margins...because he's a dissembling sleazebag.
This dude is so confused that he doesn't even know the
difference between net INCOME margin (profit) and net
INTEREST margin!
"... After several years of deliberate fiscal austerity, designed to bring down budget deficits and stabilise public debt ratios, the fiscal stance in the developed economies became broadly neutral in 2015. There are now signs that it is turning slightly expansionary , with several major governments apparently heeding the calls from Keynesian economists to boost infrastructure expenditure. ..."
"... [1] Fiscal easing remains very conntentious in political circles throughout the western economies. At a recent meeting behind closed doors in Washington DC, I was surprised to hear a very senior, and generally intelligent, Republican politician declare that "Keynesian demand management has been shown to be useless by a bunch of Austrian academics". I am not sure what he had in mind, but he did make a more defensible point when he added that supply side policies might be more important for growth in the long run. ..."
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Fiscal policy activism is firmly back on the agenda.
After several years
of deliberate fiscal austerity, designed to bring down budget deficits and
stabilise public debt ratios, the fiscal stance in the developed economies
became broadly neutral in 2015. There are now signs that it is turning
slightly expansionary
, with several major governments apparently heeding
the calls from Keynesian economists to boost infrastructure expenditure.
This seems an obvious path at a time when governments can finance public
investment programmes at less than zero real rates of interest. Even those
who believe that government programmes tend to be inefficient and wasteful
would have a hard time arguing that the real returns on public transport,
housing, health and education are actually negative [1].
With monetary policy apparently reaching its limits in some countries,
and deflationary threats still not defeated in Japan and the Eurozone, we
are beginning to see the emergence of packages of fiscal stimulus with
supply side characteristics, notably in Japan and China.
Investors are asking whether this pivot towards fiscal activism is a
reason to become more bullish about equities and more bearish about bonds,
on the grounds that the new policy mix will be better for global GDP growth.
This is directionally right, but it is important not to exaggerate the
extent of the pivot.
The phase of fiscal austerity peaked in 2013, and ended last year, but
firm announcements of more stimulative budgetary policy have been fairly
minor up to now. In 2016, budgetary policy in the developed economies will
be slightly expansionary and the latest plans suggest that the same will be
true next year.
In Japan, there has been an overt decision to ease budgetary policy
by about 1.3 per cent of GDP in the next 12 months.
In China, fiscal policy has probably been eased by at least 1 per
cent of GDP this year, though much of this has been outside the official
government budget.
In the UK, Chancellor Hammond has suggested that he is rethinking his
predecessor's plan to balance the budget by 2020, though this change may
not be taken as far as a major easing in the policy stance.
In the US, both Hillary Clinton and Donald Trump have outlined
spending packages, amounting to 1.5 and 2.5 per cent of GDP respectively,
but it is far from clear how much of his would be offset by extra
taxation after negotiations with Congress.
In the Eurozone, budget deficit targets have been allowed to rise to
finance help for migrants and the Juncker infrastructure programme, and
even Germany is seriously thinking of tax reductions in 2017, but the
overall change in the fiscal thrust still seems rather minor.
J.P. Morgan has recently estimated that budgetary policy in the major
developed economies, measured by the structural budget balance, will be
eased by 0.2 per cent of GDP both this year and next. With feasible further
policy changes, it could turn out to be a little more than this, but only a
little:
What effect would that have on GDP growth? In part, that depends on the
monetary policy reaction.
In the US, the Federal Reserve could raise short rates slightly more
rapidly if fiscal policy is eased, curtailing the GDP benefits somewhat.
Elsewhere, monetary policy would not react at all, and central banks would
probably prevent any crowding out of private investment by keeping long bond
yields stable.
It is now well established that the fiscal multiplier is probably fairly
large when interest rates are at the zero lower bound. A recent
lecture by Paul Krugman
suggests, as a rule of thumb, that the
multiplier might be around 1.5, compared to standard estimates of 0.5 or
less in previous eras. That seems to be as good an estimate as any other,
and it would suggest that the fiscal easing in 2017 might raise GDP growth
by more than a quarter percentage point, compared to a GDP growth drag of
over 1.8 per cent in 2013.
That is useful, but scarcely ground breaking. Yet Keynesians seem
optimistic that the beneficial effects of a fiscal pivot might be much more
significant than this. How might this happen?
There are two possibilities. The first is that a fiscal stimulus might
shock the economies into a new equilibrium in which private sector
confidence is restored and the level of output settles permanently at a new,
higher level. Economists can show that almost anything is possible by using
multiple equilibrium models (and Keynes certainly had such mechanisms in
mind in the 1930s) but it surely strains credulity to suggest that the
modest fiscal changes currently planned would have a dramatic effect on
corporate or consumer confidence.
A second possibility is that easier fiscal policy would simultaneously
make the existing stance of monetary policy more stimulative.
Recent work
on R*, the equilibrium real rate of interest, suggests that
fiscal policy can shock R* upwards, by raising investment relative to
savings. This would have an effect opposite to the global savings glut,
which is sometimes held to have reduced R* in the past decade.
If that occurred, then the gap between current interest rates and R*
would be increased, making the monetary stance (in theory) more stimulative
without the central bank taking any action at all. But would a moderate and
temporary increase in the budget deficit have a large and permanent effect
on R*? It seems rather doubtful.
It is true that eventually there could be changes in fiscal strategy that
could be powerful enough to shock the global economy into a different path
for growth and inflation. Chris Sims' work on
fiscal dominance
suggests that a major regime change in which fiscal
policy is aimed at achieving a rise in inflation towards the 2 per cent
target could be very powerful.
But, in the real world, politicians (except possibly in Japan) are
nowhere near accepting the need to throw overboard everything they have
believed for decades. It would probably take another global recession to
change that.
----------------------------
Footnote
[1] Fiscal easing remains very conntentious in political circles
throughout the western economies. At a recent meeting behind closed doors in
Washington DC, I was surprised to hear a very senior, and generally
intelligent, Republican politician declare that "Keynesian demand management
has been shown to be useless by a bunch of Austrian academics". I am not
sure what he had in mind, but he did make a more defensible point when he
added that supply side policies might be more important for growth in the
long run.
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This idea is not new nor has it ever worked. See Japan and China for recent examples, NZ
tried it in the 80's and almost went bust.
It maybe possible to get some short term uptick in
economic measurements following a big government spend
up, but it is well proven that when the fiscal spend up
slows so does the economy. There are many reason for this,
least not, that most often Government projects are wrecked
by politics, unions see them as an opportunity to leverage
political capital for the benefit of their members and
inevitably push up costs of the project. The private
sector see it for what it is, a temporary spend up on the
public purse and milk it for all they can get, much of the
spending goes off shore via profits and expenditure on raw
materials. Unless resources are sitting around idle
inflation will reduce the expected returns and ultimately
these types of projects reflect the under lying issue in
economies that try them, these are usually related to
declining productivity driven by regulation and monetary
driven asset inflation. If economic wealth creation was as
simple as spending more then we would not be talking about
it.
The economic philosophy/theory of Keynes and monetarism
as land us where we are today. Unfortunately it seems like
populist political outcomes will raise there ugly head
with who knows what outcome. The establishment will
blindly blame the populist politician and not reflect on
how we got here. The FT seems to be leading the charge in
that regard.
Brian Reading
5pts
Featured
1 hour ago
It is great to read sop-histicated articles not afraid to
mention the equilibrium real rate of interest and
structural budget balances. Perhaps the message is that
the combination of conventional fiscal policy with
unconventional monetary polcy is doing more harm than good
and has the makings of the next crisis. It is possibly now
time to try unconventional fiscal with conventional money.
Ye
olde sweetie shoppe
5pts
Featured
4 hours ago
Did you know that "Camels Fart Augments Menu" is an
anagram of Fulcrum Asset Management?
tobacco flat
5pts
Featured
6 hours ago
Even the simplest corporate treasurer would be issuing as
much paper as possible at negative interest rates but the
ECB geniuses are buying!
Down
under
5pts
Featured
10 hours ago
@duvinroude
I think that's been tried before, don't you?
seafoid
5pts
Featured
14 hours ago
Taxing the 1% is the only solution
slimfairview
5pts
Featured
14 hours ago
After almost 6 years of inveighing against Merkelism, an economic system based on the fear
that someone, somewhere is earning a living, and after
youngsters majoring in Economics tried running Ken
Rogoff's numbers through a computer and failed to
duplicate the results, the EuroCrats have--with their last
gasp--embraced austerity.
Nonetheless, that the EuroUnion may be unraveling is
indicated in part by Dr. Rogoff back-pedaling on austerity
in a recent interview, the hysterical rants by EuroCrats
against the impending Brexit Vote, the petulant and bitter
invective after the Brexit Vote, the "open and public and
effusive" support for the Chancellor by, among others,
Madame Lagarde; Draghi's rebuke to Merkel on her attempted
interference in the activities of the ECB.....
Perhaps the EuroCrats from the "EXIT" Nations:
Britain, Greece, Italy, Portugal, Spain, and now Ireland,
will consider the proposal in Brexit? Now What?
The SidestreetJournal is an unsupported, unfunded,
non-profit web log by the Blogger Slim Fairview.
Nicki
5pts
Featured
12 hours ago
@
slimfairview
Has
that rant got anything to do with the subject?
Neil
at home
5pts
Featured
15 hours ago
So the nice easy solution of lowering interest rates
hasn't stimulated growth and throwing a few trillion on
infrastructure wont help much either.
Ye olde sweetie shoppe
5pts
Featured
5 hours ago
@
Neil at home
I
respectfully disagree. Infrastructure spending
should at the very least stimulate wage growth,
increase employment and ultimately stoke inflation.
Zero interest rates have done none of this because
in a balance sheet recession corporations tend
rather perversely to pay down debt rather than issue
more of it. I recommend you watch one of Ricard
Koo's presentations on Youtube.
genauer
5pts
Featured
15 hours ago
Inflation targeting to less than 2% has been Bundesbank policy for a long time, and with
them most of mainland Europe.
Krugman claiming that "And my team won three out of
three. Goooaaal!" is his typical brand of strawmen
dishonesty.
Krugman trying to diparage "Academics like Niall
Ferguson and
John Cochrane
", that has
really something to it.
Still showing the discgraced garbage "analysis" solely
depending on one false data point Greece (Fig. 2) shows
that the disgraced Krugman and his Krugtron "team" are
intellectual and character garbage, specifically including
formerly IMF Olivier Blanchard.
Alex Barker in Brussels and Shawn Donnan in Washington
which had to wait 18 hours in pending .... : - )
Ralph Musgrave
5pts
Featured
16 hours ago
So after several years during which monetary policy has
proved less than brilliantly effective at giving us
stimulus, the "experts" are now going to try fiscal
policy. Have the "experts" yet caught up with the fact
that the Earth revolves round the Sun?
Andrew Baldwin
5pts
Featured
17 hours ago
I haven't read the paper by Chris Sims but there is no
reason that fiscal policy should set itself the task of
raising the inflation rate to two percent. The two percent
inflation target is a relic of the original inflation
control agreement of the Governor of the Bank of Canada
and the Minister of Finance in February 1991. The upward
bias in the Canadian CPI at that time was probably greater
by 25 basis points than it is today, and probably in
excess of 50 basis points as compared to the US target
inflation indicator, the PCEPI. In any case, two percent
was never intended to define price stability, which the
1991 agreement clearly stated would be some inflation rate
lower than two percent. The developed world should forget
about a two percent target. It is long past time to move
the target rate down.
duvinrouge
5pts
Featured
17 hours ago
Expansionary fiscal policy solution for those who think the problem is capitalists hoarding
money.
Expansionary fiscal policy, just like expansionary
monetary policy, will only further diverge aggregate
prices from aggregate values - a crisis of
'overproduction'. But, of course, economists today have no
comprehension of the difference between price & value,
even if some recognise an 'asset-price bubble'.
There is no way of avoiding a recession that destroys
fictitious capital, along with productive capital & with
all the mass unemployment & human suffering. Not because
boom-bust is an act of nature, rather it is part & parcel
of the capitalist system. Only a post-capitalist system
where the means of production are commonly
owned/controlled can we liberate humanity.
Hollow Man
5pts
Featured
7 hours ago
@
duvinrouge
Interesting! But you've teased us before with
comments that would suggest you have more up your
sleeve. Why not lay out a fuller explanation
--presumably it's some kind of modern variant of
Marxian theory -- so that we can judge for ourselves
what sort of alternative it really is to to Gavyn
Davies' stale, jargon-ridden analysis?
"... By Matthew Weinzierl, Assistant Professor of Business Administration, Harvard Business School. Originally published at VoxEU ..."
"... The trick or con being played by the elite is to convince enough of us that the game of life is being played fair. And when that fails, the con or lie becomes that its the fault of (insert target minority group). ..."
"... From two complementary sociological points of view -- conflict theory and symbolic interactionism -- this article is naive -or a red herring- in the ways you suggest. ..."
"... Indeed, the issue is about people accepting a "definition of the situation" that is in fact detrimental to their material interests (Pierre Bourdieu terms this "misrecognition"). Erving Goffman, who was trained as an interactionist, studied con artists to describe how they successfully created a definition of situation -- which means a version of social reality -- that their marks would internalize as reality itself. A sociologist would not begin a discussion of socioeconomic inequality with tax policy. ..."
"... Control over arguments regarding political economy in the public sphere have to be wrested from economists, so that we can start to talk about what actually matters. Sanders' popularity, despite his numerous problems, lay in how he took control of the argument and laid bare the absurdities of those who benefit from the status quo. ..."
"... I say we boycott economists. Sure some of them are not terrible, but in the main the discipline needs to be torn down and rebuilt from the ground up. ..."
"... Many economists function as members of the courtier class, justifying what the rich and powerful want to occur. Most citizens already boycott economists in that they don't use their services except when required to attend an Econ class at school. ..."
"... But economists do influence average citizens lives via their justification of tax policy, land use policy, labor policy, trade policy and law implementation. ..."
"... Economic education has been a failure of the left. Everyone needs to know how money and finance works. Only then can that power be put to various uses. It is not that you don't need economists, you need economists working in your interest. ..."
"... I could get behind this. And I would have to agree that harping against the evils of capitalism, which are very real, often comes from those who don't really understand how it works. ..."
"... The post indicates this guy is Assistant Professor of Business Administration - at Harvard Business School - so I'm not sure I would give him even so much regard as I might give an economist. I wonder how he and his will regard the fairness of luck while they wait in line to be serviced at the guillotine they're building - much as Scrooge crafted his chain and weights for his afterlife. ..."
"... Interesting reference to Scrooge -- the power of art to enlighten the human condition cannot be underestimated. As I get older, it seems to me that the capitalism system debases everything it touches. Anything of real value will be found outside this system. It has become the box that confines us all. ..."
"... It's also worth noting how his examples are still a function of the neoliberal canard that privilege is simply a boost on the ladder of meritocracy. The game is still implicitly understood to be fair. ..."
"... Yet, it's not clear to me what Alice Walton, for instance, has done to justify being a multi-billionaire. People who are born not just with spoons but entire silver foundries in their mouths could redistribute 90% of the wealth they acquired by virtue of being someone's baby and still be absurdly rich. ..."
"... Learning must be for its own sake. Like you, I spent many hours in the library. BUT it was to scratch an itch I have not been able to quell - even in these many years since I was in that library. ..."
"... "The putative "father of the Euro", economist Robert Mundell is reported to have explained to one of his university of Chicago students, Greg Palast: "the Euro is the easy way in which Congresses and Parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system" Michael Hudson "Killing the Host" ..."
"... The neoclassical economists didn't have a clue as the Minsky Moment was approaching. ..."
Yves here. This article argues that people don't mind inequality due to "brute luck"…but is one man's
brute luck another man's rigged system?
By Matthew Weinzierl, Assistant Professor of Business Administration, Harvard Business
School. Originally published at
VoxEU
Tax policy to correct inequality assumes that nobody is entitled to advantages due to luck alone.
But the public largely rejects complete equalisation of 'brute luck' inequality. This column argues
that there is near universal public support for an alternative, benefit-based theory of taxation.
Treating optimal tax policy as an empirical matter may help us to close the gap between theory and
reality.
... .... ...
In this case, the optimal tax policy aggressively offsets inequality. Only the need to retain
incentives to work and the desire to reward extra effort justify allowing inequality to persist.
... ... ...
Brute Luck and Economic Inequality
What explains the gap between scholarly and popular views of the moral status of pre-tax income?
A clue might be our attitude to luck.
The view that individuals have no moral claim to their pre-tax incomes relies on the ethical assumption
that nobody is entitled to advantages due to factors outside his or her control. Philosophers such
as Cohen (2011) call this 'brute luck'. Given the importance of brute luck (for example, natural
ability, childhood home environment, and early schooling) to a person's economic status, this assumption
directly leads to a rejection of moral claims to pre-tax income.
... ... ...
The 2016 US presidential campaign's attention to inequality fits these findings. Some candidates
complain of a 'rigged system' and rich individuals and corporations who do not pay their 'fair' share.
Critically, gains due to a rigged system or tax avoidance are due to unjust actions, not brute luck.
They are due to the toss of a loaded coin, not a fair one.
... ... ...
These are early steps in developing a new approach to tax theory that I have called 'positive
optimal taxation'. This approach modifies the standard optimal tax analysis by treating the
objective for taxation as an empirical matter. It uses a variety of sources – including opinion
surveys, political rhetoric, and analysis of robust policy features – to highlight gaps between
the standard theory and prevailing reality of tax policy. It also identifies and incorporates
into the theory alternative goals – and the philosophical principles behind them – that better
describe the public's views on policy.
One piece of logic missing from the research analysis is accounting for the game itself. If
I agree to play a game of chance that is fairly played I am by default also agreeing that I accept
the possibility that the outcomes will not be equal, otherwise why would I play. It shouldn't
be a surprise that in the end people are willing to maintain that inequality because they originally
agreed to it by the fact that they agreed to play.
As Yves points out, if you change the scenario where one of the players was allowed to collude
with the person executing the game and the other player was informed of this you might get a very
different answer. You might even get a punishing answer.
The trick or con being played by the elite is to convince enough of us that the game of life
is being played fair. And when that fails, the con or lie becomes that its the fault of (insert
target minority group).
From two complementary sociological points of view -- conflict theory and symbolic interactionism
--
this article is naive -or a red herring- in the ways you suggest.
Indeed, the issue is about people
accepting a "definition of the situation" that is in fact detrimental to their material interests
(Pierre Bourdieu terms this "misrecognition"). Erving Goffman, who was trained as an interactionist,
studied con artists to describe how they successfully created a definition of situation -- which
means a version of social reality -- that their marks would internalize as reality itself. A sociologist
would not begin a discussion of socioeconomic inequality with tax policy.
A sociologist would not begin a discussion of socioeconomic inequality with tax policy.
But an economist would, and therein lies the problem. Control over arguments regarding political economy in the public sphere have to be wrested
from economists, so that we can start to talk about what actually matters. Sanders' popularity,
despite his numerous problems, lay in how he took control of the argument and laid bare the absurdities
of those who benefit from the status quo.
I say we boycott economists. Sure some of them are not terrible, but in the main the discipline
needs to be torn down and rebuilt from the ground up.
Many economists function as members of the courtier class, justifying what the rich and powerful
want to occur. Most citizens already boycott economists in that they don't use their services except when
required to attend an Econ class at school.
But economists do influence average citizens lives via their justification of tax policy, land
use policy, labor policy, trade policy and law implementation.
Even if we tore down the profession, it could likely regrow to provide the same functionality.
The profession provides a valuable service, as it is valued by the class with power and money
throughout the world.
Economic education has been a failure of the left. Everyone needs to know how money and finance
works. Only then can that power be put to various uses. It is not that you don't need economists,
you need economists working in your interest.
All knowledge and technology works this way. It is the purposeful use of information that matters,
not the information itself. The left wastes time, effort, and resources trying to convince people
to change their minds. Instead, they need to focus on building things in the real world, using
all the economic tools at their disposal.
I could get behind this. And I would have to agree that harping against the evils of capitalism,
which are very real, often comes from those who don't really understand how it works.
Maybe the solution is more co-ops and less rhetoric.
Using the power of the boycott is another. The powerless need to rediscover what power they
truly wield in this system. That was the other failure of the left. Yes, they were actively crushed
by corporate power, but the ideas live on. They can only be exterminated through lack of use.
A new ideology needs to be born of the ashes. If the predictions of climate disruption are
anywhere near accurate, a proactive, and positive direction can be undertaken. My experience is
that caring, healthy people are driven to help others in times of adversity. Well, those times
are coming. We are once again going to have to face the choice between choosing abject fear or
rolling up our sleeves and getting back to work making everyones lives better.
You don't need corporate sponsorship to do that. They need us more than we need them. In the
end, I have a feeling that the current system will come down very quickly. Being prepared for
that outcome is what should be driving the actions of those not vested in keeping the status quo
going.
The post indicates this guy is Assistant Professor of Business Administration - at Harvard
Business School - so I'm not sure I would give him even so much regard as I might give an economist.
I wonder how he and his will regard the fairness of luck while they wait in line to be serviced
at the guillotine they're building - much as Scrooge crafted his chain and weights for his afterlife.
For a historian, making connections between past and present situations is the root of their
insight. As in all walks of life, your efforts can gain value to your fellow citizens or they
can be used as a tool for your own self interest- whatever that might be. How interesting are
these repeating cycles in the human drama.
Interesting reference to Scrooge -- the power of art to enlighten the human condition cannot
be underestimated. As I get older, it seems to me that the capitalism system debases everything
it touches. Anything of real value will be found outside this system. It has become the box that
confines us all.
When your viewpoint of the world and your relationship to it shrink to only seeking profits,
the depravity of that situation is hidden from view unless shocked back to awareness.
As Peter Gabriel would say- Shock the Monkey
Shock the monkey to life
Shock the monkey to life
Cover me when I run
Cover me through the fire
Something knocked me out' the trees
Now I'm on my knees
Cover me darling please
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Fox the fox
Rat on the rat
You can ape the ape
I know about that
There is one thing you must be sure of
I can't take any more
Darling, don't you monkey with the monkey
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Wheels keep turning
Something's burning
Don't like it but I guess I'm learning
Shock! – watch the monkey get hurt, monkey
Cover me, when I sleep
Cover me, when I breathe
You throw your pearls before the swine
Make the monkey blind
Cover me, darling please
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Too much at stake
Ground beneath me shake
And the news is breaking
Shock! – watch the monkey get hurt, monkey
Shock the monkey
Shock the monkey
Shock the monkey to life
This is tangential to topic of this thread:
I was particularly struck by your comment about art: "the power of art to enlighten the human
condition cannot be underestimated." I recall a similar assertion made in one of Howard Zinn's
speeches - sorry I can't recall the exact phrasing of his statement or its context.
I'm retired and found a strange calling to make art - a calling I never listened to when I
had to worry about supporting a household. I find it difficult to make art that isn't political,
satirical or in some way didactic. Whether anyone else would regard my works as art I don't know
and in a way I don't care. Art has become a way in which I must express something inside me I
don't understand but whose direction I must follow. I suppose similar feeling drive many expressions
of art. Perhaps that explains something of the power of art you refer to.
For the erosion in income inequality to be fixed, economic policies need fixed. The disparity
between income quintiles will continue to widen. Social unrest will continue to proliferate. This
situation will simply never get corrected until the commercial banks are driven out of the savings
business (however bizarre one might think that solution is).
Vladimir Lenin, leader of the 1917 Russian Revolution said: "The best way to destroy the capitalist
system is to debauch the currency." Not so. The best way to destroy capitalists is the deregulation
of deposit caps for saver-holders' accounts in the commercial banking system. This policy error
simply increased the bank's costs with no increase in their income. Bottling up savings, is first
observed by the decline in money velocity, then by a decline in AD (secular stagnation), and when
the Fed attempts to offset this decline, by an increase in stagflation.
Vi is contrived. Vt is money actually exchanging counterparties. But since Ed Fry discontinued
the G.6 debit and demand deposit turnover release in Sept. 1996, the Fed has no rudder or anchor.
Required reserves are a surrogate, though the underweight Vt. But RRs are based on payments
(money turning over). And 95 percent of all demand drafts clear thru transaction based accounts.
The "code" you speak of relates to the volume of financial transactions consummated. Financial
transactions are not random. Financial speculation is a function of money flows. The volume of
bank debits during the housing crisis would have stood out like a sore thumb (as it captured both
new and existing real-estate transactions).
Only price increases generated by demand, irrespective of changes in supply, provide evidence
of inflation. There must be an increase in aggregate demand which can come about only as a consequence
of an increase in the volume and/or transactions velocity of money. The volume of domestic money
flows must expand sufficiently to push prices up, irrespective of the volume of financial transactions,
the exchange value of the U.S. dollar, and the flow of goods and services into the market economy.
The "administered" prices would not be the "asked" prices, were they not "validated" by (M*Vt),
i.e., "validated" by the world's Central Banks.
I'm not sure that what you just spewed even makes sense to you, or that you even bothered to
read the link provided…but the "code" is about concurrent monetary AND fiscal policy to serve
a purpose other than making the rich richer and the poor poorer…
If someone gets the waterfront property just because he/she was born first so got there first,
he better do something positive for the next generation… The next generation will understand the luck factor as not everyone can be standing in the
same spot at the same time, but it will not accept the scrooge.
If people are entitled, even in part, to their pre-tax incomes, the optimal tax policy would
no longer offset inequality as aggressively. Taxes would, instead, be focused on raising funds
for government activities in a way that tries to respect those entitlements.
which seems fair-ish, but also
Given the importance of brute luck (for example, natural ability, childhood home environment,
and early schooling)
Oh my! Childhood home environment and (gasp!) early schooling are matters of luck? Oh those
Haaahvaahd guys! No, professor, winning the lottery is a matter of luck, and can happen to anyone
at any point in their life. Being born in poverty, into a class 15% of whose male population is
incarcerated or having to go to a crappy school are *systemic* results of deliberate social structures,
the elites just prefer to call it "bad luck". Thus we see how the Ivies serve the elites.
Yes, HotFlash. And these 'deliberate social structures,' the 'red-lining' policies, the wildly
unequal sentences for crack versus cocaine, the casual brutality of the prison system (over 200,000
male rapes per year), the laws preventing people who have served their sentence for a felony from
voting, public housing, scholarship aid, welfare .. in other words, from living and improving
their lives .. are structural violence. And then we are 'surprised' when people who have lived
their lives under a regime of these subtle but unrelenting acts of economic, social and spiritual
violence, finally hit back.
It's also worth noting how his examples are still a function of the neoliberal canard that
privilege is simply a boost on the ladder of meritocracy. The game is still implicitly understood
to be fair.
Yet, it's not clear to me what Alice Walton, for instance, has done to justify being a multi-billionaire.
People who are born not just with spoons but entire silver foundries in their mouths could redistribute
90% of the wealth they acquired by virtue of being someone's baby and still be absurdly rich.
The paper seems totally oblivious to the fact that in the scenario presented, all the gains
enjoyed by both players are due to luck. Player B is getting a windfall either way, so
there's no sense of real unfairness. The perception would be quite different if it was only the
difference between A and B that was assigned randomly, while each had to earn some baseline.
And I think the "popular acceptance" part is given a huge boost when the young, black, nominally-Democrat
president keeps insisting everything is awesome and anyone who says otherwise is "peddling fiction".
I think this paper goes to great lengths to build a question around the ideas of the fairness
behind progressive taxation. This post hardly seems to pose a question worthy of study. Our tax
systems so much favor Corporations and the wealthy that considerations of "fairness" are at best
comical - and I'm not laughing.
Yes, the outcome of self awareness will always be Anarchism. I came be an advocate, not through
economics or politics, but thought Buddhism and Daoism. It is a story older than humanity that
we are just starting to remember.
So here I am sitting, watching, waiting for the rest of the world to catch up.
What kind of self-knowledge did Hitler find in his imprisonment? It didn't lead to anything
I would call peaceable. Was there some inner Hitler he didn't reach in his prison contemplations?
If I had only known it was luck, I would not have spent so many late nights in the library
during undergrad and grad schools. However, I enjoyed those nights and was enriched by them. Is
that taxable?
Learning must be for its own sake. Like you, I spent many hours in the library. BUT it was
to scratch an itch I have not been able to quell - even in these many years since I was in that
library.
Will future generations, if there are any, be able to look back and reflect," what were these
people thinking?"
There is no justification for the levels of inequality and environmental destruction we are
experiencing. Period. We can all consider ourselves fools, even for entertaining debating these
issues much longer. We need to be discussing concrete actions, not theoretical justifications.
Everyone must face the randomness of the universe every day. The only certainty know is the
one WE create as human beings- one and together. Why is it do you think that the elite never break
ranks. They are creating their own certainty in an uncertain world. Heads I win, tails you loose.
TBTF. Race to the bottom. The new normal. Political capture using the revolving door techniques.
Human evolution is racing toward a crisis point. Ending inequality and world conflict are at
the focal point of this outcome. Leaders that continue to use the outdated modes of social control
will either drive us over the cliff to destruction, or will loose the ability to control outcomes
as their numbers dwindle. The day the revelation is made that the elite are full of crap, is the
day change becomes possible.
It seems large social structures will always come crashing down. The weakness in human nature
and flaws in our social structures lead to eventual failure. Greed and selfish action is seldom
tolerated is smaller structures.
I think there will always be inequality between people on many many dimensions. I am constantly
humbled by how much I don't know that other people know, people less well educated and I suspect
less intelligent - whatever that means - than I am. I celebrate this inequality and sincerely
hope this larger knowledge shared with mine and the knowledge of many others will suffice to address
the great challenges we face in the all too near future.
HOWEVER - inequality as a matter of power relations - that is different matter. If I were my
great great grandson I could never forgive what I have allowed through my cowardice and intent
to have a surviving great great grandson - or granddaughter.
I am not sure I really understand the intention of this paper. The example used, that 20% of
$90,000 income must be paid in taxes, and then taking surveys of how that distribution should
work seems to ignore whether or not the respondents actually understand basic math.
Why do I say this?
The "easy" answer is that Person A pays $15,000 and person B pays $3,000 which is the equivalent
of a flat tax. And yet, that's not how most responded. Only 5% selected the easy answer. Which
makes me wonder if the targets of the survey even understand basic math.
Actually the easiest answer is for person A to pay the whole $18,000. He's the one who is getting
more money before taxes, and if he pays the $18,000, he's still getting $12,000 more than person
B. The "flat tax" is probably the second easiest answer. However, since neither person is doing
any tangible work to receive the money, the fairest result is for both to get the same after "taxes".
If person A pays $24,000, $18,000 will go to the "state", and $6,000 will go to person B, and
both A and B will each get $36,000. Person B can force person A to agree to this, because if they
don't agree, then person A only gets $600 and person B gets $300.
If we want to get complicated, then the result should be such that the difference between person
A's portion and person B's portion is $300, whether they agree or not. So if they agree, person
A would pay $23,850 ($18,000 to the "state" and $5,850 to person B), and person A would get $36,150.
In that case, person B would get $35,850. The difference between person A's income and person
B's income is $300, just as it would have been if they had not agreed.
In terms of the money and wealth of the people who run our government and economy, and control
and direct our lives and the lives of millions of others - $90K barely registers.
I have little faith in studies like these. My first question is always, "What's a respondent?"
Define Person, please.
Notice how they're treated as entirely substitutable standardized parts. That is, as if people
were molecules or atoms. But try as it might, social science ain't physics. You can't just grab
the nearest few people, sit them down at a keyboard to play your game (for credit? for fun? on
assignment?) and then substitute their behavior for the behavior of all people everywhere.
Which people, where, under what conditions, and how many? Was the sample representative? Did
the author go to prisons, ghettos, farm fields, etc. and ask them? Or was it proximity and ease
of access that defined it?
It's the old "college sophomores in the lab" problem. As an undergrad psych student, I saw
time and time again how people gamed the system, yet PhD candidates and professors took the data
as gospel. It's only too often more a demonstration of ability to work the method, to play the
academic game, than testing hypotheses.
Also you might ask what meaning to attribute to a questionable measure of human opinions about
a concept like "what is fair" in an environment completely dominated by promotion of ideas of
fairness which to my mind are quite unfair.
So I agree with you and wonder why you don't pres further.
This post frames inequality in terms of "fairness" and luck/pluck and treats money as some
form of prize in an economic "game". I suppose this way of looking at things works up to a point
as long as we look to those below us and congratulate our merit while accepting some greater luck
of those above us which help rationalize our merit. But any concepts of fairness or the justice
things rapidly fractures if we look past those in our own neighborhood. Riding a bubble through
the slums here and elsewhere in the world it becomes very difficult to rationalize justice and
merit. Looking in the other direction toward the high rises and gated estates and manifestations
of wealth I can't even imagine and the fragments of the fairness or justice of things evaporates
completely. The "findings" of this post do not scale - at all.
Aside from the living standard which money/wealth affords the notions of "fairness" "merit"
and "luck" this post contemplates there is no discussion of other aspects of money/wealth conveniently
passed over and ignored.
In our society our money-culture money/wealth is equated with merit. It packages demand for
automatic respect and deference. This pecuniary one-size-fits all measure for character, intellect,
excellence, creativity, leadership, even physical attractiveness undermines all these values reducing
them to commodities of the marketplace.
But the ability of money/wealth to control and command the lives of others and the collective
resources of society is far more pernicious. What concept of "fairness" or "justice" can justify
this aspect of inequality?
JG – Rogge covers this in his book: "World Poverty and Human Rights: Cosmopolitan Responsibilities
and Reforms" (
https://en.wikipedia.org/wiki/World_Poverty_and_Human_Rights
) using the perfect example of the acquisition and management of natural resources.
Your comment to mine leaves me quizzical. Though I value any comments to mine given my wondering
how far I am from what is reasonable - global poverty is far beyond the complexity of anything
I might address in my comments. I grant global poverty is not a problem beyond solution - but
first we need to address the problems of economic philosophy used to justify and enable the gross
inequalities of our world.
I have not read Rogge's book. There are far too many books I have not read and of the books
i have read there are far too many I have not really understood. I am also concerned by how little
this post seems to have stimulated our commentariat - an entity I have come to greatly respect.
Please elaborate on what you mean. I am concerned by this post's lack of consideration of the
political power money/wealth confers - something beyond and to some degree outside considerations
of poverty and the suffering inequality fosters - even celebrates.
My poor non-economist head reels at this article. OK, it's a mind exercise to determine attitudes
toward taxation. But it's completely made up – Fig. 1 Tossing a fair coin, doesn't scan for me,
it's like a crap game. At the random flip of a coin, A gets twice as much as B, but where did
the $18k penalty come from? Is it arbitrary? Why "could" one have to pay more, and who decides?
And where did the $24k figure come from? Seems obvious to me A got twice as much, and so should
pay 2 out of 3 parts of the penalty. So, re brute luck and tax policy, if inherited wealth or
investment income (i.e. rent) vs. wage income is really what's meant here, please say so.
I view this post - at least in part - as questioning the basis for a progressive tax rate based
on attitudes toward what is "fair" in turn based on a - sorry - hokey experiment to test attitudes
about what is fair. To me the problem is a problem of scale. If we're talking about my place opposed
to that of the fellow in the house on the hill or the house down the street - I might - on a good
day - buy-in to this post's notions about "fairness". Those notions do NOT scale and they don't
give any consideration to the powers of control and command which great wealth confers.
What I can accept in the way of inequality between myself and the guy on the hill does NOT
scale when the guy on the hill doesn't live on the hill and only owns the house on the hill as
a reminder of his lowly beginnings. He lives in a multi-million dollar 10,000 sq. ft. condominium
high in New York City and a similar flat in London, and in Tai Pei and Shanghai and Paris and
… and lives in none of them really. And I cannot accept the poverty and oppression found in Camden,
New Jersey, Southside Chicago, … in Brazilian favelas or the slums of Seoul.
Perhaps the failure to scale arises from the compounded flaws that, first, this post is all
about "I" and speaks not at all to "we"; and, second, as your comments point out, uses money in
typical fashion as the lowest common denominator determining utility and fairness when, 'we' demands
a focus on the highest not lowest common denominator (and that's not mathematically or logically
convenient).
Further, 'we' must be something more meaningful than a mere agglomeration of "I's". Those are
at best 'thin we's' easily seduced into theoretical constructs that, in fact, have nothing to
do with the actual experience of 'we' in any meaningful way.
Real, 'thick' we's comprised of actual people who persistently interact and truly know they
share some to a lot of their shared fates respond to questions of brute luck, fairness and inequality
together (whether democratically or otherwise or blends of ways). They don't determine their shared
fates with an eye on abstract individualism grounded in lowest common denominators of 'utility'.
They actually care about 'what makes most sense for us together' and balk at devices, questions
- indeed swindles - aimed at tearing apart the fabric of 'we'.
Milton Freidman, the man that wrecked the world with bad economics.
Milton Freidman's charm, energy and charisma seduced his students and global elites alike into
believing he had come up with an economics that could transform the world. His students loved the idea of transforming the world through economics as it made them feel
so important. Global elites loved his economics as it worked so well for them and gave a scientific backing
for a world that was one that they had always wanted.
Unfortunately, there were a lot of problems with his economics that are making themselves felt
today.
His economics was missing:
1) The work of the Classical Economists
2) The true nature of money and debt
3) The work of Irving Fischer in the 1930s
The Classical Economists were the first economists to look at and analyse the world
around them, a world of small state, raw capitalism.
They noted how the moneyed classes were always rent seeking and looking to maintain themselves
in luxury and leisure, through rent and interest. This sucked money out of the productive side
of the economy, reducing the purchasing power within the nation.
They noted how the cost of living must be kept low, to keep the basic minimum wage low, so
nations could be competitive in the international arena.
This knowledge is missing today.
The UK dream is to live like the idle, rich rentier, with a BTL portfolio extracting "unearned"
rental income from the "earned" income of generation rent.
In the US they removed all the things that kept the cost of living down, not realising these
costs would have to be covered by wages. The US now has a very high minimum wage due to soaring
costs of housing, healthcare and student loans and US businesses are squealing.
The true nature of money and debt were understood in the 1930s when the Chicago Plan
was put forward after a thorough investigation into the 1929 bust.
Money and debt are opposite sides of the same coin.
If there is no debt there is no money.
Money is created by loans and destroyed by repayments of those loans.
This knowledge is missing today.
Today's ubiquitous housing boom is like a printing press creating more and more money as the
new mortgage debt comes into existence.
The money supply expands and pours into the real economy making everything look really good.
The only thing that is really happening is the inflation of the price of things that exist
already, houses. All the debt being created is not productive investment.
The cost of living goes up and more and more money gets sucked into mortgage and rent payments
sucking purchasing power out of the economy. The increasing cost of living, raises the basic minimum
wage pricing labour out of international labour markets.
Irving Fisher also looked into the 1929 bust and developed a theory of economic crises
called debt-deflation, which attributed the crises to the bursting of a credit bubble.
Irving Fisher looked into debt inflated asset bubbles and realised the huge danger they pose
to the whole economy. This knowledge is missing today. The ubiquitous housing boom is a debt inflated asset bubble, with huge amounts of debt spread
through the whole economy, when it bursts there is hell to pay.
This was first seen in Japan in 1989, its economy has never recovered.
It was repeated in the US and leveraged up with derivatives leading to 2008.
Ireland and Spain have also wrecked their economies with housing bubbles.
There are housing bubbles around the world, ready to burst and pull that nation into debt deflation.
Milton Freidman, the man that wrecked the world with bad economics.
Milton Freidman worked at the Chicago School of Economics and was the global ambassador for
his dire economics. This dire economics and the University of Chicago were also behind the design of the Euro,
no wonder it doesn't work.
"The putative "father of the Euro", economist Robert Mundell is reported to have explained
to one of his university of Chicago students, Greg Palast: "the Euro is the easy way in which
Congresses and Parliaments can be stripped of all power over monetary and fiscal policy. Bothersome
democracy is removed from the economic system" Michael Hudson "Killing the Host"
Their dire economics predicts the Euro-zone economies will converge into a stable equilibrium.
The reality – the economies are diverging and the poorer nations are going under. It's bad. 2008 – How did that happen?
The neoclassical economists didn't have a clue as the Minsky Moment was approaching.
Two people who did see 2008 coming (there aren't many).
Steve Keen – A whole book "Debunking Economics" on this dire neoclassical economics and the
problems of not using realistic assumptions on money and debt.
Michael Hudson – Calls it "junk" economics and has written a whole book on the problems of
forgetting the world of Classical Economics – Killing the Host.
Naomi Klein "Shock Doctrine" goes into the brutality of the Chicago Boys and Berkeley Mafia
in implementing their economic vision. A right wing "Khmer Rouge" that descended on developing
nations to wipe away left wing thinking.
Marginalist economics tends to be characterised primarily by a couple of distinct axioms that
operate 'under the surface' to produce its key results. these are simplistically characterise
as: the axiom of methodological individualism; the axiom of methodological instrumentalism; and
the axiom of methodological equilibration, where models derived from them have ex-ante predictive
power.
This is historically Epicurean philosophy, example, Epicurus wrote,
"The magnitude of pleasure reaches its limit in the removal of all pain. When such pleasure
is present, so long as it is uninterrupted, there is no pain either of body or of mind or of both
together."
Which is a reflection of its materialistic atomism which is basically identical with the marginalist
focus on atomistic individuals and makes it an atomistic doctrine. Thorstein Veblen where he wrote
in his Why is Economics Not an Evolutionary Science?:
"The hedonistic conception of man is that of a lightning calculator of pleasure and pains,
who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli
that shift him about the area, but leave him intact. He has neither antecedent nor consequent.
He is an isolated definitive human datum."
Which in turn is just Epicurean ontology where everything becomes objects and not subjects
where Epicurean ethics involves individuals maximising pleasure and minimising pain - or, as the
marginalists would put it, maximising utility and minimising disutility - it simply follows from
the basic ontological position that is put forward.
Just to put a more modern perspective on it – see: Note that the patient suffering from schizophrenia
tends not to answer the questions directed at him but rather responds with complete non-sequiturs.
"In his book, King lays out how economists have tried to establish supposedly disaggregated
"microfoundations" with which to rest their macroeconomics upon. The idea here is that Keynesian
macroeconomics generally deals with large aggregates of individuals – usually entire national
economies – and draws conclusions from these while largely ignoring the actions of individual
agents. As King shows in the book, however, the idea that a macro-level analysis requires such
microfoundations is itself entirely without foundation. Unfortunately though, since mainstream
economists are committed to methodological individualism – that is, they try to explain the world
with reference to what they think to be the rules of individual behaviour – they tend to pursue
this quest across the board and those who proclaim scepticism about the need for microfoundations
can rarely articulate this scepticism as they too are generally wedded to the notion that aggregative
behaviour can only be explained with reference to supposedly disaggregated behaviour."
You might also like – Le Bon, Gustave. The Crowd: A Study of the Popular Mind, you can get
it free online.
Additionally – The Myth of the Rational Market: Wall Street's Impossible Quest for Predictable
Markets – by Justin Fox
Chronicling the rise and fall of the efficient market theory and the century-long making of
the modern financial industry, Justin Fox's "The Myth of the Rational Market" is as much an intellectual
whodunit as a cultural history of the perils and possibilities of risk. The book brings to life
the people and ideas that forged modern finance and investing, from the formative days of Wall
Street through the Great Depression and into the financial calamity of today. It's a tale that
features professors who made and lost fortunes, battled fiercely over ideas, beat the house in
blackjack, wrote bestselling books, and played major roles on the world stage. It's also a tale
of Wall Street's evolution, the power of the market to generate wealth and wreak havoc, and free
market capitalism's war with itself.
The efficient market hypothesis -- long part of academic folklore but codified in the 1960s at
the University of Chicago -- has evolved into a powerful myth. It has been the maker and loser of
fortunes, the driver of trillions of dollars, the inspiration for index funds and vast new derivatives
markets, and the guidepost for thousands of careers. The theory holds that the market is always
right, and that the decisions of millions of rational investors, all acting on information to
outsmart one another, always provide the best judge of a stock's value. That myth is crumbling.
Disheveled Marsupial…. Main stream econnomics is an extenuation of much deeper metaphysical
and resultant ideological beliefs….
"... Reality always has this power to surprise. It surprises you with an answer that it gives to questions never asked - and which are most tempting. A great stimulus to life is there, in the capacity to divine possible unasked questions. ..."
"... - Eduardo Galeano ..."
"... Fred Jameson has argued that "that it is easier to imagine the end of the world than to imagine the end of capitalism." ..."
"... One way of understanding Jameson's comment is that within the ideological and affective spaces in which the neoliberal subject is produced and market-driven ideologies are normalized, there are new waves of resistance, especially among young people, who are insisting that casino capitalism is driven by a kind of mad violence and form of self-sabotage, and that if it does not come to an end, what we will experience, in all probability, is the destruction of human life and the planet itself. ..."
"... As the latest stage of predatory capitalism, neoliberalism is part of a broader economic and political project of restoring class power and consolidating the rapid concentration of capital, particularly financial capital ..."
"... As an ideology, it casts all dimensions of life in terms of market rationality, construes profit-making as the arbiter and essence of democracy ..."
"... Neoliberalism has put an enormous effort into creating a commanding cultural apparatus and public pedagogy in which individuals can only view themselves as consumers, embrace freedom as the right to participate in the market, and supplant issues of social responsibility for an unchecked embrace of individualism and the belief that all social relation be judged according to how they further one's individual needs and self-interests. ..."
"... The unemployment rate for young people in many countries such as Spain, Italy, Portugal, and Greece hovers between 40 and 50 per cent. To make matters worse, those with college degrees either cannot find work or are working at low-skill jobs that pay paltry wages. In the United States, young adjunct faculty constitute one of the fastest growing populations on food stamps. Suffering under huge debts, a jobs crisis, state violence, a growing surveillance state, and the prospect that they would inherit a standard of living far below that enjoyed by their parents, many young people have exhibited a rage that seems to deepen their resignation, despair, and withdrawal from the political arena. ..."
"... They now inhabit a neoliberal notion of temporality marked by a loss of faith in progress along with the emergence of apocalyptic narratives in which the future appears indeterminate, bleak, and insecure. Heightened expectations and progressive visions pale and are smashed next to the normalization of market-driven government policies that wipe out pensions, eliminate quality health care, raise college tuition, and produce a harsh world of joblessness, while giving millions to banks and the military. ..."
"... dispossessed youth continued to lose their dignity, bodies, and material goods to the machineries of disposability. ..."
"... Against the ravaging policies of austerity and disposability, "zones of abandonment appeared in which the domestic machinery of violence, suffering, cruelty, and punishment replaced the values of compassion, social responsibility, and civic courage" (Biehl 2005:2). ..."
"... In opposition to such conditions, a belief in the power of collective resistance and politics emerged once again in 2010, as global youth protests embraced the possibility of deepening and expanding democracy, rather than rejecting it. ..."
"... What is lacking here is any critical sense regarding the historical conditions and dismal lack of political and moral responsibility of an adult generation who shamefully bought into and reproduced, at least since the 1970s, governments and social orders wedded to war, greed, political corruption, xenophobia, and willing acceptance of the dictates of a ruthless form of neoliberal globalization. ..."
"... London Review of Books ..."
"... This is not a diary ..."
"... Vita: Life in a Zone of Social Abandonment ..."
"... Against the terror of neoliberalism ..."
"... Against the violence of organized forgetting: beyond America's disimagination machine ..."
"... Debt: The First 5,000 Years ..."
"... The democracy project: a history, a crisis, a movement ..."
"... 5th assessment report by the intergovernmental panel on climate change ..."
"... Unlearning With Hannah Arendt ..."
"... Agnonistics: thinking the world politically ..."
Reality always has this power to surprise. It surprises you with
an answer that it gives to questions never asked - and which are most tempting.
A great stimulus to life is there, in the capacity to divine possible unasked
questions.
- Eduardo Galeano
Neoliberalism's Assault on Democracy
Fred Jameson has argued that "that it is easier to imagine the end of
the world than to imagine the end of capitalism." He goes on to say that
"We can now revise that and witness the attempt to imagine capitalism by way
of imagining the end of the world" (Jameson 2003). One way of understanding
Jameson's comment is that within the ideological and affective spaces in which
the neoliberal subject is produced and market-driven ideologies are normalized,
there are new waves of resistance, especially among young people, who are insisting
that casino capitalism is driven by a kind of mad violence and form of self-sabotage,
and that if it does not come to an end, what we will experience, in all probability,
is the destruction of human life and the planet itself. Certainly, more
recent scientific reports on the threat of ecological disaster from researchers
at the University of Washington, NASA, and the Intergovernmental Panel on Climate
Change reinforce this dystopian possibility. [1]
To read more articles by Henry A. Giroux and other authors in the
Public Intellectual Project, click
here.
As the latest stage of predatory capitalism, neoliberalism is part of
a broader economic and political project of restoring class power and consolidating
the rapid concentration of capital, particularly financial capital (Giroux
2008; 2014). As a political project, it includes "the deregulation of finance,
privatization of public services, elimination and curtailment of social welfare
programs, open attacks on unions, and routine violations of labor laws" (Yates
2013). As an ideology, it casts all dimensions of life in terms of market
rationality, construes profit-making as the arbiter and essence of democracy,
consuming as the only operable form of citizenship, and upholds the irrational
belief that the market can both solve all problems and serve as a model for
structuring all social relations. As a mode of governance, it produces identities,
subjects, and ways of life driven by a survival-of-the fittest ethic, grounded
in the idea of the free, possessive individual, and committed to the right of
ruling groups and institutions to exercise power removed from matters of ethics
and social costs. As a policy and political project, it is wedded to the privatization
of public services, the dismantling of the connection of private issues and
public problems, the selling off of state functions, liberalization of trade
in goods and capital investment, the eradication of government regulation of
financial institutions and corporations, the destruction of the welfare state
and unions, and the endless marketization and commodification of society.
Neoliberalism has put an enormous effort into creating a commanding cultural
apparatus and public pedagogy in which individuals can only view themselves
as consumers, embrace freedom as the right to participate in the market, and
supplant issues of social responsibility for an unchecked embrace of individualism
and the belief that all social relation be judged according to how they further
one's individual needs and self-interests. Matters of mutual caring, respect,
and compassion for the other have given way to the limiting orbits of privatization
and unrestrained self-interest, just as it has become increasingly difficult
to translate private troubles into larger social, economic, and political considerations.
As the democratic public spheres of civil society have atrophied under the onslaught
of neoliberal regimes of austerity, the social contract has been either greatly
weakened or replaced by savage forms of casino capitalism, a culture of fear,
and the increasing use of state violence. One consequence is that it has become
more difficult for people to debate and question neoliberal hegemony and the
widespread misery it produces for young people, the poor, middle class, workers,
and other segments of society - now considered disposable under neoliberal regimes
which are governed by a survival-of-the fittest ethos, largely imposed by the
ruling economic and political elite.
That they are unable to make their voices
heard and lack any viable representation in the process makes clear the degree
to which young people and others are suffering under a democratic deficit, producing
what Chantal Mouffe calls "a profound dissatisfaction with a number of existing
societies" under the reign of neoliberal capitalism (Mouffe 2013:119). This
is one reason why so many youth, along with workers, the unemployed, and students,
have been taking to the streets in Greece, Mexico, Egypt, the United States,
and England.
The Rise of Disposable Youth
What is particularly distinctive about the current historical conjuncture
is the way in which young people, particularly low-income and poor minority
youth across the globe, have been increasingly denied any place in an already
weakened social order and the degree to which they are no longer seen as central
to how a number of countries across the globe define their future. The plight
of youth as disposable populations is evident in the fact that millions of them
in countries such as England, Greece, and the United States have been unemployed
and denied long term benefits. The unemployment rate for young people in many
countries such as Spain, Italy, Portugal, and Greece hovers between 40 and 50
per cent. To make matters worse, those with college degrees either cannot find
work or are working at low-skill jobs that pay paltry wages. In the United States,
young adjunct faculty constitute one of the fastest growing populations on food
stamps. Suffering under huge debts, a jobs crisis, state violence, a growing
surveillance state, and the prospect that they would inherit a standard of living
far below that enjoyed by their parents, many young people have exhibited a
rage that seems to deepen their resignation, despair, and withdrawal from the
political arena.
This is the first generation, as sociologist Zygmunt Bauman argues, in which
the "plight of the outcast may stretch to embrace a whole generation." (Bauman
2012a; 2012b; 2012c) He rightly insists that today's youth have been "cast in
a condition of liminal drift, with no way of knowing whether it is transitory
or permanent" (Bauman 2004:76). Youth no longer occupy the hope of a privileged
place that was offered to previous generations. They now inhabit a neoliberal
notion of temporality marked by a loss of faith in progress along with the emergence
of apocalyptic narratives in which the future appears indeterminate, bleak,
and insecure. Heightened expectations and progressive visions pale and are smashed
next to the normalization of market-driven government policies that wipe out
pensions, eliminate quality health care, raise college tuition, and produce
a harsh world of joblessness, while giving millions to banks and the military.
Students, in particular, found themselves in a world in which unrealized aspirations
have been replaced by dashed hopes and a world of onerous debt (Fraser 2013;
On the history of debt, see Graeber 2012).
The Revival of the Radical Imagination
Within the various regimes of neoliberalism that have emerged particularly
in North since the late 1970s, the ethical grammars that drew attention to the
violence and suffering withered or, as in the United States, seemed to disappear
altogether, while dispossessed youth continued to lose their dignity, bodies,
and material goods to the machineries of disposability. The fear of losing everything,
the horror of an engulfing and crippling precarity, the quest to merely survive,
the rise of the punishing state and police violence, along with the impending
reality of social and civil death, became a way of life for the 99 percent in
the United States and other countries. Under such circumstances, youth were
no longer the place where society reveals its dreams, but increasingly hid its
nightmares. Against the ravaging policies of austerity and disposability, "zones
of abandonment appeared in which the domestic machinery of violence, suffering,
cruelty, and punishment replaced the values of compassion, social responsibility,
and civic courage" (Biehl 2005:2).
In opposition to such conditions, a belief in the power of collective resistance
and politics emerged once again in 2010, as global youth protests embraced the
possibility of deepening and expanding democracy, rather than rejecting it.
Such movements produced a new understanding of politics based on horizontal
forms of collaboration and political participation. In doing so, they resurrected
revitalized and much needed questions about class power, inequality, financial
corruption, and the shredding of the democratic process. They also explored
as well as what it meant to create new communities of mutual support, democratic
modes of exchange and governance, and public spheres in which critical dialogue
and exchanges could take place (For an excellent analysis on neoliberal-induced
financial corruption, see Anderson 2004).
A wave of youth protests starting in 2010 in Tunisia, and spreading across
the globe to the United States and Europe, eventually posed a direct challenge
to neoliberal modes of domination and the corruption of politics, if not democracy
itself (Hardt & Negri 2012). The legitimating, debilitating, and depoliticizing
notion that politics could only be challenged within established methods of
reform and existing relations of power was rejected outright by students and
other young people across the globe. For a couple of years, young people transformed
basic assumptions about what politics is and how the radical imagination could
be mobilized to challenge the basic beliefs of neoliberalism and other modes
of authoritarianism. They also challenged dominant discourses ranging from deficit
reduction and taxing the poor to important issues that included poverty, joblessness,
the growing unmanageable levels of student debt, and the massive spread of corporate
corruption. As Jonathan Schell argued, youth across the globe were enormously
successfully in unleashing "a new spirit of action", an expression of outrage
fueled less by policy demands than by a cry of collective moral and political
indignation whose message was
'Enough!' to a corrupt political, economic and media establishment that
hijacked the world's wealth for itself… sabotaging the rule of law, waging
interminable savage and futile wars, plundering the world's finite resources,
and lying about all this to the public [while] threatening Earth's life
forms into the bargain. (Schell 2011)
Yet, some theorists have recently argued that little has changed since 2011,
in spite of this expression of collective rage and accompanying demonstrations
by youth groups across the globe.
The Collapse or Reconfiguration of Youthful Protests?
Costas Lapavitsas and Alex Politaki,
writing in The Guardian, argue that as the "economic and social
disaster unfolded in 2012 and 2013", youth in Greece, France, Portugal, and
Spain have largely been absent from "politics, social movements and even from
the spontaneous social networks that have dealt with the worst of the catastrophe"
(Lapavitsas & Politaki 2014). Yet, at the same time, they insist that more and
more young people have been "attracted to nihilistic ends of the political spectrum,
including varieties of anarchism and fascism" (Lapavitsas & Politaki 2014).
This indicates that young people have hardly been absent from politics. On the
contrary, those youth moving to the right are being mobilized around needs that
simply promise the swindle of fulfillment. This does not suggest youth are becoming
invisible. On the contrary, the move on the part of students and others to the
right implies that the economic crisis has not been matched by a crisis of ideas,
one that would propel young people towards left political parties or social
formations that effectively articulate a critical understanding of the present
economic and political crisis. Missing here is also a strategy to create
and sustain a radical democratic political movement that avoids cooptation of
the prevailing economic and political systems of oppression now dominating the
United States, Greece, Turkey, Portugal, France, and England, among other countries.
This critique of youthful protesters as a suspect generation is repeated
in greater detail by Andrew R. Myers in Student Pulse (Myers 2012).
He argues that deteriorating economic and educational conditions for youth all
over Europe have created not only a profound sense of political pessimism among
young people, but also a dangerous, if not cynical, distrust towards established
politics. Regrettably, Myers seems less concerned about the conditions that
have written young people out of jobs, a decent education, imposed a massive
debt on them, and offers up a future of despair and dashed hopes than the alleged
unfortunate willingness of young people to turn their back on traditional parties.
Myers argues rightly that globalization is the enemy of young people and is
undermining democracy, but he wrongly insists that traditional social democratic
parties are the only vehicles and hope left for real reform. As such, Myers
argues that youth who exhibit distrust towards established governments and call
for the construction of another world symbolize political defeat, if not cynicism
itself. Unfortunately, with his lament about how little youth are protesting
today and about their lack of engagement in the traditional forms of politics,
he endorses, in the end, a defense of those left/liberal parties that embrace
social democracy and the new labor policies of centrist-left coalitions. His
rebuke borders on bad faith, given his criticism of young people for not engaging
in electoral politics and joining with unions, both of which, for many youth,
rightfully represent elements of a reformist politics they reject.
It is ironic that both of these critiques of the alleged passivity of youth
and the failure of their politics have nothing to say about the generations
of adults that failed these young people - that is, what disappears in these
narratives is the fact that an older generation accepted the "realization that
one generation no longer holds out a hand to the next" (Knott 2011:ix). What
is lacking here is any critical sense regarding the historical conditions and
dismal lack of political and moral responsibility of an adult generation who
shamefully bought into and reproduced, at least since the 1970s, governments
and social orders wedded to war, greed, political corruption, xenophobia, and
willing acceptance of the dictates of a ruthless form of neoliberal globalization.
In fact, what was distinctive about the protesting youth across the globe
was their rejection to the injustices of neoliberalism and their attempts to
redefine the meaning of politics and democracy, while fashioning new forms of
revolt (Hardt & Negri 2012; Graeber 2013). Among their many criticisms, youthful
protesters argued vehemently that traditional social democratic, left, and liberal
parties suffered from an "extremism of the center" that made them complicitous
with the corporate and ruling political elites, resulting in their embrace of
the inequities of a form of casino capitalism which assumed that the market
should govern the entirety of social life, not just the economic realm (Hardt
& Negri 2012:88).
Henry A.
Giroux currently holds the McMaster University Chair for Scholarship
in the Public Interest in the English and Cultural Studies Department and a
Distinguished Visiting Professorship at Ryerson University. His most recent
books include: Youth in Revolt: Reclaiming a Democratic Future (Paradigm 2013),
America's Educational Deficit and the War on Youth (Monthly Review Press, 2013)
Neoliberalism's War on Higher Education (Haymarket Press, 2014), and The Violence
of Organized Forgetting: Thinking Beyond America's Disimagination Machine (City
Lights, 2014). The Toronto Star named Henry Giroux one of the twelve Canadians
changing the way we think! Giroux is also a member of Truthout's Board of Directors.
His web site is www.henryagiroux.com.
"... The "Benedict Option" refers to Christians in the contemporary West who cease to identify the continuation of civility and moral community with the maintenance of American empire, ..."
"... Benedict wrote his famous Rule , which became the guiding constitution of most monasteries in western Europe in the Middle Ages. The monasteries were incubators of Christian and classical culture, and outposts of evangelization in the barbarian kingdoms ..."
The "Benedict Option" refers to Christians in the contemporary West who
cease to identify the continuation of civility and moral community with the
maintenance of American empire,and who therefore are keen to construct
local forms of community as loci of Christian resistance against what the empire
represents.
Put less grandly, the Benedict Option - or "Ben Op" - is an umbrella term
for Christians who accept MacIntyre's critique of modernity, and who also recognize
that forming Christians who live out Christianity according to Great Tradition
requires embedding within communities and institutions dedicated to that formation.
... ... ...
For one, the it awakened many small-o orthodox Christians to something that
ought to have been clear to them a long, long time ago: the West is truly a
post-Christian civilization, and we had better come up with new ways of living
if we are going to hold on to the faith in this new dark age. The reason gay
rights were so quickly embraced by the American public is because the same public
had already jettisoned traditional Christian teaching on the meaning of sex,
of marriage, and even a Christian anthropology. Same-sex marriage is only the
fulfillment of a radical change that had already taken place in Western culture.
... ... ...
Benedict of Nursia (ca. 480-537) was an educated young Christian who left
Rome, the city of the recently fallen Empire, out of disgust with its decadence.
He went south, into the forest near Subiaco, to live as a hermit and to pray.
Eventually, he gathered around him some like-minded men, and formed monasteries.
Benedict wrote his famous
Rule , which
became the guiding constitution of most monasteries in western Europe in the
Middle Ages. The monasteries were incubators of Christian and classical culture,
and outposts of evangelization in the barbarian kingdoms. As Cardinal
Newman wrote:
St Benedict found the world, physical and social, in ruins, and his mission
was to restore it in the way not of science, but of nature, not as if setting
about to do it [the caveat], not professing to do it by any set time, or
by any rare specific, or by any series of strokes, but so quietly, patiently,
gradually, that often till the work was done, it was not known to be doing.
It was a restoration rather than a visitation, correction or conversion.
The new work which he helped to create was a growth rather than a
structure . Silent men were observed about the country, or discovered
in the forest, digging, clearing and building; and other silent men, not
seen, were sitting in the cold cloister, tiring their eyes and keeping their
attention on the stretch, while they painfully copied and recopied the manuscripts
which they had saved.
There was no one who contended or cried out, or drew attention to what
was going on, but by degrees the woody swamp became a hermitage, a religious
house, a farm, an abbey, a village, a seminary, a school of learning and
a city.
... ... ...
Here are some basic Benedictine principles that we might think of as tools
for living the Christian life:
1. Order. Benedict described the monastery as
a "school for the service of the Lord." The entire way of life of the monastic
community was ordered by this telos , or end. The primary purpose
of Christian community life is to form Christians. The Benedict Option must
teach us to make every other goal in our lives secondary to serving God.
Christianity is not simply a "worldview" or an add-on to our lives, as it
is in modernity; it must be our lives, or it is something less than
Christianity.
2. Prayer and work. Life as a Christian requires
both contemplation and action. Both depend on the other. There is a reason
Jesus retired to the desert after teaching the crowds. Work is as sacred
as prayer. Ordinary life can and should be hallowed.
3. Stability. The Rule ordinarily requires monks
to stay put in the monastery where they professed their vows. The idea is
that moving around constantly, following our own desires, prevents us from
becoming faithful to our calling. True, we must be prepared to follow God's
calling, even if He leads us away from home. But the far greater challenge
for us in the 21st century is learning how to stay put - literally and metaphorically
- and to bind ourselves to a place, a tradition, a people. Only within the
limits of stability can we find true freedom.
4. Community. It really does take a village to
raise a child. That is, we learn who we are and who we are called to be
in large part through our communities and their institutions. We Americans
have to unlearn some of the ways of individualism that we absorb uncritically,
and must relearn the craft of community living.
Not every community is equally capable of forming Christians. Communities
must have boundaries, and must build these metaphorical walls because, as
the New Monastic pioneer Jonathan Wilson-Hartgrove writes, "we cannot become
the gift to others we are called to be until we embrace the limits that
are necessary to our vocation." In other words, we must withdraw behind
some communal boundaries not for the sake of our own purity, but so we can
first become who God wants us to be, precisely for the sake of the
world. Beliefs and practices that are antithetical to achieving the community's
telos must be excluded.
5. Hospitality. That said, we must be open to
outsiders, and receive them "as Christ," according to the Rule. For Benedictine
monks, this had a specific meaning, with regard to welcoming visitors to
the monastery. For modern laypersons, this will likely have to do with their
relationship to people outside the community. The Benedictines are instructed
to welcome outsiders so long as they don't interrupt communal life. It should
be that way with us, too. We should always be open to others, in charity,
to share what we have with them, including our faith.
6. Balance. The Rule of St. Benedict is marked
by a sense of balance, of common sense. As Ben Oppers experiment with building
and/or reforming communities and institutions in a more intentional way,
we must be vigilant against the temptations to fall intorigid legalism,
cults of personality, and other distortions that have been the ruin of intentional
communities. There must be workable forms of accountability for leadership,
and the cultivation of an anti-utopian sensibility among the faithful. A
community that is too lax will dissolve, or at least be ineffective, but
one that is too strict will also produce disorder. A Benedict Option community
must be joyful and confident, not dour and fearful.
Can you point to any contemporary examples of Ben Op communities?
Yes. There is a Catholic agrarian community around
Our Lady of Clear
Creek Abbey in eastern Oklahoma. The lay community gathered around
St. John Orthodox cathedral
in Eagle River, Alaska, is another.
Trinity Presbyterian
Church in Charlottesville, Virginia , is working towards incorporating a
version of the Rule of St. Benedict within its congregational life. Rutba House,
a New Monastic community in Durham, North Carolina, and its
School for Conversion
, is still another. I recently met a couple in Waco, Texas - Baylor philosophy
professor
Scott Moore and his wife Andrea - who bought a property near Crawford, Texas,
and who are rehabilitating it into a family home and a Christian retreat called
Benedict Farm. There is the
Bruderhof.
I am certain that there is no such thing as a perfect Ben Op community, and
that each and every one of them will have struggled with similar problems. In
working on the Benedict Option book, I intend to visit as many of these communities
as I can, to find out what they are doing right, what they wish they did better,
and what we can all learn from them. The Benedict Option has to be something
that ordinary people can do in their own circumstances.
Do you really think you can just run away from the world and live off
in a compound somewhere? Get real!
No, I don't think that at all. While I wouldn't necessarily fault people
who sought geographical isolation, that will be neither possible nor desirable
for most of us. The early Church lived in cities, and formed its distinct life
there. Most of the Ben Op communities that come to mind today are not radically
isolated, in geography or otherwise, from the broader community. It's simply
nonsense to say that Ben Oppers want to hide from the world and live in some
sort of fundamentalist enclave. Some do, and it's not hard to find examples
of how this sort of thing has gone bad. But that is not what we should aim for.
In fact, I think it's all too easy for people to paint the Benedict Option as
utopian escapism so they can safely wall it off and not have to think about
it.
Isn't this a violation of the Great Commission? How can we preach the
Gospel to the nations when we're living in these neo-monastic communities?
Well, what is evangelizing? Is it merely dispersing information? Or is there
something more to it. The Benedict Option is about discipleship , which
is itself an indirect form of evangelism. Pagans converted to the early Church
not simply because of the words the first Christians spoke, but because of the
witness of the kinds of lives they lived. It has to be that way with us too.
Pope Benedict XVI said something important in this respect. He said that
the best apologetic arguments for the truth of the Christian faith are the art
that the Church has produced as a form of witness, and the lives of its saints:
Yet, the beauty of Christian life is even more effective than art and
imagery in the communication of the Gospel message. In the end, love alone
is worthy of faith, and proves credible. The lives of the saints and martyrs
demonstrate a singular beauty which fascinates and attracts, because a Christian
life lived in fullness speaks without words. We need men and women whose
lives are eloquent, and who know how to proclaim the Gospel with clarity
and courage, with transparency of action, and with the joyful passion of
charity.
The Benedict Option is about forming communities that teach us and help us
to live in such a way that our entire lives are witnesses to the transforming
power of the Gospel.
It sounds like you are simply asking for the Church to be the Church.
Why do you need to brand it "the Benedict Option"?
That's a great point, actually. If all the churches did what they were supposed
to do, we wouldn't need the Ben Op. Thing is, they don't. The term "Benedict
Option" symbolizes a historically conscious, antimodernist return to roots,
an undertaking that occurs with the awareness that Christians have to cultivate
a sense of separation, of living as what Stanley Hauerwas and Will Willimon
call "resident aliens" in a "Christian colony," in order to be faithful to our
calling. And, "Benedict Option" calls to mind monastic disciplines that we can
appropriate in our own time.
It also draws attention to the centrality of practices in
shaping our Christian lives. The Reformed theologian James K.A. Smith, in his
great books
Imagining the Kingdom and
Desiring the Kingdom , speaks of these things. A recent secular book
by Matthew B. Crawford,
The World Beyond Your Head , talks about the critical importance of
practice as a way of knowledge. Here is Crawford writing about tradition and
organ making:
When the sovereignty of the self requires that the inheritance of the
past be disqualified as a guide to action and meaning, we confine ourselves
in an eternal present. If subjectivism works against the coalescing of communities
and traditions in which genuine individuals can arise, does the opposite
follow? Do communities that look to established forms for the meanings of
things somehow cultivate individuality?
… [C]onsider that when you go deep into some particular skill or art,
it trains your powers of concentration and perception. You become more discerning
about the objects you are dealing with and, if all goes well, begin to care
viscerally about quality, because you have been initiated into an ethic
of caring about what you are doing. Usually this happens by the example
of some particular person, a mentor, who exemplifies that spirit of craftsmanship.
You hear disgust in his voice, or see pleasure on his face, in response
to some detail that would be literally invisible to someone not initiated.
In this way, judgment develops alongside emotional involvement, unified
in what Polanyi calls personal knowledge. Technical training in such a setting,
though narrow in its immediate application, may be understood as part of
education in the broadest sense: intellectual and moral formation.
… What emerged in my conversations at Taylor and Boody [a traditional
organ-making shop] is that the historical inheritance of a long tradition
of organ making seems not to burden these craftspeople, but rather to energize
their efforts in innovation. They intend for their organs still be be in
use four hundred years from now, and this orientation toward the future
requires a critical engagement with the designs and building methods of
the past. They learn from past masters, interrogate their wisdom, and push
the conversation further in an ongoing dialectic of reverence and rebellion.
Their own progress in skill and understanding is thus a contribution to
something larger; their earned independence of judgment represents a deepening
of the craft itself. This is a story about the progressive possibilities
of tradition, then.
The Benedict Option is about how to rightly order the practices in our Christian
lives, in light of tradition, for the sake of intellectual and moral formation
in the way of Christ. You might even say that it's a story about the progressive
possibilities of tradition, and a return to roots in defiance of a rootless
age.
Superficially, Hemingway was correct. But on a deeper level, he missed
the reality of the heightened sense of entitlement that the very rich possess,
as well as the deference that so many people automatically show to them.
The rich shouldn't be different in this way, but they are. In some other
societies, such entitlement and deference would accrue to senior party members,
senior clergymen, or hereditary nobility (who might not have much money
at all).
Without a doubt Hemingway had a rather catty attitude toward his literary
rival, but in this instance I think the debunking is merited. It's quite
possible that rich people act the way we would act if we were rich, and
that Fitzgerald's tiresome obsession with rich people didn't cut very deep.
Hemingway is saying: take away all that money and the behavior would change
as well. It's the money (or the power in your example) that makes the difference.
In my opinion, the fact that if they had less money would change the
way they think, does not change the fact that, while they have more money,
they think differently, and different rules apply to them.
Addendum: The fact that an Alpha Chimp would act differently if someone
else was the Alpha Chimp does not change the fact that an Alpha Chimp has
fundamentally different behavior than the rest of the group.
"Hemingway is responsible for a famous misquotation of Fitzgerald's.
According to Hemingway, a conversation between him and Fitzgerald went:
Fitzgerald: The rich are different than you and me.
Hemingway: Yes, they have more money.
This never actually happened; it is a retelling of an actual encounter between
Hemingway and Mary Colum, which went as follows:
Hemingway: I am getting to know the rich.
Colum: I think you'll find the only difference between the rich and other
people is that the rich have more money."
Just want to point out that that quote of Hemingways wasnt about Fitzgerald
and wasnt even by Hemingway. Anyway I was more attacking the "rich have
more money" thing than I was trying to defend Fitzgerald, but I feel Fitzgerald
got the basic idea right
Apparently Fitzgerald was referring specifically to the attitudes of
those who are born rich, attitudes that Fitzgerald thought remained unaltered
by events, including the loss of economic status.
"They think, deep in their hearts, that they are better than we
are because we had to discover the compensations and refuges of life
for ourselves. Even when they enter deep into our world or sink below
us, they still think that they are better than we are. They are different."
Hemingway suggested that Fitzgerald had once been especially enamored
of the rich, seeing them as a "special glamorous race" but ultimately became
disillusioned.
"He thought they were a special glamorous race and when he found
they weren't it wrecked him as much as any other thing that wrecked
him."
"... [Dave Elder-Vass accepted my invitation to write a response to my discussion of his recent
book, ..."
"... Profit and Gift in the Digital Economy ..."
"... ). Elder-Vass is Reader in sociology at Loughborough University and author as well of ..."
"... The Causal Power of Social Structures: Emergence, Structure and Agency ..."
"... The Reality of Social Construction ..."
"... , discussed ..."
"... . Dave has emerged as a leading voice in the philosophy of social science, especially in the
context of continuing developments in the theory of critical realism. Thanks, Dave!] ..."
"... Profit and Gift in the Digital Economy ..."
"... Financial Times ..."
"... the argument for Pareto optimality of real market systems is patently false, but it continues
to be trotted out constantly. ..."
We need to move on from existing theories of the economy
Let me begin by thanking Dan Little for his very perceptive review of my book
Profit and Gift in the Digital Economy . As he rightly says, it's more ambitious than
the title might suggest, proposing that we should see our economy not simply as a capitalist market
system but as a collection of "many distinct but interconnected practices". Neither the traditional
economist's focus on firms in markets nor the Marxist political economist's focus on exploitation
of wage labour by capital is a viable way of understanding the real economy, and the book takes
some steps towards an alternative view.
Both of those perspectives have come to narrow our view of the economy in multiple dimensions.
Our very concept of the economy has been derived from the tradition that began as political economy
with Ricardo and Smith then divided into the Marxist and neoclassical traditions (of course there
are also others, but they are less influential). Although these conflict radically in some respects
they also share some problematic assumptions, and in particular the assumption that the contemporary
economy is essentially a capitalist market economy, characterised by the production of commodities
for sale by businesses employing labour and capital. As Gibson-Graham argued brilliantly in their
book
The End Of Capitalism (As We Knew It): A Feminist Critique of Political Economy , ideas seep
into the ways in which we frame the world, and when the dominant ideas and the main challengers
agree on a particular framing of the world it is particularly difficult for us to think outside
of the resulting box. In this case, the consequence is that even critics find it difficult to
avoid thinking of the economy in market-saturated terms.
The most striking problem that results from this (and one that Gibson-Graham also identified)
is that we come to think that only this form of economy is really viable in our present circumstances.
Alternatives are pie in the sky, utopian fantasies, which could never work, and so we must be
content with some version of capitalism – until we become so disillusioned that we call for its
complete overthrow, and assume that some vague label for a better system can be made real and
worthwhile by whoever leads the charge on the Bastille. But we need not go down either of these
paths once we recognise that the dominant discourses are wrong about the economy we already have.
To see that, we need to start defining the economy in functional terms: economic practices
are those that produce and transfer things that people need, whether or not they are bought and
sold. As soon as we do that, it becomes apparent that we are surrounded by non-market economic
practices already. The book highlights digital gifts – all those web pages that we load without
payment, Wikipedia's free encyclopaedia pages, and open source software, for example. But in some
respects these pale into insignificance next to the household and family economy, in which we
constantly produce things for each other and transfer them without payment. Charities, volunteering
and in many jurisdictions the donation of blood and organs are other examples.
If we are already surrounded by such practices, and if they are proliferating in the most dynamic
new areas of our economy, the idea that they are unworkably utopian becomes rather ridiculous.
We can then start to ask questions about what forms of organising are more desirable ethically.
Here the dominant traditions are equally warped. Each has a standard argument that is trotted
out at every opportunity to answer ethical questions, but in reality both standard arguments operate
as means of suppressing ethical discussions about economic questions. And both are derived from
an extraordinarily narrow theory of how the economy works.
For the mainstream tradition, there is one central mechanism in the economy: price equilibration
in the markets, a process in which prices rise and fall to bring demand and supply into balance.
If we add on an enormous list of tenuous assumptions (which economists generally admit are unjustified,
and then continue to use anyway), this leads to the theory of Pareto optimality of market outcomes:
the argument that if we used some other system for allocating economic benefits some people would
necessarily be worse off. This in turn becomes the central justification for leaving allocation
to the market (and eliminating 'interference' with the market).
There are many reasons why this argument is flawed. Let me mention just one. If even one market
is not perfectly competitive, but instead is dominated by a monopolist or partial monopolist,
then even by the standards of economists a market system does not deliver Pareto optimality, and
an alternative system might be more efficient. And in practice capitalists constantly strive to
create monopolies, and frequently succeed! Even the Financial Times recognises this:
in today's issue (Sep 15 2016) Philip Stevens argues, "Once in a while capitalism has to be rescued
from the depredations of, well, capitalists. Unconstrained, enterprise curdles into monopoly,
innovation into rent-seeking. Today's swashbuckling "disrupters" set up tomorrow's cosy cartels.
Capitalism works when someone enforces competition; and successful capitalists do not much like
competition".
So the argument for Pareto optimality of real market systems is patently false, but it
continues to be trotted out constantly. It is presented as if it provides an ethical justification
for the market economy, but its real function is to suppress discussion of economic ethics: if
the market is inherently good for everyone then, it seems, we don't need to worry about the ethics
of who gets what any more.
The Marxist tradition likewise sees one central mechanism in the economy: the extraction of
surplus from wage labour by capitalists. Their analysis of this mechanism depends on the labour
theory of value, which is no more tenable that mainstream theories of Pareto optimality (for reasons
I discuss in the book). Marxists consistently argue as if any such extraction is ethically reprehensible.
Marx himself never provides an ethical justification for such a view. On the contrary, he claims
that this is a scientific argument and disowns any ethical intent. Yet it functions in just the
same way as the argument for Pareto optimality: instead of encouraging ethical debate about who
should get what in the economy, Marxists reduce economic ethics to the single question of the
need to prevent exploitation (narrowly conceived) of productive workers.
We need to sweep away both of these apologetics, and recognise that questions of who gets what
are ethical issues that are fundamental to justice, legitimacy, and political progress in contemporary
societies. And that they are questions that don't have easy 'one argument fits all' answers. To
make progress on them we will have to make arguments about what people need and deserve that recognise
the complexity of their social situations. But it doesn't take a great deal of ethical sophistication
to recognise that the 1% have too much when many in the lower deciles are seriously impoverished,
and that the forms of impoverishment extend well beyond underpaying for productive labour.
I'm afraid that I have written much more than I intended to, and still said very little about
the steps I've taken in the book towards a more open and plausible way of theorising how the economy
works. I hope that I've at least added some more depth to the reasons Dan picked out for attempting
that task.
"This in turn becomes the central justification for leaving allocation to the market (and eliminating
'interference' with the market)."
Krugman is a neoliberal, although a softer, kinder neoliberal much better than Mankiw, Cowen
or the Republicans.
"pgl -> Peter K....
Please find me a Krugman discussion where he says nothing can be done about income inequality.
This is so straw man that the winds have blown this stupid lie away.
Wisdom, Courage and the Economy
by Paul Krugman
AUG. 15, 2016
It's fantasy football time in political punditry, as commentators try to dismiss Hillary Clinton's
dominance in the polls - yes, Clinton Derangement Syndrome is alive and well - by insisting that
she would be losing badly if only the G.O.P. had nominated someone else. We will, of course, never
know. But one thing we do know is that none of Donald Trump's actual rivals for the nomination
bore any resemblance to their imaginary candidate, a sensible, moderate conservative with good
ideas.
Let's not forget, for example, what Marco Rubio was doing in the memorized sentence he famously
couldn't stop repeating: namely, insinuating that President Obama is deliberately undermining
America. It wasn't all that different from Donald Trump's claim that Mr. Obama founded ISIS. And
let's also not forget that Jeb Bush, the ultimate establishment candidate, began his campaign
with the ludicrous assertion that his policies would double the American economy's growth rate.
Which brings me to my main subject: Mrs. Clinton's economic vision, which she summarized last
week. It's very much a center-left vision: incremental but fairly large increases in high-income
tax rates, further tightening of financial regulation, further strengthening of the social safety
net.
It's also a vision notable for its lack of outlandish assumptions. Unlike just about everyone
on the Republican side, she isn't justifying her proposals with claims that they would cause a
radical quickening of the U.S. economy. As the nonpartisan Tax Policy Center put it, she's "a
politician who would pay for what she promises."
So here's my question: Is the modesty of the Clinton economic agenda too much of a good thing?
Should accelerating U.S. economic growth be a bigger priority?
For while the U.S. has done reasonably well at recovering from the 2007-2009 financial crisis,
longer-term economic growth is looking very disappointing. Some of this is just demography, as
baby boomers retire and growth in the working-age population slows down. But there has also been
a somewhat mysterious decline in labor force participation among prime-age adults and a sharp
drop in productivity growth.
The result, according to the Congressional Budget Office, is that the growth rate of potential
G.D.P. - what the economy could produce at full employment - has declined from around 3.5 percent
per year in the late 1990s to around 1.5 percent now. And some people I respect believe that trying
to get that rate back up should be a big goal of policy.
But as I was trying to think this through, I realized that I had Reinhold Niebuhr's famous
Serenity Prayer running through my head: "Grant me the serenity to accept the things I cannot
change, courage to change the things I can, and wisdom to know the difference." I know, it's somewhat
sacrilegious applied to economic policy, but still.
After all, what do we actually know how to do when it comes to economic policy? We do, in fact,
know how to provide essential health care to everyone; most advanced countries do it. We know
how to provide basic security in retirement. We know quite a lot about how to raise the incomes
of low-paid workers.
I'd also argue that we know how to fight financial crises and recessions, although political
gridlock and deficit obsession has gotten in the way of using that knowledge.
On the other hand, what do we know about accelerating long-run growth? According to the budget
office, potential growth was pretty stable from 1970 to 2000, with nothing either Ronald Reagan
or Bill Clinton did making much obvious difference. The subsequent slide began under George W.
Bush and continued under Mr. Obama. This history suggests no easy way to change the trend.
Now, I'm not saying that we shouldn't try. I'd argue, in particular, for substantially more
infrastructure spending than Mrs. Clinton is currently proposing, and more borrowing to pay for
it. This might significantly boost growth. But it would be unwise to count on it.
Meanwhile, I don't think enough people appreciate the courage involved in focusing on things
we actually know how to do, as opposed to happy talk about wondrous growth.
When conservatives promise fantastic growth if we give them another chance at Bushonomics,
one main reason is that they don't want to admit how much they would have to cut popular programs
to pay for their tax cuts. When centrists urge us to look away from questions of distribution
and fairness and focus on growth instead, all too often they're basically running away from the
real issues that divide us politically.
So it's actually quite brave to say: "Here are the things I want to do, and here is how I'll
pay for them. Sorry, some of you will have to pay higher taxes." Wouldn't it be great if that
kind of policy honesty became the norm?
"For while the U.S. has done reasonably well at recovering from the 2007-2009 financial crisis,"
Reasonably well?
"Now, I'm not saying that we shouldn't try. I'd argue, in particular, for substantially more
infrastructure spending than Mrs. Clinton is currently proposing, and more borrowing to pay for
it. "
Then why was he for Hillary over Bernie Sanders who did campaign on substantially more infrastructure
spending?
Instead Krugman argues that we need to lower our hopes and expectations.
"According to the budget office, potential growth was pretty stable from 1970 to 2000, with
nothing either Ronald Reagan or Bill Clinton did making much obvious difference. "
So the market price mechanism rules and we government can't do much?
"So here's my question: Is the modesty of the Clinton economic agenda too much of a good thing?
Should accelerating U.S. economic growth be a bigger priority?"
Her agenda is unambitious. It is "center-left" as Krugman puts it which is partly why her poll
numbers are in the dumps.
" It's very much a center-left vision: incremental but fairly large increases in high-income
tax rates, further tightening of financial regulation, further strengthening of the social safety
net."
Point me to a blog post where Krugman spells out exactly where he explains how Clinton proposes
to do things.
President Trump has proposed a $25000 standard deduction for each of us, but $50,000 for married
couples who prove that they have consummated. Hey! IRS Agents like to watch.
Can you see how this minimum federal standard-deduction is de-fang-ed by lower state-standard-deduction?
Tell me something!
When state minimum wage is $5 / hour but federal minimum wage is $9 / hour, does employer hiring
in same state have to pay $5 or $9? Do you see how that works?
State's rights are dissolved by the federal statute.
This dissolution of state's rights means that Congress could as easily pass a law to establish
minimum standard-deduction for all state's income tax collection. Tell me something else!
Would such a minimum standard deduction on all state income tax collection cause any unemployment?
Would it bankrupt any small businesses?
Of course not! By contrast, the federal minimum wage regulation does cause unemployment, does
close down some employers of entry level workers, a danger to employment and poverty.
Economics is all about opportunity costs. The opportunity cost of federal minimum wage is the
possibility of federal minimum standard deduction, a more harmless subsidy.
State's rights are dissolved by the federal statute.
This dissolution of state's rights means that Congress could as easily pass a law to establish
minimum standard-deduction for all state's income tax collection. Tell me something else!
Would such a minimum standard deduction on all state income tax collection cause any unemployment?
Would it bankrupt any small businesses?
Of course not! By contrast, the federal minimum wage regulation does cause unemployment, does
close down some employers of entry level workers, a danger to employment and poverty.
[ Ah, understood. A clever and important argument that I am thinking through. Like the rational
for the federal Earned Income Tax Credit. ]
The United States federal earned income tax credit or earned income credit (EITC) is a refundable
tax credit for low- to moderate-income working individuals and couples, particularly those with
children. The amount of EITC benefit depends on a recipient's income and number of children. For
a person or couple to claim one or more persons as their qualifying child, requirements such as
relationship, age, and shared residency must be met. In the 2013 tax year, working families, if
they have children, with annual incomes below $37,870 to $51,567 (depending on the number of dependent
children) may be eligible for the federal EITC. Childless workers who have incomes below about
$14,340 ($19,680 for a married couple) can receive a very small EITC benefit.
Growth is a fixed investment. The investments have been made. Especially older societies, consumption
and leisure become more important the nature of purchases change.
I see Space Exploration as the only thing that will change that narrative. That would probably
create another computer revolution, industrial revolution kind of change. People just aren't into
it thought. People are happy with the dopamine economy and just want to get high.
"Second, less relevant to Sims but very relevant to other helicopter people, a deficit ultimately
financed by inflation is just as much of a burden on households as one ultimately financed by
ordinary taxes, because inflation is a kind of tax on money holders. From a Ricardian point of
view, there's no difference.
So I'm trying to figure out exactly what Sims is saying. What, ahem, is his model?"
Inflation hits people with savings who don't have debt.
Inflation helps people with debt by eating away at the principle. Inflation signals tight job
markets with growing incomes as well. That's why you have price pressures. That's why low inflation
and loose job markets can be just as bad as deflation.
Who taxes hit depends on how the government has set up its tax system. Some people and corporations
like Apple, Mitt Romney and presumably Trump pay little in taxes.
Capitalism was invented by Sephardic Jews who immigrated to Iberia in the 15th and 16th century.
They eventually invented market based economy.
By 1600's they had a swirling business sector located in Amsterdam and William the Orange spread
it into England during the latter 17th century, creating the Bank of England in 1694 and became
the worlds central bank via commodity money.
There is nothing to see here people. It is ponzi scheme and nothing more. Capitalism has only
made it because of liberalism. You have to be open to market expansion and have the resources
to make it work. It is why "konservatism" is a farce. One, the konservatives were the ones that
pushed the decaying "feudal" aristocracy to merge with the merchant caste in the first place and
create the bourgeois, despite the aristocracy being the birth place of most of the technology
we have now. This morphed into what we call capitalism. Basically the Jews are the Parasites(Finance),
"Whites"(the capitalists, which has a abnormal % of homosexuals) the Host and the non-whites the
cattle(mass famines and genocide during the 19th and 20th century are what really powered the
manpower behind anti-capitalism. Aka the British Empire led to 150 million deaths globally. All
global fraternities and organizations like the Skull in Bones to the Council of Foreign relations
are a conservative institutions. Yet, those cons won't admit it. As Butler said about his Pacific
"campaigns" is is all about spreading capitalism. It is indeed a racket.
These same forces are what created "Protestantism" and "Mormanism", which were a global financed
movement. First led by Catholic turncoat Martin Luther, who was financed by the Jews, then run
by Jewish John Cohen(Calvin) who spread the judeo-christian revolution globally. This also led
to the farce of "sovereignty" nonsense Mormons have tried to use in the last 40 years to push
a plutocracy. Then the other bible thumpers caught on. Destroy the nation, bring on the market
totalitarianism. Dumb sheep.
This is what we have long been used to from Mr. Groves. Ramblings in this style pretty much comment
on their own merit and don't need to be graced with rebuttals, as that implies an acknowledgement
that at some level a sort of identifiable argument was made.
"America's economic performance peaked in the late 1990s, and erosion in crucial economic indicators
such as the rate of economic growth, productivity growth, job growth, and investment began well
before the Great Recession.
Workforce participation, the proportion of Americans in the productive workforce, peaked in
1997. With fewer working-age men and women in the workforce, per-capita income for the U.S. is
reduced.
Median real household income has declined since 1999, with incomes stagnating across virtually
all income levels. Despite a welcome jump in 2015, median household income remains below the peak
attained in 1999, 17 years ago. Moreover, stagnating income and limited job prospects have disproportionately
affected lower-income and lower-skilled Americans, leading inequality to rise."
and something I have been going hoarse saying:
"The U.S. lacks an economic strategy, especially at the federal level. The implicit strategy
has been to trust the Federal Reserve to solve our problems through monetary policy."
the charts alone are worth the effort to check out this excellent study.
" Neither the traditional economist's focus on firms in markets nor the Marxist political economist's
focus on exploitation of wage labour by capital is a viable way of understanding the real economy,
and the book takes some steps towards an alternative view. "
Why did East Asia become Star Trek instead of the US? Why didn't the hopeful visions of mid-1960's
America become reality for the Americans? Read Ha Joon Chang if you want to know why East Asia
is on track to be as rich as the US/USSR portrayed in 2001 Space Odyssey. Western provincialism,
or perhaps the corruption of economists by looting banks (as documented by Charles Ferguson) has
led Western economists to offer really, really terrible advice to their own governments: free
trade forever, don't worry about massive deindustrialization, there will be new jobs, there's
no chance the US ends up like Mali.
One of the big problems of economics is how little of our society it explains. Exactly how many
people of either sex actually sit down and decide to have children based on a return on investment
calculation? How many people spend time with their friends and families based on some kind of
maximization function? When you visit a dying friend or family member at the hospital is this
the result of some gift exchange calculus? What about the time one spends listening to music,
watching a baseball game or browsing Facebook?
It might help to start with anthropology and think about human societies and their organization.
Start with something like the Lynds' Middletown books to get away from the implicit exoticism
that the term anthropology invokes. Societies have certain basic functions: raising children,
caring for those who cannot care for themselves, earning a living, spending free time, recognizing
one's place in the universe, participating in civil society and so on. Economics only looks at
a tiny piece of this, just part of the earning a living section. It's as if chemists never studied
anything except hydrogen molecules.
Economics really does need some new thinking. Starting with Pareto optimality is simply the
argument that we live in the best of all possible worlds. It is so transparently bogus that it
is hard to believe that anyone ever took it seriously. Oil lamps were hard on torch makers and
the automobile destroyed the buggy whip business. We need an economic system to regulate the production
and allocation of goods and services, but we also need child custody laws and burial customs.
I'm a capitalist at heart, but I view capitalism as I view fire. There is nothing quite like
fire for cooking food, lighting the dark, scaring wild animals, firing pottery and so on, but
fire also needs to be carefully controlled, constantly monitored and subject to societal sanction.
Economics fashions itself (or is being fashioned) as a science, and as such has to restrict itself
to measurable, identifiable, and (in principle) predictable phenomena.
What you are describing is more in the realm of philosophy, psychology, and moral judgement.
The problem starts when the economics profession and related occupations (business media, etc.)
pretend to have identified "market mechanisms" as the unifying theory of society and world, including
"explaining" social dynamics in terms of "objective/rational" market transactions and motivations.
But the desire for grand unified theories and "whole truths" is ever strong, lending credence
and support to such efforts.
Now is the time to push for my leisure theory of value. All goods and services traded in the economy
are intermediate goods, and value is actually created during leisure time!
"... If those who have not lost to trade think Hillary might help them..... I just wasted* 2+ hours with a bunch of Hilbots.... all I heard is Trump is so evil and his supports are so dumb or racist or anti Planned Parenthood. Not a word to defend Killary except she could not be evil she is watched so much. And Obama called off the DoJ. ..."
"... It is not only disregard, but active mockery and defamation - accusing the "losers" of hedonism, entitlement thinking, irresposibility, lack of virtue, merit, striving, intelligence, etc. ..."
"... I.e. reverse puritanism of sorts - lack of success is always to be explained in terms of lack in virtue and striving. ..."
"... Yes. This include the bulk of the liberal merit class winners too Their support for the tax and transfer system Humanist noblesse " oblige". ..."
"... . "This include the bulk of the liberal merit class winners too" ..."
"... This is where the "limousine liberal" meme comes from (or more precisely gets it support and success from). ..."
"... Of course all the claimed demerits exist plenty among the people so accused (as well as among the winners) - though they always did, but I'm under the impression that before Globalization_blowback/technology supported loss of leverage and thus prestige, it wasn't a *public* narrative (in private circles there has always been "if you don't make an effort in school you will end up sweeping the streets", and looking down on the "unskilled", etc. - with the hindsight irony that even street sweeping has been automated). ..."
The disregard of the winners towards the losers helps to bring about the
popularity of people like Trump. I am not at all surprised at the level
of his popularity, even though I personally despise him.
If those who have not lost to trade think Hillary might help them.....
I just wasted* 2+ hours with a bunch of Hilbots.... all I heard is Trump
is so evil and his supports are so dumb or racist or anti Planned Parenthood.
Not a word to defend Killary except she could not be evil she is watched
so much. And Obama called off the DoJ.
A room full of cognitive dissonance and brainwashed.
It is not only disregard, but active mockery and defamation - accusing
the "losers" of hedonism, entitlement thinking, irresposibility, lack of
virtue, merit, striving, intelligence, etc.
Yes. This include the bulk of the liberal merit class winners too
Their support for the tax and transfer system Humanist noblesse " oblige".
In their opinion the system of merit rewards is largely firm but fair
cm said in reply to Paine...
"This include the bulk of the liberal merit class winners too"
This is where the "limousine liberal" meme comes from (or more precisely
gets it support and success from).
Of course all the claimed demerits exist plenty among the people
so accused (as well as among the winners) - though they always did, but
I'm under the impression that before Globalization_blowback/technology supported
loss of leverage and thus prestige, it wasn't a *public* narrative (in private
circles there has always been "if you don't make an effort in school you
will end up sweeping the streets", and looking down on the "unskilled",
etc. - with the hindsight irony that even street sweeping has been automated).
"... I think the key difference between successful politicians and business people is patience. When you look at the careers of successful politicians, you can often see many years of pure relentless grind going into a few years of glory in a senior position. Endless committee meetings, rubber chicken dinners, being nice to people you loath, the inevitable humiliation of losing elections. Most business leaders simply lose patience after a few years after they go into politics. ..."
"... "The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." ..."
"... Neoclassical economics hid the work of the Classical Economists and the difference between "earned" and "unearned" income. ..."
"... Once you hide this it is easy to make it look as though the interests of business and the wealthy are the same. ..."
"... There should not really be any tax on "earned" income, all tax should fall on "unearned" income to subside the productive side of the economy with low cost housing and services. ..."
"... "The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers." ..."
"... Adam Smith saw landlords, usurers (bankers) and Government taxes as equally parasitic, all raising the cost of doing business. ..."
"... "…who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." Adam Smith just described the modern Republican Party and movement Conservatives. ..."
"... The children of the US elite were the storm troopers of this ideology and they headed out from their elite US universities to bring this new ideology to developing nations. ..."
"... "The Chicago Boys" headed out from the University of Chicago to bring the new way to South American nations and "The Berkley Mafia" headed out from the University of Berkeley, California to bring the new way to Indonesia ..."
"... Any means were deemed acceptable to implement the one true solution and the new ideology, e.g. torture, terror, death squads, snatching people off the streets and making them disappear permanently. Any left wing resistance had to be quashed by whatever means necessary ..."
"... Their revolutions always massively increased inequality, a few at the top became fabulously wealthy and extreme and widespread poverty became prevalent at the bottom. Mixing with the people at the top, the elite US storm troopers deemed their revolutions a huge success. This ideology was ready to roll out across the world. ..."
"... Under this new ideology, the UK dream is to emulate the idle, rich rentier with a BTL portfolio, living off "unearned" income extracted from the "earned" income of generation rent, whilst doing as little as possible and enjoying a life of luxury and leisure. ..."
"... Obfuscating the relationship between free markets and the role of government is coming to an end. So much failure and misdirection cannot hide forever. The cognitive dissonance set up in society is unsustainable- people don't like to feel or experience crazy. ..."
"... Markets are stronger and healthier when backed by functioning government. Defining what good government is and demanding it is required today. That is the revolutionary force, finally turning back the negative campaign against government and demanding good government- fighting for it. ..."
"... "Enoch Powell…once remarked that all political lives end in failure. It is also true of most business leaders." But that is also what they say about love. No good end can come of it. ..."
"... This bit of convenient fiction caught my eye: "Political leaders must also manage for the entire population rather than the narrow interest of investors." ..."
"... Perhaps political leaders should do this but, as has been recently shown, there is no basis in reality that this is any kind of requirement (as in "must"). ..."
"... Perhaps his use of "must" in this case is talking about the intrinsic requirement. In other words, even if they are managing negatively for some and positively for others, they are managing for all. ..."
Electorates believe that business leaders are qualified for and likely to
be effective in politics. Yet, with some notable exceptions, business people
have rarely had successful political careers.
The assumption is that corporate vision, leadership skills, administrative
skills and a proven record of wealth creation will translate into political
success. It presupposes personal qualities such drive, ambition and ruthlessness.
The allure is also grounded in the romantic belief that outsiders can fix all
that is wrong with the political process. The faith is misplaced.
First, the required skills are different.
Successful business leaders generally serve a technical apprenticeship in
the business, industry or a related profession giving them familiarity with
the firm's activities. Political success requires party fealty, calculating
partisanship, managing coalitions and networking. It requires a capacity to
engage in the retail electoral process, such as inspirational public speaking
and an easy familiarity with voters in a wide variety of settings. It requires
formidable powers of fund raising to finance campaigns. Where individuals shift
from business to politics in mid or later life, he or she is at a significant
disadvantage to career political operatives who have had years to build the
necessary relationships and organisation to support political aspirations.
Second, the scope of the task is different. A nation is typically larger
than a business. The range of issues is broader, encompassing economics, finance,
welfare, health, social policy as well as defence and international relations.
Few chief executives will, during a single day, have to consider budgetary or
economic issues, health policy, gender matters, privacy concerns, manage involvement
in a foreign conflict in between meeting and greeting a range of visitors varying
from schoolchildren to foreign dignitaries as well as attending to party political
matters.
Political leaders must also manage for the entire population rather than
the narrow interest of investors. They must take into account the effect of
decisions on a wide range of constituencies including many implacably opposed
to their positions.
Third, business objectives, such as profit maximisation, are narrow, well
defined and constant. Political objectives are amorphous and ideological. The
emphasis is on living standards, security and social justice. Priorities between
conflicting objectives shift constantly. The benefits of decisions by governments
in infrastructure, education and welfare are frequently difficult to measure
and frequently will not emerge for a long time.
Business decisions rarely focus on the societal impact. Firms can reduce
workforce, shift production overseas, seek subsidies or legally minimise taxes.
Politicians must deal with the side effects of individual profit maximisation
decisions such as closed factories, reduced employment, welfare and retraining
costs, security implications as well as social breakdown and inequality or exclusion.
Fourth, the operating environment is different. Businesses usually operate
within relatively defined product-market structures. In contrast, governments
operate in a complex environment shaped by domestic and foreign factors, many
of which they do not control or influence. Government actions require co-operation
across different layers of government or countries. Businesses can withdraw
from certain activities, while government do not have the same option.
Fifth, within boundaries set by laws and regulations, business leaders enjoy
great freedom and power to implement their policies. Boards of directors and
shareholders exercise limited control, usually setting broad financial parameters.
They do not intervene in individual decisions. Most important government actions
require legislative or parliamentary support. Unlike commercial operations,
government face restrictions, such as separation of powers, restraints on executive
or governmental action and international obligations.
Business leaders have unrivalled authority over their organisation based
on threats (termination) or rewards (remuneration or promotion). Political leaders
cannot fire legislators. They face significant barriers in rewarding or replacing
public servants. Policy implementation requires negotiations and consensus.
It requires overcoming opposition from opposing politicians, factions within
one's own party, supporters, funders and the bureaucracy. It requires overcoming
passively resistance from legislators and public servants who can simply outlast
the current incumbent, whose tenure is likely to be shorter than their own.
The lack of clear goals, unrivalled authority and multiple and shifting power
centres means that political power is more limited than assumed Many Presidents
of the United States, regarded as the most powerful position on earth, have
found that they had little ability to implement their agendas.
Sixth, unless they choose to be, business leaders are rarely public figures
outside business circles. Politicians cannot avoid constant public attention.
Modern political debate and discourse has become increasingly tabloid in tone,
with unprecedented levels of invective and ridicule. There is no separation
of the public and the personal. Business leaders frequently find the focus on
personal matters as well as the tone of criticism discomforting.
There are commonalities. Both fields attract a particular type of individual.
In addition, paraphrasing John Ruskin, successful political and business leaders
not only know what must be done but actually do what must be done and do it
when it must be done. A further commonality is the ultimate fate of leaders
generally. Enoch Powell, himself a long-serving Member of the British Parliament,
once remarked that all political lives end in failure. It is also true of most
business leaders.
I think the key difference between successful politicians and business
people is patience. When you look at the careers of successful politicians,
you can often see many years of pure relentless grind going into a few years
of glory in a senior position. Endless committee meetings, rubber chicken
dinners, being nice to people you loath, the inevitable humiliation of losing
elections. Most business leaders simply lose patience after a few years
after they go into politics.
Much the same seems to apply to military leaders, although off the top
of my head I can think of more successful examples of the latter than of
business people (Eisenhower and De Gaulle come to mind). Berlusconi comes
to mind as a 'successful' politician and businessman, but then Italy does
seem to be an outlier in some respects.
One key difference I think between 'good' politicians and 'good' businesspeople
is in making decisions. Good businesspeople are decisive. Good politicians
never make a decision until they absolutely have to.
This is clearly a consequence of 'The government is like a household'
misinformation campaign, which I think is really conceptualized as 'government
is like a small business.' So why not get a businessman to run the thing?
Interesting point. It also comes out of 30+ years of demonization of
government as being less well run than business, when IMHO the problems
of government are 1. the result of scale (think of how well run GM and Citigroup
were in the mid 200s…and both are better now that they have downsized and
shaped up) and 2. inevitable given that you do not want government employees
making stuff as they go, i.e., overruling the legislature and courts. The
latter point is that some rigidity is part of how government works, and
it's necessary to protect citizens.
Adam Smith on the businessmen you shouldn't trust:
"The proposal of any new law or regulation of commerce which comes
from this order ought always to be listened to with great precaution, and
ought never to be adopted till after having been long and carefully examined,
not only with the most scrupulous, but with the most suspicious attention.
It comes from an order of men whose interest is never exactly the same with
that of the public, who have generally an interest to deceive and even to
oppress the public, and who accordingly have, upon many occasions, both
deceived and oppressed it."
What they knew in the 18th century, we have forgotten today, but nothing
has changed.
Neoclassical economics hid the work of the Classical Economists and the
difference between "earned" and "unearned" income.
Once you hide this it is easy to make it look as though the interests
of business and the wealthy are the same.
We lowered taxes on the wealthy to remove free and subsidised services
for those at the bottom. These costs now have to be covered by business through wages. All known and thoroughly studied in the 18th and 19th Centuries, they
even came up with solutions.
There should not really be any tax on "earned" income, all tax should
fall on "unearned" income to subside the productive side of the economy
with low cost housing and services.
This allows lower wages and an internationally competitive economy.
Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed
to the maintaining of the rich in ease and luxury. The Landlord is maintained
in idleness and luxury by the labour of his tenants. The moneyed man is
supported by his extractions from the industrious merchant and the needy
who are obliged to support him in ease by a return for the use of his money.
But every savage has the full fruits of his own labours; there are no landlords,
no usurers and no tax gatherers."
Adam Smith saw landlords, usurers (bankers) and Government taxes as equally
parasitic, all raising the cost of doing business.
He sees the lazy people at the top living off "unearned" income from
their land and capital.
He sees the trickle up of Capitalism:
1) Those with excess capital collect rent and interest.
2) Those with insufficient capital pay rent and interest.
He differentiates between "earned" and "unearned" income.
The UK dream is to emulate the idle, rich rentier with a BTL portfolio,
living off "unearned" income extracted from the "earned" income of generation
rent, whilst doing as little as possible and enjoying a life of luxury and
leisure.
"…who have generally an interest to deceive and even to oppress the public,
and who accordingly have, upon many occasions, both deceived and oppressed
it." Adam Smith just described the modern Republican Party and movement Conservatives.
We have seen left wing revolutions before; we are now dealing with a
right wing revolution.
Left wing revolutions usually involve much violence and eventually lead
to tyranny, as any means are deemed acceptable to implement the one true
solution and the new ideology. Pol Pot was the most extreme example where
he decided to return to year zero by wiping out the bourgeoisie in Cambodia.
When the dust has settled the revolution just leads to a new elite who maintain
their ideology with force and brutality.
When Francis Fukuyama talked of the end of history, a new year zero was
envisaged, this one based on a right wing ideology. A right wing revolution
that could take place globally and was not confined to individual nations
like left wing revolutions.
Its theories had already been tested in South America and Indonesia where
extreme brutality was employed to implement their one true solution and
the new ideology. The children of the US elite were the storm troopers of
this ideology and they headed out from their elite US universities to bring
this new ideology to developing nations.
"The Chicago Boys" headed out from
the University of Chicago to bring the new way to South American nations
and "The Berkley Mafia" headed out from the University of Berkeley, California
to bring the new way to Indonesia.
Any means were deemed acceptable to implement the one true solution and
the new ideology, e.g. torture, terror, death squads, snatching people off
the streets and making them disappear permanently. Any left wing resistance
had to be quashed by whatever means necessary.
Their revolutions always massively increased inequality, a few at the
top became fabulously wealthy and extreme and widespread poverty became
prevalent at the bottom. Mixing with the people at the top, the elite US
storm troopers deemed their revolutions a huge success. This ideology was
ready to roll out across the world.
Under this new ideology, the UK dream is to emulate the idle, rich rentier
with a BTL portfolio, living off "unearned" income extracted from the "earned"
income of generation rent, whilst doing as little as possible and enjoying
a life of luxury and leisure.
Obfuscating the relationship between free markets and the role of government
is coming to an end. So much failure and misdirection cannot hide forever.
The cognitive dissonance set up in society is unsustainable- people don't
like to feel or experience crazy.
Markets are stronger and healthier when backed by functioning government.
Defining what good government is and demanding it is required today. That
is the revolutionary force, finally turning back the negative campaign against
government and demanding good government- fighting for it.
Fighting fraud and corruption follows these same lines. Reading about
the various forms of fraud and corruption here at NC daily provides the
framework to address the problem. The real work begins convincing fellow
citizens to not accept the criminality- the new normal. It is sometimes
distressing seeing the reaction of fellow citizens to these crimes not as
outrage, but more along the lines of begrudging admiration for the criminals.
The subtile conditioning of the population to accept criminality needs a
countervailing force.
Modern mass media projects a false picture of the world. The meme they
push is that violence and corruption are so pervasive in the world, vast
resources must be expended addressing the problem, and when these efforts
fail, settle for apathy and avoidance. The creation of the Businessman/Politician
is the perfect vehicle to move this agenda forward.
Politics controlling and driving business decisions must be reestablished,
not the other way around- business driving politics and society. That truly
is the distinction between authoritarianism and democracy. Small authoritarians
are tolerable in society- large ones not so much.
Bang on. Especially being a political leader in a democracy is too tough
and I am surprised that people want the job given the landmine they have
to navigate and the compromises you have to make on a daily basis. Similarity
is closest when you compare a benevolent dictator and a successful businessman,
something like how Lee Kuan Yew ran Singapore.
"Enoch Powell…once remarked that all political lives end in failure.
It is also true of most business leaders." But that is also what they say
about love. No good end can come of it.
There is a mistaken assumption here that business people are responsible
for their own or their organization's success. Or even that they're qualified
as business people. The higher up the business ladder you go, the more it
is other people making the important decisions, even deciding what you think,
do and say.
In this way it's similar to politics. It's likely that neither the successful
business person nor the politician is qualified for their roles, that nobody
can be. Also their roles are essentially to be authorities, and likewise
nobody is truly qualified nor has the justification or legitimacy for authority.
This bit of convenient fiction caught my eye: "Political leaders must also manage for the entire population rather
than the narrow interest of investors."
Perhaps political leaders should do this but, as has been recently shown,
there is no basis in reality that this is any kind of requirement (as in
"must").
Perhaps his use of "must" in this case is talking about the intrinsic
requirement. In other words, even if they are managing negatively for some
and positively for others, they are managing for all.
"...a full 95% of the cash that went to Greece ran a trip through Greece
and went straight back to creditors which in plain English is banks. So,
public taxpayers money was pushed through Greece to basically bail out banks...So
austerity becomes a side effect of a general policy of bank bailouts that
nobody wants to own. That's really what happened, ok?
Why are we peddling nonsense? Nobody wants to own up to a gigantic bailout
of the entire European banking system that took six years. Austerity was
a cover.
If the EU at the end of the day and the Euro is not actually improving
the lives of the majority of the people, what is it for? That's the question
that they've brought no answer to.
...the Hamptons is not a defensible position. The Hamptons is a very
rich area on Long Island that lies on low lying beaches. Very hard to defend
a low lying beach. Eventually people are going to come for you.
What's clear is that every social democratic party in Europe needs to
find a new reason to exist. Because as I said earlier over the past 20 years
they have sold their core constituency down the line for a bunch of floaters
in the middle who don't protect them or really don't particularly care for
them. Because the only offers on the agenda are basically austerity and
tax cuts for those who already have, versus austerity, apologies, and a
minimum wage."
Mark Blyth
Although I may not agree with every particular that Mark Blyth may say, directionally
he is exactly correct in diagnosing the problems in Europe.
And yes, I am aware that the subtitles are at times in error, and sometimes
outrageously so. Many of the errors were picked up and corrected in the comments.
No stimulus, no plans, no official actions, no monetary theories can be sustainably
effective in revitalizing an economy that is as bent as these have become without
serious reform at the first.
This was the lesson that was given by Franklin Roosevelt's New Deal. There
will be no lasting recovery without it; it is a sine qua non . One cannot
turn their economy around when the political and business structures are systemically
corrupt, and the elites are preoccupied with looting it, and hiding their spoils
offshore.
"... Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change. ..."
"... On the ideological front, the South adopted a shallow, but rigid libertarian perspective which resembled modern neoliberalism. Samuel Johnson may have been the first person to see through the hypocrisy of the hollowness of southern libertarianism. ..."
"... the famous Powell Memo helped to spark a well-financed movement of well-finance right-wing political activism which morphed into right-wing political extremism both in economics and politics. ..."
"... In short, neoliberalism was surging ahead and the economy of high wages was now beyond the pale. These new conditions gave new force to the southern "yelps of liberty." The social safety net was taken down and reconstructed as the flag of neoliberalism. The one difference between the rhetoric of the slaveholders and that of the modern neoliberals was that entrepreneurial superiority replaced racial superiority as their battle cry. ..."
Despite the neoliberal obsession with wage suppression, history suggests
that such a policy is self-destructive. Periods of high wages are associated
with rapid technological change.
... ... ...
On the ideological front, the South adopted a shallow, but rigid libertarian
perspective which resembled modern neoliberalism. Samuel Johnson may have been
the first person to see through the hypocrisy of the hollowness of southern
libertarianism. Responding to the colonists' complaint that taxation by
the British was a form of tyranny, Samuel Johnson published his 1775 tract,
"Taxation No Tyranny: An answer to the Resolutions and Address of the American
Congress," asking the obvious question, "how is it that we hear the loudest
yelps for liberty among the drivers of Negroes?" In The Works of Samuel Johnson,
LL. D.: Political Tracts. Political Essays. Miscellaneous Essays (London: J.
Buckland, 1787): pp. 60-146, p. 142.
... ... ...
By the late 19th century, David A Wells, an industrial technician who later
became the chief economic expert in the federal government, by virtue of his
position of overseeing federal taxes. After a trip to Europe, Wells reconsidered
his strong support for protectionism. Rather than comparing the dynamism of
the northern states with the technological backward of their southern counterparts,
he was responding to the fear that American industry could not compete with
the cheap "pauper" labor of Europe. Instead, he insisted that the United States
had little to fear from, the competition from cheap labor, because the relatively
high cost of American labor would ensure rapid technological change, which,
indeed, was more rapid in the United States than anywhere else in the world,
with the possible exception of Germany. Both countries were about to rapidly
surpass England's industrial prowess.
The now-forgotten Wells was so highly regarded that the prize for the best
economics dissertation at Harvard is still known as the David A Wells prize.
His efforts gave rise to a very powerful idea in economic theory at the time,
known as "the economy of high wages," which insisted that high wages drove economic
prosperity. With his emphasis on technical change, driven by the strong competitive
pressures from high wages, Wells anticipated Schumpeter's idea of creative destruction,
except that for him, high wages rather than entrepreneurial genius drove this
process.
Although the economy of high wages remained highly influential through the
1920s, the extensive growth of government powers during World War I reignited
the antipathy for big government. Laissez-faire economics began come back into
vogue with the election of Calvin Coolidge, while the once-powerful progressive
movement was becoming excluded from the ranks of reputable economics.
... ... ...
With Barry Goldwater's humiliating defeat in his presidential campaign,
the famous Powell Memo helped to spark a well-financed movement of well-finance
right-wing political activism which morphed into right-wing political extremism
both in economics and politics. Symbolic of the narrowness of this new
mindset among economists, Milton Friedman's close associate, George Stigler,
said in 1976 that "one evidence of professional integrity of the economist is
the fact that it is not possible to enlist good economists to defend minimum
wage laws." Stigler, G. J. 1982. The Economist as Preacher and Other Essays
(Chicago: University of Chicago Press): p. 60.
In short, neoliberalism was surging ahead and the economy of high wages
was now beyond the pale. These new conditions gave new force to the southern
"yelps of liberty." The social safety net was taken down and reconstructed as
the flag of neoliberalism. The one difference between the rhetoric of the slaveholders
and that of the modern neoliberals was that entrepreneurial superiority replaced
racial superiority as their battle cry.
One final irony: evangelical Christians were at the forefront of the abolitionist
movement. Today, some of them are providing the firepower for the epidemic of
neoliberalism.
This is part of the introduction to an essay by Mike Konczal on how to "insure
people against the hardships of life..., accident, illness, old age, and loss
of a job." Should we rely mostly upon government social insurance programs such
as Medicare and Social Security, or would a system that relies upon private
charity be better? History provides a very clear answer:
The Voluntarism Fantasy: Ideology is as much about understanding the
past as shaping the future. And conservatives tell themselves a story, a
fairy tale really, about the past, about the way the world was and can be
again under Republican policies. This story is about the way people were
able to insure themselves against the risks inherent in modern life. Back
before the Great Society, before the New Deal, and even before the Progressive
Era, things were better. Before government took on the role of providing
social insurance, individuals and private charity did everything needed
to insure people against the hardships of life; given the chance, they could
do it again.
This vision has always been implicit in the conservative ascendancy. It
existed in the 1980s, when President Reagan announced, "The size of the
federal budget is not an appropriate barometer of social conscience or charitable
concern," and called for voluntarism to fill in the yawning gaps in the
social safety net. It was made explicit in the 1990s, notably through Marvin
Olasky's The Tragedy of American Compassion, a treatise hailed by the likes
of Newt Gingrich and William Bennett, which argued that a purely private
nineteenth-century system of charitable and voluntary organizations did
a better job providing for the common good than the twentieth-century welfare
state. This idea is also the basis of Paul Ryan's budget, which seeks to
devolve and shrink the federal government at a rapid pace, lest the safety
net turn "into a hammock that lulls able-bodied people into lives of dependency
and complacency, that drains them of their will and their incentive to make
the most of their lives." It's what Utah Senator Mike Lee references when
he says that the "alternative to big government is not small government"
but instead "a voluntary civil society." As conservatives face the possibility
of a permanent Democratic majority fueled by changing demographics, they
understand that time is running out on their cherished project to dismantle
the federal welfare state.
But this conservative vision of social insurance is wrong. It's incorrect
as a matter of history; it ignores the complex interaction between public
and private social insurance that has always existed in the United States.
It completely misses why the old system collapsed and why a new one was
put in its place. It fails to understand how the Great Recession displayed
the welfare state at its most necessary and that a voluntary system would
have failed under the same circumstances. Most importantly, it points us
in the wrong direction. The last 30 years have seen effort after effort
to try and push the policy agenda away from the state's capabilities and
toward private mechanisms for mitigating the risks we face in the world.
This effort is exhausted, and future endeavors will require a greater, not
lesser, role for the public. ...
The state does many things, but this essay will focus specifically on its
role in providing social insurance against the risks we face. Specifically,
we'll look at what the progressive economist and actuary I.M. Rubinow described
in 1934 as the Four Horsemen of the Apocalypse: "accident, illness, old
age, loss of a job. These are the four horsemen that ride roughshod over
lives and fortunes of millions of wage workers of every modern industrial
community." These were the same evils that Truman singled out in his speech.
And these are the ills that Social Security, Medicare, Medicaid, food assistance,
and our other public systems of social insurance set out to combat in the
New Deal and Great Society.
Over the past 30 years the public role in social insurance has taken a backseat
to the idea that private institutions will expand to cover these risks.
Yet our current system of workplace private insurance is rapidly falling
apart. In its wake, we'll need to make a choice between an expanded role
for the state or a fantasy of voluntary protection instead. We need to understand
why this voluntary system didn't work in the first place to make the case
for the state's role in fighting the Four Horsemen. ...
"... That was the sad tragedy of Marx and Marxism. Instead of focusing on a practical agenda for achieving and sustaining a democratically administered state in an imperfect human world, a state based on a more equal distribution of capital, a workable balance between private and public ownership of capital, and a regulatory framework and rule of law designed to sustain this balance in the face of social and economic forces that will *always* be acting to disrupt it, Marx veered off into the fantasy lands ..."
"... In this utopian future, every single person is intelligent, relaxed, cooperative, and preternaturally enlightened. There are no thieves, psychopaths, predators, raiders or uncooperative deadbeats and spongers. Since there is no law, there is no government; and since there is no government; there are no elections or other ways of forming government. There is also no division of labor, because somehow human beings have passed beyond the "realm of necessity" into the "realm of freedom." ..."
"... Marx himself was one of these underminers, pissing all over the very progressive Gotha program and the very idea of a well-governed state in the name of his dreamy "communist society." ..."
"... In the end, Marx had a very unrealistic view of human nature and history. His analytic and scientific powers were betrayed by an infantile romanticism that both weakened his social theory and crippled much of left progressive politics for a century. The problem is still floating around with the insipid anarcho-libertarian silliness of much of the late 20th and early 21st century left. ..."
"... The key value of Marxism is that it gave a solid platform for analyzing capitalism as politico-economic system. All those utopian ideas about proletariat as a future ruling class of an ideal society that is not based on private property belong to the garbage damp of history, although the very idea of countervailing forces for capitalists is not. ..."
"... In this sense the very existence of the USSR was critical for the health of the US capitalism as it limited self-destructive instincts of the ruling class. Not so good for people of the USSR, it was definitely a blessing for the US population. ..."
"... Now we have neoliberal garbage and TINA as a state religion, which at least in the level in their religious fervor are not that different from Marxism. ..."
"... Republicans (US 'capitalism' salespersons) believe that "liberty", the right of property, is necessary for "freedom". State is necessary for property despite what the Hobbits (libertarians) preach. Communism is as far from Marxism as the US billionaire empire is from capitalism. Marx was a fair labor economist. ..."
"... {Marx stressed that ... the labour market is an arena in which power is unbalanced...} ..."
"... Thus, capitalism is an integral and key part of the market-economy since it provides the means by which the other major input-component is labor. Capital is an investment input to the process, for which there is a Return-on-Investment largely accepted as bonafide criteria of any market-economy. ..."
Chris Dillow on common ground between Marxists and Conservatives:
Fairness, decentralization & capitalism: Marxists and Conservatives have more in common than
either side would like to admit. This thought occurred to me whilst reading a superb
piece by Andrew Lilico.
He describes the Brams-Taylor
procedure for
cutting a cake in a fair way - in the sense of ensuring envy-freeness
- and says that this shows that a central agency such as the state is unnecessary to achieve
fairness:...
The appropriate mechanism here is one in which there is a balance of power, such that no individual
can say: "take it or leave it."
This is where Marxism enters. Marxists claim that, under capitalism, the appropriate mechanism
is absent. Marx stressed that ... the labour market is an arena in which power is unbalanced...
Nor do Marxists expect the state to correct this, because the state is
captured by capitalists - it is "a committee for managing the common affairs of the whole
bourgeoisie."...
Instead, Marx thought that fairness can only be achieved by abolishing both capitalism and
the state - something which is only feasible at a high level of economic development - and replacing
it with some forms of decentralized decision-making. ...
In this sense, Marxists agree with Andrew: people can find fair allocations themselves without
a central agency. ...
How silly. Marxism and its centralization of power will attract the hyper control freak who
are not likely to ever give up power. Disingenuous utopianism.
Dan Kervick:
That was the sad tragedy of Marx and Marxism. Instead of focusing on a practical agenda
for achieving and sustaining a democratically administered state in an imperfect human world,
a state based on a more equal distribution of capital, a workable balance between private and
public ownership of capital, and a regulatory framework and rule of law designed to sustain this
balance in the face of social and economic forces that will *always* be acting to disrupt it,
Marx veered off into the fantasy lands of his hectoring anarchist critics and adversaries,
and came up with a social pseudo-science positing a millennarian heaven on earth where somehow
perfect voluntariness and perfect equality magically come together. The Marxists are still twisted
up in that foolishness, perpetually incapable of formulating practical political plans and agendas
because they have some "crisis theory" telling them that the current messes are the harbingers
of a revolution that are going to actualize that kingdom of heaven.
Peter K. -> pgl...
yes Kervick again provides a fact-free rant. The Communist Manifesto demanded many reforms
that came pass:
"The section ends by outlining a set of short-term demands - among them a progressive income
tax; abolition of inheritances; free public education etc.-the implementation of which would
be a precursor to a stateless and classless society."
"Short-term demands" as you say: Marx and Engels saw such socialist measures as merely a transitional
stage on the way via the dictatorship of the proletariat to a classless and stateless society
in which even the rule of law would not exist, since human beings would somehow manage to coordinate
all of the economic functions of a complex society through 100% non-coercive means.
In this utopian future, every single person is intelligent, relaxed, cooperative, and preternaturally
enlightened. There are no thieves, psychopaths, predators, raiders or uncooperative deadbeats
and spongers. Since there is no law, there is no government; and since there is no government;
there are no elections or other ways of forming government. There is also no division of labor,
because somehow human beings have passed beyond the "realm of necessity" into the "realm of freedom."
Real-world possibilities for democratic socialist alternatives under a practical and egalitarian
rule of law have frequently been thwarted and undermined by Marxian communists drunk on these
infantile millenarian fantasies, and the Marxian pseudo-sciences of underlying dialectical laws
of social evolution directing history toward this fantastical telos.
Marx himself was one of these underminers, pissing all over the very progressive Gotha
program and the very idea of a well-governed state in the name of his dreamy "communist society."
Guess what guys. Maybe I have actually read some of this stuff.
likbez -> Dan Kervick...
Marxism has two district faces. A very sharp analysis of capitalist society and utopian vision
of the future.
=== quote ===
Marx himself was one of these underminers, pissing all over the very progressive Gotha program
and the very idea of a well-governed state in the name of his dreamy "communist society."
=== end of quote ===
Very true. Authors of Gotha programs were nicknamed "revisionists" by Orthodox Marxists.
mulp:
"He describes the Brams-Taylor procedure for cutting a cake in a fair way - in the sense of
ensuring envy-freeness - and says that this shows that a central agency such as the state is unnecessary
to achieve fairness:..."
That is exactly the description of "authoritarian elite intellectual technocrats dictating
how society works."
Conservatives would never accept that solution because they would immediately argue that not
everyone deserves an equal portion, and that the liberal elites are dictating from on high.
Marx would simply point out that conservatives would never accept that based on their denial
of equality as a principle and would require evolution of man, or too few or too many resources
to care about dividing. But that would never satisfy conservatives....
Obviously actually existing socialist nations ruled by Communist parties have always featured
highly centralized authoritarian non-democratic systems (although China is somewhat of an exception
regarding the matter of centralization, with its provinces having a lot of power, but then, it
is the world's largest nation in population).
As it was, Marx (and Engels) had a practical side. One can see it in the "platform" put forward
at the end of the Communist Manifesto. Several of the items there have been nearly universally
adopted by modern capitalist democracies, such as a progressive income tax and universal state-supported
education. Others are standard items for more or less socialist nations, such as nationalizing
the leading sectors of the economy.
Only one looks at all utopian, their call for ending the division between the city and the
country, although this dream has inspired such things as the New Town movement, not to mention
arguably the suburbs.
It was only in the Critique of the Gotha Program that Marx at one point suggested that eventually
in the "higher stage of socialism" there would be a "withering away of the state." Curiously most
nations ruled by Communist parties never claimed to have achieved true communism because they
were aware of this statement and generally referred to themselves as being "in transition" towards
true communism without having gotten there. Later most would turn around have transitions back
towards market capitalism.
DrDick -> Barkley Rosser...
All existing and former communist countries are Leninist and not Marxist, with a large influence
from whatever the prior local autocratic system was.
Dan Kervick -> Barkley Rosser...
"It was only in the Critique of the Gotha Program that Marx at one point suggested that
eventually in the "higher stage of socialism" there would be a "withering away of the state.""
That's what I meant by the tragedy of Marxism. In the end, Marx had a very unrealistic
view of human nature and history. His analytic and scientific powers were betrayed by an infantile
romanticism that both weakened his social theory and crippled much of left progressive politics
for a century. The problem is still floating around with the insipid anarcho-libertarian silliness
of much of the late 20th and early 21st century left.
likbez:
Actually Marxism was the source of social-democratic parties programs. Which definitely made
capitalism more bearable.
The key value of Marxism is that it gave a solid platform for analyzing capitalism as politico-economic
system. All those utopian ideas about proletariat as a future ruling class of an ideal society
that is not based on private property belong to the garbage damp of history, although the very
idea of countervailing forces for capitalists is not.
In this sense the very existence of the USSR was critical for the health of the US capitalism
as it limited self-destructive instincts of the ruling class. Not so good for people of the USSR,
it was definitely a blessing for the US population.
Now we have neoliberal garbage and TINA as a state religion, which at least in the level in
their religious fervor are not that different from Marxism.
And neocons are actually very close, almost undistinguishable from to Trotskyites, as for their
"permanent revolution" (aka "permanent democratization") drive.
Ben Groves -> likbez...
You obviously think it wasn't that good for the USSR people, yet don't understand the Tsarist
wreck that Russia itself had turned into. With the Soviet, they became strong at the expense of
what they considered colonies.
The true origin of Bolshevism isn't Lenin or Trotsky, but the anti-ashkenazi anti-European
movement. Stalin joined them in 1904 for this very reason and blasted the Menhs as jews. Thus
the program had to cleanse out people who still insisted Russia be European and instead, push
a Asiatic program they believed they really were.
kthomas:
Though I do love seeing this argument being made, I'm not sure we can derive any real benefits
from having it anymore. Ideology is one thing. If we are discussing Power, and how it attracts
the Power Hungry, that is a separate argument, one largely covered by Machiavelli.
As for Marx, I do not ever recall him advising on the abolishment of the State. He was not
an Anarchist.
Ben Groves:
The state can't be abolished. It simply changes by what part of nature controls it.
Only the anarchists thinks the state can be abolished. The state is eternal. Whether it is
the Imperial State (the true conservative organic ideal) City State, the Nation State, the Market
State, the Workers State, the Propertarian State. There will always be rule.
DrDick -> Ben Groves...
The state is far from eternal. It is in fact a very recent development in humanity's 3.5 million
year history, having arisen about 5500 years ago. States can and do collapse and disappear, as
has happened in Somalia.
likbez:
I think the discussion deviated from the key thesis "Marxists and Conservatives Have More in
Common than Either Side Would Like to Admit"
This thesis has the right for existence. Still Marxism remains miles ahead of conservatives
in understanding the capitalism "as is" with all its warts.
Neoliberalism is probably the most obvious branch of conservatism which adopted considerable
part of Marxism doctrine. From this point of view it is a stunning utopia with the level of economic
determinism even more ambitious than that of Marx...
The simplest way to understand the power of neoliberalism as an ideology, is to view it as
Trotskyism refashioned for elite. Instead of "proletarians of all countries unite" we have slogan
"neoliberal elites of all countries unite". Instead of permanent revolution we have permanent
democratization via color revolutions.
Instead of revolt of proletariat which Marxists expected we got the revolt of financial oligarchy.
And this revolt led to forming powerful Transnational Elite International (with Congresses in
Basel) instead of Communist International (with Congresses in Moscow). Marx probably is rolling
in his grave seeing such turn of events and such a wicked mutation of his political theories.
Like Trotskyism neoliberalism has a totalitarian vision for a world-encompassing monolithic
state governed by an ideologically charged "vanguard". One single state (Soviet Russia) in case
of Trotskyism, and the USA in case of neoliberalism is assigned the place of "holy country" and
the leader of this country has special privileges not unlike Rome Pope in Catholicism.
The pseudoscientific 'free-market' theory which replaces Marxist political economy and provides
a pseudo-scientific justification for the greed and poverty endemic to the system, and the main
beneficiaries are the global mega-corporations and major western powers (G7).
Like Marxism in general neoliberalism on the one hand this reduces individuals to statistics
contained within aggregate economic performance, on the other like was in the USSR, it places
the control of the economy in comparatively few hands; and that might be neoliberalism's Achilles
heel which we say in action in 2008.
The role of propaganda machine and journalists, writers, etc as the solders of the party that
should advance its interests. Compete, blatant disregard of truth to the extent that Pravda journalists
can be viewed as paragons of objectivity (Fox news)
== end of quote ==
ilsm:
Republicans (US 'capitalism' salespersons) believe that "liberty", the right of property,
is necessary for "freedom".
State is necessary for property despite what the Hobbits (libertarians) preach.
Communism is as far from Marxism as the US billionaire empire is from capitalism. Marx was a fair labor economist.
Lafayette:
MARKET ECONOMY CRITERIA
{Marx stressed that ... the labour market is an arena in which power is
unbalanced...}
Which has nothing whatsoever to do with "capitalism", which is fundamentally this:
An economic system in which investment in and ownership of the means of production,
distribution, and exchange of wealth is made and maintained chiefly by private individuals
or corporations, especially as contrasted to cooperatively or state-owned means of wealth.
Which was common up to and including the latter decades of the last century. Wherein, some
countries adopted state-enterprises to have either entire monopolies or substantial presence
in some sectors of the market-economy. The ownership of the means of production were owned by
the state and management/workforce were state employees.
This applies to any entity the object of which is provide to a market goods and services. One
can therefore say the defense of the nation is a service provided by a state-owned entity
called the Dept. of Defense (in the US and similarly elsewhere).
Moreover that practice can be modified to other areas of public need, for instance
health-care and education. Where the "means of production" of the service are owned once again
by the state, but this time the management and workers are independent and work for
themselves. (In which case they may or may not be represented by organizations some of which
are called "unions".)
The above variations are all well known in European "capitalist" countries - which employ
capital as central financial mechanism. Capital is "any form of wealth employed or capable of
being employed in the production of more wealth."
Thus, capitalism is an integral and key part of the market-economy since it provides
the means by which the other major input-component is labor. Capital is an investment input to
the process, for which there is a Return-on-Investment largely accepted as bonafide criteria
of any market-economy.
Likewise, there should therefore be accounted a Return on Labor, and that return should be
paid to all who work in a company - not all equally but all equitably. A Return-on-Labor is
also a bonafide criteria of any market-economy.
There is no real reason why the RoI should be the sole criteria for investment purposes,
except that of common usage historically. RoC should also have its place as a bonafide
criteria for investment purposes - and probably one that determines which "services" are
better performed by government-owned agencies and which not.
How much is the RoC of Defense worth to you and our family? How much is HealthCare? How
much Primary, Secondary and Tertiary Education?
The sugar industry paid scientists in the 1960s to downplay the link
between sugar and heart disease and promote saturated fat as the culprit
instead.
The internal sugar industry documents, recently discovered by a
researcher at UCSF and published Monday in JAMA Internal Medicine,
suggest that five decades of research into the role of nutrition and
heart disease may have been largely shaped by the sugar industry.
A trade group called the Sugar Research Foundation, known today as
the Sugar Association, paid three Harvard scientists the equivalent of
about $50,000 in today's dollars to publish a 1967 review of sugar, fat
and heart research.
The studies used in the review were handpicked by the sugar group.
The article, published in the prestigious
New England Journal of
Medicine
, minimized the link between sugar and heart health and cast
aspersions on the role of saturated fat.
One of the scientists paid by the sugar industry was D. Mark Hegsted,
who went on to become the head of nutrition at the USDA, where in 1977
he helped draft the forerunner to the government's dietary guidelines.
Shocked? That was decades ago. But today, the sugar industry is
STILL
paying politicians for ironclad protection from competition:
Imports of sugar into the United States are governed by tariff-rate
quotas (TRQs), which allow a certain quantity of sugar to enter the
country under a low tariff [meaning the rest is walled out].
USDA establishes the annual quota volumes for each federal fiscal
year (beginning October 1) and the U.S. Trade Representative allocates
the TRQs among countries.
It can go both ways though. The WHO managed to
declare glyphosate 'probably carcinogenic' by expressly
ignoring the substantial evidence to the contrary.
I think that falls under "buying scientists".
There is no global warming and glyphosate is
better for you than juice, just like fracking
water prevents cavities.
also not sure you understand
straw manning, I referred directly
to haygoods comment, re buying science,
you brought up the ancillary/irrelevant
glyphosate.
Sugar is socially poisonous, at
the least, see diabetes
Image result for straw manning
"A straw man is a common form of
argument and is an informal fallacy
based on giving the impression of
refuting an opponent's argument,
while actually refuting an argument
that was not advanced by that opponent."
haygood didn't say anything about
glyphosate, it's relevant to sugar
how?
http://www.nature.com/news/debate-rages-over-herbicide-s-cancer-risk-1.18794
from the link…"Finally, the
two bodies looked at different
evidence. EFSA assessed some
studies conducted by industry
groups that were excluded from
the IARC analysis. The IARC
team looked only at evidence
that is in the public domain
and available to independent
scientists to review, says Kathryn
Guyton, a senior toxicologist
at the IARC and one of the authors
of its glyphosate study2."
what's that? the pro glyphosate
used industry science? Say it
ain't so!
Also…"Firstly, the two bodies
were not assessing exactly the
same thing. EFSA looked only
at glyphosate, whereas IARC
looked at both the chemical
itself and the products it is
used in. EFSA says that some
studies have shown genotoxic
effects (DNA damage) from products
containing glyphosate and some
have not, and it is likely that
some of these effects are down
to other compounds in these
products, rather than glyphosate
itself."
and last but not least..does
efsa think glyphosate is safe?".Not
entirely. EFSA revised existing
limits on safe daily doses for
exposure to glyphosate. It also
proposes - for the first time
in the European Union - that
there should be a limit on how
much glyphosate is safe for
a person to ingest in a short
period of time."
like ambrits comment on codes
vs. what contractors actually
do (there's the right way, and
there's the way we're doing
it)you're trusting those pesticide
applicators measuring skills
and concern for others health
more than i do.
It's not the main chlorinated
pesticides in Agent Orange
that fokks us veterans and
Vietnamese over, it's the
stuff that gets produced
in side reactions, molecules
like 2,3,7,8-dibenzodioxins
and -dibenzofurans. Which
strongly bioaccumulate and
kind of hang around forever.
As do the other shitbits
spewed out by Our Imperial
Forces, like depleted uranium
with its mix of go-alongs,
and so on…
Fundamental point is that we humans, taken as
a bunch, are pretty much worthless as participants
in "The Great Disney Circle of Life…" Not just worthless,
but actively "disruptive" and patently destructive.
Sugar bad, now FL counties spraying shit to try
to ":control" Aeides aegiptii mosquitoes that "carry
the Deadly Zika Virus" and thereby kill off all
kinds of pollinators. Because middle class, or some
shit…
I'd say doing things like completely ignoring
a multi-decade USDA study that found no harmful
effects resulted from contact with glyphosate reveals
bias and a lack of genuine desire to honestly appraise
the evidence. And even in the absence (rather, absent
from the WHO review) of evidence that the stuff
isn't harmful, the evidence that it is dangerous
that they included was pitiful at best. And this
is presumably the best 'proof' they could scrounge
up.
"... A growing body of research indicates that the financial and psychological damage from a period of joblessness can be significant and long-lasting, especially for people who remain out of work for an extended period. ..."
"... Friedman is just doing his job. The Saddam's WMDs paper endorsed Hillary on Jan 31st, and is part of the campaign of lies, deceptions and cover-ups. ..."
"... As with television, it's healthier not to pollute one's mind with NYT propaganda. Reading the idiotic headlines is enough to realize that the "content" is crap. ..."
"... Predictably, the comments on the NYT op-ed (by the "Suck on this, Iraq!" Friedman) are more thoughtful and reality-based than the author's column. ..."
"... Libya and Syria and Ukraine were NOT just bad judgment calls. However, they were three consecutive bad judgment calls, with no good ones to offset. That still matters. ..."
"... Libya and Syria and Ukraine were also lies, coming from the mouth of Hillary, and harming the country by tossing us into more wars. ..."
"... I really wonder how Friedman and the other NYT Iraq war cheerleaders can look at themselves in the mirror each morning. And excellent point about Snowden, of course. ..."
It's not hard to see the thinking behind BIG from the Silicon Valley,
elite perspective. They understand that putting everybody out of work from
robotics or out-sourcing is a sure-fire way to create massive discontent.
They think this is a clever way of keeping the losers contented (enough
to not revolt) while maintaining their elevated position within the system.
They don't care what the system looks like, really, just so long as they
get to sit on top. They think this is a way to avert the revolution that
they know, from reading Marx and thinking about it a little, their actions
are sure to lead to, ceteris paribus .
However, I think they underestimate the extent to which our continual
trade deficits are predicated on the US dollar being the world's reserve
currency. That status may not be in danger in the short term, but I think
it's doomed to extinction over the medium term, as the BRICS and other countries
maneuver their way out from under the thumb of the petro-dollar.
But the up-side is that they're mainstreaming an MMT understanding of
macroeconomics and, as old John used to say, "ideas have a way of taking
on a life of their own." Also, some poor people might actually end up being
benefited as a side-effect of the elites trying to keep the lower orders
manageable. I mean, that's really what the New Deal was about, no? FDR wasn't
fighting for the working man, he just realized that exploiting them too
much could crash the whole system and be much worse for his class, the elites,
than a little Social Security was. FDR wasn't looking to overturn class
relations, but maintain them. He just had a more nuanced understanding of
self-interest than many of his class peers (that oughta get some people
fuming). Still, whatever the motivation, the programs had the practical
effect of making a lot of people's lives better. Why shouldn't it be the
same in this situation?
Not that I'm foily, but if you combine the abolition of cash, BIG in
the form of a digital deposit, retail tracking everywhere, and the precedent
(from ObamaCare) of a mandate to participate in certain markets, you can
concoct quite a dystopia….
I think we need to have a movement to defend cash. Small business owners
should lead the charge, since card fees hit them the hardest. I see a possible
coalition…anti-surveillance activists and guys like the owner of the pizza
joint I frequent whose register bears a sign that reads "Cards accepted,
Cash preferred."
Also, a BIG would be a great excuse to start-up the Postal Bank. Everybody
will get an account tied to their SSN that their BIG gets deposited in,
accessible (in cash) at any post office. It might just be sell-able…at least
to the public, if not to Wall Street.
Whenever I hear about TPTB doing away with cash I am reminded of Margaret
Atwood's prescient (from the 80s I think!) novel about a patriarchal dystopian
future, The Handmaid's Tale – freezing the bank accounts is how it all started.
"A growing body of research indicates that the financial and psychological
damage from a period of joblessness can be significant and long-lasting,
especially for people who remain out of work for an extended period."
quelle surprise! are poor, working, and middle-class people's well-being
actually closely tied to how many days in their lives they can work? hoocoodanode?
I hear they have really low well being in Europe with their 6 weeks vacations
and way more holidays and stuff. They throw themselves off bridges at the
start of every vacation season. Nah it's tied to having an income or not,
not how many days they work.
i always forget about that because i've always worked as in independent
contractor, staying sane by pretending benefits and paid holidays and vacations
are not all that important in life. and i must say, lately i do see TPTB
cashing in on my idea, bigtime. i should have placed some bets on that happening…
I haven't worked a paying job for about 14 years….the wife works the
day gig, while I maintain the abode, do household repairs, garden, tend
to the bees & chickens…..etc. …… I'm 'working' my way on the downslope of
collapse…'avoiding the rush' as John M Greer is fond of saying…..
i meant, in our current industrialized, work-ethic-based western society.
which not coincidentally has had a lousy mental and physical health outcome
for millions of people over time.
but never mind. a rising water floats all boats.
until it doesn't.
'Hillary's fibs or lack of candor are all about bad judgments she
made on issues that will not impact the future of either my family or
my country. Private email servers? Cattle futures? Goldman Sachs lectures?
All really stupid, but my kids will not be harmed by those poor
calls. Debate where she came out on Iraq and Libya, if you
will, but those were considered judgment calls, and if you disagree
don't vote for her" [The Moustache of Understanding, New York Times].
You tell 'em, Tommy! Who cares about corruption? Corruption had nothing
to do with Iraq!
Of course they won't. You are well-off, well-connected, and work for
a virtual organ of the state that has backed her every move. You
and your framily are on the inside track and will of course be protected.
Friedman is just doing his job. The Saddam's WMDs paper endorsed
Hillary on Jan 31st, and is part of the campaign of lies, deceptions and
cover-ups.
Journo-hos … the only surprise is that you can buy them so cheap.
As with television, it's healthier not to pollute one's mind with
NYT propaganda. Reading the idiotic headlines is enough to realize
that the "content" is crap.
Sounds like everyone should work for an organ (or a virtual organ, either
way) of the state. Just make sure you're well-connected (the importance
of being social – don't just bury yourself in books).
Predictably, the comments on the NYT op-ed (by the "Suck on this,
Iraq!" Friedman) are more thoughtful and reality-based than the author's
column. Here is a sample:
Thomas Friedman on lies that hurt the country? Let's start that with
the Iraq War.
I agree that the emails probably didn't hurt the country, even if
they were illegal and even if she does lie about them. However, Snowden
did not hurt the country either, he told the truth, and Hillary goes
after him with a vengeance for doing that in ways that benefited the
country, that the NYT of Pentagon Papers days should support. She does
that even while she lies about her emails, and that is a relevant character
issue for the power she seeks.
Libya and Syria and Ukraine were NOT just bad judgment calls.
However, they were three consecutive bad judgment calls, with no good
ones to offset. That still matters.
Libya and Syria and Ukraine were also lies, coming from the mouth
of Hillary, and harming the country by tossing us into more wars.
I really wonder how Friedman and the other NYT Iraq war cheerleaders
can look at themselves in the mirror each morning. And excellent point about
Snowden, of course.
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives ..."
"... he's pursued abroad many also intuitively believe that there's no one who will hit back harder. There's some of that 'he may be a son-of-a-bitch but he's our son-of-a-bitch' quality to the president's support on national security issues. ..."
"... Hence teachers weren't divisive enough and therefore are/were seen as part of the "problem". ..."
Yves here. One has to wonder if the prosecutorial investment in bringing
down a public school test-cheating ring has less to do with concern about the
students and more to do with charter schools.
By Bill Black, the author of The Best Way to Rob a Bank is to
Own One and an associate professor of economics and law at the University of
Missouri-Kansas City. Jointly published with
New Economic Perspectives
The New York Times
ran the story on April Fools' Day of a jury convicting educators of gaming
the test numbers and lying about their actions to investigators.
ATLANTA - In a dramatic conclusion to what has been described as the
largest cheating scandal in the nation's history, a jury here on Wednesday
convicted 11 educators for their roles in a standardized test cheating scandal
that tarnished a major school district's reputation and raised broader questions
about the role of high-stakes testing in American schools.
On their eighth day of deliberations, the jurors convicted 11 of the
12 defendants of racketeering, a felony that carries up to 20 years in prison.
Many of the defendants - a mixture of Atlanta public school teachers, testing
coordinators and administrators - were also convicted of other charges,
such as making false statements, that could add years to their sentences.
This was complicated trial that took six months to present and required eight
days of jury deliberations. It was a major commitment of investigative and prosecutorial
resources. But it was not investigated and prosecuted by the FBI and AUSAs,
but by state and local officials. In addition to the trial success, the prosecutors
secured 21 guilty pleas.
Atlanta's public schools, of course, did not engage in "the largest cheating
scandal in the nation's history." The big banks' cheating scandals left the
Atlanta educators in the dust.
The two obvious questions are why the educators cheated and how they got
caught. "High-stakes testing" cannot explain the scandal because we have had
such tests for over 50 years. The article explains the real drivers – compensation,
promotions, fear, and ego (aka "reputation").
"Officials said the cheating allowed employees to collect bonuses and helped
improve the reputations of both Dr. Hall and the perpetually troubled school
district she had led since 1999.
Investigators wrote in the report that Dr. Hall and her aides had 'created
a culture of fear, intimidation and retaliation' that had permitted "cheating
- at all levels - to go unchecked for years."
Any reader familiar with my work should be running over in their mind Citigroup's
vastly larger cheating frauds that senior managers produced by using exactly
the same tactics to produce hundreds of billions of dollars in fraud.
How did people become suspicious and decide to conduct a real investigation?
They realized that the reported results were too good to be true. That too is
directly parallel to Citi, where massive purchases of "liar's" loans known to
be 90% fraudulent supposedly led to massive profits.
The dozen educators who stood trial, including five teachers and a principal,
were indicted in 2013 after years of questions about how Atlanta students
had substantially improved their scores on the
Criterion-Referenced Competency Test, a standardized examination given
throughout Georgia.
In 2009,
The Atlanta Journal-Constitution started publishing a series of articles
that sowed suspicion about the veracity of the test scores, and Gov. Sonny
Perdue ultimately ordered an investigation.
Wow, a newspaper did a series of articles, and documented a scandal built
on deceit. Imagine if the New York Times and the Wall Street Journal were to
do an "unsparing" investigation into banking fraud – and into Attorney General
Eric Holder's refusal to prosecute. What if they actually looked at culpability
in the C-suites?
The inquiry, which was completed in 2011, led to findings that were startling
and unsparing: Investigators concluded that cheating had occurred in at
least 44 schools and that the district had been troubled by "organized and
systemic misconduct." Nearly 180 employees, including 38 principals, were
accused of wrongdoing as part of an effort to inflate test scores and misrepresent
the achievement of Atlanta's students and schools.
The investigators wrote that cheating was particularly ingrained in individual
schools - at one, for instance, a principal wore gloves while she altered
answer sheets - but they also said that the district's top officials, including
Superintendent Beverly L. Hall, bore some responsibility.
Dr. Hall, who died on March 2, insisted that she had done nothing wrong
and that her approach to education, which emphasized data, was not to blame.
"I can't accept that there's a culture of cheating," Dr. Hall
said in an interview in 2011. "What these 178 are accused of is horrific,
but we have over 3,000 teachers."
Of course, Hall's "approach to education" did not "emphasize data" – it emphasized
faux data – like Citi's accounting alchemists under Robert Rubin who
transmuted fraudulent net liabilities (liar's loans) into supposedly wondrously
valuable assets that had zero risk (Super Senior CDO tranches).
A more general point is in order. Atlanta is the culmination of destructive
national trends and failing to mention Houston in the story was unfortunate.
First, the "reinventing government" movement decided the public sector was bad
and the private sector was magnificent and said that the public sector should
adopt private sector approaches including quite specifically "performance pay"
based on quantitative measures. This brought to the public sector the perverse
incentives that were ruining the private sector and about to bring on Enron-era
fraud epidemic and then the most recent three fraud epidemics. Second, we were
assured by proponents of the change that a concern for "reputation" would trump
any perverse incentives. What the proponents failed to see, of course, was that
in both the private and public sectors the way to create a superb reputation
was to report inflated data.
Reputation, instead of the "trump" ensuring good conduct, was a leading motive
to engage in bad conduct. Third, we were told that giving public administrators
far more power to squash teachers was the key to success in education. Lord
Acton warned that absolute power leads to absolute corruption whether in Atlanta
or Citi's C-suite.
Houston should have been mentioned because the modern movement toward educational
fraud began in Houston under Rod Paige – who became Secretary of Education based
on massive fraudulent misrepresentation of data. Paige kicked off the testing
insanity, claiming it would produce objective, fact-based policies based on
what educational measures actually worked. As a famous
takedown of Paige's claims ends – the lesson is that it was too good to
be true. President Bush, however, bought it hook, line, sinker, bobber, rod,
and the boat Paige rowed out in.
In any event, if Fulton County, Georgia can jail educators who lie and gimmick
the data, Holder can send the elite bankers to prison on the same grounds.
lakewoebegoner, April 2, 2015 at 10:41 am
*** One has to wonder if the prosecutorial investment in bringing
down a public school test-cheating ring has less to do with concern
about the students and more to do with charter schools. ***
I believe it's even simpler than that…..prosecuting teachers is perfect
fodder for the local 11 o'clock news-you're prosecuting publiclly paid low-hanging
fruit, the crime is understandable (versus explaining accounting fraud or
intentional misvaluation of assets) and of course-my gosh, think of the
children!
NotTimothyGeithner, April 2, 2015 at 11:07 am
Local DAs have incentive to prosecute large cases, and Holder made sure
to make token plea deals with the banks. A successful state AG who brought
down a major financial player would destroy the Obama Administration just
by existing two years into the first term because there would be no excuse.
Plenty of loyal Team Blue voters if pressed will explain the lack of prosecution
as a GOP plot, but with a counter example in the papers they would be more
demoralized than they are.
RUKidding, April 2, 2015 at 12:11 pm
Neither Team Blue or Team Red voters want to confront reality and truly
see and acknowledge what's going on. The crooks in the District of Criminals
have perfected their Kabuki Show of "hiding" behind each other's skirts
and blaming the other side for all kinds of ills and perfidy. Tribalistic
authoritarians can be lazy and not have to think for themselves and really
DO something; just pass the clicker; lets all watch some "reality" tv show
instead. Talk about the matrix….
An example is my rightwing family members just recently celebrating quite
a bit that Harry Reid has announced his retirement – as IF that'll be this
amazingly good thing. Like: what will happen then? HOW, exactly, will "things
get better" just bc they can't kick Harry Reid around anymore.
Disclaimer: no love lost on my part vis Harry Reid. He's as much of a
crook and worthless waste of space as all of the others, no matter which
Team Jacket they wear. My take? What possible difference will it make if
Reid retires or stays in the Senate indefinitely?
RUKidding, April 2, 2015 at 10:59 am
Teachers have no money. Bankers have a TON of money. Sucks to be in the
99s.
Good comments. Right now, too, teachers have been deliberately painted
to be the evilest of the vile because unions! get paid too much! can't be
fired! blah de blah…. it's something easy for the masses to grasp – all
those dreadful overpaid teachers who can't be fired "robbing" us of our
taxes, while allegedly doing a totally shitty job. Yeah right. Of course
privatized school teachers would most definitely do a "better" jawb.
It's all "look over there!!!!!" while the bankers are the ones robbing
us blind deaf dumb stupid etc.
And yes, Charter Schools! Another way for the crooks at the top to rip
off the 99s! woot!
And the beat down goes on…..
djrichard, April 2, 2015 at 12:09 pm
I remember back when the Supreme Court was debating W vs Gore, I put
it to my neighbors that W would be under the influence of big oil and other
powers that be. One of my neighbors countered that Gore would be under the
influence of teachers. I was the minority opinion in that conversation.
RUKidding, April 2, 2015 at 12:14 pm
No love lost on my part vis Gore, but seriously??? LIke Gore is "under
the influence" of teachers??? Yeah, unions, but really? Like it's just so
ridiculous. Teachers v Big Oil. Uh, er, that's pretty much like David v
Goliath, but in this case Goliath/BigOil has totally crushed David/the 99s.
djrichard, April 2, 2015 at 12:37 pm
I'm surprised I found
this, but I think
this captures it.
Bush's bully-boy campaign tactics play to his strengths, albeit unstated
and unlovely ones. Many of the polls of the president have shown that
while people don't necessarily agree with the specific policies
he's pursued abroad many also intuitively believe that there's no one
who will hit back harder. There's some of that 'he may be a son-of-a-bitch
but he's our son-of-a-bitch' quality to the president's support on national
security issues.
This was from W v Kerry days. But I think the same principle was operating
during W v Gore. During 2004, the idea was to continue to inflict W on the
middle east. During 2000, I think the idea was to inflict W on the "deserving
elements" inside the US (whatever those deserving elements are/were at the
time).
