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.
"... 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...
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!)
"... 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. ...
I wonder what facts you have to label Trump's team "globalist shills".
Robert W. Merry in his National Interest article disagrees with you
http://nationalinterest.org/feature/trump-vs-hillary-nationalism-vs-globalism-2016-16041
=== start of the quote ===
Globalists captured much of American society long ago by capturing the bulk of the nation's elite
institutions -- the media, academia, big corporations, big finance, Hollywood, think tanks, NGOs,
charitable foundations. So powerful are these institutions -- in themselves and, even more so,
collectively -- that the elites running them thought that their political victories were complete
and final. That's why we have witnessed in recent years a quantum expansion of social and political
arrogance on the part of these high-flyers.
Then along comes Donald Trump and upends the whole thing. Just about every major issue that this
super-rich political neophyte has thrown at the elites turns out to be anti-globalist and pro-nationalist.
And that is the single most significant factor in his unprecedented and totally unanticipated
rise. Consider some examples:
Immigration: Nationalists believe that any true nation must have clearly delineated and protected
borders, otherwise it isn't really a nation. They also believe that their nation's cultural heritage
is sacred and needs to be protected, whereas mass immigration from far-flung lands could undermine
the national commitment to that heritage.
Globalists don't care about borders. They believe the nation-state is obsolete, a relic of
the 1648 Peace of Westphalia, which codified the recognition of co-existing nation states.
Globalists reject Westphalia in favor of an integrated world with information, money, goods
and people traversing the globe at accelerating speeds without much regard to traditional concepts
of nationhood or borders.
=== end of the quote ===
I wonder how "globalist shills" mantra correlates with the following Trump's statements:
=== start of quote ===
"Globalization has made the financial elite who donate to politicians very, very wealthy ... but
it has left millions of our workers with nothing but poverty and heartache," Trump told supporters
during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.
In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a
series of familiar plans designed to deal with what he called [Obama] "failed trade policies"
- including rejection of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations
and re-negotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico,
withdrawing from it if necessary.
The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements
rather than multi-national deals like TPP and NAFTA.
In addition to appointing better trade negotiators and stepping up punishment of countries
that violate trade rules, Trump's plans would also target one specific economic competitor: China.
He vowed to label China a currency manipulator, bring it before the World Trade Organization and
consider slapping tariffs on Chinese imports coming into the U.S.
"... 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.
...
"... We have a dollar democracy that protects the economic interest of the elite class while more than willing to let working class families lose their homes and jobs on the back end of wide scale mortgage fraud. Then the fraud was perpetuated in the mortgage default process just to add insult to injury. ..."
"... One thing that Trump certainly got wrong that no one ever points out is that there is a lot more murder than rape crossing the Mexican-American border in the drug cartel operations ..."
"... The technocrats lied about how globalization would be great for everyone. People's actual experience in their lives has been different. ..."
"... Centrist Democrat partisans with their increasinly ineffectual defenses of the establishment say it's only about racism and xenophobia, but it's more than that. ..."
Assaults on democracy are working because our current political elites have no idea how to
defend it.
[There are certainly good points to this article, but the basic assumption that our electorally
representative form of republican government is the ideal incarnation of the democratic value
set is obviously incorrect. We have a dollar democracy that protects the economic interest of
the elite class while more than willing to let working class families lose their homes and jobs
on the back end of wide scale mortgage fraud. Then the fraud was perpetuated in the mortgage default
process just to add insult to injury.
One thing that Trump certainly got wrong that no one ever points out is that there is a lot
more murder than rape crossing the Mexican-American border in the drug cartel operations:<) ]
The author fails to mention the Sanders campaign. An elderly socialist Jew from Brooklyn was able
to win 23 primaries and caucuses and approximately 43% of pledged delegates to Clinton's 55%.
This despite a nasty, hostile campaign against him and his supporters by the Clinton campaign
and corporate media.
There's also Jeremy Corbyn in the UK. Podemos, Syriza, etc.
Italy's 5 Star movement demonstrates a hostility to technocrats as well.
The author doesn't really focus on how the technocrats have failed.
The technocrats lied about how globalization would be great for everyone. People's actual experience
in their lives has been different.
Trump scapegoated immigrants and trade, as did Brexit, but what he really did was channel hostility
and hatred at the elites and technocrats running the country.
Centrist Democrat partisans with their increasinly ineffectual defenses of the establishment
say it's only about racism and xenophobia, but it's more than that.
RC AKA Darryl, Ron said in reply to Peter K.... , -1
"Globalization has made the financial elite who donate to politicians very, very wealthy ... but
it has left millions of our workers with nothing but poverty and heartache," Trump told supporters
during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.
In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a series
of familiar plans designed to deal with what he called "failed trade policies" - including rejection
of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations and re-negotiation of the
North American Free Trade Agreement (NAFTA) with Canada and Mexico, withdrawing from it if necessary.
The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements
rather than multi-national deals like TPP and NAFTA.
In addition to appointing better trade negotiators and stepping up punishment of countries that violate
trade rules, Trump's plans would also target one specific economic competitor: China. He vowed to
label China a currency manipulator, bring it before the World Trade Organization and consider slapping
tariffs on Chinese imports coming into the U.S.
"... 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.
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)
"... 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.
"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
"... 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.
"... 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.
"... 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.
It's not regulation per se is deficient, it is regulation under neoliberal regime, were government
is captured by financial oligarchy ;-). But that understanding is foreign to WSJ with its neoliberal
agenda :-(.
Notable quotes:
"... Impressionable journalists finally meet George Stigler. ..."
"... The secret recordings were made by Carmen Segarra, who went to work as an examiner at the New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years, though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions on employees trading for their own accounts. ..."
"... On the recordings, regulators can be heard doing what regulators do-revealing the limits of their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the words of one regulator, and should have required Fed approval. But the regulators basically accept Goldman's explanations without a fight. ..."
"... The journalists have also found evidence in Ms. Segarra's recordings that even after the financial crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency resistant to new ideas and hostile to strong-willed, independent-minded employees. In government? ..."
"... "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit." ..."
"... Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats. ..."
"... And it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's debt into equity if the bank's market value falls below a healthy level. ..."
Impressionable journalists finally meet George Stigler.
The financial scandal du jour involves leaked audio recordings that purport to show that
regulators at the Federal Reserve Bank of New York were soft on
Goldman Sachs . Say it ain't so.
... ... ...
The secret recordings were made by Carmen Segarra, who went to work as an examiner at the
New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful
termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman
had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years,
though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions
on employees trading for their own accounts.
The New York Fed won against Ms. Segarra in district court, though the case is on appeal. The
regulator also notes that Ms. Segarra "demanded $7 million to settle her complaint." And last week
New York Fed President
William Dudley said,
"We are going to keep striving to improve, but I don't think anyone should question our motives or
what we are trying to accomplish."
On the recordings, regulators can be heard doing what regulators do-revealing the limits of
their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point
Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the
words of one regulator, and should have required Fed approval. But the regulators basically accept
Goldman's explanations without a fight.
The sleuths at the ProPublica website, working with a crack team of investigators from public
radio, also seem to think they have another smoking gun in one of Ms. Segarra's conversations that
was not recorded but was confirmed by another regulator. Ms. Seest means. For example, a company
offering securities is exempt from some registration requirements if it is only selling to accredited
investors, such as people with more than $1 million in net worth, excluding the value of primary
residences.
The journalists have also found evidence in Ms. Segarra's recordings that even after the financial
crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency
resistant to new ideas and hostile to strong-willed, independent-minded employees. In government?
***
Enter George Stigler, who published his famous essay "The Theory of Economic Regulation" in the
spring 1971 issue of the Bell Journal of Economics and Management Science. The University of Chicago
economist reported empirical data from various markets and concluded that "as a rule, regulation
is acquired by the industry and is designed and operated primarily for its benefit."
Stigler knew he was fighting an uphill battle trying to persuade his fellow academics. "The idealistic
view of public regulation is deeply imbedded in professional economic thought," he wrote. But thanks
to Stigler, who would go on to win a Nobel prize, many economists have studied the operation and
effects of regulation and found similar results.
A classic example was the New York Fed's decision to let Citigroup stash $1.2 trillion
of assets-including more than $600 billion of mortgage-related securities-in off-balance-sheet vehicles
before the financial crisis. That's when Tim Geithner ran the New York Fed and Jack Lew was at Citigroup.
Once one understands the inevitability of regulatory capture, the logical policy response
is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats.
This means repealing most of Dodd-Frank and the so-called Basel rules and replacing them with a simple
requirement for more bank capital-an equity-to-asset ratio of perhaps 15%. It means bringing back
bankruptcy for giant firms instead of resolution at the discretion of political appointees. And
it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's
debt into equity if the bank's market value falls below a healthy level.
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
"... Democracy is inevitably going to clash with the demands of Globalization as they are opposite. Globalization requires entrepreneurs to search cheaper means of production worldwide. ..."
"... In practice, this means moving capital out of the USA. ..."
"... To put it in Marxist terms the interests of American society to survive and prosper came into contradiction with the interests of capitalism as a system of production and with the capitalists as a class who has no homeland, and for whom homeland is where it is easier to make money. ..."
"... American capitalism from its very beginning was based on the assumption that what was good for business was good for America. Until 1929 it more or less worked. The robber barons were robbing other entrepreneurs and workers but at least they reinvested their ill gained profits in America. The crash of 1929 showed that the interests of Big Banks clashed with the interest of American society with devastating results. ..."
"... The decades after WWII have seen a slow and steady erosion of American superiority in technology and productivity and slow and steady flight of capital from the USA. Globalization has been undermining America. From the point of view of Global prosperity if it is cheaper to produce in China, production should relocate to China. From the point of view of American worker, this is treason, a policy destroying the United States as an industrial power, as a nation, and as a community of citizens. Donald Trump is the first top ranking politician who has realized this simple fact. The vote for Donald Trump has been a protest against Globalization, immigration, open borders, capital flight, multiculturalism, liberalism and all the values American Liberal establishment has been preaching for 60 years that are killing the USA. ..."
"... Donald Trump wants to arrest the assault of Globalization on America. He promised to reduce taxes, and to attract business back to the USA. However, reduced taxes are only one ingredient in incentives. For businesses to stay or come back to the US, companies must have educated labor force, steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods, among other things. As of now most of these preconditions are missing. ..."
"... Dr. Brovkin is a historian, formerly a Harvard Professor of History. He has published several books and numerous articles on Russian History and Politics. Currently, Dr. Brovkin works and lives in Marrakech, Morocco. ..."
"... This is an interesting question: is it possible to contain neoliberal globalization by building walls, rejecting 'trade' agreement, and so on. I get the feeling that a direct attack may not work. Water will find a way, as they say. With a direct attack against globalization, what you're likely to face is major capital flight. ..."
In his election campaign Donald Trump has identified several key themes that defined American malaise.
He pointed to capital flight, bad trade deals, illegal immigration, and corruption of the government
and of the press. What is missing in Trump's diagnosis though is an explanation of this crisis. What
are the causes of American decline or as Ross Pero used to say: Let's look under the hood.
Most of the challenges America faces today have to do with two processes we call Globalization
and Sovietization. By Globalization we mean a process of externalizing American business thanks to
the doctrine of Free trade which has been up to now the Gospel of the establishment. By Sovietization
we mean a process of slow expansion of the role of the government in economy, education, business,
military, press, virtually any and every aspect of politics and society.
Let us start with Globalization.
Dani Rodrick (
The Globalization Paradox: Democracy and the Future of the World Economy) has argued that
it is impossible to have democracy and globalization at the same time. Democracy is inevitably
going to clash with the demands of Globalization as they are opposite. Globalization requires entrepreneurs
to search cheaper means of production worldwide.
In practice, this means moving capital out of the USA. For fifty years economists have
been preaching Free trade, meaning that free unimpeded, no tariffs trade is good for America. And
it was in the 1950s, 60s and 1970s that American products were cheaper or better than those overseas.
Beginning with the 1970s, the process reversed. Globalization enriched the capitalists and impoverished
the rest of Americans. To put it in Marxist terms the interests of American society to survive
and prosper came into contradiction with the interests of capitalism as a system of production and
with the capitalists as a class who has no homeland, and for whom homeland is where it is easier
to make money.
American capitalism from its very beginning was based on the assumption that what was good
for business was good for America. Until 1929 it more or less worked. The robber barons were robbing
other entrepreneurs and workers but at least they reinvested their ill gained profits in America.
The crash of 1929 showed that the interests of Big Banks clashed with the interest of American society
with devastating results.
The decades after WWII have seen a slow and steady erosion of American superiority in technology
and productivity and slow and steady flight of capital from the USA. Globalization has been undermining
America. From the point of view of Global prosperity if it is cheaper to produce in China, production
should relocate to China. From the point of view of American worker, this is treason, a policy destroying
the United States as an industrial power, as a nation, and as a community of citizens. Donald Trump
is the first top ranking politician who has realized this simple fact. The vote for Donald Trump
has been a protest against Globalization, immigration, open borders, capital flight, multiculturalism,
liberalism and all the values American Liberal establishment has been preaching for 60 years that
are killing the USA.
Donald Trump wants to arrest the assault of Globalization on America. He promised to reduce
taxes, and to attract business back to the USA. However, reduced taxes are only one ingredient in
incentives. For businesses to stay or come back to the US, companies must have educated labor force,
steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods,
among other things. As of now most of these preconditions are missing.
To fight Globalization Donald Trump announced in his agenda to drop or renegotiate NAFTA and TPP.
That is a step in the right direction. However, this will not be easy. There are powerful vested
interests in making money overseas that will put up great resistance to America first policy. They
have powerful lobbies and votes in the Congress and it is by far not certain if Trump will succeed
in overcoming their opposition.
Another step along these lines of fighting Globalization is the proposed building of the Wall
on Mexican border. That too may or may not work. Powerful agricultural interests in California have
a vested interest in easy and cheap labor force made up of illegal migrants. If their supply is cut
off they are going to hike up the prices on agricultural goods that may lead to inflation or higher
consumer prices for the American workers.
... ... ...
The Military: Americans are told they have a best military in the world. In fact, it is not the
best but the most expensive one in the world. According to the National priorities Project, in fiscal
2015 the military spending amounted to 54% of the discretionary spending in the
amount of 598.5 billion dollars . Of those almost 200 billion dollars goes for operations and
maintenance, 135 billion for military personnel and 90 billion for procurement (see
Here is How the US Military Spends its Billions )
American military industrial complex spends more that the next seven runners up combined. It is
a Sovietized, bureaucratic structure that exists and thrives on internal deals behind closed doors,
procurement process closed to public scrutiny, wasted funds on consultants, kickbacks, and outrageous
prices for military hardware. Specific investigations of fraud do not surface too often. Yet for
example, DoD Inspector General reported:
Why is it that an F35 fighter jet should cost 135 million apiece and the Russian SU 35 that can
do similar things is sold for 35 million dollars and produced for 15 million? The answer is that
the Congress operates on a principle that any price the military asks is good enough. The entire
system of military procurement has to be scrapped. It is a source of billions of stolen and wasted
dollars. The Pentagon budget of half a trillion a year is a drain on the economy that is unsustainable,
and what you get is not worth the money. The military industrial complex in America does not deliver
the best equipment or security it is supposed to.(on this see:
http://nationalinterest.org/blog/the-skeptics/cutting-waste-isnt-enough-curb-pentagon-spending-18640
)
Donald Trump was the first to his credit who raised the issue: Do we need all these bases overseas?
Do they really enhance American security? Or are they a waste of money for the benefit of other countries
who take America for a free ride. Why indeed should the US pay for the defense of Japan? Is Japan
a poor country that cannot afford to defend itself? Defense commitments like those expose America
to unnecessary confrontations and risk of war over issues that have nothing to do with America's
interests. Is it worth it to fight China over some uninhabitable islands that Japan claims? (See
discussion:
http://nationalinterest.org/blog/the-skeptics/should-the-us-continue-guarantee-the-security-wealthy-states-17720
)
Similarly, Trump is the first one to raise the question: What is the purpose of NATO? ( see discussion
of NATO utility:
http://nationalinterest.org/blog/the-buzz/will-president-trump-renegotiate-the-nato-treaty-18647
) Yes the Liberal pro-Clinton media answer is: to defend Europe from Russian aggression. But
really what aggression? If the Russians wanted to they could have taken Kiev in a day two years ago.
Instead, they put up with the most virulently hostile regime in Kiev. Let us ask ourselves would
we have put up with a virulently anti-American regime in Mexico, a regime that would have announced
its intention to conclude a military alliance with China or Russia? Were we not ready to go to nuclear
war over Soviet missiles in Cuba? If we would not have accepted such a regime in Mexico, why do we
complain that the Russians took action against the new regime in Ukraine. Oh yes, they took Crimea.
But the population there is Russian, and until 1954 it was Russian territory and after Ukrainian
independence the Russians did not raise the issue of Crimea as Ukrainian territory and paid rent
for their naval base there The Russians took it over only when a hostile regime clamoring for NATO
membership settled in Kiev. Does that constitute Russian aggression or actually Russian limited response
to a hostile act? (see on this Steven Cohen:
http://eastwestaccord.com/podcast-stephen-f-cohen-talks-russia-israel-middle-east-diplomacy-steele-unger/
) As I have argued elsewhere Putin has been under tremendous pressure to act more decisively
against the neo-Nazis in Kiev. (see Vlad Brovkin: On Russian Assertiveness in Foreign Policy. (
http://eastwestaccord.com/?s=brovkin&submit=Search
)
With a little bit of patience and good will a compromise is possible on Ukraine through Minsk
accords. Moreover, Ukraine is not in NATO and as long as it is not admitted to NATO, a deal with
the Russians on Ukraine is feasible. Just like so many other pro-American governments, Ukraine wants
to milk Uncle Sam for what it is worth. They expect to be paid for being anti/Russian. (See discussion
on need of enemy:
http://nationalinterest.org/feature/does-america-need-enemy-18106
) Would it not be a better policy to let Ukraine know that they are on their own: no more subsidies,
no more payments? Mend your relations with Russia yourselves. Then peace would immediately prevail.
If we admit that there is no Russian aggression and that this myth was propagated by the Neo/Cons
with the specific purpose to return to the paradigm of the cold war, i.e. more money for the military
industrial complex, if we start thinking boldly as Trump has begun, we should say to the Europeans:
go ahead, build your own European army to allay your fears of the Russians. Europe is strong enough,
rich enough and united enough to take care of its defense without American assistance. (See discussion
of Trumps agenda:
http://nationalinterest.org/feature/course-correction-18062
)
So, if Trump restructures procurement mess, reduces the number of military bases overseas, and
invests in high tech research and development for the military on the basis of real competition,
hundreds of billions of dollars could be saved and the defense capability of the country would increase.
... ... ...
Dr. Brovkin is a historian, formerly a Harvard Professor of History. He has published several
books and numerous articles on Russian History and Politics. Currently, Dr. Brovkin works and lives
in Marrakech, Morocco.
This is a bit too much, Volodya. Maybe you should've taken one subject – globalization, for
example – and stop there.
This is an interesting question: is it possible to contain neoliberal globalization by
building walls, rejecting 'trade' agreement, and so on. I get the feeling that a direct attack
may not work. Water will find a way, as they say. With a direct attack against globalization,
what you're likely to face is major capital flight.
You might be able to make neoliberal globalization work for you (for your population, that
is), like Germany and the Scandinavians do, but that's a struggle, constant struggle. And it's
a competition; it will have to be done at the expense of other nations (see Greece, Portugal,
Central (eastern) Europe). And having an anti-neoliberal president is not enough; this would require
a major change, almost a U turn, in the whole governing philosophy. Forget the sanctity of 'free
market', start worshiping the new god: national interest
What an INTERESTING article -- So much that is right, so much that is wrong. An article you
can get your teeth into.
On globalisation: pretty spot-on (although I believe he exaggerates the US weakness in what he
calls "preconditions": there are still many well educated Americans, still good neighborhoods
(yes, sure it could be a lot better). He's against NAFTA & other neoliberal Trade self indulgences.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but
I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.
Example: "huge sectors of American economy are not private at all, that in fact they have been
slowly taken over by an ever growing state ownership and control"
This is nonsense on its face: the government spews out trillions to private actors to provide
goods & services. It does so, in part, because it has systematically privatized every government
function capable of returning a profit. The author can't see the actor behind the mask: how much
legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical
laws ?)
Of course, the author is correct on the US military-industrial complex: it is a sump of crime
& corruption. Yet he seems not to grasp that the problem is regulative capture. How is the Fiasco
of the F35 & MacDonald Douglas merely an issue for the Legislature alone & how does this circus
resemble the Soviet Union, beyond the fact that BOTH systems (like most systems) are capable of
gross negligence & corruption ?
I like what the author says about NATO, Japan, bases etc. Although he's a little naive if he
thinks NATO for instance is about "protecting" Europe. Yes, that's a part of it: but primarily
NATO etc exist as a tool/mask behind which the US can exert it's imperial ambitions against friend
& for alike.
The author does go off against welfare well that's to be expected: sadly I don't think he quite
gets the connection between globalisation & welfare .He also legitimately goes after tertiary
education, but seems to be (again) confused as to cause & effect.
The author is completely spot on with his sovietization analogy when he comes to the US security
state. Only difference between the Soviets & the US on security totalitarianism ? The US is much
better at it (of course the US has technological advantages unimaginable to the Soviets)
• Replies:
@Randal I agree with you that it's a fascinating piece, and I also agree with many of the points
you agree with.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but
I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.
Example: "huge sectors of American economy are not private at all, that in fact they
have been slowly taken over by an ever growing state ownership and control"
This is nonsense on its face: the government spews out trillions to private actors to provide
goods & services. It does so, in part, because it has systematically privatized every government
function capable of returning a profit. The author can't see the actor behind the mask: how much
legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical
laws ?)
I think part of the problem here might be a mistaken focus on "the government" as an independent
actor, when in reality it is just a mechanism whereby the rulers (whether they are a dictator,
a political party or an oligarchy or whatever), and those with sufficient clout to influence them,
get things done the way they want to see them done.
As such there is really not much difference between the government directly employing the people
who do things (state socialism), and the government paying money to companies to get the same
things done. Either way, those who use the government to get things done, get to say what gets
done and how. There are differences of nuance, in terms of organizational strengths and weaknesses,
degrees of corruption and of efficiency, but fundamentally it's all big government.
A more interesting question might be - how really different are these big government variants
from the small government systems, in which the rulers pay people directly to get things done
the way they want them to be done?
An excellent article. The points that resonated the most were:
For businesses to stay or come back to the US, companies must have educated labor force,
steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods,
among other things. As of now most of these preconditions are missing.
This is an enormously difficult problem that will take years to resolve, and it will need a
rethink of education from the ground up + the political will to fight the heart of Cultural Bolshevism
and the inevitable 24/7 Media assault.
Drain the swamp in Washington: ban the lobbyists, make it a crime to lobby for private interest
in a public place, restructure procurement, introduce real competition, restore capitalism,
phase out any government subsidies to Universities, force them to compete for students, force
hospitals to compete for patients. Cut cut cut expenditure everywhere possible, including welfare.
Banning lobbyists should be possible but draining the rest of the swamp looks really complicated.
Each area would need to be examined from the ground up from a value for money – efficiency viewpoint.
It doesn't matter which philosophy each one is run on – good value healthcare is desirable whichever
system produces it.
Could we have ever imagined in our worst dreams that a system of mass surveillance would
be created and perfected in the USA. (see discussion on this in: Surveillance State, in
http://www.americamagazine.org/issue/surveillance-state
This one should be easy. The Constitution guarantees a right to privacy so just shut down the
NSA. Also shut down the vast CIA mafia (it didn't exist prior to 1947) and the expensive and useless
FED (controlling the money supply isn't the business of a group of private banks – an office in
the Treasury could easily match the money supply to economic activity).
This one should be easy. The Constitution guarantees a right to privacy so just shut down the
NSA. Also shut down the vast CIA mafia (it didn't exist prior to 1947) and the expensive and useless
FED (controlling the money supply isn't the business of a group of private banks – an office in
the Treasury could easily match the money supply to economic activity).
From Unz, I have learned that the US actually has a four-part government: the "Deep State"
part which has no clear oversight from any of the other three branches.
To put it in Marxist terms the interests of American society to survive and prosper came
into contradiction with the interests of capitalism as a system of production and with the
capitalists as a class who has no homeland, and for whom homeland is where it is easier to
make money.
Another add-on contradiction, comrade, is that the selfsame capitalist class expect their host
nation to defend their interests whenever threatened abroad. This entails using the resources
derived from the masses to enforce this protection including using the little people as cannon
fodder when deemed useful.
Donald Trump is the first top ranking politician who has realized this simple fact.
Come now, do you really believe that all these politicians who have gone to these world-class
schools don't know this? They simply don't care. They're working on behalf of the .1% who are
their benefactors and who will make them rich. They did not go into politics to take vows of poverty.
They just realize the need to placate the masses with speeches written by professional speechwriters,
that's all.
Insofar as Social Security/Medicare/Medicaid goes, those are the most democratic institutions
of all. It's money spent on ourselves, internally, with money being cycled in and out at the grassroots
level. Doctors, nurses, home-care providers, etc etc, all local people get a piece of the action
unlike military spending which siphons money upwards to the upper classes.
I'd rather be employed in a government job than unemployed in the private sector. That's not
the kind of "freedom" I'm searching for comrade.
@animalogic What an INTERESTING article -- So much that is right, so much that is wrong. An
article you can get your teeth into.
On globalisation: pretty spot-on (although I believe he exaggerates the US weakness in what
he calls "preconditions": there are still many well educated Americans, still good neighborhoods
(yes, sure it could be a lot better). He's against NAFTA & other neoliberal Trade self indulgences.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but
I find the concept... incoherent...& suspiciously adapted to deliberately agitate US conservatives.
Example: "huge sectors of American economy are not private at all, that in fact they
have been slowly taken over by an ever growing state ownership and control"
This is nonsense on its face: the government spews out trillions to private actors to provide
goods & services. It does so, in part, because it has systematically privatized every government
function capable of returning a profit. The author can't see the actor behind the mask: how much
legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical
laws ?)
Of course, the author is correct on the US military-industrial complex: it is a sump of crime
& corruption. Yet he seems not to grasp that the problem is regulative capture. How is the Fiasco
of the F35 & MacDonald Douglas merely an issue for the Legislature alone...& how does this circus
resemble the Soviet Union, beyond the fact that BOTH systems (like most systems) are capable of
gross negligence & corruption ?
I like what the author says about NATO, Japan, bases etc. Although he's a little naive if he
thinks NATO for instance is about "protecting" Europe. Yes, that's a part of it: but primarily
NATO etc exist as a tool/mask behind which the US can exert it's imperial ambitions ...against
friend & for alike.
The author does go off against welfare...well that's to be expected: sadly I don't think he quite
gets the connection between globalisation & welfare....He also legitimately goes after tertiary
education, but seems to be (again) confused as to cause & effect.
The author is completely spot on with his sovietization analogy when he comes to the US security
state. Only difference between the Soviets & the US on security totalitarianism ? The US is much
better at it (of course the US has technological advantages unimaginable to the Soviets)
I agree with you that it's a fascinating piece, and I also agree with many of the points you
agree with.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics,
but I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.
Example: "huge sectors of American economy are not private at all, that in fact they have been
slowly taken over by an ever growing state ownership and control"
This is nonsense on its face: the government spews out trillions to private actors to provide
goods & services. It does so, in part, because it has systematically privatized every government
function capable of returning a profit. The author can't see the actor behind the mask: how
much legislation is now written by & for the benefit of private interests ? (Obama care, Bush
pharmaceutical laws ?)
I think part of the problem here might be a mistaken focus on "the government" as an independent
actor, when in reality it is just a mechanism whereby the rulers (whether they are a dictator,
a political party or an oligarchy or whatever), and those with sufficient clout to influence them,
get things done the way they want to see them done.
As such there is really not much difference between the government directly employing the people
who do things (state socialism), and the government paying money to companies to get the same
things done. Either way, those who use the government to get things done, get to say what gets
done and how. There are differences of nuance, in terms of organisational strengths and weaknesses,
degrees of corruption and of efficiency, but fundamentally it's all big government.
A more interesting question might be – how really different are these big government variants
from the small government systems, in which the rulers pay people directly to get things done
the way they want them to be done?
"... 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.
"... 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."
Donald Trump won the electoral college at least in part by promising to bring coal jobs
back to Appalachia and manufacturing jobs back to the Rust Belt. Neither promise can be honored
– for the most part we're talking about jobs lost, not to unfair foreign competition, but to
technological change. But a funny thing happens when people like me try to point that out:
we get enraged responses from economists who feel an affinity for the working people of the
afflicted regions – responses that assume that trying to do the numbers must reflect contempt
for regional cultures, or something.
Is this the right narrative? I am no longer comfortable with this line:
for the most part we're talking about jobs lost, not to unfair foreign competition, but
to technological change.
Try to place that line in context with this from
Noah Smith:
Then, in the 1990s and 2000s, the U.S opened its markets to Chinese goods, first with Most
Favored Nation trading status, and then by supporting China's accession to the WTO. The resulting
competition from cheap Chinese goods contributed to vast inequality in the United States, reversing
many of the employment gains of the 1990s and holding down U.S. wages. But this sacrifice on
the part of 90% of the American populace enabled China to lift its enormous population out
of abject poverty and become a middle-income country.
Was this "fair" trade? I think not. Let me suggest this narrative: Sometime during the
Clinton Administration, it was decided that an economically strong China was good for both the
globe and the U.S. Fair enough. To enable that outcome, U.S. policy deliberately sacrificed manufacturing
workers on the theory that a.) the marginal global benefit from the job gain to a Chinese worker
exceeded the marginal global cost from a lost US manufacturing job, b.) the U.S. was shifting
toward a service sector economy anyway and needed to reposition its workforce accordingly and
c.) the transition costs of shifting workers across sectors in the U.S. were minimal.
As a consequence – and through a succession of administrations – the US tolerated implicit
subsidies of Chinese industries, including national industrial policy designed to strip production
from the US.
And then there was the currency manipulation. I am always shocked when international economists
claim "fair trade," pretending that the financial side of the international accounts is irrelevant.
As if that wasn't a big, fat thumb on the scale. Sure, "currency manipulation" is running the
other way these days. After, of course, a portion of manufacturing was absorbed overseas. After
the damage is done.
Yes, technological change is happening. But the impact, and the costs, were certainly accelerated
by U.S. policy.
It was a great plan. On paper, at least. And I would argue that in fact points a and b above
were correct.
But point c. Point c was a bad call. Point c was a disastrous call. Point c helped deliver
Donald Trump to the Oval Office. To be sure, the FBI played its role, as did the Russians. But
even allowing for the poor choice of Hilary Clinton as the Democratic nominee (the lack of contact
with rural and semi-rural voters blinded the Democrats to the deep animosity toward their candidate),
it should never have come to this.
As the opioid epidemic sweeps through rural America, an ever-greater number of drug-dependent
newborns are straining hospital neonatal units and draining precious medical resources.
The problem has grown more quickly than realized and shows no signs of abating, researchers
reported on Monday. Their study, published in JAMA Pediatrics, concludes for the first time
that the increase in drug-dependent newborns has been disproportionately larger in rural areas.
The latest causalities in the opioid epidemic are newborns.
The transition costs were not minimal.
My take is that "fair trade" as practiced since the late 1990s created another disenfranchised
class of citizens. As if we hadn't done enough of that already. Then we weaponized those newly
disenfranchised citizens with the rhetoric of identity politics. That's coming back to bite us.
We didn't really need a white nationalist movement, did we?
Now comes the big challenge: What can we do to make amends? Can we change the narrative? And
here is where I agree with Paul Krugman:
Now, if we want to have a discussion of regional policies – an argument to the effect that
my pessimism is unwarranted – fine. As someone who is generally a supporter of government activism,
I'd actually like to be convinced that a judicious program of subsidies, relocating government
departments, whatever, really can sustain communities whose traditional industry has eroded.
The damage done is largely irreversible. In medium-size regions, lower relative housing
costs may help attract overflow from the east and west coast urban areas. And maybe a program
of guaranteed jobs for small- to medium-size regions combined with relocation subsidies for very
small-size regions could help. But it won't happen overnight, if ever. And even if you could reverse
the patterns of trade – which wouldn't be easy given the intertwining of global supply chains
– the winners wouldn't be the same current losers. Tough nut to crack.
Bottom Line: I don't know how to fix this either. But I don't absolve the policy community
from their role in this disaster. I think you can easily tell a story that this was one big policy
experiment gone terribly wrong.
Vladimir Putin's Valdai Speech at the XIII Meeting (Final Plenary Session) of the Valdai International
Discussion Club (Sochi, 27 October 2016)
As is his usual custom, Russian President Vladimir Putin delivered a speech at the final session
of the annual Valdai International Discussion Club's 13th meeting, held this year in Sochi, before
an audience that included the President of Finland Tarja Halonen and former President of South Africa
Thabo Mbeki. The theme for the 2016 meeting and its discussion forums was "The Future in Progress:
Shaping the World of Tomorrow" which as Putin noted was very topical and relevant to current developments
and trends in global politics, economic and social affairs.
Putin noted that the previous year's Valdai Club discussions centred on global problems and crises,
in particular the ongoing wars in the Middle East; this fact gave him the opportunity to summarise
global political developments over the past half-century, beginning with the United States' presumption
of having won the Cold War and subsequently reshaping the international political, economic and social
order to conform to its expectations based on neoliberal capitalist assumptions. To that end, the
US and its allies across western Europe, North America and the western Pacific have co-operated in
pressing economic and political restructuring including regime change in many parts of the world:
in eastern Europe and the Balkans, in western Asia (particularly Afghanistan and Iraq) and in northern
Africa (Libya). In achieving these goals, the West has either ignored at best or at worst exploited
international political, military and economic structures, agencies and alliances to the detriment
of these institutions' reputations and credibility around the world. The West also has not hesitated
to dredge and drum up imaginary threats to the security of the world, most notably the threat of
Russian aggression and desire to recreate the Soviet Union on former Soviet territories and beyond,
the supposed Russian meddling in the US Presidential elections, and apparent Russian hacking and
leaking of emails related to failed US Presidential candidate Hillary Rodham Clinton's conduct as
US Secretary of State from 2008 to 2012.
After his observation of current world trends as they have developed since 1991, Putin queries
what kind of future we face if political elites in Washington and elsewhere focus on non-existent
problems and threats, or on problems of their own making, and ignore the very real issues and problems
affecting ordinary people everywhere: issues of stability, security and sustainable economic development.
The US alone has problems of police violence against minority groups, high levels of public and private
debt measured in trillions of dollars, failing transport infrastructure across most states, massive
unemployment that either goes undocumented or is deliberately under-reported, high prison incarceration
rates and other problems and issues indicative of a highly dysfunctional society. In societies that
are ostensibly liberal democracies where the public enjoys political freedoms, there is an ever-growing
and vast gap between what people perceive as major problems needing solutions and the political establishment's
perceptions of what the problems are, and all too often the public view and the elite view are at
polar opposites. The result is that when referenda and elections are held, predictions and assurances
of victory one way or another are smashed by actual results showing public preference for the other
way, and polling organisations, corporate media with their self-styled "pundits" and "analysts" and
governments are caught scrambling to make sense of what just happened.
Putin points out that the only way forward is for all countries to acknowledge and work together
on the problems that challenge all humans today, the resolution of which should make the world more
stable, more secure and more sustaining of human existence. Globalisation should not just benefit
a small plutocratic elite but should be demonstrated in concrete ways to benefit all. Only by adhering
to international law and legal arrangements, through the charter of the United Nations and its agencies,
can all countries hope to achieve security and stability and achieve a better future for their peoples.
To this end, the sovereignty of Middle Eastern countries like Iraq, Syria and Yemen should be
respected and the wars in those countries should be brought to an end, replaced by long-term plans
and programs of economic and social reconstruction and development. Global economic development and
progress that will reduce disparities between First World and Third World countries, eliminate notions
of "winning" and "losing", and end grinding poverty and the problems that go with it should be a
major priority. Economic co-operation should be mutually beneficial for all parties that engage in
it.
Putin also briefly mentioned in passing the development of human potential and creativity, environmental
protection and climate change, and global healthcare as important goals that all countries should
strive for.
While there's not much in Putin's speech that he hasn't said before, what he says is typical of
his worldview, the breadth and depth of his understanding of current world events (which very, very
few Western politicians can match), and his preferred approach of nations working together on common
problems and coming to solutions that benefit all and which don't advantage one party's interests
to the detriment of others and their needs. Putin's approach is a typically pragmatic and cautious
one, neutral with regards to political or economic ideology, but one focused on goals and results,
and the best way and methods to achieve those goals.
One interesting aspect of Putin's speech comes near the end where he says that only a world with
opportunities for everyone, with access to knowledge to all and many ways to realise creative potential,
can be considered truly free. Putin's understanding of freedom would appear to be very different
from what the West (and Americans in particular) understand to be "freedom", that is, being free
of restraints on one's behaviour. Putin's understanding of freedom would be closer to what 20th-century
Russian-born British philosopher Isaiah Berlin would consider to be "positive freedom", the freedom
that comes with self-mastery, being able to think and behave freely and being able to choose the
government of the society in which one lives.
The most outstanding point in Putin's speech, which unfortunately he does not elaborate on further,
given the context of the venue, is the disconnect between the political establishment and the public
in most developed countries, the role of the mass media industry in reducing or widening it, and
the dangers that this disconnect poses to societies if it continues. If elites continue to pursue
their own fantasies and lies, and neglect the needs of the public on whom they rely for support (yet
abuse by diminishing their security through offshoring jobs, weakening and eliminating worker protection,
privatising education, health and energy, and encouraging housing and other debt bubbles), the invisible
bonds of society – what might collectively be called "the social contract" between the ruler and
the ruled – will disintegrate and people may turn to violence or other extreme activities to get
what they want.
An English-language transcript of the speech can be found at
this link .
Barron's investment weekly has published a "Get Ready for Dow 20,000" cover today. Is
that a problem for stocks, from a contrarian point of view?
Not necessarily. Paul Macrae Montgomery, who first articulated the concept of fading the always-wrong
MSM, stipulated that it's widely-circulated, general-interest publications that are the best mirrors
of popular sentiment.
So far, they are largely silent on the twin asset bubbles - stocks and house prices - rising
ominously beneath our feet. Looks like it's gonna be awhile before we reach the supreme silliness
of Time magazine's fatuous June 2005 cover "Home $weet Home: Why We're Going Gaga Over
Real Estate."
That one actually scored double points, for the MSM's presumptuous habit of invoking the cozy
"we" formulation to tell readers what they think. (That's why "we" hate the MSM.)
With Time reportedly on the block, maybe a sensational "Dow 36,000" cover could goose
the sale price up to five dollars instead of one. It's worth a try, lads!
Jim, odd snippet from something I heard last night struck me as being right up your alley.
The guy who founded Princeton Review is now some kind of investment guru. He was talking about
last years announced rate hikes, and that he told his clients they weren't going up but might
reach record lows. He based that on metals traders (gold, silver etc). He says they have never
been wrong about the direction of rates. (I got interrupted so if he explained the signals he
was seeing from them I missed it). It should be part of a pod cast from Tim Ferriss if you want
to check it out, but I really did think it was one of those things you would have in your arsenal
for market prediction.
His other big advice was treat investing like a poker game, don't bet on the cards bet on the
players – look for their tells. And he hasn't figured out that Uber has some real issues to deal
with before its 'profits' are real, so take everything with a grain of salt.
TIPS didn't exist before 1997. But real Treasury yields (proxied by subtracting the trailing
12-month CPI change from nominal Treasury yields) went negative in 1974 and 1979 too, during the
epic gold spikes of that era.
So this seems to be an enduring anticorrelation. However, I use the yield curve in my bond
model rather than gold. The pronounced serial correlation in Fed-controlled short rates is highly
non-random, signaling what the cockeyed commissars are up to.
"... 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.
Why Trade Deficits Matter, The Atlantic
: However one feels about
Donald Trump, it's fair to say he has usefully elevated a
long-simmering issue in American political economy: the hardship faced
by the families and communities who have lost out as jobs have shifted
overseas. For decades, many politicians from both parties ignored the
plight of these workers, offering them bromides about the benefits of
free trade and yet another trade deal, this time with some "adjustment
assistance."
One of Trump's economic goals is to lower the U.S.'s trade
deficit-which is to say, shrink the discrepancy between the value of
the country's imports and the value of its exports. Right now, the
U.S. currently imports $460 billion more than it exports, meaning it
has a trade deficit that works out to about 2.5 percent of GDP. Given
that the job market is still not back to full strength and the U.S.
has been losing manufacturing jobs-there are 60,000 fewer now than at
the beginning of this year,
according to the Bureau
of Labor Statistics
-economists would be wise to question their
assumption that such a deficit is harmless. ...
Is the U.S. trade deficit a problem whose solution would help American
workers? ...
Looks to me like "global power" comes from a lot more than
military spending, and if its jobs we want, then military
spending is a decent short run stimulus but long run waste in
terms of productive expenditure.
The
Great Illusion is a book by Norman Angell, first published in
the United Kingdom in 1909 under the title Europe's Optical
Illusion and republished in 1910 and subsequently in various
enlarged and revised editions under the title The Great
Illusion.
Angell argued that war between industrial countries was
futile because conquest did not pay. J.D.B. Miller writes:
"The 'Great Illusion' was that nations gained by armed
confrontation, militarism, war, or conquest." The economic
interdependence between industrial countries meant that war
would be economically harmful to all the countries involved.
Moreover, if a conquering power confiscated property in the
territory it seized, "the incentive to produce [of the local
population] would be sapped and the conquered area be
rendered worthless. Thus, the conquering power had to leave
property in the hands of the local population while incurring
the costs of conquest and occupation."
Angell said that arms build-up, for example the naval race
that was happening as he wrote the book in the early 1910s,
was not going to secure peace. Instead, it would lead to
increased insecurity and thus increase the likelihood of war.
Only respect for international law, a world court, in which
issues would be dealt with logically and peaceably would be
the route for peace.
A new edition of The Great Illusion was published in 1933;
it added "the theme of collective defence." Angell was
awarded the Nobel Peace Prize in 1933. He added his belief
that if France, Britain, Poland, Czechoslovakia, etc. had
bound themselves together to oppose all military aggression,
including that of Hitler's, and to appeal to world justice
for solution to countries' grievances, then the great mass of
reasonable Germans would have stepped up and stopped Hitler
from leading their country into an unwinnable war, and World
War II would have been avoided.
In 1909 a book was published
saying that free trade would make the world prosperous
forever. In the U.S. It was called "the Grand Illusion."
Unfortunately Kaiser Wilhelm appeared not to get the message.
If China didn't have those $$$$trillions, they wouldn't
feel empowered to change boundary lines by force. We wouldn't
be worried about a new arms race.
As for solutions, a trade weighted tariff that kicked in
after a certain period/percentage would work just fine,
probably similar to the wage equalization tariff I suggested
the other day. A VAT might accomplish a similar result.
But seriously, you and everyone who thinks like you can go
screw yourselves. Your myopic elitism has gotten us here. I
wish you nothing but pain.
"then military spending is a decent short run stimulus"
No
it is not. It is very ineffective and wasteful. You would get
much better return on your investment by spending on
repairing and upgrading civic infrastructure.
Bull. What we need is enforceable labor and environmental
standards and protections so that the corporate greed heads
will have less incentive to outsource their production to
places lacking any of those things. This is all about
maximizing rents by ruthlessly exploiting vulnerable labor in
the developing world and by being able to poison and
devastate their countries at will.
U.S. currently imports $460 billion more than it exports,
meaning
"
~J B & D B~~
... meaning that We the People print up
t-bonds valued at $460 then trade these bonds for Federal
Reserve Notes printed up by FG-s worth $460 then use same
notes to buy same amount of running shoes, shot glasses, etc.
We print up genuine t-bonds for their counterfeit products
that look like the real thing. Huh! The question is :
How can we do more of this without those foreigner suckers
catching on, getting wise to the scam?
For one, we can make sure that we don't print up more of
our genuine paper than their demand for it. Get it? So long
as their demand continues to be great enough to raise the
price of our tiny slips of paper, we are cool.
When we are printing too much, the price of our paper
falls, buys less, has less buying power. Less buying power is
what we call inflation. More buying power is what we call
deflation. Got it?
Print less thus keep popularity of our printed numbers up.
Tell me something!
What happens when our workers lose jobs to foreigner
suckers who dig our printed numbers?
Job loss to foreigners slows down the domestic development
of robotics, artificial intelligence, and the singularity
that will inevitably detonate all jobs globally. What will
that detonation do to our life style of excessive
overpopulation.
Don't ask, but don't
tell --
Donald A. Coffin :
, -1
The usual response to a trade deficit is that the country
running the deficit sees its currency decline in value. This
lowers the effective price of its exports and raises the
effective price of its imports. Assuming nothing peculiar
about the price elasticities of demand for exports and
import, this should lead to a shrinking trade deficit. From
1973 to 1998, the dollar appreciated steadily, and the
(nominal) trade deficit expanded only slightly. From 1998 to
2005, the dollar continued to appreciate--but the (nominal)
trade deficit exploded, increasing by a factor of (roughly)
10 by 2006. Then, as the dollar began depreciating (in 2002),
the trade deficit began to shrink. Since about 2008, the
dollar has been appreciating again.
What needs most to be
explained is the explosion of the trade deficit between 1998
and 2006; about half of the increase in the trade deficit was
between 1998 and 2002; the other half between 2002 and 2006.
I have spent the better
part of the last 10 years working diligently to investigate and relate information on
economics and geopolitical discourse for the liberty movement. However, long before I
delved into these subjects my primary interests of study were the human mind and the
human "soul" (yes, I'm using a spiritual term).
My fascination with economics and sociopolitical events has always been rooted in the
human element.
That is to say, while economics is often treated as a
mathematical and statistical field, it is also driven by psychology.
To know
the behavior of man is to know the future of all his endeavors, good or evil.
Evil is what we are specifically here to discuss.
I have touched on
the issue in various articles in the past including
Are Globalists Evil Or Just Misunderstood
, but with extreme tensions taking shape
this year in light of the U.S. election as well as the exploding online community
investigation of "Pizzagate," I am compelled to examine it once again.
I will not be grappling with this issue from a particularly religious perspective.
Evil applies to everyone regardless of their belief system, or even their lack of
belief. Evil is secular in its influence.
The first and most important thing to understand is this - evil is NOT simply
a social or religious construct, it is an inherent element of the human psyche.
Carl Gustav Jung was one of the few psychologists in history to dare write extensively
on the issue of evil from a scientific perspective as well as a metaphysical
perspective. I highly recommend a book of his collected works on this subject titled
'Jung On Evil', edited by Murray Stein, for those who are interested in a deeper view.
To summarize, Jung found that much of the foundations of human behavior are rooted in
inborn psychological contents or "archetypes." Contrary to the position of Sigmund
Freud, Jung argued that while our environment may affect our behavior to a certain
extent, it does not make us who we are. Rather, we are born with our own individual
personality and grow into our inherent characteristics over time. Jung also found that
there are universally present elements of human psychology. That is to say, almost every
human being on the planet shares certain truths and certain natural predilections.
The concepts of good and evil, moral and immoral, are present in us from birth and
are mostly the same regardless of where we are born, what time in history we are born
and to what culture we are born. Good and evil are shared subjective experiences. It is
this observable psychological fact (among others) that leads me to believe in the idea
of a creative design - a god. Again, though, elaborating on god is beyond the scope of
this article.
To me, this should be rather comforting to people, even atheists. For if there is
observable evidence of creative design, then it would follow that there may every well
be a reason for all the trials and horrors that we experience as a species. Our lives,
our failures and our accomplishments are not random and meaningless. We are striving
toward something, whether we recognize it or not. It may be beyond our comprehension at
this time, but it is there.
Evil does not exist in a vacuum; with evil there is always good, if one looks
for it in the right places.
Most people are readily equipped to recognize evil when they see it
directly. What they are not equipped for and must learn from environment is how to
recognize evil disguised as righteousness.
The most heinous acts in
history are almost always presented as a moral obligation - a path towards some "greater
good." Inherent conscience, though, IS the greater good, and any ideology that steps
away from the boundaries of conscience will inevitably lead to disaster.
The concept of globalism is one of these ideologies that crosses the line of
conscience and pontificates to us about a "superior method" of living.
It
relies on taboo, rather than moral compass, and there is a big difference between the
two.
When we pursue a "greater good" as individuals or as a society, the means are just as
vital as the ends. The ends NEVER
justify the means. Never. For if we
abandon our core principles and commit atrocities in the name of "peace," safety or
survival, then we have forsaken the very things which make us worthy of peace and safety
and survival. A monster that devours in the name of peace is still a monster.
Globalism tells us that the collective is more important than the individual,
that the individual owes society a debt and that fealty to society in every respect is
the payment for that debt.
But inherent archetypes and conscience tell us
differently. They tell us that society is only ever as healthy as the individuals
within it, that society is only as free and vibrant as the participants. As the
individual is demeaned and enslaved, the collective crumbles into mediocrity.
Globalism also tells us that humanity's greatest potential cannot be reached without
collectivism and centralization. The assertion is that the more single-minded a society
is in its pursuits the more likely it is to effectively achieve its goals. To this end,
globalism seeks to erase all sovereignty. For now its proponents claim they only wish to
remove nations and borders from the social equation, but such collectivism never stops
there. Eventually, they will tell us that individualism represents another nefarious
"border" that prevents the group from becoming fully realized.
At the heart of collectivism is the idea that human beings are "blank
slates;" that we are born empty and are completely dependent on our environment in order
to learn what is right and wrong and how to be good people or good citizens. The
environment becomes the arbiter of decency, rather than conscience, and whoever controls
the environment, by extension, becomes god.
If the masses are convinced of this narrative then moral relativity is only a short
step away. It is the abandonment of inborn conscience that ultimately results in evil.
In my view, this is exactly why the so called "elites" are pressing for globalism in the
first place. Their end game is not just centralization of all power into a one world
edifice, but the suppression and eradication of conscience, and thus, all that is good.
To see where this leads we must look at the behaviors of the elites
themselves, which brings us to "Pizzagate."
The exposure by Wikileaks during the election cycle of what appear to be coded emails
sent between John Podesta and friends has created a burning undercurrent in the
alternative media. The emails consistently use odd and out of context "pizza"
references, and independent investigations have discovered a wide array connections
between political elites like Hillary Clinton and John Podesta to James Alefantis, the
owner of a pizza parlor in Washington D.C. called Comet Ping Pong. Alefantis, for
reasons that make little sense to me, is listed as number 49 on GQ's
Most Powerful People In Washington list
.
The assertion according to circumstantial evidence including the disturbing child and
cannibalism artwork collections of the Podestas has been that Comet Ping Pong is somehow
at the center of a child pedophilia network serving the politically connected. Both
Comet Ping Pong and a pizza establishment two doors down called Besta Pizza use symbols
in their logos and menus that are listed on the
FBI's
unclassified documentation on pedophilia symbolism
, which does not help matters.
Some of the best documentation of the Pizzagate scandal that I have seen so far has
been done by David Seaman, a former mainstream journalist gone rogue.
Here is his
YouTube page
.
I do recommend everyone at least look at the evidence he and others present. I went
into the issue rather skeptical, but was surprised by the sheer amount of weirdness and
evidence regarding Comet Pizza. There is a problem with Pizzagate that is difficult to
overcome, however; namely the fact that to my knowledge no victims have come forward.
This is not to say there has been no crime, but anyone hoping to convince the general
public of wrong-doing in this kind of scenario is going to have a very hard time without
a victim to reference.
The problem is doubly difficult now that an armed man was arrested on the premises of
Comet Ping Pong while "researching" the claims of child trafficking. Undoubtedly, the
mainstream media will declare the very investigation "dangerous conspiracy theory."
Whether this will persuade the public to ignore it, or compel them to look into it,
remains to be seen.
I fully realize the amount of confusion surrounding Pizzagate and the assertions by
some that it is a "pysop" designed to undermine the alternative media. This is a
foolish notion, in my view. The mainstream media is dying, this is unavoidable. The
alternative media is a network of sources based on the power of choice and cemented in
the concept of investigative research. The reader participates in the alternative media
by learning all available information and positions and deciding for himself what is the
most valid conclusion, if there is any conclusion to be had. The mainstream media
simply tells its readers what to think and feel based on cherry picked data.
The elites will never be able to deconstruct that kind of movement with something
like a faked "pizzagate"; rather, they would be more inclined to try to co-opt and
direct the alternative media as they do most institutions. And, if elitists are using
Pizzagate as fodder to trick the alternative media into looking ridiculous, then why
allow elitist run social media outlets like Facebook and Reddit to shut down discussion
on the issue?
The reason I am more convinced than skeptical at this stage is because this has
happened before; and in past scandals of pedophilia in Washington and other political
hotbeds, some victims DID come forward.
I would first reference the events of the Franklin Scandal between 1988 and 1991. The
Discovery Channel even produced a documentary on it complete with interviews of alleged
child victims peddled to Washington elites for the purpose of favors and blackmail.
Meant to air in 1994, the documentary was quashed before it was ever shown to the
public. The only reason it can now be found is because an original copy was released
without permission by parties unknown.
I would also reference the highly evidenced
Westminster Pedophile Ring in the U.K.
, in which the U.K. government lost or
destroyed at least 114 related files related to the investigation.
Finally, it is disconcerting to me that the criminal enterprises of former Bear
Sterns financier and convicted pedophile Jeffrey Epstein and his "Lolita Express" are
mainstream knowledge, yet the public remains largely oblivious. Bill Clinton is
shown on flight logs
to have flown on Epstein's private jet at least a 26 times; the
same jet that he used to procure child victims as young as 12 to entertain celebrities
and billionaires on his 72 acre island called "Little Saint James". The fact that
Donald Trump was also close friends with Epstein should raise some eyebrows - funny how
the mainstream media attacked Trump on every cosmetic issue under the sun but for some
reason backed away from pursuing the Epstein angle.
Where is the vast federal investigation into the people who frequented Epstein's
wretched parties? There is none, and Epstein, though convicted of molesting a 14 year
old girl and selling her into prostitution, was only slapped on the wrist with a 13
month sentence.
Accusations of pedophilia seem to follow the globalists and elitist politicians
wherever they go. This does not surprise me. They often exhibit characteristics of
narcissism and psychopathy, but their ideology of moral relativity is what would lead to
such horrible crimes.
Evil often stems from people who are empty.
When one abandons
conscience, one also in many respects abandons empathy and love. Without these elements
of our psyche there is no happiness. Without them, there is nothing left but desire and
gluttony.
Narcissists in particular are prone to use other people as forms of
entertainment and fulfillment without concern for their humanity. They can be vicious
in nature, and when taken to the level of psychopathy, they are prone to target and
abuse the most helpless of victims in order to generate a feeling of personal power.
Add in sexual addiction and aggression and narcissists become predatory in the
extreme. Nothing ever truly satisfies them. When they grow tired of the normal, they
quickly turn to the abnormal and eventually the criminal. I would say that pedophilia
is a natural progression of the elitist mindset; for children are the easiest and most
innocent victim source, not to mention the most aberrant and forbidden, and thus the
most desirable for a psychopathic deviant embracing evil impulses.
Beyond this is the even more disturbing prospect of cultism.
It is
not that the globalists are simply evil as individuals; if that were the case then they
would present far less of a threat. The greater terror is that they are also organized.
When one confronts the problem of evil head on, one quickly realizes that evil is within
us all. There will always be an internal battle in every individual. Organized evil,
though, is in fact the ultimate danger, and it is organized evil that must be
eradicated.
For organized evil to be defeated, there must be organized good.
I believe the liberty movement in particular is that good; existing in early stages,
not yet complete, but good none the less. Our championing of the non-aggression
principle and individual liberty is conducive to respect for privacy, property and
life. Conscience is a core tenet of the liberty ideal, and the exact counter to
organized elitism based on moral relativity.
Recognize and take solace that though we live in dark times, and evil men
roam free, we are also here. We are the proper response to evil, and we have been placed
here at this time for a reason. Call it fate, call it destiny, call it coincidence, call
it god, call it whatever you want, but the answer to evil is us.
"Out of the temporary evil we are now compelled to commit will emerge the
good of an unshakable rule, which will restore the regular course of the
machinery of the national life, brought to naught by liberalism. The result
justifies the means. Let us, however, in our plans, direct our attention not
so much to what is good and moral as to what is necessary and useful."
I should also point out those alledgedly behind The Protocols
are not the people the article is referring ie: those people are
typically found in any liberal establishment.
A good article, but it fails to deliver on these key aspects of
the matter:
Everyone knows from the Godfather and its genre
that there is a connection between loyalty, criminality and
power: Once you witness someone engaging in a criminal act, you
have leverage over them and that ensures their loyalty. But what
follows from that - which healthy sane minds have trouble
contemplating - is that the greater the criminality the greater
the leverage, and that because murderous paedophilia places a
person utterly beyond any prospect of redemption in decent
society, there in NO GREATER LOYALTY than those desperate to
avoid being outed. These must be the three corners of the
triangle - Power:Loyalty:Depravity through which the evil eys
views the world.
I always beleived in an Illuminati of sorts, however they
care to self identify. Until Pizzagate, I never understood that
murderous paedophilia, luciferian in style to accentuate their
own depravity, is THE KEY TO RULING THE EARTH
And another thing. If pizzagate is 'fake news' then it it
inconceivably elaborate - they'd have had to fake Epstein 2008,
Silsby 2010, Breitbart 2011, the 2013 portugese release of
podestaesque mccann suspects, as well as the current run of
wikileaks and Alefantis' instagram account - which had an avatar
photo of the 13 yr old lover of a roman emperor.
Is that much fake news a possibility? Or has this smoke been
blowing for years and we've all been too distracted to stop and
look for fire?
What floors me about the whole pizzagate thing is the evil staring us
right in the face. And then to realize that the libtards don't even
believe in evil at all, only "mental illness"!
Lesson #1: Do not waste your time figuring some things out. Things like evil
people are probably beyond a decent persons ability to understand and let's be
honest I don't want to feel any sympathy for them anyway.
Read a book years ago by Dr. Karl Menninger, a psychiatrist, titled
'Whatever happened to Sin?'
In it he talks of murder and that it is not a natural thing for man to
do,. However, when the burden of guilt is spread over many shoulders and
government condones the action, it becomes easier to bear.
When observing the results, such as soldiers returning from war, unstable
mentally, it is evident that evil has occured. It has been decades since I
read the book, so the words I wrote may not be verbatim.
Lurked ZH for years, just started reading the comments. This is worse than
Reddit's echo chamber. Bible quotes? 3 guys 1 hammer on liveleak has more
productive comments. Why not mention methods you've used to help people reach
their own conclusion about Pizzagate?
I had two slices of pizza for dinner. I had to try not to think of the poor
children walking innocently about the store who may at any moment fall victim
to a pedo. My gf said pizza places all over now need to keep a keen eye out for
the Posdesta Brothers and their Gang after all the stuff that has come out from
WikiLeaks and other sources about them.
The bible says God created evil and loosed it on us. The correct reading of
Genesis 4;1 is from the dead sea scrolls stating :
"And Adam knew his
wife Eve,
who was pregnant by Sammael [Satan]
, and she conceived and
bare Cain,
and he was like the heavenly beings, and not like earthly
beings,
and
she
said, I have gotten a man from
the angel of
the Lord."
So in Isaiah 45:7 we have this:
I form the light, and create darkness: I make peace, and create evil: I the
LORD do all these
things
.
So my research shows evil was "grafted" into humans through
the unholy alliance and 2 seedline of people resulted.
Good article but an exception: evil doesn't reside in all of us, sin does.
Evil is the expression of wanton and intentional deception, injury,
degradation, and destruction and rarely self-recognizes or admits to God as
supreme. It may be DNA encoded. Sociopathy certainly is.
But you're so
right about the organized nature of it all, and for thousands of years. The
newly formed EU didn't advertise itself as the New Babylonia for nothing on
publicty posters, heralding the coming age of one tongue out of many and
fashioning its parliament building after the Tower of Bablyon:
Secret societies are cannibalizing us, and themselves, but members won't
know till it's too late that they'll also be eaten fairly early on. Of all
"people", they should know those in the pyramid capstone won't have enough
elbow room if they let in every Tom, Dick and Harry Mason.
I am sympatico with Brandon. I have always had similar interests, about the
soul, about ethics, about human behavior.
The reality is that evil is extant
in other human beings. The thought that your property manager is going to piss
in your OJ or fuck their BFF in your bed is abhorrent to most people, but not
all. There was an article this week about a married couple that had concerns
about their rental unit manager. And what did they find? He was fucking his BFF
(yes, of course it was another dude) in their bed. The good news is they got it
on video and moved. The bad news? This kind of attitude is rampant. People
don't give a shit about other people. They think the rules don't apply to them.
That they are special. The result is renting from some asshat that fucks in
your bed or pisses in your OJ. Or parents that wonder why little Johnny or
little Janie never move out of the house and are stoned and play video games
all day.
Evil exists, in varying forms. Sadly too many people continue to make
excuses for not only bad behavior but evil behavior. I don't think that way and
I don't live my life that way but I am fully aware of all the morons stumbling
through the world that do.
I think people are misunderstanding the setup theory. Nobody believes, at
least I hope not, that all of this art and bizarre behavior on the part of
these freaks was staged for the purposes of taking down the last of our free
media, but rather, they just took advantage of a situation where they knew
people were making accusations that couldn't be sufficiently backed up or even
prosecuted, and yet caused proven or contrived damages to people. If this is
the case, their intention,
with the help of intelligence agencies
, is
to frame alt-media for starting vigilante violence and the destruction of
innocent people's lives through promoting defamation against others.
I have
no doubt that our entire system is riddled with pedophilia and likely much
worse. They have also been getting away with this forever, so when we go for
the takedown we better have our ducks in a row. To do otherwise will just give
these sickos complete immunity and more decades will pass with them continuing
to prey on our children. Not only is this at stake but the fate of all the
children of this nation is at stake if we lose our media. We are in very
dangerous and treacherous times. When you go toe to toe with the professional
trade crafters you have to play smart or they will have you every time.
Once people have had enough exposure to NPDs or psychopaths you will vibe
them after a while. I imagine this is likely the case for anyone who has
worked as a trader, finance, politics, big commodity booms are bad, etc. We
have all encountered them somewhere. People should pay attention to how they
feel (yeah I know, people hate that word) when they are around people. I have
to pretend that I don't notice them because it is so apparent to me and
immediately.
The last time I picked one out at work, a few months later the creepy
bastard walked past me at night during a -20 blizzard, with next to no
visibility, knowing that I had an hour drive, and told me in super spooky
whisper.. "Don't hit a deer on your way home now." I found out later that a
bunch of horses had mysteriously died in his care and a bunch of other things
that confirmed my suspicions. I had a long battle with him so I eventually got
to understand him pretty well. I didn't have to hear the guy state a single
sentence or watch any body language, I just knew immediately because I could
feel his malevolence and threat in my stomach where we have a large nerve
cluster. Pay attention and you will know. Also their eye contact is all wrong
and too intense.
Globalism, is designed to make you poorer slowly over decades by allowing wages
and conditions to be for ever slowly reduced under the guise of free market
competition to funnel wealth ever upwards to the 1%.
"... Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton. ..."
"... "I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it." ..."
"... It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom. ..."
...the British politician, who was invited by Mississippi governor Phil Bryant, will draw parallels
between what he sees as the inspirational story of Brexit and Trump's campaign. Farage will describe
the Republican's campaign as a similar crusade by grassroots activists against "big banks and global
political insiders" and how those who feel disaffected and disenfranchised can become involved in
populist, rightwing politics. With Trump lagging in the polls, just as Brexit did prior to the vote
on the referendum, Farage will also hearten supporters by insisting that they can prove pundits and
oddsmakers wrong as well.
This message resonates with the Trump campaign's efforts to reach out to blue collar voters who
have become disillusioned with American politics, while also adding a unique flair to Trump's never
staid campaign rallies.
The event will mark the first meeting between Farage and Trump.
Arron Banks, the businessman who backed Leave.EU, the Brexit campaign group associated with the
UK Independence party (Ukip), tweeted that he would be meeting Trump over dinner and was looking
forward to Farage's speech.
The appointment last week of Stephen Bannon, former chairman of the Breitbart website, as
"CEO" of Trump's campaign has seen the example of the Brexit vote, which Breitbart enthusiastically
advocated, rise to the fore in Trump's campaign narrative.
Speaking to a local radio station before the joint rally, Farage urged Americans to "go out
and fight" against Hillary Clinton.
"I am going to say to people in this country that the circumstances, the similarities, the
parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks
time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change
they have get up out of their chairs and go out and fight for it. It can happen. We've just proved
it."
"I am being careful," he added when asked if he supported the controversial Republican nominee.
"It's not for me as a foreign politician to say who you should vote for ... All I will say is
that if you vote for Hillary Clinton, then nothing will change. She represents the very politics
that we've just broken through the Brexit vote in the United Kingdom."
"... As Mr. Buffet so keenly said it, There is a war going on, and we are winning. ..."
"... Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection, and historical revisionism flow across your screen. And the `objective' straight news reporting is no better. ..."
"... "Why is it afraid of us?" Because we the people are perceived to be the enemy of America the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians and military leaders, provide corporate espionage to the highest payers and more devious machinations than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking around the results tell me that. ..."
"... The fourth estate (the media) has been purchased outright by the second estate (the nobility). I guess you could call this an 'estate sale'. All power to the markets! ..."
Free Trade," the banner of Globalization, has not only wrecked the world's economy, it has left Western
Democracy in shambles. Europe edges ever closer to deflation. The Fed dare not increase interest
rates, now poised at barely above zero. As China's stock market threatened collapse, China poured
billions to prop it up. It's export machine is collapsing. Not once, but twice, it recently manipulated
its currency to makes its goods cheaper on the world market. What is happening?
The following two
graphs tell most of the story. First, an overview of Free Trade.
Capital fled from developed countries to undeveloped countries with slave-cheap labor, countries
with no environmental standards, countries with no support for collective bargaining. Corporations,
like Apple, set up shop in China and other undeveloped countries. Some, like China, manipulated its
currency to make exported goods to the West even cheaper. Some, like China, gave preferential tax
treatment to Western firm over indigenous firms. Economists cheered as corporate efficiency unsurprisingly
rose. U.S. citizens became mere consumers.
Thanks to Bill Clinton and the Financial Modernization Act, banks, now unconstrained, could peddle
rigged financial services, offer insurance on its own investment products–in short, banks were free
to play with everyone's money–and simply too big to fail. Credit was easy and breezy. If nasty Arabs
bombed the Trade Center, why the solution was simple: Go to the shopping mall–and buy. That remarkable
piece of advice is just what freedom has been all about.
Next: China's export machine sputters.
China's problem is that there are not enough orders to keep the export machine going. There comes
a time when industrialized nations simply run out of cash–I mean the little people run out of cash.
CEOs and those just below them–along with slick Wall Street gauchos–made bundles on Free Trade, corporate
capital that could set up shop in any impoverished nation in the world.. No worries about labor–dirt
cheap–or environmental regulations–just bring your gas masks. At some point the Western consumer
well was bound to run dry. Credit was exhausted; the little guy could not buy anymore. Free trade
was on its last legs.
So what did China do then? As its markets crashed, it tried to revive its export model, a model
based on foreign firms exporting cheap goods to the West. China lowered its exchange rates, not once
but twice. Then China tried to rescue the markets with cash infusion of billions. Still its market
continued to crash. Manufacturing plants had closed–thousands of them. Free Trade and Globalization
had run its course.
And what has the Fed been doing? Why quantitative easy–increase the money supply and lower short
term interest rates. Like China's latest currency manipulation, both were merely stop-gap measures.
No one, least of all Obama and his corporate advisors, was ready to address corporate outsourcing
that has cost millions of jobs. Prime the pump a little, but never address the real problem.
The WTO sets the groundwork for trade among its member states. That groundwork is deeply flawed.
Trade between impoverished third world countries and sophisticated first world economies is not merely
a matter of regulating "dumping"-not allowing one country to flood the market with cheap goods-nor
is it a matter of insuring that the each country does not favor its indigenous firms over foreign
firms. Comparable labor and environmental standards are necessary. Does anyone think that a first
world worker can compete with virtual slave labor? Does anyone think that a first world nation with
excellent environmental regulations can compete with a third world nation that refuses to protect
its environment?
Only lately has Apple even mentioned that it might clean up its mess in China. The Apple miracle
has been on the backs of the Chinese poor and abysmal environmental wreckage that is China.
The WTO allows three forms of inequities-all of which encourage outsourcing: labor arbitrage,
tax arbitrage, and environmental arbitrage. For a fuller explanation of these inequities and the
"race to the bottom," see
here.
Of course now we have the mother of all Free Trade deals –the Trans-Pacific Partnership (TPP)–
carefully wrapped in a black box so that none of us can see what finally is in store for us. Nothing
is ever "Free"–even trade. I suspect that China is becoming a bit too noxious and poisonous. It simply
has to deal with its massive environmental problems. Time to move the game to less despoiled and
maybe more impoverished countries. Meanwhile, newscasters are always careful to tout TPP.
Fast Tracking is a con man's game. Do it so fast that the marks never have a chance to watch their
wallets. In hiding negotiations from prying, public eyes, Obama, has given the con men a bigger edge:
A screen to hide the corporations making deals. Their interest is in profits, not in public good.
Consider the media. Our only defense is a strong independent media. At one time,
newsrooms were not required to be profitable. Reporting the news was considered a community service.
Corporate ownership provided the necessary funding for its newsrooms–and did not interfere.
But the 70′s and 80′s corporate ownership required its newsrooms to be profitable. Slowly but
surely, newsrooms focused on personality, entertainment, and wedge issues–always careful not to rock
the corporate boat, always careful not to tread on governmental policy. Whoever thought that one
major news service–Fox–would become a breeding ground for one particular party.
But consider CNN: It organizes endless GOP debates; then spends hours dissecting them. Create
the news; then sell it–and be sure to spin it in the direction you want.
Are matters of substance ever discussed? When has a serious foreign policy debate ever been allowed
occurred–without editorial interference from the media itself. When has trade and outsourcing been
seriously discussed–other than by peripheral news media?
Meanwhile, news media becomes more and more centralized. Murdoch now owns National Geographic!
Now, thanks to Bush and Obama, we have the chilling effect of the NSA. Just whom does the NSA
serve when it collects all of our digital information? Is it being used to ferret out the plans of
those exercising their right of dissent? Is it being used to increase the profits of favored corporations?
Why does it need all of your and my personal information–from bank accounts, to credit cards, to
travel plans, to friends with whom we chat .Why is it afraid of us?
jefemt, October 23, 2015 at 9:43 am
As Mr. Buffet so keenly said it, There is a war going on, and we are winning.
If 'they' are failing, I'd hate to see success!
Isn't it the un-collective WE who are failing?
failing to organize,
failing to come up with plausible, 90 degrees off present Lemming-to-Brink path alternative plans
and policies,
failing to agree on any of many plausible alternatives that might work
Divided- for now- hopefully not conquered ..
I gotta scoot and get back to Dancing with the Master Chefs
allan, October 23, 2015 at 10:03 am
Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection,
and historical revisionism flow across your screen. And the `objective' straight news reporting
is no better.
Vatch, October 23, 2015 at 10:36 am
Don't just watch the toxic sludge; respond to it with a letter to the editor (LTE) of the offending
publication! For some of those toxic editorials, and contact information for LTEs, see:
A few of the editorials may now be obscured by paywalls or registration requirements, but most
should still be visible. Let them know that we see through their nonsense!
TedWa, October 23, 2015 at 10:38 am
"Why is it afraid of us?" Because we the people are perceived to be the enemy of America
the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians
and military leaders, provide corporate espionage to the highest payers and more devious machinations
than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking
around the results tell me that.
TG, October 23, 2015 at 3:27 pm
The fourth estate (the media) has been purchased outright by the second estate (the nobility).
I guess you could call this an 'estate sale'. All power to the markets!
Pelham, October 23, 2015 at 8:32 pm
Even when newsrooms were more independent they probably would not, in general, have reported
on free trade with any degree of skepticism. The recent disappearance of the old firewall between
the news and corporate sides has made things worse, but at least since the "professionalization"
of newsrooms that began to really take hold in the '60s, journalists have tended to identify far
more with their sources in power than with their readers.
There have, of course, been notable exceptions. But even these sometimes serve more to obscure
the real day-to-day nature of journalism's fealty to the corporate world than to bring about any
significant change.
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.
"... Furthermore, as Mark Kleiman sagely observes , the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other. ..."
A Protectionist Moment? : ... if Sanders were to make it to the White House, he would find
it very hard to do anything much about globalization - not because it's technically or economically
impossible, but because the moment he looked into actually tearing up existing trade agreements
the diplomatic, foreign-policy costs would be overwhelmingly obvious. ...
But it's also true
that much of the elite defense of globalization is basically dishonest: false claims of inevitability,
scare tactics (
protectionism causes depressions !), vastly exaggerated claims for the benefits of trade liberalization
and the costs of protection, hand-waving away the large distributional effects that are what standard
models actually predict. I hope, by the way, that I haven't done any of that...
Furthermore, as Mark Kleiman
sagely observes , the conventional case for trade liberalization relies on the assertion that
the government could redistribute income to ensure that everyone wins - but we now have an ideology
utterly opposed to such redistribution in full control of one party, and with blocking power against
anything but a minor move in that direction by the other.
So the elite case for ever-freer trade is largely a scam, which voters probably sense even
if they don't know exactly what form it's taking.
Ripping up the trade agreements we already have would, again, be a mess, and I would say that
Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump
might actually do it, but only as part of a reign of destruction on many fronts.
But it is fair to say that the case for more trade agreements - including TPP, which hasn't
happened yet - is very, very weak. And if a progressive makes it to the White House, she should
devote no political capital whatsoever to such things.
Again, just because automation has been a major factor in job loss doesn't mean "off shoring"
(using the term broadly and perhaps somewhat inaccurately) is not a factor.
The "free" trade deals suck. They are correctly diagnosed as part of the problem.
What would you propose to fix the problems caused by automation?
Automation frees labor to do more productive and less onerous tasks. We should expand our solar
production and our mass transit. We need to start re-engineering our urban areas. This will not
bring back the number of jobs it would take to make cities like Flint thrive once again.
Flint and Detroit have severe economic problems because they were mismanaged by road building
and suburbanization in the 1950s and 1960s. Money that should have been spent on maintaining and
improving urban infrastructure was instead plowed into suburban development that is not dense
enough to sustain the infrastructure required to support it. People moved to the suburbs, abandoned
the built infrastructure of the cities and kissed them goodbye.
Big roads polluted the cities with lead, noise, diesel particles and ozone and smog. Stroads
created pedestrian kill zones making urban areas, unwalkable, unpleasant- an urban blights to
drive through rather than destinations to drive to.
Government subsidized the white flight to the suburbs that has left both the suburbs and the
urban cores with too low revenue to infrastructure ratio. The inner suburbs have aged into net
losers, their infrastructure must be subsidized. Big Roads were built on the Big Idea that people
would drive to the city to work and play and then drive home. That Big idea has a big problem.
Urban areas are only sustainable when they have a high resident density. The future of cities
like Flint and Detroit will be tearing out the roads and replacing them with streets and houses
and renewing the housing stock that has been abandoned. It needs to be done by infill, revitalizing
inner neighborhoods and working outward. Cities like Portland have managed to protect much of
their core, but even they are challenged by demands for suburban sprawl.
Slash and burn development, creating new suburbs and abandoning the old is not a sustainable
model. Not only should we put people to work replacing the Flint lead pipes, but much of the city
should be rebuilt from the inside out. Flint is the leading edge of this problem that requires
fundamental changes in our built environment to fix. I recommend studying Flint as an object lesson
of what bad development policy could do to all of our cities.
An Interview with Frank Popper about Shrinking Cities, Buffalo Commons, and the Future of Flint
How does America's approach shrinking cities compare to the rest of the world?
I think the American way is to do nothing until it's too late, then throw everything at it
and improvise and hope everything works. And somehow, insofar as the country's still here, it
has worked. But the European or the Japanese way would involve much more thought, much more foresight,
much more central planning, and much less improvising. They would implement a more, shall we say,
sustained effort. The American way is different. Europeans have wondered for years and years why
cities like Detroit or Cleveland are left to rot on the vine. There's a lot of this French hauteur
when they ask "How'd you let this happen?"
Do shrinking cities have any advantages over agricultural regions as they face declining populations?
The urban areas have this huge advantage over all these larger American regions that are going
through this. They have actual governments with real jurisdiction. Corrupt as Detroit or Philadelphia
or Camden may be, they have actual governments that are supposed to be in charge of them. Who's
in charge of western Kansas? Who's in charge of the Great Plains? Who is in charge of the lower
Mississippi Delta or central Appalachia? All they've got are these distant federal agencies whose
past performance is not exactly encouraging.
Why wasn't there a greater outcry as the agricultural economy and the industrial economy collapsed?
One reason for the rest of the country not to care is that there's no shortage of the consumer
goods that these places once produced. All this decline of agriculture doesn't mean we're running
out of food. We've got food coming out of our ears. Likewise, Flint has suffered through all this,
but it's not like it's hard to buy a car in this country. It's not as if Flint can behave like
a child and say "I'm going to hold my nose and stop you from getting cars until you do the right
thing." Flint died and you can get zero A.P.R. financing. Western Kansas is on its last legs and,
gee, cereal is cheaper than ever.
In some sense that's the genius of capitalism - it's heartless. But if you look at the local
results and the cultural results and the environmental results you shake your head. But I don't
see America getting away from what I would call a little sarcastically the "wisdom" of the market.
I don't think it's going to change.
So is there any large-scale economic fallout from these monumental changes?
Probably not, and it hurts to say so. And the only way I can feel good about saying that is
to immediately point to the non-economic losses, the cultural losses. The losses of ways of life.
The notion of the factory worker working for his or her children. The notion of the farmer working
to build up the country and supply the rest of the world with food. We're losing distinctive ways
of life. When we lose that we lose something important, but it's not like The Wall Street Journal
cares. And I feel uncomfortable saying that. From a purely economic point of view, it's just the
price of getting more efficient. It's a classic example of Schumpeter's theory of creative destruction,
which is no fun if you're on the destruction end.
Does the decline of cities like Flint mirror the death of the middle class in the United States?
I think it's more the decline of the lower-middle class in the United States. Even when those
jobs in the auto factories paid very high wages they were still for socially lower-middle-class
people. I think there was always the notion in immigrant families and working-class families who
worked in those situations that the current generation would work hard so that the children could
go off and not have to do those kind of jobs. And when those jobs paid well that was a perfectly
reasonable ambition. It's the cutting off of that ambition that really hurts now. The same thing
has been true on farms and ranches in rural parts of the united states.
It is a much different thing to be small minded about trade than it is to be large minded about
everything else. The short story that it is all about automation and not trade will always get
a bad reception because it is small minded. When you add in the large minded story about everything
else then it becomes something entirely different from the short story. We all agree with you
about everything else. You are wrong about globalization though. Both financialization and globalization
suck and even if we paper over them with tax and transfer then they will still suck. One must
forget what it is to be a created equal human to miss that. Have you never felt the job of accomplishment?
Does not pride and self-confidence matter in your life?
While automation is part of the story, offshoring is just as important. Even when there is not
net loss in the numbers of jobs in aggregate, there is significant loss in better paying jobs
in manufacturing. It is important to look at the distributional effects within countries, as well
as between them
It would probably be cheaper and easier to just fix them. We don't need to withdraw from trade.
We just need to fix the terms of trade that cause large trade deficits and cross border capital
flows and also fix the FOREX system rigging.
What would it take to ignore trade agreements? They shouldn't be any more difficult to ignore
than the Geneva Conventions, which the US routinely flaunts.
In order to import we must export and in order to export we must import. The two are tied together.
Suppressing imports means we export less.
What free trade does is lower the price level relative to wages. It doesn't uniformly lower
the price level but rather lowers the cost of goods that are capable of being traded internationally.
It lowers the price on those goods that are disproportionately purchased by those with low incomes.
Free trade causes a progressive decline in the price level while protectionism causes a regressive
increase in the price level.
Funny rebuttal! Bhagwati probably has a model that says the opposite! But then he grew up in India
and should one day get a Nobel Prize for his contributions to international economics.
Our media needs to copy France 24, ... and have real debates about real issues. What we get is
along the lines of ignoring the problem then attacking any effort to correct. for example, the
media stayed away from the healthcare crisis, too complicated, but damn they are good at criticizing.
A seriously shameful article. Krugman has been a booster of trade & globalization for 30 years:
marginally more nuanced than the establishment, but still a booster.
Now, the establishment has what it wanted and the effects have been disastrous for those not
in the top 20 percent of the income distribution.
At this stage, comes insult to injury. Establishment economists (like Mr. Krugman) can reinvent
themselves with "brilliant new studies" showing the costs and damage of globalization. They pay
no professional costs for the grievous injuries inflicted; there is no mention of the fact that
critical outsider economists have been predicting and writing about these injuries and were right;
and they blithely say we must stay the course because we are locked-in and have few options.
Krugman is not Greg Mankiw. Most people who actually get international economics (Mankiw does
not) are not of the free trade benefits all types. Paul Samuelson certainly does not buy into
Mankiw's spin. Funny thing - Mankiw recently cited an excellent piece from Samuelson only to dishonestly
suggest Samuelson did not believe in what he wrote.
Why are you mischaracterizing what Krugman has written? That's my point. Oh wait - you misrepresent
what people write so you can "win" a "debate". Never mind. Please proceed with the serial dishonesty.
"The truth is that if Sanders were to make it to the White House, he would find it very hard to
do anything much about globalization - not because it's technically or economically impossible,
but because the moment he looked into actually tearing up existing trade agreements the diplomatic,
foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders
currently benefits from the luxury of irresponsibility: he's never been anywhere close to the
levers of power, so he could take principled-sounding but arguably feckless stances in a way that
Clinton couldn't and can't."
As Dean Baker says, we need to confront Walmart and Goldman Sachs at home, who like these policies,
more than the Chinese.
The Chinese want access to our consumer market. They'd also like if we did't invade countries
like Iraq.
"so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't"
And what is that? Tear up trade deals? It is Krugman who is engaging in straw man arguments.
Krugman does indeed misrepresent Sanders' positions on trade. Sander is not against trade, he
merely insists on *Fair Trade*, which incorporates human rights and environmental protections.
His opposition is to the kinds of deals, like NAFTA and TPP, which effectively gut those (a central
element in Kruman's own critique of the latter).
Krugman has definitely backed off his (much) earlier boosterism and publicly said so. This is
an excellent piece by him, though it does rather downplay his earlier stances a bit. This is one
of the things I especially like about him.
I can get the idea that some people win, some people lose from liberalized trade. But what really
bugs me about the neoliberal trade agenda is that it has been part of a larger set of economically
conservative, laissez faire policies that have exacerbated the damages from trade rather than
offsetting them.
At the same time they were exposing US workers to greater competition from abroad and destroying
and offshoring working class jobs via both trade and liberalized capital flows, the neoliberals
were also doing things like "reinventing government" - that is, shrinking structural government
spending and public investment - and ending welfare. They have done nothing serious about steering
capital and job development efforts toward the communities devastated by the liberalization.
The neoliberal position has seem to come down to "We can't make bourgeois progress without
breaking a few working class eggs."
Agreed! "Krugman has been a booster of trade & globalization for 30 years: marginally more nuanced
than the establishment, but still a booster.'
Now he claims that he saw the light all along! "much of the elite defense of globalization
is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!),
vastly exaggerated claims for the benefits of trade liberalization and the costs of protection,
hand-waving away the large distributional effects that are what standard models actually predict.
I hope, by the way, that I haven't done any of that..."
You would be hard pressed to find any Krugman clips that cited any of those problems in the
past. Far from being an impartial economist, he was always an avid booster of free trade, overlooking
those very downsides that he suddenly decides to confess.
As far as I know, Sanders has not proposed ripping up the existing trade deals. His information
page on trade emphasizes (i) his opposition to these deals when they were first negotiated and
enacted, and (ii) the principles he will apply to the consideration of future trade deals. Much
of his argumentation concerning past deals is put forward to motivate his present opposition to
TPP.
Note also that Sanders connects his discussion of the harms of past trade policy to the Rebuild
America Act. That is, his approach is forward facing. We can't undo most of the past damage by
recreating the old working class economy we wrecked, but we can be aggressive about using government-directed
national investment programs to create new, high-paying jobs in the US.
You could have said the same about the 1920s
We can't undo most of the past damage by recreating the old agrarian class economy we wrecked,
but we can be aggressive about using government-directed national investment programs to create
new, high-paying jobs in the US.
The march of progress:
Mechanization of agriculture with displacement of large numbers of Ag workers.
The rise of factory work and large numbers employed in manufacturing.
Automation of Manufacturing with large displacement of workers engaged in manufacturing.
What do we want our workers to do? This question must be answered at the highest level of society
and requires much government facilitation. The absence of government facilitation is THE problem.
Memo to Paul Krugman - lead with the economics and stay with the economics. His need to get into
the dirty business of politics dilutes what he ends up sensibly writes later on.
""The truth is that if Sanders were to make it to the White House, he would find it very hard
to do anything much about globalization - not because it's technically or economically impossible,
but because the moment he looked into actually tearing up existing trade agreements the diplomatic,
foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders
currently benefits from the luxury of irresponsibility: he's never been anywhere close to the
levers of power, so he could take principled-sounding but arguably feckless stances in a way that
Clinton couldn't and can't."
Yeah, it's pretty dishonest for Krugman to pretend that Sanders' position is "ripping up the trade
agreements we already have" and then say Sanders is "engaged in a bit of a scam" because he can't
do that. Sanders actual position (trying to stop new trade deals like the TPP) is something the
president has a lot of influence over (they can veto the deal). Hard to tell what Krugman is doing
here other than deliberately spreading misinformation.
Also worth noting that he decides to compare Sanders' opposition to trade deals with Trump,
and ignore the fact that Clinton has come out against the TPP as well .
Busy with real life, but yes, I know what happened in the primaries yesterday. Triumph for
Trump, and big upset for Sanders - although it's still very hard to see how he can catch Clinton.
Anyway, a few thoughts, not about the horserace but about some deeper currents.
The Sanders win defied all the polls, and nobody really knows why. But a widespread guess is
that his attacks on trade agreements resonated with a broader audience than his attacks on Wall
Street; and this message was especially powerful in Michigan, the former auto superpower. And
while I hate attempts to claim symmetry between the parties - Trump is trying to become America's
Mussolini, Sanders at worst America's Michael Foot * - Trump has been tilling some of the same
ground. So here's the question: is the backlash against globalization finally getting real political
traction?
You do want to be careful about announcing a political moment, given how many such proclamations
turn out to be ludicrous. Remember the libertarian moment? The reformocon moment? Still, a protectionist
backlash, like an immigration backlash, is one of those things where the puzzle has been how long
it was in coming. And maybe the time is now.
The truth is that if Sanders were to make it to the White House, he would find it very hard
to do anything much about globalization - not because it's technically or economically impossible,
but because the moment he looked into actually tearing up existing trade agreements the diplomatic,
foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders
currently benefits from the luxury of irresponsibility: he's never been anywhere close to the
levers of power, so he could take principled-sounding but arguably feckless stances in a way that
Clinton couldn't and can't.
But it's also true that much of the elite defense of globalization is basically dishonest:
false claims of inevitability, scare tactics (protectionism causes depressions! ** ), vastly exaggerated
claims for the benefits of trade liberalization and the costs of protection, hand-waving away
the large distributional effects that are what standard models actually predict. I hope, by the
way, that I haven't done any of that; I think I've always been clear that the gains from globalization
aren't all that (here's a back-of-the-envelope on the gains from hyperglobalization *** - only
part of which can be attributed to policy - that is less than 5 percent of world GDP over a generation);
and I think I've never assumed away the income distribution effects.
Furthermore, as Mark Kleiman sagely observes, **** the conventional case for trade liberalization
relies on the assertion that the government could redistribute income to ensure that everyone
wins - but we now have an ideology utterly opposed to such redistribution in full control of one
party, and with blocking power against anything but a minor move in that direction by the other.
So the elite case for ever-freer trade is largely a scam, which voters probably sense even
if they don't know exactly what form it's taking.
Ripping up the trade agreements we already have would, again, be a mess, and I would say that
Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump
might actually do it, but only as part of a reign of destruction on many fronts.
But it is fair to say that the case for more trade agreements - including Trans-Pacific Partnership,
which hasn't happened yet - is very, very weak. And if a progressive makes it to the White House,
she should devote no political capital whatsoever to such things.
Michael Mackintosh Foot (1913 – 2010) was a British Labour Party politician and man of letters
who was a Member of Parliament (MP) from 1945 to 1955 and from 1960 until 1992. He was Deputy
Leader of the Labour Party from 1976 to 1980, and later the Leader of the Labour Party and Leader
of the Opposition from 1980 to 1983.
Associated with the left of the Labour Party for most of his career, Foot was an ardent supporter
of the Campaign for Nuclear Disarmament and British withdrawal from the European Economic Community.
He was appointed to the Cabinet as Secretary of State for Employment under Harold Wilson in 1974,
and he later served as Leader of the House of Commons under James Callaghan. A passionate orator,
he led Labour through the 1983 general election, when the party obtained its lowest share of the
vote at a general election since 1918 and the fewest parliamentary seats it had had at any time
since before 1945.
There was so much wrong with Mitt Romney's Trump-is-a-disaster-whom-I-will-support-in-the-general
* speech that it may seem odd to call him out for bad international macroeconomics. But this is
a pet peeve of mine, in an area where I really, truly know what I'm talking about. So here goes.
In warning about Trumponomics, Romney declared:
"If Donald Trump's plans were ever implemented, the country would sink into prolonged recession.
A few examples. His proposed 35 percent tariff-like penalties would instigate a trade war and
that would raise prices for consumers, kill our export jobs and lead entrepreneurs and businesses
of all stripes to flee America."
After all, doesn't everyone know that protectionism causes recessions? Actually, no. There
are reasons to be against protectionism, but that's not one of them.
Think about the arithmetic (which has a well-known liberal bias). Total final spending on domestically
produced goods and services is
Total domestic spending + Exports – Imports = GDP
Now suppose we have a trade war. This will cut exports, which other things equal depresses
the economy. But it will also cut imports, which other things equal is expansionary. For the world
as a whole, the cuts in exports and imports will by definition be equal, so as far as world demand
is concerned, trade wars are a wash.
OK, I'm sure some people will start shouting "Krugman says protectionism does no harm." But
no: protectionism in general should reduce efficiency, and hence the economy's potential output.
But that's not at all the same as saying that it causes recessions.
But didn't the Smoot-Hawley tariff cause the Great Depression? No. There's no evidence at all
that it did. Yes, trade fell a lot between 1929 and 1933, but that was almost entirely a consequence
of the Depression, not a cause. (Trade actually fell faster ** during the early stages of the
2008 Great Recession than it did after 1929.) And while trade barriers were higher in the 1930s
than before, this was partly a response to the Depression, partly a consequence of deflation,
which made specific tariffs (i.e. tariffs that are stated in dollars per unit, not as a percentage
of value) loom larger.
Again, not the thing most people will remember about Romney's speech. But, you know, protectionism
was the only reason he gave for believing that Trump would cause a recession, which I think is
kind of telling: the GOP's supposedly well-informed, responsible adult, trying to save the party,
can't get basic economics right at the one place where economics is central to his argument.
The Gains From Hyperglobalization (Wonkish)
By Paul Krugman
Still taking kind of an emotional vacation from current political madness. Following up on
my skeptical post on worries about slowing trade growth, * I wondered what a state-of-the-art
model would say.
The natural model to use, at least for me, is Eaton-Kortum, ** which is a very ingenious approach
to thinking about multilateral trade flows. The basic model is Ricardian - wine and cloth and
labor productivity and all that - except that there are many goods and many countries, transportation
costs, and countries are assumed to gain productivity in any particular industry through a random
process. They make some funny assumptions about distributions - hey, that's kind of the price
of entry for this kind of work - and in return get a tractable model that yields gravity-type
equations for international trade flows. This is a good thing, because gravity models *** of trade
- purely empirical exercises, with no real theory behind them - are known to work pretty well.
Their model also yields a simple expression for the welfare gains from trade:
Real income = A*(1-import share)^(-1/theta)
where A is national productivity and theta is a parameter of their assumed random process (don't
ask); they suggest that theta=4 provides the best match to available data.
Now, what I wanted to do was apply this to the rapid growth of trade that has taken place since
around 1990, what Subramanian **** calls "hyperglobalization". According to Subramanian's estimates,
overall trade in goods and services has risen from about 19 percent of world GDP in the early
1990s to 33 percent now, bringing us to a level of integration that really is historically unprecedented.
There are some conceptual difficulties with using this rise directly in the Eaton-Kortum framework,
because much of it has taken the form of trade in intermediate goods, and the framework isn't
designed to handle that. Still, let me ignore that, and plug Subramanian's numbers into the equation
above; I get a 4.9 percent rise in real incomes due to increased globalization.
That's by no means small change, but it's only a fairly small fraction of global growth. The
Maddison database ***** gives us a 45 percent rise in global GDP per capita over the same period,
so this calculation suggests that rising trade was responsible for around 10 percent of overall
global growth. My guess is that most people who imagine themselves well-informed would give a
bigger number.
By the way, for those critical of globalization, let me hasten to concede that by its nature
the Eaton-Kortum model doesn't let us talk about income distribution, and it also makes no room
for the possible role of globalization in causing secular stagnation. ******
Still, I thought this was an interesting calculation to make - which may show more about my
warped sense of what's interesting than it does about anything else.
General Equilibrium Analysis of the Eaton-Kortum Model of International Trade
By Fernando Alvarez and Robert E. Lucas
We study a variation of the Eaton-Kortum model, a competitive, constant-returns-to-scale multicountry
Ricardian model of trade. We establish existence and uniqueness of an equilibrium with balanced
trade where each country imposes an import tariff. We analyze the determinants of the cross-country
distribution of trade volumes, such as size, tariffs and distance, and compare a calibrated version
of the model with data for the largest 60 economies. We use the calibrated model to estimate the
gains of a world-wide trade elimination of tariffs, using the theory to explain the magnitude
of the gains as well as the differential effect arising from cross-country differences in pre-liberalization
of tariffs levels and country size.
The gravity model of international trade in international economics, similar to other gravity
models in social science, predicts bilateral trade flows based on the economic sizes (often using
GDP measurements) and distance between two units. The model was first used by Jan Tinbergen in
1962.
The Hyperglobalization of Trade and Its Future
By Arvind Subramanian and Martin Kessler
Abstract
The open, rules-based trading system has delivered immense benefits-for the world, for individual
countries, and for average citizens in these countries. It can continue to do so, helping today's
low-income countries make the transition to middle-income status. Three challenges must be met
to preserve this system. Rich countries must sustain the social consensus in favor of open markets
and globalization at a time of considerable economic uncertainty and weakness; China and other
middle-income countries must remain open; and mega-regionalism must be prevented from leading
to discrimination and trade conflicts. Collective action should help strengthen the institutional
underpinnings of globalization. The world should move beyond the Doha Round dead to more meaningful
multilateral negotiations to address emerging challenges, including possible threats from new
mega-regional agreements. The rising powers, especially China, will have a key role to play in
resuscitating multilateralism.
"Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization
relies on the assertion that the government could redistribute income to ensure that everyone
wins"
That was never the conventional case for trade. Plus it's kind of odd that you have to add
"plus have the government redistribute" to the case your making.
Tom Pally above is correct. Krugman has been on the wrong side of this issue. He's gotten better,
but the timing is he's gotten better as the Democratic Party has moved to the left and pushed
back against corporate trade deals. Even Hillary came out late against Obama's TPP.
Sanders has nothing about ripping up trade deals. He has said he won't do any more.
As cawley predicted, once Sanders won Michigan, Krugman started hitting him again at his blog.
With cheap shots I might add. He's ruining his brand.
Tell Morning Edition: It's Not "Free Trade" Folks
by Dean Baker
Published: 10 March 2016
Hey, can an experienced doctor from Germany show up and start practicing in New York next week?
Since the answer is no, we can say that we don't have free trade. It's not an immigration issue,
if the doctor wants to work in a restaurant kitchen, she would probably get away with it. We have
protectionist measures that limit the number of foreign doctors in order to keep their pay high.
These protectionist measures have actually been strengthened in the last two decades.
We also have strengthened patent and copyright protections, making drugs and other affected
items far more expensive. These protections are also forms of protectionism.
This is why Morning Edition seriously misled its listeners in an interview with ice cream barons
Ben Cohen and Jerry Greenfield over their support of Senator Bernie Sanders. The interviewer repeatedly
referred to "free trade" agreements and Sanders' opposition to them. While these deals are all
called "free trade" deals to make them sound more palatable ("selective protectionism to redistribute
income upward" doesn't sound very appealing), that doesn't mean they are actually about free trade.
Morning Edition should not have used the term employed by promoters to push their trade agenda.
This has been Dean Baker's excellent theme for a very long time. And if you actually paid attention
to what Krugman said about TPP - he agreed with Dean's excellent points. But do continue to set
up straw man arguments so you can dishonestly attack Krugman.
No. That is not a sign of a faulty memory, quite the contrary.
Krugman writes column after column praising trade pacts and criticizing (rightly, I might add)
the yahoos who object for the wrong reasons.
But he omits a few salient facts like
- the gains are small,
- the government MUST intervene with redistribution for this to work socially,
- there are no (or minimal) provisions for that requirement in the pacts.
I would say his omissions speak volumes and are worth remembering.
Krugman initially wrote a confused column about the TPP, treating it as a simple free trade deal
which he said would have little impact because tariffs were already so low. But he did eventually
look into the matter further and wound up agreeing with Baker's take.
"That was never the conventional case for trade". Actually it was. Of course Greg Mankiw never
got the memo so his free trade benefits all BS confuses a lot of people. Mankiw sucks at international
trade.
David Glasner attacks Krugman from the right, but he doesn't whitewash the past as you do.
He remembers Gore versus Perot:
"Indeed, Romney didn't even mention the Smoot-Hawley tariff, but Krugman evidently forgot the
classic exchange between Al Gore and the previous incarnation of protectionist populist outrage
in an anti-establishment billionaire candidate for President:
GORE I've heard Mr. Perot say in the past that, as the carpenters says, measure twice and cut
once. We've measured twice on this. We have had a test of our theory and we've had a test of his
theory. Over the last five years, Mexico's tariffs have begun to come down because they've made
a unilateral decision to bring them down some, and as a result there has been a surge of exports
from the United States into Mexico, creating an additional 400,000 jobs, and we can create hundreds
of thousands of more if we continue this trend. We know this works. If it doesn't work, you know,
we give six months notice and we're out of it. But we've also had a test of his theory.
PEROT When?
GORE In 1930, when the proposal by Mr. Smoot and Mr. Hawley was to raise tariffs across the
board to protect our workers. And I brought some pictures, too.
[Larry] KING You're saying Ross is a protectionist?
GORE This is, this is a picture of Mr. Smoot and Mr. Hawley. They look like pretty good fellows.
They sounded reasonable at the time; a lot of people believed them. The Congress passed the Smoot-Hawley
Protection Bill. He wants to raise tariffs on Mexico. They raised tariffs, and it was one of the
principal causes, many economists say the principal cause, of the Great Depression in this country
and around the world. Now, I framed this so you can put it on your wall if you want to.
You obviously have not read Krugman. Here is from his 1997 Slate piece:
But putting Greenspan (or his successor) into the picture restores much of the classical vision
of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in
some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate
of the noninflationary unemployment rate over the course of two or three years. To accomplish
this, the board must raise or lower interest rates to bring savings and investment at that target
unemployment rate in line with each other.
And so all the paradoxes of thrift, widow's cruses, and so on become irrelevant. In particular,
an increase in the savings rate will translate into higher investment after all, because the Fed
will make sure that it does.
To me, at least, the idea that changes in demand will normally be offset by Fed policy--so
that they will, on average, have no effect on employment--seems both simple and entirely reasonable.
Yet it is clear that very few people outside the world of academic economics think about things
that way. For example, the debate over the North American Free Trade Agreement was conducted almost
entirely in terms of supposed job creation or destruction. The obvious (to me) point that the
average unemployment rate over the next 10 years will be what the Fed wants it to be, regardless
of the U.S.-Mexico trade balance, never made it into the public consciousness. (In fact, when
I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA advocate, as
it happens--exploded in rage: "It's remarks like that that make people hate economists!")
Yes. But please do not interrupt PeterK with reality. He has important work do with his bash all
things Krugman agenda. BTW - it is a riot that he cites Ross Perot on NAFTA. Perot has a self
centered agenda there which Gore exposed. Never trust a corrupt business person whether it is
Perot or Trump.
Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of
the issues. He seems to think that Sanders is a font of economic wisdom who is not to be questioned.
I would hate to see the left try to make a flawed candidate into the larger than life icon that
the GOP has made out of Reagan.
"Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of
the issues."
Dean Baker and Jared Bernstein. Like you I want full employment and rising wages. And like
Krugman I am very much an internationalist. I want us to deal fairly with the rest of the world.
We need to cooperate especially in the face of global warming.
1. My first, best solution would be fiscal action. Like everyone else. I prefer Sanders's unicorn
plan of $1 trillion over five years rather than Hillary's plan which is one quarter of the size.
Her plan puts more pressure on the Fed and monetary policy.
a. My preference would be to pay for it with Pigouvian taxes on the rich, corporations, and
the financial sector.
b. if not a, then deficit spending like Trudeau in Canada
C. if the deficit hawks block that, then monetary-financing would be the way around them.
2. close the trade deficit. Dean Baker and Bernstein have written about this a lot. Write currency
agreements into trade deals. If we close the trade deficit and are at full employment, then we
can import more from the rest of the world.
3. If powerful interests block 1. and 2. then lean on monetary policy. Reduce the price of
credit to boost demand. It works as a last resort.
"I would hate to see the left try to make a flawed candidate into the larger than life icon
that the GOP has made out of Reagan.'
I haven't seen any evidence of this. It would be funny if the left made an old Jewish codger
from Brooklyn into an icon. Feel the Bern!!!
Sanders regularly points out it's not about him as President fixing everything, it's about
creating a movement. It's about getting people involved. He can't do it by himself. Obama would
say this too. Elizabeth Warren become popular by saying the same things Sanders is saying.
However to say that the conventional case for trade liberalization relies on the Compensation
Principle isn't quite accurate. The conventional case has traditionally relied on the assertion
that "we" are better off with trade since we could *theoretically* distribute the gains. However,
free trade boosters never seem to get around to worrying about distributing the gains *in practice*.
In practice, free trade is typically justified simply by the net aggregate gain, regardless of
how these gains are distributed or who is hurt in the process.
To my mind, before considering some trade liberalization deal we should FIRST agree to and
implement the redistribution mechanisms and only then reduce barriers. Implementing trade deals
in a backward, half-assed way as has typically been the case often makes "us" worse off than autarky.
"Krugman has at times advocated free markets in contexts where they are often viewed as controversial.
He has ... likened the opposition against free trade and globalization to the opposition against
evolution via natural selection (1996),[167]
(In fact, when I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA
advocate, as it happens--exploded in rage: "It's remarks like that that make people hate economists!")
[Thanks to electoral politics, we're all fellow panelists now.]
"To me, at least, the idea that changes in demand will normally be offset by Fed policy--so that
they will, on average, have no effect on employment--seems both simple and entirely reasonable.
Yet it is clear that very few people outside the world of academic economics think about things
that way."
As we've seen the Fed is overly fearful of inflation, so the Fed doesn't offset the trade deficit
as quickly as it should. Instead we suffer hysteresis and reduction of potential output.
"The truth is that if Sanders were to make it to the White House, he would find it very hard to
do anything much about globalization - not because it's technically or economically impossible,
but because the moment he looked into actually tearing up existing trade agreements the diplomatic,
foreign-policy costs would be overwhelmingly obvious."
Here Krugman is more honest. We're basically buying off the Chinese, etc. The cost for stopping
this would be less cooperation from the Chinese, etc.
This is new. He never used to say this kind of thing. Instead he'd go after "protectionists"
as luddites.
"This is new. He never used to say this kind of thing. Instead he'd go after "protectionists"
as luddites."
You have Krugman confused with Greg Mankiw. Most real international economics (Mankiw is not
one) recognize the distributional consequences of free trade v. protectionism. Then again - putting
forth the Mankiw uninformed spin is a prerequisite for being on Team Republican. Of course Republicans
will go protectionist whenever it is politically expedient as in that temporary set of steel tariffs.
Helped Bush-Cheney in 2004 and right after that - no tariffs. Funny how that worked.
Where is the "redistribution from government" in the TPP. There isn't any.
Even the NAFTA side agreements on labor and the environment are toothless. The point of these
corporate trade deals is to profit from the lower labor and environmental standards of poorer
countries.
The fact that you resort to calling me a professional Krugman hater means you're not interested
in an actual debate about actual ideas. You've lost the debate and I'm not participating.
One is not allowed to criticize Krugman lest one be labeled a professional Krugman hater?
Your resort to name calling just weakens the case you're making.
You of late have wasted so much space misrepresenting what Krugman has said. Maybe you don't hate
him - maybe you just want to get his attention. For a date maybe. Lord - the troll in you is truly
out of control.
Sandwichman may think Krugman changed his views but if one actually read what he has written over
the years (as opposed to your cherry picking quotes), you might have noticed otherwise. But of
course you want Krugman to look bad. It is what you do.
Sizeable numbers of Americans have seen wages decline in real terms for nearly 20 years. Many/most
parents in many communities do not see a better future before them, or for their children.
Notable quotes:
"... Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule. ..."
"... I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money. ..."
"... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
"... Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. ..."
"... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
"... Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope. ..."
Legislators affiliated with the duopoly parties should not write the rules governing the ballot
access of third parties. This exclusionary rule making amounts to preserving a self-dealing duopoly.
Elections are the interest of the people who vote and those elected should not be able to subvert
the democratic process by acting as a cartel.
Democracy demands that ballot access rules be selected by referendum, not by the very legacy
parties that maintain legislative control by effectively denying ballot access to parties that
will pose a challenge to their continued rule.
Of course any meaningful change would require a voluntary diminishment of power of the duopoly
that now has dictatorial control over ballot access, and who will prevent any Constitutional Amendment
that would enhance the democratic nature of the process.
bruce wilder 08.02.16 at 8:02 pm
I think the U.S. Party system, in the political science sense, shifted to a new state during
George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over
by Theocrats and Bad Money.
Ronan(rf) 08.04.16 at 10:35 pm
"I generally don't give a shit about polls so I have no "data" to evidence this claim,
but my guess is the majority of Trump's support comes from this broad middle"
My understanding is trumps support disproportionately comes from the small business owning
classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved
in reactionary movements. This gets oversold as "working class" when class is defined by education
level rather than income.
This would make some sense as they are generally in economically unstable jobs, they tend to
be hostile to both big govt (regulations, freeloaders) and big business (unfair competition),
and while they (rhetorically at least) tend to value personal autonomy and self sufficiency ,
they generally sell into smaller, local markets, and so are particularly affected by local demographic
and cultural change , and decline. That's my speculation anyway.
bruce wilder 08.06.16 at 4:28 pm
I am somewhat suspicious of leaving dominating elites out of these stories of racism as an
organizing principle for political economy or (cultural) community.
Racism served the purposes of a slaveholding elite that organized political communities to
serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)
Racism serves as an organizing principle. Politically, in an oppressive and stultifying
hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with
ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus
a component of how racism works to organize a political community to serve a hegemonic master
class. The business end of racism, though, is the autarkic poverty imposed on the working communities:
slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled
communities, predatory institutions and authoritarian governments.
For a time, the balkanization of American political communities by race, religion and ethnicity
was an effective means to the dominance of an tiny elite with ties to an hegemonic community,
but it backfired. Dismantling that balkanization has left the country with a very low level of
social affiliation and thus a low capacity to organize resistance to elite depredations.
bruce wilder 08.06.16 at 4:31 pm
Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her
supporters does not fill me with hope.
Trump and the other illiberal populists have been benefiting from three overlapping backlashes.
The first is cultural. Movements for civil liberties have been remarkably successful over the
last 40 years. Women, ethnic and religious minorities, and the LGBTQ community have secured important
gains at a legal and cultural level. It is remarkable, for instance, how quickly same-sex marriage
has become legal in more than 20 countries when no country recognized it before 2001.
Resistance has always existed to these movements to expand the realm of civil liberties. But this
backlash increasingly has a political face. Thus the rise of parties that challenge multiculturalism
and immigration in Europe, the movements throughout Africa and Asia that support the majority over
the minorities, and the Trump/Tea Party takeover of the Republican Party with their appeals to primarily
white men.
The second backlash is economic. The globalization of the economy has created a class of enormously
wealthy individuals (in the financial, technology, and communications sectors). But globalization
has left behind huge numbers of low-wage workers and those who have watched their jobs relocate to
other countries.
Illiberal populists have directed all that anger on the part of people left behind by the world
economy at a series of targets: bankers who make billions, corporations that are constantly looking
for even lower-wage workers, immigrants who "take away our jobs," and sometimes ethnic minorities
who function as convenient scapegoats. The targets, in other words, include both the very powerful
and the very weak.
The third backlash, and perhaps the most consequential, is political. It's not just that people
living in democracies are disgusted with their leaders and the parties they represent. Rather, as
political scientists Roberto Stefan Foa and Yascha Mounk
write in the Journal of Democracy , "they have also become more cynical about the value
of democracy as a political system, less hopeful that anything they do might influence public policy,
and more willing to express support for authoritarian alternatives."
Foa and Mounk are using 20 years of data collected from surveys of citizens in Western Europe
and North America – the democracies with the greatest longevity. And they have found that support
for illiberal alternatives is greater among the younger generation than the older one. In other countries
outside Europe and North America, the disillusionment with democratic institutions often takes the
form of a preference for a powerful leader who can break the rules if necessary to preserve order
and stability – like Putin in Russia or Abdel Fattah el-Sisi in Egypt or Prayuth Chan-ocha in Thailand.
These three backlashes – cultural, economic, political – are also anti-internationalist because
international institutions have become associated with the promotion of civil liberties and human
rights, the greater globalization of the economy, and the constraint of the sovereignty of nations
(for instance, through the European Union or the UN's "responsibility to protect" doctrine).
... ... ....
The current political order is coming apart. If we don't come up with a fair, Green, and internationalist
alternative, the illiberal populists will keep winning. John Feffer is the director of Foreign
Policy In Focus.
"... 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.
"... More than a dozen Republican rivals, described as the strongest GOP field since 1980, were sent packing. This was the year Americans rose up to pull down the establishment in a peaceful storming of the American Bastille. ..."
"... If 2016 taught us anything, it is that if the establishment's hegemony is imperiled, it will come together in ferocious solidarity - for the preservation of their perks, privileges and power. All the elements of that establishment - corporate, cultural, political, media - are today issuing an ultimatum to Middle America: Trump is unacceptable. Instructions are going out to Republican leaders that either they dump Trump, or they will cease to be seen as morally fit partners in power. ..."
"... Our CIA, NGOs and National Endowment for Democracy all beaver away for "regime change" in faraway lands whose rulers displease us. How do we effect "regime change" here at home? ..."
"... Donald Trump's success, despite the near-universal hostility of the media, even much of the conservative media, was due in large part to the public's response to the issues he raised. ..."
"I'm afraid the election is going to be rigged," Donald Trump told voters
in Ohio and Sean Hannity on Fox News. And that hit a nerve.
"Dangerous," "toxic," came the recoil from the media.
Trump is threatening to "delegitimize" the election results of 2016.
Well, if that is what Trump is trying to do, he has no small point. For consider
what 2016 promised and what it appears about to deliver.
This longest of election cycles has rightly been called the Year of the Outsider.
It was a year that saw a mighty surge of economic populism and patriotism, a
year when a 74-year-old Socialist senator set primaries ablaze with mammoth
crowds that dwarfed those of Hillary Clinton.
It was the year that a non-politician, Donald Trump, swept Republican primaries
in an historic turnout, with his nearest rival an ostracized maverick in his
own Republican caucus, Senator Ted Cruz.
More than a dozen Republican rivals, described as the strongest GOP field
since 1980, were sent packing. This was the year Americans rose up to pull down
the establishment in a peaceful storming of the American Bastille.
But if it ends with a Clintonite restoration and a ratification of the same
old Beltway policies, would that not suggest there is something fraudulent about
American democracy, something rotten in the state?
If 2016 taught us anything, it is that if the establishment's hegemony
is imperiled, it will come together in ferocious solidarity - for the preservation
of their perks, privileges and power. All the elements of that establishment
- corporate, cultural, political, media - are today issuing an ultimatum to
Middle America: Trump is unacceptable. Instructions are going out to Republican
leaders that either they dump Trump, or they will cease to be seen as morally
fit partners in power.
It testifies to the character of Republican elites that some are seeking
ways to carry out these instructions, though this would mean invalidating and
aborting the democratic process that produced Trump.
But what is a repudiated establishment doing issuing orders to anyone?
Why is it not Middle America issuing the demands, rather than the other way
around?
Specifically, the Republican electorate should tell its discredited and rejected
ruling class: If we cannot get rid of you at the ballot box, then tell us how,
peacefully and democratically, we can be rid of you?
You want Trump out? How do we get you out? The Czechs had their Prague Spring.
The Tunisians and Egyptians their Arab Spring. When do we have our American
Spring? The Brits had their "Brexit," and declared independence of an arrogant
superstate in Brussels. How do we liberate ourselves from a Beltway superstate
that is more powerful and resistant to democratic change?
Our CIA, NGOs and National Endowment for Democracy all beaver away for
"regime change" in faraway lands whose rulers displease us. How do we effect
"regime change" here at home?
Donald Trump's success, despite the near-universal hostility of the media,
even much of the conservative media, was due in large part to the public's response
to the issues he raised.
He called for sending illegal immigrants back home, for securing America's
borders, for no amnesty. He called for an America First foreign policy to
keep us out of wars that have done little but bleed and bankrupt us.
He called for an economic policy where the Americanism of the people
replaces the globalism of the transnational elites and their K Street lobbyists
and congressional water carriers.
He denounced NAFTA, and the trade deals and trade deficits with China,
and called for rejection of the Trans-Pacific Partnership.
By campaign's end, he had won the argument on trade, as Hillary Clinton was
agreeing on TPP and confessing to second thoughts on NAFTA.
But if TPP is revived at the insistence of the oligarchs of Wall Street,
the Business Roundtable, the U.S. Chamber of Commerce - backed by conscript
editorial writers for newspapers that rely on ad dollars - what do elections
really mean anymore?
And if, as the polls show we might, we get Clinton - and TPP, and amnesty,
and endless migrations of Third World peoples who consume more tax dollars than
they generate, and who will soon swamp the Republicans' coalition - what was
2016 all about?
Would this really be what a majority of Americans voted for in this most
exciting of presidential races?
"Those who make peaceful revolution impossible will make violent revolution
inevitable," said John F. Kennedy.
The 1960s and early 1970s were a time of social revolution in America, and
President Nixon, by ending the draft and ending the Vietnam war, presided over
what one columnist called the "cooling of America."
But if Hillary Clinton takes power, and continues America on her present
course, which a majority of Americans rejected in the primaries, there is going
to be a bad moon rising.
And the new protesters in the streets will not be overprivileged children
from Ivy League campuses.
"... the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder. ..."
"... the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources. ..."
No matter what central banks do, their actions will not be able to create the same level of
economic growth that we have become used to over the past seven decades.
Economic growth does not come from the central banks; if government sought to provide the basics
for all its citizens, including health care, education, a home, and proper food and all the infrastructure
needed to give people the basics, then you could have something akin to "growth" while at the
same time making life more pleasant for the less fortunate. There seems to be no definition of
economic growth that includes everyone.
This seems a very elaborate way of stating a simple problem, that can be summarised in three
points.
The living standards of most people have fallen over the last thirty years or so because of
the impact of neoliberal economic policies. Conventional politicians are promising only more
of the same. Therefore people are increasingly voting for non-conventional politicians.
Neoliberalism has only exacerbated falling living standards. Living standards would be falling
even without it, albeit more gradually.
Neoliberalism itself may even be nothing more than a standard type response of species that
have expanded beyond the capacity of their environment to support them. What we see as an evil
ideology is only the expression of a mechanism that apportions declining resources to the elites,
like shutting shutting down the periphery so the core can survive as in hypothermia.
I really don't have problem with this. Let the financial sector run the world into the ground
and get it over with.
In defference to a great many knowledgable commentors here that work in the FIRE sector, I
don't want to create a damning screed on the cost of servicing money, but at some point even the
most considered opinions have to acknowledge that that finance is flooded with *talent* which
creates a number of problems; one being a waste of intellect and education in a field that doesn't
offer much of a return when viewed in an egalitarian sense, secondly; as the field grows due to,
the technical advances, the rise in globilization, and the security a financial occuptaion offers
in an advanced first world country nowadays, it requires substantially more income to be devoted
to it's function.
This income has to be derived somewhere, and the required sacrifices on every facet of a global
economy to bolster positions and maintain asset prices has precipitated this decline in the well
being of peoples not plugged-in to the consumer capitalist regime and dogma.
Something has to give here, and I honestly couldn't care about your 401k or home resale value,
you did this to yourself as much as those day-traders who got clobbered in the dot-com crash.
the capitalist economy is more and more an asset driven one. This article does not even
begin to address the issue of asset valuations, the explicit CB support for asset inflation and
the effect on inequality, and especially generational plunder.
the problem of living standards is obviously a Malthusian one. despite all the progress
of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming,
and now irreversible. "the market" is now moving rapidly to real assets. This will eventually
lead to war as all war is eventually for resources.
But those politicians lucky enough to win discover -- if they did not know already -- that their
capacity to affect even their own domestic environment is constrained by forces beyond their control.
Notable quotes:
"... But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control. ..."
"... In the case of Britain, the once-powerful centralized governments of that country are now multiply constrained. As the power of Britain in international affairs has declined, so has the British government's power within its own domain. Membership of the European Union constrains British governments' ability to determine everything from the quantities of fish British fishermen can legally catch to the amount in fees that British universities can charge students from other EU countries. ..."
"... Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted in 2014 alone was nearer 300,000. ..."
"... On top of all that, British governments -- even more than those of some other predominantly capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale force. In a world of substantially free trade, imports and exports of goods and services are largely beyond any government's control, and the Bank of England's influence over the external value of sterling is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good or ill, Britain's government was, and is, effectively helpless to intervene. ..."
"... That's why we need a federal Europe. Local governments for local issues and elected by the local people and a European government for European issues elected by all Europeans. ..."
Once upon a time, national elections were -- or seemed to be -- overwhelmingly domestic affairs,
affecting only the peoples of the countries taking part in them. If that was ever true, it is so
no longer. Angela Merkel negotiates with Greece's government with Germany's voters looming in the
background. David Cameron currently fights an election campaign in the UK holding fast to the belief
that a false move on his part regarding Britain's relationship with the EU could cost his Conservative
Party seats, votes and possibly the entire election.
Britain provides a good illustration of a general proposition. It used to be claimed, plausibly,
that "all politics is local." In 2015, electoral politics may still be mostly local, but the post-electoral
business of government is anything but local. There is a misfit between the two. Voters are mainly
swayed by domestic issues. Vote-seeking politicians campaign accordingly. But those politicians
lucky enough to win discover -- if they did not know already -- that their capacity to affect even
their own domestic environment is constrained by forces beyond their control.
Anyone viewing the UK election campaign from afar could be forgiven for thinking that British
voters and politicians alike imagined they were living on some kind of self-sufficient sea-girt island.
The opinion polls indicate that a large majority of voters are preoccupied -- politically as well
as in other ways -- with their own financial situation, tax rates, welfare spending and the future
of the National Health Service. Immigration is an issue for many voters, but mostly in domestic terms
(and often as a surrogate for generalized discontent with Britain's political class). The fact that
migrants from Eastern Europe and elsewhere make a positive net contribution to both the UK's economy
and its social services scarcely features in the campaign.
... ... ...
After polling day, all that will change -- probably to millions of voters' dismay. One American
presidential candidate famously said that politicians campaign in poetry, but govern in prose. Politicians
in democracies, not just in Britain, campaign as though they can move mountains, then find that most
mountains are hard or impossible to move.
In the case of Britain, the once-powerful centralized governments of that country are now
multiply constrained. As the power of Britain in international affairs has declined, so has the British
government's power within its own domain. Membership of the European Union constrains British governments'
ability to determine everything from the quantities of fish British fishermen can legally catch to
the amount in fees that British universities can charge students from other EU countries.
Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated
coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to
reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted
in 2014 alone was nearer 300,000.
The UK's courts are also far more active than they were. The British parliament in 1998 incorporated
the European Convention on Human Rights into British domestic law, and British judges have determinedly
enforced those rights. During the 1970s, they had already been handed responsibility for enforcing
the full range of EU law within the UK.
Also, Britain's judges have, on their own initiative, exercised increasingly frequently their
long-standing power of "judicial review," invalidating ministerial decisions that violated due process
or seemed to them to be wholly unreasonable. Devolution of substantial powers to semi-independent
governments in Scotland, Wales and Northern Ireland has also meant that the jurisdiction of many
so-called UK government ministers is effectively confined to the purely English component part.
On top of all that, British governments -- even more than those of some other predominantly
capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale
force. In a world of substantially free trade, imports and exports of goods and services are largely
beyond any government's control, and the Bank of England's influence over the external value of sterling
is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated
that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good
or ill, Britain's government was, and is, effectively helpless to intervene.
The heirs of Gladstone, Disraeli, Lloyd George and Winston Churchill, Britain's political leaders
are understandably still tempted to talk big. But their effective real-world influence is small.
No wonder a lot of voters in Britain feel they are being conned.
ItsJustTim
That's globalization. And it won't go away, even if you vote nationalist. The issues are increasingly
international, while the voters still have a mostly local perspective. That's why we need
a federal Europe. Local governments for local issues and elected by the local people and a European
government for European issues elected by all Europeans.
"... 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.
"... Donald Trump is challenging the very fabric of the institutional elites in this country on both sides that have, quite frankly, just straight up screwed this country up and made the world a mess. ..."
Tom Coyne, a lifelong Democrat and the mayor of Brook Park, Ohio, spoke
about his endorsement of Republican presidential nominee Donald Trump with Breitbart
News Daily SiriusXM host Matt Boyle.
Coyne said:
The parties are blurred. What's the difference? They say the same things
in different tones. At the end of the day, they accomplish nothing.
Donald Trump is challenging the very fabric of the institutional elites
in this country on both sides that have, quite frankly, just straight up
screwed this country up and made the world a mess.
Regarding the GOP establishment's so-called Never Trumpers, Coyne stated,
"If it's their expertise that people are relying upon as to advice to vote,
people should go the opposite."
In an interview last week, Coyne said that Democrats and Republicans
have failed the city through inaction and bad trade policies, key themes
Trump often trumpets.
"He understands us," Coyne said of Trump. "He is saying what we feel,
and therefore, let him shake the bedevils out of everyone in the canyons
of Washington D.C. The American people are responding to him."
Breitbart News Daily airs on SiriusXM Patriot 125 weekdays from 6:00
a.m. to 9:00 a.m. Eastern.
"... Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class. ..."
"... He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors ..."
"... Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages ..."
"... Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us: ..."
"... The RNC has been forcing Republican candidates to take suicidal positions forever They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote. ..."
"... American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago. ..."
"... Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar! ..."
"... Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. ..."
"... The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade." ..."
"... The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country." ..."
"... Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC. ..."
"... Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold. ..."
Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional
and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote
for us or we'll call you stupid. It's the working class against the smirking class.
No pandering! The essence of Trump in personality and issues , August 23, 2016
Ms. Coulter explains the journey of myself and so many other voters into Trump's camp. It captures
the essence of Trump as a personality and Trump on the issues. If I had to sum Ms. Coulter's view
of the reason for Trump's success in two words, I'd say "No Pandering!" I've heard many people,
including a Liberal tell me, "Trump says what needs to be said."
I've voted Republican in every election going back to Reagan in 1980, except for 2012 when
I supported President Obama's re-election. I've either voted for, or financially supported many
"Establishment Republicans" like Mitt Romney and John McCain in 2008. I've also supported some
Conservative ones like Newt Gingrich and Rudy Giuliani. In this election I'd been planning to
vote for Jeb Bush, a superb governor when I lived in Florida.
Then Trump announced his candidacy. I had seen hints of that happening as far back as 2012.
In my Amazon reviews in 2012 I said that many voters weren't pleased with Obama or the Republican
Establishment. So the question became: "Who do you vote for if you don't favor the agendas of
either party's legacy candidates?" In November 2013 I commented on the book DOUBLE DOWN: GAME
CHANGE 2012 by Mark Halperin and John Heileman:
=====
Mr. Trump occupies an important place in the political spectrum --- that of being a Republican
Populist.
He understands that if we're ever going to get our economy back on its feet the wage-earning
middle class will have to prosper along with investors, who are recovering our fortunes in
the stock market.
IMO whichever party nominates a candidate like Trump that really "gets" the idea that the
economy is suffering because the middle class can't find employment at livable wages, will
be the party that rises to dominance.
Mr. Trump, despite his flakiness, at least understood that essential fact of American economic
life.
November 7, 2013
=====
Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much
ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because
we think of the Republican Party as being our political "family" that has turned against us:
===== The RNC has been forcing Republican candidates to take suicidal positions forever They were
happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote.
when the GOP wins an election, there is no corresponding "win" for the unemployed blue-collar
voter in North Carolina. He still loses his job to a foreign worker or a closed manufacturing
plant, his kids are still boxed out of college by affirmative action for immigrants, his community
is still plagued with high taxes and high crime brought in with all that cheap foreign labor.
There's no question but that the country is heading toward being Brazil. One doesn't have to
agree with the reason to see that the very rich have gotten much richer, placing them well beyond
the concerns of ordinary people, and the middle class is disappearing. America doesn't make anything
anymore, except Hollywood movies and Facebook. At the same time, we're importing a huge peasant
class, which is impoverishing what remains of the middle class, whose taxes support cheap labor
for the rich.
With Trump, Americans finally have the opportunity to vote for something that's popular.
=====
That explains how Trump won my vote --- and held on to it through a myriad of early blunders
and controversies that almost made me switch my support to other candidates.
I'm no "xenophobe isolationist" stereotype. My first employer was an immigrant from Eastern
Europe. What I learned working for him launched me on my successful career. I've developed and
sold computer systems to subsidiaries of American companies in Europe and Asia. My business partners
have been English and Canadian immigrants. My family are all foreign-born Hispanics. Three of
my college roommates were from Ecuador, Germany, and Syria.
BECAUSE of this international experience I agree with the issues of trade and immigration that
Ms. Coulter talks about that have prompted Trump's rising popularity.
First, there is the false promise that free trade with low-wage countries would "create millions
of high-paying jobs for American workers, who will be busy making high-value products for export."
NAFTA was signed in 1994. GATT with China was signed in 2001. Since then we've signed free trade
with 20 countries. It was said that besides creating jobs for Americans, that free trade would
prosper the global economy. In truth the opposite happened:
American companies used free trade with low-wage countries as an opportunity to close their
American factories and relocate the jobs to lower-paying foreign workers. Instead of creating
product and exporting it to other countries, our American companies EXPORTED American JOBS to
other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED
during the last five years with most of the 20 countries we signed free trade with. Even our exports
to Canada, our oldest free trade partner, are less than what they were five years ago.
We ran trade SURPLUSES with Mexico until 1994, when NAFTA was signed. The very next year the
surplus turned to deficit, now $60 billion a year. Given that each American worker produces an
average of $64,000 in value per year, that is a loss of 937,000 American jobs to Mexico alone.
The problem is A) that Mexicans are not wealthy enough to be able to afford much in the way of
American-made product and B) there isn't much in the way of American-made product left to buy,
since so much of former American-made product is now made in Mexico or China.
Trade with Japan, China, and South Korea is even more imbalanced, because those countries
actively restrict imports of American-made products. We run a 4x trade imbalance with China, which
cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our
exports to these countries are actually DECLINING, even while our imports soar!
Thus, free trade, except with a few fair-trading countries like Canada, Australia, and possibly
Britain, has been a losing proposition. Is it coincidence that our economy has weakened with each
trade deal we have signed? Our peak year of labor force participation was 1999. Then we had the
Y2K collapse and the Great Recession, followed by the weakest "recovery" since WWII? As Trump
would say, free trade has been a "disaster."
Why do Establishment Republicans join with Democrats in wanting to diminish the future
with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter
reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by
the money and jobs they receive from big corporations to believe it. Ms. Coulter says:
===== The donor class doesn't care. The rich are like locusts: once they've picked America dry,
they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years
ago said, "If the transformation of the world economy lifts four people in China and India
out of poverty and into the middle class, and meanwhile [that] means one American drops out
of the middle class, that's not such a bad trade."
=====
Then there is immigration. My wife, son, and extended family legally immigrated to the USA
from Latin America. The first family members were recruited by our government during the labor
shortage of the Korean War. Some fought for the United States in Korea. Some of their children
fought for us in Vietnam, and some grandchildren are fighting in the Middle East. Most have
become successful professionals and business owners. They came here LEGALLY, some waiting in
queue for up to 12 years. They were supported by the family already in America until they were
on their feet.
Illegal immigration has been less happy. Illegals are here because the Democrats want new voters
and the Republicans want cheap labor. Contrary to business propaganda, illegals cost Americans
their jobs. A colleague just old me, "My son returned home from California after five years, because
he couldn't get construction work any longer. All those jobs are now done off the books by illegals."
It's the same in technology. Even while our high-tech companies are laying off 260,000 American
employees in 2016 alone, they are banging the drums to expand the importation of FOREIGN tech
workers from 85,000 to 195,000 to replace the Americans they let go. Although the H1-B program
is billed as bringing in only the most exceptional, high-value foreign engineers, in truth most
visas are issued to replace American workers with young foreigners of mediocre ability who'll
work for much less money than the American family bread-winners they replaced.
Both parties express their "reverse racism" against the White Middle Class. Democrats don't
like them because they tend to vote Republican. The Republican Establishment doesn't like them
because they cost more to employ than overseas workers and illegal aliens. According to them the
WMC is too technologically out of date and overpaid to allow our benighted business leaders to
"compete internationally."
Ms. Coulter says "Americans are homesick" for our country that is being lost to illegal immigration
and the removal of our livelihoods overseas. We are sick of Republican and Democrat Party hidden
agendas, reverse-racism, and economic genocide against the American people. That's why the Establishment
candidates who started out so theoretically strong, like Jeb Bush, collapsed like waterlogged
houses of cards when they met Donald Trump. As Ms. Coulter explains, Trump knows their hidden
agendas, and knows they are working against the best interests of the American Middle Class.
Coulter keeps coming back to Mr. Trump's "Alpha Male" personality that speaks to Americans
as nation without pandering to specific voter identity groups. She contrasts his style to the
self-serving "Republican (Establishment) Brain Trust that is mostly composed of comfortable, well-paid
mediocrities who, by getting a gig in politics, earn salaries higher than a capitalist system
would ever value their talents." She explains what she sees as the idiocy of those Republican
Establishment political consultants who wrecked the campaigns of Jeb Bush and Ted Cruz by micromanaging
with pandering.
She says the Republican Establishment lost because it served itself --- becoming wealthy by
serving the moneyed interests of Wall Street. Trump won because he is speaking to the disfranchised
American Middle Class who loves our country, is proud of our traditions, and believes that Americans
have as much right to feed our families through gainful employment as do overseas workers and
illegal aliens.
"I am YOUR voice," says Trump to the Middle Class that until now has been ignored and even
sneered at by both parties' establishments.
I've given an overview of the book here. The real delight is in the details, told as only Anne
Coulter can tell them. I've quoted a few snippets of her words, that relate most specifically
to my views on Trump and the issues. I wish there were space to quote many more. Alas, you'll
need to read the book to glean them all!
Bruce, I would also add that the Republican Establishment chose not to represent the interests
of the White Middle Class on trade, immigration, and other issues that matter to us. They chose
to represent the narrow interests of:
1. The corporate 1% who believe that the global labor market should be tapped in order
to beat American workers out of their jobs; and that corporations and the 1% who own them should
be come tax-exempt organizations that profit by using cheap overseas labor to product product
that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group
of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to
the next country."
2. Pretending to care about the interests of minorities. Of course, the Republican Establishment
has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities
are no more interested in losing their jobs to foreigners or to suffer economic stagnation while
the rich have their increasing wealth (most of which is earned at the expense of the middle class)
tax-sheltered, than do the WMC.
The Republican Establishment is in a snit because Trump beat them by picking up the WMC votes
that the Establishment abandoned. What would have happened if Trump had not come on the scene?
The probable result is that the Establishment would have nominated a ticket of Jeb Bush and John
Kasich. These candidates had much to recommend them as popular governors of key swing states.
But they would have gone into the election fighting the campaign with Republican Establishment
issues that only matter to the 1%. They would have lost much of the WMC vote that ultimately rallied
around Trump, while gaining no more than the usual 6% of minorities who vote Republican. It would
have resulted in a severe loss for the Republican Party, perhaps making it the minority party
for the rest of the century.
Trump has given Republicans a new lease on life. The Establishment doesn't like having
to take a back seat to him, but perhaps they should understand that having a back seat in a popular
production is so much better than standing outside alone in the cold.
It's funny how White Men are supposed to be angry. But I've never seen any White men:
1. Running amok, looting and burning down their neighborhood, shooting police and other "angry
White men." There were 50 people shot in Chicago last weekend alone. How many of those do you
think were "angry white men?" Hint: they were every color EXCEPT white.
2. Running around complaining that they aren't allowed into the other gender's bathroom, then
when they barge their way in there complain about being sexually assaulted. No, it's only "angry
females" (of any ethnicity) who barge their way into the men's room and then complain that somebody
in there offended them.
Those "angry white men" are as legendary as "Bigfoot." They are alleged to exist everywhere,
but are never seen. Maybe that's because they mostly hang out in the quiet neighborhoods of cookie-cutter
homes in suburbia, go to the lake or bar-be-que on weekends, and take their allotment of Viagra
in hopes of occassionally "getting lucky" with their wives. If they're "angry" then at least they
don't take their angry frustrations out on others, as so many other militant, "in-your-face" activist
groups do!
"... I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful. ..."
"... (might be the Trump Chaos bc Hillary will strategically turn our war machine on us can't believe this is as good as it gets, sighed out) ..."
"... Having the establishment, the military-industrial complex and Wall Street against him helps Trump a lot. ..."
"... You can fool part of the people all the time, and all people part of the time, but Brexit won, so will Trump, politician extraordinaire ..."
"... Given his family, a Trump presidency may look more like JFK's, where Bobby had more power than LBJ. Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the VP have any power. ..."
"... What is a populist? Somebody that tries to do what the majority want. Current examples: Less wars and military spending. More infrastructure spending. Less support for banks and corps (imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the law' And how that repudiates Obama and both parties.) Gun control (but not possible from within the rep party) ..."
"... What is a fascist? Somebody that supports corporations, military, and military adventures. ..."
"... Actually, it sounds a whole lot like a different candidate from a different party, doesn't it? ..."
"... Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build a better global society for all it means Corporations and our military should be able to run roughshod over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic and military exploitation. Trump is nationalist non – interventionist, which leads to less global military destruction than hillary and less global exploitation. So who is a better for those outside the US, hillary the interventionist OR trump the non-interventionist? ..."
"... Look, the Clintons are criminals, and their affiliate entities, including the DNC, could be considered criminal enterprises or co-conspirators at this point. ..."
"... The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama. ..."
"... The striving for American empire has so totally confused the political order of the country that up is down and down is up. The idea of government for and by the people is a distant memory. Covering for lies and contradictions of beliefs has blurred any notion of principles informing public action. ..."
"... If there is any principle that matters today, it is the pursuit of money and profit reigns supreme. Trump is populist in the sense he is talking about bringing money and wealth back to the working classes. Not by giving it directly, but by forcing businesses to turn their sights back to the US proper and return to making their profits at home. In the end, it is all nostalgia and probably impossible, but working class people remember those days so it rings true. That is hope and change in action. People also could care less if he cheats on his taxes or is found out lying about how much he is worth. Once again, fudging your net worth is something working people care little about. Having their share of the pie is all that matters and Trump is tapping into that. ..."
"... The only crime Trump has committed so far is his language. Liberals like Clinton, Blair and Obama drip blood. ..."
"... The 2016 election cannot be looked at in isolation. The wars for profit are spreading from Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists. Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland. ..."
I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because
Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I
find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful.
for all the run around Hillary, Trump's chosen circle of allies are Wall Street and Austerity
enablers. actually, Trump chaos could boost the enablers as easily as Hillary's direct mongering.
War is Money low hanging fruit in this cash strapped era and either directly or indirectly neither
candidate will disappoint.
So I Ask Myself which candidate will the majority manage sustainability while assembling to create
different outcomes? (might be the Trump Chaos bc Hillary will strategically turn our war machine
on us can't believe this is as good as it gets, sighed out)
War is only good for the profiteers when it can be undertaken in another territory. Bringing
the chaos home cannot be good for business. Endless calls for confidence and stability in markets
must reflect the fact that disorder effects more business that the few corporations that benefit
directly from spreading chaos. A split in the business community seems to be underway or at least
a possible leverage point to bring about positive change.
Even the splits in the political class reflect this. Those that benefit from spreading chaos are
loosing strength because they have lost control of where that chaos takes place and who is directly
effected from its implementation. Blowback and collateral damage are finally registering.
Trump may be a disaster. Clinton will be a disaster. One of these two will win. I won't vote
for either, but if you put a gun to my head and forced me to choose, I'd take Trump. He's certainly
not a fascist (I think it was either Vice or Vox that had an article where they asked a bunch
of historians of fascism if he was, the answer was a resounding no), he's a populist in the Andrew
Jackson style. If nothing else Trump will (probably) not start WW3 with Russia.
And war with Russia doesn't depend just on Hillary, it depends on us in Western Europe agreeing
with it.
A laughable proposition. The official US policy, as you may recall, is
fuck the EU .
Where was Europe when we toppled the Ukrainian govt? Get back to me when you can actually spend
2% GDP on your military. At the moment you can't even control your illegal immigrants.
The political parties that survive display adaptability, and ideological consistency isn't
a requirement for that. Look at the party of Lincoln. Or look at the party of FDR.
If the Democrats decapitate the Republican party by bringing in the Kagans of this world and
Republican suburbanites in swing states, then the Republicans will go where the votes are; the
Iron Law of Institutions will drive them to do it, and the purge of the party after Trump will
open the positions in the party for people with that goal.
In a way, what we're seeing now is what should have happened to the Republicans in
2008. The Democrats had the Republicans down on the ground with Obama's boot on their neck. The
Republicans had organized and lost a disastrous war, they had lost the legislative and executive
branches, they were completely discredited ideologically, and they were thoroughly discredited
in the political class and in the press.
Instead, Obama, with his strategy of bipartisanship - good faith or not - gave them a hand
up, dusted them off, and let them right back in the game, by treating them as a legitimate opposition
party. So the Republican day of reckoning was postponed. We got various bids for power by factions
- the Tea Party, now the Liberty Caucus - but none of them came anywhere near taking real power,
despite (click-driven money-raising) Democrat hysteria.
And now the day of reckoning has arrived. Trump went through the hollow institutional shell
of the Republican Party like the German panzers through the French in 1939. And here we are!
(Needless to say, anybody - ***cough*** Ted Cruz ***cough*** - yammering about "conservative
principles" is part of the problem, dead weight, part of the dead past.) I don't know if the Republicans
can remake themselves after Trump; what he's doing is necessary for that, but may not be sufficient.
Republicans won Congress and the states because the Democrats handed them to them on a silver
platter. To Obama and his fan club meaningful power is a hot potato, to be discarded as soon as
plausible.
Having the establishment, the military-industrial complex and Wall Street against him helps
Trump a lot.
Pro-Sanders folks, blacks, and hispanics will mostly vote for Trump.
Having Gov. Pence on the ticket, core Republicans and the silent majority will vote for Trump.
Women deep inside know Trump will help their true interests better than the Clinton-Obama rinse
repeat
Young people, sick and tired of the current obviously rigged system, will vote for change.
You can fool part of the people all the time, and all people part of the time, but Brexit
won, so will Trump, politician extraordinaire
Even Michael Moore gets it
Trump has intimated that he is not going to deal with the nuts and bolts of government,
that will be Pence's job.
Given his family, a Trump presidency may look more like JFK's, where Bobby had more power
than LBJ.
Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support
he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to
send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe
the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the
VP have any power.
Minorities will benefit at least as much as whites with infrastructure spending, which trump
says he wants to do It would make him popular, which he likes, why not believe him? And if pres
he would be able to get enough rep votes to get it passed. No chance with Hillary, who anyway
would rather spend on wars, which are mostly fought by minorities.
What is a populist? Somebody that tries to do what the majority want. Current examples:
Less wars and military spending. More infrastructure spending. Less support for banks and corps
(imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the
law' And how that repudiates Obama and both parties.) Gun control (but not possible from within
the rep party)
What is a fascist? Somebody that supports corporations, military, and military adventures.
I'm saying you have a much better chance to pressure Clinton
Sorry, but this argues from facts not in evidence and closely resembles the Correct the Record
troll line (now substantiated through the Wikileaks dump) that Clinton "has to be elected" because
she is at least responsive to progressive concerns.
Except she isn't, and the degree to which the DNC clearly has been trying to pander to disillusioned
Republicans and the amount of bile they spew every time they lament how HRC has had to "veer left"
shows quite conclusively to my mind that, in fact, the opposite of what you say is true.
Also, when NAFTA was being debated in the '90s, the Clintons showed themselves to be remarkably
unresponsive both to the concerns of organized labor (who opposed it) as well as the majority
of the members of their own party, who voted against it. NAFTA was passed only with a majority
of Republican votes.
I have no way of knowing whether you're a troll or sincerely believe this, but either way,
it needs to be pointed out that the historical record actually contradicts your premise. If you
do really believe this, try not to be so easily taken in by crafty rhetoric.
BTW, I'll take Trump's record as a husband over HRC's record as a wife. He loves a woman, then
they break up, and he finds another one. This is not unusual in the US. Hillary, OTOH, "stood
by her man" through multiple publicly humiliating infidelities, including having to settle out
of court for more than $800,000, and rape charges. No problem with her if her husband was flying
many times on the "Lolita Express" with a child molester. Could be she had no idea where her "loved
one" was at the time. Do they in fact sleep in the same bed, or even live in the same house? I
don't know.
RE: calling Donald Trump a "sociopath"-this is another one of those words that is thrown around
carelessly, like "nazi" and "fascist". In the Psychology Today article "How to Spot a Sociopath",
they list 16 key behavioral characteristics. I can't see them in Trump-you could make a case for
a few of them, but not all. For example: "failure to follow any life plan", "sex life impersonal,
trivial, and poorly integrated", "poor judgment and failure to learn by experience", "incapacity
for love"-–you can't reasonably attach these characteristics to The Donald, who, indeed, has a
more impressive and loving progeny than any other prez candidate I can think of.
"I have a sense of international identity as well: we are all brothers and sisters."
Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build
a better global society for all it means Corporations and our military should be able to run roughshod
over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy
their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase
foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic
and military exploitation. Trump is nationalist non – interventionist, which leads to less global
military destruction than hillary and less global exploitation. So who is a better for those outside
the US, hillary the interventionist OR trump the non-interventionist?
"And not everyone feels the same way, but for most voters there is either a strong tribal loyalty
(Dem or Repub) or a weaker sense of "us" guiding the voter on that day.
Mad as I am about the Blue Dogs, I strongly identify with the Dems."
So you recognize you are a tribalist, and assume all the baggage and irrationality that tribalism
often fosters, but instead of addressing your tribalism you embrace it. What you seem to be saying
(to me)is that we should leave critical thinking at the door and become dem tribalists like you.
"But the Repubs and Dems see Wall Street issues through different cultural prisms. Republican
are more reflexively pro-business. It matters."
Hillary Clinton's biggest donors are Wallstreet and her dem. Husband destroyed glass-steagall.
Trump wants to reinstate glass-steagall, so who is more business friendly again?
"He is racist, and so he knows how to push ugly buttons."
This identity politics trope is getting so old. Both are racist just in different ways, Trump
says in your face racist things, which ensure the injustice cannot be ignored, where hillary has
and does support racist policies, that use stealth racism to incrementaly increase the misery
of minorities, while allowing the majority to pretend it's not happening.
"First, he will govern with the Republicans. Republican judges, TPP, military spending, environmental
rollbacks, etc. Trump will not overrule Repubs in Congress."
These are literally hillarys policies not trumps.
Trump: anti TPP, stop foreign interventions, close bases use money for infrastructure.
Hillary :Pro TPP, more interventions and military spending
"And no, no great Left populist party will ride to the rescue. The populist tradition (identity)
is mostly rightwing and racist in our society.
People do not change political identity like their clothes. The left tradition in the US, such
as it is, is in the Dem party."
So what you are saying is quit being stupid, populism is bad and you should vote for hillarys
neoliberalism. The democrats were once left so even if they are no longer left, we must continue
to support them if another party or candidate that is to the left isn't a democrat? Your logic
hurts my head.
Look, the Clintons are criminals, and their affiliate entities, including the DNC, could
be considered criminal enterprises or co-conspirators at this point. Those who haven't realized
that, or worse, who shill for them are willfully ignorant, amoral, or unethical. The fact that
that includes a large chunk of the population doesn't change that. I don't vote for criminals.
The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that
the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama.
I hate Hillary more than Trump. I want to protest at the Establishment, which at this represented
by Hillary.
Populism (support for popular issues) is, well, popular.
Fascism (support for corps and military adventures) is, at least after our ME adventures, unpopular.
Commenters are expressing support for the person expressing popular views, such as infrastructure
spending, and expressing little support for the candidate they believe is most fascist.
Btw, Most on this site are liberals, few are reps, so to support him they have had to buck
some of their long held antipathy regarding reps.
Right, what is changing with Trump is the Republicans are going back to, say, the Eisenhower
era, when Ike started the interstate highway system, a socialist program if there ever was one.
It's a good article; this is a general observation. Sorry!
"Hate" seems to be a continuing Democrat meme, and heck, who can be for hate? So it makes sense
rhetorically, but in policy terms it's about as sensible as being against @ssh0les (since as the
good book says, ye have the @ssh0les always with you). So we're really looking at virtue signaling
as a mode of reinforcing tribalism, and to be taken seriously only for that reason. If you look
at the political class writing about the working class - modulo writers like Chris Arnade - the
hate is plain as day, though it's covered up with the rhetoric of meritocracy, taking care of
losers, etc.
Strategic hate management is a great concept. It's like hate can never be created or destroyed,
and is there as a resource to be mined or extracted. The Clinton campaign is doing a great job
of strategic hate management right now, by linking Putin and Trump, capitalizing on all the good
work done in the press over the last year or so.
For years we have been told that government should be run like a business. In truth that statement
was used as a cudgel to avoid having the government provide any kind of a safety net to its citizenry
because there was little or no profit in it for the people who think that government largess should
only be for them.
Here's the thing, if government had been run like a business, we the people would own huge
portions of Citigroup, Goldman Sachs and Chase today. We wouldn't have bailed them out without
an equity stake in them. Most cities would have a share of the gate for every stadium that was
built. And rather than paying nothing to the community Walmart would have been paying a share
of their profits (much as those have dropped over the years).
I do not like Trump's business, but he truly does approach his brand and his relationships
as a business. When he says he doesn't like the trade deals because they are bad business and
bad deals he is correct. IF the well being of the United states and his populace are what you
are interested in regarding trade deals, ours are failures. Now most of us here know that was
not the point of the trade deals. They have been a spectacular success for many of our largest
businesses and richest people, but for America as a whole they have increased our trade deficit
and devastated our job base. When he says he won't go there, this is one I believe him on.
I also believe him on NATO and on the whole Russian thing. Why, because of the same reasons
I believe him on Trade. They are not winners for America as a whole. They are bad deals. Europe
is NOT living up to their contractual agreement regarding NATO. For someone who is a believer
in getting the better of the deal that is downright disgusting. And he sees no benefit in getting
into a war with Russia. The whole reserve currency thing vs. nukes is not going to work for him
as a cost benefit analysis of doing it. He is not going to front this because it is a business
loser.
We truly have the worst choices from the main parties in my lifetime. There are many reasons
Trump is a bad candidate. But on these two, he is far more credible and on the better side of
things than the Democratic nominee. And on the few where she might reasonably considered to have
a better position, unfortunately I do not for a moment believe her to be doing more than giving
lip service based on both her record and her character.
Is it your opinion that to have globalisation we must marginalize russia to the extent that
they realize they can't have utopia and make the practical choice of allowing finance capitalism
to guide them to realistic incrementally achieved debt bondage?
The Democratic Party has been inching further and further to the right. Bernie tried to arrest
this drift, but his internal populist rebellion was successfully thwarted by party elite corruption.
The Democratic position is now so far to the right that the Republicans will marginalize themselves
if they try to keep to the right of the Democrats.
But, despite party loyalty or PC slogans, the Democrat's rightward position is now so obvious
that it can be longer disguised by spin. The Trump campaign has demonstrated, the best electoral
strategy for the Republican Party is to leapfrog leftward and campaign from a less corporate position.
This has given space for the re-evaluation of party positions that Trump is enunciating, and the
result is that the Trump is running to the
left of Hillary. How weird is this?
I meant to use right and left to refer generally to elite vs popular. The issue is too big
to discuss without some simplification, and I'm sorry it has distracted from the main issue. On
the face of it, judging from the primaries, the Republican candidates who represented continued
rightward drift were rejected. (Indications are that the same thing happened in the Democratic
Party, but party control was stronger there, and democratic primary numbers will never be known).
The main point I was trying to make is that the Democratic party has been stretching credulity
to the breaking point in claiming to be democratic in any sense, and finally the contradiction
between their statements and actions has outpaced the capabilities of their propaganda. Their
Orwellian program overextended itself. Popular recognition of the disparity has caused a kind
of political "snap" that's initiated a radical reorganization of what used to be the party of
the right (or corporations, or elites, or finance, or "your description here".)
Besides confusion between which issues are right or left for Republicans or Democrats on the
national level, internationally, the breakdown of popular trust in the elites, and the failure
of their propaganda on that scale, is leading to a related worldwide distrust and rejection of
elite policies. This distrust has been percolating in pockets for some time, but it seems it's
now become so widespread that it's practically become a movement.
I suspect, however, there's a Plan B for this situation to restore the proper order. Will be
interesting to see how this plays out.
The striving for American empire has so totally confused the political order of the country
that up is down and down is up. The idea of government for and by the people is a distant memory.
Covering for lies and contradictions of beliefs has blurred any notion of principles informing
public action.
If there is any principle that matters today, it is the pursuit of money and profit reigns
supreme. Trump is populist in the sense he is talking about bringing money and wealth back to
the working classes. Not by giving it directly, but by forcing businesses to turn their sights
back to the US proper and return to making their profits at home. In the end, it is all nostalgia
and probably impossible, but working class people remember those days so it rings true. That is
hope and change in action. People also could care less if he cheats on his taxes or is found out
lying about how much he is worth. Once again, fudging your net worth is something working people
care little about. Having their share of the pie is all that matters and Trump is tapping into
that.
Clintons arrogance is worse because the transcripts probably clearly show her secretly conspiring
with bankers to screw the working people of this country. Trumps misdeeds effect his relationship
to other elites while Clintons directly effect working people.
Such a sorry state of affairs. When all that matters is the pursuit of money and profit, moving
forward will be difficult and full of moral contradictions. Populism needs a new goal. The political
machinery that gives us two pro-business hacks and an ineffectual third party has fundamentally
failed.
The business of America must be redefined, not somehow brought back to a mythical past greatness.
Talk about insanity.
"Bill Clinton has been a disaster for the Democratic Party. Send him packing."
"There's not much the Democrats can do about Mrs. Clinton. She's got a Senate seat for six
years. But there is no need for the party to look to her for leadership. The Democrats need to
regroup, re-establish their strong links to middle-class and working-class Americans, and move
on."
"You can't lead a nation if you are ashamed of the leadership of your party. The Clintons are
a terminally unethical and vulgar couple, and they've betrayed everyone who has ever believed
in them."
"As neither Clinton has the grace to retire from the scene, the Democrats have no choice but
to turn their backs on them. It won't be easy, but the Democrats need to try. If they succeed
they'll deserve the compliment Bill Clinton offered Gennifer Flowers after she lied under oath:
"Good for you." "
Amazing how the New York Times has "evolved" from Herbert's editorial stance of 15 years ago
to their unified editorial/news support for HRC's candacy,
In my view, it is not as if HRC has done anything to redeem herself in the intervening years.
It takes liberals to create a refugee crisis.
What country are we going to bomb back into the stone age this week?
We are very squeamish about offensive language.
We don't mind dropping bombs and ripping people apart with red hot shrapnel.
We are liberals.
Liberal sensibilities were on display in the film "Apocalypse Now".
No writing four letter words on the side of aircraft.
Napalm, white phosphorous and agent orange – no problem.
Liberals are like the English upper class – outward sophistication hiding the psychopath underneath.
They were renowned for their brutality towards slaves, the colonies and the English working class
(men, women and children) but terribly sophisticated when with their own.
Are you a bad language sort of person – Trump
Or a liberal, psychopath, empire builder – Clinton
The only crime Trump has committed so far is his language. Liberals like Clinton, Blair
and Obama drip blood.
Lambert strether said: my view is that the democrat party cannot be saved, but it can be seized.
Absolutely correct.
That is why Trump must be elected. Only then through the broken remains of both Parties can the
frangible Democrat Party be seized and restored.
The 2016 election cannot be looked at in isolation. The wars for profit are spreading from
Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to
being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and
austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization
is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots
for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists.
Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for
the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland.
"... Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth. ..."
"... Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China. ..."
Because we interpreted the end of the Cold War as the ultimate vindication
of America's economic system, we intensified our push toward the next level
of capitalism, called globalization. It was presented as a project that
would benefit everyone. Instead it has turned out to be a nightmare for
many working people. Thanks to "disruption" and the "global supply chain,"
many American workers who could once support families with secure, decent-paying
jobs must now hope they can be hired as greeters at Walmart. Meanwhile,
a handful of super-rich financiers manipulate our political system to cement
their hold on the nation's wealth.
Enrique Ferro's insight:
Moments of change require adaptation, but the United States is not good
at adapting. We are used to being in charge. This blinded us to the reality
that as other countries began rising, our relative power would inevitably
decline. Rather than shifting to a less assertive and more cooperative
foreign policy, we continued to insist that America must reign supreme.
When we declared that we would not tolerate the emergence of another "peer
power," we expected that other countries would blithely obey. Instead they
ignore us. We interpret this as defiance and seek to punish the offenders.
That has greatly intensified tensions between the United States and the
countries we are told to consider our chief adversaries, Russia and China.
This is downright sickening and the people who are voting for Hillary will not even care what will
happen with the USA iif she is elected.
By attacking Trump using "Khan gambit" she risks a violent backlash (And not only via Wikileaks,
which already promised to release information about her before the elections)
People also start to understand that she is like Trump. He destroyed several hundred American lifes
by robbing them, exploiting their vanity (standard practice in the USA those days) via Trump University
scam. She destroyed the whole country -- Libya and is complicit in killing Khaddafi (who, while not
a nice guy, was keeping the country together and providing be highest standard of living in Africa for
his people).
In other words she is a monster and sociopath. He probably is a narcissist too. So there is no much
phychological difference between them. And we need tight proportions to judge this situation if we are
talking about Hillary vs Trump.
As for people voting for Trump -- yes they will. I think if Hillary goes aganst Trump, the female
neoliberal monster will be trumped. She has little chances even taking into account the level of brainwashing
in the USA (which actually is close to those that existed in the USSR).
Notable quotes:
"... 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. ..."
"... U.S. Government Tried to Tackle Gun Violence in 1960s ..."
"... 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. ..."
"... The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences. ..."
"... "Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor. ..."
"... My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. ..."
"... " the gutters and cutters of neoliberalism" ..."
"... The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck. ..."
"... 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. ..."
"... This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot. ..."
"... Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government. ..."
"... In other words, the MSM's fear is the clearest sign to these voters that their ..."
"... Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase. ..."
"... Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories? ..."
"... Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal. ..."
"... Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders. ..."
"... Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors. ..."
"... Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation. Impose tariffs to compensate for lower labor costs overseas and revise industry. ..."
"... Cut the Defense budget by 50% and use that money for intensive infrastructure development. ..."
"... Raise the national minimum wage to $15 and hour. ..."
"... Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official. ..."
"... Free public education including college (4 year degree). ..."
"... Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left. ..."
"... This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade. ..."
"... Totally agree tegnost, no more democratic neoliberals -- ..."
"... "they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism? ..."
"... Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption. ..."
"... Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people. ..."
"... The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy. ..."
"... America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses. ..."
"... Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy. ..."
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.
According to NPR's experts, many or most of those parties are "fascist". The fascist label
is getting tossed around a LOT right now. It is slung at Trump, at UKIP, or any others. Fascist
is what you call the opposition party to the right that you oppose. Now I don't call Trump a fascist.
A buffoon, yes, even a charlatan (I still rather doubt he really originally thought he would become
the GOP nominee. Perhaps I'm wrong but, like me, many seemed to think that he was pushing his
"brand" – a term usage of which I HATE because it IS like we are all commodities or businesses
rather than PEOPLE – and that he would drop by the wayside and profit from his publicity).
Be that as it may, NPR and Co were discussing the rise of fascist/neofascist parties and wondering
why there were doing so well. Easy answer: neoliberalism + refugee hoards = what you see in Europe.
I've also blamed a large part of today's gun violence in the USA on the fruits of neoliberalism.
Why? Same reason that ugly right-wing groups (fascist or not) are gaining ground around the Western
world. Neoliberalism destroys societies. It destroys the connections within societies (the USA
in this case). Because we have guns handy, the result is mass shootings and flashes of murder-suicides.
This didn't happen BEFORE neoliberalism got its hooks into American society. The guns were there,
always have been (when I was a teen I recall seeing gun mags advertising various "assault weapons"
for sale this was BEFORE Reagan and this was BEFORE mass shootings, etc). Machine guns were much
easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns,
or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism. Neoliberalism
steals your job security, your healthcare security, your home, your retirement security, your
ability to provide for your family, your ability to send your kids to college, your ability to
BUY FOOD. Neoliberalism means you don't get to work for a company for 20 years and then see the
company pay you back for that long, good service with a pension. You'll be lucky to hold a job
at any company from month-to-month now and FORGET about benefits! Healthcare? Going by the wayside
too. Workers in the past felt a bond with each other, especially within a company. Neoliberalism
has turned all workers against each other because they have to fight to gain any of the scraps
being tossed out by the rich overlords. You can't work TOGETHER to gain mutual benefit, you need
to fight each other in a zero sum game. For ME to win you have to lose. You are a commodity. A
disposable and irrelevant widget. THAT combines with guns (that have always been available!) and
you get desperate acting out: mass shootings, murder suicides, etc.
There are actual fascist parties in Europe. To name a few in one country I've followed, Ukraine,
there's Right Sector, Svoboda, and others, and that's just one country. I don't think anyone calls
UKIP fascist.
@Praedor – Your comment that Yves posted and this one are excellent. One of the most succinct
statements of neoliberalism and its worst effects that I have seen.
As to the cause of recent mass gun violence, I think you have truly nailed it. If one thinks
at all about the ways in which the middle class and lower have been squeezed and abused, it's
no wonder that a few of them would turn to violence. It's the same despair and frustration that
leads to higher suicide rates, higher rates of opiate addiction and even decreased life expectancy.
"Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings
with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in
neoliberalism."
Easy availability of guns was seen as a serious problem long before the advent of neoliberalism.
For one example of articles about this, see U.S. Government Tried to Tackle Gun Violence in
1960s . Other examples include 1920s and 1930s gangster and mob violence that were a consequence
of Prohibition (of alcohol). While gun violence per-capita might be increasing, the population
is far larger today, and the news media select incidents of violence to make them seem like they're
happening everywhere and that everyone needs to be afraid. That, of course, instills a sense of
insecurity and fear into the public mind; thus, a fearful public want a strong leader and are
willing to accept the inconvenience and dangers of a police state for protection.
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 with our 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.
The problem here is one of semantics, really. You're using "fascist" interchangeably with "authoritarian",
which is a misnomer for these groups. The EU is absolutely anti-democratic, authoritarian, and
technocratic in a lot of respects, but it's not fascist. Both have corporatist tendencies, but
fascist corporatism was much more radical, much more anti-capitalist (in the sense that the capitalist
class was expected to subordinate itself to the State as the embodiment of the will of the Nation
or People, as were the other classes/corporate units). EU technocratic corporatism has none of
the militarism, the active fiscal policy, the drive for government supported social cohesion,
the ethno-nationalism, or millenarianism of Fascism.
The emergent Right parties like UKIP, FNP, etc. share far more with the Fascists, thought I'd
say they generally aren't yet what Fascists would have recognized as other Fascists in the way
that the NSDAP and Italian Fascists recognized each other -perhaps they're more like fellow travelers.
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.
When I was young, there were 4 divisions:
* 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.
But Jeff, is Wolin accurate in using the term "inverted totalitarianism" to try to capture
the nature of our modern extractive bureaucratic monolith that apparently functions in an environment
where "it is no longer the government that decides what must be done..simply.."private owners
just buy the government, the judiciary, the press, or whatever is needed to achieve their means."
Mirowski argues quite persuasively that the neoliberal ascendency does not represent the retreat
of the State but its remaking to strongly support a particular conception of a market society
that is imposed with the help of the State on our society.
For Mirowski, neoliberalism is definitely not politically libertarian or opposed to strong
state intervention in the economy and society.
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.
There's LePen in France and the far-right, fascist leaning party nearly won in Austria. The
far right in Greece as well. There's clearly a move to the far right in Europe. And then there's
the totalitarian mess that is Turkey. How much further this turn to a fascist leaning right goes
and how widespread remains to be seen, but it's clearly underway.
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 Libertŕ 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
Espańa 2000 Spain
Falange Espańola 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
"Fascism" has become the prefered term of abuse applied indiscriminately by the right thinking
to any person or movement which they want to tar as inherently objectionable, and which can therefore
be dismissed without the tedium of actually engaging with them at the level of ideas.
Most of the people who like to throw this word around couldn't give you a coherant definition
of what exactly they understand it to signify, beyond "yuck!!"
In fairness even students of political ideology have trouble teasing out a cosistent system
of beliefs, to the point where some doubt fascism is even a coherent ideology. That hardly excuses
the intellectual vacuity of those who use it as a term of abuse, however.
Precisely 3,248 angels can fit on the head of a pin. Parsing the true definition of "fascism"
is a waste of time, broadly, fascism is an alliance of the state, the corporation, and the military,
anyone who doesn't see that today needs to go back to their textbooks.
As far as the definition "neo-liberalism" goes, yes it's a useful label. But let's keep it
simple: every society chooses how resources are allocated between Capital and Labor. The needle
has been pegged over on the Capital side for quite some time, my "start date" is when Reagan busted
the air traffic union. The hideous Republicans managed to sell their base that policies that were
designed to let companies be "competitive" were somehow good for them, not just for the owners
of the means of production.
The only way they have avoided complete revolt has been endless borrowing to fund entitlements,
once that one-time fix plays out the consequences will be apparent. The funding mechanism itself
(The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving
Labor with the consequences.
"Every society chooses how resources are allocated between capital and labor." More specifically,
isn't it a struggle between various political/economic/cultural movements within a society which
chooses how resources are allocated between capital and labor.
Take, for example, the late 1880s-1890s in the U.S. During that time-frame there were powerful
agrarian populists movements and the beginnings of some labor/socialist movements from below,
while from above the property-production system was modified by a powerful political movement
advocating for more corporate administered markets over the competitive small-firm capitalism
of an earlier age.
It was this movement for corporate administered markets which won the battle and defeated/absorbed
the agrarian populists.
What are the array of such forces in 2016? What type of movement doe Trump represent? Sanders?
Clinton?
fascism is an alliance of the state, the corporation, and the military, anyone who doesn't
see that today needs to go back to their textbooks
Which textbooks specifically?
The article I cited above in Vox canvasses the opinion of five serious students of fascism,
and none of them believe Trump is a fascist. I'd be most interested in knowing what you
have been reading.
As for your definition of "fascism", it's obviously so vague and broad that it really doesn't
explain anything. To the extent it contains any insight it is that public institutions (the state),
private businesses (the corporation) and the armed forces all exert significant influence on public
policy. That and a buck and and a half will get you a cup of coffee. If anything it is merely
a very crude descriptive model of the political process. It doesn't define fascism as a particular
set of beliefs that make it a distinct political ideology that can be differentiated from other
ideologies (again, see the Vox article for a discussion of some of the beliefs that are arguably
characteristic of fascist movements). Indeed by your standard virtually every state that has ever
existed has to a greater or lesser extent been "fascist".
My objection to imprecise language here isn't merely pedantic. The leftist dismissal of
right wing populists like Trump (or increasingly influential European movements like Ukip, AfD,
and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize
them by implying their politics are so far outside of the mainstream that they do not need to
be taken seriously. Given that these movements are only growing in strength as faith in traditional
political movements and elites evaporate this is likely to produce exactly the opposite result.
Right wing populism isn't going to disappear just because the left keeps trying to wish it away.
Refusing to accept this basic political fact risks condemning the left rather than "the fascists"
to political irrelevance.
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.
This Trump support seems like a form of political vandalism with Trump as the spray paint.
People generally feel frustrated with government, utterly powerless and totally left out as the
ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people
who, like frustrated teens, have decided to just smashed things up for the hell of it. They think
a presidency mix of Caligula with Earl Scheib would be a funny hoot.
You also have the more gullible fundis who have actually deluded themselves into thinking the
man who is ultimate symbol of hedonism will deliver them from secularism because he says he will.
Authoritarians who seek solutions through strong leaders are usually the easiest to con because
they desperately want to believe in their eminent deliverance by a human deus ex machina. Plus
he is ostentatiously rich in a comfortably tacky way and a TV celebrity beats a Harvard law degree.
And why not the thinking goes the highly vaunted elite college Acela crowd has pretty much made
a pig's breakfast out of things. So much for meritocracy. Professor Harold Hill is going to give
River City a boys band.
Someone at American Conservative, when trying to get at why it's pointless to tell people
Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government.
You can't scare people with his crass-ness and destructive tendencies, because that's precisely
what his voters are counting on when/if he gets into government.
In other words, the MSM's fear is the clearest sign to these voters that their
political revolution is working. Since TPTB decided peaceful change (i.e. Sanders) was a non-starter,
then they get to reap the whirlwind.
Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description.
NPR this morning was discussing Trump and his relationship with the press and the issues some
GOP leaders have with him. When his followers were discussed, the speakers closely circled your
vandalism point. Basically they said that his voters are angry with the power brokers and leaders
in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric,
they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase.
Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations,
is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still
believes in such laughable kiddie stories?
Besides, consumers need to learn to play the long game and suck up the "scurrilous attacks"
on their personal consumption habits for the next four years. The end of abortion for four years
is not important - lern2hand and lern2agency, and lern2cutyourrapist if it comes to that. What
is important is that the Democratic Party's bourgeois yuppie constituents are forced to defend
against GOP attacks on their personal and cultural interests with wherewithal that would have
been ordinarily spent to attend to their sister act with their captive constituencies.
If bourgeois Democrats hadn't herded us into a situation where individuals mean nothing outside
of their assigned identity groups and their corporate coalition duopoly, they wouldn't be reaping
the whirlwind today. Why, exactly, should I be sympathetic to exploitative parasites such as the
middle class?
There are all good ideas. However, population growth undermines almost all of them. Population
growth in America is immigrant based. Reverse immigration influxes and you are at least doing
something to reduce population growth.
How to "reverse immigration influxes"?
Stop accepting refugees. It's outrageous that refugees from for example, Somalia,
get small business loans, housing assistance, food stamps and lifetime SSI benefits while some
of our veterans are living on the street.
No more immigration amnesties of any kind.
Deport all illegal alien criminals.
Practice "immigrant family unification" in the country of origin. Even if you have
to pay them to leave. It's less expensive in the end.
Eliminate tax subsidies to American corn growers who then undercut Mexican farmers'
incomes through NAFTA, driving them into poverty and immigration north. Throw Hillary Clinton
out on her ass and practice political and economic justice to Central America.
I too am a lifetime registered Democrat and I will vote for Trump if Clinton gets the crown.
If the Democrats want my vote, my continuing party registration and my until recently sizeable
donations in local, state and national races, they will nominate Bernie. If not, then I'm an Independent
forevermore. They will just become the Demowhig Party.
Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute,
or make all elections financed solely by government funds and make private contributions of
any kind to any politician illegal.
Re-institute Glass-Steagall but even more so. Limit the number of states a bank can
operate in. Make the Fed publicly owned, not privately owned by banks.
Completely revise corporate law, doing away with the legal person hood of corporations
and limit of liability for corporate officers and shareholders.
Single payer health care for everyone. Allow private health plans but do away with
health insurance as a deductible for business. Remove the AMA's hold on licensing of medical
schools which restricts the number of doctors.
Do away with the cap on Social Security wages and make all income, wages, capital gains,
interest, and dividends subject to taxation.
Impose tariffs to compensate for lower labor costs overseas and revise industry.
Cut the Defense budget by 50% and use that money for intensive infrastructure development.
Raise the national minimum wage to $15 and hour.
Severely curtail the revolving door from government to private industry with a 10 year
restriction on working for an industry you dealt with in any way as a government official.
Free public education including college (4 year degree).
Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom
are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping
the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed
for our things will never end until nothings left.
This is why Hillary is so much more dangerous than trump, because she and the demi gods
are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved,
especially if it looks like some trade traitors are going to get knocked off in the election,
scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough
to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment
until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump
hand grenade.
Totally agree tegnost, no more democratic neoliberals -- Patty Murray (up for re-election)
and Cantwell are both trade traitors and got fast track passed.
Two things are driving our troubles: over-population and globalization. The plutocrats
and kleptocrats have all the leverage over the rest of us laborers when the population of human
beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions
(and growing) today. They are happy to let us freeze to death behind gas stations in order for
them to compete with other oligarchs in excess consumption.
This deserves a longer and more thoughtful comment, but I don't have the time this morning.
I have to fight commute traffic, because the population of my home state of California has doubled
from 19M in 1970 to an estimated 43M today (if you count the Latin American refugees and H1B's).
Thank you for mentioning the third rail of overpopulation. Too often, this giant category
of problems is ignored, because it makes people uncomfortable. The planet is finite, resources
on the planet are finite, yet the number of people keeps growing. We need to strive for a higher
quality of life, not a higher quantity of people.
The issue goes beyond "current neoliberals up for election", it is most of our political
establishment that has been corrupted by a system that provides for the best politicians money
can buy.
In the 1980's I worked inside the beltway witnessing the new cadre of apparatchiks that drove
into town on the Reagan coattails full of moral a righteousness that became deviant, parochial,
absolutist and for whom bi-partisan approaches to policy were scorned prodded on by new power
brokers promoting their gospels in early morning downtown power breakfasts. Sadly our politicians
no longer serve but seek a career path in our growing meritocratic plutocracy.
America has always been a country where a majority of the population has been poor. With
the exception of a fifty five year(1950-2005) year period where access to large quantities of
consumer debt by households was deployed to first to provide a wealth illusion to keep socialism
at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated
capital of the working class, i.e. home equity, the history of the US has been one of poverty
for the masses.
Further debt was foisted on the working class in the form of military Keynesianism, generating
massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy.
"... Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine ..."
"... children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness. ..."
"... "If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist." ..."
"... It's a Wonderful Life ..."
"... as educators ..."
"... 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. ..."
"... I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings. ..."
"... The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher). ..."
"... "In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world. ..."
"... Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me. ..."
"... My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward. ..."
"... I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural" order . ..."
"... Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet . especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great unwashed globally here libertarian priests rang in the good news to the great unwashed ..."
"... I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets). ..."
"... It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual. ..."
I am almost 70 years old, born and raised in New York City, still living in a near suburb.
Somehow, somewhere along the road to my 70th year I feel as if I have been gradually transported
to an almost entirely different country than the land of my younger years. I live painfully now
in an alien land, a place whose habits and sensibilities I sometimes hardly recognize, while unable
to escape from memories of a place that no longer exists. There are days I feel as I imagine a
Russian pensioner must feel, lost in an unrecognizable alien land of unimagined wealth, power,
privilege, and hyper-glitz in the middle of a country slipping further and further into hopelessness,
alienation, and despair.
I am not particularly nostalgic. Nor am I confusing recollection with sentimental yearnings
for a youth that is no more. But if I were a contemporary Rip Van Winkle, having just awakened
after, say, 30-40 years, I would not recognize my beloved New York City. It would be not just
the disappearance of the old buildings, Penn Station, of course, Madison Square Garden and its
incandescent bulb marquee on 50th and 8th announcing NYU vs. St. John's, and the WTC, although
I always thought of the latter as "new" until it went down. Nor would it be the disappearance
of all the factories, foundries, and manufacturing plants, the iconic Domino Sugar on the East
River, the Wonder Bread factory with its huge neon sign, the Swingline Staples building in Long
Island City that marked passage to and from the East River tunnel on the railroad, and my beloved
Schaeffer Beer plant in Williamsburg, that along with Rheingold, Knickerbocker, and a score of
others, made beer from New York taste a little bit different.
It wouldn't be the ubiquitous new buildings either, the Third Avenue ghostly glass erected
in the 70's and 80's replacing what once was the most concentrated collection of Irish gin mills
anywhere. Or the fortress-like castles built more recently, with elaborate high-ceilinged lobbies
decorated like a kind of gross, filthy-wealthy Versailles, an aesthetically repulsive style that
shrieks "power" in a way the neo-classical edifices of our Roman-loving founders never did. Nor
would it even be the 100-story residential sticks, those narrow ground-to-clouds skyscraper condominiums
proclaiming the triumph of globalized capitalism with prices as high as their penthouses, driven
ever upward by the foreign billionaires and their obsession with burying their wealth in Manhattan
real estate.
It is not just the presence of new buildings and the absence of the old ones that have this
contemporary Van Winkle feeling dyslexic and light-headed. The old neighborhoods have disintegrated
along with the factories, replaced by income segregated swatches of homogenous "real estate" that
have consumed space, air, and sunlight while sucking the distinctiveness out of the City. What
once was the multi-generational home turf for Jewish, Afro-American, Puerto Rican, Italian, Polak
and Bohunk families is now treated as simply another kind of investment, stocks and bonds in steel
and concrete. Mom's Sunday dinners, clothes lines hanging with newly bleached sheets after Monday
morning wash, stickball games played among parked cars, and evenings of sitting on the stoop with
friends and a transistor radio listening to Mel Allen call Mantle's home runs or Alan Freed and
Murray the K on WINS 1010 playing Elvis, Buddy Holly, and The Drifters, all gone like last night's
dreams.
Do you desire to see the new New York? Look no further than gentrifying Harlem for an almost
perfect microcosm of the city's metamorphosis, full of multi-million condos, luxury apartment
renovations, and Maclaren strollers pushed by white yuppie wife stay-at-homes in Marcus Garvey
Park. Or consider the "new" Lower East Side, once the refuge of those with little material means,
artists, musicians, bums, drug addicts, losers and the physically and spiritually broken - my
kind of people. Now its tenements are "retrofitted" and remodeled into $4000 a month apartments
and the new residents are Sunday brunching where we used to score some Mary Jane.
There is the "Brooklyn brand", synonymous with "hip", and old Brooklyn neighborhoods like Red
Hook and South Brooklyn (now absorbed into so desirable Park Slope), and Bushwick, another former
outpost of the poor and the last place I ever imagined would be gentrified, full of artists and
hipsters driving up the price of everything. Even large sections of my own Queens and the Bronx
are affected (infected?). Check out Astoria, for example, neighborhood of my father's family,
with more of the old ways than most but with rents beginning to skyrocket and starting to drive
out the remaining working class to who knows where.
Gone is almost every mom and pop store, candy stores with their egg creams and bubble gum cards
and the Woolworth's and McCrory's with their wooden floors and aisles containing ordinary blue
collar urgencies like thread and yarn, ironing boards and liquid bleach, stainless steel utensils
of every size and shape. Where are the locally owned toy and hobby stores like Jason's in Woodhaven
under the el, with Santa's surprises available for lay-away beginning in October? No more luncheonettes,
cheap eats like Nedicks with hot dogs and paper cones of orange drink, real Kosher delis with
vats of warm pastrami and corned beef cut by hand, and the sacred neighborhood "bar and grill",
that alas has been replaced by what the kids who don't know better call "dive bars", the detestable
simulacra of the real thing, slick rooms of long slick polished mahogany, a half-dozen wide screen
TV's blaring mindless sports contests from all over the world, over-priced micro-brews, and not
a single old rummy in sight?
Old Rip searches for these and many more remembered haunts, what Ray Oldenburg called the "great
good places" of his sleepy past, only to find store windows full of branded, high-priced, got-to-have
luxury-necessities (necessary if he/she is to be certified cool, hip, and successful), ridiculously
overpriced "food emporia", high and higher-end restaurants, and apparel boutiques featuring hardened
smiles and obsequious service reserved for those recognized by celebrity or status.
Rip notices too that the visible demographic has shifted, and walking the streets of Manhattan
and large parts of Brooklyn, he feels like what walking in Boston Back Bay always felt like, a
journey among an undifferentiated mass of privilege, preppy or 'metro-sexed' 20 and 30-somethings
jogging or riding bicycles like lean, buff gods and goddesses on expense accounts supplemented
by investments enriched by yearly holiday bonuses worth more than Rip earned in a lifetime.
Sitting alone on a park bench by the river, Rip reflects that more than all of these individual
things, however, he despairs of a city that seems to have been reimagined as a disneyfied playground
of the privileged, offering endless ways to self-gratify and philistinize in a clean, safe (safest
big city in U.S., he heard someone say), slick, smiley, center-of-the-world urban paradise, protected
by the new centurions (is it just his paranoia or do battle-ready police seem to be everywhere?).
Old ethnic neighborhoods are filled with apartment buildings that seem more like post-college
"dorms", tiny studios and junior twos packed with three or four "singles" roommates pooling their
entry level resources in order to pay for the right to live in "The City". Meanwhile the newer
immigrants find what place they can in Kingsbridge, Corona, Jamaica, and Cambria Heights, far
from the city center, even there paying far too much to the landlord for what they receive.
New York has become an unrecognizable place to Rip, who can't understand why the accent-less
youngsters keep asking him to repeat something in order to hear his quaint "Brooklyn" accent,
something like the King's English still spoken on remote Smith Island in the Chesapeake, he guesses
.
Rip suspects that this "great transformation" (apologies to Polanyi) has coincided, and is somehow
causally related, to the transformation of New York from a real living city into, as the former
Mayor proclaimed, the "World Capital" of financialized commerce and all that goes with it.
"Financialization", he thinks, is not the expression of an old man's disapproval but a way
of naming a transformed economic and social world. Rip is not an economist. He reads voraciously
but, as an erstwhile philosopher trained to think about the meaning of things, he often can't
get his head around the mathematical model-making explanations of the economists that seem to
dominate the more erudite political and social analyses these days. He has learned, however, that
the phenomenon of "capitalism" has changed along with his city and his life.
Money, it seems to him, has somehow changed its role. It has "increased" (is that possible,
he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears
to seek to become an autonomous and dominating sector of economic life, functionally separated
from production of real things, almost all of which seem to come from faraway places. "Real" actually
begins to change its meaning, another topic more interesting still. This devotion to the world
of money-making-money seems to have obsessed the lives of many of the most "important" Americans.
Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the
ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways
to grow real-world business, jobs, wages, and family income. The few who are in position to master
the game live material lives that were beyond what almost any formerly "wealthy" man or woman
in Rip's prior life could even imagine
.
Above all else is the astronomical rise in wealth and income inequality. Rip recalls that growing
up in the 1950's, the kids on his block included, along with firemen, cops, and insurance men
dads (these were virtually all one-parent income households), someone had a dad who worked as
a stock broker. Yea, living on the same block was a "Wall Streeter". Amazingly democratic, no?
Imagine, people of today, a finance guy drinking at the same corner bar with the sanitation guy.
Rip recalls that Aristotle had some wise and cautionary words in his Politics concerning the stability
of oligarchic regimes.
Last year I drove across America on blue highways mostly. I stayed in small towns and cities,
Zanesville, St. Charles, Wichita, Pratt, Dalhart, Clayton, El Paso, Abilene, Clarksdale, and many
more. I dined for the most part in local taverns, sitting at the bar so as to talk with the local
bartender and patrons who are almost always friendly and talkative in these spaces. Always and
everywhere I heard similar stories as my story of my home town. Not so much the specifics (there
are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the
sadness of men and women roughly my age as they recounted a place and time – a way of life – taken
out from under them, so that now their years are filled with decayed and dead downtowns, children
gone away and lost to either the relentless rootlessness of the trans-national economy or the
virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness.
I am not a trained economist. My graduate degrees were in philosophy. My old friends call me
an "Eric Hoffer", who back in the day was known as the "longshoreman philosopher". I have been
trying for a long time now to understand the silent revolution that has been pulled off right
under my nose, the replacement of a world that certainly had its flaws (how could I forget the
civil rights struggle and the crime of Viet Nam; I was a part of these things) but was, let us
say, different. Among you or your informed readers, is there anyone who can suggest a book or
books or author(s) who can help me understand how all of this came about, with no public debate,
no argument, no protest, no nothing? I would be very much appreciative.
I'll just highlight this line for emphasis
"there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but
in the sadness of men and women roughly my age as they recounted a place and time – a way of life
– taken out from under them, so that now their years are filled with decayed and dead downtowns,
children gone away and lost to either the relentless rootlessness of the trans-national economy
or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness."
my best friend pretty much weeps every day.
I don't have a book to recommend. I do think you identify a really underemphasized central
fact of recent times: the joint processes by which real places have been converted into "real
estate" and real, messy lives replaced by safe, manufactured "experiences." This affects wealthy
and poor neighborhoods alike, in different ways but in neither case for the better.
I live in a very desirable neighborhood in one of those places that makes a lot of "Best of"
lists. I met a new neighbor last night who told me how he and his wife had plotted for years to
get out of the Chicago burbs, not only to our city but to this specific neighborhood, which they
had decided is "the one." (This sentiment is not atypical.) Unsurprisingly, property values in
the neighborhood have gone through the roof. Which, as far as I can tell, most everyone here sees
as an unmitigated good thing.
At the same time, several families I got to know because they moved into the neighborhood about
the same time we did 15-20 years ago, are cashing out and moving away, kids off to or out of college,
parents ready (and financed) to get on to the next phase and the next place. Of course, even though
our children are all Lake Woebegoners, there are no next generations staying in the neighborhood,
except of course the ones still living, or back, at "home." (Those families won't be going anywhere
for awhile!)
I can't argue that new money in the hood hasn't improved some things. Our formerly struggling
food co-op just finished a major expansion and upgrade. Good coffee is 5 minutes closer than it
used to be. But to my wife and me, the overwhelming feeling is that we are now outsiders here
in this neighborhood where we know all the houses and the old trees but not what motivates our
new neighbors. So I made up a word for it: unsettling (adj., verb, noun).
"If public life can suffer a metaphysical blow, the death of the labor question was that
blow. For millions of working people, it amputated the will to resist."
Christopher Lash in "Revolt of the Elites and the Betrayal of Democracy" mentions Ray Oldenburg's
"The Great Good Places: Cafes, Coffee Shops, Community Centers, Beauty Parlors, General Stores,
Bars, Hangouts and How they Got You through the Day."
He argued that the decline of democracy is directly related to the disappearance of what he
called third places:,
"As neighborhood hangouts give way to suburban shopping malls, or, on the other hand private
cocktail parties, the essentially political art of conversation is replaced by shoptalk or personal
gossip.
Increasingly, conversation literally has no place in American society. In its absence how–or
better, where–can political habits be acquired and polished?
Lasch finished he essay by noting that Oldenburg's book helps to identify what is missing from
our then newly emerging world (which you have concisely updated):
"urban amenities, conviviality, conversation, politics–almost everything in part that makes
life worth living."
The best explainer of our modern situation that I have read is Wendell Berry. I suggest that
you start with "The Unsettling of America," quoted below.
"Let me outline briefly as I can what seem to me the characteristics of these opposite kinds
of mind. I conceive a strip-miner to be a model exploiter, and as a model nurturer I take the
old-fashioned idea or ideal of a farmer. The exploiter is a specialist, an expert; the nurturer
is not. The standard of the exploiter is efficiency; the standard of the nurturer is care. The
exploiter's goal is money, profit; the nurturer's goal is health - his land's health, his own,
his family's, his community's, his country's. Whereas the exploiter asks of a piece of land only
how much and how quickly it can be made to produce, the nurturer asks a question that is much
more complex and difficult: What is its carrying capacity? (That is: How much can be taken from
it without diminishing it? What can it produce dependably for an indefinite time?) The exploiter
wishes to earn as much as possible by as little work as possible; the nurturer expects, certainly,
to have a decent living from his work, but his characteristic wish is to work as well as possible.
The competence of the exploiter is in organization; that of the nurturer is in order - a human
order, that is, that accommodates itself both to other order and to mystery. The exploiter typically
serves an institution or organization; the nurturer serves land, household, community, place.
The exploiter thinks in terms of numbers, quantities, "hard facts"; the nurturer in terms of character,
condition, quality, kind."
I also think Prof. Patrick Deneen works to explain the roots (and progression) of decline.
I'll quote him at length here describing the modern college student.
"[T]he one overarching lesson that students receive is the true end of education: the only
essential knowledge is that know ourselves to be radically autonomous selves within a comprehensive
global system with a common commitment to mutual indifference. Our commitment to mutual indifference
is what binds us together as a global people. Any remnant of a common culture would interfere
with this prime directive: a common culture would imply that we share something thicker, an inheritance
that we did not create, and a set of commitments that imply limits and particular devotions.
Ancient philosophy and practice praised as an excellent form of government a res publica –
a devotion to public things, things we share together. We have instead created the world's first
Res Idiotica – from the Greek word idiotes, meaning "private individual." Our education system
produces solipsistic, self-contained selves whose only public commitment is an absence of commitment
to a public, a common culture, a shared history. They are perfectly hollowed vessels, receptive
and obedient, without any real obligations or devotions.
They won't fight against anyone, because that's not seemly, but they won't fight for anyone
or anything either. They are living in a perpetual Truman Show, a world constructed yesterday
that is nothing more than a set for their solipsism, without any history or trajectory."