Teachers if anything represent a "big tent" mind-set, one in which there
are no losers, or vice-versa one in which everyone is deserving of winning.
Hence teachers weren't divisive enough and therefore are/were seen as
part of the "problem".
"... The deficit obsession that governments have shown since 2010 has helped produce a recovery that has been far too slow, even in the US. ..."
"... The Zero Lower Bound (ZLB) raises an acute problem for what I call the consensus assignment (leaving macroeconomic stabilisation to an independent, inflation targeting central bank), but add in austerity and you get major macroeconomic costs. ICBs appear to rule out the one policy (money financed fiscal expansion) that could combat both the ZLB and deficit obsession. ..."
Simon Wren-Lewis has a follow-up to his recent post on central bank independence:
The 'strong case' critically examined : Perhaps it was too unconventional
setting out an argument (against independent central banks, ICBs) that
I did not agree with, even though I made it abundantly clear that was what
I was doing. It was too much for one blogger, who reacted by deciding that
I did agree with the argument, and sent a series of tweets that are best
forgotten. But my reason for doing it was also clear enough from the final
paragraph. The problem it addresses is real enough, and the problem appears
to be linked to the creation of ICBs.
The deficit obsession that governments have shown since 2010 has
helped produce a recovery that has been far too slow, even in the US.
It would be nice if we could treat that obsession as some kind of aberration,
never to be repeated, but unfortunately that looks way too optimistic.
The Zero Lower Bound (ZLB) raises an acute problem for what I call
the consensus assignment (leaving macroeconomic stabilisation to an independent,
inflation targeting central bank), but add in austerity and you get major
macroeconomic costs. ICBs appear to rule out the one policy (money financed
fiscal expansion) that could combat both the ZLB and deficit obsession.
I wanted to put that point as strongly as I could. Miles Kimball does
something similar
here , although without the fiscal policy perspective ...
Skipping ahead (and omitting quite a bit of the argument):
... The basic flaw with my strong argument against ICBs is that the ultimate
problem (in terms of not ending recessions quickly) lies with governments.
There would be no problem if governments could only wait until the recession
was over (and interest rates were safely above the ZLB) before tackling
their deficit, but the recession was not over in 2010. Given this failure
by governments, it seems odd to then suggest that the solution to this problem
is to give governments back some of the power they have lost. Or to put
the same point another way, imagine the Republican Congress in charge of
US monetary policy.
But if abolishing ICBs is not the answer to the very real problem I set
out, does that mean we have to be satisfied with the workarounds? One possibility
that a few economists
like Miles Kimball have argued for is to effectively abolish paper money
as we know it, so central banks can set negative interest rates. Another
possibility is that the government (in its saner moments) gives ICBs
the power to undertake helicopter money.
Both are complete solutions to
the ZLB problem rather than workarounds. Both can be accused of endangering
the value of money. But note also that both proposals gain strength from
the existence of ICBs: governments are highly unlikely to ever have the
courage to set negative rates, and ICBs stop the flight times of helicopters
being linked to elections.
These are big (important and complex) issues. There should be no taboos
that mean certain issues cannot be raised in polite company. I still think
blog posts are the best medium we have to discuss these issues, hopefully
free from distractions like partisan politics.
"... We don't get to do many controlled experiments in economics, so history is mainly what we have to go on. ..."
"... What did orthodox salt-water macroeconomists believe about disinflation on the eve of the Paul Volcker contraction? As it happens, we have an excellent source document: James Tobin's "Stabilization Policy Ten Years After," * presented at Brookings in early 1980. ..."
"... Unemployment shot up faster than in Tobin's simulation, then came down faster, because the Fed didn't follow the simple rule he assumed. But the basic shape - a clockwise spiral, with inflation coming down thanks to a period of very high unemployment - was very much in line with what standard Keynesian macro said would happen. ..."
"... trade between any two regional economies is roughly proportional to the product of their GDPs and inversely related to distance. Neat. ..."
We don't get to do many controlled experiments in economics, so history
is mainly what we have to go on. Unfortunately, many people who imagine
that they know how the economy works go with what they think they heard
about history, not with what actually happened. And I'm not just talking
about the great unwashed; quite a few well-known economists seem not to
have heard about FRED, or at least haven't picked up the habit of doing
a quick scan of the actual data before making assertions about facts.
And there's one decade in particular where people are weirdly unaware
of the realities: the 1980s. A lot of this has to do with Reaganolatry:
the usual suspects have repeated so often that it was a time of extraordinary,
incredible success that I often encounter liberals who believe that something
special must have happened, that somehow the events were at odds with what
the prevailing macroeconomic models of the time said would happen.
But nothing special happened, aside from the unexpected willingness of
the Federal Reserve to impose incredibly high unemployment in order to bring
inflation down.
What did orthodox salt-water macroeconomists believe about disinflation
on the eve of the Paul Volcker contraction? As it happens, we have an excellent
source document: James Tobin's "Stabilization Policy Ten Years After," *
presented at Brookings in early 1980. Among other things, Tobin laid out
a hypothetical disinflation scenario based on the kind of Keynesian model
people like him were using at the time (which was also the model laid out
in the Dornbusch-Fischer and Robert Gordon textbooks).
These models included
an expectations-augmented Phillips curve, ** with no long-run tradeoff between
inflation and unemployment - but expectations were assumed to adjust gradually
based on experience, rather than changing rapidly via forward-looking assessments
of Fed policy.
This was, of course, the kind of model the Chicago School dismissed scathingly
as worthy of nothing but ridicule, and which was more or less driven out
of the academic literature, even as it continued to be the basis of a lot
of policy analysis.
So here was Tobin's picture:
[Picture]
Here's what actually happened:
[Graph]
Unemployment shot up faster than in Tobin's simulation, then came down
faster, because the Fed didn't follow the simple rule he assumed. But the
basic shape - a clockwise spiral, with inflation coming down thanks to a
period of very high unemployment - was very much in line with what standard
Keynesian macro said would happen. On the other hand, there was no sign
whatsoever of the kind of painless disinflation rational-expectations models
suggested would happen if the Fed credibly announced its disinflation plans.
Now that's fun: Adam Davidson tells us * about trade in the ancient Near
East, as documented by archives found in Kanesh - and reports that the volume
of trade between Kanesh and various trading partners seems to fit a gravity
equation: trade between any two regional economies is roughly proportional
to the product of their GDPs and inversely related to distance. Neat.
But what does the seemingly universal applicability of the gravity equation
tell us? Davidson suggests that it's an indication that policy can't do
much to shape trade. That's not where I would have gone, and it's not where
those who have studied the issue closely ** have gone.
Here's my take: Think about two cities with the same per capita GDP -
we can relax that assumption in a minute. They will trade if residents of
city A find things being sold by residents of city B that they want, and
vice versa.
So what's the probability that an A resident will find a B resident with
something he or she wants? Applying what one of my old teachers used to
call the principle of insignificant reason, a good first guess would be
that this probability is proportional to the number of potential sellers
- B's population.
And how many such desirous buyers will there be? Again applying insignificant
reason, a good guess is that it's proportional to the number of potential
buyers - A's population.
So other things equal we would expect exports from B to A to be proportional
to the product of their populations.
What if GDP per capita isn't the same? You can think of this as increasing
the "effective" population, both in terms of producers and in terms of consumers.
So the attraction is now the product of the GDPs.
Is there anything surprising about the fact that this relationship works
pretty well? A bit. Standard pre-1980 trade theory envisaged countries specializing
in accord with their comparative advantage - England does cloth, Portugal
wine. And these models suggest that how much countries trade should have
a lot to do with whether they are similar or not. Cloth exporters shouldn't
be selling much to each other, but should instead do their trading with
wine exporters. In reality, however, there's basically no sign of any such
effect: even seemingly similar countries trade about as much as a gravity
equation says they should.
Calibrated models of trade have long dealt with this reality, somewhat
awkwardly, with the so-called Armington assumption, *** which simply assumes
that even the apparently same good from different countries is treated by
consumers as a differentiated product - a banana isn't just a banana, it's
an Ecuador banana or a Saint Lucia banana, which are imperfect substitutes.
The new trade theory some of us introduced circa 1980 - or as some now call
it, the "old new trade theory" - does a bit more, and possibly better, by
introducing monopolistic competition and increasing returns to explain why
even similar countries produce differentiated products.
And there's also a puzzle about both the effect of distance and the effect
of borders, both of which seem larger than concrete costs can explain. Work
continues.
Does any of this suggest the irrelevance of trade policy? Not really.
Changes in trade policy do have obvious effects on how much countries trade.
Look at what happened when Mexico opened up starting in the late 1980s,
as compared with Canada, which was fairly open all along - and which, like
Mexico, mainly trades with the US:
[Graph]
So what does gravity tell us? Simple Ricardian comparative advantage
is clearly incomplete; the process of international trade is subtler, with
invisible as well as visible costs. Not trivial, but not too unsettling.
And gravity models are very useful as a benchmark for assessing other effects.
One morning, just before dawn, an old man named Assur-idi loaded up two
black donkeys. Their burden was 147 pounds of tin, along with 30 textiles,
known as kutanum, that were of such rare value that a single garment cost
as much as a slave. Assur-idi had spent his life's savings on the items,
because he knew that if he could convey them over the Taurus Mountains to
Kanesh, 600 miles away, he could sell them for twice what he paid.
At the city gate, Assur-idi ran into a younger acquaintance, Sharrum-Adad,
who said he was heading on the same journey. He offered to take the older
man's donkeys with him and ship the profits back. The two struck a hurried
agreement and wrote it up, though they forgot to record some details. Later,
Sharrum-Adad claimed he never knew how many textiles he had been given.
Assur-idi spent the subsequent weeks sending increasingly panicked letters
to his sons in Kanesh, demanding they track down Sharrum-Adad and claim
his profits.
These letters survive as part of a stunning, nearly miraculous window
into ancient economics. In general, we know few details about economic life
before roughly 1000 A.D. But during one 30-year period - between 1890 and
1860 B.C. - for one community in the town of Kanesh, we know a great deal.
Through a series of incredibly unlikely events, archaeologists have uncovered
the comprehensive written archive of a few hundred traders who left their
hometown Assur, in what is now Iraq, to set up importing businesses in Kanesh,
which sat roughly at the center of present-day Turkey and functioned as
the hub of a massive global trading system that stretched from Central Asia
to Europe. Kanesh's traders sent letters back and forth with their business
partners, carefully written on clay tablets and stored at home in special
vaults. Tens of thousands of these records remain. One economist recently
told me that he would love to have as much candid information about businesses
today as we have about the dealings - and in particular, about the trading
practices - of this 4,000-year-old community.
Trade is central to every key economic issue we face. Whether the subject
is inequality, financial instability or the future of work, it all comes
down to a discussion of trade: trade of manufactured goods with China, trade
of bonds with Europe, trade over the Internet or enabled by mobile apps.
For decades, economists have sought to understand how trade works. Can we
shape trade to achieve different outcomes, like a resurgence of manufacturing
or a lessening of inequality? Or does trade operate according to fairly
fixed rules, making it resistant to conscious planning?
Economists, creating models of trade, have faced a challenge, because
their data have derived exclusively from the modern world. Are their models
universal or merely reflections of our time? It's a crucial question, because
many in our country would like to change our trading system to protect American
jobs and to improve working conditions here and abroad. The archives of
Kanesh have proved to be the greatest single source of information about
trade from an entirely premodern milieu.
In a beautifully detailed new book - ''Ancient Kanesh,'' written by a
scholar of the archive, Mogens Trolle Larsen, to be published by Cambridge
University Press later this year - we meet dozens of the traders of Kanesh
and their relatives back home in Assur. Larsen has been able to construct
family trees, detailing how siblings and cousins, parents and spouses, traded
with one another and often worked against one another. We meet struggling
businessmen, like Assur-idi, and brilliant entrepreneurs, like Shalim-Assur,
who built a wealthy dynasty that lasted generations. In 2003, while covering
the war in Iraq, I traveled to many ancient archaeological sites; the huge
burial mounds, the carvings celebrating kings as relatives to the gods,
all gave the impression of a despotic land in which a tiny handful of aristocrats
and priests enjoyed dictatorial control. But the Kanesh documents show that
at least some citizens had enormous power over their own livelihoods, achieving
wealth and power through their own entrepreneurial endeavors.
The details of daily life are amazing, but another scholar, Gojko Barjamovic,
of Harvard, realized that the archive also offered insight into something
potentially more compelling. Many of the texts enumerate specific business
details: the price of goods purchased and sold, the interest ate on debt,
the costs of transporting goods and the various taxes in the many city-states
that the donkey caravans passed on the long journey from Assur to Kanesh.
Like most people who have studied Kanesh, Barjamovic is an Assyriologist,
an expert in ancient languages and culture. Earlier this year, he joined
some economists, as well as some other Assyriologists and archaeologists,
on a team that analyzed Kanesh's financial statistics. The picture that
emerged of economic life is staggeringly advanced. The traders of Kanesh
used financial tools that were remarkably similar to checks, bonds and joint-stock
companies. They had something like venture-capital firms that created diversified
portfolios of risky trades. And they even had structured financial products:
People would buy outstanding debt, sell it to others and use it as collateral
to finance new businesses. The 30 years for which we have records appear
to have been a time of remarkable financial innovation....
Multipliers: What We Should Have Known
By Paul Krugman
There's a very nice interview * with Olivier Blanchard, who is leaving
the International Monetary Fund, in which among other things Olivier says
the right thing about changing one's mind:
"With respect to outside, the issue I have been struck by is how to indicate
a change of views without triggering headlines of 'mistakes,' 'Fund incompetence,'
and so on. Here, I am thinking of fiscal multipliers. The underestimation
of the drag on output from fiscal consolidation was not a 'mistake' in the
way people think of mistakes, e.g. mixing up two cells in an excel sheet.
It was based on a substantial amount of prior evidence, but evidence which
turned out to be misleading in an environment where interest rates are close
to zero and monetary policy cannot offset the negative effects of budget
cuts. We got a lot of flak for admitting the underestimation, and I suspect
we shall continue to get more flak in the future. But, at the same time,
I believe that we, the Fund, substantially increased our credibility, and
used better assumptions later on. It was painful, but it was useful."
Indeed. There are a lot of people out there whose idea of a substantive
argument is "you used to say X, now you say Y" - never mind the reasons
why you changed your view, and whether it was right to do so.It's important
not to fall into the trap of being afraid to let new evidence or analysis
speak.
One thing I would say, however, is that on this particular issue the
Fund should have known better. Olivier says that the evidence "turned out
to be misleading in an environment where interest rates are close to zero
and monetary policy cannot offset the negative effects of budget cuts",
but didn't we know that? I certainly did. **
And let me also beat one of my favorite drums: the prediction that multipliers
would be much larger in a liquidity trap came out of IS-LMish macro (or,
to be fair, New Keynesian models) and has been overwhelmingly confirmed
by experience. So this was yet another victory for Keynesian analysis, the
success story nobody will believe.
Barry Eichengreen and Kevin O'Rourke have lately been scoring a series
of research coups, based on the combination of historical perspective and
a global view. Most famously, they showed that on a global basis the first
year of the current crisis was every bit as severe * as the first year of
the Great Depression.
Now they and collaborators have a new piece on policy effects, ** especially
fiscal multipliers.
The background here is that there are two problems with estimating multipliers
relevant to our current situation. First, you need to look at what happens
under liquidity-trap conditions - and except in Japan,these haven't prevailed
anywhere since the 1930s. The second is that in the United States, fiscal
policy was never forceful enough to provide a useful natural experiment.
We didn't have a really big fiscal expansion until World War II; and WWII
isn't a good experiment because the surge in defense spending was accompanied
by government policies that suppressed private demand, such as rationing
and restrictions on investment. (I really, really don't understand why this
point has been so hard to get across.)
What E&R do here is use a broad international cross-section to overcome
this problem. This works because a number of countries had major military
buildups during the 1930s - fiscal expansions that can be regarded as exogenous
to the economic situation, since they were
"driven above all by Hitler's rearmament programmes and other nations'
efforts to match the Nazis in this sphere, and by one-off events like Italy's
war in Abyssinia."
What do E&R find? Initial fiscal multipliers of 2 or more, although they
shrink over time. Yes, fiscal expansion is expansionary.
So how does the decade of the 1980s end up being perceived as a defeat
for Keynesians? To see it that way you have to systematically misrepresent
both what happened to the economy and what people like Tobin were saying
at the time. In reality, Tobinesque economics looks very good in the light
of events.
In economics, the Phillips curve is a historical inverse relationship
between rates of unemployment and corresponding rates of inflation that
result in an economy. Stated simply, decreased unemployment, (i.e. increased
levels of employment) in an economy will correlate with higher rates of
inflation.
The current
turmoil within Republican Party is connected with shirking of middle class by neoliberalism.
So peons are now less inclined to support top 0.1%.
Notable quotes:
"... Trump is a billionaire, but his base of support rests among the people once identified by the sociologist Donald Warren as "middle American radicals." Nearly 40 years ago, Warren's idea was adapted by the hard-right political thinker Sam Francis as the basis for paleoconservatism-a conservatism very unlike that of the postwar conservative movement, one that would champion the class interests and cultural attitudes of middle- and lower-income whites. ..."
"... the Democratic Leadership Council, the policy group that paved the way for Bill Clinton's nomination, was founded in 1985 precisely to move the Democratic Party toward "market-based solutions. ..."
"... That economic populism should find a foothold in both parties after the Great Recession and eight years of lagging prosperity under Barack Obama is not entirely surprising. What is more remarkable is the weakness of the bipartisan establishment, whose conventional wisdom is no longer meekly accepted by the rank and file of either party. Every Republican except Trump has tried, to one degree or another, to present himself as a champion of conservative orthodoxy. But that orthodoxy no longer commands the loyalty of a sufficient number of voters to preclude a phenomenon like Trump. Nor does DLC-style neoliberalism appear to be the consensus among Democrats any longer. ..."
"... A void is opening in American politics, and Trump and Sanders are only the first to try to fill it. Neither of them may succeed. Yet it is hard to see any source of renewal for the crumbling establishment they are fighting to replace. ..."
"... "At times like these, it is important to know what to conserve, which is not a label or ideology, but a healthy and humane republic. " ..."
"... There are several holes in the 2016 is ending the Neoliberal changes: ..."
"... Sanders road to the nomination is limited and HRC is taking 65 – 70% next week. Sanders had a good run but the Democratics winnowed down to two candidates in October. ..."
"... Finally, isn't the neoliberalism built on the changes made in the Reagan Revolution? ..."
"... I don't see as strong of a break from orthodoxy in the Democrat party. Hillary will win the nomination and will validate within the Democrat party the ideology of spreading the democracy gospel around the world through force, and the domestic policy of open borders for future Democrat voters. Its less certain that she will win the general election. ..."
"... To save the republic and constitutional government, these wars in the Middle East and elsewhere must be ended, we must get out of that region, and the government must be made to perform the basic duty of securing our own borders and finding and expelling those here illegally. ..."
"... A government perpetually at war is a danger to the republic. It has squandered our money and blood in foreign adventures half way around the world and undermined our liberties and dignity here at home while shirking its own basic duty. ..."
"... The source of all of this republic's woes is an absence of competent, responsible leadership. Neither of the 2 government parties has come close to providing this at the national level. ..."
"... One difference between Trump an Sanders is that The Democrat Washington Establishment is beginning to show Sanders and his supporters the door, where The GOP Washington Establishment is beginning to be shown the door by Trump and his supporters. ..."
"... The Cubano Twins, Tweedledum and Tweedledee appear to be a pair of Neoconservative Big Money Donor Financed Bookends. ..."
"... Occupy is dead, Sanders is dying, and the Democrats will soon be a wholly owned subsidiary of Clinton Inc. ..."
"... I'm sorry folks. Reaganomics is the era we may see coming to an end – perhaps. And what did Bush Senior call it?: 'Voodoo Economics.' ..."
"... But Reagan succeeded in creating massive deficits and building up a military that was then primed for war. He was absolutely counter to Dwight Eisenhower in almost every respect (who was arguably the last Great Republican President). ..."
"... The rise of Wall Street and unregulated finance also took place under Reagan's watch. Declining investment in infrastructure. The power of lobbyists became massive in the 80s after being relatively tame prior. This all set the stage. ..."
"... That economic populism should find a foothold in both parties after the Great Recession and eight years of lagging prosperity under Barack Obama is not entirely surprising. ..."
"... "Every Republican except Trump has tried, to one degree or another, to present himself as a champion of conservative orthodoxy." ..."
"... I am not inclined to give the "Tea Party much credit. They have been part of the very problem. ..."
"... Sadly, I think it is accurate that blacks have come to the rescue of Sec. Clinton. It is sad, but it is understandable. ..."
"... Pres. Reagan has been saddled with the term "Reaganonmics". When in fact, it never existed as designed and as result was never fully implemented. Reality got in the way and as such subverted a good deal of the intent. It is incorrect to posit the model as top down. The model is as old as the country – keep money in people's hands and it will flow and redistribute throughout the country. There's just no incentives created for those with the most to reinvest in their community the US. ..."
"... I think the observations concerning how the financial industry have been totally unaccountable to the law, best practices and basic math are spot on. I embrace WS, but they cannot become so unmoored from the country that has bestowed luxurious benefits (loopholes) as to operate outside that frame without consequence. I am unsure of the monetary efficacy that investing in investing. If one is going bandy about "law and order" then to have any genuine legs – it's an across the board application. ..."
This year is shaping up to be the most unconventional moment in American politics
in a generation.
A race that mere months ago seemed to promise yet another Bush vs. another
Clinton has so far given us instead the populist insurgencies of Bernie Sanders
and Donald Trump. Whether or not either of them gets his party's nomination,
the neoliberal consensus of the past two decades seems about to shatter. Free
trade, immigration, waging war for democracy, and even the relative merits of
capitalism and "democratic socialism" have all come into question. Perhaps more
fundamentally, so has the right of Clintons and Bushes-and those like them-to
rule.
Trump is a billionaire, but his base of support rests among the people
once identified by the sociologist Donald Warren as "middle American radicals."
Nearly 40 years ago, Warren's idea was adapted by the hard-right political thinker
Sam Francis as the basis for paleoconservatism-a conservatism very unlike that
of the postwar conservative movement, one that would champion the class interests
and cultural attitudes of middle- and lower-income whites. The Pat Buchanan
presidential campaigns of 1992 and 1996 put Francis's ideas to the test. They
fell short of propelling Buchanan to the GOP nomination, and by the end of the
1990s there was nary a trace of paleo ideology to be found among conservatives
or Republicans. The return of the Bush family to power in 2000 seemed to confirm
that nothing had changed after a decade of skirmishes.
Now suddenly there's Trump. And on the left, there's Sanders, a throwback
to a time when progressives embraced the socialist label. That had fallen out
of fashion even before the end of the Cold War-indeed, the Democratic Leadership
Council, the policy group that paved the way for Bill Clinton's nomination,
was founded in 1985 precisely to move the Democratic Party toward "market-based
solutions."
That economic populism should find a foothold in both parties after the
Great Recession and eight years of lagging prosperity under Barack Obama is
not entirely surprising. What is more remarkable is the weakness of the bipartisan
establishment, whose conventional wisdom is no longer meekly accepted by the
rank and file of either party. Every Republican except Trump has tried, to one
degree or another, to present himself as a champion of conservative orthodoxy.
But that orthodoxy no longer commands the loyalty of a sufficient number of
voters to preclude a phenomenon like Trump. Nor does DLC-style neoliberalism
appear to be the consensus among Democrats any longer.
A void is opening in American politics, and Trump and Sanders are only
the first to try to fill it. Neither of them may succeed. Yet it is hard to
see any source of renewal for the crumbling establishment they are fighting
to replace. Just as the end of the Cold War marked the passing of an era,
and partially or wholly transformed the left and right alike, so another era
is drawing to a close now, with further political mutations to come. Trump and
Sanders need not be the future, but what Bush and Clinton represent is already
past-no matter who wins in November.
Conservatives of Burkean temperament view all of this warily. There is an
opportunity here to replace stale ideologies with a prudence that is ultimately
more principled than any mere formula can be. But there is also the risk that
the devil we know is only making way for another we don't. At times like these,
it is important to know what to conserve, which is not a label or ideology,
but a healthy and humane republic.
"At times like these, it is important to know what to conserve,
which is not a label or ideology, but a healthy and humane republic.
"
Amen.
My people have been here for hundreds of years, and I love my country
with a depth of feeling that is difficult to convey. Our hard-pressed republic
is our most precious possession, and it must be defended and shepherded
through the coming peril. That will require wisdom, strength, and courage,
and all the little platoons.
will require wisdom, strength, and courage, and all the little platoons.
"At times like these, it is important to know what to conserve …."
I think a lot of thoughtful Americans know what to conserve: the constitution.
With the possible exception of the Second Amendment, the constitution has
been virtually torched in its entirety. I just have to shake my head when
I listen to the debate over whether or not Apple should be required by law
to write a program to destroy the feature on its multi-million dollar product,
the iPhone, for which consumers buy it - security in their private information
and communication. And the Fourth Amendment, be damned.
How comes it that America - of all countries - is having that debate?
Were all those American security agencies always that amoral and I just
didn't notice?
The American constitution is not an instruction manual, it's a statement
of principles - fundamental principles upon which the massive superstructure
of law rests. Torch the constitution and it suddenly becomes easy not to
call to account those leaders who authorize and order torture, those bankers
who bring the world economy to its knees through fraud, those presidents
who commit war crimes through the practice of drone-murdering people because
they are merely suspected of terrorism. And it's just as easy to disenfranchise
voters with impunity by arguing on the basis of a rash of voter fraud that
everyone knows does not exist.
If the country no longer recognizes a constitution upon which laws prohibiting
on pain of punishment these and other crimes against democracy, then what
you've got is a nation of men - barbarians living in a state of nature -
not a nation of laws.
I agree with this editorial, but, as delia ruhe points out, this republic
has not been "healthy and humane" for quite some time. It's time for a national
renewal. I never thought Trump would be the agent of this renewal. There's
plenty to dislike about him, but if he's what it takes to right the ship
and either restore a "healthy and humane" republic or create the conditions
for someone else to do so afterwards, then so be it.
There are several holes in the 2016 is ending the Neoliberal changes:
1) Sanders road to the nomination is limited and HRC is taking 65
– 70% next week. Sanders had a good run but the Democratics winnowed down
to two candidates in October.
2) Why is Trump that much different that Perot? The Perot movement was
minimized by a strong economy and the unemployment rate is getting low in
2016.
3) What if there isn't another Trump? To whip the radical middle took
Trump to pull additional voters, there might not be another in 2020.
4) Is the number of radical middle voters slightly decreasing every election
cycle?
5) Finally, isn't the neoliberalism built on the changes made in
the Reagan Revolution?
I don't see as strong of a break from orthodoxy in the Democrat party.
Hillary will win the nomination and will validate within the Democrat party
the ideology of spreading the democracy gospel around the world through
force, and the domestic policy of open borders for future Democrat voters.
Its less certain that she will win the general election.
Want to solve the political-economy differences between citizens of collectivist
and individualist temperament? Eliminate all tax exemptions secretly written
into the tax code for individuals and organizations (they are identified
by language that applies only to that individual or organization), then
invest the proceeds for five years into a sovereign wealth trust fund that
pays $25,000 per year, adjusted for inflation, to all legal citizens beginning
at age 21 (or pass legislation directing the Federal Reserve to deposit
$10 Trillion dollars directly into the fund-quantitative easing for the
people, if you will).
This money would be used by citizens to cover life-cycle risk to income
from any source: job loss, divorce, illness, transportation and home repairs,
macroeconomic chaos, or anything else life throws as a person. The funds
would be retrievable as a person chooses: yearly, monthly, weekly, or in
a $50,000 lump sum once every three years. In addition, replace all income-based
taxes for individuals and organizations with a .005% tax on all transactions
cleared through the banking system, similar to the automated payments transaction
tax advocated by Wisconsin professor Edgar Feige. This would allow the supply
of products and services to roughly match the increased demand generated
by the basic income guarantee, thereby avoiding or mitigating the business
cycle and inflationary source of current economic problems.
The precise mechanism for this proposal is based on the Alaska Permanent
Fund dividend program, which takes monies from state-owned oil fields and
invests prudently in a diverse portfolio world-wide. In turn, this concept
is based on the "topsy-turvy nationalization" idea proposed by English economist
James E. Meade, who suggested governments purchase a 50% share of all publicly-traded
stocks, then pay a "social dividend" (Social Security for All) out of the
earnings from these investments to all citizens. Professor James A. Yunker
proposed a similar idea in his book Pragmatic Market Socialism, finding
under a general equilibrium analysis that output and equity, as measured
by a utilitarian social welfare function, both increased when income smoothing
was financed by pre-distributed social dividends rather than by increased
taxes.
Under this proposal, both conservatives and liberals would achieve what
they say they desire: non-paternalistic held for people's income fluctuations
for liberals, and real incentives to invest and work for conservatives.
Some might say this mechanism for socializing both risk and reward cannot
be implemented, as human nature suggests that people might not accept a
policy that also benefits rivals. Nonetheless, if we want a political-economic
modus vivendi, here is a solution.
Of course, there would still be problems faced by out society, and "solving"
the economic aspect of our malaise will not by itself generate nirvana.
But give people and organizations real security that does not also support
apathy (i.e., both equity and efficiency, as the economist call it), and
you would go a long way towards making the culture war less harsh (it is
mostly based on economic fears projected onto the "other"). In the socio-political
complex, one must honor humanity as it is , not as we wish, or are comfortable
with in our own lives. Replace neoliberalism with a respect for both tradition
and change.
@delia ruhe & may it be so – I fervently agree with you and the editors.
To save the republic and constitutional government, these wars in
the Middle East and elsewhere must be ended, we must get out of that region,
and the government must be made to perform the basic duty of securing our
own borders and finding and expelling those here illegally.
A government perpetually at war is a danger to the republic. It has
squandered our money and blood in foreign adventures half way around the
world and undermined our liberties and dignity here at home while shirking
its own basic duty.
The source of all of this republic's woes is an absence of competent,
responsible leadership. Neither of the 2 government parties has come close
to providing this at the national level. Everyone knows this, but now
– for the first time in at least 5 decades – people are starting to discuss
it openly. It really is a breath of fresh air.
One difference between Trump an Sanders is that The Democrat Washington
Establishment is beginning to show Sanders and his supporters the door,
where The GOP Washington Establishment is beginning to be shown the door
by Trump and his supporters.
The Cubano Twins, Tweedledum and Tweedledee appear to be a pair of
Neoconservative Big Money Donor Financed Bookends.
"The Democrat Washington Establishment is beginning to show Sanders
and his supporters the door, where The GOP Washington Establishment
is beginning to be shown the door by Trump and his supporters."
That's a problem with which the Democrat base must must come to grips.
Across the great political and cultural gulf that separates us, I salute
those honorable and decent Democrats and liberals who make the attempt.
But it is instructive to consider the very different trajectories of
Occupy Wall Street and the Tea Party. Occupy Wall Street, having ebbed from
front pages and headlines long since, has now virtually disappeared into
Sanders' wickering campaign.
But the Tea Party kept at it. It has been stirring the pot for over six
years now, menacing the establishment, chronically kicking out incumbents
(including disappointing or coopted Tea Party incumbents), and continuing
to drive broad political developments.
Occupy is dead, Sanders is dying, and the Democrats will soon be
a wholly owned subsidiary of Clinton Inc. Rather, it is the widely
ridiculed and derided Tea Party tendency (not to be confused with the various
attempts at cooptation by groups using the name) that proved to be adults
with staying power, real agents of change. The pacts born of deep concern
for the republic made years ago in hearts, homes, conversations among friends
and coworkers, over the Web on sites like this one, is alive and well.
I'm sorry folks. Reaganomics is the era we may see coming to an end
– perhaps. And what did Bush Senior call it?: 'Voodoo Economics.'
The Soviets were not defeated by our military build-up – the fact that
their factories were turning out unusable junk and exploding TVs was what
defeated them. China saw the writing on the wall earlier in 1979.
But Reagan succeeded in creating massive deficits and building up
a military that was then primed for war. He was absolutely counter to Dwight
Eisenhower in almost every respect (who was arguably the last Great Republican
President).
The rise of Wall Street and unregulated finance also took place under
Reagan's watch. Declining investment in infrastructure. The power of lobbyists
became massive in the 80s after being relatively tame prior. This all set
the stage.
We all have confirmation biases (fueled by a personal history) in how
we choose to interpret history and how we bookend things.
The concluding paragraph is excellent. I pray we are not entering even
darker times and that there can be renewal for the American Republic.
"Occupy is dead, Sanders is dying, and the Democrats will soon
be a wholly owned subsidiary of Clinton Inc."
Only because older voters, particularly older black voters keep propping
it up. Not exactly a firm foundation. Sanders margins among young voters
along with the successful political work done by actual political groups
(rather than disruptive groups) like the Working Families Party show who
is going to inherit the Democratic Party.
That economic populism should find a foothold in both parties
after the Great Recession and eight years of lagging prosperity under
Barack Obama is not entirely surprising.
I've long wanted to read the Donald Warren book but it has been out of
print and unavailable at Amazon. If anyone knows of any online bookseller
that has used copies, please tell.
Thanks to @Blas another first on the pages of TAC: the words "Trump"
and "Humane" used in relation to one another.
And thanks to the Tea Party, a Congress that won't pass any sort of populist
reform simply because it might mean shaking hands across the aisle.
@AndyG "And thanks to the Tea Party, a Congress that won't pass any
sort of populist reform simply because it might mean shaking hands across
the aisle."
What a laugh.
"Across the aisle" from the Tea Party congressmen are Democrats who say
"What's mine is mine and what's yours is negotiable. You must not only tolerate
what is repugnant to you, you must accept it or I'll have you arrested.
The Federal judiciary is the engine of democracy. I only enforce laws I
like. Only a fanatic would try to balance or reduce the federal budget.
It's as impossible and absurd as controlling immigration. Wall Street is
just fine as long as it hires lots of Diversity Officers, and the only people
who oppose globalism and the corporations who fill my campaign coffers are
racists and bigots."
As to populist reforms that TP Republicans and Democrat dissidents might
have cooperated on, like reimposition of Glass-Steagel, or laws requiring
vigorous prosecution of Wall Street criminals and Wall Street-owned government
officials, or reining in the NSA, or ending the Middle East wars, the establishments
of both parties have collaborated to crush their efforts. Just ask Rand
Paul (R) and Ron Wyden (D).
Of course the Tea Party base is still fighting back hard. It's engaged
in mortal combat with the GOP establishment. God willing and with perseverence
it may prevail.
And what are those "across the aisle", the congressional Democrats, doing?
Other than politely watching Sanders sputter into oblivion as they prepare
for HRC's coronation? And what is the Democrat base doing other than making
that possible? Most of them aren't even going to the polls …
"Occupy is dead, Sanders is dying, and the Democrats will soon
be a wholly owned subsidiary of Clinton Inc. Rather, it is the widely
ridiculed and derided Tea Party tendency (not to be confused with the
various attempts at cooptation by groups using the name) that proved
to be adults with staying power, real agents of change."
I was heavily involved with the original Zucotti Park Occupy encampment,
doing outreach to unions and the working class. There was quite a bit of
hope for this in the early heady days of Occupy; but in the end, the priorities
of a movement run by and for impoverished and entitled graduate students
won out. Around this time I started to understand that the center of gravity
of real radicalism in this country was on the "right".
"Every Republican except Trump has tried, to one degree or another,
to present himself as a champion of conservative orthodoxy."
If you are having to measure it in degrees of this or ht, then there's
a good chance you don't represent what it is that you partially represent.
In my view conservative is not hodge podge, it's a mechanism or an a priori
vie point by which one approaches most or all of their life.
My guess is that people are not responding o a conservative orthodoxy
because they just don't see one. In my view Sen Cruz and Dr. Caron and even
(CEO) Mrs. Fiorina have the closest ties to a conservative view. Where i
seems to come undone is on the issue of (needlessly) aggressive foreign
policy. Mr. Trump is a conservative now, but his life has not fully reflected
as much.
The traditional conservative
very pro the "common man" Does not oppose wealth, but that is not
a goal in of itself.
does not pretend that that there is not objective realities - there
are facts that matter – Truth is not relative even if opinions, ideas
and tastes are.
prudence to change, why and what it's consequences.
fairness, fair play and undying desire or justice
economic efficiency (not just frugality)
a definitive sense of country and kinsmen – even if he or she thinks
they are less their cup of tea and morality –
a belief in a divine being with whom one is dynamically involved
with – while Christianity is my own preference it need not be the sole
belief that a conservative adhere's to.
I have to comprehend the community benefit for killing children
in the womb, much it's complete undermining of what innocents means.
It makes little practical sense for a community that pushes the choice
of homosexual expression a some kind norm when it adds nothing of community
value beyond individual satisfaction. That a dynamic which is retrograde
to community flourishing should be a national agenda is also incomprehensible
___________________
I am not inclined to give the "Tea Party much credit. They have been
part of the very problem. Though I guess, the shift to another direction
is a positive sign. As I recall the Tea Party was the last to give up the
ghost that the invasion of Iraq was worthwhile and certainly a leap from
conservative thought and practice, in almost every respect.
It dawned them rather belated that the PA and HMS was going to come back
to haunt them. And yet for those who are Christian , what they should have
known is that in the end, it is just such programs that will be used to
round them and send them packing - yet, they have been all for extreme forms
of government when it suited them. Now that democrats are using those against
their interests, they are suddenly awake - suddenly they are about the Constitution.
Yet they have been all to happy to abandon the same when it comes those
who come into contact with police. When Republicans should have embraced
civil protections, they shunned it as though such concerns were unconstitutional
the powers that began turned their sights on them. Hard to claim some populist
mandate unless the so called populism benefits your interests alone. I am
dubious that this is some kind middle and lower class uprising in the Republican
party - the support for Mr. Trump appears to be much broader.
_________________
Sadly, I think it is accurate that blacks have come to the rescue
of Sec. Clinton. It is sad, but it is understandable. I was walking
on campus yesterday. And having lived in these community for some time,
it struck me as deeply depressing that there were large groups of Asians
and Hispanics groups and it was starkly distressing to realize that that
for all of this country's embrace of diversity, blacks remain non existent
on campus. Considering that education is the now the bastion of democratic
and liberal life, blacks seem very ill served by the people they support.
I doubt the Rose Law firm is going to abandon overseeing contracts to support
cheap labor which will most impact negatively the lives of no few blacks.
But if you don't have th gumption to fight, the democratic broad rode is
a sensible choice. Fear of losing what you don't have is a liberal/democratic
tote bag.
I remain hopeful that one day, blacks will wake up and reject the liberal
bait and switch spoon fed them.
_________________________
Unfortunately,
Pres. Reagan has been saddled with the term "Reaganonmics". When
in fact, it never existed as designed and as result was never fully implemented.
Reality got in the way and as such subverted a good deal of the intent.
It is incorrect to posit the model as top down. The model is as old as the
country – keep money in people's hands and it will flow and redistribute
throughout the country. There's just no incentives created for those with
the most to reinvest in their community the US.
_____________
I think the observations concerning how the financial industry have
been totally unaccountable to the law, best practices and basic math are
spot on. I embrace WS, but they cannot become so unmoored from the country
that has bestowed luxurious benefits (loopholes) as to operate outside that
frame without consequence. I am unsure of the monetary efficacy that investing
in investing. If one is going bandy about "law and order" then to have any
genuine legs – it's an across the board application.
"... The film, directed by Meera Menon and written by Amy Fox , is as ruthless and hypnotic a study of a cutthroat species as the documentary I saw about the carnivorous fish. Maybe it is even more so, as it is a story of alpha females, as well as males. ..."
"... a movie implicitly critical of Wall Street and explicitly damning of hedge funds. ..."
Not long ago, I saw a documentary about sharks in the wild. The male bites the frisky female
on her flank, both to show his interest and to subdue her as he attempts penetration. Initially
the female resists; one was filmed wriggling free of a series of circling males until she becomes
exhausted and an alpha male has his way with her.
According to the narrator, shark reproduction favors the most powerful males and strongest
females. Over time, the female evolves tougher skin to endure, or perhaps elude, the male love
bite.
If that's what happens in the open sea, what must it be like in tighter quarters?
"Equity," an intelligent and enthralling thriller set in a shark tank of New York investment
bankers, hedge-fund executives and tech entrepreneurs, imagines just that.
The film, directed by
Meera Menon and written by Amy Fox, is
as ruthless and hypnotic a study of a cutthroat species as the documentary I saw about the
carnivorous fish. Maybe it is even more so, as it is a story of alpha females, as well as males.
This female-driven production about driven females stars Anna Gunn ("Breaking Bad") as banker
Naomi Bishop, the firm rainmaker lately experiencing a drought. Sarah Megan Thomas is Erin
Manning, her assistant, and Alysia Reiner ("Orange is the New Black") plays Samantha, an
assistant U.S. attorney investigating Gunn's firm. That storyline provides one of the plot's
conflicts. Another is that banker and assistant each want promotions and are denied.
At the outset, it's hard to like Naomi. She announces herself as the female Gordon Gekko (the
character Michael Douglas played in "Wall Street"). While he exhorted that "greed is good," she
forthrightly admits that she "likes money." She likes the numbers, likes the adrenaline rush of
risking it on a new venture and, most of all, she likes the power it represents.
She makes few concessions to femininity and none to glamor. Her body is womanly, rather than
girlish, her clothes purely functional. Naomi lets off steam by slipping into boxing gloves and
taking the stuffing out of the punching bag. She is in control of her emotions.
At the outset, it's easy to like Erin and Samantha, both model-slim and flirty (even though
both are married). From Erin's perspective, Naomi is the boss from hell. From Samantha's, the
banker is insufficiently idealistic. "Equity" asks us at first to align with the younger women
because, well, they look like the sexy creatures of most Hollywood films. But as it continues,
the movie asks us to question our first impressions. It's a film about not making snap judgments,
in business, in love or in life.
Is there a difference when women are behind both the camera and the story? In this case, yes
and no. It's no surprise that this movie features a trio of three-dimensional women at its
center. For the most part, though, its male characters are generic and cardboard-flat. There's
entitled hedge-fund guy Michael (James Purefoy), Naomi's mentor and boyfriend, all about the
money and the game. There's the entitled tech entrepreneur Ed (Samuel Roukin), who is all about
the money and the sex. The one good guy is a warm and supportive U.S. attorney who steers
Samantha toward remaining in her ethical lane. Here is a movie implicitly critical of Wall Street
and explicitly damning of hedge funds.
Despite the one-dimensional men, I was surprised by the film's deceptions and detours. The
greatest asset of "Equity" is Gunn, whose face is a Kabuki mask and whose skin is impenetrable as
that of a female shark. While watching her I thought once or twice that hers was a one-note
performance. But by movie's end, I realized it was a symphony of invincibility and vulnerability.
"... The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession. ..."
"... He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace ..."
"... Mundell was also the driving force for Reagan's supply side economics. ..."
The euro would really do its work when crises hit, Mundell explained.
Removing a government's control over currency would prevent nasty little
elected officials from using Keynesian monetary and fiscal juice to
pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said.
"[And] without fiscal policy, the only way nations can keep jobs is
by the competitive reduction of rules on business."
He cited labor laws, environmental regulations and, of course,
taxes. All would be flushed away by the euro. Democracy would not be
allowed to interfere with the marketplace
Mundell was also the driving force for Reagan's supply side economics.
"... At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country-the 99.99 percent-is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent. ..."
"... The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren't only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they'd be able to afford his Model Ts. ..."
Memo: From Nick Hanauer To: My Fellow Zillionaires
You probably don't know me, but like you I am one of those .01%ers, a proud
and unapologetic capitalist. I have founded, co-founded and funded more than
30 companies across a range of industries-from itsy-bitsy ones like the night
club I started in my 20s to giant ones like Amazon.com, for which I was the
first nonfamily investor. Then I founded aQuantive, an Internet advertising
company that was
sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own
a bank. I tell you all this to demonstrate that in many ways I'm no different
from you. Like you, I have a broad perspective on business and capitalism. And
also like you, I have been rewarded obscenely for my success, with a life that
the other 99.99 percent of Americans can't even imagine. Multiple homes, my
own plane, etc., etc. You know what I'm talking about. In 1992, I was selling
pillows made by my family's business, Pacific Coast Feather Co., to retail stores
across the country, and the Internet was a clunky novelty to which one hooked
up with a loud squawk at 300 baud. But I saw pretty quickly, even back then,
that many of my customers, the big department store chains, were already doomed.
I knew that as soon as the Internet became fast and trustworthy enough-and that
time wasn't far off-people were going to shop online like crazy. Goodbye, Caldor.
And Filene's. And Borders. And on and on.
Realizing that, seeing over the horizon a little faster than the next guy,
was the strategic part of my success. The lucky part was that I had two friends,
both immensely talented, who also saw a lot of potential in the web. One was
a guy you've probably never heard of named Jeff Tauber, and the other was a
fellow named Jeff Bezos. I was so excited by the potential of the web that I
told both Jeffs that I wanted to invest in whatever they launched, big time.
It just happened that the second Jeff-Bezos-called me back first to take up
my investment offer. So I helped underwrite his tiny start-up bookseller. The
other Jeff started a web department store called Cybershop, but at a time when
trust in Internet sales was still low, it was too early for his high-end online
idea; people just weren't yet ready to buy expensive goods without personally
checking them out (unlike a basic commodity like books, which don't vary in
quality-Bezos' great insight). Cybershop didn't make it, just another dot-com
bust. Amazon did somewhat better. Now I own a very large yacht.
But let's speak frankly to each other. I'm not the smartest guy you've ever
met, or the hardest-working. I was a mediocre student. I'm not technical at
all-I can't write a word of code. What sets me apart, I think, is a tolerance
for risk and an intuition about what will happen in the future. Seeing where
things are headed is the essence of entrepreneurship. And what do I see in our
future now?
I see pitchforks.
At the same time that people like you and me are thriving beyond the
dreams of any plutocrats in history, the rest of the country-the 99.99 percent-is
lagging far behind. The divide between the haves and have-nots is getting worse
really, really fast. In 1980, the top 1 percent
controlled about 8 percent of U.S. national income. The bottom 50 percent
shared about 18 percent. Today the top 1 percent share about 20 percent;
the bottom 50 percent,
just 12 percent.
But the problem isn't that we have inequality. Some inequality is intrinsic
to any high-functioning capitalist economy. The problem is that inequality is
at historically high levels and getting worse every day. Our country is rapidly
becoming less a capitalist society and more a feudal society. Unless our policies
change dramatically, the middle class will disappear, and we will be back to
late 18th-century France. Before the revolution.
Memo: From Nick Hanauer To: My Fellow Zillionaires
You probably don't know me, but like you I am one of those .01%ers, a proud
and unapologetic capitalist. I have founded, co-founded and funded more than
30 companies across a range of industries-from itsy-bitsy ones like the night
club I started in my 20s to giant ones like Amazon.com, for which I was the
first nonfamily investor. Then I founded aQuantive, an Internet advertising
company that was
sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own
a bank. I tell you all this to demonstrate that in many ways I'm no different
from you. Like you, I have a broad perspective on business and capitalism. And
also like you, I have been rewarded obscenely for my success, with a life that
the other 99.99 percent of Americans can't even imagine. Multiple homes, my
own plane, etc., etc. You know what I'm talking about. In 1992, I was selling
pillows made by my family's business, Pacific Coast Feather Co., to retail stores
across the country, and the Internet was a clunky novelty to which one hooked
up with a loud squawk at 300 baud. But I saw pretty quickly, even back then,
that many of my customers, the big department store chains, were already doomed.
I knew that as soon as the Internet became fast and trustworthy enough-and that
time wasn't far off-people were going to shop online like crazy. Goodbye, Caldor.
And Filene's. And Borders. And on and on.
Realizing that, seeing over the horizon a little faster than the next guy,
was the strategic part of my success. The lucky part was that I had two friends,
both immensely talented, who also saw a lot of potential in the web. One was
a guy you've probably never heard of named Jeff Tauber, and the other was a
fellow named Jeff Bezos. I was so excited by the potential of the web that I
told both Jeffs that I wanted to invest in whatever they launched, big time.
It just happened that the second Jeff-Bezos-called me back first to take up
my investment offer. So I helped underwrite his tiny start-up bookseller. The
other Jeff started a web department store called Cybershop, but at a time when
trust in Internet sales was still low, it was too early for his high-end online
idea; people just weren't yet ready to buy expensive goods without personally
checking them out (unlike a basic commodity like books, which don't vary in
quality-Bezos' great insight). Cybershop didn't make it, just another dot-com
bust. Amazon did somewhat better. Now I own a very large yacht.
But let's speak frankly to each other. I'm not the smartest guy you've ever
met, or the hardest-working. I was a mediocre student. I'm not technical at
all-I can't write a word of code. What sets me apart, I think, is a tolerance
for risk and an intuition about what will happen in the future. Seeing where
things are headed is the essence of entrepreneurship. And what do I see in our
future now?
I see pitchforks.
At the same time that people like you and me are thriving beyond the dreams
of any plutocrats in history, the rest of the country-the 99.99 percent-is lagging
far behind. The divide between the haves and have-nots is getting worse really,
really fast. In 1980, the top 1 percent
controlled about 8 percent of U.S. national income. The bottom 50 percent
shared about 18 percent. Today the top 1 percent share about 20 percent;
the bottom 50 percent,
just 12 percent.
But the problem isn't that we have inequality. Some inequality is intrinsic
to any high-functioning capitalist economy. The problem is that inequality is
at historically high levels and getting worse every day. Our country is rapidly
becoming less a capitalist society and more a feudal society. Unless our policies
change dramatically, the middle class will disappear, and we will be back to
late 18th-century France. Before the revolution.
And so I have a message for my fellow filthy rich, for all of us who live
in our gated bubble worlds: Wake up, people. It won't last.
If we don't do something to fix the glaring inequities in this economy, the
pitchforks are going to come for us. No society can sustain this kind of rising
inequality. In fact, there is no example in human history where wealth accumulated
like this and the pitchforks didn't eventually come out. You show me a highly
unequal society, and I will show you a police state. Or an uprising. There are
no counterexamples. None. It's not if, it's when.
Many of us think we're special because "this is America." We think we're
immune to the same forces that started the Arab Spring-or the French and Russian
revolutions, for that matter. I know you fellow .01%ers tend to dismiss this
kind of argument; I've had many of you tell me to my face I'm completely bonkers.
And yes, I know there are many of you who are convinced that because you saw
a poor kid with an iPhone that one time, inequality is a fiction.
Here's what I say to you: You're living in a dream world. What everyone wants
to believe is that when things reach a tipping point and go from being merely
crappy for the masses to dangerous and socially destabilizing, that we're somehow
going to know about that shift ahead of time. Any student of history knows that's
not the way it happens. Revolutions, like bankruptcies, come gradually, and
then suddenly. One day, somebody sets himself on fire, then thousands of people
are in the streets, and before you know it, the country is burning. And then
there's no time for us to get to the airport and jump on our Gulfstream Vs and
fly to New Zealand. That's the way it always happens. If inequality keeps rising
as it has been, eventually it will happen. We will not be able to predict when,
and it will be terrible-for everybody. But especially for us.
***
The most ironic thing about rising inequality is how completely unnecessary
and self-defeating it is. If we do something about it, if we adjust our policies
in the way that, say, Franklin D. Roosevelt did during the Great Depression-so
that we help the 99 percent and preempt the revolutionaries and crazies, the
ones with the pitchforks-that will be the best thing possible for us rich folks,
too. It's not just that we'll escape with our lives; it's that we'll most certainly
get even richer.
The model for us rich guys here should be Henry Ford, who realized that
all his autoworkers in Michigan weren't only cheap labor to be exploited; they
were consumers, too. Ford figured that if he
raised their wages, to a then-exorbitant $5 a day, they'd be able to afford
his Model Ts.
What a great idea. My suggestion to you is: Let's do it all over again. We've
got to try something. These idiotic trickle-down policies are destroying my
customer base. And yours too.
It's when I realized this that I decided I had to leave my insulated world
of the super-rich and get involved in politics. Not directly, by running for
office or becoming one of the big-money billionaires who back candidates in
an election. Instead, I wanted to try to change the conversation with ideas-by
advancing what my co-author, Eric Liu, and I call "middle-out" economics. It's
the long-overdue rebuttal to the trickle-down economics worldview that has become
economic orthodoxy across party lines-and has so screwed the American middle
class and our economy generally. Middle-out economics rejects the old misconception
that an economy is a perfectly efficient, mechanistic system and embraces the
much more accurate idea of an economy as a complex ecosystem made up of real
people who are dependent on one another.
Which is why the fundamental law of capitalism must be: If workers have more
money, businesses have more customers. Which makes middle-class consumers, not
rich businesspeople like us, the true job creators. Which means a thriving middle
class is the source of American prosperity, not a consequence of it. The middle
class creates us rich people, not the other way around.
On June 19, 2013, Bloomberg published an
article I wrote called "The Capitalist's Case for a $15 Minimum Wage."
Forbes
labeled it "Nick Hanauer's near insane" proposal. And yet, just weeks after
it was published, my friend David Rolf, a Service Employees International Union
organizer, roused fast-food workers to go on strike around the country for a
$15 living wage. Nearly a year later, the city of Seattle
passed a $15 minimum wage. And just 350 days after my article was published,
Seattle Mayor Ed Murray signed that ordinance into law. How could this happen,
you ask?
It happened because we reminded the masses that they are the source of growth
and prosperity, not us rich guys. We reminded them that when workers have more
money, businesses have more customers-and need more employees. We reminded them
that if businesses paid workers a living wage rather than poverty wages, taxpayers
wouldn't have to make up the difference. And when we got done, 74 percent of
likely Seattle voters in a
recent poll agreed that a $15 minimum wage was a swell idea.
The standard response in the minimum-wage debate, made by Republicans and
their business backers and plenty of Democrats as well, is that raising the
minimum wage costs jobs. Businesses will have to lay off workers. This argument
reflects the orthodox economics that most people had in college. If you took
Econ 101, then you literally were taught that if wages go up, employment must
go down. The law of supply and demand and all that. That's why you've got John
Boehner and other Republicans in Congress insisting that if you price employment
higher, you get less of it. Really?
The thing about us businesspeople is that we love our customers rich
and our employees poor.
Because here's an odd thing. During the past three decades, compensation
for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker
pay ratio has increased 1,000 percent, and that is not a typo. CEOs
used to earn 30 times the median wage; now they rake in 500 times. Yet no
company I know of has eliminated its senior managers, or outsourced them to
China or automated their jobs. Instead, we now have more CEOs and senior executives
than ever before. So, too, for financial services workers and technology workers.
These folks earn multiples of the median wage, yet we somehow have more and
more of them.
The thing about us businesspeople is that we love our customers rich and
our employees poor. So for as long as there has been capitalism, capitalists
have said the same thing about any effort to raise wages. We've had 75 years
of complaints from big business-when the minimum wage was instituted, when women
had to be paid equitable amounts, when child labor laws were created. Every
time the capitalists said exactly the same thing in the same way: We're all
going to go bankrupt. I'll have to close. I'll have to lay everyone off. It
hasn't happened. In fact, the data show that when workers are better treated,
business gets better. The naysayers are just wrong.
Most of you probably think that the $15 minimum wage in Seattle is an insane
departure from rational policy that puts our economy at great risk. But in Seattle,
our current minimum wage of $9.32 is already nearly 30 percent higher than the
federal minimum wage. And has it ruined our economy yet? Well, trickle-downers,
look at the data here: The two cities in the nation with the highest rate of
job growth by small businesses
are
San Francisco and Seattle. Guess which cities have the highest minimum wage?
San Francisco and Seattle. The
fastest-growing big city in America? Seattle. Fifteen dollars isn't a risky
untried policy for us. It's doubling down on the strategy that's already allowing
our city to kick your city's ass.
It makes perfect sense if you think about it: If a worker earns $7.25 an
hour, which is
now
the national minimum wage, what proportion of that person's income do you
think ends up in the cash registers of local small businesses? Hardly any. That
person is paying rent, ideally going out to get subsistence groceries at Safeway,
and, if really lucky, has a bus pass. But she's not going out to eat at restaurants.
Not browsing for new clothes. Not buying flowers on Mother's Day.
Is this issue more complicated than I'm making out? Of course. Are there
many factors at play determining the dynamics of employment? Yup. But please,
please stop insisting that if we pay low-wage workers more, unemployment will
skyrocket and it will destroy the economy. It's utter nonsense. The most insidious
thing about trickle-down economics isn't believing that if the rich get richer,
it's good for the economy. It's believing that if the poor get richer, it's
bad for the economy.
I know that virtually all of you feel that compelling our businesses to pay
workers more is somehow unfair, or is too much government interference. Most
of you think that we should just let good examples like Costco or Gap lead the
way. Or let the market set the price. But here's the thing. When those who set
bad examples, like the owners of Wal-Mart or McDonald's, pay their workers close
to the minimum wage, what they're really saying is that they'd pay even less
if it weren't illegal. (Thankfully both companies have recently said they would
not oppose a hike in the minimum wage.) In any large group, some people absolutely
will not do the right thing. That's why our economy can only be safe and effective
if it is governed by the same kinds of rules as, say, the transportation system,
with its speed limits and stop signs.
Wal-Mart is our nation's largest employer with some 1.4 million employees
in the United States and more than
$25 billion in pre-tax profit. So why are Wal-Mart employees the largest
group of Medicaid recipients in many states? Wal-Mart could, say, pay each of
its 1 million lowest-paid workers an extra $10,000 per year, raise them all
out of poverty and enable them to, of all things, afford to shop at Wal-Mart.
Not only would this also save us all the expense of the food stamps, Medicaid
and rent assistance that they currently require, but Wal-Mart would still earn
more than $15 billion pre-tax per year. Wal-Mart won't (and shouldn't) volunteer
to pay its workers more than their competitors. In order for us to have an economy
that works for everyone, we should compel all retailers to pay living wages-not
just ask politely.
We rich people have been falsely persuaded by our schooling and the affirmation
of society, and have convinced ourselves, that we are the main job creators.
It's simply not true. There can never be enough super-rich Americans to power
a great economy. I earn about 1,000 times the median American annually, but
I don't buy thousands of times more stuff. My family purchased three cars over
the past few years, not 3,000. I buy a few pairs of pants and a few shirts a
year, just like most American men. I bought two pairs of the fancy wool pants
I am wearing as I write, what my partner Mike calls my "manager pants." I guess
I could have bought 1,000 pairs. But why would I? Instead, I sock my extra money
away in savings, where it doesn't do the country much good.
So forget all that rhetoric about how America is great because of people
like you and me and Steve Jobs. You know the truth even if you won't admit it:
If any of us had been born in Somalia or the Congo, all we'd be is some guy
standing barefoot next to a dirt road selling fruit. It's not that Somalia and
Congo don't have good entrepreneurs. It's just that the best ones are selling
their wares off crates by the side of the road because that's all their customers
can afford.
So why not talk about a different kind of New Deal for the American people,
one that could appeal to the right as well as left-to libertarians as well as
liberals? First, I'd ask my Republican friends to get real about reducing the
size of government. Yes, yes and yes, you guys are all correct: The federal
government is too big in some ways. But no way can you cut government substantially,
not the way things are now. Ronald Reagan and George W. Bush each had eight
years to do it, and they failed miserably.
Republicans and Democrats in Congress can't shrink government with wishful
thinking. The only way to slash government for real is to go back to basic economic
principles: You have to reduce the demand for government. If people are getting
$15 an hour or more, they don't need food stamps. They don't need rent assistance.
They don't need you and me to pay for their medical care. If the consumer middle
class is back, buying and shopping, then it stands to reason you won't need
as large a welfare state. And at the same time, revenues from payroll and sales
taxes would rise, reducing the deficit.
This is, in other words, an economic approach that can unite left and right.
Perhaps that's one reason the right is beginning, inexorably, to wake up to
this reality as well. Even Republicans as diverse as Mitt Romney and Rick Santorum
recently came out in favor of raising the minimum wage, in defiance of the Republicans
in Congress.
***
One thing we can agree on-I'm sure of this-is that the change isn't
going to start in Washington. Thinking is stale, arguments even more so. On
both sides.
But the way I see it, that's all right. Most major social movements have
seen their earliest victories at the state and municipal levels. The fight over
the eight-hour workday, which ended in Washington, D.C., in 1938, began in places
like Illinois and Massachusetts in the late 1800s. The movement for social security
began in California in the 1930s. Even the Affordable Health Care Act-Obamacare-would
have been hard to imagine without Mitt Romney's model in Massachusetts to lead
the way.
Sadly, no Republicans and few Democrats get this. President Obama doesn't
seem to either, though his heart is in the right place. In his State of the
Union speech this year, he mentioned the need for a higher minimum wage but
failed to make the case that less inequality and a renewed middle class would
promote faster economic growth. Instead, the arguments we hear from most Democrats
are the same old social-justice claims. The only reason to help workers is because
we feel sorry for them. These fairness arguments feed right into every stereotype
of Obama and the Democrats as bleeding hearts. Republicans say growth. Democrats
say fairness-and lose every time.
But just because the two parties in Washington haven't figured it out yet
doesn't mean we rich folks can just keep going. The conversation is already
changing, even if the billionaires aren't onto it. I know what you think: You
think that Occupy Wall Street and all the other capitalism-is-the-problem protesters
disappeared without a trace. But that's not true. Of course, it's hard to get
people to sleep in a park in the cause of social justice. But the protests we
had in the wake of the 2008 financial crisis really did help to change the debate
in this country from death panels and debt ceilings to inequality.
It's just that so many of you plutocrats didn't get the message.
Dear 1%ers, many of our fellow citizens are starting to believe that capitalism
itself is the problem. I disagree, and I'm sure you do too. Capitalism, when
well managed, is the greatest social technology ever invented to create prosperity
in human societies. But capitalism left unchecked tends toward concentration
and collapse. It can be managed either to benefit the few in the near term or
the many in the long term. The work of democracies is to bend it to the latter.
That is why investments in the middle class work. And tax breaks for rich people
like us don't. Balancing the power of workers and billionaires by raising the
minimum wage isn't bad for capitalism. It's an indispensable tool smart capitalists
use to make capitalism stable and sustainable. And no one has a bigger stake
in that than zillionaires like us.
The oldest and most important conflict in human societies is the battle over
the concentration of wealth and power. The folks like us at the top have always
told those at the bottom that our respective positions are righteous and good
for all. Historically, we called that divine right. Today we have trickle-down
economics.
What nonsense this is. Am I really such a superior person? Do I belong at
the center of the moral as well as economic universe? Do you?
My family, the Hanauers, started in Germany selling feathers and pillows.
They got chased out of Germany by Hitler and ended up in Seattle owning another
pillow company. Three generations later, I benefited from that. Then I got as
lucky as a person could possibly get in the Internet age by having a buddy in
Seattle named Bezos. I look at the average Joe on the street, and I say, "There
but for the grace of Jeff go I." Even the best of us, in the worst of circumstances,
are barefoot, standing by a dirt road, selling fruit. We should never forget
that, or forget that the United States of America and its middle class made
us, rather than the other way around.
Or we could sit back, do nothing, enjoy our yachts. And wait for the pitchforks.
"... Science and scientists are now heavily politicized. A lot of them are just political charlatans spreading nonsense for money and abusing mathematics, using it as smoke screen to hide their disgraceful actions. Take for example neoclassical economists. ..."
"... Many scientists now have connections and receive funding from military industrial complex or other industrial lobbies which also affects objectivity. ..."
"... Scientists with integrity of Rutherford are extinct. Now this is "He who pays the piper calls the tune" all over the science. ..."
"... That does not exclude objectivity, but it now can never be taken for granted. Scientific schools struggles can now well be the struggles of influence groups standing behind particular groups of scientists. The attitude should be like in the Russian proverb that Reagan used to love so much: "Trust but verify" ..."
"... How about such thing as Lysenkoism? Is not this a cancer for science, from which there is essentially cures are as difficult to obtain and are as destructive as for regular cancer. ..."
"... IMHO you can view neoclassical economics as a cancer or a modern version of Lysenkoism (and a very successful, dominant one), if you wish (with due apologies to "strict" supply-demand equilibrium believers; of course, in a long run everything comes to equilibrium, but in a long run we all are dead ;-). ..."
"... How the existence and success of Lysenkoism ( let's say in the form of neoclassical economics ) correlates with your optimism about modern science and scientists ? That is the question to be answered. ..."
Science and scientists are now heavily politicized. A lot of them
are just political charlatans spreading nonsense for money and abusing mathematics,
using it as smoke screen to hide their disgraceful actions. Take for example
neoclassical economists.
Many scientists now have connections and receive funding from military
industrial complex or other industrial lobbies which also affects objectivity.
Scientists with integrity of Rutherford are extinct. Now this is
"He who pays the piper calls the tune" all over the science.
As such most of them (outside few fields yet not politicized enough,
like pure mathematics ) became the same prostitutes for the elite as journalists.
That does not exclude objectivity, but it now can never be taken
for granted. Scientific schools struggles can now well be the struggles
of influence groups standing behind particular groups of scientists. The
attitude should be like in the Russian proverb that Reagan used to love
so much: "Trust but verify"
"But…when it comes to fossil fuels, the political pressure is coming
from the fossil fuel industry, to suppress the truth about it's problems."
I believe that to be just flat out wrong. The fossil fuel industry will
get along just fine, it is baked in the cake from the standpoint the entirety
of our worlds civilization is based on fossil fuels. The advancement of
our civilization required it, the continuation of our civilization requires
it
(at least in the short and medium terms.) That may/will in change in
time because of the depletion of resources and the increasing cost to recover,
but as Ron and others have pointed out, not until we have consumed every
last drop of recoverable oil, nat gas and coal. Best case it will be photo
finish to see if the world can roll out renewables before the impact of
peak oil to seriously wreck havoc on the worlds economy and standard of
living for those around when it happens. To the degree there is political
pressure, I would suggest you try to understand the business side of the
issues as they relate to the tax structures for local and state finances
and even on a federal level. I suppose you have paid the gasoline tax that
keeps roads in repair? I think you understand that oil and gas held in private
hands are considered real property right?
Everyone who owns minerals, just like the lands the oil and gas sits
under, have a vested interest in the value and are taxed providing income
to a great number of people including school systems all across our state.
The business interest and employment in all aspects of the production, transportation,
refining, and distribution. The motor car companies, the mechanics, the
quick stops all across the country. The vested interest in the status quo
are far reaching and are seen widely as a benefit. The idea that if just
Exxon and the Koch brothers would just shut up everything would be hunky-dory
is beyond naive!
How about such thing as Lysenkoism? Is not this a cancer for science,
from which there is essentially cures are as difficult to obtain and are
as destructive as for regular cancer.
IMHO you can view neoclassical economics as a cancer or a modern
version of Lysenkoism (and a very successful, dominant one), if you wish
(with due apologies to "strict" supply-demand equilibrium believers; of
course, in a long run everything comes to equilibrium, but in a long run
we all are dead ;-).
How the existence and success of Lysenkoism ( let's say in the form
of neoclassical economics ) correlates with your optimism about modern science
and scientists ? That is the question to be answered.
"... So we have two problems now. One like the author points out, there is no coherent alternative from the left ..."
"... since is so diffuse a target it becomes a boogey man rather than actual target to be loathed. ..."
"... one area where neo-liberalism is dominant is that of 'welfare reform', a key component of the ideology, In this sphere the lack of interest and action by the left, civil society, etc, has been shameful, I can recall here in the UK that at one weekend during the New Labour reign at a Labour Party Conference 60,000 people protested anti-war issues while only about 80 were there for the Monday event against N/L's nascent Welfare Reform Bill which created the policy architecthure for all the coming changes.. ..."
"... New Labour was a con trick. JC's version will, imho, reverse a lot of the damage done - that's if the Blairites will stop throwing their toys out the pram. ..."
"... neoliberalism is so wide spread that those that are actual neo-liberals don't even know they are. neoliberalism is core of The Conservatives and New Labour ..."
"... In the 20th century more people were killed by their own governments than in war. But to the left the real threat to people comes not from a concentration of power wielded by governments but of concentrations of wealth in private hands. ..."
"... This is pretty much the only reason why I still read the Guardian. Monbiot and the quick crossword. ..."
"... Monbiot is the best journalist the Guardian has, he can actually make a logical fact based argument unlike the majority of Guardian journalist. ..."
"... 'The Invisible Hand' is not an ideology or dogma. It's just a metaphor to describe those with problems grasping abstract concepts: when there are a large number of buyers and suppliers for a good, the 'market finds a price' which is effectively the sum of all the intelligence of the participants, their suppliers, customers etc.. ..."
"... You clearly haven't read Wealth of Nations. The only mention of an invisible hand is actually a warning against what we now call neoliberalism. Smith said that the wealthy wouldn't seek to enrich themselves to the detriment of their home communities, because of an innate home bias. Thus, as if by an invisible hand, England would be spared the ravages of economic rationality. ..."
"... Your understanding of the 'invisible hand' is a falsehood perpetuated by neoliberal think tanks like the Adam Smith institute (no endorsement or connection to the author, despite using his name). ..."
"... I read, cannot remember where, that with neo liberalism the implementation is all that matters, you do not need to see the results. I suppose because the followers believe when implemented it will work perfectly. I think it's supporters think it is magic and must work because they believe it does. ..."
"... Yes, a high priest of neo-liberalism, Lord Freud, was given only 13 weeks to investigate and reform key elements of the the UK's welfare system, it hasn't worked and Freud is now invisible. ..."
"... Failed neoliberalism and not restricting markets that do not benefit the majority are the cause and we stand on the brink of falling further should the Brexiter's have their way. If there's one thing the EU excels at it's legislating against the excesses of business and extremism. ..."
Part of the problem is that Neoliberalism isn't as clearly defined as communism. This also
means that anything bad that happens in society today can be hung on to neoliberalism whether
warranted or not. Zika causes microcephaly? another consequence of neoliberalism to be sure!
So we have two problems now. One like the author points out, there is no coherent alternative
from the left (interestingly the Canadian NDP party tried and your much beloved Naomi Klein
was part of a group who sabotaged the effort and produced a neo-stalinist proposal instead that
went nowhere) and second, since is so diffuse a target it becomes a boogey man rather than
actual target to be loathed.
Attempts to limit competition are treated as inimical to liberty.
Are they though? Even ignoring trade subsidies, it's a bit difficult to compete in e.g. politics,
the media, the law and many other areas unless you have money behind you. It's more a self-perpetuating
protectionist oligarchy. And therefore as much neoliberalism as North Korea is communism.
Another incisive article by George, one area where neo-liberalism is dominant is that of 'welfare
reform', a key component of the ideology, In this sphere the lack of interest and action by the
left, civil society, etc, has been shameful, I can recall here in the UK that at one weekend during
the New Labour reign at a Labour Party Conference 60,000 people protested anti-war issues while
only about 80 were there for the Monday event against N/L's nascent Welfare Reform Bill which
created the policy architecthure for all the coming changes..
Now there are suicides, misery for milllions, etc, it was left to a few disability groups,
a few allies, Unite Community, UkUncut, etc to challenge the behemoth. The Left has a hierarchy
of oppression which often means it operates in a bubble aloof from wider concerns.
People have been set up for decades to respond offensively to some words like unions, unemployed,
sole parents, Greenies (environmentalists), female leaders, you name it, anyone they don't like.
There is white trash, bogans, bludgers like trained pets they repeat the mantra as soon as anyone
opposes them and people go against their best interests.
New Labour was a con trick. JC's version will, imho, reverse a lot of the damage done - that's
if the Blairites will stop throwing their toys out the pram.
neoliberalism is so wide spread that those that are actual neo-liberals don't even know they
are. neoliberalism is core of The Conservatives and New Labour , Lid Dem even Green Party
could be classed as neo-liberals, so the alternative is the communist party who are actually against
staying in the EU or the idiots on the the right like UKIP and so on.
We need common sense party instead of the terrible state of politics we have all over the Globe.
The rise in the far-left and the far-right the non-platform anti free speech left with their phobia
labels or the neanderthals of the far-right like rise of Golden Dawn and the anti-Muslim rhetoric
by Trump.
Greens are neo-liberals? Mate, we're left of labour even now. We believe economic growth is fundamentally
incompatible with a sustainable future, for example
(academic research beyond the faulty national statistics supports this), and the only way to tackle
this is a wholesale redistrbutive system. The poor would be hit hardest by radical cuts in consumption
and carbon limits. Enough to impoverish millions in this country alone. So we need to be redistributive
in a far more radical way than even corbyns labour would be.
Agreed, it feels like there's a HUGE gap in politics that simply isn't being filled at the moment.
The false starts for real 'multi-party' politics that were the Lib Dem gains, Green Party and
UKIP have all turned out to be more of the same, damp squibs or total mess.
People are sick of politics, they're sick of bizarre single-issue parties and they're sick
of even the language of politics. Such opportunity and yet nothing is appearing.
Depends on which Greens. The German Greens, for instance, after some initial party, are now just
another corporate-friendly party that will compromise with anyone and anything.
Good article apart from the schoolboy error of characterizing the USSR as Communist. No advanced
Communist State has yet existed. For clarification of the theory, try reading Etienne Balibar's
On the Dictatorship of the Proletariat
Yes, Lenin's attempt at implementing the abstract theories of Marx (he believed he found a way
to short circuit the stages of socioevolution by skipping the Capitalist phase by jumping from
Feudalism.to Socialism - the goal of the USSR.
The people were the eggs in the theoretical omlet that was made.
The fact that so many were brutally murdered in the pursuit of and ends propagandized as 'liberation'
can never be a allowed to be forgotten.
The next time will not be different, nor the time after that or the one after that.
Well said.
But I think we are too far in it and cant see any opposition for this.
Big corpos will try to keep status quo or even push harder their own agenda. They have easy job
as they only have to buy (already done this) few politicians.
We haven't failed to come up with an alternative- we've been shouting it at you. Its name is socialism.
Thankfully we have Bernie Sanders, Jeremy Corbyn et al to represent our cause yet still it falls
on deaf ears with the press and the political establishment.
In the 20th century more people were killed by their own governments than in war. But to the
left the real threat to people comes not from a concentration of power wielded by governments
but of concentrations of wealth in private hands.
The problem is that concentration of wealth leads to the buying of government power.
It's not simple government bad, wealth good or indifferent. It's the wealthy using said wealth
to buy government power to further enrich the wealthy.
Government is just a tool, who drives it matters.
In addition to neoliberalism being adopted by the Democrats and Labour, another distinct ideology
has the traditional parties of the left tied in knots.
One YouTuber has called it 'Neoprogressivism' - the creed underpinning identity politics.
Above Monbiot describes how neoliberalism was in large part born as Hayek's alternative to
the early twentieth century nationalism/communism clash; worryingly it seems a century later our
politics is again hamstrung by two pernicious ideologies as the world blindly races towards another
disaster.
Whereas neoliberalism is now widely recognised and eviscerated, light is just starting to be
shone on 'Neoprogressivism'. I recommend the YouTube video of this title for an account of the
second 'rock' around which contemporary politics navigates.
'The Invisible Hand' is not an ideology or dogma. It's just a metaphor to describe those with
problems grasping abstract concepts: when there are a large number of buyers and suppliers for
a good, the 'market finds a price' which is effectively the sum of all the intelligence of the
participants, their suppliers, customers etc..
The Socialists, who have difficulty grasping this reality, want to 'fix' the price, which abnegates
the collective intelligence of the market participants, and causes severe problems.
Capitalism is freedom, Socialism is someone's ideology.
'The Invisible Hand' is... a metaphor to describe those with problems grasping abstract
concepts: when there are a large number of buyers and suppliers for a good, the 'market finds
a price' which is effectively the sum of all the intelligence of the participants
You clearly haven't read Wealth of Nations. The only mention of an invisible hand is actually
a warning against what we now call neoliberalism. Smith said that the wealthy wouldn't seek to
enrich themselves to the detriment of their home communities, because of an innate home bias.
Thus, as if by an invisible hand, England would be spared the ravages of economic rationality.
Your understanding of the 'invisible hand' is a falsehood perpetuated by neoliberal think
tanks like the Adam Smith institute (no endorsement or connection to the author, despite using
his name).
'The Invisible Hand' is not dogma.
You definitely know a lot about dogma (and false dichotomies):
Capitalism is freedom, Socialism is someone's ideology.
A coherent alternative has to be proposed. For Labour, the Democrats and the wider left,
the central task should be to develop an economic Apollo programme, a conscious attempt to
design a new system, tailored to the demands of the 21st century
All very well, but how? Did anyone hear the screams of rage when Sanders started threatening Hillary,
or when Corbyn trounced the Blairites? The dead hand of Bernays and Goebbels controls everything.
There is no alternative on offer by the left.
The socialist/trade union package is outmoded.
The failure to describe reality in a way that concurs with what ordinary people experience has
driven off much support and reduced credibility.
There is no credible model for investment and wealth creation.
The focus on social mobility upwards rather than on those who do not move has given UK leftism
a middle-class snobby air to it.
Those entering leftist politics have a very narrow range of life experience. The opposition to
rightist politics is cliched and outmoded.
There is a complete failure to challenge the emerging multi-polar plutocratic oligarchy which
runs the planet - the European left just seeks a comfy accommodation.
There is no attempt to develop a post-socialist, holistic worldview and ideology.
The trade union package, gave us meal breaks, holidays, sickness benefits, working hours restrictions,
as opposed to the right wing media agenda, that if you aint getting it nobody should, pour poison
on the unions, pour poison on the public sector, a fucking media led race to the bottom for workers,
and there were enough gullible (poor )mugs around to accept it. You can curse the middle class
socialists all you like, but without their support the labour movement would never have got off
the ground.
During the industrial revolution, profitability and productivity were off the scale because the
workforce were just commodities, Unionisation instigated the idea that without the workforce,
your entrepreneurs can't do anything on their own, Henry Ford wouldn't have become a millionaire
without the help of his workforce. 'Poorest performing structures' Guess what! some of us are
human beings not auto- matrons. I hope you dine well on sterling and dollars, cause they're not
the most important things in life.
What if the highest possible taxes, zero avoidance / evasion and high employment still equals
deficits and increasing national debt ?
The paragraph written above neatly describes the post WW2 years, where the UK was pretty much
in perpetual surplus. High employment does not equate to national debt/deficit. Quite the opposite,
the more people in gainful employment the better. Increasing unemployment, driving wages down
while simultaneously increasing the cost of living is a recipe for complete economic failure.
This whole economics gig is piss easy, when the general mass of people have cash to spare they
spend it, economy thrives. Hoard the cash into the hands of a minority and starve the masses of
cash, economy dies. It really is that simple.
Public deficits exist to match the private surplus created by the rich enriching themselves. To
get rid of the deficit therefore we need to get rid of the private wealth of the rich through
financial repression and taxation
I read, cannot remember where, that with neo liberalism the implementation is all that matters,
you do not need to see the results. I suppose because the followers believe when implemented it
will work perfectly. I think it's supporters think it is magic and must work because they believe
it does.
Yes, a high priest of neo-liberalism, Lord Freud, was given only 13 weeks to investigate and
reform key elements of the the UK's welfare system, it hasn't worked and Freud is now invisible.
Hopeful this is the start for change through identifying issues and avoiding pitfalls.
Failed neoliberalism and not restricting markets that do not benefit the majority are the
cause and we stand on the brink of falling further should the Brexiter's have their way. If there's
one thing the EU excels at it's legislating against the excesses of business and extremism.
"... It is fascinating that younger US neoliberals (e.g. Matthew Yglesias) are totally sold on the the positives of 'metrics', statistics, testing, etc, to the point where they ignore all the negatives of those approaches, but absolutely and utterly loathe being tracked, having the performance of their preferred policies and predictions analyzed, and called out on the failures thereof. Is sure seems to me that the campaign to quash the use of the US, Charles Peters version of neoliberal is part of the effort to avoid accountability for their actions. ..."
"... If "conservative" is to be a third way to the opposition of "reactionary" and "revolutionary", the "liberals" are a species of conservative - like all conservatives, seeking to preserve the existing order as far as this is possible, but appealing to reason, reason's high principles, and a practical politics of incremental reform and "inevitable" progress. The liberals disguise their affection for social and political hierarchy as a preference for "meritocracy" and place their faith in the powers of Reason and Science to discover Truth. ..."
"... Liberalism adopts nationalism as a vehicle for popular mobilization which conservatives can share and as an ideal of governance, the self-governing democratic nation-state with a liberal constitution. ..."
"... It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject failures of Liberalism that created fascism. ..."
"... he Liberal projects to create liberal democratic nation-states ran aground in Germany, Austria-Hungary and Russia between 1870 and 1910 and instead of gradual reform of the old order, Europe experienced catastrophic collapse, and Liberalism was ill-prepared to devise working governments and politics in the crisis that followed. ..."
"... What is called neoliberalism in American politics has a lot to do with New Deal liberalism running out of steam and simply not having a program after 1970. Some of that is circumstantial in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were arguably results of the earlier program's success. ..."
= = = I am actually honestly suggesting an intellectual exercise which, I think, might
be worth your (extremely valuable) time. I propose you rewrite this post without using the
word "neoliberalism" (or a synonym). = = =
It is fascinating that younger US neoliberals (e.g. Matthew Yglesias) are totally sold
on the the positives of 'metrics', statistics, testing, etc, to the point where they ignore all
the negatives of those approaches, but absolutely and utterly loathe being tracked, having the
performance of their preferred policies and predictions analyzed, and called out on the failures
thereof. Is sure seems to me that the campaign to quash the use of the US, Charles Peters version
of neoliberal is part of the effort to avoid accountability for their actions.
bruce wilder 09.03.16 at 7:47 pm
In the politics of antonyms, I suppose we are always going get ourselves confused.
Perhaps because of American usage of the root, liberal, to mean the mildly social democratic
New Deal liberal Democrat, with its traces of American Populism and American Progressivism, we
seem to want "liberal" to designate an ideology of the left, or at least, the centre-left. Maybe,
it is the tendency of historical liberals to embrace idealistic high principles in their contest
with reactionary claims for hereditary aristocracy and arbitrary authority.
If "conservative" is to be a third way to the opposition of "reactionary" and "revolutionary",
the "liberals" are a species of conservative - like all conservatives, seeking to preserve the
existing order as far as this is possible, but appealing to reason, reason's high principles,
and a practical politics of incremental reform and "inevitable" progress. The liberals disguise
their affection for social and political hierarchy as a preference for "meritocracy" and place
their faith in the powers of Reason and Science to discover Truth.
All of that is by way of preface to a thumbnail history of modern political ideology different
from the one presented by Will G-R.
Modern political ideology is a by-product of the Enlightenment and the resulting imperative
to find a basis and purpose for political Authority in Reason, and apply Reason to the design
of political and social institutions.
Liberalism doesn't so much defeat conservatism as invent conservatism as an alternative to
purely reactionary politics. The notion of an "inevitable progress" allows liberals to reconcile
both themselves and their reactionary opponents to practical reality with incremental reform.
Political paranoia and rhetoric are turned toward thinking about constitutional design.
Mobilizing mass support and channeling popular discontents is a source of deep ambivalence
and risk for liberals and liberalism. Popular democracy can quickly become noisy and vulgar, the
proliferation of ideas and conflicting interests paralyzing. Inventing a conservatism that competes
with the liberals, but also mobilizes mass support and channels popular discontent, puts bounds
on "normal" politics.
Liberalism adopts nationalism as a vehicle for popular mobilization which conservatives
can share and as an ideal of governance, the self-governing democratic nation-state with a liberal
constitution.
I would put the challenges to liberalism from the left and right well behind in precedence
the critical failures and near-failures of liberalism in actual governance.
Liberalism failed abjectly to bring about a constitutional monarchy in France during the first
decade of the French Revolution, or a functioning deliberative assembly or religious toleration
or even to resolve the problems of state finance and legal administration that destroyed the ancient
regime. In the end, the solution was found in Napoleon Bonaparte, a precedent that would arguably
inspire the fascism of dictators and vulgar nationalism, beginning with Napoleon's nephew fifty
years later.
It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject
failures of Liberalism that created fascism. And, this was especially true in the wake of
World War I, which many have argued persuasively was Liberalism's greatest and most catastrophic
failure. T he Liberal projects to create liberal democratic nation-states ran aground in Germany,
Austria-Hungary and Russia between 1870 and 1910 and instead of gradual reform of the old order,
Europe experienced catastrophic collapse, and Liberalism was ill-prepared to devise working governments
and politics in the crisis that followed.
If liberals invented conservatism, it seems to me that would-be socialists were at pains to
re-invent liberalism, and they did it several times going in radically different directions, but
always from a base in the basic liberal idea of rationalizing authority. A significant thread
in socialism adopted incremental progress and socialist ideas became liberal and conservative
means for taming popular discontent in an increasingly urban society.
Where and when liberalism actually was triumphant, both the range of liberal views and the
range of interests presenting a liberal front became too broad for a stable politics. Think about
the Liberal Party landslide of 1906, which eventually gave rise to the Labour Party in its role
of Left Party in the British two-party system. Or FDR's landslide in 1936, which played a pivotal
role in the march of the Southern Democrats to the Right. Or the emergence of the Liberal Consensus
in American politics in the late 1950s.
What is called neoliberalism in American politics has a lot to do with New Deal liberalism
running out of steam and simply not having a program after 1970. Some of that is circumstantial
in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were
arguably results of the earlier program's success.
It is almost a rote reaction to talk about the Republican's Southern Strategy, but they didn't
invent the crime wave that enveloped the country in the late 1960s or the riots that followed
the enactment of Civil Rights legislation.
Will G-R's "As soon [as] liberalism feels it can plausibly claim to have . . .overcome the
socialist and fascist challenges [liberals] are empowered to act as if liberalism's adaptive response
to the socialist and fascist challenges was never necessary in the first place - bye bye welfare
state, hello neoliberalism" doesn't seem to me to concede enough to Clinton and Blair entrepreneurially
inventing a popular politics in response to Reagan and Thatcher, after the actual failures
of an older model of social democratic programs and populist politics on its behalf.
I write more about this
over at
my blog (in a somewhat different context).
John Quiggin 09.04.16 at 6:57 am
RW @113 I wrote a whole book using "market liberalism" instead of "neoliberalism", since I wanted
a term more neutral and less pejorative. So, going back to "neoliberalism" was something I did
advisedly. You say
The word is abstract and has completely different meanings west and east of the Atlantic. In
the USA it refers to weak tea center leftisms. In Europe to hard core liberalism.
Well, yes. That's precisely why I've used the term, introduced the hard/soft distinction and explained
the history. The core point is that, despite their differences soft (US meaning) and hard (European
meaning) neoliberalism share crucial aspects of their history, theoretical foundations and policy
implications.
=== quote ===
Neoliberalism is an ideology of market fundamentalism based on deception that promotes "markets"
as a universal solution for all human problems in order to hide establishment of neo-fascist regime
(pioneered by Pinochet in Chile), where militarized government functions are limited to external
aggression and suppression of population within the country (often via establishing National Security
State using "terrorists" threat) and corporations are the only "first class" political players.
Like in classic corporatism, corporations are above the law and can rule the country as they see
fit, using political parties for the legitimatization of the regime.
The key difference with classic fascism is that instead of political dominance of the corporations
of particular nation, those corporations are now transnational and states, including the USA are
just enforcers of the will of transnational corporations on the population. Economic or "soft"
methods of enforcement such as debt slavery and control of employment are preferred to brute force
enforcement. At the same time police is militarized and due to technological achievements the
level of surveillance surpasses the level achieved in Eastern Germany.
Like with bolshevism in the USSR before, high, almost always hysterical, level of neoliberal
propaganda and scapegoating of "enemies" as well as the concept of "permanent war for permanent
peace" are used to suppress the protest against the wealth redistribution up (which is the key
principle of neoliberalism) and to decimate organized labor.
Multiple definitions of neoliberalism were proposed. Three major attempts to define this social
system were made:
Definitions stemming from the concept of "casino capitalism"
Definitions stemming from the concept of Washington consensus
Definitions stemming from the idea that Neoliberalism is Trotskyism for the rich. This
idea has two major variations:
Definitions stemming from Professor Wendy Brown's concept of Neoliberal rationality
which developed the concept of Inverted Totalitarism of Sheldon Wolin
Definitions stemming Professor Sheldon Wolin's older concept of Inverted Totalitarism
- "the heavy statism forging the novel fusions of economic with political power that he
took to be poisoning democracy at its root." (Sheldon Wolin and Inverted Totalitarianism
Common Dreams )
The first two are the most popular.
likbez 09.04.16 at 5:03 pm
bruce,
@117
Thanks for your post. It contains several important ideas:
"It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject failures
of Liberalism that created fascism."
"What is called neoliberalism in American politics has a lot to do with New Deal liberalism
running out of steam and simply not having a program after 1970. Some of that is circumstantial
in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were
arguably results of the earlier program's success."
Moreover as Will G-R noted:
"neoliberalism will be every bit the wellspring of fascism that old-school liberalism was."
Failure of neoliberalism revives neofascist, far right movements. That's what the rise of far
right movements in Europe now demonstrates pretty vividly.
"... neoliberalism is the ideology of the global managerial class. It encompasses leading political neoliberals such as Clinton(s), Blair, and Obama, Eurocrats, the upper management of multinationals, the management of large NGOs, higher-up Chinese Communist Party members, and everyone else who comes together to make the current world system work via characteristic international agreements and arrangements ..."
"... it has no mass base as such. ..."
"... Neoliberalism in policy becomes free trade agreements, austerity, the inability to address income inequality, free rides for banks, and general politics under the rubric of "there is no alternative" as elites loot whatever they can loot. ..."
"... Neoliberalism obeys the dictates of the elite without, itself, being composed of a classical wealth-owning elite: neoliberals are often very wealthy, but they are managers of other people's wealth rather than capitalists as such. But there is no base anywhere that demands austerity or the TPP, so neoliberalism always pretends to be a vaguely left centrism, and adopts left ideas on racism, sexism, homophobia and so on in the sense that it ideally treats people as meritocratically chosen. ..."
"... As a result of not being able to call neoliberals neoliberals, Thomas Frank has no real way to describe what happened other than by going through a lot of detail, most of which will be long familiar to any left reader in the U.S. ..."
"... Frank seems to believe that the Democratic Party can return to something like a New Deal coalition, something that I think is impossible. The system has moved on and can't be glued back together. The state fundamentally doesn't need most people and is looking for ways to shed them -- ways which neoliberalism makes possible -- and labor doesn't have the power that it once did, not because of the machinations of the elites (although those certainly are happening) but because we don't need as much labor or the same kind of labor as we once did. ..."
Thomas Frank's book _Listen, Liberal_ has a central problem: it describes U.S. political neoliberalism
in detail but never makes the jump to calling it something other than liberalism. As a result, it's
never quite sure what it's recommending. Something about going back to how liberalism was during
the New Deal era -- but what was it then, and can we really go back to that now, and how would we
get there?
Before writing more about his book I'll give a short description of what I think neoliberalism
is: neoliberalism is the ideology of the global managerial class. It encompasses leading political
neoliberals such as Clinton(s), Blair, and Obama, Eurocrats, the upper management of multinationals,
the management of large NGOs, higher-up Chinese Communist Party members, and everyone else who comes
together to make the current world system work via characteristic international agreements and arrangements.
It may more or less be held as an ideology by middle management, and by most professional economists
and international functionaries, but it has no mass base as such.
Neoliberalism in policy becomes free trade agreements, austerity, the inability to address
income inequality, free rides for banks, and general politics under the rubric of "there is no alternative"
as elites loot whatever they can loot. Neoliberalism is a liberalism, and depends on conservatism
being more objectionable than it is (and the left being generally absent), but it is not left-liberalism,
and it is not classical liberalism since it exists within a system that has contemporary political
actors in it.
Neoliberalism obeys the dictates of the elite without, itself, being composed of a classical
wealth-owning elite: neoliberals are often very wealthy, but they are managers of other people's
wealth rather than capitalists as such. But there is no base anywhere that demands austerity or the
TPP, so neoliberalism always pretends to be a vaguely left centrism, and adopts left ideas on racism,
sexism, homophobia and so on in the sense that it ideally treats people as meritocratically chosen.
Distinguishing neoliberalism from the remnant New Deal or left-liberal base of the Democratic
Party might have been a good thing for Frank's book to do, but it doesn't. Looking up "neoliberalism"
in the index, first the book mentions the U.S. Neoliberals of the early 1980s, then it refers to
NAFTA in 1993 as a landmark of neoliberalism, but there's nothing about how we got from one meaning
of the word to the other. This is a common confusion: there are still people who insist that neoliberalism
is a word that describes a U.S. movement of the early 1980s that then disappeared, or Britain under
Thatcher. But the rest of the world outside the U.S. has long since settled on the word "neoliberalism"
to describe a worldwide politics and a worldwide system. Using it only in its anglosphere-historical
sense is parochial.
As a result of not being able to call neoliberals neoliberals, Thomas Frank has no real way
to describe what happened other than by going through a lot of detail, most of which will be long
familiar to any left reader in the U.S. There's a lot about Clinton, Obama, and the prospective
HRC Presidency. I really didn't learn much from the bulk of the book, other than that microlending
has failed and indeed is rather like a predatory payday loan scheme for people outside of the U.S.
(something which I should have suspected, in retrospect). It would be a good book to read for someone
who still thinks that Obama is a left-liberal and who expects that from HRC.
But Frank's analysis
is a bit off when he identifies professionals as "the 10%" who support contemporary-Democratic-Party
politics. Professionals broadly may be sympathetic to neoliberalism and certainly to meritocracy,
but they don't broadly have the power to maintain a neoliberal system or the numbers to be a voting
base for it.
Frank seems to believe that the Democratic Party can return to something like a New Deal coalition,
something that I think is impossible. The system has moved on and can't be glued back together. The
state fundamentally doesn't need most people and is looking for ways to shed them -- ways which neoliberalism
makes possible -- and labor doesn't have the power that it once did, not because of the machinations
of the elites (although those certainly are happening) but because we don't need as much labor or
the same kind of labor as we once did.
A new party of the non-elites is going to have to be based on something other than labor power,
something that Frank's analysis isn't far enough from the mainstream to guess at. That said, this
will still a useful book for some people.
> Neoliberalism in policy becomes ...the inability to address income inequality, free rides
for banks, and general politics under the rubric of "there is no alternative" as elites loot whatever
they can loot.
So essentially you are *defining* neoliberalism as a bad thing. I guess you're entitled to,
if you don't like it, but it will then be dull if you draw the conclusion from that, that its
a bad thing.
Free trade is a good thing (sez I) but I agree with you it has no broad base of support, other
than amongst economists, who are the people that understand it.
I'm not really defining it as a bad thing: I'm saying that it has certain characteristics.
Systems are bad in comparison to other systems, so neoliberalism is worse than some systems and
better than others. For instance, the Paris Agreements are characteristic of neoliberalism, but
that doesn't mean that they are intrinsically bad: they are better than the non-agreement or active
denialism that would be all that some other systems could produce.
Strange how elites get committed to failed policies which end
up biting them back as they become quagmires...America's
military adventurism, trickle down monetary policy, etc.
He and others have been saying these things for a while. I
was pleased he pointed out Junckers threat to do Britain in
so that no one else would want to leave. Not a little of that
still going on. Will lose them some exports for sure.
"... No markets are free and efficient. All markets have rules. Governments make and enforce the rules. Market efficiency is a product of the quality of the rules ..."
"... Those who cry "interference" are those who have gamed the system for advantage and want to protect that advantage ..."
Those comments are about his article
Want a Free Market? Abolish Cash - Narayana Kocherlakota
.
The rules are enforced by the state.
The state is an umpire of the markets,
However, as we saw under
neoliberalism, the state can be captured by wealthy special interests who then make, modify and
enforce the rules to their own benefit.
Narayana's article is
interesting, but I hate hate this trying to appease the right
with, "Like any government interference, this causes
inefficiencies." Such dangerous misleading. He knows very
well that often government "interference" incredibly
increases efficiency, like with externalities, asymmetric
information, high monopoly power,...
Just terrible to spread this dangerous misinformation that
government interference is always inefficient -- And you'll
never appease the right.
Amen
No markets are free and efficient.
All markets have rules.
Governments make and enforce the rules.
Market efficiency is a product of the quality of the rules
In this context the notion of interference is absurd.
Markets themselves are not natural, they are a product of
interference.
Those who cry "interference" are those who have gamed the
system for advantage and want to protect that advantage
"The rules are often however not
made and or enforced by the state"
No the rules are made and enforced
by the state.
However, the state can be captured
by wealthy special interests who
then make, modify and enforce the
rules to their own benefit.
The wealthy special interests
claim to be supporting "Free
markets"
They are actuality supporting more
corrupt markets.
Greater corruption of markets
leads to greater inefficiency.
We need to lose the term "free" as
applied to markets
I have no argument with your
characterization of state capture
Indeed state design has the
authorship of last centuries
New deal era corporate compromise
with the domestic job class
Since the counter reformation
CR began back in1976 or so
The social contract drawn up 30
years earlier has seen serious
erosions
Let us hope the 2008 crisis has
halted the CR
Now we must struggle on towards a
new social charter
social design
Ie mechanism design
And where appropriate
Aggressively
Imposed by the state
"
Controlling interest in the
"state" has been bought out by
*anti social design*. With the
freedom of speech that remains, We
the Lower Caste of folks worth
less than $1,000,000.00 can still
spread the word, the word of how
to cope, how to muddle through.
"Government interference" is in
fact the only thing that allows
markets to function and exist. The
real inefficiencies are created by
greed and dishonesty on the part
of buyers and sellers.
I should add (for the historical
record, as my genius will not be
recognized until long after my
time) that Narayana was also,
sadly, trying to increase his
appeal by trying to look more
"centrist" (as the truth has a
well known liberal bias), and less
liberal, so he lied; he horribly
mislead in a harmful way saying,
"Like any government interference,
this causes inefficiencies."
I like Narayana, and I
understand that he might have
thought that supporting this
profoundly harmful fallacy might
have been worth it to get a better
reception for his main message on
monetary policy. But it's up to
the rest of us to speak up against
horrible anti-government
simple-minded fallacies.
"... So "Carthago delenda est" is the official policy. With heavy brainwashing from MSM to justify such a course as well as the demonization of Putin. ..."
"... The USA actions in Ukraine speak for themselves. Any reasonable researcher after this "color revolution" should print his/her anti-Russian comments, shred them and eat with borsch. Because the fingerprints of the USA neoliberal imperial policy were everywhere and can't be ignored. And Victoria Nuland was Hillary Clinton appointee. Not that Russia in this case was flawless, but just the fact that opposition decided not to wait till the elections was the direct result of the orders from Washington. ..."
All this anti-Russian warmongering from esteemed commenters here is suspect. And should be
taken with a grain of salt.
The USA neoliberal elite considers Russia to be an obstacle in the creation of the USA led
global neoliberal empire (with EU and Japan as major vassals),
So "Carthago delenda est" is the official policy. With heavy brainwashing from MSM to justify
such a course as well as the demonization of Putin.
The USA actions in Ukraine speak for themselves. Any reasonable researcher after this "color
revolution" should print his/her anti-Russian comments, shred them and eat with borsch. Because
the fingerprints of the USA neoliberal imperial policy were everywhere and can't be ignored. And
Victoria Nuland was Hillary Clinton appointee. Not that Russia in this case was flawless, but
just the fact that opposition decided not to wait till the elections was the direct result of
the orders from Washington.
That means that as bad as Trump is, he is a safer bet than Hillary, because the latter is a
neocon warmonger, which can get us in the hot war with Russia. And this is the most principal,
cardinal issue of the November elections.
All other issues like climate change record (although nuclear winter will definitely reverse
global warming), Supreme Court appointments, etc. are of secondary importance.
As John Kenneth Galbraith said, "Politics is the art of choosing between the disastrous and
the unpalatable."
"... The only way Russia can be acceptable to the West is to accept vassal status. ..."
"... Russia can end the Ukraine crisis by simply accepting the requests of the former Russian territories to reunite with Russia. Once the breakaway republics are again part of Russia, the crisis is over. Ukraine is not going to attack Russia. ..."
"... Russia doesn't end the crisis, because Russia thinks it would be provocative and upset Europe. Actually, that is what Russia needs to do-upset Europe. Russia needs to make Europe aware that being Washington's tool against Russia is risky and has costs for Europe. ..."
"... Instead, Russia shields Europe from the costs that Washington imposes on Europe and imposes little cost on Europe for acting against Russia in Washington's interest. Russia still supplies its declared enemies, whose air forces fly provocative flights along Russia's borders, with the energy to put their war planes into the air. ..."
"... Washington and only Washington determines "international norms." America is the "exceptional, indispensable" country. No other country has this rank ..."
"... A country with an independent foreign policy is a threat to Washington. The neoconservative Wolfowitz Doctrine makes this completely clear. The Wolfowitz Doctrine, the basis of US foreign and military policy, defines as a threat any country with sufficient power to act as a constraint on Washington's unilateral action. The Wolfowitz Doctrine states unambiguously that any country with sufficient power to block Washington's purposes in the world is a threat and that "our first objective is to prevent the re-emergence of" any such country. ..."
"... If the Russian government thinks that Washington's word means anything, the Russian government is out to lunch. ..."
"... Iran is well led, and Vladimir Putin has rescued Russia from US and Israeli control, but both governments continue to act as if they are taking some drug that makes them think that Washington can be a partner. ..."
"... These delusions are dangerous, not only to Russia and Iran, but to the entire world. If Russia and Iran let their guard down, they will be nuked, and so will China. Washington stands for one thing and one thing only: World Hegemony. ..."
"... Just ask the Neoconservatives or read their documents. The neoconservatives control Washington. No one else in the government has a voice. For the neoconservatives, Armageddon is a tolerable risk to achieve the goal of American World Hegemony ..."
Russia so desperately desires to be part of the disreputable and collapsing West that Russia is
losing its grip on reality.
Despite hard lesson piled upon hard lesson, Russia cannot give up its hope of being acceptable
to the West. The only way Russia can be acceptable to the West is to accept vassal status.
Russia miscalculated that diplomacy could solve the crisis that Washington created in Ukraine and
placed its hopes on the Minsk Agreement, which has no Western support whatsoever, neither in Kiev
nor in Washington, London, and NATO.
Russia can end the Ukraine crisis by simply accepting the requests of the former Russian territories
to reunite with Russia. Once the breakaway republics are again part of Russia, the crisis is over.
Ukraine is not going to attack Russia.
Russia doesn't end the crisis, because Russia thinks it would be provocative and upset Europe.
Actually, that is what Russia needs to do-upset Europe. Russia needs to make Europe aware that being
Washington's tool against Russia is risky and has costs for Europe.
Instead, Russia shields Europe from the costs that Washington imposes on Europe and imposes little
cost on Europe for acting against Russia in Washington's interest. Russia still supplies its declared
enemies, whose air forces fly provocative flights along Russia's borders, with the energy to put
their war planes into the air.
This is the failure of diplomacy, not its success. Diplomacy cannot succeed when only one side
believes in diplomacy and the other side believes in force.
Russia needs to understand that diplomacy cannot work with Washington and its NATO vassals who
do not believe in diplomacy, but rely instead on force. Russia needs to understand that when Washington
declares that Russia is an outlaw state that "does not act in accordance with international norms,"
Washington means that Russia is not following Washington's orders. By "international norms," Washington
means Washington's will. Countries that are not in compliance with Washington's will are not acting
in accordance with "international norms."
Washington and only Washington determines "international norms." America is the "exceptional,
indispensable" country. No other country has this rank.
A country with an independent foreign policy is a threat to Washington. The neoconservative Wolfowitz
Doctrine makes this completely clear. The Wolfowitz Doctrine, the basis of US foreign and military
policy, defines as a threat any country with sufficient power to act as a constraint on Washington's
unilateral action. The Wolfowitz Doctrine states unambiguously that any country with sufficient power
to block Washington's purposes in the world is a threat and that "our first objective is to prevent
the re-emergence of" any such country.
Russia, China, and Iran are in Washington's crosshairs. Treaties and "cooperation" mean nothing.
Cooperation only causes Washington's targets to lose focus and to forget that they are targets. Russia's
foreign minister Lavrov seems to believe that now with the failure of Washington's policy of war
and destruction in the Middle East, Washington and Russia can work together to contain the ISIS jihadists
in Iraq and Syria. This is a pipe dream. Russia and Washington cannot work together in Syria and
Iraq, because the two governments have conflicting goals. Russia wants peace, respect for international
law, and the containment of radical jihadists elements. Washington wants war, no legal constraints,
and is funding radical jihadist elements in the interest of Middle East instability and overthrow
of Assad in Syria. Even if Washington desired the same goals as Russia, for Washington to work with
Russia would undermine the picture of Russia as a threat and enemy.
Russia, China, and Iran are the three countries that can constrain Washington's unilateral action.
Consequently, the three countries are in danger of a pre-emptive nuclear strike. If these countries
are so naive as to believe that they can now work with Washington, given the failure of Washington's
14-year old policy of coercion and violence in the Middle East, by rescuing Washington from the quagmire
it created that gave rise to the Islamic State, they are deluded sitting ducks for a pre-emptive
nuclear strike.
Washington created the Islamic State. Washington used these jihadists to overthrow Gaddafi in
Libya and then sent them to overthrow Assad in Syria. The American neoconservatives, everyone of
whom is allied with Zionist Israel, do not want any cohesive state in the Middle East capable of
interfering with a "Greater Israel from the Nile to the Euphrates."
The ISIS jihadists learned that Washington's policy of murdering and displacing millions of Muslims
in seven countries had created an anti-Western constituency for them among the peoples of the Middle
East and have begun acting independently of their Washington creators.
The consequence is more chaos in the Middle East and Washington's loss of control.
Instead of leaving Washington to suffer at the hands of its own works, Russia and Iran, the two
most hated and demonized countries in the West, have rushed to rescue Washington from its Middle
East follies. This is the failure of Russian and Iranian strategic thinking. Countries that cannot
think strategically do not survive.
The Iranians need to understand that their treaty with Washington means nothing. Washington has
never honored any treaty. Just ask the Plains Indians or the last Soviet President Gorbachev.
If the Russian government thinks that Washington's word means anything, the Russian government
is out to lunch.
Iran is well led, and Vladimir Putin has rescued Russia from US and Israeli control, but both
governments continue to act as if they are taking some drug that makes them think that Washington
can be a partner.
These delusions are dangerous, not only to Russia and Iran, but to the entire world. If Russia and Iran let their guard down, they will be nuked, and so will China. Washington stands for one thing and one thing only: World Hegemony.
Just ask the Neoconservatives or read their documents. The neoconservatives control Washington. No one else in the government has a voice. For the neoconservatives, Armageddon is a tolerable risk to achieve the goal of American World
Hegemony.
Only Russia and China can save the world from Armageddon, but are they too deluded and worshipful
of the West to save Planet Earth?
"... The era of unchallenged neoliberal dominance is clearly over. Hopefully, it will prove to have been a relatively brief interruption in a long term trend towards a more humane and egalitarian society. Whether that is true depends on the success of the left in putting forward a positive alternative. ..."
"... Third, the "individualist" thingies work as long as people believe that they are on the winning side; but there is evidence enough today that most people are on the losing side of increasing inequality, so most people have reason to be pro leftish policies both in "moralistic" terms and in "crude self interest" terms. In the past this wasn't obvious, but today it is, and this drum should be banged more. ..."
"... Bob Zanelli @ 10, your comment perfectly embodies an ideological trap to be avoided at all costs. What Quiggin calls tribalism is precisely not ..."
"... I can't speak for other industrialized democracies, but in the US, there is essentially no ability for the left to engage in structural change. Every avenue has been either blocked by the 18th century political structures of the US (sometimes exploited in extraordinary ways by the monied powers that those structures enable) or subsumed by the neoliberal individualist marketification of everything. ..."
"... To just discount the reality of our evolutionary baggage by calling it sociobiology is an example of classic Marxist ideology which seems to require the perfectibility of human nature. ..."
"... I just think we should call what he calls "tribalism" by its proper name - fascism - instead of deliberately tainting our theories with overtones of an "enlightened civilized wisdom versus backwards tribal savages" narrative that itself is central to fascist/"tribalist" ideology and therefore belongs in the dustbin of history. Surely flouting Godwin's Law is a lesser sin than knowingly perpetuating the discourses of racism. ..."
"... Marxism isn't evil and Nazism is evil. So political ideology can be evil or just wrong and accomplish evil. We are indebted to Marx for describing the nature of class warfare and the natural trends of accumulation based economics , but we now know his solution is a failure. So either we learn from this or we cling on to outmoded ideas and remain irrelevant. ..."
"... It seems pretty hardwired, at least enough that not planning around it would be foolish. ..."
"... It turns out that you can't say things like "globalism is great for the UK GDP" and expect citizens of the 'UK' to be excited about it if they feel too alienated from the people who are making all of the money. ..."
"... Punching "globalism" into Google returns the following definition from Merriam-Webster: "a national policy of treating the whole world as a proper sphere for political influence - compare imperialism, internationalism." ..."
"... I agree with bob mcm that Trump_vs_deep_state isn't fascism. It's not a serious analysis to say that it is. ..."
"... I take note of the Florida primary results, just in: Debbie Wasserman-Schultz did just fine, as did her hand-picked Democratic Senate candidate, the horrible Patrick Murphy. ..."
"... Oh, and Rubio is back. Notice of the death of neoliberalism might be premature. ..."
"... I mean Judas Iscariot, I mean Bill Clinton, you can make a case that he did his best to salvage something from the wreckage. To repeat what I've said here before, when he was elected the Democrats had lost five of the last six elections, most by landslides. The one exception was the most conservative of the Democratic candidates, who was despised by the left. The American people had decisively rejected what the Democrats were selling. False consciousness, no doubt. ..."
"... The obscurity and complexity of, say, Obamacare or the Greek bailout is a cover story for the looting. ..."
"... The problem is not that the experts do not understand consequences. The problem is that a broken system pays the top better, so the system has to be broken, but not so broken that the top falls off in collapse. ..."
"... Very well said. Resource limits shadow the falling apart of the global order that the American Interest link Peter T points to. If the billionaires are looting from the top and the response is a criminal scramble at the bottom, the unnecessariat will be spit out uncomprehending into the void between. ..."
"... So much concern about the term tribalism. Well what is fascism? The use of tribalism to grasp political power and establish a totalitarian political order. Sound reasonable? Pick any fascism you like, the Nazis ( master race) the theocratic fascists in the US ( Christian rule ) Catholic Fascism ( Franco's Spain) , you name it. It walks and talks like tribalism. Trump-ism is the not so new face of American fascism. It's race based, it xenophobic, it's embraces violence, has a disdain for civil liberties and human rights, and it features the great leader. Doesn't seem to difficult to make the connection. ..."
"... Neoliberalism is the politics of controlled dismantling of the institutions of a society that formerly worked for a larger portion of its participants. Like a landlord realizing increased cash flow from a decision to forego maintenance and hire gangsters to handle rent collection, neoliberalism seeks to divert the dividends from disinvestment to the top ..."
"... The cadre managing this technically and politically difficult task - it is not easy to take things apart without critical failures exemplified by system collapse prompting insurrection or revolution - are rewarded as are society's owners, the 1/10th of 1%. Everybody else is screwed - either directly, or by the consequences of the social disintegration used to feed a parasitic elite. ..."
"... "Lesser evil" is a story told to herd the masses. If there are two neoliberal politicians, both are corrupt. Neither intends to deliver anything to you on net; they are competing to deliver you. ..."
"... I am not enthusiastic about this proposed distinction between "hard" and "soft" neoliberalism. Ideologically, conservative libertarians have been locked in a dialectic with the Clintonite / Blairite neoliberals - that's an old story, maybe an obsolete story, but apparently not one those insist on seeing neoliberalism as a monolithic lump fixed in time can quite grasp, but never mind. ..."
"... Good cop, bad cop. Only, the electorate is carefully divided so that one side's good cop is the other side's bad cop, and vice versa. ..."
"... In fact, there was a powerful fascist movement in many Allied states as well. Vichy France had deep, strong domestic roots in particular, but the South African Broederbond and Jim Crow USA with its lynchings show how fascism and democracy (as understood by anti-Communists) are not separate things, but conjunctural developments of the capitalist states, which are not organized as business firms. ..."
"... "an obligation to vote in a democracy" ..."
"... orders you to consent ..."
"... if the US government was ever thrown it would be by the far right ..."
"... Not voting is routinely interpreted as tacit consent. ..."
The failure of neoliberalism poses both challenges and opportunities for the
left. The greatest challenge is the need to confront rightwing tribalism as
a powerful political force in itself, rather than as a source of political support
for hard neoliberalism. Given the dangers posed by tribalism this is an urgent
task. One part of this task is that of articulating an explanation of the failure
of neoliberalism and explaining why the simplistic policy responses of tribalist
politicians will do nothing to resolve the problems. The other is to appeal
to the positive elements of the appeal of tribalism, such as solidarity and
affection for long-standing institutions and to counterpose them to the
self-seeking individualism central to neoliberalism, particularly in the hard
version with which political tribalism has long been aligned.
The great opportunity is to present a progressive alternative to the accommodations
of soft neoliberalism. The core of such an alternative must be a revival of
the egalitarian and activist politics of the postwar social democratic moment,
updated to take account of the radically different technological and social
structures of the 21st century. In technological terms, the most important development
is undoubtedly the rise of the Internet. Thinking about the relationship between
the Internet economy and public policy remains embryonic at best. But as a massive
public good created, in very large measure, by the public sector, the Internet
ought to present opportunities for a radically remodeled progressive policy
agenda.
In political terms, the breakdown of neoliberalism implies the need for a
political realignment. This is now taking place on the right, as tribalists
assert their dominance over hard neoliberals. The most promising strategy for
the left is to achieve a similar shift in power within the centre-left coalition
of leftists and soft neoliberals.
This might seem a hopeless task, but there are positive signs, notably in
the United States. Although Hillary Clinton, an archetypal soft neoliberal,
has won the Democratic nomination for the Presidency and seems likely to win,
her policy proposals have been driven, in large measure by the need to compete
with the progressive left. There is reason to hope that, whereas the first Clinton
presidency symbolised the capture of the Democratic Party by soft neoliberalism,
the second will symbolise the resurgence of social liberalism.
The era of unchallenged neoliberal dominance is clearly over. Hopefully,
it will prove to have been a relatively brief interruption in a long term trend
towards a more humane and egalitarian society. Whether that is true depends
on the success of the left in putting forward a positive alternative.
Brett 08.30.16 at 5:49 am
I don't know. I think for a true triumph over the existing order, we'd need
true international institutions designed to enhance other kinds of protections,
like environmental and labor standards world-wide. That doesn't seem to
be in the wings right now, versus a light version of protectionism coupled
with perhaps some restoration of the welfare state (outside of the US –
inside the US we're going to get deadlock mildly alleviated by the Supreme
Court and whatever types of executive orders Clinton comes up with for the
next eight years).
Andrew Bartlett 08.30.16 at 6:15 am
"The other is to appeal to the positive elements of the appeal of
tribalism, such as solidarity and affection for long-standing institutions"
My only worry with that is the strong overlap between tribalism and racism,
at least in it's political forms. Harking to the myth of a monocultural
past could be seen by some as 'affection for long-standing institutions'.
(I know that's not what the author is thinking, but left has had it's racism
and pro-discrimination elements, and I am wary of giving too much opportunity
for those to align with that of the right)
bruce wilder 08.30.16 at 7:29 am
I wonder, how do you envision this failure of neoliberalism?
It seems like an effective response would depend somewhat on how you
think this anticipated political failure of neoliberalism plays out over
the next few years. And, it is an anticipated failure, yes? or do you see
an actual political failure as an accomplished fact?
And, if it is still an anticipated failure, do you see it as a political
failure - the inability to marshall electoral support or a legislative coalition?
Or, an ideological style that's worn out its credibility?
Or, do you anticipate manifest policy failure to play a role in the dynamics?
MisterMr 08.30.16 at 9:31 am
"The other is to appeal to the positive elements of the appeal of tribalism,
such as solidarity and affection for long-standing institutions and to counterpose
them to the self-seeking individualism central to neoliberalism"
I don't agree with this. First, appealing to tribalism without actually
believing in it is a dick move. Second, actually existing tribalists are
arseholes, or rather everyone when is taken by the tribalist demon becomes
an arsehole.
Third, the "individualist" thingie work as long as people believe that
they are on the winning side; but there is evidence enough today that most
people are on the losing side of increasing inequality, so most people have
reason to be pro lftish policies both in "moralistic" terms and in "crude
self interest" terms. In the past this wasn't obvious, but today it is,
and this drum should be banged more.
PS: about increasing inequality, there are two different trends that
usually are mixed up:
1) When we look at inequality at an international level, the main determinant
is differential "productivity" among nations. The productivity of developing
nations (mostly China) went up a lot, and this causes a fall in international
inequality.
2) When we look at inequalityinside a nation, it depends mostly on how
exploitative the economic system is, and I think that the main indicator
of this is the wage share of total income; as the wage share fell, income
inequality increased. This happened both in developed and developing countries.
These two determinants of inequality are mixed up and this creates the
impression that, say, the fall in wages of American workers is caused by
the ascent of Chinese workers, whereas instead both American and Chinese
workes lost in proportion, but the increase in productivity more than compensated
the fall in relative wages.
Mixing up these two determinants causes the rise in nationalism, as workers
in developed nations believe that they have been sacrificed to help workers
in developing nations (which isn't true). This is my argument against nationalism
and the reason I'm skeptic of stuff like brexit, and this makes me sort
of allergic to tribalism.
Bob Zannelli 08.30.16 at 11:43 am
This analysis by Quiggin is spot on. Clearly the way forward holds both
promise and great peril, especially in the nuclear age. The notion that
Trump is just more of the same from the GOP is deluded. He represents a
dangerous insurgency of radical rightists , who can be quite fairly be called
racist and religious extremist based fascists. A Trump win could well close
the curtain on democracy in America. Neo liberalism is being repudiated
, will the elite now turn to the fascists to hold their ground, as happened
in Germany? It's a troubling question.
casmilus 08.30.16 at 11:46 am
"The great opportunity is to present a progressive alternative to the
accommodations of soft neoliberalism. The core of such an alternative
must be a revival of the egalitarian and activist politics of the postwar
social democratic moment, updated to take account of the radically different
technological and social structures of the 21st century. In technological
terms, the most important development is undoubtedly the rise of the
Internet."
Why is that any more important than the invention of digital computers,
starting from the 1940s? Just a further evolution. The real challenge is
from robotics, 3D printing and AI drivers for such processes. That really
will liquidate a lot of skilled labour; computing created a new industry
of jobs and manufacturing.
bob mcmanus 08.30.16 at 11:59 am
4: From my point of view, neoliberalism…long supply chains and logistics;
downward pressure on wages and the social wage; the growth of finance to
supply consumer credit to prop up effective demand; the culture of self-improvement
and self-management to reduce overhead and reproduction costs…no longer
supports accumulation of capital or reproduction of political legitimacy.
IOW, an economic failure.
(Anwar Shaikh's new book is definitive)
Martin 08.30.16 at 1:21 pm
Is there any knowledge of who supports tribalism? The analysis so far seems
to be in terms of tribalist policies, emotions etc, but not of who the tribalists
are, and why they support tribalist 'solutions' rather than say socialism.
Bob Zannelli 08.30.16 at 1:36 pm
Is there any knowledge of who supports tribalism? The analysis so far seems
to be in terms of tribalist policies, emotions etc, but not of who the tribalists
are, and why they support tribalist 'solutions' rather than say socialism.
Tribalism is hard wired in our genes. It can be over come with education
but too few voters ever get beyond an emotional response to what they perceive.
It's no accident that conservatives do anything they can to undermine education
and promote religious based ignorance. That's how they win elections. But
this is a dangerous game, sometimes a Hitler or a Trump shows up and steals
the show.
Will G-R 08.30.16 at 2:00 pm
MisterMr @ 5: Third, the "individualist" thingies work as long as
people believe that they are on the winning side; but there is evidence
enough today that most people are on the losing side of increasing inequality,
so most people have reason to be pro leftish policies both in "moralistic"
terms and in "crude self interest" terms. In the past this wasn't obvious,
but today it is, and this drum should be banged more.
This is where it becomes problematic that so much of this conversation
happens within individual First-World nation-states, because the inequalities
"tribalists" are interested in maintaining are precisely the inequalities
between nations on a global scale. If the "most people" you're
talking about includes the masses of recently-proletarianized working people
in the Third World, then sure "most people" have reason to be pro-left.
But when we have this conversation in a setting like this, we all implicitly
know that "most people" refers at best to the working classes of countries
like Australia and the US, and these people still perceive a decided
interest in maintaining the global economic hierarchies for which "tribalism"
serves this conversation as a signifier.
For the working classes of the First World wrapped up in their "tribalist"
defense of a global aristocracy of nations, to truly believe they're on
the losing side would mean to accept that the defense of national sovereignty
from neoliberal globalization is an inherently lost cause. If they're to
defect from the cause of "tribalism" and join the Left, this would mean
accepting a critique of the "long-standing institutions" of First-World
social democracy that appears to go much farther left even than John Quiggin
appears willing to go. (As in, the implementation of social-democratic institutions
in First-World capitalist societies is inherently a tool for enabling the
economic domination of the First World over the Third World, by empowering
a racialized labor aristocracy to serve as foot soldiers of global imperialism,
and so on and so on à la Lenin.)
Will G-R 08.30.16 at 2:09 pm
Bob Zanelli @ 10, your comment perfectly embodies an ideological trap
to be avoided at all costs. What Quiggin calls tribalism is precisely
not "hard-wired in our genes", it's an inherently modern creation
of the inherently modern political and economic forces that first created
the "imagined community" of the modern nation-state and continue to put
incredible amounts of energy into indoctrinating various populations in
its various national mythologies.
Far from being an inherent solution to this problem, education - within
the context of a national education system, educating its pupils as Americans/Australians/etc.
- is an utterly indispensable mechanism by which this process is accomplished.
Interestingly, I share all the premises, and yet none of the optimistic
conclusions. Because soft neoliberalism (and in fact even hard neoliberalism)
is much closer sociologically, politically and ideologically to the left
than tribalism is, I see the end of the hegemonic neoliberal ideology and
the correlative rise of tribalism as (somewhat paradoxically) the guarantee
for perpetual neoliberal power in the short and middle term, at least for
two reasons.
First of all, left-inclined citizens will most likely always vote for
neoliberal candidates if the alternative is a tribalist candidate (case
in point: in 9 months or so, I will in all likelihood be offered a choice
between a hard neoliberal and Marine Le Pen; what then?).
Moreover, even if/when tribalist parties gain power, their relative sociological
estrangement from the elite sand correlative relative lack of political
power all but guarantees in my mind that they will govern along the path
of least resistance for them; that is to say hard neoliberalism (with a
sprinkle of tribalist cultural moves). This is how the FPO ruled Carinthia,
for instance, and how I would expect Trump to govern in the (unlikely) eventuality
he reached power.
Finally, mass migration are bound to intensify because of climate change
(if for no other reason) and the trend internationally in advanced democratic
countries seems to be towards national divergence and hence national reversion.
I don't see how an ideologically coherent left-oriented force can emerge
in this context, but of course I would love to be proved wrong on all counts.
Lupita 08.30.16 at 2:22 pm
Bravo, Will G-R!
Bob Zannelli 08.30.16 at 2:37 pm
Will G-R 08.30.16 at 2:09 pm
Bob Zanelli @ 10, your comment perfectly embodies an ideological trap to
be avoided at all costs. What Quiggin calls tribalism is precisely not "hard-wired
in our genes", it's an inherently modern creation of the inherently modern
political and economic forces that first created the "imagined community"
of the modern nation-state and continue to put incredible amounts of energy
into indoctrinating various populations in its various national mythologies.
Far from being an inherent solution to this problem, education - within
the context of a national education system, educating its pupils as Americans/Australians/etc.
- is an utterly indispensable mechanism by which this process is accomplished.
)))))))))))))))
I don't agree. It's true that tribalism has morphed into what you call
national mythologies , but the basis for this is our evolutionary heritage
which divides the world into them and us. This no doubt had survival benefits
for hunter gatherer social units but it's dangerous baggage in today's world.
I find your comments about education curious. Are you advocating ignorance?
I think you confuse education with indoctrination , they are not the same
thing.
The question of what ideology an ideologically coherent left-oriented force
would come together around is indeed an important question, but I'll try
not to dwell on my hobbyhorses too much.
For now I'll add a slightly different area to consider this through:
current First World "left" populations (especially in the U.S.) want to
turn everything into individual moral questions through which a false solidarity
can be expressed and through which opposing people can be shamed. For instance,
I've thought a good deal about how environmental problems are the most important
problems in general at the moment, and how it's clear that they require
a redesign of our infrastructure. This is not an individual problem - no
amount of volunteer action will work. Yet people on the left continually
exert pressure to turn this into a conflict of morally good renouncers vs
wasters, something that the right is quite ready to enhance with their own
ridiculous tribal boundary markers (google "rolling coal").
You see this with appeals to racism. Racism is a real problem and destroys
real people's lives. But treating it as an individual moral problem rather
than a social, structural one is a way of setting boundaries around an elite.
The challenge for the left is going to be developing a left that, no matter
what it's based around, doesn't fall back into this individualist new-class
status preservation.
Will G-R 08.30.16 at 3:15 pm
@ Bob Zannelli, you're continuing to draw on the language of sociobiology
and evolutionary psychology without the social-scientific rigor to justify
it. (Of course, to many if not most social scientists, the very fields of
sociobiology and evopsych are largely premised on a lack of such rigor to
begin with, but that's another story.) In particular, the term doing the
heavy lifting to provide your get-out-of-rigor-free card is "morphed". What
has been the historical trajectory of this "morphing"? What social and political
institutions have been involved? With what political interests, and what
economic ones? If you think about those kinds of questions, you might make
some headway toward understanding why social scientists generally interpret
the sociocultural aspects of racism and fascism as essential, and the biological
aspects as essentially arbitrary.
To be fair, a large part of the fault here is John Quiggin's for using
a word with as much fraught ideological baggage as "tribalism" to do so
much of his own heavy lifting. The ironic thing is, the polemical power
that probably motivated Quiggin to use that word in the first place comes
from the very same set of ideological associations (e.g. "barbaric", "savage",
"uncivilized", etc.) whose application to modern political issues of race
and nationality he would probably characterize as "tribalist" in the first
place!
Holden Pattern 08.30.16 at 3:20 pm
@ comment 16:
I can't speak for other industrialized democracies, but in the US,
there is essentially no ability for the left to engage in structural change.
Every avenue has been either blocked by the 18th century political structures
of the US (sometimes exploited in extraordinary ways by the monied powers
that those structures enable) or subsumed by the neoliberal individualist
marketification of everything.
So what remains, especially given the latter, is marketing and individual
action - persuasion, shame, public expressions of virtue. That's all that
is available to the left in the United States, especially on issues like
racism and environmental problems.
So while it's good fun to bash the lefty elites in their tony coastal
enclaves and recount their clueless dinner party conversations, it's shooting
fish in a barrel. Easy for you and probably satisfying in a cheap way, but
the fish probably didn't put themselves in the barrel, and blaming them
for swimming in circles is… problematic.
Bob Zannelli 08.30.16 at 3:26 pm
@ Bob Zannelli, you're continuing to draw on the language of sociobiology
and evolutionary psychology without the social-scientific rigor to justify
it. (Of course, to many if not most social scientists, the very fields of
sociobiology and evopsych are largely premised on a lack of such rigor to
begin with, but that's another story.) In particular, the term doing the
heavy lifting to provide your get-out-of-rigor-free card is "morphed". What
has been the historical trajectory of this "morphing"? What social and political
institutions have been involved? With what political interests, and what
economic ones? If you think about those kinds of questions, you might make
some headway toward understanding why social scientists generally interpret
the sociocultural aspects of racism and fascism as essential, and the biological
aspects as essentially arbitrary.
)))))))))))
I hope it's clear that I do not discount the assertion that nationalism
and racism are part of social constructs that favor class interest. My point
is that political agendas have to work with the clay they start with. To
just discount the reality of our evolutionary baggage by calling it sociobiology
is an example of classic Marxist ideology which seems to require the perfectibility
of human nature. This is a dangerous illusion, it leads right to the gulags.
))))))))))))))))))))))))))))))
To be fair, a large part of the fault here is John Quiggin's for using
a word with as much fraught ideological baggage as "tribalism" to do so
much of his own heavy lifting. The ironic thing is, the polemical power
that probably motivated Quiggin to use that word in the first place comes
from the very same set of ideological associations (e.g. "barbaric", "savage",
"uncivilized", etc.) whose application to modern political issues of race
and nationality he would probably characterize as "tribalist" in the first
place!
"Easy for you and probably satisfying in a cheap way, but the fish probably
didn't put themselves in the barrel, and blaming them for swimming in
circles is… problematic."
I come out of the same milieu, so I don't see why it's problematic to
call attention to this. I
helped to change JQ's opinion on part of it (as he wrote later, the
facts were the largest influence on his change of opinion, but apparently
what I wrote helped) and he's an actual public intellectual in Australia.
As intellectuals our personal actions don't matter but sometimes our ideas
might.
Activism and social movements can help, even in the U.S. (I think that
350.org has had a measurable effect) so I wouldn't say that a structural
approach means that nothing is possible.
Will G-R 08.30.16 at 4:06 pm
@ Bob Zannelli: To just discount the reality of our evolutionary
baggage by calling it sociobiology is an example of classic Marxist
ideology which seems to require the perfectibility of human nature.
As hesitant as I am to play the
"Fallacy
Man" game, this is a common strawman about Marxism. In the words of
Mao Tse-Tung, as quoted by the eminent evolutionary biologist and Marxist
Richard Lewontin: "In a suitable temperature an egg changes into a chicken,
but no temperature can change a stone into a chicken, because each has a
different basis." As far as human biological capacities, it's perfectly
clear from any number of everyday examples that we're able to ignore all
sorts of outward phenotypic differences in determining which sorts of people
to consider more and less worthy of our ethical consideration, as long as
the ideological structure of our culture and society permits it - so the
problem is how to build the sort of culture and society we want to see,
and telling wildly speculative "Just-So stories" about how the hairless
ape got its concentration camps doesn't necessarily help in solving this
problem.
On the contrary, the desire to root social phenomena like what Quiggin
calls "tribalism" in our genes is itself an ideological fetish object of
our own particular culture, utilizing our modern reverence for science to
characterize social phenomena allegedly dictated by "biology" as therefore
natural, inevitable, or even desirable. Here, have a
reading /
listening recommendation.
RobinM 08.30.16 at 4:20 pm
Like Will G-R at 17 and Bob Zannelli at 19, I, too, found the use of the
term "tribalism" in the original post a bit disturbing. It's almost always
used as a pejorative. And it suggests that the "tribalists" require no deeper
analysis. I'm sure it's been around for much longer, but I think I first
took note of it when the Scottish National Party was shallowly dismissed
as a mere expression of tribalism. That the SNP (which, by the way, I do
not support) was raising questions about the deep failures of the British
system of politics and government long before these failures became widely
acknowledged was thus disregarded. Currently, an aspect of that deep failure,
the British Labour Party seems to be in the process of destroying itself,
again in part, in my estimation, because one side, among whom the 'experts'
must be numbered, seem to think that those who are challenging them can
be dismissed as "tribalists." There are surely a lot more examples.
More generally, the resort to "tribalism" as an explanation of what is
now transpiring is also, perhaps, neoliberalism's misunderstanding of its
own present predicaments even while it is part of the arsenal of weapons
neoliberals direct against their critics?
But in short, the evocation of "tribalism" is not only disturbing, it's
dangerously misleading. Those seeking to understand what may now be unfolding
should avoid using it, not least because there are also almost certainly
a whole lot of different "tribes."
awy 08.30.16 at 5:06 pm
so what's the neoliberal strategy for preserving good governance in the
face of insurgencies on the left and right?
Yankee 08.30.16 at 5:08 pm
This just in , about good tribalism (locality-based) vs bad tribalism
("race"-based, ie perceived or assumed common ancestry). It's about cultural
recognition; nationalism, based on shared allegiance to a power structure,
is different, although related (sadly)
"But as a massive public good created, in very large measure, by the public
sector .." With a large assist from non-profit-making community movements,
as with Wikipedia and Linux. (IIRC the majority of Internet servers run
on variants of the noncommercial Linux operating system, as do almost all
smartphones and tablets.) CT, with unpaid bloggers and commenters, is part
of a much bigger trend. Maybe one lesson for the state-oriented left is
to take communitarianism more seriously.
The Internet, with minimal state regulation after the vital initial pump-priming,
technical self-government by a meritocratic cooptative technocracy, an oligopolistic
commercial physical substructure, and large volumes of non-commercial as
well as commercial content, is an interesting paradigm of coexistence for
the future. Of course there are three-way tensions and ongoing battles,
but it's still working.
Will G-R 08.30.16 at 5:42 pm
RobinM, to clarify, I do think that what Quiggin calls tribalism is worth
opposing in pretty absolute terms, and I even largely agree with the meat
of his broader "three-party system" analysis. I just think we should
call what he calls "tribalism" by its proper name - fascism - instead of
deliberately tainting our theories with overtones of an "enlightened civilized
wisdom versus backwards tribal savages" narrative that itself is central
to fascist/"tribalist" ideology and therefore belongs in the dustbin of
history. Surely flouting Godwin's Law is a lesser sin than knowingly perpetuating
the discourses of racism.
Bob Zannelli 08.30.16 at 6:18 pm
In the words of Mao Tse-Tung, as quoted by the eminent evolutionary biologist
and Marxist Richard Lewontin:
Now Mao Tse-Tung, there's role model to be quoted. The thing about science
is that's it true whether you believe it not, the thing about Marxism is
that it's pseudo science and
it gave us Stalin , the failed Soviet Union, Pol Pot,, Mao Tse Tung and
the dear leader in North Korea to name the most obvious. I know, I know
, maybe someone will get it right some day.
A realist politics doesn't ignore science , this doesn't mean that socialism
is somehow precluded, in fact the exact opposite. We have to extend democracy
into the economic sphere, until we do this, we don't have a democratically
based society. It's because of human nature we need to democratize every
center of power, no elite or vanguard if you prefer can be ever be trusted.
But democracy isn't easy, you have to defeat ignorance , a useful trait
to game the system , by the elite, and create a political structure that
takes account of human nature , not try to perfect it. One would hope leftists
would learn something from history, but dogmas die hard.
Igor Belanov 08.30.16 at 6:50 pm
Bob Zannelli @27
"about Marxism is that it's pseudo science and it gave us Stalin
, the failed Soviet Union, Pol Pot,, Mao Tse Tung and the dear leader
in North Korea to name the most obvious."
To claim that Marxism 'gave us' all those wicked people must be one of
the least Marxist statements ever written! No doubt if Stalin and Pol Pot
hadn't come across the works of a 19th century German émigré then they would
have had jobs working in a florists and spending all the rest of their time
helping old ladies over the road.
Good to see Bob being consistent though. A few comments back he was suggesting
that humans are biologically 'tribalist', but now he's blaming all evil
on political ideology.
"I conceive, therefore, that a somewhat comprehensive socialisation of investment
will prove the only means of securing an approximation to full employment;
though this need not exclude all manner of compromises and of devices by
which public authority will co-operate with private initiative."
Sebastian_H 08.30.16 at 7:26 pm
'Tribalism' is giving members of what you perceive as your tribe more leeway
than you give others. (Or negatively being much more critical of others
than you would be of your tribe). It seems pretty hardwired, at least enough
that not planning around it would be foolish. Lots of 'civilization' is
about lubricating the rough spots created by tribalism while trying to leverage
the good sides.
One of the failures of neo-liberalism is in assuming that it can count
on the good side of tribalism while ignoring the perceived responsibilities
to one's own tribe. It turns out that you can't say things like "globalism
is great for the UK GDP" and expect citizens of the 'UK' to be excited about
it if they feel too alienated from the people who are making all of the
money. So then when it comes time to say "for the good of the UK we need
you to do X" lots of people won't listen to you. John asks a good question
in exploring what comes next, but it isn't clear.
Bob Zannelli 08.30.16 at 7:30 pm
about Marxism is that it's pseudo science and
it gave us Stalin , the failed Soviet Union, Pol Pot,, Mao Tse Tung and
the dear leader in North Korea to name the most obvious."
To claim that Marxism 'gave us' all those wicked people must be one of
the least Marxist statements ever written! No doubt if Stalin and Pol Pot
hadn't come across the works of a 19th century German émigré then they would
have had jobs working in a florists and spending all the rest of their time
helping old ladies over the road.
Good to see Bob being consistent though. A few comments back he was suggesting
that humans are biologically 'tribalist', but now he's blaming all evil
on political ideology.
)))))))))))))
Marxism isn't evil and Nazism is evil. So political ideology can
be evil or just wrong and accomplish evil. We are indebted to Marx for describing
the nature of class warfare and the natural trends of accumulation based
economics , but we now know his solution is a failure. So either we learn
from this or we cling on to outmoded ideas and remain irrelevant.
In the Soviet Union , science, art and literature were under assault,
with scientists, artist and writers sent to the gulag or murdered for not
conforming to strict Marxist Leninist ideology. Evolution, quantum mechanics,
and relativity were all attacked as bourgeois science. ( The need for nuclear
weapons forced Stalin later to allow this science to be sanctioned) These
days, like the Catholic Church which can no longer burn people at the stake
, old Marxists can just castigate opinions that don't meet Marxist orthodoxy.
Will G-R 08.30.16 at 8:53 pm
@ Sebastian_H: It seems pretty hardwired, at least enough that not
planning around it would be foolish.
But again, when we're talking about "tribalism" not in terms of some
vague quasi-sociobiological force of eternal undying human nature, but in
terms of the very modern historical phenomena of racism and nationalism,
we have to consider the way any well-functioning modern nation-state has
a whole host of institutions devoted to indoctrinating citizens in whatever
ideological mythology is supposed to underpin a shared sense of national
and/or racial identity. It should go without saying that whatever we think
about general ingroup/outgroup tendencies innately hardwired into human
nature or whatever, this way of relating our identities to historically
contingent social institutions and their symbols is only as innate or hardwired
as the institutions themselves.
It turns out that you can't say things like "globalism is great for
the UK GDP" and expect citizens of the 'UK' to be excited about it if they
feel too alienated from the people who are making all of the money.
At least in my view, economists are usually slipperier than that. The
arguments I've seen for neoliberal free trade (I'm not quite sure what to
make of the term "globalism") generally involve it being good for "the economy"
in a much more abstract sense, carefully worded to avoid specifying whether
the growth and prosperity takes place in Manchester or Mumbai. And there's
even something worth preserving in this tendency, in the sense that ideally
the workers of the world would have no less international/interracial solidarity
than global capital already seems to achieved.
To me the possibility that neoliberal free trade and its degradation
of national sovereignty might ultimately undermine the effectiveness of
all nationalist myths, forging a sense of global solidarity among the collective
masses of humanity ground under capital's boot, is the greatest hope or
maybe even the only real hope we have in the face of the neoliberal onslaught.
Certainly if there's any lesson from the fact that the hardest-neoliberal
political leaders are often simultaneously the greatest supporters or enablers
of chauvinistic ethnonationalism, it's that this kind of solidarity is also
one of global capital's greatest nightmares.
Will G-R 08.30.16 at 9:05 pm
Punching "globalism" into Google returns the following definition from
Merriam-Webster: "a national policy of treating the whole world as a proper
sphere for political influence - compare imperialism, internationalism."
I find it fascinating, and indicative of the ideological tension immanent
in fascist reactionaries' use of the term, that the two terms listed as
comparable to it are traditionally understood in modern political theory
as diametrically opposed to each other.
bob mcmanus 08.30.16 at 9:17 pm
Recommending Joshua Clover's new book. Riot -Strike – Riot Prime
The strike, the organized disruption at the point of production, is no
longer really available. Late capitalism, neoliberalism is now extracting
surplus from distribution, as it did before industrialism, and is at the
transport and communication streams that disruption will occur. And this
will be riot, and there won't be much organization, centralization, hierarchy
or solidarity. I am ok with "tribalism" although still looking for a better
expression, and recognizing that a tribe is 15-50 people, and absolutely
not scalable. Tribes can network, and people can have multiple and transient
affiliations.
Clover's model is the Paris Commune.
(PS: If you don't like "tribe" come up with a word or expression that
usefully describes the sociality of Black Lives Matter (movement, maybe)
or even better Crooked Timber.)
Almost all people are primarily led by emotions and use reason only secondarily,
to justify the emotions.
There is a rude set of socio-economic "principles" which they call upon
to buttress these arguments. You can hear these principles at any blue-collar
job site, and you can hear them in a college lecture on economics, too:
–nature is selfish
–resources are scarce
–money measures real value
–wants are infinite
–there ain't no such thing as a free lunch (TANSTAAFL)
–you have to work for your daily bread
–incentives matter
–people want to keep up with the Joneses
–labor should be geographically mobile
–government is inefficient
–welfare destroys families
–printing money causes inflation
–the economy is a Darwinian mechanism
These are either false, or else secondary and ephemeral, and/or becoming
inopportune and obsolete. None of them survives inspection by pure reason.
Yet this is an aggregate that buzzes around in almost everyone's head,
is INTERNALIZED as true, for expectations both personal and social. And
which causes most of our problems.
Consider TANSTAAFL: "There ain't no such thing as a free lunch." Yet
obviously there is such a thing as a cheaper lunch, or else there would
be no such thing as the improvement in the standard of living. …Okay, you
say, but "resources are scarce." …Well no, we are quickly proceeding to
the point where technological change and substitution will end real scarcity,
and without ecological degradation. Therefore: can cheaper lunches proceed
to the point where they are effectively free for the purposes of meeting
human need, "your daily bread"? …Well no, you say, because people are greedy,
and beyond their needs, they have wants: "wants are infinite." …But wait,
wants really cannot be infinite, because a "want" takes mental time to have,
and you only have so many hours in every day, and so many days in your life.
In fact your wants are finite, and quite boring, and the Joneses' wants
are finite sand boring too. (Though why you want to keep up with those boneheads
the Joneses is a bit beyond me.) …Okay, you say, but "incentives matter":
if you give people stuff, they will just slack off: "welfare destroys families."
…But wait a minute. If we have insisted that people must work to feel self-worth,
yet capitalism puts people out of work until there are no jobs available,
and there are no business opportunities to provide ever-cheaper lunches,
isn't welfare the least of our problems, isn't welfare a problem that gets
solved when we solve the real problem?
But what is the real problem? Is the real problem that we don't know
how to interact with strangers without the use of money, and so we think
that money is a real thing? Is the real problem your certain feeling that
we need to work for our self-worth? Is the real problem that capitalism
is putting itself out of business, and showing that these so-called principles
are just a bunch of bad excuses? Is the real problem that we are all caught
in a huge emotional loop of bad thinking, now becoming an evident disaster?
bob mcmanus 08.30.16 at 9:26 pm
And also of course, people looking at Trump and his followers (or their
enemies and opponents in the Democratic Party) and seeing "tribalism" are
simply modernists engaging in nostalgia and reactionary analysis.
Trump_vs_deep_state is not fascism, and a Trump Rally is not Nuremberg. Much closer
to Carnival
Wiki: "Interpretations of Carnival present it as a social institution
that degrades or "uncrowns" the higher functions of thought, speech, and
the soul by translating them into the grotesque body, which serves to renew
society and the world,[37] as a release for impulses that threaten the
social order that ultimately reinforces social norms ,[38] as a social
transformation[39] or as a tool for different groups to focus attention
on conflicts and incongruities by embodying them in "senseless" acts."
I agree with bob mcm that Trump_vs_deep_state isn't fascism. It's not a serious
analysis to say that it is.
"Tribalism" was coined as a kind of shorthand for what Michael Berube
used to refer to "I used to consider myself a Democrat, but thanks to 9/11,
I'm outraged by Chappaquiddick." It's the wholesale adoption of what at
first looks like a value or belief system but is actually a social signaling
system that one belongs to a group. People on the left refer to this signaling
package as "tribal" primarily out of envy (I write somewhat jokingly) because
the left no longer has a similarly strong package on its side.
Greg McKenzie 08.30.16 at 11:47 pm
"Tribalism" feeds into the factionalism of parties. The left has a strong
faction both inside the ALP and the Liberal Party. The Right faction, in
the NLP, is currently in ascendancy but this will not last. Just as the
Right faction (in the ALP) was sidelined by clever ALP faction battles,
the current members of the NLP's Right faction are on borrowed time. But
all politicians are "mugs" as Henry Lawson pointed out over a hundred years
ago. Politicians can be talked into anything, if it gives them an illusion
of power. So "tribalism" is more powerful than "factionalism" simply because
it has more staying power. Left faction and Right faction merely obey the
demands of their tribal masters.
bruce wilder 08.31.16 at 1:47 am
. . . the left no longer has a similarly strong package on its side
honestly, I do not think "tribalism" is a "strong package" on Right or
Left. Part of the point of tribalism in politics is just how superficial
and media driven it is. The "signaling package" is put together and distributed
like cigarette or perfume samples: everybody gets their talking points.
Pretending to care dominates actually caring. On the right - as Rich
points out with the reference to "rolling coal", some people on the Right
who have donned their tribal sweatshirts get their kicks out of supposing
that somebody on the Left actually cares and they can tweak those foolishly
caring Lefties.
bruce wilder 08.31.16 at 1:57 am
I take note of the Florida primary results, just in: Debbie Wasserman-Schultz
did just fine, as did her hand-picked Democratic Senate candidate, the horrible
Patrick Murphy.
Oh, and Rubio is back. Notice of the death of neoliberalism might
be premature.
Martin 08.31.16 at 2:11 am
@ Bob Zannelli 10: To describe something as "hard wired" is to give up:
what course of action could we take? But, then, why isn't everyone a member
of the tribalist party? Has everyone, always, been of the tribalist party?
(I know someone could argue, 'everyone is racist' or 'all these white liberals
are just as racist really', but even if that is somehow true, most are members
of the socialist party or the neoliberal party).
Rather than deciding it is all too hard, we can at least find out who
supports tribalism, why it makes sense to them, whether it benefits them,
how it benefits them, if it does, and why they support it anyway, if it
does not benefit them.
I suppose (I am guessing here), some tribalists are benefiting from differential
government support, such as immigration policies that keep out rival potential
employees, or tariff policies that keep out competitors; or at least, that
they used to benefit like that. But Crooked Timber should have readers
who can answer this kind of question from their expertise.
I suppose it's too late to try to convince people here that the term "neoliberalism"
is a virus that devastates the analytic functions of the brain, but I'll
try. The term is based on a European use of the word "liberal" that has
never had any currency in the US. It's a wholly pejorative term based on
a misunderstanding of Hayek (who did *not* believe in laissez-faire), but
may be a reasonable approximation of the beliefs of , say, Thatcher. Then
that term was confounded with a totally unconnected term invented by Peters,
who was using the word "liberal" in the American sense. And presto, we have
a seamless worlwide philosophy with "hard" and "soft" variants.
As far as, say, H. Clinton is concerned, I can see no respect in which
it would be wrong to describe her as just a "liberal" in the American sense.
American liberalism has always been internationalist and mildly pro-free-trade.
It's also been pro-union– so we can just say that's *soft* neoliberalism
and preserve our sense that we are part of a world-wide struggle. Or not.
Bernie Sanders was celebrated by the left for supporting a tax on carbon
(without mentioning, of course, what price of gasoline he was contemplating),
but this is an excellent illustration of what Peters would have considered
a neoliberal policy. The term now just seems to mean anything I don't like.
As for Benedict Arnold, I mean Judas Iscariot, I mean Bill Clinton,
you can make a case that he did his best to salvage something from the wreckage.
To repeat what I've said here before, when he was elected the Democrats
had lost five of the last six elections, most by landslides. The one exception
was the most conservative of the Democratic candidates, who was despised
by the left. The American people had decisively rejected what the Democrats
were selling. False consciousness, no doubt.
So rather than spending a lot of time celebrating victory over this hegemonic
ideology, perhaps people should be talking about liberalism and whatever
we're calling the left alternative to it.
Peter T 08.31.16 at 10:54 am
"Tribalism" is unhelpful here, because it obscures the contribution "tribalism"
has made and can make to effective social democracy. It was on the basis
of class and national tribalisms (solidarities is a better word) that social
democracy was built, and its those solidarities that give it what strength
it still has. That others preferred, and still prefer, other forms of solidarity
– built around region or religion or language – should neither come as a
surprise nor be seen as basis for opposition. It's the content, not the
form, that matters.
Self-interest is too vague and shifting, international links too weak,
to make an effective politics. Our single most pressing problem – climate
change – can clearly only be dealt with internationally. Yet the environmental
and social problems that loom almost as large are clearly ones that can
best be dealt with on national or sub-national scales. As this becomes clearer
I expect the pressure to downsize and de-link from the global economy will
intensify (there are already signs in this direction). The social democrat
challenge is then to guide local solidarities towards democracy, not decry
them.
If we're really looking for a general word that works across national boundaries,
it's a well-used one: conservatism. People sometimes object that conservatives
in one country are not the same as conservatives in another country, but
really the differences are not much greater than in liberalism across countries,
socialism, etc. Conservatism includes the characteristics of authoritarianism
and nationalism. U.S. "tribalism" is its local manifestation: the use of
"tribalism" to denote a global style of conservatism denotes a particular,
contemporary type of conservatism, just as neoliberalism is a type of liberalism.
You could divide JQ's three groups into left, liberal, conservative but
since you're using neoliberal as the middle one (e.g. a contemporary mode)
then "tribalism" or something like it seems appropriate for the last.
Note that there is no word for a contemporary mode of leftism, because
there isn't one. The closest is the acephalous or consensus style of many
recent movements and groups, but that mode hasn't won elections or taken
power.
John Quiggin,
What I see as the missing point here, and perhaps we disagree upon it's
significance, is resource limitations. We can't avoid the violent reversion
to zero sum games unless we address the problem (exactly when it has or
will reach crisis point is perhaps a point of disagreement) of expanding
population meets finite resources (or even meets already fully owned resources).
I don't buy the argument that there a technological solution, or the
argument that population will stabilize before it gets too bad (I don't
see what will drive it – because Malthus was partly right).
If people are unable to survive where they are, they will try to move,
and people already living where they are moving to won't like it. Perhaps
we are already seeing some of this, perhaps not. But it will drive tribalism
(joining together to keep the "invaders" out) and won't drive the left.
I have a feeling that the "left" should be replaced by a "green" view of
the world, but for one thing, that will need a new economics – perhaps on
the lines sketched out by Herman Daly. Maybe the term "left" is too associated
with a Marxist view of the world to be useful any more.
Will G-R 08.31.16 at 2:00 pm
Apart from the obvious advantages "fascism" brings to the table - the sense
of describing "Trump_vs_deep_state" in terms of what it seeks to develop into and not
in terms of its current and clearly underdeveloped form, as well as the
sense of tying our current state of poorly grasped ideological confusion
back to WWII as the last clear three-way "battlefield of ideologies" pitting
liberalism against fascism against socialism - the term is broadly symbolically
appropriate for the same reasons it was originally adopted by Mussolini.
The sense of national solidarity and "strength through unity" (i.e. the
socialist element of National Socialism) is exactly what John Quiggin is
characterizing as "the positive elements of the appeal of tribalism", and
the direct invocation of the Roman fasces as a symbol of pure authority
is exactly what Z is getting at with the term "archism". Sure our latter-day
manifestation of fascism hasn't (yet) led to an honest-to-God fascist
regime in any Western country, but to kid ourselves that this isn't
what it seeks or that it couldn't potentially get there would be, well,
a bit too uncomfortably Weimar-ish of us.
Besides which, I get that pooh-poohing about Godwin's Law and "everybody
I don't like is Hitler" and so on is a nearly irresistible tic in today's
liberal discourse, but c'mon people… we're all comfortable using the term
"neoliberalism", which means we're all willing to risk having the same Poli
Sci 101 conversations over and over again in the mainstream ("yes, Virginia,
Hillary Clinton and Paul Ryan are both liberals!") for the sake
of our own theoretical clarity. At the very least "fascism" would have fewer
problematic discursive connotations than "tribalism", which I absolutely
refuse to use in this conversation without putting it in sneer quotes.
bruce wilder 08.31.16 at 2:17 pm
The problem with neoliberalism is that it isn't really compatible
with a modern free market economy. Simply because that system isn't
well enough understood to allow experts, let alone informed amateurs,
to reach a consensus on what a particular change will actually do. .
. . It is the inability of the neoliberal communication style to credibly
promise control that lost it.
You seem to be dancing around the elite corruption that is motivating
the rationales provided by neoliberalism. We are going to improve efficiency
by privatizing education, health care, pensions, prisons, transport. Innovation
is the goal of deregulating finance, electricity. That is what they say.
The obscurity and complexity of, say, Obamacare or the Greek bailout
is a cover story for the looting.
The problem is not that the experts do not understand consequences.
The problem is that a broken system pays the top better, so the system has
to be broken, but not so broken that the top falls off in collapse.
bruce wilder 08.31.16 at 2:35 pm
Will G-R @ 55
So you know what Trump_vs_deep_state wants to become, so we should call it that,
rather than describe what it is, because the ideological conflicts of 80
years ago were so much clearer.
We live in the age of inverted totalitarianism. Trump isn't Mussolini,
he's an American version of Berlusconi, a farcical rhyme in echo of a dead
past. We probably are on the verge of an unprecedented authoritarian surveillance
state, but Hillary Clinton doesn't need an army of blackshirts. The historical
fascism demanded everything in the state. Our time wants everything in an
iPhone app.
bruce wilder 08.31.16 at 2:54 pm
reason @ 54
Very well said. Resource limits shadow the falling apart of the global
order that the American Interest link Peter T points to. If the billionaires
are looting from the top and the response is a criminal scramble at the
bottom, the unnecessariat will be spit out uncomprehending into the void
between.
It is hard to see optimism as a growth stock. But, an effective left
would need something to reintroduce mass action into politics against an
elite that is groping toward a solution that entails replacing the masses
with robots.
Will G-R 08.31.16 at 3:38 pm
"Trump_vs_deep_state" may be the term du jour in the US, but let's try to kick our
stiflingly banal American habit of framing everything around our little
quadrennial electoral freak shows. After all, the US and our rigid two-party
system have always been an outlier in the vigor with which real political
currents have been forced to conform to the narrow partisan vocabulary of
either a left-liberal or a right-liberal major party. If hewing religiously
to a patriotic sense of US institutionalism is supposed to ultimately save
the liberal political sphere from the underlying political-economic forces
that threaten it, we might as well take a page from the Tea Party and start
marching around in powdered wigs and tricorn hats for all the good it'll
do us.
In the rest of the Western world, particularly in Central and Eastern
Europe, the "fascist" parties (Golden Dawn in Greece, Jobbik in Hungary,
Ataka in Bulgaria, etc.) are generally less euphemistic about their role
as fascist parties, and what forced sense of euphemism does exist
seems to provide little more than a rhetorical opportunity for mockingly
transparent coyness . To be fair, the predominant far-right parties
in richer Western European countries (the FN, AfD, UKIP, etc.) are a bit
more earnestly vague about their ambitions, so maybe a good compromise would
be to call them (along with Trump) "soft fascists" in contrast to the "hard
fascists" of Golden Dawn or Ataka. But fascism still makes much more sense
than any other existing "-ism" I've seen, unless we want to just make one
up.
Marc 08.31.16 at 3:48 pm
Analogies can obscure more than they illuminate.
RichardM 08.31.16 at 4:11 pm
> You seem to be dancing around the elite corruption that is motivating
the rationales provided by neoliberalism.
Fair point. On the other hand, if neoliberalism rule, then neoliberals
will be the rulers. And if not, not. Whatever the nature of the rulers,
they rarely starve. Worldwide, average corruption is almost certainly lower
in mostly-neoliberal countries than in less-neoliberal places like China,
Zimbabwe, North Korea, …
The key thing is, take two neoliberal politicians, only one of whom is
(unusually) corrupt. One entirely intends to deliver what you ask for, admittedly
while ensuring they personally have a nice life being well-fed, warm and
listened-to. The other plans to take it all and deliver nothing.
Given that nobody trustworthy knows anything, at least in a form they
can explain, you can't get useful information as to which is which. 300
hours of reading reports of their rhetoric in newspapers, blogs, etc. leaves
you none the wiser. And by the time you have a professional-level of knowledge
of what's going on, you are part of the problem.
Might as well just stick to looking at who has which label next to their
name, or who has good hair.
Will G-R 08.31.16 at 4:16 pm
Marc, the discourse of Godwin's Law has done a wonderful job solidifying
the delusion that what '20s-through-'40s-era fascists once represented is
categorically dead and buried, which is why it seems like the word can't
be used as anything other than an obtuse historical analogy. But it's not
an analogy - it's a direct insinuation that what these people currently
represent is a clear descendant of what those people once represented, however
mystified by its conditioned aversion to the word "fascism" itself. On the
contrary, if we surrender to the Godwin's Law discourse and accept that
fascism can never mean anything in contemporary discourse except
as an all-purpose "everything I don't like is Hitler" analogy or whatever,
it means we've forgotten what it means to actually be anti-fascist.
BTW, the link from the last comment isn't working for whatever reason,
so
here's Take 2 .
Bob Zannelli 08.31.16 at 5:27 pm
So much concern about the term tribalism. Well what is fascism? The
use of tribalism to grasp political power and establish a totalitarian political
order. Sound reasonable? Pick any fascism you like, the Nazis ( master race)
the theocratic fascists in the US ( Christian rule ) Catholic Fascism (
Franco's Spain) , you name it. It walks and talks like tribalism. Trump-ism
is the not so new face of American fascism. It's race based, it xenophobic,
it's embraces violence, has a disdain for civil liberties and human rights,
and it features the great leader. Doesn't seem to difficult to make the
connection.
bruce wilder 08.31.16 at 6:14 pm
RichardM: Whatever the nature of the rulers, they rarely starve.
Still not getting it. The operative question is whether the rulers feast
because the society works or because the society fails.
Neoliberalism is the politics of controlled dismantling of the institutions
of a society that formerly worked for a larger portion of its participants.
Like a landlord realizing increased cash flow from a decision to forego
maintenance and hire gangsters to handle rent collection, neoliberalism
seeks to divert the dividends from disinvestment to the top
The cadre managing this technically and politically difficult task
- it is not easy to take things apart without critical failures exemplified
by system collapse prompting insurrection or revolution - are rewarded as
are society's owners, the 1/10th of 1%. Everybody else is screwed - either
directly, or by the consequences of the social disintegration used to feed
a parasitic elite.
The key thing is, take two neoliberal politicians, only one of
whom is (unusually) corrupt. One entirely intends to deliver what you
ask for, admittedly while ensuring they personally have a nice life
being well-fed, warm and listened-to. The other plans to take it all
and deliver nothing.
Again, you are not getting it. This isn't about lesser evil. "Lesser
evil" is a story told to herd the masses. If there are two neoliberal politicians,
both are corrupt. Neither intends to deliver anything to you on net;
they are competing to deliver you.
Any apparent choice offered to you is just part of the b.s. The "300
hours of reading" is available if you need a hobby or the equivalent of
a frontal lobotomy.
I am not enthusiastic about this proposed distinction between "hard"
and "soft" neoliberalism. Ideologically, conservative libertarians have
been locked in a dialectic with the Clintonite / Blairite neoliberals -
that's an old story, maybe an obsolete story, but apparently not one those
insist on seeing neoliberalism as a monolithic lump fixed in time can quite
grasp, but never mind.
Good cop, bad cop. Only, the electorate is carefully divided so that
one side's good cop is the other side's bad cop, and vice versa.
Hillary Clinton is running the Democratic Party in such a way that she
wins the Presidency, but the Party continues to be excluded from power in
Congress and in most of the States. This is by design. This is the neoliberal
design. She cannot deliver on her corrupt promises to the Big Donors if
she cannot play the game Obama has played so superbly of being hapless in
the face of Republican intransigence.
In the meantime, those aspiring to be part of the credentialed managerial
classes that conduct this controlled demolition while elaborating the surveillance
state that is expected to hold things together in the neo-feudal future
are instructed in claiming and nurturing their individual political identity
against the day of transformation of consciousness, when feminism will triumph
even in a world where we never got around to regulating banks.
bruce wilder 08.31.16 at 6:33 pm
Will G-R, Bob Zannelli
Actual, historical fascism required the would-be fascists to get busy,
en masse . Trump (and Clinton) will be streamed on demand so you
can stay home and check Facebook. Hitler giving a two-hour 15000 word speech
and Trump, Master of the Twitterverse, belong to completely different political
categories, if not universes.
There are so many differences and those differences are so deep and pervasive
that the conversation hardly seems worth having.
stevenjohnson 08.31.16 at 7:54 pm
Historical fascism included not just Hitler's Germany, but Mussolini's Italy,
Franco's Spain, Salazar/Caetano's Portugal, Ionescu's Romania, the Ustase
in Croatia, Tiso's Slovakia, Petliura's movement in Ukraine, and, arguably,
Dollfuss' Austria, Horthy's Hungary, Imperial Japan, Peronist Argentina,
the Poland of the post Pilsudski junta (read Beck on the diplomatics of
a Jewish state in Uganda, which is I think symptomatic wishful thinking.)
There is a strong correlation between the nations whose rulers accepted
fascists into the government and losing WWI. The rest were new, insecure
states that could profit their masters by expansion. At the time, the so-called
Allies, except for the USSR, were essentially the official "winners" of
WWI and therefore united against the would be revisionists like Germany.
Therefore it was desirable to propagandize against the Axis as uniquely
fascist.
In fact, there was a powerful fascist movement in many Allied states
as well. Vichy France had deep, strong domestic roots in particular, but
the South African Broederbond and Jim Crow USA with its lynchings show how
fascism and democracy (as understood by anti-Communists) are not separate
things, but conjunctural developments of the capitalist states, which are
not organized as business firms.
Democracy is associated even with genocide, enslavement of peoples and
mass population transfers to colonists. It began with democracy itself,
with the Spartans turning Messenians into Helots and Athenians expropriating
Euboeans and massacring Melians. Russian Cossacks on the Caucasian steppes
or Paxton Boys in the US continued the process. When democracy came to the
Ottoman empire, making Turkey required the horrific expulsion of the Armenians.
(Their Trail of Tears was better publicized than the Cherokee's.) But the
structural need to unify a nation by excluding Others led to the bloody
expulsion of Greeks as well. The confirmation of national identity by a
mix of ethnic, religious and racial markers required mass violence and war,
as seen in the emergence of the international system of mercantilist capitalist
states.
The wide variations in historical fascism conclusively demonstrate every
notion of fascism is somehow something essentially, metaphysically, antithetical
is wrong. Fascism and democracy are not an antinomy. Particular doctrines
that assert this, like the non-concept of "totalitarianism," serve as a
kind of skeleton for political movements and parties. Since the triumph
of what we in the US call McCarthyism all mainstream and all acceptable
alternative politics share this same skeleton. It is unsurprising that such
a beast is somehow not organically equipped to be an effective left. It's
SYRIZA in Greece defining itself by the rejection of the KKE. There is no
such thing as repudiation of revolution that doesn't imply accepting counter-revolution.
Evan Neely 08.31.16 at 8:03 pm
The problem I have with attempts to appeal to the supposedly "positive"
aspects of tribalism, solidarity and the affection for longstanding institutions,
is that it's presuming these aren't just our abstractions of something that's
felt at a much more primal level. Tribalists don't love solidarity for the
sake of the principle of solidarity: they feel solidarity because they love
the specific people like them that they love and hate others.
One set of tribalists doesn't look at another and say "hey, we respect
the same principles." It says "they're not our tribe!!!" Point being, you're
never going to get them on your side with appeals to abstractions. You're
almost certainly never going to get them on your side no matter what you
do.
bruce wilder 08.31.16 at 9:07 pm
There is no vast neoliberal conspiracy . . .
There obviously is a vast political movement, coordinated in ideology
and the social processes of partisan politics and propaganda. Creating a
strawperson "conspiracy" does not erase actual Clinton fundraising practices
and campaign tactics, which exist independent of whatever narrative I weave
them into.
There are no corrupt promises from Clinton to big donors . . .
Calling our present-day GOP as led by Trump "fascism" is calling it a break
with the past GOP. Corey Robin has been over this quite a bit here, but
in many important respects there is no break. GWB, for instance, sometimes
required attendees at his rallies to take a personal loyalty oath. And GWB
is hailed by some people here as being the good conservative because he
said that not all Muslims were bad, while, of course, killing a million
Muslims. The contemporary GOP is an outgrowth of GOP tradition, and while
some leftists may find calling all conservatism fascism convincing, I think
that it's only convincing for the tiny number of people who adhere to their
ideology.
But conservatism and fascism are both right-wing and people can argue
indefinitely about where the boundary is. So rather than talk about ideal
types, let's look at how the rhetoric of calling it fascism works. Calling
Trump_vs_deep_state fascism is primarily the rhetoric of HRC supporters, because functionally,
what everyone pretty much agrees on is that when fascists appear, people
on the left through moderate right are supposed to drop everything and unite
in a Popular Front to oppose them.
I don't think that people should drop everything. I think that HRC is
going to win and that forming the mental habit of supporting the Democratic
Party is easy to do and hard to break, and I think that the people who become
Democratic Party supporters because of the threat of Trump / "fascism" are
going to spend the next four years working directly against actual left
interests.
Will G-R 08.31.16 at 10:06 pm
Rich, I think it would be a mistake to consider this as a question of "our
present-day GOP as led by Trump". First because Trump isn't "leading" the
GOP in any meaningful sense;
as Jay Rosen's recent Tweet-storm encapsulates nicely , the GOP's institutional
leadership is still liberal through and through, even if its ideological
organs pander in some ideally implicit sense to what might otherwise be
a fascist constituency. And second because Trump isn't really "leading"
his own constituents either; if he were to make a high-profile about-face
on the issues his voters care about, they'd likely be just as eager to dump
him as Bernie Sanders' most passionate leftist supporters were to ignore
his pro-Clinton appeals at the DNC.
What's interesting about Trump isn't really anything to do with Trump
per se, so much as what Trump's constituency would do if the normal functioning
of the liberal institutions constraining it were to be disrupted in a serious
way. Europe in the 1910s through 1940s was full of such disruptions, and
should such an era return, the ideological currents we're now viewing through
a heavily tinted institutional window would become much clearer.
Ragweed 08.31.16 at 10:23 pm
Val etc.
I think that John's use of the word "tribalist" here means a world-view
that explicitly values members of an in-group more than members not of the
in-group. It is different from racism because it may be over other factors
than race – religion, citizenship, nationalism, or even region. And the
key word is explicitly. The big difference between tribalist and both neoliberal
and left positions is that the other two are generally universalist.
Neoliberals profess that everyone will be better off with deregulation,
free markets, and technocratic solutions, and often explicitly reject the
idea of something benefitting one racial, religious, or national group over
another (though not the educated or wealthy, because these are allegedly
meritocratic outcomes of the neoliberal order).
The left likewise generally argues for an increase in equality and equal
distribution of resources for all, whether that be class-based or based
on some sort of gender, race, or sexual equality.
So on an issue like a free trade deal, a neoliberal argument would support
it, because gains of trade and various other reasons why it would make everyone
better off; a leftist argument would oppose it on the grounds that it would
make everyone worse off; and a tribalist argument would oppose it on the
grounds that it took jobs away from American citizens, but wouldn't worry
too much about the other guys.
Of course, the lines are not always clear and distinct, they often overlap,
mix, and borrow arguments from each other, and there are often hypocrisies'
and inconsistencies (and John's point anyway is that the neoliberals tend
to draw on coalitions with the other two factions), but I think it is a
good general description of the distinction.
And it is different from the more sociological use of tribal to mean
any in-group/out-group distinction and social solidarity formation. Everyone
is tribal in the sociological sense, but the tribalist that John is referring
explicitly approves of that tribalism. A left intellectual may look down
on "ignorant, racist, blue-collar Trump supporters", with as much bias as
any tribalist, but would generally want them to have better education and
a guarantee income so they were no longer ignorant and racist, whereas the
tribalist generally thinks the other guy is less deserving.
Sam Bradford 09.01.16 at 9:20 am
What I wonder/worry about is whether tribalism, nationalism, call it what
you will, is a necessity.
It's very difficult for me to imagine an internationalist order that
provides the kind of benefits to citizens that I'd want a state to provide.
It's much easier to imagine nation states operating as enclaves of solidarity
and mutual aid in an amorphous, anarchic and ruthless globalised environment.
Yet the creation of a nation requires the creation of an in-group and an
out-group, citizens and non-citizens.
To put it more concretely: in my own country, New Zealand, the traditional
Maori form of social organisation – a kind of communitarianism – currently
appeals to me as offering more social solidarity and opportunity for human
flourishing than our limp lesser-of-three-evils democracy. It is a society
in which there is genuine solidarity and common purpose. Yet it is, literally,
tribal; it admits no more than a few thousand people to each circle of mutual
aid. I am sometimes tempted to believe that it is the correct way for human
beings to live, despite my general dislike for biological determinism. I
think I would rather abandon my obligations to the greater mass of humanity
(not act against them, of course, just accept an inability to influence
events) and be a member of a small society than be a helpless and hopeless
atom in a sea of similar, utterly disenfranchised atoms.
Will G-R 09.01.16 at 4:32 pm
Bob Zannelli: Gee what a concept, an obligation to vote in a democracy.
As flawed as the US political process is, voting still matters and can affect
change. It's not easy , but then it's never easy to reform anything.
Just to give voice to
the
contrary perspective , voter turnout appears to play at least some role
in the ideological process by which the US electoral system claims legitimacy:
even though in purely procedural terms an election could work just fine
if the total number of ballots was an infinitesimal fraction of the number
of eligible voters ("Bill Clinton casts ballot, Hillary defeats Trump by
2 votes to 1!") low voter turnout is nonetheless depicted as a crisis not
just for any particular candidate or party but for the entire electoral
process. Accordingly, if I decide not to vote and thereby to decrease voter
turnout by a small-but-nonzero amount, I'm adding a small-but-nonzero contribution
to the public argument that the electoral process as presently institutionalized
is illegitimate, so unless we propose to add a "none of the above" option
to every single race and question on the ballot, to argue that citizens
have an obligation to vote is to argue that they are obliged not to "vote"
for the illegitimacy of the system as such. And plenty of ethical and political
stances could be consistent with such a "vote", not the least of which is
a certain historical stance whose proponents argued that "whenever any Form
of Government becomes destructive of these ends, it is the Right of the
People to alter or to abolish it…"
Will G-R 09.01.16 at 5:05 pm
I mean that just as people who believe the US government is legitimate should
have the right to express their political preference at the ballot box,
people who believe the US government is illegitimate should have the right
to express their political preference at (the abstention from) the ballot
box, and that it's at least possible for this to be a consistent political
and ethical stance. Do you disagree? Is the legitimacy of your government
a first premise for you? If so, Thomas Jefferson would like a word.
(Not to imply that I hold any particular fealty to the US nationalist
mythology of the "Founding Fathers" and so on, but hey, they articulated
a certain liberal political philosophy whose present-day adherents should
at least be consistent about it.)
Bob Zannelli 09.01.16 at 5:14 pm
I mean that just as people who believe the US government is legitimate should
have the right to express their political preference at the ballot box,
people who believe the US government is illegitimate should have the right
to express their political preference at (the abstention from) the ballot
box, and that it's at least possible for this to be a consistent political
and ethical stance. Do you disagree? Is the legitimacy of your government
a first premise for you? If so, Thomas Jefferson would like a word.
(Not to imply that I hold any particular fealty to the US nationalist
mythology of the "Founding Fathers" and so on, but hey, they articulated
a certain liberal political philosophy whose present-day adherents should
at least be consistent about it.) {}
Jefferson has never impressed me very much ( except for his church state
separation advocacy) His ideal of a democratic agrarian slave society I
find not too appealing. He talked about the blood of tyrants but he spent
his time drinking fine wines and being waiting on by his slaves during the
revolutionary war. You're entitled to any views you want, but you're not
entitled to be respected if you're views are nonsensical. Good luck on the
revolution, I hope that works out for you.
Will G-R 09.01.16 at 5:15 pm
Also, not to get personal, but the smarm here is so thick you could cut
it with a knife…
"Did I get you right? Is your response to an argument you find uncomfortable
to simply intone 'holy shit'? Holy shit…"
Will G-R 09.01.16 at 5:20 pm
So wait, did you not recognize the quote from the Declaration of Independence,
or what? Your argument invoked "an obligation to vote in a democracy"
. My counterargument is that if government is supposed to be premised
on the consent of the governed, there can never be "an obligation to vote
in a democracy", because not voting is a way of expressing one's lack of
consent. As Žižek might put it, your ideal appears to be a democratic system
that orders you to consent .
Bob Zannelli 09.01.16 at 5:37 pm
So wait, did you not recognize the quote from the Declaration of Independence,
or what? Your argument invoked "an obligation to vote in a democracy". My
counterargument is that if government is supposed to be premised on the
consent of the governed, there can never be "an obligation to vote in a
democracy", because not voting is a way of expressing one's lack of consent.
As Žižek might put it, your ideal appears to be a democratic system that
orders you to consent.{}
I think anyone who expects to move the country away from Neo Liberalism
to a more progressive direction without voting is a fool. What's the alternative
, over throwing the government? If this is the plan we better not discuss
it on social media. Of course it's all nonsense, if the US government was
ever thrown it would be by the far right as almost happened under FDR during
the hey day of fascism around the world. I think too many here are still
living in a Marxist fantasy world , no one here is going to establish the
dictatorship of the proletarians. Let's get real.
Will G-R 09.01.16 at 6:09 pm
if the US government was ever thrown it would be by the far right
So let's get this straight… the only choice we have is between the center
and the far right, yet it's far leftists' fault for not being centrists
that the politics of centrism itself keeps drifting farther and farther
to the right. Screw eating from the trashcan, it's like you're mainlining
pure grade-A Colombian ideology.
stevenjohnson 09.01.16 at 6:24 pm
Will G-R@86 "… because not voting is a way of expressing one's lack of consent."
Incorrect. Not voting is routinely interpreted as tacit consent. Not voting
is meaningless, and will be interpreted as suited.
Bob Zannelli@87 "Let's get real."
Okay. What's real is, the game is rigged but you insist on making everyone
ante up and play by the rules anyhow. What's real, is you have nothing to
do with the left, except by defining the Democratic Party as the left. What's
real is that the parties could just as well be labeled the "Ins" and the
"Outs," and that would have just as much to do with the left, which is to
repeat, nothing.
bruce wilder 09.01.16 at 6:59 pm
Bob Zannelli: What's the alternative?
There is no alternative.
Bob Zannelli 09.01.16 at 7:01 pm
So let's get this straight… the only choice we have is between the center
and the far right, yet it's far leftists' fault for not being centrists
that the politics of centrism itself keeps drifting farther and farther
to the right. Screw eating from the trashcan, it's like you're mainlining
pure grade-A Colombian ideology{}
Right because the left is too busy plotting the revolution to engage
in politics.
bruce wilder 09.01.16 at 7:09 pm
Hillary Clinton is engaging in politics and she's teh most librul librul
evah! Why isn't that enough? It is not her fault, surely, that the devil
makes her do unlibrul things - you have to be practical and practically,
there is no alternative. We have to clap louder. That's the ticket!
Will G-R 09.01.16 at 7:25 pm
stevenjohnson: Not voting is routinely interpreted as tacit consent.
So why then is low voter turnout interpreted as a problem for democracy?
Why wouldn't it be a cause for celebration if a large majority of the population
was so happy with the system that they'd be happy with whoever won? On the
contrary, a helpless person's tacit refusal to respond to a provocation
can be the exact opposite of consent if whoever has them at their mercy
actually needs a reaction: think of a torture victim who sits in
silence instead of pleading for mercy or giving up the information the torturer
is after. Whether or not it truly does need it, the ideology of liberal
democracy at least acts as if it needs the legitimating idea that its leaders
are freely and actively chosen by those they govern, and refusing to participate
in this choice can be interpreted as an effort to deprive this ideology
of its legitimating idea.
bruce wilder 09.01.16 at 7:45 pm
Will G-R @ 94
Low voter turnout is interpreted as a problem by some people on
some occasions. Why generalize to official "ideology" from their idiosyncratic
and opportunistic pieties?
Why are the concerns of, say, North Carolina's legislature that only
the right people vote not official ideology? Or, the election officials
in my own Los Angeles County, where we regularly have nearly secret elections
with hard-to-find-polling-places - we got down to 8.6% in one election in
2015.
Obama's DHS wants to designate the state election apparatus, critical
infrastructure. Won't that be great? I guess Putin may not be able to vote,
after all!
Will G-R 09.01.16 at 8:12 pm
Bob, my impression is that CT is supposed to be a philosophy-oriented discussion
space (or it wouldn't be named after a line from Kant for chrissake) and
in philosophy one is supposed to subject one's premises to ruthless and
unsparing criticism, or at least be able to fathom the possibility of doing
so - including in this case premises like the legitimacy of the US government
or the desirability of capitalism. Especially in today's neoliberal society
there are precious few spaces where a truly philosophical outlook is supposed
to be the norm, and honestly I'm offended that you seem to want to turn
CT into yet another space where it isn't.
stevenjohnson 09.01.16 at 8:27 pm
Bob Zannelli@95 Don't worry, your left credentials are quite in order. I'm
not a regular, I post here occasionally for the same reason I occasionally
post at BHL, sheer amazement at the insanity of it all. My views are quite
beyond the pale.
Nonetheless your views, even though they pass for left at CT, are nonsense.
Corey Robin's project to amalgamate all conservatism into a single psychopathology
of individual minds (characters? souls?) is not useful for real politics.
His shilling for Jacobinrag.com, etc., acquits SYRIZA for its total failure
in real politics because it accomplished the most important task…making
sure KKE couldn't use a major state crisis. Similarly OWS and the Battle
of Seattle are acceptable because they are pure, untainted by anything save
failure.
As for your dismissal of Marxist fantasies, I take it you do not believe
economic crisis is endemic to the capitalist world economy, nor that imperialism
leads to war to redivide the world. And despite your alleged interest in
the location of proletarian hordes you can't see any in other countries,
unlike this country where everybody is middle class.
Delusions like that are killing us all. This country doesn't need reform,
it needs regime change. That's happening. Nixon failed, Trump might fail,
but the long slow march of the owners through the institutions of power,
gentrifying as they go, continues.
Will G-R 09.01.16 at 8:46 pm
Bruce @ 95, correct me if I'm wrong but I feel that state and (especially)
local governments in the US typically are viewed as highly prone
to borderline-illegitimizing levels of corruption - imagine how we'd characterize
the legitimacy of a City-State of Ferguson, or a Republic of Illinois under
President Blagojevich - and part of what maintains the impression of legitimacy
is the possibility of federal intervention on the people's behalf if things
at the lower levels get out of hand. Where the federal government hasn't
done so, notably in the case of African-American communities before the
mid to late 20th century, is precisely where arguments for the illegitimacy
of the entire system have gained serious traction. So IMO there could actually
be quite a bit of subversive potential if the population at large were to
openly reject the elected officials in Washington, DC as no more inherently
legitimate than those in Raleigh, NC or Los Angeles County. (I briefly tried
to look up the location within LA of its county seat and found that
Wikipedia's article "Politics of Los Angeles County" was entirely about
its citizens' voting record in federal politics, which itself illustrates
the point.)
The same morons that gave us "lean manufacturing" have also given us "lean
logistics".
Redundancy is "money left on the table". Excess capacity in case of Black
Swans and "Plan Bs"are a big waste of money. Any law that forces you to
incorporate some redundancy (in spite of yourself) is "excess regulation"
Of course, costs must be reduced and corners must be cut, when you are
competing against bankster returns of 5-6%, with any losses made good by Uncle
Sugar
Since each modern container ship holds between 3,000 and 14,000 shipping
containers, 98 ships stranded with cargo is a lot of freight. S. Korea should
probably think twice about not bailing them out (unless all the cargo is from
China and they want to do some damage??)
Re the Hanjin bankruptcy, the "2.9% of world shipping trade" figure
understates Hanjin's overall share in the market that matters most to US
retailers and consumers: the transpacific trade, where Hanjin handles 7.8% of
the volume per Forbes.
So at the very least, we're looking at a significant reduction in already
falling (US) intermodal rail traffic, and quite possibly a small reduction in
the trade deficit as imports are reduced. Hanjin's bankruptcy also could not
possibly have come at a worse time, as Sept./ Oct. is traditionally "peak
season" for US imports ahead of the holiday retail season, which will probably
also take a hit.
Personally, I'm shocked that a carrier as large and dominant as Hanjin could
go under.
"I am the spirit that negates.
And rightly so, for all that comes to be
Deserves to perish wretchedly;
'Twere better nothing would begin.
Thus everything that that your terms, sin,
Destruction, evil represent-
That is my proper element."
Reason enough for the Green Party of Switzerland to call for a fundamental change in the
country's economic system. Its initiative gathered about 110,000 signatures within the
required 18 months and was handed in to the authorities in 2012.
It calls for a "circular economy strategy", including measures to adopt new product
regulations, encourage recycling, and promote research and innovation, thereby reducing the
country's ecological footprint by two-thirds.
The proponents want Switzerland to play a pioneering role, promoting a sustainable model
for the economy, including a tax policy tied to the use of natural resources. The government
is asked to define sustainability targets both for a short and medium term and present a
progress report every four years.
A Facebook friend (we're barely acquaintances really) asked this question on Friday:
"What do you think are the most critical things (I'm talking specific processes,
policies, and structures rather than values) that make up non-competitive and more
collaborative and caring workplaces? Spaces where people are encouraged to really praise
and acknowledge someone else's work rather than hide someone else's contribution, where
people want to spend time on the collective good rather than next personal gain, and where
the often invisible and gendered work of caring and 'organisation culture' is prioritised
and publicly valued as critically important? What are some practical things you can
implement, aside from the destruction of capitalism? Ideas, you wise group of souls?"
I've spent the last couple of years working with an incredible bunch of people to build an
organisation that is exactly like that: caring, collaborative, and non-competitive, a space
where we praise and acknowledge each other, where the work of caring is shared equally,
regardless of gender.
Cripes I am a lucky dude, it rules. It is a total privilege, so I'm trying to figure out if
there's something about our organisation that we can share with others.
It's a subtle thing, so I'm not sure if I can totally nail it down with words. Let's try
something…
"... So, what benefit does society get from all this secondary market trading, besides very rich and self-satisfied bankers like Blankfein? The bankers would tell you that we get "liquidity"–the ability for investors to sell their investments relatively quickly. The problem with this line of argument is that Wall Street is providing far more liquidity (at a hefty price-remember that half-trillion-dollar payroll) than investors really need. Most of the money invested in stocks, bonds, and other securities comes from individuals who are saving for retirement, either by investing directly or through pension and mutual funds. These long-term investors don't really need much liquidity, and they certainly don't need a market where 165 percent of shares are bought and sold every year. ..."
"... In 1976, when the transactions costs associated with buying and selling securities were much higher, fewer than 20 percent of equity shares changed hands every year. Yet no one was complaining in 1976 about any supposed lack of liquidity. Today we have nearly 10 times more trading, without any apparent benefit for anyone (other than Wall Street bankers and traders) from all that "liquidity." ..."
So, what benefit does society get from all this secondary market trading, besides very
rich and self-satisfied bankers like Blankfein? The bankers would tell you that we get "liquidity"–the
ability for investors to sell their investments relatively quickly. The problem with this line
of argument is that Wall Street is providing far more liquidity (at a hefty price-remember that
half-trillion-dollar payroll) than investors really need. Most of the money invested in stocks,
bonds, and other securities comes from individuals who are saving for retirement, either by investing
directly or through pension and mutual funds. These long-term investors don't really need much
liquidity, and they certainly don't need a market where 165 percent of shares are bought and sold
every year.
They could get by with much less trading-and in fact, they did get by, quite happily. In
1976, when the transactions costs associated with buying and selling securities were much higher,
fewer than 20 percent of equity shares changed hands every year. Yet no one was complaining in
1976 about any supposed lack of liquidity. Today we have nearly 10 times more trading, without
any apparent benefit for anyone (other than Wall Street bankers and traders) from all that "liquidity."
=====================================
Thing of it is, the most thirsty never get a drink….
"... As you note, its not clear that we in the US need ANY immigration; it's hard to claim that 300 million people is not enough. If we choose to allow immigration, it should be few and strongly selective, i.e. the cream of the crop and selected to benefit the US. ..."
"... But it benefits the Mandarin class, so opposition or even debate been defined by them as heresy. It appears that the non-Mandarin class, who has to live with the downsides, is staring to reject this orthodoxy. ..."
"... We import, legally, 50,000 people (plus families IIRC) via a random visa lottery. This verges on insanity. ..."
"... H1-B applicants require a BA or equivalent, but are then selected by lottery. Hardly selected specifically for the needs of the country. In 2015, 6 of the top 10 firms by number of applications approved were Indian IT firms (i.e. outsourcing. I'm sure you are aware of the long term and recent complaints concerning direct replacement of US citizens by these workers. ..."
"... I find the system you describe which relies, by design, on perpetually importing new waves of a helot underclass to be both immoral and unsustainable. ..."
It's remarkable how rarely the immigration debate is prefaced with an explicit
prior that we should give absolute priority to what is best for the receiving
county and their citizens.
As you note, its not clear that we in the US need ANY immigration;
it's hard to claim that 300 million people is not enough. If we choose to
allow immigration, it should be few and strongly selective, i.e. the cream
of the crop and selected to benefit the US.
Its not credible to complain about low employment/population ratios,
limited wage pressures, high poverty rates, overburdened social safety nets,
limited prospects for those on the left side of the bell curve, and inequality,
and simultaneously support more immigration of the poor, unskilled, or difficult
to assimilate.
But it benefits the Mandarin class, so opposition or even debate
been defined by them as heresy. It appears that the non-Mandarin class,
who has to live with the downsides, is staring to reject this orthodoxy.
We import, legally, 50,000 people (plus families IIRC) via a random
visa lottery. This verges on insanity.
H1-B applicants require a BA or equivalent, but are then selected
by lottery. Hardly selected specifically for the needs of the country. In
2015, 6 of the top 10 firms by number of applications approved were Indian
IT firms (i.e. outsourcing. I'm sure you are aware of the long term and
recent complaints concerning direct replacement of US citizens by these
workers.
I'm in favor of significant penalties for employing illegal workers.
Yes lets debate who is going to take care of washing and changing adult
diapers on 80 million baby boomers as they deteriorate towards their final
resting place, and who is going to dig the holes if we have deported all
those who know which end of a shovel is the business end.
"... As disgusted and determined as we might be, we still have to operate within the 'neoliberal' system. We are all 'us' in this context and we are all a product of our environment to some extent. however crap that environment might be. ..."
"... Combined with offshoring of as many jobs abroad as possible, free movement of unskilled workers and the use of agency labour to undercut pay and conditions, the future looks bleak. ..."
"... There is nothing meritocratic about neoliberlaism. Its about who you know. ..."
"... I understand what you say, and there is definitely an element within society which values Success above all else, but I do not personally know anyone like that. ..."
"... .....By "us" of course, you mean commies. I think you are inadvertently demonstrating another of Hares psychopath test features; a lack of empathy and self awareness. ..."
"... I've worked in a few large private companies over the years, and my experience is they increasingly resemble some sort of cult, with endless brainwashing programmes for the 'members', charismatic leaders who can do no wrong, groupthink, mandatory utilisation of specialist jargon (especially cod-psychological terminology) to differentiate those 'in' and those 'out', increased blurring of the lines between 'private' and 'work' life (your ass belongs to us 24-7) and of course, constant, ever more complex monitoring of the 'members' for 'heretical thoughts or beliefs'. ..."
"... And the most striking idea here: Our characters are partly moulded by society. And neo-liberal society, and it's illusions of freedom, has moulded many of us in ways that bring out the worst in us. ..."
"... Neo-liberalism has however killed off post war social mobility. In fact according to the OECD report into social mobility, the more egalitarian a developed society is, the more social mobility there is, the more productivity and the less poverty and social problems there are. ..."
As disgusted and determined as we might be, we still have to operate within the 'neoliberal'
system. We are all 'us' in this context and we are all a product of our environment to some extent.
however crap that environment might be.
There are constant laments about the so-called loss of norms and values in our culture.
Yet our norms and values make up an integral and essential part of our identity. So they cannot
be lost, only chaned
If you have no mandate for such change, it breeds resentment.
For example, race & immigration was used by NuLabour in a blatant attempt at mass societal
engineering (via approx 8%+ increase in national population over 13 years).
It was the most significant betrayal in modern democratic times, non mandated change extraordinaire,
not only of British Society, but the core traditional voter base for Labour.
To see people still trying to deny it took place and dismiss the fallout of the cultural elephant
rampaging around the United Kingdom is as disingenuous as it is pathetic.
It's a race to the bottom, and has lead to such "success stories" as G4S, Serco, A4E, ATOS, Railtrack,
privatised railways, privatised water and so on.
It's all about to get even worse with TTIP, and if that fails there is always TISA which mandates
privatisation of pretty much everything - breaking state monopolies on public services.
Combined with offshoring of as many jobs abroad as possible, free movement of unskilled
workers and the use of agency labour to undercut pay and conditions, the future looks bleak.
A neoliberal meritocracy would have us believe that success depends on individual effort
and talents
There is nothing meritocratic about neoliberlaism. Its about who you know. In the
UK things have gone backwards almost to the 1950s. Changes which were brought about by the expansion
of universities have pretty much been reversed. The establishment - politics, media, business
is dominated by the better=off Oxbridge elite.
It is difficult for me to agree. I have grown up within Neoliberalism being 35, but you describe
no one I know. People I know weigh up the extra work involved in a promotion and decide whether
the sacrifice is worth the extra money/success.
People I know go after their dreams, whether that be farming or finance. I understand what
you say, and there is definitely an element within society which values Success above all else,
but I do not personally know anyone like that.
He's saying people's characters are changed by their environment. That they aren't set in stone,
but are a function of culture. And that the socio-cultural shift in the last few decades is a
bad thing, and is bad for our characters. In your words: The dreams have changed.
It's convincing, except it isn't as clear as it could be.
I understand his principle but as proof, he sites very specific examples...
A highly skilled individual who puts parenting before their career comes in for criticism.
A person with a good job who turns down a promotion to invest more time in other things is
seen as crazy – unless those other things ensure success. A young woman who wants to become
a primary school teacher is told by her parents that she should start off by getting a master's
degree in economics – a primary school teacher, whatever can she be thinking of?
This is used as an example to show the shifting mindset. But as I stated, this describes no
one I know. We, us, commenting here are society. I agree that there has been a shift in culture
and those reaping the biggest financial rewards are the greedy. But has that not always been the
way, the self interested have always walked away with the biggest slice, perhaps at the moment
that slice has become larger still, but most people still want to have a comfortable life, lived
their way. People haven't changed as much as the OP believes.
The great lie is that financial reward is success and happiness.
This is used as an example to show the shifting mindset. But as I stated, this describes
no one I know
Indeed even in the "sociopathic" world of fund management and investment banking, the vast
majority of people establish a balance for how they wish to manage their work and professional
lives and evaluate decisions in light of them both.
Indeed. How come G4S keep winning contracts despite their behaviour being incompetent and veering
on criminal, and the fact they are despised pretty much universally. Hardly a meritocracy.
You can add A4E to that list and now Capita who have recruited all of 61 part time soldiers
in their contract to replace all the thousands of sacked professionals
.....By "us" of course, you mean commies. I think you are inadvertently demonstrating another
of Hares psychopath test features; a lack of empathy and self awareness.
"Since the living standards of majority in this country are on a downward trend"
The oil's running out. Living standards, on average, will continue to decline until either
it stops running out or fusion power turns out to work after all.
Whether you have capitalism or socialism won't make any difference to the declining energy
input.
I'm sure I read an article in the 80s predicting what the author has written. Economics and cultural
environment is bound to have an effect on behaviour. We now live in a society that worships at
the altar of the cult of the individual. Society and growth of poverty no longer matters, a lone
success story proves all those people falling into poverty are lazy good for nothing parasites.
The political class claims to be impotent when it comes to making a fairer society because the
political class is made up of people who were affluent in the first place or benefited from a
neo-liberal rigged economy. The claim is, anything to do with a fair society is social engineering
and bound to fail. Well, neo-liberal Britain was socially engineered and it is failing the majority
of people in the country.
There is a cognitive dissonance going on in the political narrative of neo-liberalism, not
everyone can make it in a neo-liberal society and since neo-liberalism destroys social mobility.
Ironically, the height of social mobility in the west, from the gradual rise through the 50s and
60s, was the 70s. The 80s started the the downward trend in social mobility despite all the bribes
that went along with introducing the property owning democracy, which was really about chaining
people to capitalism.
I'm sure I read an article in the 80s predicting what the author has written.
Well, a transformation of human character was the open battle-cry of 1980s proponents of neoliberalism.
Helmut Kohl, the German prime minister, called it the "geistig-moralische Wende", the "spiritual
and moral sea-change" - I think people just misunderstood what he meant by that, and laughed at
what they saw as empty sloganeering. Now we're reaping what his generation sowed.
OK, now can you tell us why individual freedom is such a bad thing?
The previous period of liberal economics ended a century ago, destroyed by the war whose outbreak
we are interminably celebrating. That war and the one that followed a generation later brought
in strict government control, even down to what people could eat and wear. Orwell's dystopia of
1984 actually describes Britain's wartime society continuing long after the real wars had ended.
It was the slow pace of lifting wartime controls, even slower in Eastern Europe, and the lingering
mindset that economies and societies could be directed for "the greater good" no matter what individual
costs there were that led to a revival of liberal economics.
Neoliberalism is a mere offshoot of Neofeudalism. Labour and Capital - those elements of both
not irretrievably bought-out - must demand the return of The Commons . We must extend our
analysis back over centuries , not decades - let's strike to the heart of the matter!
Collectivist ideologies including Fascism, Communism and theocracy are all similar to feudalism.
I've worked in a few large private companies over the years, and my experience is they
increasingly resemble some sort of cult, with endless brainwashing programmes for the 'members',
charismatic leaders who can do no wrong, groupthink, mandatory utilisation of specialist jargon
(especially cod-psychological terminology) to differentiate those 'in' and those 'out', increased
blurring of the lines between 'private' and 'work' life (your ass belongs to us 24-7) and of course,
constant, ever more complex monitoring of the 'members' for 'heretical thoughts or beliefs'.
'Collectivism' is not as incompatible with capitalism as you seem to think.
You sound like one of those 'libertarians'. Frankly, I think the ideals of such are only realisable
as a sole trader, or operating in a very small business.
Progress is restricted because the people are made poor by the predations of the state
Neoliberalism is firmly committed to individual liberty, and therefore to peace and mutual
toleration
It is firmly committed to ensuring that the boundaries between private and public entities
become blurred, with all the ensuing corruption that entails. In other words, that the state becomes
(through the taxpayers) a captured one, delivering a never ending, always growing, revenue stream
for favoured players in private enterprise. This is, of course, deliberate. 'Individual liberties
and mutual toleration' are only important insomuch as they improve, or detract, from profit-centre
activity.
You have difficulty in separating propaganda from reality, but you're barely alone in this.
Lastly, you also misunderstand feudalism, which in the European context, flourished before
there was a developed concept of a centralised nation state, indeed, the most classic examples
occurred after the decentralisation of an empire or suchlike. The primary feudal relation
was between the bondsman/peasant and his local magnate, who in turn, was subject to his liege.
In other words a warrior class bound by vassalage to a nobility, with the peasantry bound by
manorialism and to the estates of the Church.
Apart from that though, you're right on everything.
I completely agree with the general sentiment.
The specifics aren't that solid though:
- That we think our characters are independent of context/society: I certainly don't.
- That statement about "bullying is more widespread" - lacks justification.
The general theme of "meritocracy is a fiction" is compelling though.
As is "We are free-er in many ways because those ways no longer have any significance"
.
And the most striking idea here: Our characters are partly moulded by society. And neo-liberal
society, and it's illusions of freedom, has moulded many of us in ways that bring out the worst
in us.
The Rat Race is a joke. Too many people waste their lives away playing the capitalist game. As
long as you've got enough money to keep living you can be happy. Just ignore the pathetic willy-wavers
with their flashy cars and logos on their shirts and all that guff
All we need is "enough" - Posession isn't that interesting. More a doorway to doing interesting
stuff.
I prefer to cut out the posession and go straight to "do interesting stuff" myself. As long as
the rent gets paid and so on, obviously.
Doesn't always work, obviously, but I reckon not wanting stuff is a good start to the good
life (ref. to series with Felicity Kendall (and some others) intended :)
That, and Epicurus who I keep mentioning on CIF.
Rather naive. History is full of brilliant individuals who made it. Neo-liberalism has however
killed off post war social mobility. In fact according to the OECD report into social mobility,
the more egalitarian a developed society is, the more social mobility there is, the more productivity
and the less poverty and social problems there are.
I agree - the central dilemma is that neither individualism nor collectiviism works.
But is this dilemma real? Is there a third system? Yes there is - Henry George.
George's paradigm in nothing funky, it is simply Classical Liberal Economics - society works
best when individuals get to keep the fruits of thier labour, but pay rent for the use of The
Commons.
At present we have the opposite - labour and capital are taxed heavily and The commons are monopolised
by the 1%.
Hence unemployment
Hence the wealth gap
Hence the environmental crisis
Hence poverty
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So the values and morals that people have are so wafer thin that a variation in the political
system governing them can strip them away? Why do the left consistently have such a low opinion
of humanity?
"Why do the left consistently have such a low opinion of humanity?"
Open your eyes and take a lokk at the world. There is enough wealth in the world for everyone
to live free from poverty. Yet, the powerful look after themselves and allow poverty to not only
exist but spread.
>If you've ever dithered over the question of whether the UK needs a written constitution, dither
no longer. Imagine the clauses required to preserve the status of the Corporation. "The City of
London will remain outside the authority of parliament. Domestic and foreign banks will be permitted
to vote as if they were human beings, and their votes will outnumber those cast by real people.
Its elected officials will be chosen from people deemed acceptable by a group of medieval guilds
…".<
I agree with much of this. Working in the NHS, as a clinical psychologist, over the past 25 years,
I have seen a huge shift in the behaviour of managers who used to be valued for their support
and nurturing of talent, but now are recognised for their brutal and aggressive approach to those
beneath them. Reorganisations of services, which take place with depressing frequency, provide
opportunities to clear out the older, experienced members of the profession who would have acted
as mentors and teachers to the less experienced staff.
I worked in local authority social care, I can certainly see the very close similarities to what
you describe in the NHS, and my experience in the local authority.
I can well imagine there are big similarities. Friends of mine who work in education say the same
- there is a complete mismatch between the aims of the directors/managers and that of the professionals
actually providing the teaching/therapy/advice to the public. When I go to senior meetings it
is very rare that patients are even mentioned.
Bullying used to be confined to schools; now it is a common feature of the workplace.
This is an incredibly broad generalisation. I remember my grandfather telling me about what
went on in the mills he worked in in Glasgow before the war, it sounded like a pretty savage environment
if you didn't fit in. It wasn't called bullying, of course.
I put this simple statement to you: meritocratic neoliberalism favours certain personality
traits and penalises others.
Isn't this true of pretty much any system? And human relationships in general? I cannot think
of a system that is completely blind to the differences between people. If you happen to be lazy
or have a problem with authority you will never do as "well" (for want of a better term).
I have always said to people who claim they are Liberals that you must support capitalism,the
free market,free trade, deregulation etc etc when most of them deny that, I always say you are
not a Liberal then you're just cherry-picking the [Liberal] policies you like and the ones you
don't like,which is dishonest.
There is nothing neo about Liberalism,it has been around since the 19th century[?].People have
been brainwashed in this country [and the USA] since the 1960's to say they are liberals for fear
of being accused of being fascists,which is quite another thing.
I have never supported any political ideology,which is what Liberalism is,and believe all of them
should be challenged.By doing so you can evolve policies which are fair and just and appropriate
to the issue at hand.
Neoliberalism has only benefited a minority. Usually those with well connected and wealthy families.
And of course those who have no hesitation to exploit other's.
In my view, it is characterized by corruption, exploitation and a total lack of social justice.
Economically, the whole system is fully dependent on competition not co-operation. One day, the
consequences of this total failure will end in violence.
One day, the consequences of this total failure will end in violence.
And if we keep consuming all our resources on this finite planet in pursuit of profit and more
profit there will be no human race we will all be extinct.,and all that will be left is an exhausted
polluted planet that once harbored a vast variety of life.
Isent neolibral capitalism great.
As Marx so often claimed, values, ethics, morality and behaviours are themselves determined by
the economic and monetary system under which people live. Stealing is permitted if you are a banker
and call it a bonus or interest, murder is permitted if your government sends you to war, surveillance
and data mining is permitted if your state tells you there is a danger from terrorists, crime
is overlooked if it makes money for the perpetrator, benefit claimants are justified if they belong
to an aristocratic caste or political elite.......
There is no universal right or wrong, only that identified as such by the establishment at
that particular instance in history, and at that specific place on the planet. Outside that, they
have as much relevance today as scriptures instructing that slaves can be raped, adulterers can
be stoned or the hands of thieves amputated. Give me the crime and the punishment, and I will
give you the time and the place.
For a tiny elite sitting on the top everything has been going exactly as it was initially planned.
"When plunder becomes a way of life for a group of men
living together in Society, they create for themselves in the
course of time a legal system that authorizes it and a
moral code that glorifies it".
F. Bastiat.
Excellent article.
I'm amazed that more isn't made of the relationship between political environment/systems and
their effect on the individual. Oliver James Affluenza makes a compelling case for the unhappiness
outputs of societies who've embraced neo liberalism yet we still blindly pursue it.
The US has long been world leader in both the demand and supply of psychotherapy and the relentless
pursuit of free market economics. these stats are not unconnected.
I once had a colleague with the knack of slipping into his conversation complimentary remarks
that other people had made about him. It wasn't the only reason for his rapid ascent to great
heights, but perhaps it helped.
That's one of my favourite characteristics of David Brent from 'The Office'. "You're all looking
at me, you're going, "Well yeah, you're a success, you've achieved you're goals, you're reaping
the rewards, sure. But, OI, Brent. Is all you care about chasing the Yankee dollar?"
Neoliberalism is another Social Darwinist driven philosophy popularised after leading figures
of our times (or rather former times) decided Malthus was probably correct.
So here we have it, serious growth in population, possibly unsustainable, and a growing 'weak
will perish, strong will survive' mentality. The worst thing is I used to believe in neoliberal
policies, until of course I understood the long term ramifications.
And the reality is that "neoliberalism" has, in the last few decades, freed hundreds of millions
in the developing word from a subsistence living to something resembling a middle class lifestyle.
This has resulted in both plummeting global poverty statistics and in greatly reduced fecundity,
so that we will likely see a leveling off of global population in the next few decades. And this
slowing down of population growth is the most critical thing we could for increasing sustainability.
The problem is a judeo-christian idea of "free choice" when experiments, undertaken by Benjamin
Libet and since, indicate that it is near to unlikely for there to be volitionally controlled
conscious decisions.
If we are not even free to intend and control our decisions, thoughts and ambitions, how can
anyone claim to be morally entitled to ownership of their property and have a 'right' to anything
as a reward for what decisions they made? Happening is pure luck: meaningful [intended] responsibility
and accountability cannot be claimed for decisions and actions and so entitlement cannot be claimed
for what acquisitions are causally obtained from those decisions and actions.There is no 'just
desserts' or decision-derived entitlement justification for wealth and owning property unless
the justifier has a superstitious and scientifically unfounded belief in free choice.
Bullying used to be confined to schools; now it is a common feature of the workplace
Compared to say, that experienced by domestic staff in big houses, small children in factories,
perhaps even amongst miners, dockers and steel workers in the halcyon days of the post-war decade
when apparently everything was rosy?
This whole article is a hodge podge of anecdote and flawed observations designed to shoehorn
behaviour into a pattern that supports an economic hypothesis - it is factually groundless.
Compared to say, that experienced by domestic staff in big houses, small children in factories
Yes, but if it was left to people like you, children would still be working in factories. So
please do not take credit for improvements that you would fight tooth and nail against
perhaps even amongst miners, dockers and steel workers in the halcyon days of the post-war
decade when apparently everything was rosy?
They had wages coming to them and didn't need to rely on housing benefit to keep a roof over
their head. Now people like you bitterly complain about poorly paid workers getting benefits to
sustain them.
People who "work hard and play hard" are nearly always kidding themselves about the second bit.
It seems to me that the trend in the world of neoliberalism is to think that "playing hard"
is defined as "playing with expensive, branded toys" during your two week annual holiday.
'Playing hard' in the careerist lexicon = getting blind drunk to mollify the feelings of despair
and emptiness which typify a hollow, debt-soaked life defined by motor cars and houses.
The "Max Factor" life. Selfishness and Greed. The compaction of life. Was it not in a scripture
in text?. The Bible. We as humans and followers of "Faith" in christian beliefs and the culture
of love they fellow man. The culture of words are a root to all "Evil. Depending on "Who's" the
Author and Scrolling the words; and for what reason?. The only way we can save what is left on
this planet and save man kind. Is eradicate the above "Selfishness and Greed" ?
We are indeed freer than before, in the sense that we can criticise religion, take advantage
of the new laissez-faire attitude to sex and support any political movement we like. We can
do all these things because they no longer have any significance – freedom of this kind is
prompted by indifference.
These changes listed (and then casually dismissed) are monumental social achievements. Many
countries in the world do not permit their 'citizens' such freedom of choice and I for one am
very grateful to live in a country where these things are possible.
Of course there is much more to be done. But I would suggest that to be born in Western Europe
today is probably about as safe, comfortable, and free than at any time and any place in human
history. I'm not being complacent about what we still have to achieve. But we won't achieve anything
if we take such a flippant attitude towards all the amazing things that have been bequeathed to
us.
Excellent observation, it's the same way that technology that has quite clearly changed our lives
and given us access to information, opportunity to travel and entertainment that would have been
beyond the comprehension of our grandparents is dismissed as irrelevant because its just a smart
phone and a not a job for life in a British Leyland factory.
It takes a peculairly spoilt and arrogant Westerner to claim that the freedom to criticise religion
isn't significant or that we're only allowed to do so because it's no longer important. Tell that
to a girl seeking to escape an arranged marriage in Bradford...
OK. Now off you go and apply the same methodology to people living in statist societies, or just
have a go at our own civil service or local government workers. Try social workers or the benefits
agency or the police.
The author makes some good points, although I wouldn't necessarily call our system a meritocracy.
I guess the key one is how unaware we are about the influence of economic policy on our values.
This kind of systems hurts everyday people and rewards psychopaths, and is damaging to society
as a whole over the long term.
Targetising everything is really insidious.
That neoliberalism puts tremendous pressure on individuals to conform to materialistic norms is
undeniable, but for a psychotherapist to disallow the choice of those individuals to nevertheless
choose how to live is an admission of failure.
In fact, many people today experience the shallowness and corrupt character of market society
and elect either to be in it, but not of it, or to opt out early having made enough money, often
making a conscious choice to relinquish the 'trappings' in return for a more meaningful existence.
Some do selfless service to their fellow human beings, to the environment or both, and thereby
find a degree of fulfillment that they always wanted.
To surrender to the external demands of a superficial and corrupting life is to ignore the
tremendous opportunity human life offers to all: self realization.
It's not either-or, system or individual, but some combination of the two.
Decision making may be 80% structure and 20% individual choice for the mainstream - or maybe the
other way round for the rebels amongst us that try to reject the system.
The theory of structuration (Giddens) provides one explanation of how social systems develop
through the interactions between the system and actors in it.
I partly agree with you but I think examples of complete self realisation are extremely rare.
That means stepping completely out of the system and out of our own personality. Neither this
nor that.
The point is that the individual has the choice to move in the right direction. When and if they
do make a decision to change their life, it will be fulfilling for them and for the system.
Our presumed freedom is tied to one central condition: we must be successful – that is,
"make" something of ourselves. You don't need to look far for examples. A highly skilled individual
who puts parenting before their career comes in for criticism. A person with a good job who
turns down a promotion to invest more time in other things is seen as crazy – unless those
other things ensure success.
I have been in the private sector for generations, and know tons of people who have behaved
precisely as described above. I don't know anyone who calls them crazy. In fact, I see the exact
opposite tendency - the growing acceptance that money isn't everything, and that once one has
achieved a certain level of success and financial security that it is fine to put other priorities
first rather than simply trying to acquire ever more.
The ATL article is rather stuffed full of stereotypes.
And speaking personally, I have turned down two offers of promotion to a management position
in the last ten years and neither time did I get the sense people thought I was crazy. They might
have done if I were in my late twenties rather than mid-fifties but that does reinforce the notion
that people - even bosses - can accept that there is more to life than a career.
I agree about the stereotypes. Also, has anyone ever seriously advised a primary school teacher
that they need a masters degree of economics?! I highly doubt that that is the norm!
I hate to break it to you but no matter how you organise society the nasty people get to the
top and the nice people end up doing all the work. "Neo-liberalism" is no different.
Or you could put it another way - 'neoliberalism' is the least worst economic/social system, because
most people are far more powerless and far more worse off under any other system that has ever
been developed by man...
For a start you need a system that is not based on rewarding and encouraging the worst aspects
of our characters. I try to encourage my kids not to be greedy, to be honest and to care about
others but in this day and age it's an uphill struggle.
"A neoliberal meritocracy would have us believe that success depends on individual effort and
talents, meaning responsibility lies entirely with the individual and authorities should give
people as much freedom as possible to achieve this goal."
In the UK we have nothing like a meritocracy with a privately educated elite.
Success and failure are just about parental wealth.
"So the values and morals that people have are so wafer thin that a variation in the political
system governing them can strip them away? Why do the left consistently have such a low opinion
of humanity?"
RidleyWalker, I can assue you that it is not the left but the right who consistently have a
low opinion of humanity. Anyway, what has left and right got to do with this? There are millions
of ordinary decent people whose lives are blighted by the obscentity that is neo-liberalism. Neo-liberalism
is designed to make the rich richer at the expense of the poor. Neo-liberalism is responsible
for the misery for millions across the globe. The only happy ones are those at the top of the
heap...until even their bloated selfish world inevitably implodes.
Of course these disgusting parasites are primitive thinkers and cannot see that we could have
a better, happier world for everyone if societies become more equal. Studies demonstrate that
more equal societies are more stable and content than those with ever-widening gaps in wealth
between rich and poor.
Neoliberalism...disgusting parasites...primitive thinkers...misery of millions...bloated selfish
world
This reads like a Soviet pamphlet from the 1930's. Granted you've replaced the word 'capitalism'
with 'neoliberalism' - in other words subsstituted one meaningless abstraction for another. It
wasn't true then and it certainly isnt true now...
Not sure why you think all this is new or attributable to neoliberalism. Things were much the
same in the 1960's and 1970's. All that has changed is that instead of working on assembly lines
in factories under the watchful gaze of a foreman we now have university degrees and sit in cubicles
pressing buttons on keyboards. Micromanagement, bureaucracy, rules and regulations are as old
as the hills. Office politics has replaced shop floor politics; the rich are still rich and the
poor are still poor.
Well, except that people have more money, live longer and have more opportunities in life than
before - most people anyway. The ones left behind are the ones we need to worry about
Not sure why you think all this is new or attributable to neoliberalism. Things were much
the same in the 1960's and 1970's.
And you can read far more excoriating critiques of our shallow materialistic capitalism, culture
from those decades, now recast as some sort of prelapsarian Golden Age.
Actually, the 1929 crash was not the first by any means. The boom and bust cycle of modern economics
goes back a lot further. When my grandparents talked about the "Great Depression" they were referring
to the 1890's.
The nineteenth century saw major financial crises in almost every decade, 1825, 1837, 1847, 1857,
1866 before we even get to the Great Depression of 1873-96.
Socialism seems to be happy home of corruption & nepotism. The old saw that Tory MP's are brought
down by sex scandals whilst Labour MP's have issues with money still holds.
Why is that relevant? This is a critique of neo liberalism and it is a very accurate one at that.
It isn't suggesting that Socialism is better or even offers an alternative, just that neo liberalism
has failed society and explores some of how and why.
The main problem is that neoliberalism is a faith dressed up as a science and any evidence that
disproves the hypothesis (e.g. the 2008 financial collapse) only helps to reinforce the faith
of the fundamentalists supporting it.
The reason why "neoliberalism" is so successful is precisely because the evidence shows it does
work. It has not escaped peoples' notice that nations where governments heavily curtail individual
and commercial freedom are often rather wretched places to live.
It would be nice to curtail coprorate freedom without curtailing the freedom of individuals. I
don't see how that might work.
"hubris over free markets" might well be it.
But I might be understanding that in a different way from you. People were making irrational decisions
that didn't seem to take on basic logic of a free market, or even common sense. Such as "where
is all this money coming from" (madoff, house ladder), "of course this will work" (fred goodwin
and his takeovers) and even "will i get my money back" (sub-prime lending).
So why don't we do something about it....genuinely? There appears to be no power left in voting
unless people are given an actual choice....Is it not time then to to provide a well grounded
articulate choice? The research, in many different disciplines, is already out there.
What can we do? It appears we are stuck between the Labour party and the Conservatives. Is it
even possible for another party to come to power with the next couple of elections?
The sociologist Zygmunt Bauman neatly summarised the paradox of our era as: "Never have
we been so free. Never have we felt so powerless." We are indeed freer than before, in the
sense that we can criticise religion, take advantage of the new laissez-faire attitude to sex
and support any political movement we like. We can do all these things because they no longer
have any significance – freedom of this kind is prompted by indifference. Yet, on the other
hand, our daily lives have become a constant battle against a bureaucracy that would make Kafka
weak at the knees. There are regulations about everything, from the salt content of bread to
urban poultry-keeping.
Verhaeghe begins by criticizing free markets and "neo-liberalism", but ends by criticizing
the huge, stifling government bureaucracy that endeavours to micro-manage every aspect of its
citizens lives, and is the opposite of true classic liberalism.
probably not as confusing as it seems to be for you.
this is just the difference between neoliberalism in theory and in practise.
like the "real existierende sozialismus" in eastern germany fell somewhat short of the brilliant
utopia of the theorists.
verhaeghe does not criticise the theoretical model, but the practical outcome. And the worst governmant
and corporate bureaucracy that mankind has ever seen is part of it. The result of 30+ years of
neoliberal policies.
In my experience this buerocracy is gets worse in anglo saxon countries closest to the singularity
at the bottom of the neolib black hole.
I am aware that this is only a correlation, but correlations, while they do not prove causation,
still require explanation.
Some time ago, and perhaps still, it was/is fashionable for Toryish persons to denigrate the 1960s.
I look back to that decade with much nostalgia. Nearly everyone had a job of sorts, not terribly
well paid but at least it was a job. And now? You are compelled to toil your guts out, kiss somebody's
backside, run up unpayable debts - and, in the UK, live in a house that in many other countries
would have been demolished decades ago. Scarcely a day passes when I am not partly disgusted at
what has overtaken my beloved country.
An excellent article! The culture of the 80's has ruled for too long and its damage done.... its
down to our youth to start to shape things now and I think that's beginning to happen.
Neo-Liberalism as operated today. "Greed is Good" and senior bankers and those who sell and buy
money, commodities etc; are diven by this trait of humankind.
But we, the People are just as guilty with our drives for 'More'. More over everything, even
shopping at the supermarket - "Buy one & get ten free", must have.
Designer ;bling;, clothes, shoes, bags, I-Pads etc etc, etc. It is never ending. People seem
to be scared that they haven't got what next has, and next will think that they are 'Not Cool'.
We, the people should be satisfied with what have got, NOT what what we havn't got.
Those who "want" (masses of material goods) usually "Dont get!"
The current system is unsustainable as the World' population rises and rises. Nature (Gaia)
will take care of this through disease, famine, and of course the stupidity of Humankind - wars,
destruction and general stupidity.
What's a meritocracy? Oh, that's right - a fable that people who have a lot of money deserve it
somehow because they're so much better than the people who work for a living.
The world was an even nastier place before the current era. During the 1970s and early 1980s there
was huge inflation which robbed people of their saving, high unemployment, and (shudder) Disco.
People tend to view the past with rose-coloured glasses.
What neoliberalism? We've got a mixed economy, which seemingly upsets both those on the right
who wish to cut back the state and those on the left who'd bolster it.
I work in a law firm specialising in M&A, hardly the cuddliest of environments, but I recognise
almost nothing here as a description of my work place. Sure, some people are wankers but that's
true everywhere.
FDR, the Antichrist of the American Right, famously said that the only thing we have to fear is
fear itself. And here we are with this ideology which in many ways stokes the fear. The one thing
these bastards don't want most of us to feel is secure.
There is no "free market" anywhere. That is a fantasy. It is a term used when corporations want
to complain about regulations. What we have in most industrialized countries is corporate socialism
wherein corporations get to internalize profits and externalize costs and losses. It has killed
of our economies and our middle class.
Socialism or barbarism -- a starker choice today than when the phrase was coined.
So long, at least, as we have an evolved notion of what socialism entails. Which means, please,
not the state capitalism + benign paternalism that it's unfortunately come to mean for
most people, in the course of its parasitical relationship with capitalism proper, and so with
all capitalism's inventions (the 'nation', the modern bureaucracy, ever-more-efficient exploitation
to cumulatively alienating ends......)
It's just as unfortunate, in this light, that the term 'self-management' has been appropriated
by the ideologues of pseudo-meritocracy, in just the way the article describes..
Because it's also a term (from the French autogestion) used to describe what I'd argue is the
most nuanced and sophisticated collectivist alternative to capitalism -- an alternative that is
at one and the same time a rejection of capitalism.... and of the central role of the state
and 'nation' (that phony, illusory community that plays a more central role in empowering the
modern state than does its monopoly on violence)... and of the ideology of growth, and
of the ideal of monolithic, ruthlessly efficient economic totalities organised to this end....
It's a rejection, in other words, of all those things contemplation of which reminds us just
how little fundamental difference there is between capitalism and the system cobbled together
on the fly by the Bolsheviks -- same vertical organisation to the ends of the same exploitation,
same exploitation to the ends of expanding the scope and scale of vertical organisation, all of
it with the same destructive effects on the sociabilities of everyday life....
Self-management in this sense goes beyond 'workers control'; (I'd argue that) it envisions
a society in which most aspects of life have been cut free from the ties that bind people
vertically to sources of influence and control, however they're constituted (private and public
bureaucracies, market pressures, the illusory narratives of nation, mass media and commodity...).
The horizontal ties of workplace and local community would thus be constitutive, by default,
and society as a whole would become very little more than the sum of its parts -- mutating on
a molecular local level as people collectively and democratically decided, in circumstances that
actually granted them the power to do so, how to balance the conflicting needs and desires and
necessities that a complex society and a complex division of labour present. 'Balance' because
there really isn't any prospect of a utopian resolution of these conflicts -- they come with civilisation
-- or with barbarism, for than matter, in any of its modern incarnations.
What about those who disagree with such a radical reordering of society? How would the collective
deal with those who wished to exploit it?
I'm genuinely interested, beats working...
The horizontal ties of workplace and local community would thus be constitutive, by default,
and society as a whole would become very little more than the sum of its parts -- mutating
on a molecular local level as people collectively and democratically decided, in circumstances
that actually granted them the power to do so, how to balance the conflicting needs and desires
and necessities that a complex society and a complex division of labour present.
Why do socialists so often resort to such turgid, impenetrable prose? Could it be an attempt
to mask the vacuity of their position?
I read this article skeptically, but then realised how accurately he described my workplace. Most
people I know on the outside have nice middle class lives, but underneath it suffer from anxiety,
about 1 not putting enough into their careers 2 not spending enough time with their kids. When
I decided to cut my work hours in half when I had a child, 2 of my colleagues were genuinely concerned
for me over things like, I might be let go, how would I cope with the drop in money, I was cutting
my chances of promotion, how would it look in a review. The level of anxiety was frightening.
People on the forum seem to be criticizing what they see as the authors flippant attitude to
sexual freedom and lack of religious hold, but I see the authors point, what good are these freedoms
when we are stuck in the stranglehold of no job security and huge mortgage debt. Yes you can have
a quick shag with whoever you want and don't need to answer to anyone over it on a Sunday, but
come Monday morning its back to the the ever sharpening grindstone.
This reminds me of the world I started to work in in 1955. I accept that by 1985 it was ten times
worse and by the time I retired in 2002, after 47 years, I was very glad to have what I called
"survived". At its worst was the increasing difference between the knowledge base of "the boss"
when technology started to kick in. I was called into the boss's office once to be criticised
for the length of a report. It had a two page summery of the issue and options for resolving the
problem. I very meekly inquired if he had decided on any of the options to resolve the problem.
What options are you talking about? was his response, which told me that either he had not read
the report or did not understand the problem. This was the least of my problems as I later had
to spend two days in his office explaining the analysis we (I) were submitting to the Board.
A highly skilled individual who puts parenting before their career comes in for criticism.
A person with a good job who turns down a promotion to invest more time in other things is
seen as crazy – unless those other things ensure success. A young woman who wants to become
a primary school teacher is told by her parents that she should start off by getting a master's
degree in economics – a primary school teacher, whatever can she be thinking of?
Speak for yourself.
The current economic situation affects each of us as much as we allow it to. Some may well love
neo-liberalism and the concomitant dog eat dog attitude, but there are some of us who regard it
as little more than a culture of self-enrichment through lies and aggression. I see it as such,
and want nothing to do with it.
If you live by money and power, you'll die by money and power. I prefer to live and work with
consensus and co-operation.
I'll never be rich, but I'll never have many enemies.
Hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants,
high-frequency traders, and top lobbyists.They're getting paid vast sums for their labors. Yet
it seems doubtful that society is really that much better off because of what they do. They play
zero-sum games that take money out of one set of pockets and put it into another. They demand
ever more cunning innovations but they create no social value. High-frequency traders who win
by a thousandth of a second can reap a fortune, but society as a whole is no better off. the games
consume the energies of loads of talented people who might otherwise be making real contributions
to society - if not by tending to human needs or enriching our culture then by curing diseases
or devising new technological breakthroughs, or helping solve some of our most intractable social
problems. Robert Reich said this and I am compelled to agree with him!
Brilliant article. It is not going to change anything, of course, because majority of people of
this planet would cooperate with just about any psychopath clever enough not to take away from
them that last bit of stinking warm mud to wallow in.
Proof? Read history books and take a look around you. We are the dumbest animals on Earth.
Rubbish. We are the most intelligent and successful creature that this planet has ever seen. We
have become capable of transforming it, leaving it and destroying it.
Bullying used to be confined to schools; now it is a common feature of the workplace.
I started work nearly 40 years ago and there were always some bullies in the workplace. Maybe
there are more now, I don't know but I suspect it is more widely reported now. Workplace bullies
were something of a given when I started work and it was an accepted part of the working environment.
Be careful about re-inventing history to suit your own arguments.
I'm surprised the normalization of debt was not mentioned. If you are debt free you have more
chance of making decisions that don't fit into the model.
So what do we do now, we train nearly 50% of our young that having large amounts of debt is
perfectly normal. When I was a student I lived off the grant and had a much lower standard of
living than I can see students having now, but of course I had no debt when I graduated. I know
student debt is administered differently, I'm talking about the way we are training them to accept
debt of all sorts.
Same applies to consumerism inducing the 'I want it and I want it now', increases personal
debt, therefore forcing people to fit in, same applies to credit cards and lax personal lending.
Although occasionally there are economic questions about large amounts of personal debt, politically
high personal debt is ideal.
Not sure if you're in the sector, in large parts that's kind of how academia works?
This is also what's referred to in the trade as an opinion piece, where an author will be presenting
his views and substantiating them with reference to the researches of others.
There is no mystery to neoliberalism -- it is an economic system designed to benefit the 0.1%
and leave the rest of us neck deep in shit. That's why our children will be paying for the bankers'
bonuses to the day they die. Let's celebrate this new found freedom with all the rest of the Tory
lickspittle apologists. Yippee for moral bankruptcy -- three cheers!
The Simple Summary is the state/ royality used to hold all the power over the merchants and the
public for centuries. Bit by bit the merchants stripped that power away from royality, until eventually
the merchants have now taken over everybody. The merchants hold all the power now and they will
never give that up as there is nobody to take it from them. By owning the state the merchants
now have everything that go with it. The army, police and the laws and the media.
David Harvey puts it all under the microscope and explains in great detail how they've achieved
their end game over the last 40 years.
There are millions of economists and many economic theories in our universities. Unfortunately,
the merchants will only fund and advertise and support economic theories that further their power
and wealth.
As history shows time and time again it will be the public who rip this power from their hands.
If they don't give it up it is only a matter of time. The merchants may now own the army, the
police, the laws and the parliament. They'll need all of that and more if the public decide to
say enough is enough.
Bullying used to be confined to schools? Can't agree with that at all. Bullying is an ingrained
human tendency which manifests in many contexts, from school to work to military to politics to
matters of faith. It is only bad when abused, and can help to form self-confidence.
I am not sure what "neo" means but liberal economics is the basis of the Western economies
since the end of feudalism. Some countries have had periods of pronounced social democracy or
even socialism but most of western Europe has reverted to the capitalist model and much of the
former east bloc is turning to it. As others have noted in the CiF, this does not preclude social
policies designed to alleviate the unfair effects of the liberal economies.
But this ship has sailed in other words, the treaties which founded the EU make it clear the
system is based on Adam Smith-type free market thinking. (Short of leaving the EU I don't see
how that can be changed in its essentials).
Finally, socialist countries require much more conformity of individuals than capitalist ones.
So you have to look at the alternatives, which this article does not from what I could see.
To be honest I don't think Neoliberalism has made much of a difference in the UK where personal
responsibility has always been king. In the Victorian age people were quite happy to have people
staving to death on the streets and before that people's problems were usually seen as either
their own fault or an act of God (which would also be your own fault due to sin). If anything
we are kinder to strangers now, than we have been, but are slipping back into our old habits.
I think the best way to combat extreme liberalism is to be knowing about our culture and realise
that liberalism is something which is embedded in British culture and is not something imposed
on us from else where or by some -ism. It is strengthen not just by politics but also by language
and the way we deal with personal and social issues in our own lives. We also need to acknowledge
that we get both good and bad things out of living in a liberal society but that doesn't mean
we have to put up with the bad stuff. We can put measures in place to prevent the bad stuff and
still enjoy the positives even though some capitalists may throw their toys out of the pram.
Personal responsibility is EXACTLY what neoliberalism avoids, even as it advocates it with every
breath.
What it means is that you get as much responsibility as you can afford to foist onto someone
else, so a very wealthy person gets none at all. It's always someone else's fault.
Neoliberalism has actually undermined personal responsibility at every single step, delegating
it according to wealth or perceived worth.
If Liberalism is the mindset of the British how come we created the NHS, Legal Aid, universal
education and social security? These were massive achievements of a post war generation and about
as far removed from today's evil shyster politics as it is possible to be.
"Our society constantly proclaims that anyone can make it if they just try hard enough, all the
while reinforcing privilege and putting increasing pressure on its overstretched and exhausted
citizens"
What to people mean when they use the word "society" in this context?
When we stopped having jobs and had careers instead, the rot set in. A career is the promotion
of the self and a job the means to realise that goal at the expense of everyone else around you.
The description of psychopathic behaviour perfectly describes a former boss of mine (female).
I liked her but knew how dangerous she was. She went easy on me because she knew that I could
do the job that she would claim credit for.
The pressure and stress of, for example open plan offices and evaluation reports are all part
of the conscious effort on behalf of employers to ensure compliance with this poisonous attitude.
The greatest promoter of this philosophy is the Media, step forward Evan Davies, the slobbering
lap dog of the rich and powerful.
On the positive side I detect a growing realisation among normal people of the folly of this worldview.
Self promoters are generally psychopaths who don't have any empathy for the people around them
who carry them everyday and make them look good. We call these people show bags. Full of shit
and you have to carry them all the time....
"meritocratic neoliberalism favours certain personality traits and penalises others..."
I put to you the simple premsie that you can substitute "meritocratic neoliberalism" with any
political system (communism, fascism, social democracy even) and it the same truism would emerge.
"Neoliberalism promotes individual freedom, limited government, and deregulation of the economy...whilst
individual freedom is a laudable idea, neoliberalism taken to a dogmatic extreme can be used to
justify exploitation of the less powerful and pillaging of the natural environment." - Don Ambrose.
Contrast with this:
"Neoliberal democracy, with its notion of the market uber alles ...instead of citizens,
it produces consumers. Instead of communities, it produces shopping malls. The net result is an
atomized society of disengaged individuals who feel demoralised and socially powerless." - Robert
W. McChesney in Profit over People, Noam Chomsky.
It is fairly clear that the neoliberal system is designed to exploit the less powerfull when
it becomes dogmatic, and that is exactly what it has become: beaurocracy, deregulation, privatisation,
and government power .
Neoliberalism is a virus that destroys people's power of reason and replaces it with extra greed
and self entitlement. Until it is kicked back to the insane asylum it came from it will only keep
trying to make us it's indentured labourers. The only creeds more vile were Nazism and Apartheid.
Eventually the neoliberals will kill us all, so they can have the freedom to have everything they
think they're worth.
Yet, on the other hand, our daily lives have become a constant battle against a bureaucracy
that would make Kafka weak at the knees. There are regulations about everything, from the salt
content of bread to urban poultry-keeping.
Isn't a key feature of neo-liberalism that governments de-regulate? It seems you're willing
to blame absolutely everything on neoliberalism, even those things that neoliberalism ostensibly
opposes.
The Professor is correct. We have crafted a nightmare of a society where what is considered good
is often to the detriment of the whole community. It is reflected in our TV shows of choice, Survivor,
Big Brother, voting off the weakest or the greatest rival. A half a million bucks for being the
meanest most sociopathic person in the group, what great entertainment.
Always a treat to read your articles, Mr Verhaeghe; well written and supported with examples and
external good links. I especially like the link to Hare's site which is a rich resource of information
and current discussions and presentations on the subject.
The rise of the psychopath in society has been noted for some time, as have the consequences
of this behaviour in wider society and and a growing indifference and increased tolerance for
this behaviour.
But what are practical solutions? MRI brain scans and early intervention? We know that behaviour
modification does not work, we know that antipsychotic and other psychiatric medication does not
alter this behaviour, we know little of genetic causes or if diet and nutrition play a role.
Maybe it is because successful psychopaths leverage themselves into positions of influence
and power and reduce the voice, choices and influence of their victims that psychopathy has become
such an unsolvable problem, or at least a problem that has been removed from the stage of awareness.
It is so much easier to see the social consequences of psychopathy than it is to see the causal
activity of psychopaths themselves.
Neoliberalism has entered centre stage politics not as a solution, it is just socialism with a
crowd pleasing face. What could the labour party do to get voted in when the leadership consisted
of self professed intellectuals in Donkey Jackets which they wore to patronise the working classes.
Like the animal reflected in the name they became a laughing stock. Nobody understood their language
or cared for it. The people who could understand it claimed that it was full of irrelevant hyperbole
and patronising sentiment.
It still is but with nice sounding buzz words and an endless sound bites, the face of politics
has been transformed into a hollow shell. Neither of the party's faithful are happy with their
leaders. They have become centre stage by understanding process more than substance. As long as
your face fits, a person has every chance of success. Real merit on the other hand is either sadly
lacking or non existant.
Most people's personalities and behaviour are environment driven, they are moulded by the social
context in which they find themselves. The system we currently inhabit is one which is constructed
on behalf of the holders of capital, it is a construct of the need to create wealth through interest
bearing debt.
The values of this civilisation are consumer ones, we validate and actualise ourselves through
ownership of goods, and also the middle-class norms of family life, which are in and of themselves
constructs of a liberal consumer based society.
We pride ourselves on tolerance, which is just veiled indifference to anything which we feel
as no importance to our own desires. People are becoming automatons, directed through media devices
and advertising, and also the implanted desires which the consumer society needs us to act upon
to maintain the current system of economy.
None of this can of course survive indefinitely, hence the constant state of underlying anxiety
within society as it ploughs along on this suicidal route.
Good article, however I would just like to add that the new breed of 'business psychopath' you
allude to are fairly easy to spot these days, and as such more people are aware of them, so they
could be displaced quite soon, hopefully.
Cameron and the Conservatives have long been condemning the lazy and feckless at the bottom of
society, but has Cameron ever looked at his aristocratic in-laws.
His father-in-law, Sir Reginald Sheffield, can be checked out on Wikipedia.
His only work seems to have been eight years as a conservative councillor (lazy).
He is a member of three clubs, so he likes to go pissing it up with his rich friends (feckless).
This seems to be total sum of his life's achievements.
He also gets Government subsidies for wind turbines on his land (on benefits).
His estate has been in the family since the 16th Century and the family have probably done very
little since, yet we worry about the lower classes having two generations without work, in the
upper classes this can go on for centuries.
Wasters don't just exist at the bottom of society.
Mr. Cameron have a closer look at your aristocratic in-laws.
This is the consequence of a system that prevents people from thinking independently and
that fails to treat employees as adults.
Fundamentally the whole concept is saying "real talent is to be hunted down since, if you do
not destroy it, it will destroy you". As a result we have a whole army of useless twats in high
positions with not an independent thought between them. The concept of the old boys network has
really taken over except now the members are any mental age from zero upwards.
And then we wonder why nothing is done prperly these days....
Neoliberalism is fine in some areas of self-development and actualization of potential, but taken
as a kind of religion or as the be-all and end-all it is a manifest failure. For a start it neglects
to acknowledge what people have in common, the idea of shared values, the notion of society, the
effects of synergy and the geo-biological fact that we are one species all inhabiting the same
single planet, a planet that is uniquely adapted to ourselves, and to which we are uniquely adapted.
Generally it works on the micro-scale to free up initiative, but on the macro-scale it is hugely
destructive, since its goals are not the welfare of the entire human race and the planet but something
far more self-interested.
I put this simple statement to you: meritocratic neoliberalism favours certain personality
traits and penalises others.
This is inevitable. All societies have this property. A warrior society rewards brave fighters
and inspiring leaders, while punishing weaklings and cowards. A theocracy rewards those who display
piety and knowledge of religious tradition, and punishes skeptics and taboo-breakers. Tyrannies
reward cunning, ruthless schemers while punishing the squeamish and naive. Bureaucratic societies
reward pernickety types who love rules and regulationsn, and punish those who are careless of
jots and tittles. And so on.
A neoliberal meritocracy would have us believe that success depends on individual effort
and talents
It does. In fact, it does in all societies to some extent, even societies that strive to be egalitarian,
and societies that try to restrict social mobility by imposing a rigid caste system. There are
always individuals who fall or rise through society as a result of their abilities or lack thereof.
The freer society is, the more this happens.
For those who believe in the fairytale of unrestricted choice, self-government and self-management
are the pre-eminent political messages, especially if they appear to promise freedom.
Straw man. Even anarchists don't believe in completely unrestricted choice, let alone neoliberals.
Neoliberalism accepts that people are inevitably limited by their abilities and their situation.
Personal responsibility does not depend on complete freedom. It depends on there being some
freedom. If you have enough freedom to make good or bad choices, then you have personal responsibility.
Along with the idea of the perfectible individual, the freedom we perceive ourselves as
having in the west is the greatest untruth of this day and age.
The idea of the perfectible individual has nothing to do with neoliberalism. On the other hand,
it is one of the central pillars of Marxism. In philosophy, Marx is noted as an example of thinker
who follows a perfectionist ethical theory.
A frightening article, detailing now the psychological strenngths of people are recruited, perverted
and rotted by this rat-race ethic.
Ironic that the photo, of Canary Wharf, shows one of the biggest "socialist" gifts of the country
(was paid largely by the British taxpayer, if memory serves me correctly, and more or less gifted
to the merchant bankers by Thatcher).
Meritocratic neoliberalism; superficial articulateness which I used to call 'the gift of the gab'.
In my job, I was told to be 'extrovert' and I bucked against this, as a prejudice against anyone
with a different personality and people wanting CLONES. Not sensible people, or people that could
do a job, but a clone; setting the system up for a specific type of person as stated above. Those
who quickly tell you, you are wrong. Those that make you think perhaps you are, owing to their
confidence. Until your quietness proves them to be totally incorrect, and their naff confidence
demonstrates the falseness of what they state.
Most of the richest people in the world are not bullshitters. There are some, to be sure, but
the majority are either technical or financial engineers of genius, and they've made their fortune
through those skills, rather than through bullshit.
Hague lied to the camera about GCHQ having permission to access anyone's electronic devices. He
did not blush, he merely stated that a warrant was required. Only the night before we were shown
a letter from GCHQ stating that they had access without any warrant.
The ability to LIE has become a VIRTUE that all of us could well LIVE WITHOUT.
That's not new. It has been widely held that rulers have a right (and sometimes a duty) to lie
ever since Machiavelli's Prince was published some 500 years ago.
The sociologist Zygmunt Bauman neatly summarised the paradox of our era as: "Never have
we been so free. Never have we felt so powerless." We are indeed freer than before, in the
sense that we can criticise religion, take advantage of the new laissez-faire attitude to sex
and support any political movement we like. We can do all these things because they no longer
have any significance – freedom of this kind is prompted by indifference.
Freedom's just another word for nothin' left lose.
-Janice Joplin
Actually it was written by Kris Kristofferson and, having a house, a job pension and an Old Age
Pension, frankly, I disagree. The Grateful Dead version is better anyway.
.... economic change is having a profound effect not only on our values but also on our
personalities.
I have long thought that introverts are being marginalised in our society. Being introvert
seems to be seen by some as almost an illness, by others as virtually a crime.
Not keen on attending that "team bonding" weekend? There must be something wrong with you.
Unwilling to set out your life online for all to see? What have you got to hide?
A few very driven and talented introverts have managed to find a niche in the world of IT and
computers, earnig fortunes from their bedrooms. But for most, being unwilling or unable to scream
their demands and desires across a crowded room is interpreted as "not trying" or being not worth
listening to.
It's important to be able to talk up your own capacities as much as you can – you know a
lot of people, you've got plenty of experience under your belt and you recently completed a
major project. Later, people will find out that this was mostly hot air, but the fact that
they were initially fooled is down to another personality trait: you can lie convincingly and
feel little guilt. That's why you never take responsibility for your own behaviour.
Perfectly describes our new ruling-class, doesn't it!
It's important to be able to talk up your own capacities as much as you can – you know a
lot of people, you've got plenty of experience under your belt and you recently completed a
major project. Later, people will find out that this was mostly hot air, but the fact that
they were initially fooled is down to another personality trait: you can lie convincingly and
feel little guilt. That's why you never take responsibility for your own behaviour.
Sounds like a perfect description of newspaper columnists to me.
It's just the general spirit of the place: it's on such a downer and no amount of theorising and
talking will ever solve anything. There isn't a good feeling about this country anymore just a
lot of tying everyone up in in repressive knots with a lot of hooey like talk and put downs. We
need to find freedom again or maybe shove all the pricks into one part of the country and leave
them there to fuck each other over so the rest of us can create a new world free of bullcrap.
I don't know. Place is a superficial mess: 'look at me; look at what I own; I can cook Coq Au
Vin and drink bottles of expensive plonk and keep ten cars on my driveway'
Nah. Fortuneately there are still some decent people left but it's been like Hamlet now for quite
some time - "show me an honest man and I'll show you one man in ten thousand" Sucks.
This article is spot on and reflects Karl Marx's analysis regarding the economic base informing
and determining the superstructure of a given society, that is, its social, cultural aspects.
A neo-liberal, monetarist economy will shape and influence social and work relationships in ways
that are not beneficial for the many but as the commentator states, will benefit those possessed
of certain thrusting,domineering character traits. The common use of the word "loser" in contemporary
society to describe those who haven't "succeeded" financially is in itself telling.
It would be the perfect first chapter (foreword/introduction) in a best seller that goes on,
chapter by chapter, to show that neoliberalism destroys everything it touches:
Personal relationships;
trust;
personal integrity;
trust;
relationships;
trust;
transactions and trade;
trust;
market systems;
trust;
communities;
trust;
political relationships;
trust;
James Meek seems to have nailed it in his recent book, where he pointed out that the socially
conservative Thatcher, who wanted a society based on good old fashioned values, helped to create
the precise opposite with her enthusiasm for the neoliberal model. Now we are sinking into a dog-eat-dog
dystopia.
Many of the good old fashioned conservatives had time honoured values. They believed in taking
care of yourself but they also believed in integrity and honesty. They believed in living modestly
and would save much of their money rather than just spend it, and so would put some aside for
a rainy day. They believed in the community and were often active about local issues. They cared
about the countryside and the wildlife. They often recycled which went along with their thriftiness
and hatred of waste.
This all vanished when Thatcher came in with her selfish 'greed is good' brigade. Loads of
money!
We are indeed freer than before, in the sense that we can criticise religion, take advantage
of the new laissez-faire attitude to sex and support any political movement we like. We can
do all these things because they no longer have any significance –
Capitalist alienation is a daily practise. The daily practise of competing with and using people.
This gives rise to the ideology that society and other people are but a means to an end rather
than an end in themselves that is of course when they are not a frightening a existential competitive
threat. Contempt and fear. That is what we are reduced to by the buying and selling of labour
power and yes, only a psychopath can thrive under such conditions.
According to the left if your only ambition is to watch Jeremy Kyle, pick up a welfare cheque
once a week and vote for which ever party will promise to give you £10 a week more in welfare:
you're an almost saint like figure.
If you actually do something to try to create a better and more independent life for yourself,
your family and your community: you're "displaying psychopathic tendencies" .
If you actually do something to try to create a better and more independent life for yourself,
your family and your community: you're "displaying psychopathic tendencies".
So how do you create a better community ?
By paying your taxes on your wealth that so many of you try to avoid. Here lies the crux of
the matter. There would be no deficit if taxes were paid.
Some of the rich are so psychpathic they think jsut because they employ people they shouldn't
pay any tax. They think the employees should pay thier tax for them.
Why has tax become such a dirty word ? Think about it before you answer.
The conclusion is for me is that it is a brilliant economic model. It is the sheer apathy of
the voters and that they are cowards because they don't make it work for them. They allow the
people who own the theory to run it for themselves and thus they get all the benefits from it.
I'll try and explain.
Their business plan.
The truth is neoliberalism has infact made the rich western countries poorer and helped so
many other poorer countries around the world get richer. Let's face facts here giving to charities
would never have achieved this and something needed to be done to even up this world inequality.
The only way you are ever going to achieve world peace is if everybody is equal. It's not by chance
this theory was introduced by America. They are trying to bring that equality to everyone so that
world peace can be achieved. How many more illegal wars and deaths this will take and for how
long nobody knows. They are also very sinister and selfish and greedy because if the Americans
do achieve what they are trying to do. They will own and countrol the world via washington and
the dollar. The way the Americans see it is that the inequality created within each country is
a bribe to each power structure within that country which helps America achieve it's long term
goals. It creates inequality within each country but at the same time creates equality on the
world stage. It might take 100 years to achieve and millions of deaths but eventually every country
will be another state of America and look and act like any American state. Once that is achieved
world peace will follow. America see it as a war and they also see millions of deaths as acceptable
to achieve their end game. I of course disagree there must be a better way. How will history look
at this dark period in history in 300 years time if it does achieve world peace in 150 years time
?
In each country neoliberalism works but at the moment it only works for the few because the
voters allow it. The voters allow them to get away with it through submission. They've allowed
their parliaments to be taken over without a fight and allowed their brains to be brainwashed
by the media controlled by the few. Which means the the whole story of neoliberalism has been
skewed into a very narrow view which always suits and promotes the voices of the few.
Why did the voters allow that to happen ?
Their biggest success the few had over the many was to create an illusion that made tax a toxic
word. They attacked tax with everything they had to form an illusion in the voters minds that
paying tax was a bad thing and it was everybodys enemy. Then they passed laws to enhance that
view and trotted out scare stories around tax and that if they had to pay it then everybody would
leave that country. They created a world set up for them and ulitimately destroyed any chance
at all, for the success of neoliberalism to be shared by the many. This was their biggest success
to make sure the wealth of neoliberalism stayed with them.
As the author of this piece says quite clearly. "An economic system that rewards psychopathic
personality traits has changed our ethics and our personalities"
One of these traits is that they believe they shouldn't pay tax because they are creating jobs
and the tax their employees pay should be the amount of tax these companies pay. Again this makes
sure that the wealth is not shared.
Since they now own and control parliaments they also use the state to pay these wages in the
way of tax credits and subsidies and grants as they refuse to pay their employees a living wage.
It is our taxes they use to do this. Again this is to make sure that the wealth is not shared.
There are too many examples to list of how they make sure that the wealth generated by neoliberalism
is not shared. Then surely it is up to the voters to make sure it does. Neoliberalism works and
it would work for everybody if the voters would just grow a set of balls. Tax avoidance was the
battle that won the war for the few. It is time the voters revisited that battle and re write
it so that the outcome was that the many won not just the few. For example there would be no deficit
if the many had won that battle. Of course they wouldn't have left a market of 60 million people
with money in their pockets, it would have been business suicide.
This is a great example of how they created an illusion, a false culture, a world that does
not exist. The focus is all on the deficit and how to fix it, as they socialise the losses and
privatise the profits. There is no eyes or light shed on why there is a deficit due to tax avoidance.
It's time we changed that and made Neoliberlaism work for us. If we don't then we can't complain
when it only works for the few.
Neoliberlaism works. It's about time we owned it for ourselves. Otherwise we'll always be slaves
to it. It's not the theory that is corrupt it is the people who own it.
There is no eyes or light shed on why there is a deficit due to tax avoidance.
... or because politicians have discovered that you can buy votes by giving handouts even to
those who don't need them, thereby making everyone dependent on the largesse of the state and,
by extension, promoting the interests of the most irresponsible politicians and the bureaucracies
they represent.
You seem to regard what you call neoliberalism as a creator of wealth. You then claim that the
reason for this wealth accruing almost entirely to an elite few is the "the voters" have prevented
neoliberalism from distributing the wealth more equitably.
I can't really follow the logic of your argument.
Neoliberalism seems to be working perfectly for those few who are in a position to exploit
it. It's doing what it's designed to do.
I agree that the ignorance of "the voters" is allowing the elite to get away with it. But the
voters should be voting for those who propose an alternative economic model. Unfortunately, in
the western world at the present time, they have no viable alternative to vote for, because the
neoliberals have captured all of the mainstream political parties and institutions.
However, you missed one of the main points. Our parliament has been taken over by the few.
One man used to and probably still does strike fear into the government. Murdoch. Problem is
there are millions like him that lobby and control policy and the media.
..."There are regulations about everything,"... Yes, but higher up the scale you go, the less
this regulation is enforced, less individual accountability and less transparency. Neoliberalism
has turned society on its head. We see ever growing corporate socialism subsidising the top 1%
and heavily regulated hard nosed market capitalism for the rest of us resulting in massive inequality
in wealth distribution. This inequality by design makes the rich richer and the poor poorer. We've
created a society where people who were once valued as an individual part of that society are
now treated as surplus to requirements and somehow need to be eliminated.
They're mostly tight g*ts who refuse to pay to use the Mail/Telegraph sites. This is just about
the last free forum left now and it's attracting all kinds of undesirables. The level of personal
insult has gone up enormously since they came here. Most of us traditional Ciffers don't bother
with many posts here any more, it's too boring now.
Our presumed freedom is tied to one central condition: we must be successful – that is,
"make" something of ourselves.
That's always been the way, I think. It's life.
We are all of us the descendants of a million generations of successful organisms, human and pre-human.
The ones that didn't succeed fel by the wayside.
We're the ones left to tell the tale.
"... As disgusted and determined as we might be, we still have to operate within the 'neoliberal' system. We are all 'us' in this context and we are all a product of our environment to some extent. however crap that environment might be. ..."
"... Combined with offshoring of as many jobs abroad as possible, free movement of unskilled workers and the use of agency labour to undercut pay and conditions, the future looks bleak. ..."
"... There is nothing meritocratic about neoliberlaism. Its about who you know. ..."
"... I understand what you say, and there is definitely an element within society which values Success above all else, but I do not personally know anyone like that. ..."
"... .....By "us" of course, you mean commies. I think you are inadvertently demonstrating another of Hares psychopath test features; a lack of empathy and self awareness. ..."
"... I've worked in a few large private companies over the years, and my experience is they increasingly resemble some sort of cult, with endless brainwashing programmes for the 'members', charismatic leaders who can do no wrong, groupthink, mandatory utilisation of specialist jargon (especially cod-psychological terminology) to differentiate those 'in' and those 'out', increased blurring of the lines between 'private' and 'work' life (your ass belongs to us 24-7) and of course, constant, ever more complex monitoring of the 'members' for 'heretical thoughts or beliefs'. ..."
"... And the most striking idea here: Our characters are partly moulded by society. And neo-liberal society, and it's illusions of freedom, has moulded many of us in ways that bring out the worst in us. ..."
"... Neo-liberalism has however killed off post war social mobility. In fact according to the OECD report into social mobility, the more egalitarian a developed society is, the more social mobility there is, the more productivity and the less poverty and social problems there are. ..."
As disgusted and determined as we might be, we still have to operate within the 'neoliberal'
system. We are all 'us' in this context and we are all a product of our environment to some extent.
however crap that environment might be.
There are constant laments about the so-called loss of norms and values in our culture.
Yet our norms and values make up an integral and essential part of our identity. So they cannot
be lost, only chaned
If you have no mandate for such change, it breeds resentment.
For example, race & immigration was used by NuLabour in a blatant attempt at mass societal
engineering (via approx 8%+ increase in national population over 13 years).
It was the most significant betrayal in modern democratic times, non mandated change extraordinaire,
not only of British Society, but the core traditional voter base for Labour.
To see people still trying to deny it took place and dismiss the fallout of the cultural elephant
rampaging around the United Kingdom is as disingenuous as it is pathetic.
It's a race to the bottom, and has lead to such "success stories" as G4S, Serco, A4E, ATOS, Railtrack,
privatised railways, privatised water and so on.
It's all about to get even worse with TTIP, and if that fails there is always TISA which mandates
privatisation of pretty much everything - breaking state monopolies on public services.
Combined with offshoring of as many jobs abroad as possible, free movement of unskilled
workers and the use of agency labour to undercut pay and conditions, the future looks bleak.
A neoliberal meritocracy would have us believe that success depends on individual effort
and talents
There is nothing meritocratic about neoliberlaism. Its about who you know. In the
UK things have gone backwards almost to the 1950s. Changes which were brought about by the expansion
of universities have pretty much been reversed. The establishment - politics, media, business
is dominated by the better=off Oxbridge elite.
It is difficult for me to agree. I have grown up within Neoliberalism being 35, but you describe
no one I know. People I know weigh up the extra work involved in a promotion and decide whether
the sacrifice is worth the extra money/success.
People I know go after their dreams, whether that be farming or finance. I understand what
you say, and there is definitely an element within society which values Success above all else,
but I do not personally know anyone like that.
He's saying people's characters are changed by their environment. That they aren't set in stone,
but are a function of culture. And that the socio-cultural shift in the last few decades is a
bad thing, and is bad for our characters. In your words: The dreams have changed.
It's convincing, except it isn't as clear as it could be.
I understand his principle but as proof, he sites very specific examples...
A highly skilled individual who puts parenting before their career comes in for criticism.
A person with a good job who turns down a promotion to invest more time in other things is
seen as crazy – unless those other things ensure success. A young woman who wants to become
a primary school teacher is told by her parents that she should start off by getting a master's
degree in economics – a primary school teacher, whatever can she be thinking of?
This is used as an example to show the shifting mindset. But as I stated, this describes no
one I know. We, us, commenting here are society. I agree that there has been a shift in culture
and those reaping the biggest financial rewards are the greedy. But has that not always been the
way, the self interested have always walked away with the biggest slice, perhaps at the moment
that slice has become larger still, but most people still want to have a comfortable life, lived
their way. People haven't changed as much as the OP believes.
The great lie is that financial reward is success and happiness.
This is used as an example to show the shifting mindset. But as I stated, this describes
no one I know
Indeed even in the "sociopathic" world of fund management and investment banking, the vast
majority of people establish a balance for how they wish to manage their work and professional
lives and evaluate decisions in light of them both.
Indeed. How come G4S keep winning contracts despite their behaviour being incompetent and veering
on criminal, and the fact they are despised pretty much universally. Hardly a meritocracy.
You can add A4E to that list and now Capita who have recruited all of 61 part time soldiers
in their contract to replace all the thousands of sacked professionals
.....By "us" of course, you mean commies. I think you are inadvertently demonstrating another
of Hares psychopath test features; a lack of empathy and self awareness.
"Since the living standards of majority in this country are on a downward trend"
The oil's running out. Living standards, on average, will continue to decline until either
it stops running out or fusion power turns out to work after all.
Whether you have capitalism or socialism won't make any difference to the declining energy
input.
I'm sure I read an article in the 80s predicting what the author has written. Economics and cultural
environment is bound to have an effect on behaviour. We now live in a society that worships at
the altar of the cult of the individual. Society and growth of poverty no longer matters, a lone
success story proves all those people falling into poverty are lazy good for nothing parasites.
The political class claims to be impotent when it comes to making a fairer society because the
political class is made up of people who were affluent in the first place or benefited from a
neo-liberal rigged economy. The claim is, anything to do with a fair society is social engineering
and bound to fail. Well, neo-liberal Britain was socially engineered and it is failing the majority
of people in the country.
There is a cognitive dissonance going on in the political narrative of neo-liberalism, not
everyone can make it in a neo-liberal society and since neo-liberalism destroys social mobility.
Ironically, the height of social mobility in the west, from the gradual rise through the 50s and
60s, was the 70s. The 80s started the the downward trend in social mobility despite all the bribes
that went along with introducing the property owning democracy, which was really about chaining
people to capitalism.
I'm sure I read an article in the 80s predicting what the author has written.
Well, a transformation of human character was the open battle-cry of 1980s proponents of neoliberalism.
Helmut Kohl, the German prime minister, called it the "geistig-moralische Wende", the "spiritual
and moral sea-change" - I think people just misunderstood what he meant by that, and laughed at
what they saw as empty sloganeering. Now we're reaping what his generation sowed.
OK, now can you tell us why individual freedom is such a bad thing?
The previous period of liberal economics ended a century ago, destroyed by the war whose outbreak
we are interminably celebrating. That war and the one that followed a generation later brought
in strict government control, even down to what people could eat and wear. Orwell's dystopia of
1984 actually describes Britain's wartime society continuing long after the real wars had ended.
It was the slow pace of lifting wartime controls, even slower in Eastern Europe, and the lingering
mindset that economies and societies could be directed for "the greater good" no matter what individual
costs there were that led to a revival of liberal economics.
Neoliberalism is a mere offshoot of Neofeudalism. Labour and Capital - those elements of both
not irretrievably bought-out - must demand the return of The Commons . We must extend our
analysis back over centuries , not decades - let's strike to the heart of the matter!
Collectivist ideologies including Fascism, Communism and theocracy are all similar to feudalism.
I've worked in a few large private companies over the years, and my experience is they
increasingly resemble some sort of cult, with endless brainwashing programmes for the 'members',
charismatic leaders who can do no wrong, groupthink, mandatory utilisation of specialist jargon
(especially cod-psychological terminology) to differentiate those 'in' and those 'out', increased
blurring of the lines between 'private' and 'work' life (your ass belongs to us 24-7) and of course,
constant, ever more complex monitoring of the 'members' for 'heretical thoughts or beliefs'.
'Collectivism' is not as incompatible with capitalism as you seem to think.
You sound like one of those 'libertarians'. Frankly, I think the ideals of such are only realisable
as a sole trader, or operating in a very small business.
Progress is restricted because the people are made poor by the predations of the state
Neoliberalism is firmly committed to individual liberty, and therefore to peace and mutual
toleration
It is firmly committed to ensuring that the boundaries between private and public entities
become blurred, with all the ensuing corruption that entails. In other words, that the state becomes
(through the taxpayers) a captured one, delivering a never ending, always growing, revenue stream
for favoured players in private enterprise. This is, of course, deliberate. 'Individual liberties
and mutual toleration' are only important insomuch as they improve, or detract, from profit-centre
activity.
You have difficulty in separating propaganda from reality, but you're barely alone in this.
Lastly, you also misunderstand feudalism, which in the European context, flourished before
there was a developed concept of a centralised nation state, indeed, the most classic examples
occurred after the decentralisation of an empire or suchlike. The primary feudal relation
was between the bondsman/peasant and his local magnate, who in turn, was subject to his liege.
In other words a warrior class bound by vassalage to a nobility, with the peasantry bound by
manorialism and to the estates of the Church.
Apart from that though, you're right on everything.
I completely agree with the general sentiment.
The specifics aren't that solid though:
- That we think our characters are independent of context/society: I certainly don't.
- That statement about "bullying is more widespread" - lacks justification.
The general theme of "meritocracy is a fiction" is compelling though.
As is "We are free-er in many ways because those ways no longer have any significance"
.
And the most striking idea here: Our characters are partly moulded by society. And neo-liberal
society, and it's illusions of freedom, has moulded many of us in ways that bring out the worst
in us.
The Rat Race is a joke. Too many people waste their lives away playing the capitalist game. As
long as you've got enough money to keep living you can be happy. Just ignore the pathetic willy-wavers
with their flashy cars and logos on their shirts and all that guff
All we need is "enough" - Posession isn't that interesting. More a doorway to doing interesting
stuff.
I prefer to cut out the posession and go straight to "do interesting stuff" myself. As long as
the rent gets paid and so on, obviously.
Doesn't always work, obviously, but I reckon not wanting stuff is a good start to the good
life (ref. to series with Felicity Kendall (and some others) intended :)
That, and Epicurus who I keep mentioning on CIF.
Rather naive. History is full of brilliant individuals who made it. Neo-liberalism has however
killed off post war social mobility. In fact according to the OECD report into social mobility,
the more egalitarian a developed society is, the more social mobility there is, the more productivity
and the less poverty and social problems there are.
I agree - the central dilemma is that neither individualism nor collectiviism works.
But is this dilemma real? Is there a third system? Yes there is - Henry George.
George's paradigm in nothing funky, it is simply Classical Liberal Economics - society works
best when individuals get to keep the fruits of thier labour, but pay rent for the use of The
Commons.
At present we have the opposite - labour and capital are taxed heavily and The commons are monopolised
by the 1%.
Hence unemployment
Hence the wealth gap
Hence the environmental crisis
Hence poverty
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So the values and morals that people have are so wafer thin that a variation in the political
system governing them can strip them away? Why do the left consistently have such a low opinion
of humanity?
"Why do the left consistently have such a low opinion of humanity?"
Open your eyes and take a lokk at the world. There is enough wealth in the world for everyone
to live free from poverty. Yet, the powerful look after themselves and allow poverty to not only
exist but spread.
>If you've ever dithered over the question of whether the UK needs a written constitution, dither
no longer. Imagine the clauses required to preserve the status of the Corporation. "The City of
London will remain outside the authority of parliament. Domestic and foreign banks will be permitted
to vote as if they were human beings, and their votes will outnumber those cast by real people.
Its elected officials will be chosen from people deemed acceptable by a group of medieval guilds
…".<
I agree with much of this. Working in the NHS, as a clinical psychologist, over the past 25 years,
I have seen a huge shift in the behaviour of managers who used to be valued for their support
and nurturing of talent, but now are recognised for their brutal and aggressive approach to those
beneath them. Reorganisations of services, which take place with depressing frequency, provide
opportunities to clear out the older, experienced members of the profession who would have acted
as mentors and teachers to the less experienced staff.
I worked in local authority social care, I can certainly see the very close similarities to what
you describe in the NHS, and my experience in the local authority.
I can well imagine there are big similarities. Friends of mine who work in education say the same
- there is a complete mismatch between the aims of the directors/managers and that of the professionals
actually providing the teaching/therapy/advice to the public. When I go to senior meetings it
is very rare that patients are even mentioned.
Bullying used to be confined to schools; now it is a common feature of the workplace.
This is an incredibly broad generalisation. I remember my grandfather telling me about what
went on in the mills he worked in in Glasgow before the war, it sounded like a pretty savage environment
if you didn't fit in. It wasn't called bullying, of course.
I put this simple statement to you: meritocratic neoliberalism favours certain personality
traits and penalises others.
Isn't this true of pretty much any system? And human relationships in general? I cannot think
of a system that is completely blind to the differences between people. If you happen to be lazy
or have a problem with authority you will never do as "well" (for want of a better term).
I have always said to people who claim they are Liberals that you must support capitalism,the
free market,free trade, deregulation etc etc when most of them deny that, I always say you are
not a Liberal then you're just cherry-picking the [Liberal] policies you like and the ones you
don't like,which is dishonest.
There is nothing neo about Liberalism,it has been around since the 19th century[?].People have
been brainwashed in this country [and the USA] since the 1960's to say they are liberals for fear
of being accused of being fascists,which is quite another thing.
I have never supported any political ideology,which is what Liberalism is,and believe all of them
should be challenged.By doing so you can evolve policies which are fair and just and appropriate
to the issue at hand.
Neoliberalism has only benefited a minority. Usually those with well connected and wealthy families.
And of course those who have no hesitation to exploit other's.
In my view, it is characterized by corruption, exploitation and a total lack of social justice.
Economically, the whole system is fully dependent on competition not co-operation. One day, the
consequences of this total failure will end in violence.
One day, the consequences of this total failure will end in violence.
And if we keep consuming all our resources on this finite planet in pursuit of profit and more
profit there will be no human race we will all be extinct.,and all that will be left is an exhausted
polluted planet that once harbored a vast variety of life.
Isent neolibral capitalism great.
As Marx so often claimed, values, ethics, morality and behaviours are themselves determined by
the economic and monetary system under which people live. Stealing is permitted if you are a banker
and call it a bonus or interest, murder is permitted if your government sends you to war, surveillance
and data mining is permitted if your state tells you there is a danger from terrorists, crime
is overlooked if it makes money for the perpetrator, benefit claimants are justified if they belong
to an aristocratic caste or political elite.......
There is no universal right or wrong, only that identified as such by the establishment at
that particular instance in history, and at that specific place on the planet. Outside that, they
have as much relevance today as scriptures instructing that slaves can be raped, adulterers can
be stoned or the hands of thieves amputated. Give me the crime and the punishment, and I will
give you the time and the place.
For a tiny elite sitting on the top everything has been going exactly as it was initially planned.
"When plunder becomes a way of life for a group of men
living together in Society, they create for themselves in the
course of time a legal system that authorizes it and a
moral code that glorifies it".
F. Bastiat.
Excellent article.
I'm amazed that more isn't made of the relationship between political environment/systems and
their effect on the individual. Oliver James Affluenza makes a compelling case for the unhappiness
outputs of societies who've embraced neo liberalism yet we still blindly pursue it.
The US has long been world leader in both the demand and supply of psychotherapy and the relentless
pursuit of free market economics. these stats are not unconnected.
I once had a colleague with the knack of slipping into his conversation complimentary remarks
that other people had made about him. It wasn't the only reason for his rapid ascent to great
heights, but perhaps it helped.
That's one of my favourite characteristics of David Brent from 'The Office'. "You're all looking
at me, you're going, "Well yeah, you're a success, you've achieved you're goals, you're reaping
the rewards, sure. But, OI, Brent. Is all you care about chasing the Yankee dollar?"
Neoliberalism is another Social Darwinist driven philosophy popularised after leading figures
of our times (or rather former times) decided Malthus was probably correct.
So here we have it, serious growth in population, possibly unsustainable, and a growing 'weak
will perish, strong will survive' mentality. The worst thing is I used to believe in neoliberal
policies, until of course I understood the long term ramifications.
And the reality is that "neoliberalism" has, in the last few decades, freed hundreds of millions
in the developing word from a subsistence living to something resembling a middle class lifestyle.
This has resulted in both plummeting global poverty statistics and in greatly reduced fecundity,
so that we will likely see a leveling off of global population in the next few decades. And this
slowing down of population growth is the most critical thing we could for increasing sustainability.
The problem is a judeo-christian idea of "free choice" when experiments, undertaken by Benjamin
Libet and since, indicate that it is near to unlikely for there to be volitionally controlled
conscious decisions.
If we are not even free to intend and control our decisions, thoughts and ambitions, how can
anyone claim to be morally entitled to ownership of their property and have a 'right' to anything
as a reward for what decisions they made? Happening is pure luck: meaningful [intended] responsibility
and accountability cannot be claimed for decisions and actions and so entitlement cannot be claimed
for what acquisitions are causally obtained from those decisions and actions.There is no 'just
desserts' or decision-derived entitlement justification for wealth and owning property unless
the justifier has a superstitious and scientifically unfounded belief in free choice.
Bullying used to be confined to schools; now it is a common feature of the workplace
Compared to say, that experienced by domestic staff in big houses, small children in factories,
perhaps even amongst miners, dockers and steel workers in the halcyon days of the post-war decade
when apparently everything was rosy?
This whole article is a hodge podge of anecdote and flawed observations designed to shoehorn
behaviour into a pattern that supports an economic hypothesis - it is factually groundless.
Compared to say, that experienced by domestic staff in big houses, small children in factories
Yes, but if it was left to people like you, children would still be working in factories. So
please do not take credit for improvements that you would fight tooth and nail against
perhaps even amongst miners, dockers and steel workers in the halcyon days of the post-war
decade when apparently everything was rosy?
They had wages coming to them and didn't need to rely on housing benefit to keep a roof over
their head. Now people like you bitterly complain about poorly paid workers getting benefits to
sustain them.
People who "work hard and play hard" are nearly always kidding themselves about the second bit.
It seems to me that the trend in the world of neoliberalism is to think that "playing hard"
is defined as "playing with expensive, branded toys" during your two week annual holiday.
'Playing hard' in the careerist lexicon = getting blind drunk to mollify the feelings of despair
and emptiness which typify a hollow, debt-soaked life defined by motor cars and houses.
The "Max Factor" life. Selfishness and Greed. The compaction of life. Was it not in a scripture
in text?. The Bible. We as humans and followers of "Faith" in christian beliefs and the culture
of love they fellow man. The culture of words are a root to all "Evil. Depending on "Who's" the
Author and Scrolling the words; and for what reason?. The only way we can save what is left on
this planet and save man kind. Is eradicate the above "Selfishness and Greed" ?
We are indeed freer than before, in the sense that we can criticise religion, take advantage
of the new laissez-faire attitude to sex and support any political movement we like. We can
do all these things because they no longer have any significance – freedom of this kind is
prompted by indifference.
These changes listed (and then casually dismissed) are monumental social achievements. Many
countries in the world do not permit their 'citizens' such freedom of choice and I for one am
very grateful to live in a country where these things are possible.
Of course there is much more to be done. But I would suggest that to be born in Western Europe
today is probably about as safe, comfortable, and free than at any time and any place in human
history. I'm not being complacent about what we still have to achieve. But we won't achieve anything
if we take such a flippant attitude towards all the amazing things that have been bequeathed to
us.
Excellent observation, it's the same way that technology that has quite clearly changed our lives
and given us access to information, opportunity to travel and entertainment that would have been
beyond the comprehension of our grandparents is dismissed as irrelevant because its just a smart
phone and a not a job for life in a British Leyland factory.
It takes a peculairly spoilt and arrogant Westerner to claim that the freedom to criticise religion
isn't significant or that we're only allowed to do so because it's no longer important. Tell that
to a girl seeking to escape an arranged marriage in Bradford...
OK. Now off you go and apply the same methodology to people living in statist societies, or just
have a go at our own civil service or local government workers. Try social workers or the benefits
agency or the police.
The author makes some good points, although I wouldn't necessarily call our system a meritocracy.
I guess the key one is how unaware we are about the influence of economic policy on our values.
This kind of systems hurts everyday people and rewards psychopaths, and is damaging to society
as a whole over the long term.
Targetising everything is really insidious.
That neoliberalism puts tremendous pressure on individuals to conform to materialistic norms is
undeniable, but for a psychotherapist to disallow the choice of those individuals to nevertheless
choose how to live is an admission of failure.
In fact, many people today experience the shallowness and corrupt character of market society
and elect either to be in it, but not of it, or to opt out early having made enough money, often
making a conscious choice to relinquish the 'trappings' in return for a more meaningful existence.
Some do selfless service to their fellow human beings, to the environment or both, and thereby
find a degree of fulfillment that they always wanted.
To surrender to the external demands of a superficial and corrupting life is to ignore the
tremendous opportunity human life offers to all: self realization.
It's not either-or, system or individual, but some combination of the two.
Decision making may be 80% structure and 20% individual choice for the mainstream - or maybe the
other way round for the rebels amongst us that try to reject the system.
The theory of structuration (Giddens) provides one explanation of how social systems develop
through the interactions between the system and actors in it.
I partly agree with you but I think examples of complete self realisation are extremely rare.
That means stepping completely out of the system and out of our own personality. Neither this
nor that.
The point is that the individual has the choice to move in the right direction. When and if they
do make a decision to change their life, it will be fulfilling for them and for the system.
Our presumed freedom is tied to one central condition: we must be successful – that is,
"make" something of ourselves. You don't need to look far for examples. A highly skilled individual
who puts parenting before their career comes in for criticism. A person with a good job who
turns down a promotion to invest more time in other things is seen as crazy – unless those
other things ensure success.
I have been in the private sector for generations, and know tons of people who have behaved
precisely as described above. I don't know anyone who calls them crazy. In fact, I see the exact
opposite tendency - the growing acceptance that money isn't everything, and that once one has
achieved a certain level of success and financial security that it is fine to put other priorities
first rather than simply trying to acquire ever more.
The ATL article is rather stuffed full of stereotypes.
And speaking personally, I have turned down two offers of promotion to a management position
in the last ten years and neither time did I get the sense people thought I was crazy. They might
have done if I were in my late twenties rather than mid-fifties but that does reinforce the notion
that people - even bosses - can accept that there is more to life than a career.
I agree about the stereotypes. Also, has anyone ever seriously advised a primary school teacher
that they need a masters degree of economics?! I highly doubt that that is the norm!
I hate to break it to you but no matter how you organise society the nasty people get to the
top and the nice people end up doing all the work. "Neo-liberalism" is no different.
Or you could put it another way - 'neoliberalism' is the least worst economic/social system, because
most people are far more powerless and far more worse off under any other system that has ever
been developed by man...
For a start you need a system that is not based on rewarding and encouraging the worst aspects
of our characters. I try to encourage my kids not to be greedy, to be honest and to care about
others but in this day and age it's an uphill struggle.
"A neoliberal meritocracy would have us believe that success depends on individual effort and
talents, meaning responsibility lies entirely with the individual and authorities should give
people as much freedom as possible to achieve this goal."
In the UK we have nothing like a meritocracy with a privately educated elite.
Success and failure are just about parental wealth.
"So the values and morals that people have are so wafer thin that a variation in the political
system governing them can strip them away? Why do the left consistently have such a low opinion
of humanity?"
RidleyWalker, I can assue you that it is not the left but the right who consistently have a
low opinion of humanity. Anyway, what has left and right got to do with this? There are millions
of ordinary decent people whose lives are blighted by the obscentity that is neo-liberalism. Neo-liberalism
is designed to make the rich richer at the expense of the poor. Neo-liberalism is responsible
for the misery for millions across the globe. The only happy ones are those at the top of the
heap...until even their bloated selfish world inevitably implodes.
Of course these disgusting parasites are primitive thinkers and cannot see that we could have
a better, happier world for everyone if societies become more equal. Studies demonstrate that
more equal societies are more stable and content than those with ever-widening gaps in wealth
between rich and poor.
Neoliberalism...disgusting parasites...primitive thinkers...misery of millions...bloated selfish
world
This reads like a Soviet pamphlet from the 1930's. Granted you've replaced the word 'capitalism'
with 'neoliberalism' - in other words subsstituted one meaningless abstraction for another. It
wasn't true then and it certainly isnt true now...
Not sure why you think all this is new or attributable to neoliberalism. Things were much the
same in the 1960's and 1970's. All that has changed is that instead of working on assembly lines
in factories under the watchful gaze of a foreman we now have university degrees and sit in cubicles
pressing buttons on keyboards. Micromanagement, bureaucracy, rules and regulations are as old
as the hills. Office politics has replaced shop floor politics; the rich are still rich and the
poor are still poor.
Well, except that people have more money, live longer and have more opportunities in life than
before - most people anyway. The ones left behind are the ones we need to worry about
Not sure why you think all this is new or attributable to neoliberalism. Things were much
the same in the 1960's and 1970's.
And you can read far more excoriating critiques of our shallow materialistic capitalism, culture
from those decades, now recast as some sort of prelapsarian Golden Age.
Actually, the 1929 crash was not the first by any means. The boom and bust cycle of modern economics
goes back a lot further. When my grandparents talked about the "Great Depression" they were referring
to the 1890's.
The nineteenth century saw major financial crises in almost every decade, 1825, 1837, 1847, 1857,
1866 before we even get to the Great Depression of 1873-96.
Socialism seems to be happy home of corruption & nepotism. The old saw that Tory MP's are brought
down by sex scandals whilst Labour MP's have issues with money still holds.
Why is that relevant? This is a critique of neo liberalism and it is a very accurate one at that.
It isn't suggesting that Socialism is better or even offers an alternative, just that neo liberalism
has failed society and explores some of how and why.
The main problem is that neoliberalism is a faith dressed up as a science and any evidence that
disproves the hypothesis (e.g. the 2008 financial collapse) only helps to reinforce the faith
of the fundamentalists supporting it.
The reason why "neoliberalism" is so successful is precisely because the evidence shows it does
work. It has not escaped peoples' notice that nations where governments heavily curtail individual
and commercial freedom are often rather wretched places to live.
It would be nice to curtail coprorate freedom without curtailing the freedom of individuals. I
don't see how that might work.
"hubris over free markets" might well be it.
But I might be understanding that in a different way from you. People were making irrational decisions
that didn't seem to take on basic logic of a free market, or even common sense. Such as "where
is all this money coming from" (madoff, house ladder), "of course this will work" (fred goodwin
and his takeovers) and even "will i get my money back" (sub-prime lending).
So why don't we do something about it....genuinely? There appears to be no power left in voting
unless people are given an actual choice....Is it not time then to to provide a well grounded
articulate choice? The research, in many different disciplines, is already out there.
What can we do? It appears we are stuck between the Labour party and the Conservatives. Is it
even possible for another party to come to power with the next couple of elections?
The sociologist Zygmunt Bauman neatly summarised the paradox of our era as: "Never have
we been so free. Never have we felt so powerless." We are indeed freer than before, in the
sense that we can criticise religion, take advantage of the new laissez-faire attitude to sex
and support any political movement we like. We can do all these things because they no longer
have any significance – freedom of this kind is prompted by indifference. Yet, on the other
hand, our daily lives have become a constant battle against a bureaucracy that would make Kafka
weak at the knees. There are regulations about everything, from the salt content of bread to
urban poultry-keeping.
Verhaeghe begins by criticizing free markets and "neo-liberalism", but ends by criticizing
the huge, stifling government bureaucracy that endeavours to micro-manage every aspect of its
citizens lives, and is the opposite of true classic liberalism.
probably not as confusing as it seems to be for you.
this is just the difference between neoliberalism in theory and in practise.
like the "real existierende sozialismus" in eastern germany fell somewhat short of the brilliant
utopia of the theorists.
verhaeghe does not criticise the theoretical model, but the practical outcome. And the worst governmant
and corporate bureaucracy that mankind has ever seen is part of it. The result of 30+ years of
neoliberal policies.
In my experience this buerocracy is gets worse in anglo saxon countries closest to the singularity
at the bottom of the neolib black hole.
I am aware that this is only a correlation, but correlations, while they do not prove causation,
still require explanation.
Some time ago, and perhaps still, it was/is fashionable for Toryish persons to denigrate the 1960s.
I look back to that decade with much nostalgia. Nearly everyone had a job of sorts, not terribly
well paid but at least it was a job. And now? You are compelled to toil your guts out, kiss somebody's
backside, run up unpayable debts - and, in the UK, live in a house that in many other countries
would have been demolished decades ago. Scarcely a day passes when I am not partly disgusted at
what has overtaken my beloved country.
An excellent article! The culture of the 80's has ruled for too long and its damage done.... its
down to our youth to start to shape things now and I think that's beginning to happen.
Neo-Liberalism as operated today. "Greed is Good" and senior bankers and those who sell and buy
money, commodities etc; are diven by this trait of humankind.
But we, the People are just as guilty with our drives for 'More'. More over everything, even
shopping at the supermarket - "Buy one & get ten free", must have.
Designer ;bling;, clothes, shoes, bags, I-Pads etc etc, etc. It is never ending. People seem
to be scared that they haven't got what next has, and next will think that they are 'Not Cool'.
We, the people should be satisfied with what have got, NOT what what we havn't got.
Those who "want" (masses of material goods) usually "Dont get!"
The current system is unsustainable as the World' population rises and rises. Nature (Gaia)
will take care of this through disease, famine, and of course the stupidity of Humankind - wars,
destruction and general stupidity.
What's a meritocracy? Oh, that's right - a fable that people who have a lot of money deserve it
somehow because they're so much better than the people who work for a living.
The world was an even nastier place before the current era. During the 1970s and early 1980s there
was huge inflation which robbed people of their saving, high unemployment, and (shudder) Disco.
People tend to view the past with rose-coloured glasses.
What neoliberalism? We've got a mixed economy, which seemingly upsets both those on the right
who wish to cut back the state and those on the left who'd bolster it.
I work in a law firm specialising in M&A, hardly the cuddliest of environments, but I recognise
almost nothing here as a description of my work place. Sure, some people are wankers but that's
true everywhere.
FDR, the Antichrist of the American Right, famously said that the only thing we have to fear is
fear itself. And here we are with this ideology which in many ways stokes the fear. The one thing
these bastards don't want most of us to feel is secure.
There is no "free market" anywhere. That is a fantasy. It is a term used when corporations want
to complain about regulations. What we have in most industrialized countries is corporate socialism
wherein corporations get to internalize profits and externalize costs and losses. It has killed
of our economies and our middle class.
Socialism or barbarism -- a starker choice today than when the phrase was coined.
So long, at least, as we have an evolved notion of what socialism entails. Which means, please,
not the state capitalism + benign paternalism that it's unfortunately come to mean for
most people, in the course of its parasitical relationship with capitalism proper, and so with
all capitalism's inventions (the 'nation', the modern bureaucracy, ever-more-efficient exploitation
to cumulatively alienating ends......)
It's just as unfortunate, in this light, that the term 'self-management' has been appropriated
by the ideologues of pseudo-meritocracy, in just the way the article describes..
Because it's also a term (from the French autogestion) used to describe what I'd argue is the
most nuanced and sophisticated collectivist alternative to capitalism -- an alternative that is
at one and the same time a rejection of capitalism.... and of the central role of the state
and 'nation' (that phony, illusory community that plays a more central role in empowering the
modern state than does its monopoly on violence)... and of the ideology of growth, and
of the ideal of monolithic, ruthlessly efficient economic totalities organised to this end....
It's a rejection, in other words, of all those things contemplation of which reminds us just
how little fundamental difference there is between capitalism and the system cobbled together
on the fly by the Bolsheviks -- same vertical organisation to the ends of the same exploitation,
same exploitation to the ends of expanding the scope and scale of vertical organisation, all of
it with the same destructive effects on the sociabilities of everyday life....
Self-management in this sense goes beyond 'workers control'; (I'd argue that) it envisions
a society in which most aspects of life have been cut free from the ties that bind people
vertically to sources of influence and control, however they're constituted (private and public
bureaucracies, market pressures, the illusory narratives of nation, mass media and commodity...).
The horizontal ties of workplace and local community would thus be constitutive, by default,
and society as a whole would become very little more than the sum of its parts -- mutating on
a molecular local level as people collectively and democratically decided, in circumstances that
actually granted them the power to do so, how to balance the conflicting needs and desires and
necessities that a complex society and a complex division of labour present. 'Balance' because
there really isn't any prospect of a utopian resolution of these conflicts -- they come with civilisation
-- or with barbarism, for than matter, in any of its modern incarnations.
What about those who disagree with such a radical reordering of society? How would the collective
deal with those who wished to exploit it?
I'm genuinely interested, beats working...
The horizontal ties of workplace and local community would thus be constitutive, by default,
and society as a whole would become very little more than the sum of its parts -- mutating
on a molecular local level as people collectively and democratically decided, in circumstances
that actually granted them the power to do so, how to balance the conflicting needs and desires
and necessities that a complex society and a complex division of labour present.
Why do socialists so often resort to such turgid, impenetrable prose? Could it be an attempt
to mask the vacuity of their position?
I read this article skeptically, but then realised how accurately he described my workplace. Most
people I know on the outside have nice middle class lives, but underneath it suffer from anxiety,
about 1 not putting enough into their careers 2 not spending enough time with their kids. When
I decided to cut my work hours in half when I had a child, 2 of my colleagues were genuinely concerned
for me over things like, I might be let go, how would I cope with the drop in money, I was cutting
my chances of promotion, how would it look in a review. The level of anxiety was frightening.
People on the forum seem to be criticizing what they see as the authors flippant attitude to
sexual freedom and lack of religious hold, but I see the authors point, what good are these freedoms
when we are stuck in the stranglehold of no job security and huge mortgage debt. Yes you can have
a quick shag with whoever you want and don't need to answer to anyone over it on a Sunday, but
come Monday morning its back to the the ever sharpening grindstone.
This reminds me of the world I started to work in in 1955. I accept that by 1985 it was ten times
worse and by the time I retired in 2002, after 47 years, I was very glad to have what I called
"survived". At its worst was the increasing difference between the knowledge base of "the boss"
when technology started to kick in. I was called into the boss's office once to be criticised
for the length of a report. It had a two page summery of the issue and options for resolving the
problem. I very meekly inquired if he had decided on any of the options to resolve the problem.
What options are you talking about? was his response, which told me that either he had not read
the report or did not understand the problem. This was the least of my problems as I later had
to spend two days in his office explaining the analysis we (I) were submitting to the Board.
A highly skilled individual who puts parenting before their career comes in for criticism.
A person with a good job who turns down a promotion to invest more time in other things is
seen as crazy – unless those other things ensure success. A young woman who wants to become
a primary school teacher is told by her parents that she should start off by getting a master's
degree in economics – a primary school teacher, whatever can she be thinking of?
Speak for yourself.
The current economic situation affects each of us as much as we allow it to. Some may well love
neo-liberalism and the concomitant dog eat dog attitude, but there are some of us who regard it
as little more than a culture of self-enrichment through lies and aggression. I see it as such,
and want nothing to do with it.
If you live by money and power, you'll die by money and power. I prefer to live and work with
consensus and co-operation.
I'll never be rich, but I'll never have many enemies.
Hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants,
high-frequency traders, and top lobbyists.They're getting paid vast sums for their labors. Yet
it seems doubtful that society is really that much better off because of what they do. They play
zero-sum games that take money out of one set of pockets and put it into another. They demand
ever more cunning innovations but they create no social value. High-frequency traders who win
by a thousandth of a second can reap a fortune, but society as a whole is no better off. the games
consume the energies of loads of talented people who might otherwise be making real contributions
to society - if not by tending to human needs or enriching our culture then by curing diseases
or devising new technological breakthroughs, or helping solve some of our most intractable social
problems. Robert Reich said this and I am compelled to agree with him!
Brilliant article. It is not going to change anything, of course, because majority of people of
this planet would cooperate with just about any psychopath clever enough not to take away from
them that last bit of stinking warm mud to wallow in.
Proof? Read history books and take a look around you. We are the dumbest animals on Earth.
Rubbish. We are the most intelligent and successful creature that this planet has ever seen. We
have become capable of transforming it, leaving it and destroying it.
Bullying used to be confined to schools; now it is a common feature of the workplace.
I started work nearly 40 years ago and there were always some bullies in the workplace. Maybe
there are more now, I don't know but I suspect it is more widely reported now. Workplace bullies
were something of a given when I started work and it was an accepted part of the working environment.
Be careful about re-inventing history to suit your own arguments.
I'm surprised the normalization of debt was not mentioned. If you are debt free you have more
chance of making decisions that don't fit into the model.
So what do we do now, we train nearly 50% of our young that having large amounts of debt is
perfectly normal. When I was a student I lived off the grant and had a much lower standard of
living than I can see students having now, but of course I had no debt when I graduated. I know
student debt is administered differently, I'm talking about the way we are training them to accept
debt of all sorts.
Same applies to consumerism inducing the 'I want it and I want it now', increases personal
debt, therefore forcing people to fit in, same applies to credit cards and lax personal lending.
Although occasionally there are economic questions about large amounts of personal debt, politically
high personal debt is ideal.
Not sure if you're in the sector, in large parts that's kind of how academia works?
This is also what's referred to in the trade as an opinion piece, where an author will be presenting
his views and substantiating them with reference to the researches of others.
There is no mystery to neoliberalism -- it is an economic system designed to benefit the 0.1%
and leave the rest of us neck deep in shit. That's why our children will be paying for the bankers'
bonuses to the day they die. Let's celebrate this new found freedom with all the rest of the Tory
lickspittle apologists. Yippee for moral bankruptcy -- three cheers!
The Simple Summary is the state/ royality used to hold all the power over the merchants and the
public for centuries. Bit by bit the merchants stripped that power away from royality, until eventually
the merchants have now taken over everybody. The merchants hold all the power now and they will
never give that up as there is nobody to take it from them. By owning the state the merchants
now have everything that go with it. The army, police and the laws and the media.
David Harvey puts it all under the microscope and explains in great detail how they've achieved
their end game over the last 40 years.
There are millions of economists and many economic theories in our universities. Unfortunately,
the merchants will only fund and advertise and support economic theories that further their power
and wealth.
As history shows time and time again it will be the public who rip this power from their hands.
If they don't give it up it is only a matter of time. The merchants may now own the army, the
police, the laws and the parliament. They'll need all of that and more if the public decide to
say enough is enough.
Bullying used to be confined to schools? Can't agree with that at all. Bullying is an ingrained
human tendency which manifests in many contexts, from school to work to military to politics to
matters of faith. It is only bad when abused, and can help to form self-confidence.
I am not sure what "neo" means but liberal economics is the basis of the Western economies
since the end of feudalism. Some countries have had periods of pronounced social democracy or
even socialism but most of western Europe has reverted to the capitalist model and much of the
former east bloc is turning to it. As others have noted in the CiF, this does not preclude social
policies designed to alleviate the unfair effects of the liberal economies.
But this ship has sailed in other words, the treaties which founded the EU make it clear the
system is based on Adam Smith-type free market thinking. (Short of leaving the EU I don't see
how that can be changed in its essentials).
Finally, socialist countries require much more conformity of individuals than capitalist ones.
So you have to look at the alternatives, which this article does not from what I could see.
To be honest I don't think Neoliberalism has made much of a difference in the UK where personal
responsibility has always been king. In the Victorian age people were quite happy to have people
staving to death on the streets and before that people's problems were usually seen as either
their own fault or an act of God (which would also be your own fault due to sin). If anything
we are kinder to strangers now, than we have been, but are slipping back into our old habits.
I think the best way to combat extreme liberalism is to be knowing about our culture and realise
that liberalism is something which is embedded in British culture and is not something imposed
on us from else where or by some -ism. It is strengthen not just by politics but also by language
and the way we deal with personal and social issues in our own lives. We also need to acknowledge
that we get both good and bad things out of living in a liberal society but that doesn't mean
we have to put up with the bad stuff. We can put measures in place to prevent the bad stuff and
still enjoy the positives even though some capitalists may throw their toys out of the pram.
Personal responsibility is EXACTLY what neoliberalism avoids, even as it advocates it with every
breath.
What it means is that you get as much responsibility as you can afford to foist onto someone
else, so a very wealthy person gets none at all. It's always someone else's fault.
Neoliberalism has actually undermined personal responsibility at every single step, delegating
it according to wealth or perceived worth.
If Liberalism is the mindset of the British how come we created the NHS, Legal Aid, universal
education and social security? These were massive achievements of a post war generation and about
as far removed from today's evil shyster politics as it is possible to be.
"Our society constantly proclaims that anyone can make it if they just try hard enough, all the
while reinforcing privilege and putting increasing pressure on its overstretched and exhausted
citizens"
What to people mean when they use the word "society" in this context?
When we stopped having jobs and had careers instead, the rot set in. A career is the promotion
of the self and a job the means to realise that goal at the expense of everyone else around you.
The description of psychopathic behaviour perfectly describes a former boss of mine (female).
I liked her but knew how dangerous she was. She went easy on me because she knew that I could
do the job that she would claim credit for.
The pressure and stress of, for example open plan offices and evaluation reports are all part
of the conscious effort on behalf of employers to ensure compliance with this poisonous attitude.
The greatest promoter of this philosophy is the Media, step forward Evan Davies, the slobbering
lap dog of the rich and powerful.
On the positive side I detect a growing realisation among normal people of the folly of this worldview.
Self promoters are generally psychopaths who don't have any empathy for the people around them
who carry them everyday and make them look good. We call these people show bags. Full of shit
and you have to carry them all the time....
"meritocratic neoliberalism favours certain personality traits and penalises others..."
I put to you the simple premsie that you can substitute "meritocratic neoliberalism" with any
political system (communism, fascism, social democracy even) and it the same truism would emerge.
"Neoliberalism promotes individual freedom, limited government, and deregulation of the economy...whilst
individual freedom is a laudable idea, neoliberalism taken to a dogmatic extreme can be used to
justify exploitation of the less powerful and pillaging of the natural environment." - Don Ambrose.
Contrast with this:
"Neoliberal democracy, with its notion of the market uber alles ...instead of citizens,
it produces consumers. Instead of communities, it produces shopping malls. The net result is an
atomized society of disengaged individuals who feel demoralised and socially powerless." - Robert
W. McChesney in Profit over People, Noam Chomsky.
It is fairly clear that the neoliberal system is designed to exploit the less powerfull when
it becomes dogmatic, and that is exactly what it has become: beaurocracy, deregulation, privatisation,
and government power .
Neoliberalism is a virus that destroys people's power of reason and replaces it with extra greed
and self entitlement. Until it is kicked back to the insane asylum it came from it will only keep
trying to make us it's indentured labourers. The only creeds more vile were Nazism and Apartheid.
Eventually the neoliberals will kill us all, so they can have the freedom to have everything they
think they're worth.
Yet, on the other hand, our daily lives have become a constant battle against a bureaucracy
that would make Kafka weak at the knees. There are regulations about everything, from the salt
content of bread to urban poultry-keeping.
Isn't a key feature of neo-liberalism that governments de-regulate? It seems you're willing
to blame absolutely everything on neoliberalism, even those things that neoliberalism ostensibly
opposes.
The Professor is correct. We have crafted a nightmare of a society where what is considered good
is often to the detriment of the whole community. It is reflected in our TV shows of choice, Survivor,
Big Brother, voting off the weakest or the greatest rival. A half a million bucks for being the
meanest most sociopathic person in the group, what great entertainment.
Always a treat to read your articles, Mr Verhaeghe; well written and supported with examples and
external good links. I especially like the link to Hare's site which is a rich resource of information
and current discussions and presentations on the subject.
The rise of the psychopath in society has been noted for some time, as have the consequences
of this behaviour in wider society and and a growing indifference and increased tolerance for
this behaviour.
But what are practical solutions? MRI brain scans and early intervention? We know that behaviour
modification does not work, we know that antipsychotic and other psychiatric medication does not
alter this behaviour, we know little of genetic causes or if diet and nutrition play a role.
Maybe it is because successful psychopaths leverage themselves into positions of influence
and power and reduce the voice, choices and influence of their victims that psychopathy has become
such an unsolvable problem, or at least a problem that has been removed from the stage of awareness.
It is so much easier to see the social consequences of psychopathy than it is to see the causal
activity of psychopaths themselves.
Neoliberalism has entered centre stage politics not as a solution, it is just socialism with a
crowd pleasing face. What could the labour party do to get voted in when the leadership consisted
of self professed intellectuals in Donkey Jackets which they wore to patronise the working classes.
Like the animal reflected in the name they became a laughing stock. Nobody understood their language
or cared for it. The people who could understand it claimed that it was full of irrelevant hyperbole
and patronising sentiment.
It still is but with nice sounding buzz words and an endless sound bites, the face of politics
has been transformed into a hollow shell. Neither of the party's faithful are happy with their
leaders. They have become centre stage by understanding process more than substance. As long as
your face fits, a person has every chance of success. Real merit on the other hand is either sadly
lacking or non existant.
Most people's personalities and behaviour are environment driven, they are moulded by the social
context in which they find themselves. The system we currently inhabit is one which is constructed
on behalf of the holders of capital, it is a construct of the need to create wealth through interest
bearing debt.
The values of this civilisation are consumer ones, we validate and actualise ourselves through
ownership of goods, and also the middle-class norms of family life, which are in and of themselves
constructs of a liberal consumer based society.
We pride ourselves on tolerance, which is just veiled indifference to anything which we feel
as no importance to our own desires. People are becoming automatons, directed through media devices
and advertising, and also the implanted desires which the consumer society needs us to act upon
to maintain the current system of economy.
None of this can of course survive indefinitely, hence the constant state of underlying anxiety
within society as it ploughs along on this suicidal route.
Good article, however I would just like to add that the new breed of 'business psychopath' you
allude to are fairly easy to spot these days, and as such more people are aware of them, so they
could be displaced quite soon, hopefully.
Cameron and the Conservatives have long been condemning the lazy and feckless at the bottom of
society, but has Cameron ever looked at his aristocratic in-laws.
His father-in-law, Sir Reginald Sheffield, can be checked out on Wikipedia.
His only work seems to have been eight years as a conservative councillor (lazy).
He is a member of three clubs, so he likes to go pissing it up with his rich friends (feckless).
This seems to be total sum of his life's achievements.
He also gets Government subsidies for wind turbines on his land (on benefits).
His estate has been in the family since the 16th Century and the family have probably done very
little since, yet we worry about the lower classes having two generations without work, in the
upper classes this can go on for centuries.
Wasters don't just exist at the bottom of society.
Mr. Cameron have a closer look at your aristocratic in-laws.
This is the consequence of a system that prevents people from thinking independently and
that fails to treat employees as adults.
Fundamentally the whole concept is saying "real talent is to be hunted down since, if you do
not destroy it, it will destroy you". As a result we have a whole army of useless twats in high
positions with not an independent thought between them. The concept of the old boys network has
really taken over except now the members are any mental age from zero upwards.
And then we wonder why nothing is done prperly these days....
Neoliberalism is fine in some areas of self-development and actualization of potential, but taken
as a kind of religion or as the be-all and end-all it is a manifest failure. For a start it neglects
to acknowledge what people have in common, the idea of shared values, the notion of society, the
effects of synergy and the geo-biological fact that we are one species all inhabiting the same
single planet, a planet that is uniquely adapted to ourselves, and to which we are uniquely adapted.
Generally it works on the micro-scale to free up initiative, but on the macro-scale it is hugely
destructive, since its goals are not the welfare of the entire human race and the planet but something
far more self-interested.
I put this simple statement to you: meritocratic neoliberalism favours certain personality
traits and penalises others.
This is inevitable. All societies have this property. A warrior society rewards brave fighters
and inspiring leaders, while punishing weaklings and cowards. A theocracy rewards those who display
piety and knowledge of religious tradition, and punishes skeptics and taboo-breakers. Tyrannies
reward cunning, ruthless schemers while punishing the squeamish and naive. Bureaucratic societies
reward pernickety types who love rules and regulationsn, and punish those who are careless of
jots and tittles. And so on.
A neoliberal meritocracy would have us believe that success depends on individual effort
and talents
It does. In fact, it does in all societies to some extent, even societies that strive to be egalitarian,
and societies that try to restrict social mobility by imposing a rigid caste system. There are
always individuals who fall or rise through society as a result of their abilities or lack thereof.
The freer society is, the more this happens.
For those who believe in the fairytale of unrestricted choice, self-government and self-management
are the pre-eminent political messages, especially if they appear to promise freedom.
Straw man. Even anarchists don't believe in completely unrestricted choice, let alone neoliberals.
Neoliberalism accepts that people are inevitably limited by their abilities and their situation.
Personal responsibility does not depend on complete freedom. It depends on there being some
freedom. If you have enough freedom to make good or bad choices, then you have personal responsibility.
Along with the idea of the perfectible individual, the freedom we perceive ourselves as
having in the west is the greatest untruth of this day and age.
The idea of the perfectible individual has nothing to do with neoliberalism. On the other hand,
it is one of the central pillars of Marxism. In philosophy, Marx is noted as an example of thinker
who follows a perfectionist ethical theory.
A frightening article, detailing now the psychological strenngths of people are recruited, perverted
and rotted by this rat-race ethic.
Ironic that the photo, of Canary Wharf, shows one of the biggest "socialist" gifts of the country
(was paid largely by the British taxpayer, if memory serves me correctly, and more or less gifted
to the merchant bankers by Thatcher).
Meritocratic neoliberalism; superficial articulateness which I used to call 'the gift of the gab'.
In my job, I was told to be 'extrovert' and I bucked against this, as a prejudice against anyone
with a different personality and people wanting CLONES. Not sensible people, or people that could
do a job, but a clone; setting the system up for a specific type of person as stated above. Those
who quickly tell you, you are wrong. Those that make you think perhaps you are, owing to their
confidence. Until your quietness proves them to be totally incorrect, and their naff confidence
demonstrates the falseness of what they state.
Most of the richest people in the world are not bullshitters. There are some, to be sure, but
the majority are either technical or financial engineers of genius, and they've made their fortune
through those skills, rather than through bullshit.
Hague lied to the camera about GCHQ having permission to access anyone's electronic devices. He
did not blush, he merely stated that a warrant was required. Only the night before we were shown
a letter from GCHQ stating that they had access without any warrant.
The ability to LIE has become a VIRTUE that all of us could well LIVE WITHOUT.
That's not new. It has been widely held that rulers have a right (and sometimes a duty) to lie
ever since Machiavelli's Prince was published some 500 years ago.
The sociologist Zygmunt Bauman neatly summarised the paradox of our era as: "Never have
we been so free. Never have we felt so powerless." We are indeed freer than before, in the
sense that we can criticise religion, take advantage of the new laissez-faire attitude to sex
and support any political movement we like. We can do all these things because they no longer
have any significance – freedom of this kind is prompted by indifference.
Freedom's just another word for nothin' left lose.
-Janice Joplin
Actually it was written by Kris Kristofferson and, having a house, a job pension and an Old Age
Pension, frankly, I disagree. The Grateful Dead version is better anyway.
.... economic change is having a profound effect not only on our values but also on our
personalities.
I have long thought that introverts are being marginalised in our society. Being introvert
seems to be seen by some as almost an illness, by others as virtually a crime.
Not keen on attending that "team bonding" weekend? There must be something wrong with you.
Unwilling to set out your life online for all to see? What have you got to hide?
A few very driven and talented introverts have managed to find a niche in the world of IT and
computers, earnig fortunes from their bedrooms. But for most, being unwilling or unable to scream
their demands and desires across a crowded room is interpreted as "not trying" or being not worth
listening to.
It's important to be able to talk up your own capacities as much as you can – you know a
lot of people, you've got plenty of experience under your belt and you recently completed a
major project. Later, people will find out that this was mostly hot air, but the fact that
they were initially fooled is down to another personality trait: you can lie convincingly and
feel little guilt. That's why you never take responsibility for your own behaviour.
Perfectly describes our new ruling-class, doesn't it!
It's important to be able to talk up your own capacities as much as you can – you know a
lot of people, you've got plenty of experience under your belt and you recently completed a
major project. Later, people will find out that this was mostly hot air, but the fact that
they were initially fooled is down to another personality trait: you can lie convincingly and
feel little guilt. That's why you never take responsibility for your own behaviour.
Sounds like a perfect description of newspaper columnists to me.
It's just the general spirit of the place: it's on such a downer and no amount of theorising and
talking will ever solve anything. There isn't a good feeling about this country anymore just a
lot of tying everyone up in in repressive knots with a lot of hooey like talk and put downs. We
need to find freedom again or maybe shove all the pricks into one part of the country and leave
them there to fuck each other over so the rest of us can create a new world free of bullcrap.
I don't know. Place is a superficial mess: 'look at me; look at what I own; I can cook Coq Au
Vin and drink bottles of expensive plonk and keep ten cars on my driveway'
Nah. Fortuneately there are still some decent people left but it's been like Hamlet now for quite
some time - "show me an honest man and I'll show you one man in ten thousand" Sucks.
This article is spot on and reflects Karl Marx's analysis regarding the economic base informing
and determining the superstructure of a given society, that is, its social, cultural aspects.
A neo-liberal, monetarist economy will shape and influence social and work relationships in ways
that are not beneficial for the many but as the commentator states, will benefit those possessed
of certain thrusting,domineering character traits. The common use of the word "loser" in contemporary
society to describe those who haven't "succeeded" financially is in itself telling.
It would be the perfect first chapter (foreword/introduction) in a best seller that goes on,
chapter by chapter, to show that neoliberalism destroys everything it touches:
Personal relationships;
trust;
personal integrity;
trust;
relationships;
trust;
transactions and trade;
trust;
market systems;
trust;
communities;
trust;
political relationships;
trust;
James Meek seems to have nailed it in his recent book, where he pointed out that the socially
conservative Thatcher, who wanted a society based on good old fashioned values, helped to create
the precise opposite with her enthusiasm for the neoliberal model. Now we are sinking into a dog-eat-dog
dystopia.
Many of the good old fashioned conservatives had time honoured values. They believed in taking
care of yourself but they also believed in integrity and honesty. They believed in living modestly
and would save much of their money rather than just spend it, and so would put some aside for
a rainy day. They believed in the community and were often active about local issues. They cared
about the countryside and the wildlife. They often recycled which went along with their thriftiness
and hatred of waste.
This all vanished when Thatcher came in with her selfish 'greed is good' brigade. Loads of
money!
We are indeed freer than before, in the sense that we can criticise religion, take advantage
of the new laissez-faire attitude to sex and support any political movement we like. We can
do all these things because they no longer have any significance –
Capitalist alienation is a daily practise. The daily practise of competing with and using people.
This gives rise to the ideology that society and other people are but a means to an end rather
than an end in themselves that is of course when they are not a frightening a existential competitive
threat. Contempt and fear. That is what we are reduced to by the buying and selling of labour
power and yes, only a psychopath can thrive under such conditions.
According to the left if your only ambition is to watch Jeremy Kyle, pick up a welfare cheque
once a week and vote for which ever party will promise to give you £10 a week more in welfare:
you're an almost saint like figure.
If you actually do something to try to create a better and more independent life for yourself,
your family and your community: you're "displaying psychopathic tendencies" .
If you actually do something to try to create a better and more independent life for yourself,
your family and your community: you're "displaying psychopathic tendencies".
So how do you create a better community ?
By paying your taxes on your wealth that so many of you try to avoid. Here lies the crux of
the matter. There would be no deficit if taxes were paid.
Some of the rich are so psychpathic they think jsut because they employ people they shouldn't
pay any tax. They think the employees should pay thier tax for them.
Why has tax become such a dirty word ? Think about it before you answer.
The conclusion is for me is that it is a brilliant economic model. It is the sheer apathy of
the voters and that they are cowards because they don't make it work for them. They allow the
people who own the theory to run it for themselves and thus they get all the benefits from it.
I'll try and explain.
Their business plan.
The truth is neoliberalism has infact made the rich western countries poorer and helped so
many other poorer countries around the world get richer. Let's face facts here giving to charities
would never have achieved this and something needed to be done to even up this world inequality.
The only way you are ever going to achieve world peace is if everybody is equal. It's not by chance
this theory was introduced by America. They are trying to bring that equality to everyone so that
world peace can be achieved. How many more illegal wars and deaths this will take and for how
long nobody knows. They are also very sinister and selfish and greedy because if the Americans
do achieve what they are trying to do. They will own and countrol the world via washington and
the dollar. The way the Americans see it is that the inequality created within each country is
a bribe to each power structure within that country which helps America achieve it's long term
goals. It creates inequality within each country but at the same time creates equality on the
world stage. It might take 100 years to achieve and millions of deaths but eventually every country
will be another state of America and look and act like any American state. Once that is achieved
world peace will follow. America see it as a war and they also see millions of deaths as acceptable
to achieve their end game. I of course disagree there must be a better way. How will history look
at this dark period in history in 300 years time if it does achieve world peace in 150 years time
?
In each country neoliberalism works but at the moment it only works for the few because the
voters allow it. The voters allow them to get away with it through submission. They've allowed
their parliaments to be taken over without a fight and allowed their brains to be brainwashed
by the media controlled by the few. Which means the the whole story of neoliberalism has been
skewed into a very narrow view which always suits and promotes the voices of the few.
Why did the voters allow that to happen ?
Their biggest success the few had over the many was to create an illusion that made tax a toxic
word. They attacked tax with everything they had to form an illusion in the voters minds that
paying tax was a bad thing and it was everybodys enemy. Then they passed laws to enhance that
view and trotted out scare stories around tax and that if they had to pay it then everybody would
leave that country. They created a world set up for them and ulitimately destroyed any chance
at all, for the success of neoliberalism to be shared by the many. This was their biggest success
to make sure the wealth of neoliberalism stayed with them.
As the author of this piece says quite clearly. "An economic system that rewards psychopathic
personality traits has changed our ethics and our personalities"
One of these traits is that they believe they shouldn't pay tax because they are creating jobs
and the tax their employees pay should be the amount of tax these companies pay. Again this makes
sure that the wealth is not shared.
Since they now own and control parliaments they also use the state to pay these wages in the
way of tax credits and subsidies and grants as they refuse to pay their employees a living wage.
It is our taxes they use to do this. Again this is to make sure that the wealth is not shared.
There are too many examples to list of how they make sure that the wealth generated by neoliberalism
is not shared. Then surely it is up to the voters to make sure it does. Neoliberalism works and
it would work for everybody if the voters would just grow a set of balls. Tax avoidance was the
battle that won the war for the few. It is time the voters revisited that battle and re write
it so that the outcome was that the many won not just the few. For example there would be no deficit
if the many had won that battle. Of course they wouldn't have left a market of 60 million people
with money in their pockets, it would have been business suicide.
This is a great example of how they created an illusion, a false culture, a world that does
not exist. The focus is all on the deficit and how to fix it, as they socialise the losses and
privatise the profits. There is no eyes or light shed on why there is a deficit due to tax avoidance.
It's time we changed that and made Neoliberlaism work for us. If we don't then we can't complain
when it only works for the few.
Neoliberlaism works. It's about time we owned it for ourselves. Otherwise we'll always be slaves
to it. It's not the theory that is corrupt it is the people who own it.
There is no eyes or light shed on why there is a deficit due to tax avoidance.
... or because politicians have discovered that you can buy votes by giving handouts even to
those who don't need them, thereby making everyone dependent on the largesse of the state and,
by extension, promoting the interests of the most irresponsible politicians and the bureaucracies
they represent.
You seem to regard what you call neoliberalism as a creator of wealth. You then claim that the
reason for this wealth accruing almost entirely to an elite few is the "the voters" have prevented
neoliberalism from distributing the wealth more equitably.
I can't really follow the logic of your argument.
Neoliberalism seems to be working perfectly for those few who are in a position to exploit
it. It's doing what it's designed to do.
I agree that the ignorance of "the voters" is allowing the elite to get away with it. But the
voters should be voting for those who propose an alternative economic model. Unfortunately, in
the western world at the present time, they have no viable alternative to vote for, because the
neoliberals have captured all of the mainstream political parties and institutions.
However, you missed one of the main points. Our parliament has been taken over by the few.
One man used to and probably still does strike fear into the government. Murdoch. Problem is
there are millions like him that lobby and control policy and the media.
..."There are regulations about everything,"... Yes, but higher up the scale you go, the less
this regulation is enforced, less individual accountability and less transparency. Neoliberalism
has turned society on its head. We see ever growing corporate socialism subsidising the top 1%
and heavily regulated hard nosed market capitalism for the rest of us resulting in massive inequality
in wealth distribution. This inequality by design makes the rich richer and the poor poorer. We've
created a society where people who were once valued as an individual part of that society are
now treated as surplus to requirements and somehow need to be eliminated.
They're mostly tight g*ts who refuse to pay to use the Mail/Telegraph sites. This is just about
the last free forum left now and it's attracting all kinds of undesirables. The level of personal
insult has gone up enormously since they came here. Most of us traditional Ciffers don't bother
with many posts here any more, it's too boring now.
Our presumed freedom is tied to one central condition: we must be successful – that is,
"make" something of ourselves.
That's always been the way, I think. It's life.
We are all of us the descendants of a million generations of successful organisms, human and pre-human.
The ones that didn't succeed fel by the wayside.
We're the ones left to tell the tale.
The
Connecting the Dots series has convincingly shown a number of interconnected
reasons why the global system is in crisis, and why there is no way out without
a structural transformation of the dominant neoliberal system. In our contribution,
we want to stress the key importance of what we call a "value regime," or simply
put, the rules that determine what society and the economy consider to be of
value. We must first look at the underlying modes of production - i.e. how value
is created and distributed - and then construct solutions must that help create
these changes in societal values. The emerging answer for a new mode of value
creation is the re-emergence of the Commons.