Wow. Did this hit a nerve. You have eloquently described what was the city of hope for several
generations of outsiders, for young gay men and women, and for real artists, not just from other
places in America, but from all over the world. In New York, once upon a time, bumping up against
the more than 50% of the population who were immigrants from other countries, you could learn
a thing or two about the world. You could, for a while, make a living there at a job that was
all about helping other people. You could find other folks, lots of them, who were honest, well-meaning,
curious about the world. Then something changed. As you said, you started to see it in those hideous
80's buildings. But New York always seemed somehow as close or closer to Europe than to the U.S.,
and thus out of the reach of mediocrity and dumbing down. New York would mold you into somebody
tough and smart, if you weren't already – if it didn't, you wouldn't make it there.
Now, it seems, this dream is dreamt. Poseurs are not artists, and the greedy and smug drive
out creativity, kindness, real humor, hope.
It ain't fair. I don't know where in this world an aspiring creative person should go now,
but it probably is not there.
Americans cannot begin to reasonably demand a living wage, benefits and job security when there
is an unending human ant-line of illegals and legal immigrants willing to under bid them.
Only when there is a parity or shortage of workers can wage demands succeed, along with other
factors.
From 1925 to 1965 this country accepted hardly any immigrants, legal or illegal. We had the
bracero program where Mexican males were brought in to pick crops and were then sent home to collect
paychecks in Mexico. American blacks were hired from the deep south to work defense plants in
the north and west.
Is it any coincidence that the 1965 Great Society program, initiated by Ted Kennedy to primarily
benefit the Irish immigrants, then co-opted by LBJ to include practically everyone, started this
process of Middle Class destruction?
1973 was the peak year of American Society as measured by energy use per capita, expansion
of jobs and unionization and other factors, such as an environment not yet destroyed, nicely measured
by the The Real Progress Indicator.
Solution? Stop importing uneducated people. That's real "immigration reform".
Now explain to me why voters shouldn't favor Trump's radical immigration stands?
Maybe, but OTOH, who is it, exactly, who is recruiting, importing, hiring and training undocumented
workers to downgrade pay scales??
Do some homework, please. If businesses didn't actively go to Central and South America to
recruit, pay to bring here, hire and employ undocumented workers, then the things you discuss
would be great.
When ICE comes a-knocking at some meat processing plant or mega-chicken farm, what happens?
The undocumented workers get shipped back to wherever, but the big business owner doesn't even
get a tap on the wrist. The undocumented worker – hired to work in unregulated unsafe unhealthy
conditions – often goes without their last paycheck.
It's the business owners who manage and support this system of undocumented workers because
it's CHEAP, and they don't get busted for it.
Come back when the USA actually enforces the laws that are on the books today and goes after
big and small business owners who knowingly recruit, import, hire, train and employee undocumented
workers you know, like Donald Trump has all across his career.
This is the mechanism by which the gov't has assisted biz in destroying the worker, competition
for thee, but none for me. For instance I can't go work in canada or mexico, they don't allow
it. Policy made it, policy can change it, go bernie. While I favor immigration, in it's current
form it is primarily conducted on these lines of destroying workers (H1b etc and illegals combined)
Lucky for the mexicans they can see the american dream is bs and can go home. I wonder who the
latinos that have gained citizenship will vote for. Unlikely it'll be trump, but they can be pretty
conservative, and the people they work for are pretty conservative so no guarantee there, hillary
is in san diego at the tony balboa park where her supporters will feel comfortable, not a huge
venue I think they must be hoping for a crowd, and if she can't get one in san diego while giving
a "if we don't rule the world someone else will" speech, she can't get one anywhere. Defense contractors
and military advisors and globalist biotech (who needs free money more than biotech? they are
desperate for hillary) are thick in san diego.
I live part-time in San Diego. It is very conservative. The military, who are constantly screwed
by the GOP, always vote Republican. They make up a big cohort of San Diego county.
Hillary may not get a big crowd at the speech, but that, in itself, doesn't mean that much
to me. There is a segment of San Diego that is somewhat more progressive-ish, but it's a pretty
conservative county with parts of eastern SD county having had active John Birch Society members
until recently or maybe even ongoing.
There's a big push in the Latino community to GOTV, and it's mostly not for Trump. It's possible
this cohort, esp the younger Latino/as, will vote for Sanders in the primary, but if Clinton gets
the nomination, they'll likely vote for her (v. Trump).
I was unlucky enough to be stuck for an hour in a commuter train last Friday after Trump's
rally there. Hate to sound rude, but Trump's fans were everything we've seen. Loud, rude, discourteous
and an incessant litany of rightwing talking points (same old, same old). All pretty ignorant.
Saying how Trump will "make us great again." I don't bother asking how. A lot of ugly comments
about Obama and how Obama has been "so racially divisive and polarizing." Well, No. No, Obama
has not been or done that, but the rightwing noise machine has sure ginned up your hatreds, angers
and fears. It was most unpleasant. The only instructive thing about it was confirming my worst
fears about this group. Sorry to say but pretty loutish and very uninformed. Sigh.
part timer in sd as well, family for hillary except for nephew and niece .I keep telling my
mom she should vote bernie for their sake but it never goes over very well
Re Methland, we live in rural US and we got a not-very-well hidden population of homeless children.
I don't mean homeless families with children, I mean homeless children. Sleeping in parks in good
weather, couch-surfing with friends, etc. I think related.
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)
Sinclair Lewis
It Can't Happen Here page 141
On the Boots To Ribs Front: Anyone hereabouts notice that Captain America has just been revealed
to be a Nazi? Maybe this is what R. Cohen was alluding to but I doubt it.
The four horse men are, political , social, economic and environmental collapse . Any one remember
the original Mad Max movie. A book I recommend is the Crash Of 2016 By Thom Hartmann.
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.
The Walmart loathsome spawn and Jeff Bezos are the biggest welfare drains in our nation – or
among the biggest. They woefully underpay their workers, all while training them on how to apply
for various welfare benefits. Just so that their slaves, uh, workers can manage to eat enough
to enable them to work.
It slays me when US citizens – and it happens across the voting spectrum these days; I hear
just as often from Democratic voters as I do from GOP voters – bitch, vetch, whine & cry about
welfare abuse. And if I start to point out the insane ABUSE of welfare by the Waltons and Jeff
Bezos, I'm immediately greeted with random TRUE stories about someone who knew someone who somehow
made out like a bandit on welfare.
Hey, I'm totally sure and in agreement that there are likely a small percentage of real welfare
cheats who manage to do well enough somehow. But seriously? That's like a drop in the bucket.
Get the eff over it!!!
Those cheats are not worth discussing. It's the big fraud cheats like Bezos & the Waltons and
their ilk, who don't need to underpay their workers, but they DO because the CAN and they get
away with it because those of us the rapidly dwindling middle/working classes are footing the
bill for it.
Citizens who INSIST on focusing on a teeny tiny minority of real welfare cheats, whilst studiously
ignoring the Waltons and the Bezos' of the corporate world, are enabling this behavior. It's one
of my bugabears bc it's so damn frustrating when citizens refuse to see how they are really being
ripped off by the 1%. Get a clue.
That doesn't even touch on all the other tax breaks, tax loopholes, tax incentives and just
general all-around tax cheating and off-shore money hiding that the Waltons and Bezos get/do.
Sheesh.
"I'm immediately greeted with random TRUE stories about someone who knew someone who somehow
made out like a bandit on welfare."
is the key and a v. long term result of the application of Bernays' to political life. Its
local and hits at the gut interpersonal level 'cos the "someones" form a kind of chain of trust
esp. if the the first one on the list is a friend or a credentialed media pundit. Utterly spurious
I know but countering this with a *merely* rational analysis of how Walmart, Amazon abuse the
welfare system to gouge profits from the rest of us just won't ever, for the large majority, get
through this kind emotional wall.
I don't know what any kind of solution might look like but, somehow, we need to find a way
of seriously demonising the corporate parasites that resonates at the same emotional level as
the "welfare cheat" meme that Bill Clinton and the rest of the DLC sanctified back in the '90s.
Something like "Walmart's stealing your taxes" might work but how to get it out there in a
viral way ??
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,
commericial, 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.
I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway,
the good news is that very regular articles are appearing where you can almost feel the panic
at the populist uprisings.
Whatever system is put in place the human race will find a way to undermine it. I believe in
capitalism because fair competition means the best and most efficient succeed.
I send my children to private schools and universities because I want my own children at the
top and not the best. Crony capitalism is inevitable, self-interest undermines any larger system
that we try and impose.
Can we design a system that can beat human self-interest? It's going to be tricky.
"If that's the system, how can I take advantage of it?" human nature at work. "If that's the
system, is it working for me or not?" those at the top.
If not, it's time to change the system.
If so, how can I tweak it to get more out of it?
Neo-Liberalism
Academics, who are not known for being street-wise, probably thought they had come up with
the ultimate system using markets and numeric performance measures to create a system free from
human self-interest.
They had already missed that markets don't just work for price discovery, but are frequently
used for capital gains by riding bubbles and hoping there is a "bigger fool" out there than you,
so you can cash out with a handsome profit.
(I am not sure if the Chinese realise markets are supposed to be for price discovery at all).
Hence, numerous bubbles during this time, with housing bubbles being the global favourite for
those looking for capital gains.
If we are being governed by the markets, how do we rig the markets?
A question successfully solved by the bankers.
Inflation figures, that were supposed to ensure the cost of living didn't rise too quickly,
were somehow manipulated to produce low inflation figures with roaring house price inflation raising
the cost of living.
What unemployment measure will best suit the story I am trying to tell?
U3 – everything great
U6 – it's not so good
Labour participation rate – it hasn't been this bad since the 1970s
Anything missing from the theory has been ruthlessly exploited, e.g. market bubbles ridden
for capital gains, money creation by private banks, the difference between "earned" and "unearned"
income and the fact that Capitalism trickles up through the following mechanism:
1) Those with excess capital collect rent and interest.
2) Those with insufficient capital pay rent and interest.
I just went on a rant last week. (Not only because the judge actually LIED in court)
I left the courthouse in downtown Seattle, to cross the street to find the vultures selling
more foreclosures on the steps of the King County Administration Building, while above them, there
were tents pitched on the building's perimeter. And people were walking by just like this scene
was normal.
Because the people at the entrance of the courthouse could view this, I went over there and
began to rant. I asked (loudly) "Do you guys see that over there? Vultures selling homes rendering
more people homeless and then the homeless encampment with tents pitched on the perimeter above
them? In what world is this normal?" One guy replied, "Ironic, isn't it?" After that comment,
the Marshall protecting the judicial crooks in the building came over and tried to calm me down.
He insisted that the scene across the street was "normal" and that none of his friends or neighbors
have been foreclosed on. I soon found out that that lying Marshall was from Pierce County, the
epicenter of Washington foreclosures.
"In this postindustrial world not only is the labor question no longer asked, not only
is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who
nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful,
and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called
"blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt
the contempt of the whole white-collar world.
For these people, already skeptical about who runs things and to what end, and who are now
undergoing their own eviction from the middle class, skepticism sours into a passive cynicism.
Or it rears up in a kind of vengeful chauvinism directed at alien others at home and abroad, emotional
compensation for the wounds that come with social decline If public life can suffer a metaphysical
blow, the death of the labor question was that blow. For millions of working people, it amputated
the will to resist."
One thing I don't think I have seen addressed on this site (apologies if I have missed it!)
in all the commentary about the destruction of the middle class is the role of US imperialism
in creating that middle class in the first place and what it is that we want to save from destruction
by neo-liberalism. The US is rich because we rob the rest of the world's resources and have been
doing so in a huge way since 1945, same as Britain before us. I don't think it's a coincidence
that the US post-war domination of the world economy and the middle class golden age happened
at the same time. Obviously there was enormous value created by US manufacturers, inventors, government
scientists, etc but imperialism is the basic starting point for all of this. The US sets the world
terms of trade to its own advantage. How do we save the middle class without this level of control?
Within the US elites are robbing everyone else but they are taking what we use our military power
to appropriate from the rest of the world.
Second, if Bernie or whoever saves the middle class, is that so that everyone can have a tract
house and two cars and continue with a massively wasteful and unsustainable lifestyle based on
consumption? Or are we talking about basic security like shelter, real health care, quality education
for all, etc? Most of the stories I see seem to be nostalgic for a time when lots of people could
afford to buy lots of stuff and don't 1) reflect on origin of that stuff (imperialism) and 2)
consider whether that lifestyle should be the goal in the first place.
I went to the electronics recycling facility in Seattle yesterday. The guy at customer service
told me that they receive 20 million pounds per month. PER MONTH. Just from Seattle. I went home
and threw up.
It doesn't have to be that way. You can replace military conquest (overt and covert) with space
exploration and science expansion. Also, instead of pushing consumerism, push contentment. Don't
setup and goose a system of "gotta keep up with the Joneses!"
In the 50s(!!!) there was a plan, proven in tests and studies, that would have had humans on
the mars by 1965, out to Saturn by 72. Project Orion. Later, the British Project Daedalus was
envisioned which WOULD have put space probes at the next star system within 20 years of launch.
It was born of the atomic age and, as originally envisioned, would have been an ecological disaster
BUT it was reworked to avoid this and would have worked. Spacecraft capable of comfortably holding
100 personnel, no need to build with paper-thin aluminum skin or skimp on amenities. A huge ship
built like a large sea vessel (heavy iron/steel) accelerated at 1g (or more or slightly less as
desired) so no prolonged weightlessness and concomitant loss of bone and muscle mass. It was all
in out hands but the Cold War got in the way, as did the many agreements and treaties of the Cold
War to avoid annihilation. It didn't need to be that way. Check it out:
https://en.wikipedia.org/wiki/Project_Orion_(nuclear_propulsion)
All that with 1950s and 60s era technology. It could be done better today and for less than
your wars in the Middle East. Encourage science, math, exploration instead of consumption, getting
mine before you can get yours, etc.
Or, we could replace Western liberal culture, with its tradition to consume and expand
by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of
maintenance and "enough". Bourgeois make-work holds no interest to me.
My understanding of the data is that living standards increased around the world during
the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ).
It could be that it was still imperialism at work, but the link between imperialism and the creation
of the middle class is not straightforward.
Likewise, US elites are clearly NOT robbing the manufacturing firms that have set up in China
and other low-wage locations, so it is an oversimplification to say they are "robbing everyone
else."
Nostalgia is overrated but I don't sense the current malaise as a desire for more stuff. (I
grew up in the 60s and 70s and I don't remember it as a time where people had, or craved, a lot
of stuff. That period would be now, and I find it infects Sanders' supporters less than most.)
If anything, it is nostalgia for more (free) time and more community, for a time when (many but
not all) people had time to socialize and enjoy civic life.
those things would be nice as would just a tiny bit of hope for the future, our own and the
planet's and not an expectation of things getting more and more difficult and sometimes for entirely
unnecessary reasons like imposed austerity. But being we can't have "nice things" like free time,
community and hope for the future, we just "buy stuff".
I live on the south side, in the formerly affluent south shore neighborhood. A teenager was
killed, shot in the head in a drive by shooting, at 5 pm yesterday right around the corner from
my residence. A white coworker of mine who lives in a rich northwest side neighborhood once commented
to me how black people always say goodbye by saying "be safe". More easily said than done.
I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed
by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural"
order .
Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism
one only has to observe the decades of think tanks and their mouth organs roaming the planet .
especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great
unwashed globally here libertarian priests rang in the good news to the great unwashed
I would argue that neoliberalism is a program to define markets as primarily engaged in
information processing and to make everyone into non-agents ( as not important at all to the proper
functioning of markets).
It also appears that neoliberals want to restrict democracy to the greatest extent possible
and to view markets as the only foundation for truth without any need for input from the average
individual.
But as Mirowski argues–carrying their analysis this far begins to undermine their own neoliberal
assumptions about markets always promoting social welfare.
When I mean – agents – I'm not referring to agency, like you say the market gawd/computer does
that. I was referencing the – rational agent – that 'ascribes' the markets the right at defining
facts or truth as neoliberalism defines rational thought/behavior.
Disheveled Marsupial yes democracy is a direct threat to Hayekian et al [MPS and Friends]
paranoia due to claims of irrationality vs rationally
I have trouble understanding the focus on an emergence of fascism in Europe, focus that seems
to dominate this entire thread when, put in perspective such splinter groups bear little weight
on the European political spectrum.
As an expat living in France, in my perception the Front National is a threat to the political
establishments that occupy the center left and right and whose historically broad constituencies
have been brutalized by the financial crisis borne of unbridled anglo-saxon runaway capitalism,
coined neoliberalism. The resulting disaffection has allowed the growth of the FN but it is also
fueled by a transfer of reactionary constituencies that have historically found identity in far
left parties (communist, anti-capitalist, anarchist ), political expressions the institutions
of the Republic allow and enable in the name of plurality, a healthy exultury in a democratic
society.
To consider that the FN in France, UKIP in the UK and others are a threat to democratic values
any more that the far left is non-sensical, and I dare say insignificant compared to the "anchluss"
our conservative right seeks to impose upon the executive, legislative and judicial branches of
government.
The reality in Europe as in America is economic. The post WWII era of reconstruction, investment
and growth is behind us, the French call these years the "Trente Glorieuses" (30 glorious years)
when prosperity was felt through all societal strats, consumerism for all became the panacea for
a just society, where injustice prevailed welfare formulas provided a new panacea.
As the perspective of an unravelling of this golden era began to emerge elites sought and conspired
to consolidate power and wealth, under the aegis of greed is good culture by further corrupting
government to serve the few, ensuring impunity for the ruling class, attempting societal cohesiveness
with brash hubristic dialectics (America, the greatest this or that) and adventurism (Irak, mission
accomplished), conspiring to co-opt and control institutions and the media (to understand the
depth of this deception a must read is Jane Mayer in The Dark Side and in Dark Money).
The difference between America and Europe is that latter bears of brunt of our excess.
The 2008 Wall St / City meltdown eviscerated much of America' middle class and de-facto stalled,
perhaps definitively, the vehicle of upward mobility in an increasingly wealth-ranked class structured
society – the Trump phenomena feeds off the fatalistic resilience and "good book" mythologies
remnant of the "go west" culture.
In Europe where to varying degrees managed capitalism prevails the welfare state(s) provided the
shock absorbers to offset the brunt of the crisis, but those who locked-in on neoliberal fiscal
conservatism have cut off their nose in spite leaving scant resources to spur growth. If social
mobility survives, more vibrantly than the US, unemployment and the cost thereof remains steadfast
and crippling.
The second crisis borne of American hubris is the human tidal wave resulting from the Irak adventure;
it has unleashed mayhem upon the Middle East, Sub Saharan Africa and beyond. The current migrational
wave Europe can not absorb is but the beginning of much deeper problem – as ISIS, Boko Haram and
so many others terrorist groups destabilize the nation-states of a continent whose population
is on the path to explode in the next half century.
The icing on the cake provided by a Trump election will be a world wave of climate change refugees
as the neoliberal establishment seeks to optimize wealth and power through continued climate change
denial.
Fascism is not the issue, nationalism resulting from a self serving bully culture will decimate
the multilateral infrastructure responsible nation-states need to address today's problems.
Broadly, Trump Presidency capping the neoliberal experience will likely signal the end of the
US' dominant role on the world scene (and of course the immense benefits derived for the US).
As he has articulated his intent to discard the art of diplomacy, from soft to institutional,
in favor of an agressive approach in which the President seeks to "rattle" allies (NATO, Japan
and S. Korea for example) as well as his opponents (in other words anyone who does not profess
blind allegiance), expect that such modus operandi will create a deep schism accompanied by a
loss of trust, already felt vis-a-vis our legislature' behavior over the last seven years.
The US's newfound respect among friends and foes generated by President Obama' presidency, has
already been undermined by the GOP primaries, if Trump is elected it will dissipate for good as
other nations and groups thereof focus upon new, no-longer necessarily aligned strategic relationships,
some will form as part as a means of taking distance, or protection from the US, others more opportunist
with the risk of opponents such as Putin filling the void – in Europe for example.
Neoliberalism isn't helping, but it's a population/resource ratio thing. Impacts on social
orders occur well before raw supply factors kick in (and there is more than food supply to basic
rations). The world population has more than doubled in the last 50 years, one doesn't get that
kind of accelerated growth without profound impacts to every aspect of societies. Some of the
most significant impacts are consequent to the acceleration of technological changes (skill expirations,
automations) that are driven in no small part by the needs of a vast + growing population.
I don't suggest population as a pat simplistic answer. And neoliberalism accelerates the declining
performance of institutions (as in the CUNY article and that's been going on for decades already,
neoliberalism just picked up where neoconservatism petered out), but we would be facing issues
like homelessness, service degradation, population displacements, etc regardless of poor policies.
One could argue (I do) that neoliberalism has undertaken to accelerate existing entropies for
profit.
Thanks for soliciting reader comments on socioeconomic desperation. It's encouraging to know
that I'm not the only failure to launch in this country.
I'm a seasonal farm worker with a liberal arts degree in geology and history. I barely held
on for six months as a junior environmental consultant at a dysfunctional firm that tacitly encouraged
unethical and incompetent behavior at all levels. From what I could gather, it was one of the
better-run firms in the industry. Even so, I was watching mid-level and senior staff wander into
extended mid-life crises while our entire service line was terrorized by a badly out-of-shape,
morbidly obese, erratic, vicious PG who had alienated almost the entire office but was untouchable
no matter how many firing offenses she committed. Meanwhile I was watching peers in other industries
(especially marketing and FIRE) sell their souls in real time. I'm still watching them do so a
decade later.
It's hard to exaggerate how atrociously I've been treated by bougie conformists for having
failed/dropped out of the rat race. A family friend who got into trouble with the state of Hawaii
for misclassifying direct employees of his timeshare boiler room as 1099's gave me a panic attack
after getting stoned and berating me for hours about how I'd wake up someday and wonder what the
fuck I'd done with my life. At the time, I had successfully completed a summer job as the de facto
lead on a vineyard maintenance crew and was about to get called back for the harvest, again as
the de facto lead picker.
Much of my social life is basically my humiliation at the hands of amoral sleazeballs who presume
themselves my superiors. No matter how strong an objective case I have for these people being
morally bankrupt, it's impossible to really dismiss their insults. Another big component is concern-trolling
from bourgeois supremacists who will do awfully little for me when I ask them for specific help.
I don't know what they're trying to accomplish, and they probably don't, either. A lot of it is
cognitive dissonance and incoherence.
Some of the worst aggression has come from a Type A social climber friend who sells life insurance.
He's a top producer in a company that's about a third normal, a third Willy Loman, and a third
Glengarry Glen Ross. This dude is clearly troubled, but in ways that neither of us can really
figure out, and a number of those around him are, too. He once admitted, unbidden, to having hazed
me for years.
The bigger problem is that he's surrounded by an entire social infrastructure that enables
and rewards noxious, predatory behavior. When college men feel like treating the struggling like
garbage, they have backup and social proof from their peers. It's disgusting. Many of these people
have no idea of how to relate appropriately to the poor or the unemployed and no interest in learning.
They want to lecture and humiliate us, not listen to us.
Dude recently told me that our alma mater, Dickinson College, is a "grad school preparatory
institution." I was floored that anyone would ever think to talk like that. In point of fact,
we're constantly lectured about how versatile our degrees are, with or without additional education.
I've apparently annoyed a number of Dickinsonians by bitterly complaining that Dickinson's nonacademic
operations are a sleazy racket and that President Emeritus Bill Durden is a shyster who brainwashed
my classmates with crude propaganda. If anything, I'm probably measured in my criticism, because
I don't think I know the full extent of the fraud and sleaze. What I have seen and heard is damning.
I believe that Dickinson is run by people with totalitarian impulses that are restrained only
by a handful of nonconformists who came for the academics and are fed up with the propaganda.
Meanwhile, I've been warm homeless for most of the past four years. It's absurd to get pledge
drive pitches from a well-endowed school on the premise that my degree is golden when I'm regularly
sleeping in my car and financially dependent on my parents. It's absurd to hear stories about
how Dickinson's alumni job placement network is top-notch when I've never gotten a viable lead
from anyone I know from school. It's absurd to explain my circumstances in detail to people who,
afterwards, still can't understand why I'm cynical.
While my classmates preen about their degrees, I'm dealing with stuff that would make them
vomit. A relative whose farm I've been tending has dozens of rats infesting his winery building,
causing such a stench that I'm just about the only person willing to set foot inside it. This
relative is a deadbeat presiding over a feudal slumlord manor, circumstances that he usually justifies
by saying that he's broke and just trying to make ends meet. He has rent-paying tenants living
on the property with nothing but a pit outhouse and a filthy, disused shower room for facilities.
He doesn't care that it's illegal. One of his tenants left behind a twenty-gallon trash can full
to the brim with his own feces. Another was seen throwing newspaper-wrapped turds out of her trailer
into the weeds. They probably found more dignity in this than in using the outhouse.
When I was staying in Rancho Cordova, a rough suburb of Sacramento, I saw my next-door neighbor
nearly come to blows with a man at the light rail station before apologizing profusely to me,
calling me "sir," "man," "boss," and "dog." He told me that he was angry at the other guy for
selling meth to his kid sister. Eureka is even worse: its west side is swarming with tweakers,
its low-end apartment stock is terrible, no one brings the slumlords to heel, and it has a string
of truly filthy residential motels along Broadway that should have been demolished years ago.
A colleague who lives in Sweet Home, Oregon, told me that his hometown is swarming with druggies
who try to extract opiates from local poppies and live for the next arriving shipment of garbage
drugs. The berry farm where we worked had ten- and twelve-year-olds working under the table to
supplement their families' incomes. A Canadian friend told me that he worked for a crackhead in
Lillooet who made his own supply at home using freebase that he bought from a meathead dealer
with ties to the Boston mob. Apparently all the failing mill towns in rural BC have a crack problem
because there's not much to do other than go on welfare and cocaine. An RCMP sergeant in Kamloops
was recently indicted for selling coke on the side.
Uahsenaa's comment about the invisible homeless is spot on. I think I blend in pretty well.
I've often stunned people by mentioning that I'm homeless. Some of them have been assholes about
it, but not all. There are several cars that I recognize as regular overnighters at my usual rest
area. Thank God we don't get hassled much. Oregon is about as safe a place as there is to be homeless.
Some of the rest areas in California, including the ones at Kingsburg and the Sacramento Airport,
end up at or beyond capacity overnight due to the homeless. CalTrans has signs reminding drivers
that it's rude to hog a space that someone else will need. This austerity does not, of course,
apply to stadium construction for the Kings.
Another thing that almost slipped my mind (and is relevant to Trump's popularity): I've encountered
entrenched, systemic discrimination against Americans when I've tried to find and hold menial
jobs, and I've talked to other Americans who have also encountered it. There is an extreme bias
in favor of Mexican peasants and against Americans in the fields and increasingly in off-farm
jobs. The top quintile will be lucky not to reap the whirlwind on account of this prejudice.
"... The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability. ..."
"... In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump). ..."
"... Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks. ..."
"... Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'" ..."
In addition, the issues are similar between the two campaigns: The number
one issue fueling the leave vote was immigration – a lot like Trump's wall against
Mexico. The number two issue was lack of accountability of government: Leavers
believe that the EU government in Brussels is unaccountable to voters. For Trump
supporters, resentment towards a distant and unaccountable Washington government
ranks high as well. The Brexit constituency and the Trump constituency are both
motivated by the same sense of loss and vulnerability.
In both the U.S. and the U.K., a large and growing segment of voters
has not prospered in today's complex, technology-driven global economy. Their
wages have stagnated and in many cases fallen. Too few good-paying jobs exist
for people lacking a college degree, or even people with a college degree, if
the degree is not in the right field. These people are angry, frustrated, and
afraid -- and with very good reason. Both countries' governments have done little
to help them adapt, and little to soothe the sting of globalization. The voter's
concerns in both places are mostly the same even though these concerns have
coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S.
they have coalesced around a candidate (Trump).
In both countries, political elites were caught flat-footed. Elites lost
control over the narrative and lost credibility and persuasiveness with angry,
frustrated and fearful voters. The British elites badly underestimated the intensity
of public frustration with immigration and with the EU. Most expected the vote
would end on the side of "remain," up to the very last moment. Now they are
trying to plot their way out of something they never expected would actually
happen, and never prepared for.
Similarly, the elite insiders of the Republican Party and their business
allies badly underestimated Trump. Establishment candidates like former Florida
Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying
to make sense of a presumptive nominee who trashes free trade, one of the fundamental
principles of the party, and openly taunts one of most important emerging voting
blocks.
How did the elites lose control? There are many reasons: With social media
so pervasive, advertising dollars no longer controls what the public sees and
hears. With unrestricted campaign spending, the party can no longer "pinch the
air hose" of a candidate who strays from party orthodoxy.
Perhaps the biggest reason for the impotence of today's political elites
is that elites have trashed the very idea of competent and effective government
for 35 years now, and the public has taken the message to heart. Ever since
Reagan identified government as the problem, conservative elites have attacked
the idea of government itself – rather than respecting the idea
of government itself while criticizing the particular policies of a particular
government. This is a crucial (and dangerous) distinction. In 1986, Reagan went
on to say "the nine most terrifying words in the English language are 'I'm from
the government and I'm here to help.'"
Reagan booster Grover Norquist is known for saying, "I don't want to abolish
government. I simply want to reduce it to the size where I can drag it into
the bathroom and drown it in the bathtub." Countless candidates and elected
officials slam "Washington bureaucrats" even though these "bureaucrats" were
none other than themselves. It's not a great way to build respect. Then the
attack escalated, with the aim of destroying parts of government that were actually
mostly working. This was done to advance the narrative that government itself
is the problem, and pave the way for privatization. Take the Transportation
Security Administration for example. TSA has actually done its job. No terrorist
attacks have succeeded on U.S. airplanes since it was established. But by
systematically underfunding it , Congress has made the lines painfully long,
so people hate it. Take the Post Office. Here Congress manufactured a crisis
to force service cuts, making the public believe the institution is incompetent.
But the so-called "problem" is
due almost entirely to a requirement, imposed by Congress, forcing the Postal
Service to prepay retiree's health care to an absurd level, far beyond what
a similar private sector business would have to do. A similar dynamic now threatens
Social Security. Thirty-five years have passed since Reagan first mocked the
potential for competent and effective government. Years of unrelenting attack
have sunk in. Many Americans now distrust government leaders and think it's
pointless to demand or expect wisdom and statesmanship. Today's American voters
(and their British counterparts), well-schooled in skepticism, disdain and dismiss
leaders of all parties and they are ready to burn things down out of sheer frustration.
The moment of blowback has arrived.
PK has nearly lost all of his ability to see things objectively. Ambition got him, I suppose,
or maybe he has always longed to be popular. He was probably teased and ridiculed too much in
his youth. He is something of a whinny sniveler after-all.
Then too, I doubt if PK has ever used a public restroom in the Southwest, or taken his kids
to a public park in one of the thousands of small towns where non-English speaking throngs take
over all of the facilities and parking.Or had his children bullied at school by a gang of dark-skinned
kids whose parents believe that whites took their land, or abused or enslaved their distant ansestors.
It might be germane here too... to point out that some of this anti-white sentiment gets support
and validation from the very rhetoric that Democrats have made integral to their campaigns.
As for not knowing why crime rates have been falling, the incarceration rates rose in step,
so duh, if you lock up those with propensities for crime, well, how could crime rates not fall?
And while I'm on the subject of crime, the statistical analysis that is commonly used focuses
too much on violent crime and convictions. Thus, crimes of a less serious nature, that being the
type of crimes committed by poor folks, is routinely ignored. Then too, those who are here illegally
are often transient and using assumed names, and so they are, presumably, more difficult to catch.
So, statistics are all too often not as telling as claimed.
And, though I'm not a Trump supporter, I fully understand his appeal. As would PK if he were
more travelled and in touch with those who have seen their schools, parks, towns, and everything
else turn tawdry and dysfunctional. But of course the nation that most of us live in is much different
than the one that PK knows.
> And, though I'm not a Trump supporter, I fully understand his appeal
I wonder why everybody is thinking about this problem only in terms of identity politics.
This is a wrong, self-defeating framework to approach the problem. which is pushed by neoliberal
MSM and which we should resist in this forum as this translates the problems that the nation faces
into term of pure war-style propaganda ("us vs. them" mentality). To which many posters here already
succumbed
IMHO the November elections will be more of the referendum on neoliberal globalization (with
two key issues on the ballot -- jobs and immigration) than anything else.
If so, then the key question is whether the anger of population at neoliberal elite that stole
their jobs and well-being reached the boiling point or not. The level of this anger might decide
the result of elections, not all those petty slurs that neoliberal MSM so diligently use as a
smoke screen.
All those valiant efforts in outsourcing and replacing permanent jobs with temporary to increase
profit margin at the end have the propensity to produce some externalities. And not only in the
form "over 50 and unemployed" but also by a much more dangerous "globalization of indifference"
to human beings in general.
JK Galbraith once gave the following definition of neoliberal economics: "trickle down economics
is the idea that if you feed the horse enough oats eventually some will pass through to the road
for the sparrows." This is what neoliberalism is about. Lower 80% even in so-called rich countries
are forced to live in "fear and desperation", forced to work "with precious little dignity".
Human beings are now considered consumer goods in "job market" to be used and then discarded.
As a consequence, a lot of people find themselves excluded and marginalized: "without work, without
possibilities, without any means of escape" (pope Francis).
And that inevitably produces a reaction. Which in extreme forms we saw during French and Bolsheviks
revolutions. And in less extremist forms (not involving lampposts as the placeholders for the
"Masters of the Universe" (aka financial oligarchy) and the most obnoxious part of the "creative
class" aka intelligentsia
https://en.wikipedia.org/wiki/Intelligentsia
) in Brexit vote.
Hillary and Trump are just symbols here. The issue matters, not personalities.
"... The incomes of the financial sector are mostly pure rents so there are fewer gains from trade possible here than there are for more productive sectors. Trade negotiations on this are therefore more 'win-lose' rather than potentially 'win-win'. ..."
T's right – the economic impact of Brexit on the UK will overwhelmingly depend on how the EU "passport"
entitlements for the banks are negotiated. And of course the Germans (with Frankfurt) and the
French (with Paris) have a strong incentive to make sure that a good slab of the City's business
goes to them.
The incomes of the financial sector are mostly pure rents so there are fewer gains from trade
possible here than there are for more productive sectors. Trade negotiations on this are therefore
more 'win-lose' rather than potentially 'win-win'.
I think the result will certainly be lower aggregate GDP for the UK but it might well be better
distributed (eg London property prices may be less absurd). The City has long made the rest of
the UK economy suffer from a form of Dutch disease through an overvalued pound sterling. So those
Sunderland Brexit voters might prove ultimately correct in their assessment of their economic
interests – just not in the way they think.
The reasons for the election of Donald Trump as President of the U.S. will be analyzed and argued
about for many years to come. Undoubtedly there are U.S.-specific factors that are relevant, such
as racial divisions in voting patterns. But the election took place after the British vote to withdraw
from the European Union and the rise to power of conservative politicians in continental Europe,
so it is reasonable to ask whether globalization bears any responsibility.
Have foreign workers taken the jobs of U.S. workers? Increased trade does lead to a reallocation
of resources, as a country increases its output in those sectors where it has an advantage while
cutting back production in other sectors. Resources should flow from the latter to the former, but
in reality it can be difficult to switch employment across sectors.
Daron Acemoglu and David Autor of MIT,
David Dorn of the University of Zurich, Gordon Hanson of UC-San Diego and Brendan Price of MIT
have found that import competition from China after 2000 contributed to reductions in U.S. manufacturing
employment and weak U.S. job growth. They estimated manufacturing job losses due to Chinese competition
of 2.0 – 2.4 million.
Other studies
find similar results for workers who do not have high school degrees.
Moreover, multinational firms do shift production across borders in response to lower wages, among
other factors.
Ann E. Harrison of UC-Berkeley and Margaret S. McMillan of Tufts University looked at the hiring
practices of the foreign affiliates of U.S. firms during the period of 1977 to 1999. They found that
lower wages in affiliate countries where the employees were substitutes for U.S. workers led to more
employment in those countries but reductions in employment in the U.S. However, when employment across
geographical locations is complementary for firms that do significantly different work at home and
abroad, domestic and foreign employment rise and fall together.
Imports and foreign production, therefore, have had an impact on manufacturing employment in the
U.S. But several caveats should be raised. First, as
Erik Brynjolfsson and Andrew McAfee of MIT and others have pointed out, technology has had a
much larger effect on jobs. The U.S. is the second largest global producer of manufactured goods,
but these products are being made in plants that employ fewer workers than they did in the past.
Many of the lost jobs simply do not exist any more. Second, the U.S. exports goods and services as
well as purchases them. Among the manufactured goods that account for significant shares of U.S.
exports are
machines
and engines, electronic equipment and aircraft . Third, there is inward FDI as well as outward,
and the foreign-based firms hire U.S. workers. A 2013
Congressional Research Service
study by James V. Jackson reported that by year-end 2011 foreign firms employed 6.1 million Americans,
and 37% of this employment-2.3 million jobs-was in the manufacturing sector.
More recent data
shows that employment by the U.S. affiliates of multinational companies rose to 6.4 million in
2014. Mr. Trump will find himself in a difficult position if he threatens to shut down trade and
investment with countries that both import from the U.S. and invest here.
The other form of globalization that drew Trump's derision was immigration. Most of his ire focused
on those who had entered the U.S. illegally. However, in a speech in Arizona he said that he would
set up a commission that would
roll back the number of legal migrants to "historic norms."
The
current number of immigrants (42 million) represents around 13% of the U.S. population, and 16%
of the labor force. An increase in the number of foreign-born workers depresses the wages of some
native-born workers, principally high-school dropouts, as well as other migrants who arrived earlier.
But there are other, more significant reasons for the
stagnation in
working-class wages . In addition, a reduction in the number of migrant laborers would raise
the ratio of young and retired people to workers-the dependency ratio-and endanger the financing
of Social Security and Medicare. And by increasing the size of the U.S. economy,
these workers induce expansions in investment expenditures and hiring in areas that are complementary.
The one form of globalization that Trump has not criticized, with the exception of outward FDI,
is financial. This is a curious omission, as the crisis of 2008-09 arose from the financial implosion
that followed the collapse of the housing bubble in the U.S. International financial flows exacerbated
the magnitude of the crisis. But
Trump has pledged
to dismantle the Dodd-Frank legislation, which was enacted to implement financial regulatory
reform and lower the probability of another crisis. While
Trump has criticized China for undervaluing its currency in order to increase its exports to
the U.S., most economists believe that the
Chinese currency is no longer undervalued vis-ŕ-vis the U.S. dollar.
Did globalization produce Trump, or lead to the circumstances that resulted in
46.7% of the electorate voting
for him? A score sheet of the impact of globalization within the U.S. would record pluses and minuses.
Among those who have benefitted are consumers who purchase items made abroad at cheaper prices, workers
who produce export goods, and firms that hire migrants. Those who have been adversely affected include
workers who no longer have manufacturing jobs and domestic workers who compete with migrants for
low-paying jobs. Overall, most studies find evidence of
positive net benefits from trade . Similarly,
studies of the cost and benefits of immigration indicate that overall foreign workers make a
positive contribution to the U.S. economy.
Other trends have exerted equal or greater consequences for our economic welfare. First, as pointed
out above, advances in automation have had an enormous impact on the number and nature of jobs, and
advances in artificial intelligence wii further change the nature of work. The launch of driverless
cars and trucks, for example, will affect the economy in unforeseen ways, and more workers will lose
their livelihoods. Second, income inequality has been on the increase in the U.S. and elsewhere for
several decades. While those in the upper-income classes have benefitted most from increased trade
and finance, inequality reflects many factors besides globalization.
Why, then, is globalization the focus of so much discontent? Trump had the insight that demonizing
foreigners and U.S.-based multinationals would allow him to offer simple solutions-ripping up trade
deals, strong-arming CEOs to relocate facilities-to complex problems. Moreover, it allows him to
draw a line between his supporters and everyone else, with Trump as the one who will protect workers
against the crafty foreigners and corrupt elite who conspire to steal American jobs. Blaming the
foreign "other" is a well-trod route for those who aspire to power in times of economic and social
upheaval.
Globalization, therefore, should not be held responsible for the election of Donald Trump and
those in other countries who offer similar simplistic solutions to challenging trends. But globalization's
advocates did indirectly lead to his rise when they oversold the benefits of globalization and neglected
the downside. Lower prices at Wal-Mart are scarce consolation to those who have lost their jobs.
Moreover, the proponents of globalization failed to strengthen the safety networks and redistributive
mechanisms that allow those who had to compete with foreign goods and workers to share in the broader
benefits.
Dani Rodrik of Harvard's Kennedy School has described how the policy priorities were changed:
"The new model of globalization stood priorities on their head, effectively putting democracy to
work for the global economy, instead of the other way around. The elimination of barriers to trade
and finance became an end in itself, rather than a means toward more fundamental economic and social
goals."
The battle over globalization is not finished, and there will be future opportunities to adapt
it to benefit a wider section of society. The goal should be to place it within in a framework that
allows a more egalitarian distribution of the benefits and payment of the costs. This is not a new
task. After World War II, the Allied planners sought to revive international trade while allowing
national governments to use their policy tools to foster full employment. Political scientist
John
Ruggie of the Kennedy School called the hybrid system based on fixed exchange rates, regulated
capital accounts and government programs "
embedded liberalism
," and it prevailed until it was swept aside by the wave of neoliberal policies in the 1980s
and 1990s.
What would today's version of "embedded liberalism" look like? In the financial sector, the pendulum
has already swung back from unregulated capital flows and towards the use of capital control measures
as part of macroprudential policies designed to address systemic risk in the financial sector. In
addition,
Thomas Piketty of the École des hautes etudes en sciences (EHESS) and associate chair at the Paris
School of Economics , and author of Capital in the Twenty-first Century, has called
for a new focus in discussions over the next stage of globalization: " trade is a good thing, but
fair and sustainable development also demands public services, infrastructure, health and education
systems. In turn, these themselves demand fair taxation systems."
The current political environment is not conducive toward the expansion of public goods. But it
is unlikely that our new President's policies will deliver on their promise to return to a past when
U.S. workers could operate without concern for foreign competition or automation. We will certainly
revisit these issues, and we need to redefine what a successful globalization looks like. And if
we don't? Thomas Piketty warns of the consequences of not enacting the necessary domestic policies
and institutions: "If we fail to deliver these, Trump_vs_deep_state will prevail."
Since 1980, US manufacturing output has approximately doubled while manufacturing employment
fell by about a third.
Yes, globalization impacts the composition of output and it is a contributing factor in the
weaker growth of manufacturing output. but overall it has accounted for a very minor share of
the weakness in manufacturing employment since 1980. Productivity has been the dominant factor
driving manufacturing employment down.
JimH November 29, 2016 11:11 am
"Overall, most studies find evidence of positive net benefits from trade."
Of course they do! And in your world, studies always Trump real world experience.
Studies on trade can ignore the unemployed workers with a high school education or less. How
were they supposed to get an equivalent paying job? EDUCATION they say! A local public university
has a five year freshman graduation rate of 25%. Are those older students to eat dirt while attempting
to accumulate that education!
Studies on trade can ignore that illegal immigration increases competition for the those under
educated employees. Since 1990 there has been a rising demand that education must be improved!
That potential high school drop outs should be discouraged by draconian means if necessary. YET
we allow immigrants to enter this country and STAY with less than the equivalent of an American
high school education! Why are we spending so much on secondary education if it is not necessary!
"In Mexico, 34% of adults aged 25-64 have completed upper secondary education, much lower than
the OECD average of 76% the lowest rate amongst OECD countries."
See: http://www.oecdbetterlifeindex.org/countries/mexico/
Trade studies can ignore the fate of a small town when its major employer shuts down and leaves.
Trade studies can assume that we are one contiguous job market. They can assume that an unemployed
worker in Pennsylvania will learn of a good paying job in Washington state, submit an application,
and move within 2 weeks. Or assume that the Washington state employer will hold a factory job
open for a month! And they can assume that moving expenses are trivial for an unemployed person.
Our trade partners have not attempted anything remotely resembling balanced trade with us.
Here are the trade deficits since 1992.
Year__________US Trade Balance with the world
1992__________-39,212
1993__________-70,311
1994__________-98,493
1995__________-96,384
1996__________-104,065
1997__________-108,273
1998__________-166,140
1999__________-258,617
2000__________-372,517
2001__________-361,511
2002__________-418,955
2003__________-493,890
2004__________-609,883
2005__________-714,245
2006__________-761,716
2007__________-705,375
2008__________-708,726
2009__________-383,774
2010__________-494,658
2011__________-548,625
2012__________-536,773
2013__________-461,876
2014__________-490,176
2015__________-500,361
From:
https://www.census.gov/foreign-trade/statistics/historical/gands.pdf
AND there is the loss of the income from tariffs which had been going to the federal government!
How has that effected our national debt?
"However, when employment across geographical locations is complementary for firms that do
significantly different work at home and abroad, domestic and foreign employment rise and fall
together."
And exactly how do you think that the US government could guarantee that complementary work
at home and abroad. Corporations are profit seeking, amoral entities, which will seek profit any
way they can. (Legal or illegal)
The logical conclusion of your argument is that we could produce nothing and still have a thriving
economy. How would American consumers earn an income?
Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin are RUST BELT states. Were the voters
there merely ignorant or demented? You should never ever run for elected office.
Beverly Mann November 29, 2016 12:30 pm
Meanwhile, Trump today chose non-swampy Elaine Chao, Mitch McConnell's current wife and GWBush's
former Labor Secretary, as Transportation Secretary, to privatize roads, bridges, etc.
JimH November 29, 2016 12:36 pm
The trade balances are in millions of dollars in the table in my last comment.
Global trade had a chance of success beginning in 1992. But that required a mechanism which
was very difficult to game. A mechanism like the one that the Obama administration advocated in
October 2010.
"At the meeting in South Korea's southern city of Gyeongju, U.S. officials sought to set a
cap for each country's deficit or surplus at 4% of its economic output by 2015.
The idea drew support from Britain, Australia, Canada and France, all of which are running trade
deficits, as well as South Korea, which is hosting the G-20 meetings and hoping for a compromise
among the parties.
But the proposal got a cool reception from export powerhouses such as China, which has a current
account surplus of 4.7% of its gross domestic product; Germany, with a surplus of 6.1%; and Russia,
with a surplus of 4.7%, according to IMF statistics."
See:
http://articles.latimes.com/2010/oct/24/business/la-fi-g20-summit-20101024
That cap was probably too high. But at least the Obama administration showed some realization
that global trade was exhibiting serious unpredicted problems. Too bad that Hillary Clinton could
not have internalized that realization enough to campaign on revamping problematic trade treaties.
(And persuaded a few more of the voters in the RUST BELT to vote for her.) Elections have consequences
and voters understand that, but what choice did they have?
In your world, while American corporations act out in ways that would be diagnosed as antisocial
personality disorder in a human being, American human beings are expected to wait patiently for
decades while global trade is slowly adjusted into some practical system. (As one shortcoming
after another is addressed.)
The article states almost exactly what you 'add' in your comment:
"Imports and foreign production, therefore, have had an impact on manufacturing employment
in the U.S. But several caveats should be raised. First, as Erik Brynjolfsson and Andrew McAfee
of MIT and others have pointed out, technology has had a much larger effect on jobs".
So, what gives? Is there an award today for who ever gets the biggest DUH??? If there is anything
worth adding, it would be a mention of the Ball St study that supports the author's claim but
is somehow overlooked. But your comment, well, DUH!!
=================================================
JimH,
Some good stuff there, your assessment of Economics and its penchant for ignoring variables,
and your insight which states that "studies can assume that we are one contiguous job market",
is all very true, and especially when it comes to immigration issues. I've lived most of my life
near the Southern border and when economists claim that undocumented workers are good for our
economy I can only chuckle and shake my head. I suppose I could also list all of the variables
which those economists ignore, and there are many to choose from, but, there is that quote by
Upton Sinclair: "You can't get a man to understand what his salary depends on his not understanding".
In all fairness though, The Dept. of Labor does of course have its JOLTS data, and so not all
such studies are based on broad assumptions, but Economics does have its blind spots, generally
speaking. And of course economists apply far too much effort and energy serving their political
and financial masters.
As for your comment in regards to the the trade deficit, you might want to read up a little
on the Triffin Dilemma. The essence of globalization has a lot to do with the US leadership choosing
to maintain the reserve-currency status and Triffin showed that an increasing amount of dollars
must supply the world's demand for dollars, or, global growth would falter. So, the trade deficit
since 1975 has been intentional, for that reason, and others. Of course the cost of labor in the
US was a factor too, and shipping and standards and so on. But, it is wise also, to remember that
these choices were made at time, during and just after the Viet Nam war, when military recruitment
was a very troubling issue for the leadership. And the option of good paying jobs for the working-class
was very probably seen as in conflict with military recruitment. Accordingly, the working-class
has been left with fewer options. This being accomplished in part with the historical anomaly
of high immigration quotas, (and by the tolerance for illegal immigration), during periods with
high unemployment, a falling participation-rate, inadequate infrastructure, and etc.
Ray LaPan-Love November 29, 2016 2:18 pm
JimH,
After posting my earlier comment it occurred to me that I should have recommended an article
by Tim Taylor that has some good info on the Triffin dilemma.
Also, it might be worth mentioning that you are making the common mistake of assigning blame
to an international undertaking that would be more accurately assigned to national shortcomings.
I'm referring here to what you quoted and said:
""Overall, most studies find evidence of positive net benefits from trade.""
"Of course they do! And in your world, studies always Trump real world experience".
My point being that "positive net benefits from trade" are based on just another half-baked
measurement as you suggest, but the problems which result from trade-related displacements are
not necessarily the fault of trade itself. There are in fact political options, for example, immigration
could have been curtailed about 40 years ago and we would now have about 40 million fewer citizens,
and thus there would almost certainly be more jobs available. Or, the laws pertaining to illegal
immigration could have been enforced, or the 'Employee Free Choice Act could have been passed,
or whatever, and then trade issues may have had much different impact.
Ray LaPan-Love November 29, 2016 3:12 pm
It seems worth mentioning here, that there are other more important goals that make globalization
valuable than just matters of money or employment or who is getting what. Let us not forget the
famous words of Immanuel Kant:
"the spirit of commerce . . . sooner or later takes hold of every nation, and is incompatible
with war."
coberly November 29, 2016 6:33 pm
Ray
the spirit of commerce did not prevent WW1 or WW2.
otherwise, thank you, and Jim H and Joseph Joyce for the first Post and Comments for grownups
we've had around here in some time.
Ray LaPan-Love November 29, 2016 7:03 pm
Hey Coberly, long time no see.
And yes, you are right, 'the spirit of commerce' theory has had some ups and downs. But, one
could easily and accurately argue that the effort which began with the League of Nations, and
loosely connects back to Kant's claim, has gained some ground since WW2. There has not, after-all,
been a major war since.
So, when discussing the pros and cons of globalization, that factor, as I said, is worthy of
mention. And it was a key consideration in the formation of the Bretton Woods institutions, and
in the globalization effort in general. This suggesting then that there are larger concerns than
the unemployment-rate, or the wage levels, of the working-class folks who may, or may not, have
been at the losing end of 'free-trade'.
I've been a 'labor-lefty' since the 1970s, but I am still capable of understanding that things
could have been much worse for the American working-class. Plus, if anyone must give up a job,
who better than those with a fairly well-constructed safety-net. History always has its winners
and losers, and progress rarely, if ever, comes in an even flow.
Meanwhile, those living in extreme poverty, worldwide, have dropped from 40% in 1981, to about
10% in 2015 (World Bank), so, progress is occurring. But of course much of that is now being ignored
by the din which has drowned out so many considerations that really do matter, and a great deal.
coberly November 29, 2016 8:25 pm
Ray
I am inclined to agree with you, but sometimes it's hard to see the forest for the trees. Especially
if one of those trees has fallen on you.
In general I am more interested in stopping predatory business models that really hurt people
than in creating cosmic justice.
as for the relative lack of big wars since WW2, I always thought that was because of mutual
assured destruction. I am sure Vietnam looked like a big enough war to the Vietnamese.
It is the end of neoliberalism and the start of the era of authoritarian nationalism, and we all
need to come together to stamp out the authoritarian part.
Notable quotes:
"... Neoliberalism has been disastrous for the Rust Belt, and I think we need to envision a new future for what was once the country's industrial heartland, now little more than its wasteland ..."
"... The question of what the many millions of often-unionized factory workers, SMEs which supplied them, family farmers (now fully industrialized and owned by corporations), and all those in secondary production and services who once supported them are to actually do in future to earn a decent living is what I believe should really be the subject of debate. ..."
"... two factors (or three, I guess) have contributed to this state of despair: offshoring and outsourcing, and technology. ..."
"... Medicaid, the CHIP program, the SNAP program and others (including NGOs and private charitable giving) may alleviate some of the suffering, but there is currently no substitute for jobs that would enable men and women to live lives of dignity – a decent place to live, good educations for their children, and a reasonable, secure pension in old age. Near-, at-, and below-minimum wage jobs devoid of any benefits don't allow any of these – at most, they make possible a subsistence life, one which requires continued reliance on public assistance throughout one's lifetime. ..."
"... In the U.S. (a neoliberal pioneer), poverty is closely linked with inequality and thus, a high GINI coefficient (near that of Turkey); where there is both poverty and a very unequal distribution of resources, this inevitably affects women (and children) and racial (and ethnic) minorities disproportionately. The economic system, racism, sexism, and xenophobia are not separate, stand-alone issues; they are profoundly intertwined. ..."
"... But really, if you think about it, slavery was defined as ownership, ownership of human capital (which was convertible into cash), and women in many societies throughout history were acquired as part of a financial transaction (either through purchase or through sale), and control of their capital (land, property [farmland, herds], valuables and later, money) often entrusted to a spouse or male guardian. All of these practices were economically-driven, even if the driver wasn't 21st-century capitalism. ..."
"... Let it be said at once: Trump's victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this. ..."
"... Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street – and the inability of the Democratic media elite to learn the lessons from the Sanders vote. ..."
"... Regional inequality and globalization are the principal drivers in Japanese politics, too, along with a number of social drivers. ..."
"... The tsunami/nuclear meltdown combined with the Japanese government's uneven response is an apt metaphor for the impact of neo-liberalism/globalization on Japan; and on the US. I then explained that the income inequality in the US was far more severe than that of Japan and that many Americans did not support the export of jobs to China/Mexico. ..."
"... I contend that in some hypothetical universe the DNC and corrupt Clinton machine could have been torn out, root and branch, within months. As I noted, however, the decision to run HRC effectively unopposed was made several years, at least, before the stark evidence of the consequences of such a decision appeared in sharp relief with Brexit. ..."
"... Just as the decline of Virginia coal is due to global forces and corporate stupidity, so the decline of the rust belt is due to long (30 year plus) global forces and corporate decisions that predate the emergence of identity politics. ..."
"... It's interesting that the clear headed thinkers of the Marxist left, who pride themselves on not being distracted by identity, don't want to talk about these factors when discussing the plight of their cherished white working class. ..."
"... The construction 'white working class' is a useful governing tool that splits poor people and possible coalitions against the violence of capital. Now, discussion focuses on how some of the least powerful, most vulnerable people in the United States are the perpetrators of a great injustice against racialised and minoritised groups. Such commentary colludes in the pathologisation of the working class, of poor people. Victims are inculpated as the vectors of noxious, atavistic vices while the perpetrators get off with impunity, showing off their multihued, cosmopolitan C-suites and even proposing that their free trade agreements are a form of anti-racist solidarity. Most crucially, such analysis ignores the continuities between a Trumpian dystopia and our satisfactory present. ..."
"... Race-thinking forecloses the possibility of the coalitions that you imagine, and reproduces ideas of difference in ways that always, always privilege 'whiteness'. ..."
"... Historical examples of ethnic groups becoming 'white', how it was legal and political decision-making that defined the present racial taxonomy, suggest that groups can also lose or have their 'whiteness' threatened. CB has written here about how, in the UK at least, Eastern and Southern Europeans are racialised, and so refused 'whiteness'. JQ has written about southern white minoritisation. Many commentators have pointed that the 'white working class' vote this year looked a lot like a minority vote. ..."
"... Given the subordination of groups presently defined as 'white working class', I wonder if we could think beyond ethnic and epidermal definition to consider that the impossibility of the American Dream refuses these groups whiteness; i.e the hoped for privileges of racial superiority, much in the same way that African Americans, Latin Americans and other racialised minorities are denied whiteness. Can a poor West Virginian living in a toxified drugged out impoverished landscape really be defined as a carrier of 'white privilege'? ..."
"... I was first pointed at this by the juxtapositions of racialised working class and immigrants in Imogen Tyler's Revolting Subjects – Social Abjection and Resistance in Neoliberal Britain but this below is a useful short article that takes a historical perspective. ..."
"... In a 1990 essay, the late Yale political scientist Juan Linz observed that "aside from the United States, only Chile has managed a century and a half of relatively undisturbed constitutional continuity under presidential government - but Chilean democracy broke down in the 1970s." ..."
"... Linz offered several reasons why presidential systems are so prone to crisis. One particularly important one is the nature of the checks and balances system. Since both the president and the Congress are directly elected by the people, they can both claim to speak for the people. When they have a serious disagreement, according to Linz, "there is no democratic principle on the basis of which it can be resolved." The constitution offers no help in these cases, he wrote: "the mechanisms the constitution might provide are likely to prove too complicated and aridly legalistic to be of much force in the eyes of the electorate." ..."
"... In a parliamentary system, deadlocks get resolved. A prime minister who lacks the backing of a parliamentary majority is replaced by a new one who has it. If no such majority can be found, a new election is held and the new parliament picks a leader. It can get a little messy for a period of weeks, but there's simply no possibility of a years-long spell in which the legislative and executive branches glare at each other unproductively.' ..."
"... In any case, as I pointed out before, given that the US is increasingly an urbanised country, and the Electoral College was created to protect rural (slave) states, the grotesque electoral result we have just seen is likely to recur, which means more and more Presidents with dubious democratic legitimacy. Thanks to Bush (and Obama) these Presidents will have, at the same time, more and more power. ..."
"... To return to my original question and answer it myself: I'm forced to conclude that the Democrats did not specifically address the revitalization – rebirth of the Rust Belt in their 2016 platform. Its failure to do so carried a heavy cost that (nearly) all of us will be forced to pay. ..."
"... This sub seems to have largely fallen into the psychologically comfortable trap of declaring that everyone who voted against their preferred candidate is racist. It's a view pushed by the neoliberals, who want to maintain he stranglehold of identity politics over the DNC, and it makes upper-class 'intellectuals' feel better about themselves and their betrayal of the filthy, subhuman white underclass (or so they see it). ..."
"... You can scream 'those jobs are never coming back!' all you want, but people are never going to accept it. So either you come up with a genuine solution (instead of simply complaining that your opponents solutions won't work; you're partisan and biased, most voters won't believe you), you may as well resign yourself to fascism. Because whining that you don't know what to do won't stop people from lining up behind someone who says that they do have one, whether it'll work or not. Nobody trusts the elite enough to believe them when they say that jobs are never coming back. Nobody trusts the elite at all. ..."
"... You sound just like the Wiemar elite. No will to solve the problem, but filled with terror at the inevitable result of failing to solve the problem. ..."
"... One brutal fact tells us everything we need to know about the Democratic party in 2016: the American Nazi party is running on a platform of free health care to working class people. This means that the American Nazi Party is now running to the left of the Democratic party. ..."
"... Back in the 1930s, when the economy collapsed, fascists appeared and took power. Racists also came out of the woodwork, ditto misogynists. Fast forward 80 years, and the same thing has happened all over again. The global economy melted down in 2008 and fascists appeared promising to fix the problems that the pols in power wouldn't because they were too closely tied to the existing (failed) system. Along with the fascists, racists gained power because they were able to scapegoat minorities as the alleged cause of everyone's misery. ..."
"... None of this is surprising. We have seen it before. Whenever you get a depression in a modern industrial economy, you get scapegoating, racism, and fascists. We know what to do. The problem is that the current Democratic party isn't doing it. ..."
"... . It is the end of neoliberalism and the start of the era of authoritarian nationalism, and we all need to come together to stamp out the authoritarian part. ..."
"... This hammered people on the bottom, disproportionately African Americans and especially single AA mothers in America. It crushed the blue collar workers. It is wiping out the savings and careers of college-educated white collar workers now, at least, the ones who didn't go to the Ivy League, which is 90% of them. ..."
"... Calling Hillary an "imperfect candidate" is like calling what happened to the Titanic a "boating accident." Trump was an imperfect candidate. Why did he win? ..."
"... "The neoliberal era in the United States ended with a neofascist bang. The political triumph of Donald Trump shattered the establishments in the Democratic and Republican parties – both wedded to the rule of Big Money and to the reign of meretricious politicians." ..."
"... "It is not an exaggeration to say that the Democratic Party is in shambles as a political force. Not only did it just lose the White House to a wildly unpopular farce of a candidate despite a virtually unified establishment behind it, and not only is it the minority party in both the Senate and the House, but it is getting crushed at historical record rates on the state and local levels as well. Surveying this wreckage last week, party stalwart Matthew Yglesias of Vox minced no words: `the Obama years have created a Democratic Party that's essentially a smoking pile of rubble.' ..."
"... "One would assume that the operatives and loyalists of such a weak, defeated and wrecked political party would be eager to engage in some introspection and self-critique, and to produce a frank accounting of what they did wrong so as to alter their plight. In the case of 2016 Democrats, one would be quite mistaken." ..."
"... Foreign Affairs ..."
"... "At the end of World War II, the United States and its allies decided that sustained mass unemployment was an existential threat to capitalism and had to be avoided at all costs. In response, governments everywhere targeted full employment as the master policy variable-trying to get to, and sustain, an unemployment rate of roughly four percent. The problem with doing so, over time, is that targeting any variable long enough undermines the value of the variable itself-a phenomenon known as Goodhart's law. (..) ..."
"... " what we see [today] is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself-what we might call "Goodhart's revenge." In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can't pay-but politically, and this is crucial-it empowers debtors since they can't pay, won't pay, and still have the right to vote. ..."
"... "The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened. ..."
"... "The global revolt against elites is not just driven by revulsion and loss and racism. It's also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun." ..."
"... They want what their families have had which is secure, paid, benefits rich, blue collar work. ..."
"... trump's campaign empathized with that feeling just by focusing on the factory jobs as jobs and not as anachronisms that are slowly fading away for whatever reason. Clinton might have been "correct", but these voters didn't want to hear "the truth". And as much as you can complain about how stupid they are for wanting to be lied to, that is the unfortunate reality you, and the Democratic party, have to accept. ..."
"... trump was offering a "bailout" writ large. Clinton had no (good) counteroffer. It was like the tables were turned. Romney was the one talking about "change" and "restructuring" while Obama was defending keeping what was already there. ..."
"... "Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course - the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check." http://www.nytimes.com/2008/11/19/opinion/19romney.html ..."
"... Clinton toward the end offered tariffs. But the trump campaign hit back with what turned out to be a pretty strong counter attack – ""How's she going to get tough on China?" said Trump economic advisor Peter Navarro on CNN's Quest Means Business. He notes that some of Clinton's economic advisors have supported TPP or even worked on it. "" ..."
The question is no longer her neoliberalism, but yours. Keep it or throw it away?
I wish this issue was being seriously discussed. Neoliberalism has been disastrous for
the Rust Belt, and I think we need to envision a new future for what was once the country's industrial
heartland, now little more than its wasteland (cf. "flyover zone" – a pejorative term which
inhabitants of the zone are not too stupid to understand perfectly, btw).
The question of what the many millions of often-unionized factory workers, SMEs which supplied
them, family farmers (now fully industrialized and owned by corporations), and all those in secondary
production and services who once supported them are to actually do in future to earn a decent
living is what I believe should really be the subject of debate.
As noted upthread, two factors (or three, I guess) have contributed to this state of despair:
offshoring and outsourcing, and technology. The jobs that have been lost will not return,
and indeed will be lost in ever greater numbers – just consider what will happen to the trucking
sector when self-driving trucks hit the roads sometime in the next 10-20 years (3.5 million truckers;
8.7 in allied jobs).
Medicaid, the CHIP program, the SNAP program and others (including NGOs and private charitable
giving) may alleviate some of the suffering, but there is currently no substitute for jobs that
would enable men and women to live lives of dignity – a decent place to live, good educations
for their children, and a reasonable, secure pension in old age. Near-, at-, and below-minimum
wage jobs devoid of any benefits don't allow any of these – at most, they make possible a subsistence
life, one which requires continued reliance on public assistance throughout one's lifetime.
In the U.S. (a neoliberal pioneer), poverty is closely linked with inequality and thus,
a high GINI coefficient (near that of Turkey); where there is both poverty and a very unequal
distribution of resources, this inevitably affects women (and children) and racial (and ethnic)
minorities disproportionately. The economic system, racism, sexism, and xenophobia are not separate,
stand-alone issues; they are profoundly intertwined.
I appreciate and espouse the goals of identity politics in all their multiplicity, and also
understand that the institutions of slavery and sexism predated modern capitalist economies.
But really, if you think about it, slavery was defined as ownership, ownership of human capital
(which was convertible into cash), and women in many societies throughout history were acquired
as part of a financial transaction (either through purchase or through sale), and control of their
capital (land, property [farmland, herds], valuables and later, money) often entrusted to a spouse
or male guardian. All of these practices were economically-driven, even if the driver wasn't 21st-century
capitalism.
Also: Faustusnotes@100
For example Indiana took the ACA Medicaid expansion but did so with additional conditions that
make it worse than in neighboring states run by democratic governors.
And what states would those be? IL, IA, MI, OH, WI, KY, and TN have Republican governors. Were
you thinking pre-2014? pre-2012?
To conclude and return to my original point: what's to become of the Rust Belt in future? Did
the Democratic platform include a New New Deal for PA, OH, MI, WI, and IA (to name only the five
Rust Belt states Trump flipped)?
" Let it be said at once: Trump's victory is primarily due to the explosion in economic
and geographic inequality in the United States over several decades and the inability of successive
governments to deal with this.
Both the Clinton and the Obama administrations frequently went along with the market liberalization
launched under Reagan and both Bush presidencies. At times they even outdid them: the financial
and commercial deregulation carried out under Clinton is an example. What sealed the deal, though,
was the suspicion that the Democrats were too close to Wall Street – and the inability of the
Democratic media elite to learn the lessons from the Sanders vote. "
What should have been one comment came out as 4, so apologies on that front.
I spent the last week explaining the US election to my students in Japan in pretty much the
terms outlined by Lilla and PIketty, so I was delighted to discover these two articles.
Regional inequality and globalization are the principal drivers in Japanese politics, too,
along with a number of social drivers. It was therefore very easy to call for a show of hands
to identify students studying here in Tokyo who are trying to decide whether or not to return
to areas such as Tohoku to build their lives; or remain in Kanto/Tokyo – the NY/Washington/LA
of Japan put crudely.
I asked students from regions close to Tohoku how they might feel if the Japanese prime minister
decided not to visit the region following Fukushima after the disaster, or preceding an election.
The tsunami/nuclear meltdown combined with the Japanese government's uneven response is an
apt metaphor for the impact of neo-liberalism/globalization on Japan; and on the US. I then explained
that the income inequality in the US was far more severe than that of Japan and that many Americans
did not support the export of jobs to China/Mexico.
I then asked the students, particularly those from outlying regions whether they believe Japan
needed a leader who would 'bring back Japanese jobs' from Viet Nam and China, etc. Many/most agreed
wholeheartedly. I then asked whether they believed Tokyo people treated those outside Kanto as
'inferiors.' Many do.
Piketty may be right regarding Trump's long-term effects on income inequality. He is wrong,
I suggest, to argue that Democrats failed to respond to Sanders' support. I contend that in
some hypothetical universe the DNC and corrupt Clinton machine could have been torn out, root
and branch, within months. As I noted, however, the decision to run HRC effectively unopposed
was made several years, at least, before the stark evidence of the consequences of such a decision
appeared in sharp relief with Brexit.
Also worth noting is that the rust belts problems are as old as Reagan – even the term dates
from the 80s, the issue is so uncool that there is a dire straits song about it. Some portion
of the decline of manufacturing there is due to manufacturers shifting to the south, where the
anti Union states have an advantage. Also there has been new investment – there were no Japanese
car companies in the us in the 1980s, so they are new job creators, yet insufficient to make up
the losses. Just as the decline of Virginia coal is due to global forces and corporate stupidity,
so the decline of the rust belt is due to long (30 year plus) global forces and corporate decisions
that predate the emergence of identity politics.
It's interesting that the clear headed thinkers of the Marxist left, who pride themselves
on not being distracted by identity, don't want to talk about these factors when discussing the
plight of their cherished white working class. Suddenly it's not the forces of capital and
the objective facts of history, but a bunch of whiny black trannies demanding safe spaces and
protesting police violence, that drove those towns to ruin.
And what solutions do they think the dems should have proposed? It can't be welfare, since
we got the ACA (watered down by representatives of the rust belt states). Is it, seriously, tariffs?
Short of going to an election promising w revolution, what should the dems have done? Give us
a clear answer so we can see what the alternative to identity politics is.
basil 11.19.16 at 5:11 am
Did this go through?
Thinking with WLGR @15, Yan @81, engels variously above,
The construction 'white working class' is a useful governing tool that splits poor people
and possible coalitions against the violence of capital. Now, discussion focuses on how some of
the least powerful, most vulnerable people in the United States are the perpetrators of a great
injustice against racialised and minoritised groups. Such commentary colludes in the pathologisation
of the working class, of poor people. Victims are inculpated as the vectors of noxious, atavistic
vices while the perpetrators get off with impunity, showing off their multihued, cosmopolitan
C-suites and even proposing that their free trade agreements are a form of anti-racist solidarity.
Most crucially, such analysis ignores the continuities between a Trumpian dystopia and our satisfactory
present.
I get that the tropes around race are easy, and super-available. Privilege confessing is very
in vogue as a prophylactic against charges of racism. But does it threaten the structures that
produce this abjection – either as embittered, immiserated 'white working class' or as threatened
minority group? It is always *those* 'white' people, the South, the Working Class, and never the
accusers some of whom are themselves happy to vote for a party that drowns out anti-war protesters
with chants of USA! USA!
Race-thinking forecloses the possibility of the coalitions that you imagine, and reproduces
ideas of difference in ways that always, always privilege 'whiteness'.
--
Historical examples of ethnic groups becoming 'white', how it was legal and political decision-making
that defined the present racial taxonomy, suggest that groups can also lose or have their 'whiteness'
threatened. CB has written here about how, in the UK at least, Eastern and Southern Europeans
are racialised, and so refused 'whiteness'. JQ has written about southern white minoritisation.
Many commentators have pointed that the 'white working class' vote this year looked a lot like
a minority vote.
Given the subordination of groups presently defined as 'white working class', I wonder
if we could think beyond ethnic and epidermal definition to consider that the impossibility of
the American Dream refuses these groups whiteness; i.e the hoped for privileges of racial superiority,
much in the same way that African Americans, Latin Americans and other racialised minorities are
denied whiteness. Can a poor West Virginian living in a toxified drugged out impoverished landscape
really be defined as a carrier of 'white privilege'?
I was first pointed at this by the juxtapositions of racialised working class and immigrants
in Imogen Tyler's Revolting Subjects – Social Abjection and Resistance in Neoliberal Britain but
this below is a useful short article that takes a historical perspective.
The 'racialisation' of class in Britain has been a consequence of the weakening of 'class'
as a political idea since the 1970s – it is a new construction, not an historic one.
.
This is not to deny the existence of working-class racism, or to suggest that racism is
somehow acceptable if rooted in perceived socio-economic grievances. But it is to suggest that
the concept of a 'white working class' needs problematizing, as does the claim that the British
working-class was strongly committed to a post-war vision of 'White Britain' analogous to the
politics which sustained the idea of a 'White Australia' until the 1960s.
Yes, old, settled neighbourhoods could be profoundly distrustful of outsiders – all outsiders,
including the researchers seeking to study them – but, when it came to race, they were internally
divided. We certainly hear working-class racist voices – often echoing stock racist complaints
about over-crowding, welfare dependency or exploitative landlords and small businessmen, but
we don't hear the deep pathological racial fears laid bare in the letters sent to Enoch Powell
after his so-called 'Rivers of Blood' speech in 1968 (Whipple, 2009).
But more importantly, we also hear strong anti-racist voices loudly and clearly. At Wallsend
on Tyneside, where the researchers were gathering their data just as Powell shot to notoriety,
we find workers expressing casual racism, but we also find eloquent expressions of an internationalist,
solidaristic perspective in which, crucially, black and white are seen as sharing the same
working-class interests.
Racism is denounced as a deliberate capitalist strategy to divide workers against themselves,
weakening their ability to challenge those with power over their lives (shipbuilding had long
been a very fractious industry and its workers had plenty of experience of the dangers of internal
sectarian battles).
To be able to mobilize across across racialised divisions, to have race wither away entirely
would, for me, be the beginning of a politics that allowed humanity to deal with the inescapable
violence of climate change and corporate power.
*To add to the bibliography – David R. Roediger, Elizabeth D. Esch – The Production of Difference
– Race and the Management of Labour, and Denise Ferreira da Silva – Toward a Global Idea of Race.
And I have just been pointed at Ian Haney-López, White By Law – The Legal Construction of Race.
FWIW 'merica's constitutional democracy is going to collapse.
Some day - not tomorrow, not next year, but probably sometime before runaway climate change
forces us to seek a new life in outer-space colonies - there is going to be a collapse of the
legal and political order and its replacement by something else. If we're lucky, it won't be violent.
If we're very lucky, it will lead us to tackle the underlying problems and result in a better,
more robust, political system. If we're less lucky, well, then, something worse will happen .
In a 1990 essay, the late Yale political scientist Juan Linz observed that "aside from
the United States, only Chile has managed a century and a half of relatively undisturbed constitutional
continuity under presidential government - but Chilean democracy broke down in the 1970s."
Linz offered several reasons why presidential systems are so prone to crisis. One particularly
important one is the nature of the checks and balances system. Since both the president and the
Congress are directly elected by the people, they can both claim to speak for the people. When
they have a serious disagreement, according to Linz, "there is no democratic principle on the
basis of which it can be resolved." The constitution offers no help in these cases, he wrote:
"the mechanisms the constitution might provide are likely to prove too complicated and aridly
legalistic to be of much force in the eyes of the electorate."
In a parliamentary system, deadlocks get resolved. A prime minister who lacks the backing
of a parliamentary majority is replaced by a new one who has it. If no such majority can be found,
a new election is held and the new parliament picks a leader. It can get a little messy for a
period of weeks, but there's simply no possibility of a years-long spell in which the legislative
and executive branches glare at each other unproductively.'
Given that the basic point is polarisation (i.e. that both the President and Congress have
equally strong arguments to be the the 'voice of the people') and that under the US appalling
constitutional set up, there is no way to decide between them, one can easily imagine the so to
speak 'hyperpolarisation' of a Trump Presidency as being the straw (or anvil) that breaks the
camel's back.
In any case, as I pointed out before, given that the US is increasingly an urbanised country,
and the Electoral College was created to protect rural (slave) states, the grotesque electoral
result we have just seen is likely to recur, which means more and more Presidents with dubious
democratic legitimacy. Thanks to Bush (and Obama) these Presidents will have, at the same time,
more and more power.
nastywoman @ 150
Just study the program of the 'Sozialdemokratische Partei Deutschland' or the Program of 'Die
Grünen' in Germany (take it through google translate) and you get all the answers you are looking
for.
No need to run it through google translate, it's available in English on their site. [Or one
could refer to the Green Party of the U.S. site/platform, which is very similar in scope and overall
philosophy. (www.gp.org).]
I looked at several of their topic areas (Agricultural, Global, Health, Rural) and yes, these
are general theses I would support. But they're hardly policy/project proposals for specific regions
or communities – the Greens espouse "think global, act local", so programs and projects must be
tailored to individual communities and regions.
To return to my original question and answer it myself: I'm forced to conclude that the
Democrats did not specifically address the revitalization – rebirth of the Rust Belt in their
2016 platform. Its failure to do so carried a heavy cost that (nearly) all of us will be forced
to pay.
This sub seems to have largely fallen into the psychologically comfortable trap of declaring
that everyone who voted against their preferred candidate is racist. It's a view pushed by the
neoliberals, who want to maintain he stranglehold of identity politics over the DNC, and it makes
upper-class 'intellectuals' feel better about themselves and their betrayal of the filthy, subhuman
white underclass (or so they see it).
I expect at this point that Trump will be reelected comfortably. If not only the party itself,
but also most of its activists, refuse to actually change, it's more or less inevitable.
You can scream 'those jobs are never coming back!' all you want, but people are never going
to accept it. So either you come up with a genuine solution (instead of simply complaining that
your opponents solutions won't work; you're partisan and biased, most voters won't believe you),
you may as well resign yourself to fascism. Because whining that you don't know what to do won't
stop people from lining up behind someone who says that they do have one, whether it'll work or
not. Nobody trusts the elite enough to believe them when they say that jobs are never coming back.
Nobody trusts the elite at all.
You sound just like the Wiemar elite. No will to solve the problem, but filled with terror
at the inevitable result of failing to solve the problem.
One brutal fact tells us everything we need to know about the Democratic party in 2016:
the American Nazi party is running on a platform of free health care to working class people.
This means that the American Nazi Party is now running to the left of the Democratic party.
Folks, we have seen this before. Let's not descend in backbiting and recriminations, okay?
We've got some commenters charging that other commenters are "mansplaining," meanwhile we've got
other commenters claiming that it's economics and not racism/misogyny. It's all of the above.
Back in the 1930s, when the economy collapsed, fascists appeared and took power. Racists
also came out of the woodwork, ditto misogynists. Fast forward 80 years, and the same thing has
happened all over again. The global economy melted down in 2008 and fascists appeared promising
to fix the problems that the pols in power wouldn't because they were too closely tied to the
existing (failed) system. Along with the fascists, racists gained power because they were able
to scapegoat minorities as the alleged cause of everyone's misery.
None of this is surprising. We have seen it before. Whenever you get a depression in a
modern industrial economy, you get scapegoating, racism, and fascists. We know what to do. The
problem is that the current Democratic party isn't doing it.
Instead, what we're seeing is a whirlwind of finger-pointing from the Democratic leadership
that lost this election and probably let the entire New Deal get rolled back and wiped out. Putin
is to blame! Julian Assange is to blame! The biased media are to blame! Voter suppression is to
blame! Bernie Sanders is to blame! Jill Stein is to blame! Everyone and anyone except the current
out-of-touch influence-peddling elites who currently have run the Democratic party into the ground.
We need the feminists and the black lives matter groups and we also need the green party people
and the Bernie Sanders activists. But everyone has to understand that this is not an isolated
event. Trump did not just happen by accident. First there was Greece, then there was Brexit, then
there was Trump, next it'll be Renzi losing the referendum in Italy and a constitutional crisis
there, and after that, Marine Le Pen in France is going to win the first round of elections. (Probably
not the presidency, since all the other French parties will band together to stop her, but the
National Front is currently polling at 40% of all registered French voters.) And Marine LePen
is the real deal, a genuine full-on out-and-out fascist. Not a closet fascist like Steve Bannon,
LePen is the full monty with everything but a Hugo Boss suit and the death's heads on the cap.
Does anyone notice a pattern here?
This is an international movement. It is sweeping the world . It is the end of neoliberalism
and the start of the era of authoritarian nationalism, and we all need to come together to stamp
out the authoritarian part.
Feminists, BLM, black bloc anarchiest anti-globalists, Sandernistas, and, yes, the former Hillary
supporters. Because it not just a coincidence that all these things are happening in all these
countries at the same time. The bottom 90% of the population in the developed world has been ripped
off by a managerial and financial and political class for the last 30 years and they have all
noticed that while the world GDP was skyrocketing and international trade agreements were getting
signed with zero input from the average citizen, a few people were getting very very rich but
nobody else was getting anything.
This hammered people on the bottom, disproportionately African Americans and especially
single AA mothers in America. It crushed the blue collar workers. It is wiping out the savings
and careers of college-educated white collar workers now, at least, the ones who didn't go to
the Ivy League, which is 90% of them.
And the Democratic party is so helpless and so hopeless that it is letting the American Nazi
Party run to the left of them on health care, fer cripes sake! We are now in a situation
where the American Nazi Party is advocating single-payer nationalized health care, while the former
Democratic presidential nominee who just got defeated assured everyone that single-payer "will
never, ever happen."
C'mon! Is anyone surprised that Hillary lost? Let's cut the crap with the "Hillary
was a flawed candidate" arguments. The plain fact of the matter is that Hillary was running mainly
on getting rid of the problems she and her husband created 25 years ago. Hillary promised criminal
justice reform and Black Lives Matter-friendly policing policies - and guess who started the mass
incarceration trend and gave speeches calling black kids "superpredators" 20 years ago? Hillary
promised to fix the problems with the wretched mandate law forcing everyone to buy unaffordable
for-profit private insurance with no cost controls - and guess who originally ran for president
in 2008 on a policy of health care mandates with no cost controls? Yes, Hillary (ironically, Obama's
big surge in popularity as a candidate came when he ran against Hillary from the left, ridiculing
helath care mandates). Hillary promises to reform an out-of-control deregulated financial system
run amok - and guess who signed all those laws revoking Glass-Steagal and setting up the Securities
Trading Modernization Act? Yes, Bill Clinton, and Hillary was right there with him cheering the
whole process on.
So pardon me and lots of other folks for being less than impressed by Hillary's trustworthiness
and honesty. Run for president by promising to undo the damage you did to the country 25 years
ago is (let say) a suboptimal campaign strategy, and a distinctly suboptimal choice of presidential
candidate for a party in the same sense that the Hiroshima air defense was suboptimal in 1945.
Calling Hillary an "imperfect candidate" is like calling what happened to the Titanic a
"boating accident." Trump was an imperfect candidate. Why did he win?
Because we're back in the 1930s again, the economy has crashed hard and still hasn't recovered
(maybe because we still haven't convened a Pecora Commission and jailed a bunch of the thieves,
and we also haven't set up any alphabet government job programs like the CCC) so fascists and
racists and all kinds of other bottom-feeders are crawling out of the political woodwork to promise
to fix the problems that the Democratic party establishment won't.
Rule of thumb: any social or political or economic writer virulently hated by the current Democratic
party establishment is someone we should listen to closely right now.
Cornel West is at the top of the current Democratic establishment's hate list, and he has got
a great article in The Guardian that I think is spot-on:
"The neoliberal era in the United States ended with a neofascist bang. The political triumph
of Donald Trump shattered the establishments in the Democratic and Republican parties – both wedded
to the rule of Big Money and to the reign of meretricious politicians."
Glenn Greenwald is another writer who has been showered with more hate by the Democratic establishment
recently than even Trump or Steve Bannon, so you know Greenwald is saying something important.
He has a great piece in The Intercept on the head-in-the-ground attitude of Democratic
elites toward their recent loss:
"It is not an exaggeration to say that the Democratic Party is in shambles as a political
force. Not only did it just lose the White House to a wildly unpopular farce of a candidate despite
a virtually unified establishment behind it, and not only is it the minority party in both the
Senate and the House, but it is getting crushed at historical record rates on the state and local
levels as well. Surveying this wreckage last week, party stalwart Matthew Yglesias of Vox minced
no words: `the Obama years have created a Democratic Party that's essentially a smoking pile of
rubble.'
"One would assume that the operatives and loyalists of such a weak, defeated and wrecked
political party would be eager to engage in some introspection and self-critique, and to produce
a frank accounting of what they did wrong so as to alter their plight. In the case of 2016 Democrats,
one would be quite mistaken."
Last but far from least, Scottish economist Mark Blyth has what looks to me like the single
best analysis of the entire global Trump_vs_deep_state tidal wave in Foreign Affairs magazine:
"At the end of World War II, the United States and its allies decided that sustained mass
unemployment was an existential threat to capitalism and had to be avoided at all costs. In response,
governments everywhere targeted full employment as the master policy variable-trying to get to,
and sustain, an unemployment rate of roughly four percent. The problem with doing so, over time,
is that targeting any variable long enough undermines the value of the variable itself-a phenomenon
known as Goodhart's law. (..)
" what we see [today] is a reversal of power between creditors and debtors as the anti-inflationary
regime of the past 30 years undermines itself-what we might call "Goodhart's revenge." In this
world, yields compress and creditors fret about their earnings, demanding repayment of debt at
all costs. Macro-economically, this makes the situation worse: the debtors can't pay-but politically,
and this is crucial-it empowers debtors since they can't pay, won't pay, and still have the right
to vote.
"The traditional parties of the center-left and center-right, the builders of this anti-inflationary
order, get clobbered in such a world, since they are correctly identified by these debtors as
the political backers of those demanding repayment in an already unequal system, and all from
those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that
are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.
"In short, to understand the election of Donald Trump we need to listen to the trumpets blowing
everywhere in the highly indebted developed countries and the people who vote for them.
"The global revolt against elites is not just driven by revulsion and loss and racism.
It's also driven by the global economy itself. This is a global phenomenon that marks one thing
above all. The era of neoliberalism is over. The era of neonationalism has just begun."
You don't live here, do you? I'm really asking a genuine question because the way you are framing
the question ("SPECIFICS!!!!!!) suggests you don't. (Just to show my background, born and raised
in Australia (In the electoral division of Kooyong, home of Menzies) but I've lived in the US
since 2000 in the midwest (MO, OH) and currently in the south (GA))
If this election has taught us anything it's no one cared about "specifics". It was a mood,
a feeling which brought trump over the top (and I'm not talking about the "average" trump voter
because that is meaningless. The average trunp voter was a republican voter in the south who the
Dems will never get so examining their motivations is immaterial to future strategy. I'm talking
about the voters in the Upper Midwest from places which voted for Obama twice then switched to
trump this year to give him his margin of victory).
trump voters have been pretty clear they don't actually care about the way trump does (or even
doesn't) do what he said he would do during the campaign. It was important to them he showed he
was "with" people like them. They way he did that was partially racialized (law and order, islamophobia)
but also a particular emphasis on blue collar work that focused on the work. Unfortunately these
voters, however much you tell them they should suck it up and accept their generations of familial
experience as relatively highly paid industrial workers (even if it is something only their fathers
and grandfathers experienced because the factories were closing when the voters came of age in
the 80s and 90s) is never coming back and they should be happy to retrain as something else, don't
want it. They want what their families have had which is secure, paid, benefits rich, blue
collar work.
trump's campaign empathized with that feeling just by focusing on the factory jobs as jobs
and not as anachronisms that are slowly fading away for whatever reason. Clinton might have been
"correct", but these voters didn't want to hear "the truth". And as much as you can complain about
how stupid they are for wanting to be lied to, that is the unfortunate reality you, and the Democratic
party, have to accept.
The idea they don't want "government help" is ridiculous. They love the government. They just
want the government to do things for them and not for other people (which unfortunately includes
blah people but also "the coasts", "sillicon valley", etc.). Obama won in 2008 and 2012 in part
due to the auto bailout.
trump was offering a "bailout" writ large. Clinton had no (good) counteroffer. It was like
the tables were turned. Romney was the one talking about "change" and "restructuring" while Obama
was defending keeping what was already there.
"Without that bailout, Detroit will need to drastically restructure itself. With it, the
automakers will stay the course - the suicidal course of declining market shares, insurmountable
labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses.
Detroit needs a turnaround, not a check." http://www.nytimes.com/2008/11/19/opinion/19romney.html
So yes. Clinton needed vague promises. She needed something more than retraining and "jobs
of the future" and "restructuring". She needed to show she was committed to their way of life,
however those voters saw it, and would do something, anything, to keep it alive. trump did that
even though his plan won't work. And maybe he'll be punished for it. In 4 years. But in the interim
the gop will destroy so many things we need and rely on as well as entrench their power for generations
through the Supreme Court.
But really, it was hard for Clinton to be trusted to act like she cared about these peoples'
way of life because she (through her husband fairly or unfairly) was associated with some of the
larger actions and choices which helped usher in the decline.
Clinton toward the end offered tariffs. But the trump campaign hit back with what turned
out to be a pretty strong counter attack – ""How's she going to get tough on China?" said Trump
economic advisor Peter Navarro on CNN's Quest Means Business. He notes that some of Clinton's
economic advisors have supported TPP or even worked on it. ""
Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make
the Rich Richer
By Dean Baker
Introduction: Trading in Myths
In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential
nomination, a new line became popular among the nation's policy elite: Bernie Sanders is
the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies
to help U.S. workers, specifically manufacturing workers, risked undermining the well-being
of the world's poor because exporting manufactured goods to the United States and other
wealthy countries is their path out of poverty. The role model was China, which by
exporting has largely eliminated extreme poverty and drastically reduced poverty among its
population. Sanders and his supporters would block the rest of the developing world from
following the same course.
This line, in its Sanders-bashing permutation, appeared early on in Vox, the
millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016).
After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich
was pushing policies that would condemn much of the world to poverty.
The story made a nice contribution to preserving the status quo, but it was less
valuable if you respect honesty in public debate.
The problem in the logic of this argument should be apparent to anyone who has taken an
introductory economics course. It assumes that the basic problem of manufacturing workers
in the developing world is the need for someone who will buy their stuff. If people in the
United States don't buy it, then the workers will be out on the street and growth in the
developing world will grind to a halt. In this story, the problem is that we don't have
enough people in the world to buy stuff. In other words, there is a shortage of demand. But
is it really true that no one else in the world would buy the stuff produced by
manufacturing workers in the developing world if they couldn't sell it to consumers in the
United States? Suppose people in the developing world bought the stuff they produced
raising their living standards by raising their own consumption.
That is how the economics is supposed to work. In the standard theory, general shortages
of demand are not a problem. Economists have traditionally assumed that economies tended
toward full employment. The basic economic constraint was a lack of supply. The problem was
that we couldn't produce enough goods and services, not that we were producing too much and
couldn't find anyone to buy them. In fact, this is why all the standard models used to
analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect
total employment. Economies adjust so that shortages of demand are not a problem.
In this standard story (and the Sanders critics are people who care about textbook
economics), capital flows from slow-growing rich countries, where it is relatively
plentiful and so gets a low rate of return, to fast-growing poor countries, where it is
scarce and gets a high rate of return.
[Figure 1-1] Theoretical and actual capital flows.
So the United States, Japan, and the European Union should be running large trade
surpluses, which is what an outflow of capital means. Rich countries like ours should be
lending money to developing countries, providing them with the means to build up their
capital stock and infrastructure while they use their own resources to meet their people's
basic needs.
This wasn't just theory. That story accurately described much of the developing world,
especially Asia, through the 1990s. Countries like Indonesia and Malaysia were experiencing
rapid annual growth of 7.8 percent and 9.6 percent, respectively, even as they ran large
trade deficits, just over 2 percent of GDP each year in Indonesia and almost 5 percent in
Malaysia.
These trade deficits probably were excessive, and a crisis of confidence hit East Asia
and much of the developing world in the summer of 1997. The inflow of capital from rich
countries slowed or reversed, making it impossible for the developing countries to sustain
the fixed exchange rates most had at the time. One after another, they were forced to
abandon their fixed exchange rates and turn to the International Monetary Fund (IMF) for
help.
Rather than promulgating policies that would allow developing countries to continue the
textbook development path of growth driven by importing capital and running trade deficits,
the IMF made debt repayment a top priority. The bailout, under the direction of the Clinton
administration Treasury Department, required developing countries to switch to large trade
surpluses (Radelet and Sachs 2000, O'Neil 1999).
The countries of East Asia would be far richer today had they been allowed to continue
on the growth path of the early and mid-1990s, when they had large trade deficits. Four of
the five would be more than twice as rich, and the fifth, Vietnam, would be almost 50
percent richer. South Korea and Malaysia would have higher per capita incomes today than
the United States.
[Figure 1-2] Per capita income of East Asian countries, actual vs. continuing on 1990s
growth path.
In the wake of the East Asia bailout, countries throughout the developing world decided
they had to build up reserves of foreign exchange, primarily dollars, in order to avoid
ever facing the same harsh bailout terms as the countries of East Asia. Building up
reserves meant running large trade surpluses, and it is no coincidence that the U.S. trade
deficit has exploded, rising from just over 1 percent of GDP in 1996 to almost 6 percent in
2005. The rise has coincided with the loss of more than 3 million manufacturing jobs,
roughly 20 percent of employment in the sector.
There was no reason the textbook growth pattern of the 1990s could not have continued.
It wasn't the laws of economics that forced developing countries to take a different path,
it was the failed bailout and the international financial system. It would seem that the
enemy of the world's poor is not Bernie Sanders but rather the engineers of our current
globalization policies.
There is a further point in this story that is generally missed: it is not only the
volume of trade flows that is determined by policy, but also the content. A major push in
recent trade deals has been to require stronger and longer patent and copyright protection.
Paying the fees imposed by these terms, especially for prescription drugs, is a huge burden
on the developing world. Bill Clinton would have much less need to fly around the world for
the Clinton Foundation had he not inserted the TRIPS (Trade Related Aspects of Intellectual
Property Rights) provisions in the World Trade Organization (WTO) that require developing
countries to adopt U.S.-style patent protections. Generic drugs are almost always cheap -
patent protection makes drugs expensive. The cancer and hepatitis drugs that sell for tens
or hundreds of thousands of dollars a year would sell for a few hundred dollars in a free
market. Cheap drugs would be more widely available had the developed world not forced TRIPS
on the developing world.
Of course, we have to pay for the research to develop new drugs or any innovation. We
also have to compensate creative workers who produce music, movies, and books. But there
are efficient alternatives to patents and copyrights, and the efforts by the elites in the
United States and other wealthy countries to impose these relics on the developing world is
just a mechanism for redistributing income from the world's poor to Pfizer, Microsoft, and
Disney. Stronger and longer patent and copyright protection is not a necessary feature of a
21st century economy.