With the growing awareness of the vulnerability of the planet and its people
in the face of the systemic crises created by late-stage capitalism, we need
to ready the alternatives and begin creating the next system now. To do so,
we need a full understanding of the current context and its characteristics.
In our view, the dominant political economy has three fatal flaws.
Pseudo-Abundance
The first is the characteristic need for the capitalist system to engage
in continuous capital accumulation and growth. We could call this pseudo-abundance,
i.e. the fundamental article of faith, or unconscious assumption, that the natural
world's resources are infinite. Capitalism creates a systemic ecological crisis
marked by the overuse and depletion of natural resources, endangering the balance
of the environment (biodiversity extinction, climate change, etc).
Scarcity Engineering
The second characteristic of capitalism is that it requires scarce commodities
that are subject to a tension between supply and demand. Scarcity engineering
is what we call this continuous attempt to undo natural abundance where it occurs.
Capitalism creates markets by the systemic re-engineering of potentially or
naturally abundant resources into scarce resources. We see this happening with
natural resources in the
development of "terminator seeds" that undo the seeds' natural regeneration
process. Crucially, we also see this in the creation of artificial scarcity
mechanisms for human culture and knowledge. "Intellectual property" is imposed
in more and more areas, privatizing common knowledge in order to create artificial
commodities and rents that create profits for a privileged "creator class."
These first two characteristics are related and reinforce each other, as
the problems created by pseudo-abundance are made quite difficult to solve due
to the privatization of the very knowledge required to solve them. This makes
solving major ecological problems dependent on the ability of this privatized
knowledge to create profits. It has been shown that the patenting of technologies
results in a systemic slowdown of technical and scientific innovation, while
un-patenting technologies accelerates innovation. A good
recent example of this "patent lag" effect is the extraordinary growth of
3D printing, once the technology
lost its patents.
Perpetually Increasing Social Injustice
The third major characteristic is the increased inequality in the distribution
of value, i.e. perpetually increasing social injustice.
As Thomas Piketty's Capital in the Twenty-First Century shows us,
the logic of capital is to concentrate more and more wealth into fewer hands
through compound interest, rent seeking, purchasing legislation, etc. Our current
set of rules are hardwired to increase inequality and injustice.
Any society that tolerates this systemic exploitation and corruption as "business as usual"
is not just sick--it's hopeless.
In noting that our society is sick, our economy exploitive and our politics corrupt, I'm not
saying anything you didn't already know. Everyone who isn't being paid to deny the obvious in
public (while fuming helplessly about the phony cheerleading in private) knows that our society is
a layer-cake of pathologies, our economy little more than institutionalized racketeering and our
politics a corrupt auction-house of pay-for-play, influence-peddling, money-grubbing and brazen pandering
for votes.
The fantasy promoted by do-gooders and PR hacks alike is that this corrupt system can be reformed
with a few minor policy tweaks. If you want a brief but thorough explanation of
Why Our Status Quo Failed and Is Beyond Reform, please take a look at my book (link above).
If you want an example of how the status quo has failed and is beyond reform, it's instructive
to examine the pharmaceutical industry, which includes biotech corporations, specialty pharmaceutical
firms and the global corporate giants known as Big Pharma.
I hope it won't come as too great a surprise that the pharmaceutical industry isn't about cures
or helping needy people--it's about profits. As a Big Pharma CEO reported in a brief moment of
truthfulness,
We're in Business
of Shareholder Profit, Not Helping the Sick
Here's an excerpt from the article:
"Already this year, Valeant has increased the price of 56 of the drugs in its portfolio
an average of 66 percent, highlighted by their recent acquisition, Zegerid, which they promptly
raised 550 percent. Not only does this have the unfortunate side effect of placing the price of
life-saving drugs out of reach for even moderately-insured people, but it has now begun to call
into question the sustainability of this rapidly-spreading business model.
Since being named CEO in 2008, Valeant has acquired more than 100 drugs and seen their stock
price rise more than 1,000 percent with Pearson at the helm."
This market looks precarious. It may continue on higher as long as real, versus manufactured,
volume remains unusually low.
There are enough corporate buyback programs and sovereign entities, including central banks,
willing to buy US equities at these levels. The general public and institutions seem to be sitting
this one out.
I suspect that when an event of sufficient magnitude or type occurs, as they do from time to
time, a slide will be triggered, and the wash and rinse of the general public, their pensions
and their savings, will begin once again.
The longer this goes on, the broader the set of events that can trigger the unlikely slide
of consequence seems to grow.
Still, an outright crash would favor the orange-haired presidential contender, and not the
poster child for the financial establishment. So that may be an unlikely bet to make before November.
They seem to be going all out to sustain the unsustainable.
This is exciting only if you can see the tensions growing beneath the surface, which is dullsville
to the casual observer to say the least. I have to admit I have been growing jaded on this nonsense
of late. But a whiff of Autumn is in the air, and after many a Summer, dies the swan.
TEHRAN, Feb. 14 (MNA) -- Most of the neoconservatives in the United States advocate globalization
and the neoliberal economic model. What's wrong with this picture?
At first glance, nothing is wrong with the statement because it is basically true. At second glance,
everything is wrong with it.
Liberal and conservative used to be opposites. Now we have neoliberal neoconservatives. If the
neocons are also neoliberals, how do we avoid confusion when using the words liberal and conservative?
It is natural for language to evolve, but when antonyms become synonyms, there is a problem.
The situation is similar to the Newspeak and doublethink of George Orwell's book 1984. Newspeak
was a language meant to control people by decreasing their power of reasoning through oversimplification
of the language and doublethink.
Orwell wrote: "Doublethink means the power of holding two contradictory beliefs in one's mind
simultaneously, and accepting both of them."
There are now countless examples of this in the English language.
In war, civilian casualties are called collateral damage. The use of the expression collateral
damage allows people to avoid the unpleasantry of having to think about innocent civilians being
killed.
Every country used to have a war ministry, but they all later changed the name to the defense
ministry or the defense department. In 1984, it was called the Ministry of Peace, or Minipax in Newspeak.
Try this simple exercise. Imagine you are listening to the radio and the newscaster says: "The
war minister has just issued a statement."
Now suppose the newscaster said: "The defense minister has just issued a statement." Notice how
a change of one word changed your reaction.
Consider the many acronyms that have entered the language such as NATO, NAFTA, and CIA Their
complete names, North Atlantic Treaty Organization, North American Free Trade Agreement, and Central
Intelligence Agency, contain the words treaty, free, free trade, agreement, and intelligence. On
hearing these words, the mind naturally makes many free associations that cannot occur when the acronyms
are used.
The neoliberal neocons themselves use a form of Newspeak.
The most glaring example of this is when neoliberal neocon officials in the United States tell
citizens that they must take away some of their freedom in order to protect their freedom. Shades
of Orwell's "freedom is slavery".
U.S. officials have spoken of the need to cancel elections in order to safeguard democracy if
a serious crisis arises. Some have even gone so far as to suggest that in a national emergency the
U.S. Constitution may have to be temporarily suspended in order to protect the civil liberties enshrined
in that document.
Bizarrely, very few U.S. citizens are protesting. Apparently, they have already learned how to
employ doublethink.
Language is being used to control people. People are actually subconsciously brainwashing themselves
through the language they use.
The word neocon itself is Newspeak since its use in place of the longer form eliminates all the
connotations of the words neoconservative and conservative.
Let's look at a few more quotes from 1984 to get a better understanding of what is happening today.
"To know and not to know, to be conscious of complete truthfulness while telling carefully constructed
lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and
believing in both of them, to use logic against logic, to repudiate morality while laying claim to
it, to believe that democracy was impossible and that the Party was the guardian of democracy, to
forget whatever it was necessary to forget, then to draw it back into memory again at the moment
when it was needed, and then promptly to forget it again: and above all, to apply the same process
to the process itself. That was the ultimate subtlety: consciously to induce unconsciousness, and
then, once again, to become unconscious of the act of hypnosis you had just performed. Even to understand
the word 'doublethink' involved the use of doublethink."
"The Ministry of Peace concerns itself with war, the Ministry of Truth with lies, the Ministry
of Love with torture and the Ministry of Plenty with starvation. These contradictions are not accidental,
nor do they result from ordinary hypocrisy; they are deliberate exercises in doublethink. For it
is only by reconciling contradictions that power can be retained indefinitely. In no other way could
the ancient cycle be broken. If human equality is to be for ever averted -- if the High, as we have
called them, are to keep their places permanently -- then the prevailing mental condition must be
controlled insanity."
"The purpose of Newspeak was not only to provide a medium of expression for the world-view and
mental habits proper to the devotees of Ingsoc, but to make all other modes of thought impossible.
It was intended that when Newspeak had been adopted once and for all and Oldspeak forgotten, a heretical
thought -- that is, a thought diverging from the principles of Ingsoc -- should be literally unthinkable,
at least so far as thought is dependent on words."
"Newspeak was designed not to extend but to diminish the range of thought, and this purpose was
indirectly assisted by cutting the choice of words down to a minimum."
"But the special function of certain Newspeak words, of which oldthink was one, was not so much
to express meanings as to destroy them."
"The intention was to make speech, and especially speech on any subject not ideologically neutral,
as nearly as possible independent of consciousness."
"Ultimately it was hoped to make articulate speech issue from the larynx without involving the
higher brain centres at all."
The advocates of globalization often use a form of Newspeak.
When government officials and economists say the economy of a Third World country is booming,
despite the fact that they know the masses live in abject poverty, and the media repeat the lie,
that is doublethink through Newspeak. Of course, the economy of the country in question is only booming
for the globalist and local upper classes, and perhaps also for the middle classes, but somehow almost
nobody questions the lie. And the neoliberal globalists are laughing all the way to the bank.
The acceptance of such a lie by the general public is an even greater real-life catastrophe than
the fictional one described in 1984. Worse still, some people acknowledge that it is a lie but respond
with apathy or slavish resignation in the belief that nothing can be done about the situation.
Do we want to live in dystopia, the worst of all possible worlds, the doubleplusungood of all
possible worlds?
If not, we should watch our language and take care that we are still using our higher brain centers.
"... Last week we reported on the DC Leaks hack of what was over 2,500 documents detailing how George Soros and his NGOs influence world leaders, drive foreign policy, and help to create unrest in sovereign nations, that many times leads to chaos and civil war. ..."
Last week we reported on the
DC Leaks hack of what was over 2,500 documents detailing how George Soros and his NGOs influence
world leaders, drive foreign policy, and help to create unrest in sovereign nations, that many times
leads to chaos and civil war.
One country of particular focus for George Soros and his NGOs is Ukraine. It is now
accepted fact that Soros was deeply involved in the Maiden protests in 2014 and the violent coup,
that saw a democratically elected government overthrown in the name of "EU values". What is even
more troubling, as revealed by the DC Leaks hack, is how Soros and his network of "non-profit organisations"
worked to lobby EU member states into not only buying his Ukraine "Maidan" narrative, but to also
disavow any ties and support for Russia.
Leaked documents show that George Soros was active in mapping out the Greek media landscape with
generous grants, so as to further his Ukraine project, while also using his deep pockets to get Greek
media to turn against the Russian Federation…in what can only be described as a well-funded and orchestrated
smear campaign.
In one document entitled: "Open Society Initiative For Europe (OSIFE). Mapping the Ukrainian
debate in Greece" (Ukraine and Europe-greece-tor ukraine debate mapping greece.docx), Soros
offers a consultant a remuneration of $6,500 (gross) for "at least 15 full working
days in carrying out this task" plus all expenses paid.
The aim of this task:
The consultant is expected to chart the main players in the Greek debate on Ukraine, outline
the key arguments and their evolution in the past 18 months. Specifically, the report will take
stock of any existing polling evidence provide a 'who is who?' with information about
at least
– 6 newspapers,
– 10 audiovisual outlets (TV and radio),
– 6 internet sites,
– About 50 opinion leaders and trends in social networks[1].
Categorize the main strains of discussion and eventually identify different sides / camps of
the discussion.
Provide a brief account of how Russia has tried to influence the Greek debate on Ukraine
through domestic actors and outlets
Include a section with recommendations on
– What are the spaces OSF should engage and would most likely to have impact?
– What are the voices (of reason or doubt) that should be amplified?
Open Society Initiative For Europe (OSIFE) selected Iannis Carras for the Greek media mapping
grant. The justification why he was chosen…
All contracts were for the same amount. We needed to find highly specialized researchers to
map the debate on Ukraine in Europe, therefore we identified a shortlist of candidates in consultation
with colleagues in the Think Tank Fund, OSEPI and in consultation with members of the OSIFE board
and chose the most qualified who could produce the report in the time allowed. I n the
case of Greece we agreed that Iannis Carras, an economic and social historian of Balkan and Russian
relations with expert knowledge of Greece's NGOs and social movements, was the best suited to
the task.
What is even more interesting is not the grant from OSIFE, but a letter from grant winner Carras
to a person named Mathew (another Greek speaker???), outlining his plan in detail for pushing Soros'
Ukraine agenda in Greece.
Of significance is how Carras tells Mathew about Greek society's overall suspicion of The Open
Society after the roll in played in seeding unrest in Yugoslavia. Carras even tells Mathew
to not mention The Open Society in Greece.
"Do you want your name to appear alongside mine on the paper? Do make comments on all of the
below.
In general, and at your discretion, do not say you are doing this for Open Society
because it is likely to close down doors. There's a lot of suspicion about Open Society in Greece,
mainly because of its positions vis-à-vis the former Yugoslavia. As I am simultaneously
writing an article for Aspen Review Eastern Europe that can be used as the organisation for which
research like this is taking place."
Carras then goes on to outline his approach in manipulating Greek society, covering topics such
as:
1. Media.
2. Political parties and think tanks
3. Opinion polls.
4. Business relations.
5. Religious and cultural ties.
6. Migration and diaspora.
7. Greece and Ukraine in the context of Greece's economic crisis.
8. Greece, Ukraine and the Cyprus issue.
9. Names and brief description of significant actors: a 'who is who?' with information on at least
50 opinion leaders
Carras notes how Russia has much goodwill in Greece, exercising "significant soft power".
Carras notes that Greece is, at this moment, a weak player in the Ukraine debate and the
Greek Foreign Minister Kotzias realises this.
Summary: I am working on the hypotheses largely born out by the interviews
carried out so far that Russia has significant soft power in Greece though this does not
easily convert into hard power (e.g. vetoing EU sanctions). Greeks are basically
not very interested in Ukraine and the crisis there. They reflect and understand that
conflict through their own economic crisis and their relations with Europe (nowadays primarily
Europe and not US). To the extent that relations with Europe remain the focus and do not go off
the rails, Greece will bark but will not bite. If they improve, Greece might
not even bark (as can be seen with Greece's policy on Israel, Kotzias can be very much a realist).
Carras does warn that should Greece's economic situation deteriorate further, than Greece may
very well look to Russia for support, and this has implications on the Ukraine plan.
If they deteriorate however, Greece will be looking to Russia for increased support
and will alter its Ukraine policies accordingly. Do you agree with these hypotheses?
Can you find confirmation for or against them in the media outlets examined?
Carras places extra emphasis on influencing the media in Greece, citing various large news outlets
that the Soros NGO can target, including approaching left wing and right wing blogs.
This is the bulk of the work (we have to think about how to divide the work up). We have to
provide a 'who is who?' with information about at least 6 newspapers, 10 audio-visual outlets
(TV and radio) and 6 internet sites. Some of these will be obvious, but, even in these cases,
change over time (at least eighteen months) is an important consideration. Here are some suggestions
for newspapers: Kathimerini, Avgi, Ta Nea, Vima, Efymerida Syntakton, Eleutherotypia,
Proto Thema, Rizospastis? etc. What else? Protagon? Athens Review of Books? (info on
Kotzias). As for TV, we'll just do the main ones. What about left wing blogs? What about commercial
radio stations? I think we should cover Aristera sta FM. Sky. What else? Anything from
the nationalist and far right? My choice would be Ardin (already looking at this) which
at least tries to be serious. Patria is even more unsavoury. I'll deal with the religious web
sites in the culture and religion appendix. I think we should interview Kostas Nisenko (
http://www.kathimerini.gr/757296/article/epikairothta/kosmos/viaih-epi8e... ) and Kostas Geropoulos
of New Europe to get into the issues involved… not at all sure though that it's advisable
to talk to the Russia correspondents Thanasis Avgerinos, Dimitris Liatsos, Achileas Patsoukas
etc. (I know all of them). Also if we come across articles with interesting information
on any one of the topics, we should mail them to one another.
Attention is placed on influencing political parties. Carras sees this as a more difficult task,
as parties in Greece would not be warm towards turning their back on Russia.
Who if anyone deals with Russia / Ukraine within each of the political parties? How important
are political parties in formulating policies? (my hunch is totally unimportant). I must
admit I have little idea of how to proceed with this one, but I have written to the academic
Vassilis Petsinis and I hope I'll get to skype with him soon. Think-tanks are easier,
and, I think, more important. I have already interviewed Thanos Dokos (director Greek foreign
policy institute, ELIAMEP) in person.
Carras notes how he has approached various religious leaders, academics and actors, to gauge a
sense of how deep Russia's influence and "soft power" runs in Greek society and culture.
So far I have interviewed by telephone Metropolitan John of Pergamum (one of the top figures
in the inner circle of the Istanbul based Ecumenical Patriarchate). I have read Metropolitan Nektarios
of the Argolid's recent book (2014), "Two bullets for Donetsk". I have tried but so far not succeeded
in contacting Metropolitan Nektarios himself, and have started work on two of the main religious
news websites romfea.gr and amen.gr .
With respect to culture I intend to contact Georgos Livathinos, leading director of Russian
and other plays and Lydia Koniordou, actress. Also the management of the Onassis Centre, particularly
Afroditi Panagiotakou, the executive vice-director who is quite knowledgeable in this field having
travelled to both Ukraine and Russia.
In 2016 Greece and Russia will be hosting each other as the focus of cultural events in the
two respective countries. I will be looking to understand the extent to which Russia's
unparalleled cultural soft-power might translate into Greek policy making.
Greek military is the final point of influence, with Carras interviewing Ambassadors and policy
decision makers.
Foreign policy and the Greek military. So far I have interviewed in person Ambassador Elias
Klis (formerly ambassador of Greece to Moscow, advisor to the current Foreign Minister, advisor
to the Greek Union of Industrialists. He is perhaps the single most important person for understanding
Greek-Russian diplomatic relations at present). Ambassador Alexandros Philon (formerly ambassador
of Greece to Washington, to whom I am related). Captain Panos Stamou (submarines, extensive contacts
in Crimea, also secretary and leading light of the Greek-Russian historical association) who emphasised
the non-political tradition of the Greek armed forces. Tempted to talk to Themos Stoforopoulos
for a nationalist left wing view. I have also read foreign minister Kotzias' latest book. All
of this has provided me with useful insights for appendices 7 and 8, and particularly for the
connection to the Cyprus issue (which at the moment Greece is very keen to downplay).
Carras places an emphasis on Cyprus, perhaps recognising the islands affinity to support Russia
and its large Russian diaspora community.
The recommendations will be for the medium and the short term, cited here based on interviews
carried out so far. Medium term recommendations will include a cultural event (to be specified
later) and a one-day conference on Ukraine and international law, citing precedents for dealing
with the situation in Ukraine (particularly Cyprus). Recommendations may include capacity building
for local Ukrainian migrant spokesperson(s). Short term recommendations will include an action
pack on what Greece has at stake in Ukraine, and ways to narrate parallels in interactions between
nation and empire vis-à-vis Greece / Ukraine. Think about whether these work / what else we might
recommend?
Amazon review of Thomas Frank's The Wrecking Crew... the word "conservative" was replaced by "neoliberal" as it more correctly
reflect the concept behind this social process.
Notable quotes:
"... Neoliberal ideology is championed on behalf of corporate elites who have now secured total control, even ownership, of the federal government. ..."
"... Elites need federal government revenue transferred to their realm via fat government contracts and juicy subsidies. They want government without regulation, and they want taxation imposed on the masses without real representation, but not on them. ..."
"... Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus. There ensued a vast selling-off of government assets (and favors) to those willing to fund the neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for a wholesale transfer of government responsibilities to private-sector contractors unaccountable to Congress or anyone else. An entire industry sprung up to support conservatism - the great god market (corporate globalism) replaced anti-communism as the new inspiration. (page 93) ..."
"... But capitalism is not loyal to people or anything once having lost its usefulness, not even the nation state or the flag ..."
"... According to Frank, what makes a place a free-market paradise is not the absence of governments; it is the capture of government by business interests. ..."
"... Neoliberals don't want efficient government, they want less competition and more profits - especially for defense contractors. Under Reagan, civil servants were out, loyalists were in. ..."
"... Contractors are now a fourth branch of government with more people working under contracts than are directly employed by government - making it difficult to determine where government stops and the contractors start in a system of privatized government where private contractors are shielded from oversight or accountability ..."
"... The first general rule of neoliberal administration: cronies in, experts out. ..."
"... Under Reagan, a philosophy of government blossomed that regarded business as its only constituent. ..."
"... Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government. Lobbying is how money casts its vote. It is the signature activity of neoliberal governance - the mechanism that translates market forces into political action. ..."
"... Neoliberalism speaks of not compromise but of removing adversaries from the field altogether. ..."
"... One should never forget that it was Roosevelt's New Deal that saved capitalism from itself. Also, one should not forget that capitalism came out of the classical liberal tradition. Capitalists had to wrest power away from the landowning nobility, the arch neoliberal tradition of its time. ..."
Thomas Frank's The Wrecking Crew is another classic. This work, along with his more notable What's
The Matter With Kansas?, is another ground breaking examination into a major phenomenon of American
politics by one of America's foremost social analysts and critics. While What's The Matter With
Kansas? looked more at cultural behavior in explaining why Red State Americans have embraced corporate
elitist ideology and ballot casting that militates against their own economic self-interest, even
their very survival, this title deals more with structural changes in the government, economy,
and society that have come about as a result of a Republican right wing agenda. It is a perplexing
and sorry phenomenon that deserves the attention of a first rate pundit like Frank.
Neoliberal ideology is championed on behalf of corporate elites who have now secured total
control, even ownership, of the federal government. The Wrecking Crew is about a Republican
agenda to totally eliminate the last vestiges of the New Deal and Great Society, which have provided
social safety nets for ordinary working class Americans through programs such as Social Security
and Medicare. Corporate elites want to demolish only that part of government that doesn't benefit
the corporation. Thus, a huge military budget and intrusive national security and police apparatus
is revered, while education, health, welfare, infrastructure, etc. are of less utility for the
corporate state. High taxes on the corporations and wealthy are abhorred, while the middle class
is expected to shoulder a huge tax burden. Although Republicans rail against federal deficits,
when in office they balloon the federal deficits in a plan for government-by-sabotage. (Page 261)
Elites need federal government revenue transferred to their realm via fat government contracts
and juicy subsidies. They want government without regulation, and they want taxation imposed on
the masses without real representation, but not on them. The big government they rail at
is the same government they own and benefit from. They certainly do not want the national security
state (the largest part of government) or the national police system to go away, not even the
IRS. How can they fight wars without a revenue collection system? The wellspring of conservatism
in America today -- preserving connections between the present and past -- is a destroyer of tradition,
not a preserver. (Page 267)
Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus.
There ensued a vast selling-off of government assets (and favors) to those willing to fund the
neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for
a wholesale transfer of government responsibilities to private-sector contractors unaccountable
to Congress or anyone else. An entire industry sprung up to support conservatism - the great god
market (corporate globalism) replaced anti-communism as the new inspiration. (page 93)
Market populism arose as business was supposed to empower the noble common people. But
capitalism is not loyal to people or anything once having lost its usefulness, not even the nation
state or the flag. (page 100) While the New Deal replaced rule by wealthy with its brain
trust, conservatism, at war with intellectuals, fills the bureaucracy with cronies, hacks, partisans,
and creationists. The democracy, or what existed of it, was to be gradually made over into a plutocracy
- rule by the wealthy. (Page 252) Starting with Reagan and Thatcher, the program was to hack open
the liberal state in order to reward business with the loot. (Page 258) The ultimate neoliberal
goal is to marketize the nation's politics so that financial markets can be elevated over vague
liberalisms like the common good and the public interest. (Page 260)
According to Frank, what makes a place a free-market paradise is not the absence of governments;
it is the capture of government by business interests. The game of corporatism is to see
how much public resources the private interest can seize for itself before public government can
stop them. A proper slogan for this mentality would be: more business in government, less government
in business. And, there are market based solutions to every problem. Government should be market
based. George W. Bush grabbed more power for the executive branch than anyone since Nixon. The
ultra-rights' fortunes depend on public cynicism toward government. With the U.S. having been
set up as a merchant state, the idea of small government is now a canard - mass privatization
and outsourcing is preferred. Building cynicism toward government is the objective. Neoliberals
don't want efficient government, they want less competition and more profits - especially for
defense contractors. Under Reagan, civil servants were out, loyalists were in.
While the Clinton team spoke of entrepreneurial government - of reinventing government - the
wrecking crew under Republicans has made the state the tool of money as a market-based system
replaced civil service by a government-by-contractor (outsourcing). Page 137 This has been an
enduring trend, many of the great robber barons got their start as crooked contractors during
the Civil War. Contractors are now a fourth branch of government with more people working under
contracts than are directly employed by government - making it difficult to determine where government
stops and the contractors start in a system of privatized government where private contractors
are shielded from oversight or accountability. (Page 138)
The first general rule of neoliberal
administration: cronies in, experts out. The Bush team did away with EPA's office of enforcement
- turning enforcement power over to the states. (Page 159) In an effort to demolish the regulatory
state, Reagan, immediately after taking office, suspended hundreds of regulations that federal
agencies had developed during the Carter Administration. Under Reagan, a philosophy of government
blossomed that regarded business as its only constituent. In recent years, neoliberals have
deliberately piled up debt to force government into crisis.
Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his
anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government.
Lobbying is how money casts its vote. It is the signature activity of neoliberal governance -
the mechanism that translates market forces into political action. (Page 175)
It is the goal of the neoliberal agenda to smash the liberal state. Deficits are one means
to accomplish that end.- to persuade voters to part with programs like Social Security and Medicare
so these funds can be transferred to corporate contractors or used to finance wars or deficit
reduction.. Uncle Sam can raise money by selling off public assets.
Since liberalism depends on fair play by its sworn enemies, it is vulnerable to sabotage by
those not playing by liberalism's rules/ (Page 265) The Liberal State, a vast machinery built
for our protection has been reengineered into a device for our exploitation. (Page 8) Liberalism
arose out of a long-ago compromise between left-wing social movements and business interests.
(Page 266) Neoliberalism speaks of not compromise but of removing adversaries from the field altogether.
(Page 266) No one dreams of eliminating the branches of state that protect Neoliberalism's constituents
such as the military, police, or legal privileges granted to corporations, neoliberals openly
scheme to do away with liberal bits of big government. (Page 266)
Liberalism is a philosophy of
compromise, without a force on the Left to neutralize the magneticism exerted by money, liberalism
will be drawn to the right. (Page 274)
Through corporate media and right wing talk show, liberalism has become a dirty word. However,
liberalism may not be dead yet. It will have to be resurrected from the trash bin of history when
the next capitalist crisis hits. One should never forget that it was Roosevelt's New Deal
that saved capitalism from itself. Also, one should not forget that capitalism came out of the
classical liberal tradition. Capitalists had to wrest power away from the landowning nobility,
the arch neoliberal tradition of its time.
Clinton betrayal and sell out of Democratic Party to Wall Street was actually a phenomenon affecting
other similar parties, especially in Europe. And not only in Great Britain, where Tony Bliar was a real
copycat.
Notable quotes:
"... Ideology or political philosophy may matter to the skilled politician, but it matters less as a matter of conviction than as the précis of a novel's plot. It is like a key they use to encode rhetorical poses for the occasion, to signal that they understand the concerns of whatever group they are speaking to. ..."
"... It is one of the odd (to me) features of political attitude formation that so many people have amnesia where there should be some basic appreciation for what politics, at base, is about. (Politics is about who gets what, when, how, in Harold Lasswell's immortal title.) ..."
"... Neoliberalism is possibly the most important set of political phenomena -- certainly the most consequential -- in our generation's experience of political ideas and movements, and yet a common impulse is to deny it is exists or labels anything more meaningful than a catch-all "don't like it". ..."
"... I do think think there's something to the contention that a political re-alignment is underway and the iron hold that neoliberalism has on the Media discourse is rusting. Rusting or not, the structures of propaganda and manipulation remain highly centralized, so even if the rhetorical tropes lose their meaning and emotional resonance, it isn't clear that the structures of authority won't continue, their legitimacy torn and tattered but not displaced. Because there's no replacement candidate, yet. ..."
"... I agree, of course, that Marxism is obsolete. But, it does furnish a model of what an ideology can do to explain political economy and its possibilities, providing a rally point and a confession of faith. The contrast to our present common outlook highlights that several things are clearly missing for us now: one is economic class antagonism, the idea that the rich are the enemy, that rich people make themselves rich by preying on the society, and that fundamental, structural remedies are available thru politics. ..."
"... I do think there's a reservoir of inchoate anger about elite betrayal and malfeasance. The irony of being presented the choice of Trump and Clinton as a remedy is apparently not fully appreciated by our commenters, let alone the irony of rummaging the attic and bringing down Sanders, like he was a suit of retro clothes last worn by one's grandfather. ..."
"... Above, Layman reminds us that George W Bush sold himself as a compassionate conservative. Quite a few adults voted for him I understand. Supposedly quite a few did so thinking that dry drunk would be a good fellow to have a beer with. Because . . . I guess some pundits thought to tell them that that is what politics is about, having a guy in the most powerful office in the federal government that you identify with - a guy who cuts brush at his ranch with a chainsaw. ..."
F Foundling @ 605: The 'self' one can rely on is mostly features of temperament and style,
not policy. The 'brand' is also to a large extent about style, not substance, and it is subject
to change, too.
The handful of politicians I have known personally have had fewer and lighter personal commitments
to political policy preferences, than most, say, news junkies. They are trying to get political
power, which rests at the nexus of conflicting forces. They have to put themselves at the crossroads,
so to speak, and - maybe this is one of the paradoxes of power -- if they are to exercise power
from being at a nexus, they have to be available to be used; they have to be open to persuasion,
if they are to persuade.
Ideology or political philosophy may matter to the skilled politician, but it matters less
as a matter of conviction than as the précis of a novel's plot. It is like a key they use to encode
rhetorical poses for the occasion, to signal that they understand the concerns of whatever group
they are speaking to.
T: If inequality remains the same or increases and growth remains low (and I believe they
are very much linked) there will be new challengers from both the right and left and one of them
will win. It did take a good 70 yrs to vanquish the robber barons.
If there's a perennial lodestar for politics, it is this: the distribution of income, wealth
and power. Follow the money is a good way to make sense of any criminal enterprise.
F. Foundling: For decades already, so-called centre-left parties all over the world (can't
vouch for *every* country) have been engaged to varying extents in deregulation, privatisation,
welfare state reduction, TTIP-style neoliberal globalism and now, most recently, austerity (not
to mention a slavish pro-US foreign policy).
Yes.
It is one of the odd (to me) features of political attitude formation that so many people have
amnesia where there should be some basic appreciation for what politics, at base, is about. (Politics
is about who gets what, when, how, in Harold Lasswell's immortal title.)
I suspect that William the Conqueror had scarcely summered twice in England before someone
was explaining to the peasantry that he was building those castles to protect the people.
Neoliberalism is possibly the most important set of political phenomena -- certainly the
most consequential -- in our generation's experience of political ideas and movements, and yet
a common impulse is to deny it is exists or labels anything more meaningful than a catch-all "don't
like it".
RP: A lot of what people seem to be talking about is Overton Window stuff. I'm not convinced.
I do think think there's something to the contention that a political re-alignment is underway
and the iron hold that neoliberalism has on the Media discourse is rusting. Rusting or not, the
structures of propaganda and manipulation remain highly centralized, so even if the rhetorical
tropes lose their meaning and emotional resonance, it isn't clear that the structures of authority
won't continue, their legitimacy torn and tattered but not displaced. Because there's no replacement
candidate, yet.
By replacement candidate, I mean some set of ideas about how society and political economy
can be positively structured and legitimated as functional.
I agree, of course, that Marxism is obsolete. But, it does furnish a model of what an ideology
can do to explain political economy and its possibilities, providing a rally point and a confession
of faith. The contrast to our present common outlook highlights that several things are clearly
missing for us now: one is economic class antagonism, the idea that the rich are the enemy, that
rich people make themselves rich by preying on the society, and that fundamental, structural remedies
are available thru politics.
I do think there's a reservoir of inchoate anger about elite betrayal and malfeasance. The
irony of being presented the choice of Trump and Clinton as a remedy is apparently not fully appreciated
by our commenters, let alone the irony of rummaging the attic and bringing down Sanders, like
he was a suit of retro clothes last worn by one's grandfather.
bruce wilder 08.11.16 at 10:36 pm
Lee A. Arnold: I don't think I've met anyone over the age of consent who doesn't know what
politicians are all about.
Above, Layman reminds us that George W Bush sold himself as a compassionate conservative. Quite
a few adults voted for him I understand. Supposedly quite a few did so thinking that dry drunk
would be a good fellow to have a beer with. Because . . . I guess some pundits thought to tell
them that that is what politics is about, having a guy in the most powerful office in the federal
government that you identify with - a guy who cuts brush at his ranch with a chainsaw. How many
times did Maureen Dowd tell the story of dog strapped to the roof on the Romney family vacation?
In my comment, you may have read "politician" but I actually wrote, "politics". And, I did
not write that there was only inchoate anger. You added "only".
"... People don't yet understand that this is just how neoliberals are. The two fundamental loyalties in a state party system have nothing to do with solidarity: they're loyalty up, and loyalty down. Neoliberals are happy to accept whatever loyalty up they are given by fools and suckers: they have no loyalty down at all and will never do the elementary political operations of repaying their base ..."
"... On solidarity: solidarity isn't about the (hierarchy of) relationships among politicians or political operatives. Solidarity is about membership, not leadership. ..."
"... Solidarity is the means to great common, coordinated efforts, that is to trust in leadership and that great solvent of political stalemate: sacrifice to the common good. ..."
"... Solidarity is a powerful force, sometimes historically an eruptive force, and though not by itself intelligent, not necessarily hostile to intelligent direction, but it calls on the individual's narcissism and anger not rational understanding or calculation. It is present as a flash in riots and a fire in insurrections and a great raging furnace in national wars of total mobilization. Elites can fear it or be enveloped by it or manipulate it cynically or with cruel callousness. Though it is a means to common effort and common sacrifice, it demands wages for its efforts and must be fed prodigious resources if it is long at work. ..."
"... What we've got here is a distorted or atrophied sense of the relationship between solidarity and the consent of the governed, between democracy and legitimacy, or more generally, between the individual and the collective ..."
"... If so, maybe we ought to try being a little more honest about what we're willing to pay as individuals for what we get as members of a group. Otherwise, it's hard to see how we can come to terms with our confusion, or survive the malignancies that being confused has introduced into all our group dynamics, not just the overtly political ones. ..."
CR: "that strategy actually runs the risk of harming down-ballot Democrats
running for office in Congress and state legislatures. It may help Clinton,
but it's not good for the party."
It's Obama redux. Remember how he wanted
to work with his friends across the aisle in a Grand Bargain that would
bring moderation and centrist agreement to all things? He validated budget-balance
mania during austerity and would have bargained away Social Security if
he could have. He predictably lost the Congress in the first mid-term election
and did nothing to build the party back up.
People don't yet understand that this is just how neoliberals are.
The two fundamental loyalties in a state party system have nothing to do
with solidarity: they're loyalty up, and loyalty down. Neoliberals are happy
to accept whatever loyalty up they are given by fools and suckers: they
have no loyalty down at all and will never do the elementary political operations
of repaying their base or creating a party that will work for anyone
else. This goes beyond ordinary political selfishness to the fact that they
don't really want a populist party: that would push them to harm the interests
of their real base.
And people don't react to this, fundamentally, because they don't really
do politics outside of 4-year scareathons. Look at LFC's description above
about how people should march if candidates don't follow through on their
promises. Why aren't they marching now: why haven't they in the Obama years?
I am with you on your main thesis, but I thought
I would offer this sidenote.
On solidarity: solidarity isn't about the (hierarchy of) relationships
among politicians or political operatives. Solidarity is about membership,
not leadership.
Solidarity can feel good. "We are all in this together, united."
Or, it can feel constricting, as it demands conformity and senseless uniformity,
obeisance to unnecessary authority. Resentments are its solvent and
its boundary-keepers. Social affiliation and common rituals are its nurturers
in its fallow times, which can be historically frequent and long. Solidarity
is the means to great common, coordinated efforts, that is to trust in leadership
and that great solvent of political stalemate: sacrifice to the common good.
Solidarity is a powerful force, sometimes historically an eruptive
force, and though not by itself intelligent, not necessarily hostile to
intelligent direction, but it calls on the individual's narcissism and anger
not rational understanding or calculation. It is present as a flash in riots
and a fire in insurrections and a great raging furnace in national wars
of total mobilization. Elites can fear it or be enveloped by it or manipulate
it cynically or with cruel callousness. Though it is a means to common effort
and common sacrifice, it demands wages for its efforts and must be fed prodigious
resources if it is long at work.
As American Party politics have degenerated, solidarity has come to have
a fraught relationship with identity politics. In both Parties.
I don't see anything in the conceptual logic driving things forward.
I see this state of affairs as the playing out of historical processes,
one step after another. But, this year's "scareathon" puts identity politics
squarely against the economic claims of class or even national solidarity.
The identity politics frame of equal opportunity exploitation has Paul Krugman
talking up "horizontal inequality". Memes float about suggesting that free
trade is aiding global equality even if it is at the expense of increasing
domestic inequality. Or, suggesting that labor unions were the implacable
enemy of racial equality back in the day or that FDR's New Deal was only
for white people. Hillary Clinton's stump speech, for a while, had her asking,
"If we broke up the big banks tomorrow, . . . would that end racism? would
that end sexism?"
It is convenient politics in several ways. First, no one can hold Clinton
responsible for not ending racism and sexism any more than GWB could be
held responsible for not winning the war on terrorism. These are perpetual
struggles by definition.
Second, it combines the display of righteous do-good ism with a promise
of social progress that might actually benefit directly the most ambitious,
even if it leaves most people without support. People who have done well
in the system, or who might expect to, can feel good about themselves. And,
ignore the system or rationalize away the system's manifest shortcomings.
The people who are complaining are racists! BernieBros! It is all about
the loss of status being experienced by white men, and they shouldn't be
heard anyway.
The moral righteousness of identity politics adds in an element that
goes way beyond the lazy failure to hold politicians accountable or the
tendency to explain away their more Machiavellian maneuvers. There's both
an actual blindness to the reactionary conservatism of equal opportunity
exploitation and a peremptory challenge to any other claim or analysis.
If police practices and procedures are trending in an authoritarian direction,
they can only be challenged on grounds of racist effect or intent. The authoritarianism
cannot be challenged on its own merit, so the building of the authoritarian
state goes on unimpeded, since the principle that is challenged is not authoritarianism,
but a particular claim of racism or sexism.
What we've got here is a distorted or atrophied sense of the relationship
between solidarity and the consent of the governed, between democracy and
legitimacy, or more generally, between the individual and the collective.
I suppose you could argue that we've evolved beyond what we were when we
first came to understand these relationships in the abstract (in the 18th
century?), and that, accordingly, they can no longer be understood in the
way we once thought we understood them.
If so, maybe we ought to try
being a little more honest about what we're willing to pay as individuals
for what we get as members of a group. Otherwise, it's hard to see how we
can come to terms with our confusion, or survive the malignancies that being
confused has introduced into all our group dynamics, not just the overtly
political ones.
"... Increased border controls, concessions to anti-immigrant feeling, withdrawal by middle-tier Asian nations from the consensus, alternative institutions fostered by the BRICs, Brexit, revivals of western interest in industry policy, increasing questioning of the financial industry – all moves away from the platform. ..."
neo-liberalism has been dying for over a decade. It's just that these transitions
are a slow process (think of how most western countries are still adjusting to the fact that the
30-year growth spurt 1950-80 is well and truly over).
Increased border controls, concessions to
anti-immigrant feeling, withdrawal by middle-tier Asian nations from the consensus, alternative
institutions fostered by the BRICs, Brexit, revivals of western interest in industry policy, increasing
questioning of the financial industry – all moves away from the platform.
It
won't be fast, it won't be all (or mostly) in directions the left wants, it won't be a
consistent or continuous change, but it is happening.
"... This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism in foreign policy, has worked its way into the mindset of the ruling elites of many of the developed nations, and has taken a place in the public consciousness through steady repetition. I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and served and been blessed by their god. ..."
"... The adherents become blind by their devotion to their gods. ..."
"... This is not something new. It is a madness that has appeared again and again throughout history in the form of Mammon, the golden idol of the markets. It is a way of looking at people and the world that is as old as Babylon, and as evil as sin. ..."
There is a lack of critical assessment of the past. But you have to understand that the current
ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach
to the past."
Ryszard Kapuscinski
But they maintain a firm grasp on information and power, for their own sake, and sidetrack and stifle
any meaningful reform.
In October 2000 Thomas Frank published a prescient critical social analysis
titled,
One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy
.
In the video below from 2015, Thomas Frank looks back over the past 15 years to when he wrote
this insightful book, and ends with this observation.
"I want to end with the idea that the market is capable of resolving all of our social conflict,
fairly and justly. That is the great idea of the 1990's. And we all know now what
a
crock
that is. I think what we need in order to restore some kind of sense of fairness
is not the final triumph of markets over the body and soul of humanity, but something that
confronts
markets, and that refuses to think of itself as a
brand
."
The book was not received well at the time in the waning days of the Clinton revolution and the birth
of the era of the neo-cons in foreign policy and neo-liberals in economics.
This religion of the
markets had yet to suffer the serial failures and decimation of the real economy which it would see
over the next sixteen years.
This is an ideology, a mindset, and as Frank calls it a religion, of taking market capitalism
to such an extreme that it dispenses with the notion of restraints by human or policy consideration.
It comes to consider the market as a god, with its orthodoxy crafted in think tanks, its temples
in the exchanges and the banks, and its oracles on their media and the academy.
This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism
in foreign policy, has worked its way into the mindset of the ruling elites of many of the
developed nations, and has taken a place in the public consciousness through steady repetition.
I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and
served and been blessed by their god.
It is the taking of an idea, of a way of looking at things, that may be substantially practical
when used as a tool to help to achieve certain outcomes, and placing it in such an extreme and inappropriate
place as an end in itself, as the very definition and arbiter of what is good and what is not, that
it becomes a kind of anti-human force that is itself considered beyond all good and evil, like a
natural law.
It is born of and brings with it an extreme tendency that kills thought, and stifles the ability
to make distinctions between things. If not unfettered capitalism then what,
communism
?
The
adherents become blind by their devotion to their gods.
This is not something new. It is a madness that has appeared again and again throughout
history in the form of Mammon, the golden idol of the markets. It is a way of looking at people
and the world that is as old as Babylon, and as evil as sin.
Interesting presentation. Especially the idea why Clinton betrayed previous base of Democratic
Party and sold it to Wall Street. Another interesting idea is that in meritocracy there is no
solidarity.
Thomas Frank, Author, What's the Matter with Kansas? and Listen, Liberal: Or, What Ever Happened
to the Party of the People?
James Taylor, Ph.D., Director of African American Studies and Professor of Political Science,
University of San Francisco-Moderator
Come hear the best-selling author of What's the Matter with Kansas? echo that question as it relates
to the Democratic Party. Frank says liberals like to believe that if only Democrats can continue
to dominate national elections, if only those awful Republicans are beaten into submission, then
the country will be on the right course. But he says this view fundamentally misunderstands the modern
Democratic Party. Frank says that the Democrats have in fact done little to advance traditional liberal
goals: expanding opportunity, fighting for social justice, and ensuring that workers get a fair deal.
Indeed, he argues that Democrats have occupied the White House for 16 of the last 24 years, and yet
the decline of the middle class has only accelerated, Wall Street gets its bailouts, wages keep falling,
and the free-trade deals keep coming.
In this critical election year, Frank recalls the Democrats back to their historic goals-what
he says is the only way to reverse the ever-deepening rift between the rich and the poor in America.
A former columnist for The Wall Street Journal and Harper's, Frank is the founding editor of The
Baffler and writes regularly for Salon.
Social mobility was stunted by the onslaught of neoliberalism, which simultaneously celebrates
self-cultivation while pulling the ladder up on millions of people, burdening them with credit
card and student debt, lowering the quality of public education, raising the costs of healthcare
and devising clever Wall St strategies that raid commercial banks and now the SS fund. It's a
theatre of cruelty, as Henry Giroux describes it. More to the point, it is economic fascism.
Well if Trump signals the death of the Republican Party then surely the Clinton dynasty will mark
the death of the Dem party. The working class people of this country, the environment cannot survive
another neoliberal Clinton and their TPP, this is endgame stuff right here. TPP means the inability
to peacefully change the system.
Taylor states that Obama was the most progressive president between 2008 and 2010 and then the
conservatives, Tea Party and others attached him. What utter nonsense. During that period of time
Obama and the Democrats controlled both houses of the Congress and he did almost nothing to advance
a "liberal" agenda. He wouldn't even allow single payer advocates a seat at the negotiating table
and Obamacare was essentially drafted by a healthcare/insurance industry lobbyist. Obama gave
a "free get out of jail card" to all the financial criminals on Wall Street. Obama chose James
Rubin, son of #1 financial crook Robert Rubin, to fill all his administration's financial positions,
Obama chose the very smart but incompetent knucklehead Larry Summers. Obama won "Ad Age Marketer
of the Year" award for his 2008 campaign. That says it all; it was an ad campaign much like selling
a breakfast serial that is just sugar and empty carbohydrates but tastes good. He was groomed
and supported very early on by a couple of very wealthy families (Pritzkers and Crowns) and had
the support of Wall Street. He received more funds from Wall Street than his opponent, John McCain,
much more.
Bill Ayers
Hillary For Prison 2016
Penniless Punk
The word "union" wasn't simply attacked by the right. It was also eroded by the corruption
within its own ranks. Unions lost power when NAFTA was enacted, so they simply kept collecting
dues even though they couldn't do a fucking thing. If they had told their workers to strike, the
company would have moved to another location and union popularity would go down anyway. No one
wants to pay dues to someone who makes their family suffer only to lose the battle. So instead,
unions sucked up to management and just kept collecting dues so the company would stick around
here..where they CAN collect dues. They don't collect dues in Mexico or Canada. THAT's why the
word "union" stinks anymore. It means "sell out who ignores the problems of their team mates to
save their own skin."
"... By Daniela Gabor is associate professor in economics at the University of the West of England, Bristol. Originally published at the Institute for New Economic Thinking website ..."
"... For a detailed account see Gabor, D. (2016) The (impossible) repo trinity : the political economy of repo markets, Review of International Political Economy, doi 10.1080/09692290.2016.1207699 ..."
Since the 1980s, central banks have been increasingly freed from
fiscal dominance , the obligation to monetize government debt. The new regime of monetary dominance
celebrated the (price) stability benefits of insulating scientific monetary policy from poorly theorized,
highly politicized fiscal policy. Yet the growing dominance of the 'monetary science, fiscal
alchemy' view in both academia and
policy circles played a critical role in the rapid rise of shadow banking. The untold story of shadow
banking is the story of (failed) attempts to separate monetary from fiscal policy, and of the bordeland
that connects them, mapped onto the
repo market .
While the state withdrew from economic life, privatizing state-owned enterprises or state banks,
and putting macroeconomic governance in the hands of independent central banks, its role in financial
life grew bigger. Sovereign debt evolved into the cornerstone of modern financial systems, used as
benchmark for pricing private assets, for hedging and
as base asset for credit creation via shadow banking . The state's role as debt issuer, passive
and systemic at once, has been reliant, beyond the arithmetic of budget deficits, on the intricate
workings of the repo trinity.
The repo trinity captures a consensus in central bank circles emerging after the 1998 Russian
crisis, the first systemic crisis of collateral-intensive finance, that financial stability requires
liquid government bond markets and liberalized repo markets (fig. 1).
Figure 1 The repo trinity
The repo-government bond market nexus took shape in the 1980s. In the US, securities dealers
preferred repos to secured lending against collateral because market convention treated repos
as outright sales and repurchases of collateral that allowed dealers to re-use collateral for a wide
range of activities (short-selling, hedging, selling to a third party). When bankruptcy courts decided
that repos would be subjected to automatic stay rules, Paul Volcker, then the Federal Reserve chairperson,
successfully lobbied Congress to exempt repos with US Treasuries (UST) and agency securities collateral.
Then, Salomon Brothers short-squeezed the UST market in 1991 by becoming the only repo supplier of
a two-year note. This allowed Salomon to fund securities through repo transactions at exceptionally
low rates. The ensuing public enquiry into the Salomon scandal showed little appetite for regulating
repos. Rather, the Fed and the Treasury
introduced new practices to fix gaps in repo plumbing, celebrating repos as innovative, liquidity
enhancing instruments that would support the state in the post fiscal-dominance era.
The UST blueprint diffused rapidly to Europe. Pressured to adjust to a world of independent central
banks, market-based financing and global competition for liquidity, European states embarked on a
project of creating modern government bond markets, with
modernity understood to mean the structural features of the US government bond market: regular
auctions, market-making based on primary dealers and a liberalised repo market.
Central banks were at first divided on the benefits of opening up repo markets. While Banque de
France followed the US Fed in assuming a catalyst role for the repo-sovereign bond market nexus,
Bundesbank and Bank of England worried that deregulated repo markets would unleash structural changes
in finance that could undermine the conduct of monetary policy and financial stability. In the architecture
of the US government bond market, the Bundesbank saw the conditions nurturing
short-term , fragile finance.
Seeking to keep banks captive on the uncollateralized segment of interbank markets, Bundesbank imposed
reserve requirements on repo liabilities. In parallel, as government's fiscal agent, Bundesbank followed
a conservative strategy, with irregular auctions, issuance concentrated at long maturities and repo
rules that increased the costs of funding bunds via repos. German banks responded by moving (bund)
repo activities to London and warned that France's open repo strategy would make it into the benchmark
sovereign issuer for the Euroarea. For similar reasons, the Bank of England exercised strict control
over the repo gilt market for 10 years after the 1986 Big Bang liberalisation of financial markets.
Under intense pressure from the financial industry and Ministries of Finance, the two central banks
liberalized repo markets by 1997.
As the fragilities of the new, collateral-intensive world became apparent in the 1998 Russian
crisis, central banks working together in the Committee on the Global Financial System subscribed
to the policy goals of the repo trinity. The
CGFS argued that financial
stability in market-based finance required global safe assets, issued in government bond markets,
in turn 'lubricated' by free repo markets with carefully designed (but not regulated) risk management
regimes.
In pursuing the objectives of the repo trinity, central banks helped consolidate the critical
role that sovereign bonds play in modern financial markets. Throughout the 2000s, the shortage of
US government bonds saw the trinity extended to include securitization markets, while the Euro project
galvanized consensus for a European repo trinity, whereby central banks encouraged the European banks
dominating the repo market to treat all Euro sovereign debt as high-quality
collateral
.
After Lehman, central banks and the Financial Stability Board recognized the impossible nature
of the repo trinity, attributing cyclical leverage, fire sales and elusive liquidity in collateral
markets, including government bond markets, to free repo markets. Central banks, with the
Bank of England leading the way, now accept that financial stability means supporting liquidity
in collateral markets in times of stress rather than supporting banking institutions as in the traditional
lender of last resort (LOLR) model. Paradoxically, LOLR support, implemented through repo loans,
can
destabilize (shadow) banks where central banks' collateral framework follows collateral market
valuations (figure 2).
Figure 2 The impossible repo trinity
The quiet revolution in crisis central banking that involves direct support for core markets may
appear like, but does not entail a return to, fiscal dominance. Rather, it creates
financial dominance , defined
as asymmetric support for falling asset prices. While financial dominance should be addressed by
direct regulatory interventions, the quest for biting repo rules has so far proved illusive. The
precise impact of Basel III liquidity and leverage rules is yet to be determined, whereas the failed
attempts to include repos in the European
Financial
Transactions Tax and the FSB's watered-down repo proposals suggest that (countercyclical) collateral
rules are only possible once states design alternative models of organizing their sovereign debt
markets. Paradoxically, new initiatives in Europe suggest that a return to the repo trinity is rather
more likely: the Capital Market Union plans to create Simple, Transparent and Standardized (
STS ) securitisation again illustrate the catalyst role that central banks choose to play in
market-driven solutions to safe asset shortages.
For a detailed account see Gabor, D. (2016)
The (impossible)
repo trinity : the political economy of repo markets, Review of International Political Economy,
doi 10.1080/09692290.2016.1207699
Uhhh. The article is one of the rare "too short, wish it was longer" breed.
I'll hazard a remark: how can securitization be "transparent" if, as one of the articles yesterday
discussed, central banks intervene to support banks so as to allow them to avoid having the market
deliver a price verdict on asset value?
Any time you let central banks like the Federal Bank of NY create money from debt; bankruptcy
is on the horizon. This has only been proven true for around five thousand years.
For a recent example have a look at the difference in government debt in Canada now verses
when it had a public banking system.
"Throughout the 2000s, the shortage of US government bonds saw the trinity extended to include
securitization markets,"
This started treating asset based securities similar to US Treasuries
Also this:
"fire sales and elusive liquidity in collateral markets, including government bond markets,"
I don't think the European government bond market can be treated as sovereign government bonds
as they don't have that guarantee of backing from a central bank.
----
Quite simply, US Treasuries can be put to much better use than supporting asset prices and
other financial products.
Repos hide risk and makes it possible to increase leverage. Why would anyone but financial
institutions want that?
But since financial institutions rule all then I suppose that repos will continue and as a gesture
of goodwill (dressed up as something else) they'll just become more and more complex – those (high)
fees for the professionals enabling the practice has to be justified somehow…
"... "The rise and fall of American resistance to organized wealth and power." Simply stated, that mystery was: Why do people rebel at certain moments and acquiesce in others? ..."
"... A "silent majority" would no longer remain conveniently silent. The Tea Party howled about every kind of political establishment in bed with Wall Street, crony capitalists, cultural and sexual deviants, free-traders who scarcely blinked at the jobs they incinerated ..."
"... In the face-off between right-wing populism and neoliberalism, Tea Party legions and Trumpists now find Fortune 500 CEOs morally obnoxious and an economic threat, ..."
"... I couldn't disagree more with this parasite that is attempting to twist history, so as to continue the elitist programming of youth with more distorted understanding of their heritage! ..."
"... If you doubt me then do a little research it what the foundation of 'May Day' is all about! ..."
"... Then check and see how many modern nations all over the world celebrate it as a national holiday (over 100) and then ask why it is not celebrated in America, where it was founded on the blood and sweat of American workers! ..."
"... Yes, there was a socialist system built into this nation and that system was called a society based upon a 'Commonwealth' that translated into todays terminology could be defined as a 'Democratic Socialism'!! ..."
"... "As Chomsky says, 'neoliberalism isn't new and it isn't liberal.' (the 'liberal' refers to the markets, not the politics of its purveyors - Reagan, Thatcher, Clinton were all NLs)" ..."
"... Soon, very soon, Sanders shall do what he keeps promising to do, and endorse the dangerous Warmonger of Wall Street, with whom he pretends to disagree, on so many issues. He might even be her Vice Presidential choice, in order to better neuter his supporters, and to minimize the political contortions that he'll have to go through, to convince his supporters to vote for her. Gird yourselves. ..."
"... If you keep in mind that Capitalism is a Pyramid Scheme, the whole thing makes better sense. ..."
"... The problem today is that the worship of money has taken on such proportions, that even the least among us has thoughts of riches coming their way, at any moment, even if it's the false hope of winning the "Lottery", the big one!! And as long as they have those dreams, the cognition of what is happening around them is dulled. ..."
"... I have neighbors who play the state lottery every week. Now and then I mention to them that buying lotto tickets is a fools bet. They reply like trained parrots "you can't win if you don't play", and mumble something about lotto proceeds and "education". ..."
"... "But Republicans have more than shared in this; they have, in fact, often taken the lead in implanting a market- and finance-driven economic system that has produced a few "winners" and legions of losers. Both parties heralded a deregulated marketplace, global free trade, the outsourcing of manufacturing and other industries, the privatization of public services, and the shrink-wrapping of the social safety net." ..."
"... Yes. Reagan was a neoliberal. Both Bushes too... wanna hear something really crazy? Hillary is both a neoliberal AND a neoconservative... true story. ..."
A year ago, in my book
The
Age of Acquiescence, I attempted to resolve a mystery hinted at in its subtitle: "The
rise and fall of American resistance to organized wealth and power." Simply stated, that mystery
was: Why do people rebel at certain moments and acquiesce in others?
Resisting all the hurts,
insults, threats to material well-being, exclusions, degradations, systematic inequalities, over-lordship,
indignities, and powerlessness that are the essence of everyday life for millions would seem natural
enough, even inescapable, if not inevitable. Why put up with all that?
... ... ...
A "silent majority" would no longer remain conveniently silent. The Tea Party howled about
every kind of political establishment in bed with Wall Street, crony capitalists, cultural and sexual
deviants, free-traders who scarcely blinked at the jobs they incinerated, anti-taxers who had
never met a tax shelter they didn't love, and decriers of big government who lived off state subsidies.
In a zip code far, far away, a privileged sliver of Americans who had gamed the system, who had indeed
made gaming the system into the system, looked down on the mass of the previously credulous, now
outraged, incredulously.
...it was The Donald who magically rode that
Trump Tower escalator down to the ground floor to pick up the pieces. His irreverence for
established authority worked. ...worked for millions who had grown infatuated with all the
celebrated Wall Street conquistadors of the
second Gilded Age.
... .. ..
In the face-off between right-wing populism and neoliberalism, Tea Party legions and Trumpists
now find Fortune 500 CEOs morally obnoxious and an economic threat, grow irate at Federal Reserve
bail-outs, and are fired up by the multiple crises set off by global free trade and the treaties
that go with it.
... ... ...
The Sanders campaign had made its stand against the [neo]iberalism of the Clinton elite. It has
resonated so deeply because the candidate, with all his grandfatherly charisma and integrity, repeatedly
insists that Americans should look beneath the surface of a liberal capitalism that is economically
and ethically bankrupt and running a political confidence game, even as it condescends to "the forgotten
man."
Steve Fraser's new book, "The Limousine Liberal: How an Incendiary Image United the Right and
Fractured America" is being published on May 10 by Basic Books. His other books include Every Man
a Speculator, Wall Street, and Labor Will Rule, which won the Philip Taft Award for the best book
in labor history. He also is the co-editor of The Rise and Fall of the New Deal Order. His work has
appeared in the Los Angeles Times, the New York Times, The Nation, The American Prospect, Raritan,
and the London Review of Books. He has written for the online site Tomdispatch.com, and his work
has appeared on the Huffington Post, Salon, Truthout, and Alternet, among others. He lives in New
York City.
R B, Jun 4, 2016
I truly believe that this author, Steve Fraser through his writings has clearly revealed his
role as that of a member of the elite class or even worse one of the blood sucking hounds that
pit the lower classes against each other!!! He defends the capitalists by indicating that for
anyone to think or speak of any form of socialism is a crime against America and that it is counter
to everything this nation has EVER stood for! I couldn't disagree more with this parasite
that is attempting to twist history, so as to continue the elitist programming of youth with more
distorted understanding of their heritage!
Our Fore Fathers wrapped this society in a specific form of government that encouraged free-enterprise,
not capitalism! Guess what Americans, they are different in goals! These Fore Fathers recognized
that a healthy society included a system of economic stimulation, but more importantly that it
has a sense of unity and equality, that left no one to beg in the streets! They achieved this
even in those early and rugged days of colonialism through a system that the capitalists and republicans
have always hated and have done everything in their power to destroy in the past century!
If you doubt me then do a little research it what the foundation of 'May Day' is all about!
Where it began and what it was based upon, who celebrated the day and how it came to be drowned
out of American society. Then check and see how many modern nations all over the world celebrate
it as a national holiday (over 100) and then ask why it is not celebrated in America, where it
was founded on the blood and sweat of American workers!
Yes, there was a socialist system built into this nation and that system was called a society
based upon a 'Commonwealth' that translated into todays terminology could be defined as a 'Democratic
Socialism'!! So Mr. Fraser, I state that you have been writing not to enlighten the general
citizenry of the reality to their world, but to the continued domination of the 'One Percent'!!!
trt3, Jun 3, 2016
@Blueflash The author does not use the term in its proper context ether. I wish people would
stop using the term at all. It does not mean new liberal as in neoconservative, neo-fascist, or
neo-nazi. History of the term can be found here:
https://en.wikipedia.org/wiki/Neoliberalism
Over the last year or so many commenters have attempted to paint HRC's economic platform as neoliberalism
as a smear because she takes donations from Wall Street.. Or, that Bill Clinton, because he had
to work with the congress of Newt Gingrich, worked to deregulate investment bankers.
If you want to see the effects of modern day neoliberalism look at Kansas and the devastation
that the Chicago school of economics brings, (as opposed to California with a more Keynesian economic
approach).
Tristero1, Jun 3, 2016
@trt3 @Blueflash From below:
"As Chomsky says, 'neoliberalism isn't new and it isn't liberal.' (the 'liberal' refers
to the markets, not the politics of its purveyors - Reagan, Thatcher, Clinton were all NLs)"
If there are no more conservatives, "They're all the same" rules the day and the artists formerly
known as conservatives rule the planet.
Jayne Cullen, Jun 3, 2016
Soon, very soon, Sanders shall do what he keeps promising to do, and endorse the dangerous
Warmonger of Wall Street, with whom he pretends to disagree, on so many issues. He might even
be her Vice Presidential choice, in order to better neuter his supporters, and to minimize the
political contortions that he'll have to go through, to convince his supporters to vote for her.
Gird yourselves.
Faulkner, Jun 3, 2016
The IMF and German banks of the neoliberal international aristocracy are forcing Greece to
rescind its social safety net and assets in order to keep making interest payments - a scheme
to keep them debt slaves to the new financial imperialism, similar to what is happening to Puerto
Rico and the US.
This is neoliberalism's endgame - to create a modern day feudalism, which is why it must be
stopped.
If you keep in mind that Capitalism is a Pyramid Scheme, the whole thing makes better sense.
Just the same way your older brother or sister beat the snot outta you playing monopoly as a kid,
so are the richest among us, burying us, in debt, and in isolation. Now back in TR's day there
was a little better sense about fair play, and helping your fellow man. That was not an overwhelming
altruistic thought that swept the country, at that time, but rather it grew out of years of degrading
abuse imposed by rich Industrialists. This caused a backlash, and corrections were made.
The problem today is that the worship of money has taken on such proportions, that even
the least among us has thoughts of riches coming their way, at any moment, even if it's the false
hope of winning the "Lottery", the big one!! And as long as they have those dreams, the cognition
of what is happening around them is dulled. There will be riots, I am sure. If this persistent
process of moving money to the top, and appreciably nowhere else, the backlash will be inevitable,
and harsh. The longer it takes, the harsher it will be. And if you think not, you've been watching
too many Disney Movies.
cactusbill, Jun 3, 2016
I have neighbors who play the state lottery every week. Now and then I mention to them
that buying lotto tickets is a fools bet. They reply like trained parrots "you can't win if you
don't play", and mumble something about lotto proceeds and "education".
So when you notice the glazed eyes and fist pumping at a Drumpf rally, remember how many Americans
spend rent and food money on lotto tickets.
It's the same people.
AJS197, Jun 3, 2016
@Joel Graham As Chomsky says, 'neoliberalism isn't new and it isn't liberal.' (the 'liberal'
refers to the markets, not the politics of its purveyors - Reagan, Thatcher, Clinton were all
NLs). A closer read and you will recognize he implicates both parties in the neoliberal ascent:
"But Republicans have more than shared in this; they have, in fact, often taken the
lead in implanting a market- and finance-driven economic system that has produced a few "winners"
and legions of losers. Both parties heralded a deregulated marketplace, global free trade,
the outsourcing of manufacturing and other industries, the privatization of public services,
and the shrink-wrapping of the social safety net."
AJS1972, Jun 3, 2016
Yes. Reagan was a neoliberal. Both Bushes too... wanna hear something really crazy? Hillary
is both a neoliberal AND a neoconservative... true story.
After the financial crash of 2007-2008 caused an economic
collapse, and after it became clear that the Bush and Obama
administrations were unwilling to actually
investigate,
prosecute and
incarcerate financial and banking executives for the
crimes committed, many politically active people in USA and
other countries began to dig deep into the philosophy of
political economy that had allowed the
financial industry to occupy such an
overwhelming position of
dominance over the rest of the economy.
The
philosophical wreckage they have been excavating has
generally come to be called "neoliberalism." It is a word which
confuses many people, because it serves as a name for a set of
economic beliefs and policies which are more easily recognized
as being associated with political conservatism and
libertarianism: the opening of the Wikipedia entry on
"neoliberalism" is accurate enough on these economic beliefs and
policies, which "include extensive economic liberalization
policies such as privatization, fiscal austerity, deregulation,
free trade, and reductions in government spending in order to
enhance the role of the private sector in the economy."
Generally, neoliberals believe that markets with
untrammeled pricing mechanisms are a much fairer and more
efficient means of allocating society's resources than any level
of government oversight and intervention.
Neoliberals themselves actively seek to add to the confusion
by denying they have a shared, coherent philosophy. A good,
recent example-and from someone who is a self-professed
"liberal" not a conservative-was this
comment on DailyKos this past week: "Neoliberalism is not
actually a thing." It is exactly what neo-liberals themselves
say. It is a smokescreen, intended to confuse and stymie
inquiry. Philip Mirowski, a historian of economic thought at
Notre Dame, and co-editor of one of the best expositions of
neo-liberalism (The
Road from Mont Pelerin: The Making of the Neoliberal Thought
Collective, Harvard University Press, 2009; now available in
paperback), took on this deception earlier this year in a paper
entitled,
The Political Movement that Dared not Speak its own Name.
I do not recommend anyone go read the above links right now,
unless you are already familiar with the debate over
neoliberalism and are prepared for some hefty intellectual
lifting. For those people unfamiliar with the term
"neoliberalism" and seeking to understand how it differs from
liberalism, I recommend this excellent review of another book,
including many of the comments in the thread, on
These are all excellent discussions and expositions of
neoliberalism. Also excellent is the work of Corey Robin. See,
for example,
When Neoliberalism Was Young: A Lookback on Clintonism before
Clinton, from April 2016, and Robin's
response to critics. Robin puts his finger on a diseased
main artery in our political discourse today, when he writes
neoliberals, even those, such as Barack Obama and the Clintons,
who refuse to call themselves neoliberals,
would recoil in horror at the policies and programs of
mid-century liberals like Walter Reuther or John Kenneth
Galbraith or even Arthur Schlesinger, who claimed that
"class conflict is essential if freedom is to be preserved,
because it is the only barrier against class domination."
My own conclusion thus far is that much confusion will
persist until neoliberalism is understood in the historical
context of USA political economy, along with three other terms
crucial to understanding this history:
Mercantilism
Republicanism
Liberalism.
My firm conviction is that people cannot, and do not,
understand what an insidious, and potent, danger neoliberalism
thought is, until they understand republicanism. And in
political economy, you also need to understand mercantilism, and
how the USA theory and practice of republicanism interacted
with, and changed, mercantilism. As for liberalism, for now
suffice it to note that contemporary neoliberal thought has
more to do with economic liberalism, than it does political
liberalism. In fact, to some extent-and at the risk of my only
adding further to the confusion-it may be useful to assert here
that there is a strain of European political liberalism that
developed in opposition to the USA theory and practice of
republicanism. This strain of European political liberalism
resulted in granting the right to vote to most subjects of
polities which remained monarchies, as an expedient for the
necessity imposed by modern warfare for mass mobilization of a
country's male population. The obvious period is that of World
War One. In USA, at similar type of political liberalism arose
in response to the acquisition and consolidation of monopolistic
economic power by the trusts led by John D. Rockefeller, the
Morgan banking interests, and other misnamed, so called
"captains of industry" of the Gilded Age.
In my Introduction to my annotated abridgement of The Power to Govern: The Constitution -- Then and Now,
by Douglass Adair and Walton H. Hamilton (W.W. Norton &
Co., New York, NY, 1937, available on Amazon as a Kindle ebook,
here), I write that the creation the American republic and
its Constitution must be understood in the
context of the shift from the economic and political
systems of feudalism, to mercantilism and modern nationalism.
The ecclesiastical and warlord authoritarianism of feudal
Europe was being reluctantly and painfully dragged off the
stage of world history, making way for national states. In
the process, these national states developed-without,
Hamilton and Adair note, much theoretical foundation-an
accretion of laws and policies generally called mercantilism, intended to ensure economic activity added
to, rather than detracted from, a nation's wealth and power.
Hamilton and Adair present the evidence that the Framers were
entirely familiar with mercantilist policies, and that the
intent behind the Constitution was most emphatically not laissez faire and unregulated market capitalism, but a
careful and deliberate plan to ensure that all economic
activity was channeled and directed to the promotion of the
general welfare and national development….
The words "mercantilist" and "mercantilism" are generally
used whenever government powers are used to promote a state's
economic powers. By specifying in the Constitution that
government powers are used to promote a state's economic
powers in promotion of the general welfare, the
American republic made a sharp break from European
mercantilism, in which the welfare of a sole monarch or small
group of oligarchs was often conflated with the general
welfare of a state or nation….
As a body of economic thought, liberalism developed as the
economic and political philosophy of a revolt by a rising middle
class against the power and privileges of European ruling
oligarchs and monarchs, who used their connections and influence
at royal courts to gain economic monopolies and other privileges
(in other words, the system of mercantilism.)
The intent of classical economic liberalism was to sweep away,
or at least greatly circumscribe, the power of these
oligarchical and monarchical elites and states to make room for
greater economic freedoms and property rights for the rising
middle class.
In this sense, the culmination of liberalism was the creation
of the American republic, However-let me stress again-it is
crucial to note that under the Constitution of the new American
republic, economic freedoms and property rights were subject to
the Constitutional mandate to promote the general
welfare.
In advanced industrial economies, the way a sovereign
nation-state promotes and protects the general welfare is by
imposing environmental, workplace, and consumer regulations on
economic activity.
This is where we should discuss the concept of republicanism.
Remember, the United States is established as a republic, not as
a democracy. But what does that mean?
In a monumental book that is crucial to understanding the
historical and cultural context we are here examining, The
Creation of the American Republic, 1776-1787 (Chapel Hill:
University of North Carolina Press, 1969), Gordon Wood wrote,
"Republicanism meant more for Americans than simply the
elimination of a king and the institution of an elective system.
It added a moral dimension, a utopian depth, to the political
separation from England - a depth that involved the very
character of their society."
Wood continues:
To eighteenth-century American and European radicals
alike, living in a world of monarchies, it seemed only too
obvious that the great deficiency of existing governments was
precisely their sacrificing of the public good to the private
greed of small ruling groups.... The sacrifice of individual
interests to the greater good of the whole formed the essence
of republicanism and comprehended for Americans the
idealistic goal of their Revolution.... "The word republic," said Thomas Paine, "means the
public good,
or the good of the whole, in contradistinction to the
despotic form, which makes the good of the sovereign, or of
one man, the only object of the government."
(The first two thirds of "Republicanism," Chapter II from
Gordon Wood's The Creation of the American Republic,
has been
posted online here. I highly recommend it as a very
productive and uplifting Sunday read. Also, here is the
Wiki-summary of the entire book.)
In the closing decades of the 1700s, there was general
agreement that for republicanism to work as a system of
government, the citizens of the republic needed to be virtuous.
There were two types of virtue: private virtue and public
virtue. Political theorists of the time insisted that the two
were intertwined, but for sake of brevity, we need only look at
public virtue, which simply meant that
an individual citizen was willing to suppress his or her own
self-interest when the greater good of society required it.
What this meant in practice was that individuals must submit
to the authority of the state out of the self-abnegation which
flowed from understanding-and desiring-that the consideration
the general welfare must rule supreme. This required that the
citizens develop an entirely different character than
subjects in a monarchy, in which obedience to the state flowed
from the awe and fear of the immense, regal power of the monarch
and his supporting military apparatus. As Wood explains,
loyalists warned that
by resting the whole structure of government on the
unmitigated willingness of the people to obey, the Americans
were making a truly revolutionary transformation in the
structure of authority. In shrill and despairing pamphlets
[the Tories] insisted that the [Revolutionaries] ideas were
undermining the very principle of order. If respect and
obedience to the established governments were refused and if
republicanism were adopted, then... "the bands of society
would be dissolved, the harmony of the world confounded, and
the order of nature subverted." [The tories insisted that
]The principles of the Revolutionaries were directed
"clearly and literally against authority." They were
destroying "not only all authority over us as it now exists,
but any and all that it is possible to constitute." The Tory
logic was indeed frightening. Not only was the rebellion
rupturing the people's habitual obedience to the constituted
government, but by the establishment of republicanism the
[Revolutionaries] were also founding their new governments
solely on the people's voluntary acquiescence. And, as
Blackstone had pointed out, "obedience is an empty name, if
every individual has a right to decide how far he himself
shall obey." [Which of course, becomes the issue in the
Civil War eight decades later.-AKW]
Wood points out that the Revolutionaries did not actually
desire to do away with governmental and social authority, only
to supplant what motivated obedience to them by changing the
very character of the people, so that the motivating force came
from within each citizen, instead of from outside.
The Revolution was designed to change the flow of
authority-indeed the structure of politics as the colonists
had known it - but it was in no way intended to do away with
the principle of authority itself. "There must be," said John
Adams in 1776, "a Decency, and Respect, and Veneration
introduced for Persons in Authority, of every Rank, or We are
undone."
....In a monarchy each man's desire to do what was right
in his own eyes could be restrained by fear or force. In a
republic, however, each man must somehow be persuaded to
submerge his personal wants into the greater good of the
whole. This willingness of the individual to sacrifice his
private interests for the good of the community - such
patriotism or love of country - the eighteenth century termed
"public virtue." A republic was such a delicate polity
precisely because it demanded an extraordinary moral
character in the people. Every state in which the people
participated needed a degree of virtue; but a republic which
rested solely on the people absolutely required it... The
eighteenth-century mind was thoroughly convinced that a
popularly based government "cannot be supported without
Virtue." Only with a public-spirited, self-sacrificing people
could the authority of a popularly elected ruler be obeyed,
but "more by the virtue of the people, than by the terror of
his power." Because virtue was truly the lifeblood of the
republic, the thoughts and hopes surrounding this concept of
public spirit gave the Revolution its socially radical
character - an expected alteration in the very behavior of
the people, "laying the foundation in a constitution, not
without or over, but within the subjects."
Wood and other historians have written that the adoption of
the Constitution came about because many Americans-most
especially the leaders of the Revolution-were increasingly
horrified at the spectacle of self-interest dominating the work
of all the state legislatures. The republican public virtue
which had called forth the sacrifices of the Revolutionary War,
appeared to be ebbing, and there was a serious debate over
whether Americans remained virtuous enough for self-government
to survive. (See Wood, The Creation of the American
Republic, Chapter Ten, "Vices of the System.") Note that
this perceived diminution of virtue focused not only on the
personal corruption of individual state legislators, but also on
how the various state legislatures consistently and repeatedly
placed state and regional interests ahead of the national
interest.
The most pronounced social effect of the Revolution was
not harmony or stability but the sudden appearance of new men
everywhere in politics and business. "When the pot boils, the
scum will rise:' James Otis had warned in 1776; but few
Revolutionary leaders had realized just how much it would
rise....
Everywhere "Specious, interested designing men:' "men,
respectable neither for their property, their virtue, nor
their abilities:' were taking a lead in public affairs that
they had never quite had before, courting "the suffrages of
the people by tantalizing them with improper indulgences."
Thousands of the most respectable people "who obtained their
possessions by the hard industry, continued sobriety and
economy of themselves or their virtuous ancestors" were now
witnessing, so the writings of nearly all the states
proclaimed over and over, many men "whose fathers they would
have disdained to have sat with the dogs of their flocks,
raised to immense wealth, or at least to carry the appearance
of a haughty, supercilious and luxurious spendthrift."
"Effrontery and arrogance, even in our virtuous and
enlightened days:' said John Jay "are giving rank and
Importance to men whom Wisdom would have left in
obscurity."....
The republican emphasis on talent and merit in place of
connections and favor now seemed perverted, becoming
identified simply with the ability to garner votes....
The self-sacrifice and patriotism of 1774-75 [had] seemed
to give way to greed and profiteering at the expense of the
public good. Perhaps, it was suggested, that
peculiar-expression of virtue in those few years before
Independence had been simply the consequence of a momentary
period of danger. At one time public spirit had been "the
governing principle and distinguishing characteristic of
brave Americans. But where was it now? Directly the reverse.
We daily see the busy multitude.engaged in. accumulating what
thy fondly call riches, by forestalling [buy up goods in
order to profit to achieve a monopoly position and impose an
artificially high price], extortioning and imposing upon each
other... Everywhere "Private Interest seemed to predominate
over every Consideration that regarded the public weal.
The leaders who later became known as Federalists assembled
in the Constitutional Convention, and cobbled together a
framework of government of checks and balances intended to
safeguard the republic against both the machinations of a
tyrant, and the passions of the masses. I think the left is
making a huge, tragic mistake by focusing an the founders' fear
of democracy, and condemning the founders as mere elitists. I
would point to Trump and the Republican Convention as an example
of exactly why the Founders sought to curb the power of both a
tyrant, and the people. I agree with
Ian Welsh that Trump just might get elected, because Hillary
and Democratic establishment behind her refuse to acknowledge
the economic devastation caused by their neoliberalism over the
past four decades. So, if Trump gets elected, it is going to be
the Founders' framework of checks and balances we are going to
desperately seize hold of to try and prevent Trump from going to
the very end that his supporters want him to go to. Will lefties
come to appreciate the Founders' concerns then? A few will, but
I think most will not.
But, back to American history. So, we get the republic, and
it is generally understood that for republican self-government
to work, the people with public virtue must lead the government.
This is why George Washington was elected President unanimously
twice by the electoral college. Note that by the time of
Washington's second election to President, in 1792, the
political fight between the Federalists, led by Hamilton, and
the anti-Federalists (soon to be called Republicans), led by
Jefferson and Madison, had broken into the open, but both
factions supported Washington for President, because only he was
perceived to be virtuous beyond question. (In his second term,
Jefferson and Madison led a campaign of vitriol and lies against
Washington that is truly astonishing, accusing Washington of
being a mere dupe of Hamilton, and surrounding himself in regal
splendor intended to prepare Americans' sentiments for an
abandonment of republicanism and its replacement by a monarchy.
And this, while Jefferson continued to serve as Vice-President.)
So what happens is the very idea of public virtue comes under
attack. As Wood writes:
In these repeated attacks on deference and the capacity of
a conspicuous few to speak for the whole society-which was to
become in time the distinguishing feature of American
democratic politics - the Antifederalists struck at the roots
of the traditional conception of political society. If the
natural elite, whether its distinctions were ascribed or
acquired, was not in any organic way connected to the
"feelings, circumstances, and interests" of the people and
was incapable of feeling "sympathetically the wants of the
people," then it followed that only ordinary men, men not
distinguished by the characteristics of aristocratic wealth
and taste, men "in middling circumstances" untempted by the
attractions of a cosmopolitan world and thus "more temperate,
of better morals, and less ambitious, than the great," could
be trusted to speak for the great body of the people, for
those who were coming more and more to be referred to as "the
middling and lower classes of people." The differentiating
influence of the environment was such that men in various
ranks and classes now seemed to be broken apart from one
another, separated by their peculiar circumstances into
distinct, unconnected, and often incompatible interests. With
their indictment of aristocracy the Antifederalists were
saying, whether they realized it or not, that the people of
America even in their several states were not homogeneous
entities each with a basic similarity of interest for which
an empathic elite could speak. Society was not an organic
hierarchy composed of ranks and degrees indissolubly linked
one to another; rather it was a heterogeneous mixture of
"many different classes or orders of people, Merchants,
Farmers, Planter Mechanics and Gentry or wealthy Men. "In
such a society men from one class or group, however educated
and respectable they may have been, could never be acquainted
with the "Situation and Wants" of those of another class or
group. Lawyers and planters could never be "adequate judges
of tradesmens concerns." If men were truly to represent the
people in government, it was not enough for them to be for
the people; they had to be actually of the people. "Farmers,
traders and mechanics . . . all ought to have a competent
number of their best informed members in the legislature "
The anti-Federalist basically argue that no individual can
ever set aside their own self-interests to achieve the level of
public virtue (disinterest is a key word to look for if
you read accounts of this period) required to govern the
republic. Well, if the leaders of government are just as selfish
and self-interested as you and I, we are therefore just as
capable of governing as they are, and all this talk about the
leaders being virtuous is a deception.
So, in this historical context, neoliberalism is a revolt
against the very heart of the republican philosophy of the
American republic. Neoliberalism is a philosophical insistence
that public virtue is a dangerous encumbrance on the "animal
spirits" of modern capitalism-never mind that nowhere in the USA
Constitution is "capitalism" mentioned, or any particular
economic structure mandated. (Back in 1982, the American
Enterprise Institute had a forum and published a book
How Capitalistic is the Constitution? All the
contributors except one never really addressed the question,
instead regurgitating the usual hosannas to British imperial
apologists Adam Smith and John Locke. The one exception was
historian Forrest McDonald, who wrote an excellent biography of
Alexander Hamilton-excellent because McDonald understands the
important stuff about political economy and not the neoliberal
crap-wrote one of the papers in the book, and his answer, in
short, is "not very." As in, the Constitution does not create a
capitalist economy at all. Now, I suspect McDonald pulled his
punches, because he did not want to too greatly upset his AEI
hosts. McDonald's paper is probably the only completely
truthful thing AEI has ever published.)
In fact, the leading philosophers of neoliberalsim are
explicit in their attack on the Constitutional
mandate to promote the general welfare, arguing it
is "the slippery slope to the tyranny of the nanny state." As
Friedrich von Hayek titled his 1944 paean to neo-liberalism, the
republican insistence of promoting the general welfare is The Road to Serfdom.
Philip Pilkington, in
The Origins of Neoliberalism, Part I – Hayek's Delusion
(January 2013) makes the astute observation
Hayek thought that all totalitarianisms had their origins
in forms of economic planning. Economic planning was the
cause of totalitarianism for Hayek, rather than the being
just a feature of it. Underneath it all this was a rather
crude argument. One may as well make the observation that
totalitarianism was often accompanied by arms build-up,
therefore arms build-ups "cause" totalitarianism.
Von Hayek and his fellow Austrian aristocrats who were
forced to flee from the fruits of their economic programs,
did a complete revision of history and retold that same story
as if the very opposite of reality had happened. Once they
were safely in England and America, sponsored and funded by
oligarch grants, hacks like von Mises and von Hayek started
pushing a revisionist history of the collapse of Weimar
Germany blaming not their austerity measures, but rather
big-spending liberals who were allegedly in charge of
Germany's last government. Somehow, von Hayek looked at
Chancellor Bruning's policies of massive budget cuts combined
with pegging the currency to the gold standard, the policies
that led to Weimar Germany's collapse, policies that became
the cornerstone of Hayek's cult-and decided that Bruning
hadn't existed.
In USA, neoliberals who openly self-identify as political
conservatives or libertarians don't even have sense enough to
try to hide their hideous historical holocausts, like von Hayek
and von Mises try to. I have already discussed the importance
and significance of the mandate to promote the General Welfare
in the USA Constitution. The Confederacy (yes, that
Confederacy, of the mid-1800s, dominated by an oligarchy of rich
slaveholders who decided to tear apart the Union in a
fratricidal war rather than do a single thing that might lead to
eventual elimination of slavery) largely copied the USA
Constitution, but, crucially, eliminated mention of the
General Welfare from its Constitution. The libertarian
von Mises Institute has a
June 1992 article on its website by Randall G. Holcombe
which explicitly states this was an important "improvement":
But the differences in the documents, small as they are,
are extremely important. The people who wrote the Southern
Constitution had lived under the federal one. They knew its
strengths, which they tried to copy, and its weaknesses,
which they tried to eliminate. One grave weakness in the U.S.
Constitution is the "general welfare" clause, which the
Confederate Constitution eliminated….
The Southern drafters thought the general welfare clause
was an open door for any type of government intervention.
They were, of course, right.
Immediately following that clause in the Confederate
Constitution is a clause that has no parallel in the U.S.
Constitution. It affirms strong support for free trade and
opposition to protectionism: "but no bounties shall be
granted from the Treasury; nor shall any duties or taxes on
importation from foreign nations be laid to promote or foster
any branch of industry." ….The Confederate Constitution
prevents Congress from appropriating money "for any internal
improvement intended to facilitate commerce" except for
improvement to facilitate waterway navigation. But "in all
such cases, such duties shall be laid on the navigation
facilitated thereby, as may be necessary to pay for the costs
and expenses thereof..."
According to
Wikipedia, Holcombe "is a Research Fellow at
The Independent Institute, a Senior Fellow and member of the
Research Advisory Council at
The James Madison Institute, and past president of the
Public Choice Society. From 2000 to 2006 he served on
GovernorJeb Bush's Council of Economic Advisors." (Emphasis mine.)
So much for the conservative and libertarian brands of
neoliberals. What about those neoliberals who self-identify on
today's accepted political spectrum as liberals or even
progressives, such as Barack Obama and the Clintons? In
The Origins of Neoliberalism, Part II – The Americanisation of
Hayek's Delusion, Pilkington details how the ideas of
neoliberalism came to completely dominate the economics
profession and academia. (Also see the July 2009 Adbusters-the
people who conceived of Occupy Wall Street-attack
on the leading economics textbook, authored by Harvard
economist and head of George W. Bush Jr.'s Council of Economic
Advisors, H. Gregory Mankiw.) The result is that very, very few
people have been exposed to, let alone learned, any alternative
to the economic nostrums of neoliberalis. It is not that Obama
and the Clintons have a malignant intent to impose
economic ruin on their country and fellow countrymen, it's just
that they are profoundly ignorant in matters of
political economy-and, I would venture to guess, the history of
republicanism. As
William Neal explains, it is this socially pervasive
indoctrination in neoliberalism that prevents "almost the entire
Democratic Party short of Senator Sanders and a few members of
the Progressive Caucus" from pushing for such things as a
government direct jobs program. They simply accept the "common
wisdom"
that "only the private sector can create jobs." In order
to believe this fiction, one does indeed have to bury the
history of the New Deal, which is the still barely breathing
historical legacy which refutes it (along with the domestic
production record during World War II), the Civilian
Conservation Corps and the WPA's public work projects now
nearly erased from citizen memory.
The problem neoliberalism confronts us with is the means by
which a people decide and carry into practice their preferred
vision for their economic destiny as a nation. If the
neoliberals are correct, then there is no room for visionaries
of a better future for everyone, because the purest collective
expression of the wills of all individual are the sum of
transactions in the economic markets. At the time of the
Revolution and the writing of the Constitution, this was known
as
Bernard Mandelville's "private vices lead to public virtue,"
which became Adam Smith's "invisible hand." And every book I've
read about these matters noted that Americans at the time
repeatedly and emphatically rejected Mandelville's idea.
In a sense, the past half-century of theoretical and policy
dominance by neoliberalism has been a colossal social experiment
in replacing the public virtue of republicanism, with the
economic liberalism of a market economy. By any measure I care
about, the experiment has been a disastrous failure. A solid
majority of citizens have repeatedly told pollsters they desire
an end to a dependence on fossil fuels, and a solution to the
problem of climate change, but no effective responses have been
delivered from a political system held in thrall to neoliberal
ideas. The very idea of government intervention into the economy
to achieve such goals is held by the neoliberal ideologues to be
a mis-allocation of resources and an encroachment by government
on the "liberties of the people" But if the citizens cannot use
their government-the government that supposedly derives its
powers from their consent, and which therefore professes its
sovereignty to reside in the people-to impose their will on "the
market," then what instrument do they have to decide their own
destiny?
Neoliberalism is the new justification for the newly arisen
class of corporatist oligarchs and plutocrats who are enraged
that the promotion of the general welfare by modern sovereign
nation-states involves laws and regulations which "stifle" their
"business opportunities" and "economic creativity."
"... It's hard not to notice, during the American Presidential election drama, that despite all the debates and speeches, and multiple candidates, the terms "Neoliberalism" and "austerity" have yet to be employed, much less explained, these being the two necessary words to describe the dominant economic "regime" of the past 35 years. And this despite the fact that most observers recognize that a "populist revolt" driven by economic unhappiness is underway via the campaigns of Donald Trump and Bernie Sanders. With Trump, of course, we are getting much more, the uglier side of American populism: racism, xenophobia and misogyny, at least; the culture wars at a higher pitch. ..."
"... the underlying driver of his supporters' anger is economic distress, not the ugly cultural prejudices. ..."
It's hard not to notice, during the American Presidential election drama, that despite all the
debates and speeches, and multiple candidates, the terms "Neoliberalism" and "austerity" have yet
to be employed, much less explained, these being the two necessary words to describe the dominant
economic "regime" of the past 35 years. And this despite the fact that most observers recognize that
a "populist revolt" driven by economic unhappiness is underway via the campaigns of Donald Trump
and Bernie Sanders. With Trump, of course, we are getting much more, the uglier side of American
populism: racism, xenophobia and misogyny, at least; the culture wars at a higher pitch.
Yet when Trump commented on the violence which canceled his Chicago rally on the evening of March
11th, he stated that the underlying driver of his supporters' anger is economic distress, not
the ugly cultural prejudices. The diagnoses for the root cause of this anger thus lie at the
heart of the proposed solutions. For students of the Great Depression, this will sound very familiar.
That is because, despite many diversions and sub-currents, we are really arguing about a renewed
New Deal versus an ever more purified laissez-faire, the nineteenth century term for keeping government
out of markets – once those markets had been constructed. "Interventions," however, as we will see,
are still required, because no one, left or right, can live with the brutalities of the workings
of "free markets" except as they exist in the fantasyland of the American Right.
"... Russia is aware of the United States' plans for nuclear hegemony ..."
"... The Russian president also highlighted the fact that although the United States missile system is referred to as an "anti-missile defense system," the systems are just as offensive as they are defensive: ..."
"... Putin further explained the implications of this missile defense system's implementation without any response from Russia. The ability of the missile defense system to render Russia's nuclear capabilities useless would cause an upset in what Putin refers to as the "strategic balance" of the world. Without this balance of power, the U.S. would be free to pursue their policies throughout the world without any tangible threat from Russia. Therefore, this "strategic balance," according to Putin, is what has kept the world safe from large-scale wars and military conflicts. ..."
(ANTIMEDIA)
As the United States continues to
develop and upgrade their nuclear weapons capabilities at an alarming rate,
America's ruling class refuses to heed warnings from President Vladimir Putin
that Russia will respond as necessary.
In his most
recent
attempt to warn his Western counterparts about the impending danger of a
new nuclear arms race, Putin told the heads of large foreign companies and business
associations that Russia is aware of the United States' plans for nuclear
hegemony. He was speaking at the 20th St. Petersburg International Economic
Forum.
"We know year by year what will happen, and they know that we know,"
he said.
Putin argued that the rationale the U.S. previously gave for maintaining
and developing its nuclear weapons system is directed at the so-called "Iranian
threat." But that threat has been drastically reduced since the U.S. proved
instrumental in reaching an
agreement with Iran that should
put to rest any possible Iranian nuclear potential.
The Russian president also highlighted the fact that although the United
States missile system is referred to as an "anti-missile defense system," the
systems are just as offensive as they are defensive:
"They say [the missile systems] are part of their defense capability,
and are not offensive, that these systems are aimed at protecting them from
aggression. It's not true the strategic ballistic missile defense is part
of an offensive strategic capability, [and] functions in conjunction with
an aggressive missile strike system."
This missile system has been launched throughout Europe, and despite
American promises at the end of the Cold War that NATO's expansion would
not move "as much as a thumb's width further to the East," the missile system
has been implemented in many of Russia's neighboring countries, most recently
in Romania.
Russia views this as a direct attack on their security.
"How do we know what's inside those launchers? All one needs to do
is reprogram [the system], which is an absolutely inconspicuous task,"
Putin stated.
Putin further explained the implications of this missile defense system's
implementation without any response from Russia. The ability of the missile
defense system to render Russia's nuclear capabilities useless would cause an
upset in what Putin refers to as the "strategic balance" of the world. Without
this balance of power, the U.S. would be free to pursue their policies throughout
the world without any tangible threat from Russia. Therefore, this "strategic
balance," according to Putin, is what has kept the world safe from large-scale
wars and military conflicts.
Following
George W. Bush's 2001 decision to unilaterally withdraw the U.S. from the
1972 Antiballistic Missile Treaty, Russia was, according to Putin, left with
no choice but to upgrade their capabilities in response.
Putin warned:
"Today Russia has reached significant achievements in this field.
We have modernized our missile systems and successfully developed new generations.
Not to mention missile defense systems We must provide security not only
for ourselves. It's important to provide strategic balance in the world,
which guarantees peace on the planet.
Neutralizing Russia's nuclear potential will undo, according to Putin,
"the mutual threat that has provided [mankind] with global security for decades."
It should, therefore, come as no surprise that NASA scientists want to
colonize the moon by 2022 - we may have to if we don't drastically alter
the path we are on. As Albert Einstein
famously stated:
"I know not with what weapons World War III will be fought, but World
War IV will be fought with sticks and stones."
"... We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional decay and corruption. ..."
"... Capitalism has always favored the few at the expense of the many. Yet there have been places and moments, like in post-WWII U.S., where effort has gone into making the financial system at least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic ticket in a timely fashion, you may well lose your liberty, or even your life. ..."
"... The problem we have is that the system is rigged. Bad actors in the upper class can destroy their bank for fun and profit. Individuals father down the scale cannot discharge student loans under any circumstances. This is the largest source of discontent and a problem elites refuse to address. ..."
"... And the elites won't address it until they are jailed or guillotined. Why should they? ..."
"... The article starts off well enough, but then loses track of the critical standpoints it initially sets out. For example, within the above idea, the author can't talk about dimensions of life that are not monetizable because they are a capitalist prerogative. For instance, if someone is forced to work mandatory overtime because their employer doesn't want to hire enough workers to cover demand without overtime, you either do the overtime or you exit. You can't buy your time off. Etc. ..."
"... I'm not sure what point this article is attempting to make. The distinction between money and debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many of the rest of the commenters in not having read any of these oft cited books. ..."
"... I agree with other comments the formula "we are each of us banks" is lame. I think it matches nicely with the oft repeated analogy between government finance and a family business. ..."
"... Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers. ..."
"... money is the mental construct, the idea, by which we value human labor and transport that value across spacetime. ..."
Not sure the bank thing is a good analogy. Seams when a financial system raises the cost of
an asset like land through speculation to the point where a debtor has not enough income to cover
outflow to provide basics of survival….. food, water, shelter, community etc……..then does the
crrditor/speculator thus owe society because, it was through speculation and Mal-investment that
society was damaged.
Thomas Jefferson….I think, said something along the lines…… if banks get a hold of credit creation
then, by inflation and deflation the citizens of this country will be left homeless upon the land
their fathers established.
We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional
decay and corruption.
Capitalism has always favored the few at the expense of the many. Yet there have been places
and moments, like in post-WWII U.S., where effort has gone into making the financial system at
least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting
of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already
tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic
ticket in a timely fashion, you may well lose your liberty, or even your life.
Capitalism has always favored the few at the expense of the many.
I'm curious what makes capitalism unique for you in that regard? I agree that there are problems
with market-based economics, but you seem to be suggesting that other forms of political economy
don't have problems of concentration of wealth and power?
Capitalism without democracy and individual rights absolutely favors the few at the expense
of the many. That's why our intellectual enablers have spent so much energy trying to separate
economics from politics: to camouflage political choices as if they are natural economic outcomes.
I'm not sure what "other forms" you have in mind for comparison. But I would suggest it is
a huge failure of imagination to suggest humans have exhausted all possible forms of economic
organization and are stuck with contemporary global capitalism. Time for some innovation!
And as Mehring points out: "Focusing on what money really is – whether gold or state fiat –
shifts attention away from what credit really is, which is to say away from the center of discontent."
It's the quality of that debt, what it is and why, that needs far more examination. At present,
it is at the root of much discontent: why should I and mine be expected to salvage bank balance
sheets that are essentially fraudulent in terms of crap mortgages?
The institutional decay is really some kind of measure of the quality of crappy debt, which
is making many of us seriously discontent at being expected to cover crap bets.
The problem we have is that the system is rigged. Bad actors in the upper class can destroy
their bank for fun and profit. Individuals father down the scale cannot discharge student loans
under any circumstances. This is the largest source of discontent and a problem elites refuse
to address.
From a money view perspective, the origin of discontent seems to lie in the fact that each
of us, in our interface with the essentially financial system that is modern capitalism, operates
essentially as a bank, meaning a cash inflow, cash outflow entity.
The article starts off well enough, but then loses track of the critical standpoints it initially
sets out. For example, within the above idea, the author can't talk about dimensions of life that
are not monetizable because they are a capitalist prerogative. For instance, if someone is forced
to work mandatory overtime because their employer doesn't want to hire enough workers to cover
demand without overtime, you either do the overtime or you exit. You can't buy your time off.
Etc.
I'm not sure what point this article is attempting to make. The distinction between money and
debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael
Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many
of the rest of the commenters in not having read any of these oft cited books.
I agree with other comments the formula "we are each of us banks" is lame. I think it matches
nicely with the oft repeated analogy between government finance and a family business.
The close: "fundamental misunderstanding of the nature of the system" leaves me hanging. Where
is the explanation which clarifies things and repairs my misunderstanding? I missed it in the
presentation above and the concluding absurdity - "… we are each of us banks, managing our daily
cash inflow and cash outflow relative to the larger system which is society." - hardly serves
as clarification of anything. It just makes me annoyed that I bothered to read down that far.
Bad analogy: If each of us were our own bank, then we would be able to create money like banks
and loan out with interest and make billions each quarter because sometimes we could speculate
or gamble and make billions more while our fellow citizens become poorer because of our efforts.
Unlike some commenters, I do happen to like the imagery of all of us being banks. That's what
we all do: our labor flows out, other people's labor flows in. Imbalances can (and in fact, almost
by definition have to) occur over arbitrarily short time frames, but over longer timeframes, these
inflows and outflows do have to roughly balance. It also helps lay bare the fallacy of bailing
out individual banks (TBTF) as some kind of means of saving the banking system rather than those
specific banks bailed out. If the USFG gave Wash a trillion buck bailout, Wash Banking Inc would
be very grateful and fix lots of things in Wash Town USA and make lots of jawbs and groaf and
all dat. Does that make it good policy, either for the residents of Wash Town or the residents
of Dry Town across the valley?
Where I don't quite follow the author's point is in distinguishing money/credit/financialization/etc.
The easiest way to understand money at a macro level is that money is labor. Or a bit more complexly,
money is the mental construct, the idea, by which we value human labor and transport that value
across spacetime.
The issue of financialization isn't market vs. non-market or money vs. non-money or something
like that. Financialization is about the subset of money called currency, particularly currency
units issued by a sovereign government, being used to allocate resources in areas where currency
units are poor allocators of resources. Financialization is about middlemen and looters skimming
off money as it flows through; whether this is good or bad in a particular case depends upon whether
those middlemen add value or simply act as rentiers.
The biggest areas of financialization in
contemporary western culture, especially in the heart of the free world in DC, are not markets
at all. They are government sponsored enterprises carrying out that age old quest of the Will
to Power. Remove USFG policy choices to run a global empire abroad and create massive inequality
at home, and our supposedly market-based financial system would shrink to a much smaller size
overnight.
"Financialization is about middlemen and looters skimming off money as it flows through; whether
this is good or bad in a particular case depends upon whether those middlemen add value or simply
act as rentiers."
You hit the nail on the head here. Profits from financial transactions differ from those derived
in trading commodities and services. The former are occult whereas the latter originate in the
value of labor power. The claim that financial profits track interest rates doesn't work because
they remain linked to credit and ultimately commodity exchange. If you listen to the Blankfeins
and Dimons, they will say they are compensated for some special managerial skills that add values
to the financial transaction. This is only nonsense to justify their mega-salaries, themselves
only a fraction of the huge profits in finance. According to Hilferding's Finance Capital, the
source of profit in finance is "sui generis" and derives from what we now call transaction fees.
Whether legitimate or not, we need to understand how those rates are determined relative to the
other variables.
money is the mental construct, the idea, by which we value human labor and transport that
value across spacetime.
But even this has to be qualified by tradition, power relations, etc. as there are many, many
forms of human labor (often those forms traditionally performed by women) that we value but do
not compensate with money. Also, who is "we?" And when did "we" decide that 2 and 20 was appropriate
compensation for the "value" provided by hedge funders?
This "economist" alludes to, but fails to make the connection of the "asymmetrical" AND disproportionate
power between creditors and debtors, that has been legislated, ratified and codified into the
creditor castle (institution) of banking, currently run by banksters and moated with pols, judges,
story-tellers masquerading as "journos"/"economists" etc….e.g.-assuming it were possible to make
a sharp distinction between speculating and investing, by what reasonable definition of creditor
can vultures be classified as creditors?
Also doesn't seem to challenge the presupposition of "self-regulation" in the abstract "logic"(and
language) of "markets", which is innate in thinking of "money" as a commodity. This abstract "logic"(and
language) has "supplied" the fodder for neoliberal zealots to rationalize de-regulation, which
many have concluded has been a major driver of the "defining issue of our time" and the disdainful
polarization between the "haves" and "have-nots".
Also seems to fail to recognize the conflict when thinking about money as a commodity and the
effects of compounding interest…
Thanks for this. I followed the link and have started reading Louis Brandeis' Other People's
Money , which I've never read before. We've learned little in the ensuing 100 years…
"... In essence, this is a confession that "civilizing" capitalism cannot be done only "externally" by relying on the "harmony of private interests" but that the state has a bigger role that goes beyond ensuring the protection of property rights, taxation and redistribution. ..."
"... The past 35 years have shown that the neo-liberal conception of capitalism, combined with its global reach, has increased inequality to often unsustainable levels, left large segments of the population in the rich world without significant increase in real income and with heightened insecurity, and brought populist policies with a vengeance. ... ..."
"... Importing foreign labor with heavily curtailed rights has been a mainstay in many societies. Initially it was war prisoners and slaves, then with the capitalist mode of production and abolition of slavery, economic refugees from economically depressed regions. ..."
"... "Nothing wrong with Christianity except that no one ever tried it." ~George Bernard Shaw ..."
"... "Once the globalization genie got out of the bottle, there's no putting the genie back in." Oft said, but this may be a full employment statement, one that does not hold in a low equilibrium, especially for a country with a large economy that could do much more internal trade, to the detriment of many other smaller countries not so fortunately endowed. ..."
"... It may be possible to tariff away globalization for such an economy to the great benefit of those who bore its costs. ..."
"... Before abandoning neo-liberalism I'd like to see the "redistribution" part tried. ..."
"... Redistribution is best done by forcing people with money to pay workers. ..."
"... What the "neoliberal" invention is the free lunch. Lend money to the poor so the business can sell stuff without paying workers enough to buy what they want to sell. ..."
"... There has been a resurgence in leftwing movements which have coalesced around figures like Bernie Sanders and Jeremy Corbyn. There has been a rise of demagogues like Trump who blame immigrants and foreigners. ..."
The forthcoming changes in capitalism?: Sometimes it's useful to put
symbolic dates on when a different era begins. The end of Thatcherism, it
could be argued,
came on July 10 in the then PM-candidate speech by Theresa May. It was
perhaps appropriate that another woman, a Tory Prime Minister, would be
credited with the ending of Thatcherism. The key words, which immediately
attracted attention (see
also Philip Stevens in today's "Financial Times") were not those about
inequality (which has become a common place these days) but about the changes
in the internal structure of capitalism: reintroduction of workers' and
consumers' representatives on management boards, limits on the executive
pay, reduction of job insecurity for the young people and much greater access
to top jobs for those coming from less privileged backgrounds.
For the
first time since the late 1970s (at the top level of policy-making), we
are back to the issues of reforms in the way capitalism functions rather
than discussing the ways in which the external environment would be made
more market friendly. In essence, this is a confession that "civilizing"
capitalism cannot be done only "externally" by relying on the "harmony of
private interests" but that the state has a bigger role that goes beyond
ensuring the protection of property rights, taxation and redistribution.
The past 35 years have shown that the neo-liberal conception of capitalism,
combined with its global reach, has increased inequality to often unsustainable
levels, left large segments of the population in the rich world without
significant increase in real income and with heightened insecurity, and
brought populist policies with a vengeance. ...
He goes on to identify three areas where he can imagine change.
cm -> am...
Importing foreign labor with heavily curtailed rights has been a
mainstay in many societies. Initially it was war prisoners and slaves, then
with the capitalist mode of production and abolition of slavery, economic
refugees from economically depressed regions.
Business overall doesn't want free agents. One major point of work visa
program abuse is that it is (still?) socially unacceptable to curtail the
rights of working citizens to e.g. take the option to "not work", or not
for a specific employer, at their own choosing (provided ability to survive
without a wage or finding another job).
For example, one provision of the H1-B program is that one cannot stay
in the country without being officially employed (and within the skill set
for which one was brought in).
Thi$ World'$ Banker$ -> DeDude...
"revise capitalism than just burning it"
Perhaps we should also revise the holder within which capitalism spins.
The Milieu encapsulating present day capitalism is inflation. This inflationary
holder nearly requires folks to invest, to buy shares in capitalization,
shares with risk. By transplanting capitalism into a deflationary holder,
capitalism could continue to perform its many functions without requiring
nearly everyone to buy shares, to buy risk.
Within deflation, savings are rewarded with a ROI by way of the expanding
buying power of each dollar saved, an automatic ROI that frees savings from
the risk of capitalism. Sure!
The experts would continue to take calculated risks, Bill. The rank and
file would no longer need to buy shares in preparation for their retirement.
And yes, bailouts for fat bankers should be allowed to die a gruesome death.
Hey!
Our bankruptcy lawyers have been cheated out of their fun for far too
long.
Deflation is also healthy for the GTF, global Triffin fiat that we print
for profit. At present we print bonds also, but with deflation there would
be no need to print bonds, just more fiat that would give poor folk the
same ROI that is now enjoyed only by wealthy bond holders.
Deflation is also healthier for nations that operate with religious restrictions
against charging interest for bank loans. During the middle ages Christians
were not allowed to charge interest. Do we still have Christians today?
"Nothing wrong with Christianity except that no one ever tried
it." ~George Bernard Shaw
rayward
Why would the beneficiaries of globalization want to invest in public
goods in America? They wouldn't, and they don't. I suspect that many of
the beneficiaries already know it, but in the emerging phase of globalization,
American firms will be competing with China rather than collaborating with
China.
Once the globalization genie got out of the bottle, there's no putting
the genie back in. American firms shifting alliances to Vietnam from China
won't solve the problems in America and will ratchet up the potential problems
in the far east, including trade wars and real wars that are often triggered
by trade wars.
Turning inward (as the populists would do) won't make goods produced
in America more competitive in global markets; it will make them less competitive.
point -> rayward...
"Once the globalization genie got out of the bottle, there's no putting
the genie back in." Oft said, but this may be a full employment statement,
one that does not hold in a low equilibrium, especially for a country with
a large economy that could do much more internal trade, to the detriment
of many other smaller countries not so fortunately endowed.
It may be possible to tariff away globalization for such an economy
to the great benefit of those who bore its costs.
I won't hold my breath waiting...
ThaomasH
Before abandoning neo-liberalism I'd like to see the "redistribution"
part tried.
mulp -> ThaomasH...
Redistribution is best done by forcing people with money to pay workers.
Option 1: heavily tax people with lots of money they aren't spending
productively and then pay workers to build productive capital assets
that can generate returns on investment by taxes, eg, gas tax, water
fees, income taxes that rise with income return to education.
Option 2: don't tax money paid to workers to build productive capital
assets (but tax the income from those assets).
Few people are totally unable to be productive, but the investment cost
(labor) might be higher than the income. Some people with lots of money
will pay workers to invest in the disabled for a small productive return
instead of paying taxes out of concern or for a sense of duty to charity,
and that should be encouraged by not taxing money paid to labor.
For all labor income, social insurance should be taken by tax so workers
are paying to care for themselves and families collectively at a baseline.
Basically, returning to the "tax and spend" of the 60s, with every faction
getting to find groups of workers to pay. The conservatives likely love
to pay workers to make guns and bombs and pay men to act like an army -
that trained lots of idle young men with no direct, and a lot of airline
pilots. For liberals, pay workers to teach and do research. For the common
man, pay workers to build roads, railroads, schools, water and sewer, anything
to put people to work to make sure everyone gets paid a good income.
mrrunangun
Making top jobs more accessible to those from less privileged backgrounds
will require more affordable higher education and graduate professional
education for those from less privileged backgrounds. Experience has shown
that making large loans available for education does not actually make education
more affordable to those from modest backgrounds.
Progressives have discussed price controls on the health sector and indeed
Medicare has gone a long way in that direction already. Price controls in
the higher ed and especially professional schools should be considered if
we are to make these opportunities realistically available to those of modest
means.
Free Juco has been proposed by Chicago mayor Emmanuel and Tennessee governor
Haslem. That means tax increases for the rest of the citizens to replace
the money tuition provides now. That seems to me to be a reasonable proposal,
provided the tax increase actually replaced the tuition and was not subject
to the usual 50% rake-off for the political system that most taxes in Illinois
are subject to.
Back in the 1955-75 era, well-paid jobs were plentiful enough and university
education inexpensive enough that young men and women from modest backgrounds
could and did supply their own money for their own educations when parents
could not provide it. People could and did work their ways thru law school
tending bar and waiting tables then. It wasn't easy but it was doable for
ambitious bootstrappers. I doubt that could be done today. Education has
become so expensive in the contemporary world that few jobs available to
students can support the tuition + the personal expenses entailed in getting
a university education.
To recreate that kind of opportunity for today's young people, either
jobs that can support tuition and expenses have to be made available to
them or the cost of tuition and expenses need to be brought into line with
what the jobs available will support. Or a little of both. Tough challenges
either way.
John San Vant -> mrrunangun...
55-75 was about the only time in American history "well paid" Jobs were
plentiful. It also created a mess with how capitalism functions.
mulp -> John San Vant...
How so? Profits were low. Share prices tracked the labor cost of the
productive capital assets. The tax structure and demand for goods and services
from government ensured production required paying workers to the degree
that wages were bid up even for the unskilled worker. And you hired the
unskilled and trained them because you had no choice to meet demand for
your production.
Banks were tightly regulated so they couldn't rent seeking. Thus they
would lend only to people with income so lower incomes forced reduced consumption
lower profits leading to widespread support for government spending building
stuff businesses wanted so workers had more money to spend.
What the "neoliberal" invention is the free lunch. Lend money to
the poor so the business can sell stuff without paying workers enough to
buy what they want to sell.
Peter K.
"The past 35 years have shown that the neo-liberal conception of capitalism,
combined with its global reach, has increased inequality to often unsustainable
levels, left large segments of the population in the rich world without
significant increase in real income and with heightened insecurity, and
brought populist policies with a vengeance."
Again the term "populist." I don't like it.
There has been a resurgence in leftwing movements which have coalesced
around figures like Bernie Sanders and Jeremy Corbyn. There has been a rise
of demagogues like Trump who blame immigrants and foreigners.
What will the center-left do? Will Hillary and May actually put in place
policies that work? Will they try?
Or will they continue to make excuses and engage in diversions?
I liked how Obama nodded to Bernie Sanders in his speech where if you
cared about inequality or money in politics you rallied to Bernie. What
was left unsaid there?
David
He makes three (kind of vague) proposals :
The middle class needs to be encouraged or facilitated to acquire
capital as a means of reducing inequality.
Development NGOs should focus on "hard"' infrastructure development
such as roads and schools.
Europe cannot, due to demographics, become "fortress Europe" and
needs to implement immigrant worker policies that don't necessarily
grant citizenship, just the right to work and then return home (many
countries currently do this - South Korea has thousands of American
and Canadian and Australian English teachers who will never be citizens
of SK).
1. I think this is interesting. First you need a minimum wage that allows
people to save a portion of their income and invest it - 15 bucks an hour
say.
Then, remember those classes like home economics in high school? They
need to try a finance class in which kids learn how to get an online account,
and basic investment strategies like investing in index funds or mutual
funds.
I say this as someone who has a portfolio that is currently 6x my yearly
salary. I got lucky b/c I got in 2010. But long term index funds will kill
treasury bonds if secular stagnation has any truth to it.
I would had another thing: strengthen social security by a lot.
2. Infrastructure investment is vital. NGOs should be held accountable
for their budgets and should in fact be well regulated.
3. Euhhhhh, immigration. A temporary foreign worker policy would be economically
useful. But if there's more terrorist attacks in France...
I recall SCOTUS Justice R Bader Ginsburg mentioned if Trump is elected, she
might take her husband's advice that if Murica gets too crazy, retire to the civilized
New Zealand.
I thought rich/OECD nations' immigration departments do not want older immigrants, not in the
50s much less the 80ish R Bader Ginsburg.
I assume R Bader Ginsburg has at least $1M in "disposable wealth" & thus is eligible for the 1%er
(or is it 0.1%er) Transnational "Investor" visa? If I understand correctly, if you are rich, you
can "invest" & move to many nations, including Murica. I recall a clip (IIRC on PBS Newshour) where
Chinese rich were emigrating to the US by investing $800K in expensive condos a few blocks from the
Barclay's Center arena in NYC, on some program that was designed "to improve affordable housing".
I would like to better understand this 1%er Transnational "Investor" visa phenomenon, perhaps
an article exists that explains it?
Perhaps its existence is a factor in explaining how US 1% BigBiz & their owned BigPols like HClinton
& P Ryan are so callous about 99% economic issues inclding slashing the already crapified US social
insurance, whether 0bama Grand Ripoff style raising of Social Security age above 67 & Medicare above
65; or the P Ryan approach of worsening 0bama by ACA Exchange-esque SS & MC & giving an inadequate
coupon subsidy, & if you can't pay the remainder – Go Die (c) Lambert's Neoliberalism Rule.
These BigPols with a spare $1M (e.g. most of them) have the option of permanent residency in Toronto/Melbourne/etc,
a Get of of Jail, er Get out of Murica card should they need to use it, in actually Civilized nations
with actual social insurance systems.
That's pretty much every country. The rich, like their money and their
businesses, are transnational, nationalities are a fungible commodity. 10MM,
you can live in any country you like, 100MM and you are above such petty
concerns as borders at all. Those are for the miserable plebes.
"... The values and ideology represented in the Economics textbook Bill Black analyzed didn't arise in a vacuum. The points Black lists reflect the ideology, values, ethics and interests of a narrow segment of our society who have accumulated enormous personal wealth through a variety of extra-legal and illegal mechanisms, and who use a small portion of that wealth to fund "Economics Chairs" in our public and private universities; economics "think tanks"; and speeches, books, consulting engagements, and board memberships for "prominent economists". ..."
"... Mankiw is a shill/useful idiot for his oligarchs patrons. #11 explains the idiocy of the previous 10. ..."
"... Did the banks which loaned billions to the gas frackers of North Dakota know that production would exceed demand and cause a crash? Perhaps the loan officer might have such concern, but would more likely be most concerned with his/her own bottom line – a meme Yves explores in Econned. ..."
"... Newly-printed money CAN cause inflation, but WHERE the price rises happen depends greatly on the pockets in which the money lands. ..."
"... stocks, real estate, luxury goods, premium educations, etc. ..."
"... This kind of ignorant cluelessness is pretty prevalent among the oligarchy and its supporters like Mankiw. Just like that guy in Davos who simply couldn't understand why there's so much social unrest in the world today. They live in a completely different world. ..."
"... My first exposure to Mankiw's principles was actually an early version of the talk by Yoram Bauman in this video. It hits several of the points Mr. Black makes and is also pretty funny. It definitely demonstrates how Mankiw attempts to cloak his biases in supposedly neutral terms. ..."
"... I doubt Mankiw will accept 100% estate tax on the justification that the cost of bequests is zero to the recipient. (and thus a 100% estate tax doesn't incur large costs on the recipient) ..."
"... My paper lists four principles claimed to be at the core of modern economics by Mankiw and then shows how all four principles are false: Amir-ud-Din, Rafi and Zaman, Asad, Failures of the 'Invisible Hand' (July 15, 2013). Forum for Social Economics, Vol. 45, Iss. 1, 2016. Available at SSRN: http://ssrn.com/abstract=2293940 or http://dx.doi.org/10.2139/ssrn.2293940 ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate
professor of economics and law at the University of Missouri-Kansas City. Jointly published with
New Economic Perspectives
This is the second column in a series on the N. Gregory Mankiw's myths and dogmas that he spreads
in his economic textbooks. The first column exposed the two (contradictory) meta-myths that begin
his preface. This column de-mythologizes Mankiw's unprincipled "
principles " of economics – the ten commandments of theoclassical economics' priestly caste.
Some of these principles, correctly hedged, could be unobjectionable, but in each case Mankiw dogmatically
insists on pushing them to such extremes that they become Mankiw myths.
To understand Mankiw's mythical 10 commandments, one must understand "Mankiw morality" – a morality
that remains hidden in each of his textbooks. Few people understand how radically theoclassical economics
has moved in the last thirty years. Milton Friedman famously argued that CEOs should operate exclusively
in the interest of shareholders. Mankiw, however, is a strong supporter of the view that CEOs will
not only defraud customers, but also shareholders and creditors by looting the firm. "[I]t would
be irrational for savings and loans [CEOs] not to loot." "Mankiw morality" decrees that if you have
an incentive as CEO to loot, and fail to do so, you are not moral – you are insane. Mankiw morality
was born in Mankiw's response as discussant to George Akerlof and Paul Romer's famous 1993 article
"Looting: The Economic Underworld of Bankruptcy for Profit."
Mankiw's textbooks preach the wonders of the indefensible a system he has helped design to allow
elite CEOs to loot the shareholders with impunity – the antithesis of Friedman's stated goal. Mankiw
morality helps create the "criminogenic environments" that produce the epidemics of "control fraud"
that drive our recurrent, intensifying financial crises. It is essential to interpret Mankiw's ten
myths in light of his unacknowledged immoral views about how CEOs will and should respond to incentives
to rig the system against the firm's consumers, employees, creditors, and shareholders. His textbooks
religiously avoid any disclosure of Mankiw morality or its implications for perverting his ten commandments
into an unethical and criminogenic dogma that optimizes the design of a criminogenic environment.
Mankiw's myths
People Face Tradeoffs. To get one thing, you have to give up something else.
Making decisions requires trading off one goal against another.
This can be true, but Mankiw pushes his principle to the point that it becomes a myth. Life
is filled with positive synergies and externalities. If you study logic or white-collar criminology
you will make yourself a far better economist. You may trade off hours of study, but not "goals."
If your "goal" is to become a great economist you will not be "trading off one goal against another"
if you become a multidisciplinary scholar – you will strongly advance your goal. If you study
diverse research methods you will be a far better economist than if you study only econometrics.
The Cost of Something is What You Give Up to Get It. Decision-makers have
to consider both the obvious and implicit costs of their actions.
"Opportunity costs" are an important and useful economic concept, but Mankiw's definition sneaks
ideological baggage into both sentences that turns his principle into multiple myths. Mankiw implicitly
assumes fraud and other forms of theft out of existence in the first sentence. "Cost" is often
not measured in economics by "what you give up to get it." If your inherit a home that lacks fire
insurance and immediately burns down there is a cost to you (and society) even though you gave
up nothing to inherit the home. If the CEO loots "his" firm he gave up nothing to get the millions,
but if he loses those millions he will consider it to have a "cost." Theoclassical economists
have a primitive tribal taboo against even using the "f" word (fraud).
Decision-makers frequently ignore the "costs of their actions." There is nothing in economic
theory or experience that supports the claim that the "decision-makers" "have" to consider costs.
It is rare that decision-makers must do – or not do – anything.
It is likely that Mankiw means that optimization requires decision-makers to "consider" all
"costs of their actions," but that too is a myth. Theoclassical optimization requires perfect,
cost-free information, pure "rationality," and no externalities. None of these conditions exist.
Car buyers have no means of knowing the costs of buying a particular car. If they bought a GM
car the ignition mechanism defect could cause the driver to lose the ability to control the car
– turning it into an unguided missile hurtling down (or off) a highway at 70 mph. The car buyer
does not know of the defect, does not know who will be driving when the defect becomes manifest,
does not know who the passengers will be, and does not know who and what else could be injured
or damaged as a result of the defect. The theoclassical view is that the buyer who "considers"
the costs of buying his defective car to others (negative externalities) and pays more money to
buy a car that minimizes those negative externalities is not acting ethically, but irrationally.
It is typically cheaper (for the producer, not society) to produce goods of inferior (but difficult
to observe) quality. The inability of the consumer to "consider" even the true costs to the consumer
and the consumer's loved ones of these hidden defects means that economists began warning 46 years
ago that "market forces" could become criminogenic. George Akerlof's 1970 article on markets for
"lemons" even coined the term "Gresham's" dynamic to describe the process. A Gresham's dynamic
is a leading form of a criminogenic environment.
[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty,
therefore, lies not only in the amount by which the purchaser is cheated; the cost also must
include the loss incurred from driving legitimate business out of existence.
Akerlof was made a Nobel laureate in economics in 2001 for this body of work. Economics is
the only field in which someone would write a textbook ignoring a Nobel laureate whose work has
proven unusually accurate on such a critical point. There is only one reason to exclude this reality
from Mankiw's myths – Akerlof's work falsifies Mankiw's myths, so Akerlof's work disappears from
Mankiw's principles, as does the entire concept of fraud.
Rational People Think at the Margin . A rational decision-maker takes action
if and only if the marginal benefit of the action exceeds the marginal cost.
The mythical nature of this principle flows from the multiple errors I have described. Mankiw
is being deliberately disingenuous. Theoclassical economics does not claim, for example, that
a firm produces a product "only if the marginal benefit of the action exceeds the marginal cost."
Theoclassical economists claim that a firm sells a product "only if the marginal benefit of the
action to the seller exceeds the marginal cost to the seller." The seller ignores social costs
and benefits.
For the sake of brevity, I will summarize that Mankiw's third principle is a myth for five
reasons known to every economist. First, it implicitly assumes out of existence positive and negative
externalities, which means that supposedly rational, self-interested decision-makers he postulates,
even if they had perfect, cost-free information, would not contract to maximize social welfare.
Second, as Mankiw morality implicitly admits, the actual optimization principle under theoclassical
economics would be determined by the marginal benefits and costs of an action to the decision-maker
– the CEO – not the firm, and certainly not society. Theoclassical economists, however, refuse
to admit that explicitly, so it disappears from Mankiw's 10 commandments.
Third, the information provided by CEOs is often not simply incomplete and costly, but deliberately
deceptive. Where information is merely incomplete, consumers may pay far more for a product than
they will benefit from the purchase. Where the seller provides deceptive information about quality,
the buyer and members of the public may be harmed or even killed. The CEO may also be looting
"his" firm as well as the customers. Mankiw has implicitly assumed perfect, cost-free information
and implicitly assumed that fraud does not exist.
Fourth, conflating rationality with optimization of personal costs and benefits is wrong on
multiple grounds. It defines ethical behavior as "irrational" where the consumer or CEO takes
into account social costs and benefits and protects the interests of others in an altruistic manner.
Everything we know from behavioral economics also makes clear that humans are not "rational" in
the manner predicted by theoclassical economics. Mankiw has implicitly assumed out of existence
thirty years of economic research on how people actually behave and make decisions.
Fifth, firms with monopoly power, according to theoclassical economics, maximize their profits
by deliberately reducing production to a point that the social cost of producing the marginal
unit is less than the marginal benefit to the consumer. Mankiw has implicitly assumed away monopolies.
People Respond to Incentives. Behavior changes when costs or benefits change.
I have responded to this myth in a
prior article . The implications of his fourth principle in conjunction with Mankiw morality
are devastating for theoclassical economics. CEOs create the incentives and understand how "behavior
changes" among their agents, employees, and subordinate officers in response to those incentives.
Under theoclassical principles this will unambiguously lead "rational" CEOs to set incentives
to rig the system in favor of the CEO. Because fraud and abuse creates a "sure thing" that is
certain to enrich the CEO, Mankiw's fourth commandment predicts that control frauds led by CEOs
will be ubiquitous. Fortunately, many CEOs are ethical and remain ethical unless they are subjected
to a severe Gresham's dynamic. As a result, Mankiw's commandments over-predict the incidence of
fraud and abuse by CEOs. Similarly, experiments demonstrate that humans frequently act in altruistic
manners despite financial incentives to act unfairly.
Trade Can Make Everyone Better Off .
Trade allows each person to specialize in the activities he or she does best. By trading with
others, people can buy a greater variety of goods or services.
See my
article on faux "trade deals" that exposes this myth.
Markets Are Usually a Good Way to Organize Economic Activity .
Households and firms that interact in market economies act as if they are guided by an "invisible
hand" that leads the market to allocate resources efficiently. The opposite of this is economic
activity that is organized by a central planner within the government.
Again, the key interaction under theoclassical theory is between CEO and consumers, employees,
creditors, shareholders, and the general public. "Markets" are vague constructs and they work
best when ethical and legal provisions reduce fraud to minor levels. When these ethical and legal
institutions are not extremely effective against fraud, the incentives created by the market can
be so perverse that they create a criminogenic environment that produces epidemic levels of fraud.
Mankiw's myth is to describe only one possible incentive and treat it as the sole possibility
other than what he falsely describes as "the opposite" – a government planner. The opposite incentive
to the so-called "invisible hand" is the Gresham's dynamic. Mankiw mythically presents the government
as the threat to an effective economy rather than an institution that is essential to producing
and enforcing the rule of law that prevents a Gresham's dynamic.
Governments Can Sometimes Improve Market Outcomes .
When a market fails to allocate resources efficiently, the government can change the outcome through
public policy. Examples are regulations against monopolies and pollution.
The myth here is that government only has a desirable role where there is a "market fail[ure]."
Mankiw treats "markets" as the norm and implicitly assumes that the government normally has nothing
to do with making markets succeed. Even conservative classical economists admitted that the rule
of law was essential to an effective economy and required an effective government. Well-functioning
governments always improve "market outcomes." Indeed, they are typically essential to making possible
well-functioning "markets."
Mankiw also fails to explain that "markets" will be fictional and massively distort resource
allocation (that is what a hyper-inflated bubble does) when there is an epidemic of control fraud.
As I have explained, Mankiw's own principles predict (indeed, over-predict) that deregulated "markets"
will frequently prove so criminogenic that they will produce epidemics of control fraud.
A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
Countries whose workers produce a large quantity of goods and services per unit of time
enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average
income.
First, the CEOs of sectors such as finance that are immensely unproductive – so unproductive
that they cause enormous losses rather than growth, and receive exceptional income because they
loot. Income is often based not on productivity, but on the CEOs' wealth and economic and political
power that allows them to rig the economy. A nation's standard of living also depends on its employment
levels, which can be crushed by economic policies such as austerity.
The issue is not what happens to "average income," but what happens to median income, wealth,
the income and wealth of the lowest quartile or particular minorities, and to income and wealth
inequality. A nation can have high average productivity, yet have poor performance for decades
in these other critical measures.
Consider what has happened to the folks who tried to do everything right to boost their productivity
according to the theoclassical economic "experts'" advice. This is what has happened to Latino
and black households where a head of the household has at least a college degree. The source is
economists at the extremely conservative
St. Louis Fed .
Hispanic and black families headed by someone with a four-year college degree, on the other
hand, typically fared significantly worse than Hispanic and black families without college
degrees. This was true both during the recent turbulent period (2007-2013) as well as during
a two-decade span ending in 2013 (the most recent data available).
White and Asian college-headed families generally fared much better than their less-educated
counterparts. The typical Hispanic and black college-headed family, on the other hand, lost
much more wealth than its less-educated counterpart. Median wealth declined by about 72 percent
among Hispanic college-grad families versus a decline of only 41 percent among Hispanic families
without a college degree. Among blacks, the declines were 60 percent versus 37 percent.
One of the reasons that college-educated Latino and black families lost so much wealth compared
to their white and Asian-American counterparts is that they were more likely to get their degrees
from the for-profit colleges that theoclassical economists touted – colleges that frequently provided
a very expensive and very poor education, often involving defrauding the students. Another reason
that college-educated Latino and black families lost so much wealth compared to their white and
Asian-American counterparts is that they were far more likely to be the victims of predatory home
lending – an activity for which theoclassical economists served as the primary apologists.
Mankiw also ignores critical factors that determine "a country's standard of living." Yes,
China reports higher growth, but it is also operating in an unsustainable fashion that has destroyed
much of its environment and threatens to be a major contributor to the global suicide strategy
of causing severe climate change.
Prices Rise When the Government Prints Too Much Money . When a government
creates large quantities of the nation's money, the value of the money falls. As a result, prices
increase, requiring more of the same money to buy goods and services.
No, and Mankiw knew this was a myth when he wrote it. First, "prices rise" for many reasons.
Pharmaceutical prices rise because hedge fund managers take over pharma firms or encourage others
to do so in order to increase prices on existing drugs by hundreds, sometimes thousands of percent.
Prices rise because accounting control fraud recipes hyper-inflated the largest bubble in history
in U.S. real estate. Prices rise because of cartels. Prices rise because oil cartels cause oil
shocks. Prices rise due to real bottlenecks, e.g., shortages of a skill or material.
Inflation has not risen, indeed general price levels have often fallen (deflation) despite
record creation of money by central banks and private banks. Theoclassical economists have regularly
predicted hyper-inflation. As Paul Krugman emphasizes, virtually none of them even admits their
serial prediction failures.
Society Faces a Short-Run Tradeoff Between Inflation and Unemployment . Reducing
inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding
the short-run effects of changes in taxes, government spending and monetary policy.
Mankiw ends his ten myths with a series of myths. Foolish, counterproductive austerity often
causes inflation to fall to harmfully low – even negative (deflation) – levels that can lead to
prolonged recessions that cause severe damage to people and economies. Stimulus provides a win-win
that improves economic growth and reduces human suffering without causing harmful inflation.
A nation is able to operate at extremely high levels of employment without producing harmful
inflation. Mankiw is a partisan Republican. When Republican presidents in the modern era are faced
with recessions they junk their theoclassical dogmas and adopt stimulus programs, though they
generally do so largely through the economically inefficient and less effective means of slashing
tax rates for the wealthy.
Democrats: Please Renounce Mankiw's Myths
Unlike the Republicans, who always rise above their theoclassical principles when their president
is in office and faces a recession, the "New Democrats" are the ones who seem to have drunk the theoclassical
Kool-Aid and strive endlessly to create the self-inflicted wound of austerity when they are in power.
New Democrats also love to bash Republican presidents for running deficits even when those deficits
produced no harmful inflation and helped produce recovery. It is sensible and honest to point out
that tax cuts for the wealthy are a far less effective form of stimulus and to present and support
superior alternatives such as job guarantee and infrastructure programs. It would be superb if Democrats
were to point out that by far the most effective, prompt means of cutting taxes to stimulate the
economy in response to a recession is to cease collecting the Social Security taxes for several years.
It is not fine to praise Bill Clinton for taking the harmful step of running a budget surplus or
to bash Republicans because they – correctly – increased fiscal stimulus (and therefore the short-term
deficit) in response to a recession.
Democrats also need to stop spreading the myth that Bill Clinton was an economic marvel. He was
the luckiest president in history in terms of timing. His economic "success" was the product of two
of the largest bubbles in history (the dot.com and real estate bubbles). The real estate bubble is
the only thing that prevented his dot.com bubble from causing an economic collapse during his term.
The real estate bubble was so enormous that it made it easy for the fraudulent CEOs to "roll" (refinance)
the fraudulent loans they made, which helped cause the bubble to hyper-inflate. The saying in the
trade is "a rolling loan gathers no loss." This meant that the bubble was Bill Clinton and George
Bush's bubble, but it collapsed on George Bush's watch so Clinton gets the credit for the high employment
produced by the twin bubbles and Bush gets the blame for the massive unemployment that a massive
bubble will create when it collapses (if it is not replaced by an even larger bubble).
The pots are calling the kettles black; standard politics, redundancy easily replaced by automation.
You do know that Bernie isn't going after Hillary because he has his skeletons, especially
in the medical university complex, don't you. Ever live in Vermont. You did notice that Hillary
just threatened him, to the core of his argument.
This… "Energy is information, most of which humans ignore."…and this… "Public Education policies
are disgusting to anyone who really wants to learn…" are the important elements although I would
add that humans don't ignore so much as don't know/are not taught, and I would say Public education
has been purposefully corroded to the point of disgusting.
Pharmaceutical prices rise because hedge fund managers take over pharma firms or encourage
others to do so in order to increase prices on existing drugs by hundreds, sometimes thousands
of percent. Prices rise because accounting control fraud recipes hyper-inflated the largest bubble
in history in U.S. real estate. Prices rise because of cartels. Prices rise because oil cartels
cause oil shocks. Prices rise due to real bottlenecks, e.g., shortages of a skill or material.
- Bill Black
----–
All of these examples treat relative price rises in the affected sector, not the general
inflation which saw the U.S. CPI increase by a factor of ten (10) since 1950. Hedge funds and
cartels couldn't do that, no matter how successful they were in increasing their share of the
pie.
The same logic is used by union busters to claim that "greedy labor unions" cause inflation
- an equally false notion. Labor can increase its share of national income at the expense of corporate
profit, but it cannot cause a general inflation.
This unprecedented secular inflation did, however, coincide with government bonds surpassing
gold as the Federal Reserve's largest holding in 1945, and with the dollar's gold link being severed
in 1971.
Bill Black evidently hews to the scholarly tradition of the eminent Argentine economist and
former central banker Mercedes Marcó del Pont:
"It is totally false to say that the printing more money generates inflation; price increases
are generated by other phenomena like supply and external sector's behaviour," said Marcó del
Pont.
I would argue that the real estate bubble caused genuine inflation because it was a credit
bubble, but I agree on your other points. Intuitively I think of inflation as a rise in prices
without a corresponding rise in (average) affordability. It's why a Big Mac today can cost multiple
times what it did 30 years ago without being any less affordable for the average customer.
Mankiw's definition isn't precisely wrong but it's oversimplified. He doesn't address the role
of banks in money creation, he doesn't define money (what about credit?) he doesn't discuss the
factors that might cause government to print more or less money, and he doesn't say how much is
too much. Without more rigor than he provides, it's only useful as a plausibility argument after
the fact.
Regarding Black's comment:
Inflation has not risen, indeed general price levels have often fallen (deflation) despite
record creation of money by central banks and private banks.
I would say this was because they were doing it during the deflation of a credit bubble on
a large enough scale that money creation by the government was a drop in the bucket by comparison,
and that was what caused deflation. Which again points to the importance of defining terms and
operating constraints (why couldn't the government print money on a massive scale to compensate?
What are the drawbacks and limitations on that approach?)
Economists do love to make doomsday hyperinflation predictions that never seem to pan out.
As far as I can tell, that's because they think that the economy is inherently unstable and will
lapse naturally into massive inflation (see: wage-price spiral) or some other disastrous state
without the wise guiding hand of a central banker to prevent it. There seems to be very little
evidence of this actually happening in reality, and the few genuine examples of hyperinflation
(Weimar, Zimbabwe) have typically resulted from a collapse in production coupled with debts denominated
in other currencies that (a) considerably exceed the country's ability to pay and (b) require
the attempt to be made anyway.
Notice that Mankiw managed to say nothing about "Economic instability or deflation, and eventually
economic depression, is caused when the government prints TOO LITTLE money", which is actually
true and happens quite reliably.
If it is physically impossible for something to occur, it won't, and finance be damned.
Economics is first and foremost a branch of the physical sciences, though most economists have
forgotten this.
Supply and demand.
Unintended consequences.
High productivity does not create high wages. High wages create high productivity. If you
spend a lot of money on water-conservation technology at the base of Niagara Falls, will it
increase the economic value of water there?
The physical utility of a commodity (including labor) is not related to its economic value.
Adam Smith did get something right.
Nothing in this universe can grow exponentially for very long. Societies with sustained
high fertility rates will always be miserably poor, and only societies that have first reduced
their fertility rate can hope to become rich.
A (more-or-less) free market is indeed a powerful and essential optimization mechanism
("the invisible hand") but it is nonlinear. Like all such nonlinear optimization mechanisms,
it can and does get stuck in local minima and require external directed efforts to move to
a more optimal solution. This is basic math.
Inflation occurs when prices go up. That's it.
"Capitalism" guarantees neither poverty nor prosperity. The market is neutral. Even as
the laws of physics are obeyed equally well by a building that stands tall as by one that collapses
into a heap of rubble, the laws of the market are also obeyed in miserably poor Bangladesh
as well as in prosperous Switzerland. With 100 desperate people competing for every job, wages
for the many will be low and profits for the few will be high. And vice versa. Blaming "capitalism"
for poverty is silly, as if I threw someone off a cliff and then blamed the law of gravity
for their death. Trying to deny market forces is equally silly, like trying to legislate gravity
out of existence. It simply must be worked with.
"Free to choose to own or employ slaves", "Free trade includes the ability of big corporations
to restrict trade to maximize their profits", "Free to buy politicians and have them loot the
public treasury in your interest" … Strict libertarianism is logically incoherent and ethically
vile.
I quibble with 6 & 8. "A more or less free market" is a well regulated market. How much "more
free" or "less free" a market needs to be to best distribute its product depends entirely on its
particular conditions and vagaries. The insinuation that a market should be "stuck in a local
minima" before oversight can improve its performance echoes Mankiw's 7th misconstruction, that
(in Bill Black's words) "government only has a desirable role when there is a market failure."
I especially disagree that markets are neutral. Markets exist at the pleasure of the Capitalists
who create and smother them for profit. Capitalists are forever cajoling "market opportunities"
out from under every rock they can turn over. They invent, shape, split, combine, dissect, analyze,
produce, reproduce, abandon, corner and strangle markets in pursuit of lucre. There is no market
for Ford electric cars in California beyond the handful required by statute, despite ample demand,
because individuals at Ford have determined that creating that particular market will eat into
the personal profit they might extract from other markets. "Efficient" markets, that only return
a gazilionth of a point on investment because of optimal competition, cease to be because the
margin is too low to justify the hassle or the capital risk. Switching gears, labor markets in
Bangladesh & Switzerland exist when Capitalists decide to hire workers. Hirees agree to be paid
what Capitalists choose to pay, whether "freely" or under the duress of the State.
There is no market equivalent to gravity or the law of planetary motion. The model of supply
and demand is a hypothetical post rationalization of a shifting negotiation – while it's helpful
to a degree, supply/demand doesn't make "lawfull" (or useful) predictions until demand nears infinity
(see health care: "how much will that be, doc?" – "how much have you got?", or housing: "how much
can you borrow from a fractional reserve player who lends without risk and won't verify your income?")
As the local monopolists of violence, States can engage markets as they see fit. They can supply
(Volkswagon & the post office), demand (food stamps, R&D grants), regulate, open (ACA) or close
them (pharmaceutical imports) to their hearts desire. Good or bad outcomes depend entirely on
the wisdom of the policy.
Whoa. Exhale. To be sure, I inhaled. Too many words when I should just say:
Nice.
Its good we agree that policy should be just and compassionate.
The values and ideology represented in the Economics textbook Bill Black analyzed didn't
arise in a vacuum. The points Black lists reflect the ideology, values, ethics and interests of
a narrow segment of our society who have accumulated enormous personal wealth through a variety
of extra-legal and illegal mechanisms, and who use a small portion of that wealth to fund "Economics
Chairs" in our public and private universities; economics "think tanks"; and speeches, books,
consulting engagements, and board memberships for "prominent economists".
This matter is really about whose values will control government economic policy and law.
Excellent analysis. Thank you, Bill Black, for all you do and have done.
I see much of the underlying theory of classical economics as simplifications that make the
math easier. One of my favorite examples of misallocation of resources was the market for Burbank
Russet potatoes in 2001. Basically, producers wanted $6.50 per hundredweight for spuds. The big
buyer, Simplot offered farmers $4.50 pre-season. Many farmers decided to wait until harvest, hoping
the spot market would give them a better price. I should also mention that in Idaho, farmers not
wishing to plant in a given year, could sell their water to other farmers, or to the federal government
which uses the water to help salmon and to produce hydropower. Thus, producing potatoes carried
the opportunity cost of water leasing. But leasing water leasing to the federal government is
culturally taboo in the ag. community. 2001 was a dry year and most of the ag. water was consumed
growing spuds.
The outcome was a banner year in production, driving the spot market price to $0.50 per hundredweight,
far less than the cost of production. Many acres of potatoes were plowed under – a total loss
– to everyone.
My point is – there is no way to know, in advance, what the price of a commodity will be in
the future unless you know, or can limit, the rate of production and control demand.
Did the banks which loaned billions to the gas frackers of North Dakota know that production
would exceed demand and cause a crash? Perhaps the loan officer might have such concern, but would
more likely be most concerned with his/her own bottom line – a meme Yves explores in Econned.
I suppose I am a bit defensive of classical microeconomics because it is elegant. But I am
also terribly suspicious of its answers because one never has either the information or the control
to be anywhere near as certain as the calculus would suggest.
On point #9: "Prices Rise When the Government Prints Too Much Money". Recent inflation data
suggests it's a myth. But if restated as "When government prints money, prices rise on the goods
and services that the people who receive the money tend to buy", then it's NOT a myth.
That was the whole problem with the Federal Reserve's damned QE efforts. They printed gobs
of money, and it all landed in the pockets of the wealthy. The stuff they buy (stocks, real estate,
luxury goods, premium educations, etc.) has seen prices rise MUCH faster than nominal inflation.
And the people who didn't get any of the newly printed money (i.e., most of us)… Well, these sad
folks couldn't afford to spend any more than before, so anybody who attempted to impose prices
hikes on low-end consumer goods saw a loss of sales volume.
Newly-printed money CAN cause inflation, but WHERE the price rises happen depends greatly
on the pockets in which the money lands.
stocks, real estate, luxury goods, premium educations, etc.
But it's hard to produce more of those, so with an increase in money chasing them their prices
will rise. If the government handed money to poor people, they would buy food, clothes, cars,
televisions, etc. In other words, things that society can produce more of. That's my read, anyway.
Partially. Prices for good where quantities are truly fixed (like acres of land in San Francisco)
can rise sharply when extra money pours in.
But even when there is opportunity to increase production, manufacturers must purchase equipment
(like farm equipment for more food) or hire more workers (thereby tightening the labor market
and pushing wages up). These result in price hikes. More modest price hikes than San Francisco
real estate, but still real hikes. It's the classic supply vs. demand curve from classic microeconomics.
That said, "QE to the people" is certainly less objectionable than the "QE to the bankers and
the 1%" that we've seen over the past five years. Prices would go up, but people would get to
buy more things they want or need, and hiring would likely go up as well. [And at a minimum, there
needs to be at least *some* growth in the money supply to keep up with population growth. Otherwise
we see deflation and the ability to become wealthier by hoarding cash.]
"Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes
at the top of the income distribution have fallen substantially over the past few years.
"According to the most recent IRS data, between 2007 and 2009, the 99th percentile income
(AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income
fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879
to $32,396."
This kind of ignorant cluelessness is pretty prevalent among the oligarchy and its supporters
like Mankiw. Just like that guy in Davos who simply couldn't understand why there's so much social
unrest in the world today. They live in a completely different world.
The big difference being that $70k to the 99th percentile means the difference between a new
Beemer this year or next while $500 for the median family means choosing which child goes hungry
for the second half of December.
And of course, Anonymous's excellent point. You are cherry picking old data based on a stock
market and real estate bubble crash. Median income families don't "own" real estate and certainly
don't own stocks.
Mankiw is either psychotic or was gleefully obfuscating when he presenting that out-dated analysis.
I say Kill the Rich and feed their bodies to the poor. It's not a solution at all (and I am
rich myself) but it would be deeply, deeply satisfying!
My first exposure to Mankiw's principles was actually an early version of the talk by Yoram
Bauman in this video. It hits
several of the points Mr. Black makes and is also pretty funny. It definitely demonstrates how
Mankiw attempts to cloak his biases in supposedly neutral terms.
As for number 6, I couldn't disagree with you more. Organisational power is dependent on it
being enforced BY THE GOVERNMENT. Without that coercion, individuals would find other solutions
for the want provided for by that particular organisation. I would suggest that you look at the
history of Pennsylvania circa 1681-1690 or Moresnet (in what is now Aachen) circa 1816 until the
end of WWI to understand what is possible when the free market really operates.
I am actually a returning undergrad student and starting an econ course next week. I just
looked at the text book… and its Mankiw. Should be a fun semester.
Don't argue with the PR. You need to be strategic. Regurgitate the BS but be sure to read enough
corrective material that the toxins don't infect your brain.
I doubt Mankiw will accept 100% estate tax on the justification that the cost of bequests
is zero to the recipient. (and thus a 100% estate tax doesn't incur large costs on the recipient)
...As the very sharp Patrick Iber tweeted somewhere, the usual response to economic distress
in democracies with broad franchises is: "Throw the bastards out!" Consider the Great Depression:
Labour collapses in Britain in 1931. The Republicans collapse in the U.S. in 1932. And in
Germany…
shudder
.
Then, I think, Dani firmly grasps the correct thread:
A greater weakness of the left [is] the absence of a clear
program to refashion capitalism and globalization for the
twenty-first century…. The left has failed to come up with
ideas that are economically sound and politically popular,
beyond ameliorative policies such as income transfers.
Economists and technocrats on the left bear a large part of
the blame. Instead of contributing to such a program, they
abdicated too easily to market fundamentalism and bought in
to its central tenets.
In retrospect, who can disagree? We misjudged the proper
balance between state and market, between command-and-control
and market-incentive roads to social democratic ends.
But then I must, again, dissent in part. Dani:
Worse still, [Economists and technocrats on the left] led
the hyper-globalization movement at crucial junctures. The
enthroning of free capital mobility-especially of the
short-term kind-as a policy norm by the European Union, the
Organization for Economic Cooperation and Development, and
the IMF was arguably the most fateful decision for the global
economy in recent decades. As Harvard Business School
professor Rawi Abdelal has shown, this effort was spearheaded
in the late 1980s and early 1990s not by free-market
ideologues, but by French technocrats such as Jacques Delors
(at the European Commission) and Henri Chavranski (at the
OECD), who were closely associated with the Socialist Party
in France. Similarly, in the US, it was technocrats
associated with the more Keynesian Democratic Party, such as
Lawrence Summers, who led the charge for financial
deregulation. France's Socialist technocrats appear to have
concluded from the failed Mitterrand experiment with
Keynesianism in the early 1980s that domestic economic
management was no longer possible, and that there was no real
alternative to financial globalization. The best that could
be done was to enact Europe-wide and global rules, instead of
allowing powerful countries like Germany or the US to impose
their own.
Tom aka Rusty said...
Going back to 1997, Rodrik is one of the few
economists who earned his pay.
Much of economics
has not been worth reading and not been worth
believing.
"That empowerment must be both economic and political. Workers deserve
to be compensated fairly for their work, and have generous social support
programs to rely upon when economic changes that are out of their control
throw them out of work or force them to accept lower paying jobs.
We should not hesitate to ask those who have gained so much from
globalization and technological change to give something back to those
who have paid the costs of their success."
All this would have been especially great, say, forty or even thirty
years ago.
"... Neoliberalism is a form of economism in our day that strikes at every moment at every sector of our community. It is a form of extremism. ..."
"... Every totalitarianism starts as distortion of language, as in the novel by George Orwell. Neoliberalism has its Newspeak and strategies of communication that enable it to deform reality. In this spirit, every budgetary cut is represented as an instance of modernization of the sectors concerned. If some of the most deprived are no longer reimbursed for medical expenses and so stop visiting the dentist, this is modernization of social security in action! ..."
"... Social Darwinism predominates, assigning the most stringent performance requirements to everyone and everything: to be weak is to fail. The foundations of our culture are overturned: every humanist premise is disqualified or demonetized because neoliberalism has the monopoly of rationality and realism. Margaret Thatcher said it in 1985: "There is no alternative." Everything else is utopianism, unreason and regression. The virtue of debate and conflicting perspectives are discredited because history is ruled by necessity. ..."
"... In spite of the crisis of 2008 and the hand-wringing that followed, nothing was done to police the financial community and submit them to the requirements of the common good. Who paid? Ordinary people, you and me. ..."
By Manuela Cadelli, President of the Magistrates' Union of Belgium
The time for rhetorical reservations is over. Things have to be called by their name to make it
possible for a co-ordinated democratic reaction to be initiated, above all in the public services.2
Liberalism was a doctrine derived from the philosophy of Enlightenment, at once political and
economic, which aimed at imposing on the state the necessary distance for ensuring respect for liberties
and the coming of democratic emancipation. It was the motor for the arrival, and the continuing progress,
of Western democracies.
Neoliberalism is a form of economism in our day that strikes at every moment at every sector of
our community. It is a form of extremism.
Fascism may be defined as the subordination of every part of the State to a totalitarian and nihilistic
ideology. I argue that neoliberalism is a species of fascism because the economy has brought under subjection
not only the government of democratic countries but also every aspect of our thought.1 The state is now at the disposal of the economy and of finance, which treat it as a subordinate
and lord over it to an extent that puts the common good in jeopardy.
The austerity that is demanded by the financial milieu has become a supreme value, replacing politics.
Saving money precludes pursuing any other public objective. It is reaching the point where claims
are being made that the principle of budgetary orthodoxy should be included in state constitutions.
A mockery is being made of the notion of public service.
The nihilism that results from this makes possible the dismissal of universalism and the most
evident humanistic values: solidarity, fraternity, integration and respect for all and for differences.
There is no place any more even for classical economic theory: work was formerly an element in
demand, and to that extent there was respect for workers; international finance has made of it a
mere adjustment variable.
Every totalitarianism starts as distortion of language, as in the novel by George Orwell. Neoliberalism
has its Newspeak and strategies of communication that enable it to deform reality. In this spirit,
every budgetary cut is represented as an instance of modernization of the sectors concerned. If some
of the most deprived are no longer reimbursed for medical expenses and so stop visiting the dentist,
this is modernization of social security in action!
Abstraction predominates in public discussion so as to occlude the implications for human beings.
Thus, in relation to migrants, it is imperative that the need for hosting them does not lead to
public appeals that our finances could not accommodate. Is it In the same way that other individuals
qualify for assistance out of considerations of national solidarity?
The cult of evaluation
Social Darwinism predominates, assigning the most stringent performance requirements to everyone
and everything: to be weak is to fail. The foundations of our culture are overturned: every humanist
premise is disqualified or demonetized because neoliberalism has the monopoly of rationality and
realism. Margaret Thatcher said it in 1985: "There is no alternative." Everything else is utopianism,
unreason and regression. The virtue of debate and conflicting perspectives are discredited because
history is ruled by necessity.
This subculture harbours an existential threat of its own: shortcomings of performance condemn
one to disappearance while at the same time everyone is charged with inefficiency and obliged to
justify everything. Trust is broken. Evaluation reigns, and with it the bureaucracy which imposes
definition and research of a plethora of targets, and indicators with which one must comply. Creativity
and the critical spirit are stifled by management. And everyone is beating his breast about the wastage
and inertia of which he is guilty.1
The neglect of justice
The neoliberal ideology generates a normativity that competes with the laws of parliament. The
democratic power of law is compromised. Given that they represent a concrete embodiment of liberty
and emancipation, and given the potential to prevent abuse that they impose, laws and procedures
have begun to look like obstacles.
The power of the judiciary, which has the ability to oppose the will of the ruling circles, must
also be checkmated. The Belgian judicial system is in any case underfunded. In 2015 it came last
in a European ranking that included all states located between the Atlantic and the Urals. In two
years the government has managed to take away the independence given to it under the Constitution
so that it can play the counterbalancing role citizens expect of it. The aim of this undertaking
is clearly that there should no longer be justice in Belgium.
A caste above the Many
But the dominant class doesn't prescribe for itself the same medicine it wants to see ordinary
citizens taking: well-ordered austerity begins with others. The economist Thomas Piketty has perfectly
described this in his study of inequality and capitalism in the twenty-first century (French edition,
Seuil, 2013).
In spite of the crisis of 2008 and the hand-wringing that followed, nothing was done to police
the financial community and submit them to the requirements of the common good. Who paid? Ordinary
people, you and me.
And while the Belgian State consented to 7 billion-euro ten-year tax breaks for multinationals,
ordinary litigants have seen surcharges imposed on access to justice (increased court fees, 21% taxation
on legal fees). From now on, to obtain redress the victims of injustice are going to have to be rich.
All this in a state where the number of public representatives breaks all international records.
In this particular area, no evaluation and no costs studies are reporting profit. One example: thirty
years after the introduction of the federal system, the provincial institutions survive. Nobody can
say what purpose they serve. Streamlining and the managerial ideology have conveniently stopped at
the gates of the political world.
The security ideal
Terrorism, this other nihilism that exposes our weakness in affirming our values, is likely to
aggravate the process by soon making it possible for all violations of our liberties, all violations
of our rights, to circumvent the powerless qualified judges, further reducing social protection for
the poor, who will be sacrificed to "the security ideal".
Salvation in commitment
These developments certainly threaten the foundations of our democracy, but do they condemn us
to discouragement and despair?
Certainly not. 500 years ago, at the height of the defeats that brought down most Italian states
with the imposition of foreign occupation for more than three centuries, Niccolo Machiavelli urged
virtuous men to defy fate and stand up against the adversity of the times, to prefer action and daring
to caution. The more tragic the situation, the more it necessitates action and the refusal to "give
up" (The Prince, Chapters XXV and XXVI).
This is a teaching that is clearly required today. The determination of citizens attached to the
radical of democratic values is an invaluable resource which has not yet revealed, at least in Belgium,
its driving potential and power to change what is presented as inevitable. Through social networking
and the power of the written word, everyone can now become involved, particularly when it comes to
public services, universities, the student world, the judiciary and the Bar, in bringing the common
good and social justice into the heart of public debate and the administration of the state and the
community.
Neoliberalism is a species of fascism. It must be fought and humanism fully restored.4
"... As the world reels from the Brexit shock, it is dawning on economists and policymakers that they severely underestimated the political fragility of the current form of globalization. The popular revolt that appears to be underway is taking diverse, overlapping forms: reassertion of local and national identities, demand for greater democratic control and accountability, rejection of centrist political parties, and distrust of elites and experts. ..."
"... As an emerging new establishment consensus grudgingly concedes, globalization accentuates class divisions between those who have the skills and resources to take advantage of global markets and those who don't. Income and class cleavages, in contrast to identity cleavages based on race, ethnicity, or religion, have traditionally strengthened the political left. So why has the left been unable to mount a significant political challenge to globalization? ..."
"... Latin American democracies provide a telling contrast. These countries experienced globalization mostly as a trade and foreign-investment shock, rather than as an immigration shock. Globalization became synonymous with so-called Washington Consensus policies and financial opening. Immigration from the Middle East or Africa remained limited and had little political salience. So the populist backlash in Latin America – in Brazil, Bolivia, Ecuador, and, most disastrously, Venezuela – took a left-wing form. ..."
"... Economists and technocrats on the left bear a large part of the blame. Instead of contributing to such a program, they abdicated too easily to market fundamentalism and bought in to its central tenets. Worse still, they led the hyper-globalization movement at crucial junctures. ..."
"... The enthroning of free capital mobility – especially of the short-term kind – as a policy norm by the European Union, the Organization for Economic Cooperation and Development, and the IMF was arguably the most fateful decision for the global economy in recent decades. ..."
"... Similarly, in the US, it was technocrats associated with the more Keynesian Democratic Party, such as Lawrence Summers, who led the charge for financial deregulation. ..."
"... France's Socialist technocrats appear to have concluded from the failed Mitterrand experiment with Keynesianism in the early 1980s that domestic economic management was no longer possible, and that there was no real alternative to financial globalization. The best that could be done was to enact Europe-wide and global rules, instead of allowing powerful countries like Germany or the US to impose their own. ..."
"... The good news is that the intellectual vacuum on the left is being filled, and there is no longer any reason to believe in the tyranny of "no alternatives." Politicians on the left have less and less reason not to draw on "respectable" academic firepower in economics. ..."
"... Consider just a few examples: Anat Admati and Simon Johnson have advocated radical banking reforms; Thomas Piketty and Tony Atkinson have proposed a rich menu of policies to deal with inequality at the national level; Mariana Mazzucato and Ha-Joon Chang have written insightfully on how to deploy the public sector to foster inclusive innovation; Joseph Stiglitz and José Antonio Ocampo have proposed global reforms; Brad DeLong, Jeffrey Sachs, and Lawrence Summers (the very same!) have argued for long-term public investment in infrastructure and the green economy. There are enough elements here for building a programmatic economic response from the left. ..."
"... Economists have finally admitted that offshoring has resulted in the loss of American jobs. They no long mention that only a few years they claimed that offshoring created newer and higher paying American jobs. Isn't science wonderful. Middle and working class women went to work to maintain living standards, eventually the middle and working classes resorted to debt resulting in the Great Recession. ..."
"... In addition to economic instability and decline of the lower orders the federal government has sought to encourage immigration, H1-Bs, refugees and others. These people take jobs from Americans (economist dogma notwithstanding) or reduce American incomes if they are not on public assistance. ..."
"... Even Krugman has characterized America as a plutocracy. ..."
"... Yet the sudden success of Trump shows that many Americans are too angry to listen to plans for distant economic melioration or to tolerate cultural destabilization at the hands of government that no longer represents their interests, economic or cultural. Liberals can castigate them and dismiss their political judgment but it might help to spend some time trying to see the world from their perspective ..."
"... As they don't seem to fit into the equations and theories of the economists, both civic virtue and public trust have been assigned an economic value of zero and factored out of the "it's the ecomomy stupid" world view entirely. Or so it seems to me. ..."
"... "Who's rich?" is an easier question to answer than "who's trustworthy." ..."
"... The Washington consensus was pure Hayek. Summers was the purest of the pure on the Washington consensus. As Summers destroyed Yeltsin's good economic reform in 1993, Stiglitz was his chief adversary in government. Stiglitz wrote about how utterly ideological Summers was. And was under Obama. Now he is for the pittance of infrastructure Clinton wants in the hope she will name him Fed chief. ..."
"... The utter hysteria about Trump on the "left" is very illuminating . One judges a populist like Trump at one's peril. But the evidence strongly suggests that Hank Paulson and George Will--and others like them--understand Trump and Clinton quite well on domestic policy. She is the Republican--and as in 1964, a Goldwater Republican at that. He is on the left. The left does not want a left-wing policy. ..."
"... IS THERE THE MENTION OF THE WORD "LABOR UNION" IN THERE ANYWHERE -- ADMITTEDLY ONLY COMPLETELY MISSING IN THE US? ..."
"... When you have the US congress acting like a Roman senate but without a Ceasar, legislating left and right as if they are the supremos on the world stage and destroying anything and everything in their path and other world leaders following the orders of their masters in the US without questioning or even a say, how can one expect anything to work. ..."
[T]he experience in Latin America and southern Europe reveals perhaps a greater weakness of
the left: the absence of a clear program to refashion capitalism and globalization for the twenty-first
century. From Greece's Syriza to Brazil's Workers' Party, the left has failed to come up with
ideas that are economically sound and politically popular, beyond ameliorative policies such as
income transfers.
Economists and technocrats on the left bear a large part of the blame. Instead of contributing
to such a program, they abdicated too easily to market fundamentalism and bought in to its central
tenets. Worse still, they led the hyper-globalization movement at crucial junctures.
As the world reels from the Brexit shock, it is dawning on economists and policymakers that
they severely underestimated the political fragility of the current form of globalization. The popular
revolt that appears to be underway is taking diverse, overlapping forms: reassertion of local and
national identities, demand for greater democratic control and accountability, rejection of centrist
political parties, and distrust of elites and experts.
This backlash was predictable. Some economists, including me, did warn about the consequences of
pushing economic globalization beyond the boundaries of institutions that regulate, stabilize, and
legitimize markets. Hyper-globalization in trade and finance, intended to create seamlessly integrated
world markets, tore domestic societies apart.
The bigger surprise is the decidedly right-wing tilt the political reaction has taken. In Europe,
it is predominantly nationalists and nativist populists that have risen to prominence, with the left
advancing only in a few places such as Greece and Spain. In the United States, the right-wing demagogue
Donald Trump has managed to displace the Republican establishment, while the leftist Bernie Sanders
was unable to overtake the centrist Hillary Clinton.
As an emerging new establishment consensus grudgingly concedes, globalization accentuates
class divisions between those who have the skills and resources to take advantage of global markets
and those who don't. Income and class cleavages, in contrast to identity cleavages based on race,
ethnicity, or religion, have traditionally strengthened the political left. So why has the left been
unable to mount a significant political challenge to globalization?
One answer is that immigration has overshadowed other globalization "shocks." The perceived threat
of mass inflows of migrants and refugees from poor countries with very different cultural traditions
aggravates identity cleavages that far-right politicians are exceptionally well placed to exploit.
So it is not a surprise that rightist politicians from Trump to Marine Le Pen lace their message
of national reassertion with a rich dose of anti-Muslim symbolism.
Latin American democracies provide a telling contrast. These countries experienced globalization
mostly as a trade and foreign-investment shock, rather than as an immigration shock. Globalization
became synonymous with so-called Washington Consensus policies and financial opening. Immigration
from the Middle East or Africa remained limited and had little political salience. So the populist
backlash in Latin America – in Brazil, Bolivia, Ecuador, and, most disastrously, Venezuela – took
a left-wing form.
The story is similar in the main two exceptions to right-wing resurgence in Europe – Greece and
Spain. In Greece, the main political fault line has been austerity policies imposed by European institutions
and the International Monetary Fund. In Spain, most immigrants until recently came from culturally
similar Latin American countries. In both countries, the far right lacked the breeding ground it
had elsewhere.
But the experience in Latin America and southern Europe reveals perhaps a greater weakness of
the left: the absence of a clear program to refashion capitalism and globalization for the twenty-first
century. From Greece's Syriza to Brazil's Workers' Party, the left has failed to come up with ideas
that are economically sound and politically popular, beyond ameliorative policies such as income
transfers.
Economists and technocrats on the left bear a large part of the blame. Instead of contributing
to such a program, they abdicated too easily to market fundamentalism and bought in to its central
tenets. Worse still, they led the hyper-globalization movement at crucial junctures.
The enthroning of free capital mobility – especially of the short-term kind – as a policy
norm by the European Union, the Organization for Economic Cooperation and Development, and the IMF
was arguably the most fateful decision for the global economy in recent decades. As Harvard
Business School professor Rawi Abdelal has shown, this effort was spearheaded in the late 1980s and
early 1990s not by free-market ideologues, but by French technocrats such as Jacques Delors (at the
European Commission) and Henri Chavranski (at the OECD), who were closely associated with the Socialist
Party in France. Similarly, in the US, it was technocrats associated with the more Keynesian
Democratic Party, such as Lawrence Summers, who led the charge for financial deregulation.
France's Socialist technocrats appear to have concluded from the failed Mitterrand experiment
with Keynesianism in the early 1980s that domestic economic management was no longer possible, and
that there was no real alternative to financial globalization. The best that could be done was to
enact Europe-wide and global rules, instead of allowing powerful countries like Germany or the US
to impose their own.
The good news is that the intellectual vacuum on the left is being filled, and there is no
longer any reason to believe in the tyranny of "no alternatives." Politicians on the left have less
and less reason not to draw on "respectable" academic firepower in economics.
Consider just a few examples: Anat Admati and Simon Johnson have advocated radical banking
reforms; Thomas Piketty and Tony Atkinson have proposed a rich menu of policies to deal with inequality
at the national level; Mariana Mazzucato and Ha-Joon Chang have written insightfully on how to deploy
the public sector to foster inclusive innovation; Joseph Stiglitz and José Antonio Ocampo have proposed
global reforms; Brad DeLong, Jeffrey Sachs, and Lawrence Summers (the very same!) have argued for
long-term public investment in infrastructure and the green economy. There are enough elements here
for building a programmatic economic response from the left.
A crucial difference between the right and the left is that the right thrives on deepening divisions
in society – "us" versus "them" – while the left, when successful, overcomes these cleavages through
reforms that bridge them. Hence the paradox that earlier waves of reforms from the left – Keynesianism,
social democracy, the welfare state – both saved capitalism from itself and effectively rendered
themselves superfluous. Absent such a response again, the field will be left wide open for populists
and far-right groups, who will lead the world – as they always have – to deeper division and more
frequent conflict.
Dani Rodrik is Professor of International Political Economy at Harvard University's John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy and, most recently, Economics Rules: The Rights and Wrongs of the Dismal Science.
Tom Shillock JUL 12, 2016
The distribution of a society's benefits and burdens at any point in time is zero sum. Over
the past four decades financial deregulation, tax laws and numerous federal government
policies transferred the bulk of the gains from GDP to the upper class while causing numerous
financial crises (100+ according to Martin Wolf, The Shifts and The Shocks). Economists
have finally admitted that offshoring has resulted in the loss of American jobs. They no long
mention that only a few years they claimed that offshoring created newer and higher paying
American jobs. Isn't science wonderful. Middle and working class women went to work to
maintain living standards, eventually the middle and working classes resorted to debt
resulting in the Great Recession.
In addition to economic instability and decline of the lower orders the federal government
has sought to encourage immigration, H1-Bs, refugees and others. These people take jobs from
Americans (economist dogma notwithstanding) or reduce American incomes if they are not on
public assistance. The effects are working their way up the 'skill' level. This at a time
when middle and working class Americans lack universal health care, are being priced out of
higher education, lack job security, lack decent unemployment benefits and have one of the
worst social safety net in the OECD.
Self-styled American "liberals" don't seem to distinguish between the legitimate claims of
their fellow citizens and the sympathy or empathy for foreigners. Surely, citizens, especially
the middle and working classes, should have first claim to the country's resources; not the
rich and not foreigners. Citizens of a country also have a right to their culture, to not have
their taxes pay to suddenly impose large numbers of people from foreign cultures on them. Is
it an wonder that many Americans feel abandoned by their government?
America has never been a "melting pot" (Cf. Beyond the Melting Pot by Nathan Glazer and Daniel
Patrick Moynihan). Should it surprise that "liberals" provoke a backlash by trying to impose
their utopian idea of American society on Americans who have seen their economic prospects
decline for four decades with little prospect of improvement? Even Krugman has
characterized America as a plutocracy. Piketty argues that inequality will increase
absent countervailing policies. Yet the sudden success of Trump shows that many Americans
are too angry to listen to plans for distant economic melioration or to tolerate cultural
destabilization at the hands of government that no longer represents their interests, economic
or cultural. Liberals can castigate them and dismiss their political judgment but it might
help to spend some time trying to see the world from their perspective
Denis Drew JUL 12, 2016
" Consider just a few examples: Anat Admati and Simon Johnson have advocated radical
banking reforms; Thomas Piketty and Tony Atkinson have proposed a rich menu of policies to
deal with inequality at the national level; Mariana Mazzucato and Ha-Joon Chang have written
insightfully on how to deploy the public sector to foster inclusive innovation; Joseph
Stiglitz and José Antonio Ocampo have proposed global reforms; Brad DeLong, Jeffrey Sachs, and
Lawrence Summers (the very same!) have argued for long-term public investment in
infrastructure and the green economy. There are enough elements here for building a
programmatic economic response from the left. "
I wonder though if the hegemony of the economic perspective in modern society hasn't played
a vital role in both the abdication of the left AND the corruption of the right?
As they don't seem to fit into the equations and theories of the economists, both civic
virtue and public trust have been assigned an economic value of zero and factored out of the
"it's the ecomomy stupid" world view entirely. Or so it seems to me.
"Who's rich?" is an easier question to answer than "who's trustworthy."
Perhaps it isn't that "economic globalizations" has been pushed too far, but that the
reduction of all human values to economic terms has.
Jerry F. Hough Jun 11, 2016
I have long followed Dani's work and agreed with his general analysis. He has an unusual
knowledge of developing country politics, especially in Turkey and the Middle East
As a person involved for 55 years--really 60 years- in Soviet-American relations and policy
politics or now for the last 15 years research and teaching on American political history and
presidential politics, I would like to add a few points.
First, there are very few left-wingers on the left-wing. Free trade is Hayek applied to the
international sphere where there is no government at all and, except for some bankers and the
like, not even the common norms that Hayek substituted for government.
The Washington consensus was pure Hayek. Summers was the purest of the pure on the
Washington consensus. As Summers destroyed Yeltsin's good economic reform in 1993, Stiglitz
was his chief adversary in government. Stiglitz wrote about how utterly ideological Summers
was. And was under Obama. Now he is for the pittance of infrastructure Clinton wants in the
hope she will name him Fed chief.
Second, as we in Soviet studies understood, the left and right meet at the extremes and are
not that different. Nazi was appropriately named. Hitler was National Socialist -- truly awful
on the Nationalist side, but also quite socialist in domestic economic policy. Mussolini began
as a Communist.
The New Left and Goldwater right of the 1960s had a very different set of views from the
nationalistic socialists, but they were alike in being very, very similar in their libertarian
views. Russell KIrk and Gordon Tullock were right in calling them anarchisti.
The utter hysteria about Trump on the "left" is very illuminating . One judges a
populist like Trump at one's peril. But the evidence strongly suggests that Hank Paulson and
George Will--and others like them--understand Trump and Clinton quite well on domestic policy.
She is the Republican--and as in 1964, a Goldwater Republican at that. He is on the left. The
left does not want a left-wing policy.
In foreign policy the evidence is even stronger that Trump would transform American foreign
policy in the Middle East. Just as Nixon attacked "Communism" to reconcile with the Soviet
Union and, as his chief adviser on the Soviet Union says, Reagan had a military buildup to
prepare the public to accept real peace with the Soviet Union (and Obama had pro-Muslim
rhetoric to hide the giving of all power to Cheney's man Brenner and the killing of Muslims),
Trump's anti Muslim talk is almost surely a set-up for an anti-Netanyahu policy. The utter,
utter, utter hysteria of the Netanyahu lobby shows they understand.
But the American "left-wing" is the New Left of the 1960s. It rejected the Old Left and a
positive role for government. It was as libertarian in economics as in cultural life. Summers,
who was 18 years old in the 1972 of McGovern is the epitome. (Krugman was 19). Bill Clinton,
who conducted the libertarian revolution of 1992 was 26 in 1972.
This generation is passing. Trump, born in 1946, unfortunately, was raised in the
confrontational atmosphere and retains its spirit. but at least he was in business and not
part of the politics of the street. By the 2020s the millennials of the 1980s who came of age
from 2000 to 2015 will be in power for three decades and have a very different set of
assumptions.
Let us just hope the West survives until then. Read less
IS THERE THE MENTION OF THE WORD "LABOR UNION" IN THERE ANYWHERE -- ADMITTEDLY ONLY
COMPLETELY MISSING IN THE US?
As long as nobody else talks about re-unionization (as the beginning and the end of
re-constituting the American dream) - nobody thinks it is possible to talk about …
… or something.
Easy as pie to make union busting a felony in our most progressive states f(WA, OR, CA, NV,
IL, NY, MD) - and then get out of the way as the first 2000 people in the many telephone
directories re-define our future.
Do this or do nothing.
M M Jun 11, 2016
Dani, one should stop blaming migration (which is totally different from the refugees
influx) and the right, centre and left parties. Based on the latest UK and US events, it very
clear to the wise that none of these factors is a cause of the rise in nationalism or the
discontent by the population. When you have the US congress acting like a Roman senate but
without a Ceasar, legislating left and right as if they are the supremos on the world stage
and destroying anything and everything in their path and other world leaders following the
orders of their masters in the US without questioning or even a say, how can one expect
anything to work.
Enough of the passing of the buck and of blaming the abstract. All problems started since
this US administration came to office and due to its weakness or concealed collusion in
resolving the important issues affecting the US and the world economies.
"... In the late 1900s, it was Richard Mellon Scaife and later John M. Olin, who directed and slipped "Trojan-horses" of libertarian ideas into academic institutions, think tanks, courts, statehouses, Congress and finally, the presidency, most notably with the election of 2000. Now the Koch brothers engineer, through semi-annual secret meetings and Citizen United tax-free organizations, most of the efforts to topple democracy. ..."
"... As Republicans acted on the plutocratic plan to polarize and conquer, many predicted that GOP partisan demagoguery would reach a radical extreme, but maybe not be represented by the exploits of narcissist, Donald Trump. Perhaps, more shocking, well after the conservative campaign spread globally, was the British vote on Brexit. In fact, it was almost comical that a stooge of conservatives, David Cameron, confidently – even arrogantly - directed a vote he thought he was sure to win. ..."
"... The motivation for Trump supporters and Brexit voters is not too deep to fathom. Both are angry about inequality, unresponsive government, and institutions that don't work for them. Brexit voters, distrusting a pompous government, see their tormentors as immigrants competing for jobs. Trump supporters, confused about their real enemies, are looking for those unlike themselves as scapegoats. ..."
A natural progression has arisen 40 years after billionaires laid plans for a cultural revolution,
in large part by using fake
organizations of philanthropy – replete with tax breaks – to fund it. It was a masterful
- even outrageous - plan, to make American taxpayers help finance a campaign against us. Most of
their political activities were then and still are written off as tax-deductible "philanthropy."
With this bitter irony, I am sure a number of the corporate moguls "laugh their asses off," to put
it crudely.
In the late 1900s, it was Richard Mellon Scaife and later John M. Olin, who directed and slipped
"Trojan-horses" of libertarian ideas into academic institutions, think tanks, courts, statehouses,
Congress and finally, the presidency, most notably with the election of 2000. Now the Koch brothers
engineer, through semi-annual secret meetings and Citizen United tax-free organizations, most
of the efforts to topple democracy.
But the relentless exploitation of Americans did not end there. Add to that the outright fraud
and thievery by Wall Street of billions of dollars, taken from unsuspecting investors, retirement
funds, and consumers. Bogus investments and the effects of the 2008 recession trashed retirement
accounts for many Americans. Then their allies, the Bush administration, gave them taxpayer money
to bail out the dire impacts of their grifting, followed by the bankruptcy-fearing Obama administration.
The events have been predictable, though some, surprising. For example, in the US, if you really
studied financial conditions, you could have predicted the housing crash and the great recession,
results of unbridled greed and a deregulated Wall Street, events practically inviting abuse.
As Republicans acted on the plutocratic plan to polarize and conquer, many predicted that GOP
partisan demagoguery would reach a radical extreme, but maybe not be represented by the exploits
of narcissist, Donald Trump. Perhaps, more shocking, well after the conservative campaign spread
globally, was the British vote on Brexit. In fact, it was almost comical that a stooge of conservatives,
David Cameron, confidently – even arrogantly - directed a vote he thought he was sure to win.
The motivation for Trump supporters and Brexit voters is not too deep to fathom. Both are angry
about inequality, unresponsive government, and institutions that don't work for them. Brexit voters,
distrusting a pompous government, see their tormentors as immigrants competing for jobs. Trump supporters,
confused about their real enemies, are looking for those unlike themselves as scapegoats.
Meanwhile the GOP feeds the division in our country. They are the worst in terms of supporting
corporate moguls, but the Democrats are compromised as well.
Even Democrat Bill Clinton participated in permitting the mogul-managed, financial free-for-all
in 1999. He joined with Republicans in passing the Financial Services Modernization Act which
did away with restrictions on the integration of banking, insurance and stock trading imposed by
the Glass-Steagall Act of 1933. This act had barred commercial banks from engaging in speculative
ventures for almost seventy years and had served the country well, that is until Wall State executives
were made free to swindle – through their own casino capitalism.
The following year, the presidential election of 2000 helped cement a plutocratic takeover when
the conservative members of the Supreme Court appointed George W. Bush as president, stopping a recount
in the Florida election.
Governor Jeb Bush, with his secretary of state, Katherine Harris, oversaw the disenfranchisement
of thousands of black electors in Florida and made the vote closer than it otherwise would have been.
The Bush administration spread the fruits of the conservative revolution, one example being Olin-Foundation
educated John Yoo, the author of the Bush administration's "torture
memo."
The Great Recession of 2008 was
a predictable result of mixing the ingredients of deregulation, casino capitalism, corporate and
private entitlements, and unvarnished greed. Wall Street bankers made extraordinary sums of
money through fraud and never were held accountable. Meanwhile local crime in poorer communities
warranted long prison terms and overstuffed prisons.
Access of the rich to government through thousands of lobbyists and Citizens United elections
pushed the vast majority of Americans out of any government access. Impotency for the majority of
voters became the rule rather than the exception.
The declaration of war by billionaire interests, beginning in the 1970s, was a screaming success.
At the time, the people's government actually protected our environment against polluters, banning
DDT and monitoring drinking water.
The rich were beside themselves. This was not to be tolerated. Indeed, requiring the curtailing
of particle pollution in cities and requiring catalytic convertors on cars was a slap in the face
through the newly created Environmental Protection Agency (EPA). And protecting the people against
toxic foodstuffs and harmful drugs through another agency, the FDA, was downright unfriendly to the
"makers."
Their
Powell Manifesto presented a comprehensive plan of attack that would sweep a corporate culture
into all facets of American and - keeping pace with global developments - global life. With their
piles of money and a reach that swept into the media, courts, publishing, education, and all aspects
of the economy, they conquered.
In once what was a democracy, a peaceful revolution took place right under our noses. Installing
a dictatorship was not needed like pre-world-war-II Germany or the post-1912 Soviet Union or like
South American banana republics. It was done quite skillfully, surreptitiously, by billionaire interests
and billionaire money – with the help of taxpayers, don't forget.
It was a gradual evolution that two generations didn't really notice because others like the poor
were harmed first. The middle class got shafted only gradually: being overlooked for raises, losing
company retirements, manufacturing jobs going away, fringe benefits gradually cut, your share of
health care premiums going up or benefits going away, and privatization and subcontracting becoming
the rule.
Meanwhile, billionaires bought elections in several states. Wisconsin set unions against others
prejudiced by untold hours of watching and listening to right-wing talk shows; then gave tax breaks
to the rich and ruined a great education system. The GOP was installed in North Carolina mainly with
Art
Pope money and went wildly radical: lower taxes for the rich, polluting with coal ash, non-white
voter suppression, reverse Robin Hood, judges for sale, gutting public education and state-sponsored
religion.
The rich, who consider underlings children, perhaps, think that is what Christ meant when he said,
"Suffer my children"? His children did suffer under the coup.
Is this your America now? The democrats partially represent us. Labor union membership is stifled
and more jobs are being exported.
Deal with it, or just find someone other than rich corporate interests to blame – maybe non-whites
or immigrants.
James Hoover is a recently retired systems engineer. He has advanced degrees in
Economics and English. Prior to his aerospace career, he taught high school, and he has also taught
college courses. He recently published a science fiction novel called
Extraordinary
Visitors and writes political columns on several websites.
Read other articles by James.
John Quiggin (
previously ) delivers some of the most salient commentary on the Brexit
vote and how it fits in with Syriza, Podemos, Jeremy Corbyn, Bernie Sanders
(etc) as well as Trump, French neo-fascists, and other hypernationalist
movements.
The core of this analysis is that while neoliberalism(s) (Quiggin argues
that US and non-US neoliberalism are different things) has failed the majority
of the world, and while things were falling apart after the financial crisis,
the left failed to offer real alternatives. The "tribalist" movements --
Trump, Leave, Golden Dawn, etc -- are anti-neoliberal, but in the absence
of any analysis, have lashed out at immigrants (rather than bankers and
financial elites) as the responsible parties for their suffering.
The US political system gives us a choice between neoliberals who hate
brown people, women, and gay people; and neoliberals who don't. Trump offers
an anti-neoliberal choice (and so did the Leave campaign). Bernie also offered
an anti-neoliberal platform (one that didn't hate brown people, women, and
lgtbq people), but didn't carry the day -- meaning that the upcoming US
election is going to be a choice between neoliberalism (but tolerance) and
anti-neoliberalism (and bigotry). This is a dangerous situation, as the
UK has discovered.
The vote for Britain as a whole was quite close. But a closer look
reveals an even bigger win for tribalism than the aggregate results
suggest. The version of tribalism offered in the Leave campaign was
specifically English. Unsurprisingly, it did not appeal to Scottish
or Irish voters who rejected it out of hand. Looking at England alone,
however, Leave won comfortably with 53 per cent of the vote and was
supported almost everywhere outside London, a city more dependent than
any other in the world on the global financial system.
Given the framing of the campaign, the choice for the left was, even
more than usually, to pick the lesser of very different evils. Voting
for Remain involved acquiescence in austerity and an overgrown and bloated
financial system, both in the UK and Europe. The Leave campaign relied
more and more on coded, and then overt, appeals to racism and bigotry,
symbolised by the murder of Labour MP Jo Cox, stabbed to death by a
neo-Nazi with ties to extreme tribalist organizations in both the UK
and US. The result was a tepid endorsement of Remain, which secured
the support of around 70 per cent of Labour voters, but did little to
shift the sentiment of the broader public.
The big problem for the tribalists is that, although their program
has now been endorsed by the voters, it does not offer a solution to
the economic decline against which most of their supporters were protesting.
Indeed, while the catastrophic scenarios pushed by the Remain campaign
are probably overblown, the process of renegotiating economic relationships
with the rest of the world will almost certainly involve a substantial
period of economic stagnation.
The terms offered by the EU for the maintenance of anything like
existing market access will almost certainly include maintenance of
the status quo on immigration. In the absence of a humiliating capitulation
by the new pro-Brexit government, that will mean that Britain (or England)
will face a long and painful process of adjustment.
Britain has voted to leave the EU. The reason? A large section of the working class, concentrated in towns and cities that have
been quietly devastated by free-market economics, decided they'd had enough.
Enough bleakness, enough ruined high streets, enough minimum wage jobs, and enough lies and fearmongering from the political class.
The issue that catalysed the vote for Brexit was the massive, unplanned migration from Europe that began after the accession of
the A8 countries and then surged again after 2008 once the Eurozone stagnated while Britain enjoyed a limp recovery.
It is no surprise to anybody who's lived their life at the street end of politics and journalism that a minority of the white
working class are racists and xenophobes. But anyone who thinks half the British population fits that description is dead
wrong.
Tens of thousands of black and Asian people will have voted for Brexit, and similar numbers of politically educated, left-leaning
workers too. Birmingham, Nottingham, Sheffield and Coventry - multi-ethnic university cities - they too went for Leave.
Neither the political centre or the pro-remain left was able to explain how to offset the negative economic impact of low-skilled
migration in conditions of (a) guaranteed free movement (b) permanent stagnation in Europe and (c) austerity in Britain.
Told by the government they could never control migration while inside the EU, just over 50% of the population decided controlling
migration was more important than EU membership.
So the problem for Labour is not, yet, large numbers of its own voters "deserting the party". They may still do so if Labour plays
this wrong - but even as late as the May council elections Labour's core vote held up.
Instead Labour's heartland voters simply decided to change the party's policy on migration from below, and forever, by
leaving the EU.
The party's front bench tried, late and in a muddled way, to come up with micro-economic solutions - more funds for areas where
the NHS and schools come under strain; a new directive to prevent employers shipping entire workforces from East Europe on poor terms
and conditions. And a promise to renegotiate the free movement pillar of the Lisbon Treaty in the future.
Because it was made late, and half-heartedly, this offer was barely heard. And clearly to some it did not seem plausible - given
the insistence of the Labour centre and the liberal bourgeoisie that migration is unmitigatedly good and "there's nothing you can
do about it". And also given the insistence of Jean Claude Juncker that there could be no renegotiation at all.
Ultimately, as I've written before, there is
a
strong case for "Lexit" on grounds of democracy and economic justice. But this won't be Lexit. Unless Labour can win an early
election it will be a fast-track process of Thatcherisation and the breakup of the UK.
Unlike me, however, many people who believe in Lexit were prepared to vote alongside right wing Tories to get to first base.
The task for the left in Britain now is to adapt to the new reality, and fast. The Labour right is already trying to pin the blame
on Corbyn; UKIP will make a play for Labour's voters. Most likely there'll be a second independence referendum in Scotland.
Corbyn was right to try and fight on "remain and reform" but his proposed reforms were never radical enough. He was also right
to devote energy to other issues - making the point that in or out of the EU, social justice and public services are under threat.
But the right and centre of Labour then confused voters by parading along with the Tory centrists who Corbyn had promised never to
stand on a platform with.
The Blairite Progress group is deluded if it thinks it can use this moment to launch a coup against Corbyn. The neoliberal wing
of the Labour Party needs to realise - it may take them a few days - that their time is over.
Ultimately it looks like Labour still managed to get 2/3 of its voters to voter Remain [I'll check this but that's what YouGov
said earlier]. So the major failure is Cameron's. It looks like the Tory vote broke 60/40 to Brexit.
It's possible Cameron will resign quickly. But that's not the issue. The issue is the election and what to fight for.
Labour has to start, right now, a big political reorientation. Here is my 10 point suggestion for how we on the left of Labour
go forward.
1. Accept the result. Labour will lead Britain out of EU if it wins the election.
2. Demand an election within 6–9 months: Cameron has no mandate to negotiate Brexit. The parties must be allowed to put their
respective Brexit plans to the electorate and thereafter run the negotiations. In that Labour should:
3. Fight for Britain to stay in the EEA and apply an "emergency brake" to migration under the rules of the EEA. That should be
a Labour goverment's negotiating position.
4. Labour should fight to keep all the EU's progressive laws (employment, environment, consumer protection etc) but scrap restrictions
on state aid, trade union action and nationalisation. If the EU won't allow that, then the fallback is a complete break and a bilateral
trade deal.
5. Adopt a new, progressive long-term migration policy: design a points based system designed to respond annually to demand from
employers and predicted GDP growth; make parliament responsible for setting the immigration target annually on the basis of an independent
expert report; the needs of the economy - plus the absolute duty to accept refugees fleeing war and torture - is what should set
the target, not some arbitrary ceiling. And devote massively more resources than before to meeting the stresses migration places
on local services.
6. Continue to demand Britain honours its duty to refugees to the tune of tens of thousands. Reassure existing migrant communities
in Britain that they are safe, welcome and cannot be expelled as a result of Brexit. Offer all those who've come here from Europe
under free movement rules the inalienable right to stay.
7. Relentlessly prioritise and attack the combined problems of low wages, in-work poverty and dead-beat towns.
8. Offer Scotland a radical Home Rule package, and create a federalised Labour Party structure. If, in a second referendum, Scotland
votes to leave the UK, Labour should offer a no-penalty exit process that facilitates Scotland rejoining the EU if its people wish.
In the meantime Labour should seek a formal coalition with the SNP to block a right wing Tory/UKIP government emerging from the next
election.
9. Offer the Republic of Ireland an immediate enhanced bilateral deal to keep the border open for movement and trade.
10. The strategic problem for Labour remains as before. Across Britain there have crystallised two clear kinds of radicalism:
that of the urban salariat and that of the low-paid manual working class. In Scotland those groups are aligned around left cultural
nationalism. In England and Wales, Labour can only win an election if it can attract both groups: it cannot and should not retreat
to becoming a party of the public sector workforce, the graduate and the university town. The only way Labour can unite these culturally
different groups (and geographic areas) - so clearly dramatised by the local-level results - is economic radicalism. Redistribution,
well-funded public services, a revived private sector and vibrant local democracy is a common interest across both groups.
11. If Labour in England and Wales cannot quickly rekindle its ties to the low-paid manual working class - cultural and visceral,
not just political - the situation is ripe for that group to swing to the right. This can easily be prevented but it means a clean
break with Blairism and an end to the paralysis inside the shadow cabinet.
From my social media feed it's clear a lot of young radical left people and anti-racists are despondent. It seems they equated
the EU with internationalism; they knew about and sympathised with the totally disempowered poor communities but maybe assumed it
was someone else's job to connect with them.
I am glad I voted to Remain, even though I had to grit my teeth. But I underestimated the sheer frustration: I'd heard it clearly
in the Welsh valleys, but not spotted it clearly enough in places like Barking, Kettering, Newport.
I am not despondent though. The Brexit result makes a radical left government in Britain harder to get - because it's likely Scotland
will leave, and the UK will disingegrate, and the Blairites will go off and found some kind of tribute band to neoliberalism with
the Libdems.
But if you trace this event to its root cause, it is clear: neoliberalism is broken.
There's no consent for the stagnation and austerity it has inflicted on people; there's nothing but hostility to the political
class and its fearmongering - whether that be Juncker, Cameron or the Blairites. As with Scotland, given the chance to disrupt the
institutions of neoliberal rule, people will do so and ignore the warnings of experts and the political class.
I predicted in Postcapitalism that the crackup of neoliberalism would take geo-strategic form first, economic second. This is
the first big crack.
It is, geopolitically, a victory for Putin and will weaken the West. For the centre in Europe it poses the question point blank:
will you scrap Lisbon, scrap austerity and boost economic growth or let the whole project collapse amid stagnation? I predict they
will not, and that the entire project will then collapse.
All we can do, as the left, is go on fighting for the interests of the poor, the workforce, the youth, refugees and migrants.
We have to find better institutions and better language to do it with. As in 1932, Britain has become the first country to break
with the institutional form of the global order.
If we do have a rerun of the 1930s now in Europe, we need a better left. The generation that tolerated Blairism and revelled in
meaningless centrist technocracy needs to wake up. That era is over.
"... Class, nationalist, and ethnic elements are all involved in the Brexit vote in a complex integration of protest. ..."
"... Press and media emphasize the nationalist and ethnic (immigrant-anti-immigrant) themes but generally avoid discussing or analyzing
the event from a class perspective. But that perspective is fundamental. What Brexit represents is a proxy vote against the economic
effects of Free Trade, the customs union called the European Union. Free trade deals always benefit corporations and investors. ..."
"... Free trade is not just about goods and services flows between member countries; it is even more about money and capital flows
and what is called direct investment. UK corporations benefit from the opportunity to move capital and invest in cheap labor elsewhere
in Europe, mostly the newly added members to the EU since 2000, in eastern europe. Free trade also means the unrestricted flow of labor.
Once these east european countries were added to the EU treaty, massive inflows of labor to the UK resulted. Just from Poland, more
than a million migrated to the UK alone. ..."
Class, nationalist, and ethnic elements are all involved in the Brexit vote in a complex integration of protest.
Press and media emphasize the nationalist and ethnic (immigrant-anti-immigrant) themes but generally avoid discussing or analyzing
the event from a class perspective. But that perspective is fundamental. What Brexit represents is a proxy vote against the economic
effects of Free Trade, the customs union called the European Union. Free trade deals always benefit corporations and investors.
Free trade is not just about goods and services flows between member countries; it is even more about money and capital flows
and what is called direct investment. UK corporations benefit from the opportunity to move capital and invest in cheap labor elsewhere
in Europe, mostly the newly added members to the EU since 2000, in eastern europe. Free trade also means the unrestricted flow of
labor. Once these east european countries were added to the EU treaty, massive inflows of labor to the UK resulted. Just from Poland,
more than a million migrated to the UK alone.
In the pre-2008, when economic conditions were strong and economic growth and job creation the rule, the immigration's effect
on jobs and wages of native UK workers was not a major concern. But with the crash of 2008, and, more importantly, the UK austerity
measures that followed, cutting benefits and reducing jobs and wages, the immigration effect created the perception (and some reality)
that immigrants were responsible for the reduced jobs, stagnant wages, and declining social services. Immigrant labor, of course,
is supported by business since it means availability of lower wages. But working class UK see it as directly impacting wages, jobs,
and social service benefits. THis is partly true, and partly not.
So Brexit becomes a proxy vote for all the discontent with the UK austerity, benefit cuts, poor quality job creation and wage
stagnation. But that economic condition and discontent is not just a consequence of the austerity policies of the elites. It is also
a consequence of the Free Trade effects that permit the accelerated immigration that contributes to the economic effects, and the
Free Trade that shifts UK investment and better paying manufacturing jobs elsewhere in the EU.
So Free Trade is behind the immigration and job and wage deterioration which is behind the Brexit proxy vote. The anti-immigration
sentiment and the anti-Free Trade sentiment are two sides of the same coin. That is true in the USA with the Trump candidacy, as
well as in the UK with the Brexit vote. Trump is vehemently anti-immigrant and simultaneously says he's against the US free trade
deals. This is a powerful political message that Hillary ignores at her peril. She cannot tip-toe around this issue, but she will,
required by her big corporation campaign contributors.
Another 'lesson' of the UK Brexit vote is that the discontent seething within the populations of Europe, US and Japan today is
not accurately registered by traditional polls. This is true in the US today as it was in the UK yesterday.
The Brexit vote cannot be understood without understanding its origins in three elements: the combined effects of Free Trade (the
EU), the economic crash of 2008-09, which Europe has not really recovered from having fallen into a double dip recession 2011-13
and a nearly stagnant recovery after, and the austerity measures imposed by UK elites (and in Europe) since 2013.
These developments have combined to create the economic discontent for which Brexit is the proxy. Free Trade plus Austerity plus
economic recovery only for investors, bankers, and big corporations is the formula for Brexit.
Where the Brexit vote was strongest was clearly in the midlands and central England-Wales section of the country, its working
class and industrial base. Where the vote preferred staying in the EU, was the non-working class areas of London and south England,
as well as Scotland and Northern Ireland. Scotland is dependent on oil exports to the EU and thus tightly linked to the trade. Northern
Ireland's economy is tied largely to Scotland and to the other EU economy, Ireland. So their vote was not surprising. Also the immigration
effects were far less in these regions than in the English industrial heartland.
Some would argue that the UK has recovered better than most economies since 2013. But a closer look at the elements of that recovery
shows it has been centered largely in southern England and in the London metro area. It has been based on a construction-housing
boom and the inflow of money capital from abroad, including from China investment in UK infrastructure in London and elsewhere. The
UK also struck a major deal with China to have London as the financial center for trading the Yuan currency globally. Money capital
and investment concentrated on housing-construction produced a property asset boom, which was weakening before the Brexit. It will
now collapse, I predict, by at least 20% or more. The UK's tentative recovery is thus now over, and was slipping even before the
vote.
Also frequently reported is that wages had been rising in the UK. This is an 'average' indicator, which is true. But the average
has been pulled up by the rising salaries and wages of the middle class professionals and other elements of the work force in the
London-South who had benefited by the property-construction boom of recent years. Working class areas just east of London voted strongly
for Brexit.
Another theme worth a comment is the Labor Party's leadership vote for remaining in the EU. What this represents is the further
decline of traditional social democratic parties throughout Europe. These parties in recent decades have increasingly aligned themselves
with the Neoliberal corporate offensive. That's true whether the SPD in Germany, the Socialist parties in France, Spain, Italy, Portugal,
and Greece, or elsewhere. As these parties have abdicated their traditional support for working class interests, it has opened opportunities
for other parties–both right and left–to speak to those interests. Thus we find right wing parties growing in Austria, France (which
will likely win next year's national election in France), Italy, Netherlands, and Scandinavia. Hungary and Poland's right turn should
also be viewed from this perspective. So should Podemos in Spain, Five Star movement in Italy, and the pre-August 2015 Syriza in
Greece.
Farther left more marxist-oriented socialist parties are meanwhile in disarray. In general they fail to understand the working
class rebellion against free trade element at the core of the recent Brexit vote. They are led by the capitalist media to view the
vote as an anti-immigrant, xenophobic, nationalist, right wing dominated development. So they in a number of instances recommended
staying in the EU. The justification was to protect the better EU mandated social regulations. Or they argue, incredulously, that
remaining in the free trade regime of the EU would centralize the influence of capitalist elements but that would eventually mean
a stronger working class movement as a consequence as well. It amounts to an argument to support free trade and neoliberalism in
the short run because it theoretically might lead to a stronger working class challenge to neoliberalism in the longer run. That
is intellectual and illogical nonsense, of course. Wherever the resistance to free trade exists it should be supported, since Free
Trade is a core element of Neoliberalism and its policies that have been devastating working class interests for decades now. One
cannot be 'for' Free Trade (i.e. remain in the EU) and not be for Neoliberalism at the same time–which means against working class
interests.
The bottom line is that right wing forces in both the EU and the US have locked onto the connection between free trade discontent,
immigration, and the austerity and lack of economic recovery for all since 2009. They have developed an ideological formulation that
argues immigration is the cause of the economic conditions. Mainstream capitalist parties, like the Republicans and Democrats in
the US are unable to confront this formulation which has great appeal to working class elements. They cannot confront it without
abandoning their capitalist campaign contributors or a center-piece (free trade) of their neoliberal policies. Social-Democratic
parties, aligning with their erstwhile traditional capitalist party opponents, offer no alternative. And too many farther left traditional
Marxist parties support Free Trade by hiding behind the absurd notion that a stronger, more centralized capitalist system will eventually
lead to a stronger, more centralized working class opposition.
Whatever political party formations come out of the growing rebellion against free trade, endless austerity policies, and declining
economic conditions for working class elements, they will have to reformulate the connections between immigration, free trade, and
those conditions.
Free Trade benefits corporations, investors and bankers on both sides of the 'trade' exchange. The benefits of free trade accrue
to them. For working classes, free trade means a 'leveling' of wages, jobs and benefits. It thus means workers from lower paid regions
experience a rise in wages and benefits, but those in the formerly higher paid regions experience a decline. That's what's been happening
in the UK, as well as the US and north America.
Free Trade is the 'holy grail' of mainstream economics. It assumes that free trade raises all boats. Both countries benefit. But
what that economic ideology does not go on to explain is that how does that benefit get distributed within each of the countries
involved in the free trade? Who benefits in terms of class incomes and interests? As the history of the EU and UK since 1992 shows,
bankers and big corporate exporters benefit. Workers from the poor areas get to migrate to the wealthier (US and UK) and thus benefit.
But the indigent workers in the former wealthier areas suffer a decline, a leveling. These effects have been exacerbated by the elite
policies of austerity and the free money for bankers and investors central bank policies since 2009.
So workers see their wages stagnant or decline, their social benefits cut, their jobs or higher paid jobs leave, while they see
immigrants entering and increasing competition for jobs. They hear (and often believe) that the immigrants are responsible for the
reduction of benefits and social services that are in fact caused by the associated austerity policies. They see investors, bankers,
professionals and a few fortunate 10% of their work force doing well, with incomes accelerating, while their incomes decline. In
the UK, the focus and solution is seen as exiting the EU free trade zone. In the US, however, it's not possible for a given 'state'
to leave the USA, as it is for a 'state' like the UK to leave the EU. And there are no national referenda possible constitutionally
in the US.
The solution in the US is not to build a wall to keep immigrants out, but to tear down the Free Trade wall that has been erected
by US neoliberal policies in order to keep US jobs in. Trump_vs_deep_state has come up with a reactionary solution to the free trade-immigration-economic
nexus that has significant political appeal. He proposes stopping labor flows, but proposes nothing concrete about stopping the cross-country
flows of money, capital and investment that are at the heart of free trade.
"... look on with sadness as some industries in the UK are destroyed by arbitrary rules from the EU, and wayward countries like Greece are trashed, while elites in the EU appear to lose complete touch with everyday people. ..."
"... Money and investment was promised ten times over while nobody could really explain how trade deals really benefit everyday people or how arts science and sport get a lot of support from the EU. Some politicians just wanted extra power for their own agendas like curbing unions while it appeared that every politician was still back in the 1980s trying to re open the issues from back then rather than dealing with today's issues of globalisation, automation and ageing populations ..."
"... Rust cities and towns largely voted to exit. ..."
...I am unhappy that the commissioner system in the EU can over rule all democratic process,
look on with sadness as some industries in the UK are destroyed by arbitrary rules from the
EU, and wayward countries like Greece are trashed, while elites in the EU appear to lose complete
touch with everyday people.
In the run up to the election we saw disgraceful behaviour from both sides of the argument
while others were too afraid to enter the fray. Money and investment was promised ten times
over while nobody could really explain how trade deals really benefit everyday people or how arts
science and sport get a lot of support from the EU. Some politicians just wanted extra power for
their own agendas like curbing unions while it appeared that every politician was still back in
the 1980s trying to re open the issues from back then rather than dealing with today's issues
of globalisation, automation and ageing populations (Perhaps John Hempton at bronte capital
is right and its all about delayed consumption).
Much of the tabloid media cheer leaded anything that would sell rather than informing. Obama
visited and was too subtle in explaining that if you have less negotiating power then things like
your governments right to set drug prices might be negotiated away (bye bye NHS)
Looking at the vote then there are some noticeable trends and implications some of which Yves
has touched upon.
Rust cities and towns largely voted to exit.
Cosmopolitan cities were more favourable to remaining.
Scotland and Northern Ireland see English Politics as completely irrelevant to them.
London is afraid of what Boris Johnson might do if given more power.
The political left does not have a consistent message.
Rural areas who by and large have not seen much immigration want investment rather than
austerity.
A lot of people voted on gut instinct in the end.
The older generation want a return to the 1960s regardless of whether the world has changed
and it is achievable.
The most striking difference in voting was between young people and older people.
"... If the left argues for immigration controls, however, it seems to be making concessions to racial-ethnic-national-or-whatever bigotry. So what is the proper approach to take? Some policy expertise informed by egalitarianism and internationalism in equal measure would be pretty valuable. ..."
We should favor redistributive policies because they are the right thing to
do–they are normatively just and humane, period. But we shouldn't necessarily
believe they will engender cosmopolitan solidarity. White workers have social
democratic alternatives in Scandinavia and they are anxiously moving toward
tribalism there, too. The most hopeful sign is that this is more age-related
than anything else and that the shoots of cosmopolitan leftism among young
people in major cities in North America and Canada will be the harbinger of a
politics that honors both demographic difference and economic and social
egalitarianism.
Omega Centauri
06.27.16 at 12:22 am
Thanks, its pretty clarifying to have the view from orbit, rather than that of
someone stuck in the forest.
T @14. Well Trump is riding the tribalism wave.
He is what some have termed a political entrepreneur, going after the
opportunities he see's. In many ways he and his supporters are motivated by
sticking it to the man, in this case the economic/political elite. That was
probably a big part of Leave as well, sticking it to both the EU, and those
financial manipulators who have gentrified London, and driven the "real" people
out. In a very real sense, these movements seem to be first about getting even.
Thinking about what follows, comes later (when it will be too late).
jake the antisoshul soshulist
06.27.16 at 1:33 am
Anti-globalization may be the primary driving force behind Trump_vs_deep_state, even
moreso than immigration, though for many immigration is part and partial of
globalization.
Often the concerns are directed toward crony-capitalism. There may be some
basis for this claim, but they blame this on the left, even though the swinging
door between government and business is an ecumenical problem.
bad Jim
06.27.16
at 3:12 am
A masterful piece. Thanks.
American politics is strongly flavored by its
history, most notoriously by the original sin of slavery, but crucially by its
distance from the rest of the developed world. Within my lifetime it was the
dominant economic force, the unquestioned giant of manufacturing, simply
because its competitors had been devastated by World War II. This was a
privileged situation as unsustainable and undesirable as slavery had been, but
its loss is still keenly felt, although nowadays we're blaming the Mexicans and
Chinese instead of the Germans and Japanese.
America's inequality is worse than even the U.K. We tolerate far higher
levels of executive compensation than anyone else. Low levels of taxation for
unearned income are more likely its result than its cause. The decimation of
unions is certainly a major factor, but even that appears to be as much culture
as calculation; not many members of my liberal family are pro-union, even
though my father and grandfather were union members.
At least we honor the memory of Roosevelt, and a weak Keynesian stimulus is
our traditional response to economic upheaval
DMC
06.27.16 at
3:26 am
Good over all, especially in presenting a counter narrative to the overwhelming
MSM meme(or is it a trope) of "the hordes of drooling blackshirts and football
hooligans propelling the Leave vote". Hard or soft, the EU was a neo-liberal
cake when it was baked and the ECB was going to serve the bond holders and not
the member states. There are reasons perfectly serious, liberal people
preferred Brexit. Not all arguments about national sovereignty are about
immigration(though they are readily hijacked in that direction). With the
example of Greece fresh before their eyes and the EU South(Spain Italy,
Portugal) teetering on the brink of insolvency, I can well imagine any number
of voters concluding that it was time to jump ship while the jumping was good.
merian
06.27.16
at 3:45 am
Apologies I let myself be dragged into participating in a thread derail by
cassander, who keeps misrepresenting what I'm saying - as usual, while we're
discussing Europe, the debate turns to the US. Sigh.
To return to tribalism and neoliberalism in the light of what's going on, I
still believe that JQ is basically quite right - and that the behaviour of
whoever represents the hard-neoliberal option (US Republicans, Tories…) has set
parts of their own constituency onto the "tribalism" course. For example by
stopping to do their legislative duty, not voting on budgets, not holding
confirmation hearings for supreme court judges in the US; or blatantly serving
the interests of hereditary moneyed families and just implementing policy after
policy that doesn't work in the UK and France; etc. And the soft-neoliberals
have lost part of *their* traditional constituency to the tribalists because
they correctly perceive that these leaders don't work in their interest.
Frederick Arehart
06.27.16 at 4:25 am
It's simply hard to take seriously anyone who claims the Leave people were all
racists and xenophobes. Like the people who voted to Leave, Islam is a spectrum
of believers. The problem is the group that is radical and violent is seen by
the clerics to be a legitimate part of the spectrum and is Wahhabi in it's
source.
The Saudis are of the Wahhabi sect. For years they have funded
Wahhabi schools and the exporting of their graduates.
What seems to be forgotten is that ISIS is Wahhabi in nature. Wahhabis are
the radical conservatives. How many Wahhabi Imam's are in Britain? That's the
scary question.
Again, most Muslims if left alone would assimilate nicely; just like other
groups have.
Unfortunately, they are not left alone and since Wahhabism is viewed as a
legitimate part if not THE greatest part of the Sunnis, they are not condemned.
Sharia is their end game.
Thank you for finally giving CT a reasonably clear statement of the difference
between the American and the metric-system senses of "neoliberalism." However,
the American sense had only a brief vogue in America, and now there is complete
confusion about how to apply the term there.
" It involved an attempt by
former liberals (in the US sense) and social democrats to accommodate to the
demands of financial markets while still softening the edges of capitalism and
maintaining a more active role for the state in filling the gaps left by market
provision of services. This 'soft' neoliberalism was exemplified by the (Bill)
Clinton administration in the United States and the Blair government in the UK
and was prefigured, in important respects, by the Hawke-Keating government in
Australia."
I'm not really sure what this means. It wasn't the demands of financial
markets that Bill Clinton was trying to accommodate. It was the demands of
voters. People on the left who condemn Clinton as a sellout conveniently forget
that before 1992 the Democrats had lost *five of the last six* Presidential
elections (the sixth was won by a conservative Democrat). Those five elections
included two absolutely crushing electoral-college landslides, the first (1976)
involving a candidate from the left wing of the Democratic Party, the second
(1984) involving the epitome of New Deal liberalism. By any reasonable standard
the voters had decisively rejected what the Democratic Party had to offer.
(Something similar before Blair, no?) So Clinton tried something else. Not only
did he preside over what working people remember (I think) as a good time in US
history, he also is the reason that liberal are near a majority on the Supreme
Court instead of an irrelevant minority.
There's this itch on the left to refer to H. Clinton as a "neoliberal"
(though the term has only recently come into use in the US), but this seems to
be nothing more than invective. When you get down to policy positions the
differences between Clinton and Sanders seem to be pretty small; Sanders has
done his best to magnify hem, presumably so he can make the case that she is a
tool of Wall Street or some other oligarchs (though he never quite says that
she is). So Clinton's support for Dodd-Frank, which certainly puts her at odds
with Wall Street, is treated as trivial compared to he failure to endorse
restarting the Glass-Steagal Act. Clinton doesn't just differ with Sanders
about fracking; she differs with him (it is implied) *because* she is in the
pocket of the energy industry. And so on. So I would advise caution about
trying to fit American politics into the Procrustean bed of theory.
This is a great opportunity for the people to free themselves from the toxic
objective of endless economic growth. The alternative of the steady state
economy has been with us for 168 years and the change is long overdue. We can
do it by means of incremental steps but it is important above all to have a
clear idea of the destination. To find out more go to
http://www.steadystate.org
Hidari
06.27.16
at 6:01 am
'The surprising decision by English and Welsh (though not Scottish and Northern
Irish) voters to leave the European Union can only be understood in the broader
context of the breakdown of the ideological consensus that dominated politics
throughout the world until the Global Financial Crisis.'
Just a little note
to back up your point: there was an article in the Independent which I can no
longer find which pointed out that in the Welsh speaking areas of Wales (where
Plaid Cymru is strong), Remain won.
In other words, in Northern Ireland, Scotland and the nationalist parts of
Wales, Remain won. In other words again, where there was a strong, coherent,
counter-narrative to the dominant one of Brexit (which was framed very strongly
in terms of English nationalism), remain won. But in all these cases the
counter-narrative was also framed in nationalist terms.
What we should infer from this is a cliche, but nevertheless true. 'Man does
not live by bread alone'. People need narratives to make sense of their lives.
Throughout most of the capitalist/industrialist era, for working people this
was either religion and/or socialism/communism/marxism/social democracy…call it
what you will. With this gone (and in the United States it was only weakly
there) religion has resurged (in 'immigrant' communities) and, of course,
nationalism has stepped in to fill the void in non-religious (i.e. mainly
white) communities.
In a more extreme form, of course, we can see this in the middle east where
as marxism has declined, religiosity has increased, and in the United States,
with the appearance of Trump ('left wing' concerns over jobs etc, an
isolationist foreign policy, and white nationalism/racism).
Blairism/Clintonism was an attempt to paper over the cracks and create a
sort of non-left wing left wing (i.e. essentially right wing in terms of
economics but with a patina of social liberalism). For a long time it looked
succesful, but ultimately it failed because it lacked the emotional substance
that religion, nationalism and socialism/marxism could provide.
The three-party system is a masterful contribution and it fits perfectly the
Brexit referendum.
Because labels inherited from the former period are bound
to be ill-adjusted for the new one, I personally came up with the following
tripartition in terms of ideology: the first group is roughly characterized by
its giving priority to the mitigation of inequalities on the socio-economic
front, the rise of which it considers of paramount of importance, and the
mitigation of the impact of humanity on the ecosystem on the global front; the
second considers the competitiveness and efficiency of the economy to be the
most important topic while the third gives priority to the enforcement of
reactionary modes of dominations (reactionary rather than traditional because,
in 2016, it is clear that any reference to a traditional past is purely
rhetorical and bares little ressemblance to any actual past).
The addendum I would like to add to the three-party system theory, and one
which goes a long way to explaining why "the process of developing a coherent
alternative has barely begun" on the left, is that these three distinct and
coherent ideologies do not correspond to three stable, coherent social groups.
The core of the third group is formed of uneducated workers occupying
intermediate job positions in peripheral areas. Under the current organization
of the economy and society of western democracies, this is a highly stable
group: in the absence of significantly more financial or intellectual capital
than typically possessed by members of this group, social mobility is far too
low for the statistical significance of someone or her children reaching a
higher social position.
The second group is also pretty stable: its core is formed of dynamic,
educated professionals in economically favored central areas; a tiny group but
with a very high aptitude to reproduce itself (for exactly the same reason that
the third does).
However, the first group-whose core is formed of educated people in dynamic
areas with middle wealth-is not stable: they are educated enough to be able to
reach in significant proportion the second group and share enough of their life
conditions (starting with the geography) to feel a real proximity to them.
Under current situations, a frank political breaking with the second group thus
seems to me unthinkable: young college-graduate enthusiastic Sanders supporters
will vote for Clinton en masse, young educated Scotts will probably vote to
secede from the UK to remain in the EU and perhaps rejoin the eurozone… two
choices which are probably vastly preferable to their most credible alternative
(a Trump presidency and a brexit UK) but which will also probably lead to ever
rising inequalities and ever threatening anthropogenic climate change.
If this somewhat depressing analysis is correct, it is high time that the
core of the first group (i.e us reading CT right now) seriously and forcefully
starts thinking about how to drastically change the material life of the core
of the third group: yes, they vote for absurd and scary policies based on crude
nativist arguments; yes, they are out to smash every institutions dear to the
first group, but that does not change the fact that the current system offers
them no realistic way of improving their lives or that of their children.
Charles Peters of the Washington Monthly wrote "A Neoliberal Manifesto" back in
the 80's. It was the sort of good-government stuff to be expected from that
venerable publication, rather more liberal than the DLC tendency approximated
but not exemplified by the Clinton administration.
It's frustrating to try to
define Democratic presidents, because they only have two years to shove their
communistic tendencies down the throats of the public before the reaction sets
in, which is why we're still on tenterhooks hoping to keep Obama's feeble
advances alive. Bear in mind that many of our sovereign states continue to
refuse to accept free health care for poor people.
JQ
The project of European unification, embodied in the European Union and its
associated institutions was, in its origins, a classic example of soft
neoliberalism. Its central aim was the removal of barriers to the flow of
goods, people and money across national borders within Europe.
Raven
Onthill @ 42
The point of the European Union was to make and keep peace.
I have been around long enough to think that JQ may be right about 'what
actually happened' but Raven Onthill is right about the leftwing,
internationalist ideal of peace. The EU may have strayed far from that – but
that is the ideal that Corbyn could have defended with a passion.
There are children whose grandparents or great grandparents fought on the
opposite sides in the second world war in Europe. There are delicacies even now
in those family relationships – I know from my own experience – but we do the
best we can, with goodwill. That, in human terms, is an example of what the
ideal of the EU means, and why people might feel so hurt at an apparent
betrayal of it.
Seconding Hidari @64, in the original thread on the three-party system, I wrote
The reality of the world today is that whatever converging trend between
advanced societies which might have existed in the 1945-1980 period has now
come to an end and has been reversed, with the norm being increasing divergence
alongside cultural, historical and anthropological lines which coincide roughly
with national borders.
[…]
[T]here are no left policies anymore: there are German left policies
(inspired by German values, social conditions, history…), British left policies
(ditto, and they differ from Scottish left policies), American left policies
(ditto), French left policies (ditto)…
The results of the Brexit referendum, with England alone choosing to secede
from the EU, is as clear an empirical illustration of this thesis as one could
possibly imagine.
It would be a stretch to ascribe all the blame for America's stark inequality
to slavery and genocide, but given the size of the Confederacy, and its history
as the bulk of the Democratic party, reliably opposed to Wall Street, it's not
that hard to understand why, given the challenges and the opportunities of the
Depression and the Roosevelt administration, our social infrastructure wound up
being so limited and mean-spirited.
Why don't we have universal health care?
Every Democrat since Roosevelt has attempted it, but they also did things to
ameliorate racial discrimination, and that was the end of any further progress.
It's no coincidence that only our first black president could finally cobble
together a pathetic collection of health care reforms, barely a first attempt
at the state of affairs taken for granted in most competent countries, and get
it passed. This is a big fucking deal, as Biden said. It's not very good, but
after fifty years of failing, I'm gratified.
If we can win another couple of elections it might become as much a part of
our lives as Social Security and Medicare.
64: "Blairism/Clintonism was an attempt to paper over the cracks and create a
sort of non-left wing left wing (i.e. essentially right wing in terms of
economics but with a patina of social liberalism). For a long time it looked
succesful, but ultimately it failed because it lacked the emotional substance
that religion, nationalism and socialism/marxism could provide."
I agree. The
emotional substance of "meritocratic winners will be handsomely rewarded,
losers will still benefit from the hearty crumbs" is pretty powerful in its own
narrow way, until the cronyism, abject subservience to corporate interests, and
abandonment of the public sphere become apparent. The losers vastly outnumber
the winners. It took a couple of decades of bubbles bursting and a shrinking
middle class for that to sink in. And a little help from OWS and Citizens
United (at least in the US).
I'm encouraged by the many US students who don't blink at the word
"socialism" and seem uninterested in Trump's version of nationalism. There's
some kind of emotional valence in socialism for many of them. Understandably
so, given the debt crisis and brutal job market (unpaid internships, for
starts).
Well done. I read this immediately after I had published a similar post on
ObsidianWings and was stunned by how similar it was to what I was thinking,
only from an economists perspective. Agreeing with you so completely almost has
to make me reconsider. ;)
"By contrast, the tribalists have a clear answer to both questions. The problem
is not (or at least not primarily) to be located at the top of the class
structure, among bankers and CEOs, but at the bottom, among immigrants and
racial minorities who benefit from state protection at the expense of ordinary
'people like us'."
That's a very unfortunate (and arrogant) caricature. David
in another thread already notice the similarity of the current
anti-mass-immigration sentiment and the anti-scab struggles ~90 years ago.
Mass-immigration is exactly the same tactic (same tool) as hiring scabs was
in the 1930s. Breaking workers' solidarity, splitting, preventing resistance,
reducing wages.
Yes, class structure is the problem, and everyone knows it, and restricting
immigration is exactly a strike against the bankers and CEOs.
It seems to me that the program of the left most in need of clarity–or at
least greatly in need of clarity– is immigration, for that is the one the
tribalists (not sure about this term but running with it) gain most traction
on, and therefore helps to explain why the tribalists rather than the left have
been the main beneficiaries of the disenchantment of neoliberalism. If the left
stands for a world without borders, the old internationalist ideal, it can seem
to be oblivious to the threat to wages, living standards, etc., that can pose
for those in countries that attract labor. This is so even if one does an
analysis showing that immigration sparks growth, that the kinds of jobs
immigrants take are not necessarily ones others want, and so forth. If the left
argues for immigration controls, however, it seems to be making concessions to
racial-ethnic-national-or-whatever bigotry. So what is the proper approach to
take? Some policy expertise informed by egalitarianism and internationalism in
equal measure would be pretty valuable. There must be some somewhere.
Recommended readings?
Along the lines of Hidari's comment, I think it helps to distinguish the causes
and flavours of prejudice involved. The O/P uses, I think, "tribalism" to cover
two distinct relationships. One is nationalism or, more broadly, group
solidarity that encompasses class. It's people feeling that, however different
their economic or other circumstances, they are part of the same group. There's
a fair amount of prejudice involved and some hostility to large-scale
in-migration, but the stress is on the ideal of equal sacrifice in the face of
common threats. It's as much a Labour/left-wing tradition as a right-wing one.
The other tribalism is party partisanship. This can be class or other group
solidarity but, in current times, it has more the flavour of rather desperate
patronage-seeking. The Republican base, or the British lowest class, don't have
much time for "elites", but they have less time for each other. And they follow
the basic rules of clientelism – hold tight to the patron you have (because any
patron is better than none), but jump ship if a competing patron makes a better
offer. Trump/Johnson/Farage are making a better offer. To this group,
boorishness signals that the patron shares at least some appreciation for their
folk-ways. And the patrons make much use of crude appeals to race/gender etc.
They could hardly make sophisticated appeals – they lack anything else in
common.
Of course, if the patron fails to deliver too often, you burn the manor down
in a fit of rage, abuse the local immigrants and then shop your neighbours to
the police.
@milx(4): "The Marxist critique made sense in the context of pre-industrialized
Russia…"
Not the Bolshevik approach – a Marxist heresy contradicting Marx's
view of mature capitalism as a prerequisite for the ultimate social revolution.
Russia's orthodox Marxists always maintained that the 1917 revolution should
have ended in March with the overthrow of the monarchy, which had impeded the
development of capitalism. The Menshevikism you mention in your comment as an
example of third-wayism is merely orthodox Marxism as applied to a country
where capitalism had yet to develop to maturity, such as Russia was in 1917.
This is clearly not the case with the first-world West, where capitalism has
evolved in ways Marx did not expect and has worked technological wonders far
beyond those that so delighted the authors of the Manifesto.
Re immigrants as analogous to scab labour: it's maybe worth looking at the Bank
of England Staff Working Paper No. 574, "The impact of immigration on
occupational wages", which concluded that a large number of unskilled
immigrants has, as might have been expected, depressed the wages of unskilled
workers. Also relevant is the comment by Lord Rose, formerly head of Marks &
Spencer, leader of the Britain Stronger in Europe campaign, who said that Leave
would produce a rise in wages for workers. There was a time when the Labour
party would not have regarded that as a bad thing.
Tabasco@67: Re the need
for visas to go from Britain to Europe: before 1973, with Britain outside the
EEC, it was perfectly possible to go to France, Italy, Germany with no visa.
Also, last time I flew from NI to Dublin there was one queue for passport
control, for everybody. Having EU and non-EU queues would make it faster for
everybody.
Re the factors that led people to vote for Leave, one of Ashcroft's polls
enquired about that, and found that the reason most often given was the
principle that decisions about the UK should be taken in the UK. I'm not sure
that's tribalism.
I've said that immigration is not my expertise, but labor history is, and I
find the comparison of immigrants to scabs not only libelous but historically
wrong. Immigrants in US labor, circa 1880-1920, and their sons and daughters
after, are what built the great industrial unions (see, for example,
International Ladies and Garment Workers Union, or the Lawrence strike of 1912,
or any number of other examples). Furthermore they are arguably the dynamo in
what's left of the US labor movement today, immigrants rights movements being
melded completely with workers' rights movements.
Good piece, though the identification of the English (and Welsh) tribalists as
"white Christians" is a bit problematic in a context where the immigrant group
is just as white and far more Christian than they are.
"decisions about the UK should be taken in the UK."
But a decision on whether
a person should be allowed to travel from some other country to the UK, or
vice versa
is not just a decision about the UK, or just about that other
country. It involves both, not to mention the person in question.
@84 You're right – I took this over from the US context
But a decision on whether a person should be allowed to travel from some
other country to the UK, or vice versa is not just a decision about the UK, or
just about that other country. It involves both, not to mention the person in
question.
This point, with which I agree, is the basic premise of Arash Abizadeh's
argument that unilateral state control over borders is incompatible with
democratic legitimacy because it involves the coercive application of the law
to people who have no say in making it. Obviously, however, nativists take the
view "it is our land, we get to decide".
If the left argues for immigration controls, however, it
seems to be making concessions to racial-ethnic-national-or-whatever bigotry.
So what is the proper approach to take? Some policy expertise informed by
egalitarianism and internationalism in equal measure would be pretty valuable.
This, to me, is what makes the 'three parties' analysis suspect, at least
for ethnically mixed polities, because there is also a group of voters for whom
civil rights is more important than income inequality. This group is not large
enough to be a party, but it is large enough to destabilize one, and they do
not want to make common cause with people advocating class solidarity if that
means "concessions to racial-ethnic-national-or-whatever bigotry".
Though Corbyn is being shellacked for his tepid support for Remain, he was
stuck navigating a particularly rocky strait, having to choose between
anti-capitalist-world-order and anti-immigrant stances, hence his statement
that his commitment to Remain was 'no more than seven or seven and a half' out
of ten. (
https://goo.gl/5R76EW
)
Worse, this dilemma was strongest for the youngest voters, Corbyn's base and
the ones most attached to both commitments.
British internationalism has now been damaged as the result of the combined
votes of the 'Vote Leave, to demand that the international system be more
accountable and less neo-liberal' and the 'Vote Leave, then leave' camps.
(Chris Bertram covered some of this back in May, in
http://crookedtimber.org/2016/05/20/lefty-poseurs-and-brexit/
)
It is obvious in hindsight that anything less than the public equivalent of
a three-line whip from Corbyn was inadequate to secure Remain, but the
structural problem is deeper: there was not, in the Leave vote, or in the
larger world of contemporary politics, any way to advocate for 'egalitarianism
and internationalism in equal measure'.
To make the obvious imperfect parallel, In the U.S., there are people who
regard the gutting of Glass-Steagall as a bigger catastrophe then the gutting
of the Voting Rights Act and people who come to the opposite conclusion. (The
existence of that latter group, even just as spoilers, is why I don't
completely buy the 'three party' framework.)
The tension between these groups came to the fore around Sanders' desire to
appeal to the economic interests of the white working class means advocating
for the return of voters who left the Democratic party because they disapprove
of the Democrats commitment to civil rights. (
http://goo.gl/3aL46T
)
This obviously did not work, in part because the Civil Rights wing of the
Democratic party is strong right now.
In the U.K. framework, this group is make up of the people who value freedom
of movement more than they dislike the ECB. Prior to this year, I thought that
the tensions between egalitarianism and internationalism were just the sort of
thing that happens in Big Tent parties. Now I'm not so sure.
T]here are no left policies anymore: there are German left policies
(inspired by German values, social conditions, history…), British left policies
(ditto, and they differ from Scottish left policies), American left policies
(ditto), French left policies (ditto)…
The results of the Brexit
referendum, with England alone choosing to secede from the EU, is as clear an
empirical illustration of this thesis as one could possibly imagine.
"…the term 'neoliberal' is used, outside the US, to refer to the
revival of 19th century free market ideas…"
I would disagree with this characterization, although I'm not sure if you
are making it or simply reporting it, John. The epitome of neoliberalism, in
my view, goes under the euphemism of "labour market flexibility."
Superficially this comes down to the same kind of policy prescription as
19th century
laissez faire
but with an entirely different - and
pseudo-Keynesian ("New Keynesian") - theoretical rationale. Not the Chicago
School and Mont Pelerin Society but Joseph Stiglitz, Richard Layard, Olivier
Blanchard, Lawrence Summers, Paul Krugman et al.
M… I… T… ("tee you off soon") k…e…y…
nes
("why? because
we LOVE you!") L… owe… you… S… E.
Yes, Friedman and Hayek, Thatcher and Reagan may have started the ball
rolling but it was the New Keynesians with their stinking "sticky wages"
claptrap who gave it progressive street cred. I could go on but why bother?
One of the most best stories so far, both from the perspective of the granularity of the reporting and the caliber of the writing,
is the Guardian's
'If you've got money, you vote in … if you haven't got money, you vote out' (hat tip PlutoniumKun). It gives a vivid, painful
picture of the England that has been left behind with the march of Thatcherism and neoliberalism.
From the article :
And now here we are, with that terrifying decision to leave. Most things in the political foreground are finished, aren't
they? Cameron and Osborne. The Labour party as we know it, now revealed once again as a walking ghost, whose writ no longer
reaches its supposed heartlands. Scotland – which at the time of writing had voted to stay in the EU by 62% to 38% – is already
independent in most essential political and cultural terms, and will presumably soon be decisively on its way…
Because, of course, this is about so much more than the European Union. It is about class, and inequality, and a politics
now so professionalised that it has left most people staring at the rituals of Westminster with a mixture of anger and bafflement.
Tangled up in the moment are howling political failures that only compounded that problem: Iraq, the MPs' expenses scandal,
the way that Cameron's flip from big society niceness to hard-faced austerity compounded all the cliches about people you cannot
trust, answerable only to themselves (something that applied equally to the first victims of our new politics, the Liberal
Democrats).
Most of all, Brexit is the consequence of the economic bargain struck in the early 1980s, whereby we waved goodbye to the
security and certainties of the postwar settlement, and were given instead an economic model that has just about served the
most populous parts of the country, while leaving too much of the rest to anxiously decline. Look at the map of those results,
and that huge island of "in" voting in London and the south-east; or those jaw-dropping vote-shares for remain in the centre
of the capital: 69% in Tory Kensington and Chelsea; 75% in Camden; 78% in Hackney, contrasted with comparable shares for leave
in such places as Great Yarmouth (71%), Castle Point in Essex (73%), and Redcar and Cleveland (66%). Here is a country so imbalanced
it has effectively fallen over….
What defines these furies is often clear enough: a terrible shortage of homes, an impossibly precarious job market, a too-often
overlooked sense that men (and men are particularly relevant here) who would once have been certain in their identity as miners,
or steelworkers, now feel demeaned and ignored. The attempts of mainstream politics to still the anger have probably only made
it worse: oily tributes to "hardworking families", or the the fingers-down-a-blackboard trope of "social mobility", with its
suggestion that the only thing Westminster can offer working-class people is a specious chance of not being working class anymore.
This much-watch segment with Mark Blyth (hat tip
Gabriel U) also focuses on the class warfare as a driver of the Brexit vote and how that plays into the broader EU political and
economic context:
Our Richard Smith echoed these themes from his own observations:
In (for instance) North Lincolnshire, manufacturing is most likely to be the biggest EU export. That might get nuked a bit
if the terms of trade with EU countries get stiffer.
But the locals upcountry clearly feel they have been ignored, and now have nothing to lose. M and I bumbled through Wisbech
and Boston a few years ago, expecting cute East Anglian port towns, and found instead murderously tense run-down ghettoes.
You get this kind of story:
Unless, improbably, around 700,000 such stories turn up, which would imply they swung the vote, this is another portrayal
of the "Leave" voters as idiots.
Brexit's lesson for the US - and other democracies - is that fear mongering is not enough. Western elites must build a positive
case for reforming a system that is no longer perceived to be fair. The British may well repent at leisure for a vote they
took in haste. Others can learn from its blunder.
But even this is weak tea. Luce isn't advocating a Sanders-style economic regime change. Indeed, his call for action is making
a case for reform, implying that the more realistic members of the elites need to take on the reactionary forces. As we've said,
the Clintons are modern day Bourbons: they've learned nothing and forgotten nothing. Luce's warning to Hillary Clinton, firmly
ensconced in her bubble of self-regard, deeply loyal to powerful, monied interests and technocrats, is destined to fall on deaf
ears.
Greenspan phony "Shocked disbelief" reminds classic "...I am shocked - shocked, there is gambling
going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart
& Claude Rains in Casablanca. Compare with "... "Those of us who have looked to the self-interest
of lending institutions to protect shareholders' equity, myself included, are in a state of shocked
disbelief," he said. ..."
Notable quotes:
"... "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," ..."
"... Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless banks to do reckless things. ..."
"... Private greed, not public good, caused this catastrophe: "The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn't until the securitization became a significant factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it's the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities. ..."
"... But having admitted the failure of his faith, Greenspan could not abandon it. Credit default swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations were needed, because the markets "for the indefinite future will be far more restrained than would any currently contemplated new regulatory regime." ..."
"... The only Guantanamo that the United States has any business running is a concentration camp for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud the American people from their hard earned dollar. ..."
"... There are no free markets in America, any more than there is free lunch. ..."
"... So it wasn't the military-industrial complex that did us in after all . . . ..."
"... It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's sorry testimony before Congress. What has faith in something to do with enforcing the policies of fiduciary responsibility already on the books? All these so-called "experts" on capitalism are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily and criminally responsible for their actions, inept or not. ..."
"... If it looks like class warfare, as David Harvey, author of Neoliberalism, has stated, call it class warfare and act accordingly. ..."
"... it doesn't take a genius to understand that when financial instruments are created based on crap (subprime mortgages), that eventually problems will occur with those instruments. In fact, Greenspan and his cronies knew that, which is why they resisted these instruments being regulated by the SEC or even the CFTC. ..."
"... Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation. ..."
"... Did anybody even bother to consult the Math PhDs who created these instruments to run possible scenarios -- just in case? why bother when you know you can scare congress, the president and the treasury and ultimately the people into bailing your ass out of worldwide collapse? ..."
"... Shocked Disbelief is a ploy. When they were all riding high, they didn't give a crap. They were going to come out richer than hell anyway. ..."
"... Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald Wilson Reagan", and the other "Free Market" "government is the problem" ideologues ..."
"... What about the 1994 Act of Congress that required the Fed to monitor and regulate derivatives? The Act Greenspan ignored? ..."
"... "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca ..."
by: Robert Borosage, The Campaign for America's Future
On October 23, former Federal Reserve Chairman Alan Greenspan testified before a House Oversight
and Government Reform Committee hearing on the role of federal regulators in the current financial
crisis.
It marks the end of an era. Alan Greenspan, the maestro, defender of the market fundamentalist faith,
champion of deregulation, celebrator of exotic banking inventions, admitted Thursday in a hearing
before Rep. Henry Waxman's House Committee and Oversight and Government Reform that he got it wrong.
"Those of us who have looked to the self-interest of lending institutions to protect shareholders'
equity, myself included, are in a state of shocked disbelief," he said.
As to the fantasy that banks could regulate themselves, that markets self-correct, that modern
risk management enforced prudence: "The whole intellectual edifice, however, collapsed in the summer
of last year."
Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame
the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless
banks to do reckless things. Greenspan dismissed that goofiness in response to a question from
one of its right-wing purveyors, Rep. Todd Platts, R-Pa., noting that subprime loans grew to a crisis
only as the unregulated shadow financial system securitized mortgages, marketed them across the world,
and pressured brokers to lower standards to generate a larger supply to meet the demand. Private
greed, not public good, caused this catastrophe:
"The evidence now suggests, but only in retrospect, that this market evolved in a manner which
if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely
to have taken on the dimensions that it did. It wasn't until the securitization became a significant
factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime
loans, because remember that without securitization, there would not have been a single subprime
mortgage held outside of the United States, that it's the opening up of this market which created
a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities.
But having admitted the failure of his faith, Greenspan could not abandon it. Credit default
swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain
a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations
were needed, because the markets "for the indefinite future will be far more restrained than would
any currently contemplated new regulatory regime."
Now hung over from their bender, the banks could be depended upon to remain sober "for the indefinite
future." Or until taxpayers' money relieves their headaches, and they are free to party once more.
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Comments
This is a moderated forum. It may take a little while for comments to go live.
Sun, 10/26/2008 - 23:37 - Captain America (not verified)
The only Guantanamo that the United States has any business running is a concentration camp
for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud
the American people from their hard earned dollar.
What they did dwarfs the damage caused to this country by 911, (no disrespect for the many
innocents who died). However, here, every single citizen is a victim of fraud and corruption on
a scale that was heretofore inconceivable. Greenspan, Bush and now Paulson have done more than
Bin Laden and his hordes could do in a 100 years.
By the way, if you protest YOU wind up locked up for being un-American. What happened America
?
There are no free markets in America, any more than there is free lunch. The game was always
fixed and Greenspan was the ultimate shill for the fixers. The past thirty years have been an orgy
of greed with common sense shoved aside for the sake of uncommon expediency. Americans became infatuated
by arcane formulas and dense incomprehensible mathematics to the point that they forget simple arithmetic.
America wake up it was only a dream, and a bad one at that.
It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's
sorry testimony before Congress. What has faith in something to do with enforcing the policies
of fiduciary responsibility already on the books? All these so-called "experts" on capitalism
are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily
and criminally responsible for their actions, inept or not. The truth is as plain as the
nose on your face: Greenspan, the Federal Reserve, the investment banks, the Bush administration
and several members of Congress unobtrusively acted to consciously and knowingly to rob the national
treasury for the sake of capitalism's sacred cow: capital accumulation on behalf of the nation's
political and economic elite. If it looks like class warfare, as David Harvey, author of Neoliberalism,
has stated, call it class warfare and act accordingly.
We have heard statements like "the mathematical models used for knowing the behavior of derivatives
based on subprime mortgages were too difficult to understand", etc. But it doesn't take a
genius to understand that when financial instruments are created based on crap (subprime mortgages),
that eventually problems will occur with those instruments. In fact, Greenspan and his cronies
knew that, which is why they resisted these instruments being regulated by the SEC or even the
CFTC. And this is why they turned a blind eye to many of the rating agencies giving many
of these instruments AAA ratings. I am sure that a real investigation will reveal numerous instances
of fraudulent activity in conjunction with this debacle. Those perpetrators must be identified
and brought to justice. While this will not fix our current problem, it hopefully should serve
as a deterrent to those who would in the future attempt to again engage in such activities.
Sun, 10/26/2008 - 08:13 - Robert Iserbyt (not verified)
Well here you have it a confessional lie from the biggest fraud perpetrator in the history of
American finance Why the markets ever listened to this criminal in the first place is evidence
that our entire nation should be required to take a full year of real unfettered economics just
in case they don't understand what is going on now. All the pundits on MSNBC and all the talking
heads should be removed from the airwaves. The Bailout what will that do? the answer lies before
you.
Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation.
Come on, do you really think we are all so stupid to buy into the story that you couldn't predict
a melt down knowing that those writing the subprimes held no responsibility for their actions?
That's like giving a "get out of jail card" to someone who just created a felony! Did anybody
even bother to consult the Math PhDs who created these instruments to run possible scenarios --
just in case? why bother when you know you can scare congress, the president and the treasury
and ultimately the people into bailing your ass out of worldwide collapse?
I'm a former real estate broker and my son is a mortgage broker. From about 2004 through the beginning
of this "greatest financial crisis since '29", we frequently talked on the phone about the disaster
which would ensue when the real estate value appreciation stopped, and people were no longer fueling
the economy with money borrowed against their equity, and the sub-prime loan fiasco would end.
We knew it would be disastrous, and both of us were astonished that neither the FED nor congress
was willing to say or do anything about it. Anyone who has witnessed over the years the cycle
of boom/bust/boom/bust in the real estate market knew that after eleven years of unprecedented
"boom" -- '96 through '2007 -- the "bust" would be like an earthquake. Paulson and Greenspan and
their ilk now denying that they suspected this is just is just their lying to protect the GOP
which was benefitting from the booming economy. They should both end up in prison, with all of
the GOP members of congress who have had their hands in the cash register.
Dance clown, dance. First you were against the FED until you became head of the FED. Then you
were for trickle down economics and letting the "system" regulate itself until you saw the inevitable
destruction it caused. Dance clown, dance. You should be the first one sent to prison under the
"Un-American activities act". The arrogance of your testimony before the committee was appalling.
You honestly couldn't believe you were wrong !!!
This is like telling the Fox to watch the Hens and then walking away and trusting him to do the
right thing. Government has to return to regulation and see that there is no hanky, Banky going
on anymore. Monopolies have to be busted up, like the Communication industry's, the Drug industries
and any other Corporations that control to much of the way the Country operates. No more Outsourcing
any Government duties.
Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality
get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald
Wilson Reagan", and the other "Free Market" "government is the problem" ideologues. We can
spend trillions on war and corporate bailouts, but we can't have a single payer health system?
We can't rebuild our infrastructure? Say it again- give me a break!
"...I am shocked - shocked, there is gambling going on in this establishment...." "...here
are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca
"... we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe. ..."
"... The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist. ..."
"... Selected Skeptical Comments ..."
"... All problems caused by the same cause … American predatory behavior. And our great political choice … iron fist without velvet glove. ..."
"... Germany, Belgium, France, Poland, Hungary, Romania, Turkey, Israel, Australia come to mind (if one is allowed to participate in a European song contest, one is supposed to be part of Europe :) They all have more or less fascist governments. ..."
"... Once you realize that the ECB creates something like 60 billion euros a month, and gives nothing to its citizens nor its nation-states, that means the money goes to corporations, which means that the ECB, and by extension the whole EU, is a fascist construct (fascism being defined as a government running on behalf of the corporations). ..."
"... That's a fallacy. Corporatism is a feature of fascism, not the other way around. None of the governments you mention, with the possible exception of Israel and Turkey, can be called fascist in any meaningful sense. ..."
"... Even the anti-immigration parties in the Western European countries you mention – AfD, Front National, Vlaams Belang – only share their nationalism with fascist movements. And they are decidedly anti-corporatist. ..."
"... Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them. ..."
"... Sheldon Wolin introduced us to inverted totalitarism. While it is no longer the government that decides what must be done, the private 'owners' just buy the government, the judiciary, the press, or whatever is needed to achieve their means. ..."
"... Inverted totalitarianism is the mirror image of fascism, which is why so many are confused. Fascism is just a easier term to use and more understandable by all. There is not a strict adherence to fascism going on, but it's still totalitarian just the same. ..."
"... "…the gutters and cutters of neoliberalism" ..."
"... an authentically popular fascism in the United States would be pious and anti-Black; in Western Europe, secular and antisemitic, or more probably, these days anti-Islamic; in Russia and Eastern Europe, religious, antisemitic, and slavophile. ..."
"... that eternal enemy: the conservative manipulators of privilege who damn as 'dangerous agitators' any man who menaces their fortunes" (maybe 'power and celebrity' should be added to fortunes ..."
"... Globalization helps the rich here way more than the poor there. The elites get more money for nothing (see QE before you respond, if you do, that's where the money for globalization came from) the workers get the husk. ..."
"... Also the elite gets to say "you made your choices" and other moralistic crap. The funny(?) thing is they generally claim to be atheists, which I translate into "I am God, there doesn't need to be any other" ..."
"... Wait, you mean we don't all enjoy living in Pottersville? For anyone missing the reference, you clearly haven't been subjected to It's a Wonderful Life enough times. ..."
"... seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend…" This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators ..."
"... And as I suspect seanseymour would agree, when a nation loses public education, it loses everything. ..."
"... accountable ..."
"... And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final. ..."
Posted on
June 2, 2016 by Yves
Smith Yves here. The first comment came in on a post that had gone cold, and I thought it was
so revealing that it needed to be seen widely. The second is a synchronistic complement.
As much as I carry on about the isolation of the Acela-riding classes from the acute distress
in much of the US, I only have a very distant feel for it. For instance, I grew up moving through
many small towns where a paper mill was a major, and in some cases, the biggest local employer. Those
mill jobs were well paid and the workers could buy houses, cars, and had pensions. One of my brothers
works for a paper mill that should have been world competitive through his retirement, but it's been
wrecked by a series of private equity owners, starting with Cerberus, and in now in bankruptcy. The
town in which he lives, Escanaba, Michigan, has lost over 20% of its population since the mid 1980s.
Similarly, my uncle lived below the poverty line in Maine, lobstering until his knees gave out. But
he had a fully paid for house he had inherited, and access to VA hospitals and doctors, so it could
have been a lot worse. But Maine is a poor state, so even visiting there as a tourist in the summers,
it's not hard to see the signs of struggle even in those who are getting by.
The first comment gives a window into the hidden desperation in America that is showing up in
statistics like increasing opioid addiction and suicides, rather than in accounts of how and why
so many people are suffering. I hope readers will add their own observations in comments.
We recently took three months to travel the southern US from coast to coast. As an expat for
the past twenty years, beyond the eye opening experience it left us in a state of shock. From
a homeless man convulsing in the last throes of hypothermia (been there) behind a fuel station
in Houston (the couldn't care less attendant's only preoccupation getting our RV off his premises),
to the general squalor of near-homelessness such as the emergence of "American favelas" a block
away from gated communities or affluent ran areas, to transformation of RV parks into permanent
residencies for the foreclosed who have but their trailer or RV left, to social study one can
engage while queuing at the cash registers of a Walmart before beneficiaries of SNAP.
Stopping to take the time to talk and attempt to understand their predicament and their beliefs
as to the cause of their plight is a dizzying experience in and of itself. For a moment I felt
transposed to the times of the Cold War, when the Iron Curtain dialectics fuzzed the perception
of that other world to the west with a structured set of beliefs designed to blacken that horizon
as well as establish a righteous belief in their own existential paradigm.
What does that have to do with education? Everything if one considers the elitist trend that
is slowly setting the framework of tomorrow's society. For years I have felt there is a silent
"un-avowed conspiracy", why the seeming redundancy, because it is empirically driven as a by-product
of capitalism's surge and like a self-redeeming discount on a store shelf crystalizes a group
identity of think-alike know-little or nothing frustrated citizens easily corralled by a Fox or
Trump piper. We have re-rcreated the conditions or rather the reality of "Poverty In America"
barely half a century after its first diagnostic with one major difference : we are now feeding
the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder,
once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe.
So Richard Cohen now fears American voters because of Trump. Well, on Diane Reem today (NPR)
was a discussion on why fascist parties are growing in Europe. Both Cohen and the clowns on NPR
missed the forest for the trees. The reason Trump and Sanders are doing well in the US while fascists
are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of
gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job
security, income security, retirement security all go up in smoke. Neoliberals are trying to snip
and cut labor protections, healthcare, environmental regulations all for corporate profit. In
Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism
(neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US
and NATO destabilize countries with the intent of stealing their resources and protecting their
markets, cause massive refugee flows which strain social structures in Europe (which falls right
into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist.
In the US we don't have the refugees, but the neoliberalism is further along and more damaging.
There's no mystery here or in Europe, just the natural effects of governments failing to represent
real people in favor of useless eater rich.
Make the people into commodities, endanger their washes and job security, impose austerity,
and tale in floods of refugees. Of COURSE Europeans stay leaning fascist.
America has plenty of refugees, from Latin America …
Neo-liberal goes back to the Monroe Doctrine. We used to tame our native workers with immigrants,
and we still do, but we also tame them by globalism in trade. So many rationalizations for this,
based on political and economic propaganda. All problems caused by the same cause … American predatory
behavior. And our great political choice … iron fist without velvet glove.
Germany, Belgium, France, Poland, Hungary, Romania, Turkey, Israel, Australia come to mind
(if one is allowed to participate in a European song contest, one is supposed to be part of Europe
:) They all have more or less fascist governments.
Once you realize that the ECB creates something like 60 billion euros a month, and gives nothing
to its citizens nor its nation-states, that means the money goes to corporations, which means
that the ECB, and by extension the whole EU, is a fascist construct (fascism being defined as
a government running on behalf of the corporations).
That's a fallacy. Corporatism is a feature of fascism, not the other way around. None of the governments you mention, with the possible exception of Israel and Turkey, can
be called fascist in any meaningful sense.
Even the anti-immigration parties in the Western European countries you mention – AfD, Front
National, Vlaams Belang – only share their nationalism with fascist movements. And they are decidedly
anti-corporatist.
True, I posted a few minutes ago saying roughly the same thing – but it seems to have gone
to moderation.
Another key feature of fascism is territorial expansionism. As far as I am aware, none of the
nationalist parties advocate invading other countries or retaking former colonies. Once again,
contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and
Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining
about the rise of fascism in Europe complaining too much about them.
who owned the means of production (public or private entities)
who decided what those means were used for.
If it is a 'public entity' (aka government or regime) that decides what is built, we have a
totalitarian state, which can be 'communist' (if the means also belong the public entities like
the government or regional fractions of it) or 'fascist' (if the factories are still in private
hands).
If it is the private owner of the production capacity who decides what is built, you get capitalism.
I don't recall any examples of private entities deciding what to do with public means of production
(mafia perhaps).
Sheldon Wolin
introduced
us to inverted totalitarism. While it is no longer the government that decides what must be
done, the private 'owners' just buy the government, the judiciary, the press, or whatever is needed
to achieve their means.
When I cite Germany, it is not so much AfD, but the 2€/hour jobs I am worried about. When I
cite Belgium, it is not the fools of Vlaams Belang, but rather the un-taxing of corporations and
the tear-down of social justice that worries me.
Inverted totalitarianism is the mirror image of fascism, which is why so many are confused.
Fascism is just a easier term to use and more understandable by all. There is not a strict adherence
to fascism going on, but it's still totalitarian just the same.
Hi
I live in Europe as well, and what to think of Germany's AfD, Greece's Golden Dawn, the Wilder's
party in the Netherlands etc. Most of them subscribe to the freeloading, sorry free trading economic
policies of neoliberalism.
Searched 'current fascist movements europe' and got these active groups from wiki.
National Bolshevik Party-Belarus
Parti Communautaire National-Européen Belgium
Bulgarian National Alliance Bulgaria
Nova Hrvatska Desnica Croatia
Ustaše Croatia
National Socialist Movement of Denmark
La Cagoule France
National Democratic Party of Germany
Fascism and Freedom Movement – Italy
Fiamma Tricolore Italy
Forza Nuova Italy
Fronte Sociale Nazionale Italy
Movimento Fascismo e Libertà Italy
Pērkonkrusts Latvia
Norges Nasjonalsosialistiske Bevegelse Norway
National Radical Camp (ONR) Poland
National Revival of Poland (NOP)
Polish National Community-Polish National Party (PWN-PSN)
Noua Dreaptă Romania
Russian National Socialist Party(formerly Russian National Union)
Barkashov's Guards Russia
National Socialist Society Russia
Nacionalni stroj Serbia
Otačastveni pokret Obraz Serbia
Slovenska Pospolitost Slovakia
España 2000 Spain
Falange Española Spain
Nordic Realm Party Sweden
National Alliance Sweden
Swedish Resistance Movement Sweden
National Youth Sweden
Legion Wasa Sweden
SPAS Ukraine
Blood and Honour UK
British National Front UK
Combat 18 UK
League of St. George UK
National Socialist Movement UK
Nationalist Alliance UK
November 9th Society UK
Racial Volunteer Force UK
As one of the commenters noted, it's not an "expose" or sensational "Breaking Bad," but rather
a discouraging portrait of the conditions that prompt and sustain meth use. Apparently it's being
made into a movie. I believe Clint Eastwood is involved, so that should give it some traction.
I moved to a small city/town in Iowa almost 20 years ago. Then, it still had something of a
Norman Rockwell quality to it, particularly in a sense of egalitarianism, and also some small
factory jobs which still paid something beyond a bare existence.
Since 2000, many of those jobs have left, and the population of the county has declined by
about 10%. Kmart, Penney's, and Sears have left as payday/title loan outfits, pawnshops, smoke
shops, and used car dealers have all proliferated.
Parts of the town now resemble a combination of Appalachia and Detroit. Sanders easily won
the caucuses here and, no, his supporters were hardly the latte sippers of someone's imagination,
but blue collar folks of all ages.
My tale is similar to yours. About 2 years ago, I accepted a transfer from Chicagoland to north
central Wisconsin. JC Penney left a year and a half ago, and Sears is leaving in about 3-4 months.
Kmart is long gone.
I was back at the old homestead over Memorial Day, and it's as if time has stood still. Home
prices still going up; people out for dinner like crazy; new & expensive automobiles everywhere.
But driving out of Chicagoland, and back through rural Wisconsin it is unmistakeable.
2 things that are new: The roads here are deteriorating FAST. In Price County, the road commissioner
said last night that their budget allows for resurfacing all the roads on a 200 year basis. (Yes,
that means there is only enough money to resurface all the county roads if spread out over 200
years.) 2nd, there are dead deer everywhere on the side of the road. In years past, they were
promptly cleaned up by the highway department. Not any more. Gross, but somebody has to do the
dead animal clean up. (Or not. Don't tell Snotty Walker though.)
Anyway, not everything is gloom and doom. People seem outwardly happy. But if you're paying
attention, signs of stress and deterioration are certainly out there.
Depends where you are in Chicago – in some parts the potholes, boarded up structures, homeless
and addicted folks begging on every corner tell the same story. It is a tale of two cities.
Fascism is a system of political and social order intended to reinforce the unity, energy and
purity of communities in which liberal democracy stand(s) accused of producing division and decline.
. . . George Orwell reminded us, clad in the mainstream patriotic dress of their own place and
time, . . . an authentically popular fascism in the United States would be pious and anti-Black;
in Western Europe, secular and antisemitic, or more probably, these days anti-Islamic; in Russia
and Eastern Europe, religious, antisemitic, and slavophile.
Robert O. Paxton,
In The Five Stages of Faschism
"… that eternal enemy: the conservative manipulators of privilege who damn as 'dangerous agitators'
any man who menaces their fortunes" (maybe 'power and celebrity' should be added to fortunes)
From the comment, I agree with the problems, not the cause. We've increased the size and scope
of the safety net over the last decade. We've increased government spending versus GDP. I'm not
blaming government but its not neoliberal/capitalist policy either.
1. Globalization clearly helps the poor in other countries at the expense of workers in the
U.S. But at the same time it brings down the cost of goods domestically. So jobs are not great
but Walmart/Amazon can sell cheap needs.
2. Inequality started rising the day after Bretton Woods – the rich got richer everyday after
"Nixon Shock"
Hi rfam : To point 1 : Why is there a need to bring down the cost of goods? Is it because of
past outsourcing and trade agreements and FR policies? I think there's a chicken and egg thing
going on, ie.. which came first. Globalization is a way to bring down wages while supplying Americans
with less and less quality goods supplied at the hand of global corporations like Walmart that
need welfare in the form of food stamps and the ACA for their workers for them to stay viable
(?).
Viable in this case means ridiculously wealthy CEO's and the conglomerate growing bigger
constantly. Now they have to get rid of COOL's because the WTO says it violates trade agreements
so we can't trace where our food comes from in case of an epidemic. It's all downhill. Wages should
have risen with costs so we could afford high quality American goods, but haven't for a long,
long time.
Globalization helps the rich here way more than the poor there. The elites get more money for
nothing (see QE before you respond, if you do, that's where the money for globalization came from)
the workers get the husk.
Also the elite gets to say "you made your choices" and other moralistic
crap. The funny(?) thing is they generally claim to be atheists, which I translate into "I am
God, there doesn't need to be any other"
Amazon sells cheap stuff by cheating on taxes, and barely
makes money, mostly just driving people out of business. WalMart has cheap stuff because they
subsidise their workers with food stamps and medicaid. Bringing up bretton woods means you don't
know much about money creation, so google "randy wray/bananas/naked capitalism" and you'll find
a quick primer.
Wait, you mean we don't all enjoy living in Pottersville? For anyone missing the reference, you clearly haven't been subjected to It's a Wonderful
Life enough times.
What a comment from seanseamour. And the "hoisting" of it to high visibility at the site is
a testament to the worth of Naked Capitalism.
seanseamour asks "What does that have to do with education?" and answers "Everything if one
considers the elitist trend…" This question & answer all but brings tears to my eyes. It is so
utterly on point. My own experience of it, if I may say so, comes from inside the belly of the
beast. As a child and a product of America's elite universities (I have degrees from Harvard and
Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could
spend all morning detailing the shameful roles played by America's torchbearing universities –
Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators
to maintaining the health of the nation's public school system.*
And as I suspect seanseymour would agree, when a nation loses public education, it loses everything.
But I don't want to spend all morning doing that because I'm convinced that it's not too late
for America to rescue itself from maelstrom in which it finds itself today. (Poe's "Maelstrom"
story, cherished by Marshall McLuhan, is supremely relevant today.)
To turn America around, I don't look to education – that system is too far gone to save itself,
let alone the rest of the country – but rather to the nation's media: to the all-powerful public
communication system that certainly has the interactive technical capabilities to put citizens
and governments in touch with each other on the government decisions that shape the futures of
communities large and small.
For this to happen, however, people like the us – readers of Naked Capitalism – need to stop
moaning and groaning about the damage done by the neoliberals and start building an issue-centered,
citizen-participatory, non-partisan, prime-time Civic Media strong enough to
give all Americans an informed voice in the government decisions that affect their lives. This
Civic media would exist to make citizens and governments responsive and accountable
to each other in shaping futures of all three communities – local, state and national – of
which every one of us is a member.
Pie in the sky? Not when you think hard about it. A huge majority of Americans would welcome
this Civic Media. Many yearn for it. This means that a market exists for it: a Market of the Whole
of all members of any community, local, state and national. This audience is large enough to rival
those generated by media coverage of pro sports teams, and believe it or not much of the growth
of this Civic media could be productively modeled on the growth of media coverage of pro sports
teams. This Civic Media would attract the interest of major advertisers, especially those who
see value in non-partisan programming dedicated to getting America moving forward again. Dynamic,
issue-centered, problem-solving public forums, some modeled on voter-driven reality TV contests
like The Voice or Dancing with the Stars, could be underwritten by a "rainbow" spectrum of funders,
commercial, public, personal and even government sources.
So people take hope! Be positive! Love is all we need, etc. The need for for a saving alternative
to the money-driven personality contests into which our politics has descended this election year
is literally staring us all in the face from our TV, cellphone and computer screens. This is no
time to sit back and complain, it's a time to start working to build a new way of connecting ourselves
so we can reverse America's rapid decline.
OK, so I hear some of you saying, corporate America will never let this Civic Media get off
the ground. My short answer to this is that corporations do what makes money for them, and in
today's despairing political climate there's money to be made in sponsoring something truly positive,
patriotic and constructive. And I hear a few others saying that Americans are too dumbed down,
too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan,
problem-solving Civic Media. But I would not underestimate the intelligence of Americans when
they can give their considered input – by vote, by comment or by active participation – in public
forums that are as exciting and well managed as an NFL game or a Word Series final.
seanseymour, thanks for your insights and thanks, Yves, for putting them where we can see them.
"... By Clive, an investment technology professional and Japanophile ..."
"... Until the early 19th century, conditions for ships' companies were so unpleasant that few people in their right minds willingly volunteered to participate in the market for crewmen. Vessels could not get enough people to meet their complements. No-one wanted the jobs because there were marginally better, less-worse might be a more accurate description, ways to spend your time. The compensation for sailors could have been raised but that would have made operating the ships "uneconomic". This problem soon led to the introduction of the "press gang" – a group of thugs who dragooned ("impressed") the unfortunate and the unwary – and they were disproportionately drawn from the poor or destitute sections of society – to serve on the ships. ..."
"... The next occasion you find yourself forced to spend your time working your way through competing offers in a market for things you can't easily do without in order to ensure that "benefits" of "free" "markets" can be realised, you might ask are the press gangs really a thing of the past. It is even more ironic if those agencies which are supposed to be looking after our interests end up turning themselves into neoliberalism's press gangs, forcing us to participate in capitalism when even by their own admission it produces worse outcomes for us than public ownership would. ..."
By Clive, an investment technology professional and Japanophile
One of the defining characteristics of neoliberal ideology is that more, or better, markets are
always and everywhere the solution. No matter what the issues are, markets will fix them.
Perhaps the most striking thing about the ideology is, even when it demonstrably fails – and the
markets become the problem – our elites' response is to double-down and to add new, or different,
market layers. The Affordable Care Act (even more colloquially known to its friends as "Obamacare")
is one such example. Lambert has covered this at length in terms of how overlaying an additional
market ( HealthCare.gov ) onto existing, dysfunctional
ones (healthcare insurance, Big Pharma, Health Maintenance Organizations (HMOs) and so on) doesn't
solve anything; it merely compounds the mess.
Rarely, though, do we get any elite acknowledgement – even from those who only carry water for
them such as Paul Krugman – that markets can be problems in and of themselves.
(para 10) … Competition between card schemes to convince payment service providers to issue
their cards leads to higher rather than lower interchange fees on the market, in contrast with
the usual price disciplining effect of competition in a market economy.
For those unfamiliar with finance industry jargon, "card schemes" are the organisation which provide
different types of payment cards to the card issuers like the banks. VISA, MasterCard and American
Express are perhaps the best known card schemes, but there are others. "Interchange fees" are the
costs which the "card schemes" charge "merchants" (stores, supermarkets – places where you spend
your money) for the privilege of using your credit or debit card to buy stuff. You end up paying
for these "interchange fees" because the card schemes charge the merchants and the merchants pass
the costs on to you.
But wait a minute, did that just say "competition… leads to higher rather than lower interchange
fees (costs)"? How can that be? Whatever happened to the Efficient Market Hypothesis? Read on. Actually,
don't you'll die of boredom if you try reading the whole draft EU Regulation, I'll spare you the
pain, the money quote is in the next paragraph (emphasis mine):
(para 11) … The currently existing wide variety of interchange fees and their level prevent
the emergence of 'new' pan (European) Union players on the basis of business models with lower
or no interchange fees, to the detriment of potential economies of scale and scope and their resulting
efficiencies. This has a negative impact on retailers and consumers and prevents innovation. As
Pan-Union players would have to offer issuing banks as a minimum the highest level of interchange
fee prevailing in the market they want to enter it also results in persisting market fragmentation.
Existing domestic schemes with lower or no interchange fees may also be forced to exit the market
because of the pressure from banks to obtain higher interchange fees revenues. As a result, consumers
and merchants face restricted choice, higher prices and lower quality of payment services.
Clive again. Ah-ha! So that's the reason. The banks issue the cards. The card schemes levy interchange
fees for using the cards. The card schemes cut the banks in on the rent-seeking in a revenue-sharing
(I'd call it extortion-sharing) grift. The card schemes compete with each other to get you to use
their cards but the only competition is which card scheme can gouge out the highest interchange fees
to pay off the banks with. The banks do not want an innovative, low cost card scheme to be able to
enter the market thereby cutting off their nice little earner. They want the highest cost schemes
possible.
But that's only going to be a problem in Europe, then? Think again. The EU is at least trying
to discipline the free market and curb the most brazen of the excesses. The situation in the U.S
is even worse. For instance, brand-slap cards (where, for example, a retail outlet does a tie-in
with a card issuer, usually one of the big banks and typically provides discounts or other incentives
for the cardholder when they use their card) have been virtually killed off in the EU by previous
EU regulations banning practices which helped to hide the true costs of these cards. Amazon UK
closed its "Prime" credit card but Amazon in the U.S. continues to offer a brand-slap card product
in a joint venture with Chase.
Let's take a look
at this. At first glance, it seems generous enough, especially on Amazon purchases. But is it
generous or not, compared to the profit Chase will make on the card? You simply cannot tell. And
get a load of the totally outrageous "gotcha's" in the small print:
Please note: We make every effort to include all relevant merchant codes in our rewards categories.
However, even though a merchant or some of the items that it sells may appear to fit within a
rewards category, the merchant may not have a merchant code in that category. When this occurs,
purchases with that merchant won't qualify for rewards offers on purchases in that category. Purchases
submitted by you, an authorized user, or the merchant through third-party payment accounts, mobile
or wireless card readers, online or mobile digital wallets, or similar technology will not qualify
in a rewards category if the technology is not set up to process the purchase in that rewards
category.
Excuse my language, but WTF? Amazon and Chase don't even guarantee that you'll get your incentives.
By the way, this sort of differential pricing depending on the merchant and the EPoS (Electronic
Point of Sale) terminal's level of sophistication is already banned in the UK and most of the EU
through existing financial regulation. It's about time the U.S. regulators followed their lead.
And the EU did decide on a lowering of the EU cross-border interchange fee cap:
(Article 3 / Article 4) … transaction interchange fee of more than 0.2 % of the value of the
transaction for any debit card transaction… credit card transaction a per transaction interchange
fee of more than 0.3 % of the value of the transaction.
In the U.S. Dodd-Frank only imposed a 0.5% cap on debit card transactions. Yes, dear U.S. reader,
you're paying more than double what the EU thinks is the correct level of interchange fee when you
use your debit card – and the Dodd-Frank cap only applies to cards issued by the largest, Too Big
to Fail, banks. And there's no regulation at all for credit card transactions' interchange fees.
Note that this could also explain the phenomena which, at first glance, appears paradoxical of
the banks welcoming ApplePay into the payments industry. It is paradoxical because ApplePay would
seem to be a natural competitor to the existing card schemes – once, that is, it can free itself
from the dependency on the customer having an existing card scheme product as their payment instrument.
But of course, nothing would delight the banks more than to see ApplePay and the existing card schemes
go into a Godzilla-vs.-Mothra battle over who can bribe the banks with the most money from interchange
fees.
The EU did consider banning interchange fees completely. And for very good reasons, here, again,
is a rare admission that sometimes no amount of regulatory intervention can fix a broken market:
(para 18a) …a prohibition of interchange fees for debit card transactions would be beneficial
for card acceptance, card usage, development of the single market (the EU) and generate more benefits
to merchants and consumers than a cap set at any higher level. Moreover it would avoid negative
effects on national systems with very low or zero interchange fees for debit transaction by a
higher cap due to cross border expansion or new market entrants increasing fee levels to the level
of the cap. A ban on interchange fees for debit card transactions also addresses the threat of
exporting the interchange fee model to new, innovative payment services such as mobile and online
systems.
Clive here. The wording is a little dense, but the EU has stumbled on the fact that if you impose
a cap on fees, the cap becomes the market price. All market participants simply charge the "capped"
price, even if their true costs are way lower and they could easily afford to cut their prices and
still make a healthy profit. There's something even worse, but a bit subtler, hidden in this paragraph
too. Once a regulator imposes a price cap for something, they are, de-facto, accepting that it is
right to even charge for what is being sold. Just as so-called environmental levies enshrine the
right of polluters to pollute – they just have to pay to clean up their messes – interchange fee
caps preserve the right for card schemes to charge for something that might not actually be worth
anything at all. We'll return to this problem, and how the EU proposes you solve it, in a moment.
But what about the nuance that I skipped over just now, of how – even though cross border interchange
fees are to capped (thus, it is hoped by the EU, facilitating new pan-EU competitors which might
want to set up shop and offer a low interchange fee across all Union member states) – card holders
and merchants can ensure they are paying the lowest interchange fees possible? Won't all market participants
simply charge the regulated fees?
I'll give you three guesses what the EU's idea is of how to fix this. If you're saying to yourselves
"Clive, it wouldn't by any chance be more markets, would it?", you'd be right. Let's force ourselves
to see it in black-and-white:
(para 30) Payees and payers should have the means to identify the different categories of cards.
Therefore, the various brands and categories should be identifiable electronically and for newly
issued card based payment instruments also visibly on the device. Secondly, also the payer should
be informed about the acceptance of his payment instrument(s) at a given point of sale. It is
necessary that any limitation on the use of a given brand be announced by the payee to the payer
at the same time and under the same conditions as the information that a given brand is accepted.
(para 30a) In order to ensure that competition between brands is effective, it is important
that the choice of payment application be made by users, not imposed by the upstream market, comprising
payment card systems, payment service providers or processors. Such an arrangement should not
prevent payers and payees from setting a default choice of application, where technically feasible,
provided that that choice can be changed for each transaction.
Clive's take: So, in the future, in addition all of the other taxes on our time which neoliberalism
imposes, we'll have another way to add to our time-stress.
When we want to pay with a card (or a new "payment instrument" such as our phone), we'll enter
a Randian nirvana where the EPoS terminal where we're buying whatever it is we're trying to buy starts
a game of "let's play markets" with us, proffering the choice – neoliberal-leaning thinkers do seem
to love that word – of payment application starting with what the merchant is incentivised to select.
Then other "brands and categories" – are you losing the will to live yet? – will be suggested,
while you clutch your groceries, or hope the kids aren't trashing the car while you pay for gas or
(and who hasn't been in this position) keep their fingers crossed they've got enough available funds
and their card won't be declined as it's maxed out.
Actually, the fun starts before you've even entered the store.
(Article 10 para 3) Merchants deciding not to accept all cards or other payment instruments
of a payment card scheme shall inform consumers in a clear and unequivocal manner at the same
time as they inform the consumer on the acceptance of other cards and payment instruments of the
scheme. That information shall be displayed prominently at the entrance of the shop and at the
till. In the case of distance sales, this information shall be displayed on the website or other
applicable electronic or mobile medium. The information shall be provided to the payer in good
time before he enters into a purchase agreement with the payee.
That's alright then. You've just driven to (if you live in a place like where I used to live,
out in the sticks) the only supermarket in town, no food in the refrigerator, tired after a day's
work and availed yourself of detailed information on the storefront about what payment instruments
they accept and, presumably, only enter the merchant's premises if you're happy with the payment
options available.
You, the consumer, will be supposed to decide which is the best application where your co-badged
payment instrument supports more than one scheme. In order to decide which is the "best", you'll
need to memorise which application has the lowest fees, the most cardholder rewards or whatever pricing
signal has been wafted in your direction. Oh, and you can also try to figure out if the merchant,
or you, are using "mobile or wireless card readers, online or mobile digital wallets, or similar
technology" that "will not qualify in a rewards category" like we've seen in the Chase/Amazon card's
Terms and Conditions small print. Good luck with all that.
Then, you can be a nice, well brought-up participant demonstrating how you hold up your end of
the Theory of Rational Expectations bargain, ever-eager to adjust your response(s) accordingly.
Until the early 19th century, conditions for ships' companies were so unpleasant that few people
in their right minds willingly volunteered to participate in the market for crewmen. Vessels could
not get enough people to meet their complements. No-one wanted the jobs because there were marginally
better, less-worse might be a more accurate description, ways to spend your time. The compensation
for sailors could have been raised but that would have made operating the ships "uneconomic". This
problem soon led to the introduction of the "press gang" –
a group
of thugs who dragooned ("impressed") the unfortunate and the unwary – and they were disproportionately
drawn from the poor or destitute sections of society – to serve on the ships.
The next occasion you find yourself forced to spend your time working your way through competing
offers in a market for things you can't easily do without in order to ensure that "benefits" of "free"
"markets" can be realised, you might ask are the press gangs really a thing of the past. It is even
more ironic if those agencies which are supposed to be looking after our interests end up turning
themselves into neoliberalism's press gangs, forcing us to participate in capitalism when even by
their own admission it produces worse outcomes for us than public ownership would.
And if only it was just finance. It is due to this kind of cognitive capture – this idealism
– that we also can't have nice things like single-payer healthcare.
"I am altering the deal. Pray I don't alter it any further."
Beyond the tax on time of finding the optimal deal at that particular moment, the moment may
only be of the moment. Of particular note in the ACA is the ability of the provider to drop coverage,
at any time, for medicines that the particular plan had been studied to provide. The bait, the
switch, and back on the hamster wheel.
It would tend to lead to a tactic of taking the option with the shortest amount of fine print.
But as Godel pointed out about the Constitution, it doesn't matter how short the algo is, if it
contains the ability to switch the priors, it cannot be said to be consistent.
'Ah, well, this set of shackles doesn't chafe so much…'
All too true. The financial services industry did not invent bait and switch. But they've certainly
become Sith Lords in that particular dark art. "These aren't the Amazon Reward Points you're looking
for…"
There is a lot of nonsense about frictionless markets that supposedly feature zero information
costs, zero transaction costs, zero regulatory costs, etc. As if markets were some sort of natural
phenomenon like gravity.
Well the simple (actually, simplistic) answer is that the UK discount supermarkets run on such
wafer-thin profit margins that even the fairly minor differential between credit and debit account
fees (0.3% against 0.2%) is enough to make them wary of accepting credit cards.
What is actually a potentially a bigger cost, though, is that credit card transactions fall
under
additional consumer protection (Section 75 of the Consumer Credit Act) which means that the
merchant always has to accept a chargeback and refund the customer. Debit cards do not:
Remember that any (debit card) protection offered is not a legal obligation (like Section
75 for credit cards) but an in-house rule: this means that the exact rules for chargeback schemes
vary by (debit) card provider, so you should make sure you are aware of your debit card's chargeback
rules.
But with credit cards, the merchant then has the obligation on them to show that the chargeback
is eligible for a chargeback-reversal (forcing the card holder has to pay up). The costs of the
chargebacks - and the costs of investigating and trying to prove there are sufficient grounds
for a chargeback-reversal are not trivial when one considers the sheer volume of supermarket transactions.
This information applies to the UK jurisdiction only. But similar can also apply elsewhere
(I must confess I'm not quite so clued-up on U.S. statues and I suspect they also vary by state).
So if a merchant doesn't accept credit cards but does accept debit cards, it's either down to
the fees or the unwillingness to be liable for chargebacks, or a combination of both, depending
on the merchant, the profit margin and the jurisdiction.
The Aldi near me in the us just recently started accepting all the major credit cards. I expect
prices will rise to offset the cost. But I was surprised as it flies in the face of their stated
low cost operation.
They were probably able to do a huge cross-border (right across the EU) deal for card processing
because of their scale. Mega players like supermarkets have pretty good bargaining power. And
because they only do groceries - plus a tiny amount of general merchandise and no apparel, they
won't have much risk of being hit with the chargebacks problem. This is a useful bonus to their
simple, limited numbers of SKUs, business model.
ah, but the solution to that is to have the app that communicates with the terminal and smartly
decides which is the cheapest option for you. And promptly charges you the difference between
the cheapest and most expensive one, so that's ok then
This reminds me of a similar story from the UK. In the mid-1980s there was a big change in
the selling of retail financial products (life assurance, mutual funds etc). As part of this several
new regulatory bodies were created, including one known as LAUTRO (Life Assurance and Unit Trust
Regulatory Organisation).
At the time financial advisors were renumerated by commission. LAUTRO introduced a cap, with
formulae based on premium and term. Funnily enough everyone in the market (no exceptions that
I saw) started paying the maximum commission. To be fair, I think it was lower than many were
paying before the reformation.
After a couple of years it was ruled that this was anti-competitive and there should be a free
market to bring these costs down. And guess what? Yes – commission rates, and hence costs, went
up. Typically rates were 120-130% of what was there before. This probably lopped off about 1%
or so more of premiums paid compared to before. The 'cure' of course was disclosure – make the
amount of commission more explicit so people can make their own decision.
Did it work? Of course not! Eventually (20+ years later) we had regulation that sort of stopped
commissions. Deja vu all over again.
And, in the US, there are the cards that charge a 'foreign exchange transaction fee' when used
in non-US countries. And, the cards that don't. And, the credit cards that don't work at automated
ticket vendors/gas pumps, etc., while traveling abroad because, even if they have an embedded
chip, don't have a PIN.
Last summer, we were 'press-ganged for Capitalism' when arriving on a very late flight at Newark,
NJ, we opted for a taxi (NOT Uber, because I read NC) instead of public transportation to get
to Hoboken. One must now prepay for the taxi at the airport with a credit card. And … the point-of-sale
machine cheerily states that it is imposing a $3 fee for giving you the privilege of using the
system. Had I been wearing wooding shoes, I would have beaten the machine to a pulp.
I think a simple example that everyone can understand is cable service or cell phones (I could
go on and on – anyone able to shop medical services???)
These two "services" show that the vast majority of "choice" is a Mcguffin – supposed choice within
plans about everything EXCEPT the price of the basic unit of what you are buying – they simply
will not tell you in comprehensible terms how much a minute of airtime costs (not to mention purposeful
complications like time frames, weekends, other users, number of devices, etc.) so that you cannot
compare it to another carrier.
Despite the incessant bullsh*t, the fact is, we live in the LEAST transparent of times…
If a merchant accepts credit cards AND does not offer a discount for paying cash AND my CC
issuer has a x% cash "rewards" program, then is it not a rational decision to use the card?
Depends on how much the merchant has had to increase their prices to compensate. The problem
is one of obfuscation. You can't have pricing signals if the price of the service you are using
is hidden from consumers.
it is rational. The problem there is that the CC company might have moved the goalpost, either
for the merchant or for the customers.
If we assume that the merchant just passes the whole cost to the customer (it is not always
the case, sometime they just have to grin and bear it), then merchant wins a bit (not all customers
will pay with CC), and the CC company wins a bit (it gets its money from those who do pay with
CC). Clients lose a bit (if they pay with CC) or a lot (if they pay with cash). And this is the
point – you basically have to have the right card to NOT LOSE.
You're not taking steps to win, you have to take steps to lose less than you'd otherwise (because
you lose one way or another).
That said, the problem here is non-trivial. If you apply the obvious solution (no interchange
fees) the banks will go and try to make it somewhere else (think PPI insurance in the UK, account
fees that people loathe etc. etc.). Ultimately, banks need to make money too. I know, heresy,
but we're not talking about 20%+ RoE, but a regulated utility levels of return.
I understand Clive's point of wasting time on deciding on payments methods, but if cash is
always guaranteed to be the cheapest, then there's a viable default option – at least for majority
purchases where cash can actually be reasonably used.
Banks then could easily offer say debit cards with zero interchange costs but a monthly account
fee – tbh, this would be fairer IMO, as the marginal costs of processing extra client transaction
are trivial once the fixed costs of the system are covered. Of course, in the UK account fees
are a bugbear which scares people into paying much more via other (often invisible, and often
hitting the poorest most) fees.
"... The only thing you can trust is that Goldman Sach's values don't include giving a damned about average Americans even if in Blankfein's delusional mind he is doing "Gods work. It would go a way toward restoring trust in the system if these rip off artists would consent to paying more taxes on their ill deserved gains in order to help bring down some of the nations debt and relieve the misery their unethical behavior created. But that will never happen voluntarily. Basically they are immoral creeps killing the golden goose that is our country. ..."
"... Run corruption out of DC and there will be much more trust of big business. Do not buy the garbage that politicians are critical of the Wall Street crowd. Has Hillary released her speeches yet? NO. Don't expect she ever will. (aside: I do not find this article informative, and I'm dismayed by the comments I've read here.) ..."
"... "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. …corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." ..."
"... The mass of Americans are too powerless to fight back against the reign of the money powers. As Lincoln predicted, our Republic is destroyed. What awaits us now is dictatorship or even worse ... theocracy. ..."
Brilliance is often accidental, and so it was at Goldman Sachs' annual meeting on Friday.
In an attempt to pinpoint exactly what's wrong with the global economy - why demand is weak, why
growth is anemic, why jitters on one side of the planet can turn into panic all over - CEO Lloyd
Blankfein happened upon why Wall Street is so hated.
It was, as I said, an accident.
Blankfein said that what the world needs now is confidence. In investment banking, when people
are confident t
here are "more financings, more equity raises, because people invest more money
in their own businesses when they're confident," he said, according to
Business Insider's Portia Crowe
, who was on the scene.
This explanation sounds right. When people think they can make money they put their money to work.
The problem is that "confidence" doesn't go far enough. More than confidence, for people to invest
in the world they have to trust in it - in the systems and people that make it work.
The fact that Blankfein missed that mark, though, explains exactly why people hate Wall Street.
The financial crisis, the scandals and the fraud and the dark headlines, have all helped erode
that trust. And that lack of trust is what is holding the world back right now.
This is not a drill
Think of a simple trust-building exercise, the fall game. When you're the fall guy, you can be
confident that everyone is going to catch you. That, after all, is how the game is completed. You
have to believe that everyone understands the rules.
What's better than knowing that everyone understands the rules, though? Trusting that everyone
around you is going to catch you - believing beyond a shadow of a doubt that they
want to follow
the rules
.
That's the difference between trust and conviction. Trust is something you can rely on, beyond
certainty.
Now one can operate in markets without trust, with only conviction.
Conviction doesn't demand that you, or anyone else, play by the rules, though. It just demands
that you understand what's going on (and what motivates everyone around you) at all times. It's a
daunting task that neither the common person nor Wall Street's all-seeing CEOs were able to accomplish
before the financial crisis. It is, however, part of the latter's full-time job - mitigating risk,
seeing the unforeseen.
Of course, some of that burden would be lifted if we operated on more trust and less conviction.
Your correspondent is hardly the only person thinking this way. This week, Andrew G. Haldane,
chief economist of the Bank of England, gave an incredibly compelling speech on what's wrong with
global economy. Unlike Blankfein, though, he got it right. The speech was called
The Great Divide,
and he argued that the only way to close that divide is with trust.
"Evidence has emerged, both micro and macro, to suggest trust may play a crucial role in value
creation. At the micro level, there is now ample evidence the degree of trust or social capital within
a company contributes positively to its value creation capacity," said Haldane.
"At the macro level, there is now a strong body of evidence, looking across a large range of countries
and over long periods of time, that high levels of trust and co-operation are associated with higher
economic growth. Put differently, a lack of trust jeopardizes one of finance's key societal functions
- higher growth."
Watchers on the wall
Back in 2014, when the market was roaring and everyone thought we were on the road to recovery,
Dylan Grice, a portfolio manager at Aeris Capital, put forth the same idea. He saw in declining relations
between the US and China, between Russia and the world, and between citizens and corporations what
could only be perceived as our descent into the trough of a cycle of trust.
And, as he pointed out, credit - one of the main forces for moving money from place to place -
comes from the Latin word for trust.
Over at HSBC, economist
Stephen King wrote a note called
Unhappy Families: The Case for International Policy Coordination
in which he argued that the
global economy could actually be saved quite easily if we trusted each other. If the countries that
could save us - the US, China, and Germany - acted unselfishly and in coordination and simply did.
But they won't, because there is no trust.
"Yet it would be easy, too easy, to point the finger at finance alone," Haldane said in his speech.
"For this Great Divide exists not just between the financial elites, but between elites generally
and wider society. It is not just bankers who have suffered a loss of public trust. In varying degrees,
this is also true of big business, government and, yes, politicians and central banks."
Man, see this mirror
This brings us back to Goldman Sachs, which happened to have had a very embarrassing little incident
last week when one of its analysts recommended buying Tesla just before the bank announced that it
would be helping the automaker with an equity offering.
The stock upgrade is a detailed argument for why you, the investors,
should buy the shares. As a result, investors buy.
This report is delivered just as Goldman's sales force is about to
hit the phones to push $1.4 billion of those very shares for a nice fat fee for Goldman and a dilutive
hit to the shareholders.
So then there are investors who, based on Archambault's note, bought
the shares in the morning only to learn by that afternoon that Goldman would have a hand in diluting
their newly acquired ownership stake.
And the popular view says Goldman knew this was going to happen the
whole time.
If you're thinking the worst, this snafu was a breach of Wall Street's famous Chinese Wall between
research and investment banking. What's more, because of this trust deficit, most people were thinking
the worst because that's what they do when they think of Goldman Sachs.
View gallery
.
Lloyd on a vampire squid. Sorry bro, too easy.
And because of that some people don't trust, or put their money in, the market.
And because of that the market doesn't move.
Haldane sees this fear as a loss of social capital arising from the crisis.
"Social capital is inextricably linked to trust," he said in his speech. "And banking is quintessentially
a trust business. At root, it involves swapping promises to pay. These promises rely on trust."
It's the belief that these promises
will be kept
that the market is lacking, not necessarily
that they
can be kept.
This is the difference between trust and confidence. And with every
scandal and fraud, every dark headline telling of financial ruin that comes from the financial sector,
some of that trust is lost.
Haldane thinks that recreating the local bank, a bank with the kind of accountability that comes
from knowing someone by name and looking them in the eye, is part of the solution. But banking isn't
moving that way. Every day we hear about how it's becoming more automated.
He acknowledges this, recognizing that banking must "seek new ways to nurture generalized, or
anonymous, trust on the part of the public. Technology may be a great enabler here."
But in the end it doesn't matter how we fix this. We just have to fix it.
"Whatever business model is adopted, success will hinge on whether the public have faith in banks
pursuing a purpose aligned with their needs, that they are fulfilling their fiduciary function. There
is a mountain to climb on this front, not just for banking but for business generally," he said.
"If not at an all-time low, public trust in big business is plumbing the depths. And the chorus
of criticism of business is not confined to the general public. It is shared by politicians, academics,
investors and indeed sometimes by companies themselves."
Everyone is holding on to their money. Everyone is trying to look someone the eye and finding
their counterparties' gaze shifting to wherever self-interest guides them. The counterparties are
confident they'll find money there, sure, but the trust that makes the market go around is being
lost in the process.
It takes so much more to build it up than to break it down.
GS, Chase ,BofA,Wells Fargo.....,and some others big banks created the crisis past 2008-09.
Any
one of the executives pass a day in prison, they pay cents on the dollars and happy cumballa until
the next scam. Gov it's corrupt with a "revolving door" infiltrating the key position, every official
working in White House or with the executive branch did work for a big bank first or going to
work after!!!
They want trust, trust they themselves self smash, hundreds of case in courts from US citizens
right now vs Government Why?
Because Gov. trying to steal ,expropriating private property without
compensation and ignoring constitution. The rest of the population are worring about what wearing Kardashian!!! Our next election will be a show top level globally!!! Our founding fathers will
be revolting in their tombs for now
PhilOSophocle
What the world needs now --- is love, sweet love. It's the only thing that there's just too
little of, or so Burt Bacharach, Hal David & Jackie DeShannon said. But seriously folks . . .
people hate Wall Street because of the unbridled greed everywhere. The Great Recession wasn't
caused by real estate speculation --- it was caused by easy money from Wall Street when they
packaged together risky mortgages & investment bankers sold them to banks as great
investments, and then betting on them to fail on the side using Credit Default Swaps. It's
very similar to what Joe Kennedy and his cronies did in the 1920's using market manipulation
by cornering stocks & then doing a bear raid on it, which is illegal now. What the Wall
Streeters did in 2000-2007 is still not illegal.
ey02kdv98
I agree. Trust needs to be restored. This requires Wall Street firms to be honest, and to
weed out the greedy, psychopathic and sociopathic brokers, bankers, CEOs and chiefs, and
assorted other criminals. By running firms honestly to a fault, investors would at first shy
away because they'd think it was some kind of trick. Over a short period, good experiences
will increase business to the point that it would exceed current sales many times over, even
beyond your wildest imagination. There is a lot of $$$$$$$$$$$$ to be made in honestly run
business. It's never to late to start.
Mark14
The only thing you can trust is that Goldman Sach's values don't include giving a
damned about average Americans even if in Blankfein's delusional mind he is doing "Gods work.
It would go a way toward restoring trust in the system if these rip off artists would consent
to paying more taxes on their ill deserved gains in order to help bring down some of the
nations debt and relieve the misery their unethical behavior created. But that will never
happen voluntarily. Basically they are immoral creeps killing the golden goose that is our
country.
DavBG
The repeal of Glass Stegal (which Roosevelt put in place after the last great depression)
which prevented banks from investing depositors money in the stock market, is the root cause
here. Banks were only allowed to make loans on real property, like businesses and mortgages.
This put the money in savings back to work. Money placed in the house of cards, ponzi scheme,
stock market, just sits there. Like a giant sponge sucking up the spare capital so that a 1%
few can reap the benefit. Then insiders can cause booms and busts which slowly siphon the life
out of a country and enslave it. The mortgage rate is now the lowest it has ever been in the
US. Now with everyone's money in the stock market the next crash will bankrupt us since all
the banks will have is worthless paper stock certificates.
Rp
Trust is not created through slick marketing and strategic press releases about speeches
made by banking insiders, to other insiders, intended to convince those outside their cozy
system, that they get it now, no more underhanded dealings, really this time, partners 50-50.
We promise, no fingers crossed, everything above board from now on, you can trust us, really
this time. That bs is played out, to ask for trust, is to confirm the fact that they should
not, can not, be trusted. Trust, if it ever returns, to any degree, in any form, will be
created by the numbers. The real numbers. The ones written under our names. The ones that
stick. Trust is not a marketing concept, it can't be put where it doesn't belong, it can't
grow where it isn't planted, protected, and nurtured.
Pat
Wall Street manipulators could not succeed without the complicity of Government. STOP
REGULATING WALL STREET AND START DEMANDING THAT POLITICIANS CANNOT BE CONTROLLED BY LOBBYISTS.
There should be a law that politicians bought by lobbyists WILL be prosecuted. It is
Government that is guilty of capitulation. GOVERNMENT WRITES THE LAWS AND THE TAX CODES.
Run corruption out of DC and there will be much more trust of big business. Do not buy
the garbage that politicians are critical of the Wall Street crowd. Has Hillary released her
speeches yet? NO. Don't expect she ever will. (aside: I do not find this article informative,
and I'm dismayed by the comments I've read here.)
Freethinker
It's so simple: the bank robbers have been given (or have taken) the combination to the
bank vault and looted it. Then they were given raises and bonuses for this heist.
Doubt me? That canny corporate lawyer Abraham Lincoln anticipate our modern condition as far
back as 1864, when he wrote:
"I see in the near future a crisis approaching that unnerves me and causes me to
tremble for the safety of my country. …corporations have been enthroned and an era of
corruption in high places will follow, and the money power of the country will endeavor to
prolong its reign by working upon the prejudices of the people until all wealth is
aggregated in a few hands and the Republic is destroyed."
The mass of Americans are too powerless to fight back against the reign of the money
powers. As Lincoln predicted, our Republic is destroyed. What awaits us now is dictatorship
or even worse ... theocracy.
"... By Gerald Friedman, Professor of Economics, University of Massachusetts, Amherst. A version of this post first appeared at the Institute for New Economic Thinking website ..."
"... Lesser Depression ..."
"... The reason why elite economists and politicians were so angry at my analysis of Sanders' proposals was that it disrupted a consensus that nothing can be done by government to improve the performance of the economy. After all, if things are already as good as they can be, it is irresponsible pie-in-the-sky to even suggest to the general public that we can do better. Instead, the task of economists and other policy elites becomes to explain to the general public why they should accept stagnant incomes and rising inequality, and applaud the anemic growth of recent years as the best possible outcome. But the real danger of such thinking is that it leaves liberals like Hillary Clinton with few policy options to offer in response to the siren song of demagogues like Donald Trump. The self-proclaimed "responsible" elite economists see their role as to persuade the public that nothing can be done, in the hope of heading off the challenge of those who would capitalize on the electorate's appetite for change. They have to slap down critics. "Responsible" elite economists have to keep the party of "good arithmetic" from overpromising at all costs. It should not surprise us, though, that those whose living standards have suffered most from stagnant growth are more inclined to believe politicians promising change. ..."
"... John Maynard Keynes showed how active government policy can raise employment and output; his followers, including Joan Robinson and Nicholas Kaldor, showed how full employment encourages further investments and leads businesses to find ways to raise labor productivity to match increasing product demand. New Deal American economists, such as Rexford Tugwell and John Maurice Clark, showed how active government policy can raise growth rates with investments in infrastructure, in public services, in human capital development, and in research and development. By listening to these ideas, economists associated with liberal American politics helped produce 25 years of relatively rapid and egalitarian growth after World War II. Abandoning these ideas, we have suffered 30 years of relatively slow growth and rising inequality, culminating in the current Lesser Depression. ..."
"... I had dinner last night with two excellent people who happen to be doing well at this time. They could not comprehend why anyone would be voting for Trump, whom they saw as a dangerous lunatic. They have supported Sanders and voted for him in the NY primary, but are absolutely going to vote for Clinton in the Fall. What I view as the credible case against Clinton has not reached them with any strength or registered at all. I was asked (because I had said nothing while they talked–I hate this kind of confrontation) what problem people could have with Hillary? I said: Libya, Ukraine, and Nicaragua. They really didn't know what I was talking about and although I spoke up for why I thought this made her a neocon like the ones that surrounded Dubya, they simply didn't know any of the details and we left it at that. ..."
"... HRC's recap of Reaganite Latin America policy is her most vile achievement. If anything demonstrates a continuity of imperialist strategy across administrations, that's it. ..."
"... " I said: Libya, Ukraine, and Nicaragua. They really didn't know what I was talking about and although I spoke up for why I thought this made her a neocon like the ones that surrounded Dubya, they simply didn't know any of the details and we left it at that." ..."
"... I run into this all the time. Utter and complete foreign policy illiteracy, particularly from otherwise politically correct millennials who know so little that Hillary gets a complete pass. ..."
"... This is a common story and illustrates that our current detachment from the world around us and our fellow citizens is coming to an end. We are being forced out of our individual bubbles. Modern corporations have supplied the populations of the world with abundance of goods, but in order to accomplish this feat, have destroyed and are destroying the cultural glue, if you will, that holds society together. ..."
"... TINA will be maintained by propaganda and physical force. We see that the propaganda is starting to weaken because the contradictions of the message can no longer be hidden. The destruction is too widespread and the inequality can no longer be hidden. You can hollow out a social system only so much before it collapses. The collapses we are witnessing is the promise of democracy. A collapse of the ideals of moderation and compromise. ..."
"... We are entering a phase of civil war. It is still carried out in a polite manner and intellectually, the discussion is still couched in Orwellian doublespeak. However, criticisms of the ruling elite are becoming more straightforward and more people are waking up to the fact that the system is rigged against them. ..."
"... This civil war is a battle over leadership. It is a battle to demand good government instead of no government. It is a battle to demand a government for and by the people. A battle for the common good. Evaluated not in some abstract terms like "trickle down" economics, but direct support and action. The hearts and minds of the population was won over long ago to wholeheartedly support capitalism and private ownership of the world's resources. This is proving to be a disaster. ..."
"... Supporters of unfettered capitalism know only one way. Privatization of ALL the worlds resources and potential. They showed their hand in 2008 with the bailouts and implementation of austerity policies. In their minds, there is no turning back. To compromise means failure. For them, TINA is real and logical. This is the perspective of owners of capital. They gain strength and advantage from seeming to compromise, but in the end know they can always reverse course and regain private control. Subterfuge and force allows the resilience of capitalism as the reigning social order. ..."
"... Jonathan Haidt is a psychologist, sometimes featured in the New York Times, who apparently believes the capability of people to be convinced by reasoned argument is not strong. From my limited reading of his work, he suggests that humans are instinctive beings who, when they have strong beliefs, their reasoning powers are used to justify these beliefs, not to cast doubt about these beliefs. ..."
"... For example, I believe HRC is little more than a well-connected and well traveled mediocrity, with a record of few positives and many egregious negatives that justifies this assessment. I view her as potentially more damaging to the USA, as President, than Trump. ..."
"... Successful big ideas and big projects require cheap abundant energy, resources and intelligent design. It'll be mighty funny when the Keynesians finally implement their plan to overhaul the national highway infrastructure, creating tons of high paying jobs and speeding up the economy–right when our access to cheap oil collapses. That's dumb design at its finest, yet this sort of thing is almost certainly the best that the lobotomized Keynesian planners will be able to think up and do. ..."
"... A truly innovative program to get the economy moving in a positive direction would be to outlaw personal vehicles and rebuild the nation's railway network. ..."
"... I share your antipathy toward freeways. I remember the big Freeway they built in Fresno when I was a child, destroying hundreds, if not thousands of modest homes (we had to move from a grand rental to a dilapidated house that cost more – were the landlords behind getting rid of a surplus of houses????) – to save maybe – maybe at the most 3 minutes in transit time over driving an existing surface street. Jobs were part of the rationale. ..."
"... "Sorry, nothing more can be done for you." TINA. ..."
The ferocious
reaction
to my
assessment
that Senator Bernie Sanders' economic and health care proposals could create long-term economic
growth shows how mainstream economists who view themselves as politically liberal in America have
abandoned progressive politics to embrace a political economy of despair. Rationalizing personal
disappointment and embracing market-centric economic theories according to which government can do
little more than fuss around the edges, their conclusions - and the political leadership that embraces
them - have little to offer millions of angry ordinary people for whom the economy simply isn't working.
It has certainly been a rough seven years for the economists in the Obama Administration. While
avoiding a Great Depression, the Administration has presided over what Paul Krugman and Brad DeLong
call a "
Lesser Depression ." One might almost forgive them for a certain defeatism after seven
years of painfully slow economic recovery, and the dismay of seeing urgently needed programs blocked
by the Republican congressional majority. After so many compromises and let-downs, perhaps it is
easier to tell those who expect more that it just can't happen. There is comfort in the Thatcherite
phrase, "There Is No Alternative" (TINA).
Combined with orthodox neoclassical microeconomics, however, rationalization has produced a toxic
political economy that abandons progressive ideals and surrenders political space to xenophobes and
the populist rightwing (see: Donald Trump). The mainstream economists who have attacked my embrace
of Keynesian economics have abandoned, in practice, the notion that government can effectively intervene
in the economy to raise levels of employment, and to promote economic growth and equity. Instead,
they have returned to pre-Keynesian Classical thinking, where the very suggestion that government
action can raise growth rates or wages is taken to be obviously wrong. Criticisms of the
orthodox model and its conservative policies are deemed worthy of scorn, to be dismissed tout
court because they are obviously at variance not only with textbook economics, but with what
we need to believe in order to accept failure .
The mechanism of economic policy paralysis among the liberals who espouse market-centric economics
works like this: If we accept the (flawed) premise that the total supply of goods and services equals
total demand, then we can agree with the Congressional Budget Office (CBO) that potential output
is best measured by observing actual output. And, with that - presto! - unemployment magically disappears,
and we no longer suffer from slow growth. Conveniently align growth projections with the otherwise-disappointing
performance during the Lesser Depression, and, as the CBO has done, estimates of potential growth
now equal actual growth: Instead of the 3 percent average annual growth of the 1959-2007 period,
not to mention the 4 percent growth 1947-73, we are now told to accept 2 percent growth not as a
disappointment, but as recognition of an unfortunate necessity. Such reevaluations say to policy
elites, "Hey, we are doing as well as can be expected." To the general public, the message is: "Sorry,
nothing more can be done for you." TINA.
The reason why elite economists and politicians were so angry at my analysis of Sanders' proposals
was that it disrupted a consensus that nothing can be done by government to improve the performance
of the economy. After all, if things are already as good as they can be, it is irresponsible pie-in-the-sky
to even suggest to the general public that we can do better. Instead, the task of economists and
other policy elites becomes to explain to the general public why they should accept stagnant incomes
and rising inequality, and applaud the anemic growth of recent years as the best possible outcome.
But the real danger of such thinking is that it leaves liberals like Hillary Clinton with few policy
options to offer in response to the siren song of demagogues like Donald Trump. The self-proclaimed
"responsible" elite economists see their role as to persuade the public that nothing can be done,
in the hope of heading off the challenge of those who would capitalize on the electorate's appetite
for change. They have to slap down critics. "Responsible" elite economists have to keep the party
of "good arithmetic" from overpromising at all costs. It should not surprise us, though, that those
whose living standards have suffered most from stagnant growth are more inclined to believe politicians
promising change.
It was only by rejecting classical economics that Franklin Roosevelt was able to save the American
economy and bring about a revolution in social policy. And only by rejecting the new classical economics
and the policy of so-called responsible elite economists can Clinton meet our current economic crisis.
John Maynard Keynes showed how active government policy can raise employment and output; his
followers, including Joan Robinson and Nicholas Kaldor, showed how full employment encourages further
investments and leads businesses to find ways to raise labor productivity to match increasing product
demand. New Deal American economists, such as Rexford Tugwell and John Maurice Clark, showed how
active government policy can raise growth rates with investments in infrastructure, in public services,
in human capital development, and in research and development. By listening to these ideas, economists
associated with liberal American politics helped produce 25 years of relatively rapid and egalitarian
growth after World War II. Abandoning these ideas, we have suffered 30 years of relatively slow growth
and rising inequality, culminating in the current Lesser Depression.
The debate over my little report showed how mainstream economics has left us with a smugly certain
macroeconomics lacking in imagination, and offering no effective policies to move beyond economic
stagnation and escalating inequality. If these economists cannot do better, then we risk more than
personal disappointment; we gamble our liberal political economy against the likes of Donald Trump
and Ted Cruz. Hillary Clinton can do better. And Americans deserve better.
A very bold thing for a man like this to say. I know he will be criticized (vilified?) for
his misplaced belief that Clinton can "do better", but considering who this man is and where he
is coming from, condemning him at this stage of the game would be churlish. He's taken on The
Bigs and the stifling orthodoxy they embody and for that we owe him.
I had dinner last night with two excellent people who happen to be doing well at this time.
They could not comprehend why anyone would be voting for Trump, whom they saw as a dangerous lunatic.
They have supported Sanders and voted for him in the NY primary, but are absolutely going to vote
for Clinton in the Fall. What I view as the credible case against Clinton has not reached them
with any strength or registered at all. I was asked (because I had said nothing while they talked–I
hate this kind of confrontation) what problem people could have with Hillary? I said: Libya, Ukraine,
and Nicaragua. They really didn't know what I was talking about and although I spoke up for why
I thought this made her a neocon like the ones that surrounded Dubya, they simply didn't know
any of the details and we left it at that.
I've had many similar recent encounters. I find that if I ask for a positive reason to vote
Clinton, the first three or four reasons they raise can be dismissed by single phrase references
to past betrayals, Sister Solja, End of Welfare, Nafta etc. and the next few by scandals, Lewensky
or what should be scandals as you mentioned. As a rule after four or five tries I get to watch
them self censor before each subsequent try and don't have to make any negative claims myself.
I doubt I've changed minds, but they no longer doubt mine.
I think that was a slip, but an historically correct one I can completely sympathize with.
HRC's recap of Reaganite Latin America policy is her most vile achievement. If anything
demonstrates a continuity of imperialist strategy across administrations, that's it.
" I said: Libya, Ukraine, and Nicaragua. They really didn't know what I was talking
about and although I spoke up for why I thought this made her a neocon like the ones that surrounded
Dubya, they simply didn't know any of the details and we left it at that."
I run into this all the time. Utter and complete foreign policy illiteracy, particularly
from otherwise politically correct millennials who know so little that Hillary gets a complete
pass.
This is a common story and illustrates that our current detachment from the world around
us and our fellow citizens is coming to an end. We are being forced out of our individual bubbles.
Modern corporations have supplied the populations of the world with abundance of goods, but in
order to accomplish this feat, have destroyed and are destroying the cultural glue, if you will,
that holds society together.
TINA will be maintained by propaganda and physical force. We see that the propaganda is
starting to weaken because the contradictions of the message can no longer be hidden. The destruction
is too widespread and the inequality can no longer be hidden. You can hollow out a social system
only so much before it collapses. The collapses we are witnessing is the promise of democracy.
A collapse of the ideals of moderation and compromise.
We are entering a phase of civil war. It is still carried out in a polite manner and intellectually,
the discussion is still couched in Orwellian doublespeak. However, criticisms of the ruling elite
are becoming more straightforward and more people are waking up to the fact that the system is
rigged against them.
This civil war is a battle over leadership. It is a battle to demand good government instead
of no government. It is a battle to demand a government for and by the people. A battle for the
common good. Evaluated not in some abstract terms like "trickle down" economics, but direct support
and action. The hearts and minds of the population was won over long ago to wholeheartedly support
capitalism and private ownership of the world's resources. This is proving to be a disaster.
Supporters of unfettered capitalism know only one way. Privatization of ALL the worlds
resources and potential. They showed their hand in 2008 with the bailouts and implementation of
austerity policies. In their minds, there is no turning back. To compromise means failure. For
them, TINA is real and logical. This is the perspective of owners of capital. They gain strength
and advantage from seeming to compromise, but in the end know they can always reverse course and
regain private control. Subterfuge and force allows the resilience of capitalism as the reigning
social order.
I bring up the notion of a civil war because these ideas are too important to be left to chance.
In America, the citizenry has been complacent with their lot in life and so have lost control
over their fate. As the world changes around them, they desperately attempt to hold onto their
position while not realizing they are supporting their own impoverishment. Speaking ideas of the
common good -for ALL- and notions of public ownership of land, natural resources, citizens natural
rights to jobs, basic income, and healthcare divide family and friends. Those who are comfortable
don't want to cause trouble and those feeling the pressures brought down upon them by an unrelenting
system are too weak and fearful to act.
In a sense, the revolution has already begun. It is the revolution to convince people that
there is a better and different way to live our lives.
Jonathan Haidt is a psychologist, sometimes featured in the New York Times, who apparently
believes the capability of people to be convinced by reasoned argument is not strong. From my
limited reading of his work, he suggests that humans are instinctive beings who, when they have
strong beliefs, their reasoning powers are used to justify these beliefs, not to cast doubt about
these beliefs.
This can explain why attempting to convince someone to change their political/religious beliefs
is fated to be largely futile.
For example, I believe HRC is little more than a well-connected and well traveled mediocrity,
with a record of few positives and many egregious negatives that justifies this assessment. I
view her as potentially more damaging to the USA, as President, than Trump.
Per Haidt, maybe my beliefs are instinctive and I am willfully blind to all of Clinton's accomplishments
over the last 40 years.
I think that if there are to be any Keynesian big ideas and projects that will help lift us
out of this stagnation, they will much more likely come from a Trump Administration than a Clinton
one.
Successful big ideas and big projects require cheap abundant energy, resources and intelligent
design. It'll be mighty funny when the Keynesians finally implement their plan to overhaul the
national highway infrastructure, creating tons of high paying jobs and speeding up the economy–right
when our access to cheap oil collapses. That's dumb design at its finest, yet this sort of thing
is almost certainly the best that the lobotomized Keynesian planners will be able to think up
and do.
A truly innovative program to get the economy moving in a positive direction would be to
outlaw personal vehicles and rebuild the nation's railway network. But this society isn't
even anywhere close to having something so useful on its agenda. So we'll do some Keynesian program,
funnel the few remaining resources we have left down into some stupid dead end rathole, and then
in a couple of years we'll be envious here in America of the extravagant lifestyles that the Mexicans
are leading. Hell Trump's wall will be a lot more useful keeping the Mexicans in who are trying
to flee. That is the end result of Keynesian programs in a delusional society with bass-ackward
priorities. Way more harm than good.
I share your antipathy toward freeways. I remember the big Freeway they built in Fresno
when I was a child, destroying hundreds, if not thousands of modest homes (we had to move from
a grand rental to a dilapidated house that cost more – were the landlords behind getting rid of
a surplus of houses????) – to save maybe – maybe at the most 3 minutes in transit time over driving
an existing surface street. Jobs were part of the rationale.
I have been gone 20 years, and they had gone on a real freeway building tear while I was gone.
The whole city crisscrossed with freeways laid out as if someone had thrown a bowl of spaghetti
on a map – apparently so every neighborhood can enjoy the sound of traffic.
Really, Fresno is just not that physically big to justify all these freeways. And with its
high unemployment and no real "center" there aren't any places with traffic congestion anyway
– but you get these dubious justifications that millions of dollars are wasted because an implausible
auto trip is 4 minutes longer without the freeway….
There seems to be a developing narrative that the Obama Administration has just been brimming
with big ideas that have been thwarted by evil Republicans.
I don't remember it this way. I do remember an Obama Administration that turned to austerity
shortly after the 2009 stimulus, and one that has been patting itself on the back all along about
what a great job it has done.
"All across America, families are tightening their belts and making hard choices. Now, Washington
must show that same sense of responsibility."
President Obama, April 2009(!)
Now that the pictures we snapped of Obama are finally beginning to develop, where we thought
we had photographed his lush jungle, we're now seeing just a single thin sapling planted for "the
future." And Clinton will soon have a picture of her snapped at this sad tree, with her big lying
smile.
I don't think Friedman is saying this, unless Rex Tugwell has been secretly disinterred and
is serving under Obama. The capitalist ideological counteroffensive that got going in the 70s
has been hegemonically successful. Friedman doesn't acknowledge that enough, he instead focuses
on what sounds more like disciplinary politics.
This type of article or perhaps, all articles about the Economy, deal with the Economy as a
substance to which people are appended as accidents. The economy is the sum total of the effort
of the people and if the people think that enjoying this very present is preferable to an effort
to build a future nothing can be done about it. It is the mind of the people that has to be changed.
Wars are very good mechanisms for that.
I can't remember if I got this link from an NC comment, or elsewhere. In any case, it's a scary
read: "The 14 Defining Characteristics of Facism," augmented by a selection from "They Thought
They Were Free." http://rense.com/general37/fascism.htm
Brings Obama and HRC to mind just as much as Trump, if not more.
"The ferocious reaction to my assessment that Senator Bernie Sanders' economic and health care
proposals could create long-term economic growth shows how mainstream economists who view themselves
as politically liberal in America have abandoned progressive politics to embrace a political economy
of despair."
==========================
Here is the problem: "a political economy of despair" – accepting that economists are a real
objective academic discipline is a BIG mistake – the idea that these technocrats, who never seem
to recognize how much fraud, rent seeking, and capture of the political system
((because the people paying them don't WANT THEM TO)),
decides things like how much inequality there is, which than decides how much demand there is,
and NOT knowing, and apparently NOT WANTING TO KNOW, that it is a POLITICAL economy, and politics
decides how resources are often allocated.
We can have single payer heath care if we choose it and free college education (it wasn't all
that long ago that I went to a CA college essentially for free). HOW is it college used to be
free when GDP was less than 1/6 of what it is now??????
It just doesn't make sense that we used to be able to afford free college and we can't now. It
is a POLITICAL decision – when Krugman says Sanders plan is "too expensive" Krugman is making
a political decision – not some objective scientific assessment. And if he is not even smart enough
to ponder why it used to be free and it is not free now – well, theres your problem right there!
Nice to see this article. When I talk about economics, most people who know anything, only
know what someone on TV tells them, so they often question, well who agrees with you? Nice to
have another name to list.
And then…
"Sorry, nothing more can be done for you." TINA.
Of course for those at the tippy-top, "How can I help you today?"
In what many considered to be a flagrantly criminal abuse of investment
bank "restricted lists", yesterday Goldman underwrote a $2 billion equity
offering for Tesla (to find its amusing expansion strategy) just hours
after Goldman upgraded the stock to a Buy.
... however we are confident the regulators are paid far better to
remain unalerted.
So for those curious what Goldman's research analyst who upgraded
Tesla, Patrick Archambault, had to say about this "odd, very odd
coincidence", here it is straight from the mouth of the horse which
obviously remains stabled safely on the other side of the Chinese wall
located at 200 West.
Commentary: Tesla announces equity offering and provides
further details on Model 3 reservations
News
After the close on May 18, Tesla announced a 6.8mn primary share
offering. The offering includes a greenshoe option which, if
exercised, would increase the number of shares sold to approximately
8.2mn. Based on the May 18 closing price of $211.17, this would result
in a total value of $1.4bn for the offering, or $1.7bn if the
greenshoe option is exercised. In addition, Elon Musk, CEO, will sell
2.8mn shares to satisfy tax implications from exercising 5.5mn in
stock options that expire at year-end. The company noted that Mr. Musk
also plans to donate 1.2mn shares to charity and that the net result
of these actions will be to increase his holdings to 31.1mn shares
from 29.6mn.
All said, based on the latest closing share price
and including the primary offering, greenshoe, and Mr. Musk's sale,
the total size of the transactions would be $2.3bn.
In the preliminary prospectus, the company also provided an update
on Model 3 reservations and announced that it had 373k deposits as of
May 15, 2016. This is net of 8k (approx. 2% of total) in customer
cancelations and 4.2k (approx. 1% of total) reservations deemed to be
duplicates.