In textbook trade theory, if a country has a larger trade surplus on payments for
royalties and patent licensing fees, it will have a larger trade deficit in manufactured
goods and other areas. The reason is that, in theory, the trade balance is fixed by
national savings and investment, not by the ability of a country to export in a particular
area. If the trade deficit is effectively fixed by these macroeconomic factors, then more
exports in one area mean fewer exports in other areas. Put another way, income gains for
Pfizer and Disney translate into lost jobs for workers in the steel and auto industries....
It includes this interesting piece on international trade:
"I'll start with my favorite, the complaint that the trade policy advocating by Warren
and Sanders would hurt the poor in the developing world, or to use their words:
"And their ostensible protection of American workers leaves no room to consider the welfare
of poor people elsewhere in the world."
I like this one because it turns standard economic theory on its head to advance the
interests of the rich and powerful. In the economic textbooks, rich countries like the
United States are supposed to be exporting capital to the developing world. This provides
them the means to build up their capital stock and infrastructure, while maintaining the
living standards of their populations. This is the standard economic story where the
problem is scarcity.
But to justify trade policies that have harmed tens of millions of U.S. workers, either
by costing them jobs or depressing their wages, the Post discards standard economics and
tells us the problem facing people in the developing world is that there is too much stuff.
If we didn't buy the goods produced in the developing world then there would just be a
massive glut of unsold products.
In the standard theory the people in the developing world buy their own stuff, with rich
countries like the U.S. providing the financing. It actually did work this way in the
1990s, up until the East Asian financial crisis in 1997. In that period, countries like
Malaysia, Vietnam, and Indonesia were growing very rapidly while running large trade
deficits. This pattern of growth was ended by the terms of the bailout imposed on these
countries by the U.S. Treasury Department through the International Monetary Fund.
The harsh terms of the bailout forced these and other developing countries to reverse
the standard textbook path and start running large trade surpluses. This post-bailout
period was associated with slower growth for these countries. In other words, the poor of
the developing world suffered from the pattern of trade the Post advocates. If they had
continued on the pre-bailout path they would be much richer today. In fact, South Korea and
Malaysia would be richer than the United States if they had maintained their pre-bailout
growth rate over the last two decades. (This is the topic of the introduction to my new
book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make
the Rich Richer, it's free.)"
Not sure that I fully agree with him, but I do agree that trade imbalances and
mercantilism is a large part of the problem.
The Washington Post editorial page decided to lecture readers * on the meaning of
progressivism. Okay, that is nowhere near as bad as a Trump presidency, but really, did we
need this?
The editorial gives us a potpourri of neo-liberal (yes, the term is appropriate here)
platitudes, all of which we have heard many times before and are best half true. For
framing, the villains are Bernie Sanders and Elizabeth Warren who it tells us "are
embracing principles that are not genuinely progressive."
I'll start with my favorite, the complaint that the trade policy advocating by Warren
and Sanders would hurt the poor in the developing world, or to use their words:
"And their ostensible protection of American workers leaves no room to consider the
welfare of poor people elsewhere in the world."
I like this one because it turns standard economic theory on its head to advance the
interests of the rich and powerful. In the economic textbooks, rich countries like the
United States are supposed to be exporting capital to the developing world. This provides
them the means to build up their capital stock and infrastructure, while maintaining the
living standards of their populations. This is the standard economic story where the
problem is scarcity.
But to justify trade policies that have harmed tens of millions of U.S. workers, either
by costing them jobs or depressing their wages, the Post discards standard economics and
tells us the problem facing people in the developing world is that there is too much stuff.
If we didn't buy the goods produced in the developing world then there would just be a
massive glut of unsold products.
In the standard theory the people in the developing world buy their own stuff, with rich
countries like the U.S. providing the financing. It actually did work this way in the
1990s, up until the East Asian financial crisis in 1997. In that period, countries like
Malaysia, Vietnam, and Indonesia were growing very rapidly while running large trade
deficits. This pattern of growth was ended by the terms of the bailout imposed on these
countries by the U.S. Treasury Department through the International Monetary Fund.
The harsh terms of the bailout forced these and other developing countries to reverse
the standard textbook path and start running large trade surpluses. This post-bailout
period was associated with slower growth for these countries. In other words, the poor of
the developing world suffered from the pattern of trade the Post advocates. If they had
continued on the pre-bailout path they would be much richer today. In fact, South Korea and
Malaysia would be richer than the United States if they had maintained their pre-bailout
growth rate over the last two decades. (This is the topic of the introduction to my new
book, "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to
Make the Rich Richer," ** it's free.)
It is also important to note that the Post is only bothered by forms of protection that
might help working class people. The United States prohibits foreign doctors from
practicing in the United States unless they complete a U.S. residency program. (The total
number of slots are tightly restricted with only a small fraction open to foreign trained
doctors.) This is a classic protectionist measure. No serious person can believe that the
only way for a person to be a competent doctor is to complete a U.S. residency program. It
costs the United States around $100 billion a year ($700 per family) in higher medical
expenses. Yet, we never hear a word about this or other barriers that protect the most
highly paid professionals from the same sort of international competition faced by
steelworkers and textile workers.
Moving on, we get yet another Post tirade on Social Security.
"You can expand benefits for everyone, as Ms. Warren favors. Prosperous retirees who
live mostly off their well-padded 401(k)s will appreciate what to them will feel like a
small bonus, if they notice it. But spreading wealth that way will make it harder to find
the resources for the vulnerable elderly who truly depend on Social Security.
"But demographics - the aging of the population - cannot be wished away. In the 1960s,
about five taxpayers were helping to support each Social Security recipient, and the
economy was growing about 6 percent annually. Today there are fewer than three workers for
each pensioner, and the growth rate even following the 2008 recession has averaged about 2
percent . On current trends, 10 years from now the federal government will be spending
almost all its money on Medicare, Social Security and other entitlements and on interest
payments on the debt, leaving less and less for schools, housing and job training. There is
nothing progressive about that."
There are all sorts of misleading or wrong claims here. First, the economy did not grow
"about 6 percent annually" in the 1960s. There were three years in which growth did exceed
6.0 percent, and it was a very prosperous decade, but growth only averaged 4.6 percent from
1960 to 1970.
I suppose we should be happy that the Post is at least getting closer to the mark. A
2007 editorial *** praising The North American Free Trade Agreement told readers that
Mexico's GDP "has more than quadrupled since 1987." The International Monetary Fund data
**** put the gain at 83 percent. So by comparison, they are doing pretty good with the 6
percent growth number for the sixties.
But getting to the demographics, we did go from more than five workers for every retiree
to less than three today, and this number is projected to fall further to around 2.0
workers per retiree in the next fifteen years. This raises the obvious question, so what?
The economy did not collapse even as we saw the fall from 5 workers per retiree to less
than 3, so something really really bad happens when it falls further? We did raise taxes to
cover the additional cost and we will probably have to raise taxes in the future.
We get that the Post doesn't like tax increases (no one does), but this hardly seems
like the end of the world. The Social Security Trustees project ***** that real wages will
rise on average by more than 34 percent over the next two decades. Suppose we took back
5–10 percent of these projected wage gains through tax increases (still leaving workers
with wages that are more than 30 percent higher than they are today), what is the big
problem?
Of course most workers have not seen their wages rise in step with the economy's growth
over the last four decades. This is a huge issue which is the sort of thing that
progressives should be and are focusing on. But the Post would rather distract us with the
possibility that at some point in the future we may be paying a somewhat higher Social
Security tax.
The Post's route for savings is also classic misdirection. It tells how about
high-living seniors who get so much money from their 401(k)s they don't even notice their
Social Security checks. Only a bit more than 4.0 percent of the over 65 population has
non-Social Security income of more than $80,000 a year. If the point is to have substantial
savings from means-testing it would be necessary to hit people with incomes around $40,000
a year or even lower. That is not what most people consider wealthy.
We could have substantial savings on Medicare by pushing down the pay of doctors and
reducing the prices of drugs and medical equipment. The latter could be done by
substituting public financing for research and development for government granted patent
monopolies (also discussed in Rigged). These items would almost invariably be cheap in a
free market. But the Post seems uninterested in ways to save money that could affect the
incomes of the rich.
One can quibble with whether the current benefits for middle income people are right or
should be somewhat higher or lower, but it is ridiculous to argue that raising them $50 a
month, as proposed by Senator Warren, will break the bank.
Then we have the issue of free college. The Post raises the issue, pushed by Senator
Sanders in his presidential campaign, and then tells readers:
"Our answer - we would argue, the progressive answer - is that there are people in
society with far greater needs than that upper-middle-class family in Fairfax County that
would be relieved of its tuition burden at the College of William & Mary if Mr. Sanders got
his wish."
There are two points to be made here. First there is extensive research ****** showing
that many children from low- and moderate-income families hugely over-estimate the cost of
college, failing to realize that they would be eligible for financial aid that would make
it free or nearly free. This means that the current structure is preventing many relatively
disadvantaged children from attending college. Arguably better education on the
opportunities to get aid would solve this problem, but the problem has existed for a long
time and better education has not done much to change the picture thus far.
The second point is that the process of determining eligibility for aid is itself
costly. Many children have divorced parents, with a non-custodial parent often not anxious
to pay for their children's college. Perhaps it is appropriate that they should pay, but
forcing payment is not an easy task and it doesn't make sense to make the children in such
situations suffer.
In many ways, the free college solution is likely to be the easiest, with the tax coming
out of the income of higher earners, the vast majority of whom will be the beneficiaries of
this policy. There are ways to save on paying for college. My favorite is limiting the pay
of anyone at a public school to the salary of the president of the United States ($400,000
a year). We can also deny the privilege of tax exempt status to private universities or
other non-profits that don't accept a similar salary cap. These folks can pay their top
executives whatever they want, but they shouldn't ask the taxpayers to subsidize their
exorbitant pay packages.
There is one final issue in the column worth noting. At one point it makes a pitch for
the virtues of economic growth then tells readers:
"It's not in conflict with the goal of redistribution."
At least some of us progressive types are not particularly focused on "redistribution."
The focus of my book and much of my other writing is on the way that the market has been
structured to redistribute income upward, compared with the structures in place in the
quarter century after World War II. Is understandable that people who are basically very
satisfied with this upward redistribution of market income would not want this rigging of
the market even to be discussed, but serious progressives do.
Although I like much of what
Dean Baker, I don't like his term "loser liberalism", nor do I think his de-emphasis on
redistribution useful. Au contraire, I think talking about redistribution is absolutely
essential if we are to move to sustainable world. We can no longer be certain that per
person GDP growth will be sufficient to be able to ignore distribution or to rely on
"predistribution".
The End of Loser Liberalism: Making Markets Progressive
By Dean Baker
Upward Redistribution of Income: It Didn't Just Happen
Money does not fall up. Yet the United States has experienced a massive upward
redistribution of income over the last three decades, leaving the bulk of the workforce
with little to show from the economic growth since 1980. This upward redistribution was not
the result of the natural workings of the market. Rather, it was the result of deliberate
policy, most of which had the support of the leadership of both the Republican and
Democratic parties.
Unfortunately, the public and even experienced progressive political figures are not
well informed about the key policies responsible for this upward redistribution, even
though they are not exactly secrets. The policies are so well established as conventional
economic policy that we tend to think of them as incontrovertibly virtuous things, but each
has a dark side. An anti-inflation policy by the Federal Reserve Board, which relies on
high interest rates, slows growth and throws people out of work. Major trade deals hurt
manufacturing workers by putting them in direct competition with low-paid workers in the
developing world. A high dollar makes U.S. goods uncompetitive in world markets.
Almost any economist would acknowledge these facts, but few economists have explored
their implications and explained them to the general public. As a result, most of us have
little understanding of the economic policies that have the largest impact on our jobs, our
homes, and our lives. Instead, public debate and the most hotly contested legislation in
Congress tend to be about issues that will have relatively little impact.
This lack of focus on crucial economic issues is a serious problem from the standpoint
of advancing a progressive agenda....
"... Apparently lax and/or incompetent regulation of systemically important banks by bureaucrats, central bankers, and politicians may not be just a recent American phenomenon. ..."
"... He related how he was not only ignored by his bank, the Irish regulator but also all the major political parties. He then pointed out that the Irish regulator claims that it always – and it is the law after all – informs the regulator of the home country of banks which have subsidiaries in Ireland, about any serious problems. ..."
"... Mr Sugarman suggested Mr Draghi should be asked point-blank of he did or if he did not know . If he did not then the Irish regulator was at least incompetent, and may have lied, misled and perhaps even broken Irish laws. If he was told and did know, then Mr Draghi has serious questions to answer regarding his own dereliction of duty. ..."
Apparently lax and/or incompetent regulation of systemically important banks by bureaucrats, central
bankers, and politicians may not be just a recent American phenomenon.
As we read this, it could imperil the soundness of the financial system in Europe as well, as
is still apparently the case with The Banks in the states, despite assurances to the contrary.
Golem XIV asks some very good questions in the article below, recently posted on his blog
here.
Yesterday a very high-powered panel of international banking whistleblowers met and told their
stories in the European parliament . The questions raised were important. Among them was the Irish
Whistleblower, Jonathan Sugarman, who when UniCredit Ireland was breaking the law in very serious
ways reported it to the Irish regulator.
He related how he was not only ignored by his bank, the Irish regulator but also all the major
political parties. He then pointed out that the Irish regulator claims that it always – and it
is the law after all – informs the regulator of the home country of banks which have subsidiaries
in Ireland, about any serious problems.
In the case of UniCredit that would mean the Italian Central bank would have been told that
Italy's largest Bank was in serious breach of Irish law in ways that could endanger the whole
banking system. The head of the Italian Central Bank at the time was a certain Mr Mario Draghi.
Mr Sugarman suggested Mr Draghi should be asked point-blank of he did or if he did not know
. If he did not then the Irish regulator was at least incompetent, and may have lied, misled
and perhaps even broken Irish laws. If he was told and did know, then Mr Draghi has serious questions to answer regarding his own
dereliction of duty.
Surely not I hear you say. Well perhaps someone might ask him? Or is he above the law?
President Barack Obama said Wednesday that America's election of Donald Trump and the U.K.'s
vote to leave the European Union reflect a political uprising in the West over economic
inequities spawned by leaders' mishandling of globalization.
"... Already, motor-vehicle manufacturers ship an automotive transmission back and forth across the US-Mexican border several times in the course of production. At some point, unpacking that production process still further will reach the point of diminishing returns. ..."
"... The story for cross-border flows of financial capital is even more dramatic. Gross capital flows – the sum of inflows and outflows – are not just growing more slowly; they are down significantly in absolute terms from 2009 levels. ..."
"... ... cross-border bank lending and borrowing that have fallen. Foreign direct investment – financial flows to build foreign factories and acquire foreign companies – remains at pre-crisis levels. ..."
"... This difference reflects regulation. Having concluded, rightly, that cross-border bank lending is especially risky, regulators clamped down on banks' international operations. ..."
Does Donald Trump's election as United States president mean that globalization is dead, or are
reports of the process' demise greatly exaggerated? If globalization is only partly incapacitated,
not terminally ill, should we worry? How much will slower trade growth, now in the offing, matter
for the global economy?
World trade growth would be slowing down, even without Trump in office. Its growth was already
flat in the first quarter of 2016, and it fell
by nearly 1% in the second quarter. This continues a prior trend: since 2010, global trade has
grown at an annual rate of barely 2%. Together with the fact that worldwide production of goods and
services has been rising by more than 3%, this means that the trade-to-GDP ratio has been falling,
in contrast to its steady upward march in earlier years.
... the resurgent protectionism manifest in popular opposition to the Trans-Pacific Partnership
(TPP) and the Transatlantic Trade and Investment Partnership (TTIP),
Causality in economics may be elusive, but in this case it is clear. So far, slower trade growth
has been the result of slower GDP growth, not the other way around.
This is particularly evident in the case of investment spending, which has
fallen sharply since
the global financial crisis. Investment spending is trade-intensive, because countries rely disproportionately
on a relatively small handful of producers, like Germany, for technologically sophisticated capital
goods.
In addition, slower trade growth reflects China's economic deceleration. Until 2011 China was
growing at double-digit rates, and Chinese exports and imports were growing even faster. China's
growth has now slowed by a third, leading to slower growth of Chinese trade.
China's growth miracle, benefiting a fifth of the earth's population, is the most important economic
event of the last quarter-century. But it can happen only once. And now that the phase of catch-up
growth is over for China, this engine of global trade will slow.
The other engine of world trade has been global supply chains. Trade in parts and components has
benefited from falling transport costs, reflecting containerization and related advances in logistics.
But efficiency in shipping is unlikely to continue to improve faster than efficiency in the production
of what is being shipped. Already, motor-vehicle manufacturers ship an automotive transmission
back and forth across the US-Mexican border several times in the course of production. At some point,
unpacking that production process still further will reach the point of diminishing returns.
The story for cross-border flows of financial capital is even more dramatic. Gross capital
flows – the sum of inflows and outflows – are not just growing more slowly; they are down significantly
in absolute terms from 2009 levels.
... cross-border bank lending and borrowing that have fallen. Foreign direct investment –
financial flows to build foreign factories and acquire foreign companies – remains at pre-crisis
levels.
This difference reflects regulation. Having concluded, rightly, that cross-border bank lending
is especially risky, regulators clamped down on banks' international operations.
In response, many banks curtailed their cross-border business. But, rather than alarming anyone,
this should be seen as reassuring, because the riskiest forms of international finance have been
curtailed without disrupting more stable and productive forms of foreign investment.
We now face the prospect of the US government revoking the Dodd-Frank Act and rolling back the
financial reforms of recent years. Less stringent financial regulation may make for the recovery
of international capital flows. But we should be careful what we wish for.
"... 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.
…"
"... 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 piů delle volte in modo molto lontano da quell che č 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
"... The affluent and rich voted for Clinton by a much broader margin than they had voted for the Democratic candidate in 2012. Among those with incomes between $100,000 and $200,000, Clinton benefited from a 9-point Democratic swing. Voters with family incomes above $250,000 swung toward Clinton by 11 percentage points. The number of Democratic voters amongst the wealthiest voting block increased from 2.16 million in 2012 to 3.46 million in 2016-a jump of 60 percent. ..."
"... Clinton's electoral defeat is bound up with the nature of the Democratic Party, an alliance of Wall Street and the military-intelligence apparatus with privileged sections of the upper-middle class based on the politics of race, gender and sexual orientation ..."
"... Over the course of the last forty years, the Democratic Party has abandoned all pretenses of social reform, a process escalated under Obama. Working with the Republican Party and the trade unions, it is responsible for enacting social policies that have impoverished vast sections of the working class, regardless of race or gender. ..."
The elections saw a massive shift in party support among the poorest and wealthiest voters. The share
of votes for the Republicans amongst the most impoverished section of workers, those with family
incomes under $30,000, increased by 10 percentage points from 2012. In several key Midwestern states,
the swing of the poorest voters toward Trump was even larger: Wisconsin (17-point swing), Iowa (20
points), Indiana (19 points) and Pennsylvania (18 points).
The swing to Republicans among the $30,000 to $50,000 family income range was 6 percentage points.
Those with incomes between $50,000 and $100,000 swung away from the Republicans compared to 2012
by 2 points.
The affluent and rich voted for Clinton by a much broader margin than they had voted for the
Democratic candidate in 2012. Among those with incomes between $100,000 and $200,000, Clinton benefited
from a 9-point Democratic swing. Voters with family incomes above $250,000 swung toward Clinton by
11 percentage points. The number of Democratic voters amongst the wealthiest voting block increased
from 2.16 million in 2012 to 3.46 million in 2016-a jump of 60 percent.
Clinton was unable to make up for the vote decline among women (2.1 million), African Americans
(3.2 million), and youth (1.2 million), who came overwhelmingly from the poor and working class,
with the increase among the rich (1.3 million).
Clinton's electoral defeat is bound up with the nature of the Democratic Party, an alliance
of Wall Street and the military-intelligence apparatus with privileged sections of the upper-middle
class based on the politics of race, gender and sexual orientation.
Over the course of the last forty years, the Democratic Party has abandoned all pretenses
of social reform, a process escalated under Obama. Working with the Republican Party and the trade
unions, it is responsible for enacting social policies that have impoverished vast sections of the
working class, regardless of race or gender.
"... There are some who believe the elites are actually splintered into numerous groups and that domestic US elites have positioned themselves against the banking elites in London's City. ..."
"... US elites are basically in the employ of a handful of families, individuals and institutions in our view. It is confusing because it is hard to tell if Hillary, for instance, is operating on her own accord or at the behest of higher and more powerful authorities. ..."
"... It is probably a combination of both but at root those who control central banks are managing the world's move towards globalism. ..."
"... The vote to propel Trump to the US presidency reflects a profound backlash against open markets and borders, and the simmering anger of millions of blue-collar white and working-class people who blame their economic woes on globalisation and multiculturalism. ..."
"... If indeed Trump's election has damped the progress of TPP, and TTIP, this is a huge event. As we've pointed out, both agreements effectively substituted technocratic corporatism for the current sociopolitical model of "democracy." ..."
"... one of the elite's most powerful, operative memes today is "populism vs. globalism" ..."
"... No matter what, the reality of these two events, the victories of both Trump and Brexit, stand as signal proof that elite stratagems have been defeated, at least temporarily. Though whether these defeats have been self-inflicted as part of a change in tactics remains to be seen. ..."
Was Trump's victory actually created by the very globalist elites that Trump is supposed to have
overcome? There are some who believe the elites are actually splintered into numerous groups and
that domestic US elites have positioned themselves against the banking elites in London's City.
We
see no fundamental evidence of this.
The world's real elites in our view may have substantive histories in the hundreds and
thousands of years. US elites are basically in the employ of a handful of families,
individuals and institutions in our view. It is confusing because it is hard to tell if Hillary,
for instance, is operating on her own accord or at the behest of higher and more powerful
authorities.
It is probably a combination
of both but at root those who control central banks are managing the world's move towards globalism.
History easily shows us who these groups are – and they are not located in America.
This is a cynical perspective to be sure, and certainly doesn't remove the impact of Trump's victory
or his courage in waging his election campaign despite what must surely be death threats to himself
and his family..
But if true, this perspective corresponds to predictions that we've been making for nearly a decade
now, suggesting that sooner or later elites – especially those in London's City – would have to "take
a step back."
More:
The vote to propel Trump to the US presidency reflects a profound backlash against open markets
and borders, and the simmering anger of millions of blue-collar white and working-class people
who blame their economic woes on globalisation and multiculturalism.
"There are a few parallels to Switzerland – that the losers of globalisation find somebody
who is listening to them," said Swiss professor and lawyer Wolf Linder, a former director of the
University of Bern's political science institute.
"Trump is doing his business with the losers of globalisation in the US, like the Swiss People's
Party is doing in Switzerland," he said. "It is a phenomenon which touches all European nations."
... ... ...
If indeed Trump's election has damped the progress of TPP, and TTIP, this is a huge event. As
we've pointed out, both agreements effectively substituted technocratic corporatism for the current
sociopolitical model of "democracy." The elites were trying to move toward a new
model of world control with these two agreements. ...
Additionally, one of the elite's most powerful, operative memes today is "populism vs. globalism"
that seeks to contrast the potentially freedom-oriented events of Trump and Brexit to the discarded
wisdom of globalism. See
here and
here.
No matter what, the reality of these two events, the victories of both Trump and Brexit, stand
as signal proof that elite stratagems have been defeated, at least temporarily. Though whether these
defeats have been self-inflicted as part of a change in tactics remains to be seen.
Conclusion: But the change has come. One way or another the Internet and tens of millions or people
talking, writing and acting has forced new trends. This can be hardly be emphasized enough. Globalism
has been at least temporarily redirected.
Editor's Note: The Daily Bell is giving away a silver coin and a silver "white paper" to subscribers.
If you enjoy DB's articles and want to stay up-to-date for free, please subscribe
here .
The analysis is flawed in that it fails to understand the context for power and influence in the
western alliance. The Crowns in contest are seeking coordinated domination through political proxy,
i.e. the force behind the EU and the UN. The problem is the most influential crown was not in
a mind to destroy the fabric of their civilization and more importantly to continue to bail-out
the "socialist" paradises in the continent and beyond. Britannia has its own socialism to support
much less that of the world.
Trump represents keeping the Colony in line with a growing interest in keeping traditions intact
and in more direct control of Anglo values. Europe has this insane multi-culturalism that is fundamentally
incompatible with a "free" and robust civilization. The whole goal of detente with China was to
convert them to our values via proxy institutions and that is working in the long-run. In the
short-run, the Empire must reunite and solidify its value bulwark against the coming storm from
China and to a lesser extend from the expanded EU states. Russia is playing out on its own.
Most commenters do not realise that it is neoliberalism that caused the current suffering of
working people in the USA and elsewhere...
Notable quotes:
"... Working class wages destroyed. The wages of the low paid lowered. Ordinary people robbed of holiday and sickness pay. Working people priced out of ever owning their own home. Our city centers socially cleansed of the working class. Poor people forced to fight like rats in sacks with even poorer foreigners for jobs, housing, school places and social and health services. ..."
"... Keep going mate. Continue to pump out that snobbish attitude because every time you do you've bagged Mr Trump, Mr Farage and Ms LePen another few votes. ..."
"... I recall a time when any suggestion that immigration may be too high was silenced by cries of racism, eventually that label was misused so often that it lost its potency, one gets the sense that this trend for dubbing those who hold certain opinions as somehow unintelligent will go the same way. People are beginning to see through this most hateful tactic of the Modern Left. ..."
"... Which is why I think Mr D'Ancona and many others are wrong to say that Farage and Trump will face the whirlwind when voters realise that their promises were all unachievable. The promises were much less important than the chance to slap the political world in the face. Given another chance, a lot of voters will do the same again. ..."
"... I think the author completely misses the most salient point from the two events he cites: simply that the *vast* majority of people have become completely disenfranchised with the utter corruption that is mainstream politics today. ..."
"... It doesn't matter who is voted in, the status quo [big business and the super-rich get wealthier whilst the middle is squeezed and the poorest are destroyed] remains. ..."
"... The votes for Brexit and Trump are as much a rejection of "establishment" as anything else. Politicians in both countries heed these warnings at their peril... ..."
"... The majority of the people are sick and tired of PC ism and the zero hour, minimum wage economy that both Britain and America have suffered under "globalisation". And of the misguided "[neo]liberal" agenda of much of the media which simply does not speak to or for society. ..."
"... People in western democracies are rising up through the ballot box to defeat PC [neo]liberalism and globalisation that has done so much to impoverish Europe and America morally and economically. To the benefit of the tax haven corporates. ..."
"... Globalisation disembowelled American manufacturing so the likes of Blair and the Clintons could print money. The illimitable lives they destroyed never entered their calculus. ..."
"... I have stood in the blue lane in Atlanta waiting for my passport to be processed; in the adjoining lane was a young British female student (so she said to the official). The computer revealed she had overstayed her visa by 48 hours the last time she visited. She was marched out by two armed tunics to the next plane home. That's how Europeans get treated if they try to enter America illegally. Why the demented furor over returning illegal Hispanics or anyone else? ..."
Surely the people who voted for Trump and Farage are too stupid to realise the sheer,
criminal folly of their decision...
thoughtcatcher -> IanPitch 12h ago
Working class wages destroyed. The wages of the low paid lowered. Ordinary people
robbed of holiday and sickness pay. Working people priced out of ever owning their own home.
Our city centers socially cleansed of the working class. Poor people forced to fight like rats
in sacks with even poorer foreigners for jobs, housing, school places and social and health
services.
But yeah, they voted against the elite because they are "stupid".
attila9000 -> IanPitch 11h ago
I think at some point a lot of them will realize they have been had, but then they will
probably just blame immigrants, or the EU. Anything that means they don't have to take
responsibility for their own actions. It would appear there is a huge pool of people who can
be conned into acting against their own self interest.
jonnyoyster -> IanPitch 11h ago
Keep going mate. Continue to pump out that snobbish attitude because every time you do
you've bagged Mr Trump, Mr Farage and Ms LePen another few votes. Most people don't
appreciate being talked down to and this arrogant habit of calling those who hold views
contrary to your own 'stupid' is encouraging more and more voters to ditch the established
parties in favour of the new.
I recall a time when any suggestion that immigration may be too high was silenced by
cries of racism, eventually that label was misused so often that it lost its potency, one gets
the sense that this trend for dubbing those who hold certain opinions as somehow unintelligent
will go the same way. People are beginning to see through this most hateful tactic of the
Modern Left.
DilemmataDocta -> IanPitch 11h ago
A lot of the people who put their cross against Brexit or Trump weren't actually voting for
anything. They were just voting against this, that or the other thing about the world that
they disliked. It was voting as a gesture.
Which is why I think Mr D'Ancona and many others are wrong to say that Farage and Trump
will face the whirlwind when voters realise that their promises were all unachievable. The
promises were much less important than the chance to slap the political world in the face.
Given another chance, a lot of voters will do the same again.
Sproggit 12h ago
I think the author completely misses the most salient point from the two events he
cites: simply that the *vast* majority of people have become completely disenfranchised with
the utter corruption that is mainstream politics today.
It doesn't matter who is voted in, the status quo [big business and the super-rich get
wealthier whilst the middle is squeezed and the poorest are destroyed] remains.
The votes for Brexit and Trump are as much a rejection of "establishment" as anything
else. Politicians in both countries heed these warnings at their peril...
NotoBlair 11h ago
OMG, the lib left don't Geddit do they?
The majority of the people are sick and tired of PC ism and the zero hour, minimum wage
economy that both Britain and America have suffered under "globalisation". And of the
misguided "[neo]liberal" agenda of much of the media which simply does not speak to or for
society.
People in western democracies are rising up through the ballot box to defeat PC [neo]liberalism
and globalisation that has done so much to impoverish Europe and America morally and
economically. To the benefit of the tax haven corporates.
The sour grapes bleating of the lib left who refuse to accept the democratic will of the
people is a movement doomed failure.
Frankincensedabit 11h ago
Malign to whom? Wall Street and people who want us all dead?
Globalisation disembowelled American manufacturing so the likes of Blair and the Clintons
could print money. The illimitable lives they destroyed never entered their calculus.
I have stood in the blue lane in Atlanta waiting for my passport to be processed; in the
adjoining lane was a young British female student (so she said to the official). The computer
revealed she had overstayed her visa by 48 hours the last time she visited. She was marched
out by two armed tunics to the next plane home. That's how Europeans get treated if they try
to enter America illegally. Why the demented furor over returning illegal Hispanics or anyone
else?
I likely wouldn't have voted at all. But all my life the occupants of the White House
represented the interests of those nobody could ever identify. The owners of the media and the
numbered accounts who took away the life-chances of U.S. citizens by the million and called
any of them who objected a thick white-trash bigot. Whatever Trump is, he will be different.
That's why a British court has effectively overturned the results of the Brexit vote – in
a lawsuit brought by a hedge fund manager and former model – and thrown the fate of the country
into the hands of pro-EU Tories, and their Labor and Liberal Democrat collaborators.
This stunning reversal was baked in to the legislation that enabled the referendum to begin
with, and is par for the course as far as EU referenda are concerned: in 1992,
Danish voters rejected the EU, only to have the Euro-crats demand a rematch with a "modified"
EU treaty which won narrowly. There have been repeated attempts to modify the modifications,
which have all failed. Ireland voted against both the Lisbon Treaty and the Nice Treaty, only
to have the issue brought up again until the "right" result was achieved.
"... "Yet commentators who have been ready and willing to attribute Donald Trump's success to anger, authoritarianism, or racism rather than policy issues have taken little note of the extent to which Mr. Sanders's support is concentrated not among liberal ideologues but among disaffected white men." ... ..."
"... poor pk a leader of the Stalinist press ..."
"... the surprising success of Bernie Sanders -- a Brooklyn-born, Jewish socialist -- in the primaries is solid proof that the electorate was open to a coherent argument for genuine progressive change, and that a substantial portion of that electorate is not acting on purely racist and sexist impulses, as so many progressive commentators say. ..."
"... "I will live my life calmly and my children will be just fine. I will live my life calmly and my children will be just fine." That assumes you're about 85 years old...and don't have long to live! ..."
"... Laid out by whom? By the commercial "media" hype machine that has 12-16 hours of airtime to fill every day with the as sensationalized as possible gossip (to justify the price for the paid advertisements filling the remaining hours). ..."
"... Killary Clinton got no closer than Ann Arbor this weekend, a message! ..."
"... Mr. Krugman forgot to list the collusion of the DNC and the Clinton campaign to work against Sanders. ..."
"... putting crooked in the same sentence as Clinton or DNC is duplicative wording. This mortification is brought to US by the crooked and the stalinist press that calls crooked virtue. ..."
"... Krugman did so much to help create the mass of white working class discontent that is electing Trump. Krugman and co cheering on NAFTA/PNTR/WTO etc, US deindustrialization, collapse of middle class... ..."
"... Hopefully the working class masses will convince our rulers to abandon free trade before every last factory is sold off or dismantled and the US falls to the depths of a Chad or an Armenia. ..."
The Truth About the Sanders Movement
By Paul Krugman
In short, it's complicated – not all bad, by any means, but not the pure uprising of idealists
the more enthusiastic supporters imagine.
The political scientists Christopher Achen and Larry Bartels have an illuminating discussion
of Sanders support. The key graf that will probably have Berniebros boiling is this:
"Yet commentators who have been ready and willing to attribute Donald Trump's success to
anger, authoritarianism, or racism rather than policy issues have taken little note of the extent
to which Mr. Sanders's support is concentrated not among liberal ideologues but among disaffected
white men." ...
[ Yes, I do find defaming people by speculation or stereotype to be beyond saddening. ]
The fact that Obama either won, or did so much better than Hillary appears to be doing with, the
white working-class vote in so many key battleground states, as well as the surprising success
of Bernie Sanders -- a Brooklyn-born, Jewish socialist -- in the primaries is solid proof that
the electorate was open to a coherent argument for genuine progressive change, and that a substantial
portion of that electorate is not acting on purely racist and sexist impulses, as so many progressive
commentators say.
And her opponent was/is incapable of debating on substance, as there was/is neither coherence
nor consistency in any part of his platform -- nor that of his party....
Question is, will Krugman be able to move on after the election...and talk about something useful?
Like how to get Hillary to recognize and deal with inequality...
Barbara Ehrenreich: "Forget fear and loathing. The US election inspires projectile vomiting. The
most sordid side of our democracy has been laid out for all to see. But that's only the beginning:
whoever wins, the mutual revulsion will only intensify... With either Clinton or Trump, we will
be left to choke on our mutual revulsion."
"I will live my life calmly and my children will be just fine. I will live my life calmly
and my children will be just fine." That assumes you're about 85 years old...and don't have long
to live!
Laid out by whom? By the commercial "media" hype machine that has 12-16 hours of airtime to
fill every day with the as sensationalized as possible gossip (to justify the price for the paid
advertisements filling the remaining hours).
Something interesting today.... President Obama came to Michigan. I fully expected him to speak
in Detroit with a get out the vote message. Instead he is in Ann Arbor, speaking to an overwhelmingly
white and white-collar audience. On a related note, the Dems have apparently written off
the white blue collar vote in Michigan, even much of the union vote. the union leaders are pro
Clinton, but the workers not so much. Strange year.
The real danger of serious election-rigging: electronic voting machines. How do we know the machine
*really* recorded everyone's votes correctly? (Did any Florida county ever give Al Gore negative
something votes?)
That's a big subject but you are right, that is the biggest risk of significant fraud. Not just
the voting machines, but the automatic counting systems. Other forms of possible election fraud
are tiny by comparison.
Here is the transcript from 60 Minutes about the Luntz focus group rancor. Instructive to read
about the depth of feeling in case you didn't see the angry, disgusted faces of citizens.
putting crooked in the same sentence as Clinton or DNC is duplicative wording. This mortification
is brought to US by the crooked and the stalinist press that calls crooked virtue.
Before the 1970s the US was both rich and protectionist - no look at our horrible roads and hopeless
people - the miracle of free trade! : ,
November 07, 2016 at 07:13 PM
Krugman did so much to help create the mass of white working class discontent that is electing
Trump. Krugman and co cheering on NAFTA/PNTR/WTO etc, US deindustrialization, collapse of
middle class...
Hopefully the working class masses will convince our rulers to abandon free trade before
every last factory is sold off or dismantled and the US falls to the depths of a Chad or an Armenia.
"... In our artificial economy real things do not matter so much, but politics and managing the
perceptions of the public are of paramount importance. And so the 'Goldilocks' Jobs Report, which is
how the business TV channels described that lukewarm piece of dreck, did little to rally the markets
except fleetingly intraday. ..."
"... The headline includes ALL employees, but if you take out the top 15-20% of managers, the average
hourly earning growth showed a pronounced downward divergence to a lower growth rate. The BLS switched
to this number including all employees a few years ago from the non-supervisory number. As a rule of
thumb, when someone shows you the 'average' number, find out the median number for the same sample.
Especially in these days of historically high inequality. ..."
"The wealth of another region excites their greed; and if it is weak, their lust for power
as well. Nothing from the rising to the setting of the sun is enough for them.
Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape,
and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus
"He who makes a beast of himself gets rid of the pain of being a man."
Samuel Johnson
In our artificial economy real things do not matter so much, but politics and managing the
perceptions of the public are of paramount importance. And so the 'Goldilocks' Jobs Report, which
is how the business TV channels described that lukewarm piece of dreck, did little to rally the markets
except fleetingly intraday.
In the first chart below I take a look inside that 'average hourly earnings growth' number.
The headline includes ALL employees, but if you take out the top 15-20% of managers, the average
hourly earning growth showed a pronounced downward divergence to a lower growth rate. The BLS switched
to this number including all employees a few years ago from the non-supervisory number. As a rule
of thumb, when someone shows you the 'average' number, find out the median number for the same sample.
Especially in these days of historically high inequality.
Be that as it may, the markets overall were in a flight to safety as the financiers bowed to their
fears of the upcoming presidential election, that something might happen that will upset their status
quo.
"... it's easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. ..."
"... It's easy to carp like this but the sclerotic elite in charge of the country has failed to address demographic concerns, and has stamped out any politically incorrect thoughts as being signs of baseness. ..."
"... Now they are so upset that a challenger has arisen. It's unfortunate that this particular challenger has no background in government and will probably harm our economic growth with his lack of skill, but the elites will have to eat the cake they baked. ..."
"... Economists told us that free trade deals and open borders would make us prosperous and yet that hasn't happens. ..."
"... The technicians running trade policy, monetary policy and fiscal policy haven't held up their end of the bargain. ..."
"... Wealth and power has been redistributed upwards. ..."
"... The union movement has been destroyed in outright class war. ..."
"... The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog mentality. ..."
"... Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today. Given that, moving left should be one of the first things you consider. ..."
"... Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's bad policy. But unfortunately it seems it's always possible to do *worse*. ..."
"... Trump's policies would double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which would destroy jobs) would be good for jobs." ..."
"... Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply? ..."
More Jobs, a Strong Economy, and a Threat to Institutions : ...Institutions are significant
to economists, who have come to see that countries become prosperous not because they have bounteous
natural resources or an educated population or the most advanced technology but because they have
good institutions. Crucially, formal structures are supported by informal, often unstated, social
agreements. A nation not only needs courts; its people need to believe that those courts can be
fair. ...
Over most of history, a small élite confiscated wealth from the poor. Subsistence farmers lived
under rules designed to tax them so that the rulers could live in palaces and pay for soldiers
to maintain their power. Every now and then, though, a system appeared in which leaders were forced
to accommodate the needs of at least some of their citizens. ... The societies with the most robust
systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier
and more peaceful. ... Most nations without institutions to check the worst impulses of the rich
and powerful stay stuck in poverty and dysfunction. ...
This year's Presidential election has alarmed economists for several reasons. No economist,
save one , supports Donald J. Trump's stated economic plans, but an even larger concern is
that, were he elected, Trump would attack the very institutions that have provided our economic
stability. In his campaign, Trump has shown outright contempt for courts, free speech, international
treaties, and many other pillars of the American way of life. There is little reason to think
that, if granted the Presidency, Trump would soften his stand. ...
...it's easy to imagine a President Trump refusing to heed our own highest court, which, as
President Andrew Jackson observed, has no way, other than respect of institutions, to enforce
its decisions. No one knows what Trump would do as President, but, based on his statements on
the campaign trail, it's possible to imagine a nation where people have less confidence in the
courts, the military, and their rights to free speech and assembly. When this happens, history
tells us, people stop dreaming about what they could have if they invest in education, new businesses,
and new ideas. They focus, instead, on taking from others and holding tightly to what they've
already amassed. Those societies, without the institutions that protect us from our worst impulses,
become poorer, uglier, more violent. That is how nations fail.
It's easy to carp like this but the sclerotic elite in charge of the country has failed to address
demographic concerns, and has stamped out any politically incorrect thoughts as being signs of
baseness.
Now they are so upset that a challenger has arisen. It's unfortunate that this particular
challenger has no background in government and will probably harm our economic growth with his
lack of skill, but the elites will have to eat the cake they baked.
"No one knows what Trump would do as President, but, based on his statements on the campaign trail,
it's possible to imagine a nation where people have less confidence in the courts, the military,
and their rights to free speech and assembly. When this happens, history tells us, people stop
dreaming about what they could have if they invest in education, new businesses, and new ideas.
They focus, instead, on taking from others and holding tightly to what they've already amassed.
Those societies, without the institutions that protect us from our worst impulses, become poorer,
uglier, more violent. That is how nations fail."
This is all true but let's provide a little more context than the totebaggers' paint-by-numbers
narrative.
Economists told us that free trade deals and open borders would make us prosperous and
yet that hasn't happens.
The technicians running trade policy, monetary policy and fiscal policy haven't held up
their end of the bargain.
Wealth and power has been redistributed upwards.
The union movement has been destroyed in outright class war.
The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog
mentality.
The Democratic Party has been moved to right as the middle class has struggled.
And more and more people become susceptible to demagogues like Trump as Democrats try to play
both sides of the fence, instead of standing foresquarely behind the job class.
Let's hope we don't find out what Trump does if elected. My guess is that he'd delegate foreign
and domestic policy to Mike Pence as Trump himself would be free to pursue his own personal grudges
via whatever means are available.
Alex S -> Peter K.... , -1
As we can see here, through leftist glasses, the only possible remedy for solving a problem is
moving left.
Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically
leftist today.
Given that, moving left should be one of the first things you consider.
Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically
leftist today.
Given that, moving left should be one of the first things you consider.
Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's
bad policy. But unfortunately it seems it's always possible to do *worse*.
Trump's policies would
double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which
would destroy jobs) would be good for jobs."
Tim Harford made a good case for trust accounting
for 99% of the difference in per capita GNP between the US and Somalia.
""If you take a broad enough definition of trust, then it would explain basically all the difference
between the per capita income of the United States and Somalia," ventures Steve Knack, a senior
economist at the World Bank who has been studying the economics of trust for over a decade. That
suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are
wondering, is 99.5% of this country's income (2006 figures). If you make $40,000 a year, then
$200 is down to hard work and $39,800 is down to trust.
How could that be? Trust operates in all sorts of ways, from saving money that would have to
be spent on security to improving the functioning of the political system. But above all, trust
enables people to do business with each other. Doing business is what creates wealth." goo.gl/t3OqHc
Presidents and the US Economy: An Econometric Exploration
By Alan S. Blinder and Mark W. Watson
Abstract
The US economy has performed better when the president of the United States is a Democrat rather
than a Republican, almost regardless of how one measures performance. For many measures, including
real GDP growth (our focus), the performance gap is large and significant. This paper asks why.
The answer is not found in technical time series matters nor in systematically more expansionary
monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly
from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable
international environment, and perhaps more optimistic consumer expectations about the near-term
future.
Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country
when the oil runs out or we are forced to fight a war that disrupts the supply?
I was in college in the mid 1970's and we asked this question a lot. Some think this worry has
gone away. I don't agree with those types. Which is why a green technology investment drive makes
a lot of sense for so many reasons.
Quote from the paper you linked to: "Arguably, oil shocks have more to do with US foreign policy
than with US economic policy-the two Gulf Wars being prominent examples. That said, several economists
have claimed that US monetary policy played an important role in bringing on the oil shocks. See,
for example, Barsky and Kilian (2002)."
Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative
By Robert B. Barsky and Lutz Kilian
Abstract
This paper argues that major oil price increases were not nearly as essential a part of the
causal mechanism that generated the stagflation of the 1970s as is often thought. There is neither
a theoretical presumption that oil supply shocks are stagflationary nor robust empirical evidence
for this view. In contrast, we show that monetary expansions and contractions can generate stagflation
of realistic magnitude even in the absence of supply shocks. Furthermore, monetary fluctuations
help to explain the historical movements of the prices of oil and other commodities, including
the surge in the prices of industrial commodities that preceded the 1973/74 oil price increase.
Thus, they can account for the striking coincidence of major oil price increases and worsening
stagflation.
My quote dragged on too long. I should have ended it with the first sentence. Monetary policy
could play a role but foreign policy could still be the biggest factor.
"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."
PGL told us that Hillary's fiscal program would be YUGE.
Dean Baker in "Rigged" * reminds me of the lasting limits to growth that appear to follow the
sacrifice of growth, especially to the extent of allowing a recession, for the sake of budget
balancing during a time of surrounding economic weakness:
Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich
Richer
By Dean Baker
Introduction: Trading in Myths
In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination,
a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the
world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers,
specifically manufacturing workers, risked undermining the well-being of the world's poor because
exporting manufactured goods to the United States and other wealthy countries is their path out
of poverty. The role model was China, which by exporting has largely eliminated extreme poverty
and drastically reduced poverty among its population. Sanders and his supporters would block the
rest of the developing world from following the same course.
This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented
media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty
irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would
condemn much of the world to poverty.
The story made a nice contribution to preserving the status quo, but it was less valuable if
you respect honesty in public debate.
The problem in the logic of this argument should be apparent to anyone who has taken an introductory
economics course. It assumes that the basic problem of manufacturing workers in the developing
world is the need for someone who will buy their stuff. If people in the United States don't buy
it, then the workers will be out on the street and growth in the developing world will grind to
a halt. In this story, the problem is that we don't have enough people in the world to buy stuff.
In other words, there is a shortage of demand. But is it really true that no one else in the world
would buy the stuff produced by manufacturing workers in the developing world if they couldn't
sell it to consumers in the United States? Suppose people in the developing world bought the stuff
they produced raising their living standards by raising their own consumption.
That is how the economics is supposed to work. In the standard theory, general shortages of
demand are not a problem. Economists have traditionally assumed that economies tended toward full
employment. The basic economic constraint was a lack of supply. The problem was that we couldn't
produce enough goods and services, not that we were producing too much and couldn't find anyone
to buy them. In fact, this is why all the standard models used to analyze trade agreements like
the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so
that shortages of demand are not a problem.
In this standard story (and the Sanders critics are people who care about textbook economics),
capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a
low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of
return....
It is yuuuuge - and no I did not say anything of the sort. Rather I noted it would be less than
1% of GDP. This is what I get for trying to get the facts right. It gets too complicated for you
even when we simplify things so you get angry and start screaming "liar". Grow up.
Per capta GDP grew from $51,100 to $51,400 between July 1 2015 and July 1 2016. This 0.6% growth
does not seem to me to be a statistic supporting claims of improving employment and improving
wage growth.
Dean has suggested in one of his commentaries that wage growth may be an artifact of a decline
in the quality of health insurance coverage. Wage growth is not figured net of increased outlays
for deductibles and copays related to changes in health insurance. PPACA discourages low deductible
and low copay health plans by placing a "Cadillac tax" on them, or at least threatening to do
so. The consequent rise in wage workers' outlays for copays and deductibles are not captured in
the statistics that claim to measure wage gains. This results in an income transfer from the well
to the sick, but can produce statistics that can be interpreted in politically convenient ways
by those so inclined
I get why the plans are taxed. I don't believe that the results of that policy have been beneficial
for the bulk of the population. Most of the good done by PPACA was done by the expansion of Medicaid
eligibility. I believe that requiring the working poor people to settle for high deductible high
copay policies has had the practical effect of requiring them to choose between adequate medical
and further impoverishment. I do not believe that the PPACA could not have been financed in a
way less injurious to the working poor. As the insurers have been unable to make money in this
deal, the hospital operators seem to have been the only winners in that their bad debt problems
have been ameliorated.
"people stop dreaming about what they could have if they invest in education, new businesses,
and new ideas"
And this is entirely rational, as in the situation described, the fruits of their efforts will
likely be siphoned from their pockets by the elites and generally rent-seekers with higher social
standing and leverage, or at best their efforts will amount to too little to be worth the risk
(including the risk of wasting one's time i.e. opportunity cost). It also becomes correspondingly
harder to convince and motivate others to join or fund any worthwhile efforts. What also happens
(and has happened in "communism") is that people take their interests private, i.e. hidden from
the view of those who would usurp or derail them.
"Those who witness extreme social collapse at first hand seldom describe any deep revelation about
the truths of human existence. What they do mention, if asked, is their surprise at how easy it
is to die.
The pattern of ordinary life, in which so much stays the same from one day to the next, disguises
the fragility of its fabric. How many of our activities are made possible by the impression of
stability that pattern gives? So long as it repeats, or varies steadily enough, we are able to
plan for tomorrow as if all the things we rely on and don't think about too carefully will still
be there. When the pattern is broken, by civil war or natural disaster or the smaller-scale tragedies
that tear at its fabric, many of those activities become impossible or meaningless, while simply
meeting needs we once took for granted may occupy much of our lives.
What war correspondents and relief workers report is not only the fragility of the fabric,
but the speed with which it can unravel. As we write this, no one can say with certainty where
the unraveling of the financial and commercial fabric of our economies will end. Meanwhile, beyond
the cities, unchecked industrial exploitation frays the material basis of life in many parts of
the world, and pulls at the ecological systems which sustain it.
Precarious as this moment may be, however, an awareness of the fragility of what we call civilisation
is nothing new.
'Few men realise,' wrote Joseph Conrad in 1896, 'that their life, the very essence of their
character, their capabilities and their audacities, are only the expression of their belief in
the safety of their surroundings.' Conrad's writings exposed the civilisation exported by European
imperialists to be little more than a comforting illusion, not only in the dark, unconquerable
heart of Africa, but in the whited sepulchres of their capital cities. The inhabitants of that
civilisation believed 'blindly in the irresistible force of its institutions and its morals, in
the power of its police and of its opinion,' but their confidence could be maintained only by
the seeming solidity of the crowd of like-minded believers surrounding them. Outside the walls,
the wild remained as close to the surface as blood under skin, though the city-dweller was no
longer equipped to face it directly.
Bertrand Russell caught this vein in Conrad's worldview, suggesting that the novelist 'thought
of civilised and morally tolerable human life as a dangerous walk on a thin crust of barely cooled
lava which at any moment might break and let the unwary sink into fiery depths.' What both Russell
and Conrad were getting at was a simple fact which any historian could confirm: human civilisation
is an intensely fragile construction. It is built on little more than belief: belief in the rightness
of its values; belief in the strength of its system of law and order; belief in its currency;
above all, perhaps, belief in its future.
Once that belief begins to crumble, the collapse of a civilisation may become unstoppable.
That civilisations fall, sooner or later, is as much a law of history as gravity is a law of physics.
What remains after the fall is a wild mixture of cultural debris, confused and angry people whose
certainties have betrayed them, and those forces which were always there, deeper than the foundations
of the city walls: the desire to survive and the desire for meaning."
Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich
Richer By Dean Baker
Introduction: Trading in Myths
In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination,
a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the
world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers,
specifically manufacturing workers, risked undermining the well-being of the world's poor because
exporting manufactured goods to the United States and other wealthy countries is their path out
of poverty. The role model was China, which by exporting has largely eliminated extreme poverty
and drastically reduced poverty among its population. Sanders and his supporters would block the
rest of the developing world from following the same course.
This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented
media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty
irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would
condemn much of the world to poverty.
The story made a nice contribution to preserving the status quo, but it was less valuable if
you respect honesty in public debate.
The problem in the logic of this argument should be apparent to anyone who has taken an introductory
economics course. It assumes that the basic problem of manufacturing workers in the developing
world is the need for someone who will buy their stuff. If people in the United States don't buy
it, then the workers will be out on the street and growth in the developing world will grind to
a halt. In this story, the problem is that we don't have enough people in the world to buy stuff.
In other words, there is a shortage of demand. But is it really true that no one else in the world
would buy the stuff produced by manufacturing workers in the developing world if they couldn't
sell it to consumers in the United States? Suppose people in the developing world bought the stuff
they produced raising their living standards by raising their own consumption.
That is how the economics is supposed to work. In the standard theory, general shortages of
demand are not a problem. Economists have traditionally assumed that economies tended toward full
employment. The basic economic constraint was a lack of supply. The problem was that we couldn't
produce enough goods and services, not that we were producing too much and couldn't find anyone
to buy them. In fact, this is why all the standard models used to analyze trade agreements like
the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so
that shortages of demand are not a problem.
In this standard story (and the Sanders critics are people who care about textbook economics),
capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a
low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of
return....
More Jobs, a Strong Economy, and a Threat to Institutions : ...Institutions are significant
to economists, who have come to see that countries become prosperous not because they have bounteous
natural resources or an educated population or the most advanced technology but because they have
good institutions. Crucially, formal structures are supported by informal, often unstated, social
agreements. A nation not only needs courts; its people need to believe that those courts can be
fair. ...
Over most of history, a small élite confiscated wealth from the poor. Subsistence farmers lived
under rules designed to tax them so that the rulers could live in palaces and pay for soldiers
to maintain their power. Every now and then, though, a system appeared in which leaders were forced
to accommodate the needs of at least some of their citizens. ... The societies with the most robust
systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier
and more peaceful. ... Most nations without institutions to check the worst impulses of the rich
and powerful stay stuck in poverty and dysfunction. ...
This year's Presidential election has alarmed economists for several reasons. No economist,
save one , supports Donald J. Trump's stated economic plans, but an even larger concern is
that, were he elected, Trump would attack the very institutions that have provided our economic
stability. In his campaign, Trump has shown outright contempt for courts, free speech, international
treaties, and many other pillars of the American way of life. There is little reason to think
that, if granted the Presidency, Trump would soften his stand. ...
...it's easy to imagine a President Trump refusing to heed our own highest court, which, as
President Andrew Jackson observed, has no way, other than respect of institutions, to enforce
its decisions. No one knows what Trump would do as President, but, based on his statements on
the campaign trail, it's possible to imagine a nation where people have less confidence in the
courts, the military, and their rights to free speech and assembly. When this happens, history
tells us, people stop dreaming about what they could have if they invest in education, new businesses,
and new ideas. They focus, instead, on taking from others and holding tightly to what they've
already amassed. Those societies, without the institutions that protect us from our worst impulses,
become poorer, uglier, more violent. That is how nations fail.
It's easy to carp like this but the sclerotic elite in charge of the country has failed to address
demographic concerns, and has stamped out any politically incorrect thoughts as being signs of
baseness. Now they are so upset that a challenger has arisen. It's unfortunate that this particular
challenger has no background in government and will probably harm our economic growth with his
lack of skill, but the elites will have to eat the cake they baked.
"No one knows what Trump would do as President, but, based on his statements on the campaign trail,
it's possible to imagine a nation where people have less confidence in the courts, the military,
and their rights to free speech and assembly. When this happens, history tells us, people stop
dreaming about what they could have if they invest in education, new businesses, and new ideas.
They focus, instead, on taking from others and holding tightly to what they've already amassed.
Those societies, without the institutions that protect us from our worst impulses, become poorer,
uglier, more violent. That is how nations fail."
This is all true but let's provide a little more context than the totebaggers' paint-by-numbers
narrative.
Economists told us that free trade deals and open borders would make us prosperous and
yet that hasn't happens.
The technicians running trade policy, monetary policy and fiscal policy haven't held up
their end of the bargain.
Wealth and power has been redistributed upwards.
The union movement has been destroyed in outright class war.
The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog
mentality.
The Democratic Party has been moved to right as the middle class has struggled.
And more and more people become susceptible to demagogues like Trump as Democrats try to play
both sides of the fence, instead of standing foresquarely behind the job class.
Let's hope we don't find out what Trump does if elected. My guess is that he'd delegate foreign
and domestic policy to Mike Pence as Trump himself would be free to pursue his own personal grudges
via whatever means are available.
As Bernie Sanders's campaign demonstrated, there is still hope. In fact hope is growing.
Lucky for us Sanders campaigned hard for Hillary, knowing what the stakes are.
Given the way people like PGL treated Sanders during the campaign and given what Wikileaks
showed, I doubt the reverse would have been true had Sanders won the primary.
The reverse would have been true, because we Democrats would have voted party above all else and
especially in this election year. Remember "party" the thing that Bernie supporters and Bernie
himself denigrated? I believe the term
"elites" was used more than once to describe the party faithful.
Alex S -> Peter K.... , -1
As we can see here, through leftist glasses, the only possible remedy for solving a problem is
moving left.
Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically
leftist today.
Given that, moving left should be one of the first things you consider.
Does the Right Hold the Economy Hostage to Advance Its Militarist Agenda?
That's one way to read Tyler Cowen's New York Times column * noting that wars have often been
associated with major economic advances which carries the headline "the lack of major wars may
be hurting economic growth." Tyler lays out his central argument:
"It may seem repugnant to find a positive side to war in this regard, but a look at American
history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear
power, the computer and the modern aircraft were all pushed along by an American government eager
to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed
to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military
contracting, not today's entrepreneurial social media start-ups. The Soviet launch of the Sputnik
satellite spurred American interest in science and technology, to the benefit of later economic
growth."
This is all quite true, but a moment's reflection may give a bit different spin to the story.
There has always been substantial support among liberals for the sort of government sponsored
research that he describes here. The opposition has largely come from the right. However the right
has been willing to go along with such spending in the context of meeting national defense needs.
Its support made these accomplishments possible.
This brings up the suggestion Paul Krugman made a while back (jokingly) that maybe we need
to convince the public that we face a threat from an attack from Mars. Krugman suggested this
as a way to prompt traditional Keynesian stimulus, but perhaps we can also use the threat to promote
an ambitious public investment agenda to bring us the next major set of technological breakthroughs.
1. Baker's peaceful spending scenario is not likely because of human nature.
2. Even if Baker's scenario happened, a given dollar will be used more efficiently in a war.
If there is a threat of losing, you have an incentive to cut waste and spend on what produces
results.
3. The United States would not exist at all if we had not conquered the territory.
US Budgetary Costs of Wars through 2016: $4.79 Trillion and Counting
Summary of Costs of the US Wars in Iraq, Syria, Afghanistan and Pakistan and Homeland Security
By Neta C. Crawford
Summary
Wars cost money before, during and after they occur - as governments prepare for, wage, and
recover from them by replacing equipment, caring for the wounded and repairing the infrastructure
destroyed in the fighting. Although it is rare to have a precise accounting of the costs of war
- especially of long wars - one can get a sense of the rough scale of the costs by surveying the
major categories of spending.
As of August 2016, the US has already appropriated, spent, or taken on obligations to spend
more than $3.6 trillion in current dollars on the wars in Iraq, Afghanistan, Pakistan and Syria
and on Homeland Security (2001 through fiscal year 2016). To this total should be added the approximately
$65 billion in dedicated war spending the Department of Defense and State Department have requested
for the next fiscal year, 2017, along with an additional nearly $32 billion requested for the
Department of Homeland Security in 2017, and estimated spending on veterans in future years. When
those are included, the total US budgetary cost of the wars reaches $4.79 trillion.
But of course, a full accounting of any war's burdens cannot be placed in columns on a ledger....
Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's
bad policy. But unfortunately it seems it's always possible to do *worse*. Trump's policies would
double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which
would destroy jobs) would be good for jobs." Tim Harford made a good case for trust accounting
for 99% of the difference in per capita GNP between the US and Somalia.
""If you take a broad enough definition of trust, then it would explain basically all the difference
between the per capita income of the United States and Somalia," ventures Steve Knack, a senior
economist at the World Bank who has been studying the economics of trust for over a decade. That
suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are
wondering, is 99.5% of this country's income (2006 figures). If you make $40,000 a year, then
$200 is down to hard work and $39,800 is down to trust.
How could that be? Trust operates in all sorts of ways, from saving money that would have to
be spent on security to improving the functioning of the political system. But above all, trust
enables people to do business with each other. Doing business is what creates wealth." goo.gl/t3OqHc
Presidents and the US Economy: An Econometric Exploration
By Alan S. Blinder and Mark W. Watson
Abstract
The US economy has performed better when the president of the United States is a Democrat rather
than a Republican, almost regardless of how one measures performance. For many measures, including
real GDP growth (our focus), the performance gap is large and significant. This paper asks why.
The answer is not found in technical time series matters nor in systematically more expansionary
monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly
from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable
international environment, and perhaps more optimistic consumer expectations about the near-term
future.
Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country
when the oil runs out or we are forced to fight a war that disrupts the supply?
I was in college in the mid 1970's and we asked this question a lot. Some think this worry has
gone away. I don't agree with those types. Which is why a green technology investment drive makes
a lot of sense for so many reasons.
Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country
when the oil runs out or we are forced to fight a war that disrupts the supply?
[ Having read and reread this question, I do not begin to understand what it means. There is
oil here, there is oil all about us, there is oil in Canada and Mexico and on and on, and the
supply of oil about us is not about to be disrupted by any conceivable war and an inconceivable
war is never going to be fought. ]
Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country
when the oil runs out or we are forced to fight a war that disrupts the supply?
[ My guess is that this is a way of scarily pitching for fracking for oil right in my garden,
but I like my azealia bushes and mocking birds. ]
Quote from the paper you linked to: "Arguably, oil shocks have more to do with US foreign policy
than with US economic policy-the two Gulf Wars being prominent examples. That said, several economists
have claimed that US monetary policy played an important role in bringing on the oil shocks. See,
for example, Barsky and Kilian (2002)."
Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative
By Robert B. Barsky and Lutz Kilian
Abstract
This paper argues that major oil price increases were not nearly as essential a part of the
causal mechanism that generated the stagflation of the 1970s as is often thought. There is neither
a theoretical presumption that oil supply shocks are stagflationary nor robust empirical evidence
for this view. In contrast, we show that monetary expansions and contractions can generate stagflation
of realistic magnitude even in the absence of supply shocks. Furthermore, monetary fluctuations
help to explain the historical movements of the prices of oil and other commodities, including
the surge in the prices of industrial commodities that preceded the 1973/74 oil price increase.
Thus, they can account for the striking coincidence of major oil price increases and worsening
stagflation.
My quote dragged on too long. I should have ended it with the first sentence. Monetary policy
could play a role but foreign policy could still be the biggest factor.
"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."
PGL told us that Hillary's fiscal program would be YUGE.
Dean Baker in "Rigged" * reminds me of the lasting limits to growth that appear to follow the
sacrifice of growth, especially to the extent of allowing a recession, for the sake of budget
balancing during a time of surrounding economic weakness:
Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich
Richer
By Dean Baker
Introduction: Trading in Myths
In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination,
a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the
world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers,
specifically manufacturing workers, risked undermining the well-being of the world's poor because
exporting manufactured goods to the United States and other wealthy countries is their path out
of poverty. The role model was China, which by exporting has largely eliminated extreme poverty
and drastically reduced poverty among its population. Sanders and his supporters would block the
rest of the developing world from following the same course.
This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented
media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty
irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would
condemn much of the world to poverty.
The story made a nice contribution to preserving the status quo, but it was less valuable if
you respect honesty in public debate.
The problem in the logic of this argument should be apparent to anyone who has taken an introductory
economics course. It assumes that the basic problem of manufacturing workers in the developing
world is the need for someone who will buy their stuff. If people in the United States don't buy
it, then the workers will be out on the street and growth in the developing world will grind to
a halt. In this story, the problem is that we don't have enough people in the world to buy stuff.
In other words, there is a shortage of demand. But is it really true that no one else in the world
would buy the stuff produced by manufacturing workers in the developing world if they couldn't
sell it to consumers in the United States? Suppose people in the developing world bought the stuff
they produced raising their living standards by raising their own consumption.
That is how the economics is supposed to work. In the standard theory, general shortages of
demand are not a problem. Economists have traditionally assumed that economies tended toward full
employment. The basic economic constraint was a lack of supply. The problem was that we couldn't
produce enough goods and services, not that we were producing too much and couldn't find anyone
to buy them. In fact, this is why all the standard models used to analyze trade agreements like
the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so
that shortages of demand are not a problem.
In this standard story (and the Sanders critics are people who care about textbook economics),
capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a
low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of
return....
It is yuuuuge - and no I did not say anything of the sort. Rather I noted it would be less than
1% of GDP. This is what I get for trying to get the facts right. It gets too complicated for you
even when we simplify things so you get angry and start screaming "liar". Grow up.
Per capta GDP grew from $51,100 to $51,400 between July 1 2015 and July 1 2016. This 0.6% growth
does not seem to me to be a statistic supporting claims of improving employment and improving
wage growth.
Dean has suggested in one of his commentaries that wage growth may be an artifact of a decline
in the quality of health insurance coverage. Wage growth is not figured net of increased outlays
for deductibles and copays related to changes in health insurance. PPACA discourages low deductible
and low copay health plans by placing a "Cadillac tax" on them, or at least threatening to do
so. The consequent rise in wage workers' outlays for copays and deductibles are not captured in
the statistics that claim to measure wage gains. This results in an income transfer from the well
to the sick, but can produce statistics that can be interpreted in politically convenient ways
by those so inclined
I get why the plans are taxed. I don't believe that the results of that policy have been beneficial
for the bulk of the population. Most of the good done by PPACA was done by the expansion of Medicaid
eligibility. I believe that requiring the working poor people to settle for high deductible high
copay policies has had the practical effect of requiring them to choose between adequate medical
and further impoverishment. I do not believe that the PPACA could not have been financed in a
way less injurious to the working poor. As the insurers have been unable to make money in this
deal, the hospital operators seem to have been the only winners in that their bad debt problems
have been ameliorated.
"people stop dreaming about what they could have if they invest in education, new businesses,
and new ideas"
And this is entirely rational, as in the situation described, the fruits of their efforts will
likely be siphoned from their pockets by the elites and generally rent-seekers with higher social
standing and leverage, or at best their efforts will amount to too little to be worth the risk
(including the risk of wasting one's time i.e. opportunity cost). It also becomes correspondingly
harder to convince and motivate others to join or fund any worthwhile efforts. What also happens
(and has happened in "communism") is that people take their interests private, i.e. hidden from
the view of those who would usurp or derail them.
"Those who witness extreme social collapse at first hand seldom describe any deep revelation about
the truths of human existence. What they do mention, if asked, is their surprise at how easy it
is to die.
The pattern of ordinary life, in which so much stays the same from one day to the next, disguises
the fragility of its fabric. How many of our activities are made possible by the impression of
stability that pattern gives? So long as it repeats, or varies steadily enough, we are able to
plan for tomorrow as if all the things we rely on and don't think about too carefully will still
be there. When the pattern is broken, by civil war or natural disaster or the smaller-scale tragedies
that tear at its fabric, many of those activities become impossible or meaningless, while simply
meeting needs we once took for granted may occupy much of our lives.
What war correspondents and relief workers report is not only the fragility of the fabric,
but the speed with which it can unravel. As we write this, no one can say with certainty where
the unraveling of the financial and commercial fabric of our economies will end. Meanwhile, beyond
the cities, unchecked industrial exploitation frays the material basis of life in many parts of
the world, and pulls at the ecological systems which sustain it.
Precarious as this moment may be, however, an awareness of the fragility of what we call civilisation
is nothing new.
'Few men realise,' wrote Joseph Conrad in 1896, 'that their life, the very essence of their
character, their capabilities and their audacities, are only the expression of their belief in
the safety of their surroundings.' Conrad's writings exposed the civilisation exported by European
imperialists to be little more than a comforting illusion, not only in the dark, unconquerable
heart of Africa, but in the whited sepulchres of their capital cities. The inhabitants of that
civilisation believed 'blindly in the irresistible force of its institutions and its morals, in
the power of its police and of its opinion,' but their confidence could be maintained only by
the seeming solidity of the crowd of like-minded believers surrounding them. Outside the walls,
the wild remained as close to the surface as blood under skin, though the city-dweller was no
longer equipped to face it directly.
Bertrand Russell caught this vein in Conrad's worldview, suggesting that the novelist 'thought
of civilised and morally tolerable human life as a dangerous walk on a thin crust of barely cooled
lava which at any moment might break and let the unwary sink into fiery depths.' What both Russell
and Conrad were getting at was a simple fact which any historian could confirm: human civilisation
is an intensely fragile construction. It is built on little more than belief: belief in the rightness
of its values; belief in the strength of its system of law and order; belief in its currency;
above all, perhaps, belief in its future.
Once that belief begins to crumble, the collapse of a civilisation may become unstoppable.
That civilisations fall, sooner or later, is as much a law of history as gravity is a law of physics.
What remains after the fall is a wild mixture of cultural debris, confused and angry people whose
certainties have betrayed them, and those forces which were always there, deeper than the foundations
of the city walls: the desire to survive and the desire for meaning."
"... An awful lot of people out there think we live in a one-party state-that we're ruled by what is coming to be called the "Uniparty." ..."
"... There is a dawning realization, ever more widespread among ordinary Americans, that our national politics is not Left versus Right or Republican versus Democrat; it's we the people versus the politicians. ..."
"... Donald Trump is no nut. If he were a nut, he would not have amassed the fortune he has, nor nurtured the capable and affectionate family he has. ..."
"... To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter to utopian bliss. ..."
"... Trump has all the right instincts. And he's had the guts and courage-and, just as important, the money -to do a thing that has badly needed doing for twenty years: to smash the power of the real nuts in the GOP Establishment. ..."
A couple of remarks in
Professor Susan
McWillams' recent Modern Age piece celebrating the 25th anniversary of Christopher Lasch's
1991 book
The True and Only Heaven , which analyzed the cult of progress in its American manifestation,
have stuck in my mind. Here's the first one:
McWilliams adds a footnote to that: The 19 percent figure is from 2012, she says. Then she tells
us that in 1964, 64 percent of Americans agreed with the same statement.
Wow. You have to think that those two numbers, from 64 percent down to 19 percent in two generations,
tell us something important and disturbing about our political life.
Second McWilliams quote:
In 2016 if you type the words "Democrats and Republicans" or "Republicans and Democrats" into
Google, the algorithms predict your next words will be "are the same".
I just tried this, and she's right. These guesses are of course based on the frequency with which
complete sentences show up all over the internet. An awful lot of people out there think we live
in a one-party state-that we're ruled by what is
coming to be called the "Uniparty."
There is a dawning realization, ever more widespread among ordinary Americans, that our national
politics is not Left versus Right or Republican versus Democrat; it's we the people
versus the politicians.
Which leads me to a different lady commentator: Peggy Noonan, in her October 20th Wall Street
Journal column.
The title of Peggy's piece was:
Imagine
a Sane Donald Trump . [
Alternate link ]Its gravamen:
Donald Trump has shown up the Republican Party Establishment as totally out of touch with their base,
which is good; but that he's bat-poop crazy, which is bad. If a sane Donald Trump had done
the good thing, the showing-up, we'd be on course to a major beneficial correction in our national
politics.
It's a good clever piece. A couple of months ago on Radio Derb I offered up one and a half cheers
for Peggy, who gets a lot right in spite of being a longtime Establishment Insider. So it
was here. Sample of what she got right last week:
Mr. Trump's great historical role was to reveal to the Republican Party what half of its
own base really thinks about the big issues. The party's leaders didn't know! They were shocked,
so much that they indulged in sheer denial and made believe it wasn't happening.
The party's leaders accept more or less open borders and like big trade deals. Half the base
does not! It is longtime GOP doctrine to cut entitlement spending. Half the base doesn't want
to, not right now! Republican leaders have what might be called assertive foreign-policy impulses.
When Mr. Trump insulted George W. Bush and nation-building and said he'd opposed the Iraq invasion,
the crowds, taking him at his word, cheered. He was, as they say, declaring that he didn't want
to invade the world and invite the world. Not only did half the base cheer him, at least half
the remaining half joined in when the primaries ended.
End of pause. OK, so Peggy got some things right there. She got a lot wrong, though
Start with the notion that Trump is crazy. He's a nut, she says, five times. His brain is "a TV
funhouse."
Well, Trump has some colorful quirks of personality, to be sure, as we all do. But he's no nut.
A nut can't be as successful in business as Trump has been.
I spent 32 years as an employee or contractor, mostly in private businesses but for two years
in a government department. Private businesses are intensely rational, as human affairs go-much more
rational than government departments. The price of irrationality in business is immediate and plainly
financial. Sanity-wise, Trump is a better bet than most people in high government positions.
Sure, politicians talk a good rational game. They present as sober and thoughtful on the Sunday
morning shows.
Look at the stuff they believe, though. Was it rational to respond to the collapse of the U.S.S.R.
by moving NATO right up to Russia's borders? Was it rational to expect that post-Saddam Iraq would
turn into a constitutional democracy? Was it rational to order insurance companies to sell healthcare
policies to people who are already sick? Was the Vietnam War a rational enterprise? Was it rational
to respond to the 9/11 attacks by massively increasing Muslim immigration?
Make your own list.
Donald Trump displays good healthy patriotic instincts. I'll take that, with the personality quirks
and all, over some earnest, careful, sober-sided guy whose head contains fantasies of putting the
world to rights, or flooding our country with unassimilable foreigners.
I'd add the point, made by many commentators, that belongs under the general heading: "You don't
have to be crazy to work here, but it helps." If Donald Trump was not so very different from run-of-the-mill
politicians-which I suspect is a big part of what Peggy means by calling him a nut-would he have
entered into the political adventure he's on?
Thor Heyerdahl sailed across the Pacific on a hand-built wooden raft to prove a point, which
is not the kind of thing your average ethnographer would do. Was he crazy? No, he wasn't. It was
only that some feature of his personality drove him to use that way to prove the point he
hoped to prove.
And then there is Peggy's assertion that the Republican Party's leaders didn't know that half
the party's base were at odds with them.
Did they really not? Didn't they get a clue when the GOP lost in 2012, mainly because millions
of Republican voters didn't turn out for Mitt Romney? Didn't they, come to think of it, get the glimmering
of a clue back in 1996, when Pat Buchanan won the New Hampshire primary?
Pat Buchanan is in fact a living counter-argument to Peggy's thesis-the "sane Donald Trump" that
she claims would win the hearts of GOP managers. Pat is Trump without the personality quirks. How
has the Republican Party treated him ?
Our own
Brad Griffin , here at VDARE.com on October 24th, offered a couple more "sane Donald Trumps":
Ron Paul and Mike Huckabee. How did they fare with the GOP Establishment?
Donald Trump is no nut. If he were a nut, he would not have amassed the fortune he
has, nor nurtured the capable and affectionate family he has. Probably he's less well-informed
about the world than the average pol. I doubt he could tell you what
the capital of Burkina Faso is. That's secondary, though. A President has people to look up that
stuff for him. The question that's been asked more than any other about Donald Trump is not, pace
Peggy Noonan, "Is he nuts?" but, "
Is he conservative? "
I'm sure he is. But my definition of "conservative" is temperamental, not political. My touchstone
here is the sketch of the conservative temperament given to us by the English political philosopher
Michael Oakeshott :
To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried
to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the
near to the distant, the sufficient to the superabundant, the convenient to the perfect, present
laughter to utopian bliss.
That fits Trump better than it fits any liberal you can think of-better also than many senior
Republicans.
For example, it was one of George W. Bush's senior associates-probably Karl Rove-who scoffed at opponents
of Bush's delusional foreign policy as "the reality-based community." It would be hard to think of
a more un -Oakeshottian turn of phrase.
Trump has all the right instincts. And he's had the guts and courage-and, just as important,
the money -to do a thing that has badly needed doing for twenty years: to smash the power
of the real nuts in the GOP Establishment.
I thank him for that, and look forward to his Presidency.
"... 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.
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.
"... Any analysis that starts with the assumption reactionaries still has a great deal to its agenda to achieve, such as promoting regressive taxation; privatization of Social Security; limiting Medicare; privatization of education; expansion of the police state; using the military to support the dollar, banking, world markets, etc., rather than Corey Robin's belief that "the Right" has won is in my view an improvement on the OP. ..."
"... In the end, Putin will be done in by his oligarchs, despite the care he has taken to give them their share if they just refrain from wrecking everything with their excesses. Again, no need for NGOs. ..."
This is a very good analyses. But I am less pessimistic: the blowback against neoliberal globalization
is real and it is difficult to swipe it under the carpet.
There are some signs of the "revolutionary situation" in the USA in a sense that the neoliberal
elite lost control and their propaganda loss effectiveness, despite dusting off the "Red scare"
trick with "Reds in each computer" instead of "Reds under each bed". With Putin as a very convenient
bogeyman.
As somebody here said Trump might be a reaction of secular stagnation, kind of trump card put
into play by some part of the elite, because with continued secular stagnation, the social stability
in the USA is under real threat.
But the problem is that Hillary with her failing health is our of her prime and with a bunch
of neocons in key positions in her administration, she really represents a huge threat to world
peace. She might not last long as the level of stress inherent in POTUS job make it a killing
ground for anybody with advanced stage of Parkinson or similar degenerative neurological disease.
But that might make her more impulsive and more aggressive (and she always tried to outdo male
politicians in jingoism, real John McCain is the red pantsuit).
All-in-all it looks like she in not a solution for neoliberal elite problems, she is a part
of the problem
Adventurism of the US neoliberal elite, and especially possible aggressive moves in Syria by
Hillary regime ("no fly zone"), makes military alliance of Russia and China very likely (with
Pakistan, Iran and India as possible future members). So Hillary might really work like a powerful
China lobbyist, because the alliance with Russia will be on China terms.
Regime change via color revolution in either country requires at dense network of subservient
to the Western interests and financed via shadow channels MSM (including TV channels), strong
network of NGO and ability to distribute cash to selected members of the fifth column of neoliberal
globalization. All those condition were made more difficult in Russia and impossible in mainland
China. In Russia the US adventurism in Ukraine and the regime change of February 2014 (creation
of neo-fascist regime nicknamed by some "Kaganat of Nuland" (Asia Times
http://www.atimes.com/atimes/Central_Asia/CEN-01-100315.html
)) essentially killed the neoliberal fifth column in Russia and IMHO it no longer represent
a viable political force.
Also Russians probably learned well lesson of unsuccessful attempt of regime change by interfering
into Russian Presidential election process attempted by Hillary and Obama in 2011-2012. I would
like to see the US MSM reaction if Russian ambassador invited Sanders and Trump into the embassy
and promised full and unconditional support for their effort to remove criminal Obama regime,
mired in corruption and subservient to Wall Street interests, the regime that produced misery
for so many American workers, lower middle class and older Americans ;-)
Ambassador McFaul soon left the country, NED was banned and screws were tightened enough to
make next attempt exceedingly difficult. Although everything can happen I would discount the possibility
of the next "White Revolution" in Russia. So called "Putin regime" survived the period of low
oil prices and with oil prices over $60 in 2017 Russian economy might be able to grow several
percent a year. At the same time the US "post-Obama" regime might well face the winds of returning
higher oil prices and their negative influence of economy growth and unemployment.
In China recent troubles in Hong Cong were also a perfect training ground for "anti color revolution"
measures and the next attempt would much more difficult, unless China experience economic destabilization
due to some bubble burst.
That means that excessive military adventurism inherent in the future Hillary regime might
speed up loss by the USA military dominance and re-alignment of some states beyond Philippines.
Angela Merkel regime also might not survive the next election and that event might change "pro-Atlantic"
balance in Europe.
Although the list in definitely not complete, we can see that there are distinct setbacks for
attempts of further neoliberalization beyond Brexit and TPP troubles.
So there are some countervailing forces in action and my impression that the Triumphal march
of neoliberalism with the USA as the hegemon of the new neoliberal order is either over, or soon
will be over. In certain regions of the globe the USA foreign policy is in trouble (Syria, Ukraine)
and while you can do anything using bayonets, you can't sit on them.
So while still there is no viable alternative to neoliberalism as a social system, the ideology
itself is discredited and like communism after 1945 lost its hold of hearts and minds of the USA
population. I would say that in the USA neoliberalism entered Zombie stage.
My hope is that reasonable voices in foreign policy prevail, and the disgust of unions members
toward DemoRats (Neoliberal Democrats) could play the decisive role in coming elections. As bad
as Trump is for domestic policy, it represent some hope as for foreign policy unless co-opted
by Republican establishment.
#70 But the problem is that Hillary with her failing health is our of her prime and with a bunch
of neocons in key positions in her administration, she really represents a huge threat to world
peace. She might not last long as the level of stress inherent in POTUS job make it a killing
ground for anybody with advanced stage of Parkinson or similar degenerative neurological disease.
But that might kale her more impulsive and more aggressive (and she always tried to outdo her
male politicians in jingoism, real John McCain is the red pantsuit).
Does the new CT moderation regime have any expectations about the veracity of claims made by
commenters? Because I think it would be useful in cases like this.
Yes, it was late and I was tired, or I wouldn't have said something so foolish. Still, the
point is that after centuries of constant war, Europe went 70 years without territorial conquest.
That strikes me as a significant achievement, and one whose breach should not be taken lightly.
phenomenal cat @64
So democratic structures have to be robust and transparent before we care about them? I'd give
a pretty high value to an independent press and contested elections. Those have been slowly crushed
in Russia. The results for transparency have not been great. Personally, I don't believe that
Ukraine is governed by fascists, or that Ukraine shot down that jetliner, but I'm sure a lot of
Russians do.
Russian leaders have always complained about "encirclement," but we don't have to believe them.
Do you really believe Russia's afraid of an attack from Estonia? Clearly what Putin wants is to
restore as much of the old Soviet empire as possible. Do you think the independence of the Baltic
states would be more secure or less secure if they weren't members of NATO? (Hint: compare to
Ukraine, Georgia, Moldova.)
' .makes military alliance of Russia and China very likely '
Any analysis which arrives at this conclusion is profoundly ignorant.
Meta-comment: Is it permitted to say that a moderation scheme which objects to engels as a
troll, while permitting this tripe from likbez has taken a wrong turn somewhere. Seriously, some
explanation called for.
Does the new CT moderation regime have any expectations about the veracity of claims made
by commenters? Because I think it would be useful in cases like this.
I would like to apologize about the number of typos, but I stand by statements made. Your implicit
assumption that I am lying was not specific, so let's concentrate on three claims made:
1. "Hillary has serious neurological disease for at least four years", 2. "Obama and Hillary tried to stage color revolution in Russia in 2011-2012 interfering in Russian
Presidential elections" 3. "Hillary Clinton is a neocon, a warmonger similar to John McCain"
1. Hillary Health : Whether she suffers from Parkinson disease or not in unclear, but signs
of some serious neurological disease are observable since 2012 (for four years). Parkinson is just
the most plausible hypothesis based on symptoms observed. Those symptoms suggests that she is at
Stage 2 of the disease due to an excellent treatment she gets:
http://www.viartis.net/parkinsons.disease/news/100312.htm
The average time taken to progress from Stage 1 (mild) to Stage 2 (mild but various symptoms)
was 1 year 8 months. The average time taken to progress from Stage 2 to Stage 3 (typical) was
7 years and 3 months. From Stage 3 to Stage 4 (severe) took 2 years. From Stage 4 to Stage 5 (incapacitated)
took 2 years and 2 months. So the stage with typical symptoms lasts the longest. Those factors
associated with faster progression were older age at diagnosis, and longer disease duration. Gender
and ethnicity were not associated with the rate of Parkinson's Disease progression.
These figures are only averages. Progression is not inevitable. Some people with Parkinson's
Disease have either : stayed the same for decades, reduced their symptoms, rid their symptoms,
or worsened at a rapid rate. For more current news go to Parkinson's Disease News.
Concern about Hillary health were voiced in many publications and signs of her neurological disease
are undisputable:
3. The opinion that Hillary as a neocon is supported by facts from all her career , but
especially during her tenure as the Secretary of State. She voted for Iraq war and was instrumental
in unleashing Libya war and Syria war. The amount of evidence can't be ignored:
If you have more specific concerns please voice them and I will try to support my statements with
references and known facts.
stevenjohnson 10.26.16 at 1:50 pm
likbez @70 Any analysis that starts with the assumption reactionaries still has a great
deal to its agenda to achieve, such as promoting regressive taxation; privatization of Social
Security; limiting Medicare; privatization of education; expansion of the police state; using
the military to support the dollar, banking, world markets, etc., rather than Corey Robin's
belief that "the Right" has won is in my view an improvement on the OP. But whether mine
is actually a deep analysis seems doubtful even to me.
But the OP is really limiting itself solely to domestic politics, and in that context the
resistance to "neoliberal globalization," (Why not use the term "imperialism?") is more or
less irrelevant. The OP seems to have some essentialist notion of the "Right" as openly aimed
at restoring the past, ignoring the content of policies. Reaction would be something blatant
like restoring censorship of TV and movies, instead of IP laws that favor giant
telecommunications companies, or abolition of divorce, instead of discriminatory enforcement
of child protection laws that break up poor families. This
cultural/psychological/moralizing/spiritual approach seems to me to be fundamentally a
diversion from a useful understanding.
There may be some sort of confused notions about popular morals and tastes clearly evolving
in a more leftish direction. Free love was never a conservative principle for instance, yet
many of its tenets are now those of the majority of the population. Personally I can only
observe that there's nothing quite like the usefulness of laws and law enforcement,
supplemented by the occasional illicit violence, to change social attitudes. The great model
of course is the de facto extermination of the Left by "McCarthyism." No doubt the
disappearance of the left targeted by "McCarthyism" is perceived to be a purification of the
real left. It is customary for the acceptable "left" to agree with the McCarthys that
communism lost its appeal to the people, rather than being driven out by mass repression. As
to populism, such reactionary goals as the abolition of public education are notoriously sold
as service to the people against the hifalutin' snobs, starting of course with lazy ass
teachers. It seems to me entirely mistaken to see the populist reactionaries as out of
ammunition because the old forms of race-baiting aren't working so well.
By the way, there already is a Chinese bourgeoisie, in Taiwan, Singapore, the Philippines,
Malaysia, Indonesia, Hong Kong, as well as elements in SEZs in China proper and select circles
in various financial capitals. Restoration of capitalism in China has run into the difficulty
that capitalism isn't holding up its end. President Xi Jinping is finding it difficult for
capitalism to keep the mainland economy growing at a sufficiently rapid rate to keep the
working class pacific, much less generate the so-called middle class whose stock market
portfolios will bind them to the new ruling class forever. These are the sources for a
revolution in China, not NGOs or a color revolution. In the end, Putin will be done in by
his oligarchs, despite the care he has taken to give them their share if they just refrain
from wrecking everything with their excesses. Again, no need for NGOs.
Val @72 I remember that there were only rare, vague hints about Reagan, not factual
evidence. So unless you are committed to the proposition his Alzheimer's disease only set in
January 21, 1992, demanding factual evidence about the mental and physical health of our
elective divinities seems unduly restrictive I think.
Layman @79 The Shanghai Cooperation Organization alone makes an analysis that a military
alliance between Russia and China reasonable enough. Even if incorrect in the end, it is not
"profoundly ignorant."
Meta-comment: Engels post was perceived as mocking, which was its offense. As for "trolling,"
that's an internet thing...
"... Geithner's comments about his sacrifices in public service did not elicit any outcry from the media at the time because his perspective was widely shared. The implicit assumption is that the sort of person who is working at a high level government job could easily be earning a paycheck that is many times higher if they were employed elsewhere. In fact, this is often true. When he left his job as Treasury Secretary, Geithner took a position with a private equity company where his salary is likely several million dollars a year. ..."
"... The CEOs who are paid tens of millions a year would like the public to think that the market is simply compensating them for their extraordinary skills. A more realistic story is that a broken corporate governance process gives corporate boards of directors - the people who largely determine CEO pay -little incentive to hold down pay. Directors are more closely tied to top management than to the shareholders they are supposed to represent, and their positions are lucrative, usually paying six figures for very part-time work. Directors are almost never voted out by shareholders for their lack of attention to the job or for incompetence. ..."
"... We also have done little to foster medical travel. This could lead to enormous benefits to patients and the economy, since many high cost medical procedures can be performed at a fifth or even one-tenth the U.S. price in top quality medical facilities elsewhere in the world. In this context, it is not surprising that the median pay of physicians is over $250,000 a year and some areas of specialization earn close to twice this amount. In the case of physicians alone, if pay were reduced to West European-levels the savings would be close to $100 billion a year (@ 0.6 percent of GDP). ..."
"... As a technical matter, the Federal Reserve Bank of New York is a private bank. It is owned by the banks that are members of the Federal Reserve System in the New York District. ..."
Yves here. We are delighted to feature an excerpt from Dean Baker's new book
Rigged , which you can find at
http://deanbaker.net/books/rigged.htm via either a free download
or in hard copy for the cost of printing and shipping. The book argues that policy in five areas, macroeconomics, the financial sector,
intellectual property, corporate governance, and protection for highly paid professionals, have all led to the upward distribution
of income. The implication is that the yawning gap between the 0.1% and the 1% versus everyone else is not the result of virtue ("meritocracy")
but preferential treatment, and inequality would be substantially reduced if these policies were reversed.
I urge you to read his book in full and encourage your friends, colleagues, and family to do so as well.
By Dean Baker, Co-Director, Center for Economic and Policy Research
Chapter 1: Introduction: Trading in myths
In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among
the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies
to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting
manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which
by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters
would block the rest of the developing world from following the same course.
This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly
picked up elsewhere (Beauchamp 2016).
[1] After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would
condemn much of the world to poverty.
The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.
The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes
that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people
in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a
halt.
In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage
of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing
world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced
raising their living standards by raising their own consumption.
That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem.
[2] Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack
of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find
anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership
assume trade doesn't affect total employment.
[3] Economies adjust so that shortages of demand are not a problem.
In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing
rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce
and gets a high rate of return (Figure 1-1).
So the United States, Japan, and the European Union should be running large trade surpluses, which is what an outflow of capital
means. Rich countries like ours should be lending money to developing countries, providing them with the means to build up their
capital stock and infrastructure while they use their own resources to meet their people's basic needs.
This wasn't just theory. That story accurately described much of the developing world, especially Asia, through the 1990s. Countries
like Indonesia and Malaysia were experiencing rapid annual growth of 7.8 percent and 9.6 percent, respectively, even as they ran
large trade deficits, just over 2 percent of GDP each year in Indonesia and almost 5 percent in Malaysia.
These trade deficits probably were excessive, and a crisis of confidence hit East Asia and much of the developing world in the
summer of 1997. The inflow of capital from rich countries slowed or reversed, making it impossible for the developing countries to
sustain the fixed exchange rates most had at the time. One after another, they were forced to abandon their fixed exchange rates
and turn to the International Monetary Fund (IMF) for help.
Rather than promulgating policies that would allow developing countries to continue the textbook development path of growth driven
by importing capital and running trade deficits, the IMF made debt repayment a top priority. The bailout, under the direction of
the Clinton administration Treasury Department, required developing countries to switch to large trade surpluses (Radelet and Sachs
2000, O'Neil 1999).
The countries of East Asia would be far richer today had they been allowed to continue on the growth path of the early and mid-1990s,
when they had large trade deficits (Figure 1-2). Four of the five would be more than twice as rich, and the fifth, Vietnam, would
be almost 50 percent richer. South Korea and Malaysia would have higher per capita incomes today than the United States.
In the wake of the East Asia bailout, countries throughout the developing world decided they had to build up reserves of foreign
exchange, primarily dollars, in order to avoid ever facing the same harsh bailout terms as the countries of East Asia. Building up
reserves meant running large trade surpluses, and it is no coincidence that the U.S. trade deficit has exploded, rising from just
over 1 percent of GDP in 1996 to almost 6 percent in 2005. The rise has coincided with the loss of more than 3 million manufacturing
jobs, roughly 20 percent of employment in the sector.
There was no reason the textbook growth pattern of the 1990s could not have continued. It wasn't the laws of economics that forced
developing countries to take a different path, it was the failed bailout and the international financial system. It would seem that
the enemy of the world's poor is not Bernie Sanders but rather the engineers of our current globalization policies.
There is a further point in this story that is generally missed: it is not only the volume of trade flows that is determined by
policy, but also the content. A major push in recent trade deals has been to require stronger and longer patent and copyright protection.
Paying the fees imposed by these terms, especially for prescription drugs, is a huge burden on the developing world. Bill Clinton
would have much less need to fly around the world for the Clinton Foundation had he not inserted the TRIPS (Trade Related Aspects
of Intellectual Property Rights ) provisions in the World Trade Organization (WTO) that require developing countries to adopt U.S.-style
patent protections. Generic drugs are almost always cheap -patent protection makes drugs expensive. The cancer and hepatitis drugs
that sell for tens or hundreds of thousands of dollars a year would sell for a few hundred dollars in a free market. Cheap drugs
would be more widely available had the developed world not forced TRIPS on the developing world.
Of course, we have to pay for the research to develop new drugs or any innovation. We also have to compensate creative workers
who produce music, movies, and books. But there are efficient alternatives to patents and copyrights, and the efforts by the elites
in the United States and other wealthy countries to impose these relics on the developing world is just a mechanism for redistributing
income from the world's poor to Pfizer, Microsoft, and Disney. Stronger and longer patent and copyright protection is not a necessary
feature of a 21 st century economy.