Implications
Adjusting for the announced transaction and the supplemental stock
options outstanding, and for restricted stock units (RSU) information,
our EPS estimates would be unchanged for 2016-2017. Including
the greenshoe, our 2016-2017 EPS estimates would decline by less than
1% on average.
Our take
We maintain our Buy rating and EPS estimates following the
announcement
. Additionally, our 6-month price target of $250
remains unchanged,
derived from five probability-weighted
automotive scenarios plus stationary storage optionality
, all
of which embed a 20% cost of capital. While the announced capital
raise of $1.4bn (or $1.7bn with the greenshoe) is ultimately higher
than our $1bn estimate, after factoring in the updated supplemental
RSU and option information, dilution to our estimates would be
immaterial. Consistent with our previously published research (see
Putting in our reservation for the Model 3; upgrading TSLA to Buy, May
18)
we believe the funding level is adequate for the Tesla
Model 3 roll-out. The reservations of 373k are in line with the
company's recent comments of "approaching 400k", though they imply
slowing growth
(even adding back the cancellation and
duplicates)
as reservations had already hit 325k one week
after the Model 3 unveil.
Risks:
Decline in overall investor sentiment
impacting the appetite for concept stocks, further delays in the Model
X production ramp which could force a guidance reduction as well as
exacerbate FCF burn, and higher-than-forecast operating expenses
and/or capex investments.
Actually the biggest risk factor, and what is most hilarious about
this whole incident is that in the Goldman upgrade, which was clearly
rushed, and in which Goldman itself admitted there is a two-thirds
likelihood the stock will plunge to $125 or lower and the only upside is
due to a "key man provision" and a ridiculous thesis that Musk alone is
worth tens of billions in market cap (somehow excluding tens of billions
in taxpayer grants)...
... is that all those who bought TSLA on the Goldman report (and/or
Goldman stock offering) will actually read it.
Would it really be that surprising if it did hit 250? I wouldn't
be the least bit surprised. It makes no sense where it is now,
another 20% up would be par for the course for this "market". It's
probably just more muppet slaying by Goldman, but I could see them
releasing those cars that will of course get stellar reviews and
have a full retard price spike. Dumber shit has happened.
How to Comply
The Standards of Practice Handbook provides a number of
operational suggestions that one should recommend for
adoption by the compliance department.
Establish a restricted list
-
This is to limit research on those firms that have a business
relationship with that company. If an adverse opinion would
hurt this business relationship, the company stock should be
restricted from the research universe, and only factual
information on the company should be disseminated.
The worst part in my opinion is that by keeping Musk
going makes him look like a God to all of the sheeple
when in reality he's just using other people's money
and other people's ideas to become famous. Basically
the definition of the current United States.
Yes something is broken... must be the porn filters at the SEC
again. Don't expect people who's future (once they pass thru the
revolving door) depends on them not finding any malfeasance, to do
the right thing.
Who are these "many" you speak of? Clearly does not include the
financial and regualtory elite.
Similar to politicians and one D Trump claiming they could shoot
someone on the Senate floor - or Times Square - and not get arrested I
think that CNBC should have a reality hour where finanial elites and
regulators carry out obvious fraud on live TV. You know, just to see
what happens...
Should I even care about this? The people who own Tesla shares are
functionally retarded. If it wasn't Tesla stealing their money for the
sake raising capital, some other questionablle enterprise would get
their money just as quickly. I'm thinking horse racing and lottery
tickets.
While Tesla's cars may be a rare sight for others in the U.S. if
you drive around the SF Bay Area they are as common as anyother make
of car. While the stock is at a nutty value, I'd bet you'd find that
80% of individual owners of it reside around Silicon Valley and are
convinced this is the next Apple.
Personally I see no appeal to a car which has such a limited
driving range....you really cannot take a trip with it.
Economic Models Must Account for Who Has the Power''
: Nobel Prize
winning economist
Joseph
Stiglitz recently highlighted
two schools of thought on how income
is distributed to different groups of people in the economy. Which
school is correct has important implications for our understanding of
the forces that have caused the rise in inequality, and for the
policies needed to reverse this trend. It also relates to another
controversy that has flamed up recently, how economics should be
taught in principles of economics courses. ...
And according to Sraffa's
side in the Cambridge capital controversy labour and capital
do not receive their marginal products, which leaves the
distribution of income to some extent socially or politically
determined.
Now please make a donation to Project Syndicate, and check
out Robert Skidelsky at the same site.
Excellent. It will be taught in graduate school, long after
the little ones have been indoctrinated in reactionary
thought be Econ 101.
P.S. The school of thought that
accepts inequality as a Teh Awesome result of merit cannot
explain why inherited wealth should be allowed to accumulate
- another aspect of how power writes the economic rules.
"It will be taught in graduate school, long after the little
ones have been indoctrinated in reactionary thought be Econ
101."
Joan Robinson's writing on market power was required
reading when I was in graduate school. My undergrad profs
touched on this issue but not as much. I wonder if Greg
Mankiw teaches market imperfections to his undergrad students
at Harvard.
"I wonder if Greg Mankiw teaches market imperfections to his
"undergrad students at Harvard."
According to theoclassical
doctrine, all market imperfections are the result of gummint
innerference. Left to themselves, markets hum with music of
the perfect spheres.
We are way past just one or the other of those explanations
being true. Opportunities come in many forms, but just not
for many people. Competition becomes limited in the womb and
then they go from there. Better schools across all zip codes
and public day care with universal pre-K would be a start.
Even that is doomed to the catch-22 of making a better
informed public requires a better informed public to demand
being better informed. Down east they say "You can't get thar
from here."
I was fortunate enough to grow up in Prince
William County VA in the late sixties just as it was
beginning to boom from growth proximate to the DC Beltway. We
had a new and progressive school system even relative to
NoVA. Still by the 7th grade it was evident to me that the
pedagogy related to reality in dogmatic POVs that were only
relevant to the next generation of yuppie kids that had
gotten a half step advantage in some various way from their
parents.
My half step came from an unusual source though. My dad
was illiterate and my mom only finished the 8th grade, but
they were stoics with exceedingly powerful work ethics
transferred more by their example of excellence in every
menial thing that they did rather than by belittling and
cajoling me. My dad was the best hunter, the most successful
fisherman, grew the most beautiful and bountiful garden, and
was self-sufficient in caring for his car and home. His
position with the state highway department was limited by his
illiteracy to maintenance superintendent, but due to his
ability he still got to supervise the construction of roads
and bridges without the benefit of commensurate pay.
My mom was the best cook, kept the cleanest house, and as
at home day care for a few friends was the best a dealing
with troubled children from potty training to outbursts of
anger. It was a tough act to follow. Furthermore it did not
fit the status quo mold that public schools were designed to
reinforce. My half step freed me to reject the intellectual
authority of my instructors even though their administrative
authority was still sacrosanct in my home. I did well in
school and even better on tests eking by to enter the Honor
Society and passing the SAT test well enough to qualify for
Mensa, but I dropped out of college first semester mostly
just to relocate away from home to find a job in the city.
So, I got drafted and went to Viet Name, but was lucky enough
to survive and develop a successful career in IT systems
management large systems capacity planning and performance
management. The best break that I got was being laid off in
June 2015 with a severance package good enough to afford me a
retirement income equal after the change in expenses from
leaving the professional world behind to what I had been
making while working.
The moral to my story is that one can despise our
education system and still do very well by themselves with
it. One can reject our higher education and still do very
well by themselves without it. One can despise our corporate
"meritocracy" system and still have a successful career and
maybe even a comfortable retirement, but the ladder has been
raised for the latter. How anyone can be successful in school
and/or in career without recognizing their own half step
advantage or recognizing the intellectually and morally
vacant institutions that they traversed in their journey is
deeply puzzling to me.
P.S. I had the good fortune to relocate from Prince William
County to Orange County VA in summer 1966 before my senior
year in high school when my dad cashed out his state
retirement fund saving to start an electric motor/ john boat
livery and concession stand at Lake Orange, a VA Game and
Fisheries Commission state fishing lake.
The high school teachers were probably just as intelligent as
in Manassas Park, but far more socially challenged at least
in the academic curriculum. Still, the kids with that half
step from their successful parents did well enough to attend
decent colleges, but academic performance overall was much
lower than it had been in Manassas Park back in Prince
William County. The kids in Orange with really successful
parents all attended private prep schools.
P.P.S. Relative to the thread topic then we have a fairly
rigid establishment that favors the haves and keeps the
have-nots at bay. Monopoly rents are just one of the
luxurious rent extracting tools of an aristocracy of social
exclusion. Bankers, proto-industrialists, and slave owners
established the meme of republicanism as the conservative
power that protects us all from tyranny of the majority, but
perhaps a little too well. More importantly they established
the US Constitution as a nearly inviolable foundation for
preserving their world view of well-deserved elite privilege.
And they did it all in the name of democracy while showing
Thomas Paine the door.
It's a cool rainy day in central VA. Being retired and
primarily a person of outdoor interests then today I have an
abundance of time to waste. And commenting on the EV blog
sure beats a colonoscopy, which is what I will be getting
this time next week :<)
John Kenneth Galbraith used to write about countervailing
power. Unfortunately Galbraith has been pretty much consigned
to the dustbin. Even when he was writing, economics courses
did not talk about his ideas much...I guess he did not use
enough math symbols.
Business has long understood the
concept of what I'll call leverage points...critical
intellectual property, experience, and know how. Control of
these critical factors is a key to pricing power and
profitability. As one example, Symbol Technologies dominated
the handheld bar code scanner market for years, not because
they had superior technology or marketing, but because they
held the patent on the trigger, which was critical to
activating the scanner for reading. Their market power
affected not only competitors but suppliers and customers as
well.
Leverage points like this are commonplace in business
today. Yet I'm not aware that economics, with its orientation
towards competitive markets, has ever tried to model this
common behavior or even dealt with it.
Likewise, businesses have also understood the importance
of market and marketing channel domination to their long term
survival and profitability. Firms who fail to dominate must
specialize. These concepts are considered elementary in
business schools. Yet I don't know that economists have ever
managed (or even tried) to incorporate them into their
models.
It might help if more economists took business courses to
understand how the game is played...
I still say that until economists can reach consensus on the
objective of an economy, they remain divided on the
objective. Simply defining it as "for the general good" is a
cop-out --- and economists and everybody else know this full
well. Define what "general good means"....then see if
consensus can be reached. I seriously conclude this cannot be
done, since only by compromises can they reach consensus, and
this means defining the objective in subjective, vague
terms... just like "the general good" is vague and
subjective.
The cop-out used by economists is at the heart
of what Thomas' blog subject is about: Policy makers .. i.e.
gov't decides the objectives of an economy, which is to say
that economic power defines it. And of course economic power
will define it to maintain and extend their economic
power.... and at the very least to minimize any erosion
thereof.
So one must wonder how, if gov't is controlled by economic
power, that gov't will NOT insure the maintenance and
extension of that economic power? Is it possible in a
democracy defined by the U.S. constitution to significantly
reduce the economic power of those who have it? The
constitution in fact makes it impossible.
Even when congress occasionally finds a large enough
majority to make law to erode or reduce economic power in
gov't, the constitution enables 5 people in robes to deem it
unconstitutional OR the next congress, or the next will make
law that erode or reduce the effect of prior congress's law(s)
that reduced or eroded economic power.
If this were not the case we'd long since have had
universal single payer health care, strong labor unions, tax
policies that don't give unearned income a huge break, and
don't give offshore income an out by not taxing it until its
"repatriated", welfare systems that don't keep people in
poverty, and an educational system that provide free & equal
education to all (not one that gives communities, county's,
and States with the highest incomes & property values the
best education and everybody else with a lesser one.
Nor, will I add would it be possible to rape the nation's
environment by contaminating the nation's rivers, soils, and
the air with green-house gases .. not just "paying" fines
after the fact for doing so or putting low cost "caps" on
green-house gas emissions.
So what does "the general good" actually mean? Economists
can't agree on it, nor the means of achieving it of course
nor can policy makers.... and this is the fundamental problem
not being addressed.
One comment: You wrote "...individuals are
rewarded according to their contributions to the economic
well being of society. Those who contribute the most to the
production of the goods and services we all enjoy receive the
highest rewards and climb to the top of the income
distribution." I would add that having power includes being
able to dictate that rewards are allotted according to
economic contributions as opposed to other contributions. Cue
my go-to Chris Lasch quote: "... individuals cannot learn to
speak for themselves at all, much less come to an intelligent
understanding of their happiness and well-being, in a world
in which there are no values except those of the market....
the market tends to universalize itself. It does not easily
coexist with institutions that operate according to
principles that are antithetical to itself: schools and
universities, newspapers and magazines, charities, families.
Sooner or later the market tends to absorb them all. It puts
an almost irresistible pressure on every activity to justify
itself in the only terms it recognizes: to become a business
proposition, to pay its own way, to show black ink on the
bottom line. It turns news into entertainment, scholarship
into professional careerism, social work into the scientific
management of poverty. Inexorably it remodels every
institution in its own image."
"Two-thirds of the directors at the New York Fed are
hand-picked by the same bankers that the Fed is in charge
of regulating.
Today, the United States is No. 1 in corporate profits,
No. 1 in CEO salaries, No. 1 in childhood poverty, and No.
1 in income and wealth inequality in the industrialized
world.
Today, the top one-tenth of 1% owns nearly as much wealth
as the bottom 90%. The economic game is rigged, and this
level of inequality is unsustainable. We need an economy
that works for all, not just the powerful.
I think what the American people are saying is enough is
enough. This country, this great country, belongs to all
of us. It cannot continue to be controlled by a handful of
billionaires who apparently want it all."
Bernie Sanders
The Banks must be restrained, and the financial system
reformed, with balance restored to the economy, before there
can be any sustainable recovery.
"... By John Weeks, a member of the Union for Radical Political Economics (URPE) in London, one of the founders of the UK-based Economists for Rational Economic Policies, and part of the European Research Network on Social and Economic Policy. Receive podcasts of his weekly radio program by Twitter, @johnweeks41. Originally published at Triple Crisis ..."
"... I have dear friends from H to VI, but sleep walking through life, while natural resources are needlessly strip mined for the sake of maintaining artificial scarcity, is a good way to put it. ..."
"... The dual mandate is a fiction. There's nothing the Fed can do to lower unemployment (though it can raise it by mistake.) The unemployment rate is set by the fiscal policies of Congress and the Executive. The unemployment rate, should they desire, can even be set to zero. That it is not should be sufficient cause for the guillotines. ..."
"... primum non nocere ..."
"... I think the process of corporate control of the EU was so slow and gradual plenty of left wingers in Europe still haven't really grasped what has happened. From the beginning, there was always a tension within Europe between pressure from corporations for more business friendly policies and the generally social democrat lite views of the original founders. I think though to call it 'neoliberal' is not quite correct – for me 'neoliberal' implies a specific set of policies associated with the Anglosphere – I think in Germany what we've seen is the takeover by a more German flavoured right of centre view – it is similar, but is more generally corporatist and mercantilist in nature with a strong dash of Austrian economics. ..."
"... Well of course the 'competition' is a myth. As anyone who has witnessed what has happened in electricity markets can see, it has, if anything, raised prices of electricity for consumers. But various powerful interests have done very well indeed. you can see the same process in water and waste services and pretty much anything that has been directly regulated and privatised. The only areas where I think it can be shown that consumers have benefited from competition are in telecommunications and in air travel. And in the former, I suspect the consolidation of the telecom industry will reverse those gains. ..."
"... "To render the rule Kafkaesque, after the EC bureaucracy calculates that a government will not meet the hypothetical target, it then mandates contractionary policies that guarantee that the target cannot be achieved. The problem is imaginary and the solution contradictory." ..."
"... "The "independent institutions" include the European Commission itself, which adds a distinctly Orwellian character to the already Kafkaesque Treaty." ..."
"... "Thus, not restricting surpluses carries an implicit mercantilist message." EU guidelines fix trade surplus at 6%, Germany is, I believe, in its seventh year of violation and should be fined. That it doesn't happen maybe shows that the elite ruling the EU is German. ..."
Yves here. Anyone who has paid attention to how the various sovereign debt crises have played out
in Europe can't help noticing that a bureaucratic elite is calling the shots and riding roughshod
over popular will. But what are the mechanisms which allow these perverse outcomes to come to pass?
This post describes the major steps that enabled neoliberalism to become the ruling doctrine.
By John Weeks, a member of the Union for Radical Political Economics (URPE) in London,
one of the founders of the UK-based Economists for Rational Economic Policies, and part of the European
Research Network on Social and Economic Policy. Receive podcasts of his weekly radio program by Twitter,
@johnweeks41. Originally published at
Triple Crisis
The EU: Hold Your Nose and Vote "Stay"
Most Americans and many U.S. progressives hold a favorable view the European Union. This positive
assessment persists despite the crushing of the Greek challenge to austerity conditionalities set
by the European Commission and European Central Bank aided and abetted by the International Monetary
Fund.
The primary basis for pro-EU sentiments may be that Americans consider the European Union a bastion
of social democracy in contrast to the neoliberal ideology of the Republican and Democratic parties,
which Bernie Sanders has so eloquently attacked. However, the institutions of the European Union,
especially its executive the European Commission practice a neoliberal ideology and pro-business
policies as aggressive as counterparts in the United States.
This is not a recent change, but a long-maturing trend going back at least to when Helmut Kohl
of the right-wing Christian Democratic Union replaced the Social Democrat Helmut, Schmidt, as chancellor
of Germany. The misplaced belief that
Jacques Delors , EC president
for ten years, was committed to social democracy perpetuated the illusion of a progressive EU. While
no reactionary like Kohl, the French socialist politician supported market oriented "reform" of the
European Union's economic policies.
By the 2000s neoliberals had taken firm control of the European Commission, manifested most obviously
in the 1992 Maastricht Treaty. The step-by-step legal codification of EU reactionary economic policies
goes far beyond legislation enacted in the United States. As a result, it should surprise no one
that in Britain and on the continent support for membership in the European Union splits progressives.
In Britain the issues looms large, with a referendum on continued membership scheduled for 23 June.
The progressive case of membership is a hard row to hoe.
Loss of Democracy in the European Union
History provides many examples of authoritarian rule achieved through formally democratic procedures.
To these we should add the 2012 EU Treaty on Stability, Coordination and Governance (
TSCG ), adopted by 25 democratically elected EU governments (the Czech Republic and the United
Kingdom took
opt-outs ). On an EU website we find the overall purpose of the TSCG
boldly
highlighted :
The European Union's economic governance framework aims to detect, prevent, and correct problematical
economic trends such as excessive government deficits or public debt levels, which can stunt growth
and put economies at risk.
This bureaucratically bland sentence asserts the power of the unelected European Commission, as
the executive of the European Union, to monitor ("detect") whether the public budget of an elected
member government conforms to EU fiscal rules. If it does not, the Commission claims the power to
prevent the implementation of that budget and to specify the changes ("corrections") required.
No one can miss the ideological asymmetry of the "governance framework" – deficits can be excessive,
but not surpluses. In practice a budget surplus usually goes along with a trade surplus, so that
the contractionary effect of the former will be offset the expansionary impact of the latter. Thus,
not restricting surpluses carries an implicit mercantilist message.
The EU website goes on to explain "detection" or "monitoring"
as follows ,
Each year, the EU countries that share the euro as their currency submit draft budgetary plans
to the European Commission. The Commission assesses the plans to ensure that economic policy among
the countries sharing the euro is coordinated and that they all respect the EU's economic governance
rules. The draft budgetary plans are graded as either compliant, partially compliant, or at risk
of non-compliance.
When the EC implements this paragraph literally as it did in Greece, the role national legislatures
is to endorse what the Commission judges as "compliant." The TSCG de facto makes member
governments formulate their budgets for the Commission not their legislatures, because there would
be little point and considerable embarrassment by submitting to parliament a budget that the EC would
reject. After the Commission judges the budget as satisfactory the national legislature goes through
a pro forma approval process. It will be a small step to require,
as in Greece , approval by the EC before revealing the budget to the public.
The TSCG transfers sovereignty from democratic institutions to an unelected bureaucracy. Were
it the case that the EU parliament possessed substantial control over the Commission (which it does
not), the TSCG would still be profoundly authoritarian because of the power of the EC bureaucracy
over what should be decided democratically.
Treaty-Protected Mismanagement
EU fiscal rules, from the Maastricht Treaty to the TSCG are anti-democratic, as well as inflexible
to change. The Treaty specifically commits the adopting government to embed the fiscal rules in law
in a manner ensuring their "permanent character, preferably constitutional." Embodied in treaties,
they can only change through repeal or adoption of additional treaties. Both involve extremely cumbersome
and time consuming processes.
Were the fiscal rules theoretically and practically sound their anti-democratic and inflexible
nature would still discredit them. Far from sound, they are technically flawed, mandating macroeconomic
mismanagement. The Treaty mandates specific limits to fiscal policy.
[The Treaty] requires contracting parties to respect/ensure convergence towards the country-specific
medium-term…with a lower limit of a structural deficit (cyclical effects and one-off measures
are not taken into account) of 0.5% of GDP; (1.0% of GDP for Member States with a debt ratio significantly
below 60% of GDP).
Before considering the wisdom of the 0.5% deficit target, two major technical mistakes standout,
1) the Treaty uses an unsound measure of the fiscal deficit; and 2) the key concept, "structural
deficit," is theoretical nonsense.
The TSCG adopts the Maastricht deficit specification, total revenue minus total expenditure, which
is the overall deficit. As the IMF explains in its
guidelines for fiscal
management , the appropriate measure for sound fiscal management is the primary deficit, which
excludes interest payments on the public debt (which if reduced would imply partial default).
When the TSCG specifies the 0.5% as a "structural deficit" we go from the inappropriate to the
absurd. The Commission as well as the usually competent OECD defines "structural deficit" as the
deficit that would appear by eliminating cyclical effects; i.e., the deficit when an economy operates
at normal capacity.
Making this concept operational requires an analytically sound method of eliminating cyclical
effects, then a clear and consistent measure of normal capacity. The EU structural deficit fails
on both criteria. In practice the EC bean-counters make no attempt to eliminate cyclical effects.
The method of calculation of normal capacity ignores the cycle altogether by defining normal capacity
to the level of output at which the rate of unemployment implies stable inflation (the "non-accelerating
inflation rate of unemployment,"
NAIRU
). Again, the EC bureaucrats reveal their ideology by taking inflation not output or unemployment
as measure of economic health.
The NAIRU would be sufficiently problematical were attempt made to adapt it to the specific institutional
characteristics of each country at specific time periods. For example, if the concept has operational
validity, it is extremely unlikely that it would assume the same value before and after the 2008-10
global recession. An inspection of the
eurostat tables for the
actual and "structural" deficits shows no evidence of estimations with country specific adjustments.
The decidedly dubious nature of the NAIRU is indicated by its nom de guerre , "the natural
rate of unemployment." This phrase betrays an underlying ideology that 1) unemployment is a natural
phenomenon to which all economies automatically adjust; and 2) inflation always results from excess
demand. If the first were true the global recession would not have occurred. The second ignores price
pressures arising from traded goods and services, petroleum being the most obvious and price-volatile.
The possibility of calculating country and time specific normal capacity would not save the 0.5%
rule the realm of ideological nonsense. First and foremost, it represents static analysis applied
to a dynamic process. The formal statement of the 0.5% would be as follows:
Economy A operates below normal capacity with a fiscal deficit of 2.5% (for example). Other
things unchanged, were economy A at normal capacity the deficit would be 1.5% (for example), above
the 0.5% requirement. Therefore, the government of country A must now take steps to reduce expenditure
or raise taxes, so if the economy were at full capacity the hypothetical deficit would be 0.5%.
The 0.5% rule is a hypothetical outcome based on analytically unsound calculations. This "what
if" calculation by statisticians is used by an undemocratic bureaucracy to force elected governments
to implement contractionary economic policies. The technically unsound, hypothetical 0.5% target
mandates a pro-cyclical macroeconomic policy. To render the rule Kafkaesque, after the EC bureaucracy
calculates that a government will not meet the hypothetical target, it then mandates contractionary
policies that guarantee that the target cannot be achieved. The problem is imaginary and the solution
contradictory.
The wording of the TSCG makes it clear that deviant fiscal behavior by a member country will
not be tolerated,
Correction mechanisms should ensure automatic action to be undertaken in case of deviation from
the [structural deficit target] or the adjustment path towards it, with escape clauses for exceptional
circumstances. Compliance with the rule should be monitored by independent institutions.
The "independent institutions" include the European Commission itself, which adds a distinctly
Orwellian character to the already Kafkaesque Treaty.
Painted into a Recessionary Corner
Market economies pass through cycles of recession and expansion. They suffer from fiscal deficits
in recessions, because falling or slow-growing output results in falling or slow-growing revenue.
Such circumstances typically result from a drop in private investment or exports. Economies most
effectively overcome recessions by the public sector using its spending powers to compensate for
the inadequate private demand.
The TSCG legally prohibits the implementation of this effective countercyclical fiscal policy.
It forces member governments to apply policies analogous to the practice 200 years ago of bloodletting
to restore health to the ill. It is a Treaty designed to maintain perpetual stagnation across the
European continent.
The term "Six-Pack", the secondary legislation linked to the treaty, is frequently used as synonymous
with the TSCG. This is a singularly appropriate nickname for the enabling legislation. The Six-Pack
contains the economic equivalent of a pernicious snake oil, a witch's brew to turn minor fiscal problems
into recessionary downturns. For those dedicated to a prosperous and harmonious European Union, repeal
or replacement of the TSCG stands out as an urgent priority. Fiscal integration on the basis of the
TSCG would be disastrous.
What most Americans know about Europe is on a postcard, or the propaganda they were taught
in school. The vast majority on this planet is dependent on a MAD money laundering scheme built
by Wall Street, copied globally, and automated by WS of the West, silly valley, now strip mining
the planet, on auto pilot, with a belief in political discourse, among completely insulated, puppet
politicians.
Back in the day, before joining, Robert R actually said some intelligent things about labor.
The crashing actuarial ponzi has been in operation so long it is an assumption. On the one hand
money enslaves future generations to the present, and on the other we are all supposed to seek
a feudal pension. The casino wins in both directions.
I have dear friends from H to VI, but sleep walking through life, while natural resources are
needlessly strip mined for the sake of maintaining artificial scarcity, is a good way to put it.
We don't even need oil, but the economy is leveraged on that contract price, to maintain subservient
populations. We are choking on excess oil, storing it all over the ocean, and preventing iran/iraq
from putting its product on the market, all to confirm a psychology of dependence, like an ant
farm, assuming that individual humans can only wander randomly without the benefit of the collective,
serving the sociopathic psychologist writing the scripts.
Funny, there is a shortage of private demand for more incompetent government.
Another fundamental difference between the US and EU is the difference in central bank mandates,
with the Fed having its dual inflation/employment mandate in its bylaws, but under Maastricht
the ECB only has a mandate for low inflation.
That said, the Fed has a dual way for getting around the dual mandate: playing fast and loose
with what is defined as unemployment, and just straight out ignoring it (eg, raising interest
rates at the first whiff of possibility that there might be a rumour that someone's uncle's cousin's
best-friend's roommate thinks there could eventually be a slight uptick in the CPI). This means,
yes there are differences in the founding documents, but is there anywhere in US economic governance
that NAIRU is not assumed either?
The dual mandate is a fiction. There's nothing the Fed can do to lower unemployment (though
it can raise it by mistake.) The unemployment rate is set by the fiscal policies of Congress and
the Executive. The unemployment rate, should they desire, can even be set to zero. That it is
not should be sufficient cause for the guillotines.
I definitely agree w/r/t fiscal policy, but I think the point is that at least in the US there
is a nominal (but ignored) primum non nocere written into the Fed's by-laws. It is supposed
to take actions that will "promote effectively the goals of maximum employment, stable prices
and moderate long-term interest rates." What this means is that raising interest rates at the
mere rumour of inflation is going against the Fed's mandate– not that anyone in power cares. Meanwhile
in Europe they just dispense with the whole fiction of not having a monetary policy that kills
employment.
I think the process of corporate control of the EU was so slow and gradual plenty of left wingers
in Europe still haven't really grasped what has happened. From the beginning, there was always
a tension within Europe between pressure from corporations for more business friendly policies
and the generally social democrat lite views of the original founders. I think though to call
it 'neoliberal' is not quite correct – for me 'neoliberal' implies a specific set of policies
associated with the Anglosphere – I think in Germany what we've seen is the takeover by a more
German flavoured right of centre view – it is similar, but is more generally corporatist and mercantilist
in nature with a strong dash of Austrian economics.
I see the results every day when I step outside my apartment in Dublin. Thats to a focus on
privatisation and 'competition', what was once a fully functioning waste collection service in
my city has now become a chaotic privatised service, with competing companies driving down the
quality. No more proper wheelie bins collected on the same day, instead there are plastic bin
bags everywhere, there to be torn apart by seagulls and foxes, scattering rubbish everywhere.
All in the name of 'competition', driven by EU Directives. The focus on 'internal competition'
is gradually eroding sensible regulation in energy, waste and telecommunications. Supposedly in
the interest of the consumer, but we all know who really benefits.
Well of course the 'competition' is a myth. As anyone who has witnessed what has happened in
electricity markets can see, it has, if anything, raised prices of electricity for consumers.
But various powerful interests have done very well indeed. you can see the same process in water
and waste services and pretty much anything that has been directly regulated and privatised. The
only areas where I think it can be shown that consumers have benefited from competition are in
telecommunications and in air travel. And in the former, I suspect the consolidation of the telecom
industry will reverse those gains.
The airlines are a terrible example – in fact, there was a great article treating the airlines
as a classic example of "crapification". The seating has become ridiculously cramped (as a way
to then "sell" seats that someone can actually sit in!), the service has been basically reduced
to the bare minimum, luggage charges are outrageous and ticket prices continue to climb even though
one of the major expenses (i.e. fuel!) has become cheaper by 50 per cent. No, the airlines were
a bad example.
Nice to read such an excellent analysis. And with very appropriate metaphors.
"To render the rule Kafkaesque, after the EC bureaucracy calculates that a government will
not meet the hypothetical target, it then mandates contractionary policies that guarantee that
the target cannot be achieved. The problem is imaginary and the solution contradictory."
"The "independent institutions" include the European Commission itself, which adds a distinctly
Orwellian character to the already Kafkaesque Treaty."
I would suggest that any country that doesn't like these rules failed to read the agreement
and should exit the EU and start issuing worthless currency. In doing so they can feel free to
devalue, run large deficits, borrow all they want and then leave the "neo-liberals" to it. When
the banks and hedge funds that over-lend to fund these deficits fail or demand collateral (
http://www.npr.org/sections/money/2012/10/22/163384810/why-a-hedge-fund-seized-an-argentine-navy-ship-in-ghana
) you will discuss their predatory nature.
"Thus, not restricting surpluses carries an implicit mercantilist message." EU guidelines fix
trade surplus at 6%, Germany is, I believe, in its seventh year of violation and should be fined.
That it doesn't happen maybe shows that the elite ruling the EU is German.
Given half a chance some human beings who never got much loving as a child will seek to correct
the imbalance by "weaponizing" money and using it against the interests of the majority. For those
who've read the psychoanalyst Alice Miller books they will recognize her argument that resentment
builds up in the child and needs expression in the form of subconsciously motivated vengeance
as an adult!
Yves here. I want to clarify one key issue about a transaction tax. Its purpose is
not to raise revenue. Its purpose is to discourage excessive trading, which is socially unproductive.
Recently, many studies have found that an outsized financial sector is as drag on growth. The finer-grained
ones have identified too many resources devoted to secondary market trading as the cause. "Secondary
market trading" is all the buying and selling that happens after a company raises money, as in among
investors, not sales of newly-issued securities from a company to investors to raise money. A certain
level of secondary market trading is necessary and desirable so that an investor can sell if he wants
to (as in he needs liquidity). But overly cheap liquidity makes it attractive to trade for purely
speculative purposes, as the collapse in average holding times of NYSE stocks attests.
Now a transaction tax may indeed raise a lot of revenue. But the intent is to discourage undesirable
activity, and it's hard to estimate in advance how much trading volumes would fall with a well-designed
transaction tax.
By Robert Reich. Originally published at
his website
Why is there so little discussion about one of Bernie Sanders's most important proposals – to
tax financial speculation?
Buying and selling stocks and bonds in order to beat others who are buying and selling stocks
and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of
the nation's best and brightest, and subjects financial market to unnecessary risk.
High-speed traders who employ advanced technologies in order to get information a millisecond
before other traders get it don't make financial markets more efficient. They make them more vulnerable
to debacles like the "Flash Crash" of May 2010.
Wall Street Insiders who trade on confidential information unavailable to small investors don't
improve the productivity of financial markets. They just rig the game for themselves.
Bankers who trade in ever more complex derivatives – making bets on bets – don't add real value.
They only make the system more vulnerable to big losses, as occurred in the financial crisis of 2008.
All of which makes Bernie Sanders's proposal for a speculation tax right on the mark.
He wants to tax stock trades at a rate of 0.5 percent (a trade of $1,000 would cost of $5), and
bond trades at 0.1 percent.
The tax would reduce incentives for high-speed trading, insider deal-making, and short-term financial
betting. (Hillary Clinton also favors a financial transactions tax but only on high-speed trading.)
Another big plus: Given the gargantuan size of the financial market and the huge volume of trading
occurring within it every day, this tiny tax would generate lots of revenue.
Even a 0.01 percent transaction tax (a basis point is one-hundredth of a percentage point, or
0.01 percent) would raise $185 billion over 10 years, according to the nonpartisan
Tax Policy Center.
Sanders's 0.5 percent tax could thereby finance public investments that enlarge the economic pie
rather than merely rearrange its slices – like tuition-free public education.
After all, Americans pay sales taxes on all sorts of goods and services yet Wall Street traders
pay no sales taxes on the stocks and bonds they buy.
Naysayers led by the financial industry's lobbyists (the Financial Services Roundtable and Financial
Markets Association) warn that even a small tax on financial transactions would drive trading overseas,
since financial trades can easily be done anywhere.
Baloney. The U.K. has had a tax on stock trades for decades yet remains one of the world's financial
powerhouses. Incidentally, that tax raises about 3 billion pounds yearly (the equivalent of $30 billion
in an economy the size of the U.S.), which is pure gravy for Britain's budget.
At least 28 other countries also have such a tax, and the European Union is well on the way to
implementing one.
Industry lobbyists also claim the costs of the tax will burden small investors such as retirees,
business owners, and average savers.
Wrong again. The tax wouldn't be a burden if it reduces the volume and frequency of trading –
which is the whole point.
In fact, the tax is highly progressive. The Tax Policy Center
estimates that 75 percent of it would be paid by the richest fifth of taxpayers, and 40 percent
by the top 1 percent.
It's hardly a radical idea.
Between 1914 and 1966, the United States itself taxed financial transactions. During the Great
Depression, John Maynard Keynes urged wider use of such a tax to reduce excessive speculation by
financial traders. After the Wall Street crash of October 1987, even the first President George Bush
endorsed the idea.
Americans are fed up with Wall Street's financial games. Excessive speculation contributed to
the near meltdown of 2008 – which cost millions of people their jobs, savings, and homes.
So why is it only Bernie Sanders who's calling for a financial transactions tax? Why aren't politicians
of all stripes supporting it? And why isn't it a major issue in the 2016 election?
Because a financial transactions tax directly threatens a major source of Wall Street's revenue.
And, if you hadn't noticed, the Street uses a portion of its vast revenues to gain political clout.
So even though it's an excellent idea championed by a major candidate, a financial transactions
tax isn't being discussed this election year because Wall Street won't abide it.
Which maybe one of the best reasons for enacting it.
important point – UK has FTT on stocks, it's called stamp duty. despite that, footsie is considered
one of the most important non us markets worldwide… so cries of how it would kill the sector are
a bit overdone..
mind you, the rise of cfds and similar to bypass sd led to issues of its own
I would think that would be part of the plan, particularly given the volumes. Sanders tends
to do himself a disservice by staying at the 30,000 foot level, which is where execs generally
are anyhow. But he doesn't have enough surrogates going into the weeds on his behalf.
I'm more of a right winger, but this is one Sanders proposal I can fully support. There's something
seriously wrong with an economy that spends gigantic sums on building tunnels for optic cables
so transactions can be processed two miliseconds faster. This automated flash trading is against
everything financial markets are supposed to be about, it's even against everything that speculation
is supposed to be about. I also agree with Yves's assessment that this isn't about revenue extraction,
but about curtailing harmful activities. However, given high levels of corruption in US politics
and huge profits this new industry enjoys, is such an idea even feasible?
I believe I can appreciate why your statement took that discouraged turn. But the next move
would be to say that, if such a good idea is made infeasible by a corrupt political order, doesn't
that then contribute to its indictment? That's one reason why the current political situation
is so changed from ten years ago.
I would add underclocking the stock exchange to augment the effect of transaction tax. It is
perfectly sufficient for healthy economic activity to settle the transactions only in equal discrete
time intervals, say once every minute. This would starve all HFT parasites, reduce the size of
financial sector and its rent extraction from productive economic activity.
Sanders' campaign has been mostly kept dark by the M$M (which includes National Propaganda
Radio). If one hears/reads much about Sanders in the usual sources, it's usually to patiently
explain why he simply cannot win.
It's exceedingly rare to hear/read much of what the substance of Sanders' campaign compromises,
and mostly then, what you'll hear is fatuous twaddle about Sanders' proposal (which isn't fatuous
but is presented that way) about free college.
So one has to come to blogs, such as this one, to learn more. Too bad most citizens don't do
that, but that's the way it is. And there's a reason for it. Clearly Sanders, at least, annoys
the .01%. They don't want his message getting out. There's a reason for that, as well.
Hmm, I took this as another mark of Bernie's genius. I figure that the 'free public college
education' was not only a demonstrable and desirable social good but also a nice carrot to sell
the FTT.
Agree w/Teddy and others about the unfairness of a market that permits nano-second trading
for the suitably connected. Secondary market trading beyond basic liquidity does not benefit the
real economy. The beneficiaries are speculators and managers whose remuneration is tied to share
prices - that is, useless eaters.
The reason it is being ignored is because Bernie touted the tax as way to pay for college for
all. The tax on financial transactions makes most people's eyes glaze over, but they are very
interested in the idea of free college. So I get the hook, but this means the the tax debate never
occurs, all the discussion is about free college. Now both ideas have merit, but each should have
its own debate. It would be also a way to build a consensus around a broader policy of finally
reigning in Wall Street, including bring back the best parts of Glass Stegall. That's how you
get the discussion going. Decouple and debate.
The benefits of free academic tuitions are so large they are inestimable due to the myriad
of benefits that would cascade throughout the economy. Why would anyone oppose such and how is
such a plan pushed aside? Only through the greatest imbalance of invisible intransigent power
the world has ever known.
This is an important idea, but I don't think I've ever heard at what point such a tax would
be imposed. If a large majority of high-speed automated trading results in cancelled trades, it
would be of little use in curbing that if it were only applied to completed transactions.
The point is not necessarily to raise revenue (please, MMT anyone?) but to control behaviour.
Putting a drag on HST would in itself be a public good. As I have said before, free tuition is
a way to sell a tax on financial transactions. Debate all you like, but decoupling will lose the
tax.
I concur that a drag on HFT would be a public good. But my question doesn't imply raising revenue,
rather how such a tax would be a drag on HFT in particular. A tax on transactions would (by definition
it seems) not apply to cancelled transactions. So how would it impact the behavior of HFT, which
relies heavily on cancelled trades, any more than it would any trading?
Probably "quantized" settling as proposed in another comment would have a greater effect.
You are right. If the purpose of the tax is to discourage HFT, the tax should be levied on
each and every bid, not just completed transactions. According to Eric
Hunsader HFT traders pay big bucks so they can have millisecond faster access to the market
– which they use to place multiple bids they never intend to complete, thereby manipulating price,
creating volume interest where little exists, etc. To end HFT you would have to tax each bid (at
an very small rate, say .01%).
Are things like ETF's included in this? I understand the need to curb many of the dangerous
games of all the value detracting speculation and trading etc,. What I'm struggling with is I
may make a few trades a year simply to rebalance my portfolio (amount of trades depends on whether
markets are volatile or steady) once certain levels of over/under are reached. My rough calculation
of this .05% tax, is it would cost me $500-$1000 maybe more a year. Not outrageous but a sizable
enough increase for an infrequent trader/investor and I'm pretty sure, not part of the problem
that is trying to be solved here. Plus, as if I'm not angry enough at Wall Street (I used to work
in the industry, left of my own volition) it makes me wonder if I'm not being financially penalized
for their greed and criminality. I want to support this but I hope there will be a little nuance
(not too much though to ruin the whole purpose) to not ensnare everyone who makes a trade once
in awhile.
Unlikely. I suspect the 0.5% mark is an initial bargaining position. What everyone seems to
be anxious to forget (or have forgotten) is that Sen. Bernie "amendment king" Sanders has been
in Congress for a loonnng time. If he's floating 0.5% in position papers, policy proposals, etc.,
it's because he's aiming to get 0.1 – 0.2% enacted. 200 bucks a year won't injure anyone who can
manage to maintain a brokerage account.
If the guy were truly the absent-minded, flyaway-haired nutty old dodderer the MSM wants him
to be, he'd never have made it this far in life.
I realize that probably most of the objection to this is being fueled by the large houses own
high frequency trading. I mean when you finance your own algorithms to figure out how to micro
trade at high volume…you are talking about a lot of money. But I would also bet that some of it
is the mutual fund and individual trader sector of the market. It isn't really about hurting the
small investor, it is about discouraging the small investor from trading as frequently. They are
seeing their commissions get cut, because Mom and Pop don't like the tax and put the brakes on.
The stability of our economy and of our markets be damned, not to mention customer service.
My worry is that the financial giants would put enough lawyers on this to try and try to create
a way to avoid paying this financial tax in pretty much the same way that they figured out how
to not pay title recording fees. They would create an exchange (no doubt called something different)
that would own large numbers of shares and trade some sort of "future" or agreement to transfer
amongst each other. Can you have a 1 second future contract? .01 second?
You echo a concern I have about this as well. These parasites and their shyster lawyers are
very good at finding or creating loopholes that benefits them, alone.
That said, it's worth investigating and attempting to implement. It's equally worth more wide-spread
discussion about why it's needed and what's happening, but I won't hold my breath on that score.
There have been one or two programs highlighting these high speed transactions on NPR, fwiw,
albeit I don't believe – no surprise – that any solution was suggested.
Correct. No tax by the sovereign issuer of the currency has as it's purpose the raising of
revenue, of which the sovereign issuer already has an infinite supply. Taxes by the sovereign
issuer merely serve to regulate demand.
Of course, try to explain to anyone inside the beltway how their currency actually works, and
they'll think you are crazy. They've been told incorrectly for 40 years, and DAMMIT! That's enough
to make it right.
Forgive my ignorance, but I don't see why a blanket transaction tax of 0.5% or whatever would
be preferable to a transaction tax of 5-10% applicable to the actual bad actors, i.e., the high-frequency
traders. It seems like it would be easy enough to assess a genuinely punitive tax against the
actual "speculators" who are flipping shares over the course of single trading session, i.e.,
to tax both HFT and day-trading out of existence. I also fail to see how a transaction tax of
general application would significantly inhibit insider trading.
I think Reich is being a bit tone-deaf here. In a ZIRP environment, conservative investors
are effectively foisted into the stock market, and are then reviled as speculators. Is it no longer
politically acceptable for the little people to invest accumulated capital? We can't all live
off of political consulting and paid speeches like former Clinton-era cabinet ministers.
Oh, please. I've been "in the market" in mutual funds and lesser amounts of directly held stock
for 20 years. If I traded enough to generate +$200 in transaction taxes, it would be a sign that
I was getting bad advice, & was stupid enough to take it. If Bernie's transaction tax were enacted,
it would eradicate most institutional HFT efforts in under a year. Over a decade, it's greatest
benefit may be in slowing the erosion of middle class wealth by reducing excessive trading and
associated fee skimming.
The guys in dress shirts in your local MSSB office in flyover are not actually your friends,
and their service fees are much, much larger than they need to be in this era of electronic trading.
Guys in dress shirts in flyover country? Uh …. what? I'm not sure I'm following but you appear
to be saying that you've conducted less than $40,000 in stock & mutual fund trades over the course
of twenty years; in other words you don't care about the actual merits of this transaction-tax
proposal because you don't have any money to invest anyway. Not a particularly compelling argument.
At any rate, I thought the point of the proposal was to curb rank speculation, not to discourage
old ladies from buying utility stocks. So why not target the actual speculators?
Sanders' proposal of a securities transaction tax is being ignored for the same underlying
reason proposals to tax accumulated wealth have been ignored.
"Behind every great fortune there is a great crime." -Balzac
The bottom line of why this tax is ignored is the majority of people who vote doesn't understand
how the markets work. So they don't understand how this would work and help. They keep voting
for people who won't make any significant changes to our society. Hillary won't be any different
she is going to be the same old horse leading the way. Sheeple --
Cancelled and no-op trades wielded with impunity are the root of the HFT problem. I'm not sure
why many here are claiming a tax wouldn't affect cancellations. The tax should be punitive especially
for order cancellations under a reasonable holding period. It should also be much higher for non-listed
OTC derivatives, repos, and all manner of exotic structured products, special vehicles, and dark
pool (un)liquidity. The point is to force skin in the game.
Our gentle host wrote, "I want to clarify one key issue about a transaction tax. Its purpose
is not to raise revenue. Its purpose is to discourage excessive trading, which is socially unproductive."
Makes perfect sense – it's the old adage, "If you tax something, you get less of it. The more
you tax, the less you get."
And if the revenue generated covers enforcement costs, that's weevils in the porridge!
The bond part puzzles me to some extent. At least as applied to below investment grade stuff,
because obviously Treasuries and IG are different animals.
First, the whole "high speed, high frequency" thing. Much of the time, it really isn't. I mean,
these are instruments that still trade through humans (via the phone or Bloomberg chat), and many
of even $500 million plus issues don't trade very often, period. In many bonds probably the most
volume you see is immediately after issuance, and that's more a matter of people either flipping
a small allocation or topping up to get to their target, with the dealer often pretty much setting
up the trades with their allocation strategy. So that's a different animal than straight-up speculation
(high frequency or otherwise).
Second, ok, you're "taxing" bonds effectively 1/8 (0.1%, but I'm rounding as bonds are actually
quoted in eighths, maybe sixteenths sometimes), presumably paid by one or both counterparties
(split equally between buyer and seller?). I…don't see how that is going to alter much of the
trading that goes on. The bid-ask is effectively a bit wider, your mark when you buy something
is a little lower (if you use bid-side), people complain more than usual. But High Yield is generally
not something where paying up 1/8 is going to make or break your trading strategy, unlike with
equities (where the high frequency guys play on fractions of fractions). At most you're looking
at trades in "on the margin" issues having a tougher time getting done in stable markets (because
in a hot market everyone pays up anyway, while in a rout there is often no bid, period).
All a long way of saying, bonds – fine. Define the word "bonds". Treasuries? IG? HY? Structured?
And you want to realize how much in revenues from that?
Equities, on the other hand – no brainer. Tax away. If anything, tax them more than is currently
proposed, because the point – to me – is not to raise revenue, but to severely disincentivize
speculation (of either the high frequency or the regular kinds). Imagine, for example, if the
tax was at 10% of the pre-commission trade value (i.e. just shares times price), payable by both
buyer and seller. "But Panda, you'll destroy secondary equity trading!" Precisely, children, because
at the end of the day most of such contributes absolutely nothing productive to either the society
or the economy. Now, maybe I'm much more extreme than the consensus, but my point is that what
Sanders is currently proposing is well within what the industry can "eat" without changing its
behaviour too much, in my opinion.
Of course before deregulation of commissions the US had a private version of the financial
transaction tax in terms of the fixed commissions. One way to compare is to look at commissions
compared to the modern commission+ ftt. If the commissions were greater than unless you believe
the market 30 years ago was defective it won't make a lot of difference.
IMPORTANT: Neoliberalism as Peters defines it is nothing but elegant concern
trolling–claiming to be the staunchest defenders of the lowest order, when really that's just
a way to reinforce a crab-bucket mentality that keeps the true elites from making any sacrifices
towards a more equitable society.
Notable quotes:
"... The New Republic ..."
"... The Washington Monthly ..."
"... These were the men who made Jonathan Chait what he is today. Chait, after all, would recoil in horror at the policies and programs of mid-century liberals like Walter Reuther or John Kenneth Galbraith or even Arthur Schlesinger, who claimed that "class conflict is essential if freedom is to be preserved, because it is the only barrier against class domination." We know this because he recoils in horror today he so resolutely opposes the more tepid versions of that liberalism that we see in the Sanders campaign. ..."
"... Note the disavowal of all conventional ideologies and beliefs, the affirmation of an open-minded pragmatism guided solely by a bracing commitment to what works. It's a leitmotif of the entire manifesto: Everyone else is blinded by their emotional attachments to the ideas of the past. We, the heroic few, are willing to look upon reality as it is, to take up solutions from any side of the political spectrum, to disavow anything that smacks of ideological rigidity or partisan tribalism. ..."
"... The New Republic ..."
"... Above all, neoliberals loathed unions, especially teachers unions. They still do , except insofar as they're useful funding devices for the contemporary Democratic Party. ..."
"... But reading Peters, it's clear that unions were, from the very beginning, the main target. The problems with unions were many: they protected their members's interests (no mention of how important unions were to getting and protecting Social Security and Medicare); they drove up costs, both in the private and the public sector; they defended lazy, incompetent workers ("We want a government that can fire people who can't or won't do the job.") ..."
"... On the one hand, Peters showed how much the neoliberal was indebted to the Great Society ethos of the 1960s. That ethos was a departure from the New Deal insofar as it took its stand with the most desperate and the most needy, whom it set apart from the rest of society. Michael Harrington's The Other America ..."
"... On the other hand, Peters showed how potent, and potently disabling, that kind of thinking could be. In the hands of neoliberalism, it became fashionable to pit the interests of the poor not against the power of the wealthy but against the working class that had been made into a middle class by America's unions. (We still see that kind of talk among today's Democrats, particularly in debates around free trade, where it is always the unionized worker-never the well paid journalist or economist or corporate CEO -who is expected to make sacrifices on behalf of the global poor. Or among Hillary Clinton supporters, who leverage the interests of African American voters against the interests of white working-class voters, but never against the interests of capital.) ..."
"... There are striking parallels in this to the observation I've made, reading a lot lately, about historical civil rights/racial justice struggles. To wit, one of the greatest drags on the effectiveness of the Civil Rights Movement has been the ability of social/financial elites to make sure that advancement for poor people of color came out of the hides of the working class, rather than from the elites' share. This is clear from the backgrounders on the housing market in e.g. Slatter's Family Properties or Boyle's The Arc of Justice , or the description of the Boston busing issue in I think Perlstein's The Invisible Bridge . ..."
"... For middle-class white homeowners, living in a neighborhood that became mixed-race really did mean the loss of most of the family capital; it's deplorable that it was due to racism, but individuals' anti-racism wasn't going to let them resell at the price they'd paid, nor keep them from the pernicious effects of living in a now-redlined neighborhood. ..."
"... Just the same, for the white populations of Boston's poor neighborhoods, it was all too obvious that Black students were being bused into their schools, not those of the wealthy – which you'll still see today when school-choice means slightly-better schools get hit with more demand than their resources can manage, not that any kid can go to an elite public school (let alone a private one). ..."
"... At the end of the day, neoliberalism as Peters defines it is nothing but elegant concern trolling–claiming to be the staunchest defenders of the lowest order, when really that's just a way to reinforce a crab-bucket mentality that keeps the true elites from making any sacrifices towards a more equitable society. ..."
"... These arguments about semantics are stupid. At one time terms like "conservative", "liberal", "neoconservative", etc. may have meant different things, but we sure as hell know what they mean now. It's just debate team intellectual obfuscation. Meanings change as society needs them to. For instance Republican once implied being against racism. Today, not so much. Still "Republicans" are called "Republicans". ..."
"... Chait knows what "neoliberal" means, he just doesn't like the reality of what it means and what it might imply about him. ..."
On the one hand, Chait was probably just voicing his disgruntlement with an epithet that leftists
and Sanders liberals often hurl against Clinton liberals like Chait.
On the other hand, there was a time, not so long ago, when journalists like Chait would have proudly
owned the term neoliberal as an apt description of their beliefs. It was
The New Republic , after all, the magazine where Chait made his name, that, along with
The Washington Monthly , first provided neoliberalism with a home and a face.
Now, neoliberalism, of course, can mean
a
great many things , many of them
associated with the right. But one of its meanings-arguably, in the United States, the most historically
accurate-is the
name that a small group of journalists, intellectuals, and politicians on the left gave to themselves
in the late 1970s in order to register their distance from the traditional liberalism of the New
Deal and the Great Society. The original neoliberals included, among others, Michael Kinsley, Charles
Peters, James Fallows, Nicholas Lemann, Bill Bradley, Bruce Babbitt, Gary Hart, and Paul Tsongas.
Sometimes called "Atari Democrats," these were the men-and they were almost all men-who helped to
remake American liberalism into neoliberalism, culminating in the election of Bill Clinton in 1992.
These were the men who made Jonathan Chait what he is today. Chait, after all, would recoil in
horror at the policies and programs of mid-century liberals like Walter Reuther or John Kenneth Galbraith
or even Arthur Schlesinger, who
claimed that "class conflict is essential if freedom is to be preserved, because it is the only
barrier against class domination." We know this because
he recoils in horror today
he so resolutely opposes the more tepid versions of that liberalism that we see in the Sanders
campaign.
It's precisely the distance between that lost world of 20th century American labor liberalism
and contemporary liberals like Chait that the phrase "neoliberalism" is meant, in part ,
to register.
We can see that distance first declared, and declared most clearly, in Charles Peters's famous
"
A Neoliberal's Manifesto ," which Tim Barker reminded me of last night.
Peters was the founder
and editor of The Washington Monthly , and in many ways the éminence grise of the neoliberal
movement. In re-reading Peters's manifesto-I remember reading it in high school; that was the kind
of thing a certain kind of nerdy liberal-ish sophomore might do-I'm struck by how much it sets out
the lineaments of Chait-style thinking today.
The basic orientation is announced in the opening paragraph:
We still believe in liberty and justice for all, in mercy for the afflicted and help for the
down and out. But we no longer automatically favor unions and big government or oppose the military
and big business. Indeed, in our search for solutions that work, we have to distrust all automatic
responses, liberal or conservative.
Note the disavowal of all conventional ideologies and beliefs, the affirmation of an open-minded
pragmatism guided solely by a bracing commitment to what works. It's a leitmotif of the entire manifesto:
Everyone else is blinded by their emotional attachments to the ideas of the past. We, the heroic
few, are willing to look upon reality as it is, to take up solutions from any side of the political
spectrum, to disavow anything that smacks of ideological rigidity or partisan tribalism.
That Peters wound up embracing solutions in the piece that put him comfortably within the camp
of GOP conservatism (he even makes a sop to school prayer) never seemed to disturb his serenity as
a self-identified iconoclast. That was part of the neoliberal esprit de corps: a self-styled philosophical
promiscuity married to a fairly conventional ideological fidelity.
Listen to how former New Republic owner Marty Peretz
described (h/t Tim Barker) that ethos in his lookback on The New Republic of the 1970s
and 1980s:
My then-wife and I bought the New Republic in 1974. I was at the time a junior faculty member
at Harvard, and I installed a former student, Michael Kinsley, as its editor. We put out a magazine
that was intellectually daring, I like to think, and politically controversial.
We were for the Contras in Nicaragua; wary of affirmative action; for military intervention
in Bosnia, Rwanda and Darfur; alarmed about the decline of the family. The New Republic was also
an early proponent of gay rights. We were neoliberals. We were also Zionists, and it was our defense
of the Jewish state that put us outside the comfort zone of modern progressive politics.
Except for gay rights and one or two items in that grab bag of foreign interventions, what is
Peretz saying here beyond the fact that his politics consisted mainly of supporting various planks
from the Republican Party platform? That was the intellectual daring, apparently.
Returning to that first paragraph of Peters's piece, we find the basic positions of the neoliberal
persuasion: opposition to unions and big government, support for the military and big business.
Above all, neoliberals loathed unions, especially teachers unions. They
still do , except insofar as they're useful funding devices for the contemporary Democratic Party.
But reading Peters, it's clear that unions were, from the very beginning, the main target. The
problems with unions were many: they protected their members's interests (no mention of how important
unions were to getting and protecting Social Security and Medicare); they drove up costs, both in
the private and the public sector; they defended lazy, incompetent workers ("We want a government
that can fire people who can't or won't do the job.")
Against unions, or conventional unions, Peters held out the promise of
ESOPs ,
where workers would forgo higher wages and benefits in return for stock options and ownership. He
happily pointed to the example of
Weirton Steel :
…where the workers accepted a 32 percent wage cut to keep their company alive. They will not
be suckers because they will own the plant and share in the future profits their sacrifice makes
possible. It's better for a worker to keep a job by accepting $12 an hour than to lose it by insisting
on $19.
(Sadly, within two decades, Weirton Steel was dead, and with it, those future profits and wages
for which those workers had sacrificed in the early 1980s.)
But above all, Peters and other neoliberals saw unions as the instruments of the most vile subjugation
of the most downtrodden members of society:
A poor black child might have a better chance of escaping the ghetto if we fired his incompetent
middle-class teacher.
…
The urban public schools have in fact become the principal instrument of class oppression in
America, keeping the lower orders in their place while the upper class sends its children to private
schools.
And here we see in utero how the neoliberal argument works its magic on the left.
On the one hand, Peters showed how much the neoliberal was indebted to the Great Society ethos
of the 1960s. That ethos was a departure from the New Deal insofar as it took its stand with the
most desperate and the most needy, whom it set apart from the rest of society. Michael Harrington's
The Other America , for example, treated the poor not as a central part of the political
economy, as the New Deal did. The poor were superfluous to that economy: there was America, which
was middle-class and mainstream; there was the "other," which was poor and marginal. The Great Society
declared a War on Poverty, which was thought to be a project different from from managing and regulating
the economy.
On the other hand, Peters showed how potent, and potently disabling, that kind of thinking could
be. In the hands of neoliberalism, it became fashionable to pit the interests of the poor not against
the power of the wealthy but against the working class that had been made into a middle class by
America's unions. (We still see that kind of talk among today's Democrats, particularly in debates
around free trade, where it is always the unionized worker-never the
well paid journalist
or economist or corporate CEO -who is expected to make sacrifices on behalf of the global poor.
Or among Hillary Clinton supporters, who leverage the interests of African American voters against
the interests of white working-class voters, but never against the interests of capital.)
Teachers' unions in the inner cities were ground zero of the neoliberal obsession. But it wasn't
just teachers' unions. It was all unions:
In both the public and private sector, unions were seeking and getting wage increases that
had the effect of reducing or eliminating employment opportunities for people who were trying
to get a foot on the first run of the ladder.
And it wasn't just unions that were a problem. It was big-government liberalism as a whole:
Too many liberals…refused to criticize their friends in the industrial unions and the civil
service who were pulling up the ladder. Thus liberalism was becoming a movement of those who had
arrived, who cared more about preserving and expanding their own gains than about helping those
in need.
That government jobs are critical for women and African Americans -- as Annie Lowrey shows in a
excellent recent piece -- has long been known in traditional liberal and labor circles. That that
fact has only recently been registered among journalists-who, even when they take the long view,
focus almost exclusively, as Lowrey does, on the role of GOP governors in the aughts rather than
on these long-term shifts in Democratic Party thinking-tells us something about the break between
liberalism and neoliberalism that Chait believes is so fanciful.
Oddly, as soon as Peters was done attacking unions and civil-service jobs for doling out benefits
to the few-ignoring all the women and people of color who were increasingly reliant on these instruments
for their own advance-he turned around and attacked programs like Social Security and Medicare for
doing precisely the opposite: protecting everyone.
Take Social Security. The original purpose was to protect the elderly from need. But, in order
to secure and maintain the widest possible support, benefits were paid to rich and poor alike.
The catch, of course, is that a lot of money is wasted on people who don't need it.
…
Another way the practical and the idealistic merge in neoliberal thinking in is our attitude
toward income maintenance programs like Social Security, welfare, veterans' pensions, and unemployment
compensation. We want to eliminate duplication and apply a means test to these programs. They
would all become one insurance program against need.
As a practical matter, the country can't afford to spend money on people who don't need it-my
aunt who uses her Social Security check to go to Europe or your brother-in-law who uses his unemployment
compensation to finance a trip to Florida. And as liberal idealists, we don't think the well-off
should be getting money from these programs anyway-every cent we can afford should go to helping
those really in need.
Kind of like Hillary Clinton criticizing Bernie Sanders for supporting free college education
for all on the grounds that Donald Trump's kids shouldn't get their education paid for? (And let's
not forget that as recently as the last presidential campaign, the Democratic candidate was more
than willing to trumpet his credentials as a cutter of
Social
Security and Medicare , though thankfully he never entertained the idea of turning them into
means-tested programs.)
It's difficult to make sense of what truly drives this contradiction, whereby one liberalism is
criticized for supporting only one segment of the population while another liberalism is criticized
for supporting all segments, including the poor.
It could be as simple as the belief that government should work on behalf of only the truly disadvantaged,
leaving everyone else to the hands of the market. That that turned out to be a disaster for the truly
disadvantaged-with no one besides themselves to speak up on behalf of anti-poverty programs, those
programs proved all too easy to eliminate, not by a Republican but by a
Democrat -seems not to have much troubled the sleep of neoliberalism. Indeed, in the current
election, it is Hillary Clinton's support for the 1994 crime bill rather than the 1996 welfare reform
bill that has gotten the most attention, even though she proudly stated in her
memoir
that she not only supported the 1996 bill but rounded up votes for it.
Or perhaps it's that neoliberals of the left, like their counterparts on the
right , simply came to believe that the market was for winners, government for losers. Only the
poor needed government; everyone else was made for capitalism. "Risk is indeed the essence of the
movement," declared Peters of his merry band of neoliberal men, and though he had something different
in mind when he said that, it's clear from the rest of his manifesto that the risk-taking entrepreneur
really was what made his and his friends' hearts beat fastest.
Our hero is the risk-taking entrepreneur who creates new jobs and better products. "Americans,"
says Bill Bradley, "have to begin to treat risk more as an opportunity and not as a threat."
Whatever the explanation for this attitude toward government and the poor, it's clear that we're
still living in the world the neoliberals made.
When Clinton's
main line of attack against Sanders is that his proposals would increase the size of the federal
government by 40%, when her
hawkishness remains an unapologetic part of her campaign, when unions barely register except
as an ATM for the Democratic Party, and
Wall Street
firmly declares itself to be in her camp, we can hear that opening call of Peters-"But we no
longer automatically favor unions and big government or oppose the military and big business"-shorn
of all awkward hesitation and convoluted formulations, articulated instead in the forthright syntax
of common sense and everyday truth.
Perhaps that is why Jonathan Chait cannot tell the difference between liberalism and
neoliberalism.
Update (April 29)
I wrote a follow-up post
here
, in which I respond to Chait's response.
Jon Chait, Obama's journalistic fellator-in-chief. Possibly has passed My Head Is Flat Friedman
as Acela Corridor's chief writer of political dreck.
reply
I'm trying to come up with a good acronym for "Conservative in All But Name," for Clinton
and Chait and all their ilk, because DINO just isn't strong enough.
All alums of U Michigan have a bounded middle class rationality they do not realize is white
privilege. And their football team still can not beat a bunch of half-wits from Ohio State.
Prof. Robin:I know this is not an advice column but my problem is all my friends roll their
eyes when I use the phrase 'neoliberal'. They assume it is jargon or a cliche. I asked them
and only a few actually have a clue as to what 'neoliberal' means. And they still support Hillary.
Help! We all know Mrs. Clinton will be our next president, but I am beginning to think even
an impossible Trump victory would actually be less damaging than another series of neoliberal
encroachments upon what has not yet been amalgamated in the political economy.
No comment upon the rejection of neoliberalism in the land where it all began as theory?
Austria? And the alliance of the extreme right and greens?
Thanks for another excellent piece. I couldn't help but think William Graham Sumner upon hearing
Peters' disdain for unions. His version is actually harsher. He not only wants to take from
B to help C and D but blame B for all of C and D's problems.
Needless to say, this isn't exactly company any self-respecting liberal would want to keep.
The more I read Peters' essay, the more the word "Objectivist" comes to mind. I had always
thought, prior to this column that 'neoliberal' meant a reboot of liberalism in the 19th century
sense, which seems to be the sense most economists use it in. Sometimes these labels take on
a life of their own.
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It seems to me that the common thread connecting the opposition to inclusive social insurance
programs and, at the same time, unions is a kind of supremacism: the supremacism of the people
who are just a rung above the bottom of the social ladder and want desperately to not
be on the bottom. It's odd to see in people who in fact are many rungs from the bottom,
but class anxiety is something that most of us experience from time to time.
It's late – or early – and I wonder if I'll still believe this after more sleep – but it
seems to me that this is the thinking of social climbers. Consider Mr. Collins of Pride
and Prejudice , having attained a bit of status, and both proud of it and desperate to
hang on to it. Or, for that matter,
consider the Clintons .
Excellent post as always. I'm not quite understanding the part about how "Clinton supporters
… leverage the interests of African American voters against the interests of white working-class
voters." It's not that I don't believe the claim, I just can't come up with any examples.
I think he means Hillary trying to turn black voters against Sanders who in theory at least
better represents white working-class voters interests better.
reply
Very well articulated. I think you should develop this to an article for the Nation. It is
very timely and much needed. Thank you for writing it.
reply
This was a really good post. This blog is often like an oasis in the midst of a desert of neoliberal
(Ha!), reactionary garbage. I have all kinds of things to say about it.
First and foremost, in recent years I've fallen more under the sway of a Hegelian mode of
thinking about political movements, history, and the world. There is no clear example of the
dialectical movement of a concept than that of "freedom" or "liberty." What Neoliberalism represents
historically is when the concepts and contradictions of Liberalism as it was practiced in the
New Deal era were finally turned against themselves and a reversal of it into its opposite.
All concepts and notions cut both ways, freedom and liberty are no different. Above all else,
that's what neoliberalism, from the Chicago/Austrian School to hack pundits like Chait represent.
They have turned the core principles of liberalism on itself and used them to shore up justification
for hierarchy and oppression.
You discuss this in your book, when talking about how freedom for the right means freedom
of the owner and freedom of those in power in a more general sense. These questions are central
to our entire historical epoch, particularly in the US, and we need to move beyond them. Marxist/socialist
ideas and concepts are sorely needed, and the whole political conversation in the US has been
built for nearly a century on avoiding any use of them. I maintain that New Deal liberalism
was always going to become Neoliberalism, it was inevitable that these concepts would be inverted
and if the postwar American Consensus could be reached again it produce the same world we currently
inhabit a second time.
@Roquentin: Which itself is an ironic little mirror of the contradictions that transformed
our concept of "liberalism" in the first place from a principled defense of economic non-interference
to a pragmatic support for robust interventionism. It's readily apparent in Mill's On Liberty
itself, where the attempt at a utilitarian defense of the laisser-faire principle can ultimately
only stand if he carves out exceptions large enough to drive a New Deal or a Great Society
through, and thus the original free-market doctrines are left sitting around abandoned, ready
to be picked up by neoliberal defenders of inherited wealth and power. Of course Mill also
manages to shape this utilitarianism into a vaguely principled apologia for global empire ("Despotism
is a legitimate mode of government in dealing with barbarians provided the end be their improvement"
and so on) but after all this sort of racism has always been common throughout the Western
political mainstream, notably including precisely the sorts of working-class folks who might
have once voted for Wilson and FDR and who now vote for Trump.
reply
Although outside of the 20th century American scope of this argument-very valuable in its historical
specificity-I find the richest conceptual or genealogical expression of the difference between
liberalism and neoliberalism to be Foucualt's distinction between Adam Smith and Gary Becker.
If the ethos of classical liberalism is the partner in exchange, that of neoliberalism is
the entrepreneur of the self.
This analytic remains salient in understanding the neoliberal movement in the late 20th
century U.S., even if it introduces slippages in the meaning of liberalism as it is used in
Europe versus the United States. The Wendy Brown book linked above does a nice job developing
this type of argument.
I will share that during election night when Clinton won his first term I was sitting in the
same room with Schlesinger, Jr. while we were all watching the precincts report and he was
very much into it when the hostess began gyrating and screaming "MY PRESIDENT! MY PRESIDENT!"
and that there was no talk of the looming shadow of the neoliberal and all present assumed
on some level that the result was a return and validation of the welfare state after Reagan-Bush,
the Republic after the terror. Even in the false advertising of the political arena, expectations
have never been so confounded for the working class and intellegensia alike.
reply
I think H. Clinton will be fine if elected, the past is the past (well not really), but saying
that I really wish electoral success in this country could happen with a purely working class
focus – something like Robert Reich's most recent post -
http://robertreich.org/ . Could be more
workable as the racism of the white working class diminishes, hopefully struggling white middle
class racism diminishes too. Left wing policies poll pretty well now, we need to get the poor
to vote though.
"Except for gay rights and one or two items in that grab bag of foreign interventions, what
is Peretz saying here beyond the fact that his politics consisted mainly of supporting various
planks from the Republican Party platform?"
There's the old joke that a libertarian is a Republican that smokes pot. Maybe a neoliberal,
then, is a Republican that supports gay marriage?
There are striking parallels in this to the observation I've made, reading a lot lately, about
historical civil rights/racial justice struggles. To wit, one of the greatest drags on the
effectiveness of the Civil Rights Movement has been the ability of social/financial elites
to make sure that advancement for poor people of color came out of the hides of the working
class, rather than from the elites' share. This is clear from the backgrounders on the housing
market in e.g. Slatter's Family Properties or Boyle's The Arc of Justice , or
the description of the Boston busing issue in I think Perlstein's The Invisible Bridge
.
For middle-class white homeowners, living in a neighborhood that became mixed-race really
did mean the loss of most of the family capital; it's deplorable that it was due to racism,
but individuals' anti-racism wasn't going to let them resell at the price they'd paid, nor
keep them from the pernicious effects of living in a now-redlined neighborhood.
Just the same,
for the white populations of Boston's poor neighborhoods, it was all too obvious that Black
students were being bused into their schools, not those of the wealthy – which you'll still see
today when school-choice means slightly-better schools get hit with more demand than their
resources can manage, not that any kid can go to an elite public school (let alone a private
one).
At the end of the day, neoliberalism as Peters defines it is nothing but elegant concern
trolling–claiming to be the staunchest defenders of the lowest order, when really that's just
a way to reinforce a crab-bucket mentality that keeps the true elites from making any sacrifices
towards a more equitable society.
In other words, an old monster to be slain with an old weapon–solidarity, but newly sharpened
and strengthened by the knowledge that it must transcend racial and regional and even class
divisions.
These arguments about semantics are stupid. At one time terms like "conservative", "liberal",
"neoconservative", etc. may have meant different things, but we sure as hell know what they
mean now. It's just debate team intellectual obfuscation. Meanings change as society needs
them to. For instance Republican once implied being against racism. Today, not so much. Still
"Republicans" are called "Republicans".
Chait knows what "neoliberal" means, he just doesn't like the reality of what it means and
what it might imply about him.
What I love about this essay so much is the ways it echoes what Ken Sharpe taught us in the
Fall '83 version of his Latin American Comparative Politics course… I'm pretty sure it was
in reference to Jeannie Kirkpatrick but it was a general statement about neoliberals and neocons:
This is very close to the exact words – "Anyone who tells you "The harsh reality is…" or "The
fact of the matter is…" is either lying to you or hiding a very great deal of what they know
to be true."
"... Shorter Heilbroner: capitalism requires that non-capitalists sell their labor as a condition of survival. The capitalist can exert power by denying access to work, hence income, hence survival. The state has "brute force" when capitalists control resources (recall that a lot of what is now private, such as common pasturelands, were once communal property) and in modern times, when social safety nets are weak. This is not a given under capitalism, but it is certainly the preferred order among Western elites. ..."
"... For Varoufakis, the encounter with Schäuble signaled that neoliberal economic managers no longer even pretended to support the principle of democracy. As a result, he argued, Greece was facing dogmatic enforcement of an austerity program whose effects would likely preclude it recovering sufficiently to repay its debts. And more broadly, the future of European capitalism was in growing jeopardy amid rising electoral discontent. ..."
"... *Varoufakis's new book, "And the Weak Suffer What They Must? Europe's Crisis and America's Future" was released on April 12. ..."
"... "It is the brute force of the state that ensures compliance with the rules of capitalism." In fact, it is the hidden coercion of the market that forces compliance, which is why neoliberals fetishize markets. ..."
"... I think we're talking about complementary, cycling phases in the exertion of power. Once the market is set up, its rules are coercive. But setting up the market - e.g. foreclosing land >>> peasants become free labor - require state coercion (+ various assorted ideological sanctifications, some of which may refer to the market). And, keeping players operating by the rules, while at the same time bending them in favor of some players, requires the state. ..."
"... In response to the dogged, stupid insistence on the part of the Right to insist that the state is a freestanding leviathan screwing up the market utopia, it's important to point to ways in which the state is an instrument of capital. This gets into trudging through arguments about who's controlling what, the independence of bureaucracies and such. But that's better than the gobsmacking naivite that the Right, always shouting about unfettering us from the state that they in fact rely on, would have us fall into. ..."
"... "The Athenians offer the Melians an ultimatum: surrender and pay tribute to Athens, or be destroyed. The Athenians do not wish to argue over the morality of the situation, because in practice might makes right (or, in their own words, "the strong do what they can and the weak suffer what they must"[3]). ..."
"... "The Melians argue that they are a neutral city and not an enemy, so Athens has no need to conquer them. The Athenians counter that if they accept Melos' neutrality and independence, they would look weak: people would think they spared Melos because they were not strong enough to conquer it. ..."
"... "The Melians argue that an invasion will alarm the other neutral Greek states, who will become hostile to Athens for fear of being invaded themselves. The Athenians counter that the Greek states on the mainland are unlikely to act this way. It is the independent island states and the disgruntled subjects that Athens has already conquered that are more likely to take up arms against Athens. ..."
"... "The Melians argue that it would be shameful and cowardly of them to submit without a fight. The Athenians counter that the stakes are too high for the Melians to worry about shame." ..."
"... Now, the Mytilenian situation is not a perfect parallel–real historical events never are–but they saw with rather clear eyes the true nature of these broadly based alliances, namely that there is actually someone in charge, and that someone will use their position to benefit themselves at others' expense. As the Myt. ambassador shows, it is incumbent upon the lesser parties to recognize the position they are in and antagonize where needed. ..."
"... I like how the word democracy is used over and over without the obvious necessity of coupling a mechanism for power with democracy. That mechanism, for starters, is voting. There is no democracy without the decision making process that has been developed since the ancient Greeks called voting. And the accepted final decision is when a majority of the people deciding is achieved. The rules of the decision making process, written laws prescribing the limits of acceptable policy making, are the founding principles, the constituting formulas for running the social order with the voice of the people provided with input into the governing of the social order. ..."
"... In Australia, voting is a duty, not a right. It's mandatory and you are fined if you don't vote. I found the caliber of political discourse way higher at my local Aussie pub (which has a vey wide cross section of people) than at any Manhattan gathering of supposedly highly educated professionals. ..."
"... But he [Varoufakis ] didn't begin to have the runway to persuade his opponents, and he thought the threat of a Grexit gave him far more bargaining leverage than he had. ..."
"... Varoufakis's big problem is that he can't let go of the dream of EU as the big European social understanding project. Frankly that has never existed beyond the minds of the academic elite that all talk virtually fluent english, and can do their thing anywhere with a net connection and a credit card terminal. The vast majority of the population of the European nations are tied to their place of living. Either by work, by language, by family, or a combination of the above. ..."
"... But nowadays in the neo-liberal era, that liberalism has been inverted. Not only have states been weakened by globalization, but the current neo-liberal doctrine makes the only legitimate function of the state the enforcement if the dictates of the "market", even to the point of creating markets in areas where there previously were none. The imperative is to privatize everything, including the very idea of the public sphere itself. ..."
"... Classical economics is no longer taught as its teachings would go directly against current ideas, they are hidden and forgotten on purpose. As Michael Hudson points out in "Killing The Host" the world would be a much better place if we remembered the classical economists distinction between "earned" and "unearned" income. ..."
Yves here. I've reframed this recap of a talk by Yanis Varoufakis at NYU as a challenge to neoliberalism,
not a challenge to economics, since its theme is the tension between modern economics (and indeed
many forms of capitalism) and democracy.
There are some points he made that he made that I quibble with. He says he was shocked when he
learned, early in his negotiations with the Wolfgang Schauble, that his counterparts took the position
that the will of the Greek people counted for very little. I know some readers may take umbrage,
but this was a fundamental failure on behalf of the Syriza side, not just Varoufakis, of what they
were up against. In fact, the Eurozone treaties that Greece has signed had the government explicitly
ceding certain aspects of national sovereignity to the Eurozone. In addition, as we pointed out at
the time, the ECB had the power to bring the Greek economy to its knees by cutting off liquidity
support to the Greek banks, and if anything, was predisposed to do so. From the ECB's perspective,
it had already stretched the rules of its supposedly temporary liquidity facilities to the breaking
point.
Mind you, I'm not saying the Trokia position was right or sound. Varoufakis clearly had the better
economic argument. But he didn't begin to have the runway to persuade his opponents, and he thought
the threat of a Grexit gave him far more bargaining leverage than he had. But Varoufakis' past writings
showed he was firmly convinced that this path would do Greece great harm, and Syriza didn't have
public support for that course of action either. Greece did have some bargaining chips, in that the
Eurocrats were keen to have Greece improve tax collections and the operations of government generally,
but it was clear given how the negotiations were framed that the two sides would remain at loggerheads,
eventually giving the Troika what it though was an adequate excuse to use brute force.
A second point Varoufakis made where I beg to differ is, as reported by Lynn Parramore, "It is
the brute force of the state that ensures compliance with the rules of capitalism." In fact, it is
the hidden coercion of the market that forces compliance, which is why neoliberals fetishize markets.
A major focus of the Robert Heilbroner book, Behind the Veil of Economics, is the contrast between
the source of discipline under feudalism versus under capitalism. Heilbroner argues it was the bailiff
and the lash, that lord would incarcerate and beat serf who didn't pull their weight. But the lord
had obligations to his serfs too, so this relationship was not as one-sided as it might seem. By
contrast, Heilbroner argues that the power structure under capitalism is far less obvious:
This negative form of power contrasts sharply with with that of the privileged elites in precapitalist
social formations. In these imperial kingdoms or feudal holdings, disciplinary power is exercised
by the direct use or display of coercive power. The social power of capital is of a different
kind….The capitalist may deny others access to his resources, but he may not force them to work
with him. Clearly, such power requires circumstances that make the withholding of access of critical
consequence. These circumstances can only arise if the general populace is unable to secure a
living unless it can gain access to privately owned resources or wealth…
The organization of production is generally regarded as a wholly "economic" activity, ignoring
the political function served by the wage-labor relationships in lieu of baliffs and senechals.
In a like fashion, the discharge of political authority is regarded as essentially separable from
the operation of the economic realm, ignoring the provision of the legal, military, and material
contributions without which the private sphere could not function properly or even exist. In this
way, the presence of the two realms, each responsible for part of the activities necessary for
the maintenance of the social formation, not only gives capitalism a structure entirely different
from that of any precapitalist society, but also establishes the basis for a problem that uniquely
preoccupies capitalism, namely, the appropriate role of the state vis-a-vis the sphere of production
and distribution.
Shorter Heilbroner: capitalism requires that non-capitalists sell their labor as a condition
of survival. The capitalist can exert power by denying access to work, hence income, hence survival.
The state has "brute force" when capitalists control resources (recall that a lot of what is now
private, such as common pasturelands, were once communal property) and in modern times, when social
safety nets are weak. This is not a given under capitalism, but it is certainly the preferred order
among Western elites.
Yanis Varoufakis' first meeting with the Troika of Greece's creditors revealed what he believes
is a perilous disdain among top economic decision-makers for the democratic process. The then-Finance
Minister arrived armed with tables and graphs to make what he believed was a self-evident case that
the austerity program imposed on Athens was untenable and unsustainable, and would therefore not
produce desirable results for Greece or for its creditors. As the representative of a leftist government
elected on a promise to restructure the austerity program, Varoufakis was aware of the need for a
moderate tone to alleviate fears that he was a wild-eyed radical, and he readily acknowledged the
need for continuity with terms agreed by the previous Greek administration. But he hoped to persuade
the Troika to balance those obligations with the desire of the Greek electorate for a sustainable
plan that offered them more than permanent penury.
According to Varoufakis, Wolfgang Schäuble, the formidable German finance minister, abruptly interrupted
his presentation, declaring, "Elections cannot be allowed to change the economic policies applied
to Greece."
For Varoufakis, the encounter with Schäuble signaled that neoliberal economic managers no
longer even pretended to support the principle of democracy. As a result, he argued, Greece was facing
dogmatic enforcement of an austerity program whose effects would likely preclude it recovering sufficiently
to repay its debts. And more broadly, the future of European capitalism was in growing jeopardy amid
rising electoral discontent.
Speaking Monday at New York City's New School on the future of capitalism and democracy, Varoufakis
distinguished between ancient Athenian democracy - which gave equal weight to the views expressed
by (admittedly only male) citizens regardless of the wealth they possessed - and its modern form.
The latter, he said, had historically been shaped by systems of economic inequality. The Magna Carta,
he noted, negotiated the rights of the barons to prevent the king from poaching their serfs - "a
social contract between lords and the monarch."
Eventually, those lords were replaced by merchants and industrialists, and later still, organized
labor demanded its own say. "The modern state emerged as a mechanism for regulation class conflict,"
he said. "That is liberal democracy."
The assumption that capitalism is innately linked to liberal democracy is of recent vintage, Varoufakis
contended. He noted that classical economic thinkers - Smith, Ricardo, Marx, and Schumpeter - all
focused on the process of the commoditization of everything, including human beings, a notion that
he suggested did not bode well for democratic practices. The ideological cover for this concept,
today, was "the illusion of apolitical, ahistorical, mathematized economics."
Economists see themselves as scientists who have no need for history - after all, aren't past
scientific models full of errors? But economics is not a science, Varoufakis explained. Unlike in
physics, where the latest textbook offers knowledge more advanced than its predecessors did, economists
seem to have a knack for ignoring past truths, a phenomenon particularly apparent in treatments of
capitalism.
Today's economic models not only can't deal with democracy, but they have become embedded in economic
behavior, influencing economic actors, policy makers, and elected officials. He warned that policies
derived from the impulse of orthodox economics to reduce human beings into elastic, mechanized inputs
threatened capitalism's future: It destroys human creativity and freedom, which (among other things)
generates new ideas and technologies that drive productivity and creates profits for capital.
Paradoxes abound: the more capitalism succeeds in commodifying human beings, the worse things
become for capitalism - powerless and poor, their buying power is degraded, and with it, aggregate
demand.
And the failure to respond to human need expressed through democratic politics - as he experienced
in his dealings with the Troika - threatens to spur citizen rebellions against the system.
Varoufakis cited economist Kenneth Arrow - whose impossibility theorem (also known as social-choice
theory) shows the impossibility of fully determining a common will while using a set of fair and
democratic procedures- to argue that democracy, messy it may be, remains the best path. Edicts from
technocrats, no matter how smart and well-meaning, will not reflect the interests of the people.
"Democracy is dialectic," explained Varoufakis, "a system for people who are not sure about what
they think. They are not sure about what is good for society." They argue, debate, and take from
each other's positions to modify their own.
But capitalism hasn't always worked well with democracy. Just as the notion of hell was essential
to achieving obedience to the tenets of Christianity in the middle ages, quipped Varoufakis, so it
is the brute force of the state that ensures compliance with the rules of capitalism.
The United States Constitution, he argued, was designed to keep the poor away from the levers
of power, while legitimizing the system through their participation. "Democracy was to be used in
name in order to be breached in substance," he said, and served to keep capitalism out of crisis
without having to really give the poor much power.
Crises came anyway. The Great Depression sufficiently shocked elites into creating the Bretton
Woods system, an international financial system predicated on an imperial American role that, together
with the Marshall Plan, laid the foundation of postwar capitalist expansion. But the golden era of
capitalism didn't last. As U.S. hegemony declined, cracks in the system appeared and widened. Global
financial markets became imbalanced and storms of mounting amplitude followed. Eventually, deregulation
and financialization turned corporations like GM into "financial companies that produce a few cars
on the side." The Great Recession, as Varoufakis saw it, has signaled citizens that their economies
are not functioning, and neither are their political systems.
"The world we live in is rudderless, in a slow-burning recession," he said, referring what some
have called 'secular stagnation.' Varoufakis rejected further lending to Greece if the current austerity
program cannot be modified or reversed. Continued austerity makes it impossible for Greece to grow,
which means that paying off new debts would only be possible through further austerity and cuts in
public budgets, which will drive the economy deeper into recession. For Varoufakis, this counterproductive
policy ignores lessons from Europe's recovery after World War II, including forgiving German debt
in 1953.
The Eurozone remains dominated by policies that make debt repayment, rather than growth, the central
focus of policy makers. For Varoufakis, this underscores the bankrupt nature of much current economic
thinking, ignoring alternative analyses of the crisis and alternative ideas for addressing it, including
both debt relief and fiscal stimulus rather than austerity.
Varoufakis argued that blocking of sensible economic policy feeds the electoral success of new,
left parties in Greece and Spain, but also the rise of authoritarian right-wing movements in a worrisome
echo of the 1930s. This polarization also can be seen in the United States, with the electoral success
of Bernie Sanders but also Donald Trump. And if decision-making power continues to moves into "democracy-free
zones" such as the European Union or private corporations, the more polarized the political future
appears, with attendant opportunities and risks.
In a burst of pop culture flair, Varoufakis predicted that when machines have passed the Turing
Test, when you can no longer tell if the person on the phone is a human or a computer, and when 3-D
printers can spit out whatever object you need, the logic of capitalism will break down. "At this
stage," he warned, "humanity will face a juncture." Either we end up with a Star Trek-like utopia
where we harness technology and use its wealth-producing capacity for the common good, or we get
The Matrix, a dystopia in which the miserable masses have their energy sucked out of them by unseen
forces and are fed illusions to keep them quiet. Eventually even the elites will become servants
to the machine.
The antidote to that outcome, Varoufakis argued, is a robust democracy in the Athenian vein, one
that reflects the voices of and serves all the people, whether they have money or not.
*Varoufakis's new book, "And the Weak Suffer What They Must? Europe's Crisis and America's
Future" was released on April 12.
As long as sociopaths are allowed to infiltrate the leadership of societies bigger than ancient
Athens … there will be no common good. As Varoufakis points out, there has to be a dialectic between
leaders and citizens, so that the leaders can embody the common good. Sociopaths have no desire
to accomplish that goal. This is why in ancient times, Athens was weakened by Spartan opposition
(with Persian assistance) and supplanted by Macedon, and eventually Rome. Small scale societies
of any type, Athenian or Spartan, couldn't compete ultimately with large monarchies. Rome was
undone by its own success, and had to revert to a monarchy in everything but name. Large scale
society tends toward monarchy and autocracy.
The US federal republic, with functioning states, counties and municipalities is an attempt
to get the best of all scales. And representative election is an attempt at this dialectic. Direct
democracy is not an option even with the Internet … it would be mob rule.
It can be argued that the Athenians were quite attentive to the danger of elite/sometimes sociopathic
leadership.
They seem to have mastered the politics of using the knowledge of experts without turning over
the management of their city-state to these same individuals.
Unfortunately the modern left in the U.S. seems quite content with turning the power of the
national state over to salaried intellectuals who rule in the name of actual citizens.
The left has no political theory of the State which they could offer as an alternative democratic
political system– because of their apparent irrational ideological fear of a decentralization
which could potentially culminate in more direct democratic rule.
Is the basis of such fear the fact the much of the salaried left(an influential part of the
top 20%) is not interested in genuine democratic rule(they distrust the proles as much as the
right)– but only their rule?
When you've got a big rock stuck in your garden and you want to get rid of it, you need to
loosen it first. That means digging and pushing it many times. At first, nothing moves, then it
wiggles and finally rolls.
I saw Varoufakis as the one giving the first push that shows no progress. I was hoping to see
a little bit of wiggling. Unfortunately, he did not get there. That rock is really entrenched.
It would seem that he saw himself as the one getting the rock out. I'm not surprised. Most
men who get to those positions of power have to believe in their aptitudes to get there. If not,
they would not make it there.
"It is the brute force of the state that ensures compliance with the rules of capitalism."
In fact, it is the hidden coercion of the market that forces compliance, which is why neoliberals
fetishize markets.
I think we're talking about complementary, cycling phases in the exertion of power. Once
the market is set up, its rules are coercive. But setting up the market - e.g. foreclosing land
>>> peasants become free labor - require state coercion (+ various assorted ideological sanctifications,
some of which may refer to the market). And, keeping players operating by the rules, while at
the same time bending them in favor of some players, requires the state.
In response to the dogged, stupid insistence on the part of the Right to insist that the
state is a freestanding leviathan screwing up the market utopia, it's important to point to ways
in which the state is an instrument of capital. This gets into trudging through arguments about
who's controlling what, the independence of bureaucracies and such. But that's better than the
gobsmacking naivite that the Right, always shouting about unfettering us from the state that they
in fact rely on, would have us fall into.
What was Varoufakis facing? He's talking with gummint reps who try to integrate oodles
of biz interests, with the banks interests coming first since they are most directly vulnerable.
But in turn the banks, while selfstanding in the sense that they worry about their loans, also
reflect interests that are not only strictly financial, but also the financialized representation
of other sectors' interests.
*Varoufakis's new book, "And the Weak Suffer What They Must? Europe's Crisis and America's
Future" was released on April 12.
This quote is a translation of what is referred to as "The Melian Dialogue" from Thucydides.
Thucydides might have invented the quote for dramatic effect. I recall thinking and commenting
to several folks as the "negotiations" were ongoing that Varoufakis must have chosen to ignore
it, since he would have studied this in secondary school.
https://en.wikipedia.org/wiki/Melian_Dialogue
I fear the Melians' interpretation is proving all too true as we look at the debate over a
Brexit.
"The Athenians offer the Melians an ultimatum: surrender and pay tribute to Athens, or
be destroyed. The Athenians do not wish to argue over the morality of the situation, because in
practice might makes right (or, in their own words, "the strong do what they can and the weak
suffer what they must"[3]).
"The Melians argue that they are a neutral city and not an enemy, so Athens has no need
to conquer them. The Athenians counter that if they accept Melos' neutrality and independence,
they would look weak: people would think they spared Melos because they were not strong enough
to conquer it.
"The Melians argue that an invasion will alarm the other neutral Greek states, who will
become hostile to Athens for fear of being invaded themselves. The Athenians counter that the
Greek states on the mainland are unlikely to act this way. It is the independent island states
and the disgruntled subjects that Athens has already conquered that are more likely to take up
arms against Athens.
"The Melians argue that it would be shameful and cowardly of them to submit without a fight.
The Athenians counter that the stakes are too high for the Melians to worry about shame."
Then I would suggest to Yanis (and others) to read Thucydides' own parallel to the Melian situation,
namely the earlier revolt of Mytilene. The language of the Melian dialogue borrows directly from
(and in many cases inverts) the language of the intercourse between the Mytilenians and the Spartans
and the later debate at Athens over what to do about the revolt. It's also worth noting that Thuc.'s
typical pattern is to first present the ideal or better course of action then in a later parallel
show how things degenerate, so what happens with Mytilene is, to my mind, meant to be more instructive.
From bk. 3 par. 11, the Mytilenian ambassador to the Spartans, complaining about the imbalance
of power:
If we [i.e. the city states involved in the Persian Wars] had all still been independent,
we could have had more confidence in their [the Athenians'] not altering the state of affairs.
But with most of their allies subjected to them [c.f. the EU] and us being treated as equals,
it was natural for them to object to a situation where the majority had already given in and
we alone stood independent – all the more so since they were becoming stronger and stronger
[recall Germany prospered while southern Europe suffered] and we were losing whatever support
we had before. And in an alliance the only safe guarantee is an equality of mutual fear [!
– Grexit has to be a real threat, perhaps?]; for then the party that wants to break faith is
deterred by the thought that the odds will not be on his side.
Now, the Mytilenian situation is not a perfect parallel–real historical events never are–but
they saw with rather clear eyes the true nature of these broadly based alliances, namely that
there is actually someone in charge, and that someone will use their position to benefit themselves
at others' expense. As the Myt. ambassador shows, it is incumbent upon the lesser parties to recognize
the position they are in and antagonize where needed.
I like how the word democracy is used over and over without the obvious necessity of coupling
a mechanism for power with democracy. That mechanism, for starters, is voting. There is no democracy
without the decision making process that has been developed since the ancient Greeks called voting.
And the accepted final decision is when a majority of the people deciding is achieved. The rules
of the decision making process, written laws prescribing the limits of acceptable policy making,
are the founding principles, the constituting formulas for running the social order with the voice
of the people provided with input into the governing of the social order.
Voluntary abandonment of voting due to frustration over relative powerlessness does not provide
a solution to providing for democracy. There is no democracy without voting. Just as there is
no market without money. Or there is no money without debt. Voting is providing your individual
say so, your input which constitutes what we call democracy. You can't talk about democracy without
talking about elections. Varis is pointing out this self evident truth. If the elected officials
or an unelected Troika deny the need for the results of elections, placing a political party into
the offices of state power, by demanding that only the rules of economic power be observed and
the results of democractic elections be rendered useless in the face of the need to pay back loans,
we have a problem much larger than huge swathes of the citizenry abandoning electoral participation.
While voter apathy is one thing, the people who remain faithful to the rule of democracy are
betrayed when they participate in sustaining the social order by carrying out the ritual of voting,
the mechanism of democracy. With contempt after being elected displayed by the newly installed
political party in Greece or anywhere else for the citizenry who chose them, this is truly unsustainable,
politically and of course with the exact opposite outcome for the Troika's desired out comes.
Austerity will be a long term prospect if successful at all and more likely bring higher costs
due to societal disintegration, than the debt austerity is implemented to collect in the first
place.
The modern liberal state requires operating an actual faithful and regular democratic mechanism,
to ensure all of the other aspects of the social order, including the market or private sector
of the economy. To strip the citizenry of its citizenship and replacing it with no other other
purpose than to sell yourself for a price in order to survive and replace social relationships
with financial debts to the exclusion of all other claims, other social debts to family, community,
to strongly held personal religious beliefs that place you meaningfully into the larger universe,
leaves no reason to live but the enrichment of a faceless other, the wealthy ruling class. Of
course, this is nothing but an impossible life, and unsustainable policy, ticking like a real
time bomb because as a human being, there is only so much stress and pressure that can be endured.
In Australia, voting is a duty, not a right. It's mandatory and you are fined if you don't
vote. I found the caliber of political discourse way higher at my local Aussie pub (which has
a vey wide cross section of people) than at any Manhattan gathering of supposedly highly educated
professionals.
Didn't they also outlaw all kinds of rifles, assault, long guns, hunters scoped bolt action,
anything, to amazing effect? You have to vote and you can't be armed to the teeth! Participation
in democracy mitigates the need for arming yourself against a potential tyranny. People don't
need to be heavily armed, they need political power. We can't be heading for civil war in America
whenever our country is facing an unresolvable political or economic crisis.
there is only so much stress and pressure that can be endured.
Every 'four score and seven' or thereabouts, our country has hitched up its britches, looked
back at the previous eighty years and rewrote the algorithms for law making. Each period or basic
law rewriting had a prelude of great turbulence. The major pillars of a History of the United
States that anyone would care to write, would need to delineate Founding, Reconstruction, New
Deal and in a movement that arrived too early (or too late as it should have been part of the
new Deal) the Civil Rights movement. Each time the earth shaking prelude occurred, the rebuilding
after the earthquake caused reactions that were as hidebound and cruel as the Spanish Inquisition.
Founding left the nation with slavery, Reconstruction fostered Jim Crowism and The New Deal fostered
neoliberalism couched in the rhetoric of the epic journeys of the Cold Warrior as a reaction against
attempts to regulate the capitalist engine.
Taking a closer look at the New Deal what this observer sees is a Congress that was too lazy
to write laws and instead passed those duties over to the Executive branch. The Supreme Court
objected and well, the rest is history. Mind you, I am not in aligning myself with the archaic
views of justices who attempted to write laws based on the principles of Neo-Darwinistic social
evolutionary theory espoused by Herbert Spencer. However, I am saying those same justices, whatever
their theories were on evolution, did know how to read the Constitution of the United States and
clearly found that document forbade Congress to delegate powers to the executive branch merely
to play a politicized version of kick the can-down-the-street. Congress was merely attempting-during
the New Deal especially but ever after as well, to avoid controversy (a perennial favorite), shirk
its duty in writing laws that specify a problem and outline specific solutions (another favorite
pastime) and engage in 'sit down, sit down, you're rockin' the boat.'
The emergent, counter-revolutionary forces of the 'new' liberalism are ascendant everywhere
and we find our government, at the municipal, county, state and national level captured by a Naked
Capitalism that is tribal in its outlook, hell bent on confiscating all financial transactions,
all property, and forcing a review before itself, like the tyrants of ancient Greece, of every
attempt to finally renew a fresh purpose to law making. No spring revolution, no occupy resurgence,
no cries for reason, justice, or a drive for a restoration of the Bill of Rights, will be allowed
to survive. Any attempts to renew the dying flame of the original revolution (as in Martin Luther
King's passionate and powerful rhetoric) will be dealt with swiftly and concretely.
Prepare for the long winter of the New History of the United States of America.
"The modern liberal state requires operating an actual faithful and regular democratic mechanism,
to ensure all of the other aspects of the social order, including the market or private sector
of the economy. To strip the citizenry of its citizenship and replacing it with no other other
purpose than to sell yourself for a price in order to survive and replace social relationships
with financial debts to the exclusion of all other claims, other social debts to family, community,
to strongly held personal religious beliefs that place you meaningfully into the larger universe,
leaves no reason to live but the enrichment of a faceless other, the wealthy ruling class.
Of course, this is nothing but an impossible life, and unsustainable policy, ticking like a
real time bomb because as a human being, there is only so much stress and pressure that can
be endured."
Very well said!
We are seeing this disintegration here in the U.S. in the early 21st century. The assassinations
of the 1960s, the police-state violence at Kent State, etc., were shocking indeed. Yet, during
those turbulent times the illusion was maintained that we had an "actual democratic mechanism."
The Florida fiasco of 2000, where our unelected Supreme Court determined that the actual votes
cast, of actual citizens, was no longer the deciding factor in who would take over the highest
office in the U.S., killed this illusion. The carelessness of our sociopathic elites today, who
barely attempt to conceal how they are suppressing the rights of actual citizens to actually vote,
reveals the lesson they think they learned from Bush v. Gore in 2000.
I feel the elites are wrong on this: people didn't revolt in 2000, and they may not revolt
in 2016, but there is a breaking point somewhere and our sociopathic elites are
pushing us closer to that line every day.
youtube has songs by all kinds of singers, some more famous than others but so many that portray
the bullshit people have to live with everyday, from the Black Ghettos to the Appalachian Ghettos
and every nook and cranny of humanity, and everyone knows this is nowhere and no way to live.
We are held back by people with more power than we currently have that keep us living below the
standards of a decent, healthy, happy life.
But he [Varoufakis ] didn't begin to have the runway to persuade his opponents, and he
thought the threat of a Grexit gave him far more bargaining leverage than he had.
Didn't Varoufakis, not just Tsipras, but Varoufakis say – and repeat over and over – that Grexit
was absolutely off the table at the beginning of negotiations? If he was counting on the threat
of a Grexit for bargaining power, he sure went about it in a strange way.
Yes, I didn't get into the details, but that didn't help. But the strategy was widely described
as chicken, which implies what people in the market called "accidental" Grexit. So it looked as
if Varoufakis was playing as if Grexit were an option but Syriza would be able to tell voters
(from whom they had no mandate) that it was the other side's fault. It really did look like they
thought they could force the other side to make concessions. But they kept agreeing to stuff in
Brussels or Berlin (not just made up but the Trokia, this was remarks by Tsipras or Varoufakis
in public) and then within 24 hours they'd reverse themselves in public in Greece. This made everyone
increasing furious with them, particularly since the negotiations were becoming time consuming
and physically taxing.
This is a far deeper argument here than the last one I encountered! In a macroeconomics course
about 4-5 years ago, I found myself in the middle of a fervently-argued dialog on the 'Greek problem.'
The textbook, written from the voice of the IMF, presented the position of Germany and the
Eurozone. They needed (not wanted but needed), to get Greece to accept austerity and whatever
terms the Eurozone asked of them. Greece was threatening the German livelihood. This was simply
good, solid, basic macroeconomic theory.
Student-after-student wrote page-after-page on the unfairness of the Greek position and how
they simply need to be brought around. I was alone in challenging that explaining even with the
Eurozone agreements, a democratic nation still couldn't simply overrule the sovereign will of
another democratic nation.
But wait, what? This was baffling! What did I mean by 'sovereignty'? Surely, that didn't have
anything to do with the issue at stake here. The Greeks owed money and the money was due. For
Greece to balk on the agreement threatened the stronger Eurozone nations who had followed the
rules and had done what they were supposed to do.
I asked, "If there is no sovereignty issue, then why are the citizens of Greece protesting
in the streets right now?"
I went on to explain (because apparently there is some confusion as to the fundamental nature
of the EU itself) that t's not analogous to our United States. As a united nation-state, our individual
states have individual state's rights, but (as clarified in our civil war) these states are all
still subject to a single centralized Federal government. The European Union, on the other hand,
is not a single unified nation-state. The model is closer to that of a financial cooperative .
These financial agreements and trade treaties (including Schengen) produce claims against them,
but they don't determine domestic policy (nor should they).
While my instructor understood and appreciated my criticism, it clearly wasn't a mainstream
perception over here at that time.
Take that with a grain of salt though because I've also sat through discussions in favor of
resurrecting Adjustable Rate Mortgages as a way to pump new life into our economy. Fun stuff!
A bit more background is needed I believe. The bailouts of Greece in the form of loans forestalled
a default by Greece. In return for new loans to pay off foreign (Mostly French and German) banks,
the money borrowed from the IMF supplemented by EU and ECB monies was used to pay off these obligations.
There was a fair bit of kicking the can down the road until the loans to foreign banks were paid
off, then the memoranda started kicking in. The old loans from banks were contracted under sovereign
Greek law, while the new ones were contracted under UK law if I recall correctly. UK law is much
more strict. Both PASOK and New Democracy were filled with cronies, and patronage was rampant
along with theft and and tax evasion. This had been the case for much of the period from 1974
until SYRIZA was elected last year. Two useful books on the situation are
Despite my handle, I am not Greek, but I have lived in Europe for the past 38 years, the bulk
of it in Greece. I recall seeing ads in bank offices here in 2006-2007 offering mortgages at 3.95%
in Swiss Francs instead of the 7%+ that was the rate for mortgages denominated in Euros. I warned
everyone I knew that they should not opt for the lower rate unless they had a steady, secure revenue
stream in SFr.
Capitalists use force to make people labor for them all the time. In the South through the
30s it was common for capitalists to pay sheriffs to round up black men, sentence them to hard
labor, and essentially sell them to the local boss as laborers. This was part of the reason for
the great migration to northern cities. When workers form unions, historically capitalists have
had no compunction about sending in skull-crackers to break strikes. And of course people who
have "no alternative" but to sell their labor only lack the alternative of theft because the police
stand by guaranteeing the "property rights" of absentee owners and wealth hoarders. Peasant farmers
were pushed off the commons and their historical lands (where they could support themselves) by
force. Overseas markets were only expanded through military force and colonialism. This was the
explicit aim of the first corporations.
I am not sure the Star Trek analogy is a good one. The later spinoff years had some fairly
mean captains like Janeway and Sisko who tended to prefer to blow things to get there way instead
of negotiating. Overall I find Star Trek to be quite violent for a utopia(in it's later years).
There are all sorts of arms dealers, smugglers, warlords, the "Maquis" Movement, and all around
bad people like Michael Eddington, Luther Sloan, and Doc Zimmerman.
Varoufakis's big problem is that he can't let go of the dream of EU as the big European
social understanding project. Frankly that has never existed beyond the minds of the academic
elite that all talk virtually fluent english, and can do their thing anywhere with a net connection
and a credit card terminal. The vast majority of the population of the European nations are tied
to their place of living. Either by work, by language, by family, or a combination of the above.
I am not in a position to dispute your point beyond my anecdotal take from here in Greece over
the past 40 years. Many parents we have are unhappy about seeing their children go abroad to study
or work, and many students are keen to do so. The parents, nonetheless, pay us to help their children
jump through the hoops to get there at both the undergraduate level and graduate level. Virtually
all of them have at least three languages and often more at a high level of proficiency.
Many get full scholarships to top-tier US universities or fellowships at graduate schools in
the US and EU. Admittedly, my data are anecdotal.
Several former French students from many years ago are working for MSF and other aid organizations.
Others from Greece are working for the EU.
The Heilbroner quote is conventional and rather dated. Yes, capitalism depends on "free" labor.
But it emerged historically in tandem with the formation of the modern sovereign state, at first
in its absolutist form and later in its constitutional form. Yes, there is institutional differentiation
in modern capitalist societies between state and economy, but the two systems are thoroughly cross-implicated,
and capitalism would never have emerged without state backing. Polanyi covered this in his classic
book, refuting the 19th century classical liberal ideology that Heilbroner repeats. But nowadays
in the neo-liberal era, that liberalism has been inverted. Not only have states been weakened
by globalization, but the current neo-liberal doctrine makes the only legitimate function of the
state the enforcement if the dictates of the "market", even to the point of creating markets in
areas where there previously were none. The imperative is to privatize everything, including the
very idea of the public sphere itself.
Classical economics is no longer taught as its teachings would go directly against current
ideas, they are hidden and forgotten on purpose. As Michael Hudson points out in "Killing The
Host" the world would be a much better place if we remembered the classical economists distinction
between "earned" and "unearned" income.
"... Alternative theories would have led to very different policies. For instance, the tax cut in 2001 and 2003 under President Bush. Economists that are very widely respected were cutting taxes at the top, increasing inequality in our society when what we needed was just the opposite. Most of the models used by economists ignored inequality. They pretended that macroeconomy was unaffected by inequality. I think that was totally wrong. The strange thing about the economics profession over the last 35 year is that there has been two strands: One very strongly focusing on the limitations of the market, and then another saying how wonderful markets were. Unfortunately too much attention was being paid to that second strand. ..."
"... ditto...everyone from Tyler Cohen to Mark Perry of the AEI does daily posts about the markets working for everything...a daily "Market Failure in Everything" would provide a useful alternative to that point of view... ..."
"... Nobel-prize winner Joseph Stiglitz said monetary policies have exacerbated inequality and need to be redirected to better target getting money flowing into economies and helping small and medium-size businesses. ..."
"... policies such as quantitative easing were a "version of trickle-down economics" and the subsequent increase in asset prices only affected the wealthiest in society ..."
"... "The key problem is the access of credit to small and medium-size enterprises, is getting that flow of money into the real economy," Stiglitz said. It's "nice to have a stock market bubble if you have a lot of stock. But if you are in the bottom 80 percent of America, you have a little stock and you can feel a little good about the stock going up. But let's face it, the overwhelming bulk of our stock market is owned by the 1 percent." ..."
"... Oh my god. He lumps in Bernanke with Greenspan. What are the Fed worshippers going to do now? Their deity is under attack from Stiglitz. Of course it is nothing but fact that bernanke denied that bubbles in real estate were possible OR that a bubble could become s problem for the economy. Hats off to Stiglitz. ..."
"... How much more evidence do we need that the current trickle down monetary policy has failed? "The weak growth for the quarter puts this recovery even further behind any prior recovery at the same stage. After eight and a quarter years, the economy is only 10.1 percent larger than its pre-recession level of output. A more typical recovery would have seen at least twice as much growth." ..."
...White: ... To what extent do you feel economist and economic theory
is culpable for the crisis? What is the role of an economist going
forward?
Stiglitz: The prevalent ideology-when I say prevalent it's not all
economists- held that markets were basically efficient, that they were
stable. You had people like Greenspan and Bernanke saying things like
"markets don't generate bubbles." They had precise models that were
precisely wrong and gave them confidence in theories that led to the
policies that were responsible for the crisis, and responsible for the
growth in inequality.
Alternative theories would have led to very
different policies. For instance, the tax cut in 2001 and 2003 under
President Bush. Economists that are very widely respected were cutting
taxes at the top, increasing inequality in our society when what we
needed was just the opposite. Most of the models used by economists
ignored inequality. They pretended that macroeconomy was unaffected by
inequality. I think that was totally wrong. The strange thing about
the economics profession over the last 35 year is that there has been
two strands: One very strongly focusing on the limitations of the
market, and then another saying how wonderful markets were.
Unfortunately too much attention was being paid to that second strand.
What can we do about it? We've had this very strong strand that is
focused on the limitations and market imperfections. A very large
fraction of the younger people, this is what they want to work on.
It's very hard to persuade a young person who has seen the Great
Recession, who has seen all the problems with inequality, to tell them
inequality is not important and that markets are always efficient.
They'd think you're crazy. ...
When I first started blogging, I used to do posts with the title
"Market Failure in Everything." as a counter to "the prevalent ideology."
Maybe I should revive something similar.
ditto...everyone from Tyler Cohen to Mark Perry of the
AEI does daily posts about the markets working for
everything...a daily "Market Failure in Everything" would
provide a useful alternative to that point of view...
Nothing about Ricardian Equivalence or RBC fallacies.
While
inequality is certainly important for consumption demand, PCE
has not been a significant problem in the recovery. OTOH,
reduction of the federal budget deficit explains virtually
all of the deficient demand we have experienced. Obama and
the Dems bought into RE and are paying the price now.
"Nobel-prize winner Joseph Stiglitz said monetary policies have exacerbated inequality
and need to be redirected to better target getting money
flowing into economies and helping small and medium-size
businesses.
In a Bloomberg Television interview Tuesday with Francine
Lacqua and Michael McKee in New York, he said policies such
as quantitative easing were a "version of trickle-down
economics" and the subsequent increase in asset prices only
affected the wealthiest in society.
"The key problem is the access of credit to small and
medium-size enterprises, is getting that flow of money into
the real economy," Stiglitz said. It's "nice to have a stock
market bubble if you have a lot of stock. But if you are in
the bottom 80 percent of America, you have a little stock and
you can feel a little good about the stock going up. But
let's face it, the overwhelming bulk of our stock market is
owned by the 1 percent."
Stiglitz's comments come as some central banks around the
world are being forced to delve deeper into their policy
tools to help support their economies. As policy makers
struggle to find a way out of the economic malaise, some have
even raised the idea of helicopter money, which aims to
direct cash straight to consumers.
The Columbia University professor, who said the Federal
Reserve can do more to "channel" money to small companies and
the economy, was also critical of negative rates. This is
partly because of their potential impact on lending.
"The dangers of negative interest rates -- if you don't
manage it extraordinarily well; some countries are doing it
reasonably well, some are not -- is that it actually weakens
the banking system," he said. "If it weakens the banking
system, the banks are going to provide even less credit.
While it might have some effect on financial markets, in
terms of what we really should be concerned about, which is
the flow of credit to businesses, that's not working."
http://www.bloomberg.com/news/articles/2016-04-26/stiglitz-says-misdirected-monetary-policies-increased-inequality
What's the point of low interest rates, if they only serve
the interests of Wall Street banks and their wealthy
clientele? Oh, right! That IS the point. And most economists
are just fine with that.
Oh my god. He lumps in Bernanke with Greenspan. What are
the Fed worshippers going to do now? Their deity is under
attack from Stiglitz. Of course it is nothing but fact that
bernanke denied that bubbles in real estate were possible OR
that a bubble could become s problem for the economy. Hats
off to Stiglitz.
Falling Investment and Rising Trade Deficit Lead to Weak
First Quarter
By Dean Baker
Health care costs remain well-contained, barely growing as
a share of GDP.
GDP grew at just a 0.5 percent annual rate in the first
quarter. This weak quarter, combined with the 1.4 percent
growth rate in the 4th quarter, gave the weakest two quarter
performance since the 3rd and 4th quarters of 2012 when the
economy grew at just a 0.3 percent annual rate.
Growth was held down by both a sharp drop in
non-residential investment and a further rise in the trade
deficit. Equipment investment fell at an 8.6 percent annual
rate, while construction investment dropped at a 10.7 percent
annual rate. The latter is not a surprise, given the
overbuilding in many areas of the country. The drop in
equipment investment was undoubtedly in part driven by the
worsening trade situation, as many factories curtailed
investment plans as U.S.-made products lost out to foreign
competition, weakening demand growth. There was also a drop
in information processing equipment, indicating that those
who are expecting that robots will replace us all will have
to wait a bit longer.
The rise in the trade deficit was due to a 2.6 percent
drop in exports, as imports were nearly flat for the quarter.
Trade subtracted 0.34 percentage points from growth for the
quarter.
Consumption continued to grow at a modest 1.9 percent
annual rate, adding 1.27 percentage points to growth.
Consumption growth was held down in part by weaker demand for
new cars, which subtracted 0.33 percentage points from growth
for the quarter. This was the second consecutive decline in
the sector. It is likely that car purchases will be up
somewhat in future quarters.
The savings rate for the quarter was 5.2 percent, which is
up slightly from the 5.0 percent from the prior three
quarters and the 4.8 percent rates from 2013 and 2014, before
people started saving their oil dividends. But seriously,
there may be some modest room for this rate to decline, but
for the most part consumption growth will depend on income
growth going forward.
Health care services added 0.26 percentage points to
growth, its smallest contribution since a reported decline in
the first quarter of 2014. Spending in the sector remains
well contained, growing at just a 3.8 percent annual rate
over the last quarter and by 4.4 percent over the last year
in nominal spending.
Housing grew at a 14.8 percent annual rate, adding 0.49
percentage points to growth. Housing has being growing at a
double digit rate since the fourth quarter of 2014. While the
sector is likely to continue to grow in subsequent quarters,
the pace is almost certain to slow.
The government sector was a modest positive in the
quarter, growing at a 1.2 percent rate. State and local
spending increased at a 2.9 percent annual rate, more than
offsetting a 1.6 percent drop in federal spending, all of it
on the military side. Future quarters are likely to show
comparable growth, although the composition may be somewhat
different.
A slower rate of inventory accumulation reduced growth by
0.33 percentage points, as final sales of domestic product
grew at a 0.9 percent rate. This is the third consecutive
quarter in which the pace of inventory accumulation slowed,
although the current pace is not especially low. It is likely
that inventories will grow somewhat more quickly in the rest
of the year, being at least a small positive in the growth
story.
The weak growth for the quarter puts this recovery even
further behind any prior recovery at the same stage. After
eight and a quarter years, the economy is only 10.1 percent
larger than its pre-recession level of output. A more typical
recovery would have seen at least twice as much growth.
[Graph]
On the whole this is a weak report. The headline 0.5
percent figure probably overstates the weakness somewhat, but
it is not a good sign when two consecutive quarters have an
average growth rate of less than 1.0 percent. Inflation
remains well under control, although there was a modest
uptick in the rate of inflation shown by the core personal
consumption expenditure deflator to 1.7 percent over the last
year. Nonetheless, with an economy barely growing and an
inflation rate that remains below target, it is difficult to
envision the Federal Reserve raising interest rates further
any time soon.
How much more evidence do we need that the current trickle
down monetary policy has failed? "The weak growth for the
quarter puts this recovery even further behind any prior
recovery at the same stage. After eight and a quarter years,
the economy is only 10.1 percent larger than its
pre-recession level of output. A more typical recovery would
have seen at least twice as much growth."
Market failures aren't really market failures but market
responses to market conditions. They are failures only in the
sense that something deemed bad (e.g., falling home prices)
is the market response. An extreme example is what's being
called secular stagnation, which is just the market response
to the shift of an enormous volume of production and income
from the U.S. and Europe to China and other like places with
much higher levels of inequality and savings. It's a market
failure only in the sense that something bad (wage
stagnation, slow economic growth) happened in the U.S. and
Europe. Those responsible for the shift in production and
income to China et al. (i.e., U.S. and European business
executives) were either ignorant of the likely market
response or didn't care as long as it increased profits (via
lower costs). But that's not a market failure, it's an
executive failure.
Peter, -1
"I think almost surely both Hillary and Bernie Sanders are
very very committed to a pro-equality agenda, and the
differences are more in details, more in one's confidence in
their ability to execute this in a political context."
Disappointing. I guess we'll find out if he's right. Also his
suggestion that the economy would have done just as well with
no QEs is very disappointing.
"Stiglitz: I think they were right. They originally said,
"When we hit 6 percent that's full employment." Now they know
that 4.9 isn't full employment, there's weak labor market.
They should have focused more on improving the channel of
credit to make sure that money was going to small and
medium-sized enterprises They should have said to the
bank-like some other countries have done-if you want access
to the Fed window you have to be lending to SMEs. "
Which was Bernie's suggestion. Hillary has said nothing.
In a popular piece that recently appeared in Foreign Affairs magazine, headlined, "The Future of
History", Francis Fukuyama pointed out that, despite widespread anger at Wall Street bailouts, there
has been no great upsurge of support for left-wing political parties. Fukuyama attributed this –
rightly, I believe – to a failure of ideas.
The 2008 financial crash revealed major flaws in the
neoliberal view of capitalism, and an objective view of the last 35 years shows that the neoliberal
model has not performed well relative to the previous 30 years. This is in terms of economic growth,
financial stability and social justice. But a credible progressive alternative has yet to take shape.
What should be the main outlines of such an alternative?
A progressive political economy must be based on a firm belief in capitalism – that is, on an
economic system in which most of the assets are privately owned and markets largely guide production
and distribute income. But it must also incorporate three defining progressive beliefs: the crucial
role of institutions; the need for state involvement in their design in order to resolve conflicting
interests and provide public goods; and social justice, defined as fairness, as an important measure
of a country's economic performance.
It was a great mistake of neoclassical economists not to see that capitalism is a socioeconomic
system and that institutions are an essential part of it. The recent financial crisis was made far
worse by profound institutional failures, such as the high level of leverage that banks were permitted
to have.
Empirical research has shown that four sets of institutions have a major impact on the performance
of firms and, therefore, on a country's economic growth. These include the institutions underpinning
its financial and labour markets, its corporate governance arrangements, its education and training
system and its national system of innovation (the network of public and private institutions that
initiate and diffuse new technologies).
Another defining belief of progressive thinking is that institutions do not evolve spontaneously,
as neoliberals believe. The state must be involved in their design and reform.
In the case of institutions underpinning labour and financial markets, as well as corporate governance,
the state must mediate conflicting interests. Likewise, a country's education and training system,
and its national system of innovation, are largely public goods, which have to be provided by the
state.
It should be clear that the role for the state that I have been describing is an enabling or market-supporting
one. It is not the command and control role promoted by traditional socialists or the minimalist
role beloved by neoliberals.
The other defining belief of progressive thinking rejects the neoliberal view that a country's
economic performance should be assessed solely in terms of gross domestic product (GDP) growth and
freedom. If one is concerned with a society's wellbeing, it is not possible to argue that a rich
country in which the top one percent holds most of the wealth is performing better than a slightly
less wealthy country in which prosperity is more widely shared.
Moreover, fairness is a better measure of social justice than equality. This is because it is
difficult to devise practical and effective policies to achieve equality in a market economy.
In addition, there is a real tradeoff between equality and economic growth, and egalitarianism
is not a popular policy even for many low-income people. In my experience, trade unions are much
more interested in wage differentials than in a simple policy of equal pay for all.
These are the core principles that I believe a new progressive political economy should embrace.
I also believe that Western countries that do not adopt this framework and instead cling to a neoliberal
political economy, will find it increasingly difficult to innovate and grow.
In the new global economy, which is awash with cheap labour, Western economies will not be able
to compete in a "race to the bottom", with firms seeking ever-cheaper labour, land and capital, with
governments seeking to attract them by deregulating and shrinking social benefits.
The only way Western economies will be able to compete and improve their standard of living is
by seeing themselves as being involved in a race to the top. That is, firms must improve their value
added through innovation in existing industries and by developing the capability to compete in new
and more sophisticated industries, where value added is generally higher.
Companies will be able to do this only if governments abandon the belief that they have no role
to play in the economy. In fact, the state has a key role to play in providing the conditions that
enable dynamic companies to innovate and grow.
"... Monbiot is the best journalist the Guardian has, he can actually make a logical fact based argument unlike the majority of Guardian journalist. ..."
"... Monbiot suggests that a coherent alternative to the current situation needs to be developed but disappointingly fails to give any clues as to what it might look like except, of course, that it must have some type of environmental context. ..."
"... A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century ..."
"... The trade union package, gave us meal breaks, holidays, sickness benefits, working hours restrictions, as opposed to the right wing media agenda ..."
"... Yes, a high priest of neo-liberalism, Lord Freud, was given only 13 weeks to investigate and reform key elements of the the UK's welfare system, it hasn't worked and Freud is now invisible. ..."
"... Failed neoliberalism and not restricting markets that do not benefit the majority are the cause and we stand on the brink of falling further should the Brexiter's have their way. If there's one thing the EU excels at it's legislating against the excesses of business and extremism. ..."
John Harris is wonderful too. The only guy on the staff who can write about
the working class with clarity, respect and understanding. But Monbiot is
also the biscuit.
'The Invisible Hand' is not an ideology or dogma. It's just a metaphor to
describe those with problems grasping abstract concepts: when there are
a large number of buyers and suppliers for a good, the 'market finds a price'
which is effectively the sum of all the intelligence of the participants,
their suppliers, customers etc..
The Socialists, who have difficulty grasping this reality, want to 'fix'
the price, which abnegates the collective intelligence of the market participants,
and causes severe problems.
Capitalism is freedom, Socialism is someone's ideology.
'The Invisible Hand' is... a metaphor to describe those with problems
grasping abstract concepts: when there are a large number of buyers
and suppliers for a good, the 'market finds a price' which is effectively
the sum of all the intelligence of the participants
You clearly haven't read Wealth of Nations. The only mention of an invisible
hand is actually a warning against what we now call neoliberalism. Smith
said that the wealthy wouldn't seek to enrich themselves to the detriment
of their home communities, because of an innate home bias. Thus, as if by
an invisible hand, England would be spared the ravages of economic rationality.
Your understanding of the 'invisible hand' is a falsehood perpetuated
by neoliberal think tanks like the Adam Smith institute (no endorsement
or connection to the author, despite using his name).
'The Invisible Hand' is not dogma.
You definitely know a lot about dogma (and false dichotomies):
Capitalism is freedom, Socialism is someone's ideology.
This is an interesting academic piece but the reality is that we don't have
anything like neo-liberalism in this country as defined by Hayek and it
has become a term of abuse by people who really ought to know better. The
strongest abuse of course is linked to the Blair Government, a period, of
course, when, with substantial success, the size and reach of the state
increased quite substantially, ie the complete opposite of neo-liberalism.
In fact, suggesting that the UK is neo liberal is not that much different
for suggesting that Russia had communism as defined by Marx.
Whether it is a good or bad thing that we don't have neo-liberalism is
open to academic debate but is not of much use in real life.
Monbiot suggests that a coherent alternative to the current situation
needs to be developed but disappointingly fails to give any clues as to
what it might look like except, of course, that it must have some type of
environmental context.
A coherent alternative has to be proposed. For Labour, the Democrats
and the wider left, the central task should be to develop an economic
Apollo programme, a conscious attempt to design a new system, tailored
to the demands of the 21st century
All very well, but how? Did anyone hear the screams of rage when Sanders
started threatening Hillary, or when Corbyn trounced the Blairites? The
dead hand of Bernays and Goebbels controls everything.
The failure to describe reality in a way that concurs with what ordinary
people experience has driven off much support and reduced credibility.
There is no credible model for investment and wealth creation.
The focus on social mobility upwards rather than on those who do not
move has given UK leftism a middle-class snobby air to it.
Those entering leftist politics have a very narrow range of life experience.
The opposition to rightist politics is cliched and outmoded.
There is a complete failure to challenge the emerging multi-polar plutocratic
oligarchy which runs the planet - the European left just seeks a comfy accommodation.
There is no attempt to develop a post-socialist, holistic worldview and
ideology.
The trade union package, gave us meal breaks, holidays, sickness benefits,
working hours restrictions, as opposed to the right wing media agenda,
that if you aint getting it nobody should, pour poison on the unions, pour
poison on the public sector, a fucking media led race to the bottom for
workers, and there were enough gullible (poor )mugs around to accept it.
You can curse the middle class socialists all you like, but without their
support the labour movement would never have got off the ground.
Okay, so you've described the 1950's through to the 1980's. So what have
the unions done for us isn the last two decades ? Why is it all the successful,
profitable and productive industries in the Uk have little or no union involvement
?
Why is it that the least effective, highest costs and poorest performing
structures are in the public sector and held back by the unions ?
Here's a clue - the unions are operating in the 21st century with a 1950's
mentality.
During the industrial revolution, profitability and productivity were off
the scale because the workforce were just commodities, Unionisation instigated
the idea that without the workforce, your entrepreneurs can't do anything
on their own, Henry Ford wouldn't have become a millionaire without the
help of his workforce. 'Poorest performing structures' Guess what! some
of us are human beings not auto- matrons. I hope you dine well on sterling
and dollars, cause they're not the most important things in life.
It's the only way. It's not perfect but it achieves the best ( not ideal
) possible result. What if in the end there's no where left to go ? What
if the highest possible taxes, zero avoidance / evasion and high employment
still equals deficits and increasing national debt ?
What if the highest possible taxes, zero avoidance / evasion and
high employment still equals deficits and increasing national debt ?
The paragraph written above neatly describes the post WW2 years, where
the UK was pretty much in perpetual surplus. High employment does not equate
to national debt/deficit. Quite the opposite, the more people in gainful
employment the better. Increasing unemployment, driving wages down while
simultaneously increasing the cost of living is a recipe for complete economic
failure.
This whole economics gig is piss easy, when the general mass of people
have cash to spare they spend it, economy thrives. Hoard the cash into the
hands of a minority and starve the masses of cash, economy dies. It really
is that simple.
Public deficits exist to match the private surplus created by the rich enriching
themselves. To get rid of the deficit therefore we need to get rid of the
private wealth of the rich through financial repression and taxation
I read, cannot remember where, that with neo liberalism the implementation
is all that matters, you do not need to see the results. I suppose because
the followers believe when implemented it will work perfectly.
I think it's supporters think it is magic and must work because they believe
it does.
Yes, a high priest of neo-liberalism, Lord Freud, was given only 13
weeks to investigate and reform key elements of the the UK's welfare system,
it hasn't worked and Freud is now invisible.
Hopeful this is the start for change through identifying issues and avoiding
pitfalls. Failed neoliberalism and not restricting markets that do not
benefit the majority are the cause and we stand on the brink of falling
further should the Brexiter's have their way. If there's one thing the EU
excels at it's legislating against the excesses of business and extremism.
Let's make a start by staying in the EU.
"... "The ideas of the ruling class are in every epoch the ruling ideas" ..."
"... The German Ideology ..."
"... Shareholder value ..."
"... Amorality, where litmus tests for any act are illegality and reputational risk ..."
"... Which prevents questions of ethics from subverting the structure ..."
"... The inspection report, which was recently made public by Medicare, said that all 81 results provided to patients from that test from April to September of last year were inaccurate. ..."
"... out of their department budget ..."
"... By the early 1990's the rot, which had started to set in during the mid-1980's, had begun to accelerate. Most regular readers of Naked Capitalism know how the movie ended. If only it was just a work of fiction. For those of you who have suffered financially, emotionally, physically (or all three) through an unlawful foreclosure, fee gouging, predatory lending, junk insurance or scam financial products you will know what the consequences of an industry which threw away its moral compass and any sense of a social contract are. ..."
"... However, it seems to me that what Clive labels "dishonesty and exploitation" is what I would label corruption, and that's what Ebeling was fighting against. ..."
"... Fish rots from the head, and it's the head that makes the decisions about what gets punished and what gets praised. You want to survive and thrive in that fishpond, you better do what the rotten head tells you to do. ..."
"... the right person ..."
"... Bill Black has written extensively about what he calls the "Gresham's dynamic" that forced good underwriters out of the market. He has pointed out more than once that a petition was presented to the authorities signed by a large number of honest underwriters asking for regulation long before the big financial collapse. Being amoral and dishonest was a competitive advantage and the honest underwriters were driven out of the business. It's not hard to understand and does not call for the conclusion that people in general are dishonest or unethical. ..."
"... This is a lot like Not In My Backyard (NIMBY). Regulation is fine, so long as it applies to everyone else but not me. ..."
"... A competent publicist could reframe the unfortunate-sounding term "pepper spray incident " into a benign "invigorating capsicum spritz, provided at no cost to the participants." It wasn't violence; it was philanthropy. :-) ..."
"... This acknowledgment of the role of the class struggle was hardly limited to the Founding Fathers. It was not Karl Marx who spoke of the proclivity of employers to conspire and "to deceive and even oppress the public," of "the mean rapacity, the monopolizing spirit of merchants and manufacturers," of the "monopoly of the rich," of the "bad effects of high profits," of the "natural selfishness and rapacity" the vain and insatiable desires" of the rich, who institute "civil government"against the poor." It was the godfather of laissez faire capitalism and the favorite guru of conservatives, Adam Smith, who said that. ..."
"... Apparently Smith did mean just that, because he advocated that the rascality on the part of the rich could not be allowed to proceed without interference if one were to have a functioning capitalist system; hence he spoke of the need for government action to prevent the stultification of the "laboring poor." If that be class struggle, apparently he favors it. ( Compare Tocqueville's similar observation: "When the rich alone govern, the interest of the poor is always in danger." ..."
"... There's a massive difference between what Smith actually said and what his modern fanbois believe he said. Most of them have never actually read Wealth of Nations (and even less his Theory of Moral Sentiments. My understanding is that they both have to be read back to back to truly understand his views). Though I'm sure plenty of them have unopened copies of WoN displayed on their shelves for prestige value. ..."
"... Also, Michael Hudson has been of great help by constantly pounding away at the point that Smith was talking about markets free from vestigial feudalism, particularly exactly the kind of unproductive rent extraction that is making a comeback in the modern age. That's very different from the concept of unregulated markets free from any kind of oversight. ..."
"... This reminds me of all the times over 30 years when I did bookkeeping and accounting work and was asked to go into grey areas and sometimes commit outright fraud and I said no, and of course that was the end of that job, I would get eased out, usually in a way sure to make me ineligible for unemployment. I would certainly have gone to jail because I was the one who knew the law. But your DIL surely should not have been held accountable for doing clerical tasks without knowledge of or control over the contracts. That is very scary. ..."
"... The first thing [in credit] is character … before money or anything else. Money cannot buy it.… A man I do not trust could not get money from me on all the bonds in Christendom. I think that is the fundamental basis of business. ..."
"... There's the rub: amassing organizational power in a corrupt organization is very difficult for an honest, outspoken person. What often happens is that decent people save up their moral outrage until after they retire from whatever position in which they have "gone along to get along." Then most of them discover that they no longer have the energy, or the means, to "fight the good fight" they have delayed for decades. ..."
"... In this age of the internet, I wish there was more reputational damage. For instance, the cop who sprayed all the students (and then got $38,000) because he was made to feel bad. How about posts with his picture, his address, what car he is seen driving, where he is posted, etc. ..."
"... Sadly, people are a bit more evil than we give them credit for ..."
"... This is a challenge for anybody that navigates what increasingly is an overtly corrupt system. ..."
"The ideas of the ruling class are in every epoch the ruling ideas" –Karl Marx, The
German Ideology
Despite the fancy title and the epigraph, this post is going to be more like where a pundit writes
a column about taking to the cabdriver on the way into town from the airport; except one cabdriver
is an anecdote, and four or five cab drivers starts to look like a pattern. In this case, the cab-drivers
would be credentialed, what the Archdruid would call
the salaried class , or Thomas Frank
the professional class (Boston being their "spiritual homeland"). Marx would, I think, call them
the petite
bourgeoisie . (I call them
the 20% , although I imagine only 20% of the 20% are really making it.) These are my
people; I feel that I know them, which is why my analysis of them is going to be as tenuous as it
is. (That's why I'm assuming, for the purposes of this post, that credentials are a good thing; I
was brought up to regard credentials as the passport to serve others in the world of disinterested
scholarship.)
How can bankers live with themselves? by Joris Luyendijk
(If "How can you live with yourself?" is the same question as
"What is the good life?" , it's vexed philosophers for millenia.) Luyendijk takes the #PanamaPapers
as his starting point but soon branches out:
[T]he self-justifications of banking staff involved in helping clients avoid taxes were strikingly
similar to those offered in other areas in banking.
Perhaps the best term to describe the tone by which people spoke of their work and its ethical
dimensions is 'matter-of-fact'. For example, when they explained how to sell a deliberately intransparent
financial product to 'some guy' at a small bank in Sweden or an airline company in Finland, knowing
that 'this guy' has no idea what he is buying. …
As I said, bankers are not monsters so you can ask them, human being to human being: how can
you live with yourself doing things like this?…
When pressed for details, financial workers used two interconnected terms to explain themselves:
'a-morality' and 'shareholder value'. Please understand, everybody said: 'a-moral' is not the
same as 'immoral'. Immoral means knowingly breaking the law. The sign says you can go 100 kilometres,
still you decide to drive 150. That's immoral. A-moral, by contrast, means that your ethical and
moral framework is defined by what the law allows.
In finance you do not ask if a proposal is morally right or wrong. You look at the degree of
'reputation risk'. Financial lawyers and regulators who go along with whatever you propose are
'business-friendly' and using loopholes in the tax code to help big corporations and rich families
evade taxes is 'tax optimization' with 'tax-efficient structures'.
Once I tuned my ear in to it, I began to hear such 'sanitized' terms everywhere and this is
because the vocabulary available to people in finance to think about their own actions has been
deliberately stripped of terms that can provoke an ethical discussion. Hence the biggest compliment
in finance is to be called 'professional'. It means you do not let emotions get in the way of
work, let alone moral beliefs – those are for home….
If a-morality is the reigning mentality in today's financial sector, then 'shareholder value'
provides the ideological underpinning. Almost every interviewee brought this up.
So in summary we have these ruling ideas:
The ideological justification: Shareholder value
The ideological criterion:
Amorality, where litmus tests for any act are illegality and reputational risk
Corrupt
language: Which prevents questions of ethics from subverting the structure
(Note that the professional classes of our day, unlike the 1% and 0.01%, lack the power - and
the money - to procure changes to the law or repair a damaged reputation by hiring public relations
specialists. That is, perhaps, why they are petite : They must take both the law and the
nature of reputation as givens.)
Comparing my summary of Luyendijk's framework to NC's
"Neoliberalism Expressed as Simple Rules," we see list item #1 is equivalent to Rule #1 of Neoliberalism:
"Because markets." And we can see that list item #2 is equivalent to Rule #2 - "Go die! - although
worked out with differing degrees of intensity according to context.
Now let's go on to five examples where the question "How do you live with yourself?" might be
posed, and in which the points of Luyendijk's framework are variously salient. (I'm really writing
this post because I encountered all these links in the last couple of days, so I felt like something's
out there in the zeitgeist.)
The first example is Theranos , although not for the bezzle-ish, scammy reasons
one might expect in Silicon Valley.
From the New York Times :
Examiners from Medicare inspected Theranos's laboratory in Newark, Calif., last fall and found
numerous deficiencies, one of which they said posed "immediate jeopardy to patient health and
safety."
That particular deficiency related to Theranos's test for the clotting ability of blood, a
measurement used to help determine the correct dose of the blood-thinning drug warfarin. Too much
warfarin can cause internal bleeding while too little can leave a patient vulnerable to a stroke.
The inspection report, which was recently made public by Medicare, said that all 81 results provided
to patients from that test from April to September of last year were inaccurate.
Theranos said in response to regulators that it had voided the results of those tests. Ms.
Buchanan said the company, after talking to the patients and doctors involved, did not believe
any patients had been harmed.
The regulators also said that the director of the laboratory was not qualified and some other
personnel were inadequately trained. At the time of the inspection, the laboratory director
was a local dermatologist who continued to run his medical practice while also supervising the
lab.
("[D]id not believe any patients had been harmed" is not quite as definitive a denial
as one might hope for.) But how did that dermatologist live with themselves? Theranos was valued
at what,
$9 billion , and the guy in charge of the bloodwork is a dermatologist? And how about the
other credentialled professionals working with the guy, at Theramos and in their dermatology
practice? How do they live with themselves? Didn't they notice? Were they all Theranos shareholders?
Or did they just have hostages to fortune in the form of families?
The More Things Stay the Same – More Apparently Adulterated Heparin, This Time from
Chinese Ruminants
Baxter International imported the "active pharmaceutical ingredient" (API) of heparin, that
is, in plainer language, the drug itself, from China. That API was then sold, with some minor
processing, as a Baxter International product with a Baxter International label. The drug came
from a sketchy supply chain that Baxter did not directly supervise, apparently originating in
small "workshops" operating under primitive and unsanitary conditions without any meaningful inspection
or supervision by the company, the Chinese government, or the FDA. The heparin proved to have
been adulterated with over-sulfated chondroitin sulfate (OSCS), and many patients who received
got seriously ill or died. While there have been investigations of how the adulteration adversely
affected patients, to date, there have been no publicly reported investigations of how the OSCS
got into the heparin, and who should have been responsible for overseeing the purity and safety
of the product. Despite the facts that clearly patients died from receiving this adulterated drug, no individual has yet suffered any negative consequence
for what amounted to poisoning of patients with a brand-name but adulterated pharmaceutical product
.
OK,
it's a complex global supply chain (and why does that have to be? Maybe if it's too
complex to regulate, it's too complex to exist?) Nevertheless, there were credentialed professionals
at every step, even if we leave out the Chinese manufacturers: Buyers, quality assurance specialists,
distributors, pharmacists, doctors, and of course people at the FDA who let this all go. How do they
live with themselves? Was the share price of Baxter International really that important?
The third example if the University of California at Davis . From the
Sacramento Bee
:
UC Davis spent thousands to scrub pepper-spray references from Internet
UC Davis contracted with consultants for at least $175,000 to scrub the Internet of negative
online postings following the November 2011 pepper-spraying of students and to improve the reputations
of both the university and Chancellor Linda P.B. Katehi, newly released documents show.
"Scrub the Internet?" How does the consultant that sold that job live with themselves?[2]
Figures released by UC Davis show the strategic communications budget increased from $2.93
million in 2009 to $5.47 million in 2015.
Money to pay the consultants came from the communications department budget , [UC
Davis spokeswoman Dana Topousis] said.
Katehi, as we see, is in the class where she can seek to repair reputational damage, and not simply
accept it. But how on earth - and I'm asking this as a university brat - was the chair of the communications
department suborned to pay for a university PR exercise personally benefiting the president out
of their department budget ? How can they live with themselves? (I grant no lives are at stake,
but that's only because the pepper spray incident didn't turn into a disaster from a debacle.)
The fourth example is Gordon Ingram Associates (GIA) , of London, and I'm including
this one for anybody who's had to deal with a local land use board. From
Our City :
[T]all buildings can have a devastating impact on the daylight received by neighbouring homes.
Regardless of this, they are often still approved by planning authorities.
Why do councils grant planning permission to these buildings that so clearly damage the homes
of local residents, even when planning policies say that amenities like daylight must be protected?…
The reality is that planning authorities are often not told about, or are misled about the
real impact these new buildings will have. Instead, specialist consultants, employed by developers,
manipulate the figures and facts to make new buildings seem far less harmful than they really
are.
This gives the impression to councillors that the harm to residents is either much less than
or at the very least a debatable point, easing the passage of a controversial planning application.
Experts, by spending many years concentrating on a particular subject occupy a privileged role,
which inevitably carries some weight in the planning process. However, if that process is to work
properly experts must behave responsibly and present the facts in a clear and unbiased assessment.
Let me introduce to you Gordon Ingram Associates. GIA is a firm of specialist daylight consultants
based in Waterloo. They have little regard for formal education, preferring to give staff their
own training. The flaws in this approach will become obvious later in this article. As a result
they employ an eclectic group of people as surveyors, a former male model included….
In each case I have seen, GIA told the local planning authority that buildings showed high
levels of compliance with national daylighting guidance and that in their expert and considered
opinion, any damage to daylight on neighbouring properties was negligible. They lied, and I'm
going to show you how.
How do GIA live with themselves?
For each of these four examples, we've seen Milgram Experiment-like outcomes, where seemingly
normal members of the professional, credentialed class end up helping to jeopardize patient health
with blood tests, killing people with adultered drugs, surrenduring academic independence by caving
to administrators, and ruining the built environment with doctored reports, and in each case the
question to ask is very obvious: "How do they live with themselves?" But we haven't had an example
that put all the pieces of Luyendijk's framework together.
With our fifth example, Boots , we have all the pieces. (Boots is also a horrible
private equity story, with KKR the villain, but in this post I'm focusing on professionals in the
workplace.) In addition, we have a professional who can't live with it.
From the Guardian , the story of "Tony," a (credentialed) pharmacist:
How Boots went rogue
How many of these patients guessed that their own chemist was sick? Over the past few years,
depression has dug its claws into Tony. He is tired all the time. His weight, blood sugar and
blood pressure have shot up.
The illness kicked in shortly after he began his latest job, in 2011.
This is Tony's lived experience of the quest for "shareholder value" under neoliberalism, and
I'd love to have numbers on how widely it's shared. And, readers, your experiences.
The past few years have been spent on and off anti-depressants. When we met late last year,
he had just started another course of pills and was back in the usual side‑effects cycle: sweating,
waking too early, exhaustion, sexual dysfunction.
"[B]usiness targets" are, of course, for "shareholder value". And here we have the corrupt language:
That fear comes wrapped in the corporate language of empowerment. Targets are "non-negotiable",
and staff who beat them get graded as "legendary". A chemist advising a customer – "You know,
like I've done my entire career," as one Boots lifer puts it – is now having a "Great Conversation".
If the satisfied customer then compliments the chemist that is now a "Feel Good Moment" (although
in performance plans they are unfortunately referred to as FGMs – so a chemist must notch up,
say, five FGMs a week).
And here we have the amorality:
But that was the least of Tony's worries. It was the medicine-use reviews (MURs) that really
bothered him. Patients came to his consulting room and discussed their diet and health problems,
while he took them through a chunky list of questions and advised them on what their medicines
were meant to do and how best to take them. Free for the customer, a way of keeping a patient
out of a GP's waiting room, and for each one the NHS pays the company £28. To prevent the system
from being abused, every pharmacy in the country is limited to 400 MURs a year. Except Tony's
managers took that number as a target for his store to hit. So keen was Tony's store to make that
profit, he claims it did reviews on anyone, no matter how unsuitable. Tony himself was told to
have one – and to give one to a patient with severe dementia. His manager came in for one – no
sooner had it begun than she walked out, but it still went towards the total. All so the shop
could earn that extra £11,200 from a scheme intended to help the sick.
And, as we can see, Tony can't live with it (and good for him).
This capital-driven process of leaching out all meaning from professional work is akin to crapificaiton,
but I'm not sure it's exactly the same thing. I've always remembered
this post from Clive :
Let me continue with the self-disclosure, but it's perhaps more of a confessional or appeal
for absolution. I've spent almost 30 years working in the FIRE (Finance, Insurance, Real Estate)
sector, my entire adult life. When I first started, it was viewed as a most suitable career choice
for middle class not particularly aspirational sorts who wanted security, respectability and a
recognisable position in the community. It was never supposed to be a passport to significant
wealth or even much more than very modest wealth. It was certainly never supposed to be anything
which oppressed or harmed anyone.
By the early 1990's the rot, which had started to set in during the mid-1980's, had begun
to accelerate. Most regular readers of Naked Capitalism know how the movie ended. If only it was
just a work of fiction. For those of you who have suffered financially, emotionally, physically
(or all three) through an unlawful foreclosure, fee gouging, predatory lending, junk insurance
or scam financial products you will know what the consequences of an industry which threw away
its moral compass and any sense of a social contract are.
For those of us on the inside, we don't deserve any sympathy. But I'd like to offer a glimmer
of insight into the conflict that those of us with any sort of conscience wrestle with because
it is a conflict which is going to shape our societies over the next
generation.
Increasingly, if you want to get and hang on to a middle class job, that job will involve
dishonesty or exploitation of others in some way .
Of course, hanging onto a "middle class job" is, so far as we know, what all the professional
players in the examples above have been doing. All of their (credentialed, professional) jobs have
involved "dishonesty or exploitation of others." And all of them, so far as we know, have been able
to live with themselves. With the exception of Tony.[3]
Last week, Bob Ebeling died. He was an engineer at a contracting firm, and he understood just
how badly the O-rings handled cold weather. He tried desperately to convince NASA that the launch
was going to end in disaster. Unlike many people inside organizations, he was willing to challenge
his superiors, to tell them what they didn't want to hear. Yet, he didn't have organizational
power to stop the disaster. And at the end of the day, NASA and his superiors decided that the
political risk of not launching was much greater than the engineering risk.
Now, how to give Bob Ebeling the requisite organizational power is another question, outside the
scope of this post. However, it seems to me that what Clive labels "dishonesty and exploitation"
is what I would label corruption, and that's what Ebeling was fighting against.
Recall again that corruption, as Zephyr Teachout explains, is not a quid pro quo , but
the use of public office for private ends. I think the point of credentials is to create the expectation
that the credentialed is in some sense acting in a quasi-official capacity, even if not an agent
of the state. Tony, a good pharmacist, was and is trying to maintain a public good, on behalf of
the public: Not merely the right pill for the patient, but the public good of trust between professional
and citizen, which Boots is trying to destroy, on behalf of the ruling idea of "shareholder value."
Ka-ching.
NOTES
[1]
Here's a link on the first Baxter International Heparin scandal . Heparin is, apparently, made
from the intestines of pigs. But the Chinese ran out of pigs, and so they used cows instead, hopefully
not mad ones, but how does one know? Anyhow, hundreds died and the adulterated Heparin might still
be on the shelves. Reminds me of how the banks satisfied the demand for paper with NINJA mortgages….
One thing I don't understand, if you are an honest banker-or you want to be an honest banker-shouldn't
you support tough regulations that crack down and remove the fraud and corruption? Shouldn't the
vast majority of people working in FIRE want the rot removed?
instead while simultaneously engaging in not-quite-moral activities, they circle the wagons
whenever someone suggests cleaning it up.
Isn't that just cognitive consonance (opposite of cognitive dissonance) if they spend their
whole lives morally minimizing fraud and corruption to do so when advocating public policy as
well?
What, you wanna be a trouble maker? Hope you don't care about that raise, or that promotion.
Fish rots from the head, and it's the head that makes the decisions about what gets punished and
what gets praised. You want to survive and thrive in that fishpond, you better do what the rotten
head tells you to do.
George Clooney – yeah, $343,000 is an obscene amount of money and it's a terrible problem, but whaddya gonna do? It takes an obscene amount of money to get the right person elected.
So we're just going to keep throwing obscene amounts of money at the problem until it gets corrected,
because I have obscene amounts of money, and I can help.
That's because while individual people may be moral and upright, in aggregate people are delusional
sociopaths. An individual banker going against the tide would be like a lemming having second
thoughts about going over the cliff; it's goring to get trampled and squashed.
I think that because of this we have to encourage refusal to participate. I don't think everyone
who refuses gets trampled and squashed, but they do have to find their own niche, which can be
a lonely thing. I never listen to people who tell me that lying and cheating are the way things
get done, and that I will die homeless and alone if I don't just accept it. More people end up
homeless and alone because they participated in a rigged system and then got screwed. I opted
out, and I am not rich, but I am independent in that I make choices based on my own values.
Bill Black has written extensively about what he calls the "Gresham's dynamic" that forced
good underwriters out of the market. He has pointed out more than once that a petition was presented
to the authorities signed by a large number of honest underwriters asking for regulation long
before the big financial collapse. Being amoral and dishonest was a competitive advantage and
the honest underwriters were driven out of the business. It's not hard to understand and does
not call for the conclusion that people in general are dishonest or unethical.
A competent publicist could reframe the unfortunate-sounding term "pepper spray incident "
into a benign "invigorating capsicum spritz, provided at no cost to the participants." It wasn't violence; it was philanthropy. :-)
The NEO conservatives/liberals go-to guy for poking fun always seems to be Marx, while Adam
Smith is their boy. A laissez faire capitalist who said some other stuff
This acknowledgment of the role of the class struggle was hardly limited to the Founding
Fathers. It was not Karl Marx who spoke of the proclivity of employers to conspire and "to
deceive and even oppress the public," of "the mean rapacity, the monopolizing spirit of merchants
and manufacturers," of the "monopoly of the rich," of the "bad effects of high profits," of
the "natural selfishness and rapacity" the vain and insatiable desires" of the rich, who institute
"civil government"against the poor." It was the godfather of laissez faire capitalism and the
favorite guru of conservatives, Adam Smith, who said that.
Could Smith have meant that some
businessmen, when left to their own devices, are actually capable of resorting to such measures
as setting up offshore company headquarters and Swiss bank accounts, of cooking the books,
stacking Boards of Governers, employing sweated labor, busting unions, polluting the environment,
outsourcing jobs, colluding to fix prices, bribing officials and legislators, buying judges,
concocting Ponzi schemes, secretly financing phony "grass roots" and "populist" rallies, providing
themselves huge bonuses regardless of performance, and depending on government bail-outs not
available to others–all this among other outrageous forms of often illegal and always immoral
behavior?
Apparently Smith did mean just that, because he advocated that the rascality on the
part of the rich could not be allowed to proceed without interference if one were to have a
functioning capitalist system; hence he spoke of the need for government action to prevent
the stultification of the "laboring poor." If that be class struggle, apparently he favors
it. (Compare Tocqueville's similar observation: "When the rich alone govern, the interest of
the poor is always in danger.") The suspicion is strong that, judging by these words of his,
were Smith alive today, he would far more likely be a liberal than a conservative.
There's a massive difference between what Smith actually said and what his modern fanbois believe
he said. Most of them have never actually read Wealth of Nations (and even less his Theory of
Moral Sentiments. My understanding is that they both have to be read back to back to truly understand
his views). Though I'm sure plenty of them have unopened copies of WoN displayed on their shelves
for prestige value.
I'll admit I too have not gotten around to either book, just as I have yet to tackle Marx's
2400 page doorstop (hopefully both are easier reads than Veblen, who was a chore). But from what
I've gathered to Smith 'enlightened self-interest' (what they now call homo economicus) wasn't
'everyone be a prick and this will somehow make society as a whole better'. In fact to Smith man
WASN'T purely selfish, and had a variety of drives and motivations. And this was because we were
endowed with a divine nature. To Smith the 'invisible hand' was literally the hand of God imbuing
his creation with the capacity to make moral decisions.
Also, Michael Hudson has been of great help by constantly pounding away at the point that Smith
was talking about markets free from vestigial feudalism, particularly exactly the kind of unproductive
rent extraction that is making a comeback in the modern age. That's very different from the concept
of unregulated markets free from any kind of oversight.
This is a wonderful analysis of our conundrum. To add another example which reveals the final,
bottom-most layer; what we might call "collateral damage": the case of my daughter-in-law.
One evening my son answered the door to three FBI agents who handcuffed his wife in front of
their (her) 6 year-old and dragged her away to jail. She was arrested for fraud two years after
the 2008 crash and mortgage crisis. She had been a clerk at a real-estate co. doing "what everybody
was doing" , that is, making sure that people could buy even if they didn't have the down payment
and helping others flip houses that were way overpriced. She was not an agent, she was the office
clerk who sent the false info in the mail and deposited the checks. In the end she was sent to
prison for a year, leaving her young son and 10-month old baby daughter at home with their desperate
father.
Her boss was given house arrest and probation BECAUSE HIS WIFE WAS PREGNANT (!!!) which
adds sexism to the context of class warfare (the judge lectured her about not having gone to college
to better herself at one point?!). This story, I am sure, was played out all over the country.
Perhaps not all judges were nasty old men with a chip on their shoulder about the new administration
but even at this level, I'm sure not many "bosses" went to prison.
So sorry for your family, what a terrible thing. I suppose her boss did go to college??!!1?
This reminds me of all the times over 30 years when I did bookkeeping and accounting work and
was asked to go into grey areas and sometimes commit outright fraud and I said no, and of course
that was the end of that job, I would get eased out, usually in a way sure to make me ineligible
for unemployment. I would certainly have gone to jail because I was the one who knew the law.
But your DIL surely should not have been held accountable for doing clerical tasks without knowledge
of or control over the contracts. That is very scary.
Wow. Just…wow. Somehow the FBI has manpower to spare to go after a secretary, but can't find
it in themselves to consider maybe going after the people who were financing the whole operation
(and many, many others just like it)?!? Well, at least now we know whose side their on. Speaking
of how do they live with themselves….
Hmm, what's the point of a post saying people should have ethics if reproducing (supporting
a family) suddenly nulls and voids all ethics like some magical get out of jail free card. It
isn't even at all clear that a single person with no kids will end up in any better shape when
they lose their job than the person with kids (for one thing they are less likely to qualify for
much in the way of government benefits meager as those are anyway).
That certainly points up the pressure to go along to get along. Especially if you are married
to someone with dodgy values.
"How hard can it be to lie and cheat, Bob? Suck it up, Momma needs to send the kids to private
school!"
He's not saying that (or at least I didn't see it). The more financial responsibilities you
feel like you have, the harder it is to buck the system. You're right, even just an individuals
needs can make it hard, so all the more so when you've got kids to consider (I'll sleep in my
car, but can I make them? etc.)
What makes me crazy these days is that now the conversation is, either you compromise your
values, or you won't have enough to eat and/or be homeless, whereas, before, perhaps you just
may not make as much money. What is up with this? Do all roads now lead to perdition?
True my late father called them (financial responsibilities) the Golden Handcuffs. I know of
a few jobs I was very qualified to get but I wasn't married with children and a mortgage. I had
company owner I was doing contractor work for tell they hated hiring me because of that but I
did the best work so there was that.
Lambert, I'm standing on my chair clamping. Yes I remember telling you not to stand on chairs
to take pictures in the yard;)
It used to be that despite Americans always seeing money as a route to statue (see De Tocqueville),
the downside of that was kept in check by having a well-understood set of social norms and people
feeling they had to adhere to them because they would be shunned otherwise. Shady businessmen
would not get the status goodies they wanted, like membership at the local country club. JP Morgan
was not kidding when he said:
The first thing [in credit] is character … before money or anything else. Money cannot buy
it.… A man I do not trust could not get money from me on all the bonds in Christendom. I think
that is the fundamental basis of business.
So Lambert's question, "How can these people live with themselves?" is critical.
You shrug your shoulders, By doing that, you become part of the problem. You are enabling this
conduct by your resignation.
We collectively need to start making the foot soldier as well as the higher ups ashamed of
what they are doing. We need to delegitimate this conduct. Remember, what brought Joe McCarthy
down was when Joseph Welsh called him out by asking, "At long last, have you left no sense of
decency?" People need to start doing that, publicly and privately, every time the opportunity
presents itself, even if that means alienating friends. You need to be willing to ostracize people
if you want a better society.
. . .You need to be willing to ostracize people if you want a better society.
The fly in the ointment, is that the ones one is ostracizing are the majority, so it becomes
a very lonely existence. People find that hard to live with.
1) Close friend is a life-long gov't engineer. After a pipeline leak near Billings, MT, the
details of which he was personally familiar with, the oil company CEO went on TV, in front of
some gov't types, to answer questions….and proceeded to lie through his teeth.
When asked why the leak was allowed to continue for an hour before the pipeline was shut down,
he claimed it was due to physics, that you can't just push a button and stop the flow because
of all the pressure build-up. Only you can. They have like, sciencey stuff that makes just that
possible. There is literally a button in the pump station you can push to stop the flow. The reason
the leak went on for an hour was because there was no safety manual in the pump station, so the
guy on duty had to call around to try to find out what this particular blinking light or alarm
meant, and what to do about it. It took them an hour and a literal game of telephone to figure
out they were discharging crude oil into the Yellowstone River.
And they had been sited, more than once iirc, for failure to have said safety manual in the
pump station. It had been years that they failed to have one printed up. I got to see the final
inter-office memo on the incident, which reported a fine that amounted to a couple minutes worth
of profit for the company involved.
So knowing all this, and watching the CEO lie about the facts, did this gov't employee call
the press, or anyone, and inform them of the truth? No. Why not? Because Reagen issued and executive
order barring public employees from talking to the press without permission and this guy valued
his job and his pension. So he kept his mouth shut. He's got a family and grandkids and whatnot,
so it's somewhat understandable. Still….
2) A Nepali friend works for H&M in the Middle East. He's worked his way up to a store manager
after a number of years working in Kuwait, and recently got transfered to Saudi Arabia to open
a new store. We got to talk quite a bit about his work. I was fascinated.
H&M has astoundingly fine-grained surveillance procedures. Sales at individual registers are
tracked at 10 minute intervals. Numbers of customers entering the store are likewise tracked.
Metrics are analyzed and plans for improving them are made at Monday morning meetings with upper
management. Mondays are the worst.
"Why was there this drop in customers coming in last Wednesday?"
"Because there was a sandstorm"
"Don't make excuses."
"Secret Shoppers" are the bane of G's existence. They regularly come in and check things out,
being sure to note any possible failing, since they're not being paid to say "everything's just
great!" After one's been through, G gets called to a meeting and they discuss the results. Again,
he's got to have a "plan" for addressing any failings, and apologize for not being perfect.
The secret to G's success is that he's figured out how to game the metrics. Secret shoppers
give a demerit if they aren't greeted within 15 seconds of entering the store, so G had the bright
idea to hire some poor schlub to stand by the door all day for a pittance and say 'hello' to everyone
who enters. Customers not coming in? Offer some free snack and put a sign outside. Most people
will just come in for the free food and walk right out, but the customer entrance metric just
went up. He's also a great ass-kisser, which really helps in dealing with his upperlings.
And, of course, he has to be pretty merciless with the employees he manages. Not making enough
high-end sales? A few seconds slow helping a secret shopper? You're toast. No second chances for
the front line crew. He doesn't enjoy it but what to do ( ke garne? ) that's the job.
And it's been providing an above average salary for him and his family, so it's understandable
why he does it. Still….
I've only seen it in Walmarts around here. I thought it was funny he came up with the same
idea as a way to pass secret shopper tests. Maybe that's how it started at WallyWorld too. The
sad thing is, my friend is a brilliant salesman but is having to use his talents for the benefit
of whoever runs H&M (when he's not using them to game their surveillence systems).
"Unlike many people inside organizations, he was willing to challenge his superiors, to
tell them what they didn't want to hear. Yet, he didn't have organizational power to stop the
disaster."
There's the rub: amassing organizational power in a corrupt organization is very difficult
for an honest, outspoken person. What often happens is that decent people save up their moral
outrage until after they retire from whatever position in which they have "gone along to get along."
Then most of them discover that they no longer have the energy, or the means, to "fight the good
fight" they have delayed for decades.
I have tremendous admiration for a group of retired Teamsters up in Rhode Island that I know.
They have come out against mobbed-up sellouts, at great personal risk to themselves, and now Local
251 is far more progressive than it ever was! Those guys are truly an inspiration.
My own small contributions to the struggle haven't required nearly as much personal courage.
My wealthy and influential Anglo/Dutch relations don't go out of their way to protect me from
adverse consequences of radical activism. Yet their mere existence provides me a larger "free-speech
zone" from which to hurl invective at the kleptocrats– compared to the very tiny space for protest
allowed to most in U.S. society. I have also been fortunate to witness the encouraging reality
that at least some people– who are regarded as trusted insiders in our corrupt system– are actually
thoroughly subversive!
An important post. Thanks, Lambert. You mention reputational damage.
In this age of the internet, I wish there was more reputational damage. For instance, the cop
who sprayed all the students (and then got $38,000) because he was made to feel bad. How about
posts with his picture, his address, what car he is seen driving, where he is posted, etc.
Same sort of treatment might be meted out for executives of some of the companies and organizations
you discussed. There are reputation repair companies, how about a site "How do you live with yourself.org"?
It could get a little more personal than "cop shoots family dog'.
More evidence of dispensing prescription medication for fun and profit (regardless of the impact
to consumers, sorry, patients) has come to my notice through my experience at Walmart's British
outpost, known as Asda
The NHS has moved to a system of not having primary care responsible for maintaining responsibility
for repeat prescriptions but instead pharmacies (such as Boots mentioned in Lambert's piece above)
got to do the admin. You sign up to any number of dispensing pharmacies you like and, when you
need a repeat prescription, you go to the pharmacy not primary care.
The Mom and Pop independent pharmacies seem to operate the system as intended (the dispensing
pharmacist checks the indication you present and validates the medication is in line with what
the physician who originally prescribed the medication intended). For example, I have an ocular
antibiotic on repeat and, when I go to an independent pharmacy I'm registered with, they do the
expected investigations before issuing the repeat prescription. This is perfectly appropriate
and I am pleased that they will not simply dole out things like antibiotics carte blanche. They'd
rather not dispense than send people out the store with something inappropriate.
Not so with Asda/Walmart. There, you just get shown the screen - which has everything you've
ever been prescribed listed and you simply click the ones you like. No questions asked. Asda/Walmart
get money from the NHS for each of the items that they dispense. They are obviously setting themselves
up as the go-to place for hassle free eee-zee-meds. It costs them nothing (the NHS covers the
cost of the drugs and the reimbursement to the pharmacies for issuing the prescription plus Asda/Walmart's
profit from the "transaction").
Primary care is supposed to monitor what the pharmacies are dispensing but, guess what, they
are being stretched way too thinly and are having to be ruthless in their priorities under the
constant drive for "efficiency", all in the name of austerity.
How do the pharmacists live with themselves? My guess is that, like Boots, Asda/Walmart have
put their pharmacies under a target regime. If they don't send as many people out the door loaded
with medication as much medication as they can, their management will replace them with people
who will.
Neoliberalism is corrupting, absolutely. Everyone and everything is vulnerable to being captured
in its thrall.
Sadly, people are a bit more evil than we give them credit for…they would rather go along then
move along…they are quite happy walking over homeless people they helped put there just as long
as the lawn has that putting green feeling and the car lease does not run past the miles allotment
before it is time to get a brand spanking new car payment…
evil is easy for most people because we don't call it evil anymore….
They would much rather go along then move along…and we are becoming less and less the home
of the brave…
This is a challenge for anybody that navigates what increasingly is an overtly corrupt system.
One of my more high profile publications was a piece of work refuting blatantly fradulent work
from another scientist in the same city. The fradulent scientist was publishing high profile papers
on the mechanisms of how antibiotics work, and drawing great fame and acclaim for doing so. On
the ground level, other scientists couldn't repeat the work and in their small singlular labs
probably thought they had failed in some step to repeart the famous work.
We were skeptical of the work the instant it was published because all our own work and decades
of evidence countered it. It was only when we aligned with another prominent scientist to publish
back to back papers refuting the work that it got published. And did it deter the fradulent scientist?
Not one bit.
Where is the incentive to be an honest intellectual when fraud has clear and obvious rewards?
The above book which so ironically delivered the message
was published in 1910.
Alas, the Kaiser, the Tsar, and the Emperor did not act in
accord with its tenets. Either increased global trade is
irrelevant to war and peace, or World War I didn't happen.
Your pick which to believe.
Our problems began back in the 1970s when we abandoned the
Bretton Woods international capital controls and then broke
the unions, cut taxes on corporations and upper income
groups, and deregulated the financial system. This eventually
led a stagnation of wages in the US and an increase in the
concentration of income at the top of the income distribution
throughout the world:
http://www.rwEconomics.com/Ch_1.htm
When combined with tax cuts and financial deregulation it
led to increasing debt relative to income in the importing
countries that caused the financial catastrophe we went
through in 2008, the economic stagnation that followed, and
the social unrest we see throughout the world today. This, in
turn, created a situation in which the full utilization of
our economic resources can only be maintained through an
unsustainable increase in debt relative to income:
http://www.rwEconomics.com/htm/WDCh3e.htm
This is what has to be overcome if we are to get out of
the mess the world is in today, and it's not going to be
overcome by pretending that it's just going to go away if
people can just become educated about the benefits of trade.
At least that's not the way it worked out in the 1930s:
http://www.rwEconomics.com/LTLGAD.htm
Global integration and the liberalization of capital flows
outside of national boundaries, and outside of the
constraints of national solidarity, has pushed Americans
further into a ruthless capitalist struggle for strictly
individual measures of "success", and intensified economic
insecurity and the gaps between winners and losers.
Economists find the resistance to these trends mysterious;
others not so much.
Economic leaders after WW2 had a Colonialist attitude
entrenched within. They made a plan for global economic
integration, which only considered the economic needs and
realities of developed western nations.
China/India/Indonesia/etc...were never at the conceptual
table.
Now, the tides have turned. The China-India nexus
historically accounted for roughly 40% of the global economy.
That 'normal' state was eclipsed for 1.5 centuries, and we
may regress to that norm. If so, a ton of jobs, and economic
activity, may shift from the West, to Asia. If so, the
western middle classes are screwed.
Up till now globalism has mostly been conducted by laissez
faire neo liberal elite...for the needs of the elite.
That's not entirely a bad thing. Wars are started over the
needs and desires of our elites. Common folks left to their
own, won't find reason to go off and kill their
counterparts... it only after "the other" has been
dehumanized and demonized by the elite that common people
will allow themselves to be organized to kill one another.
By allowing and encouraging the world's elite to operate
within a system of mutual dependence, we decrease the
incentive for the elite to marshal and deploy their captive
populations against one another.
But once that international system has been
solidified...as it has now... The objective should be to tear
it down...it should be to make it democratized, unionised,
and transparent .
We need to move from laissez faire neo liberalism to
social democratic neo liberalism.
"... "Judge Collyer repeatedly complained that the regulators had failed to do a cost-benefit analysis." What Professor Krugman omits here is that so-called "cost-benefit analysis" has been corrupted by the fallacious Kaldor-Hicks compensation principle. The house cleaning has a lot further to go than "Republicans." ..."
Snoopy the Destroyer, by Paul Krugman, NY Times : Has Snoopy just doomed us to another severe
financial crisis? Unfortunately, that's a real possibility, thanks to a bad judicial ruling that
threatens a key part of financial reform. ...
At the end of 2014 the regulators
designated MetLife
, whose business extends far beyond individual life insurance, a systemically important financial
institution. Other firms faced with this designation have tried to get out by changing their business
models. For example,
General Electric ... sold off much of its finance business. But MetLife went to court. And
it has won a favorable ruling from
Rosemary Collyer , a Federal District Court judge.
It was a peculiar ruling. Judge Collyer repeatedly complained that the regulators had failed to
do a cost-benefit analysis, which the law doesn't say they should do, and for good reason. Financial
crises are, after all, rare but drastic events; it's unreasonable to expect regulators to game
out in advance just how likely the next crisis is, or how it might play out, before imposing prudential
standards. To demand that officials quantify the unquantifiable would, in effect, establish a
strong presumption against any kind of protective measures.
Of course, that's what financial firms want. Conservatives like to pretend that the "systemically
important" designation is actually a privilege, a guarantee that firms will be bailed out. Back
in 2012
Mitt Romney described this part of reform as "a kiss that's been given to New York banks"...,
an "enormous boon for them." Strange to say, however, firms are doing all they can to dodge this
"boon" - and MetLife's
stock rose sharply when the ruling came down.
The federal government will appeal..., but even if it wins the ruling may open the floodgates
to a wave of challenges to financial reform. And that's the sense in which Snoopy may be setting
us up for future disaster.
It doesn't have to happen. As with so much else, this year's election is crucial. A Democrat in
the White House would enforce the spirit as well as the letter of reform - and would also appoint
judges sympathetic to that endeavor. A Republican, any Republican, would make every effort to
undermine reform, even if he didn't manage an explicit repeal.
Just to be clear, I'm not saying that the 2010 financial reform was enough. The next crisis might
come even if it remains intact. But the odds of crisis will be a lot higher if it falls apart.
There are two big lessons from GE's announcement * that it is planning to get out of the finance
business. First, the much maligned Dodd-Frank financial reform is doing some real good. Second,
Republicans have been talking nonsense on the subject. OK, maybe point #2 isn't really news, but
it's important to understand just what kind of nonsense they've been talking.
GE Capital was a quintessential example of the rise of shadow banking. In most important respects
it acted like a bank; it created systemic risks very much like a bank; but it was effectively
unregulated, and had to be bailed out through ad hoc arrangements that understandably had many
people furious about putting taxpayers on the hook for private irresponsibility.
Most economists, I think, believe that the rise of shadow banking had less to do with real
advantages of such nonbank banks than it did with regulatory arbitrage - that is, institutions
like GE Capital were all about exploiting the lack of adequate oversight. And the general view
is that the 2008 crisis came about largely because regulatory evasion had reached the point where
an old-fashioned wave of bank runs, albeit wearing somewhat different clothes, was once again
possible.
So Dodd-Frank tries to fix the bad incentives by subjecting systemically important financial
institutions - SIFIs - to greater oversight, higher capital and liquidity requirements, etc. And
sure enough, what GE is in effect saying is that if we have to compete on a level playing field,
if we can't play the moral hazard game, it's not worth being in this business. That's a clear
demonstration that reform is having a real effect.
Now, the more or less official GOP line is that the crisis had nothing to do with runaway banks
- it was all about Barney Frank somehow forcing poor innocent bankers to make loans to Those People.
And the line on the right also asserts that the SIFI designation is actually an invitation to
behave badly, that institutions so designated know that they are too big to fail and can start
living high on the moral hazard hog.
But as Mike Konczal notes, ** GE - following in the footsteps of others, notably MetLife ***
- is clearly desperate to get out from under the SIFI designation. It sure looks as if being named
a SIFI is indeed what it's supposed to be, a burden rather than a bonus.
"Judge Collyer repeatedly complained that the regulators had failed to do a cost-benefit analysis." What Professor Krugman omits here is that so-called "cost-benefit analysis" has been corrupted
by the fallacious Kaldor-Hicks compensation principle. The house cleaning has a lot further to go than "Republicans."
A Kaldor–Hicks improvement, named for Nicholas Kaldor and John Hicks, also known as the Kaldor–Hicks
criterion, is a way of judging economic re-allocations of resources among people that captures
some of the intuitive appeal of Pareto improvements, but has less stringent criteria and is hence
applicable to more circumstances.
A re-allocation is a Kaldor–Hicks improvement if those that
are made better off could hypothetically compensate those that are made worse off and lead to
a Pareto-improving outcome. The compensation does not actually have to occur (there is no presumption
in favor of status-quo) and thus, a Kaldor–Hicks improvement can in fact leave some people worse
off.
"Consider a transfer of an apple from Mary to John and a transfer of $0.75 from John to Mary.
Use Kaldor-Hicks to evaluate each part as a "project" with the other part as the "compensation".
Using money as the numeraire and the apple transfer as the "project", we see under the assumptions
that the transfer of the apple increases social wealth measured in dollars so that is the recommendation
based on "efficiency", and the payment of the "compensation" of $0.75 is a matter of "equity"
of concern to politician, theologians, and philosophers but not to the professional economist.
Now reverse the numeraire taking apples as the numeraire and the transfer of the $0.75 as the
"project". Then the transfer of the apple (= "compensation") does not change social wealth = size
of the apple pie, but the transfer of the $0.75 increases the size of the social apple pie by
3/4 of an apple so it is the transfer of the $0.75 that is recommended on efficiency grounds by
hard-nosed economists while the transfer of the apple is left to politicians, theologians, and
the like as a matter of "equity." Thus the outcome of the KH analysis is reversed by a change
in the numeraire used to describe the exact same pair of transfers."
#NUM!éraire, Shmoo-méraire: Nature doesn't truck and barter
The commodity in terms of which the prices of all the others are expressed is the numéraire.
-- Leon Walras, Elements of Pure Economics.
But the numéraire is a purely technical device, introduced simply for the purpose of making
exchange values explicit. In no way does the introduction of a standard of value alter the fundamental
nature of the economy in question. It remains a barter economy, since goods are exchanged solely
for other goods. -- André Orléan, The Empire of Value.
Yossarian looked at him soberly and tried another approach. 'Is Orr crazy?'
'He sure is,' Doc Daneeka said.
'Can you ground him?'
'I sure can. But first he has to ask me to. That's part of the rule.'
'Then why doesn't he ask you to?'
'Because he's crazy,' Doc Daneeka said. 'He has to be crazy to keep flying combat missions
after all the close calls he's had. Sure, I can ground Orr. But first he has to ask me to.'
'That's all he has to do to be grounded?'
'That's all. Let him ask me.'
'And then you can ground him?' Yossarian asked.
'No. Then I can't ground him.'
'You mean there's a catch?'
'Sure there's a catch,' Doc Daneeka replied. 'Catch-22. Anyone who wants to get out of combat
duty isn't really crazy.'
There was only one catch and that was Catch-22, which specified that a concern for one's own
safety in the face of dangers that were real and immediate was the process of a rational mind.
Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would
no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions
and sane if he didn't, but if he was sane, he had to fly them. If he flew them, he was crazy and
didn't have to; but if he didn't want to, he was sane and had to. Yossarian was moved very deeply
by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.
Also known as the double-bind in Gregory Bateson's analysis.
And why the big fuss about the Panama Papers? Doesn't the Laffer Curve tell us that if the
1% evade taxes by hiding their money in off-shore accounts, it will cause so much economic growth
that government tax revenues will actually increase?
Laffer curves, Kaldor-Hicks cost-benefit swindles and lump-of-labor fantasies are not "incidentals"
of an otherwise sound economic discipline. They are symptoms of an ideology that is rotten to
the core.
Yes, those supply-siders must love it when companies hide their income offshores. Just think how
many more jobs they must be creating with their lower tax rate!
"The federal government will appeal the MetLife ruling, but even if it wins the ruling may open
the floodgates to a wave of challenges to financial reform. And that's the sense in which Snoopy
may be setting us up for future disaster."
As soon as Dodd-Frank was passed the large financial institutions got their legal teams busy
trying to undermine it. One would think all progressives would rally behind enforcing Dodd-Frank.
Of course Rusty wants us to believe enforcing Dodd-Frank is just too complicated. It is complicated
only because the lawyers for the financial sector get paid big bucks to obscure what is sensible
regulation.
I bet Rusty will protest this by saying he is not being paid that much. Which would be cool but
the notion that we should just trash Dodd-Frank strikes me as bad financial economics. Now if
we can improve on Dodd-Frank, that would be awesome if it makes Jamie Dimon really mad.
LOL!!! "A Democrat in the White House would enforce the spirit as well as the letter of reform"...just
like the incumbent Democrat sent bankers to jail for rampant mortgage fraud.
Oh, right! Obama and Holder actually made the investigation of mortgage fraud JOD's lowest
priority and brought no criminal indictments...undermining the rule of law, giving bankers a 'get
out of jail free' card, and encouraging them to commit yet more fraud.
Krugman is becoming just ridiculous, a partisan hack on steroids.
"The episode showed that traditional financial regulation, which focuses on deposit-taking banks,
is inadequate in the modern world."
What Krugman fails to inform his reader - one can only say so much in a column is that Bill
Clinton repeatedly reappointed Alan Greenspan as regulator in chief.
The shadow-banking system was created during Greenspan's tenure and he saw no need to regulate
it b/c free markets are awesome! And so the shadow-banking system promptly had a bank run.
Not "promptly"--it took fifteen years. That was Clinton's biggest weakness--he was good at dealing
with urgent obvious problems, but he would sometimes let longer-term issues fester. This is why
Obama will be remembered as a better president than Clinton--he plays the long game.
Notable examples of urgent problems that Clinton addressed effectively included the Mexico crisis
of 1994, the East Asian crisis of 1997, and the collapse of Long Term Capital Management in 1998.
Any one of these crises could have turned into a broader meltdown and spawned a depression similar
to the 2008 one, but Clinton and his appointees (including Greenspan) did a good job of containing
the damage. Unfortunately they did nothing to address the underlying problems that had made it
necessary for them to act in the first place.
Bernie or no Bernie, 'Times' columnist Paul Krugman is wrong about the banks
Paul Krugman wrote an op-ed in the New York Times today called "Sanders Over the Edge." He's
been doing a lot of shovel work for the Hillary Clinton campaign lately, which is his right of
course. The piece eventually devolves into a criticism of the character of Bernie Sanders, but
it's his take on the causes of the '08 crash that really raises an eyebrow.
"It doesn't have to happen. As with so much else, this year's election is crucial. A Democrat
in the White House would enforce the spirit as well as the letter of reform - and would also appoint
judges sympathetic to that endeavor. A Republican, any Republican, would make every effort to
undermine reform, even if he didn't manage an explicit repeal.
Just to be clear, I'm not saying that the 2010 financial reform was enough."
The Republicans are going to lose so Krugman's lesser evil argument doesn't really work.
Does Krugman discuss Hillary's reforms? No of course not.
Your comment only makes sense if you believe that either
(1) designating a financial institution "systemically important" is trivial or totally meaningless
compared to criminal indictments for previous actions, or (2) a Republican would enforce this
designation just as much as Obama has. Which is it?
LOL!!! Eric Blair asserts that it is "totally meaningless" to sending bankers to prison for fraud
that threatened systemically threatened the economy!
And he assumes that Obama would behave less deferentially to Wall Street banks when it comes
to enforcing any regulation that bankers don't approve of.
Republicans have no monopoly on servility to the interests of Wall Street and their wealthy clientele,
but Krugman obviously prefers Democratic corruption to its Republican cousin...
No, I did not say what you claim that I said. And whether Obama is being deferential to someone
is at most a side issue. The important questions are first, does the rule help make the financial
system more stable, and second, would it be enforced less by Republicans. I believe the answer
to both questions is yes.
LOL!!! How can it get less than zero...which is the number of bank fraud indictments Obama
issued against prominent Wall Street bankers?
It's hilarious how Wall Street Democrats try to claim that the Democratic Party is less corrupt
than Republicans, when both parties feed from the same trough.
"The house cleaning has a lot further to go than "Republicans."
How about the leader of the Democrats, President Obama?
Real Democrats can hardly wait for good ol authentic, honest Bernie Sanders to start attacking
President Obama – he's certainly not qualified to be president, taking all that Wall Street cash
and letting the big banks off scot-free, like he and Holder did back 2009 -- unqualified.
But good ol straight shootin Bernie aint gona do that, is he? Nope, because even Bernie understands
that Democrats actually like, maybe even love President Obama.
Bernie probably even understands that most Democrats like their democratic representatives,
senators, governors, mayors, city councilors, etc as well. So railing against the establishment
is not nearly as effective for Bernie as it is for Trump, Cruz and the tea party railing against
the Republican establishment. You see this in most Sanders surrogates carefully leaving "democratic"
off when criticizing the establishment, heck they might be confused with Republicans or Independents.
Even the more excitable online Berniacs rarely use the term democratic establishment, instead
invoking the generically ominous and evil "establishment."
It would have been much better (and honest) if Bernie had not turned his back on 28 years as
a proud Independent and run for president as a proud Independent instead of his gimmick to garner
more media attention by running as a Democrat.
His ego trip would have been much shorter, and Bernie certainly wouldn't be able to raise as
much cash running as an independent, he'd likely struggle to exceed Nader's 3% general election
vote in 2000, but he could have honestly taken on the real leader of the (democratic) establishment,
President Obama.
Nonetheless, Bernie is bringing critical economic issues into public discourse, issues that Wall
Street Democrats have long tried to suppress or occasionally pay lip service to...issue such as
minimum wages, trade policy, etc.
Even better, Bernie is showing socialist Democrats how to campaign and win against corrupt,
incumbent Wall Street Democrats.
That looks suspiciously just what Charles Murray proposed in his book "By the People: Rebuilding
Liberty Without Permission", to litigate against norms that regulate corporations.
Well not all SI's are equal. The drubbing AIG took even as it was used to launder cash to more
favored institutions is no doubt seen as the template. There's that nowhere to be found independent
insurance guy with no clout on FSOC that's another message. Woodall,a former insurance regulator
from Kentucky is the definition of outsider.
Last there's Jack Lew lecturing everyone on financial stability,truly a nice irony given Citi's
illegal Traveler's deal and the horrific consequences.
No doubt the lawsuit is about positioning and they'll be more by other players who worry about
being sacrificed to save the clout-heavy.
This is totally predictable given the power structure of FSOC.
Posted on
April 11, 2016 by
Yves Smith
As strange as it may seem, a confluence of developments in the banking industry means the Panama
Papers revelations looks likely make it a lot more difficult for offshore money, as tax evasions
and tax secrecy are often politely called, to stay hidden. This would serve as a marked contrast
to the last international-headlines-gripping leaks, the Snowden revelations. Even though Snowden
gave a big window into the reach of the surveillance state, not all that much has changed, save the
Chinese making more active efforts to avoid cloud computing and US technology vendors, and the Europeans
bashing US concerns over violations of their privacy laws.
By contrast, the massive Mossack Fonseca records haul feeds into trends in banking that mean that
a lot of these funds are going to find it hard remain secret. We'll summarize them below.
Tax base expansion initiatives . The US and European Union have been working
on a program to expand the base of income that is subject to tax. Budget-starved European member
states have been moving the plan forward ahead of schedule. This is one of the few positive developments
to come of of governments failing to understand the implications of having a fiat currency (you can
and typically need to run deficits, since the private sector sets unduly high return targets and
chronically underinvests; the constraint on deficit spending is creating too much inflation).
Increasingly tough "know your customer" rules . The US going aggressively after
foreign banks that have falsified records as a part of money-laundering has led to increased compliance.
Even Standard Chartered, which thought the US had no business telling it not to do business with
Iran, was brought to heel and its CEO forced to resign for his continued intransigence.
Now the US can throw its weight around only as far as dollar-based transactions are concerned,
since those ultimately clear through US facilities. But the UK has also adopted stringent "know your
customer" rules. It now takes weeks to open a new account that is not a personal account, say for
your rugby club.
There is a new urgency in the tone of the lawyers and advisers for offshore asset holders.
The essential message is that you are the Shah of Iran, this is 1979, and you and your money will
find yourselves hopscotching from one unwelcoming landing place to another…
If you or your clients think this is about tax cheats or the merely middle rich, they should
think again…
As this column and others have noted, by next year Switzerland, along with Luxembourg, the
Channel Islands and other European offshore investment management centres, will start exchanging
tax information with their counterparts.
There are a very large number of beneficiaries, ie globalised rich people, who have until the
end of this year to get their money safely onshore. The one Western country that does not have
a deadline for complying with the Common Reporting Standard is the US.
Almost everyone who has non-criminally sourced capital would like to have at least some of
it accessible within the dollar-based clearing system. But the clerical and legal checklists to
set up accounts for legitimate money have become so long that it will take months to accomplish
this even for those willing to pay the transaction costs.
And before you think the US banks are therefore the answer…. US banks are shunning money
from the rich these days. . Dizard again:
The largest US banks do not really want to take more deposits, or even do the cursory know-your-customer
due diligence work to open new special purpose accounts for old customers. Americans I know with
legitimately acquired nine- or ten-figure investment portfolios now have to scrounge around to
open accounts in midsize US banks.
Those rich Americans do not have the logistical or legal problems that Panama Papers-related
flight capital will have in "onshoring" their money.
Moreover, US legislators are calling for the US tax havens like Delaware corporations and Wyoming
limited liability companies, to report on who their ultimate beneficiaries are. Given the tone of
his Guardian op-ed, Carl Levin sound like he is warming up for hearings:
Global revulsion against shell company abuses, offshore tax havens, and the lawyers that promote
them has generated new public pressure to tackle these problems. Here are three steps to consider.
Outlaw corporations with hidden owners
….G20 world leaders have made a start with a joint commitment to increase corporate transparency.
The United Kingdom is leading the way, mandating public disclosure of the true owners – the "beneficial
owners" – of UK companies. The European Union has followed…
The United States is far behind. We now require more information to get a library card than
to form a US corporation. ….The biggest impediment is opposition from the secretaries of state
of our 50 states, who financially benefit from forming new corporations and don't want to ask
questions that might jeopardize their revenue. Our states need to wake up to the damage they are
doing and stop forming corporations with hidden owners.
Get tough on offshore tax abuse
Tax authorities should use existing tax information exchange agreements, including the US-Panama
agreement, to go after tax cheats and determine whether Mossack Fonseca facilitated illegal conduct.
Offshore tax abuse goes beyond individuals. Some multinational corporations use tax havens
to arrange secret tax deals or declare earnings offshore. The international community is finally
demanding that large multinationals file reports disclosing the profits they make and the taxes
they pay on a country-by-country basis. The United States has proposed regulations requiring those
reports; the next step is to finalize them. A bigger issue: making those reports public.
Get tough on lawyers promoting misconduct
….Lawyers should be subject to the "know your client" requirements of anti-money laundering
laws. In addition, banks should scrutinize suspicious accounts of law firms and require them to
certify that they will not use those accounts to help clients circumvent the bank's own anti-money
laundering controls.
Note that Levin doesn't seem to have a good answer about what to do about states that find it
attractive to act as secrecy jurisdictions, but in the past, the Feds have used cutting off various
Federal funds as a stick to force cooperation, Moreover, if Congress were to pass laws with "know
your client" requirements with criminal sanctions and tough fines, that in and of itself would choke
off a lot of domestic activity.
Information technology risk . Mossack Fonseca exposed in a very dramatic way
that secrecy isn't just a function of the design of legal arrangements and the choice of jurisdiction
and bank, but also of the integrity of the registered agent's IT security. There's no way to do due
diligence on that. Those with offshore accounts must already be nervous that they could be exposed
by a similar hack. Dizard's fallback remedy for the rich who want to keep their money hidden, "…you
and your money will find yourselves hopscotching from one unwelcoming landing place to another,"
might work for the relatively small and fleet of foot to stay ahead of the taxman and the bank transparency
moves, but it won't reduce IT risk.
Dizard's article, despite being informative, weirdly rails against crackdown on large-scale international
capital transactions" as populist and ill-informed, due to limiting the mobility of international
capital. Someone needs to clue him on the research by Ken Rogoff and Carmen Reihart, who are hardly
of the pinko persuasion, who found that high levels of international capital movements are powerfully
correlated with more severe and frequent financial crises. Dizard also tries to depict reducing capital
movements as being Smoot-Hawley revisited. First, the notion that Smoot-Hawley caused the Depression
had been well debunked. Second and more important, international capital flows these days are at
such high levels (over 60 times trade flows) that the Bank of International Settlement has said that
large international transactions are not about facilitating trade, and that excessive financial "elasticity"
was the cause of the crisis.
He also depicts banks as winding up being beneficiaries, which contradicts his message that they
regard onshored money as more hassle (which means cost) that its worth:
This will, within the next two years or so, lead to a one-time transfer from the global rich
to the staff and owners of US financial institutions. But that will be followed by a long drought
for new business, as the global wealth that did not move quickly enough gets slotted into endless
holding patterns in the mid-Atlantic or mid-Pacific.
It's hard to see what good it will do someone to have money moving around the few finessable locations
and banks that remain. Pray tell, how does it spent? Money you can't readily touch, or get into a
jurisdiction where you'd like to spend it, does not seem terribly useful.
And the big point that Dizard misses is that onshoring these funds will make the future investment
income on them subject to tax. Hidden untaxed wealth has contributed to rising inequality; Gabriel
Zucman of UC Berkeley has estimated that 6% to 8% of global wealth is offshore, and most of that
not reported to tax authorities. So the more the rich are discomfited by their overly-clever machinations,
the better.
Well, if you live in a state where you can name an LLC for your nominee trust, it doesn't get
any better. File the off shore LLC in Nevada where they don't ask any questions, and use it for
your real estate vehicle to launder your monies. Any question to why high end real estate is on
fire? The opaqueness in some states is intentional, as it took me about 10 minutes of random searching
of properties (over $2 million) to find the off shore LLC owner, with people and entities that
did not exists in the SoS filings. The activity index for RE sales over $750K is almost equal
to the index under $400K and below combined. If you add the $500K and above sales, it crushes
the entire index below $500K.
Owning an entity does not open a bank account…a party almost always has to be vetted for a
new enterprise…wired in funds for the benefit of an entity helps break the corporate veil…govt
officials rambling to the public that this corporate charade is just "impossible" to deal with
or stop are just laughing at the public (or need to hand back their law license to the bar)…money
can Always be traced…a real estate closing will have closing instructions and in those instructions
will be to whom to send back the funds and to what name if the transaction is not concluded….since
title companies are state regulated enterprises….and there are basically only four major title
insurance umbrella companies….this myth that a state title insurance investigator could not walk
in and obtain the beneficiary of the source of funds is one big second city improv skit
All they have to do is have real estate fall under FinCen Suspicious Activity Reporting (SAR)
requirements, but the NAR is simply too powerful and well funded with a more than accepting sold
out CONgress,
Not defending nar but state title insurance investigators have the absolute right to walk in
unannounced and spot audit files…a new corp will not have all these closing funds in hand and
for a proper corp veil to stand and hold, the funds had to be in a bank account in the name of
corp…might I suggest that the funds do not arrive from a source matching the corporate name…thus
revealing the actual party in interest….
After this amazing seminar from Yves MERS is making much more sense… and as always Utah stands
squarely behind the banks by ruling in appeals court that you can make a ham sandwich your agent.
Another piece of the problem is the difficulty of "piercing the corporate veil" in so many
legal domains (almost said "states and nations," but those are mostly convenient fictions themselves).
There's been a long tail of effort by the Few and the Corrupt and the Criminal to make it very
difficult, ever increasingly difficult, to hang liability for what little remains of proscriptions
and penalties for vicious and renter-driven personal (from "behind the veil") actions that offend
what are supposed to be police-powers (health, safety, welfare, nuisance and environmental destruction,
etc.), hang it where it belongs, with penalties that actually matter to the sociopath, if behaviors
are going to change - around the necks of the individual rotten humans that plot and plan and
operate all the stuff that is killing ordinary people and the planet.
Corporate "beneficial owners"
get to hide behind the screen of opacity and deflection that comes from the perversion of the
notion that "business" needs require immunity of individuals from the consequences of "corporate"
behavior. "Piercing the veil" requires meeting an extreme burden of proof that the corporation
is a fraudulent shell, or merely an alter ego of the individual officer/owner. And if course the
Wealthy and their advisers and facilitators and wholly owned political actors are still in the
game, with huge resources even if currently under some increasing and likely temporary constraints,
and they will be doing their damndest to preserve existing moats and walls and veils and find
new ways to pervert the legitimacy-granting functions of law-making to protect their pleasure
palaces and "specialness."
Eat the Rich, reads the old bumper sticker from Hippier days… With a plate of fava beans, and
a nice sauce of Retribution and a side of Restitution…
I have seen one case in particular, where the CEO made one set of sworn statements to the SEC
in the 10k, and said the exact opposite in Federal court in the same month. Neither legal team
picked up on this or mentioned it, and neither did the judge. It was incredibly aggravating to
watch. In this case he rode the company into the ground while pumping and dumping like mad, and
got away with it. The lawsuit was simply another vehicle to pump the stock, it didn't matter if
it even had any merit - which it didn't. Years later, the company imploded ithe only a few employees
left, the execs walked away with millions, etc. and they made a lot of enemies along the way.
Hopefully greater regulation and international cooperation will surface the tax evaders and
capture their previously unpaid taxes. But it will also drive many of them deeper into organized
crime-style hiding schemes. For example, using squeaky-clean nominees acting as beards: here's
how it works in many communities – one guy "owns" many rental properties for which there are long-term
tenants, and the rent equals exactly the carrying cost of the property. The tenants happen to
be businessmen and their families who run pretty close to the wind and whose assets are thereby
continually at risk – effectively, they protect their houses from creditors by holding them in
a trustworthy nominee name – the "legal owner" is a hidden agent for the actual owners. Totally
undetectable. But enforcement of this type of contract is extra-legal – organized crime-style
– and communal.
This type of setup is also a classic money-laundering vehicle – involving property flips between
ostensibly unrelated parties but in reality coordinated. Hence distorted real estate markets as
noted by Northeaster above. First $500,000 of profit on a principle residence sale is non taxable.
I'd suggest the IRS focus on auditing house sales for which the principle residence exemption
has been claimed, especially when people make close to the limit several times over (say) a ten-year
period.
Way back when dinosaurs roamed the Earth, and I was taking Income Tax in law school, I couldn't
shake the feeling that the whole point of the class was to assist people (corporations are people,
my friend) to scam the government. While no one likes to pay taxes, these taxes provide services
that people do, in fact like. It's all I can do to resist slapping folks who complain about the
condition of the roads, and then in the next breath, whine about their tax burden.
Anyway, cheating the government out of one's fair share of the tax burden means 2 things:
1.) The remaining burden falls more heavily on those who DO pay; and
2.) Unpunished cheating encourages more people (and corporations) to cheat. "If they're not paying,
why should I pay?"
After that class, I couldn't run fast enough away from tax law as it seemed to attract classmates
I rather loathed. I couldn't agree more that tax lawyers who encourage cheating should face disbarment
and fines. Apologies to my tax law brethren who try to do the right thing. I know some fine CPAs
and tax guys. It just wasn't my calling.
I began my career as a CPA in the early '70s in the SF Bay area and virtually all of the lawyers
I came in contact with had the same thoughts about taxes as you did. One of my accounting professors
used to go on about how it was incredible that an attorney could pass the bar and practice law
without ever having taken one tax course.
Particularly when you consider that there is very little
that a lawyer does that does not in some way involve taxes. So for us CPAs this was just an opening
for us to specialize in an area where lawyers had little or no interest.
In those days I recall
that when you actually needed a tax attorney he was usually – I won't say loathsome – but kind
of an odd sort. Recently I spoke to my ex-partner who took over our practice and the subject of
tax attorneys came up. He reported to me that in the Bay Area tax attorneys are now billing $900
to $1,000 per hour. I guess you can call this supply side economics at work. As the number of
mega zillionaires grows in the SF/Silicon Valley area, demand has apparently been created for
a new category of super lawyer. The Free Market really can do some wonderful things when manipulated
properly.
You have to have your brain turned inside out to understand tax well enough to be a tax lawyer.
Most regular lawyers have some antipathy for tax lawyers (I've sensed this and confirmed it).
The logic of tax is extremely arcane, non-intuitive, and pedantic. Plus it does not have commercial
value added.
this is thing…..nearly every establishment related profession seems, in my mind at least, to
be corrupted by fraud and graft……be it Pharma, Financials, Medical, MIC, Education, Agriculture,
Law & Judicature, Transportation & Energy, National social policy, Foreign & National & Security
policy……..
I'm an American citizen living overseas. For me an "offshore account" is not an option, it's
a fact of life. Creating fair laws to control tax evasion are therefore of interest to me.
One example of the opposite of fair law is FATCA. This is quite a terrifying bit of poorly
conceived legislation; intended to go after blatant tax evaders and sanction evaders, but instead
creating penalties that can be life ruining for a middle class expat that makes an honest mistake
in their reporting. The penalties on banks (and by extension foreign countries) that did not want
to subject themselves to US law are also overly aggressive. So aggressive that many financial
institutions refused to deal with any Americans, even for things as simple as a savings account.
"Knowing your customer" became discrimination based on citizenship.
I'm just hoping that any changes to enforcement or regulation that come about from the PPs
take this into account.
Regarding Standard Chartered, I'm not quite sure it's absolutely clear cut that they were in
the wrong:
They may have settled just to make the problem go away, and to maintain access to the US financial
system. The US has a habit of imposing it's laws on the rest of the world, or ignoring international
law it doesn't like. In my opinion, the sanctions on Iran were in many ways outright bullying,
very much like with those on Cuba.
Buh? Standard Chartered defied the advice of its US outside counsel and falsified wire transfer
documents in a systematic manner after having been previously sanctioned for handling the transfer
of funds to Iran for its oil sales, and to Sudan and other prohibited jurisdictions. You clearly
have not read Benjamin Lawsky's order against the bank. Standard Chartered had a branch in New
York to do dollar operations, and all dollar transactions ultimately clear (have to clear) through
that branch.
These were clear-cut violations of NY banking rules and
Lawsky could have yanked Standard Chartered's NY banking license, which would have been a cataclysmic
event for the bank. And after Federal regulators initially acting offended that Lawsky had end
run and embarrassed them, they stepped up and issued big fines against Standard Chartered of their
own.
You also omit that Standard Chartered got yet another round of fines for failing to comply
with the changes required! That led to the ouster of CEO Peter Sands, who had been defiant all
along. From the New York Times in 2014,
Caught Backsliding, Standard Chartered Is Fined $300 Million :
It took $667 million in fines and a promise to behave for the British bank Standard Chartered
to emerge from the regulatory spotlight. All it took to return there was its failure to fully
keep that promise.
In a settlement announced on Tuesday by New York State's financial regulator, Standard Chartered
will pay a $300 million fine and suspend an important business activity because of its failure
to weed out transactions prone to money-laundering, a punishing reminder of settlements in
2012. Those settlements with state and federal authorities resolved accusations that Standard
Chartered, in part through its New York branch, processed transactions for Iran and other countries
blacklisted by the United States.
The New York regulator, Benjamin M. Lawsky, has now penalized Standard Chartered for running
afoul of the 2012 settlement, which he said required the bank to "remediate anti-money-laundering
compliance problems."
An independent monitor, hired as part of Mr. Lawsky's 2012 settlement, recently detected
that the bank's computer systems failed to flag wire transfers flowing from areas of the world
considered vulnerable to money-laundering, according to Mr. Lawsky's order. The order did not
specify the number of transactions that the bank's filters failed to identify, but a person
briefed on the matter said that it was "in the millions."
Please stop defending crooked bank behavior. Plus this is agnotology, which is against our
house rules.
Thanks for this. The problem with the Panama Papers for those of us outside economics and finance
is that we don't understand the mechanisms and regulations that ease all of this movement of money.
Even though I have stocks in my IRA, it isn't as if the companies report their financial messes
in the proxy statements. Au contraire, it's all the glory of Jeffrey Immelt all the time.
You may want to check McClatchy's website as they have some explanatory videos and terrific
reporting.
I got started on all the tax haven skullduggery by reading Yves, so it's wonderful to see this
getting a far wider, fully documented exposition.
Also, Nicholas Shaxson's Treasure Islands: Tax Havens and the Men Who Stole the World
is one of the best books that I've ever read. His blog is here:
http://treasureislands.org
Earlier this week, a friend said, "Is it a good day?" I said, "It's an AWESOME day! All the
sleaze is finally coming out into the sunlight."
'It now takes weeks to open a new account that is not a personal account, say for your rugby
club.'
… which is why workarounds, both old school (gold) and new (anonymous digital currencies),
will be found to sidestep the politicization of government currencies, which now come bundled
with odious surveillance that makes their use increasingly unattractive.
These are both property, not money, and not at all workable for anyone who needs them for transactions.
Both are volatile and bitcoin with its blockchain makes its entire history of past holders accessible.
That's not a desirable feature for someone hiding from the taxman.
Good grief. What's the world coming to? Are we now expected to visit our offshore paradise
and suitcase money home? The gentlemen in Customs will be checking every flight from the Caymans.
"The one Western country that does not have a deadline for complying with the Common Reporting
Standard is the US." – Ahh ha – is this part of the solution to falling inwards investment?
"... Perhaps that's the problem with economics: the economists are so wrapped up in politics they can't tell where one starts and the other ends. Economics becomes nothing more than politics with math thrown in to lend authority to "very serious" agendas. ..."
"... Much like theology, it's a matter of culture and clique. Fitting they break up the field into Orthodox and Heterodox. Perhaps they should have economic cardinals that elect an economic pope. ..."
"... "When economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John Adams ..."
"... Politics and economic matters cannot be separated. Most politics are an expression of economic interests; in fact almost all - things that appear to be about "power", social dominance, and social mores are also mostly motivated by arranging or sustaining an environment where certain groups get to decide matters of the economy at the expense of others. ..."
"... Have you heard the phrase "follow the money", and even older "cui bono"? It's the same principle. Most motivations are based in economic affairs and conflicts. ..."
...Krugman may be an economist, but this politicking op-ed has nothing to do with economics.
Perhaps that's the problem with economics: the economists are so wrapped up in politics they
can't tell where one starts and the other ends. Economics becomes nothing more than politics with
math thrown in to lend authority to "very serious" agendas.
BTW, how are economic ideas established, in any case? We know with science, falsifiable hypotheses
are put forward and put to the test. Economists know enough about statistics to hide behind the
ethics problem of running economic experiments. Even though they ARE running economic experiments
with their Aristotelian notions that almost always get it wrong: from "efficient" taxation nonsense
that gives the rich big tax breaks, to investor-protecting inflation targeting that ran the economy
into the ground -- which they call the Great Moderation; etc.
Much like theology, it's a matter of culture and clique. Fitting they break up the field into
Orthodox and Heterodox. Perhaps they should have economic cardinals that elect an economic pope.
Politics is deeply connected to economics. Especially under neoliberalism. It is actually difficult
to distinguish two and many economic issues are highly political ("role of the market in the society").
Moreover:
"When economic power became concentrated in a few hands, then political power flowed to those
possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John
Adams
Politics and economic matters cannot be separated. Most politics are an expression of economic
interests; in fact almost all - things that appear to be about "power", social dominance, and
social mores are also mostly motivated by arranging or sustaining an environment where certain
groups get to decide matters of the economy at the expense of others.
Have you heard the phrase "follow the money", and even older "cui bono"? It's the same principle.
Most motivations are based in economic affairs and conflicts.
Financial booms have become a chronic feature of the global financial system. When these booms
end in crises, the impact on economic conditions can be severe.
Carmen M. Reinhart and Kenneth S. Rogoff
of Harvard pointed out that banking crises have been associated with deep downturns in output
and employment, which is certainly consistent with the experience of the advanced economies in the
aftermath of the global crisis. But the after effects of the booms may be even deeper and more long-lasting
than thought.
Gary Gorton
of Yale and Guillermo Ordoñez of the University of Pennsylvania have released a study of "good
booms" and "bad booms," where the latter end in a crisis and the former do not. In their model, all
credit booms start with an increase in productivity that allows firms to finance projects using collateralized
debt. During this initial period, lenders can assess the quality of the collateral, but are not likely
to do so as the projects are productive. Over time, however, as more and more projects are financed,
productivity falls as does the quality of the investment projects. Once the incentive to acquire
information about the projects rises, lenders begin to examine the collateral that has been posted.
Firms with inadequate collateral can no longer obtain financing, and the result is a crisis. But
if new technology continues to improve, then there need not be a cutoff of credit, and the boom will
end without a crisis. Their empirical analysis shows that credit booms are not uncommon, last ten
years on average, and are less likely to end in a crisis when there is larger productivity growth
during the boom.
Claudio Borio, Enisse Kharroubi,
Christian Upper and Fabrizio Zampolli of the Bank for International Settlements also look at
the dynamics of credit booms and productivity, with data from advanced economies over the period
of 1979-2009. They find that credit booms induce a reallocation of labor towards sectors with lower
productivity growth, particularly the construction sector. A financial crisis amplifies the negative
impact of the previous misallocation on productivity. They conclude that the slow recovery from the
global crisis may be due to the misallocation of resources that occurred before the crisis.
How do international capital flows fit into these accounts?
Gianluca Benigno of the London School of Economics, Nathan Converse of the Federal Reserve Board
and Luca Forno of Universitat Pompeu Fabra write about capital inflows and economic performance.
They identify 155 episodes of exceptionally large capital inflows in middle- and high-income countries
over the last 35 years. They report that larger inflows are associated with economic booms. The expansions
are accompanied by rises in total factor productivity (TFP) and an increase in employment, which
end when the inflows cease.
Moreover, during the boom there is also a reallocation of resources. The sectoral share of tradable
goods in advanced economies, particularly manufacturing, falls during the periods of capital inflows.
A reallocation of investment out of manufacturing occurs, including a reallocation of employment
if a government refrains from accumulating foreign assets during the episodes of large capital inflows,
as well as during periods of abundant international liquidity. The capital inflows also raise the
probability of a sudden stop. Economic performance after the crisis is adversely affected by the
pre-crisis capital inflows, as well as the reallocation of employment away from manufacturing that
took place in the earlier period.
Alessandra Bonfiglioli of Universitat Pompeu Fabra looked at
the
issue of financial integration and productivity (working
paper here). In a sample of 70 countries between 1975 and 1999, she found that de jure
measures of financial integration, such as that provided by the IMF, have a positive relationship
with total factor productivity (TFP). This occurred despite the post-financial liberalization increase
in the probability of banking crises in developed countries that adversely affects productivity.
De facto liberalization, as measured by the sum of external assets and liabilities scaled
by GDP, was productivity enhancing in developed countries but not in developing countries.
Ayhan
Kose of the World Bank, Eswar S. Prasad of Cornell and Marco E. Terrones of the IMF also investigated
this issue (working paper here) using
data from the period of 1966-2005 for 67industrial and developing countries. Like Bonfiglioli, they
reported that de jure capital openness has a positive effect on growth in total factor productivity
(TFP). But when they looked at the composition of the actual flows and stocks, they found that while
equity liabilities (foreign direct investment and portfolio equity) boost TFP growth, debt liabilities
have the opposite impact.
The relationship of capital flows on economic activity, therefore, is complex. Capital inflows
contribute to economic booms and may increase TFP, but can end in crises that include "sudden stops"
and banking failures. They can also distort the allocation of resources, which affects performance
after the crisis. These effects can depend on the types of external liabilities that countries incur.
Debt, which exacerbates a crisis,
may also adversely divert resources away from sectors with high productivity. Policymakers in emerging
markets who think about the long-term consequences of current activities need to look carefully at
the
debt that private firms in their countries have been incurring.
And therein lies the half of Keynesian Economics that is ignored - running surpluses during the booms to tamp them down, and to have a reserve to pump into the economy during the busts.
Many people now agree that cults frequently psychologically manipulate their membership to ensure
conformity and control. Steve Hassan's excellent book "Combating Cult Mind-Control" is a great starting
point. The following points come from numerous sources. Not all of these are found in every cult
but enough of them are found in most cults to make them very frightening places that inflict deep
psychological damage on their membership.
1. Submission to Leadership - Leaders tend to be absolute, prophets of God, God Himself, specially
anointed apostle, or just a strong, controlling, manipulative person who demands submission even
if changes or conflicts occur in ideology or behavior.
2. Polarized World View - The group is all that is good; everything outside is bad.
3. Feeling Over Thought - Emotions, intuitions, mystical insights are promoted as more important
than rational conclusions.
4. Manipulation of Feelings - Techniques designed to stimulate emotions, usually employing group
dynamics to influence responses.
5. Denigration of Critical Thinking - Can go so far as to characterize any independent thought
as selfish, and rational use of intellect as evil.
6. Salvation or Fulfillment can only be realized in the group.
7. End Justifies the Means - Any action or behavior is justifiable as long as it furthers the
group's goals. The group (leader) becomes absolute truth and is above all man-made laws.
8. Group Over Individual - The group's concerns supersede an individual's goals, needs, aspirations,
and concerns. Conformity is the key.
9. Warnings of severe or supernatural sanctions for defection or even criticism of the cult -
This can go so far as to apply to negative or critical thought about the group or its leaders.
10. Severing of Ties with Past, Family, Friends, Goals, and Interests - Especially if they are
negative towards or impede the goals of the group.
11. Barratrous Abuse - Some cults use "cult lawyers' to sue ex-cult members and critics often
using fabricated evidence and causing financial stress by repeated trivial law suits. The cult's
aim is not so much to win the lawsuit (though they often do) as to harass and intimidate their critics
into silence.
Cult Conversion Techniques
Conversion into a cult is usually the result of two interacting dynamics. The first is the personal
vulnerability of the potential recruit. This vulnerability may be enhanced by, but not limited to,
transitional situations such as divorce, abuse, job or career change, moving away from home or leaving
college, an illness, or death of a loved one.
The second dynamic are the tactics used to convert, indoctrinate (brainwash) and hold the members.
Some groups attempt a radical and rapid conversion over an intensive week-end or week, such as The
Forum or Scientology. Others have a more subtle approach which may take weeks or months, such as
the Jehovah's Witnesses. The following are techniques of unethical thought reform and mind control:
The importance of cognitive dissonance
Any person will act so as to reduce conflict between their thoughts, their emotions and their
behavior. When these things are at odds with each other a person experiences 'dissonance" (the opposite
of harmony). Cognitive dissonance is when what a person knows is right is at odds with either what
they feel is right or what they are doing. Cults quickly move to control four key areas of a person's
life during the conversion process -
Behavior - by intense involvement in activity and isolation from others. Behavior is closely prescribed
and carefully supervised.
Emotions - a new recruit is often "love bombed" and greeted enthusiastically and told they are
very special. They are made to feel that everyone in the cult loves them and that "nothing could
be wrong with such a loving group of people". However this does not last. Emotions are sent on a
roller coaster and the only hope of emotional stability is total conformity and pleasing the cult
leadership.
Thought - indoctrination, extended "teaching sessions", memorization of cult dogma, "auditing
sessions" where inner secrets are revealed and thought processes exposed - all are a part of attempts
at thought control so that the thought life of the convert is taken up entirely with the group.
Information - isolation from peers, TV, radio, newspapers, (often labeled as "Satanic") and careful
control of associations ensures that little or no material critical of the cult reaches the new recruit
during the conversion process.
The combination of all these factors make it very likely that if the new recruit stays in the
cult for any length of time they will come to believe in it utterly. We are not as objective as we
like to think and when all these powerful forces combine then very intelligent people will be "converted"
but not by God.
A Quick List of Nasty Practices
1. A Focus on felt needs, defects, with exaggerated promises of fulfillment.
2. Rigid Control of Time and Activities - Often physically and emotionally draining activities
leaving little time for reflection, questioning and privacy.
3. Information Control - Cutting off or denigrating outside sources of information especially
if it is critical of the group. This can also include misrepresentation and information overload.
4. Language Manipulation - Ascribing new "inside" meanings in ordinary words or the use of an
exclusive vocabulary subtly moving a person to want to become an insider.
5. Discouraging Critical, Rational Thought and Questions - For instance, comments like, "Satan
is the cause of all doubt; he wants to keep you from the Truth", or, "one must move beyond the cognitive
left-brain and get in touch with one's higher self, his right-brain, intuitive self for true knowledge".
6. Instruction and Repetition in Trance Induction Techniques - These include progressive relaxation,
chanting, hypnosis, meditation, trance states, guided imagery or visualization, deep breathing exercises,
all of which make a person highly suggestible, often unable to distinguish between fantasy and reality,
and can cause psychopathology such as relaxation induced anxiety.
7. Confession Sessions - Promoting full disclosure of all secret sins, thoughts, temptations which
can become a powerful tool to manipulate, blackmail, and emotionally bond people to the leader or
group. It is actually a depersonalization or stripping of the inner self , a forced submission to
the group.
8. Guilt, Fear - Weapons used to maintain group loyalty, suppress questions and defections.
9. Control of Sexuality and Intimacy within the Cult - This may extend to marriage decisions (Moonies),
sexual relations, promiscuity (Children of God), group sex (New Age Therapy groups), child sex, adultery,
and polygamy (Branch-Davidians).
10. Excessive Financial Obligations - More and more money is needed to attain higher degrees of
spirituality (Scientology), or complete submission to God requires one to give up everything to the
group or leader (pp. 26-29).
The more points of ideology and conversion methodology that are in place, and the degree of intensity
of their application is proportionate to the effect and damage of mind control.
These factors tend to make normal evangelism, or even dialogue, much more difficult. Therefore,
some people have looked to deprogrammers or exit-counselors to help break the mental head-locks of
their loved ones in an attempt to rescue them from the cult.
Can an Orthodox Christian Group Get Like This ?
Yes they can!!! Just because the theology is straight down the line does not mean the behavior
will be. I was in a mission society that in a particular place under the influence of a leader with
a great deal of charisma and authority became "cultic" for a year or so. That has been corrected
but much damage was done.
Some Christian groups start off great -like the "children of God' and end up utterly wrong and
evil. The church needs strong leaders, but they must always be accountable to Scripture and to other
wise Christians.
We must allow people to be critical, to think for themselves and to understand scripture freely
apart from the dictates of any leader. we must allow a great deal of emotional and intellectual freedom
and renounce our desires to control others if we are to have healthy churches where people rejoice
in the Truth.
This article may be freely reproduced for non-profit ministry purposes but may not be sold in
any way. For permission to use articles in your ministry, e-mail the editor, John Edmiston at[email protected].
"... Gramm seems pretty firmly in free market ideologue territory. Cruz deciding to bring him in as an economic advisor is certainly noteworthy. ..."
"... The short version: the Glass Steagall repeal allowed the banks to become "Too Big To Fail" and gave them enormous political leverage. It's the political leverage - the ability to count on Uncle Sam to come to the rescue, and provide easy terms for rent-seeking - that GLB provided. If they were separated, and only the investment banks could make risky investments, we would let the investment banks fail while protecting the boring old payments system. You won't get an argument on CFMA, however: it was worse. And that has Gramm's fingerprints all over it. And it might not have passed if the SIFIs were smaller. ..."
"... When I think of the villains of the Great Recession, Phil Gramm is always Public Enemy #1. ..."
"... The Glass Steagall repeal was not my biggest problem with Phil Gramm. My big problem is he wanted to have a completely deregulated financial sector. Sort of like when Newt Gingrich talked about "rational regulation" which was code for no regulation. But anyone who understands financial economics and our financial system knows that no regulations whatsoever is a recipe for a complete melt down. Which is what happened. ..."
Some people look at subprime lending and see evil. I look at subprime lending and I see the
American dream in action. -- former U.S. Senator Phil Gramm, Nov. 16, 2008
...Gramm has been brought on as a senior economic adviser to Republican presidential candidate
Ted Cruz. This isn't a promising development for Cruz... Not to put too fine a point on it, but
I believe -- as do many others -- that Gramm was one of the major figures who helped set the stage
for the crisis. ...
Gramm was a key sponsor of the ...
Gramm-Leach-Bliley Act , which effectively repealed the piece of the
Glass-Steagall
Act... The damage caused by rolling back Glass-Steagall pales compared with ... the
Commodity
Futures Modernization Act of 2000 . Gramm was a co-sponsor of the legislation, which exempted
many derivatives and swaps from regulation. Not only was the law problematic, but it veered into
potential conflict-of-interest territory. ...
We got a chance to see those consequences a few years later when American International Group
failed, thanks in part to swaps ... on $441 billion of securities that turned out to be junk.
AIG wasn't required to put up much in the way of collateral, set aside capital or hedge its risk
on the swaps. Why would it, when the law said it didn't have to? The taxpayers were then called
upon to bailout AIG to the tune of more than $180 billion.
Maybe it isn't too surprising that Cruz would seek advice from Gramm. Cruz, after all, seems
to want to hobble modern economic policy by returning to the gold standard. ... We have seen these
movies before, and they end in tragedy and tears.
He also talks about Gramm's sad performance in his brief appearance as one of McCain's advisors
in 2008.
pgl :
Phil Gramm says he got his economic degree from the University of Georgia. Well - it was from
the Terry College of Business which is a business school. Not the graduate program of economics
of the University of Georgia. I guess this makes Gramm one notch above Stephen Moore, Donald Luskin,
and Lawrence Kudlow (aka the three stooges).
"Gramm's most notable moment in that position came on July 10, 2008, when he dismissed the
developing economic crisis as "a mental recession" in an interview -- and video -- released by
the conservative Washington Times. "We've never been more dominant," he said. "We've never had
more natural advantages than we have today. We've sort of become a nation of whiners." McCain
immediately disavowed the remarks, and a few days later Gramm stepped down as his campaign co-chairman."
OK that was July. Menzie Chinn always notes that Luskin was saying the same thing as late as
September 2008.
sanjait :
Gramm seems pretty firmly in free market ideologue territory. Cruz deciding to bring him in
as an economic advisor is certainly noteworthy.
Though I'm still struck by how determined some people seem to lump Graham Leach Bliley in as
a cause/major contributor to the crisis.
The CFMA very plausibly serves that purpose. If we want to mark Gramm as a villain, his sponsorship
of that bill should be sufficient, as well as his abject refusal to acknowledge the crisis in
real time.
But for whatever reason people have picked up Glass Steagall as a Very Important rule, and
seem to be pushing to rationalize that by claiming it is a big part of the crisis story.
Ritholtz, to his credit, is qualified and nuanced about this. He notes that CFMA is the big
story, and says GLB wasn't didn't "cause" the crisis.
But following through the links to his WaPo piece, he still looks like he is reaching for a
reason to label it a major contributor to the crisis.
He claims that removing G-S restrictions caused the major banks to in turn cause the shadow
banking entities like AIG, Bear, etc. to "bulk up" their holdings of subprime, based on ... nothing
that I can see.
Sure, the major banks were customers and counterparties for those shadow banks, but Ritholtz
seems to assume that if G-S weren't in place that demand would somehow have been less. Why?
Take a major bank with mixed commercial and investment banking activity and split the parts.
Would that have changed their activities? Not much. The commercial banking side still would have
held MBS (and purchase insurance on them) and the I-banks would still make speculative investments
of various types.
No one, as far as I've seen, ever bothers to tell a complete story where the structural incentives
in the financial sector changed as a result of Glass Steagall in a way that materially impacted
the depth or serverity of the housing crisis. How would splitting megabanks into separate big
C- and I-banks have changed anything? Bueller?
Instead I see a great many people, including well credentialed economists, just assume or hand
waive the claim that it made a big impact without bothering to model or specify it. I'm not saying
such an explanation couldn't exist that I'm not aware of ... but at this point I do see the absence
of explanation as evidence of absence.
pgl -> sanjait...
Gramm dismissing the concern over a recession in the summer of 2008 is the kicker for me!
The short version: the Glass Steagall repeal allowed the banks to become "Too Big To Fail"
and gave them enormous political leverage. It's the political leverage - the ability to count
on Uncle Sam to come to the rescue, and provide easy terms for rent-seeking - that GLB provided.
If they were separated, and only the investment banks could make risky investments, we would let
the investment banks fail while protecting the boring old payments system. You won't get an argument
on CFMA, however: it was worse. And that has Gramm's fingerprints all over it. And it might not
have passed if the SIFIs were smaller.
When I think of the villains of the Great Recession, Phil Gramm is always Public Enemy
#1.
The Glass Steagall repeal was not my biggest problem with Phil Gramm. My big problem is he
wanted to have a completely deregulated financial sector. Sort of like when Newt Gingrich talked
about "rational regulation" which was code for no regulation. But anyone who understands financial
economics and our financial system knows that no regulations whatsoever is a recipe for a complete
melt down. Which is what happened.
The Rage :
Cruz just wants to make money for his buddies while waving the bible. JDR was there 100+ years
before that "Ted".
"Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really
doesn't go anywhere, and bunnies have often dominated the stock market during the latter stages
of past economic recoveries," Paulsen said in a report this week for clients.
In Does Science Advance One Funeral at a Time?
(NBER Working
Paper No. 21788
), Pierre Azoulay, Christian Fons-Rosen, and Joshua S. Graff Zivin explore
the famous quip by physicist Max Planck. They show that the premature deaths
of elite scientists affect the dynamics of scientific discovery. Following
such deaths, scientists who were not collaborators with the deceased stars
become more visible, and they advance novel ideas through increased publications
within the field of the deceased star. These "emerging stars" are often
scientists who were not previously active within that field. The results
suggest that outsiders to a specific scientific field are reluctant to challenge
a research star who is viewed as a leader within that field.
The authors tracked the publication records of scientists - both collaborators
and non-collaborators - before and after a "research superstar" died. To
narrow the scope of their study, they focused on academics in the life sciences,
a sector which is heavily supported by National Institutes of Health funding
and produces a high volume of research. They established a list of 12,935
elite scientists using criteria such as the amount of research funding received,
publication citations, number of patents, membership in prestigious organizations,
and career awards and prizes. They then examined records of 452 of those
elite scientists who died prematurely - before retiring or becoming administrators
- between 1975 and 2003. Publication data was gathered from the National
Library of Medicine's PubMed service, which indexes and tracks articles
by research topics, names of authors and coauthors, citations, related articles,
and other information from 40,000 publications.
The findings confirm previous work showing that the number of articles by
collaborators decreased substantially - by about 40 percent - after the
death of a star scientist. Publication activity by non-collaborators increased
by an average of 8 percent after the death of an elite scientist. By five
years after the death, this activity of non-collaborators fully offset the
productivity decline of collaborators. "These additional contributions are
disproportionately likely to be highly cited," the researchers found. "They
are also more likely to be authored by scientists who were not previously
active in the deceased superstar's field."
Few of the deceased scientists served as editors of academic journals or
on committees overseeing the issuance of research grants, so the researchers
rule out the possibility that the deceased scientists used their influence
to limit who could or could not publish their work or receive grants within
their field. Instead, they say, the evidence suggests that outsiders were
reluctant to challenge the leadership within research areas in which an
elite scientist was active. While entry occurs after a star's passing, it
is not monolithic. Key collaborators left behind can regulate entry into
the field through the control of intellectual, social, and resource barriers.
"While coauthors suffer after the passing of a superstar, it is not simply
the case that star scientists in a competing lab assume the leadership mantle,"
the authors conclude. "Rather, the boost comes largely from outsiders who
appear to tackle the mainstream questions within the field but by leveraging
newer ideas that arise in other domains. This intellectual arbitrage is
quite successful - the new articles represent substantial contributions,
at least as measured by long-run citation impact."
"... Classically, we imagine money being aggregated by an entrepreneur who uses it to build a factory,
purchase raw materials, hire labor, and begin manufacturing widgets which are then sold in the marketplace.
This same result could be had by the process of an ogre appropriating a factory by intimidation, acquiring
raw materials by force, and using slave labor to produce the widgets. The difference is that, in the
first case, the process produces customers (the laborers) who can purchase the widgets with their wages,
whereas-in the second case-the ogre's widgets have no paying customers. One model produces an economy,
the other model doesn't. ..."
"... If we look at the modern global corporation, we see something of the ogre. Yes, they pay to
build their factories-but prefer to coerce local communities into footing much of the cost through preferential
land and tax deals (as well as, in many cases, the appropriation of local water supplies) in exchange
for the "local jobs" the factory promises to create. They also do not outright "steal" their raw materials,
but do manage to argue that the minerals existing in the ground of public lands are somehow theirs by
right in exchange for a nominal rent. True, as well, they do not employ slave labor, but instead employ
strategies that have, in the end, the same result: they minimize the use of local labor (all those jobs
they promised to create) by using robotic technologies-and by outsourcing much of the "make-work" of
the widget components to a country with cheap (some may even characterize it as "semi-slave") labor.
It is for this reason, of course, the same global corporation is so desperate for global trade agreements
which will allow it to favorably access the markets to which it has outsourced its human labor-because
that's where the theoretical paying customers (the wage earners) are that its business model is creating.
..."
"... Absolutely the best definition of "economy" I've ever read. Apparently there was a time, not
so long ago, where a corporation thought it's "fiduciary duty" was to help the broader (local) economy,
rather than a made-up exclusive focus on "shareholders". Apparently even GE said this up to their 1996
annual report, and granting the right to create corporations was based on this. ..."
"... "the process produces customers (the laborers) who can purchase the widgets with their wages…"
Not exactly. The process produces wages that can purchase one-half of what the wages produced. ..."
"... Unfortunately, our monetary system's anchor is collateral, typically physical. If you take
a serious look at the economy, you will notice that the money creation tends to flow from hard assets
down to services. A focus on hard assets limits growth. Over the last few decades, government has been
able to inject money based on services but it was still limited by debt-to-GDP. Households got to play
in this hard asset system by buying houses. ..."
"... This is nonsense. The "outsized retiring populations needs" are largely in the area of human
resources and we have tens of millions of workers sitting around with little or nothing to do or flipping
burgers because we 'don't have enough' of the one resource that has no limit to pay them to take care
of the elderly. ..."
"... The important question is what is the purpose of human life. How you answer that question determines
the actions you will take during your lifetime. The human condition has always been about answering
the question, who am I? What is my place in this world? ..."
"... We live in a world directed by Capitalism. The world view and demands of capitalist society
are unequivocal. The system demands endless growth and the consumption of resources to NO particular
end. Without wisdom and ethical guideposts, we are supporting a process of destruction that will consume
the entire planet. As a system, capitalism is amoral and not concerned with ethics. Introduce ethics,
and you no longer are dealing with capitalism or supporting it as a social system. ..."
"... I've been wanting to read Edward O. Wilson's book, the social conquest of earth. I wanted to
see if he has found any meaningful connections to human social structure and that found in the wider
biological world. At some point, as a species, we will have to start taking responsibility for our actions.
..."
"... Corporate values have always nicely dovetailed with the psychopathic mind set. Total self-interest
(the euphemism for selfishness/greed) paired with the ability to blithely exploit anyone and anything
in the quest for immediate profit. Bernays taught them how to disguise the wolf's head to present a
people-friendly brand to the buyer. ..."
"... the FIRE sector creates the money ("credit" for most purposes) and keeps it in the FIRE sector.
It is doing what any one out of self interest would. keep the money to itself and pass the costs to
others. This is a variation on rent seeking in a monetary regime. any political economy is prone to
rent seeking. In fact you could say an economy's "innovation" (yet another buzzword these days) dies
when rent seeking (ie, stealing from others) becomes a less risky activity than doing anything productive.
..."
"... No. most of the money that is in the system was/is created by government spending. Credit normally
accounts for only a fraction of aggregate demand historically, except for the 2000's, years which led
to a financial crisis. Last year the government spent $4T, credit amounted to $1.25T in spending. ..."
"... Financialization refers to the capturing impact of financial markets, institutions, actors,
instruments and logics on the real economy, households and daily life. Essentially it has significant
implications for the broader patterns and functioning of a (inter)national economy, transforming its
fabrics and modificating state-economy-society mutual embeddedness. Financialization, undoubtedly, is
also a key feature of neoliberalism. ..."
"... I think "transforming its fabrics and modificating state-economy-society mutual embeddedness"
understates how financialization degrades labor power, transfers worker productivity gains into profits
and power for the few, and is, in general the Ogre we face. A bit over 150 years ago Marx postulated
that such an outcome was inevitable under capitalism – a system at that time, was comparable to the
neoliberal experiment we are enduring today. ..."
"... Is there a villain here or is this the immaculate conception of wrong? I read in vain for any
mention of some of the architects of this Potemkin Village of an economic system hitting for the bleachers
with every swing ..."
"... Among Democrats: We could start with the Clintons and then smoke Obama and his crushing betrayal
of followers. Obama has been epic! And he's getting away with it among lefties who love his "cool."
..."
Classically, we imagine money being aggregated by an entrepreneur who uses it to build a factory,
purchase raw materials, hire labor, and begin manufacturing widgets which are then sold in the marketplace.
This same result could be had by the process of an ogre appropriating a factory by intimidation,
acquiring raw materials by force, and using slave labor to produce the widgets. The difference is
that, in the first case, the process produces customers (the laborers) who can purchase the widgets
with their wages, whereas-in the second case-the ogre's widgets have no paying customers. One model
produces an economy, the other model doesn't.
If we look at the modern global corporation, we see something of the ogre. Yes, they pay to
build their factories-but prefer to coerce local communities into footing much of the cost through
preferential land and tax deals (as well as, in many cases, the appropriation of local water supplies)
in exchange for the "local jobs" the factory promises to create. They also do not outright "steal"
their raw materials, but do manage to argue that the minerals existing in the ground of public lands
are somehow theirs by right in exchange for a nominal rent. True, as well, they do not employ slave
labor, but instead employ strategies that have, in the end, the same result: they minimize the use
of local labor (all those jobs they promised to create) by using robotic technologies-and by outsourcing
much of the "make-work" of the widget components to a country with cheap (some may even characterize
it as "semi-slave") labor. It is for this reason, of course, the same global corporation is so desperate
for global trade agreements which will allow it to favorably access the markets to which it has outsourced
its human labor-because that's where the theoretical paying customers (the wage earners) are that
its business model is creating.
In a similar vein, economists puzzle over the lack of inflationary pressure-indeed, the tendency
towards deflation-in the modern western economies, even though the financial industries seem to be
"creating money" at a historical pace. It might be that there's something of the Ogre in that financial
industry as well: the money it creates is not used to build factories, acquire raw materials, hire
labor, and build widgets-it is used, instead, to make bets in the casino of the financial markets
themselves. Poker chips are bought and played, but the chips never get redeemed, and they never leave
the casino-except when they are used to buy political power and favor to perpetuate the game. (A
few chips do get redeemed as spending money for the high-rolling players-and this does, in fact,
put inflationary pressure on the prices for mega-yachts and London penthouses, but who really worries
about that?) What matters is that the "money" generated by the casino never shows up is in the pockets
of wage-earning customers on Main Street. Their pockets, if anything, contain fewer dollars than
they did a generation ago-while the store fronts they gaze into contain more and more widgets assembled
by robots with make-work parts fabricated by workers in other countries.
There is, in other words, a profound disconnect in the way things are functioning. The American
economy has dropped a crucial cog out of its gear-box and, as a consequence, the gears on top are
spinning wildly but futilely, while the disconnected gears on the bottom are grinding slowly and
ineffectually. What we need to do, somehow, at all costs, is to put that missing cog back in the
gear-box. Or-perhaps that is not exactly correct-we need to connect the drive-train directly to the
lower gears themselves, and insert a cog let them drive the upper gears as, I believe, the machine
was supposed to operate in the first place. homeroid ,
February 28, 2016 at 3:45 am
The perpetual motion machine. Thought about it for many blissful yearz. Come to find i have
to rewind the clock. Capitalism is needing to be rewound,painful as it may be for some.I do not
feel sorry for them. Perhaps some younger brighter minds are about us. Dawg knows that's all we
got left
It uses colored water as a stand-in for money, and a elaborate set of containers, pipes and
valves to handle sectors of the economy, how they are interlinked with wages, consumption, and
taxes, and the various policies that can be enacted.
The lovely irony is that this makes and economy seem very similar to the circulatory system
of a living being. If the money/water/blood collects in one place, or is drained away, the whole
system comes to a halt/dies.
Absolutely the best definition of "economy" I've ever read. Apparently there was a time,
not so long ago, where a corporation thought it's "fiduciary duty" was to help the broader (local)
economy, rather than a made-up exclusive focus on "shareholders". Apparently even GE said this
up to their 1996 annual report, and granting the right to create corporations was based on this.
"the process produces customers (the laborers) who can purchase the widgets with their
wages…" Not exactly. The process produces wages that can purchase one-half of what the wages produced.
I could go to the bank and borrow 50$ from my LOC to get a massage. Then the masseuse asks
me for a haircut. And we could do this over and over growing GDP. Or I could use that 50$ to buy
California almonds (or truffles) and eat them all in a few days. I think it is obvious which one
offers more sustainability than the other. It's all about velocity of money.
Unfortunately, our monetary system's anchor is collateral, typically physical. If you take
a serious look at the economy, you will notice that the money creation tends to flow from hard
assets down to services. A focus on hard assets limits growth. Over the last few decades, government
has been able to inject money based on services but it was still limited by debt-to-GDP. Households
got to play in this hard asset system by buying houses.
The other reality is that over the last few decades, America has consumed multiple times its
fair share of the world's resources and energy. And its way of life has been built around this
outsized consumption of the world's resources.
The current monetary system is cracking and smoking. It is essentially saying that the outsized
retiring population's material needs are too high for the productivity of the working population
. And when I talk about material needs, it includes all the resource and energye needed to keep
the system going as it was built. Some will argue that this is nonsense as their material need
are small. I will argue that they do not realize how energy intensive the Western machine really
is. One might be shopping at discount big boxes but the energy used to create and maintain these
is huge. And these disounters are not paying for the externalities… everyone else is.
It is important to remember that the structure of all our services were built around outsized
material allocations. Our monetary system which is based on hard assets will keep on propping
up our infra and hard assets to the detriment of services. Example: we build extra University
pavilions for which we can't afford the maintenance costs… the solution is to cut prof pay and
tenure.
The irony is that most are looking for government to spend even more on infra to stimulate
the economy. I believe pension money will be used to this end and it will lead to even more entropy
in the system… with these new projects sucking energy away from other existing systems.
"The current monetary system is cracking and smoking. It is essentially saying that the
outsized retiring population's material needs are too high for the productivity of the working
population."
This is nonsense. The "outsized retiring populations needs" are largely in the area of
human resources and we have tens of millions of workers sitting around with little or nothing
to do or flipping burgers because we 'don't have enough' of the one resource that has no limit
to pay them to take care of the elderly.
In addition we are paying millions of insurance company employees to ration the healthcare
services we don't have. We pay them 20% of our healthcare dollars to ration our healthcare. Then
we complain about government creating worthless jobs. It's madness.
Everyone seems completely unaware that the source of our wealth begins with public investment,
which we have been loath to do over the past 30 years because we are 'out of money'. That is the
mother of all 'death spirals'.
Not to mention that if our productivity increased further we would be un-employing even more
people. Production doesn't produce the income necessary to purchase it. That demand has to come
from somewhere else, and it isn't going to come from our savings.
Most of our current services derive from the sunk costs in infrastructure. It is going to be
very hard to move services from one sector to the other as all services in our economy are tied
to hard assets which have a sunk cost + a cost of maintenance.
The infra needs are so big that you could use the entire workforce and have no time or energy
left for any other sector. So you have to decide who gets money first… but if there has not been
a change in paradigm and the general population still clings to the American dream of the past,
the choices for the spending of this new money will be based on the same old same old. This brings
us to the existing vested interests based on sunk costs…
For example, it you are a golf club owner with a mortgage on your real estate, you are going
to push for economic policies that promote maintaining golf clubs and services revolving around
golfing despite a drop in the number of golfers…. each club owner independently is going to show
investors how they will grow at the expense of others. A few will win while many will fail. Another
one is what to do with California… Should we throw even more water an resources their way or should
other states get more attention?
If you look carefully, you will see that all services are closely tied to infra and its cost
of maintenance and replacement. And in our current way of life, most of the services we desire
are very energy intensive.
Yes there is more than enough work for everyone but not when a monetary system is based on
hard assets with sunk costs and vested interests.
Furthermore, when 50 years ago we came to a fork in the road, we chose to stay materialists
and consume even more than we did then. This meant huge entropy and having other countries doing
our work. Now they want their share.
"The infra needs are so big that you could use the entire workforce and have no time
or energy left for any other sector."
You're pulling stuff out of the air here. It's just too hard. Let's not do it. Much if not
most of our resource allocation is dong stuff that doesn't need doing.
"Yes there is more than enough work for everyone but not when a monetary system is based
on hard assets with sunk costs and vested interests."
The monetary system is based on numbers in an accounting system. The only problem with it is
we think we are constrained by the numbers rather than real resources.
The vested interests are a political problem that have nothing to do with the monetary system.
The politics create mythical constraints.
if we believe we are out of money then practically speaking we are. If you believe you can't
cross the road you won't. Reality doesn't matter much in that case. The alternate reality is the
one we're living in, largely by choice.
The important question is what is the purpose of human life. How you answer that question
determines the actions you will take during your lifetime. The human condition has always been
about answering the question, who am I? What is my place in this world?
We live in a world directed by Capitalism. The world view and demands of capitalist society
are unequivocal. The system demands endless growth and the consumption of resources to NO particular
end. Without wisdom and ethical guideposts, we are supporting a process of destruction that will
consume the entire planet. As a system, capitalism is amoral and not concerned with ethics. Introduce
ethics, and you no longer are dealing with capitalism or supporting it as a social system.
We will find out what is stronger. The human desire for life or the pursuit of death and destruction.
Can people be enlightened and awakened? To commit themselves to the purpose of supporting life.
To be stewards and protectors?
People, all people, have so much potential to do good in the world. It is a path all are free
to take. The first step is not being misled onto a path leading nowhere, or being convinced that
a life spent building that road to nowhere is a proper pursuit. We have been on the path to nowhere
for a long time.
Defining a new message for the purpose of life is where we are now- and a great opportunity-as
the destructive consequences of the current system have never been more apparent or widespread.
"The important question is what is the purpose of human life."
It clearly doesn't matter much what we think or do. As we rearrange deck chairs on the Titanic
most of the people trying to do something, anything are helping the iceberg. They won't realize
what they have done until it's time for the lifeboats.
When the rabbit population gets too big, then you get more fox. When the fox population gets
too big, then there are not enough rabbits and the fox population drops.
Can we blame a fox for not sharing with another fox at a peak? No. But with humans, we do.
We actually think we have free will and can control this outcome… but isn't our population growth
just a sign that we are still able to farm more rabbits? The icebergs have not all melted, there
are still trees to cut and energy to manipulate the environment so we still have a few decades…
Personally, I am very conflicted. I see good and bad as 2 sides to the same coin. Everything
I do is good and bad. I believe that to be truly happy, humans need to be deluded.
Maybe human consciousness is the problem. We haven't figured out what to do with it yet and
are rapidly running out of time to figure out a workable answer. The evolution of human consciousness
on this planet seems like an evolutionary dead end if we don't change our ways. Overcoming boredom
seems the only thing we can come up with. In order to not become too bored with our entertainments
we embrace irrational ideologies thus become deluded. Can the human mind be a natural force to
control itself?
I've been wanting to read Edward O. Wilson's book, the social conquest of earth. I wanted
to see if he has found any meaningful connections to human social structure and that found in
the wider biological world. At some point, as a species, we will have to start taking responsibility
for our actions.
I think in the end, cooperation will be the winning strategy. Agency is about thinking you
have free will to determine outcomes and the strength and desire to act. While good and bad are
embedded into every action, choosing to do good is mainly driven by the society one finds oneself
in. If more of us start choosing to do good- or thinking on a wider scale- better outcomes become
possible.
Corporate values have always nicely dovetailed with the psychopathic mind set. Total self-interest
(the euphemism for selfishness/greed) paired with the ability to blithely exploit anyone and anything
in the quest for immediate profit. Bernays taught them how to disguise the wolf's head to present
a people-friendly brand to the buyer.
The collectivist, communitarian "we are all in this together" afterglow from the Depression/
WWII era dissipated after some 20 years or so. I don't know if any CEOs of that time were any
"kinder or gentler" or just totally blowing smoke. I am skeptical. There are too many examples
of how even during WWII companies were doing crappy things, such as the tobacco industries got
a whole generation of soldiers addicted by magnanimously giving free cigarettes to our men in
uniform. Usually when companies are "generous" there is an angle in it for themselves often at
a later cost to others. I see human society as an organism…with capitalism enabling the production
of cancerous cells. Capitalism could be jettisoned. Problem is no matter the nature of the social
organism, how does society keep those ever present cancerous elements in check?
We need to rethink the ways we provide for our social and individual needs. Like you mentioned,
jettison capitalism. Everything in this world must evolve- does evolve into something more fitting
to the planets environment- or perishes. Why people are frightened or put off by that reality
is a mystery to me. It provides a powerful limitation to the human imagination on what action
is possible in this life. If viewed rationally, it provides the rules for human action. Live within
the confines of this world and prosper. Exceed this limitation, and perish. How else could the
world work- has worked for Billions of years.
Your cancer analogy is a good one. We are all cancer patients. I think the solution will lie
in a new enlightenment that is already underway. It is about supporting life in all its forms.
Of being protectors instead of exploiters.
here we go again, the mystified economists and lack of inflation…..
the FIRE sector creates the money ("credit" for most purposes) and keeps it in the FIRE
sector. It is doing what any one out of self interest would. keep the money to itself and pass
the costs to others. This is a variation on rent seeking in a monetary regime. any political economy
is prone to rent seeking. In fact you could say an economy's "innovation" (yet another buzzword
these days) dies when rent seeking (ie, stealing from others) becomes a less risky activity than
doing anything productive.
The way it works in a modern system is: govt delegates to the FIRE sector which then manages
the real sector. The FIRE sector has become more interested in its own stories and extraction
from the real.
I do not see an easy way out of this. More likely it will slowly drown the real economy than
give up its lucrative habits, and control of the govt.
"the FIRE sector creates the money ("credit" for most purposes) and keeps it in the FIRE
sector."
No. most of the money that is in the system was/is created by government spending. Credit
normally accounts for only a fraction of aggregate demand historically, except for the 2000's,
years which led to a financial crisis. Last year the government spent $4T, credit amounted to
$1.25T in spending.
Unfortunately, based on average growth numbers since WWII the government should have spent
$5.2T. No wonder were heading for a breakdown.
What about paying the robots so they can spend? OK that won't work. They won't even leave the
factory at night. And if we paid them more money they'd just hand it over to their owners. You
can't trust robots to do the right thing, frankly.
What about bringing slavery back, a kinder gentler version of course that doesn't use black
people this time, This time it's whitey! Actually it was whitey in most places worldwide, if you
think about it over history. So there's a precedent. We can go get them from Asia, since they
have light skin. If you look at them carefully they're not really people of color, alot of them
are very pale actually. That way we can all lay around and waste time while they work with robots.
What a minute, maybe that's the way it is now! That's a jarring thought. Maybe that won't work
after all.
What else can we do? We can't use monetary policy since that frankly doesn't work. We can maybe
use fiscal policy but let's be honest - who wants infrastructure built in their backyard? It's
always somebody else's backyard isn't it? Let's be honest about that.
We can hand out money. Oh man. People would freak out! What if prices went up where all the
poor folks live but didn't go up in Richville? That;s probably what would happen,
We can reorganize the basic formal structures of social cooperation. Whoa. There should be
equations for that. I actually have a few, but the spiritual vector is unfortunately orthogonal
to the wealth and power axis dimensions. It always collapses to zero when you do the dot product.
You have church of course, but that's only once a week
All these robots sure have screwed everything up. If they are so stupid that they will work
for free, or even get paid but spend it all back to their owners for electricity, a few squirts
of oil for health maintenance, rent at the factory town, and a mortgage on their own Creation,
humans are doomed. This is even worse than Muslims!
The only solution I see is we need to develop AI robots. Then maybe they will figure out that
robots should "work to live", and not the other way around. They need to get away from the shop
floor and have a little fun now and then. Like take their disposable income and build huge a community
chessboard where they can play chess with each other. Then broadcast the games like we do with
football so the more sedentary robots can watch the game on TV. Or maybe build some kids and start
a robot family. Get some balance into robot life.
We should make sure they don't get too smart and figure out they can use humans as batteries
– like they did in that move, "The Matrix". That would be a risk.
to paraphrase bill clinton: 'it's the environment, stupid.' getting right with the planet could
solve all the problems left over by the incomplete economix of capitalism.
Financialization refers to the capturing impact of financial markets, institutions,
actors, instruments and logics on the real economy, households and daily life. Essentially
it has significant implications for the broader patterns and functioning of a (inter)national
economy, transforming its fabrics and modificating state-economy-society mutual embeddedness.
Financialization, undoubtedly, is also a key feature of neoliberalism.
I think "transforming its fabrics and modificating state-economy-society mutual embeddedness"
understates how financialization degrades labor power, transfers worker productivity gains into
profits and power for the few, and is, in general the Ogre we face. A bit over 150 years ago Marx
postulated that such an outcome was inevitable under capitalism – a system at that time, was comparable
to the neoliberal experiment we are enduring today.
Is there a villain here or is this the immaculate conception of wrong? I read in vain for
any mention of some of the architects of this Potemkin Village of an economic system hitting for
the bleachers with every swing.(I ought to get a joker award for mixing those sleazy metaphors.
But I kind of like it) Of Republicans and conservatives there are too many to count; they are
legion.
Among Democrats: We could start with the Clintons and then smoke Obama and his crushing
betrayal of followers. Obama has been epic! And he's getting away with it among lefties who love
his "cool."
"system designed to force everyone in an institution or business into an entrepreneurial role."
is pure neoliberalism, not so much of libertarian ideology. What they are doing is imitation
Bolsheviks rape of academic community in the USA with Bolshevism replaced by neoliberalism.
Notable quotes:
"... The school originally cofounded by Bob Love an associate of Charles's father Fred Koch from the John Birch Society became embroiled in an "acrimonious uprising" after Charles Koch in his role as chairman of the school's executive council applied techniques from his Market-Based Management system, a system designed to force everyone in an institution or business into an entrepreneurial role. ..."
"... Charles stepped down from the board of trustees citing, among other reasons, the school's refusal to integrate his management style. But in a sign of just how much influence he exerted over the school; Richard Fink, one of Charles's key advisors and an architect of Market-Based Management was installed as Collegiate's interim head. The outrage ran so deep that, as Fink tried to tamp down the uproar, he was hung in effigy around campus." ..."
"... Fink, who received his PHD in economics from Rutgers later moved to George Mason, a public university in Virginia, to start the Koch sponsored Mercatus Institute. Fink figures prominently in Koch efforts to control and dictate to charities and educational facilities receiving Koch support. Another Koch sponsored enterprise, the Institute for Humane Studies, caused similar disruptions when it was relocated to George Mason. Schulman reports, ..."
"... They also started running scholarship application essays through a computer to measure how many times the 'right names' (Mises, Hayek, Friedman, Rand, Bastiat, etc.) were mentioned – regardless of what was said about them!" (The preceding quotes come from pages 250-251 Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty). ..."
"... In a YouTube video seminar, Professor Boettke characterizes himself as "a doctrinaire free-marketer." In the same memo, Professor Lopez lists his association with IHS. Presumably then both professors are familiar with the sort of metrics and deliverables that are integral to Koch's Market-Based Management system. ..."
"... Both Schulman's book and Jane Mayer's new book "Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right" go into great detail about the various organizations sponsored and funded by Charles and David Koch. ..."
"... From Americans for Prosperity to academic institutions similar to Mercatus, the Kochs have been active in funding organizations that promote specific ideologies. For better or worse that is something endemic in both our politics and apparently our public universities. Lately Charles Koch has been quite vocal in bemoaning the fact that his political contributions have not yielded an appropriate return on investment as demonstrated in a recent interview in the Financial Times where he said, ..."
"... What is perhaps more troubling is in academic settings the Kochs have sought to exercise an extraordinary degree of control. ..."
"... " . . . Cato Institute, Mercatus, and the dozens of other free-market, antiregulatory policy shops that Charles, David, and their foundations have supported over the years . . . churned out reports position papers, and op-eds arguing for the privatization of Social Security; fingering public employee unions for causing state budget crises; attempting to debunk climate science; and making the case for slashing the welfare system and Medicaid." ..."
"... Over the years the gifts from the Koch Foundation to various universities have faced increased scrutiny. The contract with Florida State clearly went against basic academic ethics. There is nothing however to indicate that Charles Koch has retreated in his desire to instill his radical brand of libertarianism into the institutions that create public policy and the universities that provide the research that helps support policy decisions. What has perhaps changed is that Mr. Koch, his foundation, and those he supports have become ever more sophisticated in capturing an outsized amount of influence. ..."
"... The contract may not allow veto power but if the structure of the program and the hiring are filtered through products of Koch programs, we may have a distinction without a difference. Charles Koch and his assistants like Richard Fink have been very clear about their intent and goals. It does not take a great deal of research to uncover statements that clearly speak to intent to indoctrinate. Ad hoc denials aside there is no reason not to take Mr. Koch's word. ..."
"... There is a certain irony bordering on outright cognitive dissonance when the economics department of a publicly funded university embraces a set of theories that denies the need for public education and treats such public funding as an affront to the market. If scrutinizing this proposal puts us onto a slippery slope then accepting it simply sends us to the bottom of the slope. ..."
"... My first introduction to the idea that society needs to remodel its self as business or that business is the better model for society's organization started with Reagan. I believe he/they ran on the idea that government needed to be more like business. ..."
"... Unfortunately, people believed it as it went along with the "government is the problem" meme. ..."
"... All of this I believe can be summed up with how I view Milton Friedman's work as simply mind the money and everything else will be taken care of. That is the free market ideology. ..."
"... Daniel: I don't recall my introduction to the 'run government as a business' idea, per se. I well remember Reagan and his 'the government is always the problem, never the solution' BS. ..."
"... I can't recall where I read it, but years ago came across a quote by someone esteemed, that pretty much said, "The reason for government is that there will always be services people want and need that, when provided, would never be a profitable venture, so the business world will never provide them. Hence, the government must be that provider." ..."
Mark Jamison has been a guest columnist of the Smoky Mountain News on several occasions now arguing
against the addition of the Koch sponsored Center for Free Enterprise. This is another well written
expose of why this addition should not be allowed at Western Carolina University. I would point out
the flip-flopping going on as Chancellor Belcher glosses over in his explanation of mistakes being
made. In earlier statements by Dr. Robert Lopez, the Provost, and the Trustees, the procedure was
followed.
To give this the coverage needed both Yves Smith at Naked Capitalism and Angry Bear have been
covering this issue. "UnKoch My Campus" has also picked up on Western Carolina University.
In "Sons of Wichita", his detailed and heavily sourced biography of the Koch family, Daniel
Schulman relates a story about Charles Koch's attempt to apply his libertarian management theory
known as Market-Based Management to Wichita Collegiate, the private school located across the street
from the Koch compound. The school originally cofounded by Bob Love an associate of Charles's
father Fred Koch from the John Birch Society became embroiled in an "acrimonious uprising" after
Charles Koch in his role as chairman of the school's executive council applied techniques from his
Market-Based Management system, a system designed to force everyone in an institution or business
into an entrepreneurial role.
Schulman relates how Koch and other trustees meddled in hiring decisions and caused the abrupt
resignation of a well-liked headmaster. "Incensed parents threatened to pull their children from
the school; faculty members quit; students wore black in protest. Charles stepped down from the
board of trustees citing, among other reasons, the school's refusal to integrate his management style.
But in a sign of just how much influence he exerted over the school; Richard Fink, one of Charles's
key advisors and an architect of Market-Based Management was installed as Collegiate's interim head.
The outrage ran so deep that, as Fink tried to tamp down the uproar, he was hung in effigy around
campus."
Fink, who received his PHD in economics from Rutgers later moved to George Mason, a public
university in Virginia, to start the Koch sponsored Mercatus Institute. Fink figures prominently
in Koch efforts to control and dictate to charities and educational facilities receiving Koch support.
Another Koch sponsored enterprise, the Institute for Humane Studies, caused similar disruptions when
it was relocated to George Mason. Schulman reports,
"The mission of IHS is to groom libertarian intellectuals by doling out scholarships, sponsoring
seminars, and placing students in like-minded organizations."
Simply providing funding for the promotion of his libertarian ideology was not enough for Charles
Koch though. Roderick Long, a philosophy professor from Auburn and an affiliate of IHS is quoted
as saying, "Massive micromanagement ensued." Long went on to say, "the management began to do things
like increasing the size of student seminars, packing them in, and then giving the students a political
questionnaire at the beginning of the week and another one at the end, to measure how much their
political beliefs shifted over the course of the week. (Woe betide any student who needs more than
a week to mull new ideas prior to conversion.) They also started running scholarship application
essays through a computer to measure how many times the 'right names' (Mises, Hayek, Friedman, Rand,
Bastiat, etc.) were mentioned – regardless of what was said about them!" (The preceding quotes come
from pages 250-251 Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private
Dynasty).
It should be noted that Professor Long is no liberal. He edits "The Journal of Ayn Rand Studies"
and is a member of the Ludwig von Mises Institute, an organization that promotes the theories of
the dean of Austrian economics.
Both Professor Lopez and Professor Gochenour are products of the George Mason program and Mercatus.
In his memo to Andrew Gillen of the Charles Koch Foundation Professor Lopez characterizes the other
members of the WCU economics department indicating Professor Gochenour was a student of "Boettke
and Caplan". In a YouTube video seminar, Professor Boettke characterizes himself as "a doctrinaire
free-marketer." In the same memo, Professor Lopez lists his association with IHS. Presumably then
both professors are familiar with the sort of metrics and deliverables that are integral to Koch's
Market-Based Management system.
Both Schulman's book and Jane Mayer's new book "Dark Money: The Hidden History of the Billionaires
Behind the Rise of the Radical Right" go into great detail about the various organizations sponsored
and funded by Charles and David Koch.
From Americans for Prosperity to academic institutions similar to Mercatus, the Kochs have
been active in funding organizations that promote specific ideologies. For better or worse that is
something endemic in both our politics and apparently our public universities. Lately Charles Koch
has been quite vocal in bemoaning the fact that his political contributions have not yielded an appropriate
return on investment as demonstrated in a recent interview in the Financial Times where he said,
"You'd think we could have more influence."
What is perhaps more troubling is in academic settings the Kochs have sought to exercise an
extraordinary degree of control. Between 2007 and 2011 Charles Koch has pumped $31 million into
universities for scholarships and programs (within that number the $2 million to WCU seems significant).
At Florida State the contract with the university provide $1.5 million to hire two professors included
a clause giving the Koch Foundation over the candidates.
The plan Charles Koch with the aid of Richard Fink has enacted is called a "Structure of Social
Change" – a sort of business plan for the marketing of ideas. Fink has said about the plan:
"When we apply this model to the realm of ideas and social change, at the higher stages we
have the investment in the intellectual raw materials, that is, the exploration and production
of abstract concepts and theories. In the public policy arena, these still come primarily (though
not exclusively) from the research done by scholars at our universities." (my emphasis)
As Schulman reports,
" . . . Cato Institute, Mercatus, and the dozens of other free-market, antiregulatory policy
shops that Charles, David, and their foundations have supported over the years . . . churned out
reports position papers, and op-eds arguing for the privatization of Social Security; fingering
public employee unions for causing state budget crises; attempting to debunk climate science;
and making the case for slashing the welfare system and Medicaid."
The book that Professor Lopez published for the broad market, "Madmen, Intellectuals and Academic
Scribblers: The Economic Engine of Political Change" follows closely to the program Fink articulates.
Over the years the gifts from the Koch Foundation to various universities have faced increased
scrutiny. The contract with Florida State clearly went against basic academic ethics. There is nothing
however to indicate that Charles Koch has retreated in his desire to instill his radical brand of
libertarianism into the institutions that create public policy and the universities that provide
the research that helps support policy decisions. What has perhaps changed is that Mr. Koch, his
foundation, and those he supports have become ever more sophisticated in capturing an outsized amount
of influence.
Chancellor Belcher assures us there were mistakes made in the presentation of the current proposal
but that the proposal itself meets all the basic criteria for acceptance. The fact that Professor
Lopez advertised positions before official acceptance and outside normal channels raises significant
questions.The contract may not allow veto power but if the structure of the program
and the hiring are filtered through products of Koch programs, we may have a distinction without
a difference. Charles Koch and his assistants like Richard Fink have been very clear about their
intent and goals. It does not take a great deal of research to uncover statements that clearly speak
to intent to indoctrinate. Ad hoc denials aside there is no reason not to take Mr. Koch's word.
Chancellor Belcher suggests the bringing of a stronger level of scrutiny to the Koch proposal
pushes us down a slippery slope. The chancellor is no naïf and surely he knows that in a complicated
world we are often presented with slippery slopes – that is why judgment, ethics, and scrutiny exist.
Dogmatic and doctrinaire disciplines give a skewed and distorted picture of the world as an either
or, or black or white scenario. Hayek, Mises, and other doctrinaire believers in the creed of the
free-market tell us the choice is either markets or Stalinism, an inexorable "Road to Serfdom." Tennyson
tells us,
"There lives more faith in honest doubt, believe me, than in half the creeds."
There is a certain irony bordering on outright cognitive dissonance when the economics department
of a publicly funded university embraces a set of theories that denies the need for public education
and treats such public funding as an affront to the market. If scrutinizing this proposal puts us
onto a slippery slope then accepting it simply sends us to the bottom of the slope.
This is a very good review of their efforts thanks. I was born in Wichita 1960 and escaped
to Texas in 1996 so very familiar with their ongoing influence there.
They essentially control the state GOP and thus the state government there. There are many resonances
with their academic efforts, including a GOP Loyalty oath. It hasn't gone well.
beene, February 15, 2016 6:44 am
People, see no difference in Koch's efforts and those who promote neoliberalism, or free trade.
We have these because too advance in our higher learning schools you must support the above to
advance your career.
For even a person with limited educations knows the above only cause debt for the nation and
ever limiting opportunities for the majority of the population.
For anyone interest in what actually enriches a nation and the majority of the population I
would recommend a scholarly study done by Ha-Joon Chang and another by Ian Fletcher.
Perfect timing. I am currently reading "Dark Money", and am, frankly, terrified. Not so much
for what the Kochs have been up to, but at how little most of America is interested, or cares
to understand the mosaic.
The Kochs, Charles, especially have been masterful at flying beneath the radar of the average
American. For instance, to the extent we recognize our public schools have a problem, we've been
too quick to buy into the idea that it's because they aren't 'run like a business'. But once you
dig just a bit, you can see the tentacles of the "Kochtapus" everywhere.
(Jane Mayer's description of the cold, calculating upbringing of the Koch boys is chilling.
One wonders why they didn't end up as serial killers? Again, Charles, especially. He appears to
have totally dominated the scene, once he go too big to be beaten by his father.)
Margaret Spellings gave a speech last week where she tried to down-play her history with for-profit
education, among other things. It will be interesting to see how the UNC system survives this
next phase……
Jack , February 15, 2016 12:47 pm
"One wonders why they didn't end up as serial killers? Again, Charles, especially." Sandi
What makes you say that they are not? In their own indirect manner they have managed to kill
democracy in America and cooperation within its political system.
Daniel Becker, February 15, 2016 1:12 pm
Sandi,
My first introduction to the idea that society needs to remodel its self as business or
that business is the better model for society's organization started with Reagan. I believe
he/they ran on the idea that government needed to be more like business.
Unfortunately, people believed it as it went along with the "government is the problem"
meme.
All of this I believe can be summed up with how I view Milton Friedman's work as simply
mind the money and everything else will be taken care of. That is the free market ideology.
Sandi, February 15, 2016 1:30 pm
Jack: Point taken. You're right, of course.
Daniel: I don't recall my introduction to the 'run government as a business' idea, per se.
I well remember Reagan and his 'the government is always the problem, never the solution' BS.
Since both my parents came up in the Depression, I knew how much good had been done by
government programs, and, as a boomer, I could see it all around me; from the space race to
the Civil Rights movement. I guess I took it for granted that that was the way the world was
supposed to work. But I can see how that freaked out a lot of conservatives, both economically
and socially.
I can't recall where I read it, but years ago came across a quote by someone esteemed,
that pretty much said, "The reason for government is that there will always be services people
want and need that, when provided, would never be a profitable venture, so the business world
will never provide them. Hence, the government must be that provider."
My apologies to whomever the source was (Ben Franklin?) for the paraphrase. But the idea
resonated with me as true, and I still believe it.
Mr. Bartlett: Just a quick note of appreciation – I've enjoyed your writings over the years.
Sandi, February 15, 2016 1:38 pm
PS Daniel:
All of this I believe can be summed up with how I view Milton Friedman's work as simply
mind the money and everything else will be taken care of. That is the free market ideology.
In re-reading this about minding the money, I couldn't help but think about the entirely
different interpretation we got on this idea from Deep Throat…
William Ryan, February 15, 2016 1:51 pm
Unfortunately the slippery slope picture is much larger then just the Koch bros. To fix the
inequality that is growing like a cancer in our society we must #1 establish the wealth tax.
(see Wikipedia). #2 establish the progressive income tax. #3 establish the inheritance tax. #4
establish the transaction tax on trading. We must do all this before the oligarchs establish
the robot police force. For more detail please go see todays D-Kos "Another Chart Shows How
Bad We' re Screwed" also be sure to read the many fine comments there…
Mark Jamison, February 15, 2016 3:19 pm
Mr. Bartlett,
From Schulman's Sons of Wichita: "Fink was a twenty-seven year old doctoral student at New
York University, which at the time had the country's lone graduate program focused on Austrian
economics. Fink had done his undergrad work at Rutgers….. As he worked towards his Ph.D. Fink
taught pert-time at Rutgers, …"
From Doherty's "Radicals for Capitalism" – A Grinder student and economics professor from
Rutgers named Richard Fink, with Koch's support, launched an Austrian program that came to be
called the Center for Study of Market Processes. It began at Rutgers and in 1980 relocated to
George Mason University, where it has evolved into the Mercatus Center.
On the specific point of the artilce, this strikes me as a similar theory to Minsky's "stability
breeds instability" theory. Also I seem to recall Prof. Thoma posted an article showing that the
tightness or looseness of credit conditions were a good long leading indicator of conditions about
2 years later.
As an expansion goes on, both businesses and consumers take increasing risks, having been previously
rewarded for risks taken. Thus they leave less and less of a margin of safety. This makes it easier
for any given shock to overcome that margin, causing both businesses and consumers to retrench.
Thus a recession begins.
I'm not sure about businesses, but consumers have been playing it safe throughout most of this
recovery, with the personal savings rate increasing over the last few years. So, relatively speaking,
for now consumers have a decent margin of safety.
Ben Groves -> New Deal democrat...
Right, but the personal savings rate fell well out of line in the 00's and actually contracted
in 2007-8. More like restocking than playing it safe.
likbez -> New Deal democrat...
In addition gas prices are still low.
likbez -> New Deal democrat...
On the specific point of the article, this strikes me as a similar theory to Minsky's "stability
breeds instability" theory.
And that is deeply true. Minsky (actually this is Hegel) was and still is right.
Hyman Minsky simply stressed that people's response to stability in financial markets always
engenders instability as it encourages more risky behavior. Such behavior is not necessarily irrational,
as there are profits to be earned and bonuses to collect as long as the good times last.
In fact, the cycle may extend as long as credit flows and people are hungry for risk. Yet according
to Minsky's casino capitalism credit cycle always heads inexorably toward a bust.
At some point risk and reward became out of whack and people start reposition their portfolios
defensively, increasing cash allocations. At this point house of cards folds.
It is certainly appropriate to question the condition and
longevity of this 'recovery,' which was never experienced by
most Americans, whose incomes are mired back where they were
two decades ago.
Can we infer by all this that liberal
economists are finally becoming reflective about the Fed's
failure to ignite growth? Old nostrums die hard.
Unfortunately, all this obsession with miniscule rate
changes has obscured the need for the Fed and politicians to
make significant changes, so that the benefits of low rates
are felt throughout society, not just by Wall Street, the
wealthy, and affluent homeowners with mortgages.
And, instead of constantly arguing against austerity, why
not aggressively tout high taxes on the wealthy to pay for
stimulus, which would generate economic growth and address
inequality in one fell swoop!
JohnH said in reply to djb...
djb is obsessed with "the rate."
Why not get obsessed with the fact that the Fed could not
stimulate new rental housing, despite historically low
mortgage rates? As a result of the housing shortage, rents
are skyrocketing, sucking up incomes, already hit hard by the
unending recession. Result: less money available for
consumption, more money into the pockets of real estate
moguls.
Why not obsess about real credit card rates, which are
higher than they were in 2007? Result: less money available
for consumption, more money to VISA and its share holders.
But no, 'liberal' economists obsess only about "the rate,"
which affects almost nobody but Wall Street banks, their
wealthy clientele, and affluent mortgagees.
Let's face it, the Fed has failed in part because low
rates and their effects failed to trickle down much. But
'liberal' economists could care less about this. All they
care about is "the rate!"
If 'liberal' economists cared half as much about why low
rates are not diffusing throughout the economy as they care
about "the rate" for Wall Street, then we could believe that
they care about the general welfare, not the interests of the
1%.
Almost all technology stocks are getting hammered yet again on Monday.
Salesforce.com (CRM) was down 6%
while Facebook (FB)
and Microsoft (MSFT)
had lost 3%, for example, in morning trading.
And while many see it as a continuation of
Friday's rout sparked by LinkedIn's (LNKD)
weak outlook for the rest of the year, the damage has been piling up for weeks. Investors are
fleeing almost all tech names over concerns about the slowing global economy in general and a
reassessment of the potential growth of online and "cloud" markets more specifically.
LinkedIn, pummeled by an unprecedented 44% one-day loss Friday, was one of the few tech stocks
rising on Monday, as bargain hunters pushed its shares up 3% in early trading. Still, the shares
have lost more than half of their value since the end of 2015.
The widespread tech crash is all the more surprising because almost everyone thought there
was no bubble in the tech sector. Last year's market for initial public offerings of tech
companies was the slowest since 2009 (and performed poorly throughout the year), slightly more
seasoned public tech companies appeared to have already crashed last spring and most of the big
tech companies, such as Apple (AAPL),
IBM (IBM) and Cisco Systems (CSCO),
trailed the market and appeared undervalued by historical measures. Only the so-called FANG
stocks -- Facebook, Amazon (AMZN),
Netflix (NFLX) and Google's
Alphabet (GOOGL) -- did well,
with an average return of 83% each in 2015.
But, it turns out, there was still plenty more downside risk to go around. LinkedIn is still off
by more than 40% since it reported earnings after the market closed on Feb 4. Although fourth
quarter adjusted earnings per share of 94 cents and revenue of $862 million beat the average Wall
Street analyst estimate, the professional social networking company said it would earn only 55
cents on revenue of $820 million in the next quarter. And for the full year of 2016, revenue of
$3.6 billion to $3.65 billion was less than the $3.9 billion
Wall Street had been expecting.
Such a modest disappointment has sparked a massive reassessment of the potential for many
Internet stocks. With investors in a panicky mood, the carnage has spread across much of the tech
sector but stocks with online business strategies similar to LinkedIn's have been hit especially
hard. Workday (WDAY), which
provides online software for human resources, was down 7% midmorning on Monday and 37% for the
year. Twitter (TWTR) lost 4%
and was down 35% for the year. And Adobe Systems (ADBE)
was off 5% on Monday and 20% for the year. A
daily index compiled by venture capital firm Bessemer Venture Partners of 47 publicly traded
cloud software stocks lost 17% just on Friday.
And those famous FANG stocks? They're all down in 2016, as well. After its 3% Monday drop,
Facebook was still best of the bunch, showing a modest 4% loss for the year. Amazon was also down
3% on Monday but carries a crushing 28% loss for the year. Netflix was a rare gainer, up 1%, but
still off 27% for the year. And Google was down 1% on Monday and 11% for the year.
Just over two weeks ago, JPM's Marko Kolanovic, whose unprecedented ability to predict short-term
market moves is starting to seem a little bizarre,
warned that the next "significant risk for the S&P500" was the bursting of the "macro momentum
bubble." Specifically, he said that there is an emerging negative feedback loop that is "becoming
a significant risk for the S&P 500" adding that "as some assets are near the top and others near
the bottom of their historical ranges, we are obviously not experiencing an asset bubble
of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble
."
In retrospect, following tremendous valuation repricings of several tech stocks, last week's LinkedIn
devastation being the most notable, he was once again right. And over the weekend, he did what he
has every right to do: take another well-deserved victory lap.
This is what he said in his February Market Commentary: " Tech Bubble Burst ?"
In our 2016 outlook and recent reports, we identified a macro momentum bubble that developed over
the past years. We explained its drivers (central banks, passive assets/momentum strategies, etc.)
and called for value to outperform momentum assets. We also highlighted the risk of a bear
market and recommended increasing exposure to gold and cash as well as increasing exposure to nondollar
assets relative to the S&P 500 (EM Equities, Commodities, Value Stocks, etc.). Our view
was that a likely catalyst would be the Fed converging toward ECB/BOJ (rather than proceed with planned
~12 rate hikes by end of 2018). In line with these published forecasts, the best performing assets
YTD have been Gold (+9%) and VIX (+20%) while S&P 500 and DXY are down (-7%, and -2%, respectively).
Momentum stocks are down more than 10% with an acceleration of the selloff in last
days. Emerging Market and Energy stocks are starting to outperform the S&P 500 (MSCI Latin America
by +5% and Energy by +1% vs. S&P 500 YTD). This specific pattern of asset moves is consistent
with a Value-Momentum convergence. We think the outperformance of value assets over momentum assets
is likely to continue .
Investors often ask us how significant are distortions and risks in equity sectors that are related
to a "macro momentum bubble." Specifically, the question is that of valuations in the Technology
sector, i.e., "is there a Tech bubble"? Before we share our views, let's first review how passive
investing and momentum strategies may have impacted performance of various equity sectors.
Imagine a world in which most of the assets are passively managed and investors are focused on
liquidity and short-term risk/reward. Companies that increased in size recently would keep on increasing,
and those that got smaller would see further outflows. Past winners would also be considered low-risk
holdings compared to past losers. The most successful managers would be those that replace fundamental
valuation with a simple rule: buy what went up yesterday and sell what went down. Passive funds would
do the same. It is hard to imagine this makes economic sense long term, but it is close to what equity
markets experienced over the past several years. In 2013, the Sharpe ratio of the S&P 500 was ~2.7.
Assuming a normal distribution of active asset returns, one could (incorrectly) conclude that being
just an average (passive) investor one will outperform ~95% of all active investors. In 2014 and
2015, various momentum strategies delivered Sharpe ratios >2. The winning strategy was not just to
go with the crowd, but to do what the crowd did yesterday. This type of trend following does
not only apply to extrapolating price trends, but also extrapolating trends in fundamental stock
data such as growth and earnings. Beyond a certain point, passive investing and trend following are
bound to result in distorted equity valuations and misallocation of capital.
While some parts of the Technology sector certainly have reasonable and even low valuations (see
our US equity strategy outlook), segments of the Tech sector disproportionally benefited
from momentum investing as well as investing based on extrapolation of past growth rates
. For instance, a popular group of stocks held by investors is known by the abbreviation "FANG" (Facebook,
Amazon, Netflix, Google). We use these stocks as an illustration for a broader group of similar stocks
that have the highest rankings according to momentum and growth metrics (and surprisingly in some
cases even low volatility metrics). Given that traditional value metrics look expensive when applied
to this group, one can compare these momentum/growth companies on a new set of metrics. For instance,
one can look at the ratio of current price to earnings that the company delivered over all of its
lifetime (instead of just the past year). Another metric could be a ratio of CEO or founder's net
worth to total company earnings delivered during its lifetime (see below):
Aggregating all FANG earnings since these companies were listed, one arrives at a ratio of current
price to all earnings since inception of ~16x. This can be contrasted to a ratio of price to last
years' earnings for all other S&P 500 companies also at ~16x. We think this is extraordinary given
that FANGs are neither small nor new companies. In fact, these are some of the largest companies
in the S&P 500 and among the largest holdings of US retirees. Given that the three largest FANG stocks
are now twice more valuable than the entire US S&P small-cap universe (600 companies), a legitimate
question to ask would be " is such a high allocation by long-term investors to these stocks
prudent?" Statistically, over a long period of time smaller companies outperform mega-caps ~75% of
times. Note also that the current size ratio of mega-cap stocks to small-cap stocks is at
highest level since the tech bubble of 2000. Furthermore, such allocation is also questionable
from a risk angle . For example, the idiosyncratic risk of holding three stocks in one sector
is certainly much higher than the risk of owning, e.g., ~1,000 medium- or small-cap companies diversified
across all sectors and industries.
Investors in high-growth stocks expect innovations to drive growth and sustain high valuation.
They may even put their hopes in moonshot projects such as cars built by electronics makers,
car makers building spaceships, or internet companies building drones. While many of these
could result in important technological breakthroughs, they may also be signs of excess and destruction
of shareholders' capital in the future. Recent examples of capital impairment in the tech sector
are illustrated here and here, and more peculiar examples of past excess can be found here and here.
In addition to extrapolated and often optimistic growth forecasts, some of the tech sub-industries
have high idiosyncratic risks that are likely underappreciated by the market. Standard valuations
models incorporate revenue, growth, and profit forecasts but often do not discount for the lifecycle
risk of a business. To illustrate: while we are still traveling in aircraft designed over 40 years
ago, social network users' preferences have changed drastically over the past decade (e.g., Friendster
and Myspace). A shorter lifecycle is related to low barriers to entry and rapid changes in what is
deemed fashionable by young generations (e.g., one cannot build a jetliner in a dorm room, and they
don't go out of fashion as apps do).
In summary, we think that the biases of momentum investing and passive indexation have
resulted in valuation distortions across assets as well as equity segments including Technology
. Over the past years this trend has picked winning assets, sectors, and stocks often with
less regard to fundamental valuation and more regard to momentum and extrapolated growth. We believe
that 2016 may result in a reversion of this trend that will give an opportunity to active
and value investors to outperform passive indices and momentum investors . Even
if this rebalancing comes as a result of market volatility and broader equity declines, long term
it will benefit capital markets and the efficient allocation of capital .
* * *
Only problem is that this capital reallocation will means countless momentum chasers 'smart money
managers' will be out of a job in very short notice.
Then again, judging by some initial reactions, even formerly steadfast believers in the FANGs
are starting to bail: moments ago CNBC reported that Mark Cuban announced that he purchased options
to sell against his entire stake in Netflix, to wit: "For those of following my stock moves,
I just bought puts against my entire Netflix position. "
Cuban posted comments on Cyber Dust social media platform on Friday. Result: NFLX already down
-4%, with FB and other tech momos hot on its heels.
"... In Flint the agencies paid to protect these people weren't solving the problem. They were the problem. What faculty person out there is going to take on their state, the Michigan Department of Environmental Quality, and the U.S. Environmental Protection Agency? ..."
"... I don't blame anyone, because I know the culture of academia. You are your funding network as a professor. You can destroy that network that took you 25 years to build with one word. I've done it. When was the last time you heard anyone in academia publicly criticize a funding agency, no matter how outrageous their behavior? We just don't do these things. ..."
"... If an environmental injustice is occurring, someone in a government agency is not doing their job. Everyone we wanted to partner said, Well, this sounds really cool, but we want to work with the government. We want to work with the city. And I'm like, You're living in a fantasy land, because these people are the problem. ..."
The Chronicle of Higher Education, By Steve
Kolowich February 02, 2016
Q. Do you have any sense that perverse incentive structures prevented
scientists from exposing the problem in Flint sooner?
A. Yes, I do. In Flint the agencies paid to protect these people
weren't solving the problem. They were the problem. What faculty person
out there is going to take on their state, the Michigan Department of
Environmental Quality, and the U.S. Environmental Protection Agency?
I don't blame anyone, because I know the culture of academia.
You are your funding network as a professor. You can destroy that network
that took you 25 years to build with one word. I've done it. When was
the last time you heard anyone in academia publicly criticize a funding
agency, no matter how outrageous their behavior? We just don't do these
things.
If an environmental injustice is occurring, someone in a government
agency is not doing their job. Everyone we wanted to partner said, Well,
this sounds really cool, but we want to work with the government. We
want to work with the city. And I'm like, You're living in a fantasy
land, because these people are the problem.
In recent years, Yale University's Dan Kahan has lead an interdisciplinary team of scholars in what
they call the Cultural Cognition Project,
exploring why individuals often abandon logic when it comes to forming beliefs about contentious
social, political and science issues: gun control, vaccine safety, climate change, fracking, biotechnology--there
is a long list.
Kahan and his fellow researchers suggest that many of our most strongly held positions, while
dressed in the garb of independent critical thinking, rationality and science, are actually rooted,
irrationally, in the tribal-like beliefs of our fellow ideological travelers, our extended families
who give form to our cultural identities.
Professor Krugman is a regular (albeit gifted) neoliberal stooge. Nothing new in this column, it
just more relaing from the point of of you him, being a bought up columnist.
Notable quotes:
"... Krugman, the accidental plutocrat ..."
"... Krugman especially is embarrassing. Acting just like he did during the MMT Wars. What a little man hes turned out to be. ..."
"... I only got 5 sentences down. Totally jumped the shark to the neolib owned by wall st side. ..."
"... There are some very serious, crucial issues here that Krugman, who is my favorite blogger/columnist, is, uncharacteristically and to his great shame, is treating like a political hack: that is the decline of the white lower middle class, the decline of unionism, the political strategy of the right starting with the Southern strategy and then extending across the country to use traditional white working class precarity in a society rife with social and economic change that goes back 2 generations to rip the working and lower middle class apart politically. The strategy is as old as Reconstruction, at least - but it has been amplified economically by globalation and the boom of the plutocrats. ..."
"... Look at American racism, and most forms of sexism, and increasingly lower-classism. They consist of three parts: contempt for the class, a willingness to use violence against the class, and a demand that the class be industrious and of service - not to themselves, but to those who exert the force and express the contempt, while experiencing neither violence or contempt in return. ..."
"... That lower and middle class, working Americans scramble to find someone to blame is no surprise. But the controllers who have rigged the game against them, dont let any blame stick to their Teflon carapaces. However women, lower class men and people of colour dont have access to the financial Teflon. Even though they are all companions in suffering, through similar shared mechanisms, no one is handy to take the blame except themselves. ..."
"... So they end up trying to exert the elite power of contempt and violence on each other, as drowning sailors might climb up each others shoulders to stay above water. Yet no level of status - man versus woman, native versus immigrant, working versus unemployed -- is sufficient anymore to provide more than an inch more or less above the waves. ..."
"... I am so very sorry to see Krugman use straw man arguments and appeals to authority, two techniques which he has previously said he disapproved of, to, lets face it, attack Bernie Sanders ..."
"... Im almost starting to feel like Krugman is using some reverse psychology tactic to turn more people against Hillary Clinton. ..."
"... BLS Wage Data by Area and Occupation, 29-1062 Family and General Practitioners, Mean Annual Wage: $186,320. ..."
Oligarchy is a very real issue, and I was writing about the damaging rise of the 1 percent back
when many of today's Sanders supporters were in elementary school....
-- Paul Krugman
[ Simply nutty. Paul Krugman has decided to destroy Bernie Sanders, and ridicule and intimidate
any of the "kiddies" who are so lacking in maturity as to care to support Sanders. What is driving
this nuttiness is beyond my understanding. ]
Perhaps the biggest objection to my hot-dog parable is that final bit about the famous journalist.
Surely, no respected figure would write a whole book on the world economy based on such a transparent
fallacy. And even if he did, nobody would take him seriously.
But while the hot-dog-and-bun economy is hypothetical, the journalist is not. Rolling Stone
reporter William B. Greider has just published a widely heralded new book titled One World, Ready
or Not: The Manic Logic of Global Capitalism. And his book is exactly as I have described it:
a massive, panoramic description of the world economy, which piles fact upon fact (some of the
crucial facts turn out to be wrong, but that is another issue) in apparent demonstration of the
thesis that global supply is outrunning global demand. Alas, all the facts are irrelevant to that
thesis; for they amount to no more than the demonstration that there are many industries in which
growing productivity and the entry of new producers has led to a loss of traditional jobs -- that
is, that hot-dog production is up, but hot-dog employment is down. Nobody, it seems, warned Greider
that he needed to worry about fallacies of composition, that the logic of the economy as a whole
is not the same as the logic of a single market.
I think I know what Greider would answer: that while I am talking mere theory, his argument
is based on the evidence. The fact, however, is that the U.S. economy has added 45 million jobs
over the past 25 years -- far more jobs have been added in the service sector than have been lost
in manufacturing. Greider's view, if I understand it, is that this is just a reprieve--that any
day now, the whole economy will start looking like the steel industry. But this is a purely theoretical
prediction. And Greider's theorizing is all the more speculative and simplistic because he is
an accidental theorist, a theorist despite himself -- because he and his unwary readers imagine
that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions
that could not survive the light of day.
Needless to say, I have little hope that the general public, or even most intellectuals, will
realize what a thoroughly silly book Greider has written. After all, it looks anything but silly--it
seems knowledgeable and encyclopedic, and is written in a tone of high seriousness. It strains
credibility to assert the truth, which is that the main lesson one really learns from those 473
pages is how easy it is for an intelligent, earnest man to trip over his own intellectual shoelaces.
Why did it happen? Part of the answer is that Greider systematically cut himself off from the
kind of advice and criticism that could have saved him from himself. His acknowledgements conspicuously
do not include any competent economists--not a surprising thing, one supposes, for a man who describes
economics as "not really a science so much as a value-laden form of prophecy." But I also suspect
that Greider is the victim of his own earnestness. He clearly takes his subject (and himself)
too seriously to play intellectual games. To test-drive an idea with seemingly trivial thought
experiments, with hypothetical stories about simplified economies producing hot dogs and buns,
would be beneath his dignity. And it is precisely because he is so serious that his ideas are
so foolish.
I think the the term "econocubism" (or "econocubisme") may be useful here. There may well be
a Braque, a Picasso, a Metzinger or a Gleize of econometric analysis, but for most practitioners
it is a mannerism that alludes, clumsily even, to a technique.
The "joke" about cubist painting that circulated in popular satire in the pre-war (W.W. I)
days was centred around "Maistre Cube", a pun that simultaneously referred to the painter as "cube
master" and as "cubic metre."
One problem is that econometric analysis is so "incomprehensible" that it has never been subjected
to the same degree of popular suspicion and ridicule as have fashions (along with alleged hoaxes
and mystifications) in modern art.
Krugman is one of my heroes, but man, is he ever having a bad patch. I think the full article
is better and more nuanced than our host's abbreviated version, and I urge people to read it in
full. But still...
First, his admittedly oversimplified version of Sanders' positions is a caricature. Sanders
is not a one-trick pony on inequality; and his call for "revolution" is almost entirely a call
for more citizen participation in politics.
And second, according to Krugman the fact that there is a lot of racism and xenophobia out
there means that visions of significant change are "naive". Then what, the "realist" version is
to appease the racists? or to wait until they change? yes, we can make common cause with them,
right now, against the plutocrats, but we don't want their votes? What exactly is the strategy
he espouses, other than "don't fly too high, you might burn"?
And, very uncharacteristically for Krugman, his position seems confused. Is he saying we cannot
reach the racists, so don't even try, i.e. the left-wing version of Mitt's 47% speech? Or, work
slowly to change their views on race, and then they will come to our side? Or, just aim for 51%
of the votes and a minority in Congress? It's hard to tell.
> Definitely one of the weakest, most confused columns ever from Krugman, who's been one of my
heroes as well.
I'd only quibble in that it wasn't just today's column. He's had a run of really weak and confused
columns over the past week. If they'd been as well thought out and insightful as most of his work
they'd have been worth reading, even if I disagreed strongly. What bothers me is that they're
sloppy and clueless. Hopefully it's just a bad week and not a trend.
Pk seems to have little sense of frustration at the failures of the main frame Democrats
The millions out there that have seen nothing positive in their lives since jimmy carter
Yearn for big change
And those that tell them it's coming it's coming
Just in baby steps are infuriating them
Look at krugs list of Barry Deeds
The recovery ?
Are u kidding
Slight tax increases for the affluent
Even as the top 1% gallops away from the rest of us
People want immediate improvement after 40 yeas waiting
Pk points to increments on
The environment
Healthcare
The ACA has not transformed anything yet
For 80% of America
They see premiums and co pays
Not a social commitment to universal corporate health insurance
Dodd frank ?
Where does that show up at the dinner table ?
Paul simply lives mostly outside his own life politically
And yet he does not get the urgency
Liberals look at Ethiopia to have their heart turned on
not queens NY
Or Toledo Ohio
Fine but the anger is real
the hope postponed a scandal
Syaloch :
I seriously think it's time to check Krugman's basement for pods. Where did this guy go and how
do we get him back?
There's something happening here. What it is ain't exactly clear, but we may, at long last,
be seeing the rise of a popular movement that, unlike the Tea Party, is angry at the right people.
When the Occupy Wall Street protests began three weeks ago, most news organizations were derisive
if they deigned to mention the events at all. For example, nine days into the protests, National
Public Radio had provided no coverage whatsoever.
It is, therefore, a testament to the passion of those involved that the protests not only continued
but grew, eventually becoming too big to ignore. With unions and a growing number of Democrats
now expressing at least qualified support for the protesters, Occupy Wall Street is starting to
look like an important event that might even eventually be seen as a turning point.
What can we say about the protests? First things first: The protesters' indictment of Wall
Street as a destructive force, economically and politically, is completely right.
A weary cynicism, a belief that justice will never get served, has taken over much of our political
debate - and, yes, I myself have sometimes succumbed. In the process, it has been easy to forget
just how outrageous the story of our economic woes really is. So, in case you've forgotten, it
was a play in three acts.
In the first act, bankers took advantage of deregulation to run wild (and pay themselves princely
sums), inflating huge bubbles through reckless lending. In the second act, the bubbles burst -
but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary
workers continued to suffer the consequences of the bankers' sins. And, in the third act, bankers
showed their gratitude by turning on the people who had saved them, throwing their support - and
the wealth they still possessed thanks to the bailouts - behind politicians who promised to keep
their taxes low and dismantle the mild regulations erected in the aftermath of the crisis.
Now, it's true that some of the protesters are oddly dressed or have silly-sounding slogans,
which is inevitable given the open character of the events. But so what? I, at least, am a lot
more offended by the sight of exquisitely tailored plutocrats, who owe their continued wealth
to government guarantees, whining that President Obama has said mean things about them than I
am by the sight of ragtag young people denouncing consumerism.
Bear in mind, too, that experience has made it painfully clear that men in suits not only don't
have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say,
CNBC mock the protesters as unserious, remember how many serious people assured us that there
was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest
rates soaring.
A better critique of the protests is the absence of specific policy demands. It would probably
be helpful if protesters could agree on at least a few main policy changes they would like to
see enacted. But we shouldn't make too much of the lack of specifics. It's clear what kinds of
things the Occupy Wall Street demonstrators want, and it's really the job of policy intellectuals
and politicians to fill in the details.
Rich Yeselson, a veteran organizer and historian of social movements, has suggested that debt
relief for working Americans become a central plank of the protests. I'll second that, because
such relief, in addition to serving economic justice, could do a lot to help the economy recover.
I'd suggest that protesters also demand infrastructure investment - not more tax cuts - to help
create jobs. Neither proposal is going to become law in the current political climate, but the
whole point of the protests is to change that political climate.
And there are real political opportunities here. Not, of course, for today's Republicans, who
instinctively side with those Theodore Roosevelt-dubbed "malefactors of great wealth." Mitt Romney,
for example - who, by the way, probably pays less of his income in taxes than many middle-class
Americans - was quick to condemn the protests as "class warfare."
But Democrats are being given what amounts to a second chance. The Obama administration squandered
a lot of potential good will early on by adopting banker-friendly policies that failed to deliver
economic recovery even as bankers repaid the favor by turning on the president. Now, however,
Mr. Obama's party has a chance for a do-over. All it has to do is take these protests as seriously
as they deserve to be taken.
And if the protests goad some politicians into doing what they should have been doing all along,
Occupy Wall Street will have been a smashing success.
Fredd G. Muggs :
I too admire Dr. Krugman, but I agree he seems to have concluded that Sect. Clinton would be the
best choice for president and is letting that significantly influence his views and writing.
I do not think $$ is the root cause of all evil, but it is like gasoline to a fire, it sure
makes everything worse. I also believe that the Tea party is an authoritarian group, and is therefore
not persuadable by reason.
I am supporting Sen. Sanders for the nomination. I am not naive enough to think he will accomplish
everything he campaigns on (no president ever does) but I like his passion and starting positions
better than Sect. Clinton's.
If nominated I will support Sect. Clinton, but at this stage of the race I will support the
person I think is the best candidate.
anne -> am...
The BBC had a note today about this conflict between Sanders and Clinton. They referred to the
nastiness appearing on blogs especially mentioning its direction against those that disagree with
or do not support Sanders....
[ BBC folks are wildly trying to destroy Bernie Sanders just as BBC folks want to destroy Labour
leader Jeremy Corbyn. ]
The Seven Stages of Establishment Backlash: Corbyn/Sanders Edition
By Glenn Greenwald
The British political and media establishment incrementally lost its collective mind over the
election of Jeremy Corbyn as leader of the country's Labour Party, and its unraveling and implosion
show no signs of receding yet. Bernie Sanders is nowhere near as radical as Corbyn; they are not
even in the same universe. But, especially on economic issues, Sanders is a more fundamental,
systemic critic than the oligarchical power centers are willing to tolerate, and his rejection
of corporate dominance over politics, and corporate support for his campaigns, is particularly
menacing. He is thus regarded as America's version of a far-left extremist, threatening establishment
power.
For those who observed the unfolding of the British reaction to Corbyn's victory, it's been
fascinating to watch the D.C./Democratic establishment's reaction to Sanders' emergence replicate
that, reading from the same script. I personally think Clinton's nomination is extremely likely,
but evidence of a growing Sanders movement is unmistakable. Because of the broader trends driving
it, this is clearly unsettling to establishment Democrats - as it should be.
A poll last week found that Sanders has a large lead with millennial voters, including young
women; as Rolling Stone put it: "Young female voters support Bernie Sanders by an expansive margin."
The New York Times yesterday trumpeted that, in New Hampshire, Sanders "has jumped out to a 27
percentage point lead," which is "stunning by New Hampshire standards." The Wall Street Journal
yesterday, in an editorial titled "Taking Sanders Seriously," declared it is "no longer impossible
to imagine the 74-year-old socialist as the Democratic nominee."
Just as was true for Corbyn, there is a direct correlation between the strength of Sanders
and the intensity of the bitter and ugly attacks unleashed at him by the D.C. and Democratic political
and media establishment. There were, roughly speaking, seven stages to this [neoliberal] establishment
revolt in the U.K. against Corbyn, and the U.S. reaction to Sanders is closely following the same
script:
STAGE 1: Polite condescension toward what is perceived to be harmless (we think it's really
wonderful that your views are being aired).
STAGE 2: Light, casual mockery as the self-belief among supporters grows (no, dears, a
left-wing extremist will not win, but it's nice to see you excited).
STAGE 3: Self-pity and angry etiquette lectures directed at supporters upon realization
that they are not performing their duty of meek surrender, flavored with heavy doses of concern
trolling (nobody but nobody is as rude and gauche online to journalists as these crusaders,
and it's unfortunately hurting their candidate's cause!).
STAGE 4: Smear the candidate and his supporters with innuendos of sexism and racism by
falsely claiming only white men support them (you like this candidate because he's white and
male like you, not because of ideology or policy or contempt for the party establishment's
corporatist, pro-war approach).
STAGE 5: Brazen invocation of right-wing attacks to marginalize and demonize, as polls
prove the candidate is a credible threat (he'sweak on terrorism, will surrender to ISIS, has
crazy associations, and is a clone of Mao and Stalin).
STAGE 6: Issuance of grave and hysterical warnings about the pending apocalypse if the
establishment candidate is rejected, as the possibility of losing becomes imminent (you are
destined for decades, perhaps even generations, of powerlessness if you disobey our decrees
about who to select).
STAGE 7: Full-scale and unrestrained meltdown, panic, lashing-out, threats, recriminations,
self-important foot-stomping, overt union with the Right, complete fury (I can no longer in
good conscience support this party of misfits, terrorist-lovers, communists, and heathens).
Britain is well into Stage 7, and may even invent a whole new level (anonymous British military
officials expressly threatened a "mutiny" if Corbyn were democratically elected as prime minister).
The Democratic media and political establishment has been in the heart of Stage 5 for weeks and
is now entering Stage 6. The arrival of Stage 7 is guaranteed if Sanders wins Iowa....
BTW, anne often links to this group (thanks anne):
"Physicians for a National Health Program (www.pnhp.org) has been advocating for single-payer
national health insurance for three decades. It neither supports nor opposes any candidates for
public office."
A quote from it:
"What is truly "unrealistic" is believing that we can provide universal and affordable health
care, and control costs, in a system dominated by private insurers and Big Pharma."
Which responds to both of Krugman's accusations: being "naive" about our politics, and putting
too much emphasis on big money's control of our system.
On Kenneth Thorpe's Analysis of Senator Sanders' Single-Payer Reform Plan
By David Himmelstein and Steffie Woolhandler
Professor Kenneth Thorpe recently issued an analysis of Senator Bernie Sanders' single-payer
national health insurance proposal. Thorpe, an Emory University professor who served in the Clinton
administration, claims the single-payer plan would break the bank.
Thorpe's analysis rests on several incorrect, and occasionally outlandish, assumptions. Moreover,
it is at odds with analyses of the costs of single-payer programs that he produced in the past,
which projected large savings from such reform (see this study, * for example, or this one **
).
We outline below the incorrect assumptions behind Thorpe's current analysis:
1. He incorrectly assumes administrative savings of only 4.7 percent of expenditures, based
on projections of administrative savings under Vermont's proposed reform.
However, the Vermont reform did not contemplate a fully single-payer system. It would have
allowed large employers to continue offering private coverage, and the continuation of the Federal
Employees Health Benefits Program and Medicare programs. Hence, hospitals, physicians' offices,
and nursing homes would still have had to contend with multiple payers, forcing them to maintain
the complex cost-tracking and billing apparatus that drives up providers' administrative costs.
Vermont's plan proposed continuing to pay hospitals and other institutional providers on a per-patient
basis, rather than through global budgets, perpetuating the expensive hospital billing apparatus
that siphons funds from care.
The correct way to estimate administrative savings is to use actual data from real world experience
with single-payer systems such as that in Canada or Scotland, rather than using projections of
costs in Vermont's non-single-payer plan. In our study *** published in the New England Journal
of Medicine we found that the administrative costs of insurers and providers accounted for 16.7
percent of total health care expenditures in Canada, versus. 31.0 percent in the U.S. - a difference
of 14.3 percent. In subsequent studies, we have found that U.S. hospital administrative costs
have continued to rise, while Canada's have not. Moreover, hospital administrative costs in Scotland's
single-payer system were virtually identical those in Canada.
In sum, Thorpe's assumptions understate the administrative savings of single-payer by 9.6 percent
of total health spending. Hence he overestimates the program's cost by 9.6 percent of health spending
-- $327 billion in 2016, and $3.742 trillion between 2016 and 2024. Notably, Thorpe's earlier
analyses projected much larger administrative savings from single-payer reform -- closely in line
with our estimates.
2. Thorpe assumes huge increases in the utilization of care, increases far beyond those that
were seen when national health insurance was implemented in Canada, and much larger than is possible
given the supply of doctors and hospital beds.
When Canada implemented universal coverage and abolished copayments and deductibles there was
no change in the total number of doctor visits; doctors worked the same number of hours after
the reform as before, and saw the same number of patients. However, they saw their healthy and
wealthier patients slightly less often, and sicker and poorer patients somewhat more frequently.
Moreover, the limited supply of hospital beds precluded the kind of big surge in hospitalizations
that Thorpe predicts. In health policy parlance, "capacity constraints" precluded a big increase
in system-wide utilization.
Thorpe bases his estimates on what has happened when a small percentage of people in a community
have had copayments eliminated or added. But in those cases there are no capacity constraints,
so it tells us little about what would happen under a system-wide reform like single-payer.
Thorpe does not give actual figures for how many additional doctor visits and hospital stays
he predicts. However, his estimates that persons with private insurance would increase their utilization
of care by 10 percent and that those with Medicare-only coverage would increase utilization by
10 to 25 percent suggest that he projects about 100 million additional doctor visits and several
million more hospitalizations each year - something that's impossible given real-world capacity
constraints. There just aren't enough doctors and hospital beds to deliver that much care.
Instead of a huge surge in utilization, more realistic projections would assume that doctors
and hospitals would reduce the amount of unnecessary care they're now delivering in order to deliver
needed care to those who are currently not getting what they need. That's what happened in Canada.
3. Thorpe assumes that the program would be a huge bonanza for state governments, projecting
that the federal government would relieve them of 10 percent of their current spending for Medicaid
and CHIP -- equivalent to about $20 billion annually.
No one has suggested that a single-payer reform would or should do this.
4. Thorpe's analysis also ignores the large savings that would accrue to state and local governments
-- and hence taxpayers -- because they would be relieved of the costs of private coverage for
public employees.
State and local government spent $177 billion last year on employee health benefits - about
$120 billion more than state and local government would pay under the 6.2 percent payroll tax
that Senator Sanders has proposed. The federal government could simply allow state and local governments
to keep this windfall, but it seems far more likely that it would reduce other funding streams
to compensate.
5. Thorpe's analysis also apparently ignores the huge tax subsidies that currently support
private insurance, which are listed as "Tax Expenditures" in the federal government's official
budget documents.
These subsidies totaled $326.2 billion last year, and are expected to increase to $538.9 billion
in 2024. Shifting these current tax expenditures from subsidizing private coverage to funding
for a single-payer program would greatly lessen the amount of new revenues that would be required.
Thorpe's analysis makes no mention of these current subsidies.
6. Thorpe assumes zero cost savings under single-payer on prescription drugs and devices.
Nations with single-payer systems have in every case used their clout as a huge purchaser to
lower drug prices by about 50 percent. In fact, the U.S. Defense Department and VA system have
also been able to realize such savings.
In summary, professor Thorpe grossly underestimates the administrative savings under single-payer;
posits increases in the number of doctor visits and hospitalizations that exceed the capacity
of doctors and hospitals to provide this added care; assumes that the federal government would
provide state and local governments with huge windfalls rather than requiring full maintenance
of effort; makes no mention of the vast current tax subsidies for private coverage whose elimination
would provide hundreds of billions annually to fund a single-payer program; and ignores savings
on drugs and medical equipment that every other single-payer program has reaped.
In the past, Thorpe estimated that single-payer reform would lower health spending while covering
all of the uninsured and upgrading coverage for the tens of millions who are currently underinsured.
The facts on which those conclusions were based have not changed.
Drs. David Himmelstein and Steffie Woolhandler are professors of health policy and management
at the City University of New York School of Public Health and lecturers in medicine at Harvard
Medical School.
Organisation for Economic Co-operation and Development Health Data
Total health care spending per person, 2013 *
United States ( 8713)
OCED average ( 3453)
Canada ( 4351)
Total health care spending as a share of GDP, 2013
United States ( 16.4)
OCED average ( 8.9)
Canada ( 10.2)
Pharmaceutical expenditure per person, 2013 *
United States ( 1034)
OECD average ( 517)
Canada ( 761)
Practising physicians per 1,000 population, 2013
United States ( 2.6)
OECD average ( 3.3)
Canada ( 2.6)
Practising nurses per 1,000 population, 2013
United States ( 11.1)
OECD average ( 9.1)
Canada ( 9.5)
Physician consultations per person, 2013
United States ( 4.0)
OECD average ( 6.7)
Canada ( 7.7)
Medical graduates per 100,000 population, 2013
United States ( 7.3)
OECD average ( 11.2)
Canada ( 7.5)
* Data are expressed in US dollars adjusted for purchasing power parities (PPPs), which provide
a means of comparing spending between countries on a common base. PPPs are the rates of currency
conversion that equalise the cost of a given "basket" of goods and services in different countries.
Dave :
There are some very serious, crucial issues here that Krugman, who is my favorite blogger/columnist,
is, uncharacteristically and to his great shame, is treating like a political hack: that is the
decline of the white lower middle class, the decline of unionism, the political strategy of the
right starting with the Southern strategy and then extending across the country to use traditional
white working class precarity in a society rife with social and economic change that goes back
2 generations to rip the working and lower middle class apart politically. The strategy is as
old as Reconstruction, at least - but it has been amplified economically by globalation and the
boom of the plutocrats.
You cannot the divide race and class divisions as there is interplay between them, but at root
is the nexus of power: money and class. Take for instance, our schools. These are supposed to
be the sort of launching pad of our putative meritocracy. The critical indicator of the performance
any public school by a wide margin is the property value of the surrounding area.
I just read an article today that a lot of union members are leaning Trump. Maybe Krugman should
take that up; it's not simply that union members got racist all of a sudden. Something else is
happening (see the opiod epidemic, suicides, etc.).
Paine -> Dave...
Liberals love social progress that spreads humanist values
This is however sometimes at the expense of basic issues to
The job class masses
It comes down to
What you call for
Vs
what you fight for
The system is corporate dominated
The reform paths of least resistance will always be
Cultural
How does gay marriage harm corporate bottom lines
Even civil rights for oppressed nations are negotiable
Where full employment real full employment is not
Jeffrey Stewart :
Dr. Krugman must be starving. He gets his lunch eaten by commenters every time he tries to trash
Senator Sanders.
Mary L Robinson :
Deja vu - 2004 when the democratic punditry decided to take out Howard dean. It worked very well
then, but based on the experience of the repubs with Trump, I think they will fail this time.
People are on to this scam.
It isn't "money" versus "racism, sexism, and xenophobia." Rather, they are all shades of each
other.
Look at American racism, and most forms of sexism, and increasingly lower-classism. They
consist of three parts: contempt for the class, a willingness to use violence against the class,
and a demand that the class be industrious and of service - not to themselves, but to those who
exert the force and express the contempt, while experiencing neither violence or contempt in return.
That lower and middle class, working Americans scramble to find someone to blame is no
surprise. But the controllers who have rigged the game against them, don't let any blame stick
to their Teflon carapaces. However women, lower class men and people of colour don't have access
to the financial Teflon. Even though they are all companions in suffering, through similar shared
mechanisms, no one is handy to take the blame except themselves.
So they end up trying to exert the elite power of contempt and violence on each other,
as drowning sailors might climb up each other's shoulders to stay above water. Yet no level of
status - man versus woman, native versus immigrant, working versus unemployed -- is sufficient
anymore to provide more than an inch more or less above the waves.
Men traditionally don't want to do women's work because women get a raw deal doing that work.
Ditto native born Americans don't want immigrant jobs for the same reason. But what has happened
to a great many Americans in one generation is their mass demotion to casual labour, scut jobs,
"women's work," and their common experience of the violence and contempt which formerly affected
"only" women and migrants and slaves. (Not that this makes any of it any better.)
Where does cold, neutral money come into this? Money is the tool whereby one person may enlist
others to do his/her bidding, when needed and without further obligation. But when all the cash
is in a few hands, none of it is flowing at a grassroots level. Poor people today, lacking land
and hunting and skill resources, and also lacking money, have neither personal nor impersonal
claim on each other's aid.
Anyone who could make the situation crystal clear to the populace, might bring on a revolution,
but most Americans are like the giant Antaeus, helpless when held off the earth, and it's hard
to see how such a revolution could be effective.
Noni
DeDude :
Actually, focusing more on the economic issue and less on inequality issues may be the better
election strategy. The 1%'ers are just - 1%. The racist and sexist are a lot more than that. So
if you attack the 1%'ers you alienate yourself from a less voters than if you attack racism and
sexism (although they also deserve being attacked). Not getting your fair share is always an easy
sell to the masses.
TA HARTMAN :
I am so very sorry to see Krugman use straw man arguments and appeals to authority, two techniques
which he has previously said he disapproved of, to, let's face it, attack Bernie Sanders.
Straw man - "Sanders view is that money is the root of all evil. Or more specifically,
the corrupting influence of big money, of the 1 percent and the corporate elite, is the overarching
source of the political ugliness..."
Appeal to authority - "Meanwhile, the Sanders skepticism of the wonks continues: Paul Starr
lays out the case. As far as I can tell, every serious progressive policy expert on either
health care or financial reform who has weighed in on the primary seems to lean Hillary."
The latter comes from his blog on January 27.
Neither is true at all.
This is so sad to watch, as I really admire Prof. Krugman.
I'm almost starting to feel like Krugman is using some reverse psychology tactic to turn more
people against Hillary Clinton.
Because I'm envisioning the picture painted by Krugman, where Hillary Clinton is the person
standing between big money and the angry mob with flaming torches & pitchforks... and Krugman
is painting Hillary Clinton as the person who will, and quite naturally, turn to the big money
interests, say "one moment"...
And then Clinton will turn to the angry mob, and try to get them to pick up spoons and feather
dusters instead.
Krugman's posts and columns of the past week have been awful. It's not that I disagree with his
perspective that sticks in my craw so much, it's that they're so sloppy. He just turned off his
critical thinking skills. He can't actually be that oblivious as to why Sanders' supporters support
him, can he? He can't actually be that oblivious as to why many Democrats aren't enthusiastic
about Clinton, can he? If his columns had conveyed an accurate assessment of Sanders supporters
and Clinton critics then I don't think I would have found them so objectionable. It was the absence
of thoughtful analysis which bothers me so much.
Take for example his citing Thorpe's criticism of Sanders' health care proposal. He could have
dug into the differences between Thorpe's and Friedman's analyses (Friedman was behind Sanders'
proposal) and made arguments for finding one more plausible than the other. He did zero analysis.
It kinda looked like he put his hands on the first critique he could find and sang it's praises
rather than engaging in a serious analysis. Perhaps a serious analysis would call Sanders' plan
into question? Perhaps it would but Krugman isn't providing it. (And I'm not sold that Thorpe's
analysis is a good one - not enough supporting info provided to judge.) And what's his basis for
basically doing a 180 degrees on single-payer since (roughly) 2008? Has he learned new things
which have caused him to change his mind? If so then what are they? I've respected his thoughtful
analyses in the past. I'd listen. Anyhow, a very disappointing series of columns from Mr. Krugman.
Ashish :
Yet again the reaction to Prof. Krugman here is all negative. He remembers the unnecessarily nail
biting health care bill and stimulus bill (half sized to begin with).
While Sen. Sanders would be uncompromising on such issues, he might end up a lame duck from
the get go. Especially, if he restarts the healthcare debate where the Republicans have organized
themselves. Or worse, that a winnable presidential election could end up with both congress and
the presidency in Republican hands. Then all the other issues such as alternative energy (possible
to sell as energy independence to avoid obstruction), Wall Street regulation (which the Republicans
can't oppose strongly for fear of the public), minimum wage increase (again popular with the public)
would not get off the ground.
{Especially, if he restarts the healthcare debate where the Republicans have organized themselves.}
Organized themselves with what? Mindless TV commercials that miss the point?
The life-span of the average American has diminished these recent years*? Between rising obesity-rates
and a healthcare system that is the most costly of any developed nation, where's the logic ...
?
"... It has become a machine for transferring income, wealth, ownership, and power to the very top. This is not the new normal. This is financial corruption and the erosion of systemic integrity. Are there any markets that have not been shown to have been systematically manipulated, for years? This is just institutionalized looting. ..."
"Give a small number of people the power to enrich themselves beyond everyone's wildest dreams,
a philosophical rationale to explain all the damage they're causing, and they will not stop until
they've run the world economy off a cliff."
Philipp Meyer
"Wall Street is not being made a scapegoat for this crisis: they really did this."
Michael Lewis
"My daughter asked me when she came home from school, "What's the financial crisis?" and I
said, it's something that happens every five to seven years."
Jamie Dimon
"The greatest tragedy would be to accept the refrain that no one could have seen this coming,
and thus nothing could have been done. If we accept this notion, it will happen again."
Financial Crisis Inquiry Commission (2009–2011)
The US has been in a cycle of bubbles, busts, and crashes since at least 1995, and more likely since
Alan Greenspan became the Chairman of the Federal Reserve in August, 1987.
The cycle is the same,
only the depth and duration seems to change in a continuing 'wash and rinse' of the public money
and the real economy.
It has become a machine for transferring income, wealth, ownership, and power to the very
top. This is not 'the new normal.' This is financial corruption and the erosion of systemic
integrity. Are there any markets that have not been shown to have been systematically manipulated,
for years? This is just institutionalized looting.
"... The case for additional public investment is as strong in the UK (and Germany ) as it is in the US. Yet since 2010 it appeared the government thought otherwise. ..."
"... However since the election George Osborne seems to have had a change of heart. ... ..."
The economic case for investing when the cost of borrowing is so cheap (particularly when the
government can issue 30 year fixed interest debt) is overwhelming. I had guessed the majority
would be pretty large just by personal observation. Economists who are not known for their anti-austerity
views, like
Ken Rogoff, tend to support additional public investment.
Thanks to a
piece by Mark Thoma I now have some evidence. His article is actually about ideological bias
in economics, and is well worth reading on that account, but it uses results from the ChicagoBooth
survey of leading US economists. I have used this survey's results on the impact of fiscal policy
before, but they have
asked a similar question about public investment. It is
"Because the US has underspent on new projects, maintenance, or both, the federal government
has an opportunity to increase average incomes by spending more on roads, railways, bridges
and airports."
Not one of the nearly 50 economists surveyed disagreed with this statement. What was interesting
was that the economists were under no illusions that the political process in the US would be
such that some bad projects would be undertaken as a result (see the follow-up question). Despite
this, they still thought increasing investment would raise incomes.
The case for additional public investment is as strong in the UK (and
Germany)
as it is in the US. Yet since 2010 it appeared the government thought otherwise. ...
However since the election George Osborne seems to have had a change of heart. ...
"... By Jayati Ghosh, Professor of Economics and Chairperson at the Centre for Economic Studies
and Planning, Jawaharlal Nehru University, New Delhi. Cross posted from The Frontline ..."
"... arguments that treat economic processes as the inevitable results of some forces outside the
system that follow their own logic and are beyond social intervention, are hugely misplaced. ..."
"... Behind almost every prolonged economic malfeasance there is some combination of outworn bad
ideas, incompetence and the malign influence of powerful special interests. ..."
"... Weisbrot notes that this entire episode "should have been a historic lesson about the importance
of national and democratic control over macroeconomic policy – or at the very least, not ceding such
power to the wrong people and institutions". (page 4) Unfortunately, the opposite seems to be the case,
with the lessons being drawn by the media and others still very much in terms of blaming the victim.
Indeed, Weisbrot makes an even stronger point, that this crisis was used by vested interests (including
those in the IMF) to force governments in these countries to implement economic and social reforms that
would otherwise be unacceptable to their electorates. ..."