In textbook trade theory, if a country has a larger trade surplus on payments for royalties and patent licensing fees, it will
have a larger trade deficit in manufactured goods and other areas. The reason is that, in theory, the trade balance is fixed by national
savings and investment, not by the ability of a country to export in a particular area. If the trade deficit is effectively fixed
by these macroeconomic factors, then more exports in one area mean fewer exports in other areas. Put another way, income gains for
Pfizer and Disney translate into lost jobs for workers in the steel and auto industries.
The conventional story is that we lose manufacturing jobs to developing countries because they have hundreds of millions of people
willing to do factory work at a fraction of the pay of manufacturing workers in the United States. This is true, but developing countries
also have tens of millions of smart and ambitious people willing to work as doctors and lawyers in the United States at a fraction
of the pay of the ones we have now.
Gains from trade work the same with doctors and lawyers as they do with textiles and steel. Our consumers would save hundreds
of billions a year if we could hire professionals from developing countries and pay them salaries that are substantially less than
what we pay our professionals now. The reason we import manufactured goods and not doctors is that we have designed the rules of
trade that way. We deliberately write trade pacts to make it as easy as possible for U.S. companies to set up manufacturing operations
abroad and ship the products back to the United States, but we have done little or nothing to remove the obstacles that professionals
from other countries face in trying to work in the United States. The reason is simple: doctors and lawyers have more political power
than autoworkers.
[4]
In short, there is no truth to the story that the job loss and wage stagnation faced by manufacturing workers in the United States
and other wealthy countries was a necessary price for reducing poverty in the developing world.
[5] This is a fiction that is used to justify the upward redistribution of income in rich countries. After all, it is pretty
selfish for rich country autoworkers and textile workers to begrudge hungry people in Africa and Asia and the means to secure food,
clothing, and shelter.
The other aspect of this story that deserves mention is the nature of the jobs to which our supposedly selfish workers feel entitled.
The manufacturing jobs that are being lost to the developing world pay in the range of $15 to $30 an hour, with the vast majority
closer to the bottom figure than the top. The average hourly wage for production and nonsupervisory workers in manufacturing in 2015
was just under $20 an hour, or about $40,000 a year. While a person earning $40,000 is doing much better than a subsistence farmer
in Sub-Saharan Africa, it is difficult to see this worker as especially privileged.
By contrast, many of the people remarking on the narrow-mindedness and sense of entitlement of manufacturing workers earn comfortable
six-figure salaries. Senior writers and editors at network news shows or at the New York Times and Washington Post
feel entitled to their pay because they feel they have the education and skills to be successful in a rapidly changing global economy.
These are the sort of people who consider it a sacrifice to work at a high-level government job for $150,000 to $200,000 a year.
For example, Timothy Geithner, President Obama's first treasury secretary, often boasts about his choice to work for various government
agencies rather than earn big bucks in the private sector. His sacrifice included a stint as president of the Federal Reserve Bank
of New York that paid $415,000 a year.
[6] This level of pay put Geithner well into the top 1 percent of wage earners.
Geithner's comments about his sacrifices in public service did not elicit any outcry from the media at the time because his perspective
was widely shared. The implicit assumption is that the sort of person who is working at a high level government job could easily
be earning a paycheck that is many times higher if they were employed elsewhere. In fact, this is often true. When he left his job
as Treasury Secretary, Geithner took a position with a private equity company where his salary is likely several million dollars
a year.
Not everyone who was complaining about entitled manufacturing workers was earning as much as Timothy Geithner, but it is a safe
bet that the average critic was earning far more than the average manufacturing worker - and certainly far more than the average
displaced manufacturing worker.
Turning the Debate Right-Side Up: Markets Are Structured
The perverse nature of the debate over a trade policy that would have the audacity to benefit workers in rich countries is a great
example of how we accept as givens not just markets themselves but also the policies that structure markets. If we accept it as a
fact of nature that poor countries cannot borrow from rich countries to finance their development, and that they can only export
manufactured goods, then their growth will depend on displacing manufacturing workers in the United States and other rich countries.
It is absurd to narrow the policy choices in this way, yet the centrists and conservatives who support the upward redistribution
of the last four decades have been extremely successful in doing just that, and progressives have largely let them set the terms
of the debate.
Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations
are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The
elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten which
means they have no interest in even having them discussed.
But for progressive change to succeed, these rules must be addressed. While modest tweaks to tax and transfer policies can ameliorate
the harm done by a regressive market structure, their effect will be limited. The complaint of conservatives - that tampering with
market outcomes leads to inefficiencies and unintended outcomes - is largely correct, even if they may exaggerate the size of the
distortions from policy interventions. Rather than tinker with badly designed rules, it is far more important to rewrite the rules
so that markets lead to progressive and productive outcomes in which the benefits of economic growth and improving technology are
broadly shared
This book examines five broad areas where the rules now in place tend to redistribute income upward and where alternative rules
can lead to more equitable outcomes and a more efficient market:
Macroeconomic policies determining levels of employment and output. Financial regulation and the structure of financial markets.
Patent and copyright monopolies and alternative mechanisms for financing innovation and creative work. Pay of chief executive
officers (CEOs) and corporate governance structures. Protections for highly paid professionals, such as doctors and lawyers.
In each of these areas, it is possible to identify policy choices that have engineered the upward redistribution of the last four
decades.
In the case of macroeconomic policy, the United States and other wealthy countries have explicitly adopted policies that focus
on maintaining low rates of inflation. Central banks are quick to raise interest rates at the first sign of rising inflation and
sometimes even before. Higher interest rates slow inflation by reducing demand, thereby reducing job growth, and reduced job growth
weakens workers' bargaining power and puts downward pressure on wages. In other words, the commitment to an anti-inflation policy
is a commitment by the government, acting through central banks, to keep wages down. It should not be surprising that this policy
has the effect of redistributing income upward.
The changing structure of financial regulation and financial markets has also been an important factor in redistributing income
upward. This is a case where an industry has undergone very rapid change as a result of technological innovation. Information technology
has hugely reduced the cost of financial transactions and allowed for the development of an array of derivative instruments that
would have been unimaginable four decades ago. Rather than modernizing regulation to ensure that these technologies allow the financial
sector to better serve the productive economy, the United States and other countries have largely structured regulations to allow
a tiny group of bankers and hedge fund and private equity fund managers to become incredibly rich.
This changed structure of regulation over the last four decades was not "deregulation," as is often claimed. Almost no proponent
of deregulation argued against the bailouts that saved Wall Street in the financial crisis or against the elimination of government
deposit insurance that is an essential part of a stable banking system. Rather, they advocated a system in which the rules restricting
their ability to profit were eliminated, while the insurance provided by the Federal Reserve Board, the Federal Deposit Insurance
Corporation, and other arms of the government were left in place. The position of "deregulators" effectively amounted to arguing
that they should not have to pay for the insurance they were receiving.
The third area in which the rules have been written to ensure an upward redistribution is patent and copyright protection. Over
the last four decades these protections have been made stronger and longer. In the case of both patent and copyright, the duration
of the monopoly period has been extended. In addition, these monopolies have been applied to new areas. Patents can now be applied
to life forms, business methods, and software. Copyrights have been extended to cover digitally produced material as well as the
internet. Penalties for infringement have been increased and the United States has vigorously pursued their application in other
countries through trade agreements and diplomatic pressure.
Government-granted monopolies are not facts of nature, and there are alternative mechanisms for financing innovation and creative
work. Direct government funding, as opposed to government granted monopolies, is one obvious alternative. For example, the government
spends more than $30 billion a year on biomedical research through the National Institutes of Health - money that all parties agree
is very well spent. There are also other possible mechanisms. It is likely that these alternatives are more efficient than the current
patent and copyright system, in large part because they would be more market-oriented. And, they would likely lead to less upward
redistribution than the current system.
The CEOs who are paid tens of millions a year would like the public to think that the market is simply compensating them for their
extraordinary skills. A more realistic story is that a broken corporate governance process gives corporate boards of directors -
the people who largely determine CEO pay -little incentive to hold down pay. Directors are more closely tied to top management than
to the shareholders they are supposed to represent, and their positions are lucrative, usually paying six figures for very part-time
work. Directors are almost never voted out by shareholders for their lack of attention to the job or for incompetence.
The market discipline that holds down the pay of ordinary workers does not apply to CEOs, since their friends determine their
pay. And a director has little incentive to pick a fight with fellow directors or top management by asking a simple question like,
"Can we get a CEO just as good for half the pay?" This privilege matters not just for CEOs; it has the spillover effect of raising
the pay of other top managers in the corporate sector and putting upward pressure on the salaries of top management in universities,
hospitals, private charities, and other nonprofits.
Reformed corporate governance structures could empower shareholders to contain the pay of their top-level employees. Suppose directors
could count on boosts in their own pay if they cut the pay of top management without hurting profitability, With this sort of policy
change, CEOs and top management might start to experience some of the downward wage pressure that existing policies have made routine
for typical workers.
This is very much not a story of the natural workings of the market. Corporations are a legal entity created by the government,
which also sets the rules of corporate governance. Current law includes a lengthy set of restrictions on corporate governance practices.
It is easy to envision rules which would make it less likely that CEOs earn such outlandish paychecks by making it easier for shareholders
to curb excessive pay.
Finally, government policies strongly promote the upward redistribution of income for highly paid professionals by protecting
them from competition. To protect physicians and specialists, we restrict the ability of nurse practitioners or physician assistants
to perform tasks for which they are entirely competent. We require lawyers for work that paralegals are capable of completing. While
trade agreements go far to remove any obstacle that might protect an autoworker in the United States from competition with a low-paid
factory worker in Mexico or China, they do little or nothing to reduce the barriers that protect doctors, dentists, and lawyers from
the same sort of competition. To practice medicine in the United States, it is still necessary to complete a residency program here,
as though there were no other way for a person to become a competent doctor.
We also have done little to foster medical travel. This could lead to enormous benefits to patients and the economy, since many
high cost medical procedures can be performed at a fifth or even one-tenth the U.S. price in top quality medical facilities elsewhere
in the world. In this context, it is not surprising that the median pay of physicians is over $250,000 a year and some areas of specialization
earn close to twice this amount. In the case of physicians alone, if pay were reduced to West European-levels the savings would be
close to $100 billion a year (@ 0.6 percent of GDP).
Changing the rules in these five areas could reduce much and possibly all of the upward redistribution of the last four decades.
But changing the rules does not mean using government intervention to curb the market. It means restructuring the market to produce
different outcomes. The purpose of this book is to show how.
[1] See also Weissman (2016), Iacono (2016), Worstall (2016), Lane (2016), and Zakaria (2016).
[2] As explained in the next chapter, this view is not exactly correct, but it's what you're supposed to believe if you adhere
to the mainstream economic view.
[3] There can be modest changes in employment through a supply-side effect. If the trade deal increases the efficiency of the
economy, then the marginal product of labor should rise, leading to a higher real wage, which in turn should induce some people to
choose work over leisure. So the trade deal results in more people choosing to work, not an increased demand for labor.
[4] For those worried about brain drain from developing countries, there is an easy fix. Economists like to talk about taxing
the winners, in this case developing country professionals and rich country consumers, to compensate the losers, which would be the
home countries of the migrating professionals. We could tax a portion of the professionals' pay to allow their home countries to
train two or three professionals for every one that came to the United States. This is a classic win-win from trade.
[5] The loss of manufacturing jobs also reduced the wages of less-educated workers (those without college degrees) more generally.
The displaced manufacturing workers crowded into retail and other service sectors, putting downward pressure on wages there.
[6] As a technical matter, the Federal Reserve Bank of New York is a private bank. It is owned by the banks that are members
of the Federal Reserve System in the New York District.
"Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations
are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The
elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten
which means they have no interest in even having them discussed."
======================================================
It is one of those remarkable hypocrisies that free "unregulated" trade requires deals of thousands of pages .
but if these deals weren't so carefully structured to help the 1%, support would melt like snowmen in Fresno on a July day
Or check your local indy, or one of those that take orders (I refrain from naming my favorite co-op in Chicago, and anyway
I admit there are others). Nice to support those when you can.
Almost no proponent of deregulation argued against the bailouts that saved Wall Street in the financial crisis or against
the elimination of government deposit insurance that is an essential part of a stable banking system.
Actually I believe there were some Republicans who denounced the Wall Street bailout as a violation of capitalist principles.
My state's Mark Sanford comes to mind. It was the Dems at the urging of Pelosi who saved the bailout. On the other hand many of
my local politicians are big on "public/private" partnerships which would be a violation of laissez-faire that they approve. Perhaps
it was simply that there are no giant banks headquartered in SC.
The truth is there is no coherent intellectual basis to how the US economy is currently run. It's all about power and what
you can do with it. Which is to say it is our politics, above all, that is broken.
"That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem.[2]
Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of
supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find
anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership
assume trade doesn't affect total employment.[3] Economies adjust so that shortages of demand are not a problem."
Unbelievable.
By the 1920s they realised the system produced so much stuff that extensive advertising was needed to shift it all.
One hundred year's later, we might take this on board.
What is the global advertising budget?
The amount necessary to shift all the crap the system produces today.
We need to move on from Milton Freidman's ideas and discover what trade in a globalized world is really about.
We are still under the influence of Milton Freidman's ideas of a globalised free trade world.
These ideas came from Milton Freidman's imagination where he saw the ideal as small state, raw capitalism and thought the public
sector should be sold off and entitlement programs whittled down until everything must be purchased through the private sector.
"You are free to spend your money as you choose"
Not mentioning its other meaning:
"No money, no freedom"
After Milton Freedman's "shock therapy" in Russia, people were left with so little money they couldn't afford to eat and starved
to death. In Greece people cannot afford even bread today.
But this is economic liberalism, the economy comes first.
Milton Freidman used his imagination to work out what small state, raw capitalism looked like whereas he could have looked
at it in reality through history books of the 18th and 19th centuries where it had already existed.
The Classical Economists studied it and were able to see its problems first hand and noted the detrimental effects of the rentier
class on the economy. They were constantly looking to get "unearned" income from doing nothing; sucking purchasing power out of
the economy and bleeding it dry.
Adam Smith observed:
"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.
Today we encourage a new rentier class of BTL landlords who look to extract the "earned" income of generation rent for "unearned"
income. If you have a large BTL portfolio you can become a true rentier, do nothing productive at all and live off "unearned"
income extracted from generation rent, the true capitalist parasite. (UK)
The Classical Economists realised capitalism has two sides, the productive side where "earned" income is generated and the
unproductive, parasitic, rentier side where "unearned" income is generated.
You should tax "unearned" income to discourage the parasitic side of capitalism.
You shouldn't tax "earned" income to encourage the productive side of capitalism.
You should provide low cost housing, education and services to create a low cost of living, giving a low minimum wage making
you globally competitive. This is to be funded by taxes on "unearned" income.
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.
That's Milton Freidman's imagined small state, raw capitalism.
What he imagined bears little resemblance to the reality the Classical Economists saw firsthand.
We need to move on from Milton Freidman fantasy land.
Small state, raw capitalism as observed by Adam Smith:
"But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society.
On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going
fastest to ruin."
When rates of profit are high, capitalism is cannibalising itself by:
1) Not engaging in long term investment for the future
2) Paying insufficient wages to maintain demand for its products and services
In the 18th Century they would have understood today's problems with growth and demand.
Luckily Jeff Bezos didn't inhabit Milton Freidman fantasy land.
He re-invested almost everything to turn Amazon onto the global behemoth it is today.
' The commitment to an anti-inflation policy is a commitment by the government, acting through central banks, to keep wages
down. '
This is strikingly silly. Insert the word 'nominal' before wages, and it's not a howler anymore.
Anti-inflation policy in fact has little influence on real wages (the variable of concern, not nominal wages). But it has a
lot to do with preventing the social chaos of constantly rising prices, strikes for higher wages, inability of first-time home
buyers to borrow at affordable rates, and so on.
Inflationism is greasy kid stuff not to mention a brazen fraud on the public.
As one who walked the corridors of power in a very modest capacity in my country in the early to mid 1990s, can I just say
that people with power or influence then were aware that globalisation would create winners and losers. I recall the consensus
of those I knew then was that steps would need to be taken to compensate the losers. The tragedy is that these steps were never
taken, or, if they were, only to a wholly inadequate degree.
The always elusive referents for cost, price and value the flip-side of social chaos would seem the entropic degradation of
wasted lives, excluded from participating {either-OR} abandoned as irredeemable
Higher interest rates slow inflation by reducing demand, thereby reducing job growth, and reduced job growth weakens workers'
bargaining power and puts downward pressure on wages.
Your assertion that anti-inflation policy has little influence on real wages does not address Baker's statement about the mechanism
by which he says it does. Given an argument between two people, one of whom cites a mechanism he is probably prepared to document
with numbers and one of whom merely declares his belief, which are people more likely to trust? Granted always, they should go
look for the numbers before they fully accept the statement, his credibility is currently higher than yours on this subject.
By contrast, since the 1970s real wages stalled, while interest rates round-tripped back to 2 percent.
Over nearly seven decades, the correlation is quite the opposite from that made up claimed by Dean Bonkers.
Namely, real wages soared under a regime of steadily rising nominal interest rates.
Since my original reply has disappeared in limbo, I will merely note that numbers are probably even crunchier when you don't
generalize across a span of decades: first there was A, then there was B, nothing else happened. It's a sure way to obscure patterns.
And Jim, please quit the ad hominem stuff! It's ugly and needless. If you really have an argument you don't need it, and if
you don't you don't gain by it. You know perfectly well he's not making things up and he's not bonkers. When you say stuff like
that, the obvious presumption is that you just don't want to consider his arguments because they lead somewhere you don't want
to go.
Perhaps I am missing the point being made, but if you are suggesting that increases in real wages in the 1945-1975 period caused
inflation, why not provide the data on inflation which would in fact show that inflation was essentially tame for 20 years in
this period (1952-1972, with a slight hiccup in 1969-1971), thereby contradicting your point? And if you are suggesting that Fed
increases in interest rate have not resulted in suppression of wages you will have to demonstrate that using analysis that takes
into account the lag in time between increase in rate and transmission to wages, and in that case would you not also use the Fed
Funds Rate itself as a variable?
Bulltwacky, they have been globalizing wages downwards while globalizing housing prices upwards!
Every time some stupid and moronic newsy floozy on one of the CorporateNonMedia outlets claims housing purchases may be going
down because consumer confidence is plummeting, they CHOOSE to ignore the foreign buyers of said houses!
Did I get this right? Full employment is an assumed boundary condition and so is fixed balance of trade? If the model is to
work as advertised then the boundary conditions must be hard wired to be true, right?
If the top 25 hedge fund managers saved around $5 billion per year in being taxed on their income at capital gains rate (carried
interest ruling in tax code - utterly corrupt), then think of the amount that is being robbed from the tax base when one considers
ALL the hedge fund people, and ALL the private equity types (who also do this), a conservative amount of tax revenues remitted
should be around $100 billion per year!
[IMO, Noah muddles the message, but it is a important
topic that gets muddled by everyone else too. Economists with
a financial bent had no problem apparently with the bank
mergers that started in the seventies and everyone loved the
auto maker mergers of the first half of the 2oth century.
Efficiency itself is an amorphous term. Mergers can be an
efficient use of capital since they deliver lower competition
and higher profits. JP Morgan did not want to be in a
industry that he could not dominate. Efficiency is different
for a fish than a capital owner. Mergers are good for
regulatory capture and ineffishient for fish. Mergers are
inefficient for workers that want higher wages or the
unemployed that want jobs. Market power and regulatory
capture can be efficient vehicles for taking advantage of
trade agreements to offshore production and increase returns
to capital all while lowering both prices and quality as well
as reducing domestic wages. Efficiency is in the eyeballs of
the beholder especially if they make good soup.]
Reply
Tuesday,
reason
-> RC AKA Darryl, Ron...
,
October 25, 2016 at 06:58 AM
But Keynes was saying something quite different - he wasn't
actually talking about policy but about economics (the task
of economists). He was saying that understanding short term
fluctuations was as important as predicting the long term.
Still relevant in this age of irrelevant general equilibrium
models.
I always looked at Keynes as a fellow traveler, one who wrote
obtusely at times for the express purpose of couching his
meaning in sweetened platitudes that at a second glance were
drenched in cynicism and sarcasm, at least when it came to
his opinions of economists and politicians and the capital
owning class that they both served.
OK, "obtusely" was a poor choice of words, at least with
regards to Keynes. Keynes realized WWI was a big mistake, the
Treaty at Versailles was an abomination with regards to
German restitution, and he was accused of anti-Semitism just
for being honest about Jewish elites in the Weimar Republic.
It was not that Keynes was insensitive, unpatriotic, or
anti-Semitic, but that Keynes was just correct on all counts.
JohnH -> RC AKA Darryl, Ron...
, -1
This is a good example of economists working in lock step
with investors: "Economists with a financial bent had no
problem apparently with the bank mergers that started in the
seventies and everyone loved the auto maker mergers of the
first half of the 2oth century."
I think it has been
questioned for decades whether increased efficiency in
banking actually materialized in the wake of industry
consolidation. Local market oligopolies may well have
generated higher profits and the appearance of more
efficiency. And concentration certainly facilitated collusion
as we have seen in many markets, including LIBOR.
What concentration indisputably caused was a dramatic
increase in the political power of the Wall Street banking
cartel, which owns not only the Federal Reserve but also a
lot of powerful politicians...a subject on which 'liberal'
economists are generally agnostic, since politics is outside
their silo.
The article ignored the effect of mergers on supplier
relationships, often one of near monopsony (oligopsony?). DOJ
seems to be focused on unit pricing to consumers(though
perhaps not with cable) to the point that most managements
understand that they have free rein to squeeze suppliers. And
so they merge to do so.
It may be that more contribution to increasing margins is
from purchase prices than selling prices.
"... My impression is that Trump_vs_deep_state is more about dissatisfaction of the Republican base with the Republican brass (which fully endorsed neoliberal globalization), the phenomenon somewhat similar to Sanders. ..."
"... Working class and lower middle class essentially abandoned DemoRats (Clinton democrats) after so many years of betrayal and "they have nowhere to go" attitude. ..."
"... Now they try to forge the alliance of highly paid professionals who benefitted from globalization("creative class"), financial speculators and minorities. Which does not look like a stable coalition to me. ..."
"... In other words both Parties are now split and have two mini-parties inside. I am not sure that Sanders part of Democratic party would support Hillary. The wounds caused by DNC betrayal and double dealing are still too fresh. ..."
"... We have something like what Marxists call "revolutionary situation" when the elite loses control of "peons". And existence of Internet made MSM propaganda far less effective that it would be otherwise. That's why they resort to war propaganda tricks. ..."
"That's not untrue, but it seems to me to be getting worse."
Because of economic stagnation and anxiety among lower class Republicans. Trump blames immigration
and trade unlike traditional elite Republicans. These are economic issues.
Trump supporters no longer believe or trust the Republican elite who they see as corrupt
which is partly true. They've been backing Nixon, Reagan, Bush etc and things are just getting
worse. They've been played.
Granted it's complicated and partly they see their side as losing and so are doubling down
on the conservatism, racism, sexism etc. But Trump *brags* that he was against the Iraq war.
That's not an elite Republican opinion.
likbez -> DrDick... , -1
My impression is that Trump_vs_deep_state is more about dissatisfaction of the Republican base with the Republican
brass (which fully endorsed neoliberal globalization), the phenomenon somewhat similar to Sanders.
Working class and lower middle class essentially abandoned DemoRats (Clinton democrats) after
so many years of betrayal and "they have nowhere to go" attitude.
Looks like they have found were to go this election cycle and this loss of the base is probably
was the biggest surprise for neoliberal Democrats.
Now they try to forge the alliance of highly paid professionals who benefitted from globalization("creative
class"), financial speculators and minorities. Which does not look like a stable coalition to
me.
Some data suggest that among unions which endorsed Hillary 3 out of 4 members will vote against
her. And that are data from union brass. Lower middle class might also demonstrate the same pattern
this election cycle.
In other words both Parties are now split and have two mini-parties inside. I am not sure that
Sanders part of Democratic party would support Hillary. The wounds caused by DNC betrayal and
double dealing are still too fresh.
We have something like what Marxists call "revolutionary situation" when the elite loses control
of "peons". And existence of Internet made MSM propaganda far less effective that it would be
otherwise. That's why they resort to war propaganda tricks.
In a lengthy speech on Saturday night in Manheim, Pennsylvania, Republican nominee for president
Donald J. Trump lambasted his opponent Democratic nominee Hillary Rodham Clinton for a secret tape
recording of her bashing supporters of Sen. Bernie Sanders of Vermont-and even called for Clinton
to be placed in prison and questioned as to whether she has been loyal to her husband former President
Bill Clinton.
Trump said in the speech on Saturday night:
A new audio tape that has surfaced just yesterday from another one of Hillary's high roller
fundraisers shows her demeaning and mocking Bernie Sanders and all of his supporters. You know,
and I'll tell you something we have a much bigger movement that Bernie Sanders ever had. We have
much bigger crowds than Sanders ever had. And we have a more important movement than Bernie Sanders
ever had because we're going to save our country, okay? We're going to save our country. But I
can tell you Bernie Sanders would have left a great, great legacy had he not made the deal with
the devil. He would have really left a great legacy. Now he shows up and 120 people come in to
hear him talk. Bernie Sanders would have left a great legacy had he not made the deal, had he
held his head high and walked away. Now he's on the other side perhaps from us and we want to
get along with everybody and we will-we're going to unite the country-but what Bernie Sanders
did to his supporters was very, very unfair. And they're really not his supporters any longer
and they're not going to support Hillary Clinton. I really believe a lot of those people are coming
over and largely because of trade, college education, lots of other things-but largely because
of trade, they're coming over to our side-you watch, you watch. Especially after Hillary mocks
him and mocks all of those people by attacking him and his supporters as 'living in their parents'
basements,' and trapped in dead-end careers. That's not what they are.
Also in his speech on Saturday night, Trump summed up exactly what came out in the latest Hillary
Clinton tapes in which she mocks Sanders supporters:
She describes many of them as ignorant, and [that] they want the United States to be more like
Scandinavia but that 'half the people don't know what that means' in a really sarcastic tone because
she's a sarcastic woman. To sum up, and I'll tell you the other thing-she's an incompetent woman.
She's an incompetent woman. I've seen it. Just take a look at what she touches. It never works
out, and you watch: her run for the presidency will never ever work out because we can't let it
work out. To sum up, Hillary Clinton thinks Bernie supporters are hopeless and ignorant basement
dwellers. Then, of course, she thinks people who vote for and follow us are deplorable and irredeemable.
I don't think so. I don't think so. We have the smartest people, we have the sharpest people,
we have the most amazing people, and you know in all of the years of this country they say, even
the pundits-most of them aren't worth the ground they're standing on, some of that ground could
be fairly wealthy but ground, but most of these people say they have never seen a phenomenon like
is going on. We have crowds like this wherever we go.
WATCH THE FULL SPEECH:
Later in the speech, Trump came back to the tape again and hammered her once more for it.
"Hillary Clinton all but said that most of the country is racist, including the men and women
of law enforcement," Trump said. "She said that the other night. Did anybody like Lester Holt? Did
anybody question her when she said that? No, she said it the other night. [If] you're not a die hard
Clinton fan-you're not a supporter-from Day One, Hillary Clinton thinks you are a defective person.
That's what she's going around saying."
In the speech, Trump questioned whether Clinton has the moral authority to lead when she considers
the majority of Americans-Trump supporters and Sanders supporters-to be "defective" people. And he
went so far as saying that Clinton "should be in prison." He went on:
How on earth can Hillary Clinton try to lead this country when she has nothing but contempt
for the people who live in this country? She's got contempt. First of all, she's got so many scandals
and she's been caught cheating so much. One of the worst things I've ever witnessed as a citizen
of the United States was last week when the FBI director was trying so hard to explain how she
away with what she got away with, because she should be in prison. Let me tell you. She should
be in prison. She's being totally protected by the New York Times and the Washington Post and
all of the media and CNN-Clinton News Network-which nobody is watching anyway so what difference
does it make? Don't even watch it. But she's being protected by many of these groups. It's not
like do you think she's guilty? They've actually admitted she's guilty. And then she lies and
lies, 33,000 emails deleted, bleached, acid-washed! And then they take their phones and they hammer
the hell out of them. How many people have acid washed or bleached a Tweet? How many?
He returned to the secret Clinton tape a little while later:
Hillary Clinton slanders and attacks anyone who wants to put America First, whether they
are Trump Voters or Bernie Voters. What she said about Bernie voters amazing. Like the European
Union, she wants to erase our borders and she wants to do it for her donors and she wants people
to pour into country without knowing who they are.
Trump later bashed the media as "dishonest as hell" when calling on the reporters at his event
to "turn your cameras" to show the crowd that came to see him.
"If they showed the kind of crowds we have-which people can hear, you know it's interesting: you
can hear the crowd when you hear the television but if they showed the crowd it would be better television,
but they don't know much about that. But it would actually be better television," Trump said.
Trump also questioned whether Hillary Clinton has been loyal to her husband, former President
Bill Clinton. Bill Clinton has been known to cheat on Hillary Clinton with a variety of mistresses
and has been accused of rape and sexual assault by some women.
"Hillary Clinton's only loyalty is to her financial contributors and to herself," Trump
said. "I don't even think she's loyal to Bill, if you want to know the truth. And really, folks,
really: Why should she be, right? Why should she be?"
Throughout the speech, Trump weaved together references to his new campaign theme about Clinton-"Follow
The Money"-with details about the Trans Pacific Partnership (TPP) trade deal. He said:
We're going to take on the corrupt media, the powerful lobbyists and the special interests
that have stolen your jobs, your factories, and your future-that's exactly what's happened. We're
going to stop Hillary Clinton from continuing to raid the industry from your state for her profit.
Hillary Clinton has collected millions of dollars from the same global corporations shipping
your jobs and your dreams to other countries. You know it and everybody else knows it. That's
why Clinton, if she ever got the chance, would 100 percent approve Trans Pacific Partnership-a
total disastrous trade deal. She called the deal the 'gold standard.' The TPP will bring economic
devastation to Pennsylvania and our campaign is the only chance to stop that and other bad things
that are happening to our country. She lied about the Gold Standard the other night at the debate.
She said she didn't say it-she said it. We want to stop the Trans Pacific Partnership and if we
don't-remember this, if we don't stop it, billions and billions [of dollars] in jobs and wealth
will be vacuumed right out of Pennsylvania and sent to these other countries. Just like NAFTA
was a disaster, this will be a disaster. Frankly I don't think it'll be as bad as NAFTA. It can't
get any worse than that-signed by Bill Clinton. All of us here in this massive room here tonight
can prevent this from happening. Together we can stop TPP and we can end the theft of American
jobs and prosperity.
Trump praised Sanders for being strongly opposed to the TPP:
I knew one man-I'm not a big fan-but one man who knew the dangers of the TPP was Bernie
Sanders. Crazy Bernie. He was right about one thing, only one thing, and that was trade. He was
right about it because he knew we were getting ripped off, but he wouldn't be able to do anything
about it . We're going to do a lot about it. We're going to have those highways running the
opposite direction. We're going to have a lot of trade, but it's going to come into our country.
We are going to start benefitting our country because right now it's one way road to trouble.
Our jobs leave us, our money leaves us. With Mexico, we get the drugs-they get the cash-it's that
simple.
Hillary Clinton, Trump noted, is "controlled by global special interests."
"She's on the opposite side of Bernie on the trade issue," Trump said. "She's totally on the opposite
side of Bernie."
He circled back to trade a bit later in the more-than-hour-long speech, hammering TPP and Clinton
cash connections. Trump continued:
Three TPP member countries gave between $6 and $15 million to Clinton. At least four lobbyists
who are actively lobbying for TPP passage have raised more than $800,000 for her campaign. I'm
just telling you Pennsylvania, we're going to make it. We're going to make it. We're going to
make it if we have Pennsylvania for sure. It'll be easy. But you cannot let this pass. NAFTA passed.
It's been the worst trade deal probably ever passed, not in this country but anywhere in the world.
It cleaned out New England. It cleaned out big portions of Pennsylvania. It cleaned out big portions
of Ohio and North Carolina and South Carolina-you can't let it happen.
Trump even called the politicians like Clinton "bloodsuckers" who have let America be drained
out of millions upon millions of jobs.
"These bloodsuckers want it to happen," Trump said. "They're politicians that are getting taken
care of by people that want it to happen. Other countries want it to happen because it's good for
them, but it's not good for us. So hopefully you're not going to let it happen. Whatever Hillary's
donors want, they get. They own her. On Nov. 8, we're going to end Clinton corruption. Hillary Clinton,
dishonest person, is an insider fighting for herself and for her friends. I'm an outsider fighting
for you. And by the way, just in case you're not aware, I used to be an insider but I thought this
was the right thing to do. This is the right thing to do, believe me."
This is the smoking gun behind the corruption of the Fed during the 2008 crisis. I want to
see how they tell the world that this was all legal.
END PRIVATE FINANCE! The folks that own private finance also own the US and many other governments.....with
or without vote rigging as one of their tools.
This guy is die hard neoliberal. That's why he is fond of Washington consensus. He does not understand
that the time is over for Washington consensus in 2008. this is just a delayed reaction :-)
Notable quotes:
"... after years of unusually sluggish and strikingly non-inclusive growth, the consensus is breaking down. Advanced-country citizens are frustrated with an "establishment" – including economic "experts," mainstream political leaders, and dominant multinational companies – which they increasingly blame for their economic travails. ..."
"... Anti-establishment movements and figures have been quick to seize on this frustration, using inflammatory and even combative rhetoric to win support. They do not even have to win elections to disrupt the transmission mechanism between economics and politics. ..."
"... They also included attacks on "international elites" and criticism of Bank of England policies that were instrumental in stabilizing the British economy in the referendum's immediate aftermath – thus giving May's new government time to formulate a coherent Brexit strategy. ..."
"... The risk is that, as bad politics crowds out good economics, popular anger and frustration will rise, making politics even more toxic. ..."
"... At one time, the people's government served as a check on the excesses of economic interests -- now, it is simply owned by them. ..."
"... The defects of the maximalist-globalist view were known for years before the "consensus began to break down". ..."
"... In at least some of these cases, the "transmission" of the consensus involved more than a little coercion and undermining local interests, sovereignty, and democracy. This is an central feature of the "consensus", and it is hard to see how it can by anything but irredeemable. ..."
"... However it is not bad politics crowding out out good economics, for the simple reason that the economic "consensus" itself, in embracing destructive and destabilizing economic policy crowded out the ostensibly centrist politics... ..."
"... The Inclusive Growth has remained only a Slogan and Politicians never ventured into the theme. In the changed version of the World.] essential equal opportunity and World of Social media, perspective and social Political scene is changed. Its more like reverting to mean. ..."
In the 1990s and 2000s, for example, the so-called Washington Consensus dominated policymaking
in much of the world...
... ... ...
But after years of unusually sluggish and strikingly non-inclusive growth, the consensus is
breaking down. Advanced-country citizens are frustrated with an "establishment" – including economic
"experts," mainstream political leaders, and dominant multinational companies – which they increasingly
blame for their economic travails.
Anti-establishment movements and figures have been quick to seize on this frustration, using
inflammatory and even combative rhetoric to win support. They do not even have to win elections to
disrupt the transmission mechanism between economics and politics. The United Kingdom proved
that in June, with its Brexit vote – a decision that directly defied the broad economic consensus
that remaining within the European Union was in Britain's best interest.
... ... ...
... speeches by Prime Minister Theresa May and members of her cabinet revealed an intention to
pursue a "hard Brexit," thereby dismantling trading arrangements that have served the economy well.
They also included attacks on "international elites" and criticism of Bank of England policies
that were instrumental in stabilizing the British economy in the referendum's immediate aftermath
– thus giving May's new government time to formulate a coherent Brexit strategy.
Several other advanced economies are experiencing analogous political developments. In Germany,
a surprisingly strong showing by the far-right Alternative für Deutschland in recent state
elections already appears to be affecting the government's behavior.
In the US, even if Donald Trump's presidential campaign fails to put a Republican back in the
White House (as appears increasingly likely, given that, in the latest twist of this highly unusual
campaign, many Republican leaders have now renounced their party's nominee), his candidacy will likely
leave a lasting impact on American politics. If not managed well, Italy's constitutional referendum
in December – a risky bid by Prime Minister Matteo Renzi to consolidate support – could backfire,
just like Cameron's referendum did, causing political disruption and undermining effective action
to address the country's economic challenges.
... ... ...
The risk is that, as bad politics crowds out good economics, popular anger and frustration
will rise, making politics even more toxic. ...
Mr El-Erian, I know you are a good man, but it seems as though everyone believes we can synthetically
engineer a way out of this never ending hole that financial engineering dug us into in the first
place.
Instead why don't we let this game collapse, you are a good man and you will play a role in
the rebuilding of better system, one that nurtures and guides instead of manipulate and lie.
The moral suasion you mention can only appear by allowing for the self annihilation of this
financial system. This way we can learn from the autopsies and leave speculative theories to third
rate economists
It is sadly true that "the relationship between politics and economics is changing," at least
in the U.S.. At one time, the people's government served as a check on the excesses of economic
interests -- now, it is simply owned by them.
It seems to me that the best we can hope for now is some sort of modest correction in the relationship
after 2020 -- and that the TBTF banks won't deliver another economic disaster in the meantime.
Petey Bee OCT 15, 2016
1. The defects of the maximalist-globalist view were known for years before the "consensus
began to break down".
2. In at least some of these cases, the "transmission" of the consensus involved more than
a little coercion and undermining local interests, sovereignty, and democracy. This is an central
feature of the "consensus", and it is hard to see how it can by anything but irredeemable.
In the concluding paragraph, the author states that the reaction is going to be slow. That's absolutely
correct, the evidence has been pushed higher and higher above the icy water line since 2008.
However it is not bad politics crowding out out good economics, for the simple reason that
the economic "consensus" itself, in embracing destructive and destabilizing economic policy crowded
out the ostensibly centrist politics...
Paul Daley OCT 15, 2016
The Washington consensus collapsed during the Great Recession but the latest "consensus" among
economists regarding "good economics" deserves respect.
atul baride OCT 15, 2016
The Inclusive Growth has remained only a Slogan and Politicians never ventured into the theme.
In the changed version of the World.] essential equal opportunity and World of Social media, perspective
and social Political scene is changed. Its more like reverting to mean.
so when people criticize the big deflation in
computer/electronics hardware using baseless measures like
"if the computer has a processor twice as fast then it has
fallen by half in price" they are wackos. but now the real
growth that is artificially generated by this way (quality
improvements) to keep inflation down is being criticized by
Fox. Of course it is completely made up growth. the absurdity
of the economists deal with price inflation. now years later,
everyone realizes we have all taken a big fall in living
standards no matter how many gigahertz my stupid computer is.
Manufacturing hasn't boomed since the 60's. The FRED graphs
are garbage and useless in general. They are improperly
calculated and they have out right admitted they may have
"problems".
Manufacturing is dying out and becoming automated over the
decades. There is no such thing as artificial growth either.
Demand based on consumption is just as valid as industrial
production shipped to other countries.
"The FRED graphs are garbage and useless in general."
No -
your comments are garbage and useless. Actually READ the
post. He did not get his graphs or data from FRED. Seriously
- you need professional help.
poppycock. the garbage on their industrial production chart
in the 90's and 00's was stupid bad. The US hasn't had a
industrial boom since the 60's when our consumption was
surging while we still made most of our products. No wonder
inflation surged by the late 60's. The war against communism
was having a painful bad side effects to rentiers and
bankers, which spread to capital by the late 60's.
"the garbage on their industrial production chart in the 90's
and 00's was stupid bad."
Can we focus on the single word
"their". You think he used FRED. No jackass, he made his own
charts from the source data - BLS. But noooooooo - you are
too stupid to get even this simple point. So the rest of your
ramblings is nothing more than your usual intellectual
garbage.
Auto mfg dropped by half post 2008.
It is now back but has nowhere to grow.
Urbanization makes cars less necessary and less desirable
There is not enough room to park them all now.
People who earn MinWage cannot afford them
Interesting point but many will overinterpret this. Leave in
the expansion of computer and electronics manufacturing value
add, and we have manufacturing output slightly expanding.
Take it out entirely and we have manufacturing output
basically steady.
The difference isn't telling an important
macro story.
The important macro story is the major decline in
manufacturing employment, and that has two big and one
smaller causes.
The two big factors are the increased productivity of
manufacturing globally and the declining share of
manufactured products as a % of GDP globally. The smaller
factor is the US's declining share of global manufacturing
output, which itself is only fractionally attributable to
trade policy.
I don't know anyone who says US manufacturing is
"booming." It certainly isn't. It's treading water. It's
growing slowly as the economy grows, but we can predict with
high confidence that it will continue to contract as a share
of total output over time, because that has been the secular
trend for decades and there's no reason to expect that to
change.
The only big question is how we adapt to the world as it
actually is.
Also, I did not realize I was being presented
with an argument about Chinese growth and sustainability. I
foolishly stopped reading and I am entirely sorry. I have set
down data and begun to answer the argument below on Links:
What is significant though is how China insists on holding to
growth targets that are very likely not sustainable.
Stability is a worthy aim but when growth is achieved through
pushing bad private sector loans, that is ultimately the
enemy of stability.
[ For these 39 past years China has
been holding to and achieving growth targets that were
repeatedly considered unsustainable so I prefer to figure out
why Chinese growth targets have been and from my perspective
are now sustainable. ]
the forgotten spirit of American protectionism :
, -1
YES! Of course US manufacturing isn't booming - how could it?
We have horrible economic policies that are focused almost
entirely on destroying our industrial base. High overvalued
currency, combined with 0% tariffs and we have no VAT, so
foreign imports from countries with a VAT receive export
subsidies but are not taxed on the US side. That we have even
one factory left is amazing and testament to the quality of
American workers. Under Clinton, we'll lose what's left.
Trump is our only hope. 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.
"... Of course it is completely made up growth. the absurdity of the economists deal with price inflation. now years later, everyone realizes we have all taken a big fall in living standards no matter how many gigahertz my stupid computer is. ..."
"... The important macro story is the major decline in manufacturing employment, and that has two big and one smaller causes. ..."
"... I don't know anyone who says US manufacturing is "booming." It certainly isn't. It's treading water. It's growing slowly as the economy grows, but we can predict with high confidence that it will continue to contract as a share of total output over time, because that has been the secular trend for decades and there's no reason to expect that to change. ..."
No, U.S. Manufacturing Isn't Really Booming :...[Is]American manufacturing .. in decline?
An answer frequently offered by wonky economics journalists is that, no, U.S. manufacturing output
has actually kept growing. ...
There's a catch, though. As economist Susan N. Houseman of the W.E. Upjohn Institute for Employment
Research ...
points out , about half of the growth in U.S. manufacturing output since 1997 has been in
just one sector: computer and electronics manufacturing.
If it weren't for computers and electronics (which includes semiconductors), manufacturing
output would still be well below its 2008 peak and only 21 percent higher than in 1997...
The ... way those computers-and-electronics numbers are arrived at is worthy of a closer look.
... Without adjusting for deflation, value added in computer and electronics manufacturing is
up 45 percent since 1997. With the adjustments, it's up 699 percent! What's happening here is
that the Bureau of Economic Analysis has been trying to account for vast improvements in ... quality...
Writes Houseman:
Such quality adjustment ... can make the numbers difficult to interpret..., figures that exclude
this industry ... arguably provide a clearer picture of trends in manufacturing output.
As it stands now, those trends don't look impressive. U.S. manufacturing output has held up
a lot better than manufacturing employment. But it definitely isn't booming.
so when people criticize the big deflation in computer/electronics hardware using baseless
measures like "if the computer has a processor twice as fast then it has fallen by half in price"
they are wackos. but now the real growth that is artificially generated by this way (quality improvements)
to keep inflation down is being criticized by Fox.
Of course it is completely made up growth. the absurdity of the economists deal with price
inflation. now years later, everyone realizes we have all taken a big fall in living standards
no matter how many gigahertz my stupid computer is.
Auto mfg dropped by half post 2008. It is now back but has nowhere to grow. Urbanization makes
cars less necessary and less desirable
There is not enough room to park them all now. People who earn MinWage cannot afford them
Interesting point but many will overinterpret this. Leave in the expansion of computer and electronics
manufacturing value add, and we have manufacturing output slightly expanding. Take it out entirely
and we have manufacturing output basically steady.
The difference isn't telling an important macro story.
The important macro story is the major decline in manufacturing employment, and that has
two big and one smaller causes.
The two big factors are the increased productivity of manufacturing globally and the declining
share of manufactured products as a % of GDP globally. The smaller factor is the US's declining
share of global manufacturing output, which itself is only fractionally attributable to trade
policy.
I don't know anyone who says US manufacturing is "booming." It certainly isn't. It's treading
water. It's growing slowly as the economy grows, but we can predict with high confidence that
it will continue to contract as a share of total output over time, because that has been the secular
trend for decades and there's no reason to expect that to change.
The only big question is how we adapt to the world as it actually is.
Also, I did not realize I was being presented with an argument about Chinese growth and sustainability.
I foolishly stopped reading and I am entirely sorry. I have set down data and begun to answer
the argument below on Links:
What is significant though is how China insists on holding to growth targets that are very likely
not sustainable. Stability is a worthy aim but when growth is achieved through pushing bad private
sector loans, that is ultimately the enemy of stability.
[ For these 39 past years China has been holding to and achieving growth targets that were
repeatedly considered unsustainable so I prefer to figure out why Chinese growth targets have
been and from my perspective are now sustainable. ]
the forgotten spirit of American protectionism : , -1
YES! Of course US manufacturing isn't booming - how could it? We have horrible economic policies
that are focused almost entirely on destroying our industrial base. High overvalued currency,
combined with 0% tariffs and we have no VAT, so foreign imports from countries with a VAT receive
export subsidies but are not taxed on the US side. That we have even one factory left is amazing
and testament to the quality of American workers. Under Clinton, we'll lose what's left. Trump
is our only hope. 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.
48% of Trump supporters "completely distrust the economic data reported by the federal government"
including unemployment, spending, jobs. https://t.co/5l9GhucBFI
- Justin Wolfers (@JustinWolfers)
October
15, 2016
That tweet and the
linked article got my attention (no trust of data by 25% of adults!) ... Still why reflect
on this? ... so much else to get stuck on these days. First, I use official statistics in my work
A LOT; second, I am always on the look out for new survey insights; and finally, I am a bit
obsessed lately with models
in which people are not acting on the same information. This level of distrust is troubling
... even though I doubt it's new or entirely about the data ... I want us to think about WHY.
I study consumer behavior as an economist, which in 2016 still means reading lots of research
with dynamic optimization and Euler equations. This is a typical
early morning
ritual for me, that quiet time before my kids wake up when I can still imagine a world in
which we know everything about everything, including ourselves, and we choose calmly and appropriately.
BUT I balance out my openness to such models with a determination to also understand what people
ACTUALLY do and think.
Nevertheless, I am picky about the survey insights that I absorb, pass on, and try to understand.
My cognate in grad school
was survey methodology and I still write survey questions in my research ... thus I understand
how much responses can be manipulated, or even carelessly biased by poor methods and human nature.
Also I want to know what people think, not what someone writing up the survey results wants me
as a reader to think. (I'm not a fan of the tweet, by the way.) So I googled and found the
survey's homepage
, a Marketplace-Edison Research poll designed to measure economic anxiety. And, I found a
description of the
methods AND the
full survey too (see page 30 for this question). It's not the micro data online, so I can't
replicate the statistic in the tweet, but I could see that the "data trust" question was asked
before voting intentions or political affiliation. I have learned from pollsters that
asking about politics conjures up an identity that can be hard to shake in the rest of the survey.
The main roadblock I see in interpreting the data distrust is this survey's short time series;
it only began last fall as a quarterly survey. My hunch is that distrust of economic data is nothing
new but I can't prove that here. Plus changes in attitudes are often more informative than a snapshot,
since subjective questions are tricky to interpret. What does it mean to "trust data" anyway?
Do you trust data?
To be clear, I am not justifying anyone's views, but I am also trying not to be judgmental.
A key principle of surveying is not to make people feel bad or shameful about their views. Because,
guess what, if you do, they are less likely to tell you what they think or did ... then you are
fighting blind and may miss the chance to learn why we sometimes see the world differently. I
am not in the 25% of adults who have "no trust at all" in economic statistics from the
government. In fact, I am in a rare set of adults who spends more time on the
Bureau of Economic Analysis ' website sorting
through spending data than on Amazon adding to it. So what's up with all this distrust? I have
a few hypotheses to take to the data.
Hypothesis 1: government economic data don't match people's life
Sometimes I think the Representative Agent is a frenemy of economists. (Oh, not the
Twitter persona , he's great, but
the concept.) How can a simplifying assumption ... a focus on the typical or aggregate household
... be an enemy in disguise? Well, sometimes it gives theoretical models the focus they need and
other times, especially in empirical work, it glosses over important details. Details, also known
as people . So maybe distrust of economic data comes from not seeing your life experience
in the numbers that roll across the screen. National aggregates get a lot of attention, so maybe
it is minorities that end of distrusting data more, data that doesn't tell their story as loudly.
Not so, at least in terms of data about the economy, minorities are more trusting
than whites. Only 15 percent of African-American have no trust at all in economic data almost
half the fraction of whites. And among Hispanics, only12 percent have complete distrust of data.
With whites comprising over 70 percent of all adults, they are well represented in both aggregate
statistics and the distrust of them. Of course, this is just one cut of the data and not seeing
your life experience in the data may raise other issues (more below). Government agencies have
made a push to improve regional statistics
and even make
neighborhood data more readily accessible and help improve local decision making. And of course,
lots of household level surveys exist too. Another reason to take distrust (or even disinterest)
in government economic data seriously is that the quality of the data we have depends on people's
participation in our surveys. Response rates on numerous surveys
have been falling and
research
suggests that non response could impact official statistics, making them a less accurate reflection
of life experiences.
Hypothesis 2: distrust stems from people being "hurt" by data
One the first Friday of the every month, my Twitter feed is overflowing with chatter about
the latest employment report from the Bureau of
Labor Statistics . That makes me weird. I firmly believe that few people absorb the government
statistics in the way that I and my fellow econos do. Why should they? People confront economic
data when it affects them. One example I can think of is the cost-of-living adjustment, such as
for Social Security benefits. That came to mind when I looked at data distrust by age.
no cost-of-living
adjustment to benefits had led some seniors to "distrust" government data, like the CPI-W?
Again, this hypothesis would be a lot better to test with a time series of data, comparing years
with benefit increases and without. But feeling shortchanged by the data may be understandable
given wide variation relative price changes , few of us exactly consume the representative
basket. Alternatively, as risk aversion appears to rise with age, maybe so too does distrust?
I wrote earlier that age is
more than just a number , the impact of demographic change deserves more study.
Hypothesis 3: it's not the data, it is the way we use them ... the spin
I don't trust data, I trust people. And even then, trust but verify, right? Perfectly measured
data (dream, dream), can be still be suspect. In fact, data can codify a lot of the biases and
mistakes we have made together in the past. Maybe we should also be concerned for the people who
"completely trust" government economic data? (Do read
Cathy O'Neil's book on
Big Data and algorithms.) Yet, I suspect the distrust in the survey is not about data construction
(I've never seen a protest at the ever-interesting
BEA advisory committee meetings
) ... or even about the government employees who construct the statistics in excruciating
detail, and in line with
international
standards . I bet the distrust is more about how the numbers are interpreted and how they
are used in policy making. Drawing conclusions from data is hard and reasonable disagreement is
to be expected. As just one example, the seasonally-adjusted unemployment rate for African Americans
was 8.3 in September
, which is below its average of 10.8 percent over the past 20 years but is almost double the
4.4 percent unemployment rate of whites. Should we call that 8.3 (or 4.4, for that matter) victory
or 'full employment'? And is the unemployment rate even the right statistic to assess? Relative
to the past it may well be but the past can be an imperfect guide for the future. Every data point
has its shortcoming, especially where there is no clear counterfactual or agreed upon target.
My "moderate" growth could easily be your "weaker-than-expected" growth. And, of course, on top
of honest disagreements about data, plenty of motivated reasoning is done with numbers. BUT when
we start with the same data, there are at least some bounds on the disagreement. In contrast,
when government data are wholesale rejected one quarter of adults, it's no surprise that we aren't
living in the same world. And we stop trying to understand each other. I would be lost (and bored
out of my mind) in my work on consumer behavior without data. You don't want me extrapolating
from my tiny circle of experience ... and frankly no one should make decisions with that little
information. We can learn a lot from the data, including these attitudinal surveys. And data adds
accountability, including in how its collected. Even so, no one likes to feel manipulated or,
worse, written off, especially with numbers.
Data can't solve problems but maybe it holds clues to a path forward ... to rebuild trust.
**Opinions here are mine and should not to be attributed to anyone with whom I work.**
Is it just not done to ask people why they distrust Government figures ?
2016-10-17, Stuart Gibson The same thing happened here in Italy with Silvio Berlusconi. He got
a lot of reforms but a lot of people ignored facts.
2016-10-17, pietro No one 'trusts' data. We all have confidence intervals.
This combined with your point number 3 is the main issue I suspect.
Point number 1 is also in play, I think point 2 is essentially irrelevant, it might be true for
some data, but not for data.
As far as economics goes, people intuitively understand that economics attempts to push the envelope
and use data to draw conclusions that are not really addressable with the data. Economists don't
even have agreement on how data is used - thinking mostly of macro. I see no reason to puzzle
on this until you can get economists to all agree. I don't mean this as a challenge, just a description
of the situation.
2016-10-17, Dan The headline unemployment number is obviously false, and this affects confidence
in the other numbers.
There is no particular mystery about what is going on.
2016-10-17, Dave Chapman Because your aggregated statistics does not reflect the experience of
the individuals:
"But several underlying factors also appear to have contributed to the closeness of the race.
For starters, many Americans are economically worse off than they were a quarter-century ago.
The median income of full-time male employees is lower than it was 42 years ago, and it is increasingly
difficult for those with limited education to get a full-time job that pays decent wages.
Indeed, real (inflation-adjusted) wages at the bottom of the income distribution are roughly where
they were 60 years ago. So it is no surprise that Trump finds a large, receptive audience when
he says the state of the economy is rotten. But Trump is wrong both about the diagnosis and the
prescription. The US economy as a whole has done well for the last six decades: GDP has increased
nearly six-fold. But the fruits of that growth have gone to a relatively few at the top – people
like Trump, owing partly to massive tax cuts that he would extend and deepen. "
https://www.project-syndicate.org/commentary/trump-candidacy-message-to-political-leaders-by-joseph-e--stiglitz-2016-10
2016-10-17, PSteele
"... If you insist on focusing on individuals, you may miss the connection, because the worst off
within communities - actual chronic discouraged workers, addicts - are likely to express no opinion
to the degree they can be polled at all. Trump primary voters are white Republicans who vote, automatically
a more affluent baseline* than the white voters generally. ..."
EMichael quotes Steve Randy Waldman and Dylan Matthews in today's links:
""Trump voters, FiveThirtyEight's Nate Silver found, had a median household income of $72,000,
a fair bit higher than the $62,000 median household income for non-Hispanic whites in America."
...
""But it is also obvious that, within the Republican Party, Trump's support comes disproportionately
from troubled communities, from places that have been left behind economically, that struggle
with unusual rates of opiate addiction, low educational achievement, and other social vices."
I followed the link and failed to find any numbers on the "troubled communities" thing. It
seems strange to me that the two comments above are in conflict with each other."
It seems like you are missing the point of Waldman's blog post (and Stiglitz and Shiller)
You didn't quote this part:
"... If you insist on focusing on individuals, you may miss the connection, because the
worst off within communities - actual chronic discouraged workers, addicts - are likely to express
no opinion to the degree they can be polled at all. Trump primary voters are white Republicans
who vote, automatically a more affluent baseline* than the white voters generally.
"Among Republicans, Trump supporters have slightly lower incomes. But what really differentiates
them?"]
"At the community level**, patterns are clear. (See this*** too.) Of course, it could still
all be racism, because within white communities, measures of social and economic dysfunction are
likely correlated with measures you could associate with racism."
Of course, it could still all be racism, because within white communities, measures of social
and economic dysfunction are likely correlated with measures you could associate with racism.
Social affairs are complicated and the real world does not hand us unique well-identified models.
We always have to choose our explanations,**** and we should think carefully about how and why
we do so. Explanations have consequences, not just for the people we are imposing them upon, but
for our polity as a whole. I don't get involved in these arguments to express some high-minded
empathy for Trump voters, but because I think that monocausally attributing a broad political
movement to racism when it has other plausible antecedents does real harm....
"... ...Trump referred explicitly to "the disenfranchisement of working people" ..."
"... Trump denounced the "global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities." ..."
"... He continued: "Just look at what this corrupt establishment has done to our cities like Detroit and Flint, Michigan-and rural towns in Pennsylvania, Ohio, North Carolina and across our country. They have stripped these towns bare, and raided the wealth for themselves and taken away their jobs." ..."
"... He went on to cite internal Clinton campaign emails published by WikiLeaks this week, documenting how, as Trump put it, "Hillary Clinton meets in secret with international banks to plot the destruction of US sovereignty in order to enrich these global financial powers." ..."
"... The Clinton campaign, warned of the impending release of masses of politically incriminating documents by WikiLeaks, sought to preempt this exposure by denouncing the leaks as a conspiracy engineered by Russia and its president, Vladimir Putin. ..."
"... Clinton is appealing for support from sections of the Republican Party, above all the neo-conservatives of the George W. Bush administration, responsible for the war in Iraq, the widespread use of torture and other crimes. ..."
"... The anti-Russian campaign has been combined with an effort to demonize Trump for a series of purported sexual offenses, with a barrage of video and audio recordings, together with the testimony of alleged victims. ..."
"... The Democratic campaign and its media allies are using methods similar to those the ultra-right employed in its efforts to oust Bill Clinton from the White House in the 1990s. They are seeking to stampede public opinion with increasingly sensationalized material. These methods degrade political discussion and distract popular consciousness from the real issues in the election. ..."
In a speech delivered by Donald Trump to an audience of thousands in West Palm Beach, Florida, the
Republican candidate turned his campaign in a more distinctly fascistic direction. Presenting himself
as both the savior of America and the victim of a ruthless political and economic establishment,
Trump sought to connect deep-seated social anger among masses of people with an "America First" program
of anti-immigrant xenophobia, militarism, economic nationalism and authoritarianism.
Responding to the latest allegations of sexual abuse, Trump proclaimed that he is being targeted
by international bankers, the corporate-controlled media and the political establishment who fear
that his election will undermine their interests.
He offered as an alternative his own persona-the strong-man leader who is willing to bear the
burden and make the sacrifices necessary for a pitiless struggle against such powerful adversaries.
Trump warned that the November 8 election would be the last opportunity for the American people to
defeat the powerful vested interests that are supporting Hillary Clinton.
The clear implication of the speech is that if Trump loses the election, the struggle against
the political establishment will have to be carried forward by other means...
...
...Trump referred explicitly to "the disenfranchisement of working people" -with racist,
chauvinist and dictatorial solutions. This includes not only the demand for jailing Hillary Clinton,
now a refrain of every speech, but his calls for his supporters to prevent a "rigged" election by
blocking access to the polls for voters in "certain communities."
Trump denounced the "global power structure that is responsible for the economic decisions
that have robbed our working class, stripped our country of its wealth and put that money into the
pockets of a handful of large corporations and political entities."
He continued: "Just look at what this corrupt establishment has done to our cities like Detroit
and Flint, Michigan-and rural towns in Pennsylvania, Ohio, North Carolina and across our country.
They have stripped these towns bare, and raided the wealth for themselves and taken away their jobs."
He went on to cite internal Clinton campaign emails published by WikiLeaks this week, documenting
how, as Trump put it, "Hillary Clinton meets in secret with international banks to plot the destruction
of US sovereignty in order to enrich these global financial powers."
After the top congressional Republican, House Speaker Paul Ryan, publicly broke with Trump Monday,
declaring that he would neither campaign for him nor defend him, Trump responded with the declaration,
"It is so nice that the shackles have been taken off me and I can now fight for America the way I
want to."
... ... ...
The Clinton campaign, warned of the impending release of masses of politically incriminating
documents by WikiLeaks, sought to preempt this exposure by denouncing the leaks as a conspiracy engineered
by Russia and its president, Vladimir Putin.
Clinton is appealing for support from sections of the Republican Party, above all the neo-conservatives
of the George W. Bush administration, responsible for the war in Iraq, the widespread use of torture
and other crimes.
The anti-Russian campaign has been combined with an effort to demonize Trump for a series
of purported sexual offenses, with a barrage of video and audio recordings, together with the testimony
of alleged victims.
The Democratic campaign and its media allies are using methods similar to those the ultra-right
employed in its efforts to oust Bill Clinton from the White House in the 1990s. They are seeking
to stampede public opinion with increasingly sensationalized material. These methods degrade political
discussion and distract popular consciousness from the real issues in the election.
The Hillary Clinton campaign says the hackers behind the leaked
email evidence of their collusion with the major media are from
Russia and linked to the Russian regime. If so, I want to publicly
thank those Russian hackers and their leader, Russian President
Vladimir Putin, for opening a window into the modern workings of
the United States government-corporate-media establishment.
We always knew that the major media were extensions of the
Democratic Party. But the email evidence of how figures like
Maggie
Haberman
of The New York Times,
Juliet
Eilperin
of The Washington Post, and
John
Harwood
of CNBC worked hand-in-glove with the Democrats is
important. The Daily Caller and Breitbart have led the way in
digging through the emails and exposing the nature of this
evidence. It is shocking even to those of us at Accuracy in Media
who always knew about, and had documented, such collusion through
analysis and observation.
The Clinton campaign and various intelligence officials insist
that the purpose of the Russian hacking is to weaken the confidence
of the American people in their system of government, and to
suggest that the American system is just as corrupt as the Russian
system is alleged to be. Perhaps our confidence in our system
should be shaken. The American people can see that our media are
not independent of the government or the political system and, in
fact, function as an arm of the political party in control of the
White House that wants to maintain that control after November 8.
In conjunction with other evidence, including the ability to
conduct vote fraud that benefits the Democrats, the results on
Election Day will be in question and will form the basis for Donald
J. Trump to continue to claim that the system is "rigged" against
outsiders like him.
The idea of an American system of free and fair elections that
includes an honest press has been terribly undermined by the
evidence that has come to light. We are not yet to the point of the
Russian system, where opposition outlets are run out of business
and dissidents killed in the streets. That means that the Russians
have not completely succeeded in destroying confidence in our
system. But we do know that federal agencies like the Federal
Election Commission (FEC) and Federal Communications Commission
(FCC) are poised to strike blows against free and independent
media. Earlier this year the three Democrats on the FEC
voted
to punish
filmmaker Joel Gilbert for distributing a film
critical of President Barack Obama during the 2012 campaign.
The New York Times is
reporting
that
Clinton campaign chairman John Podesta has been contacted by the
FBI about the alleged Russian hackers behind the leaks of his
emails. This is what Podesta and many in the media want to talk
about.
But the Russians, if they are responsible, have performed a
public service. And until there is a thorough house-cleaning of
those in the major media who have made a mockery of professional
journalism, the American people will continue to lack confidence in
their system. The media have been caught in the act of sabotaging
the public's right to know by taking sides in the presidential
contest. They have become a propaganda arm of the Democratic Party,
coordinating with the Hillary Clinton for president campaign, which
apparently was being run out of Georgetown University, where John
Podesta was based. Many emails carry the web address of
[email protected], a reference to the Georgetown
University position held by the chairman of the 2016 Hillary
Clinton presidential campaign. Podesta is a Visiting Professor at
Georgetown University Law Center. His other affiliations include
the George Soros-funded Center for American Progress and the United
Nations High Level Panel on the Post-2015 Development Agenda.
Podesta and the other members of this U.N. panel had proposed "
A
New Global Partnership for the World
," which advocated for a
"profound economic transformation" of the world's economic order
that would result in a new globalist system. Shouldn't the American
people be informed about what Podesta and his Democratic allies
have planned for the United States should they win on November 8?
That Podesta would serve the purposes of the U.N. is not a
surprise. But it is somewhat surprising that he would use his base
at Georgetown University to run the Hillary campaign. On the other
hand, Georgetown, the nation's oldest Catholic and Jesuit
university,
describes
itself
as preparing "the next generation of global citizens to lead and
make a difference in the world."
When a Catholic university serves as the base for the election
of a Democratic Party politician committed to taxpayer-funded
abortion on demand and transgender rights, you know America's
political system and academia are rotten to the core. The
disclosure from WikiLeaks that Podesta used his Georgetown email to
engage in party politics only confirms what we already knew.
If the Russians are ultimately responsible for the release of
these emails, some of which
show
an anti-Catholic animus
on the part of Clinton campaign
officials, we are grateful to them. The answer has to be to clean
out the American political system of those who corrupt it and
demonstrate to the world that we can achieve higher standards of
integrity and transparency.
For its part, Georgetown University should be stripped of its
Catholic affiliation and designated as an official arm of the
Democratic Party.
Paul Kersey
balolalo
Oct 14, 2016 12:02 PM
The well deserved hatred for Hillary and the globalists is so
great, that at least 40% of the males in this country would back
anyone who went up against the Clintons. That's just not the
same thing as "BUYING TRUMPS BULLSHIT HOOK, LINE, AND SINKER".
Trump is exposing the corruption and the hypocrisy of the
Clintons in a way that no one has ever had the guts to do in the
past. He's doing it on national TV with a large national
audience. With Trump we may get anarchy, but with the Clintons,
Deep State is guaranteed. It is Deep State that is working
overtime to finish building the expressway to neofeudalism.
Killary only can beg that voters hold their noses and vote for her. Guardian neoliberal presstitutes
still don't want to understand that Hillary is more dangerous then trump, Sge with her attempt that
she is more militant then male neocons can really provoke a confrontation with Russia or China.
Notable quotes:
"... War at home versus another foreign war, nothing will get through Congress, and either will get impeached...so third party all the way for me. ..."
"... Keep in mind, the election is not over and that drip, drip, drip of Hillary emails may push more people towards Trump. ..."
"... Shameless. Absolutely shameless, Guardian. This is not-even-disguised Clinton sycophancy... ..."
"... Clinton has everything going for her. The media, the banks, big business, the UN, foreign leaders, special interest lobbyists, silicon valley, establishment Republicans. How can she not win in an landslide?! ..."
"... We came, we saw, and he grabbed some pussy. ..."
"... It seems nobody wants to talk about what is really going on here - instead we are fed this bilge from both sides about 'sexual misconduct' and other fluff ..."
"... The stagnation of middle-class incomes in the West may last another five decades or more. ..."
"... This calls into question either the sustainability of democracy under such conditions or the sustainability of globalization. ..."
"... These classes of "globalization losers," particularly in the United States, have had little political voice or influence, and perhaps this is why the backlash against globalization has been so muted. They have had little voice because the rich have come to control the political process. The rich, as can be seen by looking at the income gains of the global top 5 percent in Figure 1, have benefited immensely from globalization and they have keen interest in its continuation. ..."
"... But while their use of political power has enabled the continuation of globalization, it has also hollowed out national democracies and moved many countries closer to becoming plutocracies. Thus, the choice would seem either plutocracy and globalization – or populism and a halt to globalization. ..."
The vast majority of her support comes from people that will be holding their noses as they vote
for her. Seems to me that convincing those same people that you have it in the bag will just cause
them to think voting isn't worth their time since they don't want to anyway.
I know Trump's supporters, the real ones, and the anyone-but-Hillary club will show up as well.
Funny if this backfires and he wins.
I won't be voting for either one and couldn't care less which one wins. War at home versus
another foreign war, nothing will get through Congress, and either will get impeached...so third
party all the way for me.
"Trump has to be the limit, and there has to be a re-alignment"
Trump has shown one must fight fire with fire. The days of the meek and mild GOP are over. Twice
they tried with nice guys and failed. Trump has clearly shown come out with both fists swinging
and you attract needed media and you make the conversation about you. Trump's mistake was not
seeking that bit of polish that leaves your opponent on the floor.
Keep in mind, the election is not over and that drip, drip, drip of Hillary emails may
push more people towards Trump.
Shameless. Absolutely shameless, Guardian. This is not-even-disguised Clinton sycophancy...
tugend49
For every woman that's been sexually harassed, bullied, raped, assaulted, catcalled, groped,
objectified, and treated lesser than, a landslide victory for Clinton would be an especially sweet
"Fuck You" to the Trumps of this world.
Clinton has everything going for her. The media, the banks, big business, the UN, foreign
leaders, special interest lobbyists, silicon valley, establishment Republicans. How can she not
win in an landslide?!
It might be a reaction against Trump, but it's also a depressing example of the power of the
establishment, and their desire for control in democracy. Just look at how they squealed at Brexit.
It seems nobody wants to talk about what is really going on here - instead we are fed this
bilge from both sides about 'sexual misconduct' and other fluff
There is a report from two years ago, July 2014, before the candidates had even been selected,
by the economist Branko Milanovic for Yale 'Global' about the impact of Globalisation on the Lower
Middle Classes in the West and how this was basically going to turn into exactly the choice the
American electorate is facing now
Why won't the media discuss these issues instead of pushing this pointless circus?
These are the penultimate paragraphs of the article on the report (there is a similar one for
the Harvard Business Review
here ):
The populists warn disgruntled voters that economic trends observed during the past three
decades are just the first wave of cheap labor from Asia pitted in direct competition with
workers in the rich world, and more waves are on the way from poorer lands in Asia and Africa.
The stagnation of middle-class incomes in the West may last another five decades or more.
This calls into question either the sustainability of democracy under such conditions
or the sustainability of globalization.
If globalization is derailed, the middle classes of the West may be relieved from the immediate
pressure of cheaper Asian competition. But the longer-term costs to themselves and their countries,
let alone to the poor in Asia and Africa, will be high. Thus, the interests and the political
power of the middle classes in the rich world put them in a direct conflict with the interests
of the worldwide poor.
These classes of "globalization losers," particularly in the United States, have had
little political voice or influence, and perhaps this is why the backlash against globalization
has been so muted. They have had little voice because the rich have come to control the political
process. The rich, as can be seen by looking at the income gains of the global top 5 percent
in Figure 1, have benefited immensely from globalization and they have keen interest in its
continuation.
But while their use of political power has enabled the continuation of globalization, it
has also hollowed out national democracies and moved many countries closer to becoming plutocracies.
Thus, the choice would seem either plutocracy and globalization – or populism and a halt to
globalization.
Globalisation will continue to happen. It has pulled a large part of the world population out
of poverty and grown the global economy.
Sure on the downside it has also hugely benefitted the 1%, while the western middle classes
have done relatively less well and blue collar workers have suffered as they seek to turn to other
types (less well paid) of work.
The issue is the speed of change, how to manage globalisation and spread the wealth more equitably.
Maybe it will require slowing but it cannot and should not be stopped.
"... In the West, the priority accorded to the individualist self-regarding norms underlying the Washington Consensus created a nurturing environment for growth in corruption, inequality, and mistrust in governing elites – the unintended consequences of rational-choice, me-first premises. With the emergence in advanced economies of disorders previously associated with developing countries, Swedish political scientist Bo Rothstein has petitioned the Academy of Sciences (of which he is a member) to suspend the Nobel Prize in economics until such consequences are investigated." ..."
Interesting read on the history of the Nobel Prize in
Economics and its ideological tendency:
Avner Offer: "a
group of center-right economists captured the process of
selecting prizewinners...The prize kingmaker was Stockholm
University economist Assar Lindbeck, who had turned away from
social democracy. During the 1970s and 1980s, Lindbeck
intervened in Swedish elections, invoked microeconomic theory
against social democracy, and warned that high taxation and
full employment led to disaster. His interventions diverted
attention from the grave policy error being made at the time:
deregulation of credit, which led to a deep financial crisis
in the 1990s and anticipated the global crisis that erupted
in 2008.
Lindbeck's concerns were similar to those of the
International Monetary Fund, the World Bank, and the US
Treasury. These actors' insistence on privatization,
deregulation, and liberalization of capital markets and trade
– the so-called Washington Consensus – enriched business and
financial elites, led to acute crises, and undermined
emerging economies' growth.
In the West, the priority accorded to the individualist
self-regarding norms underlying the Washington Consensus
created a nurturing environment for growth in corruption,
inequality, and mistrust in governing elites – the unintended
consequences of rational-choice, me-first premises. With the
emergence in advanced economies of disorders previously
associated with developing countries, Swedish political
scientist Bo Rothstein has petitioned the Academy of Sciences
(of which he is a member) to suspend the Nobel Prize in
economics until such consequences are investigated."
"... But if the third globalisation wave is mostly about taking advantage of cheap labour not commodities - whilst simultaneously reducing industrial capacity at home - today's global imbalances could result in a very different type of correction (something which may or may not be happening now). ..."
"... The immediate consequence may be the developed world's desire to engage in significant industrial on-shoring. ..."
"... I'm not convinced the end of globalization and the retrenchment of banking industry are the same thing. There are some things that can't be exp/imported. Maybe we just got to the point where it didn't make sense to order moules marinieres from Brussels!? ..."
"... You forget the third leg - reducing the price of labour for services via immigration of labour from poorer countries. On top of the supply-and-demand effects, it reduces social solidarity (see Robert Putnam) - of which trades union membership and activity is one indicator. It's a win-win for capital. ..."
According to strategists Bhanu Baweja, Manik Narain and Maximillian
Lin the elasticity of trade to GDP - a measure of wealth creating
globalisation - rose to as high as 2.2. in the so-called third wave
of globalisation which began in the 1980s. This compared to an
average of 1.5 since the 1950s. In the post-crisis era, however,
the elasticity of trade has fallen to 1.1, not far from the weak
average of the 1970s and early 1980s but well below the second and
third waves of globalisation.
... ... ...
The anti-globalist position has always been simple. Global trade isn't a net positive for anyone
if the terms of trade relationships aren't reciprocal or if the trade exists solely for the purpose
of taking advantage of undervalued local resources like labour or commodities whilst channeling
rents/profits to a single central beneficiary. That, they have always argued, makes it more akin to
an imperialistic relationship than a reciprocal one.
If the latest wave of "globalisation" is mostly an expression of
American imperialism, then it does seem logical it too will fade as
countries wake-up to the one-sided nature of the current global
value chains in place.
Back in the first wave of globalisation,
of course, much of the trade growth was driven by colonial empires
taking advantage of cheap commodity resources abroad in a bid to
add value to them domestically. When these supply chains unravelled,
that left Europe short of commodities but long industrial capacity
- a destabilising imbalance which coincided with two world wars.
Simplistically speaking, resource rich countries at this point
were faced with only two options: industrialising on their own
autonomous terms or be subjugated by even more oppressive
imperialist forces, which had even grander superiority agendas than
their old colonial foes. That left those empires boasting domestic
industrial capacity but lacking natural resources of their own,
with the option of fighting to defend the rights of their former
colonies in the hope that the promise of independence and friendly
future knowledge exchanges (alongside military protection) would be
enough to secure resource access from then on.
But if the third globalisation wave is mostly about taking
advantage of cheap labour not commodities - whilst simultaneously
reducing industrial capacity at home - today's global imbalances
could result in a very different type of correction (something
which may or may not be happening now).
The immediate consequence
may be the developed world's desire to engage in significant
industrial on-shoring.
But while reversing the off-shoring trend may boost productivity
in nations like the US or even in Europe, it's also likely to
reduce demand for mobile international capital as a whole. As UBS
notes, global cross border capital flows are already decelerating
significantly as a share of GDP post-crisis, and the peak-to-trough
swing in capital inflows to GDP over the past ten years has been
much more dramatic in developed markets than in emerging ones:
To note, in China trade as a % of GDP fell from
65% in 2006 to 42% in 2014. The relationship
between trade and GDP is in reality more variable
than is usually claimed.
I'm not convinced the end of globalization and
the retrenchment of banking industry are the same
thing. There are some things that can't be
exp/imported. Maybe we just got to the point
where it didn't make sense to order moules
marinieres from Brussels!?
"if the third globalisation wave is mostly about taking advantage of cheap labour not
commodities - whilst simultaneously reducing
industrial capacity at home"
You forget the third leg - reducing the
price of labour for services via immigration of
labour from poorer countries. On top of the
supply-and-demand effects, it reduces social
solidarity (see Robert Putnam) - of which trades
union membership and activity is one indicator.
It's a win-win for capital.
The simple problem with globalization is that it was based off economic views which looked
at things in aggregate - but people are
individuals, not aggregates. "On average, GDP
per person has gone up" doesn't do anything for
the person whose income has gone down. "Just
think about all the people in China who are so
much better off than they used to be" isn't going
to do much for an American or European whose
standard of living has slipped from middle class
to working class to government assistance.
"Redistribution" is routinely advertised as
the solution to all of this. I leave it as an
exercise to the reader to figure out how to
redistribute wealth from the areas that have
prospered the most (Asia, particularly China) to
the individuals (primarily in the West) who have
lost the most. In the absence of any viable
redistribution scheme, though, I suspect the most
likely outcome will be a pulling back on
globalization.
@
Terra_Desolata
The aggregates also do apply to countries -
i.e. the US on aggregate has benefited from
globalisation, but median wages have been
stagnant in real terms, meaning that the
benefits of globalisation have not been
well distributed across the country
(indeed, companies like Apple have
benefited hugely from reducing the costs of
production, while you could make the case
that much of the benefits of lower
production costs have been absorbed into
profit margins).
That suggests that redistribution can
occur at the country level, rather than
requiring a cross-border dimension.
@
Meh...
in the US, median male wages were
lower in 2014 than in 1973 - when a
far higher proportion of working-age
males were active in the labour
force.
Growing up in the 1970s, it would
have been unthinkable for wages to
have fallen since the 1930s.
Terra_Desolata
5pts
Featured
8 hours ago
@
Meh...
@
Terra_Desolata
Yes, there has been uneven
distribution of income within
countries as well as between them -
but as the Panama Papers revealed, in
a world of free movement of capital,
incomes can also move freely between
borders. (See: Apple.) While the
U.S. has lower tolerance than Europe
and Asia for such games, any attempts
at redistribution would necessarily
include an effort to keep incomes
from slipping across national
borders, which would have the same
effect: a net reduction in
globalization.
"... 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.
"... "In my lifetime I cannot remember anything like the scepticism about these values that we see today," said Suma Chakrabarti, president of the European Bank for Reconstruction and Development. ..."
"... There was much discussion this week about the underlying causes of that scepticism - low growth, stagnant wages and other scars of the 2008 global financial crisis - together with calls for governments to do more to ensure the benefits of globalisation are distributed more widely. ..."
"... Lou Jiwei, China's finance minister, told reporters on Friday, the current "political risks" would in the immediate future lead only to "superficial changes" for the global economy. But underlying them was a deeper trend of "deglobalisation". ..."
The world's economic elite spent this week invoking fears of protectionism and the
existential
crisis facing globalisation
.... ... ...
Mr Trump has raised the possibility of trying to renegotiate the terms of the US sovereign debt
much as he did repeatedly with his own business debts as a property developer. He also has proposed
imposing punitive tariffs on imports from China and Mexico and ripping up existing US trade pacts.
... ... ...
"Once a tariff has been imposed on a country's exports, it is in that country's best interest
to retaliate, and when it does, both countries end up worse off," IMF economists wrote.
It is not just angst over Mr Trump. There are similar concerns over Brexit and the rise of populist
parties elsewhere in Europe. All present their own threats to the advance of the US-led path of economic
liberalisation pursued since Keynes and his peers gathered at Bretton Woods in 1944.
"In my lifetime I cannot remember anything like the scepticism about these values that we
see today," said Suma Chakrabarti, president of the European Bank for Reconstruction and Development.
There was much discussion this week about the underlying causes of that scepticism - low growth,
stagnant wages and other scars of the 2008 global financial crisis - together with calls for governments
to do more to ensure the benefits of globalisation are distributed more widely.
Lou Jiwei, China's finance minister, told reporters on Friday, the current "political risks" would
in the immediate future lead only to "superficial changes" for the global economy. But underlying
them was a deeper trend of "deglobalisation".
"... Weak global trade, fears that the U.K. is marching towards a hard Brexit , and polls indicating that the U.S. election remains a tighter call than markets are pricing in have led a bevy of analysts to redouble their warnings that a backlash over globalization is poised to roil global financial markets-with profound consequences for the real economy and investment strategies. ..."
"... From the economists and politicians at the annual IMF meeting in Washington to strategists on Wall Street trying to advise clients, everyone seems to be pondering a future in which cooperation and global trade may look much different than they do now. ..."
"... "The main risk with potentially tough negotiating tactics is that trade partners could panic, especially if global coordination evaporates." ..."
Weak global trade, fears that the U.K. is marching towards a
hard Brexit , and polls indicating that the U.S. election remains a
tighter call than markets are
pricing in have led a bevy of analysts to redouble their warnings that a backlash over globalization
is poised to roil global financial markets-with profound consequences for the real economy and investment
strategies.
From the economists and politicians at the annual
IMF meeting in Washington to strategists on Wall Street trying to advise clients, everyone seems
to be pondering a future in which cooperation and
global trade may look much different than they do now.
Brexit
Suggestions that the U.K. will prioritize control over its migration policy at the expense of
open access to Europe's single market in negotiations to leave the European Union-a strategy that's
being dubbed a "hard Brexit"-loomed large over global markets. The U.K. government is "strongly supportive
of open markets, free markets, open economies, free trade," said
Chancellor of the Exchequer Philip Hammond during a Bloomberg Television interview in New York
on Thursday. "But we have a problem-and it's not just a British problem, it's a developed-world problem-in
keeping our populations engaged and supportive of our market capitalism, our economic model."
Trade
Citing the rising anti-trade sentiment, analysts from Bank of America Merrill Lynch warned that
"events show nations are becoming less willing to cooperate, more willing to contest," and a
backlash against inequality is likely to trigger more activist fiscal policies. Looser government
spending in developed countries-combined with trade protectionism and wealth redistribution-could
reshape global investment strategies, unleashing a wave of inflation, the bank argued, amid a looming
war against inequality.
U.S. Treasury Secretary Jack Lew did his part to push for more openness. During an interview in
Washington on Thursday, he said that efforts to boost trade, combined with a more equitable distribution
of the fruits of economic growth, are key to ensuring
U.S. prosperity. Rolling back on globalization would be counterproductive to any attempt to boost
median incomes, he added.
Trump
Without mentioning him by name, Lew's comments appeared to nod to Donald Trump, who some believe
could take the U.S. down a more isolationist trading path should he be elected president in November.
"The emergence of Donald Trump as a political force reflects a mood of growing discontent about immigration,
globalization and the distribution of wealth," write analysts at Fathom Consulting, a London-based
research firm. Their central scenario is that a Trump administration might be benign for the U.S.
economy. "However, in our downside scenario, Donald Dark, global trade falls sharply and a global
recession looms. In this world, isolationism wins, not just in the U.S., but globally," they caution.
Analysts at Standard Chartered Plc agree that the tail risks of a Trump presidency could be significant.
"The main risk with potentially tough negotiating tactics is that trade partners could panic, especially
if global coordination evaporates." They add that business confidence could take a big hit in this
context. "The global trade system could descend into a spiral of trade tariffs, reminiscent of what
happened after the
Smoot-Hawley tariff of 1930 , and ultimately a trade war, possibly accompanied by foreign-exchange
devaluations; this would be a 'lose-lose' deal for all."
Market participants are also concerned that populism could take root under a Hillary Clinton administration.
"We believe the liberal base's demands on a Clinton Administration could lead to an overly expansive
federal government with aggressive regulators," write analysts at Barclays Plc. "If the GOP does
not unify, Clinton may expand President Obama's use of executive authority to accomplish her goals."
"... Average US wages rose 350% in the 40 years between 1932 and 1972, but only 22% over the next 40 years. The pattern holds similar across the developed world. In other words, for all their hype, the computer and the internet have done less to lift economic growth than the flush toilet. ..."
"... ahem… the computer and the internet sped outsourcing to countries like China. Ask China or India how their economic growth has been since 1972. The author is mixing up several things at once. ..."
"... When so many of our jobs, technology and investment is offshored to China (and elsewhere), the future for innovation is certainly not bright, and this should be obvious to everyone, including the author. ..."
" Average US wages rose 350% in the 40 years between 1932 and 1972, but only 22% over the next
40 years. The pattern holds similar across the developed world. In other words, for all their hype,
the computer and the internet have done less to lift economic growth than the flush toilet."
ahem… the computer and the internet sped outsourcing to countries like China. Ask China or India
how their economic growth has been since 1972. The author is mixing up several things at once.
Great comments, and please allow me to piggyback off them:
When so many of our jobs, technology and investment is offshored to China (and elsewhere), the
future for innovation is certainly not bright, and this should be obvious to everyone, including
the author.
When so many have contributed so much, only to see their jobs and livelihoods offshored again
and again and again, that great jump the others have will then zero out OUR innovation!
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 Ł3.58m in
2015, and George Weston, boss of international food group
ABF, who
earned Ł3.05m in 2015, were in second and third place.
The total pay of all three is below the average pay of Ł5.5m 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 Ł14.6m last year, and RELX boss Erik Engstrom, who was awarded
Ł10.9m.
None of the other top 10 best paid bosses last year, which included Sir Martin Sorrell, who earned
Ł70.4m at WPP
, Rakesh Kapoor, awarded Ł23.2m at
Reckitt Benckiser
, Jeremy Darroch, on Ł16.9m at Sky, or Bob Dudley, on Ł13.3m 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."
Doing what contemporary American economists
suggest: eliminate tariffs, don't worry about huge capital inflows or a ridiculously overvalued dollar,
has led the US from being the envy of the world to being a non-developed economy with worse roads
than Cuba or Ghana.
That US economists are still treated with any degree of credibility it totally
appalling. They are so obviously bought-and-paid for snake oil salesmen that people are finally tuning
them out.
TRUMP 2016: Return America to Protectionism - Screw globalism
[There is a pdf at the link. Olivier Blanchard has
surprised me again. As establishment economists go he is not
so bad. There is plenty that he still glosses over but
insofar as status quo establishment macroeconomics goes he is
thorough and coherent. One might hope that those that do not
understand either the debate for higher inflation targets or
the debate for fiscal policy to accomplish what monetary
policy cannot might learn from this article by Olivier
Blanchard, but I will not hold my breath waiting for that. In
any case the article is worth a read for anyone that can.]
RC AKA Darryl, Ron -> RC AKA Darryl, Ron...
,
Friday, September 30, 2016 at 07:07 AM
Get real! No alumni of the Peterson Institute and IMF is
going to go all mushy on the down sides of globalization and
wealth distribution.
The State of Advanced Economies and Related Policy
Debates: A Fall 2016 Assessment
By Olivier Blanchard
Perhaps the most striking macroeconomic fact about
advanced economies today is how anemic demand remains in the
face of zero interest rates.
In the wake of the global financial crisis, we had a
plausible explanation why demand was persistently weak:
Legacies of the crisis, from deleveraging by banks, to fiscal
austerity by governments, to lasting anxiety by consumers and
firms, could all explain why, despite low rates, demand
remained depressed.
This explanation is steadily becoming less convincing.
Banks have largely deleveraged, credit supply has loosened,
fiscal consolidation has been largely put on hold, and the
financial crisis is farther in the rearview mirror. Demand
should have steadily strengthened. Yet, demand growth has
remained low.
Why? The likely answer is that, as the legacies of the
past have faded, the future has looked steadily bleaker.
Forecasts of potential growth have been repeatedly revised
down. And consumers and firms-anticipating a gloomier
future-are cutting back spending, leading to unusually low
demand growth today....
"... 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.
"... "Over the last 25 years, the number of people living in extreme poverty has been cut from nearly 40 percent of humanity to under 10 percent." This is roughly true, according to World Bank data, but the story of how it happened goes against his whole speech - which argues that this progress is a result of the "globalization" that Washington leads and supports wherever it has influence in the developing world. In fact, the majority of the reduction in extreme poverty during this period (more than 1.1 billion people worldwide) took place in China. But during this period China was really the counterexample to the "principles of open markets" with which Obama insists "we must go forward, not backward." ..."
"... If we go back a bit more and look at 1981–2012, China accounted for even more of the reduction of the world population in extreme poverty, about 70 percent. This would indicate that other parts of the developing world increased their economic and social progress during the 21st century, relative to China, and indeed many developing countries did (as compared to the last two decades of the 20th century). But China played an increasingly large role in reducing poverty in other countries during this period. ..."
"... It was so successful in its economic growth and development - by far the fastest in world history - that it became the largest economy in the world, and pulled up many developing countries through its imports. Chinese imports went from a negligible 0.1 percent of other developing countries' exports to 3 percent, from 1980–2010. China also provided hundreds of billions of dollars in investment, loans, and aid to low- and middle-income countries in the 21st century. (In the last few years, Chinese growth has slowed, along with that of most countries, and that has contributed - although perhaps not as much as Europe has - to the global slowdown since 2011.) ..."
"... the "principles of open markets" that Obama refers to is really code for "policies that Washington supports." ..."
"... In his defense of a world economic order ruled by Washington and its rich country allies, President Obama also asserted that "we have made international institutions like the World Bank and the International Monetary Fund more representative." But that is a gross exaggeration: the most recent reform of IMF voting shares left the US with an unchanged 16.7 percent share, enough to veto many important decisions (that require an 85 percent majority) by itself; and it left Washington and its traditional rich country allies with a solid majority of more than 60 percent of votes. Of course, it is the developing countries, especially poorer ones, that are most subject to IMF decisions. But the IMF is - by a gentleman's agreement among the rich country governments - headed by a European, and the World Bank by an American. It should not be surprising if these institutions do not look out for the interests of the developing world. ..."
President Obama Inadvertently Gives High Praise to China
in UN Speech
By Mark Weisbrot
President Obama's speech at the UN last week was mostly a
defense of the world's economic and political status quo,
especially that part of it that is led or held in place by
the US government and the global institutions that Washington
controls or dominates. In doing so, he said some things that
were exaggerated or wrong, or somewhat misleading. It is
worth looking at some of the things that media reports on
this speech missed.
"Over the last 25 years, the number of people living
in extreme poverty has been cut from nearly 40 percent of
humanity to under 10 percent." This is roughly true,
according to World Bank data, but the story of how it
happened goes against his whole speech - which argues that
this progress is a result of the "globalization" that
Washington leads and supports wherever it has influence in
the developing world. In fact, the majority of the reduction
in extreme poverty during this period (more than 1.1 billion
people worldwide) took place in China. But during this period
China was really the counterexample to the "principles of
open markets" with which Obama insists "we must go forward,
not backward."
China's historically unprecedented economic growth in the
past 25 years (or 35 years, or even more) was accomplished
with state-owned enterprises and banks dominating the
economy. State control over investment, technology transfer,
and foreign exchange was vastly greater than in other
developing countries. China rejected the neoliberal policies
of an "independent central bank," indiscriminate opening to
international trade and investment, and rapid privatization
of state companies. Instead, it chose a gradual transition,
over 35 years, from an overwhelmingly planned economy to a
mixed economy in which the state still plays a leading role.
Even today, China expanded the investment of state-owned
enterprises by 23.5 percent in the first six months of 2016
(as compared to the same period in 2015), to help boost the
economy.
If we go back a bit more and look at 1981–2012, China
accounted for even more of the reduction of the world
population in extreme poverty, about 70 percent. This would
indicate that other parts of the developing world increased
their economic and social progress during the 21st century,
relative to China, and indeed many developing countries did
(as compared to the last two decades of the 20th century).
But China played an increasingly large role in reducing
poverty in other countries during this period.
It was so
successful in its economic growth and development - by far
the fastest in world history - that it became the largest
economy in the world, and pulled up many developing countries
through its imports. Chinese imports went from a negligible
0.1 percent of other developing countries' exports to 3
percent, from 1980–2010. China also provided hundreds of
billions of dollars in investment, loans, and aid to low- and
middle-income countries in the 21st century. (In the last few
years, Chinese growth has slowed, along with that of most
countries, and that has contributed - although perhaps not as
much as Europe has - to the global slowdown since 2011.)
Of course, the "principles of open markets" that Obama
refers to is really code for "policies that Washington
supports." Some of them are the exact opposite of "open
markets," such as the lengthening and strengthening of patent
and copyright protection included in the Trans-Pacific
Partnership (TPP) agreement. President Obama also made a plug
for the TPP in his speech, asserting that "we've worked to
reach trade agreements that raise labor standards and raise
environmental standards, as we've done with the Trans-Pacific
Partnership, so that the benefits [of globalization] are more
broadly shared." But the labor and environmental standards in
the TPP, as with those in previous US-led commercial
agreements, are not enforceable; whereas if a government
approves laws or regulations that infringe on the future
profit potential of a multinational corporation - even if
such laws or regulations are to protect public health or
safety - that government can be hit with billions of dollars
in fines. And they must pay these fines, or be subject to
trade sanctions.
In his defense of a world economic order ruled by
Washington and its rich country allies, President Obama also
asserted that "we have made international institutions like
the World Bank and the International Monetary Fund more
representative." But that is a gross exaggeration: the most
recent reform of IMF voting shares left the US with an
unchanged 16.7 percent share, enough to veto many important
decisions (that require an 85 percent majority) by itself;
and it left Washington and its traditional rich country
allies with a solid majority of more than 60 percent of
votes. Of course, it is the developing countries, especially
poorer ones, that are most subject to IMF decisions. But the
IMF is - by a gentleman's agreement among the rich country
governments - headed by a European, and the World Bank by an
American. It should not be surprising if these institutions
do not look out for the interests of the developing world.
"We can choose to press forward with a better model of
cooperation and integration," President Obama told the world
at the UN General Assembly. "Or we can retreat into a world
sharply divided, and ultimately in conflict, along age-old
lines of nation and tribe and race and religion."