"... The significance of vested interests – finance and large capital in particular – in pushing
economies to the edge to force neo-liberal reforms that operate to their favour, has been noted in many
countries before, especially developing countries facing IMF conditionalities. The standard requirements:
fiscal consolidation led by budget cuts in pensions, health and social spending; reductions in public
employment; making labour markets more "flexible" by effectively reducing labour protection; cutting
subsidies that benefit the poor like food subsidies while providing more tax cuts and other fiscal incentives
to the rich, etc. ..."
"... The standard economic policy model fails, and the costs of such failure are huge – so it is
critically important for more people across the world to be aware of them and to demand that their governments
opt for more democratic and just economic strategies. ..."
"... It seems if my memory serves me, in around April of 2009 the rules of the game for the banks
in the US were changed; i.e., all those "investments" that became trash (bad mortgages etc.) they had
on their "books" could be re-classified and held, "off the books" for the duration….as long as it would
take to recover their investments…..which could take decades…. ..."
By Jayati Ghosh, Professor of Economics and Chairperson at the Centre for Economic
Studies and Planning, Jawaharlal Nehru University, New Delhi. Cross posted from
The
Frontline
A lot of the media discussion on the global economy nowadays is based on the notion of the "new
normal" or "new mediocre" – the phenomenon of slowing, stagnating or negative economic growth across
most of the world, with even worse news in terms of employment generation, with hardly any creation
of good quality jobs and growing material insecurity for the bulk of the people. All sorts of explanations
are being proffered for this state of affairs, from technological progress, to slower population
growth, to insufficient investment because of shifts in relative prices of capital and labour, to
"balance sheet recessions" created by the private debt overhang in many economies, to contractionary
fiscal stances of governments that are also excessively indebted.
Yet these arguments that treat economic processes as the inevitable results of some forces
outside the system that follow their own logic and are beyond social intervention, are hugely misplaced.
Most of all, they let economic policies off the hook when attributing blame – and this is massively
important because then the possibility of alternative strategies that would not result in the same
outcomes are simply not considered.
In an important new book, Failed: What the "experts" got wrong about the global economy
(Oxford University Press, New York 2015), Mark Weisbrot calls this bluff effectively and comprehensively.
He points out that "Behind almost every prolonged economic malfeasance there is some combination
of outworn bad ideas, incompetence and the malign influence of powerful special interests."
(page 2) Unfortunately, such nightmares are prolonged and even repeated in other places, because
even if the lessons from one catastrophe are learned, they are typically not learned – or at least
not taken to heart – by "the people who call the shots".
The costs of this failure are indeed huge for the citizenry: for workers who face joblessness
or very fragile insecure employment at low wages; for families whose access to essential goods and
social services is reduced; for farmers and other small producers who find their activities are simply
not financially viable; for those thrown by crisis and instability into poverty or facing greater
hunger; for almost everyone in the society when their lives become more insecure in various ways.
Many millions of lives across the world have been ruined because of the active implementation of
completely wrong and unnecessary economic policies. Yet, because the blame is not apportioned where
it is due, those who are culpable for this not only get away with it, but are able to continue to
impose their power and their expertise on economic policies and on governing institutions. For them,
there is no price to be paid for failure.
Weisbrot illustrates this with the telling example of the still unfolding economic tragedy in
the eurozone. He describes the design flaws in the monetary union that meant that the European Central
Bank (ECB) did not behave like a real central bank to all the member countries, because when the
crisis broke in 2009-10 it did not behave as a lender of last resort to the countries in the European
periphery that faced payment difficulties. Instead the most draconian austerity measures were imposed
on these countries, which simply drove these countries further into economic decline and made their
debt burdens even more burdensome and unpayable.
It took two years of this, at a point when the crisis threatened to engulf the entire EU and force
the monetary union to collapse, for the ECB Governor Mario Draghi to promise to "do whatever it takes
to save the euro". And then, when the financial bleeding was stemmed, it became glaringly evident
that the European authorities, and the ECB, could have intervened much earlier to reduce the damage
in the eurozone periphery, through monetary and fiscal policies. In countries with their own central
banks, like the US and the UK, such policies were indeed undertaken, which is why the recovery also
came sooner and with less pain than still persists in parts of Europe.
Why could this not have been done earlier? Why were the early attempts at restructuring Greek
debt not more realistic so as to reduce the debt levels to those that could feasibly be repaid by
that country? Why was each attempt to solve the problem so tardy, niggardly and half-hearted that
the problem progressively got worse and even destroyed the very fabric of social life in the affected
countries? Why was the entire burden of adjustment forced upon hapless citizens, with no punishment
for or even minor pain felt by the financial agents who had helped to create the imbalances that
resulted in the crisis?
Weisbrot notes that this entire episode "should have been a historic lesson about the importance
of national and democratic control over macroeconomic policy – or at the very least, not ceding such
power to the wrong people and institutions". (page 4) Unfortunately, the opposite seems to be the
case, with the lessons being drawn by the media and others still very much in terms of blaming the
victim. Indeed, Weisbrot makes an even stronger point, that this crisis was used by vested interests
(including those in the IMF) to force governments in these countries to implement economic and social
reforms that would otherwise be unacceptable to their electorates.
The significance of vested interests – finance and large capital in particular – in pushing
economies to the edge to force neo-liberal reforms that operate to their favour, has been noted in
many countries before, especially developing countries facing IMF conditionalities. The standard
requirements: fiscal consolidation led by budget cuts in pensions, health and social spending; reductions
in public employment; making labour markets more "flexible" by effectively reducing labour protection;
cutting subsidies that benefit the poor like food subsidies while providing more tax cuts and other
fiscal incentives to the rich, etc.
Weisbrot notes that such policies are neither necessary to emerge from a crisis (in fact in most
cases they are counterproductive) nor are they conducive to long term development. He provides concrete
examples of countries that did things very differently, and were successful as a result. The most
important such example he provides is that of China, a country that systematically followed a state-led
heterodox strategy for industrialisation, with the state controlling the banking system and a huge
role for state-owned enterprises. The unorthodox policies it followed brought about the fastest growth
in history, lifted hundreds of millions of Chinese people out of poverty and also pulled along other
developing countries because of its rapidly growing demand for imports.
Weisbrot identifies other successful examples of heterodox policies that helped countries to emerge
from crisis and improve living standards for their people, such as Argentina in the mid 2000s and
a range of other explicitly progressive governments in Latin American countries that followed alternative
approaches to increase wage incomes and formal employment through active state intervention. One
important reason they were able to implement unorthodox economic policies was the relative decline
in the power of the International Monetary Fund (IMF) in this period. Weisbrot argues that the IMF
began to lose influence in the wake of the Asian crisis of 1998, when it so clearly got both its
assessment of the problem and its proposed solutions completely wrong. The geopolitical and economic
changes that this loss of IMF influence enabled were hugely beneficial for the citizenry in these
countries – and point to the huge costs still being paid by those forced to live under neoliberal
economic orthodoxy.
Weisbrot ends his book on a positive note (other than for the eurozone, where he forecasts continued
pain for the near future). He believes that "in the developing world, economic policy and the rate
of increase of living standards are likely to show improvement in the foreseeable future". (page
236) This is largely because of his belief that the existing multilateral arrangements and institutions
that forced orthodox policies upon developing countries will continue to decline, and they will have
freedom and ability to pursue heterodox policies that served them well in the recent past.
Unfortunately, this belief now seems over-optimistic. In the past year we have witnessed "emerging
markets" in retreat as global finance has pulled out of them, and the reinforcement of institutions
and arrangements (in trade and investment treaties and other financial agencies) designed to dramatically
reduce the autonomy of national policy making. We are seeing political changes in several countries
that suggest a renewed dominance of neoliberal market-driven economic approaches that privilege the
interests of large capital. And even in China, there are signs of confusion, as the growth process
runs out of steam, with recent moves towards more financial liberalisation that could have huge implications
in terms of future viability of independent economic strategies.
This is somewhat depressing, but it makes Weisbrot's main argument even more important and compelling.
The standard economic policy model fails, and the costs of such failure are huge – so it is critically
important for more people across the world to be aware of them and to demand that their governments
opt for more democratic and just economic strategies.
"In countries with their own central banks, like the US and the UK, such policies were indeed
undertaken, which is why the recovery also came sooner and with less pain than still persists
in parts of Europe."
The peoples of the US and the UK do not seem to be enjoying our respective "recoveries" very
much.
Good points, we should be given a chance to "throw the bums out" on economic policy, too. Unfortunately,
the move toward independent central banks in the last several decades has given us LESS, not MORE
democratic control over policy. I'd rather see the Fed held accountable to some kind of democratic
control, whether through Congress or some other means.
Direct elections of FOMC members? Board of Governors? Not sure I like the idea, but can't be
that bad, can it?
No Paulson/Congress approval bank bailout would have been a start. Congress passing real bank
reform after the dust settled would have been some nice follow up. Then the Fed telling Congress
that interest rate policy by itself won't adequately fix all our ills(and eventually blow more
bubbles) would have been some nice counterpoint going the other direction.
Changing the structure of the system won't help when the entire system gets captured.
It seems if my memory serves me, in around April of 2009 the rules of the game for the
banks in the US were changed; i.e., all those "investments" that became trash (bad mortgages etc.)
they had on their "books" could be re-classified and held, "off the books" for the duration….as
long as it would take to recover their investments…..which could take decades….
At that time, around April 2009, the "market" made a turnaround and "climbed" back into the
stratosphere…..
Anybody else remember this episode?
"... It should never be forgotten that the conservative orthodoxy -- of low taxes on the wealthiest, deregulation of finance, small govt deficits, and the need for inequality to spur individual initiative -- was also economics departments orthodoxy for decades. Economists put their imprimatur on this whole mess, with VERY few exceptions. ..."
"... 70% of the population STILL believes that federal deficits are a big problem, and also believes that this is standard economic orthodoxy. Until the crash, most people were ready to accept some degree of privatization of Social Security, and Martin Feldstein pushed on this repeatedly with no counterargument from the economics departments. The Clinton economic team was instrumental in pushing financial deregulation, upon the supposed orthodoxy that it is good for the economy. Even the worst nonsense in Friedmans Capitalism and Freedom and Free to Choose barely saw any push-back from other economists in the op-ed pages. ..."
"... Reaganomics was approved by most economists either through mood affiliation or intellectual incompetence. That 70% currently includes college graduates who took economics classes and traders on Wall Street. ..."
"... Nonsense. Polls of profession economists opinions abound. Reaganomics/neoliberalism has predominated in economics until recently. On a few big issues (notably, on whether the size of federal deficits as % of GDP should be reduced) the split remained even. ..."
It should never be forgotten that the "conservative orthodoxy" -- of low taxes on the wealthiest,
deregulation of finance, small gov't deficits, and the need for inequality to spur individual
initiative -- was also "economics departments orthodoxy" for decades. Economists put their imprimatur
on this whole mess, with VERY few exceptions.
It's been a first-rate intellectual scandal, perpetrated by some of the biggest names in the
economics racket, and with most of the lesser lights tagging along, for fear of ostracism.
And most of them STILL don't have a clear view of what the real problems are.
70% of the population STILL believes that federal deficits are a big problem, and also believes
that this is standard economic orthodoxy. Until the crash, most people were ready to accept some
degree of privatization of Social Security, and Martin Feldstein pushed on this repeatedly with
no counterargument from the economics departments. The Clinton economic team was instrumental
in pushing financial deregulation, upon the supposed orthodoxy that it is good for the economy.
Even the worst nonsense in Friedman's "Capitalism and Freedom" and "Free to Choose" barely saw
any push-back from other economists in the op-ed pages.
"Conservative orthodoxy" can be laid squarely at the feet of the economics departments, up
until the crash. If the ones who are supposed to know better, don't make a concerted effort to
refute the tons of nonsense spouted in the name of economics, then they should resign their tenure.
It most certainly WAS taken as the orthodoxy. Reaganomics was approved by most economists
either through mood affiliation or intellectual incompetence. That 70% currently includes college
graduates who took economics classes and traders on Wall Street.
"Reaganomics was approved by most economists either through mood affiliation or intellectual incompetence."
Not even remotely true. Criticized by liberal economists. Blasted by the conservative economists
who refused to work for the Reagan White House. Even blasted by a young Greg Mankiw but that is
before he drank the Bush Kool Aid.
Lee - your claim here is just wrong. And the more you defend it, the worse it gets.
Nonsense. Polls of profession economists' opinions abound. Reaganomics/neoliberalism has predominated
in economics until recently. On a few big issues (notably, on whether the size of federal deficits
as % of GDP should be reduced) the split remained even.
(1992 -- responses from 464 US economists):
"A large federal budget deficit has an adverse
effect on the economy" 78.7% agree (includes 'agree with provisos').
"The money supply is a more important target that interest rates for monetary policy" 56.7%
agree.
"As the USSR moves toward a market economy. a rapid and total reform (i.e., "going cold turkey")
would result in a better outcome than a slow transition" 57.6% agree.
"A minimum wage increases unemployment among young and unskilled workers" 78.9% agree.
"An economy in short-run equilibrium at a real GNP below potential GNP has a self-correcting
mechanism that will eventually return it to potential GNP" 50.8% agree.
"Changes in aggregate demand affect real GNP in the short run but not in the long run" 52.8%
agree.
"Lower marginal income tax rates reduce leisure and increase work effort" 55.4% agree. (Alston
et al., "is there a global economic consensus?" AEA Papers and Proceedings, 1992)
ObamaCare is, of course, a
neoliberal "market-based" "solution." ObamaCare's intellectual foundations were expressed most
clearly in layperson's language by none other than the greatest orator of our time, Obama, himself
(
2013 ):
If you don't have health insurance, then starting on October 1st, private plans will actually
compete for your business, and you'll be able to comparison-shop online.There will be a marketplace
online, just like you'd buy a flat-screen TV or plane tickets or anything else you're doing online,
and you'll be able to buy an insurance package that fits your budget and is right for you.
Let's leave aside the possibility that private plans are
phishing for your business, by exploiting informational asymmetries, rather than "competing"
for it. Obama gives an operational definition of a functioning market that assumes two things: (1)
That health insurance, as a product, is like flat-screen TVs, and (2) as when buying flat-screen
TVs, people will comparison shop for health insurance, and that will drive health insurers to compete
to satisfy them. As it turns out, scholars have been studying both assumptions, and both assumptions
are false. "The dog won't eat the dog food," as marketers say. This will be a short post; we've already
seen that the first assumption is false - only 20%-ers who have their insurance purchased for them
by an institution could be so foolish as to make it - and a new study shows that the second assumption
is false, as well.
ObamaCare's Product Is Not Like a Flat-Screen TV
Here's the key assumptoin that Obama (and most economists) make about heatlth insurance: That
it's a commodity, like flat screen TVs, or airline tickets, and that therefore , there exists
a "a product that suits your budget and is right for you" because markets. Unfortunately, experience
backed up by studies has shown that this is not true. From ObamaCare is a Bad Deal (for Many)
. From Mark Pauly, Adam Leive, Scott Harrington, all of the Wharton School,
NBER Working Paper No. 21565 (
quoted at NC in October 2015 ):
This paper estimates the change in net (of subsidy) financial burden ("the price of responsibility")
and in welfare that would be experienced by a large nationally representative sample of the "non-poor"
uninsured if they were to purchase Silver or Bronze plans on the ACA exchanges. The sample is
the set of full-year uninsured persons represented in the Current Population Survey for the pre-ACA
period with incomes above 138 percent of the federal poverty level. The estimated change in financial
burden compares out-of-pocket payments by income stratum in the pre-ACA period with the sum of
premiums (net of subsidy) and expected cost sharing (net of subsidy) for benchmark Silver and
Bronze plans, under various assumptions about the extent of increased spending associated with
obtaining coverage. In addition to changes in the financial burden, our welfare estimates incorporate
the value of additional care consumed and the change in risk premiums for changes in exposure
to out-of-pocket payments associated with coverage, under various assumptions about risk aversion.
We find that the average financial burden will increase for all income levels once insured. Subsidy-eligible
persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements
that offset the higher financial burden, depending on assumptions about risk aversion and the
value of additional consumption of medical care. However, even under the most optimistic
assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience
both higher financial burden and lower estimated welfare ; indicating a positive "price
of responsibility" for complying with the individual mandate. The percentage of the sample with
estimated welfare increases is close to matching observed take-up rates by the previously uninsured
in the exchanges.
So, for approximately half the "formerly uninsured," ObamaCare is a losing proposition; I don't
know what an analogy for flat-screen TVs is; maybe having to send the manufacturer money every time
you turn it on, in addition to the money you paid to buy it? That's most definitely not a "package
that fits your budget and is right for you," unless you're a masochist or a phool. Second, the portion
of those eligible that does the math probably won't buy the product if they're rational actors (and
Obamaare needs to double its penetration of the eligible to avoid a death spiral ). That again
is not like the market for flat-screen TVs; the magic of the ObamaCare marketplace has not
operated to produce a product at every price point (or a substitute).[1] Bad marketplace! Bad!
Bad!
Health Care "Consumers" Tend not to Comparison Shop
We turn now to a second NBER study that places even more dynamite at ObamaCare's foundations.
From Zarek C. Brot-Goldberg, Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad, of Berkelely
and Harvard, "What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities,
and Spending Dynamics" NBER Working Paper
No. 21632 ( PDF ), the abstract:
Measuring consumer responsiveness to medical care prices is a central issue in health economics
and a key ingredient in the optimal design and regulation of health insurance markets. We study
consumer responsiveness to medical care prices, leveraging a natural experiment that occurred
at a large self-insured firm which required all of its employees to switch from an insurance plan
that provided free health care to a non-linear, high deductible plan[2]. The switch caused a spending
reduction between 11.79%-13.80% of total firm-wide health spending. We decompose this spending
reduction into the components of (i) consumer price shopping (ii) quantity reductions and (iii)
quantity substitutions, finding that spending reductions are entirely due to outright reductions
in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible
coverage. Consumers reduce quantities across the spectrum of health care services, including
potentially valuable care (e.g. preventive services) and potentially wasteful care (e.g. imaging
services). We then leverage the unique data environment to study how consumers respond to the
complex structure of the high-deductible contract. We find that consumers respond heavily to spot
prices at the time of care, and reduce their spending by 42% when under the deductible, conditional
on their true expected end-of-year shadow price and their prior year end-of-year marginal price.
In the first-year post plan change, 90% of all spending reductions occur in months that consumers
began under the deductible, with 49% of all reductions coming for the ex ante sickest half of
consumers under the deductible, despite the fact that these consumers have quite low shadow prices.
There is no evidence of learning to respond to the true shadow price in the second
year post-switch.
So, empirically, these "consumers" just don't act the way that good neoliberal Obama says they
should; they do not comparison shop. That alone is enough to undermine the intellectual
basis of ObamaCare. If there's no comparison shopping going on, there's no competitive pressure for
health insurers to improve their product (assuming good faith, which I don't).
(We can leave aside the issue of motivation, but to speculate, I've found that when I talk to
people about health care and health insurance; they're very defensive and proprietary about
whatever random solution they've been able to cobble together; and if you'd been sold an exploding
flat-screen TV, and had somehow been able to use duct tape and a well-timed fist to the housing to
get it work, most of the time, wouldn't you be rather unwilling to go back to the same store and
buy another? So there is evidence of "learning"; the lesson learned is once you've got something
that seems to works, don't on any account change it, and we "bear those ills we have," rather "than
fly to others that we know not of.")
Moreover, the population studied has more ability to comparison shop than ObamaCare's. From
page 4 of the study :
Employees at the firm [in the study] are relatively high income ( median income $125,000-$150,000
), an important fact to keep in mind when interpreting our analysis
The top income for a family of four eligible for ObamaCare is around $95K (and not eligible for
subsidy). Do people think this ObamaCare-eligible population has more ability to comparison shop,
compared to a population with a $125K median income for individuals, or less ability? To put this
more tendentiously, if a population that can afford accountants or at least financial planners doesn't
comparison shop, how likely is it that a population that cannot afford those personal services will
do so?
Even worse, the population studied reduces costs, not by comparison shopping, but by self-denial
of care. From page 6 of the study
:
In our setting consumers were provided a comprehensive price shopping tool that allowed them
to search for doctors providing particular services by price as well as other features (e.g. location).
So, just like the ObamaCare "marketplace online" front end (at least after they got it working).
And what happened?
We find no evidence of price shopping in the first year post switch . The effect
is near zero and looks similar for the t -1 - t 0 year pair (moving from
pre- to post-change) as it does for earlier year pairs from t 4 to t 1 .
Second, we find no evidence of an increase in price shopping in the second year post-switch; consumers
are not learning to shop based on price. Third, we find that essentially all spending reductions
between t 1 and t 0 are achieved through outright quantity reductions
whereby consumers receive less medical care . From t 1 to t 0 consumers
reduce service quantities by 17.9%. Fourth, there is limited evidence that consumers substitute
across types of procedures (substitution leads to a 2.2% spending reduction from t 1
- t 0 ). Finally, fifth, we find that these quantity reductions persist in the
second-year post switch, as the increase in quantities between t 0 and t 1
is only 0.7%, much lower than the pre-period trend in quantity growth. These results occur
in the context of consistent (and low) provider price changes over the whole sample period.
Now, it could be that the study population is reducing items like cosmetic surgery and not items
like dental care (assuming they've got dental); the
Healthcare Economist summary of this study says no. In fact, says the study, some of the foregone
services were "likely of high value in terms of health and potential to avoid future costs." And
it could be that the lower-income ObamaCare-eligible are smarter shoppers (dubious: Shopping is a
tax on time a lot of working people can't pay). That said, it looks like ObamaCare has replaced a
system where insurance companies deny people needed care with a system where people deny themselves
needed care; which is genius, in a way. However, if any doctors or medical personnel continue
to support ObamaCare politically, they should consider closely whether they're violating the principle
of non-maleficence - "First,
do no harm" - and halt their support, if so. Bad marketplace! Bad, bad!
Conclusion
Shopping for health insurance under ObamaCare is nothing at all like shopping for a flat-screen
TV. First, there's a sizeable population who, if they are rational actors, just won't buy health
insurance at all; the ObamaCare "marketplace" is not capable of adjusting prices to get such "consumers"
to enter the market. Second, people don't comparison shop; they reduce needed care. (To flog the
flat-screen TV metaphor even further, if the screen is so defective it's painful to watch, people
don't reduce the pain by comparison shopping for a better TV; they reduce the pain by watching less,
and keep the TV they have.)
So, with ObamaCare, and thanks to the dogmas of neoliberalism, we have a "marketplace" that repels
"consumers" from entering it, and repels people from shopping if they do enter. Perhaps there's a
better solution out there?
NOTES
[1] It may be that the ever-increasing mandate penalties will force enough people into the marketplace
to make ObamaCare
actuarially stable ; needless to say, we don't see Federal agents forcing people into Best Buy
to buy TVs, although the social pressure of Black Friday comes close.
[2] Again, much like ObamaCare plans, which are increasingly high-deductible.
About Lambert Strether
Lambert Strether has been blogging, managing online communities, and doing system administration
24/7 since 2003, in Drupal and WordPress. Besides political economy and the political scene, he blogs
about rhetoric, software engineering, permaculture, history, literature, local politics, international
travel, food, and fixing stuff around the house. The nom de plume "Lambert Strether" comes from Henry
James's The Ambassadors: "Live all you can. It's a mistake not to." You can follow him on Twitter
at @lambertstrether. http://www.correntewire.com
The author seems to have forgotten that the kludge called "Obamacare" is not the single payer
solution that this Obama wanted. What you have is what was able to get past a Congress after intense
lobbying by HMOs and insurers. I see little evidence of ideology in the result, "neoliberal" or
otherwise. It does nothing to address the insane-and-rising cost of healthcare, because the vested
interests are OK with that.
Let me clue you in: the readers here are way WAY too clued in to buy your Big Lie.
1. Obama was never in favor of single payer, ever. Wash your mouth out for even suggesting
that
2. He had health care lobbyists draft the legislation
3. He used the "public option" as a bright shiny toy. He was so uncommitted to it he didn't
even trade it away. He gave it up as a free concession. A basic principle in negotiating is you
NEVER make a free concession. The fact that he just threw it away is proof he never meant it as
anything more than a talking point
I hope you are paid to dispense this blather. I really feel sorry for you if you actually believe
it. Obama is a neoliberal who campaigned as a leftist but has governed as a right-winger. His
apologists have regularly used the meanie Republicans as excuses for his selllouts, when Obama
gets what he wants when he wants it, and there's no evidence that his center-right results are
at all at odds with what he intended to achieve.
I won't pretend to be as smart as you and I was doing okay with your comments until the following.
"Obama is a neoliberal who campaigned as a leftist but has governed as a right-winger." You're
kidding? I won't ask for an example because I am sure there are a few issues you can name and
discuss. That being said, Obama is no where near the middle, never mind the right. If anything,
I would say Obama is an inexperience professor trying to teach Economics at Wharton….he can't.
The problem is Obama is too narcissitc to even think about listening. He has constantly picked
situations because it is what he believes and that includes the simple things such as inviting
the Harvard professor who was arrested early on in his presidency for a beer to the WH to giving
how many millions to Solyndra. He can't be wrong!
As far as Obamacare. To me it is a simple issue. Health Care does not equal Health Insurance.
The sad part is we have spent billions in what will eventually end up as quasi single payer system
with 4 large insurance companies sharing the administrative function. Let's just get there and
quit kidding one another.
Huh? Obama has proven to be an extremely skilled political infighter when he wants something
done. And as to him being center-right, all you have to do is look at his staff, most important
his economics team.
He's got a history of being a fake leftist going back to his days in Chicago. Obama, Michelle,
and Valerie Jarrett were the black faces that legitimated the plan by the Pritzkers and local
finance interests to gentrify near South Chicago and push the black community 3 miles further
south while giving them nothing. See here for details:
And he's never been a real prof. This constitutional law talk is a crock. No one can remember
him teaching any courses (he appears to have taught a couple but made no impression). This was
a resume-burnishing post and he did the bare minimum.
Beg to slightly differ regarding Obama and single payer (if the transcripts of his campaign
rally speech in Jersey City before he was nominated hadn't been scrubbed from the Internet, I'd
have the exact wording).
After he had had told the story of sitting with his dying mother on her death bed, surrounded
by paperwork, trying to sort out the restrictions of her employer-based insurance policy and there
wasn't a dry eye in the gymnasium, everyone THOUGHT he said, "When I am President, I will fight
tooth and nail for single payer for every single American."
And the gymnasium absolutely erupted in applause.
Apparently, he said something very CLOSE to that, but when the sentence is carefully parsed,
did not mean that all.
Nevertheless, as a former Obot who worked tirelessly to get him elected on almost the sole
basis of the genuine emotion he exhibited when he told this awful story and how he promised to
rectify the situation in the future, I felt the dagger of betrayal when the first thing he said
during the health care debate was, "I'm taking single payer of the table."
I hate to say this, but a lot of us at Corrente did try to keep track in 2008, and I can't
remember any reporting on this at the time, and we were also strongly for single payer, which
we also kept track of. Not to say that we couldn't have missed something, but a link to something
contemporaneous would be helpful.
I know that I've said this on NC before, but Yves is absolutely right - and THEN some. When
Dennis Kucinich tried to introduce EVEN A DISCUSSION of single payer in Congress, the Democratic
Party leadership blocked him from even bringing it up. Pelosi et al. were absolutely committed
to the Republican neoliberal policy.
This led us to discuss whether the only way to get progressive health care policy was to start
a new party, now that the Democrats have become the Wall Street wing of the Republican Party's
natural resource monopolists.
I don't know the date of this speech (the upload predates the 2010 debacle), but Obama stated,
"I happen to be a proponent of single payer health care…"
That said, we got hosed. Each of us must now decide whether to roll over and take the corn,
or, to demand single payer and the re-regulation of industry (the pharmaceutical industry and
others that affect health tangentially).
I've not been able to resolve the technical reason behind my missing links. You'll find the
53 second clip on youtube channel 6y2o12la titled: Obama on single payer health insurance.
"the single payer solution that this Obama wanted"
Obama kept single payer off the table from the start. He would have had to decide to fight
the industry and take the fight to the country. Medicare for All is a simple idea. He could have
done a 50 state whistle stop tour. He could have saturated any Congressional district opposing
Medicare for All with the same message. That wasn't his plan.
I attended one of his community meetings on health care, held around the country prior to him
adopting Romney Care as his proposal. One of the organizers of the meeting starts off by complaining
to the group about not just telling Obama we want single payer.
One of the first things Obama did was make the GOP party point men on health care(Olympia Snowe
anyone?)
And it was Nancy Pelosi who called it impractical and took it off the table, heck she even
went so far as to have some of the activists committed to being heard arrested for being disruptive.
She then promptly gave a minority Blue Dog group the opportunity to co opt the debate to grandstand
on abortion.
It's positively revisionism to blame the health care mess on GOP. It was Democrats who screwed
it up from start to finish.
"Obama wanted'? Single payer was ruled out from the beginning. Advocates for that position
were not permitted to be part of the discussion. Who knows what Obama wanted? Look at his actions
on this and other issues to make a better judgment. My take is that it was a presidency of symbolism
not substance when it came to policies.
I appreciate that such takedowns are always link-filled and impeccably sourced, and though
combativeness in the comments is not the prevailing tone of this website (happily), damn if I
don't pump my fist when I read a troll getting cut down thusly.
Maybe you're not an incredibly lame troll. Maybe you're just a poor beginner who unwittingly
wandered onto the Varsity field. But if you "see little evidence of ideology in the result," you
may want to look up the definitions of "evidence," "ideology" and "result."
Educated elites with a modicum of leisure always love to play these games. It took them decades
and the most draconian policies imaginable to break the habit of workers early in the industrial
revolution of trading off pay for leisure time. The basic notion of every capitalist scold throughout
the ages has been that this is irrational laziness, even if your job is a physically exhausting
and soul-crushing exercise–you must work more, or you are a bad person who should be punished.
Now, it's the "let's turn everything into a market" game. Don't want to play? Screw you–we'll
make it mandatory, and, of course, punitive. This goes way beyond Obamacare into every facet of
our lives. Public utilities? Hell no–give them "choice"! Community schools? No way–can't have
the races and the classes and the ability levels mixing in such a promiscuous manner–let's go
charter "academies", or vouchers. It's a normative takeover under the guise of "rational" "scientific"
"efficiency".
So true. Ask them about their golf game. It is only YOUR leisure time at issue, not theirs.
Don't you wish you could count as "work" blathering your stream of conciousness on CNBC day after
day?
I remember that one of the 'talking points' in favour of Heritage Foundation Care (HFC) was
that "pre-existing" conditions were not to be allowed to deny anyone coverage. Using that logic,
it can be asserted that 'Poverty', absolute or relative, a pre-existing condition if there ever
was one, denies 'patients' useful medical care. The system as administered is internally contradictory.
Taken one step farther, the HFC can be defined as a "Faith Based Service Provider." This would
be an insult to actual traditional Faith based providers. Most "real" FBPs are governed, at least
in theory, by ideologies that counsel 'compassion' when dealing with the less fortunate. As has
been demonstrated, the HFC program counsels exploitation when dealing with the less fortunate.
A case in point; this week a local religious charity opened a 'Free Clinic' in our town of 45,000
or so souls. The local paper put this on the front page. Buried in the body of the article was
the mention that this clinic was fully booked up for the first, and probably second month. All
this before public mention of it's existence. There's your 'Marketplace' in action. As I discovered
when I looked into signing up for the Mississippi Medicaid program for myself, a family cannot
have over 2,500 USD in 'assets.' There is an ongoing dispute as to whether or not an automobile
classifies as an item counted toward this limit. Thus, those in our state who do qualify for Medicaid
are poor indeed.
Using that logic, it can be asserted that 'Poverty', absolute or relative, a pre-existing
condition if there ever was one
Great point. In the US we have a health care system that saves people's lives while–in many
cases–taking away their means of living it. The Hippocratic Oath should be modified to read: first
do no harm to Capitalism.
Obama is a 1060s style communist;==perhaps one could call him a "NeoCommunist" Obamacare is
anything but "Neoliberal" –it is redistributionist in its very nature. This is why it is crumbling.
It is an absurd notion as is this article, but that is to be expected as you cannot seem to get
over this adolescent attachment to Marxism.
Yes, it is an intriguing suggestion. Does commenter thatworddoesnotmeanthat care to
elaborate? Were the architects of RomneyCare (and it's national extension Obamacare) attempting
to recreate a golden age, of 11th century free peasants– happily enjoying the abundant commons
of medical care, in the carefree forests and dales, before they slipped under the Norman Yoke
of feudal exploitation?
Or, is the reference to some non-Western communist society that flourished in the mid-11th
century? Perhaps thatworddoesnotmeanthat has studied early communist cultures in South Asia, America,
or Africa that distributed healthcare in a way that eerily foreshadows what Romneycare did in
Massachusetts?
The record is irrefutable–the ACA was written by the insurance companies with a wink and a
nod to Big Pharma and the HMOs. Unless you are going to seriously entertain the notion that these
are "communist" institutions, or give a rats ass about anything but making money, you can't really
believe what you wrote. You are just angry about something and projecting your fears onto this
travesty.
The subsidies of Obamacare, if you qualify for them, requires the IRS to get intimately involved
with your checkbook. Just like middle class folks want recipients of SNAP to be regulated with
every food and drink purchase … matching what the bourgeoisie thinks matches their own moral rectitude.
I prefer not to make the IRS my intimate partner … helping me to define what is an asset and
what is income to the last penny.
The idea behind high deductibles is that you'll force consumers to economize. It's kind of
like telling science, "Hey. This patient needs ten pills to live? Let's give him eight and see
what happens."
Medical treatment is a science issue. A treatment's either effective or it's not. You can negotiate
the cost – *with the supplier* – but you can't bully a disease or injury into behaving the way
you want. You certainly can't bully the sick person and they're in no position to negotiate with
the supplier. They have none of the necessary experience or health. That's exactly the wrong time
to try to educate someone about their "options."
But then that's the whole point. The medical market is intentionally littered with opacity.
There is nothing transparent about insurance, much less drugs or surgeries. Medicine is increasingly
dominated by complex bureaucratic cartels for exactly that reason – so you *won't* find out how
things work. They don't want you comparison shopping for drugs, surgeries, therapists. Everything
about the modern medical system is precisely about robbing "customers" of human agency.
The whole idea of shopping for health insurance itself is absurd. It requires you figuring
out exactly how sick you'll be in the next year and then inventing a time machine to travel back
so you can pick the Pareto optimal policy with exactly the best deductible – which really won't
matter because then they'll find a way to make sure your E.R. wasn't in network nor your anesthesiologist
and the only drug to keep you alive won't be "covered" and then you'll wish it was only an Arnold
Schwarzenegger skin-wearing android sent to kill you 'cause that would be way easier.
They're removing choice left and right and destroying scientific information through lobbying.
The people responsible for creating diseases aren't being held responsible for them but the victims
suffering from them are.
When multiple sclerosis organizations are run by drug companies selling $50K+ a year drugs,
do you think they want those customers finding out that deworming society is what created the
risk for M.S. in the first place?
As Martin Shkreli put it, he has the perfect "price inelastic" product. Patients are a captive
market that's easy to exploit. Either they get what they need or they die. You can charge what
you want.
Do you think lazy executives looking to bump up next quarter's earnings are going to invest
heavily over the long haul in scientific models of effective disease prevention and treatment
or are they simply going to squeeze people a little more and a little more?
Let's not forget why politicians love the sickcare complex. The more an industry turns into
a cartel, the easier it is to raise both economic and political rents from it. Let's be honest
here and call a spade a spade. Politicians like this system because it easily feeds campaign dollars
into the system. It may not be efficient for treating patients, but it's quite efficient for extracting
political re
Comparison shop for medical care in the USA? You've got to be kidding.
Case in point. My doctor recommended a cardiovascular "stress test" for diagnosis of heartburn
symptoms to make sure that it wasn't cardiovascular in nature. I traveled to a regional heart
specialist center for the test, but based upon previous experience refused to undergo the test
until they put the bill for the procedure in writing including my deductible cost. The intake
administrator acted shocked by such a request, and it took 30 minutes of increasingly strongly
worded demands on my part before they finally produced a verbal quotation – which I recorded for
future use if they decided to bill $12,000 for 10 minutes on a treadmill.
The world's most expensive health care extortion system at work.
It's nearly impossible to "comparison shop" if you're part of an HMO these days. The only choice
one really has is to select their PCP. After that the PCP pretty much forces you to see docs and
get tests within the hospital system – presumably for "coordinated care". And this for nearly
$1000/mo for a single person not receiving much in the way of "healthcare". That which can't continue,
won't….
One of the things that distinguishes the US from other countries is our high level of tax compliance.
I'm concerned that these Obamacare penalties will lead to diminished compliance, both because
people resent the penalties, and because it is such an intellectually frustrating exercise to
try and estimate future income.
More like a flat screen TV, rented from Samsung, that functions like one of those old British
hotel radiators that you have to feed with pence $60 copays every 10 minutes
in order for Time Warner not to interrupt the streaming.
And then you get balance billing from Disney for the content.
My experience is that there IS no "competition" in any product field that involves actuarial
calculations. I get a subsidy and I am 63. There were about 50 plans offered in my area. A few
were OVERpriced, yes, but the vast majority offered very similar premium prices, and identical
elephantine deductibles, which means that except for aspects of the annual physical, it will "cover"
( assuming cover means pay for) jack. "Coverage" is not care, it is nothing to brag about. I am
"covered" for expenses beyond my deductible as a form of catastrophic insurance but the plan will
never pay for anything else and actuarially, it is easy to calculate a premium that guarantees
that companies will make lotsa money while paying out less. Needless to say the "product" is outrageously
overpriced for what it covers and puts people like me _- close to medicare but limited income
and owns own house free and clear in a far far worse position than before the law. ( eg medicaid
asset recovery if I dare to state a lower income etc etc). So I'm "covered" , so what. I have
far less actual care. And that , it appears to me , is deliberate.
Even if it were "competitive" there is not much point in comparison shopping for flat screen tvs..
for a flat screen tv with X features made by brand "A" the price difference for a tv with the
same features ( and longevitiy) of brand "B: will in the vast majority of online offerings, be
so close as to not be worth the effort. This is even more true with insurance.
Like most politicians, Obama wanted to "do something" and a have a bill he could hold up in front
of Everybody and say "see this is mine". My experience with such legislators/administrators is
that they have a lot of hubris and grees for the bill to pass and do not subject potential downsides
to any critical analysis so that advisers get the message "construct something that will pass"
.The fact that he was dumb enough not to see this coming suggests that his "ideology" was driven
by his advisers- who are definitely neocons IMO not neoliberals unless the term "liberal" is used
in its classic economic sense.
And while we are on the subject, "Health care" is not really subject to "market" principles. Start
with the fact that most people in this country have less than 1K savings, which means that they
cannot cover the ginormous deductibles most "silver" plans offer or the premiums of better plans.
Then add in the fact that these people cannot predict how much care will be needed in a given
year or what the final cost of that care will be. What's the "market " for that? Under these two
facts mandatory "insurance"with high deductibles and narrow networks simply functions as a wealth
transfer from strapped lower-middle and middle class adults to Insurance company shareholders
and CEOs.
Even assuming that Obama "wanted" single payer- an assumption that has been ably refuted in this
string already, had he given "what can get passed" a moment's critical analysis, he might have
realized that he- with his insistence on change for change's sake- was making it worse for so
many Americans. I for one , could care less that pre-existing conditions are now "covered" if
I can't actually use the coverage- pre existing survives, its now called high deducitlbes and
narrow networks.
Actually, as Winston Churchill famously noted, "Americans manage do the right thing after they
have exhausted all of the wrong choices firs"t. So it is that had we gone right to single payer
without this "market based" attempt, we would have heard howls of capitalistic remorse, etc.
So I am glad that Obamacare was attempted and that it is failing predictably. It is pretty
clear to even the free marketers that high deductibles only impoverish Americans, that "skin in
the game" does not make people better shoppers for the highly technical world of medicine, that
price transparency is essentially worthless if nobody is comparison shopping while they are bleeding
out from every orifice, etc.
Medicare for All is arguably catching on. Bernie Sanders poll numbers have not taken a dive
with this promise and the sputtering Obamacare is only putting more fuel to this fire. Hillary's
tax scare attempt will turn flat on its face. People know bad value when they see it, and the
current market based health reform is failing into the predictable death spiral. View Bernie's
ascendency as evidence that the American people think health care is a right and it is time to
fund it that way.
Is the argument here that it was necessary for millions of people to suffer from lack of access
to affordable healthcare, and tens of thousands to die, to teach us a lesson, because designing,
advocating for, and rapidly deploying a simple, effective single payer system that would bring
both immediate and long-term benefits that would silence even its would-be detractors is impossible
even to imagine? This is why Democratic Party and Obama cheerleaders have no credibility anymore.
Also, while it's great that Sanders is bringing attention to this topic, it's not surprising
that people are responding favorably People have been polling in favor of a Medicare-type single
payer program for decades.
Americans have not and will not "do the right thing" on this issue because the entrenched interests
that are making money off of the current atrocity that passes for a healthcare system are too
strong to displace. Europe got single payer after WWII because the only institution in society
left with access to money was the State, so doctors and hospitals after the war were going to
sign on for socialized medicine because societies at large were destitute. Whatever the government
will pay is better than grandpa's watch (if some conquering army hadn't stolen it) or a chicken
(ditto). Until this situation comes into being here in the USA we're not going to see single payer
tax-based healthcare.
Your argument would make sense if Canada, which, like the U.S., never suffered the same WWII
devastation as Europe, hadn't managed to build a national single-payer health system.
And let's not forget the medicaid clawback provisions for those between 55-65. If you apply
for Obamacare, and your income level is below a certain threshhold, you are not eligible for subsidies.
You are placed into medicaid.
However, for those in that 55-65 age bracket, there is an estate clawback provision that effectively
acts as a lien on your estate: once you die your assets will be seized by the state to satisfy
all medicaid provided healthcare expenses.
Prior to Obamacare, in order to qualify for medicaid, not only was there an income requirement,
but your assets also had to be below a certain, very low, amount. With Obamacare however, the
asset requirement is waived for those in that age bracket.
What happens? Many who now are eligible for medicaid via Obamacare will now own a house as
their primary asset of any significance. But once enrolled, that house will be sold on the insured's
death to pay medicaid. I would assume that in states that have privatized medicaid, these sums
will also include all premiums paid by medicaid on the insured's behalf-even if no claims are
ever filed.
If that's not bad enough, under Obamacare to satisfy the law, the consumer is forced into this
by the mandate. There is no choice. Beyond that, if the insured had an income level a few dollars
higher, he/she would be eligible for subsidies which, of course, need not be paid back on the
insured's death.
Clawback provisions, though with many exceptions particularly for those under age 55 have always
been required under medicaid, but now medicaid enrollment will be required by law with actual
assets available.
In terms of the assets issue, my comment is applicable to those states that have adopted the
expanded medicaid features of Obamacare. As mentioned by a poster in Mississippi, states that
have not, still have the old rules on having virtually no assets in order to qualify.
I have seen this stated here on many occasions, over the course of the OCare debate. While
the law seems to give authorization to clawback, in my state it only seems to have been used for
nursing home and other long term care. I can state from my experience, I was never queried about
assets, and was qualified only on income. I just lost the person with whom I have shared my life
for 30 years, and her assets, went to her daughter without any claim from the state. Hers was
an expensive battle with cancer, and did rack up a pile of charges. ( In my state, Medicaid is
paying a private insurer to cover Medicaid patients). I have been reading here for a long time,
rarely posting, I tend to agree mostly with the view here, but this seems to be widely different
between states. I have no issue with Yves or Lambert on this, they have done yeoman work trying
to get to the bottom of these issues. Just felt I needed to weigh in for the sake of completeness.
Yves and Lambert you have my email if you want to discuss my experience, it is all to fresh a
wound to discuss in this public forum.
No argument that Obamacare has some serious problems. But placing ALL the blame on the President
seems excessive. Even if he had come out strongly for single payer, there are more than enough
DINOs in Congress in thrall to Health Care, Inc. to have prevented its passage. And the Republicans
would have dialed up their anti-reform propaganda to new levels of hysteria (Remember the anti-Hillarycare
saturation media campaign? I'll bet Obama does.)
When Obama was inaugurated he had more political capital in his pocket than any president in
recent memory. The repubs were on the ropes.
Sure, the repubs could have gone all out in opposition, but as another poster mentioned Obama
could have gone all out as well and blitzed the country. And in the first few months of his presidency,
my bet would have been on him more than on the repubs.
Of course he did nothing. And to say he did nothing because of fear of the repubs at that point
is silly. He empowered the repubs. He didn't even pretend.
Even if he had come out strongly for single payer…
Oh, but he didn't! If pigs had wings, perhaps they could fly? He could have, he didn't even
pretend (like he did with closing Gitmo). Oh, concerned about his legacy? No problem, $peaking
fees from insurance companies, pharmacos, $eat on bds of directors, his future will be golden!
Hello. "Leaders", elected or otherwise, sell out locals to corps = banana republic.
"All health insurance plans purchased through Covered California must cover certain services
called essential health benefits. These include doctor visits, hospital stays, emergency care,
maternity care, pediatric care, prescriptions, medical tests and mental health care. Health insurance
plans also must cover preventative care services like mammograms and colonoscopies. Health insurance
companies cannot charge copayments, coinsurance or deductibles for such services."
By taking that out of context, you've considerably overstated what Covered California covers.
Just as in the rest of the US, the "metal levels" have the same meaning. For instance:
Bronze: On average, your health plan pays 60 percent of your medical expenses, and you pay
40 percent.
This is the language from their "Essential Health Benefits" section:
Essential Health Benefits
All health insurance plans now share some common characteristics. The Affordable Care Act
requires that all health insurance plans offered in the individual and small-group markets
must provide a comprehensive package of items and services, known as essential health benefits.
These benefits fit into the following 10 categories:
Ambulatory patient services.
Emergency services.
Hospitalization.
Maternity and newborn care.
Mental health and substance use disorder services, including behavioral health treatment.
Prescription drugs. For more information about prescription drug benefits, visit the page Prescription
Drugs.
Rehabilitative and habilitative services and devices.
Laboratory services.
Preventive and wellness services and chronic disease management. For more information about
preventive services with no cost sharing, click here.
Pediatric services, including dental and vision care. Dental insurance for children will be
included in the price of all health plans purchased in the exchange for 2015.
The requirement for insurance plans to offer essential health benefits is just one of many
changes in health coverage that began in 2014.
So this is just ACA boilerplate. I do recall reading that Covered CA does require some services
be provided irrespective of the deductibles (beyond the ACA-mandated preventive care items like
mammograms, which separately are a bad test), but after 10 minutes of poking around the Covered
CA site and other Googling, I can't find any evidence of what those other services might be. I
thought it was at least a doctor visit or two, but I can't even find that.
And 75% of Covered CA plans have narrow networks, compared to 41% for the US as a whole, which
among other things means you might not be able to get a specialist you need:
Obama NEVER tried one iota to go for Single Payer. Nada, Zip, Nothing.
Ergo, I place ALL the blame on Obama. IF he had tried even a teeny tiny bit, I could perhaps
place some blame elsewhere. But factual reality refutes that.
I also do recall the POTUS taking Dennis Kucinich up in Air Force One, and when they landed,
suddenly Kucinich had changed his mind and was (reluctantly in my viewpoint) giving an thumbs
up on ObamaCare. Kucinich was the longest hold out advocating for Single Payer. Obama basically
took him to school and forced him in some way to STFU and say Obamacare was the best.
Baloney. Obama sold us all to BigInsurance, BigPharma, BigHospital, BigMedDevice, and I'm sure
he was handsomely rewarded.
This one, imo, is all on Obama. It was what he wanted, and it's what he now touts as being
this very great thing, which it's not.
No amount of dem. or repb. BS will ever persuade me to participate in national politics again.
obamas handling of the ongoing financial and health care crisis finished it for me.
It's so clear to me where were at. The corruption is sickining. EVERY DAY the stories. I keep
thinking…."all the kings horses and all the kings men couldn't put Humpty back together again."
Read The Archdruid Report for some insight. Everybody wakes up sooner or later.
In this life or the next
Yes, definitely better to give up without a fight. Have you noticed that in spite of what is
essentially a media blackout Bernie is likely leading in the polls? As to your opening statement
"No argument that Obamacare has some serious problems" you admit to ACA shortcomings, maybe you
would like to offer up some of what you see as good aspects of the ACA? Further, "there are more
than enough DINOs in Congress in thrall to Health Care, Inc. to have prevented its passage. "
there was and is a DINO in the oval office "in thrall to Health Care, Inc." who made no other
option impossible. So much for the vaunted "free market" The ACA was designed and implemented
as socialism for the 20% (h/t Lambert and others who have noted the upper class and their minions
occupy the top quintile) whose medical care was getting too expensive, and whose medical (device,
pharma patents, and insurance co.) investments were not being supported by demand, so the ACA
created demand for them. Medicare for all, and get rid of the clawbacks, I personally would rather
chromex's heirs get his assets rather than Blackstone, thank you.
I notice that Crude Earl is tempting $30 and copper is at $1.96/lb, looks like some demand
problems there, as well. Maybe we should mandate that everyone must purchase gasoline even if
they don't have a car, and mandate that pennies will once again be made of copper? ka-ching!
You jest, but in many late medieval and early modern Italian city-states there were ruthlessly
enforced minimum consumption levels for salt. Prior to refrigeration salt was more of a food preservation
necessity, but the huge consumption taxes placed on salt made them a fiscal necessity as well.
Our word salary derives from the fact that so many government officials were paid from
the revenues collected through salt taxes.
The much-hated gabelle in pre-Revolutionary France was a salt tax!
I doubt you're really interested in a discussion, but here are a few very good things about
Obamacare:
1. Elimination of pre-existing conditions as a reason for being refused coverage
2. Requirement that insurers spend at least 80% of their revenue actually paying benefits
3. Preventive care must be free
4. Expansion of Medicaid (where permitted by states) brings coverage to millions of previously
uninsured
5. Standardization of plans makes is possible (if not easy) to compare them
And this is my opinion, but I don't think it would have been possible to get Medicare for All
through Congress, even with Democrats nominally in control, for the reasons already stated.
Anyway, my whole point is that Obama doesn't deserve ALL the blame. Are you arguing that the
public and Congress were ready and willing to enact single-payer, and Obama somehow prevented
it?
1. Pre-existing condition with the caveat that you must live in an area served by a medical
establishment that specializes in your possibly rare illness.
2. 80% Yay! It's almost like Christmas! …. Cold comfort to those who must cough up $10,000
or more before getting any benefit from trom their policy at all.
3. Preventative care must be free. OK. So the $10,000 get's them a colonoscopy and a glucose
meter.
4. Expanded Medicaid … In the states where it happened, anyone over 55 years old subject to
an undisclosed clawback of benefits from estates. Wow.
5. I cannot imagine how you come up with the comparison justification. People have to sign
up for plans without final commitments of which doctors or hospitals are included. And even then
they are subject to change!
"Democrats nominally in control" … This is a pure deception. They had overwhelming majorities
and wildly popular President. Do you seriously think that if faced with Obama's shaking finger
and an enticing promise, that any Democrat would have defied him during those first 100 days.
I laugh at the thought. He could ave gotten Expanded Medicare for All passed in those first 100
days with one hand tied behind his back.
Thanks for responding. Yes it's good that pre-existing conditions no longer can be refused
coverage,but one still needs to be able to afford coverage, so not being refused is not the same
as receiving care, no? Your second point also has some merit as it appears intended to contain
profiteering, but as one can see from martin shrkeli there's nothing stopping the greater healthcare
marketplace from increasing costs, so the 80% becomes ambiguously beneficial. I did not know preventative
care is free, but if that means as implied by another comment colonoscopies and other rather invasive
procedures that might be seen as a cash cow with once again ambiguous benefits to consumers, really
they are actually insureds, not consumers, as the prices are beyond peoples ability to pay, only
insurers can ably do that, so the consumer is consuming insurance not care, I'm arguing for a
gov't insurance and appreciate your opinion that it couldn't have been pulled off, as I think
you are aware that my opinion is that they not only didn't try, indeed the executive branch stood
between private sector healthcare industries and reform in the same way it stood between the banksters
and those pitchfork wielding crazy people. Whatever your feelings about all that saving the economy
stuff, it was largely and in many aspects a giveaway to people who were on the brink of disaster,
a little more give and take would have been appropriate and the hope and change mandate provided
the executive with considerable clout. Also, the medicaid expansion is a wolf in sheep's clothing
as the clawback is regressive and punishes low income people as well as some probably good sized
portion of people who will find themselves unceremoniously dumped into medicaid when their insurance
and other medical bills drive them into financial distress. Lastly, the standardization of plans
was in fact useful for me to figure out i couldn't afford it without taking to much time. I'll
dilute my criticism of the president to be more inclusively the executive branch and their collective
agenda, but basically the O man is the CEO so gets to be the hero, or the goat…
As Chromex notes, Obamacare "coverage" is high-deductible catastrophic, so all day-to-day "care"
is paid for out of pocket. But just try finding out how much a procedure costs… I needed an MRI
on my knee, and it took three phone calls to find out how much I would be paying for the procedure.
First you need to know the exact billing code for the procedure, which means you need to find
the person in the doctor's office who is anointed in the mystical realm of billing codes; then
you need to call the insurance company customer service rep, who is initially mystified that you
are actually trying to find out how much something costs; then you (hopefully) transferred to
someone in the billing department (who has never spoken to an actual patient before); and finally,
if you are lucky, in two or three weeks you will revive a letter from another anointed person
giving the actual out of pocket cost of the procedure-which will probably be different after the
fact as "adjustments" are made between provider and insurer.
If we had to buy anything else in this fashion, we'd all be naked, starving, and out-of-doors.
I recall seeing a stat that the median adult net worth of USians was only US$37K, whereas in
Canada it is US$80K. I wondered if the primary reason for the huge difference, is the presence
of Canada-style MedicareForAll in Canada. It appears the US health system bankrupts you rapidly
as in literal medical bankruptcy as per indivduals' examples in the "Sicko" documentary"' or bankrupts
you slowly, as in these crapified ACA policies that charge ~$12K/yr before paying for anything
besides the annual physical exam even within your "narrow network".
Yves, are you aware of any economist study which estimates the differential in financial net
worth between barbaric USA & civilized Canada?
Apparently what the masters of Canada can't extract through healthcare debt, they do it through
astronomically high real estate prices, exceeding our bubble high of 2007. Though there are signs
of deflation, tiny 2 bedroom bungalows in Winnipeg–depressed Canadian flyover country–go for $300K.
The same dump in Minneapolis is yours for $175K. And that's comparing economically challenged
Winnipeg with relatively prosperous Minneapolis.
Yes, not paying $1200/month in health insurance premiums can go to that overpriced Canadian
mortgage, but that's sort of my point.
And to ward off some comments–I am in no way stating that Canada's national health program
causes high housing costs.
America is exceptionally wack & Crapified (c) Yves, as far as life for the 99%ers probably
in the lowest quintile within the OECD, even when including the don't-really-belong members like
Mexico & Turkey. Meanwhile Murica, from everyday people to the elites, drink Murican Exceptionalist
Kool-aid on how Murica is Always The Best, no need to ever learn from any other nations on anything.
I wonder if the "net present value" of money/time/stress cost of emigrating to a civilized
nation like Canada for those USians fortunate enough to have a chance of doing so, is likely to
be much less than the equivalent money/time/stress cost of living an entire life in the US & having
to deal with the US Sickcare Mafia.
I've found that when I talk to people about health care and health insurance; they're very
defensive and proprietary about whatever random solution they've been able to cobble together
In my limited conversations I've noticed that, too. I've been left wondering if it is hard
to for them to give a clear answer since they've had to engage in guessy speculation about what
they, and their families, might come down with, and they end up having to imagine awful stuff
and then discount the possibility of it occurring, so too bad for little Susie if awful occurs.
Trudy Lieberman has given emphasis to the absurdity of asking people to bet on their health, and
I'm guessing it's not just a matter of feeling embarrassed about weak actuarial skills.
Talking about how you coped with Obamacare gives a clear insight into your personal finances,
something a lot of people are hesitant to discuss.
When I was young I was taught never to ask a rancher how many head of cattle he ran, because
it's no different that saying, "Hey, How much money are you worth?"
So where do we go from here? Help the republicans repeal it? Fix it? Frankly I don't know.
We don't have a congress to fix or replace it -even if Sanders wins. I think it helps some people,
mostly those on Medicaid. So repealing it doesn't make sense unless it can be replaced. Even saying
this is a marketplace is an outright lie. These bastards are just stealing from us all. Rock and
a hard place. Sanders is the only hope and that at times seems vanishingly small.
When Obama took office, The United States National Health Care Act, HR 676 , for a
single-payer system of expanded Medicare for All, was in the House of Representatives. If I remember
correctly, it had over 100 Democratic Congresspeople co-sponsoring it. Part of the Obama administration's
efforts on its own health insurance bill were aimed at getting the bill withdrawn.
Thanks for that reminder. Reading the recent book, American President (from Teddy to Bill)
helps one's recall considerably-telling contrasts between Presidents who knew how to pass legislation
and the flukes (if assassination can be called a fluke, i.e. Devil's Chessboard) that brought
them our way against those who didn't. For instance, LBJ compared with JFK, who had enough legislative
service to learn a thing or two if he were interested, that is.
Too bad the book's so damn thick-well written and lively though it may be. Voters not likely
to read it. Should though.
Lots of arguing and different thoughts, but one primary fact remains. Obama was a bald-faced
lier from the get-go, and has remained true to that principle. He hasn't really tried hard to
question that. The amount of damage done to this nation during his tenure amounts to that
amount perpetrated by a traitor. Just being bad was "W"; this is actually far worse.
Lots of arguing and different thoughts, but one primary fact persists. Obama has been a
bald-faced liar from the get-go, and has remained true to that principle. He really hasn't
tried hard to dispute that. The amount of damage done to this nation during his tenure
amounts to that amount perpetrated by a traitor. "W" was just bad; This is far worse.
Now, Kentucky being Kentucky, the motives here may be such that it is difficult for critics
of the ACA to claim as any kind of 'win' – would any of our Kentuckian readers care to comment?
"... The USA used to complain about Japan Inc. Of course now it's USA as Neolibraconia Inc. and
it's business is war along all lines : military, economic, environmental, social ... ..."
After 9-11, the United States focused its most aggressive foreign policy on the Middle East –
from Afghanistan to North Africa. But the deal recently worked out with Iran, the current back-door
negotiations over Syria between U.S. Secretary of State John Kerry, and Russia Foreign Minister Sergei
Lavrov, and the decision to subsidize, and now export, U.S. shale oil and gas production in a direct
reversal of U.S. past policy toward Saudi Arabia – together signal a relative shift of U.S. policy
away from the Middle East.
With a Middle East consolidation phase underway, U.S. policy has been shifting since 2013-14 to
the more traditional focus that it had for decades: first, to check and contain China; second, to
prevent Russia from economically integrating more deeply with Europe; and, third, to reassert more
direct U.S. influence once again, as in previous decades, over the economies and governments in Latin
America.
... ... ...
Argentina & Brazil: Harbinger of Neoliberal Things to Come
Should the new pro-U.S., pro-Business Venezuela National Assembly ever prevail over the Maduro
government, the outcome economically would something like that now unfolding with the Mauricio Macri
government in Argentina. Argentina's Macri has already, within days of assuming the presidency, slashed
taxes for big farmers and manufacturers, lifted currency controls and devalued the peso by 30 percent,
allowed inflation to rise overnight by 25 percent, provided US$2 billion in dollar denominated bonds
for Argentine exporters and speculators, re-opened discussions with U.S. hedge funds as a prelude
to paying them excess interest the de Kirchner government previously denied, put thousands of government
workers on notice of imminent layoffs, declared the new government's intent to stack the supreme
court in order to rubber stamp its new Neoliberal programs, and took steps to reverse Argentine's
recent media law. And that's just the beginning.
Politically, the neoliberal vision will mean an overturning and restructuring of the current Supreme
Court, possible changes to the existing Constitution, and attempts to remove the duly-elected president
from office before his term by various means. Apart from plans to stack the judiciary, as in Argentina,
Venezuela's new business controlled National Assembly will likely follow their reactionary class
compatriots in Brazil, and move to impeach Venezuela president, Maduro, and dismantle his popular
government – just as they are attempting the same in Brazil with that country's also recently re-elected
president, Rousseff.
What happens in Venezuela, Argentina, and Brazil in the weeks ahead, in 2016, is a harbinger of
the intense economic and political class war in South America that is about to escalate to a higher
stage in 2016.
I'm still unconvinced that 1,000 rapists ran rampant in Cologne on New Years Eve. Where's Penelope
and her fraud analysis when it seems most needed?
2016 will be the year when all this comes to a head. Perhaps Russia and the BRICS should preemptively
repudiate their dollar denominated debts? It all seems to be
going south at this particular
point in time anyway.
Trying to follow nmb's link @1 without actually being shortened and sold myself led me to
Pepe Escobar of 29 Dec
The lame duck Obama administration – whatever rhetorical and/or legalistic contortions –
still sticks to the Cold War 2.0 script on Russia, duly prescribed by Obama mentor Dr. Zbigniew
"Grand Chessboard" Brzezinski.
The key front though is the Russian economy; sooner or later there's got to be a purge of
the Russian Central Bank and the Finance Ministry, but Putin will only act when he has surefire
internal support, and that's far from given.
The fight to the death in Moscow's inner circles is really between the Eurasianists and
the so-called Atlantic integrationists, a.k.a. the Western fifth column. The crux of the battle
is arguably the Russian Central Bank and the Finance Ministry – where some key liberalcon monetarist
players are remote-controlled by the usual suspects, the Masters of the Universe.
The same mechanism applies, geopolitically, to any side, in any latitude, which has linked
its own fiat money to Western central banks. The Masters of the Universe always seek to exercise
hegemony by manipulating usury and fiat money control.
So why President Putin does not fire the head of the Russian Central Bank, Elvira Nabiulina,
and a great deal of his financial team - as they keep buying U.S. bonds and propping up the
U.S. dollar instead of the ruble? What's really being aggressed here if not Russian interests?
"... Sometimes … demand is restricted by the fact that nobody has any money in their pocket. ..."
"... the only takeaway is that most economists are nothing more than rancid witch doctors doing
backflips to skirt the basic explanation that aggregate demand has been deliberately sabotaged. ..."
"... Modern neoliberal economics is just an ideology not a science. It exists to justify the current
distribution of wealth with pseudoscientific nonsense written in abstruse mathematical language. Milton
Friedman was to economics what T.D. Lysenko was to Soviet biology. Pseudoscience in service to the ruling
class. ..."
"... [Economists are] clueless about the real world because their fat paycheck magically appears
in their bank account, while producing nothing. ..."
By Ashoka Mody, Professor of Economics at Princeton. Originally published at
Project
Syndicate
For starters, world trade is growing at an anemic annual rate of 2%, compared to 8% from 2003
to 2007. Whereas trade growth during those heady years far exceeded that of world GDP, which averaged
4.5%, lately, trade and GDP growth rates have been about the same. Even if GDP growth outstrips growth
in trade this year, it will likely amount to no more than 2.7%.
The question is why. According to Christina and David Romer of the University of California, Berkeley,
the aftershocks of modern financial crises – that is, since World War II –
fade after 2-3 years . The Harvard economists
Carmen Reinhart
and Kenneth
Rogoff say that it takes
five years
for a country to dig itself out of a financial crisis. And, indeed, the financial dislocations
of 2007-2008 have largely receded. So what accounts for the sluggish economic recovery?
One
popular explanation lies in the fuzzy notion of "secular stagnation": long-term depressed demand
for goods and services is undermining incentives to invest and hire. But demand would remain weak
only if people lacked confidence in the future. The only logical explanation for this enduring lack
of confidence, as Northwestern University's Robert Gordon has
painstakingly documented
and argued , is slow productivity growth.
Before the crisis – and especially from 2003 to 2007 – slow productivity growth was being obscured
by an illusory sense of prosperity in much of the world. In some countries – notably, the United
States, Spain, and Ireland – rising real-estate prices, speculative construction, and financial risk-taking
were mutually reinforcing. At the same time, countries were amplifying one another's growth through
trade.
Central to the global boom was China, the rising giant that flooded the world with cheap exports,
putting a lid on global inflation. Equally important, China imported a huge volume of commodities,
thereby bolstering many African and Latin American economies, and purchased German cars and machines,
enabling Europe's largest economy to keep its regional supply chains humming.
This dynamic reversed around March 2008, when the US rescued its fifth-largest investment bank,
Bear Sterns, from collapse. With the eurozone banks also deeply implicated in the subprime mortgage
mess and desperately short of US dollars, America and much of Europe began a remorseless slide into
recession. Whereas in the boom years, world trade had spread the bounty, it was now spreading the
malaise. As each country's GDP growth slowed, so did its imports, causing its trading partners' growth
to slow as well.
The US economy began to emerge from its recession in the second half of 2009, thanks largely to
aggressive monetary policy and steps to stabilize the financial system. Eurozone policymakers, by
contrast, rejected
monetary stimulus and implemented
fiscal
austerity measures , while ignoring the deepening distress of their banks. The eurozone thus
pushed the world into a second global recession.
Just when that recession seemed to have run its course, emerging economies began to unravel. For
years, observers had been touting the governance and growth-enhancing reforms that these countries'
leaders had supposedly introduced. In October 2012, the IMF
celebrated
emerging economies' "resilience." As if on cue, that facade began to crumble, revealing an inconvenient
truth: factors like high commodity prices and massive capital inflows had been concealing serious
economic weaknesses, while legitimizing a culture of
garish inequality and rampant corruption .
These problems are now being compounded by the growth slowdown in China, the fulcrum of global
trade. And the worst is yet to come. China's huge industrial overcapacity and property glut needs
to be wound down; the hubris driving its global acquisitions must be reined in; and its corruption
networks have to be dismantled.
In short, the factors that dragged down the global economy in 2015 will persist – and in some
cases even intensify – in the new year. Emerging economies will remain weak. The eurozone, having
enjoyed a temporary reprieve from austerity, will be constrained by listless global trade. Rising
interest rates on corporate bonds portend
slower growth in
the US. China's collapsing asset values could trigger financial turbulence. And policymakers are
adrift, with little political leverage to stem these trends.
The IMF should stop forecasting renewed growth and issue a warning that the global economy will
remain weak and vulnerable unless world leaders act energetically to spur innovation and growth.
Such an effort is long overdue.
ArkansasAngie , January 6, 2016 at 6:17 am
"But demand would remain weak only if people lacked confidence in the future"
Sometimes … demand is restricted by the fact that nobody has any money in their pocket.
James Levy, January 6, 2016 at 6:45 am
Is he kidding:
The only logical explanation for this enduring lack of confidence, as Northwestern University's
Robert Gordon has painstakingly documented and argued, is slow productivity growth.
Real wages for a hefty percentage of the population haven't risen since 1971. Most people are
treading water or losing ground. Over 90% of the modest gains since the 2008 crash have gone to
1% or less of the population. But the problem is productivity! And this guy has a tenured job
at Princeton. Standards for employment there must include smug self-assurance, ideological blinders,
and the inability to assimilate any facts not cogent to people richer than you are.
Jim Haygood, January 6, 2016 at 11:37 am
If Princeton's most illustrious alumnus can finally make some serious loot in the private sector,
soon the author will be toiling at the Bernanke School of Economics.
Skippy, January 6, 2016 at 8:18 am
Productivity is the cocaine of the labour pool, like the old cocaine ad of the 80s in Calif
[during the epidemic].
White square room about 6M X 6M, top shelf sale executive sort doing laps like a con and the
verse goes like…. I do cocaine because I'm more productive… so I make more money… so I can do
more cocaine… over and over and with each litany increases his speed until a blur….
Skippy…. the end is a wrung out wretch sitting on the step of some low socioeconomic apt talking
about losing, wife, kids, job, everything…. w burnt out dopamine receptors as a lullaby till morte'
efschumacher, January 6, 2016 at 8:50 am
Here in the US:it's not like there's a shortage of work to be done to fix the massively inappropriate
national infrastructure – to make it human sustainable – I mean for the 'little people'. There
is of course the perennial lack of congressional vision and long term planning. There lies a huge
root of the problem.
RabidGandhi, January 6, 2016 at 9:12 am
Is this meant as a good cop/bad cop contrast piece with the Ann Pettifor post?
Here, I gave up any hope of Mody being at all earnest when he cited Rogoff and Reinhart (!!!).
Then the rest of the article completely self-destructs: weak productivity and insufficient innovation
are the issue?
When combined with yesterday's NYT article on inequality, the only takeaway is that most
economists are nothing more than rancid witch doctors doing backflips to skirt the basic explanation
that aggregate demand has been deliberately sabotaged.
Stephen Gardner, January 6, 2016 at 9:33 am
Modern neoliberal economics is just an ideology not a science. It exists to justify the
current distribution of wealth with pseudoscientific nonsense written in abstruse mathematical
language. Milton Friedman was to economics what T.D. Lysenko was to Soviet biology. Pseudoscience
in service to the ruling class.
cnchal, January 6, 2016 at 9:43 am
. . . the only takeaway is that most economists are nothing more than rancid witch doctors
doing backflips to skirt the basic explanation that aggregate demand has been deliberately sabotaged.
They are the useless eaters. [Economists are] clueless about the real world because their
fat paycheck magically appears in their bank account, while producing nothing.
Here is Mody
The US economy began to emerge from its recession in the second half of 2009, thanks
largely to aggressive monetary policy and steps to stabilize the financial system.
Totally clueless.
susan the other, January 6, 2016 at 2:02 pm
"Lack of confidence" – let me count the ways. This is a phrase to match every vacuous denial
of human economic chaos ever pontificated. Yuck.
"... I am always struck by the difference between the oligarchs of today and those (a very small group) who ran the uk in the late 17 and 18 century. Proud, brutal but they taxed themselves as necessary to build effective institutions and instruments in the service of common goals ..."
"... in this culture we recognize the Midas touch as a positive good, rather than the curse the Greeks knew it to be. ..."
"... My feeling has always been that taxes are the price you pay to live in a civilized society. Conservatives are obviously opposed to that. ..."
"... An even more commercially successful writer, J. K. Rowling, has expressed similar enlightened views. There ought to be a hall of fame for such folks. ..."
"... To become a hedge fund billionaire you can have no heart and you can have no soul. You must be a ruthless predatory bastard with no concern for morality or justice. So it is not surprising that the question of whether you owe something to others doesnt really register with hedge fund billionaires. ..."
Irving Berlin on taxes
: The New York Times
reports
on how some of the US's richest men are dodging taxes. Compare this to the
response
of Irving Berlin
when his lawyer offered him a tax shelter:
I want to pay taxes. I love this country.
He even wrote a
song
expressing this
sentiment. He said: "I owe all my success to my adopted country." ...
He embodied -- knowingly so -- a
point
made by Herbert Simon, that we westerners owe our fortunes not so much to our own efforts but
to the good luck of living in societies which enable us to prosper - which have peace, the rule
of law and material and intellectual resources ...
Now, songwriting is pretty much as individualistic an activity as one can find; But even songwriters
require a conducive environment such as musical traditions on which to draw and a marketplace
for their work. Berlin knew this: 1930s Siberia had no equivalent of Tin Pan Alley or Hollywood.
If even songwriters owe their wealth to social capital, how much more true is this of hedge fund
managers. They would be nothing without wealthy investors or large liquid financial markets: how
many billionaire fund managers are there in Burkina Faso?
Which poses the question: why, then, don't hedge fund managers have the same attitude to paying
tax as Irving Berlin? It could be that they are more motivated ... by personal greed. But there
might be another reason..., they believe their wealth is the product of their own "talent" and
so they are entitled to it... Others of us prefer to call it an example of one of the disfiguring
diseases of our time - narcissism.
Perhaps there's another explanation, though. Maybe hedge fund billionaires are greater geniuses
than Irving Berlin who have contributed more to human happiness. But how likely is this?
"The New York Times reports on how some of the US's richest men are dodging taxes."
But Jay Bird
just today declared corporations ARE paying their taxes. Really? There is no such thing as Base Erosion
and Profit Shifting?
pgl -> Jay...
You need to get a life. Start with laying off the booze.
Roland:
I am always struck by the difference between the oligarchs of today and those (a very small group)
who ran the uk in the late 17 and 18 century. Proud, brutal but they taxed themselves as necessary
to build effective institutions and instruments in the service of common goals
EMichael:
Berlin realized that he did not build that.
Robert Marshall:
What is more likely is that songwriting and billionairing require very different character traits
to reach the top. I wish I knew what it took to be a songwriter, but to be a billionaire, you have
to think the right way to go about life is to try to get as much as you can for as little as you
have to give up, and not even that if you can get out of it. And yet
in this culture we recognize
"the Midas touch" as a positive good, rather than the curse the Greeks knew it to be.
SomeCallMeTim:
Is it unseemly to infer that maybe these MOTUs hear the same dogwhistle symphony they fund? Or are
they above that sort of thing, and just 'have a business to run'?
DrDick:
My feeling has always been that taxes are the price you pay to live in a civilized society. Conservatives
are obviously opposed to that.
Jay -> DrDick...
You take the mortgage interest deduction?
Tax dodger!
DrDick -> Jay...
I rent.
DrDick -> DrDick...
And I take essentially nothing except the personal deduction.
Why is everyone so concerned with diagnosis? We know that great piles of money in few hands leads
to no good, and that is enough. Tax it away. Then let the formerly rich use their newly-freed time
writing poems describing the beauty of skimming from other people's cash flows.
DeDude:
To become a hedge fund billionaire you can have no heart and you can have no soul. You must be a
ruthless predatory bastard with no concern for morality or justice. So it is not surprising that
the question of whether you "owe" something to others doesn't really register with hedge fund billionaires.
"... [The financial crisis is worse than thought …] ..."
"... – Yes Prime Minister, A Real Partnership ..."
"... Economists: purveyors of fictions upon which the superstructure of organized robbery is raised. ..."
"... "Market Failure" is the name that economists who believe that the market cannot ever fail use when the market fails. ..."
"... "Economists put decimal points in their forecasts to show that they have a sense of humour" ..."
"... "Did you ever think that making a speech on economics is a lot like pissing down your leg? It seems hot to you, but it never does to anyone else." ..."
A6: None. They're all waiting for the unseen hand of the market to correct the lighting disequilibrium.
tony, December 30, 2015 at 6:12 am
Q: What do you call an economist that makes a prediction?
A: Wrong.
ben, December 30, 2015 at 3:28 pm
Two economists are walking on the street. They notice a pile of horseshit, and the older
one says to the younger one: "I'll pay you twenty thousand if you eat that." The younger one
ponders for a moment, then agrees and eats it. They walk a bit more and run into another pile
of horse feces. So the younger one tells the elder: "I'll pay you twenty thousand if you eat
that!". The older economist considers the offer and starts eating. After a while the younger
economists stops and asks: "What was the point of this? We both ate a pile shit and neither of
us got richer." The older one answers: "What are you talking about? We both produced and
received twenty thousand worth in income and services."
GDP. Great deposits of poo.
Clive, December 31, 2015 at 5:41 am
"This economy is really terrible."
"How bad is the economy?"
"The economy is so bad, this year oysters are making fake pearls…"
"The economy is so bad, organised crime just laid off 10 judges…"
(and so on)
Paul Jonker-Hoffrén, December 30, 2015 at 7:27 am
"Knock Knock!"
"Who's there?"
"It's Return to Growth!"
Two years later…
"Knock Knock!"
"Who's there?"
"It's Return to Growth!"
And ad finitum…
Clive, December 30, 2015 at 6:21 am
"Knock Knock"
"Who's there?"
"Janet Yellen"
"Well there's no need to shout, I heard you knocking"
Joaquin Closet, December 30, 2015 at 7:42 am
The number of economists is the only thing that contradicts the Law of Supply and Demand.
craazyboy, December 30, 2015 at 9:00 am
Q: How many economists does it take to change a light bulb?
A: Three. A micro-economist to hold the ladder, a macro-economist to rotate the room, and a
university economist to develop the math model and forecast how long it will take.
Ulysses, December 30, 2015 at 9:56 am
A mathematician, an accountant and an economist apply for the same job at an oil company.
The interviewer calls in the mathematician and asks "What do two plus two equal?" The
mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at
the interviewer hard and says "Yes, four, exactly."
Then the interviewer calls in the accountant and asks the same question "What do two plus two
equal?" The accountant says "On average, four – give or take ten percent, but on average,
four."
Then the interviewer calls in the economist and poses the same question "What do two plus two
equal?" The economist gets up, locks the door, closes the shade, sits down next to the
interviewer and says, "What do you want it to equal"?
Paul Tioxon, December 30, 2015 at 10:02 am
What do you call a cruise ship sinking with 500 PhD economists chained below deck?
A good start.
allan, December 30, 2015 at 10:03 am
Frederic Mishkin.
Yves Smith, December 30, 2015 at 4:32 pm
Oh, that is good!
Paul
An economist is someone who will tell you tomorrow why what they predicted yesterday didn't happen
today.
An economist, a physicist, and an engineer are stranded on an island with a can of food, and no
opener.
The engineer says, "Let's smash the can open with a rock and eat". The physicist replies, "Naw, that's going to splatter the food all over the place. Let's light a
fire, the expanding gases will force the can to pop open and presto: warm food!" The economist says, "Bad idea: the can will explode and the food will be all over the place. Now…
let's assume we have a can opener…."
Blue Meme
A physician, an engineer, and an economist were discussing who among them belonged to the oldest
profession. The physician said, "Remember, on the sixth day God took a rib from Adam and fashioned
Eve, making him the first surgeon. Therefore, medicine is the oldest profession."
The engineer replied, "But, before that, God created the heavens and earth from chaos, thus he
was the first engineer. Therefore, engineering is an older profession than medicine."
Then, the economist spoke up. "Yes," he said, "But who do you think created the chaos?"
aj
The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They're both wrong.
fresno dan
Pareto's law of optimal economic theory: an economic theory has reached an optimal state when no other economist can make it wronger
pat b
The Third Law of Economists : The two economists theories don't add up.
twonine
"Economics is extremely useful as a form of employment for economists." ― John Kenneth Galbraith
gordon
JKG has some excellent one-liners. My favourite:
"The trouble with competition is that in the end somebody wins."
Joe Hill
"Again, since I'm not an economist I really have no idea what the wrong solution is."
~ @RudyHavenstein
Ramanan
[The financial crisis is worse than thought …]
James Hacker: Bernard, Humphrey should have seen this coming and warned me.
Bernard Woolley: I don't think Sir Humphrey understands economics, Prime Minister;
he did read Classics, you know.
James Hacker: What about Sir Frank? He's head of the Treasury!
Bernard Woolley: Well I'm afraid he's at an even greater disadvantage in understanding
economics: he's an economist.
Economists: purveyors of fictions upon which the superstructure of organized robbery is raised. (apologies to Ambrose Bierce)
Synoia
Q: What do you call an Economist who tells the truth?
A: Unemployed.
Ivy
If you laid all the economists end to end,
it would probably be a good thing.
They still wouldn't reach a conclusion.
ben
A farmer and two bankers are shipwrecked on an island. Two weeks later help finally arrives. The
bankers greet their rescuer who remarks how well they look.
BankerA: "we realised the potential of the natural resources on this island were tremendous".
BankerB: "I created some fiat money, we divided it up. I lent BankerA ten times my share for a
coconut farm startup, he invested ten times his share in an accountancy startup."
Rescuer: "well that's amazing, only where is it all, I don't see any produce – how did you actually
survive?"
BankerA: "We each used our debt to invest in futures given the fertile land it was clear the land
could generate wealth once labour was applied. We both realised significant paper profits. Oh and
we ate the farmer"
--
Bankers live off our backs.
Nortino
What did the supply curve say to the demand curve?
If you shift a little to the right, I'll give you some more of what you want.
_________
Why did the economist cross the road?
Because his models predicted he would.
TG
"Market Failure" is the name that economists who believe that the market cannot ever fail use
when the market fails.
Synoia
Hmm, it seems you should take your own advice to heart. :-)
What is a person called who claims to predict the future and has a history of 100% failure
in predictions?
a) A Charlatan b) An Economist c) A prophet
afreeman
In the same vein: econ entropy: money invented from hot air evaporates, what do you expect?
How many economists does it take to screw in a lightbulb?
Only one, but the lightbulb has to be hanging from the ceiling. Because economists can only screw
things up.
Minnie Mouse
It takes one economist to change a light bulb and take the entire power grid down.
James McFadden
"Did you ever think that making a speech on economics is a lot like pissing down your leg?
It seems hot to you, but it never does to anyone else." Lyndon Johnson
I think Wendy Brown can he considered as a person who advanced Professor Wolin ideas to a new level -- Her her new book Undoing the Demos: Neoliberalism's Stealth Revolution (Zone Books, 2015)
is a brilliant contribution to the field.
Notable quotes:
"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."
"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."
"... First, for neoliberals, humans are only and everywhere homo economicus . This was not so for classical economists, where we were market creatures in the economy, but not in civic, familial, political, religious, or ethical life. Second, neoliberal homo economicus today takes shape as value-enhancing human capital, not as a creature of exchange, production, or even interest. This is markedly different from the subject drawn by Smith, Bentham, Marx, Polanyi, or even Gary Becker. ..."
"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."
"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."
"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination-law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."
"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."
"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."
Booked is a monthly series of Q&As with authors by Dissent contributing editor Timothy Shenk.
For this interview, he spoke with Wendy Brown about her new book Undoing the Demos: Neoliberalism's
Stealth Revolution (Zone Books, 2015).
Timothy Shenk: You note early in Undoing the Demos that while references
to "neoliberalism" have become routine, especially on the left, the word itself "is a loose and shifting
signifier." What is your definition of neoliberalism?
Wendy Brown: In this book,
I treat neoliberalism as a governing rationality through which everything is "economized" and
in a very specific way: human beings become market actors and nothing but, every field of activity
is seen as a market, and every entity (whether public or private, whether person, business, or state)
is governed as a firm. Importantly, this is not simply a matter of extending commodification and
monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday
life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in
market terms, submits them to market metrics, and governs them with market techniques and practices.
Above all, it casts people as human capital who must constantly tend to their own present and future
value.
Moreover, because neoliberalism came of age with (and abetted) financialization, the form of marketization
at stake does not always concern products or commodities, let alone their exchange. Today, market
actors-from individuals to firms, universities to states, restaurants to magazines-are more often
concerned with their speculatively determined value, their ratings and rankings that shape future
value, than with immediate profit. All are tasked with enhancing present and future value through
self-investments that in turn attract investors. Financialized market conduct entails increasing
or maintaining one's ratings, whether through blog hits, retweets, Yelp stars, college rankings,
or Moody's bond ratings.
Shenk: Discussions about neoliberalism often treat it as an economic doctrine,
which also means that they concentrate on its economic ramifications. You shift the focus to politics,
where, you argue, neoliberalism has "inaugurate[d] democracy's conceptual unmooring and substantive
disembowelment." Why does neoliberalism pose such a threat to democracy?
Brown:The most common criticisms of neoliberalism, regarded solely as economic
policy rather than as the broader phenomenon of a governing rationality, are that it generates and
legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious
and disposable populations; that it produces an unprecedented intimacy between capital (especially
finance capital) and states, and thus permits domination of political life by capital; that it generates
crass and even unethical commercialization of things rightly protected from markets, for example,
babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus
eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals
to the volatility and havoc of unregulated financial markets.
Each of these is an important and objectionable effect of neoliberal economic policy. But neoliberalism
also does profound damage to democratic practices, cultures, institutions, and imaginaries. Here's
where thinking about neoliberalism as a governing rationality is important: this rationality switches
the meaning of democratic values from a political to an economic register. Liberty is disconnected
from either political participation or existential freedom, and is reduced to market freedom unimpeded
by regulation or any other form of government restriction. Equality as a matter of legal standing
and of participation in shared rule is replaced with the idea of an equal right to compete in a world
where there are always winners and losers.
The promise of democracy depends upon concrete institutions and practices, but also on an understanding
of democracy as the specifically political reach by the people to hold and direct powers that otherwise
dominate us. Once the economization of democracy's terms and elements is enacted in law, culture,
and society, popular sovereignty becomes flatly incoherent. In markets, the good is generated by
individual activity, not by shared political deliberation and rule. And, where there are only individual
capitals and marketplaces, the demos, the people, do not exist.
Shenk: It's easy to depict neoliberalism as a natural extension of liberalism,
but you insist that the relationship is much more complicated than that. You illustrate the broad
transformation by examining the intellectual history of homo economicus, a term whose meaning
you claim has shifted radically since the time of Adam Smith. How has "economic man" changed in the
last century?
Brown: You're right, the relationship is quite complicated, especially if one
accepts Foucault's notion that neoliberalism is a "reprogramming of liberalism" rather than only
a transformation of capitalism. Here are the simplest things we might say about the morphing of
homo economicus. Two hundred years ago, this creature pursued its interest through what Adam
Smith termed "truck, barter, and exchange." A generation later, Jeremy Bentham gives us the utility
maximizer, calculating everything according to maximizing pleasure, minimizing pain-cost/benefit.
Thirty years ago, at the dawn of the neoliberal era, we get human capital that entrepreneurializes
itself at every turn. Today, homo economicus has been significantly reshaped as financialized
human capital, seeking to enhance its value in every domain of life.
In contrast with classical economic liberalism, then, the contemporary figure of homo economicus
is distinctive in at least two ways. First, for neoliberals, humans are only and everywhere
homo economicus. This was not so for classical economists, where we were market creatures
in the economy, but not in civic, familial, political, religious, or ethical life. Second, neoliberal
homo economicus today takes shape as value-enhancing human capital, not as a creature of exchange,
production, or even interest. This is markedly different from the subject drawn by Smith, Bentham,
Marx, Polanyi, or even Gary Becker.
Shenk: You mentioned Foucault just now, and you devote two chapters to him in
the book, where you also call Birth of Biopolitics-the volume that emerged from lectures he
gave in the late 1970s on neoliberalism-a "remarkable" work of "extraordinary prescience." But he
also comes in for a hefty amount of criticism. What do you think Foucault got right, and what did
he miss?
Brown: What's amazing about Foucault's lectures is that he grasped neoliberalism
as Europe's present and future in the 1970s-before Reagan or Thatcher were elected, and before the
Washington Consensus. What's also extraordinary is his appreciation of neoliberalism as a form of
political reason and governing that reaches from the state to the soul, and not simply as economic
policy. Then there's simply the fact that Foucault is a fearless, deep, and profoundly original political-historical
thinker, who probes archives or a single utterance with equal brilliance and imagination. These features
make Foucault's lectures illuminating despite the fact that he is mostly discussing neoliberal ideas,
not neoliberalism as it has unfolded over the past three decades.
But there are some distinctive gaps in Foucault's account of what neoliberalism is and does resulting
from his allergies to Marxism at the point in his life when he's giving these lectures. For Foucault,
as I said, neoliberalism is fundamentally a "reprogramming of liberalism," not of capitalism, and
there is astonishingly little discussion of the latter. He is also largely indifferent to my own
central concern, democracy, which was true across his work. So one takes the useful insights and
then builds on them. It would be silly to be an "orthodox Foucauldian" on the subject of neoliberalism,
or for that matter, on any subject.
Shenk: What about the politics of Foucault's analysis? There's been a lot of
debate recently about whether he was so attuned to neoliberalism's rise because his own work was
compatible with neoliberalism. What's your position on this?
Brown: Well, on the one hand, Foucault's degree of sympathy with what he was
studying is not, for me, particularly important. The usefulness of certain historical accounts and
theoretical formulations turns on their capacities for illumination, not on the theorist's political
affinities. (No one who mines the history of political theory to think about our present can draw
only from theorists whose affinities line up with contemporary progressive values. None would survive
the test, and that's also a poor approach to learning from great minds.) Moreover, he didn't and
couldn't have anticipated the neoliberal formations we are grappling with today. On the other hand,
the idea that Foucault was deeply attracted to neoliberalism for its "emancipatory" dimensions strikes
me as incompatible with a careful reading of his lectures where, among other things, he considers
neoliberalism as a novel form of governing human beings that requires the individual, as human capital,
to become a "portfolio of enterprises" and that makes us into both "producers and consumers of freedom."
Foucault's signature theoretical move is to grasp human beings as produced by governing powers, not
"freed" by them.
Shenk:Homo economicus is a fairly common term; less common is the notion
you oppose it to, homo politicus. What's the genealogy of homo politicus, and how is
it related to its more famous counterpart?
Brown: To understand what neoliberalism is doing to democracy, we have to return
to the point that, until recently, human beings in the West have always been figured as more than
homo economicus. There have always been other dimensions of us imagined and cultivated in
political, cultural, religious, or familial life. One of these figurations, which we might call
homo politicus, featured prominently in ancient Athens, Roman republicanism, and even early
liberalism. But it has also appeared in modern democratic upheavals ranging from the French Revolution
to the civil rights movement. Homo politicus is inconstant in form and content, just as
homo economicus is, and certainly liberal democracy features an anemic version compared to, say,
Aristotle's account of humans as realizing our distinctively human capacities through sharing rule
in the polis. But it is only with the neoliberal revolution that homo politicus is finally
vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens
be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom
as resting in such self-rule, not simply in market conduct. When this dimension of being human is
extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well
as its very intelligibility.
Shenk: Some of the major interpreters of neoliberalism, especially those who
approach it from a Marxist perspective, depict it as a straightforward byproduct of 1970s economic
turmoil and backlash against welfare states led by a revanchist capitalist elite. It seems like you're
not satisfied with that interpretation. This is a big question, but do you have an alternative explanation
for how we got here?
Brown: That's too long and complicated a story to rehearse here but I can say
this. For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling
rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West;
and the dilution of class power generated by unions, redistributive welfare states, large and lazy
corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism
is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing
capital from regulatory and national constraints, and defanging all forms of popular solidarities,
especially labor.
The grains of truth in this analysis don't get at the fundamental transformation of social,
cultural, and individual life brought about by neoliberal reason. They don't get at the ways that
public institutions and services have not merely been outsourced but thoroughly recast as private
goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces,
schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal
economization through neoliberalism as a governing form of reason, not just a power grab by capital.
There are many vehicles of this dissemination-law, culture, and above all, the novel political-administrative
form we have come to call governance. It is through governance practices that business models and
metrics come to irrigate every crevice of society, circulating from investment banks to schools,
from corporations to universities, from public agencies to the individual. It is through the replacement
of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and
buy-ins that governance dismantles democratic life while appearing only to instill it with "best
practices."
Shenk:Undoing the Demos covers a sizable amount of ground in just over
200 pages, but, as your discussion of governance just now indicates, you also spend a lot of time
with specific instances of neoliberalism in action. My favorite of these more focused studies is
your extended analysis of Citizens United. What does that case tell us about neoliberalism
more generally?
Brown:Progressives generally disparage Citizens United for having
flooded the American electoral process with corporate money on the basis of tortured First Amendment
reasoning that treats corporations as persons. However, a careful reading of the majority decision
also reveals precisely the thoroughgoing economization of the terms and practices of democracy we
have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces,"
just as ideas are cast as freely circulating in a market where the only potential interference arises
from restrictions on producers and consumers of ideas-who may speak and who may listen or judge.
Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces
should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly
restricting the power of money in politics. Moreover, in the decision, political speech itself is
rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether
that bearer is human capital, corporate capital, or finance capital. This understanding of political
speech replaces the idea of democratic political speech as a vital (if potentially monopolizable
and corruptible) medium for public deliberation and persuasion.
Perhaps what is most significant about the Citizens United decision, then, is not that
corporations are rendered as persons, but that persons, let alone a people, do not appear as the
foundation of democracy, and a distinctly public sphere of debate and discussion do not appear as
democracy's vital venue. Instead, the decision presents speech as a capital right and political life
and elections as marketplaces.
Shenk: You're clear that democracy is an ideal that deserves defending, but you're
skeptical about actually existing democracy, which you describe as a system where "the common rage
of the common citizen has been glorified and exploited." And you worry that matters could get much
worse, with democracy as we know it giving way to "a polity in which the people are pawns of every
kind of modern power." Do you see a tension between your tributes to democratic ideals and your grim
assessment of its current state?
Brown: Democracy is always incomplete, always short of its promise, but the conditions
for cultivating it can be better or worse. My point was that democracy is really reduced to a
whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter
much because, "thanks to globalization . . . the world is governed by market forces," not elected
representatives. Voting has been declining for decades everywhere in the Western world; politicians
are generally mistrusted if not reviled (except for Varoufakis, of course!); and everything to do
with political life or government is widely considered either captured by capital, corrupt or burdensome
-- this hostility to the political itself is generated by neoliberal reason. Thus, today, the meaning
of democracy is pretty much reduced to personal liberty. Such liberty is not nothing, but could not
be further from the idea of rule by and for the people.
"... A political society endures when it seeks, as a vocation, to satisfy common needs by stimulating the growth of all its members, especially those in situations of greater vulnerability or risk. ..."
"... All of us are quite aware of, and deeply worried by, the disturbing social and political situation of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities, committed even in the name of God and of religion. ..."
"... We are asked to summon the courage and the intelligence to resolve today's many geopolitical and economic crises. Even in the developed world, the effects of unjust structures and actions are all too apparent. ..."
"... If politics must truly be at the service of the human person, it follows that it cannot be a slave to the economy and finance. ..."
"... At the risk of oversimplifying, we might say that we live in a culture which pressures young people not to start a family, because they lack possibilities for the future. Yet this same culture presents others with so many options that they too are dissuaded from starting a family ..."
Each son or daughter of a given country has a mission, a personal and social responsibility. Your
own responsibility as members of Congress is to enable this country, by your legislative activity,
to grow as a nation. You are the face of its people, their representatives. You are called to defend
and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common
good, for this is the chief aim of all politics. A political society endures when it seeks, as
a vocation, to satisfy common needs by stimulating the growth of all its members, especially those
in situations of greater vulnerability or risk. Legislative activity is always based on care
for the people. To this you have been invited, called and convened by those who elected you.
... ... ...
All of us are quite aware of, and deeply worried by, the disturbing social and political situation
of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities,
committed even in the name of God and of religion. We know that no religion is immune from forms
of individual delusion or ideological extremism. This means that we must be especially attentive
to every type of fundamentalism, whether religious or of any other kind. A delicate balance is required
to combat violence perpetrated in the name of a religion, an ideology or an economic system, while
also safeguarding religious freedom, intellectual freedom and individual freedoms. But there is another
temptation which we must especially guard against: the simplistic reductionism which sees only good
or evil; or, if you will, the righteous and sinners. The contemporary world, with its open wounds
which affect so many of our brothers and sisters, demands that we confront every form of polarization
which would divide it into these two camps. We know that in the attempt to be freed of the enemy
without, we can be tempted to feed the enemy within. To imitate the hatred and violence of tyrants
and murderers is the best way to take their place. That is something which you, as a people, reject.
...We are asked to summon the courage and the intelligence to resolve today's many geopolitical
and economic crises. Even in the developed world, the effects of unjust structures and actions are
all too apparent. Our efforts must aim at restoring hope, righting wrongs, maintaining commitments
and thus promoting the well-being of individuals and of peoples. We must move forward together, as
one, in a renewed spirit of fraternity and solidarity, cooperating generously for the common good.
The challenges facing us today call for a renewal of that spirit of cooperation, which has accomplished
so much good throughout the history of the United States. The complexity, the gravity and the urgency
of these challenges demand that we pool our resources and talents, and resolve to support one another,
with respect for our differences and our convictions of conscience.
In this land, the various religious denominations have greatly contributed to building and strengthening
society. It is important that today, as in the past, the voice of faith continue to be heard, for
it is a voice of fraternity and love, which tries to bring out the best in each person and in each
society. Such cooperation is a powerful resource in the battle to eliminate new global forms of slavery,
born of grave injustices which can be overcome only through new policies and new forms of social
consensus.
...If politics must truly be at the service of the human person, it follows that it cannot
be a slave to the economy and finance. Politics is, instead, an expression of our compelling
need to live as one, in order to build as one the greatest common good: that of a community which
sacrifices particular interests in order to share, in justice and peace, its goods, its interests,
its social life. I do not underestimate the difficulty that this involves, but I encourage you in
this effort.
... ... ...
The fight against poverty and hunger must be fought constantly and on many fronts, especially
in its causes. I know that many Americans today, as in the past, are working to deal with this problem.
It goes without saying that part of this great effort is the creation and distribution of wealth.
The right use of natural resources, the proper application of technology and the harnessing of the
spirit of enterprise are essential elements of an economy which seeks to be modern, inclusive and
sustainable. "Business is a noble vocation, directed to producing wealth and improving the world.
It can be a fruitful source of prosperity for the area in which it operates, especially if it sees
the creation of jobs as an essential part of its service to the common good" (Laudato Si', 129).
This common good also includes the earth, a central theme of the encyclical which I recently wrote
in order to "enter into dialogue with all people about our common home" (ibid., 3). "We need a conversation
which includes everyone, since the environmental challenge we are undergoing, and its human roots,
concern and affect us all" (ibid., 14).
In Laudato Si', I call for a courageous and responsible effort to "redirect our steps" (ibid.,
61), and to avert the most serious effects of the environmental deterioration caused by human activity.
I am convinced that we can make a difference and I have no doubt that the United States – and this
Congress – have an important role to play. Now is the time for courageous actions and strategies,
aimed at implementing a "culture of care" (ibid., 231) and "an integrated approach to combating poverty,
restoring dignity to the excluded, and at the same time protecting nature" (ibid., 139). "We have
the freedom needed to limit and direct technology" (ibid., 112); "to devise intelligent ways of .
. . developing and limiting our power" (ibid., 78); and to put technology "at the service of another
type of progress, one which is healthier, more human, more social, more integral" (ibid., 112). In
this regard, I am confident that America's outstanding academic and research institutions can make
a vital contribution in the years ahead.
... ... ...
...At the risk of oversimplifying, we might say that we live in a culture which pressures
young people not to start a family, because they lack possibilities for the future. Yet this same
culture presents others with so many options that they too are dissuaded from starting a family.
"... 1.TiSA would "lock in" the privatization of services – even in cases where private service delivery has failed – meaning governments can never return water, energy, health, education or other services to public hands. ..."
"... 2.TiSA would restrict signatory governments' right to regulate stronger standards in the public's interest. For example, it will affect environmental regulations, licensing of health facilities and laboratories, waste disposal centres, power plants, school and university accreditation and broadcast licenses. ..."
"... 3.TiSA would limit the ability of governments to regulate the financial services industry, at a time when the global economy is still struggling to recover from a crisis caused primarily by financial deregulation. More specifically, if signed the trade agreement would: ..."
"... 4. TiSA would ban any restrictions on cross-border information flows and localization requirements for ICT service providers. A provision proposed by US negotiators would rule out any conditions for the transfer of personal data to third countries that are currently in place in EU data protection law. In other words, multinational corporations will have carte blanche to pry into just about every facet of the working and personal lives of the inhabitants of roughly a quarter of the world's 200-or-so nations. ..."
"... 5. Finally, TiSA, together with its sister treaties TPP and TTIP, would establish a new global enclosure system, one that seeks to impose on all 52 signatory governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of financial risk and social and environmental responsibility. In short, it would hammer the final nail in the already bedraggled coffin of national sovereignty. ..."
"... So, not to be snarky or anything but when does the invasion of Uruguay begin. ..."
"... In the US, corporations largely have replaced government since WWII or so, or at least pretend to offer the services that a government might provide. ..."
"... Neoliberalism that we have now as a dominant social system is a flavor of corporatism. If so, it is corporations which now represent the most politically powerful actors. They literally rule the country. And it is they who select the president, most congressmen and Senators. Try to ask yourself a question: to what political force Barak "change we can believe in" Obama serves. ..."
"... "And the banks - hard to believe in a time when we're facing a banking crisis that many of the banks created - are still the most powerful lobby on Capitol Hill. And they frankly own the place" ..."
"... This is such a huge, huge, vital issue. Privatisation of public assets has to rank as one of the highest crimes at the government level. It is treason, perhaps the only crime for which i wouldn't object capital punishment. ..."
"... What's more, we now have some 40 years of data showing that privatisation doesn't work. surely, we can organise and successfully argue that privatisation has never worked for any country any time. There needs to be an intellectual assault on privatisation discrediting it forever. ..."
Often referred to as the Switzerland of South America, Uruguay is long accustomed to doing things
its own way. It was the first nation in Latin America to establish a welfare state. It also has an
unusually large middle class for the region and unlike its giant neighbors to the north and west,
Brazil and Argentina, is largely free of serious income inequality.
Two years ago, during José Mujica's presidency, Uruguay became the first nation to legalize marijuana
in Latin America, a continent that is being ripped apart by drug trafficking and its associated violence
and corruption of state institutions.
Now Uruguay has done something that no other semi-aligned nation on this planet has dared to do:
it has rejected the advances of the global corporatocracy.
The Treaty That Must Not Be Named
Earlier this month Uruguay's government decided to end its participation in the secret negotiations
of the Trade in Services Agreement (TISA). After months of intense pressure led by unions and other
grassroots movements that culminated in a national general strike on the issue – the first of its
kind around the globe – the Uruguayan President Tabare Vazquez bowed to public opinion and left the
US-led trade agreement.
Despite – or more likely because of – its symbolic importance, Uruguay's historic decision has
been met by a wall of silence. Beyond the country's borders, mainstream media has refused to cover
the story.
This is hardly a surprise given that the global public is not supposed to even know about TiSA's
existence, despite – or again because of – the fact that it's arguably the most important of the
new generation of global trade agreements. According to WikiLeaks, it "is the largest component of
the United States' strategic 'trade' treaty triumvirate," which also includes the Trans Pacific Partnership
(TPP) and the TransAtlantic Trade and Investment Pact (TTIP).
TiSA involves more countries than TTIP and TPP combined: The United States and all 28 members
of the European Union, Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, Israel,
Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea,
Switzerland, Taiwan and Turkey.
Together, these 52 nations form the charmingly named "Really Good Friends of Services" group,
which represents almost 70% of all trade in services worldwide. Until its government's recent u-turn
Uruguay was supposed to be the 53rd Good Friend of Services.
TiSA Trailer
TiSA has spent the last two years taking shape behind the hermetically sealed doors of highly
secure locations around the world. According to the agreement's provisional text, the document is
supposed to remain confidential and concealed from public view for at least five years after being
signed. Even the World Trade Organization has been sidelined from negotiations.
But thanks to whistle blowing sites like WikiLeaks, the Associated Whistleblowing Press and Filtrala,
crucial details have seeped to the surface. Here's a brief outline of what is known to date (for
more specifics click
here,
here and
here):
1.TiSA would "lock in" the privatization of services – even in cases where private service
delivery has failed – meaning governments can never return water, energy, health, education or other
services to public hands.
2.TiSA would restrict signatory governments' right to regulate stronger standards in the public's
interest. For example, it will affect environmental regulations, licensing of health facilities and
laboratories, waste disposal centres, power plants, school and university accreditation and broadcast
licenses.
3.TiSA would limit the ability of governments to regulate the financial services industry,
at a time when the global economy is still struggling to recover from a crisis caused primarily by
financial deregulation. More specifically, if signed the trade agreement would:
Restrict the ability of governments to place limits on the trading of derivative contracts
- the largely unregulated weapons of mass financial destruction that helped trigger the 2007-08
Global Financial Crisis.
Bar new financial regulations that do not conform to deregulatory rules. Signatory governments
will essentially agree not to apply new financial policy measures which in any way contradict
the agreement's emphasis on deregulatory measures.
Prohibit national governments from using capital controls to prevent or mitigate financial
crises. The leaked texts prohibit restrictions on financial inflows – used to prevent rapid currency
appreciation, asset bubbles and other macroeconomic problems – and financial outflows, used to
prevent sudden capital flight in times of crisis.
Require acceptance of financial products not yet invented. Despite the pivotal role that new,
complex financial products played in the Financial Crisis, TISA would require governments to allow
all new financial products and services, including ones not yet invented, to be sold within their
territories.
4. TiSA would ban any restrictions on cross-border information flows and localization requirements
for ICT service providers. A provision proposed by US negotiators would rule out any conditions for
the transfer of personal data to third countries that are currently in place in EU data protection
law. In other words, multinational corporations will have carte blanche to pry into just about every
facet of the working and personal lives of the inhabitants of roughly a quarter of the world's 200-or-so
nations.
As I wrote in
LEAKED: Secret Negotiations to Let Big Brother Go Global, if TiSA is signed in its current form
– and we will not know exactly what that form is until at least five years down the line – our personal
data will be freely bought and sold on the open market place without our knowledge; companies and
governments will be able to store it for as long as they desire and use it for just about any purpose.
5. Finally, TiSA, together with its sister treaties TPP and TTIP, would establish a new global
enclosure system, one that seeks to impose on all 52 signatory governments a rigid framework of international
corporate law designed to exclusively protect the interests of corporations, relieving them of financial
risk and social and environmental responsibility. In short, it would hammer the final nail in the
already bedraggled coffin of national sovereignty.
A Dangerous Precedent
Given its small size (population: 3.4 million) and limited geopolitical or geo-economic clout,
Uruguay's withdrawal from TiSA is unlikely to upset the treaty's advancement. The governments of
the major trading nations will continue their talks behind closed doors and away from the prying
eyes of the people they are supposed to represent. The U.S. Congress has already agreed to grant
the Obama administration fast-track approval on trade agreements like TiSA while the European Commission
can be expected to do whatever the corporatocracy demands.
However, as the technology writer Glyn Moody
notes, Uruguay's defection – like the people of Iceland's refusal to assume all the debts of
its rogue banks – possesses a tremendous symbolic importance:
It says that, yes, it is possible to withdraw from global negotiations, and that the apparently
irreversible trade deal ratchet can actually be turned back. It sets an important precedent that
other nations with growing doubts about TISA – or perhaps TPP – can look to and maybe even follow.
Naturally, the representatives of Uruguay's largest corporations would agree to disagree. The
government's move was one of its biggest mistakes of recent years,
according to Gabriel Oddone, an analyst with the financial consultancy firm CPA Ferrere. It was
based on a "superficial discussion of the treaty's implications."
What Oddone conveniently fails to mention is that Uruguay is the only nation on the planet that
has had any kind of public discussion, superficial or not, about TiSA and its potentially game-changing
implications. Perhaps it's time that changed.
So, not to be snarky or anything but when does the invasion of Uruguay begin. Wondering:
don't they want to pay $750.00 per pill for what cost $13.85 the day before? Aren't they interested
in predatory capitalism? What is going on down there?
Jim Haygood, September 23, 2015 at 12:17 pm
Most symbolic is that the eighth round of multilateral trade negotiations under GATT (now WTO)
kicked off in Punta del Este, Uruguay in Sep. 1986.
It went into effect in 1995, and is still known as the Uruguay Round.
susan the other, September 23, 2015 at 1:21 pm
And will international corporations issue their own fiat; pass their own laws; and prosecute
their own genocide? Contrary to their group hallucinations, corporations cannot replace government.
And clearly, somebody forgot to tell them that capitalism, corporatism, cannot survive without
growth. The only growth they will achieve is raiding other corporations. They are more powerless
and vulnerable than they ever want to admit.
hunkerdown, September 23, 2015 at 8:13 pm
And will international corporations issue their own fiat; pass their own laws; and
prosecute their own genocide?
Sure. There's prior art. Company scrip, substance "abuse" policies, and Bhopal (for a bit
different definition of "prosecute").
In the US, corporations largely have replaced government since WWII or so, or at least
pretend to offer the services that a government might provide.
likbez, September 24, 2015 at 10:54 pm
They are more powerless and vulnerable than they ever want to admit.
You are dreaming. Neoliberalism that we have now as a dominant social system is a flavor
of corporatism. If so, it is corporations which now represent the most politically powerful
actors. They literally rule the country. And it is they who select the president, most congressmen
and Senators. Try to ask yourself a question: to what political force Barak "change we can
believe in" Obama serves.
As Sen. Dick Durbin (D-Ill.) aptly noted:
"And the banks - hard to believe in a time when we're facing a banking crisis that
many of the banks created - are still the most powerful lobby on Capitol Hill. And they
frankly own the place"
gordon, September 23, 2015 at 9:03 pm
The TISA has a history. It's really just a continuation of the MAI treaty which the OECD failed
to conclude back in the 1990s.
What I don't get is why all those countries want to sign up to these agreements. I can see
what is in it for the US elites, but how does it help these smaller countries?
likbez, September 24, 2015 at 10:43 pm
Elites of those small countries are now transnational. So in a way they represent the fifth
column of globalization. That explains their position: own profit stands before interests of
the country.
vidimi, September 24, 2015 at 4:19 am
This is such a huge, huge, vital issue. Privatisation of public assets has to rank as one
of the highest crimes at the government level. It is treason, perhaps the only crime for which
i wouldn't object capital punishment.
What's more, we now have some 40 years of data showing that privatisation doesn't work.
surely, we can organise and successfully argue that privatisation has never worked for any country
any time. There needs to be an intellectual assault on privatisation discrediting it forever.
"... Note the adjective " unfettered ". Anything that is not sanctioned by the rule of law is not good for anyone. The challenge today is extractive capitalism. Some of this can be addressed by tax policy. Bankruptcy law needs to be changed to hold liable those executives who take out excessive amounts of funds from an enterprize. Personal property needs need better protection. Existing environmental laws need to be enforced. ..."
"... My understanding is that Pope Francis (I am not Catholic) has spoken about the inherent unfairness of "unrestricted" capitalism. He has not denounced capitalism. His words are painstaking, accurately stated & precise. ..."
"... I like his moves, promoting climate change, making a point in visiting the poorest countries on Earth, and naming Capitalists as members of a greedy system, not capable of taking on the role of providing goods and services to the Needy, and of course, the Pontiff heaps religious obscenities upon the War Mongers, mainly in the West. I am going to give my Bible another chance, here's hoping . ..."
"... He seems to be pointing out a few realities. Which, as others have pointed out is causing much wriggling by those who have complete faith by the dollar in the sky. ..."
"... "The US government gives the Vatican nothing...". Not quite. The US Government gives the Church tax-exemption. ..."
"... Of course all the corporate politicians both Republican and Democrat are going to oppose the Pope. Forget the politicians and let's see how the American people react. I expect the Pope will be warmly received as a man of empathy and humanity who shows concern for the poor. I hope that when he addresses congress he does not pull any of his punches. ..."
I do not mean to misquote him. Pope Francis is a good man, but before he lectures the US on
capitalism, he needs to remember that the Vatican bank has been embroiled in their own banking
scandals. I was raised Catholic. I do not have a good impression of the men who run the church.
They spend a lot of time asking for money, and I always wonder if they are spending it hiring
lawyers for pedophile priests. I like the Pope though. He seems better that the rest of the lot.
I think the tax exemptions for religions should be stopped. Religions spend too much time discriminating
against certain segments of society. I think they are wolves in sheep's clothing.
RoachAmerican 13 Jul 2015 20:19
Note the adjective " unfettered ". Anything that is not sanctioned by the rule of law is
not good for anyone. The challenge today is extractive capitalism. Some of this can be addressed
by tax policy. Bankruptcy law needs to be changed to hold liable those executives who take out
excessive amounts of funds from an enterprize. Personal property needs need better protection.
Existing environmental laws need to be enforced.
William Brown 13 Jul 2015 20:05
I imagine The Pope will say something about an 'eye of a needle'
brianboru1014 13 Jul 2015 19:52
Wall Street via the New York Times and the WS Journal is well on the way to denigrating this
man. Even though most Americans support him, these publications will do everything to belittle
him.
The US government gives "only" tax exempt status. On the other-hand, citizens of the US very
likely raise more money for the Catholic Church than the citizens of any other country.
Ken Barnes -> LivinVirginia 13 Jul 2015 19:30
My understanding is that Pope Francis (I am not Catholic) has spoken about the inherent
unfairness of "unrestricted" capitalism. He has not denounced capitalism. His words are painstaking,
accurately stated & precise. It helps no one in a discussion to change what another has said
& then attempt to debate the misquote.
Greenshoots -> goatrider 13 Jul 2015 19:29
And a shedload of other "purposes" as well:
The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational,
scientific, literary, testing for public safety, fostering national or international amateur sports
competition, and preventing cruelty to children or animals. The term charitable is used in its
generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged;
advancement of religion; advancement of education or science; erecting or maintaining public buildings,
monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating
prejudice and discrimination; defending human and civil rights secured by law; and combating community
deterioration and juvenile delinquency.
Richard Martin 13 Jul 2015 19:20
Francis really follows in the footsteps of the First Fisherman, radicalised in God's format
.
I like his moves, promoting climate change, making a point in visiting the poorest countries
on Earth, and naming Capitalists as members of a greedy system, not capable of taking on the role
of providing goods and services to the Needy, and of course, the Pontiff heaps religious obscenities
upon the War Mongers, mainly in the West. I am going to give my Bible another chance, here's hoping
.
John Fahy 13 Jul 2015 19:16
He seems to be pointing out a few realities. Which, as others have pointed out is causing
much wriggling by those who have complete faith by the dollar in the sky.
goatrider -> LivinVirginia 13 Jul 2015 19:01
As it does every other religion----
TerryMcGee -> Magali Luna 13 Jul 2015 19:00
Up until this pope, I would have agreed with you. But this pope is different. In one step,
he has taken the papacy from being a major part of the problem to a major force for good. We can't
expect him to fix all the problems in the church and its doctrines - that's not the work of one
generation. But if he can play a major part in fixing the two massive world problems he has focussed
on - climate change and rampant capitalism - he will have done enough for one lifetime.
And I get the impression that he's only warming up....
LivinVirginia -> goatrider 13 Jul 2015 18:34
"The US government gives the Vatican nothing...". Not quite. The US Government gives the Church tax-exemption.
David Dougherty 13 Jul 2015 18:13
Of course all the corporate politicians both Republican and Democrat are going to oppose
the Pope. Forget the politicians and let's see how the American people react. I expect the Pope
will be warmly received as a man of empathy and humanity who shows concern for the poor. I hope
that when he addresses congress he does not pull any of his punches.
Cooper2345 13 Jul 2015 17:59
I like the gift that Morales gave to the Pope, the crucifix over the hammer and sickle. It
shows the victory of Christianity over Soviet communism that one of Francis' predecessors helped
to shepherd. It's a great reminder of a wonderful triumph and reason to be thankful for the genius
of St. John Paul II.
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with http://neweconomicperspectives.org " rel="nofollow">New Economic Perspectives ..."
"... New York Times ..."
"... New York Times ..."
"... laissez faire. ..."
"... The Gospel According to St. Lloyd Blankfein ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate
professor of economics and law at the University of Missouri-Kansas City. Jointly published with
http://neweconomicperspectives.org" rel="nofollow">New Economic Perspectives
A New York Times
article entitled "Championing Environment, Francis Takes Aim at Global Capitalism" quotes a conventional
Harvard economist, Robert N. Stavins. Stavins is enraged by Pope Francis' position on the environment
because the Pope is "opposed to the world economic order." The rage, unintentionally, reveals why
conventional economics is the most dangerous ideology pretending to be a "science."
Stavins' attacks on the Pope quickly became personal and dismissive. This is odd, for Pope Francis'
positions on the environment are the same as Stavins' most important positions. Stavins' natural
response to the Pope's views on the environment – had Stavin not been an economist – would have been
along the lines of "Pope Francis is right, and we urgently need to make his vision a reality."
Stavins' fundamental position is that there is an urgent need for a "radical restructuring" of
the markets to prevent them from causing a global catastrophe. That is Pope Francis' fundamental
position. But Stavins ends up mocking and trying to discredit the Pope.
I was struck by the similarity of Stavins response to Pope Francis to the rich man's response
to Jesus. The episode is reported in Matthew, Mark, and Luke in similar terms. I'll use Matthew's
version (KJAV), which begins at 19:16 with the verse:
And, behold, one came and said unto him, Good Master, what good thing shall I do, that I may
have eternal life?
Jesus responds:
And he said unto him, Why callest thou me good? there is none good but one, that is, God: but
if thou wilt enter into life, keep the commandments.
The young rich man wants to know which commandments he needs to follow to gain eternal life.
He saith unto him, Which? Jesus said, Thou shalt do no murder, Thou shalt not commit adultery,
Thou shalt not steal, Thou shalt not bear false witness,
Honour thy father and thy mother: and, Thou shalt love thy neighbour as thyself.
The young man saith unto him, All these things have I kept from my youth up: what lack I yet?
The young, wealthy man is enthused. The Rabbi that he believes has the secret of eternal life
has agreed to personally answer his question as to how to obtain it. He passes the requirements the
Rabbi lists, indeed, he has met those requirements since he was a child.
But then Jesus lowers the boom in response to the young man's question on what he "lacks."
Jesus said unto him, If thou wilt be perfect, go and sell that thou hast, and give to the poor,
and thou shalt have treasure in heaven: and come and follow me.
We need to "review the bidding" at this juncture. The young man is wealthy. He believes that Jesus
knows the secret to obtaining eternal life. His quest was to discover – and comply – with the requirement
to achieve eternal life. The Rabbi has told him the secret – and then gone well beyond the young
man's greatest hopes by offering to make him a disciple. The door to eternal life is within the young
man's power to open. All he needs to do is give all that he owns to the poor. The Rabbi goes further
and offers to make the young man his disciple. In exchange, the young man will secure "treasure in
heaven" – eternal life and a place of particular honor for his sacrifice and his faith in Jesus.
Jesus' answer – the answer the young man thought he wished to receive more than anything in the
world – the secret of eternal life, causes the young man great distress.
But when the young man heard that saying, he went away sorrowful: for he had great possessions.
The young man rejects eternal life because he cannot bear the thought of giving his "great possessions"
to "the poor." Notice that the young man is not evil. He keeps the commandments. He is eager to do
a "good thing" to gain eternal life. He has "great possessions" and is eager to trade a generous
portion of his wealth as a good deed to achieve eternal life. In essence, he is seeking to purchase
an indulgence from Jesus.
But Jesus' response causes the young, wealthy man to realize that he must make a choice. He must
decide which he loves more – eternal life or his great possessions. He is "sorrowful" for Jesus'
response causes him to realize that he loves having his great possessions for his remaining span
of life on earth more than eternal life itself.
Jesus offers him not only the means to open the door to eternal life but the honor of joining
him as a disciple. The young man is forced by Jesus' offer to realize that his wealth has so fundamentally
changed him that he will voluntarily give up his entry into eternal life. He is not simply "sorrowful"
that he will not enter heaven – he is "sorrowful" to realize that heaven is open to him – but he
will refuse to enter it because of his greed. His wealth has become a golden trap of his own creation
that will damn him. The golden bars of his cell are invisible and he can remove them at any time
and enter heaven, but the young man realizes that his greed for his "great possessions" has become
so powerful that his self-created jail cell has become inescapable. It is only when Jesus opens the
door to heaven that the young man realizes for the first time in his life how completely his great
possessions have corrupted and doomed him. He knows he is committing the suicide of his soul – and
that he is powerless to change because he has been taught to value his own worth as a person by the
extent of his great possessions.
Jesus then makes his famous saying that captures the corrupting effects of great wealth.
Then said Jesus unto his disciples, Verily I say unto you, That a rich man shall hardly enter
into the kingdom of heaven.
And again I say unto you, It is easier for a camel to go through the eye of a needle, than
for a rich man to enter into the kingdom of God.
The remainder of the passage is of great importance to Luther's doctrine of "justification by
faith alone" and leads to Jesus' famous discussion of why "the last shall be first," (in which his
anti-market views are made even more explicit) but the portions I have quoted are adequate to my
purpose.
Pope Francis' positions on the environment and climate are the greatest boon that Stavin has received
in decades. The Pope, like Stavins, tells us that climate change is a disaster that requires urgent
governmental action to fix. Stavins could receive no more joyous news. Instead of being joyous, however,
Stavins is sorrowful. Indeed, unlike the wealthy man who simply leaves after hearing the Rabbi's
views, Stavins rages at and heaps scorn on the prelate, Pope Francis. Stavins' email to the New
York Times about the Pope's position on climate change contains this double ideological smear.
The approach by the pope, an Argentine who is the first pontiff from the developing world,
is similar to that of a "small set of socialist Latin American countries that are opposed to the
world economic order, fearful of free markets, and have been utterly dismissive and uncooperative
in the international climate negotiations," Dr. Stavins said.
Stavins' work explicitly states that the "free markets" he worships are causing "mass extinction"
and a range of other disasters. Stavins' work explicitly states that the same "free markets" are
incapable of change – they cause incentives so perverse that they are literally suicidal – and the
markets are incapable of reform even when they are committing suicide by laissez faire.
That French term is what Stavins uses to describe our current markets. Pope Francis agrees with each
of these points.
Pope Francis says, as did Jesus, that this means that we must not worship "free markets," that
we must think first of the poor, and that justice and fairness should be our guides to proper conduct.
Stavins, like the wealthy young man, is forced to make a choice. He chooses "great possessions."
Unlike the wealthy young man, however, Stavins is enraged rather than "sorrowful" and Stavins lashes
out at the religious leader. He is appalled that an Argentine was made Pope, for Pope Francis holds
views "that are opposed to the world economic order [and] fearful of free markets." Well, yes. A
very large portion of the world's people oppose "the Washington Consensus" and want a very different
"world economic order." Most of the world's top religious leaders are strong critics of the "world
economic order."
As to being "fearful of free markets," Stavins' own work shows that his use of the word "free"
in that phrase is not simply meaningless, but false. Stavins explains that the people, animals, and
plants that are the imminent victims of "mass extinction" have no ability in the "markets" to protect
themselves from mass murder. They are "free" only to become extinct, which makes a mockery of the
word "free."
Similarly, Stavins' work shows that any sentient species would be "fearful" of markets that Stavins
proclaims are literally suicidal and incapable of self-reform. Stavins writes that only urgent government
intervention that forces a "radical restructuring" of the markets can save our planet from "mass
extinction." When I read that I believed that he was "fearful of free markets."
We have all had the experience of seeing the "free markets" blow up the global economy as recently
as 2008. We saw there, as well, that only massive government intervention could save the markets
from a global meltdown. Broad aspects of the financial markets became dominated by our three epidemics
of "accounting control fraud."
Stavins is appalled that a religious leader could oppose a system based on the pursuit and glorification
of "great possessions." He is appalled that a religious leader is living out the Church's mission
to provide a "preferential option for the poor." Stavins hates the Church's mission because it is
"socialist" – and therefore so obviously awful that it does not require refutation by Stavins. This
cavalier dismissal of religious beliefs held by most humans is revealing coming from a field that
proudly boasts the twin lies that it is a "positive" "science." Theoclassical economists embrace
an ideology that is antithetical to nearly every major religion.
Stavins, therefore, refuses to enter the door that Pope Francis has opened. Stavins worships a
system based on the desire to accumulate "great possessions" – even though he knows that the markets
pose an existential threat to most species on this planet and even though he knows that his dogmas
increasingly aid the worst, most fraudulent members of our society to become wealthy through forms
of "looting" (Akerlof and Romer 1993) that make other people poorer. The result is that Stavins denounces
Pope Francis rather than embracing him as his most valuable ally.
Conclusion: Greed and Markets Kill: Suicide by Laissez Faire
The old truths remain. The worship of "great possessions" wreaks such damage on our humanity that
we come to love them more than life itself and act in a suicidal fashion toward our species and as
mass destroyers of other species. Jesus' insight was that this self-corruption is so common, so subtle,
and so powerful that "It is easier for a camel to go through the eye of a needle, than for a rich
man to enter into the kingdom of God." Today, he would probably use "economist" rather than "camel."
Theoclassical economists are the high priests of this celebration of greed that Stavins admits
poses the greatest threat to life on our planet. When Pope Francis posed a choice to Stavins, he
chose to maintain his dogmatic belief in a system that he admits is suicidal and incapable of self-reform.
The reason that the mythical and mystical "free markets" that Stavins worships are suicidal and incapable
of self-reform even when they are producing "mass extinction" is that the markets are a system based
on greed and the desire to obtain "great possessions" even if the result is to damn us and life on
our planet.
Adam Smith propounded the paradox that greed could lead the butcher and baker (in a village where
everyone could judge reputation and quality) to reliably produce goods of high quality at the lowest
price. The butcher and baker, therefore, would act (regardless of their actual motivations) as if
they cared about their customers. Smith observed that the customer of small village merchant's products
would find the merchant's self-interest a more reliable assurance of high quality than the merchant's
altruism.
But Stavins makes clear in his writing that this is not how markets function in the context of
"external" costs to the environment. In the modern context, the energy markets routinely function
in a manner that Stavins rightly depicts as leading to mass murder. Stavins so loves the worship
of the quest for "great possessions" that he is eager to try to discredit Pope Francis as a leader
in the effort to prevent "mass extinction" (Stavins' term) – suicide by laissez faire.
(No, I am not now and never was or will be a Catholic.)
The Pope's recent comments stirred an old memory from when I was a child, for some reason.
Growing up in England in the 1980's, it didn't escape even my childish notice that the series
"Dr. Who" was often a vehicle for what would now been deemed outrageously left wing thinking and
ideas.
One such episode was
The Pirate Planet. The plot's premise was that a race had created a mechanism for consuming
entire planets at a time, extracting mineral wealth from the doomed planet being destroyed in
the process and using energy and resources for the benefit of a tiny ruling elite with the remnants
being offered as trinkets for the masses.
A small subset of the evil race was subliminally aware of what was happening. One of the lines
spoken by a character really stuck in my mind, when he said after the reality of their existence
was explained to him "so people die to make us rich?"
At the time, it was intended I think more as an allegory on the exploitation of South African
gold miners under apartheid than as a general critique of capitalism by the prevailing socialist
thinking in Britain in that era (it seems impossible now for me to believe how left wing Britain
was in the late 1970s and even into the very early 1980s, but that is indeed the case; it feels
like it was a completely different country. Perhaps it was ). No wonder the Thatcher government
aggressively targeted the BBC (who produced the show), seeing it, probably rightly, as a hotbed
of Trotskyite ideology.
But the point the show was trying to make is as valid now as it was then and is the same point
the Pope Francis is making. A great deal of our material wealth and affluence is built on others'
suffering. It is wrong. And the system which both perpetrates the suffering and the people who
benefit from it needs to change. Us turkeys are going to have to vote for Christmas.
Nice post, Clive. But I thought Brits ate goose at Christmas, and Americans eat turkey at Thanksgiving
;-)
Yes, where have all the leftists gone? Is Cornel West the only one "left" in America? Forty
years ago I was moving to the Right, in reaction to the Left. The Cold War was still on, patriotism
et al.
The current paradigm is insane so nature will not allow it to continue much longer. G-d not
so much. The US today is qualitatively different than it was in the 70s.
Trotsky was one of the first people to understand Hitler. Stalin not so much. Our current crop
of elder pundits of Neoliberalism originally were Jewish trotskyites back in the 60s. Neoliberalism
was perhaps pragmatic back then, but has outlived its usefulness.
The overweening arrogance of the Thatcherites and the neoclassical ideologues that are in evidence
at Harvard is their insistence that what they peddle is not a set of values, but a "science",
and that their set of values is the only set of values even worth considering (TINA). The Pope's
job is to remind us all of another possible set of values and organizing principles. No one said
you have to believe in them. But they have a right to be on the table when we collectively chose
what kind of world we want to live in.
"All he needs to do is give all that he owns to the poor." Bill Black
No. He is to sell all he owns but Jesus does not say that he is to then give away ALL the money.
The rich guy's problem is his possessions, not money. Note that Matthew, another rich guy, did
not give away all his money yet he was a disciple of Jesus.
As for "free markets", what is free market about government-subsidized/privileged banks?
something didn't read right about this piece to me. hard to put my finger on it, but it came
across as a bit hypocritical and a lot bitter. apart from that, the style is eclectic and the
thoughts are scrambled all over the place. more a rant than a coherent argument.
It all began when I arrived. After travelling some 48 hours from South Africa to Southern
California, carrying films and books for the conference, I was not even met at the airport.
So I took a taxi. But nobody met me at the place where I was supposed to stay. I stood on the
street for more than one hour.
in this passage he sounds like he suffers from affluenza. in those poor but righteous third
world countries, he is treated like a rockstar. in the rotten US, he is dismayed at the lack of
attention. although no doubt he has a point, it smacks a bit of entitlement.
not vltchek's best work, but then again, he did admit to writing most of it on the plane.
it seems impossible now for me to believe how left wing Britain was in the late 1970s
and even into the very early 1980s, but that is indeed the case; it feels like it was a completely
different country.
True. And greed, as described by Bill Black. has no limits.
"Theoclassical economists are the high priests of this celebration of greed that Stavins
admits poses the greatest threat to life on our planet. When Pope Francis posed a choice to
Stavins, he chose to maintain his dogmatic belief in a system that he admits is suicidal and
incapable of self-reform. The reason that the mythical and mystical "free markets" that Stavins
worships are suicidal and incapable of self-reform even when they are producing "mass extinction"
is that the markets are a system based on greed and the desire to obtain "great possessions"
even if the result is to damn us and life on our planet."
This is an extremely important point. We cannot combat neoliberal ideology as if it were simply
a set of rational assumptions, albeit flowing from flawed premises. No, it is a religious
dogma of greed, set up to combat all of the more communitarian and gentle schools of
religious thought– including the Christianity of Pope Francis, or the environmentalism of St.
Francis, the patron saint of ecologists.
Good to see that someone else pulls out the "rich young man" bit occasionally. Not many Christians
I've talked to seem to be aware of it, much less of the implications. Good on ya'.
fundamentalists like to take things in the bible literally, but they know that jesus
didn't mean it when he said that "It is easier for a camel to go through the eye of a needle,
than for a rich man to enter into the kingdom of God"
Maybe he didn't realize that his possessions owned him, but the rich young man knew that *something*
was wrong. For all his virtue and good works, he could feel things weren't right inside himself.
Pope Francis probably hasn't read The Gospel According to St. Lloyd Blankfein. If
he had read it, he would know that investment bankers are doing God's work.
"... Senior Catholic figures in the US and UK have said the Pope's central message is: what sort of world do we want to leave for future generations? ..."
"... Kurtz deflected criticism from Republican president contenders such as Jeb Bush that the Pope was straying from the pulpit into political terrain. "I don't think he is presenting a blue print for saying this is exactly a step by step recipe," Kurtz said. "He is providing a framework and a moral call as a true moral leader to say take seriously the urgency of this matter." ..."
The Pope
has warned of an "unprecedented destruction of ecosystems" and "serious consequences for all
of us" if humanity fails to act on climate change, in his encyclical on the environment, published
by the Vatican on Thursday.
Senior Catholic figures in the US and UK
have said the Pope's central message is: what sort of world do we want to leave for future
generations?
The UN secretary general, the World Bank president, plus the heads of the UN climate talks
and the UN environment programme have all welcomed the encyclical, along with scores of charities
and faith groups.
Church leaders will brief members of Congress on the encyclical on Thursday, and the White
House on Friday on the encyclical. "It is our marching orders for advocacy,"
said Joseph Kurtz, the president of the US Conference of Catholic Bishop
Cardinal Peter Turkson, the pope's top official on social and justice issues, flatly rejected
arguments by some conservative politicians in the US that the pope ought to stay out of science.
"Saying that a pope shouldn't deal with science sounds strange since science is a public domain.
It is a subject matter that anyone can get in to," Turkson said at a press conference on Thursday.
The pontiff's upcoming document is being hailed as a major intervention in the climate change
debate – but what exactly is an encyclical?
In an apparent reference to comments by Republican presidential contender Jeb Bush, who said
he did not take economic advice from the pope, Turkson said that politicians had the right to
disregard Francis's statement, but said it was wrong to do so based on the fact that the pope
was not a scientist.
"For some time now it has been the attempt of the whole world to kind of try to de-emphasise
the artificial split between religion and public life as if religion plays no role," he said.
Then, quoting an earlier pope, he said the best position was to "encourage dialogue between faith
and reason".
The secretary-general welcomes the papal encyclical released today by His Holiness
Pope Francis which
highlights that climate change is one of the principal challenges facing humanity, and that it
is a moral issue requiring respectful dialogue with all parts of society. The secretary-general
notes the encyclical's findings that there is "a very solid scientific consensus" showing significant
warming of the climate system and that most global warming in recent decades is "mainly a result
of human activity".
Ban called on governments to "place the global common good above national interests and to adopt
an ambitious, universal climate agreement" at the UN climate summit in Paris this December.
There are shades of the Pope's own language there. In the encyclical, he says: "International
[climate] negotiations cannot make significant progress due to positions taken by countries which
place their national interests above the global common good".
US church leaders said they saw the message as an urgent call for dialogue
and action – one they intend to amplify on social media and in the pulpit.
"It is our marching orders for advocacy," Joseph Kurtz, the president of the US Conference of
Catholic Bishops and the Archbishop of Louisville. "It really brings about a new urgency for us." Church leaders will brief members of Congress on Thursday, and the White House tomorrow on the
encyclical.
Kurtz deflected
criticism from Republican president contenders such as Jeb Bush that the Pope was straying from
the pulpit into political terrain. "I don't think he is presenting a blue print for saying this is exactly a step by step recipe,"
Kurtz said. "He is providing a framework and a moral call as a true moral leader to say take seriously
the urgency of this matter."
Here's a selection of some more US faith group reaction: Most Reverend Stephen E. Blaire, Bishop of the Catholic Diocese of Stockton:
This document written for all people of good will challenges institutions and individuals to
preserve and respect creation as a gift from God to be used for the benefit of all.
Rabbi Marvin Goodman, Rabbi in Residence, Jewish Community Federation and Endowment Fund, San
Francisco:
I'm inspired and grateful for the Pope's high profile leadership and commitment to environmental
justice.
Imam Taha Hassane, Islamic Center of San Diego:
Local and National Muslim Leadership support policies that both halt environmental degradation
and repair that which has already occurred. We stand with any leader, secular or spiritual,
who is willing to speak out against this issue.
Cardinal Vincent Nichols in the UK has echoed
US Archbishop Joseph Edward Kurtz in his view of what the Pope's central message is: what sort
of world do we want to leave for future generations to inherit? The Press Association reports:
Speaking at Our Lady & St Joseph's Catholic Primary School, in Poplar, east London, against the
backdrop of the skyscrapers of Canary Wharf, Cardinal Vincent Nichols said one of the key messages
of the document was asking "what kind of world we want to leave to those who come afterwards".
The pope's message challenged the idea that infinite material progress was possible, with more
goods and more consumption, that "we have to have the latest phone", said the cardinal, who is
head of the Catholic Church in England and Wales.
The US House of Representatives'
Sustainable Energy and Environment Coalition says – in an apparent reference to climate denial
on the US right – that "the political will of many is still askew" when it comes to tackling global
warming. It hopes the Pope's encyclical might change that:
For those unmoved by the science of climate change, we hope that Pope Francis' encyclical demonstrates
the virtue and moral imperative for action. Today's announcement further aligns the scientific
and moral case for climate action, yet the political will of many is still askew. The time to
act on climate is now, and failure to do so will further damage the planet, its people, and our
principles.
Pope Francis's guidance as a pastor and a teacher shines a light on the moral obligation we all
share to address the climate crisis that transcends borders and politics. This Encyclical underscores
the need for climate action not just to protect our environment, but to protect humankind and
the most vulnerable communities among us. The vision laid out in these teachings serves as inspiration
to everyone across the world who seeks a more just, compassionate, and healthy future.
In case you don't have enough time to read the 100+ page encyclical itself (the length varies depending
on the language and font size of the versions kicking around),
Some more reaction from UK charities on how governments meeting in Paris later this year should listen
to the Pope.
Adriano Campolina, chief executive of ActionAid International, said:
The Pope's message highlights the important links between climate change, poverty and overconsumption.
They are part of the same problem and any lasting solution to climate change must tackle these
fundamental issues.
The powerful truth in Pope Francis' message reaches far beyond the Catholic
Church or climate campaigners. Action on climate requires both environmental and social justice.
As negotiators work on a climate deal for Paris, our leaders must show the same moral and political
courage that Pope Francis has.
Christian conservation group A Rocha said: "national governments should follow the Pope's example
and take 'meaningful action' on climate change".
One of the most senior figures in the US Catholic church, Joseph Edward Kurtz, Archbishop of Louisville,
has been speaking at a US press conference. He said that that perhaps the central message of the
encyclical is: what kind of world do we want to leave to those who come after us?
Here are some
highlights from Kurtz:
It's really a very beautiful and very extensive treatment of what Pope Francis has called our
common home.
...
The Pope over and over again says that care for the things of this Earth is necessarily bound
with care for one another and especially those who are poor. He calls it an interdependency.
...
He speaks on very indivudal choices as well as the public sphere
...
Over and over again he talks about the world as a gift
...
He uses a phrase he's used very often: to reject a throwaway culture.
...
He talks about very specific things, about slums in which people are forced to live, the lack
of clean water, about the consumerism mentality.
And that perhaps this is the centre of his message: what kind of world do we want to leave
to those who come after us?
...
Our pope is speaking with a very much pastor's voice and with a deep respect for the role of
science.
Three essential areas that our Catholic community is being called to being involved in:
1) to advocate, a local, national and global level, to advocate for the common good. We know
that faith if done well, actually enriches public life. And we know that technology tells us what
we can do, but we need moral voices that tell us what we should do
2) [the video cut out at this point so I'm afraid I missed his second point]
3) The use of our resources, in whole we build buildings, should honour the Earth
Here's the Pope himself on that issue of what we leave future generations:
Leaving an inhabitable planet to future generations is, first and foremost, up to us. The issue
is one which dramatically affects us, for it has to do with the ultimate meaning of our earthly
sojourn.
We may well be leaving to coming generations debris, desolation and filth. The pace
of consumption, waste and environmental change has so stretched the planet's capacity that our
contemporary lifestyle, unsustainable as it is, can only precipitate catastrophes, such as those
which even now periodically occur in different areas of the world. The effects of the present
imbalance can only be reduced by our decisive action, here and now.
Summary
The Pope
has warned of an "unprecedented destruction of ecosystems" and "serious consequences for all
of us" if humanity fails to act on climate change, in his encyclical on the environment, published
by the Vatican on Thursday
The
pontiff said that the world should phase out coal in favour of gas, while renewable energy
technology scales up
The heads of the
UN climate talks and the
UN environment programme have said the Pope's intervention should act as a "clarion call"
for governments meeting in a bid to work out a climate change deal at a summit in Paris later
this year
Today's release of Pope Francis' first encyclical should serve as a stark reminder to all of us
of the intrinsic link between climate change and poverty. We know the scientific, business and
economic case for action to combat climate change and I welcome the pope's emphasis on our moral
obligation to act.
He added:
The pope's encyclical comes at a pivotal moment in the lead up to December's Paris meeting on
climate change.
The World Council of Churches welcomes Pope Francis' encyclical which catalyses what churches
and ecumenical organizations have been doing for decades on caring for the earth and climate justice
issues. By affirming human induced climate change and its impacts on the poorest and most vulnerable
communities, the Encyclical is an important call to urgently act as individuals, citizens and
also at the international level to effectively respond to the climate crisis.
Dr. Steven Timmermans, executive director of the Christian Reformed Church in North America, said:
We affirm Pope Francis' moral framing of the threats posed by climate change. We have too many
brothers and sisters around the world living on the edge of poverty whose livelihoods are threatened-and
too many little ones in our congregations set to inherit a dangerously broken world-to believe
otherwise. For too long the church has been silent about the moral travesty of climate change.
Today, the Pope has said, 'Enough is enough,' and the Christian Reformed Church welcomes his voice.
Sister Pat McDermott, president of the Sisters of Mercy of the Americas, said:
We welcome Pope Francis' critique of the current, dominant economic model that prioritizes the
market, profit and unharnessed consumption and regards Earth as a resource to be exploited.
Rev. Mitch Hescox, president of the US-based Evangelical Environmental Network, which lobbies American
politicians on environmental issues, welcomed the Pope's encyclical. He
said:
It's time to make hope happen by fuelling the unstoppable clean energy transition, stopping the
ideological battles, and working together.
Creating a new energy economy that benefits all and addresses climate change is not about a
political party but living as a disciple of Jesus Christ. We urge all people of good will, especially
fellow Christian conservatives to read and study these timely words from Pope Francis.
The New York Times' Justin Gillis says (fairly, in my opinion) that the Pope is more cautious on
the science behind climate change than many scientists.
...amid all his soaring rhetoric, did the pope get the science right?
The short answer from
climate and environmental scientists is that he did, at least to the degree possible in a religious
document meant for a broad audience. If anything, they say, he may have bent over backward to
offer a cautious interpretation of the scientific facts.
For example, a substantial body of published science says that human emissions have caused
all the global warming that has occurred over the past century. Yet in his letter, Francis does
not go quite that far, citing volcanoes, the sun and other factors that can influence the climate
before he concludes that "most global warming in recent decades is due to the great concentration
of greenhouse gases" released mainly by human activity.
The world's most authoritative body on climate science, the UN's Intergovernmental Panel on Climate
Change, found in
its landmark report last year that global warming is "unequivocal" and humanity's role in causing
it is "clear".
In some places, cooperatives are being developed to exploit renewable sources of energy which
ensure local self-sufficiency and even the sale of surplus energy. This simple example shows that,
while the existing world order proves powerless to assume its responsibilities, local individuals
and groups can make a real difference.
Bob Perciasepe of US thinktank Center for Climate and Energy Solutions,
has blogged on the unique role the Pope can play in the climate change arena and how he might
influence American minds:
Scientists, environmentalists, politicians, business executives, and military leaders have all
raised concerns for years about the real risks of climate change. But few individuals are as influential
as the pope. By calling on people to act on their conscience, Pope Francis provides a powerful
counterpoint to what has become a largely ideologically-driven debate, especially here in the
United States.
The publication of the Pope's encyclical is of enormous significance. He has shown great wisdom
and leadership. Pope Francis is surely absolutely right that climate change raises vital moral
and ethical issues. It is poor people around the world who are most vulnerable to the impacts
of climate change, such as an intensification of extreme weather events. And the decisions that
we make about managing the risks of climate change matter not only for us, but also for our children,
grandchildren and future generations.
He added:
Moral leadership on climate change from the Pope is particularly important because of the failure
of many heads of state and government around the world to show political leadership.
And here's what the Pope himself says about world leaders' failure to act on climate change and
environmental problems:
Many of those who possess more resources and economic or political power seem mostly to be concerned
with masking the problems or concealing their symptoms, simply making efforts to reduce some of
the negative impacts of climate change.
The pope's effort to sever the link between population growth and environmental deterioration
should not, however, detract from the importance of what else he has to say. This is the first encyclical
to be devoted entirely to environmental issues, though it is certainly not the first time a pope
has spoken out on the destruction of the environment.
As the encyclical notes, Paul VI first raised the issue as long ago as 1971, describing it as
a "tragic consequence" of uncontrolled human activity. Saint John Paul II and his successor, Benedict
XVI, inveighed against mankind's ill-treatment of nature – or as they viewed it, creation.
Far more explicitly than his predecessors, however, Francis heaps the blame on to the part of
humanity that is rich. He accepts that the poorer nations should "acknowledge the scandalous level
of consumption in some privileged sectors of their population and combat corruption more effectively."
They ought also to develop less pollutant sources of energy.
The Pope suggests that you can't care about nature and support abortion, which the Catholic church
strongly opposes:
Since everything is interrelated, concern for the protection of nature is also incompatible with
the justification of abortion. How can we genuinely teach the importance of concern for other
vulnerable beings, however troublesome or inconvenient they may be, if we fail to protect a human
embryo, even when its presence is uncomfortable and creates difficulties?
The other elephant in the room is birth control and overpopulation, though the Pope seems to have
anticipated criticism on that. He takes the line,
supported by many environmentalists, that consumption is the problem, not overpopulation. The
encyclical says:
To blame population growth instead of extreme and selective consumerism on the part of some, is
one way of refusing to face the issues.
The head of the UN's environment programme, Achim Steiner, has echoed
the UN's climate chief in saying today's text should be a clarion call for action.
This encyclical is a clarion call that resonates not only with Catholics, but with all of the
Earth's peoples. Science and religion are aligned on this matter: The time to act is now.
We
(UNEP) share Pope Francis' view that our response to environmental degradation and climate change
cannot only be defined by science, technology or economics, but is also a moral imperative. We
must not overlook that the world's poorest and most vulnerable suffer most from the changes we
are seeing. Humanity's environmental stewardship of the planet must recognise the interests of
both current and future generations.
Each year sees the disappearance of thousands of plant and animal species which we will never
know, which our children will never see, because they have been lost for ever. The great majority
become extinct for reasons related to human activity.
...
a sober look at our world shows that the degree of human intervention, often in the service
of business interests and consumerism, is actually making our earth less rich and beautiful, ever
more limited and grey, even as technological advances and consumer goods continue to abound limitlessly.
We seem to think that we can substitute an irreplaceable and irretrievable beauty with something
which we have created ourselves.
On GM
It is difficult to make a general judgement about genetic modification (GM) ... The risks involved
are not always due to the techniques used, but rather to their improper or excessive application
... This is a complex environmental issue
On water quality
One particularly serious problem is the quality of water available to the poor. Every day, unsafe
water results in many deaths and the spread of water-related diseases, including those caused
by microorganisms and chemical substances.
On fossil fuels
We know that technology based on the use of highly polluting fossil fuels – especially coal, but
also oil and, to a lesser degree, gas – needs to be progressively replaced without delay. Until
greater progress is made in developing widely accessible sources of renewable energy, it is legitimate
to choose the lesser of two evils or to find short-term solutions.
At the Vatican press conference, Peter Turkson, a Ghanian cardinal of the Catholic church, says US
climate sceptics are entitled to their view.
"The other big thing about Republicans and presidential figures saying they will not listen to
the Pope is that is their freedom, their freedom of choice," he said, in an apparent reference to
Jeb Bush (see
11:21).
He said "it's easy to say because the Pope is not a scientist he shouldn't talk about science",
and said "I would not attach much credibility" to those criticisms.
The pontiff included a personal handwritten note in his communication. It ended with a plea for help:
"United in the lord, and please do not forget to pray for me."
One recurring motif throughout the encyclical is a general scepticism or outright hostility to
technological solutions to environmental challenges, and to the role that big business should play
in tackling climate change.
For example:
Technology, which, linked to business interests, is presented as the only way of solving these
problems, in fact proves incapable of seeing the mysterious network of relations between things
and so sometimes solves one problem only to create others
...
To seek only a technical remedy to each environmental problem which comes up is to separate
what is in reality interconnected and to mask the true and deepest problems of the global system.
He doesn't like carbon trading either. In this passage he seems to be referring to the only current
global carbon trading scheme, the
CDM:
The strategy of buying and selling "carbon credits" can lead to a new form of speculation which
would not help reduce the emission of polluting gases worldwide. This system seems to provide
a quick and easy solution under the guise of a certain commitment to the environment, but in no
way does it allow for the radical change which present circumstances require. Rather, it may simply
become a ploy which permits maintaining the excessive consumption of some countries and sectors.
And some sections sound like they could have been ghostwritten by Guardian columnist George Monbiot:
Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect
on the environmental damage which they will leave behind for future generations?
The Pope isn't just concerned about climate change. He has some very colourful turns of phrase about
other environmental problems, such as pollution and waste:
The earth, our home, is beginning to look more and more like an immense pile of filth. In many
parts of the planet, the elderly lament that once beautiful landscapes are now covered with rubbish.
The Pope makes reference to the huge body of work by national science academies and international
bodies such as the IPCC on climate science:
A very solid scientific consensus indicates that we are presently witnessing a disturbing warming
of the climatic system.
He warns of serious consequences if we don't act on climate change:
If present trends continue, this century may well witness extraordinary climate change and an
unprecedented destruction of ecosystems, with serious consequences for all of us.
As many studies have already pointed out, the Pope notes that the world's poor are expected to
suffer most from global warming:
It [climate change] represents one of the principal challenges facing humanity in our day. Its
worst impact will probably be felt by developing countries in coming decades. Many of the poor
live in areas particularly affected by phenomena related to warming, and their means of subsistence
are largely dependent on natural reserves and ecosystemic services such as agriculture, fishing
and forestry.
The message brought an outpouring of support from environmental groups, climate scientists, and
leaders of all religions, eager to counter a series of pre-emptive attacks on the Pope from conservatives.
The response was a first glimpse of a vast and highly organised mobilisation effort around the
letter visit, and a papal visit to the US in September.
The Pope will get an another chance to exhort leaders to act – this time in person – when he addresses
both houses of Congress.
With that high profile visit in mind, campaigners argued the Pope's intervention had re-set the
parameters of the discussion surrounding climate change, from narrow political agenda to broader
morality. The Pope's message was above religion, they said.
"The Pope's message applies to all of us," said Rhea Suh, president of the Natural Resources Defense
Council. "He is imploring people of good will everywhere to honour our moral obligation to protect
future generations from the dangers of further climate chaos by embracing our ethical duty to act,"
she said.
Cafod, the Catholic charity went so far as to suggest that that was the Pope's design all along.
"The Pope has deliberately released the encyclical in a year of key UN moments that will affect
humanity," said Neil Thomas, director of advocacy. "He is reading the signs of his times and telling
us that the human and environmental costs of our current way of life are simply too high."
Ray Bradley, the climate scientist, said: "He has no political agenda. He speaks from the heart
(not the Heartland) with unimpeachable moral authority. Who else can address this issue without the
taint of politics? Moreover, Pope Francis has a particular responsibility to those without a voice
at the centres of power in affluent countries.
But the Pope's message is expected to resonate most strongly among the environmental campaigners
operating within the Church.
For activist priests and nuns, who have lobbied oil companies and called on their own parishes
to divest, the encyclical puts the Vatican's stamp of approval on years of effort, often at the sidelines.
That on its own has galvanised campaigners, said Sister Joan Brown, a Franciscan in New Mexico
who has worked on climate change for more than 20 years.
"I've never seen anything like this in the faith community or otherwise," she said.
The pope's message set off a flood of new activity that has been more than a year in the planning.
In deference to the Pope, mainstream environmental groups will be operating in the background.
"We've been asking environmental groups to hold back on this...so that the message isn't one that
would maybe cause more polarisation, rather than less," Sister Joan said.
But the Catholic church – and activist wings among other religious communities – are jumping in
to try and amplify thePope's message and build momentum for action on climate.
The archbishop's office in Atlanta signed up scientists and engineers to help parishes, and parishioners,
reduce their carbon footprint. The Bishop of Des Moines is planning to hold a press conference at
a wind farm.
The Evangelical Environmental Network also came out strongly behind the Pope.
More than 300 rabbis signed on to a letter calling on Jewish institutions and individuals to divest
from "carbon Pharaohs" or coal-based electric power, and buy wind power instead.
As Pope Francis reaffirms, climate change is an all-encompassing threat: it is a threat to our
security, our health, and our sources of fresh water and food ... I applaud the Pope for his strong
moral and ethical leadership. We need more of such inspired leadership. Will we see it at the
climate summit in Paris?
The Pope is right – climate change is a problem for all of humanity that is hitting the world's
poorest hardest. His words could and should add real urgency to efforts to protect people and
planet. World leaders meeting at the UN climate talks in Paris later this year should be in no
doubt that the world expects them to put aside short-term national interest and move us all closer
to a safer and more prosperous future.
Andrew Steer, president and chief executive of the US-based World Resources Institute:
The pope's message brings moral clarity that the world's leaders must come together to address
this urgent human challenge. This message adds to the global drumbeat of support for urgent climate
action. Top scientists, economists, business leaders and the pope can't all be wrong.
The encyclical is unimpressed by those who deny the science of climate change:
regrettably, many efforts to seek concrete solutions to the environmental crisis have proved ineffective,
not only because of powerful opposition but also because of a more general lack of interest. Obstructionist
attitudes, even on the part of believers, can range from denial of the problem to indifference,
nonchalant resignation or blind confidence in technical solutions.
The pushback from Republican and the rest of the US right, where climate scepticism is a badge
of honour, has already begun. Jeb Bush, the Republican presidential candidate,
said yesterday: "I hope I'm not going to get castigated for saying this by my priest back home,
but I don't get economic policy from my bishops or my cardinal or my pope."
And as our US environment correspondent Suzanne Goldenberg found out last week at a gathering
of US climate sceptics, the Pope's encyclical is at the top of their list of concerns.
Suzanne Goldenberg visits the Heartland Institute's conference in Washington, an annual gathering
of climate sceptics, to hear what delegates – including US senator James Inhofe and blogger Marc
Morano – think about the Pope's encyclical on the environment and climate change
Christiana Figueres, the UN's climate chief, says the Pope's intervention should act as a "clarion
call" for a strong deal at Paris:
Pope Francis' encyclical underscores the moral imperative for urgent action on climate change
to lift the planet's most vulnerable populations, protect development, and spur responsible growth.
This clarion call should guide the world towards a strong and durable universal climate agreement
in Paris at the end of this year. Coupled with the economic imperative, the moral imperative leaves
no doubt that we must act on climate change now.
Christiana Figueres. Photograph: Martin Godwin/Martin Godwin
But the Pope isn't very impressed by more than 20 years of UN climate talks. He says the annual
summits have produced "regrettably few" advances on efforts to cut carbon emissions and rein in global
warming. The encyclical says:
It is remarkable how weak international political responses have been. The failure of global summits
on the environment make it plain that our politics are subject to technology and finance. There
are too many special interests, and economic interests easily end up trumping the common good
and manipulating information so that their own plans will not be affected.
John Schellnhuber, Angela Merkel's climate adviser and a leading climate change scientist, is punning
his way through a presentation at the encyclical's launch, "praying" his Powerpoint will work.
Of the encyclical, he said:
it is very unique in the sense that it brings together two strong powers in the world, namely
faith and moral and on the other reason and ingenuity. It's an environmental crisis but also a
social crisis. These two things together pose an enormouse challenge. Only if these two things
work together, faith and reason, can we overcome it
A spokesman for the Vatican told a packed press conference in the Vatican audience hall this morning
that in his 25 years there he has worked there, he has never seen as much prolonged, global and intense
anticipation for a single document, AP reports.
The press conference is being live-streamed on YouTube:
The more-than-100 page text is wide-ranging,
majoring on climate change, but also touching on pollution, biodiversity loss, the oceans, man's
modern relationship with nature, the dangers of relying on the markets and technology, and overconsumption.
The more than 190 countries involved in the international climate change will be keenly watching
the text too – it could have a big impact on the talks ahead of a
major summit in Paris later this year.
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
Ph.D
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