But the rich country governments led by Washington are not
offering the rest of the world any better model of
cooperation and integration than the failed model they have
been offering for the past 35 years. And that is a big part
of the problem....
China's historically unprecedented economic growth in the
past 25 years (or 35 years, or even more) was accomplished
with state-owned enterprises and banks dominating the
economy. State control over investment, technology transfer,
and foreign exchange was vastly greater than in other
developing countries. China rejected the neoliberal policies
of an "independent central bank," indiscriminate opening to
international trade and investment, and rapid privatization
of state companies. Instead, it chose a gradual transition,
over 35 years, from an overwhelmingly planned economy to a
mixed economy in which the state still plays a leading role.
Even today, China expanded the investment of state-owned
enterprises by 23.5 percent in the first six months of 2016
(as compared to the same period in 2015), to help boost the
economy....
Even today, China expanded the investment of state-owned
enterprises by 23.5 percent in the first six months of 2016
(as compared to the same period in 2015), to help boost the
economy....
Yale Professors Offer Economic Prescriptions
By Brenda Cronin - Wall Street Journal
Richard C. Levin, president of Yale - and also a professor
of economics - moderated the conversation among Professors
Judith Chevalier, John Geanakoplos, William D. Nordhaus,
Robert J. Shiller and Aleh Tsyvinski....
An early mistake during the recession, Mr. Levin said, was
not targeting more stimulus funds to job creation. He
contrasted America's meager pace of growth in gross domestic
product in the past few years with China's often double-digit
pace, noting that after the crisis hit, Washington allocated
roughly 2% of GDP to job creation while Beijing directed 15%
of GDP to that goal....
Repeatedly there are warnings from Western economists that
the Chinese economy is near collapse, nonetheless economic
growth through the first 2 quarters this year is running at
6.7% and the third quarter looks about the same. The point is
to ask and describe how after these last 39 remarkable years:
Before the crash, complacent Democrats, ... tended to agree
with them that the economy was largely self-correcting.
Who is a complacent Democrat? Obama ran as a fiscal
conservative and appointed a GOP as his SecTreas. Geithner
was a "banks need to be bailed out" and the economy self
corrects. Geithner was not in favor of cram down or mortgage
programs that would have bailed out the injured little folks.
Democrats like Romer and Summers were in favor a fiscal
stimulus, but not enough of it. I expect to see the Clinton
economic team include a lot more women and especially focus
on economic policies that help working women and families.
I have always thought that a big reason for the Bush
jobless recovery was his lack of true fiscal stimulus. Bush
had tax cuts for the wealthy, but the latest from Summers
shows why trickle down does not work.
Full employment may have been missing from the 1992
platform, but full employment was pursued aggressively by
Bill Clinton. He got AG to agree to allow unemployment to
drop to 4% in exchange for raising taxes and dropping the
middle class tax cuts. Bill Clinton used fiscal policy to tax
the economy and as a break so monetary policy could be
accommodating.
He should include raising the MinWage. Maybe that has not
changed but it is a lynchpin for putting money in the pockets
of the working poor.
"... Will the media ever stop the ridiculous charade of pretending that the path of globalization that we are on is somehow and natural and that it is the outcome of a "free" market? Are longer and stronger patent and copyright monopolies the results of a free market? ..."
"... The NYT should up its game in this respect. It had a good piece on the devastation to millions of working class people and their communities from the flood of imports of manufactured goods in the last decade, but then it turns to hand-wringing nonsense about how it was all a necessary part of globalization. Actually, none of it was a necessary part of a free trade. ..."
"... First, the huge trade deficits were the direct result of the decision of China and other developing countries to buy massive amounts of U.S. dollars to hold as reserves in this period. This raised the value of the dollar and made our goods and services less competitive internationally. This problem of a seriously over-valued dollar stems from the bungling of the East Asian bailout by the Clinton Treasury Department and the I.M.F. ..."
"... The second point is political leaders are constantly working to make patents and copyrights stronger and longer. This raises the price that ordinary workers have to pay for everything from drugs to computer games. The result is lower real wages for ordinary workers and higher incomes for the beneficiaries of these rents. It also slows economic growth since markets are not smart enough to distinguish between a 10,000 percent price increase due to a tariff and a 10,000 percent price increase due to a patent monopoly. (In other words, all the bad things that "free trade" economists say about tariffs also apply to patents and copyrights, except the impact is far larger in the later case.) ..."
Why are none of the "free trade" members of
Congress pushing to change the regulations that require
doctors go through a U.S. residency program to be able to
practice medicine in the United States? Obviously they are
all protectionist Neanderthals.
Will the media ever stop the ridiculous charade of
pretending that the path of globalization that we are on is
somehow and natural and that it is the outcome of a "free"
market? Are longer and stronger patent and copyright
monopolies the results of a free market?
The NYT should up its game in this respect. It had a good
piece on the devastation to millions of working class people
and their communities from the flood of imports of
manufactured goods in the last decade, but then it turns to
hand-wringing nonsense about how it was all a necessary part
of globalization. Actually, none of it was a necessary part
of a free trade.
First, the huge trade deficits were the direct result of
the decision of China and other developing countries to buy
massive amounts of U.S. dollars to hold as reserves in this
period. This raised the value of the dollar and made our
goods and services less competitive internationally. This
problem of a seriously over-valued dollar stems from the
bungling of the East Asian bailout by the Clinton Treasury
Department and the I.M.F.
If we had a more competent team in place, that didn't
botch the workings of the international financial system,
then we would have expected the dollar to drop as more
imports entered the U.S. market. This would have moved the
U.S. trade deficit toward balance and prevented the massive
loss of manufacturing jobs we saw in the last decade.
The second point is political leaders are constantly
working to make patents and copyrights stronger and longer.
This raises the price that ordinary workers have to pay for
everything from drugs to computer games. The result is lower
real wages for ordinary workers and higher incomes for the
beneficiaries of these rents. It also slows economic growth
since markets are not smart enough to distinguish between a
10,000 percent price increase due to a tariff and a 10,000
percent price increase due to a patent monopoly. (In other
words, all the bad things that "free trade" economists say
about tariffs also apply to patents and copyrights, except
the impact is far larger in the later case.)
Finally, the fact that trade has exposed manufacturing
workers to international competition, but not doctors and
lawyers, was a policy choice, not a natural development.
There are enormous potential gains from allowing smart and
ambitious young people in the developing world to come to the
United States to work in the highly paid professions. We have
not opened these doors because doctors and lawyers are far
more powerful than autoworkers and textile workers. And, we
rarely even hear the idea mentioned because doctors and
lawyers have brothers and sisters who are reporters and
economists.
Addendum:
Since some folks asked about the botched bailout from the
East Asian financial crisis, the point is actually quite
simple. Prior to 1997 developing countries were largely
following the textbook model, borrowing capital from the West
to finance development. This meant running large trade
deficits. This reversed following the crisis as the
conventional view in the developing world was that you needed
massive amounts of reserves to avoid being in the situation
of the East Asian countries and being forced to beg for help
from the I.M.F. This led to the situation where developing
countries, especially those in the region, began running very
large trade surpluses, exporting capital to the United
States. (I am quite sure China noticed how its fellow East
Asian countries were being treated in 1997.)
"... The current US presidential election shows, perhaps better than anything else, just how far that decadence has gone. Hillary Clinton's campaign is floundering in the face of Trump's challenge because so few Americans still believe that the [neo]liberal shibboleths in her campaign rhetoric mean anything at all. ..."
"... Even among her supporters, enthusiasm is hard to find, and her campaign rallies have had embarrassingly sparse attendance. Increasingly frantic claims that only racists, fascists, and other deplorables support Trump convince no one but true believers, and make the concealment of interests behind shopworn values increasingly transparent. Clinton may still win the election by one means or another, but the broader currents in American political life have clearly changed course. ..."
"... Or one could take the idea that "Health" or "College" reform is merely funneling ever more resources to insurance companies and College administrations with precious little if any improvement in the real cost or quality to the users of the service. ..."
Ironies of this sort are anything but unusual in political history. It's astonishingly common
for a movement that starts off trying to overturn the status quo in the name of some idealistic
abstraction or other to check its ideals at the door once it becomes the status quo. If anything,
American liberalism held onto its ideals longer than most and accomplished a great deal more
than many, and I think that most of us-even those who, like me, are moderate Burkean conservatives-are
grateful to the liberal movement of the past for ending such obvious abuses as chattel slavery
and the denial of civil rights to women, and for championing the idea that values as well as
interests deserve a voice in the public sphere. It deserves the modern equivalent of a raised
hat and a moment of silence, if no more, as it finally sinks into the decadence that is the
ultimate fate of every successful political movement.
The current US presidential election shows, perhaps better than anything else, just
how far that decadence has gone. Hillary Clinton's campaign is floundering in the face of Trump's
challenge because so few Americans still believe that the [neo]liberal shibboleths in her campaign
rhetoric mean anything at all.
Even among her supporters, enthusiasm is hard to find, and her campaign rallies have
had embarrassingly sparse attendance. Increasingly frantic claims that only racists, fascists,
and other deplorables support Trump convince no one but true believers, and make the concealment
of interests behind shopworn values increasingly transparent. Clinton may still win the election
by one means or another, but the broader currents in American political life have clearly changed
course.
=====================================
Great article IMHO – I certainly agree about the portion concerning immigration.
And for an example of a contradiction – Police unions and big cities. Unions do much more than
raise wages and pensions – many of the protections of police by hamstringing complaint investigations
against the police are exposing a fissure that has reached the point of earthquake.
Or one could take the idea that "Health" or "College" reform is merely funneling ever more
resources to insurance companies and College administrations with precious little if any improvement
in the real cost or quality to the users of the service.
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!
"... Reuters reports that an investigation conducted by it in 2013 found that around three-fourths of the 50 biggest U.S. technology companies use practices that are similar to Apple's to avoid paying tax. So Verstager has taken on not just one giant, but the worlds corporate elite. She should not lose. But even if she does this time, this is a battle well begun. ..."
"... Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions ..."
"... Those who support globalisation support this power disparity. ..."
The case of Apple's Irish operations is an extreme example of such tax avoidance accounting. It relates
to two Apple subsidiaries Apple Sales International and Apple Operations Europe. Apple Inc US has
given the rights to Apple Sales International (ASI) to use its "intellectual property" to sell and
manufacture its products outside of North and South America, in return for which Apple Inc of the
US receives payments of more than $2 billion per year. The consequence of this arrangement is that
any Apple product sold outside the Americas is implicitly first bought by ASI, Ireland from different
manufacturers across the globe and sold along with the intellectual property to buyers everywhere
except the Americas. So all such sales are by ASI and all profits from those sales are recorded in
Ireland. Stage one is complete: incomes earned from sales in different jurisdictions outside the
Americas (including India) accrue in Ireland, where tax laws are investor-friendly. What is important
here that this was not a straight forward case of exercising the "transfer pricing" weapon. The profits
recorded in Ireland were large because the payment made to Apple Inc in the US for the right to use
intellectual property was a fraction of the net earnings of ASI.
Does this imply that Apple would
pay taxes on these profits in Ireland, however high or low the rate may be? The Commission found
it did not. In two rather curious rulings first made in 1991 and then reiterated in 2007 the Irish
tax authority allowed ASI to split it profits into two parts: one accruing to the Irish branch of
Apple and another to its "head office". That "head office" existed purely on paper, with no formal
location, actual offices, employees or activities. Interestingly, this made-of-nothing head office
got a lion's share of the profits that accrued to ASI, with only a small fraction going to the Irish
branch office. According to Verstager's Statement: "In 2011, Apple Sales International made profits
of 16 billion euros. Less than 50 million euros were allocated to the Irish branch. All the rest
was allocated to the 'head office', where they remained untaxed." As a result, across time, Apple
paid very little by way of taxes to the Irish government. The effective tax rate on its aggregate
profits was short of 1 per cent. The Commissioner saw this as illegal under the European Commission's
"state aid rules", and as amounting to aid that harms competition, since it diverts investment away
from other members who are unwilling to offer such special deals to companies.
In the books, however, taxes due on the "head office" profits of Apple are reportedly treated
as including a component of deferred taxes. The claim is that these profits will finally have to
be repatriated to the US parent, where they would be taxed as per US tax law. But it is well known
that US transnationals hold large volumes of surplus funds abroad to avoid US taxation and the evidence
is they take very little of it back to the home country. In fact, using the plea that it has "permanent
establishment" in Ireland and, therefore, is liable to be taxed there, and benefiting from the special
deal the Irish government has offered it, Apple has accumulated large surpluses. A study by two non-profit
groups published in 2015 has argued that Apple is holding as much as $181 billion of accumulated
profits outside the US, a record among US companies. Moreover, The Washington Post reports that Apple's
Chief Executive Tim Cook told its columnist Jena McGregor, "that the company won't bring its international
cash stockpile back to the United States to invest here until there's a 'fair rate' for corporate
taxation in America."
This has created a peculiar situation where the US is expressing concern about the EC decision
not because it disputes the conclusion about tax avoidance, but because it sees the tax revenues
as due to it rather than to Ireland or any other EU country. US Treasury Secretary Jack Lew criticised
the ruling saying, "I have been concerned that it reflected an attempt to reach into the U.S. tax
base to tax income that ought to be taxed in the United States." In Europe on the other hand, the
French Finance Minister and the German Economy Minister, among others, have come out in support of
Verstager, recognizing the implication this has for their own tax revenues. Governments other than
in Ireland are not with Apple, even if not always for reasons advanced by the EC.
... ... ...
Thus the power of the multinationals comes not just from their own size and reach, and from
the support that their own governments afford them, but from their ability to divide desperate
countries seeking the presence of global giants to make a small difference to their economic
conditions. The costs of garnering that difference are, therefore, often missed. Reuters
reports that an investigation conducted by it in 2013 found that around three-fourths of the 50
biggest U.S. technology companies use practices that are similar to Apple's to avoid paying tax.
So Verstager has taken on not just one giant, but the worlds corporate elite. She should not
lose. But even if she does this time, this is a battle well begun.
I think the common misconception that multinational corporations exist because "they are big
companies that happen to operate in more than one country" is one of the biggest lies ever told.
From the beginning (e.g. Standard Oil, United Fruit) it was clear that multinational status
was an exercise in political arbitrage.
" Thus the power of the multinationals comes not just from their own size and reach, and
from the support that their own governments afford them, but from their ability to divide desperate
countries seeking the presence of global giants to make a small difference to their economic conditions
"
Those who support globalisation support this power disparity.
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!
"... By Miguel Nińo-Zarazúa, Research Fellow, UNU-WIDE, Laurence Roope, Researcher, Health Economics Research Centre, University of Oxford, and Finn Tarp, Director, UNU-WIDER. Originally published at VoxEU ..."
"... See original post for references ..."
"... John Ross argues that the reduction in poverty has been pretty much all China. I'm also not convinced China is actually that much richer than before. A sweatshop worker has a higher income than a traditional farmer, but probably has a lower standard of living, and while the traditional farmer maintains the natural resource base, the industrial worker destroys it. ..."
"... Globalization is an economic and ecological disaster. We have outsourced wealth creation to China and they do it in the most polluting way possible, turning their country into a toxic waste dump in the process. ..."
"... The peasants slaving away in the cinder block hellholes of their factories churning out the crapola on Wal-Mart's shelves also get paid squat, while the leaders of the Chinese Criminal Party steal half of their effort for themselves and smuggle the loot out, to get away from the pollution. The other half gets stolen by the likes of Wal-Mart and Apple. ..."
"... The elites sold globalization as something that would generate such a munificent surplus that those in harms way would be helped. It ends up as a lie, where the elites the world over help themselves to the stolen sweat of the lowest people in society, with nothing left over, except for a polluted planet. ..."
"... Yes, those who "have seen their incomes stagnating in real terms for over 20 years" are indeed experiencing "considerable discontent." But this anodyne phrasing masks the reality of entire communities seeing their means of livelihood ripped out and shipped across the globe. This rhetoric makes it sound like, Oh those prosperous American workers can't buy as many luxuries now, boo hoo, when the standard practice from NAFTA on of globalization-as-corporate-welfare has meant real impoverishment for hundreds of thousands of individuals, entire cities and large chunks of whole states. As Lambert always says, Whose economy? ..."
...if you look at absolute inequality, as opposed to relative inequality, inequality has increased
around the world. This calls into question one of the big arguments made in favor of globalization:
that the cost to workers in advanced economies are offset by gains to workers in developing economies,
and is thus virtuous by lowering inequality more broadly measured.
By Miguel Nińo-Zarazúa, Research Fellow, UNU-WIDE, Laurence Roope, Researcher, Health
Economics Research Centre, University of Oxford, and Finn Tarp, Director, UNU-WIDER. Originally published
at VoxEU
Since the turn of the century, inequality in the distribution of income, together with concerns
over the pace and nature of globalisation, have risen to be among the most prominent policy issues
of our time. These concerns took centre stage at the recent annual G20 summit in China. From President
Obama to President Xi, there was broad agreement that the global economy needs more inclusive and
sustainable growth, where the economic pie increases in size and is at the same time divided more
fairly. As President Obama emphasised, "[t]he international order is under strain." The consensus
is well founded, following as it does the recent Brexit vote, and the rise of populism (especially
on the right) in the US and Europe, with its hard stance against free trade agreements, capital flows
and migration.
... ... ...
The inclusivity aspect of growth is now more imperative than ever. Globalisation has not been
a zero sum game. Overall perhaps more have benefitted, especially in fast-growing economies in the
developing world. However, many others, for example among the working middle class in industrialised
nations, have seen their incomes stagnating in real terms for over 20 years. It is unsurprising that
this has bred considerable discontent, and it is an urgent priority that concrete steps are taken
to reduce the underlying sources of this discontent. Those who feel they have not benefitted, and
those who have even lost from globalisation, have legitimate reasons for their discontent. Appropriate
action will require not only the provision of social protection to the poorest and most vulnerable.
It is essential that the very nature of the ongoing processes of globalisation, growth, and economic
transformation are scrutinised, and that broad based investments are made in education, skills, and
health, particularly among relatively disadvantaged groups. Only in this way will the world experience
sustained – and sustainable – economic growth and the convergence of nations in the years to come.
John Ross argues that the reduction in poverty has been pretty much all China. I'm also
not convinced China is actually that much richer than before. A sweatshop worker has a higher
income than a traditional farmer, but probably has a lower standard of living, and while the traditional
farmer maintains the natural resource base, the industrial worker destroys it.
Only in this way will the world experience sustained – and sustainable
– economic growth and the convergence of nations in the years to come.
Globalization is an economic and ecological disaster. We have outsourced wealth creation
to China and they do it in the most polluting way possible, turning their country into a toxic
waste dump in the process.
The peasants slaving away in the cinder block hellholes of their factories churning out
the crapola on Wal-Mart's shelves also get paid squat, while the leaders of the Chinese Criminal
Party steal half of their effort for themselves and smuggle the loot out, to get away from the
pollution. The other half gets stolen by the likes of Wal-Mart and Apple.
The elites sold globalization as something that would generate such a munificent surplus
that those in harms way would be helped. It ends up as a lie, where the elites the world over
help themselves to the stolen sweat of the lowest people in society, with nothing left over, except
for a polluted planet.
The notable presence of public policies that exacerbate racial and economic inequality and
the lack of will by Washington to change the system mean that the ethnic/racial wealth gap is
becoming more firmly entrenched in society.
"broad based investments are made in education, skills, and health, particularly among relatively
disadvantaged groups. Only in this way will the world experience sustained – and sustainable
– economic growth and the convergence of nations in the years to come."
…I guess if the skills were sustainable low chemical and diverse farming in 5 acre lots or
in co-ops then I might have less complaint, however the skills people apparently are going to
need are supervising robots and going to non jobs in autonomous vehicles and being fed on chemical
mush shaped like things we used to eat, a grim dystopia.
Yesterday I had the unpleasant experience of reading the hard copy nyt wherein kristof opined
that hey it's not so bad, extreme poverty has eased (the same as in this article, but without
this article's Vietnamese example where 1 v. 8 becomes 8 v. 80),ignoring the relative difference
while on another lackluster page there was an article saying immigrants don't take jobs from citizens
which had to be one of the most thinly veiled press releases of some study made by some important
sounding acronym and and, of course a supposed "balance" between pro and anti immigration academics.
because in this case, they claim we're relatively better off.
So there you have it, it's all relative. Bi color bird cage liner, dedicated to the ever shrinking
population of affluent/wealthy who are relatively better off as opposed to the ever increasing
population of people who are actually worse off…There was also an article on the desert dwelling
uighur and their system of canals bringing glacier water to farm their arid land which showed
some people who were fine for thousands of years, but now thanks to fracking, industrial pollution
and less community involvement (kids used to clean the karatz, keeping it healthy) now these people
can be uplifted into the modern world(…so great…) that was reminiscent of the nyt of olde which
presented the conundrum but left out the policy prescription which now always seems to be "the
richer I get the less extreme poverty there is in the world so stop your whining and borrow a
few hundred thousand to buy a PhD "
Yes, those who "have seen their incomes stagnating in real terms for over 20 years" are
indeed experiencing "considerable discontent." But this anodyne phrasing masks the reality of
entire communities seeing their means of livelihood ripped out and shipped across the globe. This
rhetoric makes it sound like, Oh those prosperous American workers can't buy as many luxuries
now, boo hoo, when the standard practice from NAFTA on of globalization-as-corporate-welfare has
meant real impoverishment for hundreds of thousands of individuals, entire cities and large chunks
of whole states. As Lambert always says, Whose economy?
Three reading recommendations for anyone who doesn't grasp your sentiment, shared by millions:
Sold Out , by Michelle Malkin Outsourcing America , by Ron Hira America: Who
Stole the Dream? , by Donald L. Barlett
Reply ↓
"... traditional ways of life are dissolving as a new class of entrepreneur-warriors are wielding unprecedented power - and changing the global landscape. ..."
"... It's a huge psychological dent in people's faith in the system. I think what's going to happen in the next few years is huge unemployment in the middle class in America because a lot of their jobs will be outsourced or automated. ..."
Novelist Rana Dasgupta recently turned to nonfiction to explore the explosive
social and economic changes in Delhi starting in 1991, when India launched a
series of transformative economic reforms. In
Capital: The Eruption of Delhi, he describes a city where the epic hopes
of globalization have dimmed in the face of a sterner, more elitist world. In
Part 1 of an interview with the
Institute for New Economic
Thinking, Dasgupta traces a turbulent time in which traditional ways
of life are dissolving as a new class of entrepreneur-warriors are wielding
unprecedented power - and changing the global landscape.
Lynn Parramore: Why did you decide to move from New York to Delhi
in 2000, and then to write a book about the city?
Rana Dasgupta: I moved to be with my partner who lived in Delhi, and soon
realized it was a great place to have landed. I was trying write a novel and
there were a lot of people doing creative things. There was a fascinating intellectual
climate, all linked to changes in society and the economy. It was 10 years since
liberalization and a lot of the impact of that was just being felt and widely
sensed.
There was a sense of opportunity, not any more just on the part of business
people, but everyone. People felt that things were really going to change in
a deep way - in every part of the political spectrum and every class of society.
Products and technology spread, affecting even very poor people. Coke made ads
about the rickshaw drivers with their mobile phones -people who had never had
access to a landline. A lot of people sensed a new possibility for their own
lives.
Amongst the artists and intellectuals that I found myself with, there were
very big hopes for what kind of society Delhi could become and they were very
interested in being part of creating that. They were setting up institutions,
publications, publishing houses, and businesses. They were thinking new ideas.
When I arrived, I felt, this is where stuff is happening. The scale of conversations,
the philosophy of change was just amazing.
LP: You've interviewed many of the young tycoons who emerged during
Delhi's transformation. How would you describe this new figure? How do they
do business?
RD: Many of their fathers and grandfathers had run significant provincial
businesses. They were frugal in their habits and didn't like to advertise themselves,
and anyway their wealth remained local both in its magnitude and its reach.
They had business and political associates that they drank with and whose weddings
they went to, and so it was a tight-knit kind of wealth.
But the sons, who would probably be now between 35 and 45, had an entirely
different experience. Their adult life happened after globalization. Because
their fathers often didn't have the skills or qualifications to tap into the
forces of globalization, the sons were sent abroad, probably to do an MBA, so
they could walk into a meeting with a management consultancy firm or a bank
and give a presentation. When they came back they operated not from the local
hubs where their fathers ruled but from Delhi, where they could plug into federal
politics and global capital.
So you have these very powerful combinations of father/son businesses. The
sons revere the fathers, these muscular, huge masculine figures who have often
done much more risky and difficult work building their businesses and have cultivated
relationships across the political spectrum. They are very savvy, charismatic
people. They know who to give gifts to, how to do favors.
The sons often don't have that set of skills, but they have corporate skills.
They can talk finance in a kind of international language. Neither skill set
is enough on its own by early 2000's: they need each other. And what's interesting
about this package is that it's very powerful elsewhere, too. It's kind of a
world-beating combination. The son fits into an American style world of business
and finance, but the thing about American-style business is that there are lots
of things in the world that are closed to it. It's very difficult for an American
real estate company or food company to go to the president of an African country
and do a deal. They don't have the skills for it. But even if they did, they
are legally prevented from all the kinds of practices involved, the bribes and
everything.
This Indian business combination can go into places like Africa and Central
Asia and do all the things required. If they need to go to market and raise
money, they can do that. But if they need to sit around and drink with some
government guys and figure out who are the players that need to be kept happy,
they can do that, too. They see a lot of the world open to themselves.
LP: How do these figures compare to American tycoons during, say,
the Gilded Age?
RD: When American observers see these people they think, well, we had these
guys between 1890 and 1920, but then they all kind of went under because there
was a massive escalation of state power and state wealth and basically the state
declared a kind of protracted war on them.
Americans think this is a stage of development that will pass. But I think
it's not going to pass in our case. The Indian state is never going to have
the same power over private interests as the U.S. state because lots of things
have to happen. The Depression and the Second World War were very important
in creating a U.S. state that was that powerful and a rationale for defeating
these private interests. I think those private interests saw much more benefit
in consenting to, collaborating in, and producing a stronger U.S. state.
Over time, American business allied itself with the government, which did
a lot to open up other markets for it. In India, I think these private interests
will not for many years see a benefit in operating differently, precisely because
continents like Africa, with their particular set of attributes, have such a
bright future. It's not just about what India's like, but what other places
are like, and how there aren't that many people in the world that can do what
they can do.
LP: What has been lost and gained in a place like Delhi under global
capitalism?
RD: Undeniably there has been immense material gain in the city since 1991,
including the very poorest people, who are richer and have more access to information.
What my book tracks is a kind of spiritual and moral crisis that affects rich
and poor alike.
One kind of malaise is political and economic. Even though the poorest are
richer, they have less political influence. In a socialist system, everything
is done in the name of the poor, for good or for bad, and the poor occupy center
stage in political discourse. But since 1991 the poor have become much less
prominent in political and economic ideology. As the proportion of wealth held
by the richest few families of India has grown massively larger, the situation
is very much like the break-up of the Soviet Union, which leads to a much more
hierarchical economy where people closest to power have the best information,
contacts, and access to capital. They can just expand massively.
Suddenly there's a state infrastructure that's been built for 70 years or
60 years which is transferred to the private domain and that is hugely valuable.
People gain access to telecommunication systems, mines, land, and forests for
almost nothing. So ordinary people say, yes, we are richer, and we have all
these products and things, but those making the decisions about our society
are not elected and hugely wealthy.
Imagine the upper-middle-class guy who has been to Harvard, works for a management
consultancy firm or for an ad agency, and enjoys a kind of international-style
middle-class life. He thinks he deserves to make decisions about how the country
is run and how resources are used. He feels himself to be a significant figure
in his society. Then he realizes that he's not. There's another, infinitely
wealthier class of people who are involved in all kinds of backroom deals that
dramatically alter the landscape of his life. New private highways and new private
townships are being built all around him. They're sucking the water out of the
ground. There's a very rapid and seemingly reckless transformation of the landscape
that's being wrought and he has no part in it.
If he did have a say, he might ask, is this really the way that we want this
landscape to look? Isn't there enormous ecological damage? Have we not just
kicked 10,000 farmers off their land?
All these conversations that democracies have are not being had. People think,
this exactly what the socialists told us that capitalism was - it's pillage
and it creates a very wealthy elite exploiting the poor majority. To some extent,
I think that explains a lot of why capitalism is so turbulent in places like
India and China. No one ever expected capitalism to be tranquil. They had been
told for the better part of a century that capitalism was the imperialist curse.
So when it comes, and it's very violent, and everyone thinks, well that's what
we expected. One of the reasons that it still has a lot of ideological consensus
is that people are prepared for that. They go into it as an act of war, not
as an act of peace, and all they know is that the rewards for the people at
the top are very high, so you'd better be on the top.
The other kind of malaise is one of culture. Basically, America and Britain
invented capitalism and they also invented the philosophical and cultural furniture
to make it acceptable. Places where capitalism is going in anew do not have
200 years of cultural readiness. It's just a huge shock. Of course, Indians
are prepared for some aspects of it because many of them are trading communities
and they understand money and deals. But a lot of those trading communities
are actually incredibly conservative about culture - about what kind of lifestyle
their daughters will have, what kinds of careers their sons will have. They
don't think that their son goes to Brown to become a professor of literature,
but to come back and run the family business.
LP: What is changing between men and women?
RD: A lot of the fallout is about families. Will women work? If so, will
they still cook and be the kind of wife they're supposed to be? Will they be
out on the street with their boyfriends dressed in Western clothes and going
to movies and clearly advertising the fact that they are economically independent,
sexually independent, socially independent? How will we deal with the backlash
of violent crimes that have everything to do with all these changes?
This capitalist system has produced a new figure, which is the economically
successful and independent middle-class woman. She's extremely globalized in
the sense of what she should be able to do in her life. It's also created a
set of lower-middle-class men who had a much greater sense of stability both
in their gender and professional situation 30 years ago, when they could rely
on a family member or fellow caste member to keep them employed even if they
didn't have any marketable attributes. They had a wife who made sure that the
culture of the family was intact - religion, cuisine, that kind of stuff.
Thirty years later, those guys are not going to get jobs because that whole
caste value thing has no place in the very fast-moving market economy. Without
a high school diploma, they just have nothing to offer. Those guys in the streets
are thinking, I don't have a claim on the economy, or on women anymore because
I can't earn anything. Women across the middle classes - and it's not just across
India, it's across Asia -are trying to opt out of marriage for as long as they
can because they see only a downside. Remaining single allows all kinds of benefits
– social, romantic, professional. So those guys are pretty bitter and there's
a backlash that can become quite violent. We also have an upswing of Hindu fundamentalism
as a way of trying to preserve things. It's very appealing to people who think
society is falling apart.
LP: You've described India's experience of global capitalism as traumatic.
How is the trauma distinct in Delhi, and in what ways is it universal?
RD: Delhi suffers specifically from the trauma of Partition, which has created
a distinct society. When India became independent, it was divided into India
and Pakistan. Pakistan was essentially a Muslim state, and Hindis and Sikhs
left. The border was about 400 kilometers from Delhi, which was a tiny, empty
city, a British administrative town. Most of those Hindis and Sikhs settled
in Delhi where they were allocated housing as refugees. Muslims went in the
other direction to Pakistan, and as we know, something between 1 and 2 million
were killed in that event.
The people who arrived in Delhi arrived traumatized, having lost their businesses,
properties, friends, and communities, and having seen their family members murdered,
raped and abducted. Like the Jewish Holocaust, everyone can tell the stories
and everyone has experienced loss. When they all arrive in Delhi, they have
a fairly homogeneous reaction: they're never going to let this happen to them
again. They become fiercely concerned with security, physical and financial.
They're not interested in having nice neighbors and the lighter things of life.
They say, it was our neighbors that killed us, so we're going to trust only
our blood and run businesses with our brother and our sons. We're going to build
high walls around our houses.
When the grandchildren of these people grow up, it's a problem because none
of this has been exorcised. The families have not talked about it. The state
has not dealt with it and wants to remember only that India became independent
and that was a glorious moment. So the catastrophe actually becomes focused
within families rather than the reverse. A lot of grandchildren are more fearful
and hateful of Muslims than the grandparents, who remembered a time before when
they actually had very deep friendships with Muslims.
Parents of my generation grew up with immense silence in their households
and they knew that in that silence was Islam - a terrifying thing. When you're
one year old, you don't even know yet what Islam is, you just know that it's
something which is the greatest horror in the universe.
The Punjabi businessman is a very distinct species. They have treated business
as warfare, and they are still doing it like that 70 years later and they are
very good at it. They enter the global economy at a time when it's becoming
much less civilized as well. In many cases they succeed not because they have
a good idea, but because they know how to seize global assets and resources.
Punjabi businessmen are not inventing Facebook. They are about mines and oil
and water and food -things that everyone understands and needs.
In this moment of globalization, the world will have to realize that events
like the Partition of India are not local history anymore but global history.
Especially in this moment when the West no longer controls the whole system,
these traumas explode onto the world and affect all of us, like the Holocaust.
They introduce levels of turbulence into businesses and practices that we didn't
expect necessarily.
Then there's the trauma of capitalism itself, and here I think it's important
for us to re-remember the West's own history. Capitalism achieved a level of
consensus in the second half of the 20th century very accidentally, and by a
number of enormous forces, not all of which were intended. There's no guarantee
that such consensus will be achieved everywhere in the emerging world. India
and China don't have an empire to ship people off to as a safety valve when
suffering become immense. They just have to absorb all that stuff.
For a century or so, people in power in Paris and London and Washington felt
that they had to save the capitalist system from socialist revolution, so they
gave enormous concessions to their populations. Very quickly, people in the
West forgot that there was that level of dissent. They thought that everyone
loved capitalism. I think as we come into the next period where the kind of
consensus has already been dealt a huge blow in the West, we're going to have
to deal with some of those forces again.
LP: When you say that the consensus on capitalism has been dealt
a blow, are you talking about the financial crisis?
RD: Yes, the sense that the nation-state - I'm talking about the U.S. context
- can no longer control global capital, global processes, or, indeed, it's own
financial elite.
It's a huge psychological dent in people's faith in the system. I think
what's going to happen in the next few years is huge unemployment in the middle
class in America because a lot of their jobs will be outsourced or automated.
Then, if you have 30-40 percent unemployment in America, which has always
been the ideological leader in capitalism, America will start to re-theorize
capitalism very profoundly (and maybe the Institute of New Economic Thinking
is part of that). Meanwhile, I think the middle class in India would not have
these kinds of problems. It's precisely because American technology and finance
are so advanced that they're going to hit a lot of those problems. I think in
places like India there's so much work to be done that no one needs to leap
to the next stage of making the middle class obsolete. They're still useful.
Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire,
founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient
Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English
and cultural theory from NYU. Follow her on Twitter @LynnParramore.
"... Moscow did indeed support secessionist pro-Russia rebels in East Ukraine. But did not the U.S. launch a 78-day bombing campaign on tiny Serbia to effect a secession of its cradle province of Kosovo? ..."
"... Russia is reportedly hacking into our political institutions. If so, it ought to stop. But have not our own CIA, National Endowment for Democracy, and NGOs meddled in Russia's internal affairs for years? ..."
"... Scores of the world's 190-odd nations are today ruled by autocrats. How does it advance our interests or diplomacy to have congressional leaders yapping "thug" at the ruler of a nation with hundreds of nuclear warheads? ..."
"... Very good article indeed. Knee-jerk reaction of american politicians and journalists looks extremely strange. As a matter of fact they look like idiots or puppets. ..."
"... Rubio and Graham are reflexively ready to push US influence everywhere, all the time, with military force always on the agenda, and McCain seems to be in a state of constant agitation ..."
"... Very sensible article. And as the EU falls further into disarray and possible disintegration, due to migration and other catastrophically mishandled problems, a working partnership with Russia will become even more important. Right now, we treat Russia as an enemy and Saudi Arabia as a friend. That makes no sense at all. ..."
"... As I've stated many times, Obama the narcissist hates Putin because Putin doesn't play the sycophantic lapdog yapping about how good it is to interact with the "smartest person in the room". ..."
"... I'm serious. Obama craves sources of narcissistic supply and has visceral contempt for sources of narcissistic injury. I.e., people who may reveal the mediocrity that he actually is. Obama considers Putin a threat in that context. ..."
"... The downside for the U.S. is that Obama has extended hating Putin to hating Russia. And yes, Washington is flooded with sources of sycophantic narcissistic supply for Obama including the MSM. And they are happy to massage his twisted ego by enthusiastically playing along with the Putin/Russia fear-monger bashing. ..."
"... P.S. too bad Hillary is saturated with her own psychopathology that portends more Global Cop wreckage. ..."
"... Anyway, what Buchanan is saying is, "We have to deal with him," not "favor him." The two terms should not be confused. ..."
"... There are a lot of "allies" of questionable usefulness that the US should stop "favoring," and a lot of competitors (and potential allies in the true sense) out there the US should begin "dealing" with. ..."
"... Everything the Western elite does is about dollar hegemony and control of energy. ..."
"... As long as Russia is not a puppet of the globalist banking cartel they will be presented as an "enemy". Standing in the way of energy imperialism was the last straw for the all out hybrid war being launched on Russia now. ..."
"... If the Western public wasn't so lazy and stupid we would remove the globalists controlling us. Instead people, especially liberals, get in bed with the globalists plans against Russia bc they can't stand Russia is Christian and supports the family. ..."
"... Every word about Russia allowed in the Western establishment are lies funded and molded by people like Soros and warmongers. This is the reality. Nobody who will speak honestly or positively about Russia is allowed any voice. And scumbag neoliberal globalists like Kasperov are presented as "Russians" while real Russian people are given zero voice. ..."
"... What the Western elite is doing right now in Ukraine and Syria is reprehensible and its all our fault for letting these people control us. ..."
...Arriving on Capitol Hill to repair ties between Trump and party elites,
Gov. Mike Pence was taken straight to the woodshed.
John McCain told Pence that Putin was a "thug and a butcher," and Trump's
embrace of him intolerable.
Said Lindsey Graham: "Vladimir Putin is a thug, a dictator … who has
his opposition killed in the streets," and Trump's views bring to mind Munich.
Putin is an "authoritarian thug," added "Little Marco" Rubio.
What causes the Republican Party to lose it whenever the name of Vladimir
Putin is raised?
Putin is no Stalin, whom FDR and Harry Truman called "Good old Joe" and "Uncle
Joe." Unlike Nikita Khrushchev, he never drowned a Hungarian Revolution in blood.
He did crush the Chechen secession. But what did he do there that General Sherman
did not do to Atlanta when Georgia seceded from Mr. Lincoln's Union?
Putin supported the U.S. in Afghanistan, backed our nuclear deal with Iran,
and signed on to John Kerry's plan have us ensure a cease fire in Syria and
go hunting together for ISIS and al-Qaida terrorists.
Still, Putin committed "aggression" in Ukraine, we are told. But was that
really aggression, or reflexive strategic reaction? We helped dump over a pro-Putin
democratically elected regime in Kiev, and Putin acted to secure his Black Sea
naval base by re-annexing Crimea, a peninsula that has belonged to Russia from
Catherine the Great to Khrushchev. Great powers do such things.
When the Castros pulled Cuba out of America's orbit, we decided to keep Guantanamo,
and dismiss Havana's protests?
Moscow did indeed support secessionist pro-Russia rebels in East Ukraine.
But did not the U.S. launch a 78-day bombing campaign on tiny Serbia to effect
a secession of its cradle province of Kosovo?
... ... ...
Russia is reportedly hacking into our political institutions. If so,
it ought to stop. But have not our own CIA, National Endowment for Democracy,
and NGOs meddled in Russia's internal affairs for years?
... ... ...
Is Putin's Russia more repressive than Xi Jinping's China? Yet, Republicans
rarely use "thug" when speaking about Xi. During the Cold War, we partnered
with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand
Marcos in Manila, and Park Chung-Hee of South Korea. Cold War necessity required
it.
Scores of the world's 190-odd nations are today ruled by autocrats. How
does it advance our interests or diplomacy to have congressional leaders yapping
"thug" at the ruler of a nation with hundreds of nuclear warheads?
>>During the Cold War, we partnered with such autocrats as the Shah
of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park
Chung-Hee of South Korea
buttressed could be even more pertinent)
Very good article indeed. Knee-jerk reaction of american politicians
and journalists looks extremely strange. As a matter of fact they look like
idiots or puppets.
Rubio
and Graham are reflexively ready to push US influence everywhere, all the
time, with military force always on the agenda, and McCain seems to be in
a state of constant agitation whenever US forces are not actively engaged
in combat somewhere. They are loud voices, yes, but irrational voices, too.
Very sensible article. And as the EU falls further into disarray
and possible disintegration, due to migration and other catastrophically
mishandled problems, a working partnership with Russia will become even
more important. Right now, we treat Russia as an enemy and Saudi Arabia
as a friend. That makes no sense at all.
"Just" states the starvation of the Ukraine is a western lie. The Harvest
of Sorrow by Robert Conquest refutes this dangerous falsehood. Perhaps "Just"
believes The Great Leap Forward did not lead to starvation of tens of millions
in China. After all, this could be another "western lie". So to could be
the Armenian genocide in Turkey or slaughter of Communists in Indonesia.
As I've stated many times, Obama the narcissist hates Putin because
Putin doesn't play the sycophantic lapdog yapping about how good it is to
interact with the "smartest person in the room".
I'm serious. Obama craves sources of narcissistic supply and has
visceral contempt for sources of narcissistic injury. I.e., people who may
reveal the mediocrity that he actually is. Obama considers Putin a threat
in that context.
The downside for the U.S. is that Obama has extended hating Putin
to hating Russia. And yes, Washington is flooded with sources of sycophantic
narcissistic supply for Obama including the MSM. And they are happy to massage
his twisted ego by enthusiastically playing along with the Putin/Russia
fear-monger bashing.
And so the U.S. – Russia relationship is wrecked by the "smartest person
in the room".
P.S. too bad Hillary is saturated with her own psychopathology that
portends more Global Cop wreckage.
John asks, "We also have to deal with our current allies. Whom would
Mr. Buchanan like to favor?"
Well, we could redouble our commitment to our democracy and peace loving
friends in Saudi Arabia, we could deepen our ties to those gentle folk in
Egypt, and maybe for a change give some meaningful support to Israel. Oh,
and our defensive alliances will be becoming so much stronger with Montenegro
as a member, we will need to pour more resources into that country.
Anyway, what Buchanan is saying is, "We have to deal with him," not
"favor him." The two terms should not be confused.
There are a lot of "allies" of questionable usefulness that the US
should stop "favoring," and a lot of competitors (and potential allies in
the true sense) out there the US should begin "dealing" with.
"During the Cold War, we partnered with such autocrats as the Shah of
Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park
Chung-Hee of South Korea. Cold War necessity required it (funny, you failed
to mention Laos, South Vietnam, Nicaragua, Noriega/Panama, and everyone's
favorite 9/11 co-conspirator and WMD developer, Saddam Hussein). either
way how did these "alliances" work out for the US? really doesn't matter,
does it? it is early 21st century, not mid 20th century. there is a school
of thought in the worlds of counter-terrorism/intelligence operations, which
suggests if you want to be successful, you have to partner with some pretty
nasty folks. Trump is being "handled" by an experienced, ruthless (that's
a compliment), and focused "operator". unless, of course, Trump is actually
the superior operator, in which case, this would be the greatest black op
of all time.
"From Russia With Money - Hillary Clinton, the Russian Reset and Cronyism,"
"Of the 28 US, European and Russian companies that participated in Skolkovo,
17 of them were Clinton Foundation donors" or sponsored speeches by former
President Bill Clinton, Schweizer told The Post.
Everything the Western elite does is about dollar hegemony and control
of energy. Once you understand that then the (evil)actions of the Western
elite make sense. Anyone who stands in the way of those things is an "enemy".
This is how they determine an "enemy".
As long as Russia is not a puppet of the globalist banking cartel
they will be presented as an "enemy". Standing in the way of energy imperialism
was the last straw for the all out hybrid war being launched on Russia now.
If the Western public wasn't so lazy and stupid we would remove the
globalists controlling us. Instead people, especially liberals, get in bed
with the globalists plans against Russia bc they can't stand Russia is Christian
and supports the family.
Every word about Russia allowed in the Western establishment are
lies funded and molded by people like Soros and warmongers. This is the
reality. Nobody who will speak honestly or positively about Russia is allowed
any voice. And scumbag neoliberal globalists like Kasperov are presented
as "Russians" while real Russian people are given zero voice.
What the Western elite is doing right now in Ukraine and Syria is
reprehensible and its all our fault for letting these people control us.
You need to substitute PIC (a.k.a., The Elites or Political Class)) for
neoliberal elite for the article to make more sense.
Notable quotes:
"... Our nation is in the grip of such poisonous thinking. The DNC with its "Super Delegates" already has a way to control who will be their candidate. In an irony to beat all ironies, the DNC's Super Delegates were able to stop Bernie Sanders... ..."
"... The reason Trump is still rising (and I believe will win handily) is he clearly represents the original image of America: a self made success story based on capitalism and the free market. ..."
This election cycle is so amazing one cannot help but think it has been scripted
by some invisible, all-powerful, hand. I mean, how could we have two completely
opposite candidates, perfectly reflecting the forces at play in this day and
age? It truly is a clash between The Elites and The Masses!
Main Street vs Wall & K Street.
The Political Industrial Complex (PIC – a.k.a., The Elites or Political Class)
is all up arms over the outsider barging in on their big con. The PIC is beside
itself trying to stop Donald Trump from gaining the Presidency, where he will
be able to clean out the People's House and the bureaucratic cesspool that has
shackled Main Street with political correctness, propaganda, impossibly expensive
health care, ridiculous taxes and a national debt that will take generations
to pay off.
The PIC has run amok long enough – illustrated perfectly by the defect ridden
democrat candidate: Hillary Clinton. I mean, how could you frame America's choices
this cycle
any better than this --
Back in July, Democratic presidential nominee and former Secretary of
State Hillary Clinton said, "there is
absolutely no connection between anything that I did as secretary of
state and the Clinton Foundation."
On Monday of this week,
ABC's Liz Kreutzer reminded people of that statement, as a new batch
of emails reveal that there was a connection, and
it was cash .
…
The Abedin emails reveal that the longtime Clinton aide apparently served
as a conduit between Clinton Foundation donors and Hillary Clinton while
Clinton served as secretary of state. In more than a dozen email exchanges,
Abedin provided expedited, direct access to Clinton for donors who had contributed
from $25,000 to $10 million to the Clinton Foundation. In many instances,
Clinton Foundation top executive Doug Band, who worked with the Foundation
throughout Hillary Clinton's tenure at State, coordinated closely with Abedin.
In Abedin's June deposition to Judicial Watch, she conceded that part of
her job at the State Department was taking care of "
Clinton family matters ."
This is what has Main Street so fed up with Wall & K street (big business,
big government). The Clinton foundation is a cash cow for Clinton, Inc. So while
our taxes go up, our debt sky rockets and our health care becomes too expensive
to afford, Clan Clinton has made 100's of millions of dollars selling access
(and obviously doing favors, because no one spends that kind of money without
results).
The PIC is circling the wagons with its news media arm shrilly screaming
anything and everything about Trump as if they could fool Main Street with their
worn out propaganda. I seriously doubt it will work. The Internet has broken
the information monopoly that allowed the PIC in the not too distant past to
control what people knew and thought.
Massachusetts has a long history of using the power of incumbency to
cripple political opponents. In fact, it's a leading state for such partisan
gamesmanship. Dating back to 1812, when Gov. Elbridge Gerry signed into
law a redistricting plan for state Senate districts that favored his Democratic-Republican
Party, the era of Massachusetts rule rigging began. It has continued, unabated,
ever since.
Given the insider dealing and venality that epitomized the 2016 presidential
primary process, I'd hoped that politicians would think twice before abusing
the power of the state for political purposes. Galvin quickly diminished
any such prospect of moderation in the sketchy behavior of elected officials.
He hid his actions behind the thin veil of fiscal responsibility. He claimed
to be troubled by the additional $56,000 he was going to have to spend printing
ballots to accommodate Independent voters. He conveniently ignored the fact
that thousands of these UIP members have been paying taxes for decades to
support a primary process that excludes them.
…
In my home state of Kansas, where my 2014 candidacy threatened to take
a U.S. Senate seat from the Republicans, they responded predictably. Instead
of becoming more responsive to voters, our state's highly partisan secretary
of state, Kris Kobach, introduced legislation that would bring back one
of the great excesses of machine politics: straight party-line voting –
which is designed to discourage voters from considering an Independent candidacy
altogether. Kobach's rationale, like Galvin's, was laughable. He described
it as a "convenience" for voters.
The article goes on to note these acts by the PIC are an affront to the large
swath of the electorate who really choose who will win elections:
In a recent Gallup poll, 60 percent of Americans said they do not feel
well-represented by the Democrats and Republicans and believe a third major
party is needed. Fully 42 percent of Americans now describe themselves
as politically independent .
That means the two main parties are each smaller in size than the independents
(68% divided by 2 equals 34%), which is why independents pick which side will
win. If the PIC attacks this group – guess what the response will look like?
I recently had a discussion with someone from Washington State who is pretty
much my opposite policy-wise. She is a deep blue democrat voter, whereas I am
a deep purple independent who is more small-government Tea Party than conservative-GOP.
She was lamenting the fact that her state has caucuses, which is one method
to blunt Main Street voters from having a say. It was interesting that we quickly
and strongly agreed on one thing above all else: open primaries. We both knew
that if the voters had the only say in who are leaders
would be, all sides could abide that decision easily. It is when PIC intervenes
that things get ugly.
Open primaries make the political parties accountable to the voters. Open
primaries make it harder for the PIC to control who gets into office, and reduces
the leverage of big donors. Open primaries reflect the will of the states and
the nation – not the vested interests (read bank accounts) of the PIC.
Without doubt, one of the most troublesome aspects of the current system
is its gross inefficiency. Whereas generations ago selecting a nominee
took relatively little time and money , today's process has resulted
in a near-permanent campaign. Because would-be nominees have to
win primaries and open caucuses in several states, they must put
together vast campaign apparatuses that spread across the nation, beginning
years in advance and raising tens of millions of dollars.
The length of the campaign alone keeps many potential candidates on the
sidelines. In particular, those in positions of leadership at various
levels of our government cannot easily put aside their duties and
shift into full-time campaign mode for such an extended period.
It is amazing how this kind of thinking can be considered legitimate. Note
how independent voters are evil in the mind of the PIC, and only government
leaders need apply. Not surprising, their answer is to control access to the
ballot:
During the week of Lincoln's birthday (February 12), the Republican Party
would hold a Republican Nomination Convention that would borrow from the
process by which the Constitution was ratified. Delegates to the
convention would be selected by rank-and-file Republicans in their local
communities , and those chosen delegates would meet, deliberate,
and ultimately nominate five people who, if willing, would each
be named as one of the party's officially sanctioned finalists for its presidential
nomination. Those five would subsequently debate one another a half-dozen
times.
Brexit became a political force because the European Union was not accountable
to the voters. The EU members are also selected by members of the European PIC
– not citizens of the EU. Without direct accountability to all citizens (a.k.a.
– voters) there is no democracy –
just a variant
of communism:
During the Russian Civil War (1918–1922), the Bolsheviks nationalized
all productive property and imposed a policy named war communism,
which put factories and railroads under strict government control,
collected and rationed food, and introduced some bourgeois management of
industry . After three years of war and the 1921 Kronstadt rebellion,
Lenin declared the New Economic Policy (NEP) in 1921, which was to give
a "limited place for a limited time to capitalism." The NEP lasted until
1928, when Joseph Stalin achieved party leadership, and the introduction
of the Five Year Plans spelled the end of it. Following the Russian Civil
War, the Bolsheviks, in 1922, formed the Union of Soviet Socialist Republics
(USSR), or Soviet Union, from the former Russian Empire.
Following Lenin's democratic centralism, the Leninist parties
were organized on a hierarchical basis, with active cells of members as
the broad base; they were made up only of elite cadres approved by higher
members of the party as being reliable and completely subject to party discipline
.
Emphasis mine. Note how communism begins with government control of major
industries. The current con job about Global Warming is the cover-excuse for
a government grab of the energy sector. Obamacare is an attempt to grab the
healthcare sector. And Wall Street already controls the banking sector. See
a trend yet?
This is then followed by imposing a rigid hierarchy of "leaders" at all levels
of politics – so no opposing views can gain traction. Party discipline uber
alles!
Our nation is in the grip of such poisonous thinking. The DNC with its "Super
Delegates" already has a way to control who will be their candidate. In an irony
to beat all ironies, the DNC's Super Delegates were able to stop Bernie Sanders...
The reason Trump is still rising (and I believe will win handily) is he clearly
represents the original image of America: a self made success story based on
capitalism and the free market.
His opponent is the epitome of the Political Industrial Complex – a cancer
that has eaten away America's free market foundation and core strength. A person
who wants to impose government on the individual.
"... cultural nationalism is the only ideology capable of being a legitimising ideology under the prevailing global and national political economy. ..."
"... Neoliberalism cannot perform this role since its simplicities make it harsh not just towards the lower orders, but give it the potential for damaging politically important interests amongst capitalist classes themselves. ..."
"... In this form, cultural nationalism provides national ruling classes a sense of their identity and purpose, as well as a form of legitimation among thelower orders. ..."
"... As Gramsci said, these are the main functions of every ruling ideology. Cultural nationalism masks, and to a degree resolves, the intense competition between capitals over access to the state for support domestically and in the international arena – in various bilateral and multilateral fora – where it bargainsfor the most favoured national capitalist interests within the global and imperial hierarchy. ..."
This is where cultural nationalism comes in. Only it can serve to mask, and
bridge, the divides within the 'cartel of anxiety' in a neoliberal context.
Cultural nationalism is a nationalism shorn of its civic-egalitarian and developmentalist
thrust, one reduced to its cultural core. It is structured around the culture
of thee conomically dominant classes in every country, with higher or lower
positions accorded to other groups within the nation relative to it. These positions
correspond, on the whole, to the groups' economic positions, and as such it
organises the dominant classes, and concentric circles of their allies, into
a collective national force. It also gives coherence to, and legitimises, the
activities of the nation-state on behalf of capital, or sections thereof, in
the international sphere.
Indeed, cultural nationalism is the only ideology capable of being a legitimising
ideology under the prevailing global and national political economy.
Neoliberalism
cannot perform this role since its simplicities make it harsh not just towards
the lower orders, but give it the potential for damaging politically important
interests amongst capitalist classes themselves. The activities of the state
on behalf of this or that capitalist interest necessarily exceed the Spartan
limits that neoliberalism sets. Such activities can only be legitimised as being
'in the national interest.'
Second, however, the nationalism that articulates
these interests is necessarily different from, but can easily (and given its
function as a legitimising ideology, it must be said, performatively) be mis-recognised
as, nationalism as widely understood: as being in some real sense in the interests
of all members of the nation. In this form, cultural nationalism provides national
ruling classes a sense of their identity and purpose, as well as a form of legitimation
among thelower orders.
As Gramsci said, these are the main functions of every
ruling ideology. Cultural nationalism masks, and to a degree resolves, the intense
competition between capitals over access to the state for support domestically
and in the international arena – in various bilateral and multilateral fora
– where it bargainsfor the most favoured national capitalist interests within
the global and imperial hierarchy.
Except for a commitment to neoliberal policies, the economic policy content
of this nationalism cannot be consistent: within the country, and inter-nationally,
the capitalist system is volatile and the positions of the various elements
of capital in the national and international hierarchies shift constantly as
does the economic policy of cultural nationalist governments. It is this volatility
that also increases the need for corruption – since that is how competitive
access of individual capitals to the state is today organised.
Whatever its utility to the capitalist classes, however, cultural nationalism
can never have a settled or secure hold on those who are marginalised or sub-ordinated
by it. In neoliberal regimes the scope for offering genuine economic gains to
the people at large, however measured they might be, is small.
This is a problem for right politics since even the broadest coalition of
the propertied can never be an electoral majority, even a viable plurality.
This is only in the nature of capitalist private property. While the left remains
in retreat or disarray, elec-toral apathy is a useful political resource but
even where, as in most countries, political choices are minimal, the electorate
as a whole is volatile. Despite, orperhaps because of, being reduced to a competition
between parties of capital, electoral politics in the age of the New Right entails
very large electoral costs, theextensive and often vain use of the media in
elections and in politics generally, and political compromises which may clash
with the high and shrilly ambitiou sdemands of the primary social base in the propertied
classes. Instability, uncertainty ...
"... What is "Globalization" and "Free Trade" really?… Does it encompass the slave trade, trading in narcotics, deforestation and export of a nation's tropical hardwood forests, environmentally damaging transnational oil pipelines or coal ports, fisheries depletion, laying off millions of workers and replacing them and the products they make with workers and products made in a foreign country, trading with an enemy, investing capital in a foreign country through a subsidiary or supplier that abuses its workers to the point that some commit suicide, no limits on or regulation of financial derivatives and transnational financial intermediaries?… the list is endless. ..."
"... As always, the questions are "Cui bono?"… "Who benefits"?… How and Why they benefit?… Who selects the short-term "Winners" and "Losers"? And WRT those questions, the final sentence of this post hints at its purpose. ..."
"... Yeah, how is European colonialism - starting in, what, like the 15th century, or something - not "globalisation"? What about the Roman and Persian and Selucid empires? Wasn't that globalisation? I think we've pretty much always lived in a globalised world, one way or another (if "globalised world" even makes sense). ..."
"... Bring back the broader, and more meaningful conception of Political Economy and some actual understanding can be gained. The study of economics cannot be separated from the political dimension of society. Politics being defined as who gets what in social interactions. ..."
"... The neoliberal experiment has run its course. Milton Friedman and his tribe had their alternative plan ready to go and implemented it when they could- to their great success. The best looting system developed-ever. This system only works with the availability of abundant resources and the mental justifications to support that gross exploitation. Both of which are reaching limits. ..."
"... If only the Milton Friedman tribe had interested itself in sports instead of economics. They could have argued that referees and umpires should be removed from the game for greater efficiency of play, and that sports teams would follow game rules by self-regulation. ..."
"... Wouldn't the whole thing just work out more efficiently if you leave traffic lights and rules out of it? Just let everyone figure it out at each light, survival of the fittest. ..."
"... With increasingly free movement of people as tourists whose spending impacts nations GDP, where does it fit in to discussions on globalization and trade? ..."
What is "Globalization" and "Free Trade" really?… Does it encompass
the slave trade, trading in narcotics, deforestation and export of a nation's
tropical hardwood forests, environmentally damaging transnational oil pipelines
or coal ports, fisheries depletion, laying off millions of workers and replacing
them and the products they make with workers and products made in a foreign
country, trading with an enemy, investing capital in a foreign country through
a subsidiary or supplier that abuses its workers to the point that some
commit suicide, no limits on or regulation of financial derivatives and
transnational financial intermediaries?… the list is endless.
As always, the questions are "Cui bono?"… "Who benefits"?… How and
Why they benefit?… Who selects the short-term "Winners" and "Losers"? And
WRT those questions, the final sentence of this post hints at its purpose.
diptherio
Yeah, how is European colonialism - starting in, what, like the 15th
century, or something - not "globalisation"? What about the Roman and Persian
and Selucid empires? Wasn't that globalisation? I think we've pretty much
always lived in a globalised world, one way or another (if "globalised world"
even makes sense).
Norb
Bring back the broader, and more meaningful conception of Political
Economy and some actual understanding can be gained. The study of economics
cannot be separated from the political dimension of society. Politics being
defined as who gets what in social interactions.
What folly. All this complexity and strident study of minutia to bring
about what end? Human history on this planet has been about how societies
form, develop, then recede form prominence. This flow being determined by
how well the society provided for its members or could support their worldview.
Talk about not seeing the forest for the trees.
The neoliberal experiment has run its course. Milton Friedman and
his tribe had their alternative plan ready to go and implemented it when
they could- to their great success. The best looting system developed-ever.
This system only works with the availability of abundant resources and the
mental justifications to support that gross exploitation. Both of which
are reaching limits.
Only by thinking, and communicating in the broader terms of political
economy can we hope to understand our current conditions. Until then, change
will be difficult to enact. Hard landings for all indeed.
flora
If only the Milton Friedman tribe had interested itself in sports
instead of economics. They could have argued that referees and umpires should
be removed from the game for greater efficiency of play, and that sports
teams would follow game rules by self-regulation.
LA Mike September 17, 2016 at 8:15 pm
While in traffic, I was thinking about that today. For some time now,
I've viewed the traffic intersection as being a good example of the social
contract. We all agree on its benefits. But today, I thought about it in
terms of the Friedman Neoliberals.
Why should they have to stop at red lights. Wouldn't the whole thing
just work out more efficiently if you leave traffic lights and rules out
of it? Just let everyone figure it out at each light, survival of the fittest.
sd
Something I have wondered for some time, how does tourism fit into trade?
With increasingly free movement of people as tourists whose spending
impacts nations GDP, where does it fit in to discussions on globalization
and trade?
I Have Strange Dreams
Other things to consider:
– negative effects of immigration (skilled workers leave developing countries
where they are most needed)
– environmental pollution
– destruction of cultures/habitats
– importation of western diet leading to decreased health
– spread of disease (black death, hiv, ebola, bird flu)
– resource wars
– drugs
– happiness
How are these "externalities" calculated?
"...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.
"Massachusetts Senator Elizabeth Warren on Thursday requested a formal
investigation into why the Obama administration did not bring criminal
charges individuals and corporation involved in the 2007-2008 financial
crisis" [International Business Times]. Why now? Liz edging her hat
toward the ring if Clinton comes up lame?
I can see two possible interpretations for this.
First, as much as I hate to draw the analogy, she could be positioning
herself to take the reigns after a loss in the way that Richard Nixon, Paul
Ryan, and later Bill Clinton did. Richard Nixon sat back and concentrated
on building up credibility as Barry Goldwater melted down and then quietly
stepped in to take over the party after the loss to set up his eventual
run. Paul Ryan quietly permitted or perhaps aided the coup against Boehner.
And Bill Clinton, through the DLC teed up his control of the party after
Dukakis lost.
Second, with Wells-Fargo and bank fraud once again in the news she could
be working to keep prior decisions current both to force better action this
time or to nudge the Clinton and Trump into making promises of stronger
action in the future.
It seems to me that both those objectives would be served by continuing
to hammer on Wells Fargo, so the question "Why now?" isn't really answered
in your comment.
But if you wanted to take out an option on running a full-throated populist
campaign - and throwing bankers in jail would be wildly popular across the
entire political spectrum (except Clinton's 10%-ers on up) - in the unhappy
event that the party's candidate came up lame, then calling for an account
of regulatory decision making in 2009 would be one way to signal that. Note
also that would call Obama's "legacy" into question, too; the whole "stand
between you and the pitchforks" thing. This is a big deal.
Commissioner Ohlhausen had some pretty strong words. ... Specifically, she implies a very strong
presumption against public interference in private markets, as indicated by her argument that
there is not yet sufficient evidence that we have a monopoly problem. The argument seems to be
that we must wait until we are very, very sure, beyond any reasonable econometric doubt, apparently,
that there's something wrong before we step in. ...
She is mistaken, and she ignores roughly a library-full of well-known..., sophisticated empirical
work. ...
In the end, the irony of these remarks is captured in this point: Commissioner Ohlhausen is
pretty witheringly dismissive of a certain kind of evidence of market power, and implies that
it would not support increased enforcement unless it can overcome a high methodological bar. But
for her own countervailing evidence that in fact American markets are "fierce[ly] competiti[ve],"
she says this: "Consider the new economy, which is a hotbed of technological innovation. That
environment does not strike me as one lacking competition."
In other words, the presumption against antitrust is so strong that evidence of harm must meet
the most exacting standards of social science. To prove that markets are in fact competitive,
however, needs nothing more than seat-of-the-pants anecdotes. Again, I mean no disrespect, and
I think we have an honest difference of opinion. But this stance is not social science, and it
is not good, empirically founded public policy. It is just ideology. ...
It's definitely true that the agencies have brought a bunch of challenges to a bunch of nasty
mergers, and perhaps total enforcement numbers have gone up a bit. But that is because we are
in the midst of a merger wave in which parties have been proposing breathtakingly massive, overwhelmingly
consolidating horizontal deals. While there is a track record to be proud of in the administration's
enforcement, especially, as the commissioner observes, in the Commission's campaign against hospital
mergers, reverse-payment deals, SEP problems, and patent trolls, and who knows how many other
matters, the fact remains that by and large the administration has mostly not taken action that
any administration would not have taken, including the Reagan and both Bush administrations. ...
If we were actually serious about antitrust, which we very much should be, we would not only block
most of these mergers, but break up many of existing behemoths (like the big banks, the media
giants, Comcast, and many others).
I'm all for breaking up the behemoths when they are indeed stifling competition. The Reagan Revolution
to anti-trust was based on a contention that some mergers were about efficiency effects. I think
this argument is sometimes overblown but it is not per se false. I do object (see below) to the
weak evidence that goes like this. Collective shareholder value rose so ergo the merger is about
efficiency effects. Anyone who argues that (see Don Luskin and the premium ice cream proposed
merger) is not very bright.
Exactly. Corporations being able to suck more profit out of the costumers (and as a result share
prices rising) is the proof that anti-trust has failed. In a fully functional competitive market
companies do not make much profit.
Accounting profits? Maybe you should read that paper by the commissioner as she makes a very clear
statement about what accounting profit would look like in a competitive market. And it is not
zero. Return to capital? Hello?
No if it was zero the whole thing breaks down. However, a small return on capital is an indication
that companies are forced to cut prices because of competition- and that is a healthy market.
So yes there is (some but) not much profit in a fully functional competitive market.
Let's define "small return". Standard financial economics puts this at the risk-free rate plus
a premium for bearing systematic risk. OK - the risk-free return now is quite small. Say 2%. But
if the risk premium is say 4%, then we are talking about a 6% expected return to assets. If that
is what you mean by small - cool.
Of course I have seen a lot of "professionals" argue for much higher returns. Of course these
professionals would flunk a Finance 101 class.
I don't think the risk premium needs to be more than about 2% unless/until the economy enter a
phase where demand outstrips supply (and more investment money needs to be attracted). If there
is a glut of investment money then the price of it (=risk free returns) should go down.
This is the kind of thinking that got Hassett and Glassman to tell us about DOW 36000. Some people
overestimate the risk premium but 2% is what a regulated utility or a leasing company gets. And
neither bears commercial risk. Dude - you can make up whatever number your heart desires but there
is market evidence on these things.
Ability to better suck profit out of a captive base of customers is an efficiency of a sort. Instead
of investing in risky new business processes or technologies one merely has to buy out your competitors.
This is practically risk free.
"Though she says that "[e]fficiencies are real"-citing no evidence for it in a speech critical
of everyone else for failure to supply evidence-there is in fact no meaningful proof that consolidation
generates social benefits. Especially in the case of mergers, a large and sophisticated empirical
literature has been hunting for decades for evidence that mergers produce "efficiencies" or other
benefits. The evidence has not been found. At least with respect to deals among publicly traded
firms, the evidence tends to suggest that mergers do no good on average for shareholders of either
acquiring or target firms, and if there were some efficiencies or larger social benefits, they
should be measurable as benefits to shareholders. The empirical evidence has therefore confirmed
the popular wisdom shared on Wall Street for years-that all this activity is not serving any good
social purpose, though it might be helping executives and their bankers quite a lot."
The conservative (Reagan) approach to anti-trust did indeed ask DOJ and FTC to consider whether
the merger was about beneficial efficiency effects v. anti-competitive effects. But let's suppose
two firms merged and their collective value did rise benefiting shareholders. That does not prove
the efficiency effects dominate. No – mergers that lead to less competition will often raise shareholder
value even if there are no efficiency effects. Those mergers should be disallowed.
Proof of Monopoly Power - Verizon and ATT's pricing and apparent lack of any interest in maintaining
or even knowing where their physical plant is installed. Also - see directTV's recent price increases.
American markets are "fierce[ly] competiti[ve]," she says this: "Consider the new economy, which
is a hotbed of technological innovation. That environment does not strike me as one lacking competition."
In other words, the presumption against antitrust is so strong
"
You are assumed properly competing until proved monopoly-based. The burden of proof is on the
victims. Tell me something!
Does the government always appear as crystal clear as the mirror of Alice? When we look at
local, county, state, and federal rulers, do we always see ourselves? Our own bias? Our own agenda?
The government apes its voters.
Do you see how today's polity is begging for less competition? Less free trade from our trading
partners? Do you see how we want to make a monopoly out of America? Build a fence around it so
that nobody is allowed to buy anything from anyone other than our monopoly?
" We have identified the enemy, ourselves. " ~~Pogo~
Yes you need at least a dozen independent businesses delivering the same (substitutable) products
to ensure that there is indeed a competitive market that will not be gamed against the consumers.
This is not just needed to ensure that consumers will be offered a fair price, but also to ensure
that companies will be forced to continue to innovate and offer better and better products. The
oversight of mergers has been a scandal and needs to be tightened by new laws. Obviously we have
to make the "dozen rule" a law rather than just common sense guidance.
The dozen rule? Where did that come from? Depends on the market but I would hope we have more
than 12 suppliers of beer. BTW - it would be nice to have 12 health insurance companies but we
could break up this oligopoly with such one more - the government aka the public option.
Yes some products can benefit from more variation, but at least with 12 suppliers you would not
have anybody able to corner the market. The dozen rule is mine, that is how I get my eggs. If
Ohlhausen can just make it up - so can I.
The FTC has ignored a many major health care mergers but has gone litigation guns a blazin' into
small mergers in such less-than-major metro centers as Moscow Idaho and Toledo Ohio.
The sad fact is that the right-wing Law and Economics scholars have literally been trained to
believe that the only correct null hypothesis is "free markets are good". When the null is not
rejected with a 95% confidence interval, they actually think they've won the argument, while you're
sitting there scratching your head saying, but when the null hypothesis is "free markets are bad",
we can't reject that either. I've never seen logic get much traction with this crowd, because
they are literally willing to tell you that economics demonstrates that "free markets are good",
so that's the correct null.
It's very sad, but also very common when talking to lawyers. In fact, I often wonder whether
the right-wing didn't create the "Law and Economics" movement in order to slow the exposure of
the legal profession to the actual tools of modern economic analysis.
It would be a start if we would simply stop seeing hostile takeovers as something positive (you
know ex-ante efficiency improvements) and start seeing them for the interference in natural selection
that they actually are (no 40-40 foresight exists).
"But part of the answer lies in something Americans have a hard time
talking about: class. Trade is a class issue. The trade agreements we have
entered into over the past few decades have consistently harmed some
Americans (manufacturing workers) while just as consistently benefiting
others (owners and professionals). …
To understand "free trade" in such a way has made it difficult for people
in the bubble of the consensus to acknowledge the actual consequences of the
agreements we have negotiated over the years."
"... 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.
"... the US has been successful in dictating neoliberal policies, acting partly through the IMF and World Bank and partly through direct pressure. ..."
"... From roughly the mid 1930s to the mid 1970s a new "interventionist" approach replaced classical liberalism, and it became the accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s the Old Religion of classical liberalism made a rapid comeback, first in academic economics and then in the realm of public policy. ..."
"... Neoliberal theory claims that a largely unregulated capitalist system (a "free market economy" not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. ..."
"... The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state. ..."
"... This paper argues that the resurgence and tenacity of neoliberalism during the past two decades cannot be explained, in an instrumental fashion, by any favorable effects of neoliberal policies on capitalist economic performance. On the contrary, we will present a case that neoliberalism has been harmful for long-run capitalist economic performance, even judging economic performance from the perspective of the interests of capital. It will be argued that the resurgence and continuing dominance of neoliberalism can be explained, at least in part, by changes in the competitive structure of world capitalism, which have resulted in turn from the particular form of global economic integration that has developed in recent decades. The changed competitive structure of capitalism has altered the political posture of big business with regard to economic policy and the role of the state, turning big business from a supporter of state-regulated capitalism into an opponent of it. ..."
"... Second, the neoliberal model creates instability on the macroeconomic level by renouncing state counter-cyclical spending and taxation policies, by reducing the effectiveness of "automatic stabilizers" through shrinking social welfare programs,3 and by loosening public regulation of the financial sector. This renders the system more vulnerable to major financial crises and depressions. Third, the neoliberal model tends to intensify class conflict, which can potentially discourage capitalist investment.4 ..."
"... The evidence from GDP and labor productivity growth rates supports the claim that the neoliberal model is inferior to the state regulationist model for key dimensions of capitalist economic performance. There is ample evidence that the neoliberal model has shifted income and wealth in the direction of the already wealthy. However, the ability to shift income upward has limits in an economy that is not growing rapidly. Neoliberalism does not appear to be delivering the goods in the ways that matter the most for capitalism's long-run stability and survival. ..."
"... Once capitalism had become well established in the US after the Civil War, it entered a period of cutthroat competition and wild accumulation known as the Robber Baron era. In this period a coherent anti-interventionist liberal position emerged and became politically dominant. Despite the enormous inequalities, the severe business cycle, and the outrageous and often unlawful behavior of the Goulds and Rockefellers, the idea that government should not intervene in the economy held sway through the end of the 19th century. ..."
"... Small business has remained adamantly opposed to the big, interventionist state, from the Progressive Era through the New Deal down to the present. This division between big and small business is chronicled for the Progressive Era in Weinstein (1968). In the decades immediately following World War II one can observe this division in the divergent views of the Business Roundtable, a big business organization which often supported interventionist programs, and the US Chambers of Commerce, the premier small business organization, which hewed to an antigovernment stance. ..."
"... By contrast, the typical small business faces a daily battle for survival, which prevents attention to long-run considerations and which places a premium on avoiding the short-run costs of taxation and state regulation. This explains the radically different positions that big business and small business held regarding the proper state role in the economy for the first two-thirds of the twentieth century. ..."
"... This long-standing division between big business and small business appeared to vanish in the US starting in the 1970s. Large corporations and banks which had formerly supported foundations that advocated an active government role in the economy, such as the Brookings Institution, became big donors to neoliberal foundations such as the American Enterprise Institute and the Heritage Foundation. As a result, such right-wing foundations, which previously had to rely mainly on contributions from small business, became very wealthy and influential.10 It was big business=s desertion of the political coalition supporting state intervention and its shift to neoliberalism that rebuilt support for neoliberal theories and policies in the US, starting in the 1970s. With business now unified on economic policy, the shift was dramatic. Big grants became available for economics research having a neoliberal slant. The major media shifted their spin on political developments, and the phrase "government programs" now could not be printed except with the word "bloated" before it. ..."
"... Globalization is usually defined as an increase in the volume of cross-border economic interactions and resource flows, producing a qualitative shift in the relations between national economies and between nation-states (Baker et. al., 1998, p. 5; Kozul-Wright and Rowthorn, 1998, p. 1). Three kinds of economic interactions have increased substantially in past decades: merchandise trade flows, foreign direct investment, and cross-border financial investments. We will briefly examine each, with an eye on their effects on the competitive structure of contemporary capitalism. ..."
"... By the close of the twentieth century, capitalism had become significantly more globalized than it had been fifty years ago, and by some measures it is much more globalized than it had been at the previous peak of this process in 1913. The most important features of globalization today are greatly increased international trade, increased flows of capital across national boundaries (particularly speculative short-term capital), and a major role for large TNCs in manufacturing, extractive activities, and finance, operating worldwide yet retaining in nearly all cases a clear base in a single nation-state. ..."
"... Some analysts argue that globalization has produced a world of such economic interdependence that individual nation-states no longer have the power to regulate capital. However, while global interdependence does create difficulties for state regulation, this effect has been greatly exaggerated. Nation-states still retain a good deal of potential power vis-a-vis capitalist firms, provided that the political will is present to exercise such power. For example, even such a small country as Malaysia proved able to successfully impose capital controls following the Asian financial crisis of 1997, despite the opposition of the IMF and the US government. ..."
"... Globalization appears to be one factor that has transformed big business from a supporter to an opponent of the interventionist state. It has done so partly by producing TNCs whose tie to the domestic markets for goods and labor is limited. ..."
"... Globalization has produced a world capitalism that bears some resemblance to the Robber Baron Era in the US. Giant corporations battle one another in a system lacking well defined rules. Mergers and acquisitions abound, including some that cross national boundaries, but so far few world industries have evolved the kind of tight oligopolistic structure that would lay the basis for a more controlled form of market relations. Like the late 19th century US Robber Barons, today's large corporations and banks above all want freedom from political burdens and restraints as they confront one another in world markets.18 ..."
"... The existence of a powerful bloc of Communist-run states with an alternative "state socialist" socioeconomic system tended to push capitalism toward a state regulationist form. It reinforced the fear among capitalists that their own working classes might turn against capitalism. It also had an impact on relations among the leading capitalist states, promoting inter-state unity behind US leadership, which facilitated the creation and operation of a world-system of state-regulated capitalism.19 The demise of state socialism during 1989-91 removed one more factor that had reinforced the regulationist state. ..."
"... If state socialism re-emerged in one or more major countries, perhaps this might push the capitalist world back toward the regulationist state. However, such a development does not seem likely. Even if Russia or Ukraine at some point does head in that direction, it would be unlikely to produce a serious rival socioeconomic system to that of world capitalism. ..."
Department of Economics and Political Economy Research Institute Thompson Hall
University of Massachusetts Amherst, MA 01003 U.S.A. Telephone 413-545-1248
Fax 413-545-2921 Email [email protected] August, 2000 This paper was published
in Rethinking Marxism, Volume 12, Number 2, Summer 2002, pp. 64-79.
Research assistance was provided by Elizabeth Ramey and Deger Eryar. Research
funding was provided by the Political Economy Research Institute of the University
of Massachusetts at Amherst. Globalization and Neoliberalism 1 For some
two decades neoliberalism has dominated economic policymaking in the US and
the UK. Neoliberalism has strong advocates in continental Western Europe and
Japan, but substantial popular resistance there has limited its influence so
far, despite continuing US efforts to impose neoliberal policies on them. In
much of the Third World, and in the transition countries (except for China),
the US has been successful in dictating neoliberal policies, acting partly through
the IMF and World Bank and partly through direct pressure.
Neoliberalism is an updated version of the classical liberal economic thought
that was dominant in the US and UK prior to the Great Depression of the 1930s.
From roughly the mid 1930s to the mid 1970s a new "interventionist" approach
replaced classical liberalism, and it became the accepted belief that capitalism
requires significant state regulation in order to be viable. In the 1970s the
Old Religion of classical liberalism made a rapid comeback, first in academic
economics and then in the realm of public policy.
Neoliberalism is both a body of economic theory and a policy stance.
Neoliberal theory claims that a largely unregulated capitalist system (a "free
market economy" not only embodies the ideal of free individual choice but also
achieves optimum economic performance with respect to efficiency, economic growth,
technical progress, and distributional justice. The state is assigned a
very limited economic role: defining property rights, enforcing contracts, and
regulating the money supply.1 State intervention to correct market failures
is viewed with suspicion, on the ground that such intervention is likely to
create more problems than it solves.
The policy recommendations of neoliberalism are concerned mainly with
dismantling what remains of the regulationist welfare state. These recommendations
include deregulation of business; privatization of public activities and assets;
elimination of, or cutbacks in, social welfare programs; and reduction of taxes
on businesses and the investing class. In the international sphere, neoliberalism
calls for free movement of goods, services, capital, and money (but not people)
across national boundaries. That is, corporations, banks, and individual investors
should be free to move their property across national boundaries, and free to
acquire property across national boundaries, although free cross-border movement
by individuals is not part of the neoliberal program. How can the re-emergence
of a seemingly outdated and outmoded economic theory be explained? At first
many progressive economists viewed the 1970s lurch toward liberalism as a temporary
response to the economic instability of that decade. As corporate interests
decided that the Keynesian regulationist approach no longer worked to their
advantage, they looked for an alternative and found only the old liberal ideas,
which could at least serve as an ideological basis for cutting those state programs
viewed as obstacles to profit-making. However, neoliberalism has proved to be
more than just a temporary response. It has outlasted the late 1970s/early 1980s
right-wing political victories in the UK (Thatcher) and US (Reagan). Under a
Democratic Party administration in the US and a Labor Party government in the
UK in the 1990s, neoliberalism solidified its position of dominance.
This paper argues that the resurgence and tenacity of neoliberalism during
the past two decades cannot be explained, in an instrumental fashion, by any
favorable effects of neoliberal policies on capitalist economic performance.
On the contrary, we will present a case that neoliberalism has been harmful
for long-run capitalist economic performance, even judging economic performance
from the perspective of the interests of capital. It will be argued that the
resurgence and continuing dominance of neoliberalism can be explained, at least
in part, by changes in the competitive structure of world capitalism, which
have resulted in turn from the particular form of global economic integration
that has developed in recent decades. The changed competitive structure of capitalism
has altered the political posture of big business with regard to economic policy
and the role of the state, turning big business from a supporter of state-regulated
capitalism into an opponent of it.
The Problematic Character of Neoliberalism
Neoliberalism appears to be problematic as a dominant theory for contemporary
capitalism. The stability and survival of the capitalist system depends on its
ability to bring vigorous capital accumulation, where the latter process is
understood to include not just economic expansion but also technological progress.
Vigorous capital accumulation permits rising profits to coexist with rising
living standards for a substantial part of the population over the long-run.2
However, it does not appear that neoliberalism promotes vigorous capital accumulation
in contemporary capitalism. There are a number of reasons why one would not
expect the neoliberal model to promote rapid accumulation. First, it gives rise
to a problem of insufficient aggregate demand over the long run, stemming from
the powerful tendency of the neoliberal regime to lower both real wages and
public spending. Second, the neoliberal model creates instability on the
macroeconomic level by renouncing state counter-cyclical spending and taxation
policies, by reducing the effectiveness of "automatic stabilizers" through shrinking
social welfare programs,3 and by loosening public regulation of the financial
sector. This renders the system more vulnerable to major financial crises and
depressions. Third, the neoliberal model tends to intensify class conflict,
which can potentially discourage capitalist investment.4
The historical evidence confirms doubts about the ability of the neoliberal
model to promote rapid capital accumulation. We will look at growth rates of
gross domestic product (GDP) and of labor productivity. The GDP growth rate
provides at least a rough approximation of the rate of capital accumulation,
while the labor productivity growth rate tells us something about the extent
to which capitalism is developing the forces of production via rising ratios
of means of production to direct labor, technological advance, and improved
labor skills.5 Table 1 shows average annual real GDP growth rates for six leading
developed capitalist countries over two periods, 1950-73 and 1973-99. The first
period was the heyday of state-regulated capitalism, both within those six countries
and in the capitalist world-system as a whole. The second period covers the
era of growing neoliberal dominance. All six countries had significantly faster
GDP growth in the earlier period than in the later one.
While Japan and the major Western European economies have been relatively
depressed in the 1990s, the US is often portrayed as rebounding to great prosperity
over the past decade. Neoliberals often claim that US adherence to neoliberal
policies finally paid off in the 1990s, while the more timid moves away from
state-interventionist policies in Europe and Japan kept them mired in stagnation.
Table 2 shows GDP and labor productivity growth rates for the US economy for
three subperiods during 1948-99.6 Column 1 of Table 2 shows that GDP growth
was significantly slower in 1973-90 B a period of transition from state-regulated
capitalism to the neoliberal model in the US B than in 1948-73. While GDP growth
improved slightly in 1990-99, it remained well below that of the era of state-regulated
capitalism. Some analysts cite the fact that GDP growth accelerated after 1995,
averaging 4.1% per year during 1995-99 (US Bureau of Economic Analysis, 2000).
However, it is not meaningful to compare a short fragment of the 1990s business
cycle expansion to the longrun performance of the economy during 1948-73.7
Column 2 of Table 1 shows that the high rate of labor productivity growth
recorded in 1948- 73 fell by more than half in 1973-90. While there was significant
improvement in productivity growth in the 1990s, it remained well below the
1948-73 rate, despite the rapid spread of what should be productivity-enhancing
communication and information-management technologies during the past decade.
The evidence from GDP and labor productivity growth rates supports the
claim that the neoliberal model is inferior to the state regulationist model
for key dimensions of capitalist economic performance. There is ample evidence
that the neoliberal model has shifted income and wealth in the direction of
the already wealthy. However, the ability to shift income upward has limits
in an economy that is not growing rapidly. Neoliberalism does not appear to
be delivering the goods in the ways that matter the most for capitalism's long-run
stability and survival.
The Structure of Competition and Economic Policy
The processes through which the dominant economic ideology and policies
are selected in a capitalist system are complex and many-sided. No general rule
operates to assure that those economic policies which would be most favorable
for capitalism are automatically adopted. History suggests that one important
determinant of the dominant economic ideology and policy stance is the competitive
structure of capitalism in a given era. Specifically, this paper argues that
periods of relatively unconstrained competition tend to produce the intellectual
and public policy dominance of liberalism, while periods of relatively constrained,
oligopolistic market relations tend to promote interventionist ideas and policies.
A relation in the opposite direction also exists, one which is often commented
upon. That is, one can argue that interventionist policies promote monopoly
power in markets, while liberal policies promote greater competition. This latter
relation is not being denied here. Rather, it will be argued that there is a
normally-overlooked direction of influence, having significant historical explanatory
power, which runs from competitive structure to public policy. In the period
when capitalism first became well established in the US, during 1800-1860, the
government played a relatively interventionist role. The federal government
placed high tariffs on competing manufactured goods from Europe, and federal,
state, and local levels of government all actively financed, and in some cases
built and operated, the new canal and rail system that created a large internal
market. There was no serious debate over the propriety of public financing of
transportation improvements in that era -- the only debate was over which regions
would get the key subsidized routes.
Once capitalism had become well established in the US after the Civil
War, it entered a period of cutthroat competition and wild accumulation known
as the Robber Baron era. In this period a coherent anti-interventionist liberal
position emerged and became politically dominant. Despite the enormous inequalities,
the severe business cycle, and the outrageous and often unlawful behavior of
the Goulds and Rockefellers, the idea that government should not intervene in
the economy held sway through the end of the 19th century.
From roughly 1890 to 1903 a huge merger wave transformed the competitive
structure of US capitalism. Out of that merger wave emerged giant corporations
possessing significant monopoly power in the manufacturing, mining, transportation,
and communication sectors. US industry settled down to a more restrained form
of oligopolistic rivalry. At the same time, many of the new monopoly capitalists
began to criticize the old Laissez Faire ideas and support a more interventionist
role for the state.8 The combination of big business support for state regulation
of business, together with similar demands arising from a popular anti-monopoly
movement based among small farmers and middle class professionals, ushered in
what is called the Progressive Era, from 1900-16. The building of a regulationist
state that was begun in the Progressive Era was completed during the New Deal
era a few decades later, when once again both big business leaders and a vigorous
popular movement (this time based among industrial workers) supported an interventionist
state. Both in the Progressive Era and the New Deal, big business and the popular
movement differed about what types of state intervention were needed. Big business
favored measures to increase the stability of the system and to improve conditions
for profit-making, while the popular movement sought to use the state to restrain
the power and privileges of big business and provide greater security for ordinary
people. The outcome in both cases was a political compromise, one weighted toward
the interests of big business, reflecting the relative power of the latter in
American capitalism.
Small business has remained adamantly opposed to the big, interventionist
state, from the Progressive Era through the New Deal down to the present. This
division between big and small business is chronicled for the Progressive Era
in Weinstein (1968). In the decades immediately following World War II one can
observe this division in the divergent views of the Business Roundtable, a big
business organization which often supported interventionist programs, and the
US Chambers of Commerce, the premier small business organization, which hewed
to an antigovernment stance.
What explains this political difference between large and small business?
When large corporations achieve significant market power and become freed from
fear concerning their immediate survival, they tend to develop a long time horizon
and pay attention to the requirements for assuring growing profits over time.9
They come to see the state as a potential ally. Having high and stable monopoly
profits, they tend to view the cost of government programs as something they
can afford, given their potential benefits. By contrast, the typical small
business faces a daily battle for survival, which prevents attention to long-run
considerations and which places a premium on avoiding the short-run costs of
taxation and state regulation. This explains the radically different positions
that big business and small business held regarding the proper state role in
the economy for the first two-thirds of the twentieth century.
This long-standing division between big business and small business appeared
to vanish in the US starting in the 1970s. Large corporations and banks which
had formerly supported foundations that advocated an active government role
in the economy, such as the Brookings Institution, became big donors to neoliberal
foundations such as the American Enterprise Institute and the Heritage Foundation.
As a result, such right-wing foundations, which previously had to rely mainly
on contributions from small business, became very wealthy and influential.10
It was big business=s desertion of the political coalition supporting state
intervention and its shift to neoliberalism that rebuilt support for neoliberal
theories and policies in the US, starting in the 1970s. With business now unified
on economic policy, the shift was dramatic. Big grants became available for
economics research having a neoliberal slant. The major media shifted their
spin on political developments, and the phrase "government programs" now could
not be printed except with the word "bloated" before it.
This switch in the dominant economic model first showed up in the mid 1970s
in academic economics, as the previously marginalized Chicago School spread
its influence far beyond the University of Chicago. This was soon followed by
a radical shift in the public policy arena. In 1978- 79 the previously interventionist
Carter Administration began sounding the very neoliberal themes B deregulation
of business, cutbacks in social programs, and general fiscal and monetary austerity
B that were to become the centerpiece of Reagan Administration policies in 1981.
What caused the radical change in the political posture of big business regarding
state intervention in the economy? This paper argues that a major part of the
explanation lies in the effects of the globalization of the world capitalist
economy in the post-World War II period.
Globalization and Competition
Globalization is usually defined as an increase in the volume of cross-border
economic interactions and resource flows, producing a qualitative shift in the
relations between national economies and between nation-states (Baker et. al.,
1998, p. 5; Kozul-Wright and Rowthorn, 1998, p. 1). Three kinds of economic
interactions have increased substantially in past decades: merchandise trade
flows, foreign direct investment, and cross-border financial investments. We
will briefly examine each, with an eye on their effects on the competitive structure
of contemporary capitalism.
Table 3 shows the ratio of merchandise exports to gross domestic product
for selected years from 1820 to 1992, for the world and also for Western Europe,
the US, and Japan. Capitalism brought a five-fold rise in world exports relative
to output from 1820-70, followed by another increase of nearly three-fourths
by 1913. After declining in the interwar period, world exports reached a new
peak of 11.2% of world output in 1973, rising further to 13.5% in 1992. The
1992 figure was over fifty per cent higher than the pre-World War I peak.
Merchandise exports include physical goods only, while GDP includes services,
many of which are not tradable, as well as goods. In the twentieth century the
proportion of services in GDP has risen significantly. Table 4 shows an estimate
of the ratio of world merchandise exports to the good-only portion of world
GDP. This ratio nearly tripled during 1950-92, with merchandise exports rising
to nearly one-third of total goods output in the latter year. The 1992 figure
was 2.6 times as high as that of 1913.
Western Europe, the US, and Japan all experienced significant increases in
exports relative to GDP during 1950-92, as Table 3 shows. All of them achieved
ratios of exports to GDP far in excess of the 1913 level. While exports were
only 8.2% of the total GDP of the US in 1992, exports amounted to 22.0% of the
non-service portion of GDP that year (Economic Report of the President,
1999, pp. 338, 444).
Many analysts view foreign direct investment as the most important form of
cross-border economic interchange. It is associated with the movement of technology
and organizational methods, not just goods. Table 5 shows two measures of foreign
direct investment. Column 1 gives the outstanding stock of foreign direct investment
in the world as a percentage of world output. This measure has more than doubled
since 1975, although it is not much greater today than it was in 1913. Column
2 shows the annual inflow of direct foreign investment as a percentage of gross
fixed capital formation. This measure increased rapidly during 1975-95. However,
it is still relatively low in absolute terms, with foreign direct investment
accounting for only 5.2 per cent of gross fixed capital formation in 1995.
Not all, or even most, international capital flows take the form of direct
investment. Financial flows (such as cross-border purchases of securities and
deposits in foreign bank accounts) are normally larger. One measure that takes
account of financial as well as direct investment is the total net movement
of capital into or out of a country. That measure indicates the extent to which
capital from one country finances development in other countries. Table 6 shows
the absolute value of current account surpluses or deficits as a percentage
of GDP for 12 major capitalist countries. Since net capital inflow or outflow
is approximately equal to the current account deficit or surplus (differing
only due to errors and omissions), this indicates the size of net cross-border
capital flows. The ratio nearly doubled from 1970-74 to 1990-96, although it
remained well below the figure for 1910-14.
Cross-border gross capital movements have grown much more rapidly
than cross-border net capital movements.11 In recent times a very large
and rapidly growing volume of capital has moved back and forth across national
boundaries. Much of this capital flow is speculative in nature, reflecting growing
amounts of short-term capital that are moved around the world in search of the
best temporary return. No data on such flows are available for the early part
of this century, but the data for recent decades are impressive. During 1980-95
cross-border transactions in bonds and equities as a percentage of GDP rose
from 9% to 136% for the US, from 8% to 168% for Germany, and from 8% to 66%
for Japan (Baker et. al., 1998, p. 10). The total volume of foreign exchange
transactions in the world rose from about $15 billion per day in 1973 to $80
billion per day in 1980 and $1260 billion per day in 1995. Trade in goods and
services accounted for 15% of foreign exchange transactions in 1973 but for
less than 2% of foreign exchange transactions in 1995 (Bhaduri, 1998, p. 152).
While cross-border flows of goods and capital are usually considered to be
the best indicators of possible globalization of capitalism, changes that have
occurred over time within capitalist enterprises are also relevant. That is,
the much-discussed rise of the transnational corporation (TNC) is relevant here,
where a TNC is a corporation which has a substantial proportion of its sales,
assets, and employees outside its home country.12 TNCs existed in the pre-World
War I era, primarily in the extractive sector. In the post-World War II period
many large manufacturing corporations in the US, Western Europe, and Japan became
TNCs.
The largest TNCs are very international measured by the location of their
activities. One study found that the 100 largest TNCs in the world (ranked by
assets) had 40.4% of their assets abroad, 50.0% of output abroad, and 47.9%
of employment abroad in 1996 (Sutcliffe and Glyn, 1999, p. 125). While this
shows that the largest TNCs are significantly international in their activities,
all but a handful have retained a single national base for top officials and
major stockholders.13 The top 200 TNCs ranked by output were estimated to produce
only about 10 per cent of world GDP in 1995 (Sutcliffe and Glyn, 1999, p. 122).
By the close of the twentieth century, capitalism had become significantly
more globalized than it had been fifty years ago, and by some measures it is
much more globalized than it had been at the previous peak of this process in
1913. The most important features of globalization today are greatly increased
international trade, increased flows of capital across national boundaries (particularly
speculative short-term capital), and a major role for large TNCs in manufacturing,
extractive activities, and finance, operating worldwide yet retaining in nearly
all cases a clear base in a single nation-state.
While the earlier wave of globalization before World War I did produce a
capitalism that was significantly international, two features of that earlier
international system differed from the current global capitalism in ways that
are relevant here. First, the pre-world War I globalization took place within
a world carved up into a few great colonial empires, which meant that much of
the so-called "cross-border" trade and investment of that earlier era actually
occurred within a space controlled by a single state. Second, the high level
of world trade reached before World War I occurred within a system based much
more on specialization and division of labor. That is, manufactured goods were
exported by the advanced capitalist countries in exchange for primary products,
unlike today when most trade is in manufactured goods. In 1913 62.5% of world
trade was in primary products (Bairoch and Kozul-Wright, 1998, p. 45). By contrast,
in 1970 60.9% of world exports were manufactured goods, rising to 74.7% in 1994
(Baker et. al., 1998, p. 7).
Some analysts argue that globalization has produced a world of such economic
interdependence that individual nation-states no longer have the power to regulate
capital. However, while global interdependence does create difficulties for
state regulation, this effect has been greatly exaggerated. Nation-states still
retain a good deal of potential power vis-a-vis capitalist firms, provided that
the political will is present to exercise such power. For example, even such
a small country as Malaysia proved able to successfully impose capital controls
following the Asian financial crisis of 1997, despite the opposition of the
IMF and the US government. A state that has the political will to exercise
some control over movements of goods and capital across its borders still retains
significant power to regulate business. The more important effect of globalization
has been on the political will to undertake state regulation, rather than on
the technical feasibility of doing so. Globalization has had this effect by
changing the competitive structure of capitalism. It appears that globalization
in this period has made capitalism significantly more competitive, in several
ways. First, the rapid growth of trade has changed the situation faced by large
corporations. Large corporations that had previously operated in relatively
controlled oligopolistic domestic markets now face competition from other large
corporations based abroad, both in domestic and foreign markets. In the US the
rate of import penetration of domestic manufacturing markets was only 2 per
cent in 1950; it rose to 8% in 1971 and 16% by 1993, an 8-fold increase since
1950 (Sutcliffe and Glyn, 1999, p. 116).
Second, the rapid increase in foreign direct investment has in many cases
placed TNCs production facilities in the home markets of their foreign rivals.
General Motors not only faces import competition from Toyota and Honda but has
to compete with US-produced Toyota and Honda vehicles. Third, the increasingly
integrated and open world financial system has thrown the major banks and other
financial institutions of the leading capitalist nations increasingly into competition
with one another.
Globalization appears to be one factor that has transformed big business
from a supporter to an opponent of the interventionist state. It has done so
partly by producing TNCs whose tie to the domestic markets for goods and labor
is limited. More importantly, globalization tends to turn big business
into small business. The process of globalization has increased the competitive
pressure faced by large corporations and banks, as competition has become a
world-wide relationship.17 Even if those who run large corporations and financial
institutions recognize the need for a strong nationstate in their home base,
the new competitive pressure they face shortens their time horizon. It pushes
them toward support for any means to reduce their tax burden and lift their
regulatory constraints, to free them to compete more effectively with their
global rivals. While a regulationist state may seem to be in the interests of
big business, in that it can more effectively promote capital accumulation in
the long run, in a highly competitive environment big business is drawn away
from supporting a regulationist state.
Globalization has produced a world capitalism that bears some resemblance
to the Robber Baron Era in the US. Giant corporations battle one another in
a system lacking well defined rules. Mergers and acquisitions abound, including
some that cross national boundaries, but so far few world industries have evolved
the kind of tight oligopolistic structure that would lay the basis for a more
controlled form of market relations. Like the late 19th century US Robber Barons,
today's large corporations and banks above all want freedom from political burdens
and restraints as they confront one another in world markets.18
The above interpretation of the rise and persistence of neoliberalism attributes
it, at least in part, to the changed competitive structure of world capitalism
resulting from the process of globalization. As neoliberalism gained influence
starting in the 1970s, it became a force propelling the globalization process
further. One reason for stressing the line of causation running from globalization
to neoliberalism is the time sequence of the developments. The process of globalization,
which had been reversed to some extent by political and economic events in the
interwar period, resumed right after World War II, producing a significantly
more globalized world economy and eroding the monopoly power of large corporations
well before neoliberalism began its second coming in the mid 1970s. The rapid
rise in merchandise exports began during the Bretton Woods period, as Table
3 showed. So too did the growing role for TNC's. These two aspects of the current
globalization had their roots in the postwar era of state-regulated capitalism.
This suggests that, to some extent, globalization reflects a long-run tendency
in the capital accumulation process rather than just being a result of the rising
influence of neoliberal policies. On the other hand, once neoliberalism became
dominant, it accelerated the process of globalization. This can be seen most
clearly in the data on cross-border flows of both real and financial capital,
which began to grow rapidly only after the 1960s.
Other Factors Promoting Neoliberalism
The changed competitive structure of capitalism provides part of the explanation
for the rise from the ashes of classical liberalism and its persistence in the
face of widespread evidence of its failure to deliver the goods. However, three
additional factors have played a role in promoting neoliberal dominance. These
are the weakening of socialist movements in the industrialized capitalist countries,
the demise of state socialism, and the long period that has elapsed since the
last major capitalist economic crisis. There is space here for only some brief
comments about these additional factors.
The socialist movements in the industrialized capitalist countries have declined
in strength significantly over the past few decades. While Social Democratic
parties have come to office in several European countries recently, they no
longer represent a threat of even significant modification of capitalism, much
less the specter of replacing capitalism with an alternative socialist system.
The regulationist state was always partly a response to the fear of socialism,
a point illustrated by the emergence of the first major regulationist state
of the era of mature capitalism in Germany in the late 19th century, in response
to the world=s first major socialist movement. As the threat coming from socialist
movements in the industrialized capitalist countries has receded, so too has
to incentive to retain the regulationist state.
The existence of a powerful bloc of Communist-run states with an alternative
"state socialist" socioeconomic system tended to push capitalism toward a state
regulationist form. It reinforced the fear among capitalists that their own
working classes might turn against capitalism. It also had an impact on relations
among the leading capitalist states, promoting inter-state unity behind US leadership,
which facilitated the creation and operation of a world-system of state-regulated
capitalism.19 The demise of state socialism during 1989-91 removed one more
factor that had reinforced the regulationist state.
The occurrence of a major economic crisis tends to promote an interventionist
state, since active state intervention is required to overcome a major crisis.
The memory of a recent major crisis tends to keep up support for a regulationist
state, which is correctly seen as a stabilizing force tending to head off major
crises. As the Great Depression of the 1930s has receded into the distant past,
the belief has taken hold that major economic crises have been banished forever.
This reduces the perceived need to retain the regulationist state.
Concluding Comments
If neoliberalism continues to reign as the dominant ideology and policy stance,
it can be argued that world capitalism faces a future of stagnation, instability,
and even eventual social breakdown.20 However, from the factors that have promoted
neoliberalism one can see possible sources of a move back toward state-regulated
capitalism at some point. One possibility would be the development of tight
oligopoly and regulated competition on a world scale. Perhaps the current merger
wave might continue until, as happened at the beginning of the 20th century
within the US and in other industrialized capitalist economies, oligopoly replaced
cutthroat competition, but this time on a world scale. Such a development might
revive big business support for an interventionist state. However, this does
not seem to be likely in the foreseeable future. The world is a big place, with
differing cultures, laws, and business practices in different countries, which
serve as obstacles to overcoming the competitive tendency in market relations.
Transforming an industry=s structure so that two to four companies produce the
bulk of the output is not sufficient in itself to achieve stable monopoly power,
if the rivals are unable to communicate effectively with one another and find
common ground for cooperation. Also, it would be difficult for international
monopolies to exercise effective regulation via national governments, and a
genuine world capitalist state is not a possibility for the foreseeable future.
If state socialism re-emerged in one or more major countries, perhaps
this might push the capitalist world back toward the regulationist state. However,
such a development does not seem likely. Even if Russia or Ukraine at some point
does head in that direction, it would be unlikely to produce a serious rival
socioeconomic system to that of world capitalism.
A more likely source of a new era of state interventionism might come from
one of the remaining two factors considered above. The macro-instability of
neoliberal global capitalism might produce a major economic crisis at some point,
one which spins out of the control of the weakened regulatory authorities. This
would almost certainly revive the politics of the regulationist state. Finally,
the increasing exploitation and other social problems generated by neoliberal
global capitalism might prod the socialist movement back to life at some point.
Should socialist movements revive and begin to seriously challenge capitalism
in one or more major capitalist countries, state regulationism might return
in response to it. Such a development would also revive the possibility of finally
superceding capitalism and replacing it with a system based on human need rather
than private profit.
"... Elites can continue on the current path of pursuing integration projects and defending existing
integration, hoping to win enough popular support that their efforts are not thwarted. On the evidence
of the U.S. presidential campaign and the Brexit debate, this strategy may have run its course. ...
..."
"... I think some fellows already had this idea: "Much more promising is this idea: The promotion
of global integration can become a bottom-up rather than a top-down project" -- "Workers of the World,
Unite. You have nothing to lose but your chains!" ~Marx/Engels, 1848 ..."
"... Krugman sort of said this when he saw that apparel multinationals were shifting jobs out of
China to Bangladesh. Like $3 an hour is just way too high for workers. ..."
"... The "populists" are raging against global trade which benefits the world poor. The Very Serious
economists know what is really going on and have to interests of the poor at heart. Plus they are smarter
than the "populists" who are just dumb hippies. ..."
"... And what about neocolonialism and debt slavery ? http://historum.com/blogs/solidaire/245-debt-slavery-neo-colonialism-neoliberalism.html
..."
"... International debtors are the modern colonialists, sucking the marrow of countries; no armies
are needed anymore to keep those countries subjugated. Debt is the modern instrument of enslavement,
the international banks, corporations and hedge funds the modern colonial powers, and its enforcers
are instruments like the Global Bank, the IMF, and the corrupt, collaborationist governments (and totalitarian
regimes) of those countries, supported and propped up by these neo-colonials. ..."
"... Cover your a$$ much Larry? No mention of mass immigration? No mention of the elites' conscious,
planned attack on homogeneous societies in Western Europe, the US, and now Japan? ..."
"... The US was 88% European as of 1960. As of 1800 it was like 90% English. So yes, it was basically
a homogeneous society prior to the immigration act of 1965. Today it is extremely hard for Europeans
to get into the US -- but easier for non-Europeans. Now why would that be? Hmm .... ..."
"... The only trade that is actually free is trade not covered by laws and/or treaties. All other
trade is regulated trade. ..."
"... Here's a good rule to follow. When someone calls something the exact opposite of what it is,
in all probability they are trying to hustle your wallet. ..."
"... ISIS was invented by Wall Street who financed them. ISIS is a scam, just like Bin Laden's group,
just like "COMMUNISM!!!!" to control people. To manipulate them. ..."
"... Guys, the bourgeois state is a protection racket and always has been. It makes you feel safe,
secure and "feel like man". So we can enjoy every indulgent individual lust the world has to offer.
Then comes in dialectics of what that protection racket should do. ..."
"... To me, the bourgeois state is nothing more than a protection racket for the rich, something
you should not forget. ..."
"... I find it rather precious that Summers pretends not to understand why people hate TPP. I do
not think there is any real widespread antipathy toward global integration, though it does pose some
rather substantial systemic dangers, as we saw in the global financial collapse. What people, including
me, oppose is how that integration is structured. These agreements are about is not "free trade", but
removing all restrictions on global capital and that is a big problem. ..."
"... TPP is not free trade. It is protectionism for the rich. ..."
"... All or most modern "free trade" agreements are like that. What people oppose is agreements
which impoverish them and enrich capital. ..."
"... More free trade arrangement are not always better trade arrangements. People have seen the
results of the labor race to the bottom caused by earlier free trade agreements; and now they are guessing
we're going to get the same kind of race to the bottom with TPP when we have to put all of our environmental
laws and other domestic regulations into capitalist competition with backward countries. ..."
"... progressive states (WA, OR, CA, NV, IL, NY, MD) could simply treat union busting the same way
any OTHER major muscling or manipulation of the free market is treated: make it a felony. ..."
"... Summers: "Pie in the Sky" So trade negotiations would have to be lead by labor advocates and
environmental groups -- sounds great to me, but I can't for the life of me figure out why the goods
and service producers (i.e. capital owners) would have any incentive to promote trade under such a negotiated
trade agreement... or that trade would actually occur. You'd have to eliminate private enterprise incentives
to profit I think.. not something the U.S.'s "individualism" god can't tolerate. ..."
"... 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.
..."
What's behind the revolt against global integration? : Since the end of World War II, a broad
consensus in support of global economic integration as a force for peace and prosperity has been
a pillar of the international order. ...
This broad program of global integration has been more successful than could reasonably have
been hoped. ... Yet a revolt against global integration is underway in the West. ...
One substantial part of what is behind the resistance is a lack of knowledge. ...The core of
the revolt against global integration, though, is not ignorance. It is a sense - unfortunately
not wholly unwarranted - that it is a project being carried out by elites for elites, with little
consideration for the interests of ordinary people. ...
Elites can continue on the current path of pursuing integration projects and defending
existing integration, hoping to win enough popular support that their efforts are not thwarted.
On the evidence of the U.S. presidential campaign and the Brexit debate, this strategy may have
run its course. ...
Much more promising is this idea: The promotion of global integration can become a bottom-up
rather than a top-down project. The emphasis can shift from promoting integration to managing
its consequences. This would mean a shift from international trade agreements to international
harmonization agreements, whereby issues such as labor rights and environmental protection would
be central, while issues related to empowering foreign producers would be secondary. It would
also mean devoting as much political capital to the trillions of dollars that escape taxation
or evade regulation through cross-border capital flows as we now devote to trade agreements. And
it would mean an emphasis on the challenges of middle-class parents everywhere who doubt, but
still hope desperately, that their kids can have better lives than they did.
I think some fellows already had this idea: "Much more promising is this idea: The promotion
of global integration can become a bottom-up rather than a top-down project" -- "Workers of the
World, Unite. You have nothing to lose but your chains!" ~Marx/Engels, 1848
Krugman sort of said this when he saw that apparel multinationals were shifting jobs out of
China to Bangladesh. Like $3 an hour is just way too high for workers.
A large part of the concern over free trade comes from the weak economic performances around the
globe. Summers could have addressed this. Jared Bernstein and Dean Baker - both sensible economists
- for example recently called on the US to do its own currency manipulation so as to reverse the
US$ appreciation which is lowering our net exports quite a bit.
What they left out is the fact that both China and Japan have seen currency appreciations as
well. If we raise our net exports at their expense, that lowers their economic activity. Better
would be global fiscal stimulus. I wish Larry had raised this issue here.
The "populists" are raging against global trade which benefits the world poor. The Very Serious
economists know what is really going on and have to interests of the poor at heart. Plus they
are smarter than the "populists" who are just dumb hippies.
One of the most fundamental reasons for the poverty and underdevelopment of Africa (and of
almost all "third world" countries) is neo-colonialism, which in modern history takes the shape
of external debt.
When countries are forced to pay 40,50,60% of their government budgets just to pay the interests
of their enormous debts, there is little room for actual prosperity left.
International debtors are the modern colonialists, sucking the marrow of countries; no
armies are needed anymore to keep those countries subjugated. Debt is the modern instrument of
enslavement, the international banks, corporations and hedge funds the modern colonial powers,
and its enforcers are instruments like the Global Bank, the IMF, and the corrupt, collaborationist
governments (and totalitarian regimes) of those countries, supported and propped up by these neo-colonials.
In reality, not much has changed since the fall of the great colonial empires. In paper, countries
have gained their sovereignty, but in reality they are enslaved to the international credit system.
The only thing that has changed, is that now the very colonial powers of the past, are threatened
to become debt colonies themselves. You see, global capitalism and credit system has no country,
nationality, colour; it only recognises the colour of money, earned at all cost by the very few,
on the expense of the vast, unsuspected and lulled masses.
Debt had always been a very efficient way of control, either on a personal, or state level.
And while most of us are aware of the implementations of personal debt and the risks involved,
the corridors of government debt are poorly lit, albeit this kind of debt is affecting all citizens
of a country and in ways more profound and far reaching into the future than those of private
debt.
Global capitalism was flourishing after WW2, and reached an apex somewhere in the 70's.
The lower classes in the mature capitalist countries had gained a respectable portion of the
distributed wealth, rights and privileges inconceivable several decades before. The purchasing
power of the average American for example, was very satisfactory, fully justifying the American
dream. Similar phenomena were taking place all over the "developed" world.
Cover your a$$ much Larry? No mention of mass immigration? No mention of the elites' conscious,
planned attack on homogeneous societies in Western Europe, the US, and now Japan?
There is of course no reasonable answering to prejudice, since prejudice is always unreasonable,
but should there be a question, when was the last time that, say, the United States or the territory
that the US now covers was a homogeneous society?
Before the US engulfed Spanish peoples? Before the US engulfed African peoples? Before the
US engulfed Indian peoples? When did the Irish, just to think of a random nationality, ruin "our"
homogeneity?
I could continue, but how much of a point is there in being reasonable?
The US was 88% European as of 1960. As of 1800 it was like 90% English. So yes, it was basically
a homogeneous society prior to the immigration act of 1965. Today it is extremely hard for Europeans
to get into the US -- but easier for non-Europeans. Now why would that be? Hmm ....
ISIS was invented by Wall Street who financed them. ISIS is a scam, just like Bin Laden's
group, just like "COMMUNISM!!!!" to control people. To manipulate them.
It is like using the internet to think you are "edgy". Some dudes like psuedo-science scam
artist Mike Adams are uncovering secrets to this witty viewer............then you wonder why society
is degenerating. What should happen with Mike Adams is, he should be beaten up and castrated.
My guess he would talk then. Boy would his idiot followers get a surprise and that surprise would
have results other than "poor mikey, he was robbed".
This explains why guys like Trump get delegates. Not because he uses illegal immigrants in
his old businesses, not because of some flat real wages going over 40 years, not because he is
a conman marketer.........he makes them feel safe. That is purely it. I think its pathetic, but
that is what happens in a emasculated world. Safety becomes absolute concern. "Trump makes me
feel safe".
Guys, the bourgeois state is a protection racket and always has been. It makes you feel
safe, secure and "feel like man". So we can enjoy every indulgent individual lust the world has
to offer. Then comes in dialectics of what that protection racket should do.
To me, the bourgeois state is nothing more than a protection racket for the rich, something
you should not forget.
I find it rather precious that Summers pretends not to understand why people hate TPP. I do
not think there is any real widespread antipathy toward global integration, though it does pose
some rather substantial systemic dangers, as we saw in the global financial collapse. What people,
including me, oppose is how that integration is structured. These agreements are about is not
"free trade", but removing all restrictions on global capital and that is a big problem.
Actually, this is my first actual response to the post itself, but you were too busy being and
a*****e to notice. All or most modern "free trade" agreements are like that. What people oppose
is agreements which impoverish them and enrich capital.
This has become a popular line, and it's not exactly false. But so what if it were a "free trade"
agreement? More free trade arrangement are not always better trade arrangements. People have
seen the results of the labor race to the bottom caused by earlier free trade agreements; and
now they are guessing we're going to get the same kind of race to the bottom with TPP when we
have to put all of our environmental laws and other domestic regulations into capitalist competition
with backward countries.
" The promotion of global integration can become a bottom-up rather than a top-down project. "
" ... whereby issues such as labor rights and environmental protection would be central ...
"
+1
Now if we could just adopt that policy internally in the United States first we could then
(and only then) support it externally across the world.
Easy approach: (FOR THE TEN MILLIONTH TIME!) progressive states (WA, OR, CA, NV, IL, NY,
MD) could simply treat union busting the same way any OTHER major muscling or manipulation of
the free market is treated: make it a felony. FYI (for those who are not aware) states can
add to federal labor protections, just not subtract.
A completely renewed, re-constituted democracy would be born.
Biggest obstacle to this being done in my (crackpot?) view: human males. Being instinctive
pack hunters, before they check out any idea they, first, check in with the pack (all those other
boys who are also checking in with the pack) -- almost automatically infer impossibility to overcome
what they see (correctly?) as wheels within wheels of inertia.
Self-fulfilling prophecy: nothing (not the most obvious, SHOULD BE easiest possible to get
support for actions) ever gets done.
I'm not the only one seeking a new path forward on trade.
by Jared Bernstein
April 11th, 2016 at 9:20 am
"...
Here's Larry's view of the way forward:
"The promotion of global integration can become a bottom-up rather than a top-down project.
The emphasis can shift from promoting integration to managing its consequences. This would
mean a shift from international trade agreements to international harmonization agreements,
whereby issues such as labor rights and environmental protection would be central, while issues
related to empowering foreign producers would be secondary. It would also mean devoting as
much political capital to the trillions of dollars that escape taxation or evade regulation
through cross-border capital flows as we now devote to trade agreements. And it would mean
an emphasis on the challenges of middle-class parents everywhere who doubt, but still hope
desperately, that their kids can have better lives than they did.
Good points, all. "Bottom-up" means what I've been calling a more representative, inclusive
process. But what's this about "international harmonization?""
It's a way of saying that we need to reduce the "frictions" and thus costs between trading
partners at the level of pragmatic infrastructure, not corporate power. One way to think of
this is TFAs, not FTAs. TFAs are trade facilitation agreements, which are more about integrating
ports, rail, and paperwork than patents that protect big Pharma.
It's refreshing to see mainstreamers thinking creatively about the anger that's surfaced
around globalization. Waiting for the anger to dissipate and then reverting back to the old
trade regimes may be the preferred path for elites, but that path may well be blocked. We'd
best clear a new, wider path, one that better accommodates folks from all walks of life, both
here and abroad."
Summers: "Pie in the Sky" So trade negotiations would have to be lead by labor advocates and
environmental groups -- sounds great to me, but I can't for the life of me figure out why the
goods and service producers (i.e. capital owners) would have any incentive to promote trade under
such a negotiated trade agreement... or that trade would actually occur. You'd have to eliminate
private enterprise incentives to profit I think.. not something the U.S.'s "individualism" god
can't tolerate.
Imagine a trade deal negotiated by the AFL-CIO. Labor wins a lot and capital owners lose a little.
We can all then smile and say to the latter - go get your buddies in Congress more serious about
the compensation principle. Turn the table!
"consensus in support of global economic integration as a force for peace and prosperity " --
"The Great Illusion" (
https://en.m.wikipedia.org/wiki/The_Great_Illusion
)
That increased trade is a bulwark against war rears its ugly head again. 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
"... From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. ..."
"... young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity ..."
"... In the "glorious thirty years" after World War II, North America and Western Europe achieved remarkable rates of economic growth and relatively low levels of inequality for capitalist societies, while instituting a broad range of benefits for workers, students and retirees. From roughly 1980 on, however, the neoliberal movement, rooted in the laissez-faire economic theories of Milton Friedman, launched what became a full-scale assault on workers' power and an attempt, often remarkably successful, to eviscerate the social welfare state. ..."
"... "Washington consensus" meant that the urge to impose privatisation on stagnating, nepotistic postcolonial states would become the order of the day. ..."
"... While neoliberalism has produced more unequal societies throughout the world, nowhere else has the income of the poor declined quite so strikingly. The concentration of wealth in a few hands profoundly contradicts the founding principles of Israel's Labour Zionism, and results from decades of right-wing Likud policies punishing the poor and middle classes and shifting wealth to the top of society. ..."
"... Juan Cole is the Richard P. Mitchell Professor of History and the director of the Centre for South Asian Studies at the University of Michigan. His latest book, ..."
"... Engaging the Muslim World , is just out in a revised paperback edition from Palgrave Macmillan. He runs the Informed Comment website. ..."
"... A version of this article was first published on Tom Dispatch . ..."
"... The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy. ..."
ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to Oakland, a new
generation of youth activists is challenging the neoliberal state that has dominated
the world ever since the Cold War ended. The massive popular protests that
shook the globe this year have much in common, though most of the reporting
on them in the mainstream media has obscured the similarities.
Whether in Egypt or the United States, young rebels are reacting to a
single stunning worldwide development: the extreme concentration of wealth in
a few hands thanks to neoliberal policies of deregulation and union busting.
They have taken to the streets, parks, plazas and squares to protest against
the resulting corruption, the way politicians can be bought and sold, and the
impunity
ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to
Oakland, a new generation of youth activists is challenging the neoliberal state
that has dominated the world ever since the Cold War ended. The massive popular
protests that shook the globe this year have much in common, though most of
the reporting on them in the mainstream media has obscured the similarities.
Whether in Egypt or the United States, young rebels are reacting to a single
stunning worldwide development: the extreme concentration of wealth in a few
hands thanks to neoliberal policies of deregulation and union busting. They
have taken to the streets, parks, plazas and squares to protest against the
resulting corruption, the way politicians can be bought and sold, and the impunity
of the white-collar criminals who have run riot in societies everywhere. They
are objecting to high rates of unemployment, reduced social services, blighted
futures and above all the substitution of the market for all other values as
the matrix of human ethics and life.
Pasha the Tiger
In the "glorious thirty years" after World War II, North America and
Western Europe achieved remarkable rates of economic growth and relatively low
levels of inequality for capitalist societies, while instituting a broad range
of benefits for workers, students and retirees. From roughly 1980 on, however,
the neoliberal movement, rooted in the laissez-faire economic theories of Milton
Friedman, launched what became a full-scale assault on workers' power and an
attempt, often remarkably successful, to eviscerate the social welfare state.
Neoliberals chanted the mantra that everyone would benefit if the public
sector were privatised, businesses deregulated and market mechanisms allowed
to distribute wealth. But as economist David Harvey
argues, from the beginning it was a doctrine that primarily benefited the
wealthy, its adoption allowing the top one per cent in any neoliberal society
to capture a disproportionate share of whatever wealth was generated.
In the global South, countries that gained their independence from European
colonialism after World War II tended to create large public sectors as part
of the process of industrialization. Often, living standards improved as a result,
but by the 1970s, such developing economies were generally experiencing a levelling-off
of growth. This happened just as neoliberalism became ascendant in Washington,
Paris and London as well as in Bretton Woods institutions like the International
Monetary Fund. This "Washington consensus" meant that the urge to impose
privatisation on stagnating, nepotistic postcolonial states would become the
order of the day.
Egypt and Tunisia, to take two countries in the spotlight for sparking the
Arab Spring, were successfully pressured in the 1990s to privatise their relatively
large public sectors. Moving public resources into the private sector created
an almost endless range of opportunities for staggering levels of corruption
on the part of the ruling families of autocrats
Zine El Abidine Ben Ali in Tunis and
Hosni Mubarak in Cairo. International banks, central banks and emerging
local private banks aided and abetted their agenda.
It was not surprising then that one of the first targets of Tunisian crowds
in the course of the revolution they made last January was the
Zitouna bank, a branch of which they torched. Its owner? Sakher El Materi,
a son-in-law of President Ben Ali and the notorious owner of
Pasha, the well-fed pet tiger that prowled the grounds of one of his sumptuous
mansions. Not even the way his outfit sought legitimacy by practicing "Islamic
banking" could forestall popular rage. A 2006 State Department cable released
by WikiLeaks
observed, "One local financial expert blames the [Ben Ali] Family for chronic
banking sector woes due to the great percentage of non-performing loans issued
through crony connections, and has essentially paralysed banking authorities
from genuine recovery efforts." That is, the banks were used by the regime to
give away money to his cronies, with no expectation of repayment.
Tunisian activists similarly directed their ire at foreign banks and lenders
to which their country owes $14.4bn. Tunisians are still railing and rallying
against the repayment of all that money, some of which they believe was
borrowed profligately by the corrupt former regime and then squandered quite
privately.
Tunisians had their own one per cent, a thin commercial elite,
half of whom were related to or closely connected to President Ben Ali.
As a group, they were accused by young activists of mafia-like, predatory practices,
such as demanding pay-offs from legitimate businesses, and discouraging foreign
investment by tying it to a stupendous system of bribes. The closed, top-heavy
character of the Tunisian economic system was blamed for the bottom-heavy waves
of suffering that followed: cost of living increases that hit people on fixed
incomes or those like students and peddlers in the marginal economy especially
hard.
It was no happenstance that the young man who
immolated himself and so sparked the Tunisian rebellion was a hard-pressed
vegetable peddler. It's easy now to overlook what clearly ties the beginning
of the Arab Spring to the European Summer and the present American Fall: the
point of the Tunisian revolution was not just to gain political rights, but
to sweep away that one per cent, popularly imagined as a sort of dam against
economic opportunity.
Tahrir Square, Zuccotti Park, Rothschild Avenue
The success of the Tunisian revolution in removing the octopus-like Ben Ali
plutocracy inspired the dramatic events in Egypt, Libya, Yemen, Syria and even
Israel that are redrawing the political map of the Middle East. But the 2011
youth protest movement was hardly contained in the Middle East. Estonian-Canadian
activist Kalle Lasn and his anti-consumerist colleagues at the Vancouver-based
Adbusters Media Foundation
were inspired by the success of the revolutionaries in Tahrir Square in
deposing dictator Hosni Mubarak.
Their organisation specialises in combatting advertising culture through
spoofs and pranks. It was Adbusters magazine that sent out the call
on Twitter in the summer of 2011 for a rally at Wall Street on September 17,
with the now-famous hash tag #OccupyWallStreet. A thousand protesters gathered
on the designated date, commemorating the 2008 economic meltdown that had thrown
millions of Americans out of their jobs and their homes. Some camped out in
nearby Zuccotti Park, another unexpected global spark for protest.
The Occupy Wall Street movement has now spread throughout the United States,
sometimes in the face of serious acts of repression, as in
Oakland, California. It has followed in the spirit of the Arab and European
movements in demanding an end to special privileges for the richest one per
cent, including their ability to more or less buy the US government for purposes
of their choosing. What is often forgotten is that the Ben Alis, Mubaraks and
Gaddafis were not simply authoritarian tyrants. They were the one per
cent and the guardians of the one per cent, in their own societies - and loathed
for exactly that.
Last April, around the time that Lasn began imagining Wall Street protests,
progressive activists in Israel started planning their own movement. In July,
sales clerk and aspiring filmmaker Daphne Leef found herself
unable
to cover a sudden rent increase on her Tel Aviv apartment. So she started
a protest Facebook page similar to the ones that fuelled the Arab Spring and
moved into a tent on the posh Rothschild Avenue where she was soon joined by
hundreds of other protesting Israelis. Week by week, the demonstrations grew,
spreading to cities throughout the country and
culminating on September 3 in a massive rally, the largest in Israel's history.
Some 300,000 protesters came out in Tel Aviv, 50,000 in Jerusalem and 40,000
in Haifa. Their demands
included not just lower housing costs, but a rollback of neoliberal policies,
less regressive taxes and more progressive, direct taxation, a halt to the privatisation
of the economy, and the funding of a system of inexpensive education and child
care.
Many on the left in Israel are also
deeply troubled by the political and economic power of right-wing settlers
on the West Bank, but most decline to bring the Palestinian issue into the movement's
demands for fear of losing support among the middle class. For the same reason,
the way the Israeli movement was inspired by Tahrir Square and the Egyptian
revolution has been downplayed, although
"Walk like an Egyptian" signs - a reference both to the Cairo demonstrations
and the 1986 Bangles hit song - have been spotted on Rothschild Avenue.
Most of the Israeli activists in the coastal cities know that they are victims
of the same neoliberal order that displaces the Palestinians, punishes them
and keeps them stateless. Indeed, the Palestinians, altogether lacking a state
but at the complete mercy of various forms of international capital controlled
by elites elsewhere, are the ultimate victims of the neoliberal order. But in
order to avoid a split in the Israeli protest movement, a quiet agreement was
reached to focus on economic discontents and so avoid the divisive issue of
the much-despised West Bank settlements.
There has been little reporting in the Western press about a key source of
Israeli unease, which was palpable to me when I visited the country in May.
Even then, before the local protests had fully hit their stride, Israelis I
met were complaining about the rise to power of an Israeli one per cent. There
are now
16 billionaires in the country, who control $45bn in assets, and the current
crop of 10,153 millionaires is 20 per cent larger than it was in the previous
fiscal year. In terms of its distribution of wealth, Israel is now among the
most unequal of the countries in the Organisation for Economic Cooperation
and Development. Since the late 1980s, the average household income of families
in the bottom fifth of the population has been declining at an annual rate of
1.1 per cent. Over the same period, the average household income of families
among the richest 20 per cent went up at an annual rate of 2.4 per cent.
While neoliberalism has produced more unequal societies throughout the
world, nowhere else has the income of the poor declined quite so strikingly.
The concentration of wealth in a few hands profoundly contradicts the founding
principles of Israel's Labour Zionism, and results from decades of right-wing
Likud policies punishing the poor and middle classes and shifting wealth to
the top of society.
The indignant ones
European youth were also inspired by the Tunisians and Egyptians - and by
a similar flight of wealth. I was in Barcelona on May 27, when the police attacked
demonstrators camped out at the Placa de Catalunya, provoking widespread consternation.
The government of the region is currently led by the centrist Convergence and
Union Party, a moderate proponent of Catalan nationalism. It is relatively popular
locally, and so Catalans had not expected such heavy-handed police action to
be ordered. The crackdown, however, underlined the very point of the protesters,
that the neoliberal state, whatever its political makeup, is protecting the
same set of wealthy miscreants.
Spain's "indignados" (indignant ones) got
their start in mid-May with huge protests at Madrid's Puerta del Sol Plaza
against the country's persistent 21 per cent unemployment rate (and double that
among the young). Egyptian activists in Tahrir Square
immediately sent a statement of warm support to those in the Spanish capital
(as they would months later to New York's demonstrators). Again following the
same pattern, the Spanish movement does not restrict its objections to unemployment
(and the lack of benefits attending the few new temporary or contract jobs that
do arise). Its targets are the banks, bank bailouts, financial corruption and
cuts in education and other services.
Youth activists I met in Toledo and Madrid this summer
denounced
both of the country's major parties and, indeed, the very consumer society that
emphasised wealth accumulation over community and material acquisition over
personal enrichment. In the past two months Spain's young protesters have concentrated
on demonstrating against cuts to education, with crowds of 70,000 to 90,000
coming out more than once in Madrid and tens of thousands in other cities. For
marches in support of the Occupy Wall Street movement,
hundreds of thousands reportedly took to the streets of Madrid and Barcelona,
among other cities.
The global reach and connectedness of these movements has yet to be fully
appreciated. The Madrid education protesters, for example, cited for inspiration
Chilean students who, through persistent, innovative, and large-scale demonstrations
this summer and fall, have forced that country's neoliberal government, headed
by the increasingly unpopular billionaire president Sebastian Pinera, to inject
$1.6bn in new money into education. Neither the crowds of youth in Madrid nor
those in Santiago are likely to be mollified, however, by new dorms and laboratories.
Chilean students have
already moved on from insisting on an end to an ever more expensive class-based
education system to demands that the country's lucrative copper mines be nationalised
so as to generate revenues for investment in education. In every instance, the
underlying goal of specific protests by the youthful reformists is the neoliberal
order itself.
The word "union" was little uttered in American television news coverage
of the revolutions in Tunisia and Egypt, even though factory workers and sympathy
strikes of all sorts played a
key role in them. The right-wing press in the US actually went out of its
way to contrast Egyptian demonstrations against Mubarak with the Wisconsin rallies
of government workers against Governor Scott Walker's measure to cripple the
bargaining power of their unions.
The Egyptians, Commentary typically
wrote,
were risking their lives, while Wisconsin's union activists were taking the
day off from cushy jobs to parade around with placards, immune from being fired
for joining the rallies. The implication: the Egyptian revolution was against
tyranny, whereas already spoiled American workers were demanding further coddling.
The American right has never been interested in recognising this reality:
that forbidding unions and strikes is a form of tyranny. In fact, it wasn't
just progressive bloggers who saw a connection between Tahrir Square and Madison.
The head of the newly formed independent union federation in Egypt dispatched
an
explicit expression of solidarity to the Wisconsin workers, centering on
worker's rights.
At least,Commentary did us one favour: it clarified
why the story has been told as it has in most of the American media. If the
revolutions in Tunisia, Egypt and Libya were merely about individualistic political
rights - about the holding of elections and the guarantee of due process - then
they could be depicted as largely irrelevant to politics in the US and Europe,
where such norms already prevailed.
If, however, they centered on economic rights (as they certainly did), then
clearly the discontents of North African youth when it came to plutocracy, corruption,
the curbing of workers' rights, and persistent unemployment deeply resembled
those of their American counterparts.
The global protests of 2011 have been cast in the American media largely
as an "Arab Spring" challenging local dictatorships - as though Spain, Chile
and Israel do not exist. The constant speculation by pundits and television
news anchors in the US about whether "Islam" would benefit from the Arab Spring
functioned as an Orientalist way of marking events in North Africa as alien
and vaguely menacing, but also as not germane to the day to day concerns of
working Americans. The inhabitants of Zuccotti Park in lower Manhattan clearly
feel differently.
Facebook flash mobs
If we focus on economic trends, then the neoliberal state looks eerily similar,
whether it is a democracy or a dictatorship, whether the government is nominally
right of centre or left of centre. As a package, deregulation, the privatisation
of public resources and firms, corruption and forms of insider trading and interference
in the ability of workers to organise or engage in collective bargaining have
allowed the top one per cent in Israel, just as in Tunisia or the US, to capture
the lion's share of profits from the growth of the last decades.
Observers were puzzled by the huge crowds that turned out in both Tunis and
Tel Aviv in 2011, especially given that economic growth in those countries had
been running at a seemingly healthy five per cent per annum. "Growth", defined
generally and without regard to its distribution, is the answer to a neoliberal
question. The question of the 99 per cent, however, is: Who is getting the increased
wealth? In both of those countries, as in the US and other neoliberal lands,
the answer is: disproportionately the one per cent.
If you were wondering why outraged young people around the globe are chanting
such similar slogans and using such similar tactics (including Facebook "flash
mobs"), it is because they have seen more clearly than their elders through
the neoliberal shell game.
Juan Cole is the Richard P. Mitchell Professor of History and
the director of the Centre for South Asian Studies at the University of Michigan.
His latest book,
Engaging the Muslim World, is just out in a revised paperback edition from
Palgrave Macmillan. He runs the
Informed Comment website.
A version of this article was first published on
Tom Dispatch.
The views expressed in this article are the author's own and
do not necessarily reflect Al Jazeera's editorial policy.
Yet another response [ to globalization] is that I term 21stcentury fascism.The ultra-right is an insurgent force in many countries. In broad strokes,
this project seeks to fuse reactionary political power with transnational capital
and to organise a mass base among historically privileged sectors of the global
working class – such as white workers in the North and middle layers in the
South – that are now experiencing heightened insecurity and the specter of downward
mobility. It involves militarism, extreme masculinisation, homophobia, racism
and racist mobilisations, including the search for scapegoats, such as immigrant
workers and, in the West, Muslims. Twenty-first century fascism evokes mystifying
ideologies, often involving race/culture supremacy and xenophobia, embracing an
idealised and mythical past. Neo-fascist culture normalises and glamorises warfare
and social violence, indeed, generates a fascination with domination that is portrayed
even as heroic.
Notable quotes:
"... over-accumulation ..."
"... Cyclical crises ..."
"... . Structural crises ..."
"... systemic crisis ..."
"... social reproduction. ..."
"... crisis of humanity ..."
"... 1984 has arrived; ..."
"... The crisis has resulted in a rapid political polarisation in global society. ..."
"... In broad strokes, this project seeks to fuse reactionary political power with transnational capital and to organise a mass base among historically privileged sectors of the global working class ..."
"... It involves militarism, extreme masculinisation, homophobia, racism and racist mobilisations, including the search for scapegoats, such as immigrant workers and, in the West, Muslims. ..."
"... Neo-fascist culture normalises and glamorises warfare and social violence, indeed, generates a fascination with domination that is portrayed even as heroic. ..."
World capitalism is experiencing the worst crisis in its 500 year history.
Global capitalism is a qualitatively new stage in the open ended evolution of
capitalism characterised by the rise of transnational capital, a transnational
capitalist class, and a transnational state. Below, William I. Robinson argues
that the global crisis is structural and threatens to become systemic, raising
the specter of collapse and a global police state in the face of ecological
holocaust, concentration of the means of violence, displacement of billions,
limits to extensive expansion and crises of state legitimacy, and suggests that
a massive redistribution of wealth and power downward to the poor majority of
humanity is the only viable solution.
The New Global Capitalism and the 21st Century Crisis
The world capitalist system is arguably experiencing the worst crisis in
its 500 year history. World capitalism has experienced a profound restructuring
through globalisation over the past few decades and has been transformed in
ways that make it fundamentally distinct from its earlier incarnations. Similarly,
the current crisis exhibits features that set it apart from earlier crises of
the system and raise the stakes for humanity. If we are to avert disastrous
outcomes we must understand both the nature of the new global capitalism and
the nature of its crisis. Analysis of capitalist globalisation provides a template
for probing a wide range of social, political, cultural and ideological processes
in this 21st century. Following Marx, we want to focus on the internal dynamics
of capitalism to understand crisis. And following the global capitalism perspective,
we want to see how capitalism has qualitatively evolved in recent decades.
The system-wide crisis we face is not a repeat of earlier such episodes such
as that of the the 1930s or the 1970s precisely because capitalism is fundamentally
different in the 21st century. Globalisation constitutes a qualitatively new
epoch in the ongoing and open-ended evolution of world capitalism, marked by
a number of qualitative shifts in the capitalist system and by novel articulations
of social power. I highlight four aspects unique to this epoch.1
First is the rise of truly transnational capital and a new global production
and financial system into which all nations and much of humanity has been integrated,
either directly or indirectly. We have gone from a world economy, in
which countries and regions were linked to each other via trade and financial
flows in an integrated international market, to a global economy, in
which nations are linked to each more organically through the transnationalisation
of the production process, of finance, and of the circuits of capital accumulation.
No single nation-state can remain insulated from the global economy or prevent
the penetration of the social, political, and cultural superstructure of global
capitalism. Second is the rise of a Transnational Capitalist Class (TCC), a
class group that has drawn in contingents from most countries around the world,
North and South, and has attempted to position itself as a global ruling class.
This TCC is the hegemonic fraction of capital on a world scale. Third
is the rise of Transnational State (TNS) apparatuses. The TNS is constituted
as a loose network made up of trans-, and supranational organisations together
with national states. It functions to organise the conditions for transnational
accumulation. The TCC attempts to organise and institutionally exercise its
class power through TNS apparatuses. Fourth are novel relations of inequality,
domination and exploitation in global society, including an increasing importance
of transnational social and class inequalities relative to North-South inequalities.
Cyclical, Structural, and Systemic Crises
Most commentators on the contemporary crisis refer to the "Great Recession"
of 2008 and its aftermath. Yet the causal origins of global crisis are to be
found in over-accumulation and also in contradictions of state
power, or in what Marxists call the internal contradictions of the capitalist
system. Moreover, because the system is now global, crisis in any one place
tends to represent crisis for the system as a whole. The system cannot expand
because the marginalisation of a significant portion of humanity from direct
productive participation, the downward pressure on wages and popular consumption
worldwide, and the polarisation of income, has reduced the ability of the world
market to absorb world output. At the same time, given the particular configuration
of social and class forces and the correlation of these forces worldwide, national
states are hard-pressed to regulate transnational circuits of accumulation and
offset the explosive contradictions built into the system.
Is this crisis cyclical, structural, or systemic? Cyclical crises
are recurrent to capitalism about once every 10 years and involve recessions
that act as self-correcting mechanisms without any major restructuring of the
system. The recessions of the early 1980s, the early 1990s, and of 2001 were
cyclical crises. In contrast, the 2008 crisis signaled the slide into astructural
crisis. Structural crises reflect deeper contradictions that can only
be resolved by a major restructuring of the system. The structural crisis of
the 1970s was resolved through capitalist globalisation. Prior to that, the
structural crisis of the 1930s was resolved through the creation of a new model
of redistributive capitalism, and prior to that the structural crisis of the
1870s resulted in the development of corporate capitalism. A systemic crisis
involves the replacement of a system by an entirely new system or
by an outright collapse. A structural crisis opens up the possibility
for a systemic crisis. But if it actually snowballs into a systemic crisis –
in this case, if it gives way either to capitalism being superseded or to a
breakdown of global civilisation – is not predetermined and depends entirely
on the response of social and political forces to the crisis and on historical
contingencies that are not easy to forecast. This is an historic moment of extreme
uncertainty, in which collective responses from distinct social and class forces
to the crisis are in great flux.
Hence my concept of global crisis is broader than financial. There are multiple
and mutually constitutive dimensions – economic, social, political, cultural,
ideological and ecological, not to mention the existential crisis of our consciousness,
values and very being. There is a crisis of social polarisation, that is, of
social reproduction. The system cannot meet the needs or assure the
survival of millions of people, perhaps a majority of humanity. There are crises
of state legitimacy and political authority, or of hegemony and
domination. National states face spiraling crises of legitimacy as they
fail to meet the social grievances of local working and popular classes experiencing
downward mobility, unemployment, heightened insecurity and greater hardships.
The legitimacy of the system has increasingly been called into question by millions,
perhaps even billions, of people around the world, and is facing expanded counter-hegemonic
challenges. Global elites have been unable counter this erosion of the system's
authority in the face of worldwide pressures for a global moral economy. And
a canopy that envelops all these dimensions is a crisis of sustainability rooted
in an ecological holocaust that has already begun, expressed in climate change
and the impending collapse of centralised agricultural systems in several regions
of the world, among other indicators.
By a crisis of humanity I mean a crisis that is approaching systemic
proportions, threatening the ability of billions of people to survive, and raising
the specter of a collapse of world civilisation and degeneration into a new
"Dark Ages."2
Global capitalism now couples human and natural history in such a way
as to threaten to bring about what would be the sixth mass extinction in the
known history of life on earth.
This crisis of humanity shares a
number of aspects with earlier structural crises but there are also several
features unique to the present:
The system is fast reaching the ecological limits of its reproduction.
Global capitalism now couples human and natural history in such a way as
to threaten to bring about what would be the sixth mass extinction in the
known history of life on earth.3 This mass extinction would
be caused not by a natural catastrophe such as a meteor impact or by evolutionary
changes such as the end of an ice age but by purposive human activity. According
to leading environmental scientists there are nine "planetary boundaries"
crucial to maintaining an earth system environment in which humans can exist,
four of which are experiencing at this time the onset of irreversible environmental
degradation and three of which (climate change, the nitrogen cycle, and
biodiversity loss) are at "tipping points," meaning that these processes
have already crossed their planetary boundaries.
The magnitude of the means of violence and social control is unprecedented,
as is the concentration of the means of global communication and symbolic
production and circulation in the hands of a very few powerful groups.
Computerised wars, drones, bunker-buster bombs, star wars, and so forth,
have changed the face of warfare. Warfare has become normalised and sanitised
for those not directly at the receiving end of armed aggression. At the
same time we have arrived at the panoptical surveillance society and the
age of thought control by those who control global flows of communication,
images and symbolic production. The world of Edward Snowden is the world
of George Orwell; 1984 has arrived;
Capitalism is reaching apparent limits to its extensive
expansion. There are no longer any new territories of significance that
can be integrated into world capitalism, de-ruralisation is now well advanced,
and the commodification of the countryside and of pre- and non-capitalist
spaces has intensified, that is, converted in hot-house fashion into spaces
of capital, so that intensive expansion is reaching depths never
before seen. Capitalism must continually expand or collapse. How or where
will it now expand?
There is the rise of a vast surplus population inhabiting a "planet
of slums,"4 alienated from the productive economy, thrown
into the margins, and subject to sophisticated systems of social control
and to destruction – to a mortal cycle of dispossession-exploitation-exclusion.
This includes prison-industrial and immigrant-detention complexes, omnipresent
policing, militarised gentrification, and so on;
There is a disjuncture between a globalising economy and a nation-state
based system of political authority. Transnational state apparatuses
are incipient and have not been able to play the role of what social scientists
refer to as a "hegemon," or a leading nation-state that has enough power
and authority to organise and stabilise the system. The spread of weapons
of mass destruction and the unprecedented militarisation of social life
and conflict across the globe makes it hard to imagine that the system can
come under any stable political authority that assures its reproduction.
Global Police State
How have social and political forces worldwide responded to crisis? The
crisis has resulted in a rapid political polarisation in global society.
Both right and left-wing forces are ascendant. Three responses seem to be in
dispute.
One is what we could call "reformism from above." This elite reformism is
aimed at stabilising the system, at saving the system from itself and from more
radical responses from below. Nonetheless, in the years following the 2008 collapse
of the global financial system it seems these reformers are unable (or unwilling)
to prevail over the power of transnational financial capital. A second response
is popular, grassroots and leftist resistance from below. As social and political
conflict escalates around the world there appears to be a mounting global revolt.
While such resistance appears insurgent in the wake of 2008 it is spread very
unevenly across countries and regions and facing many problems and challenges.
Yet another response is that I term 21stcentury fascism.5
The ultra-right is an insurgent force in many countries. In broad
strokes, this project seeks to fuse reactionary political power with transnational
capital and to organise a mass base among historically privileged sectors of
the global working class – such as white workers in the North and middle
layers in the South – that are now experiencing heightened insecurity and the
specter of downward mobility. It involves militarism, extreme masculinisation,
homophobia, racism and racist mobilisations, including the search for scapegoats,
such as immigrant workers and, in the West, Muslims. Twenty-first century
fascism evokes mystifying ideologies, often involving race/culture supremacy
and xenophobia, embracing an idealised and mythical past. Neo-fascist culture
normalises and glamorises warfare and social violence, indeed, generates a fascination
with domination that is portrayed even as heroic.
The need for dominant groups around the world to secure widespread, organised
mass social control of the world's surplus population and rebellious forces
from below gives a powerful impulse to projects of 21st century fascism. Simply
put, the immense structural inequalities of the global political economy cannot
easily be contained through consensual mechanisms of social control. We have
been witnessing transitions from social welfare to social control states around
the world. We have entered a period of great upheavals, momentous changes and
uncertainties. The only viable solution to the crisis of global capitalism is
a massive redistribution of wealth and power downward towards the poor majority
of humanity along the lines of a 21st century democratic socialism, in which
humanity is no longer at war with itself and with nature.
About the Author
William I. Robinson is professor of sociology, global and
international studies, and Latin American studies, at the University of California-Santa
Barbara. Among his many books are Promoting Polyarchy (1996),
Transnational Conflicts (2003), A Theory of Global Capitalism
(2004), Latin America and Global Capitalism (2008),
and
Global Capitalism and the Crisis of Humanity (2014).
Spirited defense of the establishment from one of financial oligarchy members.
" The economy overall is doing just fine." Does this include QE? If the Fed is pouring
billions of new money into the economy, how accurate is it to say that the economy
is doing just fine?
Notable quotes:
"... "That was a number that was devised, statistically devised, to make politicians - and in particular, presidents - look good. And I wouldn't be getting the kind of massive crowds that I'm getting if the number was a real number." ..."
"... In the 1950s and 1960s, for instance, organized labor was fairly convinced that the government was purposely underestimating inflation and the cost of living to keep Social Security payments low and wages from rising. George Meany, the powerful head of the American Federation of Labor at the time, claimed that the Bureau of Labor Statistics, which compiled both employment and inflation numbers, had "become identified with an effort to freeze wages and is not longer a free agency of statistical research." ..."
"... Employment figures are sometimes seen as equally suspect. Jack Welch, the once-legendary former CEO of GE, blithely accused the Obama administration of manipulating the final employment report before the 2012 election to make the economic recovery look better than it was. "Unbelievable jobs numbers … these Chicago guys will do anything … can't debate so change numbers," he tweeted ..."
"... His arguments were later fleshed out by New York Post columnist John Crudele , who went on to charge the Census Bureau (which works with BLS to create the samples for the unemployment rate) with faking and fabricating the numbers to help Obama win reelection. ..."
"... The chairman of the Gallup organization, Jim Clifton, sees so many flaws with the way unemployment is measured that he has called the official rate a "Big Lie." In the Democratic presidential campaign, Bernie Sanders has also weighed in, saying the real unemployment rate is at best above 10 percent. ..."
"... What a useless article. The author explains precisely nothing about what the official statistics do and do not measure, what they miss and what they capture. ..."
"... I had the same impression as well. Notice he does not mention that the Gallop number is over 10% and is based on their polling data. ..."
"... But never mentioned that Reagan changed how Unemployment was figured in the early 80's. He included all people in the military service, as employed. Before that, they was counted neither way. He also intentionally left out that when Obama, had the unemployed numbers dropped one month before the election, from 8.1% to 7.8% --because it was believed that no one could be reelected if it was above 8%. ..."
"... U6 is 9.8% for March 2016. We still have 94 million unemployed and you want to say its 5 % what journalistic malpractice. ..."
"... Trump has emphasized that he is looking at the percent of the population that is participating in the workforce - and that this participation rate is currently at historical lows -- and Trump has been clear that his approach to paying down the national debt is based on getting the participation rates back to historical levels ..."
"... "The government can't lie about a hundred billion dollars of Social Security money stolen for the Clinton 'balanced budget', that would be a crime against the citizens, they would revolt. John, come one now. " ..."
"... I didn't say it first, Senator Ernest Hollings did, on the Senate floor. ..."
"... And here is how they did it: http://www.craigsteiner.us/articles/16 ..."
"... There is plenty of evidence the figures are cooked, folks, enough to fill a book: Atlas Shouts. Don't believe trash like this article claims. GDP, unemployment and inflation are all manipulated numbers, as Campbell's Law predicts. ..."
"... I can't believe the Washington Post prints propaganda like this. ..."
"... I do remember when the officially-announced unemployment rate stopped including those who were no longer looking for work. That *was* a significant shift, and there's no doubt it made politicians (Reagan, I think it was) look better; of course, no President since then has reversed it, as it would instantly make themselves look worse. ..."
"... Working one hour a week, at minimum wage, is 'employed', according to the government. No wonder unemployment is at 5%. ..."
"... Add in people who are working, but want and need full time jobs, add in people who have dropped out of the labor market and/or retired earlier than they wanted to, and unemployment is at least 10%. Ten seconds on Google will show you that. ..."
"... The writer should be sacked for taking a very serious issue and turning it into a piece of non-informative fluff. Bad mouthing Trump and Sanders is the same as endorsing Hilly. ..."
Yes, Donald Trump is wrong about unemployment. But he's not the only one. -
The Washington Post
Listen to President Obama, and you'll hear that job growth is stronger than
at any point in the past 20 years, and - as
he said in his final State of the Union address - "anyone claiming that
America's economy is in decline is peddling fiction."
Listen to Donald Trump and you'll hear something completely different. The
billionaire Republican candidate for president told The Washington Post last
week that
the economy is one big Federal Reserve bubble waiting to burst, and that
as for job growth, "we're not at 5 percent unemployment. We're at a number that's
probably into the 20s if you look at the real number." Not only that, Trump
said, but the numbers are juiced: "That was a number that was devised, statistically
devised, to make politicians - and in particular, presidents - look good. And
I wouldn't be getting the kind of massive crowds that I'm getting if the number
was a real number."
It's easy enough to dismiss - as a phalanx of economists and analysts
did - Trump's claims as yet another one of his all-too-frequent campaign
lines that have little to do with reality. But with this one, at least, Trump
is tapping into a deep and mostly overlooked well of popular suspicion of government
numbers and a deeply held belief that what "we the people" are told about the
economy by the government is
lies, damn
lies and statistics designed to benefit the elite at the expense of the
working class. The stubborn persistence of these beliefs should be a reminder
that just because the United States is doing well in general, that doesn't mean
everyone in the country is. It's also a warning to experts and policymakers
that in the real world,
there is no "the economy," there are many, and generalizations have a way
of glossing over some very rough patches.
Since the mid-20th century, when the U.S. government began keeping
and compiling our modern suite of economic numbers, there has been constant
skepticism of the reports, coming from different corners depending on economic
trends and the broader political climate. In the 1950s and 1960s, for instance,
organized labor was fairly convinced that the government was purposely underestimating
inflation and the cost of living to keep Social Security payments low and wages
from rising. George Meany, the powerful head of the American Federation of Labor
at the time, claimed that the Bureau of Labor Statistics, which compiled both
employment and inflation numbers, had "become identified with an effort to freeze
wages and is not longer a free agency of statistical research."
Over the decades, those views hardened. Throughout the 1970s, as workers
struggled with unemployment and stagflation, the government continually tweaked
its formulas for measuring prices. By and large, these changes and new formulas
were designed to make the figures more accurate in a fast-changing world. But
for those who were already convinced the government was trying to paint a deliberately
false picture, the tweaks and innovations were interpreted as a devious way
to avoid spending money to help the ailing middle class, not trying to measure
what was actually happening to design policies to help address it. The commissioner
of BLS at the time, Janet Norwood, dismissed those concerns
in testimony to Congress in the late 1970s, saying that when people don't
get the number they want, "they feel there must be something wrong with the
indicator itself."
Employment figures are sometimes seen as equally suspect. Jack Welch,
the once-legendary former CEO of GE,
blithely accused the Obama administration of manipulating the final employment
report before the 2012 election to make the economic recovery look better than
it was. "Unbelievable jobs numbers … these Chicago guys will do anything … can't
debate so change numbers," he tweeted after that last October report showed
better-than-expected job growth and lower-than-anticipated unemployment rate.
His arguments were later fleshed out by New York Post columnist
John Crudele, who went on to charge the Census Bureau (which works with
BLS to create the samples for the unemployment rate) with faking and fabricating
the numbers to help Obama win reelection.
These views are not fringe. Type the search terms "inflation
is false" into Google, and you will get reams of articles and analysis from
mainstream outlets and voices, including investment guru Bill Gross (who referred
to inflation numbers as a "haute
con job"). Similar results pop up with the terms "real
unemployment rate," and given how many ways there are to count employment,
there are legitimate issues with the headline number.
The cohort that responds to Trump reads those numbers in a starkly different
light from the cohort laughing at him for it. Whenever the unemployment rate
comes out showing improvement and hiring, those who are experiencing dwindling
wages and shrinking opportunities might see a meticulously constructed web of
lies meant to paint a positive picture so that the plight of tens of millions
who have dropped out of the workforce can be ignored. The chairman of the
Gallup organization, Jim Clifton, sees so many flaws with the way unemployment
is measured that he has called the
official rate a "Big Lie." In the Democratic presidential campaign,
Bernie Sanders has also weighed in, saying the real unemployment rate is
at best above 10 percent.
Beneath the anger and the distrust - which extend to a booming stock market
that helps the wealthy and banks flush with profit even after the financial
crisis - there lies a very real problem with how economists, the media and policymakers
discuss economics. No, the bureaucrats in the Labor and Commerce departments
who compile these numbers aren't a cabal engaged in a cover-up. And no, the
Fed is not an Illuminati conspiracy. But the idea that a few simple big numbers
that are at best averages to describe a large system we call "the economy" can
adequately capture the stories of 320 million people is a fiction, one that
we tell ourselves regularly, and which millions of people know to be false to
their own experience.
It may be true that there is a national unemployment rate measured at
5 percent.
But it is also true that for white men without a college degree, or white men
who had worked factory jobs until the mid-2000s with no more than a high school
education, the unemployment reality is much worse (though it's even worse for
black
and Hispanic men, who don't seem to be responding by flocking to Trump in
large numbers). Even when those with these skill sets can get a job, the pay
is woefully below a living wage. Jobs that don't pay well still count, in the
stats, as jobs. Telling people who are barely getting by that the economy is
just fine must appear much more than insensitive. It is insulting, and it feels
like a denial of what they are experiencing.
The chords Trump strikes when he makes these claims, therefore, should be
taken more seriously than the claims themselves. We need to be much more diligent
in understanding what our national numbers do and do not tell us, and how much
they obscure. In trying to hang our sense of what's what on a few big numbers,
we risk glossing over the tens of millions whose lives don't fit those numbers
and don't fit the story. "The economy" may be doing just fine, but that doesn't
mean that everyone is. Inflation might be low, but millions can be struggling
to meet basic costs just the same.
So yes, Trump is wrong, and he's the culmination of decades of paranoia and
distrust of government reports. The economy overall is doing just fine.
But people are still struggling. We don't have to share the paranoia or buy
into the conspiratorial narrative to acknowledge that. A great nation, the one
Trump promises to restore, can embrace more than one story, and can afford to
speak to those left out of our rosy national numbers along with those whose
experience reflect them.
the3sattlers, 4/8/2016 1:05 PM EDT
" The economy overall is doing just fine." Does this include QE? If the
Fed is pouring billions of new money into the economy, how accurate is it
to say that the economy is doing just fine?
james_harrigan, 4/8/2016 10:14 AM EDT
What a useless article. The author explains precisely nothing about
what the official statistics do and do not measure, what they miss and what
they capture.
Derbigdog, 4/8/2016 11:40 AM EDT
I had the same impression as well. Notice he does not mention that
the Gallop number is over 10% and is based on their polling data.
captdon1, 4/8/2016 5:51 AM EDT
Not reported by WP
The first two years of Obama's presidency Democrats controlled the house
and Senate. The second two years, Republicans controlled the Senate. The
last two years of Obama's term, the Republicans controlled house and Senate.
During this six years the national debt increase $10 TRILLION and the Government
collected $9 TRILLION in taxes and borrowed $10 TRILLION. ($19 Trillion
In Six Years!!!) (Where did our lovely politicians spend this enormous amount
of money??? (Republicans and Democrats!)
reussere, 4/8/2016 1:43 AM EDT
Reading the comments below it strikes me again and again how far out
of whack most people are with reality. It's absolutely true that using a
single number for the employment rate reflects the overall average of the
economy certainly doesn't measure how every person is doing, anymore than
an average global temperature doesn't measure any local temperatures.
One thing not emphasized in the article is that there is a number of
different statistics. The 5% figure refers to the U-3 statistic. Nearly
all of the rest of the employment statistics are higher, some considerably
so because they include different groups of people. But when you compare
U-3 from different years, you are comparing apples and apples. The rest
of the numbers very closely track with U-3. That is when U-3 goes up and
down, U-6 go up and down pretty much in lockstep.
It is unfortunate that subpopulations of Americans are doing far worse
(and some doing far better) than average. But that is the nature of averages
after all. It is simply impossible for a single number (or even a group
of a dozen different employment measurements) to accurately reflect a complex
reality.
Smoothcountryside, 4/8/2016 12:04 PM EDT
The alternative measures of labor underutilization are defined as U-1
through U-6 with U-6 being the broadest measure and probably the closes
to the "true" level of unemployment. Otherwise, all the rest of your commentary
is correct.
southernbaked, 4/7/2016 11:02 PM EDT
Because this highly educated writer is totally bias, he left out some
key parts, I personally lived though. He referred back to the late 70's
twice. But never mentioned that Reagan changed how Unemployment was
figured in the early 80's. He included all people in the military service,
as employed. Before that, they was counted neither way. He also intentionally
left out that when Obama, had the unemployed numbers dropped one month before
the election, from 8.1% to 7.8% --because it was believed that no one could
be reelected if it was above 8%.
Then after he was sworn in--- in January, they had to readjust the numbers
back up. They blamed it on one employees mistakes-- PS. no one was fired
or disciplined for fudging. Bottom line is, for every 1.8 manufacturing
job, there are 2 government jobs, that is disaster. Because this writer
is to young to have lived in America when it was great. When for every 1
government job, you had 3 manufacturing jobs.
I will enlighten him. I joined the workforce -- With no higher education
-- when you merely walked down the road, and picked out a job. Because jobs
hang on trees like apples. By 35 I COMPLETELY owned my first 3 bedroom brick
house, and the 2 newer cars parked in the driveway. Anyone care to try that
now ??
As for all this talk about education-- I have a bit of knowledge about
that subject-- because I paid in full to send all under my roof through
it. Without one dime of aide from anyone. The above writer is proof-- you
can be heavily educated, and DEAD WRONG. There is nothing good about this
economy. Signed, UN-affiliated to either corrupted party
Bluhorizons, 4/7/2016 9:43 PM EDT
"we're not at 5 percent unemployment. We're at a number that's probably
into the 20s if you look at the real number." Trump is correct. The unemployment
data is contrived from data about people receiving unemployment compensation
but the people who's unemployment has ended and people who have just given
up is invisible.
"It may be true that there is a national unemployment rate measured at
5 percent. But it is also true that for white men without a college degree,
or white men who had worked factory jobs until the mid-2000s with no more
than a high school education, the unemployment reality is much worse "
The author goes on and on about the legitimate distrust of government
unemployment data and then tells us Trump is wrong. But the article convinces
us Trump is right! So, this article its not really about the legitimate
distrust of government data is is about the author's not liking Trump. Typical
New Left bs
Aushax, 4/7/2016 8:24 PM EDT
Last jobs report before the 2012 election the number unusually dropped
then was readjusted up after the election. Coincidentally?
George Mason, 4/7/2016 8:15 PM EDT
U6 is 9.8% for March 2016. We still have 94 million unemployed and
you want to say its 5 % what journalistic malpractice.
F mackey, 4/7/2016 7:57 PM EDT
hey reporter,Todays WSJ, More than 40% of the student borrowers aren't
making payments? WHY? easy,they owe big $ money$ & cant get a job or a well
paying job to pay back the loans,hey reporter,i'd send you $10 bucks to
buy a clue,but you'd probably get lost going to the store,what a %@%@%@,another
reporter,who doesn't have a clue on whats going on,jmo
SimpleCountryActuary, 4/7/2016 7:57 PM EDT
This reporter is a Hillary tool. Even the Los Angeles Times on March
6th had to admit:
"Trump is partly right in saying that trade has cost the U.S. economy
jobs and held down wages. He may also be correct - to a degree - in saying
that low-skilled immigrants have depressed salaries for certain jobs or
industries..."
If this is the quality of reporting the WaPo is going to provide, namely
even worse than the Los Angeles Times, then Bezos had better fire the editorial
staff and buy a new one.
Clyde4, 4/7/2016 7:34 PM EDT [Edited]
This article dismissing Trump is exactly what is wrong with journalism
today - all about creating a false reality for people instead of investigating
and reporting
Trump has emphasized that he is looking at the percent of the population
that is participating in the workforce - and that this participation rate
is currently at historical lows -- and Trump has been clear that his approach
to paying down the national debt is based on getting the participation rates
back to historical levels
The author completely ignored the big elephant in the room -- that is
irresponsible journalism
The author may want to look into how the unemployment rate shot up in
2008 when the government extended benefits and then the unemployment rate
plummeted again when unemployment benefits were decrease (around 2011, I
believe) - if I were the author I would do a little research into whether
the unemployment rate correlates with how much is paid out in benefits or
with unemployment determined through some other approach (like surveys
dangerbird1225, 4/7/2016 7:25 PM EDT
Bunch of crap. If you stop counting those that stop looking for a job,
your numbers are wrong. Period. Why didn't this apologist for statistics
mention that?
"The government can't lie about a hundred billion dollars of Social
Security money stolen for the Clinton 'balanced budget', that would be a
crime against the citizens, they would revolt. John, come one now. "
I didn't say it first, Senator Ernest Hollings did, on the Senate
floor.
"Both Democrats and Republicans are all running this year and next
and saying surplus, surplus. Look what we have done. It is false. The
actual figures show that from the beginning of the fiscal year until
now we had to borrow $127,800,000,000." - Senate speech, Democratic
Senator Ernest Hollings, October 28, 1999
Go to New Orleans Chicago Atlanta Los Angeles Detroit stop anybody on
the street and ask if unemployment is 5% and that there is a 95% chance
a guy can get a job.
Then you will have a statistic reference point. Its not a Democratic
or republican issue because both of them have manipulated the system for
so long its meaningless. Go Trump 2016 and get this crap sorted out with
common sense plain English
AtlasRocked, 4/7/2016 4:37 PM EDT
There is plenty of evidence the figures are cooked, folks, enough
to fill a book: Atlas Shouts. Don't believe trash like this article claims.
GDP, unemployment and inflation are all manipulated numbers, as Campbell's
Law predicts.
I can't believe the Washington Post prints propaganda like this.
TimberDave, 4/7/2016 2:23 PM EDT
I do remember when the officially-announced unemployment rate stopped
including those who were no longer looking for work. That *was* a significant
shift, and there's no doubt it made politicians (Reagan, I think it was)
look better; of course, no President since then has reversed it, as it would
instantly make themselves look worse.
astroboy_2000, 4/7/2016 1:28 PM EDT
This would be a much more intelligent article if the writer actually
said what the government considers as 'employed'.
Working one hour a week, at minimum wage, is 'employed', according
to the government. No wonder unemployment is at 5%.
Add in people who are working, but want and need full time jobs,
add in people who have dropped out of the labor market and/or retired earlier
than they wanted to, and unemployment is at least 10%. Ten seconds on Google
will show you that.
The writer should be sacked for taking a very serious issue and turning
it into a piece of non-informative fluff. Bad mouthing Trump and Sanders
is the same as endorsing Hilly.
Manchester0913, 4/7/2016 2:12 PM EDT
The number you're referencing is captured under U6. However, U3 is the
traditional measure.
Son House, 4/7/2016 2:24 PM EDT
The government doesn't claim that working one hour a week is employed.
Google U 3 unemployment. Then google U 6 unemployment. You can be enlightened.
Liz in AL, 4/7/2016 7:21 PM EDT
I've found this compilation of all 6 of the "U-rates" very useful. It
encompasses the most restrictive (and thus smallest) U-1 rate, though the
most expansive U-6. It provides brief descriptions of what gets counted
for each rate, and (at least for more recent years) provides the ability
to compare at the monthly level of detail.
U6 Unemployment Rate Portal Seven
This
article outlines the main elements of
rupture and continuity in the global political economy since the global
economic crisis of
2008-2009. While the current calamity poses a more systemic challenge to
neoliberal
globalization than genetically similar turbulences in the
semi-periphery during the 1990s, we find that evidence for its
transformative significance remains mixed. Efforts to reform the distressed
capitalist models in the North encounter severe resistance, and the
broadened multilateralism of the G-20 is yet
to provide effective global economic governance. Overall,
neoliberal
globalization looks set to survive, but in more heterodox and
multipolar fashion. Without tighter coordination between old and emerging
powers, this new synthesis is unlikely to inspire lasting solutions to
pressing global problems such as an unsustainable international financial
architecture and the pending environmental catastrophe, and may even fail to
preserve some modest democratic and developmental gains
of the recent past.
"... 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".
So I was peacefully drinking my coffee this morning, and was accosted by someone waving the latest
Wall Street Journal editorial on the dollar * in my face, demanding my reaction. Um, this is not cool.
Also, with apologies to Brad DeLong, when reading WSJ editorials you need to bear two things in mind:
1. The WSJ editorial page is wrong about everything.
2. If you think the WSJ editorial page is right about something, see rule #1.
After all, here's what you would have believed if you listened to that page over the years: Clinton's
tax hike will destroy the economy, you really should check out those people suggesting that Clinton
was a drug smuggler, Dow 36000, the Bush tax cuts will bring surging prosperity, Saddam is backing Al
Qaeda and has WMD, there isn't any housing bubble, US households have a high savings rate if you measure
it right. I'm sure I missed another couple of dozen high points.
Today's editorial was in the grand tradition. A few months ago falling stock prices showed Obama's
failure - never mind, we meant the falling dollar. And just to provide extra spice, the editorial cited
David Malpass ** as the wise expert on all this.
But more specifically, you need to see the Journal's fear of a weak dollar in terms of its long-term
gold-bug position. The Journal has always maintained that changes in exchange rates play no useful role,
that stable exchange rates - preferably enforced by some barbarous relic like the gold standard - are
the essence of sound policy.
I explained why this is all wrong a long time ago. *** But it's especially important to understand
the wrongness of this view right now. If there's one overwhelming lesson from the Great Depression,
it is that putting a higher priority on stabilizing your currency than on domestic recovery is utterly
disastrous. Barry Eichengreen **** pointed out years ago that major economies went off gold in the following
order: Japan, Britain, Germany, US, France. And here's what happened to their industrial output:
[Slowest to leave the gold standard, slowest to recover.
All that glitters went off gold.]
The WSJ may not realize it, but it wants us to be France in the 1930s. Let's not.
The legend of King Midas has been generally misunderstood. Most people think the curse that turned
everything the old miser touched into gold, leaving him unable to eat or drink, was a lesson in the
perils of avarice. But Midas' true sin was his failure to understand monetary economics. What the gods
were really telling him is that gold is just a metal. If it sometimes seems to be more, that is only
because society has found it convenient to use gold as a medium of exchange--a bridge between other,
truly desirable, objects. There are other possible mediums of exchange, and it is silly to imagine that
this pretty, but only moderately useful, substance has some irreplaceable significance.
But there are many people--nearly all of them ardent conservatives--who reject that lesson. While
Jack Kemp, Steve Forbes, and Wall Street Journal editor Robert Bartley are best known for their promotion
of supply-side economics, they are equally dedicated to the belief that the key to prosperity is a return
to the gold standard, which John Maynard Keynes pronounced a "barbarous relic" more than 60 years ago.
With any luck, these latter-day Midases will never lay a finger on actual monetary policy. Nonetheless,
these are influential people--they are one of the factions now struggling for the Republican Party's
soul--and the passionate arguments they make for a gold standard are a useful window on how they think.
There is a case to be made for a return to the gold standard. It is not a very good case, and most
sensible economists reject it, but the idea is not completely crazy. On the other hand, the ideas of
our modern gold bugs are completely crazy. Their belief in gold is, it turns out, not pragmatic but
mystical.
The current world monetary system assigns no special role to gold; indeed, the Federal Reserve is
not obliged to tie the dollar to anything. It can print as much or as little money as it deems appropriate.
There are powerful advantages to such an unconstrained system. Above all, the Fed is free to respond
to actual or threatened recessions by pumping in money. To take only one example, that flexibility is
the reason the stock market crash of 1987--which started out every bit as frightening as that of 1929--did
not cause a slump in the real economy.
While a freely floating national money has advantages, however, it also has risks. For one thing,
it can create uncertainties for international traders and investors. Over the past five years, the dollar
has been worth as much as 120 yen and as little as 80. The costs of this volatility are hard to measure
(partly because sophisticated financial markets allow businesses to hedge much of that risk), but they
must be significant. Furthermore, a system that leaves monetary managers free to do good also leaves
them free to be irresponsible--and, in some countries, they have been quick to take the opportunity.
That is why countries with a history of runaway inflation, like Argentina, often come to the conclusion
that monetary independence is a poisoned chalice. (Argentine law now requires that one peso be worth
exactly one U.S. dollar, and that every peso in circulation be backed by a dollar in reserves.)
So, there is no obvious answer to the question of whether or not to tie a nation's currency to some
external standard. By establishing a fixed rate of exchange between currencies--or even adopting a common
currency--nations can eliminate the uncertainties of fluctuating exchange rates; and a country with
a history of irresponsible policies may be able to gain credibility by association. (The Italian government
wants to join a European Monetary Union largely because it hopes to refinance its massive debts at German
interest rates.) On the other hand, what happens if two nations have joined their currencies, and one
finds itself experiencing an inflationary boom while the other is in a deflationary recession? (This
is exactly what happened to Europe in the early 1990s, when western Germany boomed while the rest of
Europe slid into double-digit unemployment.) Then the monetary policy that is appropriate for one is
exactly wrong for the other. These ambiguities explain why economists are divided over the wisdom of
Europe's attempt to create a common currency. I personally think that it will lead, on average, to somewhat
higher European unemployment rates; but many sensible economists disagree.
Future Economists Will Probably Call
This Decade the 'Longest Depression'
:
... Back before 2008, I used to teach my
students that during a disturbance in
the business cycle, we'd be 40 percent
of the way back to normal in a year. The
long-run trend of economic growth, I
would say, was barely affected by
short-run business cycle disturbances.
There would always be short-run bubbles
and panics and inflations and
recessions. They would press production
and employment away from its long-run
trend -- perhaps by as much as 5
percent. But they would be transitory.
After the shock hit, the economy would
rapidly head back to normal. The
equilibrium-restoring logic and magic of
supply and demand would push the economy
to close two-fifths of the gap to normal
each year. After four years, only a
seventh of the peak disturbance would
remain.
In the aftermath of 2008, Stiglitz was
indeed one of those warning that I and
economists like me were wrong. Without
extraordinary, sustained and aggressive
policies to rebalance the economy, he
said, we would never get back to what
before 2008 we had thought was normal.
"... I think Trump is afraid the imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs ..."
"... Much has been written about the internet revolution, about the impact of people having access to much more information than before. The elite does not recognize this and is still organizing political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush, Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the point of being counterproductive. ..."
"... I don't think something as parochial as racism is sustaining Trump, but rather the fear of the loss of empire by a population with several orders of magnitude more information and communication than in 2008, even 2012. ..."
"... No one has literally argued that people should be glad to lose employment: that part was hyperbole. But the basic argument is often made quite seriously. See e.g. outsource Brad DeLong . ..."
"... The same thing has happened in Mexico with neoliberal government after neoliberal government being elected. There are many democratically elected neoliberal governments around the world. ..."
"... In the case of Mexico, because Peńa Nieto's wife is a telenovela star. How cool is that? It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni. ..."
"... To the guy who asked- poor white people keep voting Republican even though it screws them because they genuinely believe that the country is best off when it encourages a culture of "by the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people in order to give the money to the supposedly less fortunate as the anti thesis of this, because it gives people an easy out that let's them avoid having to engage in the hard work needed to live independently. ..."
"... The extent to which "poor white people" vote against their alleged economic interests is overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot to represent their interests. And, yes, they are misinformed systematically by elites out to screw them and they know this, but cannot do much to either clear up their own confusion or fight back. ..."
"... The mirror image problem - of elites manipulating the system to screw the poor and merely middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who do you recommend they vote for? ..."
"... I think you're missing Patrick's point. These voters are switching from one Republican to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush. ..."
"... They've figured out that the mainstream party is basically 30 years of affinity fraud. ..."
"... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
"... Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole point is that there is very little difference between the racism of Trump and the mainstream party since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than Bush for reasons other than race? ..."
"... Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among the defining characteristics of a coherent group is an explicit boundary which determines whether an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage together; it is a crowd.) The boundary helps provide social cohesion and is so important that groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone must play the role of outsider. ..."
"... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
I think Trump is afraid the imperial global order presided by the US is about to crash
and thinks he will be able to steer the country into a soft landing by accepting that other world
powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating
trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs
.
Much has been written about the internet revolution, about the impact of people having
access to much more information than before. The elite does not recognize this and is still organizing
political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush,
Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the
point of being counterproductive.
I don't think something as parochial as racism is sustaining Trump, but rather the fear
of the loss of empire by a population with several orders of magnitude more information and communication
than in 2008, even 2012.
Layman 08.04.16 at 11:59 am
Rich P: "Neoliberals often argue that people should be glad to lose employment at 50 so
that people from other countries can have higher incomes "
I doubt this most sincerely. While this may be the effect of some neoliberal policies, I can't
recall any particular instance where someone made this argument.
Rich Puchalsky 08.04.16 at 12:03 pm
"I can't recall any particular instance where someone made this argument."
No one has literally argued that people should be glad to lose employment: that part was
hyperbole. But the basic argument is often made quite seriously. See e.g.
outsource
Brad DeLong .
engels 08.04.16 at 12:25 pm
While this may be the effect of some neoliberal policies, I can't recall any particular instance
where someone made this argument
Maybe this kind of thing rom Henry Farrell? (There may well be better examples.)
Is some dilution of the traditional European welfare state acceptable, if it substantially
increases the wellbeing of current outsiders (i.e. for example, by bringing Turkey into the club).
My answer is yes, if European leftwingers are to stick to their core principles on justice, fairness,
egalitarianism etc
Large numbers of low-income white southern Americans consistently vote against their
own economic interests. They vote to award tax breaks to wealthy people and corporations, to
cut unemployment benefits, to bust unions, to reward companies for outsourcing jobs, to resist
wage increases, to cut funding for health care for the poor, to cut Social Security and Medicare,
etc.
The same thing has happened in Mexico with neoliberal government after neoliberal government
being elected. There are many democratically elected neoliberal governments around the world.
Why might this be?
In the case of Mexico, because Peńa Nieto's wife is a telenovela star. How cool is that?
It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni.
Patrick 08.04.16 at 4:32 pm
To the guy who asked- poor white people keep voting Republican even though it screws them
because they genuinely believe that the country is best off when it encourages a culture of "by
the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people
in order to give the money to the supposedly less fortunate as the anti thesis of this, because
it gives people an easy out that let's them avoid having to engage in the hard work needed to
live independently.
They see it as little different from letting your kid move back on after college and smoke
weed in your basement. They don't generally mind people being on unemployment transitionally,
but they're supposed to be a little embarrassed about it and get it over with as soon as possible.
They not only worry that increased government social spending will incentivize bad behavior, they
worry it will destroy the cultural values they see as vital to Americas past prosperity. They
tend to view claims about historic or systemic injustice necessitating collective remedy because
they view the world as one in which the vagaries of fate decree that some are born rich or poor,
and that success is in improving ones station relative to where one starts. Attempts at repairing
historical racial inequity read as cheating in that paradigm, and even as hostile since they can
easily observe white people who are just as poor or poorer than those who racial politics focuses
upon. Left wing insistence on borrowing the nastiest rhetoric of libertarians ("this guy is poor
because his ancestors couldn't get ahead because of historical racial injustice so we must help
him; your family couldn't get ahead either but that must have been your fault so you deserve it")
comes across as both antithetical to their values and as downright hostile within the values they
see around them.
All of this can be easily learned by just talking to them.
It's not a great world view. It fails to explain quite a lot. For example, they have literally
no way of explaining increased unemployment without positing either that everyone is getting too
lazy to work, or that the government screwed up the system somehow, possibly by making it too
expensive to do business in the US relative to other countries. and given their faith in the power
of hard work, they don't even blame sweatshops- they blame taxes and foreign subsidies.
I don't know exactly how to reach out to them, except that I can point to some things people
do that repulse them and say "stop doing that."
bruce wilder 08.04.16 at 5:50 pm
The extent to which "poor white people" vote against their alleged economic interests is
overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot
to represent their interests. And, yes, they are misinformed systematically by elites out to screw
them and they know this, but cannot do much to either clear up their own confusion or fight back.
The mirror image problem - of elites manipulating the system to screw the poor and merely
middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who
do you recommend they vote for?
There is serious deficit of both trust and information among the poor. Poor whites hardly have
a monopoly; black misleadership is epidemic in our era of Cory Booker socialism.
bruce wilder 08.04.16 at 7:05 pm
Politics is founded on the complex social psychology of humans as social animals. We elevate
it from its irrational base in emotion to rationalized calculation or philosophy at our peril.
T 08.04.16 at 9:17 pm
@Layman
I think you're missing Patrick's point. These voters are switching from one Republican
to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush.
They've figured out that the mainstream party is basically 30 years of affinity fraud.
So, is your argument is that Trump even more racist? That kind of goes against the whole point
of the OP. Not saying that race doesn't matter. Of course it does. But Trump has a 34% advantage
in non-college educated white men. It just isn't the South. Why does it have to be just race or
just class?
Ronan(rf) 08.04.16 at 10:35 pm
"I generally don't give a shit about polls so I have no "data" to evidence this claim, but
my guess is the majority of Trump's support comes from this broad middle"
My understanding is trumps support disproportionately comes from the small business owning
classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved
in reactionary movements. This gets oversold as "working class" when class is defined by education
level rather than income.
This would make some sense as they are generally in economically unstable jobs, they tend to
be hostile to both big govt (regulations, freeloaders) and big business (unfair competition),
and while they (rhetorically at least) tend to value personal autonomy and self sufficiency ,
they generally sell into smaller, local markets, and so are particularly affected by local demographic
and cultural change , and decline. That's my speculation anyway.
T 08.05.16 at 3:12 pm
@patrick @layman
Patrick, you're right about the Trump demographic. https://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/
Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole
point is that there is very little difference between the racism of Trump and the mainstream party
since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than
Bush for reasons other than race?
Are the folks that voted for the other candidates in the primary less racist so Trump supporters
are just the most racist among Republicans? Cruz less racist? You have to explain the shift within
the Republican party because that's what happened.
Anarcissie 08.06.16 at 3:00 pm
Faustusnotes 08.06.16 at 1:50 pm @ 270 -
Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among
the defining characteristics of a coherent group is an explicit boundary which determines whether
an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage
together; it is a crowd.) The boundary helps provide social cohesion and is so important that
groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone
must play the role of outsider. While Berne's theories are a bit too nifty for me to love
them, I have observed a lot of the behaviors he predicts. If one wanted to be sociobiological,
it is not hard to hypothesize evolutionary pressures which could lead to this sort of behavior
being genetically programmed. If a group of humans, a notably combative primate, does not have
strong social cohesion, the war of all against all ensues and everybody dies. Common affections
alone do not seem to provide enough cohesion.
In an earlier but related theory, in the United States, immigrants from diverse European communities
which fought each other for centuries in Europe arrived and managed to now get along because they
had a major Other, the Negro, against whom to define themselves (as the White Race) and thus to
cohere sufficiently to get on with business. The Negro had the additional advantage of being at
first a powerless slave and later, although theoretically freed, was legally, politically, and
economically disabled - an outsider who could not fight back very effectively, nor run away. Even
so, the US almost split apart and there continue to be important class, ethnic, religious, and
regional conflicts. You can see how these two theories resonate.
It may be that we can't have communities without this dark side, although we might be able
to mitigate some of its destructive effects.
bruce wilde r 08.06.16 at 4:28 pm
I am somewhat suspicious of leaving dominating elites out of these stories of racism as an
organizing principle for political economy or (cultural) community.
Racism served the purposes of a slaveholding elite that organized political communities to
serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)
Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy
like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz
status. The ugly prejudices and resentful arrogance of working class whites is thus a component
of how racism works to organize a political community to serve a hegemonic master class. The business
end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers,
poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory
institutions and authoritarian governments.
For a time, the balkanization of American political communities by race, religion and ethnicity
was an effective means to the dominance of an tiny elite with ties to an hegemonic community,
but it backfired. Dismantling that balkanization has left the country with a very low level of
social affiliation and thus a low capacity to organize resistance to elite depredations.
engels 08.07.16 at 1:02 am
But how did that slavery happen
Possible short answer: the level of technological development made slavery an efficient way
of exploiting labour. At a certain point those conditions changed and slavery became a drag on
further development and it was abolished, along with much of the racist ideology that legitimated
it.
Lupita 08.07.16 at 3:40 am
But how did that slavery happen
In Mesoamerica, all the natives were enslaved because they were conquered by the Spaniards.
Then, Fray Bartolomé de las Casas successfully argued before the Crown that the natives had souls
and, therefore, should be Christianized rather than enslaved. As Bruce Wilder states, this did
not serve the interests of the slaveholding elite, so the African slave trade began and there
was no Fray Bartolomé to argue their case.
It is interesting that while natives were enslaved, the Aztec aristocracy was shipped to Spain
to be presented in court and study Latin. This would not have happened if the Mesoamericans were
considered inferior (soulless) as a race. Furthermore, the Spaniards needed the local elite to
help them out with their empire and the Aztecs were used to slavery and worse. This whole story
can be understood without recurring to racism. The logic of empire suffices.
"... 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.
"You're living in poverty, your schools are no good, you have no jobs, 58% of your youth is unemployed.
What the hell do you have to lose" by voting for Trump? the candidate asked. "At the end of four
years, I guarantee I will get over 95% of the African American vote."
The statement – highly unlikely given how poorly Republicans fare among black voters – continues
a theme the GOP presidential nominee has pounded this week as he courted African American voters.
He said Democrats take black voters for granted and have ignored their needs while governing cities
with large African American populations.
"America must reject the bigotry of Hillary Clinton, who sees communities of color only as votes,
not as human beings worthy of a better future," he said of his Democratic opponent.
... ... ...
Trump argued that Democratic presidential nominee Hillary Clinton's policies on issues such as
immigration and refugee resettlement harm African Americans.
=== quote ===
It has recently become commonplace to argue that globalization can leave people behind, and that
this can have severe political consequences. Since 23 June, this has even become conventional
wisdom. While I welcome this belated acceptance of the blindingly obvious, I can't but help feeling
a little frustrated, since this has been self-evident for many years now. What we are seeing,
in part, is what happens to conventional wisdom when, all of a sudden, it finds that it can no
longer dismiss as irrelevant something that had been staring it in the face for a long time.
=== end of quote ==
This is not about "conventional wisdom". This is about the power of neoliberal propaganda,
the power of brainwashing and indoctrination of population via MSM, schools and universities.
And "all of a sudden, it finds that it can no longer dismiss as irrelevant something that had
been staring it in the face for a long time." also has nothing to do with conventional wisdom.
This is about the crisis of neoliberal ideology and especially Trotskyism part of it (neoliberalism
can be viewed as Trotskyism for the rich). The following integral elements of this ideology no
longer work well and are starting to cause the backlash:
1. High level of inequality as the explicit, desirable goal (which raises the productivity).
"Greed is good" or "Trickle down economics" -- redistribution of wealth up will create (via higher
productivity) enough scrapes for the lower classes, lifting all boats.
2. "Neoliberal rationality" when everything is a commodity that should be traded at specific
market. Human beings also are viewed as market actors with every field of activity seen as a specialized
market. Every entity (public or private, person, business, state) should be governed as a firm.
"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."
People are just " human capital" who must constantly tend to their own present and future market
value.
3. Extreme financialization or converting the economy into "casino capitalism" (under neoliberalism
everything is a marketable good, that is traded on explicit or implicit exchanges.
4. The idea of the global, USA dominated neoliberal empire and related "Permanent war for permanent
peace" -- wars for enlarging global neoliberal empire via crushing non-compliant regimes either
via color revolutions or via open military intervention.
5. Downgrading ordinary people to the role of commodity and creating three classes of citizens
(moochers, or Untermensch, "creative class" and top 0.1%), with the upper class (0.1% or "Masters
of the Universe") being above the law like the top level of "nomenklatura" was in the USSR.
6. "Downsizing" sovereignty of nations via international treaties like TPP, and making transnational
corporations the key political players, "the deciders" as W aptly said. Who decide about level
of immigration flows, minimal wages, tariffs, and other matters that previously were prerogative
of the state.
So after 36 (or more) years of dominance (which started with triumphal march of neoliberalism
in early 90th) the ideology entered "zombie state". That does not make it less dangerous but its
power over minds of the population started to evaporate. Far right ideologies now are filling
the vacuum, as with the discreditation of socialist ideology and decimation of "enlightened corporatism"
of the New Deal in the USA there is no other viable alternatives.
The same happened in late 1960th with the Communist ideology. It took 20 years for the USSR
to crash after that with the resulting splash of nationalism (which was the force that blow up
the USSR) and far right ideologies.
It remains to be seen whether the neoliberal US elite will fare better then Soviet nomenklatura
as challenges facing the USA are now far greater then challenges which the USSR faced at the time.
Among them is oil depletion which might be the final nail into the coffin of neoliberalism and,
specifically, the neoliberal globalization.
"... 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.
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….
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.
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.
"... 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.
Stiglitz: AUG 5, 2016 8
Globalization and its New Discontents
NEW YORK – Fifteen years ago, I wrote a little book, entitled Globalization
and its Discontents, describing growing opposition in the developing world
to globalizing reforms. It seemed a mystery: people in developing countries
had been told that globalization would increase overall wellbeing. So why
had so many people become so hostile to it?
Now, globalization's opponents in the emerging markets and developing
countries have been joined by tens of millions in the advanced countries.
Opinion polls, including a careful study by Stanley Greenberg and his associates
for the Roosevelt Institute, show that trade is among the major sources
of discontent for a large share of Americans. Similar views are apparent
in Europe.
How can something that our political leaders – and many an economist
– said would make everyone better off be so reviled?
One answer occasionally heard from the neoliberal economists who advocated
for these policies is that people are better off. They just don't know it.
Their discontent is a matter for psychiatrists, not economists.
But income data suggest that it is the neoliberals who may benefit from
therapy. Large segments of the population in advanced countries have not
been doing well: in the US, the bottom 90% has endured income stagnation
for a third of a century. Median income for full-time male workers is actually
lower in real (inflation-adjusted) terms than it was 42 years ago. At the
bottom, real wages are comparable to their level 60 years ago.
The effects of the economic pain and dislocation that many Americans
are experiencing are even showing up in health statistics. For example,
the economists Anne Case and Angus Deaton, this year's Nobel laureate, have
shown that life expectancy among segments of white Americans is declining.
Things are a little better in Europe – but only a little better.
Branko Milanovic's new book Global Inequality: A New Approach for the
Age of Globalization provides some vital insights, looking at the big winners
and losers in terms of income over the two decades from 1988 to 2008. Among
the big winners were the global 1%, the world's plutocrats, but also the
middle class in newly emerging economies. Among the big losers – those who
gained little or nothing – were those at the bottom and the middle and working
classes in the advanced countries. Globalization is not the only reason,
but it is one of the reasons.
Under the assumption of perfect markets (which underlies most neoliberal
economic analyses) free trade equalizes the wages of unskilled workers around
the world. Trade in goods is a substitute for the movement of people. Importing
goods from China – goods that require a lot of unskilled workers to produce
– reduces the demand for unskilled workers in Europe and the US.
This force is so strong that if there were no transportation costs, and
if the US and Europe had no other source of competitive advantage, such
as in technology, eventually it would be as if Chinese workers continued
to migrate to the US and Europe until wage differences had been eliminated
entirely. Not surprisingly, the neoliberals never advertised this consequence
of trade liberalization, as they claimed – one could say lied – that all
would benefit.
The failure of globalization to deliver on the promises of mainstream
politicians has surely undermined trust and confidence in the "establishment."
And governments' offers of generous bailouts for the banks that had brought
on the 2008 financial crisis, while leaving ordinary citizens largely to
fend for themselves, reinforced the view that this failure was not merely
a matter of economic misjudgments.
In the US, Congressional Republicans even opposed assistance to those
who were directly hurt by globalization. More generally, neoliberals, apparently
worried about adverse incentive effects, have opposed welfare measures that
would have protected the losers.
But they can't have it both ways: if globalization is to benefit most
members of society, strong social-protection measures must be in place.
The Scandinavians figured this out long ago; it was part of the social contract
that maintained an open society – open to globalization and changes in technology.
Neoliberals elsewhere have not – and now, in elections in the US and Europe,
they are having their comeuppance.
Globalization is, of course, only one part of what is going on; technological
innovation is another part. But all of this openness and disruption were
supposed to make us richer, and the advanced countries could have introduced
policies to ensure that the gains were widely shared.
Instead, they pushed for policies that restructured markets in ways that
increased inequality and undermined overall economic performance; growth
actually slowed as the rules of the game were rewritten to advance the interests
of banks and corporations – the rich and powerful – at the expense of everyone
else. Workers' bargaining power was weakened; in the US, at least, competition
laws didn't keep up with the times; and existing laws were inadequately
enforced. Financialization continued apace and corporate governance worsened.
Now, as I point out in my recent book Rewriting the Rules of the American
Economy, the rules of the game need to be changed again – and this must
include measures to tame globalization. The two new large agreements that
President Barack Obama has been pushing – the Trans-Pacific Partnership
between the US and 11 Pacific Rim countries, and the Transatlantic Trade
and Investment Partnership between the EU and the US – are moves in the
wrong direction.
The main message of Globalization and its Discontents was that the problem
was not globalization, but how the process was being managed. Unfortunately,
the management didn't change. Fifteen years later, the new discontents have
brought that message home to the advanced economies.
"... 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…
"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.
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
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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
I found it amusing that Goldman raised their price target (causing a rally in the
stock) hours before underwriting a capital raise that cause a decline in Tesla's stock.
Although, to be fair there are SEC rules that are very explicit, with severe consequences,
if Goldman Sachs' underwriting dept talked or leaked anything to their analysts.
Goldman Sachs does plenty of shady things to make a profit – like selling Mortgage Backed Securities
as AAA investments, and simultaneously, knowing they're crap, betting on them going bad (covered
in the critically acclaimed documentary "Inside Job"), or helping Greece hide their budget deficit
with accounting magic… so they can sell them debt… that they know will go bad.
However, as odd as it is, none of those actions were illegal. THIS would actually be illegal,
and Goldman Sachs is smarter than that. I'd guess it is a genuine coincidence.
On a separate note, I find it important to note that Tesla FIRST scouted out battery suppliers
to supplement their battery supply 1 DAY before announcing the amount of their capital raise.
My hypothesis, Tesla's accelerated Model 3 ramp-up meant that they will need a large supply
of additional batteries as the Gigafactory will not be able to accelerate it's schedule enough
to match the accelerated vehicle production ramp.
This also tells me that Tesla is confident enough in their accelerated Model 3 production schedule
that they needed to arrange a multi-million dollar contract with battery suppliers to supplement
their capacity until the Gigafactory can meet demand.
Although, to be fair there are SEC rules that are very explicit, with severe consequences,
if Goldman Sachs' underwriting dept talked or leaked anything to their analysts.
This is all about corruption of regulators and impunity of TBTF financial institutions under
neoliberalism - which is an immanent feature of neoliberalism aka "casino capitalism"…
Goldman's role in the growth of casino capitalism in the USA is similar to that of other players,
except for one thing: Goldman didn't believe its own hype. The now famous Rolling Stone magazine
article in 2009 by Matt Taibbi unforgettably referred to Goldman Sachs, the world's most powerful
investment bank, as a "great vampire squid wrapped around the face of humanity, relentlessly jamming
its blood funnel into anything that smells like money." (
http://www.forbes.com/sites/jakezamansky/2013/08/08/the-great-vampire-squid-keeps-on-sucking/
)
Impunity is epidemic in America. The rich and powerful get away with their heists in broad
daylight. When a politician like Bernie Sanders calls out the corruption, the New York Times
and Wall Street Journal double down with their mockery over such a foolish "dreamer." The Journal
recently opposed the corruption sentence of former Virginia governor Bob McDonnell for taking
large gifts and bestowing official favors - because everybody does it. And one of its columnists
praised Panama for facilitating the ability of wealthy individuals to hide their income from
"predatory governments" trying to collect taxes. No kidding.
Our major institutions, the ones that should know better, are often gross enablers of impunity.
Consider my alma mater, Harvard University, and its recent nuptial with hedge-fund manager
John Paulson. Paulson was the co-conspirator with Goldman Sachs of one of the most notorious
scams of the recent financial bubble.
Professional financial hackers have a lot of common with the organized crime. And not only
in respect to common addictions to cocaine and prostitutes. But there is a subtle difference:
financial hackers make it daily (and very lucrative) business to figure out ways to abide by
the letter of the law while violating its spirit. Although the claim that they do not break
the law has very little credibility. They do break the law, but at the same time their political
influence is big enough to keep them out of jail. In 2012 Lanny Breuer, then the head of the
Justice Department's criminal division openly admitted that. In a speech at the New York City
Bar Association he said that he felt that it was his duty to consider the health of the company,
the industry, and the markets in deciding whether or not to file charges. Which in case of
Goldman represents insurmountable obstacle to criminal prosecution.
In any case GS converted itself into a special type of TBTF company, the company that specialized
in hacking financial system. And in a large company internal politic can turn really destructive
both to the firm and society at large. In fact, in large companies there are people with very
high IQ at the top with personal traits that makes them more dangerous in comparison with bosses
of Mexican gangs. It also makes internal political battles more vicious. BTW, a lot of psychopaths
have above average IQ.
In a way the USA never had a subprime crisis. What we had was systemic, neoliberalism-induced
crisis that involves FED, government, congress, banking, ratings, insurance, investment and
financial industries (the banks were at the center of this crime syndicate and they were the
largest beneficiaries of the crimes committed), one manifestation of which was 2008 subprime
crisis. Large banks became huge, dominant political force and based on their political weight,
they hacked the financial system in the same way computer hackers hack computers systems to
suit their short term needs and first of all for enrichment of the brass (appetite for "make
money fast" schemes was greatly raised during dot-com crisis).
As Simon Johnson wrote in May 2009 the USA had a The Quiet Coup with banks becoming the most
favored and the most protected industry of the Congress. Financial system is essentially a
system of rules. If a rich and powerful organization is directed toward hacking the rules:
finding weaknesses and exploiting them it is undistinguishable from mafia in a very precise
meaning of the term (organize crime syndicate with strong ethnic component), only more sophisticated.
Again they are not gangsters in traditional meaning of this word, they are of a hackers, and
as such they are much more difficult to prosecute. As a comment to blog post at EconomistView
by "Eric" (Paul Krugman The Unwisdom of Elites) aptly stated:
Villains….who exactly? The principle reason that there have been few prosecutions of high level
bankers is that not so much that got done was illegal. Reckless, maybe. But even here is it
really reckless behavior if you have a belief - which turns out to be true - that public finances
will bear the downside risks on your behalf?
In hindsight it feels like these things should have been illegal, but the available serious
punishments, such as not bailing out AIG, not allowing various investment firms to become bank
holding entites, not backstopping the GSEs (read their debt issues and you'll see that nowhere
is a claim made for public backing), not taking first loss positions on Bear Stearn assets,
etc., etc., were foregone by voluntary actions by public officials.
Make peace with the truth that there will be no sweeping prosecutions, least of all by the
federal government of the USA.
"... 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.
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.
"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.
"... By James A. Kidney, former SEC attorney. Originally published at Watch the Circus ..."
"... Pro Publica ..."
"... Pro Publica's ..."
"... The New York Times ..."
"... The New York Times ..."
"... The New York Times ..."
"... The New York Times ..."
"... Dodd-Frank at best imposes generalized rules about bank size and other generic issues, rather than addressing the kinds of fraudulent actions that actually occurred. It is appropriate for the SEC or Federal Reserve to impose narrower changes in corporate practice to address specific kinds of fraud. They are called "undertakings" and are often imposed by civil settlements with the SEC or in litigated relief. It did not happen with the Big Bank frauds. ..."
"... The only reason to keep the information secret is to prevent embarrassment to the SEC or to those people who made decisions for the agency. Most of them left the SEC years ago. For public consumption, I have tried to redact all names of the non-supervisory personnel in the Division of Enforcement who worked on Goldman. I also must add that, as the emails show, for a period of time those dedicated investigators were excited about the notion of bringing at least a slightly broader action than their supervisors wanted. As is the case with much of the Division of Enforcement, the worker bees try hard and usually are fearless. It is their bosses who frequently suppress their enthusiasm for policy, political, or personal reasons. ..."
"... The author is trying very hard to be nice to the point of being delusional. This is criminality and corruption through and through, and it didn't end in '08. Don't be sad… get mad. ..."
"... This man has risked a lot to do what he did. He's lost more than many of you will realize. If he can't just crap on the old life and the old profession, please, cut the man a little slack. You don't want to be him. ..."
"... James A. Kidney, former trial attorney with the Securities and Exchange Commission, retired from the SEC in 2014 at the age of 66 after 24 years working there. Looks like he had a full career, although had to put up with a lot of bullshit, and possibly soured some relationships on his way out. ..."
"... Very similar situation here. Going on 50, unemployed in my chosen field, etc. And yes, its hard to just walk away sometimes… I have to keep my mind focused ahead instead of looking back. ..."
"... I know other whistleblowers and internal dissenters who wound up losing their jobs who initially blame themselves, than come to accept that the system in which they operated was fundamentally corrupt, that even if some people locally really were trying to do the right thing, it was bound to either 1. go nowhere, 2. be allowed to proceed to a more meaningful level if it was cosmetic or served some larger political purpose or 3. got elevated because the organization was suddenly in trouble and they needed to burnish their cred in a big way (a variant of 2, except with 3, you might have a something serious take place by happenstance of timing). ..."
Yves here. Two things struck me about Jim Kidney's article below. One is that he still wants to
think well of his former SEC colleagues. I know other whistleblowers and internal dissenters who
wound up losing their jobs who initially blame themselves, than come to accept that the system in
which they operated was fundamentally corrupt, that even if some people locally really were trying
to do the right thing, it was bound to either 1. go nowhere, 2. be allowed to proceed to a more meaningful
level if it was cosmetic or served some larger political purpose or 3. got elevated because the organization
was suddenly in trouble and they needed to burnish their cred in a big way (a variant of 2, except
with 3, you might have a something serious take place by happenstance of timing). Kidney does criticize
corrosive practices, particularly the SEC stopping developing its own lawyers and becoming dependent
on the revolving door, but his criticisms seem muted relative to the severity of the problems.
Number two, and related, are the class assumptions at work. The SEC does not want to see securities
professionals at anything other than bucket shops as bad people. At SEC conferences, agency officials
are virtually apologetic and regularly say, "We know you are honest people who want to do the right
thing." Please tell me where else in law enforcement is that the underlying belief.
By James A. Kidney, former SEC attorney. Originally published at
Watch the Circus
The New Yorker and
Pro Publica websites today posted an article by Pro Publica's Jesse Eisinger
about the de minimis investigation by the Securities and Exchange Commission into the conduct
of Goldman Sachs in the sale of derivatives based on mortgage-backed securities during the run-up
to the Great Recession of 2008. The details of the SEC's failure to aggressively pursue Goldman in
the particular investigation, Abacus, and its refusal to investigate fully misconduct by Goldman
and other "Too Big to Fail" banks, stands not only as a historic misstep by the SEC and its Division
of Enforcement, but undermines the claim that the Obama Administration has been "tough on Wall Street."
The Pro Publica version contains links to a few of the documents I provided.
No one in authority who was involved in the Goldman investigation ever gave me an explanation
for why the effort was so slight. Mr. Eisinger's article doesn't offer any explanation from the one
investigation participant brave enough to comment. The details of the investigation into Abacus at
my level as trial counsel, which I provided to Pro Publica earlier this year, compels the
conclusion that the SEC, its chairman at the time, Mary Schapiro, and the leadership of the Division
of Enforcement were more interested in a quick public relations hit than in pursuing a thorough investigation
of Goldman, Bank of America, Citibank, JP Morgan and other large Wall Street firms.
Although the emails and documents I produced to Pro Publica stemming from my role as
the designated (later replaced) trial attorney for the Division of Enforcement are excruciatingly
boring to all but the most dedicated securities lawyer, even a lay person can observe that the Division
of Enforcement was more anxious to publicize a quick lawsuit than to follow the trail of clues as
far up the chain-of-command at Goldman as the evidence warranted. Serious consideration also never
was given to fraud theories in any of the Big Bank cases stemming from the Great Recession that would
better tell the story of how investors were defrauded and who was responsible, due either to dereliction
or design.
Instead, the SEC restricted its investigation to the narrowest theory of liability, had to be
pressed (by me) to go even one short rung above the lowest level Goldman supervisor in its investigation
(which took months to push through, though investigative subpoenas are frequently issued on far less
in far smaller cases) and finally dropped other investigations of Goldman in return for a $550 million
settlement
announced July 15, 2010. To my knowledge (I retired in March 2014), the SEC never again pursued
Goldman for its mortgage securities fraud or other major fraud. There is no evidence on the SEC website
that it did so.
At a minimum, it can be said that the SEC left 90 percent of the money on the table at a time
when a more aggressive investigation of the company, as well as others, could have counted for something
by disclosing, in a detailed court complaint, Wall Street wrongs that might have helped policy makers
better address the subject and allow damaged individuals and entities to bring their own lawsuits.
It is very important to emphasize emphatically several points. First, I have zero evidence, and
would be very surprised, if any of the individuals at the Division of Enforcement, including senior
supervisors or the SEC chairman or associate commissioners, acted unlawfully or were motivated principally
to protect Goldman and other big banks. All of these people appeared well-intentioned from their
point of view, even they never really explained, to me, or to many others at the Commission, their
motives in limiting investigations. The most senior level supervisors left more lucrative jobs in
the private sector to head the Division of Enforcement, taking plum jobs but at significant personal
sacrifice. (They then returned to even more lucrative employment or even more high-profile public
positions.) All of them were gentlemen. These factors make it all the more surprising that I never
got a clear answer as to why the investigation was so constipated, as it obviously was. Its range
was clearly limited from the outset: we will sue the bank and not look hard for evidence of individual
participation beyond the lowest levels.
By the same token, it is unfair to assume as a fact that any of the individuals at Goldman not
sued, or anyone at Paulson & Co., violated the securities laws, civilly or criminally. Like any citizen,
they are entitled to a day in court. Absent such opportunity, they are innocent of any wrongdoing.
Arguments in my internal correspondence that evidence was sufficient to sue should be viewed only
as that - arguments.
So my point in releasing these documents to Pro Publica is not to chastise or hold up
to public criticism those involved at the SEC, Paulson & Co. or Goldman, though criticism of the
process and of the underlying financial conduct certainly is inevitable. All of these institutions
have substantial influence in the investment industry. Rather, it is to bring to light the actual
conduct of one of several SEC investigations into Big Bank fraud leading up to the 2008 financial
crisis.
As I told Mr. Eisinger when I met him, I hoped he would go to the individuals in charge of the
SEC investigation at the time and find out why the investigation was so limited. I have spent six
years wondering what is the true answer to that question. Perhaps there were sound reasons, other
than the urge to get out a quick press release, which led experienced criminal prosecutors with histories
in Wall Street to smother a major investigation by limiting it to the lowest level employee possible,
to express total resistance to even investigating further up the chain of command, and ignoring without
serious explanation and analysis what I and others, including my own immediate supervisors, viewed
as the more appropriate theory for civil prosecution. I hope there are such reasons. As a trial attorney
at the SEC for over 20 years, I bled SEC blue. I believed that the agency usually tried to do the
best it could, using analog era procedures and processes to combat fraud in a digital age. I am saddened
to release this information. But the notion that "the Administration was tough on Wall Street" must
be addressed by facts, not press releases and self-serving interviews, else the system's problems
cannot be adequately addressed and repaired to deal with the next financial crisis.
Not only is the issue of how the financial sector enforcement agencies handled the wrongs of the
Great Recession an important political issue, but it is important to history. It is important that
the facts not be shielded from the public so that we can all learn for the future. And it is a melancholy
thought that, presented with the opportunity for a rigorous investigation and airing of facts in
civil or criminal proceedings gone, history will be denied a fairer story of both the financial crisis
itself and how the government responded.
As
many news organizations have noted , the taxpayer and Goldman shareholders will pay the combination
of penalties and repayments in the DOJ settlement. No individual was named as liable in the civil
settlement with Goldman nor in any of the other similar, and even larger, financial settlements entered
into with the Department of Justice, all of which are vastly greater than what the SEC obtained in
its "quick hit, one and done" enforcement actions. DOJ must be credited with what appears to have
been a far more thorough investigation of wrongdoing than the SEC performed, but the public is properly
mystified that no individuals were charged, criminally or civilly, although the DOJ press releases
contains the usual caveat that "the investigation continues."
The settlements with Goldman and other Big Banks were resolved under the Financial Institutions
Reform, Recovery and Enforcement Act (FIRREA), which allows the Feds to ignore the normal five-year
statute of limitations for fraud, but does not permit suit by private party victims. As has been
the practice with DOJ when dealing with Wall Street, no criminal charge was brought. In fact, no
complaint was filed in any of these cases. Instead, DOJ entered into contractual arrangements with
the banks. Failing to fulfill their obligations under the contract would subject them to civil enforcement
as a breach of contract matter, not a contempt charge in federal District Court.
Contrary to claims by politicians, it is clear that the Obama Administration has not been hard-hitting
on Wall Street fraudsters. The large fines obtained by the Department of Justice, while a short-term
pinch, are simply a cost of doing business. Relying on fines to penalize rich Wall Street banks,
which, after all, specialize in making money and do it well, if not always honestly, is like fining
Campbell Soup in chicken broth. It costs something, but doesn't change anything in the way of operations
or personnel.
Despite billions in fines representing many more billions in fraud, the enforcement agencies of
the United States have been unable to find anyone responsible criminally or civilly for this huge
business misconduct other than a janitor or two at the lowest rung of the companies. Nor have they
sought to impose systemic changes to these banks to prevent similar frauds from happening again.
Yessir, according to the Obama administration, Goldman Sachs, JP Morgan, Bank of America, Citibank
and other institutions made their contributions to tearing down the economy, but no one was responsible.
They are ghost companies. And nothing needs to be done to prevent such intent or dereliction in the
future.
Law enforcement by contract? Clearly, the banks made it a condition of settlement that no complaint,
civil or criminal, be filed. That might gum up the works by requiring state regulators to take action
under their own rules, or cause other collateral consequences.
Ah, say the defenders of the status quo, don't forget about Dodd-Frank, the unwieldy legislation
passed by feckless Democrats influenced by big money contributors and their own fear of appearing
too aggressive (a particular Democratic Party contagion). Dodd-Frank was and is a virtual chum pool
for Wall Street lawyers and lobbyists, leaving most of the substance to regulatory agencies such
as the SEC and the Federal Reserve, who for years have been significantly captured by those they
are supposed to regulate. The private sector lawyers and lobbyists have open doors to these places
to "help" write the rules and add complexity, which they later complain about in court, challenging
those same rules as too complex.
Dear citizen, just remember this: complexity favors fraud, and certainly favors Wall Street and
corporate America. You can't understand the rules and neither can Congress or all but the most dedicated
experts. That's a lot of room to disguise misdeeds. To take a current example, which came to my attention
just before completing this post, Congress is trying to use sentencing reform, generally thought
of as intending to remove inequities from the criminal justice system, to also make it even tougher
to prosecute and punish white-collar crime. Is this why the Koch Brothers suddenly show such public
attention to the poor and needy by favoring such legislation?
See this discussion of adding the "mens rea" requirement to such legislation. Burying an important
but legalistic issue in otherwise liberal leaning legislation is a current example of disguising
lax enforcement of white-collar crime in a complicated package. As one Democratic congressman suggested,
how can a liberal vote against sentencing reform? The explanation of the badger buried in the woodpile
is too complicated for the average voter.
Not coincidentally, adding a requirement to the law that it is a defense to either the crime itself
or to sentencing that "I didn't know my acts were against the law" is a get out of jail free card
as the complexity of laws addressed to ever more sophisticated business misconduct grows. Wall Street
clearly has shown no shame in using the defense that "no one knew". Can't blame them. It has worked
so far. Maybe they don't even need new legislation.
I was told repeatedly when I entered the Goldman investigation that synthetic CDOs were just too
complex for me to understand. Of course, it appeared to be plain vanilla fraud selling a product
designed to fail but nicely packaged for chumps to buy. Claims of complexity hide many easily understood
sins.
At least for the major sins, we don't need even more complex regulations. Instead, put leadership
in place who will aggressively enforce the laws we have already. That would raise plenty of eyebrows
and put some bums in prison, or at least make them pay civil and criminal penalties personally. As
many have noted, prison or, at least, personal financial liability, beats corporate concessions every
time and pays back in future reluctance to break the law. The country should try it sometime.
So back to little me, a small and ineffective cog in the larger system. Why is this release of
documents so long after the investigation?
My friends know that I have been upset since 2010 about the way the SEC handled the Goldman case
and, in my view (confirmed by other trial lawyers), that it became a template for other SEC civil
suits against the Big Banks. In 2011 I wrote an anonymous letter to The New York Times complaining
about the lack of investigative effort by the Division of Enforcement and the impact of the "revolving
door" bringing Wall Street defense lawyers into the highest reaches of the SEC. This is a practice
that Obama has continued at most departments and agencies having to do with the financial system,
following in Bill Clinton's footsteps. The New York Times letter was based entirely on publicly
available information.
I was dismayed to not find any follow-up to my letter in The New York Times . I gave
up trying to bring attention to the investigative lassitude of the agency. Interest appeared to be
over.
A year after I retired, I sent a copy of the letter to The Times , under a cover letter
identifying myself. One of the addressees on the original letter called and told me the original
letter never was received. The caller suggested that was because I misaddressed it to the old location
of The New York Times . I felt foolish, of course, but I guess that in 2014, when the letter
was finally received, The Times didn't see fit to follow-up the information even knowing
its source. This was another indication to me that the time for debate over the law enforcement treatment
of wrong doers on Wall Street had passed.
Once, years earlier and only for a brief time, the SEC was an agency that was at least sometimes
fearless of Wall Street institutions. In those days, the directors of the Division of Enforcement
were home-grown, not imported from Wall Street law firms. After 1996, that ended. Every director
since has been nurtured as a Wall Street defense lawyer. The decline in performance has followed
an expected arc. No one has seemed bothered by this. It seems the phrase "lawyers represent client
interests" is sufficient explanation to insulate this practice from critics. In this view (pushed
by lawyers), lawyers are the only people in America who are not influenced by their work experience,
including friendships and defense of client practices. They are SO exceptional! So give it up, Jim,
I finally told myself. It's the nature of Washington to put foxes in hen houses and claim they are
protecting the fowl.
But in April 2015, Sen. Bernie Sanders announced his presidential candidacy, based principally
on anger over how Wall Street has escaped being held seriously responsible for its misdeeds. If you
credit Sanders with nothing else, praise him for not letting go of the notion of justice for those
who suffered and those who caused pain and anger for millions. Yes, the banks are not solely responsible
for the Great Recession, but they contributed more than their fair share and leveraged immensely
the damage initially caused by others.
Sanders was not treated seriously. The publications I read made it clear that Sanders was, like
Donald Trump, a flash in the pan. Jeb Bush and Hillary Clinton would be nominated. Anger against
Wall Street and inequality were issues, but not worthy vehicles for a political campaign. Nothing
here. Move on.
It turns out that the ravages caused by Wall Street are the gift that keeps on giving. As Sanders
campaigned with far more success than predicted, and Secretary of State Clinton defended President
Obama as "tough on Wall Street," it was evident that my small contribution to correcting the record
might be timely.
So here it is.
Do I think Obama is responsible for the ineffective and embarrassing lay downs at the SEC and
DOJ? Yes, I do. I have no idea if the President communicated to his law enforcement appointees that
they should "go easy on Wall Street." Rarely is such overt instruction necessary in Washington. But
it is not hard to believe that in some fashion he did send such signals, since he came into office
with a mantra of letting bygones be bygones, including in the far more important arena of the false
narratives for invading Iraq.
In any event, the chairman of the SEC and the attorney general are appointed by the President.
At a minimum, we can say with certainty that Obama was satisfied with their performance. It is difficult
to conceive that, as a Harvard educated lawyer who also taught law at the University of Chicago,
it never crossed his mind how massive civil or criminal misconduct could go on without the supervision
or knowledge of at least mid-level executives. Certainly, the public criticism was brought to his
attention. His response was to create a joint task force on the subject of fraud in general. Its
main visible public function is to collect all the press releases on fraud prosecutions, including
small-time fraud, on one website . It also
offers advice to "elders" on how to avoid fraudulent scams. The pro forma mention of the
task force in DOJ's announcement of the Goldman settlement signals that the Task Force doesn't do
much. Again, law enforcement by press release.
The alternative possibility, never mentioned because it is preposterous, is that big Wall Street
firms so lack supervision of their lower level employees that fraud on a huge scale can be conducted
without the knowledge of even mid-level executives. At the SEC, at least, such a conclusion should
call for application of its "regulatory" function to impose supervisory conditions on the banks.
No such action was ever undertaken. Instead, it was "pay up some money and nevermind."
Dodd-Frank at best imposes generalized rules about bank size and other generic issues, rather
than addressing the kinds of fraudulent actions that actually occurred. It is appropriate for the
SEC or Federal Reserve to impose narrower changes in corporate practice to address specific kinds
of fraud. They are called "undertakings" and are often imposed by civil settlements with the SEC
or in litigated relief. It did not happen with the Big Bank frauds.
I believe that the American public is entitled to accurate information about how their government
works, including the important regulatory agencies. One way to do this is to fully disclose how the
sausage is made, especially when the process is defective. Self-promoting press releases swallowed
by a fawning business press is not sufficient. I knew I would not disclose any non-public information
about the Goldman investigation while the lawsuit against Fabrice Tourre was pending. He was the
one guy at Goldman the SEC sued personally. In fact, I think he was the only guy employed by any
of the big banks sued personally. (Another fellow who worked with the banks - not for the banks -
was sued in another case. He was found not liable, with the jury asking how come higher-ups were
not in the dock and urging the investigation to continue. It wasn't.) The Tourre case concluded a
few years ago with a verdict against the defendant. All appeals are exhausted. The statute of limitations
has expired for private actions. Disclosure of the information I had can do no harm to the public
or to pending litigation.
The only reason to keep the information secret is to prevent embarrassment to the SEC or to
those people who made decisions for the agency. Most of them left the SEC years ago. For public consumption,
I have tried to redact all names of the non-supervisory personnel in the Division of Enforcement
who worked on Goldman. I also must add that, as the emails show, for a period of time those dedicated
investigators were excited about the notion of bringing at least a slightly broader action than their
supervisors wanted. As is the case with much of the Division of Enforcement, the worker bees try
hard and usually are fearless. It is their bosses who frequently suppress their enthusiasm for policy,
political, or personal reasons.
As final egotistical end note, I must say that, despite all of my personal reservations about
his dedication to effective law enforcement in the financial sector, I voted for the President twice.
I will vote for whoever is the Democratic nominee. But I ask myself: Is this the best that two political
parties given de facto monopoly over selection of presidential candidates can do?
Whoever is nominated and elected, Republican or Democrat, I hope that he or she will recognize
the need to end the practice of hiring Wall Street personnel to run our financial enforcement agencies.
They should begin by looking to home-trained personnel to lead the major departments and agencies,
such as Treasury, the SEC and the Department of Justice, including the chief of the Antitrust Division.
These are the people who are responsible for these institutions on a daily basis and also understand
the nature and importance of their mission. They have a career stake in doing an effective job. Outsiders
are, in general, more interested in resume polishing for the next private job. Additionally, much
great talent leaves these agencies for their own more lucrative private careers when they see their
own chances for advancement blocked by outsiders or their energies trying to fairly but aggressively
enforce the law sapped by timid leadership.
One party has chastised our government on every occasion for nearly 40 years and shows no intention
of reining in Big Business or Wall Street. Directly or by implication, these attacks tarnish government
employees in general, making a public service career less attractive to our most talented citizens.
The other party has been indifferent or ineffective in its defense of civil service and has addressed
financial sector wrongs by adding to the complexity of the system rather than cutting through it.
As a result, some of our businesses are above the law.
Something has got to change. It will. The question is, will it be for the better?
The author is trying very hard to be nice to the point of being delusional. This is criminality
and corruption through and through, and it didn't end in '08. Don't be sad… get mad.
A little history: I was hired, first as an adjunct, then a tenure-track professor, by the interdisciplinary
Freshman teaching unit at my old university. Two years before I would have come up for tenure
(and gotten it) they axed the program and switched me, against its will, to the History Department.
And they reset my tenure clock to zero. Long story short, they were never going to tenure me.
So I slogged on and earned my pay and got my two kids through high school. By then, my wife wanted
out of the suburbs and said she was leaving, preferably with me, but leaving. So we moved to the
country. This cut me off from the academic life (and nice $72,000 a year paycheck) that I had
struggled for years to enter and excel in.
So what? So, It's gone. I'm cut off. My intended life's work is ruined. At 51 I'm an unemployed
naval historian with two books and seven refereed journal articles and I can't get an interview
for a full-time job at a community college. How painful is this? It's murder. Hurts all the time.
No more exciting lectures to give. No more university library at my beck and call. No more access
to journals. No more conferences. It's an occasional one-off course and driving a delivery van.
This man has risked a lot to do what he did. He's lost more than many of you will realize.
If he can't just crap on the old life and the old profession, please, cut the man a little slack.
You don't want to be him.
Mr Levy, I am very sympathetic to your situation – long story short, I was in the forefront
of the late 70s to the present, layoffs in various industries where I found myself game-fully
employed. I too, no longer believe I will ever be employed full time at any job.
But I argue that it is not that the gods do not favour us; it is that we are the outcome of
bad gov't policies and unregulated (regulated for the consumer) businesses practices. Hence, my
lack of sympathy or willingness to tolerate breast beating (see my April 24, 2016 at 6:44 am posting)
by those who put us here.
James A. Kidney, former trial attorney with the Securities and Exchange Commission, retired
from the SEC in 2014 at the age of 66 after 24 years working there. Looks like he had a full career,
although had to put up with a lot of bullshit, and possibly soured some relationships on his way
out.
Very similar situation here. Going on 50, unemployed in my chosen field, etc. And yes,
its hard to just walk away sometimes… I have to keep my mind focused ahead instead of looking
back.
Are there any yacht clubs nearby you? There is like 4 of them within 10 minutes of me (I'm
on the Great Lakes) You could teach sailing and rigging no doubt. Bonus: Union crane operators
are required to know their rigging – they may need teachers too.
More than ever, I am convinced the capitalist system needs to be rejected as the means determining
how goods and services are delivered. The injustice and inequality generated are too great. Finding
a positive expressive outlet for this dissatisfaction will require leadership- and a new vision
for the future.
The amount of social damage being inflicted by the elite is almost beyond comprehension. Since
they have successfully insulated themselves form the consequences of their actions, they remain
aloof and uncaring for the plight of ordinary people, not to mention the health of the planet.
This system will continue to cut more and more people off from the benefits of collective social
action and effort. The work of the many, supporting the desires of the few cannot stand.
We all have to decide the level of inequality we are willing to live with. How people answer
this question will naturally sort them into common communities. Leave the isolated gated communities
to the elite. Careerism, like capitalism, is a dead end if your position cannot be guaranteed.
The amount of talent and passion for work wasted under the current system is another undercounted
fact. Sustainability and democracy are not compatible with capitalism.
Getting mad is only the beginning. The anger must be directed in some productive fashion. Any
resistance to the current order must have broad social support and that support only has strength
if self-reliant. Building these self-reliant structures is what the future will hold. If the plutocrats
can build a world for themselves, why can't the common man. It only takes work,discipline, and
control over the means of production.
Workers without power, influence, and the means to obtain life necessities are slaves. Is the
best the human mind can conceive a life of benevolent serfdom?
By the way, I believe I would enjoy sitting in on one of your lectures. I'm sure I would learn
much- and be a better man for it.
@James Levy … sorry to hear. I know a few who have been chewed up by the academic meat grinder.
I hope you can find a productive outlet for your scholarship. Exile is hard.
"The explanation of the badger buried in the woodpile is too complicated for the average voter."
That's it! Stop right there! I will not let you (speaking to the author) BS your guilty conscience
over my internet link. The average voter clearly knows they are getting screwed, that Wall Street
and the voter's own bank is ripping the voter off, and most clearly, that the justice department,
from state and local to federal, is enabling this injustice.
You sir, are swimming with sharks. Your morality is "is it legal?", your justification is "for
the shareholder". Therefore, you refuse to see the mendacity and instead excuse it for ignorance.
I know other whistleblowers and internal dissenters who wound up losing their jobs who
initially blame themselves, than come to accept that the system in which they operated was fundamentally
corrupt, that even if some people locally really were trying to do the right thing, it was bound
to either 1. go nowhere, 2. be allowed to proceed to a more meaningful level if it was cosmetic
or served some larger political purpose or 3. got elevated because the organization was suddenly
in trouble and they needed to burnish their cred in a big way (a variant of 2, except with 3,
you might have a something serious take place by happenstance of timing).
Wow, that's a mouthful – and it's only one sentence. Whilst I love your pieces, I've noticed
that many of the articles – at least the run up summation to the articles – tend to be written
in a stream-of-consciousness style that, frankly, is hard to digest. This seems to be the case
more now than in the past. I don't know if you're harried or on an impossible schedule, but could
you please make your syntax easier to read? Thanks from a long-time reader and donator.
Because it's a Sunday and I have time to goof off, one potential revision - b/c I believe what
Mr Kidney has to say is important enough for me to spend a few minutes on one potential suggestion.
I've amended and added what I hope are accurate meanings:
----
Focusing on these as the key subject /verb pairs: I know (other whistleblowers) (other whistleblowers) [lost their jobs] (other whistleblowers) [blamed themselves – initially]
(other whistleblowers) [finally… accept] the system in which they operated … [was corrupt]
… even if… (some employees) tried to [be competent]
(It - there's a problem with 'it' as the subject, because we are unclear what 'it'
refers back to - I'll interpret 'it' as 'investigating fraud' ) was bound to…
-------------–
I know other whistleblowers and internal dissenters. They wound up losing their jobs.
Initially, they blamed themselves, until they finally came to accept that the system in which
they operated was so fundamentally corrupt that they could not retain a sense of their own integrity
while working within the organization.
Despite the fact that some people really were trying to do the right thing, for reasons that
I will explain, investigating fraud was bound to go in one of only three directions:
1. fraud would not be investigated at all,
2. fraud investigation would serve the agency's need for better public relations - in other words,
the appearance of fraud investigation would be allowed to proceed, but only if it was merely cosmetic
(or served some larger political purpose), or else
3. fraud investigation became temporarily elevated, but only because the organization* was suddenly
in trouble – and consequently, needed to burnish its credibility by actually investigating fraud.
(Although 3 is a variant of 2, in the third option, credible fraud investigation could occur
if, and only if, political necessity enabled competent SEC employees to actually investigate fraud
in order to maintain the reputation of the SEC).
[NOTE: *It's not entirely clear here whether 'the organization' is the target business, or
whether it is the SEC (which would need to burnish it's cred in the face of bad publicity)]
------------
Not sure how close I came to the author's intended meanings, but I thought that I'd give it
a shot.
The sentence parses correctly even though it is long. Stream of consciousness often does not
parse correctly, plus another characteristic is the jumbling of ideas or observations. The point
is to try to recreate the internal state of the character.
For instance, from David Lodge's novel "The British Museum Is Falling Down":
It partook, he thought, shifting his weight in the saddle, of metempsychosis, the way his
humble life fell into moulds prepared by literature. Or was it, he wondered, picking his nose,
the result of closely studying the sentence structure of the English novelists? One had resigned
oneself to having no private language any more, but one had clung wistfully to the illusion
of a personal property of events. A find and fruitless illusion, it seemed, for here, inevitably
came the limousine, with its Very Important Personage, or Personages, dimly visible in the
interior. The policeman saluted, and the crowd pressed forward, murmuring 'Philip', 'Tony',
'Margaret', 'Prince Andrew'.
More generally:
The Stream of Consciousness style of writing is marked by the sudden rise of thoughts and
lack of punctuations.
The sentence may be longer than you like but this is not stream of consciousness. A clear logical
structure ("first, second, third") is the antithesis of stream of consciousness.
I fail to see why fraud is not prosecuted. We can get cute with fancy words but fraud is clear
and simple. Also – Enron results in SARBOX which seems to be clearly ignored. Yves – do we know
of any SARBOX prosecutions? Clinton started deregulation, Bush implemented deregulation and Obama
maintains it. No wonder the kids are mad. The financial industry makes the Koch brothers look
like pikers.
There is actually a high legal bar to prosecuting fraud.
I have written at length re Sarbox and the answer is no. And under Sarbox, you don't need to
prosecute, you can start with a civil case and flip it to criminal if you get strong enough evidence
in discovery. There was only one case (IIRC, with Angelo Mozilo) where the SEC filed Sarbox claims,
one in which it also filed securities law claims. The judge threw out the Sarbox claims with no
explanation. I assume it was because the judge regarded that as doubling up: you can do Sarbox
or securities law (the claims to have some similarity) but not both. But the SEC as it so often
does seems to have lost its nerve after that one.
I don't know if an election would have consequences and if a new administration headed by Sanders
would make it the SEC more responsible to the taxpayers and not the investors / banks.
It only took a decade for Markopolos to have his ponzi scheme information read by SEC.
I want to like this guy, I really do. But then he goes and says stuff like this:
The most senior level supervisors left more lucrative jobs in the private sector to head
the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They
then returned to even more lucrative employment or even more high-profile public positions.)
All of them were gentlemen. These factors make it all the more surprising that I never got
a clear answer as to why the investigation was so constipated, as it obviously was.
So he doesn't understand how the revolving door works…or he does but he's being purposefully
obtuse about it. Sacrifice my ass! Gentleman my heiny! And claiming that there's no proof of criminality
when, as is pointed out above, Sarbanes-Oxley was obviously violated isn't helping things either.
Listen dude, pick a side. It's either the American people or Wall Street crooks and their abettors
in government. You don't get to have it both ways. This kind of minimization and wishy-washyness
is only helping the crooks. More disappointing than I exepected.
these kinds of articles are nothing more than defensive measures against a growing public
rage !!!
I don't actually agree. I think the guy feels a little guilty for not doing more, now he's
trying to salve his conscience. Still, he can't quite bring himself to admit that the people he
was working for may well have been criminals. They were just so nice!
Self-reflection is not comfortable, and most people don't have much tolerance for it. I think
this guy's legitimately trying to do the right thing (not cover up for criminality) it's just
that it's really psychologically difficult to admit certain aspects of reality. It's not like
he's the only one.
I find it telling that suddenly now (within the last year or so) that all these people ( people
in high finance, their underlings, traders, hedge funders, and other assorted enablers of massive
fraud upon the general public, are suddenly having a 'come to hayzeus' epiphany! I'm not buying
whatever faux sincerity they're trying to project…….
They've screwed millions of trusting people with their fraudulent grifting!
> I find it telling that suddenly now (within the last year or so) that all these people […],
are suddenly having a 'come to hayzeus' epiphany!
Especially when it comes after a fat retirement and a lengthy career of going along. I have
much more respect for people who really did put their daily bread on the line, and there are plenty
of those people, a lot of whom Obama sent to jail. So, yeah, great, you finally told the truth…
but where were you when the country needed you to speak out?
Couldn't we use civil forfeiture to go after them regardless of whether we can prove any actual
crime? What's good for the average citizen is surely good for the elite banker…
It's a good thing they're gentlemen. I don't know if I could handle all the looting and self-dealing
if it came from common ruffians. Truly we are fortunate to be in such hands, my fellow countrymen!
According to Bill Black in a ted talk 2014. After the Savings and loans debacle, where the
regulators went after the worst of the worst criminals, they made 30.000 criminal referrals and
1000 procecutions with a 90% succes rate.
Now after the 2008 crisis, which was 70 times bigger causing 10 million job losses and costing
11 trillion dolllars, the Obama administration has not made one single criminal referral.
https://www.youtube.com/watch?v=-JBYPcgtnGE
Today I fell over some information about the IMF, that the organization is exempt from legal
prosecutions and taxes. Can this be true?
From the article: "The employees who bare the IMF badge are pretty much exempt from all forms
of government intervention. And, according to LisaHavenNews, the IMF "law book," the Articles
of Agreement lists the reasons and requirements for exclusion from government mandate."
Thank you, I was hoping someone would mention Bill Black.
I'm a software/hardware product/business development engineer. In 2008, after 20 years of reading
the WSJ and stunned by the sellout to Murdoch, I went to the internet independent media (IM) to
follow the 'economic crisis'. Within a few months it was clear to me 1) I had learned nothing
of substance reading the WSJ, 2) the U.S. MSM, education system, and government are thoroughly
captured/corrupt.
Being a 'reader' (note: I don't know anyone who reads non-fiction) for me this 'worldview transition'
was quite natural, nothing really surprised me, and it was a big relief to discover such good
information/analysis so easily available on the internet. However, eight years later, I have yet
to meet a single person who has rejected the MSM or tuned in to what's happening, via the IM or
otherwise. In fact, after leaving the university in 1990, I have yet to meet a single person with
any basic understanding of (or the slightest interest in, or concern about) the extreme institutional
criminality of the the Savings & Loan Crisis, Asian Economic Crisis, Technology Bubble, the 2008
crisis, or the many economic/military wars-of-aggression methodically destroying one government/economy/country
after another.
To me, nothing made the global/economic/organized/mafia criminality more clear than the 2008/2009
articles by Bill Black. Back then I again foolishly assumed people would rally behind Dr. Black
to reestablish basic law enforcement against yet another obvious largest-ever "epidemic" of organized
crime. Looking back, the highly organized (and very successful) criminality of the Paulson/Obama/Geithner/Bernanke/etc.
cabal was truly an amazing operation to behold. Perhaps the most shocking news came in 2010 when
numerous studies confirmed that the top 7% of Americans had already "profited" from the economic
crisis, that the criminally organized upper class had not only increased their net wealth but,
more importantly, had increased their rate of wealth accumulation relative to the bottom 93%.
Still, to me, infinitely more amazing, the bottom 93% didn't, and still don't, seem to care, or
if they do, they've done absolutely nothing to even start to fight back.
Today, when reading these articles, I'm astounded how completely meek and 'unorganized' the
bottom 93% are compared to the extremely vicious and organized top 7%. Year after year the wealthy
elite, who's core organizing philosophy is "take or be taken, kill or be killed", increasingly
wallow in dangerously high and unprecedented levels of wealth accumulated by blatant/purposeful/methodical/criminal/vicious
looting while their victims, the bottom 93% 'working class', do absolutely nothing (what are they
doing?…. other than playing with their phone-toys, facebook, video games, movies?). At this point,
the main (only?) reason I continue to 'read' is to perhaps someday 'behold' the working class
93% attempting to educate themselves and consequently 'organize' to defend themselves.
I sympathize with Mr. Kidney and applaud him for doing what he can to try to rectify this abhorrent
situation. I also applaud him for placing the blame squarely on Obama and his reasons for doing
so are solid.
What I find much harder to understand is why he would vote for Obama even in 2012 after it
became apparent that Obama was ultimately responsible for stonewalling his investigation, and
his complete willingness to vote for the corrupt Democrat party no matter what going forward.
As long as enough people continue to have that attitude things will never change until the
whole system comes crashing down. I'd much rather see an FDR-type overhaul of the system rather
than a complete collapse as I'm rather fond of civilization. But I've come to expect the latter
rather than the former so I'll be reading my weekly Archdruid report for the foreseeable future.
The most senior level supervisors left more lucrative jobs in the private sector to head
the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They
then returned to even more lucrative employment or even more high-profile public positions.)
All of them were gentlemen. These factors make it all the more surprising that I never got
a clear answer as to why the investigation was so constipated, as it obviously was.
Yes poor babies for that "significant personal sacrifice" that resulted in "even more lucrative"
private employment. The author explains the problem then scratches his head over what it might
be.
In a rational world there would be a strict separation between the regulated and the regulators.
The government would hire professional experts at decent salaries and they never ever would be
allowed to then move on to jobs with the regulated. Clearly the assumption underlying our current–irrational–system
is that these high status technocrats are "gentlemen" with a code of honor. Welcome to the 19th
century. Those long ago plutocrats in their stately English mansions were all gentlemen and therefore
entitled to their privileges by their superior breeding. They were the better sort.
Meanwhile for lesser mortals it seems totally unsurprising when laws are ignored because you
hire your police from the ranks of the criminal gangs. No head scratching needed.
Reid Muoio (boss of kidney @ $EC) has a brother at a major tall bldg law firm whose job is
to help fortune 500 companies deal with D & O insurance issues…so when in the article Muoio says
"He" did not go thru the revolving door…it was fraud by omission…his brother sits on the opposite
side of these private settlement agreements…
so is Kidney unaware…leaving us to maybe accept he was never much of an investigator…or just
forgot to point it out for us…
The world is full of govt types who tell us TINA…
The wealthy Elliott Spitzer told us he would have loved to help "the little people" but the
OCC and then scotus with waters v wachovia…except scotus ruled only direct subsidiaries get protection
and the OCC specifically said the trustee operations of OCC regulated entities are also not covered/protected…
Does anyone else think this was insider demolition – not just the failure to prosecute, but
the whole financial implosion in the first place? Who writes up nothing but "shitty deals" – all
the while saying to each other: IBGYBG and survives to slink away? They must have had a heads
up that the financial system as we had known it in the 20th c. was done. They had a heads up and
then they got free passes. My only question is, Wasn't there a better way to bring down the system,
an honest way that protected us all? By the end of the cold war money itself had become an inconvenience
because of diminishing returns. And now the stuff is just plain dangerous because everyone who
got screwed (99%) wants their fair share still. It is paralyzing our thinking. Obama maintains
he personally "prevented another depression". I honestly think he might be insane. What we need
is a recognition that the old system was completely irrational and it isn't coming back. And most
of us are SOL. Somebody is going to figure out how to maintain both the value and usefulness of
money very soon, because we've got work to do.
The GFC was the first great financial crime of this millenium, and Goldman Sachs was at the
epicenter. A heist of gargantuan proportions, they didn't even need a safecracker after Bernanke
spun the dials and opened the door wide.
Imagine if the FBI and the Mafia exchanged their top leaders every few months. That's what
we have here with the SEC and Wall Street.
Bernie Sanders: The business of Wall Street is fraud and greed.
We can add to that. The business of the SEC is to provide cover.
In Yves intro she shares her views, first, that Kidney still wants to think well of his former
SEC colleagues and his criticisms seem muted relative to the severity of the problems, and second,
that there are class assumptions at work.
The first is obvious, as the SEC is an utter failure in its responsibility to investigate and
prosecute financial criminals. While Mr. Kidney devotes a fair amount of his passages pondering
how it can be that no individuals within these financial institutions bear personal responsibility,
Mr. Kidney fails to see the SEC through that same lens. To say Kidney's criticism of his coworkers
is muted is an understatement. The individuals at the SEC are corrupt. The individuals at the
Justice Department are corrupt. Probably all nice people: husbands, wives, fathers, mothers, friends,
etc. Just like those folks at the financial institutions. Mr. Kidney cuts them slack because of
his personal relationships with them. Mr. Kidney chooses to give them the benefit of doubt when
the totality of their professional performance at the SEC make clear this cannot be true.
With respect to class assumptions at work, Yves illustrates with the deference shown by SEC
officials and investigators toward these financial criminals and their presumption that these
individuals are honest. Mr. Kidney does share some of his disappointment in President Obama and
Obama's administration but fails to properly connect the dots. In short, the lack of financial
crime prosecutions is the result of a deliberate, planned and orchestrated effort.
Mr. Kindney's investigations were prevented in going forward by his superiors. He was never
given an explanation for this despite his asking. But Kidney believes his superiors are all good
people.
No, they are not. They are compromised people who have placed their career employment above
their sworn duty. The fact that their bosses have done the same, as have those in the Justice
Department as well as President Obama, should not diminish this fact. The phrase "class assumptions"
is too euphemistic when describing a system where there is no justice for the victims of financial
crimes, a system where the Justice Department and Administration coordinate to shield financial
criminals based on where they work.
This is America. In today's America the fact is certain individuals are above the law because
our elected officials at all levels accept that this is okay. Victims of these individuals will
be prevented access to their legal recourse, and that these criminals are protected from the highest
level of our government down. This goes way, way beyond class assumptions.
Yves has written extensively about how corporate interests have funded academic sinecures,
as well as continuing legal education seminars attended by attorneys and judges. This is part
of the fallout; if you want more, check out her section of ECONned where she explains how legal
thinking was perverted by business interests.
As someone who has fallen on their sword more than once (and again recently), I just want to
say that "placed their career employment above their sworn duty" is accurate but also oversimplifies
the situation.
People with families tell themselves that they balance performance of most (some?) of those
duties, while shirking the balance in order to protect their families (a "good" (as in, expensive)
college for the kids)… this actually comes down to sustaining their social status, in a culture
(political as well as corporate) where loyalty is valued equal to and above performance, and honorable
action is diminished, trivialized, even ridiculed; and not just within the context of the financial
industry.
This is not at all a defense of the choice, but the choice is made in a very class-stratified
social context, and arises in that general context. People take out loans to buy cars and houses,
they squirrel earnings away into investments (to avoid taxes) which they are reluctant to draw
from… they feel less ready to abandon their addictive income streams for honor, and fudge their
responsibilities. It's not isolated to regulators, or government, or even finance. It occurs so
constantly and on so many fronts that addressing specific cases doesn't make a dent in the compromise
of the entire culture. And that compromise is fueled and maintained by a very twisted set of ideas
about money, and career, and social status (not to mention compromises in journalism, education,
science, you name it).
I read Mr kidney as being very sarcastic. I could not write this with a serious sarcastic (Lawsuit
Avoiding) view:
The most senior level supervisors left more lucrative jobs in the private sector to head
the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They
then returned to even more lucrative employment or even more high-profile public positions.)
taking plum jobs but at significant personal sacrifice
Oh really? Must have hurt. And from a legal point of view does not appear libelous.
"... 'There's an interesting theory – called the 'green paradox' – that low oil prices are in part the reaction of an industry fearful of the impacts of climate change policy on its future revenues. ..."
"... The German economist Hans-Werner Sinn has argued that "if suppliers feel threatened by a gradual greening of economic policies.. they will extract their stocks more rapidly" thus pushing their prices down' ..."
There's a new parliamentary group in UK on Limits to Growth that had it's
first meeting this week.
'A 2015 analysis of the remaining fossil fuel resources in China, USA,
Canada and Australia, which includes unconventional resources, suggests
that overall oil production is in fact peaking already'
I hadn't heard this before:
'There's an interesting theory – called the 'green paradox' – that
low oil prices are in part the reaction of an industry fearful of the impacts
of climate change policy on its future revenues.
The German economist Hans-Werner
Sinn has argued that "if suppliers feel threatened by a gradual greening
of economic policies.. they will extract their stocks more rapidly" thus
pushing their prices down'
"... The following is a preview of a chapter by Claudia von Werlhof in "The Global Economic Crisis: The Great Depression of the XXI Century." (2009) ..."
"... To read more, order the book online. Help us spread the word: "like" the book on Facebook and share with your friends -- ..."
No one asks these questions because they seem absurd. Yet, no one can escape
them either. Until the onslaught of the global economic crisis, the motto of
so-called "neoliberalism" was TINA: "There Is No Alternative!"
No alternative to "neoliberal globalization"?
No alternative to the unfettered "free market" economy?
What Is "Neoliberal Globalization"?
Let us first clarify what globalization and neoliberalism are, where they
come from, who they are directed by, what they claim, what they do, why their
effects are so fatal, why they will fail and why people nonetheless cling to
them. Then, let us look at the responses of those who are not – or will not
– be able to live with the consequences they cause.
This is where the difficulties begin. For a good twenty years now we have
been told that there is no alternative to neoliberal globalization, and that,
in fact, no such alternative is needed either. Over and over again, we have
been confronted with the TINA-concept: "There Is No Alternative!" The "iron
lady", Margaret Thatcher, was one of those who reiterated this belief without
end.
The TINA-concept prohibits all thought. It follows the rationale that there
is no point in analyzing and discussing neoliberalism and so-called globalization
because they are inevitable. Whether we condone what is happening or not does
not matter, it is happening anyway. There is no point in trying to understand.
Hence: Go with it! Kill or be killed!
Some go as far as suggesting that globalization – meaning, an economic system
which developed under specific social and historical conditions – is nothing
less but a law of nature. In turn, "human nature" is supposedly reflected by
the character of the system's economic subjects: egotistical, ruthless, greedy
and cold. This, we are told, works towards everyone's benefit.
The question remains: why has Adam Smith's "invisible hand" become a "visible
fist"? While a tiny minority reaps enormous benefits from today's neoliberalism
(none of which will remain, of course), the vast majority of the earth's population
suffers hardship to the extent that their very survival is at stake. The damage
done seems irreversible.
All over the world media outlets – especially television stations – avoid
addressing the problem. A common excuse is that it cannot be explained.[1] The
true reason is, of course, the media's corporate control.
What Is Neoliberalism?
Neoliberalism as an economic policy agenda which began in Chile in 1973.
Its inauguration consisted of a U.S.-organized coup against a democratically
elected socialist president and the installment of a bloody military dictatorship
notorious for systematic torture. This was the only way to turn the neoliberal
model of the so-called "Chicago Boys" under the leadership of Milton Friedman
– a student of Friedrich von Hayek – into reality.
The predecessor of the neoliberal model is the economic liberalism of the
18th and 19th centuries and its notion of "free trade". Goethe's assessment
at the time was: "Free trade, piracy, war – an inseparable three!"[2]
At the center of both old and new economic liberalism lies:
Self-interest and individualism; segregation of ethical principles and economic
affairs, in other words: a process of 'de-bedding' economy from society; economic
rationality as a mere cost-benefit calculation and profit maximization; competition
as the essential driving force for growth and progress; specialization and the
replacement of a subsistence economy with profit-oriented foreign trade ('comparative
cost advantage'); and the proscription of public (state) interference with market
forces.[3]
Where the new economic liberalism outdoes the old is in its global claim.
Today's economic liberalism functions as a model for each and everyone: all
parts of the economy, all sectors of society, of life/nature itself. As a consequence,
the once "de-bedded" economy now claims to "im-bed" everything, including political
power. Furthermore, a new twisted "economic ethics" (and with it a certain idea
of "human nature") emerges that mocks everything from so-called do-gooders to
altruism to selfless help to care for others to a notion of responsibility.[4]
This goes as far as claiming that the common good depends entirely on the
uncontrolled egoism of the individual and, especially, on the prosperity of
transnational corporations. The allegedly necessary "freedom" of the economy
– which, paradoxically, only means the freedom of corporations – hence consists
of a freedom from responsibility and commitment to society.
The maximization of profit itself must occur within the shortest possible
time; this means, preferably, through speculation and "shareholder value". It
must meet as few obstacles as possible. Today, global economic interests outweigh
not only extra-economic concerns but also national economic considerations since
corporations today see themselves beyond both community and nation.[5] A "level
playing field" is created that offers the global players the best possible conditions.
This playing field knows of no legal, social, ecological, cultural or national
"barriers".[6] As a result, economic competition plays out on a market that
is free of all non-market, extra-economic or protectionist influences – unless
they serve the interests of the big players (the corporations), of course. The
corporations' interests – their maximal growth and progress – take on complete
priority. This is rationalized by alleging that their well-being means the well-being
of small enterprises and workshops as well.
The difference between the new and the old economic liberalism can first
be articulated in quantitative terms: after capitalism went through a series
of ruptures and challenges – caused by the "competing economic system", the
crisis of capitalism, post-war "Keynesianism" with its social and welfare state
tendencies, internal mass consumer demand (so-called Fordism), and the objective
of full employment in the North. The liberal economic goals of the past are
now not only euphorically resurrected but they are also "globalized". The main
reason is indeed that the competition between alternative economic systems is
gone. However, to conclude that this confirms the victory of capitalism and
the "golden West" over "dark socialism" is only one possible interpretation.
Another – opposing – interpretation is to see the "modern world system" (which
contains both capitalism and socialism) as having hit a general crisis which
causes total and merciless competition over global resources while leveling
the way for investment opportunities, i.e. the valorization of capital.[7]
The ongoing globalization of neoliberalism demonstrates which interpretation
is right. Not least, because the differences between the old and the new economic
liberalism can not only be articulated in quantitative terms but in qualitative
ones too. What we are witnessing are completely new phenomena: instead of a
democratic "complete competition" between many small enterprises enjoying the
freedom of the market, only the big corporations win. In turn, they create new
market oligopolies and monopolies of previously unknown dimensions. The market
hence only remains free for them, while it is rendered unfree for all others
who are condemned to an existence of dependency (as enforced producers, workers
and consumers) or excluded from the market altogether (if they have neither
anything to sell or buy). About fifty percent of the world's population fall
into this group today, and the percentage is rising.[8]
Anti-trust laws have lost all power since the transnational corporations
set the norms. It is the corporations – not "the market" as an anonymous mechanism
or "invisible hand" – that determine today's rules of trade, for example prices
and legal regulations. This happens outside any political control. Speculation
with an average twenty percent profit margin edges out honest producers who
become "unprofitable".[9] Money becomes too precious for comparatively non-profitable,
long-term projects,
or projects that only – how audacious! – serve a good life. Money instead
"travels upwards" and disappears. Financial capital determines more and more
what the markets are and do.[10] By delinking the dollar from the price of gold,
money creation no longer bears a direct relationship to production".[11] Moreover,
these days most of us are – exactly like all governments – in debt. It is financial
capital that has all the money – we have none.[12]
Small, medium, even some bigger enterprises are pushed out of the market,
forced to fold or swallowed by transnational corporations because their performances
are below average in comparison to speculation – rather: spookulation – wins.
The public sector, which has historically been defined as a sector of not-for-profit
economy and administration, is "slimmed" and its "profitable" parts ("gems")
handed to corporations (privatized). As a consequence, social services that
are necessary for our existence disappear. Small and medium private businesses
– which, until recently, employed eighty percent of the workforce and provided
normal working conditions – are affected by these developments as well. The
alleged correlation between economic growth and secure employment is false.
When economic growth is accompanied by the mergers of businesses, jobs are lost.[13]
If there are any new jobs, most are precarious, meaning that they are only
available temporarily and badly paid. One job is usually not enough to make
a living.[14] This means that the working conditions in the North become akin
to those in the South, and the working conditions of men akin to those of women
– a trend diametrically opposed to what we have always been told. Corporations
now leave for the South (or East) to use cheap – and particularly female – labor
without union affiliation. This has already been happening since the 1970s in
the "Export Processing Zones" (EPZs, "world market factories" or "maquiladoras"),
where most of the world's computer chips, sneakers, clothes and electronic goods
are produced.[15] The EPZs lie in areas where century-old colonial-capitalist
and authoritarian-patriarchal conditions guarantee the availability of cheap
labor.[16] The recent shift of business opportunities from consumer goods to
armaments is a particularly troubling development.[17]
It is not only commodity production that is "outsourced" and located in the
EPZs, but service industries as well. This is a result of the so-called Third
Industrial Revolution, meaning the development of new information and communication
technologies. Many jobs have disappeared entirely due to computerization, also
in administrative fields.[18] The combination of the principles of "high tech"
and "low wage"/"no wage" (always denied by "progress" enthusiasts) guarantees
a "comparative cost advantage" in foreign trade. This will eventually lead to
"Chinese wages" in the West. A potential loss of Western consumers is not seen
as a threat. A corporate economy does not care whether consumers are European,
Chinese or Indian.
The means of production become concentrated in fewer and fewer hands, especially
since finance capital – rendered precarious itself – controls asset values ever
more aggressively. New forms of private property are created, not least through
the "clearance" of public property and the transformation of formerly public
and small-scale private services and industries to a corporate business sector.
This concerns primarily fields that have long been (at least partly) excluded
from the logic of profit – e.g. education, health, energy or water supply/disposal.
New forms of so-called enclosures emerge from today's total commercialization
of formerly small-scale private or public industries and services, of the "commons",
and of natural resources like oceans, rain forests, regions of genetic diversity
or geopolitical interest (e.g. potential pipeline routes), etc.[19] As far as
the new virtual spaces and communication networks go, we are witnessing frantic
efforts to bring these under private control as well.[20]
All these new forms of private property are essentially created by (more
or less) predatory forms of appropriation. In this sense, they are a continuation
of the history of so-called original accumulation which has expanded globally,
in accordance with to the motto: "Growth through expropriation!"[21]
Most people have less and less access to the means of production, and so
the dependence on scarce and underpaid work increases. The destruction of the
welfare state also destroys the notion that individuals can rely on the community
to provide for them in times of need. Our existence relies exclusively on private,
i.e. expensive, services that are often of much worse quality and much less
reliable than public services. (It is a myth that the private always outdoes
the public.) What we are experiencing is undersupply formerly only known by
the colonial South. The old claim that the South will eventually develop into
the North is proven wrong. It is the North that increasingly develops into the
South. We are witnessing the latest form of "development", namely, a world system
of underdevelopment.[22] Development and underdevelopment go hand in hand.[23]
This might even dawn on "development aid" workers soon.
It is usually women who are called upon to counterbalance underdevelopment
through increased work ("service provisions") in the household. As a result,
the workload and underpay of women takes on horrendous dimensions: they do unpaid
work inside their homes and poorly paid "housewifized" work outside.[24] Yet,
commercialization does not stop in front of the home's doors either. Even housework
becomes commercially co-opted ("new maid question"), with hardly any financial
benefits for the women who do the work.[25]
Not least because of this, women are increasingly coerced into prostitution,
one of today's biggest global industries.[26] This illustrates two things: a)
how little the "emancipation" of women actually leads to "equal terms" with
men; and b) that "capitalist development" does not imply increased "freedom"
in wage labor relations, as the Left has claimed for a long time.[27] If the
latter were the case, then neoliberalism would mean the voluntary end of capitalism
once it reaches its furthest extension. This, however, does not appear likely.
Today, hundreds of millions of quasi-slaves, more than ever before, exist
in the "world system."[28] The authoritarian model of the "Export Processing
Zones" is conquering the East and threatening the North. The redistribution
of wealth runs ever more – and with ever accelerated speed – from the bottom
to the top. The gap between the rich and the poor has never been wider. The
middle classes disappear. This is the situation we are facing.
It becomes obvious that neoliberalism marks not the end of colonialism but,
to the contrary, the colonization of the North. This new "colonization of the
world"[29] points back to the beginnings of the "modern world system" in the
"long 16th century", when the conquering of the Americas, their exploitation
and colonial transformation allowed for the rise and "development" of Europe.[30]
The so-called "children's diseases" of modernity keep on haunting it, even in
old age. They are, in fact, the main feature of modernity's latest stage. They
are expanding instead of disappearing.
Where there is no South, there is no North; where there is no periphery,
there is no center; where there is no colony, there is no – in any case no "Western"
– civilization.[31]
Austria is part of the world system too. It is increasingly becoming a corporate
colony (particularly of German corporations). This, however, does not keep it
from being an active colonizer itself, especially in the East.[32]
Social, cultural, traditional and ecological considerations are abandoned
and give way to a mentality of plundering. All global resources that we still
have – natural resources, forests, water, genetic pools – have turned into objects
of utilization. Rapid ecological destruction through depletion is the consequence.
If one makes more profit by cutting down trees than by planting them, then there
is no reason not to cut them.[33] Neither the public nor the state interferes,
despite global warming and the obvious fact that the clearing of the few remaining
rain forests will irreversibly destroy the earth's climate – not to mention
the many other negative effects of such actions.[34] Climate, animal, plants,
human and general ecological rights are worth nothing compared to the interests
of the corporations – no matter that the rain forest is not a renewable resource
and that the entire earth's ecosystem depends on it. If greed, and the rationalism
with which it is economically enforced, really was an inherent anthropological
trait, we would have never even reached this day.
The commander of the Space Shuttle that circled the earth in 2005 remarked
that "the center of Africa was burning". She meant the Congo, in which the last
great rain forest of the continent is located. Without it there will be no more
rain clouds above the sources of the Nile. However, it needs to disappear in
order for corporations to gain free access to the Congo's natural resources
that are the reason for the wars that plague the region today. After all, one
needs diamonds and coltan for mobile phones.
Today, everything on earth is turned into commodities, i.e. everything becomes
an object of "trade" and commercialization (which truly means liquidation, the
transformation of all into liquid money). In its neoliberal stage it is not
enough for capitalism to globally pursue less cost-intensive and preferably
"wageless" commodity production. The objective is to transform everyone and
everything into commodities, including life itself.[35] We are racing blindly
towards the violent and absolute conclusion of this "mode of production", namely
total capitalization/liquidation by "monetarization".[36]
We are not only witnessing perpetual praise of the market – we are witnessing
what can be described as "market fundamentalism". People believe in the market
as if it was a god. There seems to be a sense that nothing could ever happen
without it. Total global maximized accumulation of money/capital as abstract
wealth becomes the sole purpose of economic activity. A "free" world market
for everything has to be established – a world market that functions according
to the interests of the corporations and capitalist money. The installment of
such a market proceeds with dazzling speed. It creates new profit possibilities
where they have not existed before, e.g. in Iraq, Eastern Europe or China.
One thing remains generally overlooked: the abstract wealth created for accumulation
implies the destruction of nature as concrete wealth. The result is a "hole
in the ground" and next to it a garbage dump with used commodities, outdated
machinery and money without value.[37] However, once all concrete wealth (which
today consists mainly of the last natural resources) will be gone, abstract
wealth will disappear as well. It will, in Marx's words, "evaporate". The fact
that abstract wealth is not real wealth will become obvious, and so will the
answer to the question of which wealth modern economic activity has really created.
In the end it is nothing but monetary wealth (and even this mainly exists virtually
or on accounts) that constitutes a monoculture controlled by a tiny minority.
Diversity is suffocated and millions of people are left wondering how to survive.
And really: how do you survive with neither resources nor means of production
nor money?
The nihilism of our economic system is evident. The whole world will be transformed
into money – and then it will disappear. After all, money cannot be eaten. What
no one seems to consider is the fact that it is impossible to re-transform commodities,
money, capital and machinery into nature or concrete wealth. It seems that underlying
all "economic development" is the assumption that "resources", the "sources
of wealth",[38] are renewable and everlasting – just like the "growth" they
create.[39]
The notion that capitalism and democracy are one is proven a myth by neoliberalism
and its "monetary totalitarianism".[40]
The primacy of politics over economy has been lost. Politicians of all parties
have abandoned it. It is the corporations that dictate politics. Where corporate
interests are concerned, there is no place for democratic convention or community
control. Public space disappears. The res publica turns into a res privata,
or – as we could say today – a res privata transnationale (in its original Latin
meaning, privare means "to deprive"). Only those in power still have rights.
They give themselves the licenses they need, from the "license to plunder" to
the "license to kill".[41] Those who get in their way or challenge their "rights"
are vilified, criminalized and to an increasing degree defined as "terrorists"
or, in the case of defiant governments, as "rogue states" – a label that usually
implies threatened or actual military attack, as we can see in the cases of
Yugoslavia, Afghanistan and Iraq, and maybe Syria and Iran in the near future.
U.S. President Bush had even spoken of the possibility of "preemptive" nuclear
strikes should the U.S. feel endangered by weapons of mass destruction.[42]
The European Union did not object.[43]
Neoliberalism and war are two sides of the same coin.[44] Free trade, piracy
and war are still "an inseparable three" – today maybe more so than ever. War
is not only "good for the economy" but is indeed its driving force and can be
understood as the "continuation of economy with other means".[45] War and economy
have become almost indistinguishable.[46] Wars about resources – especially
oil and water – have already begun.[47] The Gulf Wars are the most obvious examples.
Militarism once again appears as the "executor of capital accumulation" – potentially
everywhere and enduringly.[48]
Human rights and rights of sovereignty have been transferred from people,
communities and governments to corporations.[49] The notion of the people as
a sovereign body has practically been abolished. We have witnessed a coup of
sorts. The political systems of the West and the nation state as guarantees
for and expression of the international division of labor in the modern world
system are increasingly dissolving.[50] Nation states are developing into "periphery
states" according to the inferior role they play in the proto-despotic "New
World Order".[51] Democracy appears outdated. After all, it "hinders business".[52]
The "New World Order" implies a new division of labor that does no longer
distinguish between North and South, East and West – today, everywhere is South.
An according International Law is established which effectively functions from
top to bottom ("top-down") and eliminates all local and regional communal rights.
And not only that: many such rights are rendered invalid both retroactively
and for the future.[53]
The logic of neoliberalism as a sort of totalitarian neo-mercantilism is
that all resources, all markets, all money, all profits, all means of production,
all "investment opportunities", all rights and all power belong to the corporations
only. To paraphrase Richard Sennett: "Everything to the Corporations!"[54] One
might add: "Now!"
The corporations are free to do whatever they please with what they get.
Nobody is allowed to interfere. Ironically, we are expected to rely on them
to find a way out of the crisis we are in. This puts the entire globe at risk
since responsibility is something the corporations do not have or know. The
times of social contracts are gone.[55] In fact, pointing out the crisis alone
has become a crime and all critique will soon be defined as "terror" and persecuted
as such.[56]
IMF Economic Medicine
Since the 1980s, it is mainly the Structural Adjustment Programs (SAPs) of
the World Bank and the IMF that act as the enforcers of neoliberalism. These
programs are levied against the countries of the South which can be extorted
due to their debts. Meanwhile, numerous military interventions and wars help
to take possession of the assets that still remain, secure resources, install
neoliberalism as the global economic politics, crush resistance movements (which
are cynically labeled as "IMF uprisings"), and facilitate the lucrative business
of reconstruction.[57]
In the 1980s, Ronald Reagan and Margaret Thatcher introduced neoliberalism
in Anglo-America. In 1989, the so-called "Washington Consensus" was formulated.
It claimed to lead to global freedom, prosperity and economic growth through
"deregulation, liberalization and privatization". This has become the credo
and promise of all neoliberals. Today we know that the promise has come true
for the corporations only – not for anybody else.
In the Middle East, the Western support for Saddam Hussein in the war between
Iraq and Iran in the 1980s, and the Gulf War of the early 1990s, announced the
permanent U.S. presence in the world's most contested oil region.
In continental Europe, neoliberalism began with the crisis in Yugoslavia
caused by the Structural Adjustment Programs (SAPs) of the World Bank and the
IMF. The country was heavily exploited, fell apart and finally beset by a civil
war over its last remaining resources.[58] Since the NATO war in 1999, the Balkans
are fragmented, occupied and geopolitically under neoliberal control.[59] The
region is of main strategic interest for future oil and gas transport from the
Caucasus to the West (for example the "Nabucco" gas pipeline that is supposed
to start operating from the Caspian Sea through Turkey and the Balkans by 2011.[60]
The reconstruction of the Balkans is exclusively in the hands of Western corporations.
All governments, whether left, right, liberal or green, accept this. There
is no analysis of the connection between the politics of neoliberalism, its
history, its background and its effects on Europe and other parts of the world.
Likewise, there is no analysis of its connection to the new militarism.
NOTES
[1] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale
Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und
was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 23, 36.
[2] Johann Wolfgang von Goethe, Faust: Part Two, New York, Oxford University
Press, 1999.
[3] Maria Mies, Krieg ohne Grenzen. Die neue Kolonisierung der Welt, Köln,
PapyRossa, 2005, p. 34.
[4] Arno Gruen, Der Verlust des Mitgefühls. Über die Politik der Gleichgültigkeit,
München, 1997, dtv.
[5] Sassen Saskia, "Wohin führt die Globalisierung?," Machtbeben, 2000, Stuttgart-München,
DVA.
[6] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale
Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und
was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 24.
[7] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen
Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen
über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, 1979, Suhrkamp;
Immanuel Wallerstein (Hg), The Modern World-System in the Longue Durée, Boulder/
London; Paradigm Publishers, 2004.
[8] Susan George, im Vortrag, Treffen von Gegnern und Befürwortern der Globalisierung
im Rahmen der Tagung des WEF (World Economic Forum), Salzburg, 2001.
[9] Elmar Altvater, Das Ende des Kapitalismus, wie wir ihn kennen, Münster,
Westfälisches Dampfboot, 2005.
[10] Elmar Altvater and Birgit Mahnkopf, Grenzen der Globalisierung. Ökonomie,
Ökologie und Politik in der Weltgesellschaft, Münster, Westfälisches Dampfboot,
1996.
[11] Bernard Lietaer, Jenseits von Gier und Knappheit, Interview mit Sarah
van Gelder, 2006,
www.transaction.net/press/interviews/Lietaer 0497.html; Margrit Kennedy,
Geld ohne Zinsen und Inflation, Steyerberg, Permakultur, 1990.
[12] Helmut Creutz, Das Geldsyndrom. Wege zur krisenfreien Marktwirtschaft,
Frankfurt, Ullstein, 1995.
[13] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale
Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und
was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 7.
[14] Barbara Ehrenreich, Arbeit poor. Unterwegs in der Dienstleistungsgesellschaft,
München, Kunstmann, 2001.
[15] Folker Fröbel, Jürgen Heinrichs, and Otto Kreye, Die neue internationale
Arbeitsteilung. Strukturelle Arbeitslosigkeit in den Industrieländern und die
Industrialisierung der Entwicklungsländer, Reinbek, Rowohlt, 1977.
[16] Veronika Bennholdt-Thomsen, Maria Mies, and Claudia von Werlhof, Women,
The Last Colony, London/ New Delhi, Zed Books, 1988.
[17] Michel Chossudovsky, War and Globalization. The Truth Behind September
11th, Oro, Ontario, Global Outlook, 2003.
[18] Folker Fröbel, Jürgen Heinrichs, and Otto Kreye, Die neue internationale
Arbeitsteilung. Strukturelle Arbeitslosigkeit in den Industrieländern und die
Industrialisierung der Entwicklungsländer, Reinbek, Rowohlt, 1977.
[19] Ana Isla, The Tragedy of the Enclosures: An Eco-Feminist Perspective
on Selling Oxygen and Prostitution in Costa Rica, Man., Brock Univ., Sociology
Dpt., St. Catherines, Ontario, Canada, 2005.
[20] John Hepburn, Die Rückeroberung von Allmenden – von alten und von neuen,
übers. Vortrag bei, Other Worlds Conference; Univ. of Pennsylvania; 28./29.4,
2005.
[21] Claudia von Werlhof, Was haben die Hühner mit dem Dollar zu tun? Frauen
und Ökonomie, München, Frauenoffensive, 1991; Claudia von Werlhof, MAInopoly:
Aus Spiel wird Ernst, in Mies/Werlhof, 2003, p. 148-192.
[22] Andre Gunder Frank, Die Entwicklung der Unterentwicklung, in ders. u.a.,
Kritik des bürgerlichen Antiimperialismus, Berlin, Wagenbach, 1969.
[23] Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln,
PapyRossa, 2005.
[24] Veronika Bennholdt-Thomsen, Maria Mies, and Claudia von Werlhof, Women,
the Last Colony, London/New Delhi, Zed Books, 1988.
[25] Claudia von Werlhof, Frauen und Ökonomie. Reden, Vorträge 2002-2004,
Themen GATS, Globalisierung, Mechernich, Gerda-Weiler-Stiftung, 2004.
[26] Ana Isla, "Women and Biodiversity as Capital Accumulation: An Eco-Feminist
View," Socialist Bulletin, Vol. 69, Winter, 2003, p. 21-34; Ana Isla, The Tragedy
of the Enclosures: An Eco-Feminist Perspective on Selling Oxygen and Prostitution
in Costa Rica, Man., Brock Univ., Sociology Department, St. Catherines, Ontario,
Canada, 2005.
[27] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen
Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen
über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979.
[28] Kevin Bales, Die neue Sklaverei, München, Kunstmann, 2001.
[29] Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln,
PapyRossa, 2005.
[30] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen
Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen
über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979;
Andre Gunder Frank, Orientierung im Weltsystem, Von der Neuen Welt zum Reich
der Mitte, Wien, Promedia, 2005; Maria Mies, Patriarchy and Accumulation on
a World Scale, Women in the International Division of Labour, London, Zed Books,
1986.
[31] Claudia von Werlhof, "Questions to Ramona," in Corinne Kumar (Ed.),
Asking, We Walk. The South as New Political Imaginary, Vol. 2, Bangalore, Streelekha,
2007, p. 214-268
[32] Hannes Hofbauer, Osterweiterung. Vom Drang nach Osten zur peripheren
EU-Integration, Wien, Promedia, 2003; Andrea Salzburger, Zurück in die Zukunft
des Kapitalismus, Kommerz und Verelendung in Polen, Frankfurt – New York, Peter
Lang Verlag, 2006.
[34] August Raggam, Klimawandel, Biomasse als Chance gegen Klimakollaps und
globale Erwärmung, Graz, Gerhard Erker, 2004.
[35] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen
Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen
über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979.
[36] Renate Genth, Die Bedrohung der Demokratie durch die Ökonomisierung
der Politik, feature für den Saarländischen Rundfunk am 4.3., 2006.
[37] Johan Galtung, Eurotopia, Die Zukunft eines Kontinents, Wien, Promedia,
1993.
[38] Karl Marx, Capital, New York, Vintage, 1976.
[39] Claudia von Werlhof, Loosing Faith in Progress: Capitalist Patriarchy
as an "Alchemical System," in Bennholdt-Thomsen et.al.(Eds.), There is an Alternative,
2001, p. 15-40.
[40] Renate Genth, Die Bedrohung der Demokratie durch die Ökonomisierung
der Politik, feature für den Saarländischen Rundfunk am 4.3., 2006.
[41] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale
Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und
was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 7; Maria Mies, Krieg
ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.
[42] Michel Chossudovsky, America's "War on Terrorism," Montreal, Global
Research, 2005.
[43] Michel Chossudovsky, "Nuclear War Against Iran," Global Research, Center
for Research on Globalization, Ottawa 13.1, 2006.
[44] Altvater, Chossudovsky, Roy, Serfati, Globalisierung und Krieg, Sand
im Getriebe 17, Internationaler deutschsprachiger Rundbrief der ATTAC – Bewegung,
Sonderausgabe zu den Anti-Kriegs-Demonstrationen am 15.2., 2003; Maria Mies,
Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.
[45] Hazel Hendersen, Building a Win-Win World. Life Beyond Global Economic
Warfare, San Francisco, 1996.
[46] Claudia von Werlhof, Vom Wirtschaftskrieg zur Kriegswirtschaft. Die
Waffen der, Neuen-Welt-Ordnung, in Mies 2005, p. 40-48.
[47] Michael T. Klare, Resource Wars. The New Landscape of Global Conflict,
New York, Henry Holt and Company, 2001.
[48] Rosa Luxemburg, Die Akkumulation des Kapitals, Frankfurt, 1970.
[49] Tony Clarke, Der Angriff auf demokratische Rechte und Freiheiten, in
Mies/Werlhof, 2003, p. 80-94.
[50] Sassen Saskia, Machtbeben. Wohin führt die Globalisierung?, Stuttgart-München,
DVA, 2000.
[51] Michael Hardt and Antonio Negri, Empire, Cambridge, Harvard Univ. Press,
2001; Noam Chomsky, Hybris. Die endgültige Sicherstellung der globalen –Vormachtstellung
der USA, Hamburg-Wien, Europaverlag, 2003.
[52] Claudia von Werlhof, Speed Kills!, in Dimmel/Schmee, 2005, p. 284-292
[53] See the "roll back" and "stand still" clauses in the WTO agreements
in Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale
Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und
was wir dagegen tun können, Hamburg, EVA, 2003.
[54] Richard Sennett, zit. "In Einladung zu den Wiener Vorlesungen," 21.11.2005:
Alternativen zur neoliberalen Globalisierung, 2005.
[55] Claudia von Werlhof, MAInopoly: Aus Spiel wird Ernst, in Mies/Werlhof,
2003, p. 148-192.
[56] Michel Chossudovsky, America's "War on Terrorism," Montreal, Global
Research, 2005.
[57] Michel Chossudovsky, Global Brutal. Der entfesselte Welthandel, die
Armut, der Krieg, Frankfurt, Zweitausendeins, 2002; Maria Mies, Krieg ohne Grenzen.
Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005; Bennholdt-Thomsen/Faraclas/Werlhof
2001.
[58] Michel Chossudovsky, Global Brutal. Der entfesselte Welthandel, die
Armut, der Krieg, Frankfurt, Zweitausendeins, 2002.
[59] Wolfgang Richter, Elmar Schmähling, and Eckart Spoo (Hg), Die Wahrheit
über den NATO-Krieg gegen Jugoslawien, Schkeuditz, Schkeuditzer Buchverlag,
2000; Wolfgang Richter, Elmar Schmähling, and Eckart Spoo (Hg), Die deutsche
Verantwortung für den NATO-Krieg gegen Jugoslawien, Schkeuditz, Schkeuditzer
Buchverlag, 2000.
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 Ordońez 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.
"... 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.
Barriers to productivity growth
: "The limits to productivity growth
are set only by the limits to human inventiveness"
says
John Kay. This understates the problem. There are other limits.
I'd mention two which I think are under-rated.
One is competition. Of course, this tends to increase productivity in many
ways. But it has a downside. The fear of competition from future new technologies
can
inhibit
investment today: no firm will spend Ł10m on robots if they
fear a rival will buy better ones for Ł5m soon afterwards. ...
The second is that, as Brynjolfsson and MacAfee
say
, "significant organizational innovation is required to capture
the full benefit of…technologies."
For example, Paul David has
described (pdf)
how the introduction of electricity into American factories
did not immediately raise productivity much, simply because it merely replaced
steam engines. It was only when bosses realized that electric motors allowed
factories to be reorganized – dispensing with the need for machines to be
close to a central power source – that productivity soared, as workflow
improved and new cheaper buildings could be used. This took many years.
It's not just organizational change that's needed, though..., I suspect
that if IT is to have (further?) productivity-enhancing effects, they require
socio-organizational change. ...
However, there are always obstacles to the social and organizational change
necessary for technical change to lead to productivity gains. These might
be cognitive – such as the Frankenstein
syndrome
or "not invented
here
" mentality. Or they can be material. Socio-technical change is
a process of creative destruction, the losers from which kick up a stink;
think of taxi-drivers protesting against Uber.
Worse still, these losers aren't always politically weak Ludditites. They
can be well-connected bosses of incumbent firms, or managers seeking to
maintain their power base. ...
The big question facing us is, therefore: do we have the right set of institutions
to foster the socio-organizational change that beget productivity growth?
These require a mix of healthy markets, to maximize ecological diversity;
a financial system which backs risky new-comers;
property
rights which incentivise innovation; and state intervention
that facilitates all these whilst not being captured by Luddites. If our
politics weren't so imbecilic, this question would be getting a lot more
attention than it is.
Since the Gazprom long-favored pipeline project South Stream by the end of 2014 due to the European
resistance was abandoned, Russia tirelessly seeks for new Pipelinevarianten to secure its dominant
position in the lucrative European market. It also tries to hedge supplied. But suppied to Chinese
market are not so quick to occur.
From the point of view of the Russians, time is short, because the Kremlin and Gazprom have decided,
the problematic gas transit through Ukraine to Europe from 2019 to shut down, and on other routes
to redirect. The fundamental plan does not change, even if Russia's energy Minister last week in
an Interview with the "world" did not exclude "that part of the deliveries to continue over the Ukraine
is running".
As a substitute for South Stream was Russia has been an Alternative at the ready: the "Turkish
Stream" Pipeline should Gas through the Black sea and via Turkey to the EU border. But it has not
been more than a flash in the pan, because the project since the Russian-Turkish upheavals of the
past few months has been put on hold.
New Pipeline plans to increase the pressure on Brussels
The revival of the Poseidon Pipeline is therefore to become more important. Also as a Signal to
the Mediterranean countries. The namely were recently very angry about the Gazprom group, the majority
of its energy in the intended Expansion of the Nord Stream Baltic sea pipeline (Nord Stream 2) to
Germany to invest in it.
Nord Stream 2 should the Plan to the existing capacity of 110 billion cubic meters of double,
which the majority of Europe in particular Russian gas in Germany would arrive. For comparison: ITGI
Poseidon has the original concept after only eight billion cubic meters of capacity, equal to one
tenth of the German annual consumption. In total, Gazprom delivered in the previous year 158,56 billion
cubic meters of Gas to Europe and, thus, eight percent more than in the weak Exportjahr 2014.
For Nord Stream 2 has Gazprom, with Shell, BASF, E. on, very interesting to count and OMV five
leading European gas companies for a consortium and won the support of individual EU member States.
The EU Commission is, however, resists this project, because it is a violation of the EU energy Package,
and sees the dependence on Russian Gas supplies anyway would rather like to reduce. With the Poseidon
project would have Gazprom at least a small lever to the participants of Nord Stream 2 to get your
pressure in Brussels to increase.
"... And as I commented on another post, a couple of years ago Citi Research put the gross decline rate from existing US gas production at about 24%/year. This would be the rate of decline in the absence of new wells. Note that Louisiana showed a 20%/year net rate of decline in total marketed gas production from 2012 to 2014 (this was the net rate of decline after new wells were put on line). So, the Louisiana case history would seem to confirm the CIti estimate. ..."
"... The estimated volumetric loss of US gas production from existing wells, about 17 BCF/day per year, matches or exceeds the 2014 annual dry gas production of every country in the world, except for the US Russia (2014 BP data). ..."
Oilpro.com had an article about the EU importing LNG from the US and Australia, in order to reduce
their reliance on Russian gas. My response:
Based on production and consumption data through 2014 (BP), and ignoring changes in storage
volumes, in 2014 Russia had net natural gas exports of 16 BCF/day, Australia had net natural gas
exports of 2.5 BCF/day and the US had net natural gas imports of 3 BCF/day. So, as of 2014 anyway,
combined net natural gas exports from the US + Australia would be approximately zero.
And as I commented on another post, a couple of years ago Citi Research put the gross decline
rate from existing US gas production at about 24%/year. This would be the rate of decline in the
absence of new wells. Note that Louisiana showed a 20%/year net rate of decline in total marketed
gas production from 2012 to 2014 (this was the net rate of decline after new wells were put on
line). So, the Louisiana case history would seem to confirm the CIti estimate.
The estimated volumetric loss of US gas production from existing wells, about 17 BCF/day
per year, matches or exceeds the 2014 annual dry gas production of every country in the world,
except for the US & Russia (2014 BP data).
So, while the Marcellus/Utica Play has some very impressive wells, in round numbers it seems
likely that we need the productive equivalent of a new Marcellus Play every year, or the productive
equivalent of all of Qatar's gas production every year, just to offset the declines from existing
US wells–as the overall US rig count has declined about 70% from the rig counts we have seen in
recent years.
Economic hopes are rising in Armenia that the country can serve as a trade conduit for Iran now
that international sanctions against Tehran are being lifted.
Armenia has
long-standing
ties to Iran, and is a member
of the Russia-led Eurasian Economic Union (EEU), a factor that potentially increases its attractiveness
as a trade partner for Tehran. Yerevan is "an important avenue for both Iran to export through Armenia
into that large combined market [EEU], and as a platform for Western engagement in the now opening
Iranian market," noted Richard Giragosian, director of the non-governmental Regional Studies Center
in the Armenian capital, Yerevan.
The World Bank's country director for Armenia, Laura Bailey, told RFE/RL's Armenian service in
January that stalled energy partnerships
between Iran and Armenia could be the first sector to take off.
Indeed, National Iranian Gas Exports Company Managing Director Alireza Kameli announced on February
7 that Iran is considering increasing five-fold the 1 million cubic meters of gas it sends daily
to Armenia, state-run Iranian media reported. At the same time, plans for a new power line to increase
Armenia's electricity exports to Iran are developing.
The gas deal appears to fit into a larger, regional scheme. In December, quadripartite talks took
place during which Armenia, Iran, and the Black Sea countries of Georgia and Russia agreed to establish
a coordinating group on establishing an energy corridor linking the four countries.
"We should spare no efforts to connect the Persian Gulf with the Black Sea [via Georgia, Armenia's
northern neighbor]," Iranian President Hassan Rouhani told his Armenian counterpart, Serzh Sargsyan
in a January 24 phone conversation, Iran's MehrNews agency reported.
Negotiations already have occurred between Iran and the Georgian government about sending Iranian
gas to Georgia via Armenia, Iranian state media reported Kameli, the Iranian gas official, as saying
in early January.
Some Armenian experts are tempering their optimism with caution. Russian-owned companies control
an estimated 80 percent of Armenia's energy sector. Energy giant Gazprom runs the gas pipelines from
Iran and on to Georgia, and it tends to look askance at competitors who might try to muscle in on
their markets. At the same time, no clear sign has emerged that Moscow opposes an increase in Iranian
gas exports to Armenia. The Sputnik news agency, a Kremlin mouthpiece, promptly reported Kameli's
announcement on February 7.
Iranian affairs specialist Armen Vardanian at Yerevan's Armenian Institute of International and
Security Affairs believes that "Russia will embrace the projects that will not contradict its national
interests."
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.
Do FT honchos know that the USA is importer of natural gas and will stay as such in foreseeable
future due to decimation of shale oil/gas sector. See
http://www.eia.gov/dnav/ng/ng_move_impc_s1_a.htm
Notable quotes:
"... Finally, like Saudi Arabia in oil, Gazprom is one of the lowest-cost gas producers. According to calculations by Mr Henderson at OIES, the cost to Gazprom of delivering its gas to Germany is $3.5 per mmbtu (million British thermal unit) - compared with an estimated $4.3 per mmbtu break-even for US LNG supplies despite US gas prices trading near 16-year lows. ..."
"... Gazprom's contract prices, which are largely tied to oil prices, have kept pace with the spot gas market decline and are likely to fall further in the next six to nine months. ..."
Just as Saudi Arabia is the main swing producer for the global oil market thanks to its ability
to ramp up production if needed, Gazprom is the main holder of spare capacity in the global gas market.
According to Gazprom executives, the company has about 100bn cu m of spare production capacity
- thanks largely to investments made on over-optimistic assumptions about future gas demand - equivalent
to almost a quarter of its production and about 3 per cent of world output.
And just as Saudi Arabia has been unnerved by the prospect of US shale oil
producers eroding its market share, Gazprom faces a similar prospect in the gas market. The flood
of cheap gas unleashed by the
US shale boom has prompted a wave of US LNG projects in recent years. The first cargo of LNG
from the "lower 48" contiguous states of the US is due to be shipped in the next two months, and
the total export capacity under
construction is equivalent to two-thirds of Gazprom's exports to Europe.
Finally, like Saudi Arabia in oil, Gazprom is one of the lowest-cost gas producers. According
to calculations by Mr Henderson at OIES, the cost to Gazprom of delivering its gas to Germany is
$3.5 per mmbtu (million British thermal unit) - compared with an estimated $4.3 per mmbtu break-even
for US LNG supplies despite US gas prices trading near 16-year lows.
Put all those facts together, and it would seem to make sense for the Russian company to push
down prices to keep US LNG out of the market.
"Now the market is getting excited about it; but also the Russians have done their maths and they
know they can win if it happens," says Thierry Bros, European gas analyst at Société Générale in
Paris.
Such a move would be cheaper to implement now because European gas prices have already fallen
dramatically - spot UK gas prices are down 50 per cent in the past two years. Gazprom's contract
prices, which are largely tied to oil prices, have kept pace with the spot gas market decline and
are likely to fall further in the next six to nine months.
Mr Bros estimates it would cost Gazprom $1.3bn in lost revenues to price US LNG out of the market
this year - less than 1 per cent of its historical annual sales.
Gazprom executives have studied the economics of the price war approach and are discussing the
issue, according to people familiar with the company's thinking.
At a
meeting with investors in New York this week, Alexander Medvedev, Gazprom's deputy chief executive,
argued that low spot prices in Europe had already made US LNG supplies uneconomical. "Despite the
prevailing view on the market that North American LNG can change the current pricing model in Europe,
in reality this is not the case at all," he said.
"... 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.
"... 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 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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no cost-of-living
adjustment to benefits had led some seniors to "distrust" government data, like the CPI-W?
Again, this hypothesis would be a lot better to test with a time series of data, comparing years
with benefit increases and without. But feeling shortchanged by the data may be understandable
